SK TELECOM CO LTD - Interim / Quarterly Report 2014

6-K 1 d787956d6k.htm FORM 6-K Form 6-K

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF SEPTEMBER 2014

COMMISSION FILE NUMBER 333-04906

SK Telecom Co., Ltd.

(Translation of registrants name into English)

Euljiro65(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 registrants home country), or under the rules of the home country exchange on which the registrants 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 registrants 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-

Table of Contents

SEMI-ANNUAL BUSINESS REPORT

(From January 1, 2014 to June 30, 2014)

THIS IS A SUMMARY OF THE SEMI-ANNUAL 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.

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

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

Table of Contents

I. COMPANY OVERVIEW

1. Company Overview

Starting in the first quarter of 2011, the Company prepares and reports its financial statements under 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 Companys semi-annual business report for the six months ended June 30, 2014 includes the following consolidated subsidiaries:

Name	Date of Establishment	Principal Business		Material Subsidiary*
SK Telink Co., Ltd.	Apr. 9, 1998	Telecommunication services and satellite broadcasting services	252,475	Material
M&Service Co., Ltd.	Feb. 10, 2000	Online information services	68,587	Material
SK Communications Co., Ltd.	Sep. 19, 1996	Internet portal and other Internet information services	205,792	Material
Stonebridge Cinema Fund	Sep. 30, 2005	Investment partnership	11,974
Commerce Planet Co., Ltd.	Jul. 1, 1997	Online shopping mall operation services	26,237
SK Broadband Co., Ltd.	Sep. 26, 1997	Fixed-line telecommunication services, multimedia and IPTV services	3,044,349	Material
K-net Culture and Contents Venture Fund	Nov. 24, 2008	Investment partnership	16,181
Hwaitec Focus Investment Partnership 2	Dec. 12, 2008	Investment partnership	21,446
Open Innovation Fund	Dec. 22, 2008	Investment partnership	27,996
PS&Marketing Co., Ltd.	Apr. 3, 2009	Sale of telecommunication devices	277,300	Material
Service Ace Co., Ltd.	Jul. 1, 2010	Customer center management services	56,276	Material
Service Top Co., Ltd.	Jul. 1, 2010	Customer center management services	48,369
Network O&S Co., Ltd.	Jul. 1, 2010	Network maintenance services	56,677	Material
BNCP Co., Ltd.	Dec. 7, 2009	Internet services	12,108
SK Planet Co., Ltd.	Oct. 1,2011	Telecommunication and platform services	2,528,054	Material
SK Planet Japan, K.K.	Mar. 14, 2012	Digital contents sourcing services	1,793
SK Planet Global PTE, LTD.	Aug. 4, 2012	Digital contents sourcing services	697
SK Planet America LLC	Jan. 27, 2012	Digital contents sourcing services	22,399
SKP Global Holdings PTE, LTD.	Aug. 10, 2012	Holding company for overseas commerce	20,713
SK Global Healthcare Business Group, Ltd.	Sep. 14, 2012	Investment	27,625
Technology Innovation Partners, L.P.	Jun. 24, 2011	Investment	23,759
SK Telecom China Fund I L.P.	Sep. 14, 2011	Investment	3,166
SK Telecom China Holdings Co., Ltd.	Jul. 12, 2007	Investment	36,261
Shenzhen E-eye High Tech Co., Ltd.	Apr. 1, 2000	Telematics manufacturing	17,894

Table of Contents

Name	Date of Establishment	Principal Business
SKT Vietnam PTE., Ltd.	Apr. 5, 2000	Telecommunication services	11,773
SKT Americas, Inc.	Dec. 29, 1995	Information collection and management consulting services	33,876
YTK Investment Ltd.	Jul. 1, 2010	Investment	42,118
Atlas Investment	Jun. 24, 2011	Investment	40,218
NEOS Networks Co., Ltd.	Jun. 12, 2008	Security system services	14,202

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: 65 Euljiro, 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 devices, affordable pricing, network coverage and an extensive contents library. Since the introduction of services employing LTE technology in July 2011, the telecommunications market for such services has grown as demand for fast data transfer speeds and differentiated services has increased. Having reached one million subscribers by January 2012 and over 10 million subscribers by April 2013, the Company has solidified its leadership position in LTE services as it has done with its 3G services. In June 2013, the Company became the first telecommunications service provider in the world to provide commercial LTE-Advanced (LTE-A) services using carrier aggregation technology, and in June 2014, the Company reaffirmed the Companys technological leadership by becoming the first to provide commercial 225 Mbps wideband LTE-A services, which is three times faster than LTE. In line with such efforts, the Company set forth its vision under the name of ICTnomics which is derived from the meaning of information and communication technology (ICT), and launched unlimited LTE data plans and other innovative data plans such as Rush hour / Subway Free plans that are unlimited data plans based on time, place and occasion (or, TPO). The Company plans to increase profitability by transforming into a telecommunications company fit for the age of big data and strengthening its fundamental competitive edges. By pioneering services that provide differentiated customer experience, including the T-Phone, the Company expects to become a leader in ICT.

In the business-to-business area, the Company is strengthening its solutions business through the implementation of five main solution products: Smart Store, Smart Work, Smart Cloud, Green & Safety and MAd & Payment. Since the commercial launch of its mobile IPTV services, B tv Mobile, in October 2012, the Company has gained over one million paying subscribers as of March 2014. The Company is the first telecommunications services provider in the world to provide full high definition streaming services using its LTE-A network. With increasing video on demand usage and the potential to expand into other business areas such as advertising and shopping, the Company expects that the mobile IPTV services business will grow in the mid- to long-term. The Company also plans to create and fortify new businesses including health care, and seek out new growth engines in existing businesses, including the intelligence business, by utilizing its technologies relating to big data.

Table of Contents

In addition, in order to strengthen our sales channels, the Company has been offering a variety of fixed-line and wireless telecommunication convergence products to its customers through PS&Marketing Co., Ltd. (PS&Marketing), one of its subsidiaries. Through Service Ace Co., Ltd., another subsidiary, the Company operates customer service centers in Seoul and provides telemarketing services. Furthermore, Network O&S Co., Ltd., the Companys subsidiary responsible for the operation of the Companys 2G to 4G networks (including its CDMA, WCDMA and LTE networks), provides customers with quality network services and provides the Company with technological know-how in network operations.

(2) Fixed-line business

SK Broadband Co., Ltd. (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. In 1999, SK Broadband launched its high-speed Internet service in Seoul, Busan, Incheon and Ulsan, and currently provides such service nationwide. SK Broadband also commercialized its TV-Portal service in July 2006 and its IPTV service in January 2009 upon receipt of permit in September 2008.

(3) Other businesses

With respect to the Companys e-commerce business, 11th Street, a platform service that connects various sellers and purchasers online, continues to gain market share. In the commerce platform business area, the Company, utilizing the existing network of partner businesses of OK Cashbag, Koreas largest loyalty mileage program with 37 million members, consumer information from big data, information technology, and other sources of competitive edges that can lead the industry, launched Syrup to provide smart shopping services to consumers and Syrup Store to provide integrated marketing solutions to partner businesses in June 2014. Syrup, a mobile wallet service upgraded and rebranded from the Smart Wallet, reached 11.7 million users as of June 30, 2014 and leads the online-to-offline commerce. In the location-based services business area, users of the Companys T-Map Navigation service reached 19.2 million as of June 30, 2014. T-Map Navigation provides real time traffic information and various local information. Utilizing location-based service technology in other services, including leisure, logistics and travel services, the Company provides increased convenience and added value to customers. In the digital contents business area, the Company provides high-quality digital contents in its leading mobile contents marketplace, T Store, which had 22.7 million subscribers as of June 30, 2014 and which the Company plans to expand. In the media business area, the Company provides Hoppin service that enables subscribers to access various multimedia contents through personal computers, mobile devices and other digital devices. In the advertising business area, the Company is engaged in advertisement production, promotion services and research and consulting services to substantively help businesses increase their value in a rapidly evolving business environment. Through M&Service Co., Ltd. (M&Service), one of its subsidiaries, the Company also develops, supplies and provides technical support for system software relating to commerce platforms, and provides other online information services.

SK Communications Co., Ltd. (SK Communications) provides integrated Internet portal services through NATE 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 and NATE-ON and aims to give greater exposure to the advertisers brand name to the public. The increased effectiveness of online media as an advertising outlet has resulted in a greatly expanded advertiser base, and the increasing variety in the format of advertising has 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 contents sales and providing certain types of services. Revenues from contents and other services are generated through revenues from NATE-ON instant messaging, custom decorations for mobile phones, cartoon strips, fortunetelling, movies and other contents services. In addition, SK Planet Co., Ltd. (SK Planet) receives revenue from its services agreement with the Company in connection with operation of WAP wireless NATE services and application development.

See II-1. Business Overview for more information.

Table of Contents

E. Credit Ratings

(1) Corporate bonds

| Credit rating date | Subject of rating | Credit rating | Credit rating entity (Credit rating
range) | Rating classification |
| --- | --- | --- | --- | --- |
| June 21, 2012 | Corporate bond | AAA | Korea Ratings | Regular rating |
| June 22, 2012 | Corporate bond | AAA | Korea Investors Service, Inc. | Regular rating |
| June 29, 2012 | Corporate bond | AAA | NICE Investors Service Co., Ltd. | Regular rating |
| August 10, 2012 | Corporate bond | AAA | Korea Ratings | Current rating |
| August 14, 2012 | Corporate bond | AAA | Korea Investors Service, Inc. | Current rating |
| August 14, 2012 | Corporate bond | AAA | NICE Investors Service Co., Ltd. | Current rating |
| April 11, 2013 | Corporate bond | AAA | Korea Ratings | Current rating |
| April 11, 2013 | Corporate bond | AAA | Korea Investors Service, Inc. | Current rating |
| April 11, 2013 | Corporate bond | AAA | NICE Investors Service Co., Ltd. | Current rating |
| April 11, 2013 | Corporate bond | AAA | Korea Ratings | Regular rating |
| April 11, 2013 | Corporate bond | AAA | Korea Investors Service, Inc. | Regular rating |
| April 11, 2013 | Corporate bond | AAA | NICE Investors Service Co., Ltd. | Regular rating |
| April 22, 2014 | Corporate bond | AAA | Korea Ratings | Regular rating |
| April 22, 2014 | Corporate bond | AAA | Korea Investors Service, Inc. | Regular rating |
| April 22, 2014 | Corporate bond | AAA | NICE Investors Service Co., Ltd. | Regular rating |
| April 22, 2014 | Corporate bond | AAA | Korea Ratings | Current rating |
| April 22, 2014 | Corporate bond | AAA | Korea Investors Service, Inc. | Current rating |
| April 22, 2014 | Corporate bond | AAA | NICE Investors Service, Co., Ltd. | 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 such that it will not be influenced by reasonably foreseeable changes in external factors.

(2) Commercial paper (CP)

| Credit rating date | Subject of rating | Credit rating | Credit rating entity (Credit rating
range) | Rating classification |
| --- | --- | --- | --- | --- |
| June 21, 2012 | CP | A1 | Korea Ratings | Current rating |
| June 22, 2012 | CP | A1 | Korea Investors Service, Inc. | Current rating |
| June 29, 2012 | CP | A1 | NICE Investors Service Co., Ltd. | Current rating |
| December 14, 2012 | CP | A1 | Korea Investors Service, Inc. | Regular rating |
| December 18, 2012 | CP | A1 | Korea Ratings | Regular rating |
| December 18, 2012 | CP | A1 | NICE Investors Service Co., Ltd. | Regular rating |
| April 11, 2013 | CP | A1 | Korea Ratings | Current rating |
| April 11, 2013 | CP | A1 | Korea Investors Service, Inc. | Current rating |
| April 11, 2013 | CP | A1 | NICE Investors Service Co., Ltd. | Current rating |
| November 29, 2013 | CP | A1 | Korea Ratings | Regular rating |
| December 18, 2013 | CP | A1 | Korea Investors Service, Inc. | Regular rating |
| December 20, 2013 | CP | A1 | NICE Investors Service Co., Ltd. | Regular rating |
| April 22, 2014 | CP | A1 | Korea Ratings | Current rating |
| April 22, 2014 | CP | A1 | Korea Investors Service, Inc. | Current rating |
| April 22, 2014 | CP | A1 | NICE Investors Service Co., Ltd. | Current rating |

Rating definition : A1 - Timely repayment capability is at the highest level with extremely low investment risk and is stable such that it will not be influenced by reasonably foreseeable changes in external factors.

Table of Contents

(3) International credit ratings

Date of credit rating	Subject of rating	Credit rating of securities	Credit rating company	Rating type
June 6, 2012	Bonds denominated in Swiss Franc	A-	Fitch Inc.	Current rating
June 4, 2012	Bonds denominated in Swiss Franc	A3	Moodys Investors Service	Current rating
June 7, 2012	Bonds denominated in Swiss Franc	A-	Standard & Poors Rating Services	Current rating
October 24, 2012	Bonds denominated in U.S. dollars	A-	Fitch Inc.	Current rating
October 24, 2012	Bonds denominated in U.S. dollars	A3	Moodys Investors Service	Current rating
October 24, 2012	Bonds denominated in U.S. dollars	A-	Standard & Poors Rating Services	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)

65 Euljiro, 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 Companys board of directors to transfer to an affiliate of the Company. At the 28th General Meeting of Shareholders 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 of the Companys board of directors. At the 29th General Meeting of Shareholders held on March 22, 2013, Dae Sik Cho was elected as an inside director and Dae Shick Oh was elected as an independent director and member of the audit committee of the Companys board of directors. At the 30th General Meeting of Shareholders held on March 21, 2014, Jae Hoon Lee was elected as an independent director and Jae Hyeon Ahn was elected as an independent director and member of the audit committee of the Companys board of directors.

Table of Contents

C. Change in Company Name

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 general meeting of shareholders.

D. Mergers, Acquisitions and Restructuring

[SK Telecom]

(1) Spin-off

In accordance with the resolution of the Companys 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 a summary of the Companys financial position before and after the spin-off.

| Description | Before the spin-off (As of September
30, 2011) | After the spin-off (As of October 1,
2011) | |
| --- | --- | --- | --- |
| | 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 |

The schedule of the spin-off is set forth below.

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 and Inaugural Meeting of Shareholders		October 4, 2011
Registration of Spin-off		October 5, 2011
Others	Notice of closure of shareholders register Period of closure of shareholders register Public notice of shareholders meeting Dispatch of notice of shareholders meeting	July 20, 2011 August 5, 2011~ August 8, 2011 August 10, 2011 and August 12, 2011 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

Table of Contents

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 SK hynix Inc. (formerly, Hynix Semiconductor Inc.)

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

(3) Merger of SK Planet and SK Marketing & Company Co., Ltd.

On January 11, 2013, the Company acquired the remaining 50% equity stake in SK Marketing & Company Co., Ltd. (SK Marketing & Company), a company providing e-commerce and advertising services, from SK Innovation Co., Ltd. and gained control of both SK Marketing & Company and its subsidiary, M&Service Co., Ltd. The Company thereafter contributed the 100% equity stake in SK Marketing & Company to SK Planet and merged SK Marketing & Company into SK Planet as of February 1, 2013.

(4) Acquisition of shares of PS&Marketing

On February 20, 2014, the board of directors of the Company resolved to invest an additional Won 100 billion (20 million common shares) into PS&Marketing, an affiliated company, in order to increase its mid- to long-term competitiveness in distribution. The estimated date of investment is April 2, 2014 and the cumulative investment amount will total Won 330 billion.

(5) Disposition of shares of iHQ Inc.

On March 10, 2014, the Company disposed of 3,790,000 shares (its 9.4% equity share) of iHQ Inc. to rebalance its investment portfolio.

[SK Broadband]

(1) Merger

On July 26, 2012, the board of directors of SK Broadband resolved to merge Broadband D&M Co., Ltd., its wholly-owned subsidiary, into SK Broadband after transferring Broadband D&M Co., Ltd.s network maintenance business to Network O&S Co., Ltd. The merger was effective as of September 26, 2012. In connection with this merger, SK Broadband did not issue any new shares.

On October 25, 2012, the board of directors of SK Broadband resolved to merge Broadband CS Co., Ltd., its wholly-owned subsidiary, into SK Broadband after transferring Broadband CS Co., Ltd.s customer service business to Service Ace Co., Ltd. The merger was effective as of December 26, 2012. In connection with this merger, SK Broadband did not issue any new shares.

On January 3, 2013, the board of directors of SK Broadband approved the merger of Broadband Media Co., Ltd., its wholly-owned subsidiary, into SK Broadband. The merger was effective as of March 22, 2013 and was recorded as of March 25, 2013. Please refer to the Merger Completion Report filed with the Financial Services Commission on March 25, 2013. In connection with this merger, SK Broadband did not issue any new shares.

Table of Contents

[SK Planet]

(1) Merger

On January 11, 2013, the Company acquired the remaining 50% equity stake in SK Marketing & Company, a company providing e-commerce and advertising services, from SK Innovation Co., Ltd. and gained control of both SK Marketing & Company and its subsidiary, M&Service Co., Ltd. The Company thereafter contributed the 100% equity stake in SK Marketing & Company to SK Planet and merged SK Marketing & Company into SK Planet as of February 1, 2013. In connection with this merger, the merger ratio between SK Planet and SK Marketing & Company was 1.2927317:1 and SK Planet issued 12,927,317 of its common stock.

On April 22, 2013, the board of directors of SK Planet resolved to merge Madsmart, Inc., its wholly-owned subsidiary, into SK Planet to enhance the competitiveness of its platform business and provide faster service to customers by merging the ICT capabilities of the two companies. The merger was effective as of June 1, 2013 and SK Planet did not issue any new shares in connection with the merger.

[SK Telink]

(1) Merger

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

[SK Communications]

(1) Disposition and acquisition of businesses

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.

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.

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.

Disposition of the Cyworld service

Pursuant to the resolution of its board of directors on March 8, 2014, SK Communications sold its Cyworld service and certain related assets to Cyworld Co., Ltd. for Won 2,824 million.

(2) Disposition of shares

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 billion 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.

Table of Contents

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.

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 at a price of Won 10 million.

Disposition of shares of Service-In

On November 19, 2012, SK Communications sold all of its shares (80,000 common shares) in Service-In Co., Ltd., its subsidiary, to the chief executive officer of Service-In Co., Ltd., pursuant to a resolution of its board of directors of October 31, 2012.

[PS&Marketing]

On February 20, 2014, the board of directors of PS&Marketing resolved to acquire the retail distribution business, including related assets, liabilities, contracts and human capital of the information technology and mobile wing of SK Networks. On the same day, the board of directors of PS&Marketing also resolved to acquire retail stores, including their assets and liabilities, of LCNC Co., Ltd (LCNC). The acquisitions were completed on April 30, 2014 at a purchase price of Won 124.5 billion for the assets acquired from SK Networks and a purchase price of Won 10 billion for the assets acquired from LCNC.

[M&Service]

Upon the merger between SK Marketing & Company, which held 100% equity stake in M&Service, and SK Planet on February 1, 2013, SK Planet holds 100% equity stake in M&Service.

E. Other Important Matters related to Management Activities

[SK Telecom]

(1) Issuance of bonds

On April 23, 2013, the Company issued two tranches of fixed-rate unsecured bonds in the principal amounts of Won 230 billion (with an annual interest rate of 3.03% and a maturity date of April 23, 2023) and Won 130 billion (with an annual interest rate of 3.22% and a maturity date of April, 23, 2033).

On May 14, 2014, the Company issued four tranches of fixed-rate unsecured bonds in the principal amounts of Won 50 billion (with an annual interest rate of 3.301% and a maturity date of May 14, 2019), Won 150 billion (with an annual interest rate of 3.637% and a maturity date of May 14, 2024), Won 50 billion (with embedded options, an annual interest rate of 4.725% and a maturity date of May 14, 2029), and Won 50 billion (with embedded options, an annual interest rate of 4.72% and a maturity date of May 14, 2029).

(2) Issuance of hybrid securities

On June 7, 2013, the Company issued Won 400 billion principal amount of hybrid securities in the form of unguaranteed subordinated bonds with an annual interest rate of 4.21%, which interest rate is adjusted five years after the date of issuance. The Company classified the hybrid securities as equity as there is no contractual obligation to deliver financial assets to the bondholders. The maturity date of the hybrid securities is June 7, 2073, which can be extended by the Company without any notice or announcement.

Table of Contents

(3) Conversion of convertible notes

On April 7, 2009, the Company issued convertible notes with a maturity of five years in the principal amount of US$332,528,000 with an annual interest rate of 1.75%. In 2013, holders exercised their conversion rights with respect to an aggregate principal amount of US$326,023,000 of the convertible notes. The Company delivered 1,241,337 treasury shares in respect of US$170,223,000 of the exercised aggregate principal amount and delivered cash in respect of the remainder due to the limit on foreign ownership. In connection with such conversion, the Company recognized Won 135,108 million in financial expenses in 2013. On November 13, 2013, the Company exercised its early redemption right and on December 13, 2013, redeemed the US$6,505,000 principal amount of convertible notes not converted by noteholders. A 20-day volume weighted average pricing formula was used for the delivery of cash made in place of treasury shares. Due to such calculation, the Company still had US$91,108,507 outstanding in payables as of December 31, 2013. The amount was delivered in full as of January 6, 2014 and currently has no amount outstanding.

[SK Broadband]

SK Broadband acquired subscriberships of regional cable and other service providers on several different occasions. Such acquisitions were intended to secure a stable subscriber base for its 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, SK Broadband did not believe such acquisitions rose to the level of purchasing an entire business line from another company or were likely to have a material impact on its business, and therefore decided that such acquisitions did not require resolutions of its shareholders.

[SK Communications]

In July 2011, there was a leak of personal information of subscribers of NATE and Cyworld websites operated by SK Communications. As of June 30, 2014, 22 lawsuits were filed against SK Communications, alleging that the leak was caused by its poor management of subscribers personal information and seeking damages of approximately Won 2.0 billion. With respect to a few of the lawsuits, the relevant district courts have rendered judgments for the relevant plaintiffs claims in part and SK Communications has appealed such judgments to the applicable high courts, where the cases are currently pending. Other cases remain pending at various district courts in Korea.

3. Total Number of Shares

A. Total Number of Shares

(As of June 30, 2014) (Unit: in shares)

Classification	Share type — Common shares	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	9,809,375	9,809,375
VI. Number of shares outstanding (IV-V)	70,936,336	70,936,336

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

Table of Contents

B. Treasury Shares

(1) Acquisitions and dispositions of treasury shares

(As of June 30, 2014) (Unit: in shares)

Acquisition methods
					Acquired (+)	Disposed (-)	Retired (-)
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
			Preferred shares
		Direct over-the- counter acquisition	Common shares
			Preferred shares
		Tender offer	Common shares
			Preferred shares	7,086,028				7,086,028
		Sub-total	Common shares
			Preferred shares
	Acquisition through trust and other agreements	Held by trustee	Common shares
			Preferred shares
		Held in actual stock	Common shares	3,886,710				3,886,710
			Preferred shares
		Sub-total	Common shares	3,886,710				3,886,710
			Preferred shares
Other acquisition			Common shares	(1,163,363	)			(1,163,363	)
			Preferred shares
Total			Common shares	9,809,375				9,809,375
			Preferred shares

Due to the Companys exercise of its early redemption right with respect to its convertible notes on November 13, 2013, the conversion right exercise period had expired by December 31, 2013 and there are no more treasury shares deposited with the Korea Securities Depository.

Table of Contents

4. Status of Voting Rights

(As of June 30, 2014) (Unit: in shares)

Classification — Total shares (A)	Common share	80,745,711
	Preferred share
Number of shares without voting rights (B)	Common share	9,809,375	Treasury shares
	Preferred share
Shares without voting rights pursuant to the Companys articles of incorporation (the Articles of
Incorporation) (C)	Common share
	Preferred share
Shares with restricted voting rights pursuant to Korean law (D)	Common share
	Preferred share
Shares with reestablished voting rights (E)	Common share
	Preferred share
The number of shares with exercisable voting right s (F = A - B - C - D + E)	Common share	70,936,336
	Preferred share

5. Dividends and Others

A. Dividends

(1) 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.

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

(3) 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.

(4) Distribution of interim dividends of Won 1,000 was approved during the 344th Board of Directors Meeting on July 25, 2012.

(5) Distribution of cash dividends was approved during the 29th General Meeting of Shareholders held on March 22, 2013.

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

(6) Distribution of interim dividends of Won 1,000 was approved during the 357th Board of Directors Meeting on July 25, 2013.

(7) Distribution of cash dividends was approved during the 30th General Meeting of Shareholders held on March 21, 2014.

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

(8) Distribution of interim dividends of Won 1,000 was approved during the 366th Board of Directors Meeting on July 24, 2014.

Table of Contents

B. Dividends for the Last Three Fiscal Years

(Unit: in millions of Won, except per share values and percentages)

Classification — Par value per share (Won)		500	500	500
Net income		516,907	910,157	1,242,767
Net income per share (Won)		7,168	12,837	17,832
Total cash dividend		70,508	666,374	655,133
Total stock dividends
Percentage of cash dividend to available income (%)		13.6	73.2	52.7
Cash dividend yield ratio (%)	Common share	0.4	6.2	6.6
	Preferred share
Stock dividend yield ratio (%)	Common share
	Preferred share
Cash dividend per share (Won)	Common share	1,000	9,400	9,400
	Preferred share
Stock dividend per share (share)	Common share
	Preferred share

The above figures were prepared based on separate financial statements. Net income per share means basic net income per share.
The 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 per share of Won 1,000.
The total cash dividend of Won 655,133 million for the year ended December 31, 2012 includes the total interim dividend amount of Won 69,695 million, and the cash dividend amount per share of Won 9,400 includes the interim cash dividend amount per share of Won 1,000.
The total cash dividend of Won 666,374 million for the year ended December 31, 2013 includes the total interim dividend amount of Won 70,508 million, and the cash dividend amount per share of Won 9,400 includes the interim cash dividend amount per share of Won 1,000.

Table of Contents

II. BUSINESS

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

1. Business Overview

Set forth below is a summary business description of material consolidated subsidiaries.

Classification	Company name	Description of business
Wireless	SK Telecom Co., Ltd.	Wireless voice and data telecommunications services via digital wireless networks
	PS&Marketing Co., Ltd.	Sale of fixed-line and wireless telecommunications products through wholesale, retail and online distribution channels
	Network O&S Co., Ltd.	Network maintenance services such as the operation of the Companys base stations and related transmission and power facilities
	Service Ace Co., Ltd.	Customer center management and telemarketing services
Fixed-line	SK Broadband Co., Ltd.	High-speed Internet, TV, telephone, commercial data and other fixed-line services and management of the transmission system for online
digital contents Various media-related services, such as channel management, including video on demand, and mobile IPTV
services
	SK Telink Co., Ltd.	International wireless direct-dial 00700 services, pre-paid international card calling services, voice services using Internet protocol and Mobile Virtual Network
Operator (MVNO) services
Other business	SK Planet Co., Ltd.	Various platform services such as 11th Street, T Store, T-Map Navigation and Hoppin in the application, commerce and new media areas, among others
	SK Communications Co., Ltd.	Integrated portal services through NATE and instant messaging services through NATE-ON
	M&Service Co., Ltd.	System software development, distribution and technical support services and other online information services

[Wireless Business]

A. Industry Characteristics

As of December 31, 2013, the Korean mobile communication market can be considered to have reached its maturation stage with more than a 100% penetration rate. However, the Korean mobile communications market continues to improve in the quality of services with the help of advances in network-related technology and the development of highly advanced LTE-A, LTE and 3G smartphones which enable the provision of convergence services for multimedia contents, mobile commerce, telematics, new media and other related services. In addition, through the commercialization of LTE network in July 2011 and LTE-A network in June 2013, B2B businesses, such as the corporate connected workforce business which can directly contribute to an enhancement in productivity, are expected to grow rapidly. In the first half of 2014, wideband LTE-A service was commercialized and by late 2014, technology will progress for the commercialization of the 3band LTE-A service, which bundles three different bandwidths to allow faster network service.

Table of Contents

B. Growth Potential

Classification	As of June 30, 2014	(Unit: in 1,000 persons) — As of December 31,
		2013	2012	2011	2010
Number of subscribers	SK Telecom	27,889	27,352	26,961	26,553	25,705
	Others (KT, LGU+)	27,782	27,328	26,663	25,954	25,062
	Total	55,671	54,680	53,624	52,507	50,767

Source: Ministry of Science, ICT and Future Planning (MSIP) website and each Korean telecommunications companys respective earnings releases (including MVNOs).

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 high-speed wireless networks. The importance of the business-to-business segment, which creates added value by selling and developing various solutions, is also growing. Seasonal and economic fluctuations have much less impact on the Korean mobile communication market compared to other industries.

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

Classification	As of June 30, 2014	As of December 31,
		2013	2012	2011	2010
Mobile communication services	50.1	50.0	50.3	50.6	50.6

Source: MSIP website and each Korean telecommunications companys respective earnings releases (including MVNOs).

D. Business Overview and Competitive Strengths

The Company is seeking to transform itself from a telecommunications service provider into a comprehensive ICT service provider. It has continued to innovate the scope of its services and achieved strong growth in subscribers amid fierce competition and rate cuts. As a result, for the six months ended June 30, 2014, the Company recorded Won 8.5 trillion in revenue and Won 800 billion in operating income on a consolidated basis and Won 6.5 trillion in revenue and Won 780 billion in operating income on a separate basis.

The number of subscribers (including MVNO subscribers) as of June 30, 2014 was 27.89 million, an increase of approximately 80,000 from the previous quarter. In particular, the number of smartphone subscribers as of June 30, 2014 was 18.93 million, an increase of approximately 110,000 from the previous quarter, including 15.38 million LTE subscribers, solidifying the Companys market leadership. Following the launch of commercial LTE services in July 2011, the Company became the first telecommunications service provider in the world to launch commercial wideband LTE-A services in June 2014. By launching various high quality services utilizing the LTE-A and wideband LTE networks such as group video conference call services, full high definition mobile IPTV streaming services, and T Baseball Multiview, which allows users to watch multiple baseball games on one screen, the Company plans to provide an innovative user experience, enhance customer satisfaction and increase profitability.

The Company has proved that it has superior network quality compared to its competitors according to the Korea Communications Commission quality evaluations. The Company has also proved to be the leader in Koreas top three customer satisfaction indices: according to the National Customer Satisfaction Index, Korean Customer Satisfaction Index and Korean Standard Service Quality Index, the Company has continued to hold the leading position for 17 years, 16 years and 15 years, respectively.

Table of Contents

SK Telink, a consolidated subsidiary of the Company, expanded its operations to the MVNO business based on its technical expertise and know-how obtained in its international telecommunications business and launched its MVNO service, 7Mobile, which is offered at reasonable rates and provides excellent quality. SK Telink is increasing its efforts to develop low-cost distribution channels and create niche markets through targeted marketing towards customers with lower average revenue per user. 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.

Network O&S, a subsidiary of the Company responsible for the operation of the Companys base stations and related transmission and power facilities, offers quality fixed-line and wireless network services to customers, including mobile office products to business customers.

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

[Fixed-line Business]

A. Industry Characteristics

As subscribers to various bundled wireless and fixed-line products are continuing to increase, the IPTV business is evolving to satisfy diverse customer needs for media services through differentiated service offerings including mobile IPTV, bundled wireless and IPTV products and smart set-top box services for smart televisions. The market for our corporate business is also growing with cloud computing, mobile offices and other new information and communications technologies being commercialized. The increased usage of smartphones and tablet computers, the pilot programming of commercial ultra-high definition television broadcasting services and competition for wideband LTE services has greatly increased data traffic, thereby further emphasizing the importance of fixed-line network infrastructure that is capable of handling large capacities of data traffic with stability and efficiency.

B. Growth Potential

(Unit: in 1,000 persons)

Classification	As of June 30, 2014	2013	2012
Fixed-line Subscribers	High-speed Internet	18,961	18,738	18,253
	Fixed-line telephone	17,271	17,620	18,261
	IPTV (real-time)	9,557	8,522	6,310

Source: MSIP website, Korea Communications Commission website and the Korea Digital Media Industry Association website.

C. Cyclical Nature and Seasonality

High-speed Internet, fixed-line telephone and IPTV services are mature markets that are generally not sensitive to cyclical economic changes due to the easing of competition resulting from the decrease in differentiation between service providers and the nature of the respective services. The telecommunications services market overall is not expected to be particularly affected by economic downturns due to the low income elasticity of demand for telecommunication services.

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

Classification	As of	As of December 31,
	June 30, 2014	2013	2012
High-speed Internet (include resales)	24.7	24.4	24.1
Fixed-line telephone (include Voice over Internet Protocol)	16.9	16.9	16.7
IPTV (real-time)	25.3	24.4	22.2

Table of Contents

Source: MSIP website, Korea Communications Commission website and the Korea Digital Media Industry Association website.

D. Business Overview and Competitive Strengths

In 1999, the Company was the first in the world to commence commercial ADSL services and on the back of its premium technology and enhanced competitiveness achieved through bundled products, it is currently expanding subscriber base across all of its businesses, including broadband Internet, telephone and IPTV. In particular, SK Broadband has positioned itself to focus on corporate customer services and IPTV services as key strategic areas for mid- to long-term growth, exploiting opportunities in new ICT-based businesses that have led to revenue growth, and providing differentiated contents in its IPTV business by securing popular programming which includes exclusive childrens channels and live broadcasts of Major League Baseball games. In addition, in September 2013, the Company developed technology that compresses videos for its ultra-high definition IPTV services. During the first quarter of 2014, the Company commercialized new transmission technology that can more efficiently transmit signals on the hybrid fiber-coaxial network despite its limited frequency. Furthermore, the Company solidified its technological leadership for providing ultra-high definition broadcasting for wireless and fixed line in the IPTV industry by commercializing a unique ultra-high-definition service that can be provided directly to smart televisions without the installation of smart set-top boxes in April 2014 and started transmitting ultra-high definition contents to mobile IPTV in May 2014.

SK Telink 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. SK Telink plans to strategically target the convergence of wireless and fixed-line telecommunications and strengthen its existing business, including international and long-distance calling services, value-added services for local calling and B2B services, and video conference call services while aiming to satisfy the diverse needs of customers through the provision of quality solutions at reasonable prices.

[Other Business]

A. Industry Characteristics

As the number of smartphones distributed in Korea exceeds 30 million, the growth in various mobile devices has spurred the rise of the service provider with a strong platform business as the leader in the ICT market. It is becoming increasingly important to enhance competitiveness by building a platform with large data capacity to handle the increase in data transmission.

A platform business acts as an intermediary by promoting interactions among various customer groups, thereby generating new values. It is important for a platform business to continually attract subscribers and users and to create an ecosystem with certain lock-in effects. A platform can exist in various forms, including as a technological standard (iOS, Android OS), a subscriber-based service platform (Facebook, Twitter) or a marketplace (Amazon, T Store). Platform businesses are evolving and expanding globally.

A platform business has strong growth potential due to its connectivity with related services and ease of global expansion. Apple became a world-leading smartphone producer based on its innovative design and the competitive strength of its App Store platform. Google has created a new ecosystem of long-tail advertising 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. It is becoming increasingly important to enhance competitiveness through a database that can register and analyze purchase patterns of customers across all areas and a platform with large data capacity to utilize this database and provide differentiated services to customers.

Table of Contents

B. Growth Potential

The scope and value generated by the platform business, including application and content marketplaces and N-screen services, continues to increase, as smartphones and tablet computers become more popular and the bandwidth and speed of network infrastructure improve. As the wireless network evolves to LTE, business opportunities for the platform business exist, including multimedia streaming, N-screen service based on cloud technology and high-definition location-based services. Since the platform business realizes profit by connecting with advertisements or commerce sites after building a critical mass of subscribers and traffic, the recent growth in the advertising and commerce markets is expected to present an opportunity for platform businesses. The importance of building a platform with large data capacity that is connected to various digital contents and commerce is expected to increase in the future.

C. Domestic and Overseas Market Conditions

(1) Commerce markets

The Company expects that online commerce markets will continue to grow due to the growth potential of the Internet shopping population, the strengthening of online business models by off-line operators, and the rapid rise of mobile commerce. Recently, due to the widespread use of smartphones and social media, the commercialization of location-based services and the development of big data technology, online to offline (or, O2O) business, which is a concept of attracting customers to offline stores using online and mobile environments, is being highlighted as a new field in the online commerce market industry.

(2) Digital contents

The growth of application marketplaces, which started with Apples App Store, provides the platform business with new opportunities for revenue generation. The competitive paradigm is shifting from a competition among platform operators toward a competition among eco-systems that include application developers as well as platform operators.

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 the online and mobile video market.

D. Business Overview and Competitive Strengths

The Company plans to expand its platform ecosystem focusing on its Open & Collaboration motto in operating its commerce business such as 11 th Street, Syrup, and OK Cashbag, its digital contents business such as T Store and Hoppin, and its location-based service business such as T-Map Navigation, thereby ultimately increasing its enterprise value.

(1) Commerce

11th Street, an online 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 is leading the domestic e-commerce market and is also rapidly growing in the mobile commerce market. Growth plans involving overseas joint ventures based on 11th Streets business expertise have resulted in the successful launch of an open online commerce market in Turkey in partnership with Doğuş Group in March 2013. In Indonesia, an open market platform was successfully launched through a joint venture established in July 2013 with PT XM Axiata Tbk, a wireless telecommunications company in Indonesia.

Syrup is a consumer-oriented commerce service and its goal is to minimize its customers time and efforts while maximizing the economic benefits provided by providing information about coupons and events based on time, place and occasion. To achieve this goal, Syrup combines location-based services, such as geo-fencing, a virtual perimeter technology using a global positioning system (or, GPS) and Bluetooth Low Energy (or, BLE), with big data analysis of consumption patterns. Syrups business partners can benefit from cost-effective marketing through Syrup by utilizing statistics and analysis regarding consumers frequency of visits, preferred products, and consumption patterns.

Table of Contents

OK Cashbag is a point-based loyalty marketing program which has grown to become a global top-tier loyalty marketing program since its inception in 1999. Customers have access to increased benefits through accumulation of loyalty reward points and partner companies use OK Cashbag as a marketing resource. With 37 million subscribers, OK Cashbag maintains a leading position in the industry and plans to continue strengthening its position by providing customized services befitting customers needs and market conditions.

(2) Location-based services

T-Map Navigation provides map, local information, real-time traffic information and navigation services. With cumulative subscribers of 19.19 million as of June 30, 2014, T-Map Navigation is one of the leading location-based service platforms in Korea. The Company is broadening the range of its location-based services by also providing infotainment systems to commercial vehicle businesses as well as providing localized content on its products, such as region-specific information and advertisements. The Company plans to further develop the T-Map Navigation platform by initiating open application programming interface-based services, providing services to more diverse types of devices and providing local area-based services.

(3) Digital contents

T Store, launched in September 2009, reached 22.69 million subscribers and cumulative downloads of 2.2 billion as of June 30, 2014, solidifying its leadership position in the application market and plans to widen its services to tablets and navigation devices. The Company intends to further develop T Store into a personalized gateway and mobile playground through expansion of the scope of serviceable devices, reinforcement of digital content offerings and enhancement of search services, among other things.

The Companys Hoppin service enables subscribers to enjoy wide-ranging video on demand contents. Through continual service improvements and stable service provision, Hoppin has become the leading mobile video on demand service.

(4) Social networking services (SNS) and Internet portal services

The Companys instant messenger service, Nate-On, had the largest market share of 36.8% in the instant messenger market in Korea with 6 million net users during June 2014. The Companys Internet search portal service, Nate, had a page-view market share of 5.1% as of June 30, 2014. (Source: Korean Click, based on fixed-line access)

Satellite DMB service

The Company launched its Hanbyul satellite in 2004 and received government approval in December 30, 2004 to provide satellite DMB services. Broadcasting through satellite DMB commenced in May 2005 and satellite DMB services expanded nationwide thereafter. On August 23, 2012, the board of directors of SK Telink resolved to discontinue operation of its satellite DMB services due to the rapid decrease in satellite DMB subscribers and the continued burden of fixed costs.

2. Major Products & Services

A. Updates on Major Products and Services

(Unit: in millions of Won and percentages)

Business	Major Companies	Item	Major Trademarks
Wireless	SK Telecom Co., Ltd., PS&Marketing Co., Ltd., Service Ace Co., Ltd., Network O&S Co., Ltd.	Mobile communication service, wireless data service, ICT service	T and others	6,775,491	(79.7%)

Table of Contents

Business	Major Companies	Item	Major Trademarks
Fixed -line	SK Broadband Co., Ltd., SK Telink Co., Ltd.	Fixed-line phone, high speed Internet, data and network lease service	B tv , 00700 international call, 7Mobile and others	1,228,107	(14.4%)
Other	SK Planet Co., Ltd , SK Communications Co., Ltd., M&Service Co., Ltd.,	Internet portal service, e-commerce and investment	OK Cashbag, NATE, T Store, T-Map Navigation and others	503,690	(5.9%)
Total				8,507,288	(100.0%)

[Wireless Business]

In the past, based on the Companys basic monthly subscription plan, the basic service fee was Won 13,000 per month and the usage fee was Won 20 per 10 seconds (daytime calls) and based on the Companys standard monthly subscription plan, the basic service fee was Won 12,000 per month and the usage fee was Won 18 per 10 seconds. As of June 30, 2014, based on the Companys standard monthly subscription plan, the basic service fee was Won 11,000 per month and the usage fee was Won 1.8 per 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. As of June 30, 2014, broadband Internet and TV services comprised 51.2% of SK Broadbands revenue, telephony service 22.0%, corporate data services 26.3% and other telecommunications services 0.5%. Price fluctuations in the different services provided by SK Broadband are due to discounts provided for long-term contracts, changes in equipment costs and competition between companies.

Table of Contents

[Other Business]

Set forth below are major products and services of the Companys material consolidated subsidiaries.

Business	Item	Major Trademarks
Platform	ICT services, new media services, advertisement services, telecommunications sales,
e-commerce and others	Syrup, T Store, 11th Street, T Map, Hoppin, OK Cashbag and others
Display advertisement	Online advertisement services	Nate, Nate-On
Search advertisement	Online advertisement services	Nate, Nate-On
Contents and others	Pay content sales and other services	Nate, Nate-On

3. Investment Status

[Wireless Business]

A. Investment in Progress

(Unit: in 100 millions of Won) — Business	Classification	Investment period	Subject of investment	Investment effect	Expected investment amount	Amount already invested	Future investment
Network/Common	Upgrade/ New installation	2014	Network, systems and others	Capacity increase and quality improvement; systems improvement	21,000	7,822
Total					21,000	7,822

B. Future Investment Plan

(Unit: in 100 millions of Won)

Business	Expected investment amount — Asset type	Amount	Expected investment for each year — 2014	2015	2016	Investment effect
Network/Common	Network, systems and others	21,000	21,000	To be determined	To be determined	Upgrades to the existing services and expanded provision of services including wideband LTE-A
Total		21,000	21,000	To be determined	To be determined

[Fixed-line Business]

A. Investment in Progress

In the first half of 2014, the Company has increased the amount of capital investments compared to the same period in 2013 due to a net increase in the number of IPTV subscribers and the number of new contracts with corporate customers and in order to expand its B2B coverage in advance of the revenue growth expected in the second half of 2014. The Company expects that the total amount of capital investments in 2014 will be similar to that of 2013.

(Unit: in 100 millions of Won) — Business	Classification	Investment period	Subject of investment	Investment effect	Total investments	Amount already invested	Future investment
High-speed Internet	Upgrade/ New installation	For the six months ended June 30, 2014	Backbone and subscriber network / others	Expand subscriber networks and facilities	2,241	420	To be determined
Telephone						27
Television						592
Corporate Data				Increase leased-line and integrated information system		1,040
Others				Expand networks and required space		162
Total					2,241	2,241

Table of Contents

4. Revenues

(Unit: in millions of Won)

Business — Wireless	Sales type — Services	Item — Mobile communication	Export	1,508	2,526	14,202
			Domestic	6,568,795	13,313,006	13,204,702
			Subtotal	6,570,303	13,315,532	13,218,904
Fixed-line	Services	Fixed-line, B2B data, High-speed Internet, TV	Export	28,575	28,002	29,883
			Domestic	1,120,361	2,296,387	2,163,978
			Subtotal	1,148,936	2,324,389	2,193,861
Other	Services	Display and Search ad., Content	Export		14,049	4,698
			Domestic	463,380	948,084	723,946
			Subtotal	463,380	962,133	728,644
Total			Export	30,083	44,577	48,783
			Domestic	8,152,536	16,557,477	16,092,626
			Total	8,182,619	16,602,054	16,141,409

Revenue for the year ended December 31, 2011 has been retroactively revised to reflect the effect of discontinued operations resulting from the sale of Loen Entertainment.

(Unit: in millions of Won)

For the six months ended June 30, 2014 — Total sales	7,520,742	1,517,777	878,927		9,917,446	(1,410,158	)	8,507,288
Internal sales	745,251	289,670	375,237		1,410,158	(1,410,158	)
External sales	6,775,491	1,228,107	503,690		8,507,288			8,507,288
Operating income (loss)	788,831	25,865	(16,206	)	798,490			798,490
Net income (loss)								940,583
Total assets	23,386,690	3,325,776	3,089,274		29,801,740	(2,774,091	)	27,027,649
Total liabilities	9,958,215	2,067,197	866,318		12,891,730	(67,261	)	12,824,469

5. Derivative Transactions

A. Current Swap Contract Applying Cash Flow Risk Hedge Accounting

Currency swap contracts under cash flow hedge accounting as of June 30, 2014 are as follows.

Borrowing date	Hedged item	Hedged risk	Contract type	Financial institution	Duration of contract
Jul. 20, 2007	Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of US$400,000,000)	Foreign currency risk	Cross currency swap	Morgan Stanley and five other banks	Jul. 20, 2007 Jul. 20, 2027
Dec. 15, 2011	Floating-to-fixed cross currency interest rate swap (Singapore dollar denominated bonds face value of SGD 65,000,000)	Foreign currency risk and interest rate risk	Cross currency interest rate swap	United Overseas Bank	Dec. 15, 2011 Dec. 12, 2014
Dec. 15, 2011	Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of US$250,000,000)	Foreign currency risk and interest rate risk	Cross currency interest rate swap	DBS Bank and Citibank	Dec. 15, 2011 Dec. 12, 2014
Jun. 12, 2012	Fixed-to-fixed cross currency swap (Swiss Franc denominated bonds face value of CHF 300,000,000)	Foreign currency risk	Cross currency swap	Citibank and five other banks	Jun. 12, 2012 Jun.12, 2017
Nov. 1, 2012	Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of US$700,000,000)	Foreign currency risk	Cross currency swap	Barclays and nine other banks	Nov. 1, 2012 May. 1, 2018
Jan. 17, 2013	Fixed-to-fixed cross currency swap (Australia dollar denominated bonds face value of AUD 300,000,000)	Foreign currency risk	Cross currency swap	BNP Paribas and three other banks	Jan. 17, 2013 Nov. 17, 2017

Table of Contents

Borrowing date	Hedged item	Hedged risk	Contract type	Financial institution	Duration of contract
Mar. 7, 2013	Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of US$300,000,000)	Foreign currency risk and interest rate risk	Cross currency interest rate swap	DBS Bank	Mar. 7, 2013 Mar. 7, 2020
Oct. 29, 2013	Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of US$300,000,000)	Foreign currency risk	Cross currency swap	Korea Development Bank and others	Oct. 29, 2013 Oct. 26, 2018
Dec. 16, 2013	Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of US$92,098,000)	Foreign currency risk	Cross currency swap	Deutsche Bank	Dec. 16, 2013 Apr. 29, 2022

B. Treatment of Derivative Instruments on the Balance Sheet

As of June 30, 2014, fair values of the above derivatives recorded in assets or liabilities and details of derivative instruments are as follows.

(Unit: in millions of Won and thousands of foreign currencies)

Hedged item
Cash flow hedge							Trading purposes	Total
Accumulated gain (loss) on valuation of derivatives		Tax effect		Foreign currency translation gain (loss)		Others (*1)
Non-current assets:
Convertible option (*2) (face amounts of Won 100 million)								6,017	6,017
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of US$400,000,000)	(48,130	)	(15,367	)	(50,973	)	129,806		15,336
Total assets									21,353
Current liabilities:
Floating-to-fixed cross currency interest rate swap (Singapore dollar denominated bonds face value of SGD
65,000,000)	47		15		(4,683	)			(4,621	)
Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of US$250,000,000)	5,538		1,768		(35,807	)			(28,501	)
Non-current liabilities:
Fixed-to-fixed cross currency swap (Swiss Franc denominated bonds face value of CHF 300,000,000)	(8,026	)	(2,562	)	(21,910	)			(32,498	)
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of US$700,000,000)	(12,082	)	(3,857	)	(52,811	)			(68,750	)
Fixed-to-fixed cross currency swap (Australia dollar denominated bonds face value of AUD 300,000,000)	6,919		2,208		(48,732	)			(39,605	)
Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of US$300,000,000)	2,344		749		(20,669	)			(17,576	)
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of US$300,000,000)	(3,249	)			(13,955	)			(17,204	)
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of US$92,098,000)	(3,336	)	(1,065	)	(3,527	)			(7,928	)
Total liabilities									(216,683	)

(*1) Cash flow hedge accounting has been applied to the relevant contract from May 12, 2010. Others represent gain on valuation of currency swap incurred prior to the application of hedge accounting and was recognized through profit or loss prior to the year ended December 31, 2012.

(*2) Fair value of the conversion option of convertible bonds held by SK Communications Co., Ltd.. amounting to Won 10 million was accounted for as derivative financial assets.

Table of Contents

6. Major Contracts

[SK Telecom]

(Unit: in 100 millions of Won)

Category	Vendor	Start Date	Completion Date	Contract Title	Contract Amount
Purchase	SK Planet Co., Ltd.	January 1, 2014	January 1, 2015	2014 SK Planet B2B Strategic Product #1 T map]	2,545
Purchase	SK C&C Co., Ltd.	April 1, 2014	December 31, 2014	2014 IT Academy IT Service Management Contract (SK C&C)	1,462
Purchase	SK Planet Co., Ltd.	January 1, 2014	January 1, 2015	2014 SK Planet B2B Strategic Product #2 T freemium	1,001
Purchase	SK Planet Co., Ltd.	January 1, 2014	January 1, 2015	2014 SK Planet B2B Biz ASP #5 Voice/Messaging VAS (Color Ring, etc.)	545
Purchase	SK Planet Co., Ltd.	March 1, 2014	February 1, 2015	2014 T Membership Program Management Contract (March 2014 January 2015)	529
Real Estate	Individuals	January 1, 2014	April 30, 2014	Purchase of land for construction of new headquarters and 8 other buildings	126
Subtotal					6,208

[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
Telecommunication service providers	Interconnection among telecommunication service providers		Automatically renewed for two years at a time unless specific amendments are requested
KEPCO	Provision of electric facilities	From Dec. 2013 to Nov. 2014	Use of electricity poles
Seoul City Railway	Use of telecommunication line conduits	From Jan. 2009 to Dec. 2012 (Renewal in progress)	Use of railway telecommunication conduit (Serviced areas to expand)
Busan Transportation Corporation	Use of telecommunication line conduits	From July 2009 to July 2013 (Renewal in progress)	Use of railway telecommunication conduit (Serviced areas to expand)
Seoul Metro	Use of telecommunication line conduits	From May 2010 to May 2013 (Renewal in progress)	Use of railway telecommunication conduit (Serviced areas to expand)
Gwangju City Railway	Use of telecommunication line conduits	From Sep. 2010 to Dec. 2012 (Renewal in progress)	Use of railway telecommunication conduit (Service lease)

Renewal is in progress after negotiation of lower usage fees.

[SK Communications]

Counterparty	Purpose	Contract Period	Contract Amount
Daum Communications	Cost-per-click Internet search advertisement		Amount determined based on the number of clicks

SK Communications and Daum Communications have agreed not to publicly disclose the contract period with respect to the contract with Daum Communications.

7. R&D Investments

Set forth below are the Companys R&D expenditures.

Table of Contents

(Unit: in millions of Won except percentages)

Category
		2013	2012
Raw material		61	38	42
Labor		34,901	79,865	59,050
Depreciation		96,373	158,158	163,295
Commissioned service		46,836	22,923	62,399
Others		29,468	102,668	61,546
Total R&D costs		207,639	363,652	346,332
Accounting	Sales and administrative expenses	204,960	352,385	304,557
	Development expenses (Intangible assets)	2,679	11,267	41,775
R&D cost / sales amount ratio (Total R&D costs / Current sales amount×100)		2.44 %	2.19 %	2.12 %

8. Other information relating to investment decisions

A. Trademark Policies

The Company manages its corporate brand and other product brands in a comprehensive way to protect and increase their value. The Companys Brand Strategy 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 registering and licensing of the brands.

B. Business-related Intellectual Property

[SK Telecom]

The Company holds 5,234 Korean-registered patents, 309 U.S.-registered patents, 211 Chinese-registered patents (all including patents held jointly with other companies) and more patents with other countries. The Company holds 899 Korean-registered trademarks and owns intellectual property rights to the design of the 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 409 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 June 30, 2014, SK Planet held 2,360 registered patents, 112 registered design marks, 1,187 registered trademarks and one copyright (including those held jointly with other companies) in Korea. It also holds 88 U.S.-registered patents, 78 Chinese-registered patents, 53 Japanese-registered patents, 23 E.U.-registered patents (all including patents held jointly with other companies) and 226 registered trademarks, along with a number of other intellectual property rights, in other countries.

[SK Communications]

As of June 30, 2014, SK Communications held 74 registered patents, 26 registered design rights and 736 registered trademarks in Korea.

Table of Contents

C. Business-related Pollutants and Environmental Protection

The Company does not engage in any manufacturing and therefore does not undertake any industrial processes that emit pollutants into the air or industrial processes in which hazardous materials are used.

Table of Contents

III. FINANCIAL INFORMATION

1. Summary Financial Information (Consolidated)

A. Summary Financial Information (Consolidated)

As of June 30, 2014	(Unit: in millions of Won except number of companies)	As of December 31, 2013		As of December 31, 2012		As of December 31, 2011
Assets
Current Assets	5,592,624		5,123,415		5,294,421		6,117,479
Cash and Cash Equivalents	1,331,263		1,398,639		920,125		1,650,794
Accounts Receivable Trade, net	2,483,091		2,257,316		1,954,920		1,823,170
Accounts Receivable Other, net	747,478		643,603		582,098		908,836
Others	1,030,792		823,857		1,837,278		1,734,679
Non-Current Assets	21,435,025		21,453,100		20,301,138		18,248,557
Long-Term Investment Securities	924,610		968,527		953,712		1,537,945
Investments in Associates and Joint Ventures	5,602,137		5,325,297		4,632,477		1,384,605
Property and Equipment, net	10,057,105		10,196,607		9,712,719		9,030,998
Intangible Assets, net	2,566,599		2,750,782		2,689,658		2,995,803
Goodwill	1,751,075		1,733,261		1,744,483		1,749,933
Others	533,499		478,626		568,089		1,549,273
Total Assets	27,027,649		26,576,515		25,595,559		24,366,036
Liabilities
Current Liabilities	6,162,670		6,069,220		6,174,895		6,673,590
Non-Current Liabilities	6,661,799		6,340,738		6,565,882		4,959,737
Total Liabilities	12,824,469		12,409,958		12,740,777		11,633,327
Equity
Equity Attributable to Owners of the Parent Company	13,493,924		13,452,372		11,854,777		11,661,881
Share Capital	44,639		44,639		44,639		44,639
Capital Surplus (Deficit) and Other Capital Adjustments	288,726		317,508		(288,883	)	(285,347	)
Retained Earnings	13,254,623		13,102,495		12,124,657		11,642,525
Reserves	(94,064	)	(12,270	)	(25,636	)	260,064
Non-controlling Interests	709,256		714,185		1,000,005		1,070,828
Total Equity	14,203,180		14,166,557		12,854,782		12,732,709
Total Liabilities and Equity	27,027,649		26,576,515		25,595,559		24,366,036
Number of Companies Consolidated	29		28		32		31

Table of Contents

For the six months ended June 30, 2014	(Unit: in millions of Won except per share amounts)	For the year ended December 31, 2013		For the year ended December 31, 2012*		For the year ended December 31, 2011*
Operating Revenue	8,507,288		16,602,054		16,141,409		15,803,174
Operating Income	798,490		2,011,109		1,730,049		2,266,197
Profit Before Income Tax	940,583		1,827,101		1,519,368		2,212,273
Profit for the Period	764,948		1,609,549		1,115,663		1,582,073
Profit for the Period Attributable to Owners of the Parent Company	768,350		1,638,964		1,151,705		1,612,889
Profit for the Period Attributable to Non-controlling Interests	(3,402	)	(29,415	)	(36,042	)	(30,816	)
Basic Earnings Per Share (Won)	10,713		23,211		16,525		22,848
Diluted Earnings Per Share (Won)	10,713		23,211		16,141		22,223

Financial information for the years ended December 31, 2011 and 2012 have been retroactively revised to reflect the effect of discontinued operations resulting from the sale of Loen Entertainment.

B. Changes to Accounting Standards Adopted During 2012

(1) Financial Instruments: Disclosures

The Company has applied the amendments to K-IFRS No.1107, Financial Instruments: Disclosures since January 1, 2012. The amendments require disclosing the nature of transferred assets, their carrying amount, and the description of risks and rewards for each class of transferred financial assets that are not derecognized in their entirety. If the Company derecognizes transferred financial assets but still retains their specific risks and rewards, the amendments require additional disclosures of their risks.

(2) Presentation of Financial Statements

The Company adopted the amendments pursuant to the amended K-IFRS No. 1001, Presentation of Financial Statements starting with the year ended December 31, 2012. The Companys operating income is calculated as operating revenue less operating expense. Operating expense represents expense incurred from the Companys main operating activities and includes cost of products that have been resold and selling, general and administrative expenses.

C. Changes to Accounting Standards Adopted During 2013

(1) Presentation of Financial Statements

The Company has applied the amendments to K-IFRS No. 1001, Presentation of Financial Statements since January 1, 2013, classified items within other comprehensive income by nature and presented items that are not subsequently recycled through profit or loss and items that are subsequently reclassified if certain conditions are met as a group.

(2) Consolidated Financial Statements

The Company has applied the amendments to K-IFRS No. 1110, Consolidated Financial Statements since January 1, 2013. The standard introduces a single control model to determine whether an investee should be consolidated. Subsidiary is an entity that is controlled by a controlling entity or a subsidiary of a controlling company. A controlling entity or a subsidiary of a controlling company controls a subsidiary when the controlling entity or the subsidiary of the controlling company is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary.

Table of Contents

(3) Joint Arrangements

The Company has applied the amendments to K-IFRS No. 1111, Joint Arrangements since January 1, 2013. The standard classifies joint arrangements into two typesjoint operations and joint ventures. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint ventures) have rights to the net assets of the arrangement. The standard requires a joint operator to recognize and measure the assets and liabilities (and recognize the related revenues and expenses) in relation to its interest in the arrangement in accordance with relevant IFRSs applicable to the particular assets, liabilities, revenues and expenses. The standard requires a joint venture to recognize an investment and to account for that investment using the equity method.

(4) Disclosure of Interests in Other Entities

The Company has applied the amendments to K-IFRS No. 1112, Disclosure of Interests in Other Entities since January 1, 2013. The standard brings together into a single standard all the disclosure requirements about an entitys interests in subsidiaries, joint arrangements, associates and unconsolidated structured entities. The Company is currently assessing the disclosure requirements for interests in subsidiaries, interests in joint arrangements and associates and unconsolidated structured entities in comparison with the existing disclosures. The standard requires the disclosure of information about the nature, risks and financial effects of these interests.

(5) Employee Benefits

The Company has applied the amendments to K-IFRS No. 1019, Employee Benefits since January 1, 2013. The standard requires recognition of actuarial gains and losses immediately in other comprehensive income and to calculate expected return on plan assets based on the rate used to discount the defined benefit obligation.

(6) Fair Value Measurement

The Company has applied the amendments to K-IFRS No. 1113, Fair Value Measurement since January 1, 2013. The standard defines fair value and a single framework for fair value, and requires disclosures about fair value measurements.

D. Impact of Changes in Accounting Policies

(1) Consolidated Financial Statements

In accordance with the transitional provision on K-IFRS No. 1110, the Company assessed control on investees as of January 1, 2013, the initial adoption date of the standard, and there have been no changes in subsidiaries upon adoption of the standard.

Table of Contents

2. Summary Financial Information (Separate)

A. Summary Financial Information (Separate)

As of June 30, 2014	(Unit: in millions of Won) — As of December 31, 2013	As of December 31, 2012		As of December 31, 2011
Assets
Current Assets	2,754,974	2,817,782	2,589,699		3,948,077
Cash and Cash Equivalents	412,194	448,459	256,577		895,558
Accounts Receivable Trade, net	1,597,263	1,513,138	1,407,206		1,282,234
Accounts Receivable Other, net	338,861	388,475	383,048		774,221
Others	250,654	467,710	542,868		996,064
Non-Current Assets	19,739,061	20,009,637	19,659,803		16,572,450
Long-Term Investment Securities	610,715	729,703	733,893		1,312,438
Investments in Subsidiaries and Associates	8,175,838	8,010,121	7,915,547		4,647,506
Property and Equipment, net	7,318,724	7,459,986	7,119,090		6,260,169
Intangible Assets, net	2,067,883	2,239,167	2,187,872		2,364,795
Goodwill	1,306,236	1,306,236	1,306,236		1,306,236
Others	259,665	264,424	397,165		681,306
Total Assets	22,494,035	22,827,419	22,249,502		20,520,527
Liabilities
Current Liabilities	4,110,587	4,288,07	4,343,086		4,467,006
Non-Current Liabilities	5,233,127	5,223,938	5,529,368		4,087,219
Total Liabilities	9,343,714	9,512,011	9,872,454		8,554,225
Equity
Share Capital	44,639	44,639	44,639		44,639
Capital Surplus and Other Capital Adjustments	433,894	433,894	(236,160	)	(236,016	)
Retained Earnings	12,568,736	12,665,699	12,413,981		11,837,185
Reserves	103,052	171,176	154,588		320,494
Total Equity	13,150,321	13,315,408	12,377,048		11,966,302
Total Liabilities and Equity	22,494,035	22,827,419	22,249,502		22,520,527

For the six months ended June 30, 2014	(Unit: in millions of Won except per share amounts) — For the year ended December 31, 2013	For the year ended December 31, 2012	For the year ended December 31, 2011
Operating Revenue	6,528,313	12,860,379	12,332,719	12,551,255
Operating Income	778,959	1,969,684	1,675,388	2,184,498
Profit Before Income Tax	640,379	1,220,797	1,546,719	2,274,421
Profit for the Period	516,907	910,157	1,242,767	1,694,363
Basic Earnings Per Share (Won)	7,168	12,837	17,832	24,002
Diluted Earnings Per Share (Won)	7,168	12,837	17,406	23,343

B. Changes to Accounting Standards Adopted During 2012

(1) Financial Instruments: Disclosures

Table of Contents

(2) Presentation of Financial Statements

C. Changes to Accounting Standards Adopted During 2013

(1) Presentation of Financial Statements

(2) Consolidated Financial Statements

(3) Joint Arrangements

The Company has applied the amendments to K-IFRS No. 1111, Joint Arrangements since January 1, 2013. The standard classifies joint arrangements into two typesjoint operations and joint ventures. A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint operators) have rights to the assets, and obligations for the liabilities, relating to the arrangement. A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement (i.e. joint venturers) have rights to the net assets of the arrangement. The standard requires a joint operator to recognize and measure the assets and liabilities (and recognize the related revenues and expenses) in relation to its interest in the arrangement in accordance with relevant IFRSs applicable to the particular assets, liabilities, revenues and expenses. The standard requires a joint venturer to recognize an investment and to account for that investment using the equity method.

(4) Disclosure of Interests in Other Entities

(5) Employee Benefits

Table of Contents

(6) Fair Value Measurement

D. Impact of Changes in Accounting Policies

(1) Consolidated Financial Statements

K-IFRS: Preparation, Impact to Financial Statements and Changes in the Accounting Principles Implemented

Transition to K-IFRS

The Company prepares its financial statements in accordance with K-IFRS starting from fiscal year 2011 which commenced on January 1, 2011. The Companys financial statements in previous periods were prepared in accordance with Korean GAAP. The Companys financial statements for fiscal year 2010, which are presented for comparison, were prepared in accordance with K-IFRS with January 1, 2010 as the transition date and pursuant to K-IFRS No. 1101, First-time Adoption of Korean International Financial Reporting Standards.

Table of Contents

IV. AUDITORS OPINION

1. Auditor (Consolidated)

| Six months ended June 30, 2014 | Year ended December 31, 2013 | Year ended
December 31, 2012 |
| --- | --- | --- |
| KPMG Samjong Accounting Corp. | KPMG Samjong Accounting Corp. | KPMG Samjong Accounting Corp. |

2. Audit Opinion (Consolidated)

Period	Auditors opinion	Issues noted
Six months ended June 30, 2014
Year ended December 31, 2013	Unqualified	N/A
Year ended December 31, 2012	Unqualified	N/A

3. Auditor (Separate)

4. Audit Opinion (Separate)

Period — Six months ended June 30, 2014
Year ended December 31, 2013	Unqualified	N/A
Year ended December 31, 2012	Unqualified	N/A

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

A. Audit Contracts

(Unit: in thousands of Won except number of hours) — Fiscal Year	Auditors	Contents	Fee	Total number of hours accumulated for the fiscal year
Year ended December 31, 2014	KPMG Samjong Accounting Corp.	Semi-annual review	1,280,000	17,890
		Quarterly review
		Separate financial statements audit
		Consolidated financial statements audit
		English financial statements review and other audit task
Year ended December 31, 2013	KPMG Samjong Accounting Corp.	Semi-annual review	1,250,000	17,796
		Quarterly review
		Separate financial statements audit
		Consolidated financial statements audit
		English financial statements review and other audit task
Year ended December 31, 2012	KPMG Samjong Accounting Corp.	Semi-annual review	1,220,000	19,583
		Quarterly review
		Separate financial statements audit
		Consolidated financial statements audit
		English financial statements review and other audit task

Table of Contents

B. Non-Audit Services Contract with External Auditors

(Unit: in thousands of Won) — Period	Contract date	Service provided	Service duration	Fee
Six months ended June 30, 2014	N/A
Year ended December 31, 2013	N/A
Year ended December 31, 2012	N/A

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.

Table of Contents

V. Managements discussion and analysis

Omitted in quarterly and semi-annual reports in accordance with Korean disclosure rules.

Table of Contents

VI. CORPORATE ORGANIZATION INCLUDING BOARD OF DIRECTORS AND AFFILIATED COMPANIES

1. Board of Directors

A. Overview of the Composition of the Board of Directors

The Companys board of directors (the Board of Directors) is composed 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.

| (As of August 8,
2014) — Total number of persons | Inside directors | Independent directors |
| --- | --- | --- |
| 8 | Sung Min Ha, Dae Sik Cho, Dong Seob Jee | Jae Hyeon Ahn, Dae Shick Oh, Jae Hoon Lee, Hyun Chin Lim, Jay Young Chung |

At the 30th General Meeting of Shareholders held on March 21, 2014, Jae Hoon Lee was elected as an inside director and Jae Hyeon Ahn was elected as an independent director and a member of the audit committee.

B. Significant Activities of the Board of Directors

Meeting	Date	Agenda	Approval
361th (the 1st meeting of 2014)	February 6, 2014	Financial statements as of and for the year ended December 31,
2013 Annual business report as of and for the year ended December 31, 2013 Report of internal
accounting management Report for the period after the fourth quarter of 2013	Approved as proposed Approved as proposed
362th (the 2nd meeting of 2014)	February 20, 2014	2014 transaction of goods, services and assets with SK Planet Co.,
Ltd. Rights offering by PS&Marketing Co., Ltd. Convocation of the
30th General Meeting of Shareholders Evaluation results of internal accounting management system	Approved as proposed Approved as proposed Approved as proposed
363th (the 3rd meeting of 2014)	March 21, 2014	Election of the chief executive officer Election of the
chairman of the Board of Directors Election of committee members Financial
transactions with affiliated company (SK Securities) Provision of funds for management of the 2014 SUPEX meetings	Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed
364th (the 4th meeting of 2014)	April 24, 2014	Transaction of goods relating to B Box with SK Broadband Bond
offering Financial transactions with affiliated company (SK Securities) Report for the
period after the first quarter of 2014	Approved as proposed Approved as proposed Approved as proposed
365th (the 5th meeting of 2014)	June 24, 2014	Financial transactions with affiliated company (SK Securities)	Approved as proposed
366th (the 6th meeting of 2014)	July 24, 2014	Payment of interim dividends Financial results
for the first six months of 2014 Report for the period after the first quarter of 2014	Approved as proposed

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

Table of Contents

C. Committees within Board of Directors

(1) Committee structure (as of August 8, 2014)

(a) Compensation Review Committee

Total number of persons	Members		Task
	Inside Directors	Independent Directors
3		Jae Hoon Lee, Hyun Chin Lim, Jay Young Chung	Review CEO remuneration system and amount

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

(b) Capex Review Committee

Total number of persons	Members		Task
	Inside Directors	Independent Directors
5	Dong Seob Jee	Jae Hyeon Ahn, Dae Shick Oh, Jae Hoon Lee, Jay Young Chung	Review major investment plans and changes thereto

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

Total number of persons	Members		Task
	Inside Directors	Independent Directors
4	Dong Seob Jee	Jae Hyeon Ahn, Hyun Chin Lim, Jay Young Chung	Review guidelines on corporate social responsibility (CSR) programs, etc.

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

(d) Independent Director Nomination Committee

Total number of persons	Members		Task
	Inside Directors	Independent Directors
3	Sung Min Ha	Dae Shick Oh, Jae Hoon Lee	Nomination of independent directors

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

(e) Audit Committee

Total number of persons	Members		Task
	Inside Directors	Independent Directors
3		Dae Shick Oh, Hyun Chin Lim, Jae Hyeon Ahn	Review financial statements and supervise independent audit process, etc.

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

2. Audit System

The Companys Audit Committee consists of three independent directors, Dae Shick Oh, Hyun Chin Lim, Jae Hyeon Ahn.

Major activities of the Audit Committee as of August 8, 2014 are set forth below.

Meeting	Date	Agenda
The 1st meeting of 2014	February 5, 2014	Evaluation of internal monitoring controls based on the opinion of
the members of the Audit Committee Review of business and audit results for the second half of 2013 and business and audit
plans for 2014 Report of internal accounting management system	Approved as proposed

Table of Contents

Meeting	Date	Agenda
The 2nd meeting of 2014	February 19, 2014	Report on the IFRS audit of fiscal year 2013 Report on review of
2013 internal accounting management system Evaluation of internal accounting management system operation Agenda and document review for the 30th General Meeting of Shareholders Auditors
report for fiscal year 2013 IT service management contract for 2014 Service contract
with SK Wyverns for 2014 Service contract with SKTCH Construction of
fixed-line and wireless networks in 2014	Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed
The 3rd meeting of 2014	March 20, 2014	Transactions with SK C&C Co., Ltd. in the second quarter of
2014	Approved as proposed
The 4th meeting of 2014	April 23, 2014	Election of chairman Purchase of
maintenance, repair and operations items from Happynarae Co., Ltd. Construction of fixed-line and wireless network facilities for 2014 Remuneration for outside auditor for fiscal year 2014 Outside auditor
service plan for fiscal year 2014 Audit plan for fiscal year 2014	Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed
The 5th meeting of 2014	June 25, 2014	Transactions with SK C&C Co., Ltd. in the third quarter of
2014 Energy reduction business contract with SK Broadband Co., Ltd.	Approved as proposed Approved as proposed
The 6th meeting of 2014	July 23, 2014	Construction of fixed-line and wireless network facilities for
2014 Review of business and audit results for the first half of 2014 and business and audit
plans for the second half of 2014 Report on the IFRS audit of fiscal year 2014	Approved as proposed

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

3. Shareholders Exercise 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 held 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 meeting of shareholders held in
2003.

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

Table of Contents

4. Affiliated Companies

A. Capital Investments between Affiliated Companies

(As of June 30, 2014)

Investing company	Invested companies — SK Corporation	SK Innovation	SK Energy	SK Global Chemical	SK Telecom	SK Networks	SKC	SK E&C	SK Shipping	SK Securities
SK Holdings		33.4 %			25.2 %	39.1 %	42.5 %	44.5 %	83.1 %
SK Innovation			100.0 %	100.0 %
SK Energy
SK Global Chemical
SK Networks
SK Telecom
SK Chemicals						0.02 %		28.2 %
SKC
SK E&C
SK Gas
SK C&C	31.8 %									10.0 %
SK E&S
SK Communications
SK Broadband
SK D&D
SK Continental E-Motion
SK Lubricants
SK Shipping
SK Planet
SK Hynix
Ko-one Energy
SK Seentec
Total affiliated companies	31.8 %	33.4 %	100.0 %	100.0 %	25.2 %	39.2 %	42.5 %	72.7 %	83.1 %	10.0 %

Table of Contents

| Investing company | Invested companies — SK E&S | SK Gas | DOPCO | CCE | YN Energy | Ko-one
Energy Service | Entis | SK Telink | Busan City Gas | Jeonnam City Gas |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| SK Holdings | 94.1 % | | | | | | | | | |
| SK Innovation | | | 41.0 % | | | | | | | |
| SK Energy | | | | | | | | | | |
| SK Global Chemical | | | | | | | | | | |
| SK Networks | | | | | | | | | | |
| SK Telecom | | | | | | | | 83.5 % | | |
| SK Chemicals | | 45.5 % | | | | | 50.0 % | | | |
| SKC | | | | | | | | | | |
| SK E&C | | | | | | | | | | |
| SK Gas | | | | | | | | | | |
| SK C&C | 5.9 % | | | | | | | | | |
| SK E&S | | | | 100.0 % | 100.0 % | 99.9 % | | | 67.3 % | 100.0 % |
| SK Communications | | | | | | | | | | |
| SK Broadband | | | | | | | | | | |
| SK D&D | | | | | | | | | | |
| SK Continental E-Motion | | | | | | | | | | |
| SK Lubricants | | | | | | | | | | |
| SK Shipping | | | | | | | | | | |
| SK Planet | | | | | | | | | | |
| SK Hynix | | | | | | | | | | |
| Ko-one Energy Service | | | | | | | | | | |
| SK Seentec | | 10.0 % | | | | | | | | |
| Total affiliated companies | 100.0 % | 55.5 % | 41.0 % | 100.0 % | 100.0 % | 99.9 % | 50.0 % | 83.5 % | 67.3 % | 100.0 % |

Table of Contents

Investing company	Invested companies — Gangwon City Gas	JBES	M & Service	SK Wyverns	Infosec	Happynarae	SK Telesys	Gimcheon Energy Services	F&U Credit Info	Hanam Energy Service
SK Holdings
SK Innovation						42.5 %
SK Energy
SK Global Chemical
SK Networks
SK Telecom				100.0 %		42.5 %			50.0 %
SK Chemicals
SKC							50.0 %
SK E&C
SK Gas						5.0 %
SK C&C					100.0 %	5.0 %
SK E&S	100.0 %	100.0 %						80.0 %
SK Communications
SK Broadband
SK D&D
SK Continental E-Motion
SK Lubricants
SK Shipping
SK Planet			100.0 %
SK Hynix
Ko-one Energy Service										100.0 %
SK Seentec
Total affiliated companies	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	95.0 %	50.0 %	80.0 %	50.0 %	100.0 %

Table of Contents

Investing company	Invested companies — SK D&D	Natruck	SK Hynix	Speed Motor	SK Mobile Energy	SK Petrochemical	SK Communications	SK Planet	SKC Air Gas	SKN service
SK Holdings
SK Innovation					100.0 %
SK Energy		100.0 %
SK Global Chemical						100.0 %
SK Networks				100.0 %						86.5 %
SK Telecom			20.4 %					100.0 %
SK Chemicals
SKC									80.0 %
SK E&C	50.0 %
SK Gas
SK C&C
SK E&S
SK Communications
SK Broadband
SK D&D
SK Continental E-Motion
SK Lubricants
SK Shipping
SK Planet							64.5 %
SK Hynix
Ko-one Energy Service
SK Seentec
Total affiliated companies	50.0 %	100.0 %	20.4 %	100.0 %	100.0 %	100.0 %	64.5 %	100.0 %	80.0 %	86.5 %

Table of Contents

Investing company	Invested companies — Commerce Planet	Initz	SKC Solmics Co., Ltd.	SK Broadband	LC&C	PMP	PS&Marketing	UBcare	PyongTaek Energy Service	Wirye Energy Service
SK Holdings
SK Innovation
SK Energy
SK Global Chemical
SK Networks					100.0 %
SK Telecom				50.6 %			100.0 %
SK Chemicals		80.3 %						44.0 %
SKC			41.4 %
SK E&C
SK Gas
SK C&C
SK E&S						100.0 %			100.0 %	89.5 %
SK Communications
SK Broadband
SK D&D
SK Continental E-Motion
SK Lubricants
SK Shipping
SK Planet	100.0 %
SK Hynix
Ko-one Energy Service
SK Seentec
Total affiliated companies	100.0 %	80.3 %	41.4 %	50.6 %	100.0 %	100.0 %	100.0 %	44.0 %	100.0 %	89.5 %

Table of Contents

Investing company	Invested companies — Jeju United FC	MKS Guarantee	SK Forest	SK Lubricants	SKC Lighting	Bizen	SK HY ENG	HYSTEC	Silicon File	SK Biopharmaceuticals
SK Holdings			100.0 %							100.0 %
SK Innovation				100.0 %
SK Energy	100.0 %
SK Global Chemical
SK Networks
SK Telecom
SK Chemicals
SKC					100.0 %
SK E&C
SK Gas
SK C&C						99.0 %
SK E&S
SK Communications
SK Broadband
SK D&D		100.0 %
SK Continental E-Motion
SK Lubricants
SK Shipping
SK Planet
SK Hynix							100.0 %	100.0 %	100.0 %
Ko-one Energy Service
SK Seentec
Total affiliated companies	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %	99.0 %	100.0 %	100.0 %	100.0 %	100.0 %

Table of Contents

Investing company	Invested companies — 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 Holdings
SK Innovation
SK Energy
SK Global Chemical
SK Networks									100.0 %
SK Telecom						100.0 %	100.0 %	100.0 %
SK Chemicals	100.0 %
SKC				90.0 %
SK E&C		32.0 %	42.0 %
SK Gas
SK C&C
SK E&S
SK Communications
SK Broadband
SK D&D
SK Continental E-Motion
SK Lubricants										100.0 %
SK Shipping
SK Planet					51.0 %
SK Hynix
Ko-one Energy Service
SK Seentec
Total affiliated companies	100.0 %	32.0 %	42.0 %	90.0 %	51.0 %	100.0 %	100.0 %	100.0 %	100.0 %	100.0 %

Table of Contents

Investing company	Invested companies — Ulsan Aromatics	SK Continental E-Motion Korea	G.Hub	SK Incheon Petrochem	SK Trading International	Boryeong LNG Terminal	NEOS Networks	SK Encar	QRT Semiconductor
SK Holdings
SK Innovation				100.0 %	100.0 %
SK Energy
SK Global Chemical	50.0 %
SK Networks
SK Telecom							66.7 %
SK Chemicals
SKC
SK E&C
SK Gas			100.0 %
SK C&C								50.0 %
SK E&S						50.0 %
SK Communications
SK Broadband
SK D&D
SK Continental E-Motion		100.0 %
SK Lubricants
SK Shipping
SK Planet
SK Hynix									100.0 %
Ko-one Energy Service
SK Seentec
Total affiliated companies	50.0 %	100.0 %	100.0 %	100.0 %	100.0 %	50.0 %	66.7 %	50.0 %	100.0 %

Change in company names:
Ulsan Aromatics changed its name from Arochemi
Happynarae changed its name from MRO Korea
Bizen changed its name from Telsk
SK Hystec changed its name from Hystec
SK HY ENG changed its name from Hynix Engineering
Entis changed its name from SK Sci-tech
Gamgok Development changed its name from [Ants Development]

Table of Contents

VII. SHAREHOLDERS

1. Shareholdings of the Largest Shareholder and Related Persons

A. Shareholdings of the Largest Shareholder and Related Persons

(As of June 30, 2014) — Name	(Unit: in shares and percentages) — 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 Holdings Co., Ltd.	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	4,000	0.00
Sung Min Ha	Officer of affiliated company	Common share	738	0.00	738	0.00
Total		Common share	20,366,290	25.22	20,368,290	25.22

B. Overview of the Largest Shareholder

SK Holdings Co., Ltd. (SK Holdings) is a holding company in accordance with the Fair Trade Act and as of June 30, 2014, has nine 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., SK Biofarm Co., Ltd. and SK Forest Co., Ltd.

Details of the subsidiaries of SK Holdings are as follows:

| 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 % | 905,691 | Energy/ICT-related Product Distribution, Resource Development, Automotive Aftermarket, Fashion, Hotel | Publicly Listed |
| SKC Co., Ltd. | 42.5 % | 254,632 | PET Film Manufacturing and Chemical Products | Publicly Listed |
| SK E&C Co., Ltd. | 44.5 % | 470,015 | Infrastructure, Architectural Housing and Plant Construction | Privately Held |
| SK Shipping Co., Ltd. | 83.1 % | 420,568 | 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. | 100.0 % | 328,702 | Biotechnology | Privately Held |
| SK Forest Co., Ltd. | 100.0 % | 61,387 | Forestry and Landscaping | Privately Held |

The above shareholdings are based on common share holdings as of June 30, 2014.

SK Holdings 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 Holdings is required to report key management activities of its subsidiaries in accordance with Article 8 of KOSPI Market Disclosure Regulation.

Table of Contents

The rule is applicable to subsidiaries whose book value of the holding companys shareholding exceeds 10% of its total assets based on the financial statements as of December 31, 2013. SK Innovation Co., Ltd. and SK Telecom Co., Ltd. are two such subsidiaries.

2. Changes in Shareholdings of the Largest Shareholder

Changes in shareholdings of the largest shareholder are as follows.

| (As of June 30, 2014) — Largest Shareholder | Date of the change in
the largest shareholder/ Date of change in shareholding | Shares Held | Holding Ratio | (Unit: in shares and percentages) — Remarks |
| --- | --- | --- | --- | --- |
| SK Corporation | March 11, 2011 | 18,750,490 | 23.22 | Man Won Jung, SK Telecoms CEO, resigned Shin Bae Kim, SK C&Cs 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, SKCs Chairman, purchased 500 shares |
| | August 5, 2011 | 18,750,490 | 23.22 | Shin Won Chey, SKCs Chairman, purchased 500 shares |
| | August 23, 2011 | 18,751,490 | 23.22 | Shin Won Chey, SKCs Chairman, purchased 500 shares |
| | December 21, 2011 | 20,366,490 | 25.22 | SK Holdings purchased 1,615,000 shares |
| | January 31, 2012 | 20,366,290 | 25.22 | Retirement of Bang Hyung Lee, a former officer of an affiliated company |
| | January 1, 2014 | 20,367,290 | 25.22 | Shin Won Chey, SKCs Chairman, purchased 1,000 shares |
| | March 24, 2014 | 20,368,290 | 25.22 | Shin Won Chey, SKCs Chairman, purchased 1,000 shares |

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

3. Distribution of Shares

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

(As of June 30, 2014) — Rank	Name (title)	Common share
		Number of shares	Ownership ratio	Remarks
1	Citibank ADR	13,337,328	16.52 %
2	SK Holdings	20,363,452	25.22
3	SK Telecom	9,809,375	12.15	Treasury shares
4	National Pension Service	4,760,489	5.90	As of End of 2013
Shareholdings under the Employee Stock Ownership Program		111,528	0.14	As of June 30, 2014

B. Shareholder Distribution

(As of June 30, 2014) — Classification	Number of shareholders	Ratio (%)	Number of shares	Ratio (%)	Remarks
Total minority shareholders*	24,174	99.76 %	31,057,635	38.46 %

Defined as shareholders whose shareholding is less than a hundredth of the total issued and outstanding shares.

Table of Contents

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

A. Domestic Securities Market

(Unit: in Won and shares) — Types	June 2014	May 2014	April 2014	March 2014	February 2014	January 2014
Common stock	Highest	243,500	229,000	217,000	219,000	216,500	229,000
	Lowest	218,500	216,000	198,000	203,500	196,500	205,500
Monthly transaction volume		3,423,138	2,785,194	4,636,269	3,786,217	3,920,134	3,528,891

B. Foreign Securities Market

New York Stock Exchange — Types	June 2014	(Unit: in US dollars and number of American Depositary Receipts) — May 2014	April 2014	March 2014	February 2014	January 2014
Depository Receipt	Highest	26.50	24.77	23.09	22.67	22.38	24.07
	Lowest	23.56	23.23	20.76	21.25	20.76	21.14
Monthly transaction volume		21,637,750	14,595,143	20,665,121	15,377,813	20,403,936	22,341,886

Table of Contents

VIII. EMPLOYEES AND DIRECTORS

1. Employees

(As of June 30, 2014)	Number of employees				Average	Aggregate	Average
Classification	Regular employees	Contract employees	Others	Total	service year	wage for the year
2014	wage per person	Remarks
Male	3,590	139		3,729	12.9	276,693	74
Female	543	87		630	10.7	32,673	52
Total	4,133	226		4,359	12.6	309,366	71

Excludes retirement and severance payments to employees whose employment was terminated before the end of the respective employment periods. Average wage per person was calculated with respect to the total number of paid employees.

2. Compensation of Directors

A. Amount Approved at the Shareholders Meeting

(As of June 30, 2014) — Classification	Number of Directors	Aggregate Amount Approved
Directors	8	12,000

B. Amount Paid

(As of June 30, 2014) — Classification	Number of Directors	Aggregate Amount Paid	Average Amount Paid Per Director
Insider Directors	3	2,307	769
Independent Directors*	2	82	41
Audit Committee Members	3	123	41
Total	8	2,512	314

3. Individual Compensation of Directors

(As of June 30, 2014)	(Unit: in millions of Won)
Name	Title	Aggregate Amount Paid
Sung Min Ha	Chief Executive Officer and President	1,083
Dong Seob Jee	Head of Strategy & Planning Office	544

Table of Contents

IX. RELATED PARTY TRANSACTIONS

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

A. Investment and Disposition of Investment

None.

B. Transfer of Assets

(Unit: in millions of Won)

Name (Corporate name)	Transferred Assets	Purpose of Transfer	Date of Transfer	Amount Transferred from Largest Shareholder	Amount Transferred to Largest Shareholder
SK Broadband Co., Ltd.	Subsidiary	Computer software	Disposition of assets	June 30, 2014		8,760
Total						8,760

On April 24, 2014, the board of directors resolved to transfer the Companys tangible and intangible investment assets related to B Box to SK Broadband Co., Ltd. for Won 8,760 million for reliable and efficient operations of smart IPTV services, and the transfer of the assets was completed on June 30, 2014.

2. Related Party Transactions (excluding Transactions with the Largest Shareholder and Related Persons)

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

(Unit: in millions of Won)

Name (Corporate name)		Account category — Beginning	Increase	Decrease	Ending
Seoul E&T and others	Agency	Long-term and short-term loans	84,760	85,959	69,413	101,306

(Unit: in millions of Won)

Name (Corporate name)		Account category — Beginning	Increase	Decrease	Ending
Daehan Kanggun BcN Co., Ltd.	Investee	Long-term loans	22,102	46		22,148

Table of Contents

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
27 th Fiscal Year Meeting of Shareholders (March 11, 2011)	1. Approval of the financial statements for the year ended
December 31, 2010 2. Approval of Remuneration Limit for Directors 3. Amendment to
Company Regulation on Executive Compensation 4. Election of directors Election of inside directors Election of
independent directors Election of independent directors as Audit Committee members	Approved (Cash dividend, Won 8,400 per share) Approved Approved (Won 12 billion) Approved (Sung Min Ha, Jin Woo So) Approved (Rak Young Uhm, Jay Young Chung, Jae Ho Cho) Approved (Jay Young Chung, Jae Ho Cho)
1 st Extraordinary Meeting of Shareholders of
2011 (August 31, 2011)	1. Approval of the Spin-off Plan 2. Election of
director	Approved (Spin-off of SK Planet) 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 2. Amendment to Articles of Incorporation 3. Election of
directors Election of an inside director Election of an
inside director Election of an independent director 4. Election of
an independent director as Audit Committee member 5. Approval of remuneration limit for directors	Approved (Cash dividend, Won 8,400 per share) Approved Approved (Young Tae Kim) Approved (Dong Seob Jee) Approved (Hyun Chin Lim) Approved (Hyun Chin Lim) Approved (Won 12 billion)
29 th Fiscal Year Meeting of Shareholders (March 22, 2013)	1. Approval of the financial statements for the year ended
December 31, 2012 2. Amendments to Articles of Incorporation 3. Election of
directors Election of an inside director Election of an
independent director 4. Election of an independent director as Audit Committee member 5. Approval of
remuneration limit for directors	Approved (Cash dividend, Won 8,400 per share) Approved Approved (Dae Sik Cho) Approved (Dae Shick Oh) Approved (Dae Shick Oh) Approved (Won 12 billion)
30 th Fiscal Year Meeting of Shareholders (March 21, 2014)	1. Approval of the financial statements for the year ended
December 31, 2013 2. Amendments to Articles of Incorporation 3. Election of
directors Election of an inside director Election of an
independent director Election of an independent director Election of an
independent director 4. Election of an independent director as Audit Committee member 5. Approval of
remuneration limit for directors	Approved (Cash dividend, Won 8,400 per share) Approved Approved (Sung Min Ha) Approved (Jay Young Chung) Approved (Jae Hoon Lee) Approved (Jae Hyeon Ahn) Approved (Jae Hyeon Ahn) Approved (Won 12 billion)

Table of Contents

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 Companys 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 filed an appeal at the Supreme Court of Korea and the judgment was overturned on July 11, 2013. The case was remanded down to the appellate court and the Company expects to successfully defend the suit, based on recent decisions in similar suits involving KT and LGU+. While the Company does not expect this litigation to have an immediate impact on the Companys business or results of operation as the final outcome of this litigation has not been determined, the Company may be required to pay increased annual license fees to KOMCA if the final judgment is rendered against the Company.

Actual impact on the Companys business and financial condition from the litigation may be different from the Companys expectation stated above.

B. Other Matters

None.

[SK Broadband]

A. Material Legal Proceedings

(1) SK Broadband as the plaintiff

Description of Proceedings	(Unit: in thousands of Won) — Date of Commencement of Proceedings	Amount of Claim	Status
Damages claim against Welcome Savings Bank	March 2014	1,291,533	Pending before district court
Damages claim against Golden Young and others	April 2011	908,166	Pending before appellate court
Total		2,199,699

(2) SK Broadband as the defendant

The Company does not believe that the outcome of any of the proceedings in which SK Broadband is named as a defendant will have a material effect on the Companys financial statements.

B. Other Contingent Liabilities

(1) Pledged assets and covenants

SK Broadband, upon approval by its board of directors, has provided guarantees for financial instruments amounting to Won 2,335 million to support employees funding for the Employee Stock Ownership Program.

Additionally, SK Broadband has provided geun mortgage amounting to Won 14.2 billion to others, including Ilsan Guksa, on a part of its buildings in connection with the leasing of the buildings.

Table of Contents

[SK Planet]

A. Material Legal Proceedings

As of June 30, 2014, there was one pending proceeding with SK Planet as the defendant and the aggregate amount of the claim was Won 78 million. The management cannot reasonably forecast the outcome of this case and no amount in connection with this proceeding was recognized on the Companys financial statements.

B. Other Contingent Liabilities

None.

[SK Communications]

A. Material Legal Proceedings

As of June 30, 2014, the aggregate amount of claims was Won 2.0 billion. The management cannot reasonably forecast the outcome of the pending cases.

B. Other Contingent Liabilities

The material payment guarantees provided by third parties to SK Communications as of June 30, 2014 are set forth in the table below.

(Unit: in thousands of Won) — Financial Institution	Guarantee	Amount
Seoul Guarantee Insurance Company	Prepaid coverage payment guarantee	700,000
Seoul Guarantee Insurance Company	Provisional deposit guarantee insurance for bonds	863,000
Etoos Education Co., Ltd.	Support for production and publication of cartoon series	1,600,000

[PS&Marketing]

A. Other Contingent Liabilities

Shinhan Bank has provided a payment guarantee of Won 3 billion for PS&Marketings purchase of mobile devices from Apple Korea Ltd.

Additionally, PS&Marketing has entered into a credit facility up to Won 27 billion with Shinhan Bank for working capital purposes.

[NEOS Networks]

A. Other Contingent Liabilities

NEOS Networks, has agreed to provide geun mortgage amounting to Won 1.2 billion.

3. Status of sanctions, etc.

[SK Telecom]

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

Table of Contents

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 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 21,928 million. The Company appealed the order and filed a suit with the administrative court. The suit is currently pending.

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 Exchanges disclosure rules. The Company paid the fine and has been taking efforts to prevent a repetitive violation.

On June 21, 2012, the Company received a correctional order from the Korea Communications Commission in connection with its decision on whether the Company had violated regulations related to the safeguarding of location information. The Company completed the improvement of the procedures in consultation with the Korea Communications Commission by December 2012.

On July 4, 2012, the Fair Trade Commission issued correctional orders and imposed fines on the Company and seven affiliated companies for alleged unfair advantage provided to SK C&C, an affiliated company, in services fees for information technology system management and operation. The Company and SK Planet were imposed fines of Won 25,042 million and Won 1,349 million, respectively. The Company and the seven affiliated companies appealed the orders and on May 14, 2014, won the suit at the Seoul High Court. The Fair Trade Commission appealed the decision, and the case is currently pending before the Supreme Court of Korea.

On December 24, 2012, the Korea Communications Commission imposed on the Company a fine of Won 6.89 billion, imposed a suspension on acquiring new subscribers from January 31, 2013 to February 21, 2013 and issued a correctional order for providing discriminatory subsidies to subscribers. The Company paid the fine and completed the improvement of the procedures in consultation with the Korea Communications Commission by March 2013.

On January 11, 2013, the Company received a correctional order and a fine of Won 100 million from the Fair Trade Commission of Korea for alleged violation of Article 23 of the Fair Trade Act relating to the Companys transactions with its distribution network. The Company paid the fine by May 10, 2013.

On March 14, 2013, the Korea Communications Commission imposed on the Company a fine of Won 3.14 billion and issued a correctional order in a case for providing discriminatory subsidies to subscribers. The Company paid the fine and completed the improvement of the procedures in consultation with the Korea Communications Commission by April 2013.

On July 18, 2013, the Korea Communications Commission imposed on the Company a fine of Won 36.5 billion and issued a correctional order for providing discriminatory subsidies to subscribers. The Company paid the fine and reported to the Korea Communications Commission on the implementation of actions pursuant to the correctional order by August 2013.

On August 21, 2013, the Company received a correctional order from the Korea Communications Commission in connection with its decision on whether the Company had violated procedural regulations related to terms and conditions of usage. The Company completed the improvement of the procedures in consultation with the Korea Communications Commission by November 2013.

On September 16, 2013, the Company received a correctional order from the Korea Communications Commission in connection with its decision on whether the Company had violated regulations related to wholesale provision of telecommunication services. The Company completed the improvement of the procedures and reported to the Korea Communications Commission on the implementation of actions pursuant to the correctional order by October 2013.

Table of Contents

On November 15, 2013, the Korea Communications Commission imposed a fine of Won 676 million and issued a correctional order for limiting termination of telecommunication services. The Company paid the fine and completed the improvement of the procedures and reported to the Korea Communications Commission on the implementation of actions pursuant to the correctional order by December 2013.

On December 27, 2013, the Korea Communications Commission imposed on the Company a fine of Won 56.0 billion and issued a correctional order for providing discriminatory subsidies to subscribers. The Company paid the fine and completed the improvement of the procedures and reported to the Korea Communications Commission on the implementation of actions pursuant to the correctional order by January 2014.

On March 7, 2014, the MSIP imposed a suspension of operations for 45 days for failure to observe the order of the Korea Communications Commission to cease providing discriminatory subsidies to subscribers. The Company suspended its operations during the period beginning April 5, 2014 and ending May 19, 2014, and reported to the MSIP on the implementation of actions pursuant to the suspension order by May 2014.

On March 13, 2014, the Korea Communications Commission imposed on the Company a fine of Won 16.65 billion, imposed a suspension on acquiring new customers for 7 days, and issued a correctional order for providing discriminatory subsidies to subscribers. In April 2014, the Company paid the fine and completed the improvement of the procedures and reported to the Korea Communications Commission on the implementation of actions pursuant to the correctional order by April 2014. The Company plans to suspend acquisition of new customers in the future.

On January 31, 2013, the Seoul Central District Court acquitted Mr. Jae Won Chey, our former director and vice chairman, on all charges against him. On September 27, 2013, the Seoul High Court reversed the acquittal of the above-mentioned former director, sentencing him to a prison term of three and a half years for violating the Act on the Aggravated Punishment, etc. of Specific Economic Crimes. On February 27, 2014, the Supreme Court of Korea affirmed the Seoul High Courts decision. While the courts final decision on the appealed case is not expected to have a material effect on the Companys financial position, investors should note that it is difficult to predict, among others, the markets assessment of such case.

[SK Broadband]

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

Date: August 16, 2014

Subject: SK Broadband

Sanction: SK Broadband was imposed a fine of Won 3 million.

Reason and the Relevant Law: Violated Articles 59 and 76 of the Act on Facilitation of the Use of Information Network and Protection of Information and Article 76 of the Enforcement Decree of the Act by not having designated proper contacts for the users of telecommunications billing services to raise objections and protect rights and interests of the users and by not having provided the contact information on the Internet or other means of communication.

Status of Implementation: Paid the fine, designated contact persons for user protection of telecommunications billing services, and provide contact information on the Companys website.

Companys Plan: Designate contact persons for user protection of telecommunications billing services and provide contact information to users.

Table of Contents

(2) Violation of the Telecommunication Business Act

Date: August 21, 2013

Subject Company: SK Broadband

Sanction: SK Broadband received a correctional order from the Korea Communications Commission.

Reason and the Relevant Law: Violation of Article 50, Paragraph 1, Number 5 of the Telecommunications Business Act for use of subscription agreements that omitted certain material terms and conditions pertaining to high-speed Internet usage.

Status of Implementation: Completed revision of subscription agreements to include material terms and conditions pertaining to high-speed Internet usage. Planning to distribute information sheets on current terms and conditions to new subscribers.

Companys Plan: Improve operations including through revision of subscription agreements.

(3) Violation of the Telecommunication Business Act

Date: June 5, 2013

Subject Company: SK Broadband

Sanction: SK Broadband received a correctional order from the Korea Communications Commission.

Reason and the Relevant Law: Improperly delayed cancellations of high-speed Internet subscribers and violated Articles 42 and 50 of the Telecommunication Business Act.

Status of Implementation: Improving operating procedures to stop the prohibited practice due for completion in August, completed amendment of the terms of service and published the sanction in newspapers.

Companys Plan: Improve cancellation procedures to prevent recurrence of the cancellation delays.

(4) Violation of accounting rules

Date: December 13, 2012

Subject Company: SK Broadband

Sanction: SK Broadband was imposed a fine of Won 39 million from the Korea Communications Commission.

Reason and the relevant law: Business report for 2011 violated accounting rules under Article 49 of the Telecommunication Business Act.

Status of Implementation: Paid the fine.

Companys plan: Will improve accounting management system.

(5) Violation of the Telecommunications Business Act

Date: May 18, 2012

Subject Company: SK Broadband

Sanction: SK Broadband received a correctional order and a fine of Won 253 million

Table of Contents

Reason and relevant law: Violation of Article 50, Paragraph 1, Number 5 of the Telecommunications Business Act and Article 50, Paragraph 1 of the related Enforcement Decree for offering discounts outside the terms and conditions of the subscription agreement to certain subscribers and thereby discriminating against certain subscribers

Status of implementation: Paid the fine, ceased the prohibitive practice, disclosed receiving the correctional order in a newspaper advertisement and changed business practice to prevent reoccurrence.

Companys plan: Continuous management of the companys distribution network and improve the companys distribution structure.

(6) 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.

Companys Plan: Will improve accounting management system.

(7) 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.

Companys Plan: Will improve operating procedures.

(8) 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.

Table of Contents

Companys Plan: Provide education to officers and employees and strengthen internal regulations.

(9) Violation of the Telecommunication Business Act

Date: February 21, 2011

Subject Company: SK Broadband

Sanction: SK Broadband was imposed a correctional 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 in newspapers, improved operating procedures and amended the terms of services.

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

4. Important Matters That Occurred After June 30, 2014

[SK Telecom]

On June 24, 2014, the Company entered into a share purchase agreement regarding a purchase of 10,241,722 common shares of Iriver Ltd. from Vogo-Rio Investment Holdings Co., Ltd. and KGF-Rio Limited, and completed the acquisition of shares at a purchase price of Won 29.5 billion.

5. Use of Proceeds

A. Use of Proceeds from Public Offerings

Not applicable.

B. Use of Proceeds from Private Offerings

(As of June 30, 2014) (Unit: in millions of Won)

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

In 2013, holders exercised their conversion rights with respect to an aggregate principal amount of US$326,023,000 of the convertible notes. The Company delivered 1,241,337 treasury shares in respect of US$170,223,000 of the exercised aggregate principal amount and delivered cash in respect of the remainder due to the limit on foreign ownership. In connection with such conversion, the Company recognized Won 135.1 billion in financial expenses in 2013. On November 13, 2013, the Company exercised its early redemption right and on December 13, 2013, redeemed the US$6,505,000 principal amount of convertible notes not converted by noteholders.

Table of Contents

Contents

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	8
Notes to the Condensed Consolidated Interim Financial Statements	10

Table of Contents

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), which comprise the condensed consolidated statement of financial position as of June 30, 2014, the related condensed consolidated statements of income and comprehensive income for the three-month and six-month periods ended June 30, 2014 and 2013, the condensed consolidated interim statements of changes in equity and cash flows for the six-month periods ended June 30, 2014 and 2013, and notes to the interim financial statements.

Managements responsibility

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 reviews.

We did not review the financial statements of SK Broadband Co., Ltd., a domestic subsidiary, and an associate, whose financial statements constitute 11.8% of the Groups consolidated operating revenue and 23.5% of the Groups profit before income tax for the six-month period ended June 30, 2013. Other auditors reviewed those financial statements and our report, insofar as it relates to the amounts included for these entities, is based solely on the reports of other auditors.

We conducted our reviews in accordance with the Review Standards for Quarterly and Semiannual Financial Statements established by the Securities and Futures Commission of the Republic of Korea. A review of interim financial statements 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 reviews 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 prepared fairly, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.

Table of Contents

Highlights

As discussed in note 36 to the condensed consolidated interim financial statements, the Group disposed of a controlling equity interest in Loen Entertainment, Inc., during the year ended December 31, 2013. The Group presented the results of operations of Loen Entertainment, Inc. as a discontinued operation and accordingly restated the comparative information for the three and six-month period ended June 30, 2013.

Other matters

The consolidated statement of financial position of the Group as of December 31, 2013, and the related 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 us and our report thereon, dated February 21, 2014, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Group as of December 31, 2013, presented for comparative purposes, is not different from that audited by us in all material respects.

The procedures and practices utilized in the Republic of Korea to review such condensed consolidated interim financial statements may differ from those generally accepted and applied in other countries.

KPMG Samjong Accounting Corp.

Seoul, Korea

August 8, 2014

This report is effective as of August 8, 2014, 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.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Statements of Financial Position

As of June 30, 2014 and December 31, 2013

(In millions of won)		June 30, 2014
Assets
Current Assets:
Cash and cash equivalents	33,34	￦	1,331,263	1,398,639
Short-term financial instruments	5,33,34		320,769	311,474
Short-term investment securities	8,33,34		54,198	106,068
Accounts receivabletrade, net	6,33,34,35		2,483,091	2,257,316
Short-term loans, net	6,33,34,35		82,967	79,395
Accounts receivableother, net	6,33,34,35		747,478	643,603
Prepaid expenses			113,860	108,909
Derivative financial assets	22,33,34			10
Inventories, net	7		399,899	177,120
Assets held for sale	9		2,611	3,667
Advanced payments and other	6,33,34		56,488	37,214
Total Current Assets			5,592,624	5,123,415
Non-Current Assets:
Long-term financial instruments	5,33,34		8,131	8,142
Long-term investment securities	8,33,34		924,610	968,527
Investments in associates and joint ventures	12		5,602,137	5,325,297
Property and equipment, net	13,35,37		10,057,105	10,196,607
Investment property, net	14		16,053	15,811
Goodwill	10,15		1,751,075	1,733,261
Intangible assets, net	16,35		2,566,599	2,750,782
Long-term loans, net	6,33,34		68,312	57,442
Long-term accounts receivableother	6		2,490
Long-term prepaid expenses			41,253	32,008
Guarantee deposits	5,6,33,34		280,185	249,600
Long-term derivative financial assets	22,33,34		21,353	41,712
Deferred tax assets	31		25,909	26,322
Other non-current assets	6,33,34		69,813	47,589
Total Non-Current Assets			21,435,025	21,453,100
Total Assets		￦	27,027,649	26,576,515

See accompany notes to the condensed consolidated interim financial statements .

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Statements of Financial Position, Continued

As of June 30, 2014 and December 31, 2013

(In millions of won)		June 30, 2014
Liabilities and Equity
Current Liabilities:
Short-term borrowings	17,33,34	￦	869,500		260,000
Current portion of long-term debt, net	17,18,20,33,34		944,527		1,042,276
Current portion of finance lease liabilities	20,33,34		11,248		19,351
Current portion of long-term accounts payables other	18,33,34		187,444		206,800
Accounts payabletrade	33,34,35		417,181		214,716
Accounts payableother	33,34,35		1,114,834		1,864,024
Withholdings	33,34		970,277		728,936
Accrued expenses	33,34		953,562		988,193
Income tax payable	31		63,270		112,316
Unearned revenue			400,564		441,731
Derivative financial liabilities	22		33,122		21,171
Provisions	19		75,855		66,775
Advanced receipts and other			121,286		102,931
Total Current Liabilities			6,162,670		6,069,220
Non-Current Liabilities:
Debentures, net, excluding current portion	17,33,34		5,147,268		4,905,579
Long-term borrowings, excluding current portion	17,33,34		104,675		104,808
Long-term payablesother	18,33,34		660,963		838,585
Long-term unearned revenue			35,139		50,894
Finance lease liabilities	20,33,34		1,757		3,867
Defined benefit liabilities	21		125,829		74,201
Long-term derivative financial liabilities	22,33,34		183,561		103,168
Long-term provisions	19		56,052		28,106
Deferred tax liabilities	31		280,458		168,825
Other non-current liabilities	33,34		66,097		62,705
Total Non-Current Liabilities			6,661,799		6,340,738
Total Liabilities			12,824,469		12,409,958
Equity
Share capital	1,23		44,639		44,639
Capital surplus and other capital adjustments	23,24,25		288,726		317,508
Retained earnings	26		13,254,623		13,102,495
Reserves	27		(94,064	)	(12,270	)
Equity attributable to owners of the Parent Company			13,493,924		13,452,372
Non-controlling interests			709,256		714,185
Total Equity			14,203,180		14,166,557
Total Liabilities and Equity		￦	27,027,649		26,576,515

See accompanying notes to the condensed consolidated interim financial statements .

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Statements of Income

For the three and six-month periods ended June 30, 2014 and 2013

(In millions of won except for per share data)
		June 30, 2014				June 30, 2013
Note		Three-month period ended		Six-month period
ended		Three-month period ended		Six-month period
ended
Continuing operations
Operating revenue:	4,35
Revenue		￦	4,305,368		8,507,288		4,116,965		8,182,619
Operating expense:	35
Labor cost			401,137		830,276		359,179		803,163
Commissions paid			1,364,310		2,991,953		1,360,159		2,783,043
Depreciation and amortization	4,13,14,16		668,435		1,324,263		670,615		1,308,493
Network interconnection			280,736		556,533		252,293		504,842
Leased lines			101,176		207,337		116,602		230,230
Advertising			99,883		185,233		108,791		172,170
Rent			113,376		222,576		110,762		221,055
Cost of products that have been resold			393,957		729,654		305,296		624,140
Other operating expenses	28		336,264		660,973		287,823		585,511
Sub-total			3,759,274		7,708,798		3,571,520		7,232,647
Operating income	3,4		546,094		798,490		545,445		949,972
Finance income	4,30		35,167		75,162		27,428		64,290
Finance costs	4,30		(110,919	)	(199,699	)	(162,825	)	(311,575	)
Gains relating to investments in subsidiaries, associates and joint ventures, net	4,12		149,647		294,702		189,521		349,603
Other non-operating income	3,4,29		16,731		36,574		24,372		38,211
Other non-operating expense	3,4,29		(28,714	)	(64,646	)	(31,032	)	(77,625	)
Profit before income tax	4		608,006		940,583		592,909		1,012,876
Income tax expense from continuing operations	31		110,367		175,635		131,141		211,134
Profit from continuing operations			497,639		764,948		461,768		801,742
Discontinued operation
Gains from discontinued operation, net of income taxes	36						5,943		11,903
Profit for the period		￦	497,639		764,948		467,711		813,645
Attributable to :
Owners of the Parent Company		￦	498,536		768,350		466,645		820,799
Non-controlling interests			(897	)	(3,402	)	1,066		(7,154	)
Earnings per share (in won)
Basic earnings per share	32	￦	6,909		10,713		6,663		11,747
Diluted earnings per share	32	￦	6,909		10,713		6,663		11,747
Earnings per shareContinuing operations (in won)
Basic earnings per share	32		6,909		10,713		6,606		11,632
Diluted earnings per share	32		6,909		10,713		6,606		11,632

See accompanying notes to the condensed consolidated interim financial statements.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

For the three and six-month periods ended June 30, 2014 and 2013

(In millions of won)
	Three- month period ended		Six-month period
ended		Three-month period ended		Six-month period
ended
Profit for the period	￦	497,639		764,948		467,711		813,645
Other comprehensive income (loss)
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit obligations	21	(7,841	)	(11,994	)	(2,522	)	(5,605	)
Items that may be reclassified subsequently to profit or loss:
Net change in unrealized fair value of available-for-sale financial assets	27,30	13,579		(537	)	(32,168	)	(51,405	)
Net change in other comprehensive income of investments in associates and joint ventures	27	(52,638	)	(53,469	)	50,514		99,478
Net change in unrealized fair value of derivatives	27,30	(23,433	)	(18,813	)	(56,642	)	(64,092	)
Foreign currency translation differences for foreign operations	27	(12,023	)	(10,416	)	7,847		14,055
Total other comprehensive loss, net of taxes		(82,356	)	(95,229	)	(32,971	)	(7,569	)
Total comprehensive income	￦	415,283		669,719		434,740		806,076
Total comprehensive income (loss) attributable to:
Owners of the Parent Company	￦	417,499		674,619		434,441		813,317
Non-controlling interests		(2,216	)	(4,900	)	299		(7,241	)

See accompanying notes to the condensed consolidated interim financial statements .

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

For the six-month periods ended June 30, 2014 and 2013

(In millions of won)
	Controlling Interest
	Share capital	Capital surplus (deficit) and other capital adjustments		Retained earnings		Reserves		Sub-total		Non-controlling interests		Total equity
Balance, January 1, 2013	￦	44,639	(288,883	)	12,124,657		(25,636	)	11,854,777		1,000,005		12,854,782
Cash dividends					(585,438	)			(585,438	)	(2,242	)	(587,680	)
Total comprehensive income
Profit (loss) for the period					820,799				820,799		(7,154	)	813,645
Other comprehensive loss					(5,588	)	(1,894	)	(7,482	)	(87	)	(7,569	)
Issuance of hybrid bond			398,518						398,518				398,518
Interest on hybrid bond					(1,058	)			(1,058	)			(1,058	)
Treasury stock			176,085						176,085				176,085
Business combination under common control			(61,854	)					(61,854	)			(61,854	)
Changes in ownership in subsidiaries			(2,002	)					(2,002	)	(206,414	)	(208,416	)
Balance, June 30, 2013	￦	44,639	221,864		12,353,372		(27,530	)	12,592,345		784,108		13,376,453
Balance, January 1, 2014		44,639	317,508		13,102,495		(12,270	)	13,452,372		714,185		14,166,557
Cash dividends					(595,865	)			(595,865	)	(170	)	(596,035	)
Total Comprehensive Income
Profit (loss) for the period					768,350				768,350		(3,402	)	764,948
Other comprehensive loss					(11,937	)	(81,794	)	(93,731	)	(1,498	)	(95,229	)
Interest on hybrid bond					(8,420	)			(8,420	)			(8,420	)
Business combination under common control			(28,641	)					(28,641	)			(28,641	)
Changes in ownership in subsidiaries			(141	)					(141	)	141
Balance, June 30, 2014	￦	44,639	288,726		13,254,623		(94,064	)	13,493,924		709,256		14,203,180

See accompanying notes to the condensed consolidated interim financial statements .

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the six-month periods ended June 30, 2014 and 2013

(In millions of won)
Cash flows from operating activities:
Cash generated from operating activities
Profit for the period	￦	764,948		813,645
Adjustments for income and expenses	38	1,528,742		1,615,747
Changes in assets and liabilities related to operating activities	38	(710,051	)	(885,694	)
Sub-total		1,583,639		1,543,698
Interest received		23,348		30,806
Dividends received		10,567		10,197
Interest paid		(141,322	)	(161,347	)
Income tax paid		(100,204	)	(48,777	)
Net cash provided by operating activities		1,376,028		1,374,577
Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term financial instruments, net				145,242
Decrease in short-term investment securities, net		55,007
Collection of short-term loans		73,766		173,811
Proceeds from disposal of long-term financial instruments		11		15
Proceeds from disposal of long-term investment securities		47,431		175,788
Proceeds from disposal of investments in associates and joint ventures		4		1,250
Proceeds from disposal of property and equipment		4,049		6,782
Proceeds from disposal of intangible assets		1,441		1,068
Proceeds from disposal of assets held for sale		1,056		190,393
Collection of long-term loans		2,398		9,577
Decrease of deposits		4,136		7,274
Proceeds from disposal of other non-current assets		90		1,197
Proceeds from disposal of a subsidiary				7,221
Sub-total		189,389		719,618
Cash outflows for investing activities:
Increase in short-term financial instruments, net		(9,379	)
Increase in short-term investment securities, net				(5,006	)
Increase in short-term loans		(88,101	)	(168,592	)
Increase in long-term loans		(2,450	)	(1,647	)
Increase in long-term financial instruments				(4	)
Acquisition of long-term investment securities		(19,805	)	(10,463	)
Acquisition of investments in associates and joint ventures		(29,809	)	(66,532	)
Acquisition of property and equipment		(1,331,556	)	(1,085,500	)
Acquisition of intangible assets		(38,114	)	(46,563	)
Increase in deposits		(2,643	)	(13,758	)
Increase in other non-current assets				(6,645	)
Acquisition of business, net of cash acquired		(118,667	)	(94,805	)
Sub-total		(1,640,524	)	(1,499,515	)
Net cash used in investing activities	￦	(1,451,135	)	(779,897	)

See accompanying notes to the condensed consolidated interim financial statements .

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2014 and 2013

(In millions of won)	June 30, 2014
Cash flows from financing activities:
Cash inflows from financing activities:
Proceeds from short-term borrowings	￦	608,000		44,000
Issuance of debentures		627,970		1,014,859
Proceeds from long-term borrowings		13,552		8,600
Issuance of hybrid bond				398,518
Cash inflows from settlement of derivatives		119		2,267
Sub-total		1,249,641		1,468,244
Cash outflows for financing activities:
Repayment of short-term borrowings				(583,745	)
Repayment of long-term account payablesother		(207,668	)	(161,575	)
Repayment of debentures		(406,149	)
Repayment of long-term borrowings		(11,916	)	(355,122	)
Cash outflows from settlement of derivatives		(373	)
Payment of finance lease liabilities		(10,250	)	(10,389	)
Payment of dividends		(595,865	)	(587,680	)
Payment of interest on hybrid bond		(8,420	)
Cash paid for transactions with non-controlling interest				(3,871	)
Sub-total		(1,240,641	)	(1,702,382	)
Net cash provided by (used in) financing activities		9,000		(234,138	)
Net increase (decrease) in cash and cash equivalents		(66,107	)	360,542
Cash and cash equivalents at beginning of the period		1,398,639		920,125
Effects of exchange rate changes on cash and cash equivalents		(1,269	)	2,076
Cash and cash equivalents at end of the period	￦	1,331,263		1,282,743

See accompanying notes to the condensed consolidated interim financial statements .

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Reporting Entity

(1) General

SK Telecom Co., Ltd. (the Parent Company) was incorporated in March 1984 under the laws of the 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 Companys 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 June 30, 2014, the Parent Companys total issued shares are held by the following:

SK Holdings Co., Ltd.	20,363,452	25.22
National Pension Service, other institutional investors and other minority stockholders	50,572,884	62.63
Treasury stock	9,809,375	12.15
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). SK Holdings Co., Ltd. is the ultimate controlling entity of the Parent Company.

(2) List of subsidiaries

The list of subsidiaries as of June 30, 2014 and December 31, 2013 is as follows:

Subsidiary	Location	Primary business	Ownership(%) — June 30, 2014	December 31, 2013
SK Telink Co., Ltd.	Korea	Telecommunication service	83.5	83.5
M& Service Co., Ltd.	Korea	Database and online information agency	100.0	100.0
SK Communications Co., Ltd.	Korea	Internet website services	64.6	64.6
Stonebridge Cinema Fund	Korea	Investment association	56.0	56.0
Commerce Planet Co., Ltd.	Korea	Online shopping mall operation agency	100.0	100.0
SK Broadband Co., Ltd.	Korea	Telecommunication services	50.6	50.6
K-net Culture and Contents Venture Fund	Korea	Investment association	59.0	59.0
Fitech Focus Limited Partnership II	Korea	Investment association	66.7	66.7
Open Innovation Fund	Korea	Investment association	98.9	98.9
PS&Marketing Corporation	Korea	Communications device retail business	100.0	100.0
Service Ace Co., Ltd.	Korea	Customer center management service	100.0	100.0
Service Top Co., Ltd.	Korea	Customer center management service	100.0	100.0
Network O&S Co., Ltd.	Korea	Base station maintenance service	100.0	100.0
BNCP Co., Ltd.	Korea	Internet website services	100.0	100.0

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Reporting Entity, Continued

(2) List of subsidiaries, Continued

Subsidiary	Location	Primary business	Ownership(%) — June 30, 2014	December 31, 2013
SK Planet Co., Ltd.	Korea	Telecommunication service	100.0		100.0
Neosnetworks Co., Ltd.(*1)	Korea	Guarding of facilities	66.7	(*2)
SK Telecom China Holdings Co., Ltd.	China	Investment association	100.0		100.0
Shenzhen E-eye High Tech Co., Ltd.	China	Manufacturing	65.5		65.5
SK Global Healthcare Business Group., Ltd.	Hong Kong	Investment association	100.0		100.0
SK Planet Japan	Japan	Digital contents sourcing service	100.0		100.0
SKT Vietnam PTE. Ltd.	Singapore	Telecommunication service	73.3		73.3
SK Planet Global PTE. Ltd.	Singapore	Digital contents sourcing service	100.0		100.0
SKP GLOBAL HOLDINGS PTE. LTD.	Singapore	Investment association	100.0		100.0
SKT Americas, Inc.	USA	Information gathering and consulting	100.0		100.0
SKP America LLC.	USA	Digital contents sourcing service	100.0		100.0
YTK Investment Ltd.	Cayman	Investment association	100.0		100.0
Atlas Investment	Cayman	Investment association	100.0		100.0
Technology Innovation Partners, LP	USA	Investment association	100.0		100.0
SK Telecom China Fund I L.P.	Cayman	Investment association	100.0		100.0

(*1) Changes in subsidiaries are explained in Note 1-(4).

(*2) Due to the shareholders agreement which grants put option to the non-controlling shareholders, this entity is consolidated as a wholly owned subsidiary in the consolidated financial statements. (Refer to Note 10)

In accordance with the Groups 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 their financial statements are not material considering both individual and overall quantitative and qualitative effects, although the Group controls those subsidiaries.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Reporting Entity, Continued

(3) Condensed financial information of subsidiaries

Condensed financial information of subsidiaries as of and for the six-month period ended June 30, 2014 is as follows:

(In millions of won) — Subsidiary	Total assets	Total liabilities	Total equity (deficit)		Revenue	Profit (loss)
SK Telink Co., Ltd.	￦	294,028	162,212	131,816		228,125	5,190
M& Service Co., Ltd.		72,675	32,471	40,204		63,580	4,538
SK Communications Co., Ltd.		187,238	45,939	141,299		47,769	(10,632	)
Stonebridge Cinema Fund		12,077	382	11,695			98
Commerce Planet Co., Ltd.		25,739	27,024	(1,285	)	31,080	285
SK Broadband Co., Ltd.		3,031,748	1,904,985	1,126,763		1,289,652	1,411
K-net Culture and Contents Venture Fund		15,863	7	15,856			(313	)
Fitech Focus Limited Partnership II		19,744		19,744			(1,634	)
Open Innovation Fund		26,050		26,050			(1,973	)
PS&Marketing Corporation		709,403	506,473	202,930		705,905	(3,846	)
Service Ace Co., Ltd.		64,695	38,505	26,190		97,659	1,184
Service Top Co., Ltd.		59,668	38,358	21,310		87,721	4,416
Network O&S Co., Ltd.		60,830	33,105	27,725		101,143	3,525
BNCP Co., Ltd.		10,837	6,202	4,635		6,682	(1,040	)
SK Planet Co., Ltd.		2,544,743	742,864	1,801,879		709,050	1,686
Neosnetworks Co., Ltd.(*1)		29,843	8,599	21,244		15,234	872
SK Telecom China Holdings Co., Ltd.		34,658	644	34,014		5,967	656
Shenzhen E-eye High Tech Co., Ltd.		15,616	721	14,895		2,296	(154	)
SK Global Healthcare Business Group., Ltd.		26,599		26,599			(16	)
SK Planet Japan		4,412	49	4,363		21	(486	)
SKT Vietnam PTE. Ltd.		3,916	1,086	2,830			33
SK Planet Global PTE. Ltd.		1,807	247	1,560		9	(767	)
SKP GLOBAL HOLDINGS PTE. LTD.		17,577	25	17,552			(2,786	)
SKT Americas, Inc.		33,790	247	33,543		4,826	223
SKP America LLC.		43,802		43,802
YTK Investment Ltd.		40,485		40,485
Atlas Investment(*2)		60,125	132	59,993			(2,179	)

(*1) Changes in subsidiaries are explained in Note 1-(4).

(*2) The condensed 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.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Reporting Entity, Continued

(3) Condensed financial information of subsidiaries, Continued

Condensed financial information of subsidiaries as of and for the year ended December 31, 2013 is as follows:

(In millions of won) — Subsidiary	Total assets	Total liabilities	Total equity (deficit)		Revenue	Profit (loss)
SK Telink Co., Ltd.	￦	252,475	125,807	126,668		433,276	16,024
M& Service Co., Ltd.		68,587	32,626	35,961		130,178	4,176
SK Communications Co., Ltd.		205,792	53,755	152,037		128,272	(41,893	)
Stonebridge Cinema Fund		11,974	377	11,597		1	1,320
Commerce Planet Co., Ltd.		26,237	27,333	(1,096	)	56,565	587
SK Broadband Co., Ltd.		3,044,349	1,916,721	1,127,628		2,539,366	12,306
K-net Culture and Contents Venture Fund		16,181	12	16,169			(16,595	)
Fitech Focus Limited Partnership II		21,446		21,446			(1,179	)
Open Innovation Fund		27,996		27,996			(15,408	)
PS&Marketing Corporation		277,300	141,356	135,944		1,095,647	1,369
Service Ace Co., Ltd.		56,276	30,667	25,609		187,961	2,995
Service Top Co., Ltd.		48,369	30,634	17,735		159,364	3,484
Network O&S Co., Ltd.		56,677	32,353	24,324		198,664	2,060
BNCP Co., Ltd.		12,108	6,433	5,675		14,819	(9,019	)
SK Planet Co., Ltd.		2,528,054	766,841	1,761,213		1,378,211	201,556
SK Telecom China Holdings Co., Ltd.		36,261	2,052	34,209		17,025	613
Shenzhen E-eye High Tech Co., Ltd.		17,894	1,841	16,053		7,703	(789	)
SK Global Healthcare Business Group., Ltd.		27,625		27,625			831
SK Planet Japan		1,793	280	1,513		394	(1,635	)
SKT Vietnam PTE. Ltd.		11,773	8,862	2,911			(28,086	)
SK Planet Global PTE. Ltd.		697	149	548		331	(1,420	)
SKP GLOBAL HOLDINGS PTE. LTD.		20,713	9	20,704			1,542
SKT Americas, Inc.		33,876	1,315	32,561		9,207	(6,544	)
SKP America LLC.		22,399	12	22,387
YTK Investment Ltd.		42,118		42,118			(21,764	)
Atlas Investment(*1)		40,218	101	40,117			(8,248	)

(*1) The condensed 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.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Reporting Entity, Continued

(4) Changes in subsidiaries

Neosnetworks Co., Ltd. was newly included in the list of subsidiaries as the Group acquired controlling ownership interest in Neosnetworks Co., Ltd. There have been no changes to other subsidiaries during the six-month period ended June 30, 2014.

(5) The information of significant non-controlling interests of consolidated entities as of and for the six-month period ended June 30, 2014, and as of and for the year ended December 31, 2013 is as follows:

(In millions of won)
	June 30, 2014
	SK Communications Co., Ltd.		SK Broadband Co., Ltd.
Ownership of non-controlling interests (%)		35.4		49.4
Current assets	￦	97,275		525,084
Non-current assets		89,963		2,506,664
Current liabilities		(43,913	)	(750,591	)
Non-current liabilities		(2,026	)	(1,154,394	)
Net assets		141,299		1,126,763
Adjustment for fair value				112,520
Net assets of consolidated entities		141,299		1,239,283
Carrying amount of non-controlling interests		50,101		612,658
Revenue	￦	47,769		1,289,652
Profit (loss) for the period		(10,632	)	1,411
Amortization of adjustment for fair value				(958	)
Profit (loss) of the consolidated entities		(10,632	)	453
Total comprehensive loss		(10,738	)	(1,824	)
Profit (loss) attributable to non-controlling interests		(3,770	)	224
Net cash provided by (used in) operating activities	￦	(2,672	)	234,313
Net cash provided by (used in) investing activities		284		(274,911	)
Net cash provided by financing activities				53,346
Net increase (decrease) in cash and cash equivalents		(2,388	)	12,748

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Reporting Entity, Continued

(In millions of won)
	December 31, 2013
	SK Communications Co., Ltd.		SK Broadband Co., Ltd.
Ownership of non-controlling interests(%)		35.4		49.4
Current assets	￦	108,100		533,597
Non-current assets		97,692		2,510,752
Current liabilities		(51,868	)	(938,385	)
Non-current liabilities		(1,887	)	(978,336	)
Net assets		152,037		1,127,628
Adjustment for fair value				113,478
Net assets of consolidated entities		152,037		1,241,106
Carrying amount of non-controlling interests		53,856		613,560
Revenue	￦	128,272		2,539,366
Profit (loss) for the period		(41,893	)	12,306
Amortization of adjustment for fair value				(30,977	)
Loss of the consolidated entities		(41,893	)	(18,671	)
Total comprehensive loss		(43,318	)	(13,059	)
Loss attribute to non-controlling interests		(14,853	)	(9,231	)
Net cash provided by (used in) operating activities	￦	(22,867	)	440,036
Net cash provided by (used in) Investing activities		41,788		(329,346	)
Net cash provided by (used in) financing activities		19		(129,181	)
Net increase (decrease) in cash and cash equivalents		18,940		(18,491	)

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Basis of Preparation

(1) Statement of compliance

The condensed consolidated interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards (K-IFRS), as prescribed in the Act on External Audits of Stock Companies .

These condensed consolidated interim financial statements were prepared in accordance with K-IFRS No. 1034, Interim Financial Reporting as part of the period covered by the Groups K-IFRS annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Group since the last annual consolidated financial statements as at and for the year ended December 31, 2013. These condensed consolidated interim financial statements do not include all of the disclosures required for full annual financial statements.

(2) Use of estimates and judgments

1) Assumptions and estimation uncertainties

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 Groups 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, 2013.

2) Fair value measurement

The Group establishes fair value measurement policies and procedures as its accounting policies and disclosures require fair value measurements for the majority of financial and non-financial assets and liabilities. Such policies and procedures are executed by the valuation division, which is responsible for the review of significant fair value measurements including fair value classified as level 3 in the fair value hierarchy and the results of which are directly reported to the finance executive.

The valuation division regularly reviews unobservable significant inputs and valuation adjustments. If third party information such as prices available from an exchange, dealer, broker, industry group, pricing service or regulatory agency is used for fair value measurements, the valuation division reviews whether the valuation based on third party information includes classification by levels within the fair value hierarchy and meets the requirements for the relevant standards.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Basis of Preparation, Continued

The Group uses the best observable inputs in market when measuring fair values of assets or liabilities. Fair values are classified within the fair value hierarchy based on inputs used in valuation method, as follows:

ü Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

ü 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)

ü Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

If various inputs used to measure fair value of assets or liabilities are transferred between levels of the fair value hierarchy, the Group classifies the assets and liabilities at the lowest level of inputs among the fair value hierarchy which is significant to the entire measured value and recognizes transfers between levels at the end of the reporting period of which such transfers occurred.

Information about assumptions used for fair value measurements are included in Note 34.

(3) Common control transactions

SK Holdings Co., Ltd. (the Ultimate Controlling Entity) is the ultimate controlling entity of the Parent Company because it has de facto control of the Parent Company. Accordingly, gains and losses from business acquisitions and dispositions involving entities that are under the control of the Ultimate Controlling Entity are accounted for as common control transactions within equity.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Significant Accounting Policies

Except as described below, 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, 2013. The following changes in accounting policy are also expected to be reflected in the Groups consolidated financial statements as at and for the year ending December 31, 2014.

(1) Changes in accounting policies

1) Offsetting financial assets and financial liabilities

The Group has applied the amendments to K-IFRS No.1032, Financial instruments: Presentation since January 1, 2014. This standard requires financial assets and financial liabilities being offset and the presentation of financial assets and financial liabilities on a net basis when, and only when, the Group currently has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

The right of set-off that cannot be contingent on a future event, and must be legally enforceable in all of the following circumstances: (i) the normal course of business; (ii) an event of default; and (iii) an event of insolvency or bankruptcy of the entity or any of the counterparties.

To meet the net settlement criterion, all settlements need to remove or reduce credit risk or liquidity risk as minor level. In case of single payment or payment period which can handle bonds and payables, settlement result needs to be paid as same as practical settle net.

There is no material impact of the application of this amendment on the consolidated financial statements.

Operating Segments

The Groups operating segments have been determined to be each business unit, for which the Group provides independent services and merchandise. The Groups reportable segments are: 1) cellular services, which include cellular voice service, wireless data service and wireless internet services, and 2) fixed-line telecommunication services, which include telephone services, internet services, and leased line services. All other operating segments, which include the Groups internet portal services and other operations, do not meet the quantitative thresholds to be considered reportable segments and are presented as other.

Cellular services include cellular voice service, wireless data service and wireless internet services. Fixed-line telecommunication services include telephone services, internet services, and leased line services. Other includes the Groups Internet portal services, game manufacturing and other immaterial operations.

Segment information of the Group for the six-month period ended June 30, 2013 has been retrospectively restated to exclude discontinued operations.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Operating Segments, Continued

(1) Details of the segment information as of and for the six-month period ended June 30, 2014 are as follows:

(In millions of won)	Cellular Services	Fixed-line Telecommunication services	Other		Sub-total	Consolidation adjustments		Consolidated amount
Total revenue	￦	7,520,742	1,517,777	878,927		9,917,446	(1,410,158	)	8,507,288
Inter-segment revenue		745,251	289,670	375,237		1,410,158	(1,410,158	)
External revenue		6,775,491	1,228,107	503,690		8,507,288			8,507,288
Depreciation and amortization		1,035,809	247,530	40,924		1,324,263			1,324,263
Operating income (loss)		788,831	25,865	(16,206	)	798,490			798,490
Finance income (cost), net									(124,537	)
Gain relating to investments in subsidiaries, associates and joint ventures, net									294,702
Other non-operating income (expense), net									(28,702	)
Profit from continuing operations before income tax									940,583
Total assets		23,386,690	3,325,776	3,089,274		29,801,740	(2,774,091	)	27,027,649
Total liabilities		9,958,215	2,067,197	866,318		12,891,730	(67,261	)	12,824,469

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Operating Segments, Continued

(2) Details of the segment information as of and for the six-month period ended June 30, 2013 are as follows:

(In millions of won)	Cellular Services	Fixed-line Telecommunication services	Other		Sub-total	Consolidation adjustments		Consolidated amount
Total revenue	￦	7,150,041	1,426,555	814,214		9,390,810	(1,208,191	)	8,182,619
Inter-segment revenue		579,738	277,619	350,834		1,208,191	(1,208,191	)
External revenue		6,570,303	1,148,936	463,380		8,182,619			8,182,619
Depreciation and amortization		988,647	260,760	59,086		1,308,493			1,308,493
Operating income (loss)		960,838	22,598	(33,464	)	949,972			949,972
Finance income (cost), net									(247,285	)
Gain relating to investments in subsidiaries, associates and joint ventures, net									349,603
Other non-operating income (expense), net									(39,414	)
Profit from continuing operations before income tax									1,012,876
Total assets		22,626,393	3,094,795	3,122,979		28,844,167	(3,407,759	)	25,436,408
Total liabilities		9,553,776	1,856,430	953,417		12,363,623	(303,668	)	12,059,955

Intersegment sales and purchases are conducted on an arms-length basis and eliminated on consolidation. Since there are no intersegment sales of inventory, there is no unrealized intersegment profit to be eliminated on consolidation. The Group principally operates its business in its domestic market in Korea and the amounts outside of Korea are immaterial, therefore no entity-wide geographical information is presented.

No single customer contributed 10% or more to the Groups total revenue for the six-month periods ended June 30, 2014 and 2013.

Restricted Deposits

Deposits which are restricted in use as of June 30, 2014 and December 31, 2013 are summarized as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Short-term financial instruments(*)	￦	78,885	81,634
Long-term financial instruments(*)		7,595	7,589
Guarantee deposits		40	40
	￦	86,520	89,263

(*) Financial instruments include charitable trust fund established by the Group. Profits from this charitable fund are donated to charitable institutions. As of June 30, 2014, the fund cannot be withdrawn.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Trade and Other Receivables

(1) Details of trade and other receivables as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014 — Gross amount	Allowances for impairment		Carrying amount
Current assets:
Accounts receivabletrade	￦	2,710,738	(227,647	)	2,483,091
Short-term loans		83,736	(769	)	82,967
Accounts receivableother		822,477	(74,999	)	747,478
Accrued income		14,381	(28	)	14,353
Others		3,033			3,033
		3,634,365	(303,443	)	3,330,922
Non-current assets:
Long-term loans		94,897	(26,585	)	68,312
Long-term accounts receivableother		2,490			2,490
Guarantee deposits		280,185			280,185
Long-term accounts receivabletrade		12,874			12,874
		390,446	(26,585	)	363,861
	￦	4,024,811	(330,028	)	3,694,783
(In millions of won)	December 31, 2013
	Gross amount	Allowances for impairment		Carrying amount
Current assets:
Accounts receivabletrade	￦	2,482,001	(224,685	)	2,257,316
Short-term loans		80,129	(734	)	79,395
Accounts receivableother		715,405	(71,802	)	643,603
Accrued income		11,970	(29	)	11,941
Others		2,548			2,548
		3,292,053	(297,250	)	2,994,803
Non-current assets:
Long-term loans		84,176	(26,734	)	57,442
Guarantee deposits		249,600			249,600
Long-term accounts receivabletrade		13,154			13,154
		346,930	(26,734	)	320,196
	￦	3,638,983	(323,984	)	3,314,999

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Trade and Other Receivables, Continued

(2) The movements in allowances for doubtful accounts of trade and other receivables during the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2014		June 30, 2013
Balance at January 1	￦	323,984		300,668
Increase of bad debt		31,678		46,967
Write-off		(38,532	)	(39,337	)
Others		12,898		13,351
Balance at June 30	￦	330,028		321,649

(3) Details of overdue but not impaired, and impaired trade and other receivables as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)
	June 30, 2014				December 31, 2013
	Accounts receivable - trade		Other receivables		Accounts receivable - trade		Other receivables
Neither overdue nor impaired	￦	1,926,629		1,149,151		1,882,607		938,131
Overdue but not impaired		61,980		1,925		46,773		2,030
Impaired		735,003		150,123		565,775		203,667
		2,723,612		1,301,199		2,495,155		1,143,828
Allowance for doubtful accounts		(227,647	)	(102,381	)	(224,685	)	(99,299	)
	￦	2,495,965		1,198,818		2,270,470		1,044,529

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 June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)
	June 30, 2014		December 31, 2013
	Accounts receivable - trade	Accounts receivable - other	Accounts receivable - trade	Accounts receivable - other
Less than 1 month	￦	30,264	5	12,036	20
1 ~ 3 months		11,809	647	15,686	1,220
3 ~ 6 months		4,573	397	3,610	516
More than 6 months		15,334	876	15,441	274
	￦	61,980	1,925	46,773	2,030

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Inventories

Details of inventories as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)
	June 30, 2014				December 31, 2013
	Acquisition cost	Write-down of inventory		Carrying amount	Acquisition cost	Write-down of inventory		Carrying amount
Merchandise	￦	391,121	(4,697	)	386,424	165,080	(3,152	)	161,928
Finished goods		1,911			1,911	1,711	(34	)	1,677
Raw materials and supplies		11,564			11,564	13,515			13,515
	￦	404,596	(4,697	)	399,899	180,306	(3,186	)	177,120

Investment Securities

(1) Details of short-term investment securities as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Beneficiary certificates(*)	￦	48,125	102,828
Current portion of long-term investment securities		6,073	3,240
	￦	54,198	106,068

(*) The interest distributions arising from beneficiary certificates as of June 30, 2014 were accounted for as accrued income.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Investment Securities, Continued

(2) Details of long-term investment securities as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)
	June 30, 2014		December 31, 2013
Equity securities:
Marketable equity securities	￦	630,723		638,445
Unlisted equity securities		51,181		47,145
Equity investments		206,191		239,354
		888,095		924,944
Debt securities:
Public bonds(*1)		353		356
Investment bonds(*2)		42,235		46,467
		42,588		46,823
Total		930,683		971,767
Less current portion of long-term investment securities		(6,073	)	(3,240	)
Long-term investment securities	￦	924,610		968,527

(*1) Details of maturity for the public bonds as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Less than 1 year	￦	353	356

(*2) During the six-month period ended June 30, 2014, the Parent Company exercised the conversion right for the convertible bonds of NanoEnTek, Inc., which were classified as financial assets at fair value through profit or loss. As a result of this transaction, investments in associates have increased by ￦19,180 million and the difference between carrying amount of the financial assets at fair value and fair value of ￦1,352 million is accounted for as finance costs.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Assets Held for Sale

Non-current assets held for sale as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Investments in associates
TR Entertainment(*1)	￦	2,611	2,611
SK Fans Co., Ltd.(*2)			1,056
	￦	2,611	3,667

(*1) A disposal contract for the Groups entire ownership interests in TR Entertainment was entered into during the year ended December 31, 2013 and the investment in the associate was reclassified to non-current assets held for sale and an impairment loss of ￦4,019 million was recognized.

(*2) For the year ended December 31, 2013, contract changes for SK Fans Co., Ltd. has been made and the Group recognized the difference between the changes and the existing contractual amount as impairment loss. For the six-month period ended June 30, 2014, the Group disposed of its investments in SK Fans Co., Ltd. in 2014.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Acquisition of Subsidiary

(1) General information

On April 2, 2014, the Parent Company acquired the ownership interest of 66.7% of Neosnetworks Co., Ltd., which manages facility guarding services, in order to secure newly developing power considering the physical security market and obtained the control over Neosnetworks Co., Ltd..

Neosnetworks Co., Ltd. recognized revenue of ￦7,676 million and profit of ￦584 million, respectively, from the acquisition date to June 30, 2014.

(2) Consideration paid and identifiable assets and liabilities transferred

Consideration paid and identifiable assets acquired and liabilities assumed recognized at the acquisition date are as follows:

(In millions of won)
	April 2, 2014
Consideration paid
Cash and cash equivalents	￦	23,968
Account payablesother (*)		14,500
		38,468
Assets and liabilities in succession
Cash and cash equivalents	￦	16,631
Accounts receivabletrade, net		111
Property, equipment and intangible assets		11,489
Investment securities		132
Other assets		1,157
Accounts payabletrade		(3,411	)
Borrowings and debentures		(2,150	)
Other liabilities		(3,305	)
	￦	20,654

(*) During the 6 months ended June 30, 2014, the Parent Company acquired 31,310 shares of Neosnetworks Co., Ltd. (the ownership interest of 66.7%) by purchasing old shares from the pre-existing shareholders and participating in the capital increase The Parent Company entered into a shareholders agreement which granted put options to the pre-existing shareholders for the remaining equity interest of Neosnetworks Co., Ltd. and call options to the Parent Company for those shares if certain conditions are met. In accordance with this shareholders agreement, the Group assumed that the residual equity of the pre-existing shareholders were obtained on the acquisition date, and the amount to be paid to the pre-existing shareholders for this acquisition in the future was recorded as account payables-other.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Business combination under common control

(1) General information

PS&Marketing Corporation, a subsidiary of the Parent Company, acquired the retail distribution business of IT service department of SK Networks Co., Ltd. on April 30, 2014 in order to strengthen the mid/long-term distribution competitiveness by expanding the retail infrastructure and enlarging the direct management network.

From the acquisition date to June 30, 2014, PS&Marketing Corporation recognized revenue of ￦152,479 million and profit of ￦975 million, respectively, relating to the acquired retail distribution business.

In January 2013, the Parent Company acquired the ownership interest of 50% of SK Marketing & Company Co., Ltd., advertising and e-commerce agency, from SK Innovation Co., Ltd., a related party under common control, through additional purchase of shares and obtained the control over SK Marketing & Company Co., Ltd., and its subsidiary, M&Service Co., Ltd.

Prior to the acquisition, the Parent Company owns 50% ownership of SK Marketing & Company Co., Ltd. After obtaining the control over SK Marketing & Company Co., Ltd, the Parent Company acquired the shares of SK Planet Co., Ltd. by investing its ownership interest of 100% of SK Marketing & Company Co., Ltd. as a form of investment in kind. On February 1, 2013, SK Planet Co., Ltd. merged SK Marketing & Company Co., Ltd.

As the business combination occurred during the six-month period ended June 30, 2013 was a business combination between entities under common control, the difference between the consideration and book value of net assets was recognized as capital deficit and other capital adjustments.

(2) Consideration paid and identifiable assets and liabilities transferred

(In millions of won)
	Jun 30, 2014		Jun 30, 2013
Consideration paid
Cash and cash equivalents	￦	111,330		190,605
Investments in associates (carrying value)				141,534
Accounts payablesother		13,156
		124,486		332,139
Identifiable assets and liabilities transferred
Cash and cash equivalents	￦			95,800
Accounts receivabletrade, net		57,760		132,514
Inventories		94,441		3,472
Property, equipment and intangible assets		13,010		68,699
Other assets		23,281		457,431
Accounts payabletrade		(78,821	)	(150,014	)
Other liabilities		(13,826	)	(337,617	)
	￦	95,845		270,285

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Investments in Associates and Joint Ventures

(1) Investments in associates and joint ventures accounted for using the equity method as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	Country	June 30, 2014 — Ownership percentage	Carrying amount	Ownership percentage		Carrying amount
Investments in associates
SK China Company Ltd.(*1)	China	9.6		34,732	9.6	￦	37,434
Korea IT Fund(*2)	Korea	63.3		233,218	63.3		231,402
Etoos Co., Ltd.(*3)	Korea				15.6		12,029
HanaSK Card Co., Ltd.	Korea	49.0		376,817	49.0		378,616
Candle Media Co., Ltd.(*4)	Korea	36.5		18,999	40.9		21,241
NanoEnTek, Inc.(*5)	Korea	26.0		36,279	9.2		9,312
SK Industrial Development China Co., Ltd.	Hongkong	21.0		74,720	21.0		77,517
Packet One Network	Malaysia	27.0		53,580	27.0		60,706
SK Technology Innovation Company	Cayman	49.0		50,324	49.0		53,874
HappyNarae Co., Ltd.	Korea	42.5		14,834	42.5		13,935
SK hynix Inc.(*6)	Korea	20.4		4,224,260	20.6		3,943,232
SK MENA Investment B.V.	Nederland	32.1		12,955	32.1		13,477
SKY Property Mgmt. Ltd.	Virgin Islands	33.0		232,257	33.0		238,278
Xinan Tianlong Science and Technology Co., Ltd.	China	49.0		26,546	49.0		26,562
Daehan Kanggun BcN Co., Ltd. and others				160,180			164,976
Sub-total				5,549,701			5,282,591
Investments in joint ventures
Dogus Planet, Inc.(*7)	Turkey	50.0		24,081	50.0		10,105
PT. Melon Indonesia	Indonesia	49.0		3,304	49.0		3,230
Television Media Korea Ltd.	Korea	51.0		7,516	51.0		8,659
PT XL Planet Digital	Indonesia	50.0		17,535	50.0		20,712
Sub-total				52,436			42,706
Total			￦	5,602,137		￦	5,325,297

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Investments in Associates and Joint Ventures, Continued

(*1) The Group classified the investments in SK China Company Ltd as investments in associates as the Group can exercise significant influence on these investees through participation of their board of directors.

(*2) 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.

(*3) Reclassified as available-for-sale financial assets in 2014 as the Group lost the right to appoint directors of this investee and lost significant influence on the investee.

(*4) Ownership percentage has reduced due to disproportionate paid-in capital increase during the six-month period ended June 30, 2014.

(*5) The carrying amount has increased due to the additional investment and the conversion of convertible bonds during the six-month period ended June 30, 2014.

(*6) Ownership percentage has been decreased due to the conversion of convertible bonds issued by SK hynix Inc.

(*7) The carrying amount has increased due to additional investment during the six-month period ended June 30, 2014.

(2) There is no joint venture listed publicly and the market price of investments in associates listed publicly as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won, except for share and per share data)
	June 30, 2014			December 31, 2013
	Market value per share	Number of shares held	Market price	Market value per share	Number of shares held	Market price
Candle Media Co., Ltd.	￦	888	21,620,360	19,199	810	21,620,360	17,512
NanoEnTek, Inc.		6,400	5,870,290	37,570	5,170	1,807,130	9,343
SK hynix Inc.		48,550	146,100,000	7,093,155	36,800	146,100,000	5,376,480

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Investments in Associates and Joint Ventures, Continued

(3) The condensed financial information of the major investees as of and for the six-month period ended June 30, 2014 and as of and for the year ended December 31, 2013 are as follows:

(In millions of won)	As of and for the six-month period ended June 30, 2014
	SK hynix Inc.		HanaSK Card Co., Ltd.		SKY Property Mgmt. Ltd.		Korea IT Fund
Current assets	￦	7,171,103		3,603,453		133,888		131,655
Non-current assets		15,385,603		666,191		629,480		236,741
Current liabilities		4,853,122		446,934		146,218
Non-current liabilities		3,093,600		3,134,715		133,666
Revenue		7,665,565		397,097		39,522		9,033
Profit (loss) from continuing operations		1,476,004		16		7,022		(634	)
Other comprehensive loss		(203,077	)	(848	)	(5,694	)
Total comprehensive income (loss)		1,272,927		(832	)	1,328		(634	)

(In millions of won)	As of and for the year ended December 31, 2013 — SK hynix Inc.	HanaSK Card Co., Ltd.	SKY Property Mgmt. Ltd.	Korea IT Fund
Current assets	￦	6,653,123	4,687,020	106,122	132,968
Non-current assets		14,144,175	211,376	695,653	232,566
Current liabilities		3,078,240	2,053,942	137,544	6
Non-current liabilities		4,652,200	2,155,165	163,540
Revenue		14,165,102	853,506	76,834	8,161
Profit from continuing operations		2,872,857	3,521	14,408	2,128
Other comprehensive income		6,594	1,906	55,403
Total comprehensive income		2,879,451	5,427	69,811	2,128

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Investments in Associates and Joint Ventures, Continued

(4) The condensed financial information of joint ventures as of and for the six-month period ended June 30, 2014 and as of and for the year ended December 31, 2013 are as follows:

(In millions of won)	As of and for six-month period ended June 30, 2014
	Television Media Korea Ltd.		Dogus Planet, Inc.		PT. Melon Indonesia		PT XL Planet Digital
Current assets	￦	16,307		47,598		7,204		31,410
Cash and cash equivalents		2,531		43,000		4,002		30,090
Non-current assets		3,985		10,419		3,246		7,486
Current liabilities		5,662		12,258		3,559		3,839
Account payable, other payables and provisions		5,662		12,258		3,559		3,839
Non-current liabilities		367		48		98
Account payable, other payables and provisions		367		48		98
Revenue		7,449		8,554		5,451		8
Depreciation and amortization		(41	)	(1,148	)	(453	)	(118	)
Interest income		149		755		125
Interest expense				(5	)
Income Tax expense								(959	)
Profit (loss) from continuing operations		(2,242	)	(13,246	)	387		(2,929	)
Total comprehensive income (loss)		(2,242	)	(13,246	)	387		(2,929	)

(In millions of won)	As of and for the year ended December 31, 2013
	Television Media Korea Ltd.		Dogus Planet, Inc.		PT. Melon Indonesia		PT XL Planet Digital
Current assets	￦	18,106		25,508		7,423		31,241
Cash and cash equivalents		14,532		10,723		4,428		30,288
Non-current assets		5,143		9,935		1,658		5,801
Current liabilities		6,385		15,471		2,338		2,133
Account payable, other payables and provisions		6,385		15,386		2,338		2,133
Non-current liabilities		359		142		100		14
Account payable, other payables and provisions		359		1				14
Revenue		14,139		7,509		7,475
Depreciation and amortization		(4,004	)	(1,315	)	(397	)	(84	)
Interest income		410		1,598		289		357
Interest expense				(29	)			(3	)
Income tax expense								(513	)
Profit (loss) from continuing operations		(6,021	)	(29,278	)	(575	)	3,606
Total comprehensive income (loss)		(6,021	)	(29,278	)	(575	)	3,606

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Investments in Associates and Joint Ventures, Continued

(5) Reconciliations of financial information of significant associates to carrying amounts of investments in associates in the consolidated financial statements as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014 — Net assets	Ownership interests (%)	Net assets attributable to the ownership interests	Cost-book value differentials	Carrying amount
Associates:
SK hynix Inc.(*)	￦	14,610,062	20.4	2,980,452	1,243,808	4,224,260
HanaSK Card Co., Ltd.		687,995	49.0	337,117	39,700	376,817
SKY Property Mgmt. Ltd.(*)		476,793	33.0	157,342	74,915	232,257
Korea IT Fund		368,239	63.3	233,218		233,218

(In millions of won)	December 31, 2013 — Net assets	Ownership interests (%)	Net assets attributable to the ownership interests	Cost-book value differentials	Carrying amount
Associates:
SK hynix Inc.(*)	￦	13,066,474	20.6	2,687,806	1,255,426	3,943,232
HanaSK Card Co., Ltd.		689,290	49.0	337,752	40,864	378,616
SKY Property Mgmt. Ltd.(*)		494,004	33.0	163,021	75,257	238,278
Korea IT Fund		365,528	63.3	231,402		231,402

(*) These entities prepare consolidated financial statements and net assets of these entities represent net assets attributable to owners of the Parent Company.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Investments in Associates and Joint Ventures, Continued

(6) Details of changes in investments in associates and joint ventures accounted for using the equity method for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended June 30, 2014 — Beginning balance	Acquisition and Disposal	Share of profits (losses)		Other comprehensive income (loss)		Impairment loss		Other increase (decrease)		Ending balance
Investments in associates
SK China Company Ltd.	￦	37,434		(988	)	(1,714	)					34,732
Korea IT Fund		231,402		4,370		(2,554	)					233,218
Etoos Co., Ltd		12,029		346						(12,375	)
HanaSK Card Co., Ltd.		378,616		(1,156	)	(643	)					376,817
Candle Media Co., Ltd.		21,241		(1,710	)	(41	)	(491	)			18,999
NanoEnTek, Inc.		9,312	7,778	7		2				19,180		36,279
SK Industrial Development China Co., Ltd.		77,517		2,381		(5,178	)					74,720
Packet One Network		60,706		(12,050	)	4,924						53,580
SK Technology Innovation Company		53,874		(1,514	)	(2,036	)					50,324
HappyNarae Co., Ltd.		13,935		970		(71	)					14,834
SK hynix Inc.		3,943,232		322,120		(41,092	)					4,224,260
SK MENA Investment B.V.		13,477		(3	)	(519	)					12,955
SKY Property Mgmt. Ltd.		238,278		502		(6,523	)					232,257
Xian Tianlong Science and Technology Co., Ltd		26,562		(16	)							26,546
Daehan Kanggun BcN Co., Ltd. and others		164,976	2,354	(7,818	)	1,634				(966	)	160,180
Sub-total		5,282,591	10,132	305,441		(53,811	)	(491	)	5,839		5,549,701
Investments in joint ventures
Dogus Planet, Inc.		10,105	19,677	(6,636	)	935						24,081
PT. Melon Indonesia		3,230		190		(116	)					3,304
Television Media Korea Ltd.		8,659		(1,143	)							7,516
PT XL Planet Digital		20,712		(2,780	)	(397	)					17,535
Sub-total		42,706	19,677	(10,369	)	422						52,436
Total	￦	5,325,297	29,809	295,072		(53,389	)	(491	)	5,839		5,602,137

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Investments in Associates and Joint Ventures, Continued

(6) Details of changes in investments in associates and joint ventures accounted for using the equity method for the six-month periods ended June 30, 2014 and 2013 are as follows, Continued:

(In millions of won)	For the six-month period ended June 30, 2013 — Beginning balance	Acquisition and Disposal	Share of profits (losses)		Other comprehensive income (loss)		Other increase (decrease)		Ending balance
Investments in associates
SK Marketing & Company Co., Ltd.(*1)	￦	145,333	190,606	(3,955	)	155		(332,139	)
SK China Company Ltd.		37,628		(8,706	)	10,738				39,660
Korea IT Fund		230,016		1,474		38				231,528
JYP Entertainment Corporation		4,232		1,073		400				5,705
Etoos Co., Ltd		12,037		210						12,247
HanaSK Card Co., Ltd.		378,457		2,010		584				381,051
Candle Media Co., Ltd.		21,935		(933	)	(22	)	88		21,068
NanoEnTek, Inc.		9,276		98		(66	)			9,308
SK Industrial Development China Co., Ltd.		77,967		(797	)	5,687				82,857
Packet One Network		88,389		1,024		1,073				90,486
SK Technology Innovation Company		63,559		(2,711	)	4,545				65,393
ViKi, Inc.		15,667		(995	)	(157	)			14,515
HappyNarae Co., Ltd.		13,113		198		2				13,313
SK hynix Inc.		3,328,245		230,004		58,429				3,616,678
SK MENA Investment B.V.		13,666				985				14,651
SKY Property Mgmt. Ltd. (*2)				3,905		16,845		232,703		253,453
Xian Tianlong Science and Technology Co., Ltd.			26,982							26,982
Daehan Kanggun BcN Co., Ltd. and others		170,748	16,871	(4,153	)	404		2,665		186,535
Sub-total		4,610,268	234,459	217,746		99,640		(96,683	)	5,065,430
Investments in joint ventures
Dogus Planet, Inc.		6,005	21,428	(6,423	)	(354	)			20,656
PT. Melon Indonesia		4,447		(293	)	193				4,347
Television Media Korea Ltd.		11,757		(1,108	)					10,649
Sub-total		22,209	21,428	(7,824	)	(161	)			35,652
Total	￦	4,632,477	255,887	209,922		99,479		(96,683	)	5,101,082

(*1) The entity was merged into SK Planet Co., Ltd., a subsidiary of the Parent Company during the six-month period ended June 30, 2013.

(*2) The Group reclassified the investments in SKY Property Mgmt. Ltd. as investments in associates during the six-month period ended June 30, 2013.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Investments in Associates and Joint Ventures, Continued

(7) As the Group discontinued the application of the equity method due to the carrying amount of the Groups share being reduced to zero, the unrecognized accumulated equity losses as of June 30, 2014 are as follows:

(In millions of won)	Unrealized loss — Period ended June 30, 2014	Accumulated	Period ended June 30, 2014
ULand Company Limited	￦		1,553	(3	)
Wave City Development Co., Ltd.		733	4,454	334
	￦	733	6,007	331

Property and Equipment

Changes in property and equipment for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)
	For the six-month period ended June 30, 2014
	Beginning balance	Acquisition	Disposal		Transfer		Depreciation		Impairment		Others	Business acquistion	Ending balance
Land	￦	732,206	3,406			14,568						1,493	608	752,281
Buildings		956,691	3,902	(383	)	6,816		(24,329	)			2,678	947	946,322
Structures		364,951	124			3,483		(16,287	)					352,271
Machinery		6,847,059	140,326	(4,514	)	828,158		(1,011,543	)	(2,929	)		7,741	6,804,298
Other		533,181	551,456	(1,474	)	(340,107	)	(64,800	)			4,743	129	683,128
Construction in progress		762,519	316,178	(980	)	(558,912	)							518,805
	￦	10,196,607	1,015,392	(7,351	)	(45,994	)	(1,116,959	)	(2,929	)	8,914	9,425	10,057,105

(In millions of won)
	For the six-month period ended June 30, 2013
	Beginning balance	Acquisition	Disposal		Transfer		Depreciation		Business acquistion	Ending balance
Land	￦	704,908	4,597	(14	)	4,877				5,192	719,560
Buildings		886,371	45	(99	)	11,277		(22,647	)	5,025	879,972
Structures		363,484	985	(7	)	6,025		(17,539	)		352,948
Machinery		6,316,192	109,177	(6,914	)	920,779		(983,917	)	6,346	6,361,663
Other		637,212	443,890	(2,192	)	(468,165	)	(63,630	)	6,886	554,001
Construction in progress		804,552	219,548	(5,695	)	(508,064	)			8,290	518,631
	￦	9,712,719	778,242	(14,921	)	(33,271	)	(1,087,733	)	31,739	9,386,775

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Investment Property

Changes in investment property for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended June 30, 2014 — Beginning balance	Transfer	Depreciation		Ending balance
Land	￦	10,822	249			11,071
Buildings		4,989	116	(123	)	4,982
	￦	15,811	365	(123	)	16,053

(In millions of won)	For the six-month period ended June 30, 2013 — Beginning balance	Transfer		Depreciation		Ending balance
Land	￦	12,638	(9,732	)			2,906
Buildings		14,841	(1,351	)	(465	)	13,025
	￦	27,479	(11,083	)	(465	)	15,931

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Goodwill

(1) Goodwill as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Goodwill related to acquisition of Shinsegi Telecomm, Inc.	￦	1,306,236	1,306,236
Goodwill related to acquisition of SK Broadband Co., Ltd.		358,443	358,443
Other goodwill		86,396	68,582
	￦	1,751,075	1,733,261

(2) Details of changes in goodwill for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended — June 30, 2014	June 30, 2013
Beginning balance	￦	1,733,261	1,744,483
Change of consolidation scope		17,814	1,660
Impairment loss on Goodwill			(9,982	)
Other decrease			(2,493	)
	￦	1,751,075	1,733,668

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Intangible Assets

(1) Details of changes in intangible assets for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)
	For the six-month period ended June 30, 2014
	Beginning balance	Acquisition	Disposal		Transfer	Amortization		Impairment		Others	Business acquisition	Ending balance
Frequency use rights	￦	1,664,571					(140,264	)					1,524,307
Land use rights		16,590	8,990	(33	)		(3,808	)			2,258		23,997
Industrial rights		58,763	2,804	(8	)		(2,269	)	(2	)			59,288
Development costs		10,127	158	(25	)	62	(1,955	)					8,367
Facility usage right		58,828	615	(16	)	379	(4,190	)					55,616
Customer relations		6,333	272				(1,731	)			692	1,702	7,268
Memberships(*1)		128,452	2,690	(44	)							267	131,365
Other(*2)		807,118	22,585	(597	)	75,631	(149,349	)	(235	)	1,146	92	756,391
	￦	2,750,782	38,114	(723	)	76,072	(303,566	)	(237	)	4,096	2,061	2,566,599

(In millions of won)
	For the six-month period ended June 30, 2013
	Beginning balance	Acquisition	Disposal		Transfer	Amortization		Impairment		Business acquisition		Ending balance
Frequency use rights	￦	1,693,868					(126,306	)					1,567,562
Land use rights		16,062	1,460	(178	)		(3,315	)					14,029
Industrial rights		60,104	1,243	(75	)		(1,859	)			(68	)	59,345
Development costs		13,420	409				(2,764	)	(635	)	2,140		12,570
Facility usage rights		65,340	662	(49	)		(4,138	)					61,815
Customer relations		48,886	283				(20,550	)					28,619
Memberships(*1)		118,954	2,755	(664	)						8,510		129,555
Other(*2)		673,024	39,751	(270	)	101,435	(144,629	)	(628	)	27,622		696,305
	￦	2,689,658	46,563	(1,236	)	101,435	(303,561	)	(1,263	)	38,204		2,569,800

(*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 and the Group in turn is given rights-to-use for a definite number of years.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Intangible Assets, Continued

(2) The carrying amount and residual useful lives of major intangible assets as of June 30, 2014 are as follows:

(In millions of won)	Amount		Description	Commencement of amortization	Completion of amortization
W-CDMA license	￦	246,394	Frequency use rights relating to W-CDMA service	Dec. 2003	Dec. 2016
W-CDMA license		40,777	Frequency use rights relating to W-CDMA service	Oct. 2010	Dec. 2016
800MHz license		283,808	Frequency use rights relating to CDMA and LTE service	Jul. 2011	Jun. 2021
1.8GHz license		942,150	Frequency use rights relating to LTE service	Sep. 2013	Dec. 2021
WiBro license		11,178	WiBro service	Mar. 2012	Mar. 2019
	￦	1,524,307

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Borrowings and Debentures

(1) Short-term borrowings as of June 30, 2014 and December 31, 2013 are as follows:

| (In millions of won) | Lender | Annual interest rate
(%) | June 30, 2014 | December 31, 2013 | |
| --- | --- | --- | --- | --- | --- |
| Commercial Paper | Woori Bank, etc. | 2.67~3.09 | ￦ | 515,000 | 200,000 |
| Short-term borrowings | Kookmin Bank, etc. | 3.48~4.58 | | 354,500 | 60,000 |
| | | | ￦ | 869,500 | 260,000 |

(2) Long-term borrowings as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won and thousands of U.S. dollars) — Lender	Annual interest rate (%)	Maturity	June 30, 2013		December 31, 2012
Korea Development Bank	3.19	Jun. 16, 2014	￦			1,648
Shinhan Bank	3.19	Jun. 15, 2015		3,424		5,136
Kookmin Bank	3.19	Jun. 15, 2015		6,499		8,124
Kookmin Bank	3.19	Mar. 15, 2017		5,496		5,996
Kookmin Bank	3.19	Mar. 15, 2018		8,600		8,600
Shinhan Bank (*1)	6M bank debenture rate + 1.58	Apr. 30, 2016		10,000
Woori Bank	4.45	Oct. 05, 2020		625
Export Kreditnamnden (*2)	1.7	Apr. 29, 2022		93,425		99,975
				(USD 92,098	)	(USD 94,736	)
Sub-total				128,069		129,479
Less present value discount on long-term borrowings				(2,742	)	(3,287	)
				125,327		126,192
Less current portion of long-term borrowings				(20,652	)	(21,384	)
Long-term borrowings			￦	104,675		104,808

(*1) As of June 30, 2014, the 6M bank debenture rate of Shinhan Bank is 2.68%.

(*2) For the year ended December 31, 2013, the Group obtained long-term borrowings from Export Kreditnamnden, an export credit agency. The long-term borrowings are redeemed by installment on an annual basis from 2014 to 2022.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Borrowings and Debentures, Continued

(3) Debentures as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won, thousands of U.S. dollars and thousands of other currencies)	Purpose	Maturity	Annual interest rate (%)	June 30, 2014		December 31, 2013
Unsecured private bonds	Refinancing fund	2016	5.00	￦	200,000		200,000
Unsecured private bonds		2014	5.00		200,000		200,000
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		2016	5.54		40,000		40,000
Unsecured private bonds		2016	5.92		230,000		230,000
Unsecured private bonds	Operating fund	2016	3.95		110,000		110,000
Unsecured private bonds		2021	4.22		190,000		190,000
Unsecured private bonds	Operating and refinancing fund	2019	3.24		170,000		170,000
Unsecured private bonds		2022	3.30		140,000		140,000
Unsecured private bonds		2032	3.45		90,000		90,000
Unsecured private bonds	Operating fund	2023	3.03		230,000		230,000
Unsecured private bonds		2033	3.22		130,000		130,000
Unsecured private bonds		2019	3.30		50,000
Unsecured private bonds		2024	3.64		150,000
Unsecured private bonds(*7)		2029	4.73		53,909
Unsecured private bonds(*7)		2029	4.72		53,885
Unsecured private bonds(*1)		2014	4.86				20,000
Unsecured private bonds(*1)		2015	4.62		10,000		10,000
Unsecured private bonds(*2)		2014	4.53				290,000
Unsecured private bonds(*2)		2014	4.40		100,000		100,000
Unsecured private bonds(*2)		2015	4.09		110,000		110,000
Unsecured private bonds(*2)		2015	4.14		110,000		110,000
Unsecured private bonds(*2)		2017	4.28		100,000		100,000
Unsecured private bonds(*2)		2015	3.14		130,000		130,000
Unsecured private bonds(*2)		2017	3.27		120,000		120,000
Unsecured private bonds(*2)		2016	3.05		80,000
Unsecured private bonds(*2)		2019	3.49		210,000
Unsecured private bonds(*3)		2015	3.12		10,000
Unsecured private bonds(*3)		2016	3.24		10,000
Unsecured private bonds(*3)		2017	3.48		20,000
Foreign global bonds		2027	6.63		405,760 (USD 400,000	)	422,120 (USD 400,000	)
Exchangeable bonds(*6)	Refinancing fund	2014	1.75				96,147 (USD 91,109	)
Floating rate notes(*4)	Operating fund	2014	3M Libor + 1.60		253,600 (USD 250,000	)	263,825 (USD 250,000	)
Floating rate notes(*5)		2014	SOR rate + 1.20		52,768 (SGD 65,000	)	54,129 (SGD 65,000	)
Swiss unsecured private bonds		2017	1.75		341,529 (CHF 300,000	)	356,601 (CHF 300,000	)
Foreign global bonds		2018	2.13		710,080 (USD 700,000	)	738,710 (USD 700,000	)
Australia unsecured private bonds		2017	4.75		286,578 (AUD 300,000	)	281,988 (AUD 300,000	)
Floating rate notes(*4)		2020	3M Libor + 0.88		304,320 (USD 300,000	)	316,590 (USD 300,000	)
Foreign global bonds(*2)		2018	2.88		304,320		316,590

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Borrowings and Debentures, Continued

(In millions of won, thousands of U.S. dollars and thousands of other currencies)
	June 30, 2014		December 31, 2013
		(USD 300,000	)	(USD 300,000	)
Sub-total		6,106,749		5,966,700
Less discounts on bonds		(35,606	)	(40,229	)
		6,071,143		5,926,471
Less current portion of bonds		(923,874	)	(1,020,892	)
Discounted issue price	￦	5,147,268		4,905,579

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

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

(*3) Unsecured private bonds were issued by PS&Marketing Corporation, a subsidiary of the Parent Company.

(*4) As of June 30, 2014, 3M Libor rate is 0.23%.

(*5) As of June 30, 2014, SOR rate is 0.22%.

(*6) 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%.

The Group may redeem the principal amount after three years from the issuance date if the market price exceeds 130% of the exchange price during a predetermined period. The exchange right may be exercised during the period from May 18, 2009 to March 24, 2014.

Exchanges of notes for 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 Groups 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.

As of December 31, 2013, the principal amount and the fair value of the remaining exchangeable bonds were USD 57,046,000 and USD 91,108,508, respectively. Exchange for the remaining entire bonds was claimed during 2013 and has been redeemed by cash during the six-month period ended June 30, 2014.

(*7) The Group settled the difference of the measurement bases of accounting profit or loss between the bonds and related derivatives by appointing the structured bonds as designated financial liabilities at fair value through profit or loss.

The difference between the carrying amount of the designated financial liabilities at fair value through profit or loss and the amount required to pay at maturity is ￦7,793 million as of June 30, 2014.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Long-term Payablesother

(1) Long-term payables as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Payables related to acquisition of W-CDMA licenses	￦	649,997	828,721
Other(*)		10,966	9,864
	￦	660,963	838,585

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

(2) As of June 30, 2014 and December 31, 2013, long-term payables consist of payables related to acquisition of W-CDMA licenses for 2.1GHz, 800MHZ, 1.8GHz and 2.3GHz frequencies and other details are as follows (Refer to Note 16):

(In millions of won)	Period of repayment	Coupon rate	Annual effective interest rate(*)	June 30, 2014		December 31, 2013
2.1GHz	2012~2014	3.58%	5.89%				17,533
800MHz	2013~2015	3.51%	5.69%		69,416		138,833
2.3GHz	2014~2016	3.00%	5.80%		5,766		8,650
1.8GHz	2012~2021	2.43~3.00%	4.84~5.25%		824,841		942,675
					900,023		1,107,691
Present value discount on long-term payablesother					(62,582	)	(72,170	)
					837,441		1,035,521
Current portion of long-term payablesother					(187,444	)	(206,800	)
Carrying amount at period end				￦	649,997		828,721

(*) 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 payables-other.

(3) The repayment schedule of long-term payablesother as of June 30, 2014 is as follows:

(In millions of won)
	Amount
Less than 1 year	￦	190,134
1~3 years		238,552
3~5 years		235,669
More than 5 years		235,668
	￦	900,023

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Provisions

Changes in provisions for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)
	For the six-month period ended June 30, 2014							As of June 30, 2014
	Beginning balance	Increase	Utilization (*)		Others		Ending balance	Current	Non-current
Provision for handset subsidy	￦	53,923	86,249	(49,206	)			90,966	58,043	32,923
Provision for restoration		40,507	1,528	(1,256	)	(145	)	40,634	17,812	22,822
Other provisions		451		(99	)	(45	)	307		307
	￦	94,881	87,777	(50,561	)	(190	)	131,907	75,855	56,052

(*) Utilization includes reversal of provision for restoration of ￦909 million.

(In millions of won)
	For the six-month period ended June 30, 2013						As of June 30, 2013
	Beginning balance	Increase	Utilization (*)		Others	Ending balance	Current	Non-current
Provision for handset subsidy	￦	353,383	2,412	(200,072	)		155,723	136,489	19,234
Provision for restoration		39,895	2,744	(954	)	911	42,596	9,454	33,142
Other provisions		590		(107	)	18	501	56	445
	￦	393,868	5,156	(201,133	)	929	198,820	145,999	52,821

(*) Utilization includes reversal of other provisions of ￦777 million.

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.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Finance Lease Liabilities

(1) Finance Lease

The Group has leased telecommunication equipment under finance lease agreements with Cisco Systems Capital Korea Ltd. Finance lease liabilities as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Finance Lease Liabilities
Current portion of long-term finance lease liabilities	￦	11,248	19,351
Long-term finance lease liabilities		1,757	3,867
	￦	13,005	23,218

The Groups related interest and principal as of June 30, 2014, December 31, 2013 are as follows:

(In millions of won)	June 30, 2014 — Minimum lease payment	Present value		Minimum lease payment	Present value
Less than 1 year	￦	11,573	11,248	20,039	19,351
1~5 years		1,775	1,757	3,974	3,867
Sub-total		13,348	13,005	24,013	23,218
Current portion of long-term finance lease liabilities			(11,248	)	(19,351	)
Long-term finance lease liabilities	￦		1,757		3,867

(2) Operating Lease

The Group entered into operating lease and sublease agreements in relation to rented office space and the expected future lease payments and lease revenues are as follows:

(In millions of won)	Lease payments	Lease revenues
Less than 1 year	￦	27,631	1,345
1~5 years		82,440	1,074
More than 5 years		68,757	940
	￦	178,828	3,359

(3) Sales and Leaseback

For the year ended December 31, 2012, the Group disposed a portion of its property and equipment and investment property, and entered into lease agreements with respect to those assets. This sale and leaseback transaction is considered as an operating lease and expected future lease payments and lease revenues are disclosed in Note 20-(2).

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Defined Benefit Liabilities

(1) Details of defined benefit liabilities as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)
	June 30, 2014		December 31, 2013
Present value of defined benefit obligations	￦	367,129		312,494
Fair value of plan assets		(241,300	)	(238,293	)
	￦	125,829		74,201

(2) Principal actuarial assumptions as of June 30, 2014 and December 31, 2013 are as follows:

	June 30, 2014	December 31, 2013
Discount rate for defined benefit obligations	3.06%~4.34%	3.06~4.34%
Expected rate of salary increase	3.05%~6.27%	3.05~6.27%

Discount rate for defined benefit obligation is determined based on the Groups credit ratings and yield rate of corporate bonds with similar maturities for estimated payment term of defined benefit obligation. Expected rate of salary increase is determined based on the Groups historical promotion index, inflation rate and salary increase ratio in accordance with salary agreement.

(3) Changes in defined benefit obligations for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2014		June 30, 2013
Beginning balance	￦	312,494		244,866
Current service cost		64,192		43,731
Interest cost		5,126		4,478
Remeasurement - Adjustment based on experience		14,600		7,852
Benefit paid		(33,361	)	(25,249	)
Others(*)		4,078		17,966
Ending balance	￦	367,129		293,644

(*) Others for the six-month period ended June 30, 2014 include liabilities of ￦3,151 million, transferred from affiliated companies and transfer to construction in progress. Others include liabilities of ￦14,703 million transferred due to business combination and transfer to construction in progress during the six-month period ended June 30, 2013.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Defined Benefit Liabilities, Continued

(4) Changes in plan assets for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2014		June 30, 2013
Beginning balance	￦	238,293		158,345
Expected return on plan assets		4,596		3,066
Remeasurement factor of plan assets		(214	)	958
Contributions by employer directly to plan assets		6,415		8,016
Benefit paid		(8,830	)	(9,472	)
Others(*)		1,040		12,976
Ending balance	￦	241,300		173,889

(*) Others include assets of ￦14,334 million transferred due to business combination and effects of changes in consolidation scope of ￦(1,312) million during the six-month period ended June 30, 2013.

Actual return on plan assets for the six-month periods ended June 30, 2014 and 2013 amounted to ￦4,421 million and ￦4,024 million, respectively.

(5) Expenses recognized in profit and loss for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended — June 30, 2014	June 30, 2013
Current service cost	￦	64,192	43,731
Net interest cost		530	1,412
	￦	64,722	45,143

The above costs are recognized in labor cost, research and development, or capitalized into construction-in-progress.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Derivative Instruments

(1) Currency swap contracts under cash flow hedge accounting as of June 30, 2014 are as follows:

(In thousands of foreign currencies)

Borrowing date	Hedged item	Hedged risk	Contract type	Financial institution	Duration of contract
Jul. 20, 2007	Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 400,000)	Foreign currency risk	Currency swap	Morgan Stanley and five other banks	Jul. 20, 2007 ~ Jul. 20, 2027
Dec. 15, 2011	Floating-to-fixed cross currency interest rate swap (Singapore dollar denominated bonds face value of SGD 65,000)	Foreign currency risk and the interest rate risk	Currency interest rate swap	United Overseas Bank	Dec. 15, 2011 ~ Dec. 12, 2014
Dec. 15, 2011	Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 250,000)	Foreign currency risk and the interest rate risk	Currency interest rate swap	DBS Bank and Citibank	Dec. 15, 2011 ~ Dec. 12, 2014
Jun. 12, 2012	Fixed-to-fixed cross currency swap (Swiss Franc denominated bonds face value of CHF 300,000)	Foreign currency risk	Currency swap	Citibank and five other banks	Jun. 12, 2012 ~ Jun. 12, 2017
Nov. 1, 2012	Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 700,000)	Foreign currency risk	Currency swap	Barclays and nine other banks	Nov. 1, 2012~ May. 1, 2018
Jan. 17, 2013	Fixed-to-fixed cross currency swap (Australia dollar denominated bonds face value of AUD 300,000)	Foreign currency risk	Currency swap	BNP Paribas and three other banks	Jan. 17, 2013 ~ Nov. 17, 2017
Mar. 7, 2013	Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 300,000)	Foreign currency risk and the interest rate risk	Currency interest rate swap	DBS Bank	Mar. 7, 2013 ~ Mar. 7, 2020
Oct. 29, 2013	Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 300,000)	Foreign currency risk	Currency swap	Korea Development Bank and others	Oct. 29, 2013 ~ Oct. 26, 2018
Dec. 16, 2013	Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 92,098)	Foreign currency risk	Currency swap	Deutsche bank	Dec. 16, 2013 ~ Apr. 29, 2022

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Derivative Instruments, Continued

(2) As of June 30, 2014, fair values of above derivatives recorded in assets or liabilities and details of derivative instruments are as follows:

(In millions of won and thousands of foreign currencies)

	Fair value
	Cash flow hedge							Held for trading purpose	Total
Hedged item	Accumulated gain (loss) on valuation of derivatives		Tax effect		Accumulated foreign currency translations loss		Others (*1)
Non-current assets:
Structured bonds ( face value of KRW 100,000)	￦								6,017	6,017
Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 400,000)		(48,130	)	(15,367	)	(50,973	)	129,806		15,336
Total assets	￦									21,353
Current liabilities:
Floating-to-fixed cross currency interest rate swap (Singapore dollar denominated bonds face value of SGD 65,000)		47		15		(4,683	)			(4,621	)
Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 250,000)		5,538		1,768		(35,807	)			(28,501	)
Non-current liabilities:
Fixed-to-fixed cross currency swap (Swiss Franc denominated bonds face value of CHF 300,000)		(8,026	)	(2,562	)	(21,910	)			(32,498	)
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 700,000)		(12,082	)	(3,857	)	(52,811	)			(68,750	)
Fixed-to-fixed cross currency swap (Australia dollar denominated bonds face value of AUD 300,000)		6,919		2,208		(48,732	)			(39,605	)
Floating-to-fixed cross currency interest rate swap(face amounts of USD 300,000)		2,344		749		(20,669	)			(17,576	)
Fixed-to-fixed cross currency swap(U.S. dollar denominated bonds face value of USD 300,000)		(3,249	)			(13,955	)			(17,204	)
Fixed-to-fixed long-term borrowings (U.S. dollar denominated bonds face value of USD 92,098)		(3,336	)	(1,065	)	(3,527	)			(7,928	)
Total liabilities	￦									(216,683	)

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Share Capital and Capital Surplus and Other Capital Adjustments

The Parent Companys outstanding share capital consists entirely of common stock with a par value of ￦500. The number of authorized, issued and outstanding common shares and capital surplus and other capital adjustments as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won, except for share data)
	June 30, 2014		December 31, 2013
Authorized shares(*1)	￦	220,000,000		220,000,000
Issued shares		80,745,711		80,745,711
Share capital		44,639		44,639
Common stock
Capital surplus and other capital adjustments:
Paid-in surplus		2,915,886		2,915,887
Treasury stock(Note 24)		(2,139,683	)	(2,139,683	)
Loss on disposal of treasury stock		(18,087	)	(18,087	)
Hybrid bond(Note 25)		398,518		398,518
Others(*2)		(867,908	)	(839,127	)
	￦	288,726		317,508

(*1) For 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 Companys outstanding shares have decreased without change in the share capital.

There were no changes in share capital for the six-month period ended June 30, 2014 and the year ended December 31, 2013 and the number of issued shares for the six-month periods ended June 30, 2014 and 2013 are follows:

(In shares)	For the six-month period ended — June 30, 2014			June 30, 2013
	Issued shares	Treasury stock	Outstanding shares	Issued shares	Treasury stock	Outstanding shares
Issued shares	80,745,711	9,809,375	70,936,336	80,745,711	10,237,229	70,508,482

(*2) Changed mainly due to the business combination between entities under common control that took place during the six-month period ended June 30, 2014 (Refer to Note 11).

Treasury Stock

The Parent Company acquired treasury stock to provide stock dividends, merge with Shinsegi Telecom, Inc. and SK IMT Co, Ltd., increase shareholder value and to stabilize its stock prices when needed.

Treasury stock as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won, shares)	June 30, 2014	December 31, 2013
Number of shares		9,809,375	9,809,375
Amount	￦	2,139,683	2,139,683

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Hybrid Bond

The Parent Company issued hybrid bond at face amount on June 7, 2013 and details as of June 30, 2014 are as follows:

(In millions of won)	Type	Issuance date	Maturity(*1)	Annual interest rate(%)(*2)	Amount
Private hybrid bond	Blank coupon unguaranteed subordinated bond	June 7, 2013	June 7, 2073	4.21	￦	400,000
Issuance costs						(1,482	)
					￦	398,518

Hybrid bonds issued by the Parent Company are classified as equity as there is no contractual obligation for delivery of financial assets to the bond holders. These are subordinated bonds which rank before common shareholders in the event of a liquidation or reorganization of the Parent Company.

(*1) The Parent Company has a right to extend the maturity under the same issuance terms without any notice or announcement. The Parent Company also has the right to defer interest payment at its sole discretion.

(*2) Annual interest rate is adjusted after five years from the issuance date.

Retained Earnings

(1) Retained earnings as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Appropriated:
Legal reserve	￦	22,320	22,320
Reserve for research & manpower development		151,533	155,766
Reserve for business expansion		9,476,138	9,376,138
Reserve for technology development		2,416,300	2,271,300
		12,066,291	11,825,524
Unappropriated		1,188,332	1,276,971
	￦	13,254,623	13,102,495

(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.

(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.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Reserves

(1) Details of reserves as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)
	June 30, 2014		December 31, 2013
Net change in unrealized fair value of available-for-sale financial assets	￦	207,899		208,529
Net change in other comprehensive income of investments in associates and joint ventures		(225,477	)	(172,117	)
Net change in unrealized fair value of derivatives		(53,195	)	(35,429	)
Foreign currency translations differences for foreign operations		(23,291	)	(13,253	)
	￦	(94,064	)	(12,270	)

(2) Change in reserves for the six-month periods ended June 30, 2014 and 2013 are as follows:

| (In millions of won) — Balance at January 1, 2013 | Net change in unrealized fair value of available-for- sale
financial assets — ￦ | 207,063 | | (175,044 | ) | (46,652 | ) | (11,003 | ) | (25,636 | ) |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Changes | | (66,893 | ) | 99,329 | | (84,554 | ) | 14,334 | | (37,784 | ) |
| Tax effect | | 15,402 | | 26 | | 20,462 | | | | 35,890 | |
| Balance at June 30, 2013 | | 155,572 | | (75,689 | ) | (110,744 | ) | 3,331 | | (27,530 | ) |
| Balance at January 1, 2014 | | 208,529 | | (172,117 | ) | (35,429 | ) | (13,253 | ) | (12,270 | ) |
| Changes | | (4,718 | ) | (53,527 | ) | (23,095 | ) | (10,038 | ) | (91,378 | ) |
| Tax effect | | 4,088 | | 167 | | 5,329 | | | | 9,584 | |
| Balance at June 30, 2014 | ￦ | 207,899 | | (225,477 | ) | (53,195 | ) | (23,291 | ) | (94,064 | ) |

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Other Operating Expenses

Details of other operating expenses for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	2014 — Three-month period ended June 30	Six-month period ended June 30	Three-month period ended June 30	Six-month period ended June 30
Other Operating Expenses:
Communication expenses	￦	14,828	29,132	17,057	30,715
Utilities		51,936	114,734	50,678	105,306
Taxes and dues		6,522	14,760	5,876	13,490
Repair		69,872	134,481	60,308	124,724
Research and development		104,054	204,960	80,614	162,211
Training		9,017	16,594	8,212	14,578
Bad debt for accounts receivablestrade		17,362	23,553	17,587	28,667
Travel		7,806	14,563	8,589	15,055
Supplies and other		54,867	108,196	38,902	90,765
	￦	336,264	660,973	287,823	585,511

Other Non-operating Income and Expenses

(1) Details of other non-operating income and expenses for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	2014 — Three-month period ended June 30	Six-month period ended June 30	Three-month period ended June 30	Six-month period ended June 30
Other Non-operating Income:
Fees revenues	￦	4,449	5,964	2,105	2,864
Gain on disposal of property and equipment and intangible assets		1,385	3,411	2,745	4,754
Others		10,897	27,199	19,522	30,593
	￦	16,731	36,574	24,372	38,211
Other Non-operating Expenses:
Loss on impairment of property and equipment and intangible assets	￦	237	3,166		10,617
Loss on disposal of property and equipment and intangible assets		1,696	3,980	7,683	13,061
Donations		18,663	27,052	10,490	22,649
Bad debt for accounts receivableother		5,154	8,125	6,004	16,530
Loss on disposal of investment securities		7	7		1
Loss on impairment of investment securities			127
Others		2,957	22,189	6,855	14,767
	￦	28,714	64,646	31,032	77,625

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Finance Income and Costs

(1) Details of finance income and costs for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	2014 — Three-month period ended June 30	Six-month period ended June 30	Three-month period ended June 30	Six-month period ended June 30
Finance Income:
Interest income	￦	14,274	29,756	15,864	32,850
Dividends		939	10,567	48	10,197
Gain on foreign currency transactions		2,364	6,663	4,898	7,432
Gain on foreign currency translation		14,400	15,926	3,098	6,038
Gain on disposal of long-term investment securities		1,223	6,114	1,093	2,134
Gain on valuation of derivatives		1,967	6,017
Gain on settlement of derivatives			119		2,274
Gain on relating to financial asset at fair value through profit or loss				2,427	3,365
	￦	35,167	75,162	27,428	64,290

(In millions of won)	2014 — Three-month period ended June 30	Six-month period ended June 30	Three-month period ended June 30	Six-month period ended June 30
Finance Costs:
Interest expense	￦	82,593	161,229	83,017	172,924
Loss on foreign currency transactions		5,526	9,552	4,244	7,265
Loss on foreign currency translation		117	5,186	1,351	5,326
Loss on disposal of long-term investment securities			2,112	4,523	4,713
Loss on impairment of long-term investment securities				2,979	16,548
Loss on valuation of derivatives		12,135	12,135	198	198
Loss on settlement of derivatives		335	335
Loss relating to financial assets at fair value through profit or loss		2,419	1,352
Loss relating to financial liability at fair value through profit or loss(*)		7,794	7,798	66,513	104,601
	￦	110,919	199,699	162,825	311,575

(*) Loss relating to financial liability at fair value through profit or loss for the six-month period ended June 30, 2013 represents 1) valuation loss related to exchangeable bond (issue price of USD 326,397,463) as a result of increase in stock price of the Parent Company and increase in foreign exchange rate, and 2) loss on repayment of debentures upon the claim for exchange.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Finance Income and Costs, Continued

(2) Details of interest income included in finance income for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	2014 — Three-month period ended June 30	Six-month period ended June 30	Three-month period ended June 30	Six-month period ended June 30
Interest income on cash equivalents and deposits	￦	8,602	18,250	9,676	20,047
Interest income on installment receivables and others		5,672	11,506	6,188	12,803
	￦	14,274	29,756	15,864	32,850

(3) Details of interest expense included in finance costs for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

| (In millions of won) | 2014 — Three-month period ended June 30 | Six-month period
ended June 30 | Three-month period ended June 30 | Six-month period
ended June 30 | |
| --- | --- | --- | --- | --- | --- |
| Interest expense on bank overdrafts and borrowings | ￦ | 8,735 | 13,994 | 7,307 | 23,059 |
| Interest expense on debentures | | 61,749 | 122,035 | 66,135 | 128,299 |
| Interest on finance lease liabilities | | 149 | 349 | 355 | 767 |
| Others | | 11,960 | 24,851 | 9,220 | 20,799 |
| | ￦ | 82,593 | 161,229 | 83,017 | 172,924 |

(4) Details of impairment losses for financial assets for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

| (In millions of won) | 2014 — Three-month period ended June 30 | Six-month period
ended June 30 | Three-month period ended June 30 | Six-month period
ended June 30 | |
| --- | --- | --- | --- | --- | --- |
| Available-for-sale financial assets | ￦ | | | 2,979 | 16,548 |
| Accounts receivabletrade | | 17,304 | 23,494 | 17,956 | 29,086 |
| Accounts receivableother | | 5,154 | 8,125 | 6,004 | 16,530 |
| | ￦ | 22,458 | 31,619 | 26,939 | 62,164 |

Income Tax Expense for Continuing Operations

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 of temporary differences, and income tax recognized in other comprehensive income.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Earnings per Share

(1) Basic earnings per share

1) Basic earnings per share for the three and six-month periods ended June 30, 2014 and 2013 are calculated as follows:

(In millions of won, shares)	2014
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Basic earnings per share attributable to owners of the Parent Company from continuing
operation:
Profit attributable to owners of the Parent Company from continuing operations	￦	498,536		768,350		462,630		812,757
Dividend on hybrid bond		(8,420	)	(8,420	)	(1,058	)	(1,058	)
Profit for the period on common shares		490,116		759,930		461,572		811,699
Weighted average number of common shares outstanding		70,936,336		70,936,336		69,872,438		69,784,208
Basic earnings per share from continuing operations (In won)	￦	6,909		10,713		6,606		11,632
Basic earnings per share attributable to owners of the Parent Company:
Profit attributable to owners of the Parent Company	￦	498,536		768,350		466,645		820,799
Dividend on hybrid bond		(8,420	)	(8,420	)	(1,058	)	(1,058	)
Profit for the period on common shares		490,116		759,930		465,587		819,741
Weighted average number of common shares outstanding		70,936,336		70,936,336		69,872,438		69,784,208
Basic earnings per share (In won)	￦	6,909		10,713		6,663		11,747

2) Profit attributable to owners of the Parent Company from continuing operation for the three and six-month periods ended June 30, 2014 and 2013 are calculated as follows:

| (In millions of won) | 2014 — Three-month period ended June 30 | Six-month period
ended June 30 | Three-month period ended June 30 | Six-month period
ended June 30 | |
| --- | --- | --- | --- | --- | --- |
| Profit attributable to owners of the Parent Company | ￦ | 498,536 | 768,350 | 466,645 | 820,799 |
| Results of discontinued operation attributable to owners of the Parent Company | | | | 4,015 | 8,042 |
| Profit attributable to owners of the Parent Company from continuing operation | ￦ | 498,536 | 768,350 | 462,630 | 812,757 |

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Earnings per Share, Continued

3) The weighted average number of common shares outstanding for the three and six-month periods ended June 30, 2014 and 2013 are calculated as follows:

(In shares)
		Three-month period ended June 30		Six-month period ended June 30
Outstanding common shares	80,745,711		80,745,711		80,745,711
Effect of treasury stock	(9,809,375	)	(9,809,375	)	(9,809,375	)
Weighted average number of common shares outstanding	70,936,336		70,936,336		70,936,336

(In shares)
		Three-month period ended June 30		Six-month period ended June 30
Outstanding common shares at January 1, 2013	80,745,711		80,745,711		80,745,711
Effect of treasury stock	(11,050,712	)	(11,050,712	)	(11,050,712	)
Exchange of exchangeable bond	813,483		177,439		89,209
Weighted average number of common shares outstanding	70,508,482		69,872,438		69,784,208

(2) Diluted earnings per share

For the six-month period ended June 30, 2014, potential diluted of share does not exist. The number of common shares outstanding in respect of the exchangeable common shares of exchangeable bonds is excluded from the diluted earnings per share calculation for the six-month period ended June 30, 2013 as effect would have been anti-dilutive (diluted shares of 2,421,077); therefore, diluted earnings per share for the six-month period ended June 30, 2014 and 2013 are same as basic earnings per share.

(3) Basic earnings per share from discontinued operation

| (In millions of won, shares) | 2014 — Three-month period
ended June 30 | Six-month period
ended June 30 | Three-month period ended June 30 | Six-month period
ended June 30 | |
| --- | --- | --- | --- | --- | --- |
| Results from discontinued operation attributable to owners of the Parent Company | ￦ | | | 4,015 | 8,042 |
| Weighted average number of common shares outstanding | | 70,936,336 | 70,936,336 | 69,872,438 | 69,784,208 |
| Basic earnings per share (In won) | ￦ | | | 57 | 115 |

Diluted earnings per share from discontinued operation is the same as basic earnings per share from discontinued operation.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Categories of Financial Instruments

(1) Financial assets by categories as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)
	June 30, 2014
	Trading financial assets	Available- for-sale financial assets	Loans and receivables	Derivative financial instruments designated as hedged item	Total
Cash and cash equivalents	￦			1,331,263		1,331,263
Financial instruments				328,900		328,900
Short-term investment securities			54,198			54,198
Long-term investment securities			924,610			924,610
Accounts receivabletrade				2,495,965		2,495,965
Loans and receivables(*2)				1,198,818		1,198,818
Derivative financial assets		6,017			15,336	21,353
	￦	6,017	978,808	5,354,946	15,336	6,355,107

(In millions of won)
	December 31, 2013
	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	￦			1,398,639		1,398,639
Financial instruments				319,616		319,616
Short-term investment securities			106,068			106,068
Long-term investment securities(*1)		20,532	947,995			968,527
Accounts receivabletrade				2,270,470		2,270,470
Loans and receivables(*2)				1,044,529		1,044,529
Derivative financial assets(*3)		10			41,712	41,722
	￦	20,542	1,054,063	5,033,254	41,712	6,149,571

(*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.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Categories of Financial Instruments, Continued

(*2) Details of loans and receivables as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Short-term loans	￦	82,967	79,395
Accounts receivable other		747,478	643,603
Accrued income		14,353	11,941
Other current assets		3,033	2,548
Long-term loans		68,312	57,442
Long-term accounts receivable other		2,490
Guarantee deposits		280,185	249,600
	￦	1,198,818	1,044,529

(*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.

(2) Financial liabilities by categories as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014 — Financial liabilities at fair value through profit or loss	Financial liabilities measured at amortized cost	Derivative financial instruments designated as hedging instruments	Total
Accounts payable trade	￦		417,181		417,181
Derivative financial liabilities				216,683	216,683
Borrowings			994,827		994,827
Debentures(*1)		107,794	5,963,348		6,071,142
Accounts payableother and other payables(*3)			2,960,154		2,960,154
	￦	107,794	10,335,510	216,683	10,659,987

(In millions of won)	December 31, 2013 — 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	￦		214,716		214,716
Derivative financial liabilities				124,339	124,339
Borrowings			386,192		386,192
Debentures(*2)		96,147	5,830,324		5,926,471
Accounts payableother and other payables(*3)			3,949,794		3,949,794
	￦	96,147	10,381,026	124,339	10,601,512

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Categories of Financial Instruments, Continued

(*1) Bonds classified as financial liabilities at fair value through profit or loss as of June 30, 2014 are structured bonds and they were designated as financial liabilities at fair value through profit or loss in order to settle the difference of the measurement bases of accounting profit or loss between the related derivatives and bonds.

(*2) The entire amount of debentures was designated as financial liabilities at fair value through profit or loss as the fair value of the embedded derivative (conversion right option), which should be separated from the main contract, could not be separately measured.

(*3) Details of accounts payable and other payables as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Accounts payable other	￦	1,114,834	1,864,024
Withholdings		1,856	1,549
Accrued expenses		953,562	988,193
Current portion of long-term payablesother		198,692	226,151
Long-term payables other		660,963	838,585
Finance lease liabilities		1,757	3,867
Other non-current liabilities		28,490	27,425
	￦	2,960,154	3,949,794

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 Groups 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 respective Group entities.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(1) Financial risk management, Continued

Monetary foreign currency assets and liabilities as of June 30, 2014 are as follows:

(In millions of won, thousands of U.S. dollars, thousands of Euros, thousands of Japanese Yen, thousands of other currencies)

Foreign currencies	Won translation	Foreign Currencies	Won translation
USD	174,869	176,383	2,119,791	2,149,591
EUR	5,549	7,680	54	75
JPY	67,198	672
SGD	6	5	64,910	52,694
AUD			298,286	284,941
CHF			298,746	340,101
Others	40,670	9,649	1,009	164
		194,389		2,827,566

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 20)

As of June 30, 2014, 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	￦	7,769	(7,769	)
EUR		761	(761	)
JPY		67	(67	)
Others		949	(949	)
	￦	9,546	(9,546	)

(ii) Equity price risk

The Group has equity securities which include listed and non-listed securities for its liquidity and operating purpose. As of June 30, 2014, available-for-sale equity instruments measured at fair value amount to ￦814,546 million.

(iii) Interest rate risk

Since the Groups interest bearing assets are mostly fixed-interest bearing assets, as such, the Groups 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.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(1) Financial risk management, Continued

The Groups interest rate risk arises from floating-rate borrowings and debentures. As of June 30, 2014, floating-rate borrowings and debentures amount to ￦78,519 million and ￦610,688 million respectively, the Group has entered into interest rate swaps to hedge interest rate risk related to floating-rate debentures. (Refer to Note 22) If interest rate only increases (decreases) by 1%, income before income taxes for the six-month period ended June 30, 2014 would have been changed ￦393 million due to the interest expense from floating-rate borrowings.

2) 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. The maximum credit exposure as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Cash and cash equivalents	￦	1,330,977	1,398,548
Financial instruments		328,900	319,616
Available-for-sale financial assets		16,547	35,174
Accounts receivabletrade		2,495,965	2,270,470
Loans and receivables		1,198,818	1,044,529
Derivative financial assets		15,336	41,712
Financial assets at fair value through profit or loss		6,017	20,532
	￦	5,392,560	5,130,581

To manage credit risk, the Group evaluates the credit worthiness of each customer or counterparty considering the partys 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 six-month period ended June 30, 2014, 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 Groups 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 June 30, 2014.

In addition, the aging of trade and other receivables that are overdue 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 30.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(1) Financial risk management, Continued

3) Liquidity risk

The Groups 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 June 30, 2014 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	￦	417,181	417,181	417,181
Borrowings(*1)		994,827	1,009,726	896,001	77,158	36,567
Debentures(*1)		6,071,142	7,332,084	1,137,465	3,783,371	2,411,248
Accounts payable-other and others(*2)		2,960,154	3,089,494	2,245,276	591,102	253,116
	￦	10,443,304	11,848,485	4,695,923	4,451,631	2,700,931

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 borrowings and debentures.

(*2) Excludes discounts on accounts payable-other and others.

As of June 30, 2014, periods which cash flows from cash flow hedge derivatives is expected to be incurred are as follows:

(In millions of won)
	Carrying amount		Contractual cash flows		Less than 1 year		1 - 5 years		More than 5 years
Assets	￦	15,336		2,449		6,111		29,643		(33,305	)
Liabilities		(216,683	)	(232,879	)	(53,748	)	(161,319	)	(17,812	)
	￦	(201,347	)	(230,430	)	(47,637	)	(131,676	)	(51,117	)

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(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 2013.

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 June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Liabilities	￦	12,824,469	12,409,958
Equity		14,203,180	14,166,557
Debt-equity ratio		90.29 %	87.60 %

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(3) Fair value

1) Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of June 30, 2014 are as follows:

(In millions of won)	Carrying amount	Level 1	Level 2	Level 3	Total
Financial assets that can be measured at fair value
Trading financial assets	￦	6,017		6,017		6,017
Derivative financial assets		15,336		15,336		15,336
Available-for-sale financial assets		814,546	630,723	46,648	137,175	814,546
	￦	835,899	630,723	68,001	137,175	835,899
Financial assets that cannot be measured at fair value
Cash and cash equivalents(*1)	￦	1,331,263
Available-for-sale financial assets(*1,2)		164,262
Accounts receivable trade and others(*1)		3,694,783
Financial instruments(*1)		328,900
	￦	5,519,208
Financial liabilities that can be measured at fair value
Debentures		107,794		107,794		107,794
Derivative financial liabilities		216,683		216,683		216,683
	￦	324,477		324,477		324,477
Financial liabilities that cannot be measured at fair value
Accounts payable trade(*1)	￦	417,181
Borrowings		994,826		993,476		993,476
Debentures		5,963,348		6,200,113		6,200,113
Accounts payableother and others(*1)		2,960,154
	￦	10,335,509		7,193,589		7,193,589

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(3) Fair value, Continued

2) Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of December 31, 2013 are as follows:

(In millions of won)	Carrying amount	Level 1	Level 2	Level 3	Total
Financial assets that can be measured at fair value
Financial assets at fair value through profit or loss	￦	20,542		20,532	10	20,542
Derivative financial assets		41,712		41,712		41,712
Available-for-sale financial assets		839,647	638,445	46,414	154,788	839,647
	￦	901,901	638,445	108,658	154,798	901,901
Financial assets that cannot be measured at fair value
Cash and cash equivalents(*1)	￦	1,398,639
Available-for-sale financial assets(*1,2)		214,416
Accounts receivable trade and others(*1)		3,314,999
Financial instruments(*1)		319,616
	￦	5,247,670
Financial liabilities that can be measured at fair value
Financial liabilities at fair value through profit or loss	￦	96,147	96,147			96,147
Derivative financial liabilities		124,339		124,339		124,339
	￦	220,486	96,147	124,339		220,486
Financial liabilities that cannot be measured at fair value
Accounts payable trade(*1)	￦	214,716
Borrowings		386,192		399,247		399,247
Debentures		5,830,324		5,946,586		5,946,586
Accounts payableother and others(*1)		3,949,794
	￦	10,381,026		6,345,833		6,345,833

(*1) Does not include fair values of financial assets and liabilities of which fair values have not been measured as carrying amounts are closed to the reasonable approximate fair values.

(*2) Equity instruments which do not have quoted price in an active market for the identical instruments (inputs for level 1) are measured at cost in accordance with K-IFRS 1039 as such equity instruments cannot be reliably measured using other methods.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(3) Fair value, Continued

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.

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 receivabletrade, and accounts payabletrade 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 June 30, 2014 are as follows:

Derivative instruments	2.30 ~ 2.73 %
Borrowings and debentures	3.10 ~ 3.28 %

There have been no transfers from Level 2 to Level 1 for the six-month period ended June 30, 2014 and changes of financial assets classified as Level 3 for the six-month period ended June 30, 2014 are as follows:

| (In millions of won) | Balance
at January 1 | Acquisition | Other comprehensive income | | Disposal | | Balance at June 30 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Financial assets at fair value through profit or loss | ￦ | 10 | | | | (10 | ) | |
| Available-for-sale financial assets | | 154,788 | 31,066 | (9,413 | ) | (39,266 | ) | 137,175 |

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(4) Enforceable master netting agreement or similar agreement

Carrying amount of financial instruments recognized of which offset agreements are applicable as of June 30, 2014 are as follows:

(In millions of won)
	Gross
financial instruments recognized	Gross
offset financial instruments recognized		Net
financial instruments presented on
the statements of financial position	Relevant amount not
offset on the statements of financial position
					Financial instruments		Cash collaterals received	Net amount
Financial assets:
Derivatives(*)	￦	16,241			16,241	(16,241	)
Accounts receivabletrade and others		147,473	(132,495	)	14,978				14,978
		163,714	(132,495	)	31,219	(16,241	)		14,978
Financial liabilities:
Derivatives(*)		56,956			56,956	(16,241	)		40,715
Accounts payabletrade and others		132,495	(132,495	)
	￦	189,451	(132,495	)	56,956	(16,241	)		40,715

Carrying amount of financial instruments recognized of which offset agreements are applicable as of December 31, 2013 are as follows:

(In millions of won)
	Gross
financial instruments recognized	Gross
offset financial instruments recognized		Net
financial instruments presented on
the statements of financial position	Relevant amount not offset on the statements of financial position
					Financial instruments		Cash collaterals received	Net amount
Financial assets:
Derivatives(*)	￦	28,870			28,870	(28,870	)
Accounts receivabletrade and others		138,897	(127,055	)	11,842				11,842
		167,767	(127,055	)	40,712	(28,870	)		11,842
Financial liabilities:
Derivatives(*)		43,536			43,536	(28,870	)		14,666
Accounts payabletrade and others		127,055	(127,055	)
	￦	170,591	(127,055	)	43,536	(28,870	)		14,666

(*) The amount is applicable by enforceable master netting agreement according to ISDA (International Swap and Derivatives Association).

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Transactions with Related Parties

(1) List of related parties

Relationship	Interest rate
Ultimate Controlling Entity	SK Holding Co., Ltd.
Subsidiaries	SK Planet Co., Ltd. and 28 others (Refer to Note 1)
Joint venture	Dogus Planet, Inc. and three others
Associates	SK hynix Inc. and 64 others
Affiliates	The Ultimate Controlling Entitys investor using the equity method and the Ultimate Controlling Entitys subsidiaries and associates, etc.

(2) Compensation for the key management

The Parent Company considers registered directors who have substantial role and responsibility in planning, operating, and controlling of the business as key management. The considerations given to such key management for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

| (In millions of won) | 2014 — Three-month period ended June 30,
2014 | Six-month period ended June 30, 2014 | Three-month period ended June 30,
2013 | Six-month period ended June 30, 2013 | |
| --- | --- | --- | --- | --- | --- |
| Salaries | ￦ | 287 | 1,626 | 340 | 1,594 |
| Provision for retirement benefits | | 113 | 681 | 97 | 817 |
| | ￦ | 400 | 2,307 | 437 | 2,411 |

Compensation for the key management includes salaries, non-monetary salaries and contributions made in relation to the pension plan.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Transactions with Related Parties, Continued

(3) Transactions with related parties for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

| (In millions of won) — Scope | Company | Operating revenue and others — Three-month period ended June 30, 2014 | Six-month period
ended June 30, 2014 | Three-month period ended June 30, 2014 | Six-month period
ended June 30, 2014 | |
| --- | --- | --- | --- | --- | --- | --- |
| Ultimate Controlling Entity | SK Holding Co., Ltd.(1) | ￦ | 130 | 255 | 8,954 | 188,694 |
| Associates | F&U Credit information Co., Ltd. | | 470 | 993 | 9,740 | 21,982 |
| | HappyNarae Co., Ltd. | | 74 | 129 | 1,072 | 2,617 |
| | SK hynix Inc. | | 2,208 | 4,922 | | 879 |
| | SK USA, Inc. | | | | 301 | 960 |
| | SK Wyverns Baseball Club Co., Ltd. | | 180 | 228 | 120 | 9,041 |
| | HanaSK Card Co., Ltd. | | 11,179 | 21,436 | 1,078 | 2,297 |
| | Others | | 2,138 | 3,433 | 4,832 | 7,642 |
| | | | 16,249 | 31,141 | 17,143 | 45,418 |
| Other | SK Engineering & Construction Co., Ltd. | | 821 | 1,669 | 23,544 | 23,544 |
| | SK C&C Co., Ltd. | | 4,689 | 8,595 | 71,056 | 154,140 |
| | SK Networks Co., Ltd.(2) | | 6,229 | 12,354 | 551,082 | 928,615 |
| | SK Networks Service Co., Ltd. | | 5,359 | 5,423 | 22,880 | 41,511 |
| | SK Telesys Co., Ltd. | | 80 | 202 | 25,677 | 46,113 |
| | SK Energy Co., Ltd. | | 7,834 | 11,848 | 221 | 443 |
| | SK Gas Co., Ltd. | | 786 | 3,952 | | |
| | Others | | 5,636 | 10,534 | 5,184 | 14,718 |
| | | | 31,434 | 54,577 | 699,644 | 1,209,084 |
| Total | | ￦ | 47,813 | 85,973 | 725,741 | 1,443,196 |

(*1) Operating expense and others include ￦171,053 million of dividends paid by the Parent Company.

(*2) Operating expense and others include the consideration paid for the business acquisition under common control.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Transactions with Related Parties, Continued

(3) Transactions with related parties for the three and six-month periods ended June 30, 2014 and 2013 are as follows, Continued:

| (In millions of won) — Scope | Company | Acquisition of property
and equipment — Three-month period ended June 30, 2014 | Six-month period
ended June 30, 2014 | Three-month period ended June 30, 2014 | Six-month period
ended June 30, 2014 | |
| --- | --- | --- | --- | --- | --- | --- |
| Ultimate Controlling Entity | SK Holding Co., Ltd. | ￦ | | | | |
| Associates | F&U Credit information Co., Ltd. | | | | | |
| | HappyNarae Co., Ltd. | | 3,157 | 4,050 | | |
| | SK hynix Inc. | | | | | |
| | SK USA, Inc. | | | | | |
| | SK Wyverns Baseball Club Co., Ltd. | | | | | |
| | HanaSK Card Co., Ltd. | | | | | |
| | Others | | | | 45 | 45 |
| | | | 3,157 | 4,050 | 45 | 45 |
| Other | SK Engineering & Construction Co., Ltd. | | 70,063 | 100,126 | | |
| | SK C&C Co., Ltd. | | 25,364 | 51,409 | | |
| | SK Networks Co., Ltd. | | 2,452 | 3,251 | | |
| | SK Networks Service Co., Ltd. | | 716 | 716 | | |
| | SK Telesys Co., Ltd | | 54,873 | 78,838 | | |
| | SK Energy Co., Ltd. | | | | | |
| | SK Gas Co., Ltd. | | | | | |
| | Others | | 4,623 | 5,150 | | |
| | | | 158,091 | 239,490 | | |
| Total | | ￦ | 161,248 | 243,540 | 45 | 45 |

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Transactions with Related Parties, Continued

(3) Transactions with related parties for the three and six-month periods ended June 30, 2014 and 2013 are as follows, Continued:

| (In millions of won) — Scope | Company | Operating revenue
and others — Three-month period ended June 30, 2013 | Six-month period
ended June 30, 2013 | Three-month period ended June 30, 2013 | Six-month period
ended June 30, 2013 | Three-month period ended June 30, 2013 | Six-month period
ended June 30, 2013 | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Ultimate Controlling Entity | SK Holding Co., Ltd.(*) | ￦ | 746 | 1,320 | 8,668 | 188,534 | | |
| Associates | F&U Credit information Co., Ltd. | | 488 | 861 | 11,057 | 21,564 | | |
| | HappyNarae Co., Ltd. | | 116 | 124 | 730 | 2,256 | 2,035 | 2,330 |
| | SK hynix Inc. | | 1,231 | 2,453 | 57 | 57 | | |
| | SK USA, Inc. | | | | | 520 | | |
| | SK Wyverns Baseball Club Co., Ltd. | | 207 | 233 | 1,130 | 9,630 | | |
| | HanaSK Card Co., Ltd. | | 11,086 | 20,157 | 945 | 1,671 | | |
| | Others | | 3,694 | 6,380 | 13,131 | 19,019 | | |
| | | | 16,822 | 30,208 | 27,050 | 54,717 | 2,035 | 2,330 |
| Other | SK Engineering & Construction Co., Ltd. | | 3,077 | 3,933 | 13,085 | 13,634 | 65,035 | 96,616 |
| | SK C&C Co., Ltd. | | 3,781 | 6,787 | 76,420 | 157,818 | 42,457 | 66,235 |
| | SK Networks Co., Ltd. | | 11,849 | 25,511 | 316,204 | 716,903 | 1,210 | 1,458 |
| | SK Networks Service Co., Ltd. | | 2,696 | 5,956 | 27,345 | 45,119 | 136 | 136 |
| | SK Telesys Co., Ltd | | 365 | 489 | 21,715 | 39,999 | 19,287 | 51,057 |
| | SK Energy Co., Ltd. | | 5,210 | 9,318 | 499 | 812 | | |
| | SK Gas Co., Ltd. | | 840 | 1,259 | | | | |
| | Others | | 9,146 | 13,971 | 494 | 1,465 | 591 | 678 |
| | | | 36,964 | 67,224 | 455,762 | 975,750 | 128,716 | 216,180 |
| Total | | ￦ | 54,532 | 98,752 | 491,480 | 1,219,001 | 130,751 | 218,510 |

(*) Operating expense and others include ￦171,053 million of dividends paid by the Parent Company.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Transactions with Related Parties, Continued

(4) Account balances as of June 30, 2014 and 2013 are as follows:

(In millions of won)		June 30, 2014
		Accounts receivable		Accounts payable
Scope	Company	Loans	Accounts receivable-trade, and others	Accounts payable-trade, and others
Ultimate Controlling Entity	SK Holding Co., Ltd.	￦		99
Associates	HappyNarae Co., Ltd.			25	968
	F&U Credit information Co., Ltd.			73	953
	SK hynix Inc.			730
	SK Wyverns Baseball Club Co., Ltd.		1,425	591	321
	Wave City Development Co., Ltd.		1,200	38,412
	Daehan Kanggun BcN Co., Ltd.		22,148
	SK USA, Inc.				626
	Television Media Korea Inc.			333	1,618
	Others			5,604	359
			24,773	45,768	4,845
Other	SK Engineering & Construction Co., Ltd.			170	8,818
	SK C&C Co., Ltd.			1,232	60,247
	SK Networks Co., Ltd.			27,899	395,047
	SK Networks Service Co., Ltd.			2	7,995
	SK Telesys Co., Ltd			177	6,092
	SK Innovation Co., Ltd.			1,329	162
	SK Energy Co., Ltd.			2,230	77
	SK Gas Co., Ltd.			1,381	47
	Others			1,343	10,292
				35,763	488,777
Total		￦	24,773	81,630	493,622

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Transactions with Related Parties, Continued

(4) Account balances as of June 30, 2014 and 2013 are as follows, Continued:

(In millions of won)		June 30, 2013
		Accounts receivable		Accounts payable
Scope	Company	Loans	Accounts receivable-trade, and others	Accounts payable-trade, and others
Ultimate Controlling Entity	SK Holding Co., Ltd.	￦		334
Associates	HappyNarae Co., Ltd.			27	16,317
	F&U Credit information Co., Ltd.			258
	SK hynix Inc.			392
	SK Wyverns Baseball Club Co., Ltd.		1,425
	Wave City Development Co., Ltd.		1,200	38,412
	Daehan Kanggun BcN Co., Ltd.		22,102
	SK USA, Inc.				436
	Others			3,733	5,500
			24,727	42,822	22,253
	SK Engineering & Construction Co., Ltd.			988	92,058
	SK Telesys Co., Ltd.			412	70,467
Other	SK C&C Co., Ltd.			182
	SK Networks. Co., Ltd.			5,930	118,759
	SK Energy Co., Ltd.			5,457	7,438
	SK Gas Co., Ltd.			1,469
	Others			4,707	12,759
				19,145	301,481
Total		￦	24,727	62,301	323,734

(5) There are no collateral or guarantee provided by related parties to the Group nor the Group to related parties.

(6) M&Service Co., Ltd., a subsidiary of the Parent Company, entered into performance agreement with SK Energy Co., Ltd. and provides a blank note to SK Energy Co., Ltd., with regard to this transaction.

(7) There were additional acquisition of investments in associates. (Refer to Note 12)

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Discontinued Operation

(1) Discontinued operation

During the year ended December 31, 2013, SK Planet Co., Ltd., a subsidiary of the Parent Company, sold 52.6% of its ownership interests (13,294,369 shares) in Loen Entertainment, Inc., to Star Invest Holdings Limited. Consideration for the sale amounted to ￦265,887 million. Loen Entertainment was a subsidiary of SK Planet Co., Ltd. and is engaged in the release of music discs as its primary business, The Groups ownership interests after the disposition is 15.0% and Loen Entertainment, Inc. was excluded from the Groups consolidated financial statements as of the date of the sale.

(2) Results of discontinued operation

Results of discontinued operation included in the consolidated statements of income for the six-month period ended June 30, 2013 are as follows. The consolidated statement of income presented for comparative purposes was restated in order to present discontinued operation segregated from the continuing operations.

(In millions of won)
	June 30, 2013
Results of discontinued operation:
Revenue	￦	94,240
Expense		(80,134	)
Operating income generated by discontinued operation		14,106
Non-operating income		1,621
Income tax benefit		(3,824	)
Gain generated by discontinued operation	￦	11,903
Attributable to :
Owners of the Parent Company		8,042
Non-controlling interests		3,861

(3) Cash flows used in discontinued operation

Cash flows used in discontinued operation for the six-month period ended June 30, 2013 are as follows:

(In millions of won)
	June 30, 2013
Cash flow from discontinued operation:
Net cash provided by operating activities	￦	23,589
Net cash used in investing activities		(8,667	)
Net cash used in financing activities		(4,780	)
Net cash provided by discontinued operation	￦	10,142

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Commitments and Legal Claims and Litigations

(1) Collateral assets and commitments

SK Broadband Co., Ltd., a subsidiary of the Parent Company, has pledged its properties as collateral for leases on buildings in the amount of ￦14,230 million as of June 30, 2014.

SK Broadband Co., Ltd., a subsidiary of the Parent Company, has guaranteed for employees borrowings relating to employee stock ownership and provided short-term financial instruments amounting to ￦2,335 million as collateral as of June 30, 2014.

In addition, Neosnetworks Co., Ltd., a subsidiary of the Parent Company, has pledged its properties as collateral for facility funds borrowings in the amount of ￦1,200 million as of June 30, 2014.

(2) Legal claims and litigations

As of June 30, 2014, the Group is involved in various legal claims and litigation. Provision recognized in relation to these claims and litigation is immaterial. For those legal claims and litigation for which no provision was recognized, management does not believe the Group has a present obligation for these matters, nor is it expected any of these claims or litigation will have a significant impact on the Groups financial position or operating results in the event an outflow of resources is ultimately necessary.

(3) Guarantee provided

PS&Marketing Corporation a subsidiary of the Parent Company, is being offered ￦3,000 million of payment guarantees from Shinhan Bank for accounts payable related to handset of the fee of the Apple Computer Korea Ltd.

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Statements of Cash Flows

(1) Adjustments for income and expenses from operating activities for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2014		June 30, 2013
Interest income	￦	(29,756)		(34,026	)
Dividend		(10,567	)	(10,197	)
Gain on foreign currency translation		(15,926	)	(6,038	)
Gain on disposal of long-term investments assets		(6,114	)	(2,134	)
Gain on valuation of derivatives		(6,017	)
Gain on settlement of derivatives		(119	)	(2,274	)
Gain on relating to investments in subsidiaries, associates and joint ventures, net		(294,702	)	(350,676	)
Gain on disposal of property, equipment and intangible assets		(3,411	)	(4,754	)
Gain on relating to financial assets at fair value through profit or loss				(3,365	)
Other income		(6	)	(2,748	)
Interest expenses		161,229		172,924
Loss on foreign currency translation		5,186		5,326
Loss on disposal of long-term investments securities		2,112		4,713
Loss on impairment of long-term investments securities				16,548
Loss on valuation of derivatives		12,135		198
Loss on settlement of derivatives		335
Income tax expense		175,635		214,958
Provision for retirement benefits		64,722		45,143
Depreciation and amortization		1,420,648		1,391,759
Bad debt for accounts receivabletrade		23,553		30,425
Loss on disposal of property and equipment and intangible assets		3,980		13,061
Loss on impairment of property, equipment and intangible assets		3,166		11,245
Loss on relating to financial assets at fair value through profit or loss		1,352
Loss on relating to financial liabilities at fair value through profit or loss		7,798		104,600
Bad debt for accounts receivableother		8,125		16,542
Loss on disposal of investments assets		7		1
Loss on impairment of investments assets		127
Other expenses		5,250		4,516
	￦	1,528,742		1,615,747

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Statements of Cash Flows, Continued

(2) Changes in assets and liabilities from operating activities for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2014		June 30, 2013
Accounts receivabletrade	￦	(195,944	)	(198,320	)
Accounts receivableother		(106,246	)	(36,124	)
Accrued income		57		63
Advance payments		(31,938	)	(46,357	)
Prepaid expenses		(14,301	)	4,530
Proxy paid V.A.T.		7,949		(25,031	)
Inventories		(142,872	)	24,521
Guarantee deposits		(5,876	)	9,857
Accounts payabletrade		118,439		25,642
Accounts payableother		(491,376	)	(323,833	)
Advanced receipts		11,668		(10,963	)
Withholdings		218,630		(98,016	)
Deposits		(1,275	)	(718	)
Accrued expenses		(35,025	)	62,214
Advanced V.A.T.		8,019		59,261
Unearned revenue		(56,921	)	(83,609	)
Provisions		4,710		(143,560	)
Long-term provisions		32,304		(53,684	)
Plan assets		2,415		1,456
Retirement benefit payment		(33,361	)	(25,249	)
Others		893		(27,774	)
	￦	(710,051	)	(885,694	)

(3) Significant non-cash transactions for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended — June 30, 2014	June 30, 2013
Transfer of construction in progress to property, equipment and intangible assets	￦	943,978	993,276
Transfer of other tangible assets to construction in progress		364,744	408,202
Accounts payableother related to acquisition of tangible assets and others		316,164	307,258
Accounts receivableother related to disposal of tangible assets and others		2,015

Table of Contents

SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Subsequent Events

(1) Interim dividends

On July 24, 2014, the Board of Directors of the Parent Company resolved to pay interim cash dividends of ￦1,000 per share totaling ￦70,936 million (Market dividend rate: 0.42%). The ex-dividend date was June 30, 2014 and the interim dividends are expected to be paid within twenty days after the date of the Board of Directors resolution.

Table of Contents

Contents

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	8
Notes to the Condensed Separate Interim Financial Statements	10

Table of Contents

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), which comprise the condensed separate statement of financial position as of June 30, 2014, the related condensed separate statements of income, comprehensive income for the three and six-month periods ended June 30, 2014 and 2013, the changes in equity and cash flows for the six-month periods ended June 30, 2014 and 2013, and notes to the interim financial statements.

Managements responsibility

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 reviews.

Conclusion

Based on our reviews, nothing has come to our attention that causes us to believe that the accompanying condensed separate interim financial statements referred to above are not prepared fairly, in all material respects, in accordance with K-IFRS No.1034 Interim Financial Reporting.

Other matters

The separate statement of financial position of the Company as of December 31, 2013, and the related 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 us and our report thereon, dated February 21, 2014, expressed an unqualified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2013, presented for comparative purposes, is not different from that audited by us in all material respects.

Table of Contents

The procedures and practices utilized in the Republic of Korea to review such condensed separate interim financial statements may differ from those generally accepted and applied in other countries.

KPMG Samjong Accounting Corp.

Seoul, Korea

August 8, 2014

This report is effective as of August 8, 2014, 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 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.

Table of Contents

SK TELECOM CO., LTD.

Condensed Separate Statements of Financial Position

As of June 30, 2014 and December 31, 2013

(In millions of won)		June 30, 2014
Assets
Current Assets:
Cash and cash equivalents	27,28	￦	412,194	448,459
Short-term financial instruments	4,27,28		156,000	166,000
Short-term investment securities	6,27,28		47,274	102,042
Accounts receivabletrade, net	5,27,28,29		1,597,263	1,513,138
Short-term loans, net	5,27,28,29		75,728	72,198
Accounts receivableother, net	5,27,28,29		338,861	388,475
Prepaid expenses			77,949	82,837
Inventories, net			22,171	24,596
Assets held for sale	7		2,611	3,667
Advanced payments and other	5,27,28		24,923	16,370
Total Current Assets			2,754,974	2,817,782
Non-Current Assets:
Long-term financial instruments	4,27,28		7,569	7,569
Long-term investment securities	6,27,28		610,715	729,703
Investments in subsidiaries and associates	8		8,175,838	8,010,121
Property and equipment, net	9,29		7,318,724	7,459,986
Goodwill	10		1,306,236	1,306,236
Intangible assets, net	11		2,067,883	2,239,167
Long-term loans, net	5,27,28,29		50,931	39,925
Long-term prepaid expenses			27,911	23,007
Guarantee deposits	4,5,27,28,29		151,838	152,057
Long-term derivative financial assets	16,27,28		21,353	41,712
Other non-current assets			63	154
Total Non-Current Assets			19,739,061	20,009,637
Total Assets		￦	22,494,035	22,827,419

See accompanying notes to the condensed separate interim financial statements.

Table of Contents

SK TELECOM CO., LTD.

Condensed Separate Statements of Financial Position, Continued

As of June 30, 2014 and December 31, 2013

(In millions of won)		June 30, 2014
Liabilities and Equity
Current Liabilities:
Short-term borrowings	12,27,28	￦	700,000	260,000
Current portion of long-term debt, net	12,13,27,28		902,654	829,503
Accounts payableother	27,28,29		792,483	1,556,201
Withholdings	27,28		758,990	574,166
Accrued expenses	27,28		601,175	653,742
Income tax payable			58,033	104,564
Unearned revenue			137,618	178,569
Derivative financial liabilities	16,27,28		33,122	21,170
Provisions	14		75,633	66,559
Advanced receipts and other			50,879	43,599
Total Current Liabilities			4,110,587	4,288,073
Non-Current Liabilities:
Debentures, net, excluding current portion	12,27,28		4,059,010	4,014,777
Long-term borrowings, excluding current portion	12,27,28		79,519	85,125
Long-term payablesother	13,27,28		649,997	828,721
Long-term unearned revenue			35,139	50,894
Defined benefit liabilities	15		42,179	22,886
Long-term derivative financial liabilities	16,27,28		166,357	100,210
Long-term provisions	14		47,970	19,537
Deferred tax liabilities	25		93,082	44,601
Other non-current liabilities	27,28,29		59,874	57,187
Total Non-Current Liabilities			5,233,127	5,223,938
Total Liabilities			9,343,714	9,512,011
Equity
Share capital	1,17		44,639	44,639
Capital surplus and other capital adjustments	17,18,19		433,894	433,894
Retained earnings	20		12,568,736	12,665,699
Reserves	21		103,052	171,176
Total Equity			13,150,321	13,315,408
Total Liabilities and Equity		￦	22,494,035	22,827,419

See accompanying notes to the condensed separate interim financial statements.

Table of Contents

SK TELECOM CO., LTD.

Condensed Separate Statements of Income

For the three and six-month periods ended June 30, 2014 and 2013

(In millions of won except for per share data)
		June 30, 2014		June 30, 2013
Note		Three-month period ended	Six-month period ended	Three-month period ended	Six-month period ended
Operating revenue:	29
Revenue		￦	3,264,610	6,528,313	3,209,053	6,321,152
Operating expense:	29
Labor cost			147,178	313,216	131,361	331,266
Commissions paid			1,305,216	2,894,331	1,301,196	2,670,696
Depreciation and amortization			518,153	1,027,207	506,354	982,718
Network interconnection			219,888	434,763	184,569	360,936
Leased lines			92,490	189,352	106,669	210,705
Advertising			57,108	96,546	75,409	110,078
Rent			92,520	185,243	88,669	174,955
Cost of products that have been resold			121,630	235,573	94,272	173,074
Other operating expenses	22		182,762	373,123	188,316	354,376
Sub-total			2,736,945	5,749,354	2,676,815	5,368,804
Operating income			527,665	778,959	532,238	952,348
Finance income	24		15,102	40,706	17,358	44,242
Finance costs	24		86,279	152,387	139,333	253,752
Other non-operating income	23		13,569	28,592	13,370	20,343
Other non-operating expenses	23		25,622	55,491	26,730	57,301
Gain on disposal of investments in subsidiaries and associates	8					71,200
Profit before income tax			444,435	640,379	396,903	777,080
Income tax expense	25		81,061	123,472	83,472	161,471
Profit for the period		￦	363,374	516,907	313,431	615,609
Earnings per share (in won)
Basic earnings per share	26	￦	5,004	7,168	4,471	8,806
Diluted earnings per share	26	￦	5,004	7,168	4,471	8,806

See accompanying notes to the condensed separate interim financial statements.

Table of Contents

SK TELECOM CO., LTD.

Condensed Separate Statements of Comprehensive Income

For the three and six-month periods ended June 30, 2014 and 2013

(In millions of won) — Note	Three-month period ended		Six-month period ended		Three-month period ended		Six-month period ended
Profit for the period	￦	363,374		516,907		313,431		615,609
Other comprehensive loss
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit obligations	15	(6,467	)	(9,585	)	(2,968	)	(5,317	)
Items that are or may be reclassified subsequently to profit or loss:
Net change in unrealized fair value of available-for-sale financial assets	21	(9,136	)	(51,431	)	(28,921	)	(48,242	)
Net change in unrealized fair value of derivatives	16,21	(21,064	)	(16,693	)	(56,642	)	(64,092	)
Total other comprehensive loss, net of taxes		(36,667	)	(77,709	)	(88,531	)	(117,651	)
Total comprehensive income	￦	326,707		439,198		224,900		497,958

See accompanying notes to the condensed separate interim financial statements.

Table of Contents

SK TELECOM CO., LTD.

Condensed Separate Statements of Changes in Equity

For the six-month periods ended June 30, 2014 and 2013

(In millions of won)
		Capital surplus and other capital adjustments								Retained earnings		Reserves		Total equity
	Share capital	Paid-in surplus	Treasury stock		Loss on disposal of treasury stock		Hybrid bond	Other
Balance, January 1, 2013	￦	44,639	2,915,887	(2,410,451	)	(18,855	)		(722,741	)	12,413,981		154,588		12,377,048
Cash dividends											(585,438	)			(585,438	)
Issuance of hybrid bond								398,518							398,518
Interest on hybrid bond											(1,058	)			(1,058	)
Treasury stock				177,442		(1,357	)								176,085
Total comprehensive income
Profit for the period											615,609				615,609
Other comprehensive loss											(5,317	)	(112,334	)	(117,651	)
Balance, June 30, 2013	￦	44,639	2,915,887	(2,233,009	)	(20,212	)	398,518	(722,741	)	12,437,777		42,254		12,863,113
Balance, January 1, 2014	￦	44,639	2,915,887	(2,139,683	)	(18,087	)	398,518	(722,741	)	12,665,699		171,176		13,315,408
Cash dividends											(595,865	)			(595,865	)
Interest on hybrid bond											(8,420	)			(8,420	)
Total Comprehensive Income
Profit for the period											516,907				516,907
Other comprehensive loss											(9,585	)	(68,124	)	(77,709	)
Balance, June 30, 2014	￦	44,639	2,915,887	(2,139,683	)	(18,087	)	398,518	(722,741	)	12,568,736		103,052		13,150,321

See accompanying notes to the condensed separate interim financial statements.

Table of Contents

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows

For the six-month periods ended June 30, 2014 and 2013

(In millions of won)
Cash flows from operating activities:
Cash generated from operating activities
Profit for the period	￦	516,907		615,609
Adjustments for income and expenses	31	1,361,390		1,396,172
Changes in assets and liabilities related to operating activities	31	(452,702	)	(710,472	)
Sub-total		1,425,595		1,301,309
Interest received		9,065		11,401
Dividends received		10,567		12,643
Interest paid		(115,795	)	(133,545	)
Income tax paid		(96,712	)	(29,428	)
Net cash provided by operating activities		1,232,720		1,162,380
Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term financial instruments, net		10,000		40,800
Decrease in short-term investment securities, net		55,002
Collection of short-term loans		69,413		170,110
Proceeds from disposal of long-term investment securities		44,572		11,336
Proceeds from disposal of property and equipment		9,350		1,511
Proceeds from disposal of intangible assets		275		635
Proceeds from disposal of assets held for sale		1,056		190,393
Collection of long-term loans		1,988		8,810
Proceeds from disposal of other non-current assets		90		177
Sub-total		191,746		423,772
Cash outflows for investing activities:
Increase in short-term investment securities, net				(5,000	)
Increase in short-term loans		(85,960	)	(166,592	)
Acquisition of long-term investment securities		(8,357	)	(3,084	)
Acquisition of investments in subsidiaries and associates		(146,536	)	(204,043	)
Acquisition of property and equipment		(1,024,367	)	(927,770	)
Acquisition of intangible assets		(23,489	)	(19,229	)
Increase in long-term loans		(45	)
Sub-total		(1,288,754	)	(1,325,718	)
Net cash used in investing activities	￦	(1,097,008	)	(901,946	)

See accompanying notes to the condensed separate interim financial statements.

Table of Contents

SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2014 and 2013

(In millions of won)	June 30, 2014
Cash flows from financing activities:
Cash inflows from financing activities:
Proceeds from short-term borrowings	￦	440,000		40,000
Proceeds from long-term borrowings		3,552
Issuance of hybrid bond				398,518
Issuance of debenture		299,354		1,014,858
Cash inflows from settlement of derivatives		118		2,274
Sub-total		743,024		1,455,650
Cash outflows for financing activities:
Repayment of short-term borrowings				(370,000	)
Repayment of long-term borrowings		(6,407	)	(350,000	)
Repayment of long-term account payablesother		(207,668	)	(161,574	)
Repayment of debentures		(96,151	)
Payment of cash dividends		(595,865	)	(585,438	)
Payment of interest on hybrid bond		(8,420	)
Cash outflows from settlement of derivatives		(335	)
Sub-total		(914,846	)	(1,467,012	)
Net cash used in financing activities		(171,822	)	(11,362	)
Net increase (decrease) in cash and cash equivalents		(36,110	)	249,072
Cash and cash equivalents at beginning of the period		448,459		256,577
Effects of exchange rate changes on cash and cash equivalents		(155	)	155
Cash and cash equivalents at end of the period	￦	412,194		505,804

See accompanying notes to the condensed separate interim financial statements.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Reporting Entity

SK Telecom Co., Ltd. (the Company) was incorporated in March 1984 under the laws of the Republic of Korea (Korea) to engage in providing cellular telephone communication services in Korea. The Company mainly provides wireless telecommunications in Korea. The Companys 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 June 30, 2014, the Companys total issued shares are held by the following:

SK Holdings Co., Ltd.	20,363,452	25.22
National Pension Service, other institutional investors and other minority stockholders	50,572,884	62.63
Treasury stock	9,809,375	12.15
Total number of shares	80,745,711	100.00

Basis of Presentation

(1) Statement of compliance

The condensed separate interim financial statements have been prepared in accordance with Korean International Financial Reporting Standards (K-IFRS), as prescribed in the Act on External Audits of Stock Companies.

These condensed separate interim financial statements were prepared in accordance with K-IFRS No. 1034, Interim Financial Reporting as part of the period covered by the Companys K-IFRS annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since the last annual separate financial statements as at and for the year ended December 31, 2013. These condensed separate interim financial statements 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, Separate Financial Statements presented by a parent, an investor in an associate or a venturer in a joint venture, 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.

(2) Use of estimates and judgments

1) Assumptions and estimation uncertainties

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 Companys 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, 2013.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Basis of Presentation, Continued

(2) Use of estimates and judgments, Continued

2) Fair value measurement

The Company establishes fair value measurement policies and procedures as its accounting policies and disclosures require fair value measurements for the majority of financial and non-financial assets and liabilities. Such policies and procedures are executed by the valuation division, which is responsible for the review of significant fair value measurements including fair value classified as level 3 in the fair value hierarchy and the results of which are directly reported to the finance executive.

The Company uses the best observable inputs in market when measuring fair values of assets or liabilities. Fair values are classified within the fair value hierarchy based on inputs used in valuation method, as follows:

ü Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

ü 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)

ü Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)

If various inputs used to measure fair value of assets or liabilities are transferred between levels of the fair value hierarchy, the Company classifies the assets and liabilities at the lowest level of inputs among the fair value hierarchy which is significant to the entire measured value and recognizes transfers between levels at the end of the reporting period of which such transfers occurred.

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

(3) Common control transactions

SK Holdings Co., Ltd. (the Ultimate Controlling Entity) is the Ultimate Controlling Entity of the Company because it controls the Company. Accordingly, gains and losses from business acquisitions and dispositions involving entities that are under the control of the Ultimate Controlling Entity are accounted for as common control transactions within equity.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Significant Accounting Policies

Except as described below, 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, 2013. The following changes in accounting policy are also expected to be reflected in the Companys separate financial statements as at and for the year ending December 31, 2014.

(1) Changes in accounting policies

1) Offsetting financial assets and financial liabilities

The Company has applied the amendments to K-IFRS No.1032, Financial instruments: Presentation since January 1, 2014. This standard requires financial assets and financial liabilities being offset and the presentation of financial assets and financial liabilities on a net basis when, and only when, the Company currently has a legally enforceable right to set off the recognized amounts and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

There is no material impact of the application of this amendment on the Companys financial statements.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Restricted Deposits

Deposits which are restricted in use as of June 30, 2014 and December 31, 2013 are summarized as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Short-term financial instruments(*)	￦	76,000	76,000
Long-term financial instruments(*)		7,569	7,569
Guarantee deposits		40	40
	￦	83,609	83,609

(*) Financial instruments include charitable trust fund established by the Company. Profits from this charitable fund are donated to charitable institutions. As of June 30, 2014 the funds cannot be withdrawn.

Trade and Other Receivables

(1) Details of trade and other receivables as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014 — Gross amount	Allowances for impairment		Carrying amount
Current assets:
Accounts receivabletrade	￦	1,703,498	(106,235	)	1,597,263
Short-term loans		76,493	(765	)	75,728
Accounts receivableother		392,886	(54,025	)	338,861
Accrued income		6,306			6,306
		2,179,183	(161,025	)	2,018,158
Non-current assets:
Long-term loans		72,730	(21,799	)	50,931
Guarantee deposits		151,838			151,838
		224,568	(21,799	)	202,769
	￦	2,403,751	(182,824	)	2,220,927

(In millions of won)	December 31, 2013 — Gross amount	Allowances for impairment		Carrying amount
Current assets:
Accounts receivabletrade	￦	1,614,466	(101,328	)	1,513,138
Short-term loans		72,928	(730	)	72,198
Accounts receivableother		439,209	(50,734	)	388,475
Accrued income		5,682			5,682
		2,132,285	(152,792	)	1,979,493
Non-current assets:
Long-term loans		61,613	(21,688	)	39,925
Guarantee deposits		152,057			152,057
		213,670	(21,688	)	191,982
	￦	2,345,955	(174,480	)	2,171,475

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Trade and Other Receivables, Continued

(2) The movement in allowance for doubtful accounts of trade and other receivables during the six-month periods ended June 30, 2014 and 2013 were as follows:

(In millions of won)
	June 30, 2014		June 30, 2013
Balance at January 1	￦	174,480		153,337
Increase of bad debt allowances		16,034		16,365
Increase of bad debt allowances-others		8,123		16,326
Write-offs		(25,391	)	(28,014	)
Collection of receivables previously written-off		9,578		9,624
Balance at June 30	￦	182,824		167,638

(3) Details of overdue but not impaired, and impaired trade and other receivable as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014
	Accounts receivable - trade		Other receivables		Accounts receivable - trade		Other receivables
Neither overdue nor impaired	￦	1,236,806		591,670		1,169,946		622,679
Overdue but not impaired		51,324				32,705
Impaired		415,368		108,583		411,815		108,810
		1,703,498		700,253		1,614,466		731,489
Allowances for doubtful accounts		(106,235	)	(76,589	)	(101,328	)	(73,152	)
	￦	1,597,263		623,664		1,513,138		658,337

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.

(4) The aging of overdue but not impaired accounts receivable as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Less than 1 month	￦	27,805	9,549
1 ~ 3 months		4,935	6,975
3 ~ 6 months		4,436	2,565
More than 6 months		14,148	13,616
	￦	51,324	32,705

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Investment Securities

(1) Details of short-term investment securities as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Beneficiary certificates(*)	￦	46,649	101,414
Current portion of long-term investment securities		625	628
	￦	47,274	102,042

(*) The interest distributions arising from beneficiary certificates as of June 30, 2014, were accounted for as accrued income.

(2) Details of long-term investment securities as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)
	June 30, 2014		December 31, 2013
Equity securities:
Marketable equity securities	￦	515,772		574,321
Unlisted equity securities		24,830		22,870
Equity investments		63,925		111,792
		604,527		708,983
Debt securities:
Public bonds(*1)		353		356
Investment bonds(*2)		6,460		20,992
		6,813		21,348
Total		611,340		730,331
Less current portion of long-term investment securities		(625	)	(628	)
Long-term investment securities	￦	610,715		729,703

(*1) Details of maturity for the public bonds as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Less than 1 year	￦	353	356

(*2) During the six-month period ended June 30, 2014, the Company exercised the conversion right for the convertible bonds of NanoEnTek, Inc., which were classified as financial assets at fair value through profit or loss. As a result of this transaction, investments in associates have increased by ￦19,180 million and the difference between carrying amount of the financial assets at fair value and fair value of ￦1,352 million is accounted for as finance costs.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Assets Held for Sale

Disposal contracts for the Companys ownership interests in SK Fans Co., Ltd. and TR Entertainment, investments in associates, have been entered, and investments in associates were reclassified to non-current assets held for sale.

Non-current assets held for sale as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Investments in associates:
TR Entertainment(*1)	￦	2,611	2,611
SK Fans Co., Ltd.(*2)			1,056
	￦	2,611	3,667

(*1) A disposal contract for the Company ownership interests in TR Entertainment was entered into during the year ended December 31, 2013 and the investment in the associate was reclassified to assets classified held for sale and an impairment loss of ￦4,019 million was recognized.

(*2) For the year ended December 31, 2013, contract changes for SK Fans Co., Ltd. has been made and the Company recognized the difference between the changes and the existing contractual amount as impairment loss. For the six-month period ended June 30, 2014, the Company disposed of its investments in SK Fans Co., Ltd. In 2014.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Investments in Subsidiaries and Associates

(1) Investments in subsidiaries and associates as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Investments in subsidiaries	￦	3,592,746	3,453,988
Investments in associates		4,583,092	4,556,133
	￦	8,175,838	8,010,121

(2) Details of investments in subsidiaries as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won) — Number of shares	Ownership (%)		Carrying amount	Carrying amount
SK Telink Co., Ltd.	1,082,272	83.5	￦	144,740	144,740
SK Broadband Co., Ltd.	149,638,354	50.6		1,242,247	1,242,247
PS&Marketing Corporation(*1)	66,000,000	100.0		313,934	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.	72,927,317	100.0		1,538,020	1,538,020
Neosnetworks Co., Ltd.(*2)	31,310	66.7		23,968
SK Telecom China Holdings Co., Ltd.		100.0		29,116	29,116
SKT Vietnam PTE. Ltd.	180,476,700	73.3		2,364	2,364
SKT Americas, Inc.	122	100.0		78,811	76,764
YTK Investment Ltd.		100.0		69,464	69,464
Atlas Investment(*3)		100.0		73,090	60,347
SK Global Healthcare Business Group Ltd.		100.0		25,784	25,784
			￦	3,592,746	3,453,988

(*1) The Company participated in increasing paid-in capital and additionally obtained 20,000,000 shares.

(*2) During the 6 months ended June 30, 2014, the Company acquired 31,310 shares of Neosnetworks Co., Ltd. (the ownership interest of 66.7%) by purchasing old shares from the pre-existing shareholders and participating in the capital increase. The Company entered into a shareholders agreement which granted put options to the pre-existing shareholders for the remaining equity interest of Neosnetworks Co., Ltd. and call options to the Company for those shares if certain conditions are met.

(*3) The company additionally invested ￦12,743 million.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Investments in Subsidiaries and Associates, Continued

(3) Details of investments in associates as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won) — Number of shares	Ownership percentage (%)		Carrying amount	Carrying amount
SK China Company Ltd.(*1)	720,000	9.6	￦	47,830	47,830
HappyNarae Co., Ltd	680,000	42.5		12,250	12,250
Korea IT Fund(*2)	190	63.3		220,957	220,957
Wave City Development Co., Ltd.(*1)	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.	1,675,126	29.0		8,340	8,340
NanoEnTek, Inc.(*3)	5,870,290	26.0		37,959	11,000
SK Industrial Development China Co., Ltd.	72,952,360	21.0		83,691	83,691
Packet One Network	1,153,902	27.0		60,706	60,706
SK Technology Innovation Company	9,800	49.0		85,873	85,873
SK Hynix Inc.	146,100,000	20.4		3,374,725	3,374,725
SK MENA Investment B.V.	9,772,686	32.1		14,485	14,485
SK Latin America Investment S.A.	9,448,937	32.1		14,243	14,243
SKY Property Mgmt. Ltd.	12,639	33.0		145,656	145,656
SK Wyverns Baseball Club Co., Ltd. and others				74,845	74,845
			￦	4,583,092	4,556,133

(*1) Classified as investments in associates because the Company can exercise significant influence over the associates through participation on the associates board of directors.

(*2) Classified as an investment in associates as the Company has less than 50% of the voting rights of the board of directors.

(*3) The number of shares increased by 2,812,374 and 1,250,786, respectively, due to a conversion of convertible bond and the additional investment.

(4) The market price of investments in listed subsidiaries as of June 30, 2014 and December 31, 2013 are as follows:

| (In millions of won, except for share data) | June 30, 2014 — Market value per share (In won) | Number of shares held | Market price | Market value
per share (In won) | Number of shares held | Market price | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| SK Broadband Co., Ltd. | ￦ | 3,640 | 149,638,354 | 544,684 | 4,375 | 149,638,354 | 654,668 |

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Property and Equipment

(1) Changes in property and equipment for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)
	For the six-month period ended June 30, 2014
	Beginning balance	Acquisition	Disposal		Transfer		Depreciation		Ending balance
Land	￦	416,991	3,372			14,221				434,584
Buildings		585,375	428	(101	)	5,967		(17,177	)	574,492
Structures		363,093	125			3,406		(16,257	)	350,367
Machinery		4,945,088	30,095	(709	)	729,287		(772,697	)	4,931,064
Other		472,832	533,525	(1,140	)	(339,991	)	(51,053	)	614,173
Construction in progress		676,607	178,473	(9,438	)	(431,598	)			414,044
	￦	7,459,986	746,018	(11,388	)	(18,708	)	(857,184	)	7,318,724

(In millions of won)
	For the six-month period ended June 30, 2013
	Beginning balance	Acquisition	Disposal		Transfer		Depreciation		Ending balance
Land	￦	395,968	4,596	(14	)	4,634				405,184
Buildings		607,973	34	(99	)	1,803		(17,209	)	592,502
Structures		363,364	946	(7	)	6,025		(17,538	)	352,790
Machinery		4,532,811	26,989	(5,335	)	869,288		(749,863	)	4,673,890
Other		579,448	434,801	(921	)	(468,169	)	(49,394	)	495,765
Construction in progress		639,526	152,426	(5,695	)	(440,405	)			345,852
	￦	7,119,090	619,792	(12,071	)	(26,824	)	(834,004	)	6,865,983

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Goodwill

Goodwill as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Goodwill related to acquisition of Shinsegi Telecom, Inc.	￦	1,306,236	1,306,236

Intangible Assets

(1) Details of changes in intangible assets for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)
	For the six-month period ended June 30, 2014
	Beginning balance	Acquisition	Disposal		Transfer	Amortization		Ending balance
Frequency use rights	￦	1,664,571					(140,264	)	1,524,307
Land use rights		9,752	4,000				(2,038	)	11,714
Industrial rights		9,113	2,796				(1,717	)	10,192
Facility usage rights		16,155	615	(16	)	379	(1,250	)	15,883
Memberships		82,815							82,815
Other		456,761	16,078	(330	)	31,600	(81,137	)	422,972
	￦	2,239,167	23,489	(346	)	31,979	(226,406	)	2,067,883

(In millions of won)
	For the six-month period ended June 30, 2013
	Beginning balance	Acquisition	Disposal		Transfer	Amortization		Ending balance
Frequency use rights	￦	1,693,868					(126,306	)	1,567,562
Land use rights		9,815	913	(50	)		(2,225	)	8,453
Industrial rights		9,769	1,027	(74	)		(1,240	)	9,482
Development costs		665					(464	)	201
Facility usage rights		16,786	662	(49	)		(1,198	)	16,201
Memberships		81,518	2,066	(501	)				83,083
Other		375,451	14,561			39,984	(70,032	)	359,964
	￦	2,187,872	19,229	(674	)	39,984	(201,465	)	2,044,946

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Intangible Assets, Continued

(2) The carrying amount and residual useful lives of frequency usage rights as of June 30, 2014 are as follows:

| (In millions of won) | Amount | | Description | Commencement of amortization | Completion
of amortization |
| --- | --- | --- | --- | --- | --- |
| W-CDMA license | ￦ | 246,394 | Frequency use rights relating to W-CDMA service | Dec. 2003 | Dec. 2016 |
| W-CDMA license | | 40,777 | Frequency use rights relating to W-CDMA service | Oct. 2010 | Dec. 2016 |
| 800MHz license | | 283,808 | Frequency use rights relating to CDMA and LTE service | Jul. 2011 | Jun. 2021 |
| 1.8GHz license | | 942,150 | Frequency use rights relating to LTE service | Sep. 2013 | Dec. 2021 |
| WiBro license | | 11,178 | WiBro service | Mar. 2012 | Mar. 2019 |
| | ￦ | 1,524,307 | | | |

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Borrowings and Debentures

(1) Short-term borrowings as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won) — Lender	Annual interest rate (%)	Maturity	June 30, 2014	December 31, 2013
Kookmin Bank	3.48	Jan. 3, 2014	￦		60,000
	3.48	Jul. 15, 2014		100,000
Korea Development Bank	3.04	Oct. 15, 2014		100,000
Shinhan Bank	3.46	Jul. 15, 2014		100,000
CP	3.09	Jan. 3, 2014			100,000
	3.09	Jan. 6, 2014			100,000
	2.68	Jul. 16, 2014		200,000
	2.70	Jul. 24, 2014		200,000
			￦	700,000	260,000

(2) Long-term borrowings as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won and thousands of U.S. dollars) — Lender	Annual interest rate (%)	Maturity	June 30, 2014	December 31, 2013
Export Kreditnamnden(*)	1.7	Apr. 29, 2022	￦93,425 (USD 92,098	)	99,975 (USD 94,736	)
Less present value discount on long-term borrowings			93,425 (2,743	)	99,975 (3,287	)
			90,682		96,688
Less current portion of long-term borrowings			(11,163	)	(11,563	)
			￦79,519		85,125

(*) For the year ended December 31, 2013, the Company obtained long-term borrowings from Export Kreditnamnden, an export credit agency. The long-term borrowings are redeemed by installment on an annual basis from 2014 to 2022.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Borrowings and Debentures, Continued

(3) Debentures as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won, thousands of U.S. dollars, and thousands of other currencies)	Purpose	Maturity	Annual interest rate (%)	June 30, 2014		December 31, 2013
Unsecured private bonds	Refinancing fund	2016	5.00	￦	200,000		200,000
Unsecured private bonds		2014	5.00		200,000		200,000
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		2016	5.54		40,000		40,000
Unsecured private bonds		2016	5.92		230,000		230,000
Unsecured private bonds	Operating fund	2016	3.95		110,000		110,000
Unsecured private bonds		2021	4.22		190,000		190,000
Unsecured private bonds	Operating and refinancing fund	2019	3.24		170,000		170,000
Unsecured private bonds		2022	3.30		140,000		140,000
Unsecured private bonds		2032	3.45		90,000		90,000
Unsecured private bonds	Operating fund	2023	3.03		230,000		230,000
Unsecured private bonds		2033	3.22		130,000		130,000
Unsecured private bonds		2019	3.30		50,000
Unsecured private bonds		2024	3.64		150,000
Unsecured private bonds(*4)		2029	4.73		53,909
Unsecured private bonds(*4)		2029	4.72		53,885
Foreign global bonds		2027	6.63		405,760		422,120
					(USD 400,000	)	(USD 400,000	)
Exchangeable bonds (*3)	Refinancing fund	2014	1.75				96,147
							(USD 91,109	)
Floating rate notes (*1)	Operating fund	2014	3M Libor + 1.60		253,600		263,825
					(USD 250,000	)	(USD 250,000	)
Floating rate notes (*2)		2014	SOR rate + 1.20		52,768		54,129
					(SGD 65,000	)	(SGD 65,000	)
Swiss unsecured private bonds		2017	1.75		341,529		356,601
					(CHF 300,000	)	(CHF 300,000	)
Foreign global bonds		2018	2.13		710,080		738,710
					(USD 700,000	)	(USD 700,000	)
Australian unsecured private bonds		2017	4.75		286,578		281,988
					(AUD 300,000	)	(AUD 300,000	)
Floating rate notes (*1)		2020	3M Libor + 0.88		304,320		316,590
					(USD 300,000	)	(USD 300,000	)
					4,792,429		4,660,110
Less discounts on bonds					(29,372	)	(34,193	)
					4,763,057		4,625,917
Less current portion of bonds					(704,047	)	(611,140	)
				￦	4,059,010		4,014,777

(*1) As of June 30, 2014, 3M Libor rate is 0.23%.

(*2) As of June 30, 2014, SOR rate is 0.22%.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Borrowings and Debentures, Continued

(*3) 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%.

The Company may redeem the principal amount after three years from the issuance date if the market price exceeds 130% of the exchange price during a predetermined period. The exchange right may be exercised during the period from May 18, 2009 to March 24, 2014.

Exchanges of notes for 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 Companys 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) The Company settled the difference of the measurement bases of accounting profit or loss between the related derivatives by appointing the structured bonds as designated financial liabilities at fair value through profit or loss.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Long-term Payablesother

1) As of June 30, 2014 and December 31, 2013, long-term payables consist of payables related to the acquisition of W-CDMA licenses for 2.1GHz, 800MHZ, 1.8GHz and 2.3GHz frequencies as follows (Refer to Note 11):

(In millions of won) — Period of repayment	Coupon rate	Annual effective interest rate(*)		June 30, 2014		December 31, 2013
2.1GHz	2012~2014	3.58 %	5.89 %	￦			17,533
800MHz	2013~2015	3.51 %	5.69 %		69,416		138,833
2.3GHz	2014~2016	3.00 %	5.80 %		5,766		8,650
1.8GHz	2012~2021	2.43~3.00 %	4.84~5.25 %		824,841		942,675
					900,023		1,107,691
Present value discount on long-term payablesother					(62,582	)	(72,170	)
					837,441		1,035,521
Less current portion of long-term payablesother					(187,444	)	(206,800	)
Carrying amount at period end				￦	649,997		828,721

(*) 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 payables-other.

(2) The repayment schedule of long-term payablesother as of June 30, 2014 is as follows:

(In millions of won)	Amount
Less than 1 year	￦	190,134
1~3 years		238,552
3~5 years		235,669
More than 5 years		235,668
	￦	900,023

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Provisions

Changes in provisions for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended June 30, 2014 — Beginning balance	Increase	Utilization		Reversal		Ending balance	Current	Non- current
Provision for handset subsidy	￦	53,923	86,249	(49,206	)			90,966	58,043	32,923
Provision for restoration		32,173	1,528	(180	)	(884	)	32,637	17,590	15,047
	￦	86,096	87,777	(49,386	)	(884	)	123,603	75,633	47,970

(In millions of won)	For the six-month period ended June 30, 2013 — Beginning balance	Increase	Utilization		Reversal		Ending balance	Current	Non- current
Provision for handset subsidy	￦	353,383	2,413	(200,072	)			155,724	136,489	19,235
Provision for restoration		32,791	2,199	(144	)	(758	)	34,088	9,285	24,803
	￦	386,174	4,612	(200,216	)	(758	)	189,812	145,774	44,038

The Company recognizes a provision for handset subsidies given to the subscribers who purchase handsets on an installment basis.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Defined Benefit Liabilities

(1) Details of defined benefit liabilities as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)
	June 30, 2014		December 31, 2013
Present value of defined benefit obligations	￦	176,557		154,460
Fair value of plan assets		(134,378	)	(131,574	)
	￦	42,179		22,886

(2) Principal actuarial assumptions as of June 30, 2014 and December 31, 2013 are as follows:

Discount rate for defined benefit obligations	3.96 %	3.96 %
Expected rate of salary increase	4.32 %	4.32 %

Discount rate for defined benefit obligation is determined based on the Companys credit ratings and yield rate of corporate bonds with similar maturities for estimated payment term of defined benefit obligation. Expected rate of salary increase is determined based on the Companys historical promotion index, inflation rate and salary increase ratio in accordance with salary agreement.

(3) Changes in defined benefit obligations for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2014		June 30, 2013
Beginning balance	￦	154,460		133,098
Current service cost		16,294		16,843
Interest cost		2,990		2,351
Remeasurement :
- Adjustment based on experience		12,086		8,045
Benefit paid		(10,710	)	(13,554	)
Others(*)		1,437		3,468
Ending balance	￦	176,557		150,251

(*) Others for the six-month periods ended June 30, 2014 and 2013 include transfer to construction in progress and liabilities succeeded in relation to transfer of executives from affiliates.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Defined Benefit Liabilities, Continued

(4) Changes in plan assets for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2014		June 30, 2013
Beginning balance	￦	131,574		98,147
Interest income		2,480		1,653
Actuarial gain(loss)		(560	)	1,031
Contributions to the plan		4,000		4,000
Benefit paid		(3,116	)	(4,074	)
Ending balance	￦	134,378		100,757

Actual return on plan assets for the six-month periods ended June 30, 2014 and 2013 amounted to ￦1,920 million and ￦2,684 million, respectively.

(5) Expenses recognized in profit and loss and capitalized into construction-in-progress for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended — June 30, 2014	June 30, 2013
Current service cost	￦	16,294	16,843
Net interest cost		510	698
	￦	16,804	17,541

The above costs are recognized in labor cost, research and development, or capitalized into construction-in-progress.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Derivative Instruments

(1) Currency swap contracts under cash flow hedge accounting as of June 30, 2014 are as follows:

(In thousands of foreign currencies) — Borrowing date	Hedged item	Hedged risk	Contract type	Financial institution	Duration of contract
Jul. 20, 2007	Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 400,000)	Foreign currency risk	Currency swap	Morgan Stanley and five other banks	Jul. 20, 2007 ~ Jul. 20, 2027
Dec. 15, 2011	Floating-to-fixed cross currency interest rate swap (Singapore dollar denominated bonds face value of
SGD 65,000)	Foreign currency risk and the interest rate risk	Currency interest rate swap	United Overseas Bank	Dec. 15, 2011 ~ Dec. 12, 2014
Dec. 15, 2011	Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 250,000)	Foreign currency risk and the interest rate risk	Currency interest rate swap	DBS Bank and Citi bank	Dec. 15, 2011 ~ Dec. 12, 2014
Jun. 12, 2012	Fixed-to-fixed cross currency swap (Swiss Franc denominated bonds face value of CHF 300,000)	Foreign currency risk	Currency swap	Citibank and five other banks	Jun. 12, 2012 ~ Jun. 12, 2017
Nov. 1, 2012	Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 700,000)	Foreign currency risk	Currency swap	Barclays and nine other banks	Nov. 1, 2012 ~ May. 1, 2018
Jan. 17, 2013	Fixed-to-fixed cross currency swap (Australia dollar denominated bonds face value of
AUD 300,000)	Foreign currency risk	Currency swap	BNP Paribas and three other banks	Jan. 17, 2013 ~ Nov. 17, 2017
Mar. 7, 2013	Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 300,000)	Foreign currency risk and the interest rate risk	Currency interest rate swap	DBS Bank	Mar. 7, 2013 ~ Mar. 7, 2020
Dec. 16, 2013	Fixed-to-fixed cross currency swap (Australia dollar denominated bonds face value of
USD 92,098)	Foreign currency risk	Currency swap	Deutsche bank	Dec. 16, 2013 ~ Apr. 29, 2022

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Derivative Instruments, Continued

(2) As of June 30, 2014, fair values of the above derivatives recorded in assets or liabilities and details of derivative instruments are as follows:

(In millions of won and thousands of foreign currencies)
	Cash flow hedge							Held for trading purpose	Total
Hedged item	Accumulated gain (loss) on valuation of derivatives		Tax effect		Accumulated foreign currency translations gain (loss)		Others(*)
Non-current assets:
Structured bond(*) (face value of KRW 100,000)	￦								6,017	6,017
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 400,000)		(48,130	)	(15,367	)	(50,973	)	129,806		15,336
Total assets	￦									21,353
Current liabilities:
Floating-to-fixed cross currency interest rate swap (Singapore dollar denominated bonds face value of
SGD 65,000)		47		15		(4,683	)			(4,621	)
Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of
USD 250,000)		5,538		1,768		(35,807	)			(28,501	)
Non-current liabilities:
Fixed-to-fixed cross currency swap (Swiss Franc denominated bonds face value of CHF 300,000)		(8,026	)	(2,562	)	(21,910	)			(32,498	)
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 700,000)		(12,082	)	(3,857	)	(52,811	)			(68,750	)
Fixed-to-fixed cross currency swap (Australia dollar denominated bonds face value of AUD 300,000)		6,919		2,208		(48,732	)			(39,605	)
Floating-to-fixed cross currency interest rate swap (face amounts of USD 300,000)		2,344		749		(20,669	)			(17,576	)
Fixed-to-fixed long-term borrowings (U.S. dollar denominated bonds face value of USD 92,098)		(3,336	)	(1,065	)	(3,527	)			(7,928	)
Total liabilities	￦									(199,479	)

(*) Cash flow hedge accounting has been applied to the relevant contract from May 12, 2010. Others represent gain on valuation of currency swap incurred prior to the application of hedge accounting and was recognized through profit or loss prior to the year ended December 31, 2013.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Share Capital and Capital Surplus and Other Capital Adjustments

The Companys outstanding share capital consists entirely of common stock with a par value of ￦500. The number of authorized, issued and outstanding common shares and capital surplus and other capital adjustments as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won, except for share data)
	June 30, 2014		December 31, 2013
Authorized shares		220,000,000		220,000,000
Issued shares(*)		80,745,711		80,745,711
Share capital
Common stock	￦	44,639		44,639
Capital surplus and other capital adjustments:
Paid-in surplus		2,915,887		2,915,887
Treasury stock (Note 18)		(2,139,683	)	(2,139,683	)
Loss on disposal of treasury stock		(18,087	)	(18,087	)
Hybrid bond (note 19)		398,518		398,518
Others		(722,741	)	(722,741	)
	￦	433,894		433,894

(*) 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 Companys outstanding shares have decreased without change in the share capital.

There were no changes in share capital for the six-month period ended June 30, 2014 and the year ended December 31, 2013.

Changes in number of shares outstanding for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In shares)
June 30, 2014			June 30, 2013
Issued shares	Treasury stock	Outstanding shares	Issued shares	Treasury stock	Outstanding shares
Issued shares	80,745,711	9,809,375	70,936,336	80,745,711	10,237,229	70,508,482

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Treasury Stock

The Company acquired treasury stock 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. Treasury stock as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won, shares)	June 30, 2014	December 31, 2013
Number of shares		9,809,375	9,809,375
Amount	￦	2,139,683	2,139,683

Hybrid Bonds

Hybrid bonds classified as equity as of June 30, 2014 is as follows:

(In millions of won)	Type	Issuance date	Maturity	Annual interest rate (%)			Amount
Private hybrid bonds	Blank coupon unguaranteed subordinated bond	June 7, 2013	June 7, 2073	(*1)	4.21	(*2)	￦	400,000
Issuance costs								(1,482	)
							￦	398,518

Hybrid bonds issued by the Company are classified as equity as there is no contractual obligation for delivery of financial assets to the bond holders. These are subordinated bonds which rank before common shareholders in the event of a liquidation or reorganization of the Company.

(*1) The Company has a right to extend the maturity under the same issuance terms without any notice or announcement.

(*2) Annual interest rate is adjusted after five years from the issuance date.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Retained Earnings

(1) Retained earnings as of June 30, 2014 and December 31 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Appropriated:
Legal reserve	￦	22,320	22,320
Reserve for research & manpower development		151,533	155,767
Reserve for business expansion		9,476,138	9,376,138
Reserve for technology development		2,416,300	2,271,300
		12,066,291	11,825,525
Unappropriated		502,445	840,174
	￦	12,568,736	12,665,699

(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

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

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Reserves

(1) Details of reserves, net of taxes, as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)
	June 30, 2014		December 31, 2013
Net change in unrealized fair value of available-for-sale financial assets	￦	159,778		211,209
Net change in unrealized fair value of derivatives		(56,726	)	(40,033	)
	￦	103,052		171,176

(2) Changes in reserves for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended June 30, 2014
	Net change in unrealized fair value of available-for-sale financial assets		Net change in unrealized fair value of derivatives		Total
Balance at January 1, 2014	￦	211,209		(40,033	)	171,176
Changes		(67,851	)	(22,022	)	(89,873	)
Tax effect		16,420		5,329		21,749
Balance at June 30, 2014	￦	159,778		(56,726	)	103,052

(In millions of won)	For the six-month period ended June 30, 2013
	Net change in unrealized fair value of available-for-sale financial assets		Net change in unrealized fair value of derivatives		Total
Balance at January 1, 2013	￦	206,414		(51,826	)	154,588
Changes		(63,643	)	(84,554	)	(148,197	)
Tax effect		15,401		20,462		35,863
Balance at June 30, 2013	￦	158,172		(115,918	)	42,254

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Other Operating Expenses

Details of other operating expenses for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	2014 — Three-month period ended June 30	Six-month period ended June 30	Three-month period ended June 30	Six-month period ended June 30
Other Operating Expenses:
Communication expenses	￦	10,671	21,863	12,775	25,512
Utilities		37,588	83,713	37,401	76,991
Taxes and dues		4,043	8,809	3,395	7,702
Repair		45,074	86,517	48,798	86,850
Research and development		57,254	108,358	56,652	109,351
Training		5,751	11,968	5,350	9,952
Bad debt for accounts receivablestrade		12,039	16,034	11,190	16,365
Other		10,342	35,861	12,755	21,653
	￦	182,762	373,123	188,316	354,376

Other Non-operating Income and Expenses

Details of other non-operating income and expenses for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	2014 — Three-month period ended June 30	Six-month period ended June 30	Three-month period ended June 30	Six-month period ended June 30
Other Non-operating Income:
Gain on disposal of property and equipment and intangible assets	￦	489	600	510	858
Others(*1)		13,080	27,992	12,860	19,485
	￦	13,569	28,592	13,370	20,343
Other Non-operating Expenses:
Loss on disposal of property and equipment and intangible assets	￦	1,146	2,709	6,918	11,457
Donations		18,581	26,560	9,424	21,288
Bad debt for accounts receivableother		5,153	8,123	5,974	16,326
Others(*2)		742	18,099	4,414	8,230
	￦	25,622	55,491	26,730	57,301

(*1) Others for the six-month period ended June 30, 2014 primarily consists of ￦8.6 billion of VAT refund.

(*2) Others for the six-month period ended June 30, 2014 primarily consists of ￦16.7 billion of penalties.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Finance Income and Costs

(1) Details of finance income and costs for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

| (In millions of won) | 2014 — Three-month period ended June
30 | Six-month period ended June 30 | Three-month period ended June 30 | Six-month period ended June 30 | |
| --- | --- | --- | --- | --- | --- |
| Finance Income: | | | | | |
| Interest income | ￦ | 5,999 | 12,827 | 8,039 | 16,471 |
| Dividends | | 939 | 10,567 | 65 | 12,643 |
| Gain on foreign currency transactions | | 1,212 | 5,211 | 4,599 | 6,729 |
| Gain on foreign currency translation | | | 115 | 1,858 | 1,468 |
| Gain relating to financial asset at fair value through profit or loss | | | | 2,427 | 3,365 |
| Gain on disposal of long-term investment securities | | 935 | 5,851 | 370 | 1,292 |
| Gain on valuation of derivatives | | 6,017 | 6,017 | | |
| Gain on settlement of derivatives | | | 118 | | 2,274 |
| | ￦ | 15,102 | 40,706 | 17,358 | 44,242 |
| Finance Costs: | | | | | |
| Interest expense | ￦ | 68,473 | 132,372 | 69,547 | 143,098 |
| Loss on foreign currency transactions | | 5,148 | 8,783 | 3,271 | 5,852 |
| Loss on foreign currency translation | | 2,106 | 1,741 | | 128 |
| Loss on disposal of long-term investment securities | | 5 | 6 | 1 | 73 |
| Loss on settlement of derivatives | | 335 | 335 | | |
| Loss relating to financial asset at fair value through profit or loss | | 2,419 | 1,352 | | |
| Loss relating to financial liability at fair value through profit or loss(*) | | 7,793 | 7,798 | 66,514 | 104,601 |
| | ￦ | 86,279 | 152,387 | 139,333 | 253,752 |

(*) Loss relating to financial liability at fair value through profit or loss for the six-month period ended June 30, 2013 represents 1) valuation loss related to exchangeable bond (issue price of USD 326,397,463) as a result of increase in stock price of the Company and increase in foreign exchange rate, and 2) loss on repayment of debentures upon the claim for exchange.

(2) Details of interest income included in finance income for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	2014 — Three-month period ended June 30	Six-month period ended June 30	Three-month period ended June 30	Six-month period ended June 30
Interest income on cash equivalents and deposits	￦	3,128	6,674	4,858	9,738
Interest income on installment receivables and others		2,871	6,153	3,181	6,733
	￦	5,999	12,827	8,039	16,471

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Finance Income and Costs, Continued

(3) Details of interest expense included in finance costs for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	2014 — Three-month period ended June 30	Six-month period ended June 30	Three-month period ended June 30	Six-month period ended June 30
Interest expense on bank overdrafts and borrowings	￦	7,648	11,983	6,393	18,574
Interest expense on debentures		49,378	96,536	54,553	105,141
Others		11,447	23,853	8,601	19,383
	￦	68,473	132,372	69,547	143,098

(4) Details of impairment losses for financial assets for the three and six-month periods ended June 30, 2014 and 2013 are as follows.

(In millions of won)	2014 — Three-month period ended June 30	Six-month period ended June 30	Three-month period ended June 30	Six-month period ended June 30
Bad debt for accounts receivabletrade	￦	12,039	16,034	11,190	16,365
Bad debt for accounts receivableother		5,153	8,123	5,974	16,326
	￦	17,192	24,157	17,164	32,691

Income Tax Expense

Earnings per Share

(1) Basic earnings per share

1) Basic earnings per share for the three and six-month periods ended June 30, 2014 and 2013 are calculated as follows:

(In millions of won, shares)	2014
	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Profit for the period	￦	363,374		516,907		313,431		615,609
Dividend on hybrid bond		(8,420	)	(8,420	)	(1,058	)	(1,058	)
Profit for the period on common shares		354,954		508,487		312,373		614,551
Weighted average number of common shares outstanding		70,936,336		70,936,336		69,872,438		69,784,208
Basic earnings per share (In won)	￦	5,004		7,168		4,471		8,806

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Earnings per Share, Continued

(1) Basic earnings per share, Continued

2) The weighted average number of common shares outstanding for the three and six-month periods ended June 30, 2014 and 2013 are calculated as follows:

(In shares)
		Three-month period ended June 30		Six-month period ended June 30
Outstanding common shares at January 1, 2014	80,745,711		80,745,711		80,745,711
Effect of treasury stock	(9,809,375	)	(9,809,375	)	(9,809,375	)
Weighted average number of common shares outstanding at June 30, 2014	70,936,336		70,936,336		70,936,336

(In shares)
		Three-month period ended June 30		Six-month period ended June 30
Outstanding common shares at January 1, 2013	80,745,711		80,745,711		80,745,711
Effect of treasury stock	(11,050,712	)	(11,050,712	)	(11,050,712	)
Exchange of exchangeable bonds	813,483		177,439		89,209
Weighted average number of common shares outstanding at June 30, 2013	70,508,482		69,872,438		69,784,208

(2) Diluted earnings per share

For the six-month period ended June 30, 2014, potential ordinary share does not exist. The number of common shares outstanding in respect of the exchangeable common shares of exchangeable bonds is excluded from the diluted earnings per share calculation for the six-month period ended June 30, 2013 as effect would have been anti-dilutive (diluted shares of 2,421,077); therefore, diluted earnings per share for the six-month period ended June 30, 2014 and 2013 are same as basic earnings per share.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Categories of Financial Instruments

(1) Financial assets by categories as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014 — Trading financial assets	Available- for-sale financial assets	Loans and receivables	Derivative financial instruments designated as hedged item	Total
Cash and cash equivalents	￦			412,194		412,194
Financial instruments				163,569		163,569
Short-term investment securities			47,274			47,274
Long-term investment securities			610,715			610,715
Accounts receivabletrade				1,597,263		1,597,263
Loans and receivables(*2)				623,664		623,664
Derivative financial assets		6,017			15,336	21,353
	￦	6,017	657,989	2,796,690	15,336	3,476,032

(In millions of won)	December 31, 2013 — 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	￦			448,459		448,459
Financial instruments				173,569		173,569
Short-term investment securities			102,042			102,042
Long-term investment securities(*1)		20,532	709,171			729,703
Accounts receivabletrade				1,513,138		1,513,138
Loans and receivables(*2)				658,337		658,337
Derivative financial assets					41,712	41,712
	￦	20,532	811,213	2,793,503	41,712	3,666,960

(*1) Long-term investment securities of which the embedded derivative (conversion right option), which should be separated from the main contract, could not be separately measured, were designated as financial assets at fair value through profit or loss.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Categories of Financial Instruments, Continued

(1) Financial assets by categories as of June 30, 2014 and December 31, 2013 are as follows, Continued:

(*2) Details of loans and other receivables as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Short-term loans	￦	75,728	72,198
Accounts receivableother		338,861	388,475
Accrued income		6,306	5,682
Long-term loans		50,931	39,925
Guarantee deposits		151,838	152,057
	￦	623,664	658,337

(2) Financial liabilities by categories as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)
	June 30, 2014
	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	￦			199,479	199,479
Borrowings			790,682		790,682
Debentures(*1)		107,794	4,655,263		4,763,057
Accounts payableother and others(*3)			2,265,394		2,265,394
	￦	107,794	7,711,339	199,479	8,018,612

(In millions of won)
	December 31, 2013
	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	￦			121,380	121,380
Borrowings			356,688		356,688
Debentures(*2)		96,147	4,529,770		4,625,917
Accounts payableother and others(*3)			3,279,604		3,279,604
	￦	96,147	8,166,062	121,380	8,383,589

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Categories of Financial Instruments, Continued

(2) Financial liabilities by categories as of June 30, 2014 and December 31, 2013 are as follows, Continued:

(*3) Details of accounts payable and other payables as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Accounts payableother	￦	792,483	1,556,201
Withholdings		3	3
Accrued expenses		601,175	653,742
Current portion of long-term payablesother		187,444	206,800
Long-term payablesother		649,997	828,721
Other non-current liabilities		34,292	34,137
	￦	2,265,394	3,279,604

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 Companys 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.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(1) Financial risk management, Continued

Monetary foreign currency assets and liabilities as of June 30, 2014 are as follows:

(In millions of won, thousands of U.S. dollars, thousands of Euros, thousands of Japanese Yen, thousands of other currencies)

Foreign currencies		Korean won equivalent	Foreign currencies		Korean won equivalent
USD	71,424	￦	71,522	1,730,095	￦	1,755,002
EUR	5,549		7,680	54		75
JPY	64,979		650
SGD	6		5	64,910		52,694
AUD				298,286		284,941
CHF				298,746		340,101
Other	1,919		3,328	2
		￦	83,185		￦	2,432,813

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 June 30, 2014, 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	￦	6,694	(6,694	)
EUR		761	(761	)
JPY		65	(65	)
Others		333	(333	)
	￦	7,853	(7,853	)

(ii) Equity price risk

The Company has equity securities which include listed and non-listed securities for its liquidity and operating purpose. As of June 30, 2014, available-for-sale equity instruments measured at fair value amounts to ￦609,392 million.

(iii) Interest rate risk

Since the Companys interest bearing assets are mostly fixed-interest bearing assets, as such, the Companys 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.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(1) Financial risk management, Continued

The Companys interest rate risk arises from floating-rate debentures. As of June 30, 2014, floating-rate debentures amount to ￦610,688 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 six-month period ended June 30, 2014 would not have been changed due to the interest expense from floating-rate debentures.

2) 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. The maximum credit exposure as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Cash and cash equivalents	￦	412,164	448,429
Financial instruments		163,569	173,569
Available-for-sale financial assets		6,813	816
Accounts receivable - trade		1,597,263	1,513,138
Loans and receivables		623,664	658,337
Derivative financial assets		21,353	41,712
Financial assets at fair value through profit or loss			20,532
	￦	2,824,826	2,856,533

To manage credit risk, the Company evaluates the credit worthiness of each customer or counterparty considering the partys 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 six-month period ended June 30, 2014, 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 remote. Also, the Companys 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 June 30, 2014.

In addition, the aging of trade and other receivables that are overdue 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 24.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(1) Financial risk management, Continued

3) Liquidity risk

The Companys 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.

Contractual maturities of financial liabilities as of June 30, 2014 are as follows:

(In millions of won)	Carrying amount	Contractual cash flows	Less than 1 year	1 - 5 years	More than 5 years
Borrowings (*1)	￦	790,682	801,646	713,946	51,133	36,567
Debentures (*1)		4,763,057	5,877,713	873,073	2,593,392	2,411,248
Accounts payable - other and others (*2)		2,265,394	2,380,348	1,567,102	567,723	245,523
	￦	7,819,133	9,059,707	3,154,121	3,212,248	2,693,338

The Company 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 borrowings and debentures.

(*2) Excludes discounts on accounts payable - other and others.

As of June 30, 2014, periods which cash flows from cash flow hedge derivatives is expected to be incurred are as follows:

(In millions of won)
	Carrying amount		Contractual cash flows		Less than 1 year		1 - 5 years		More than 5 years
Assets	￦	15,336		2,449		6,111		29,643		(33,305	)
Liabilities		(199,479	)	(214,256	)	(51,060	)	(145,384	)	(17,812	)
	￦	(184,143	)	(211,807	)	(44,949	)	(115,741	)	(51,117	)

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(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 December 31, 2013.

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 June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)	June 30, 2014	December 31, 2013
Liability	￦	9,343,714	9,512,011
Equity		13,150,321	13,315,408
Debt-equity ratio		71.05 %	71.44 %

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(3) Fair value

1) Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of June 30, 2014 are as follows:

(In millions of won)	June 30, 2014 — Carrying amount	Level 1	Level 2	Level 3	Total
Financial assets that can be measured at fair value
Trading financial assets	￦	6,017		6,017		6,017
Derivative financial assets		15,336		15,336		15,336
Available-for-sale financial assets		609,392	515,772	46,648	46,972	609,392
	￦	630,745	515,772	68,001	46,972	630,745
Financial assets that cannot be measured at fair value
Cash and cash equivalents(*1)	￦	412,194
Available-for-sale financial assets(*1,2)		48,597
Accounts receivabletrade and others(*1)		2,220,927
Financial instruments(*1)		163,569
	￦	2,845,287
Financial liabilities that can be measured at fair value
Debentures		107,794		107,794		107,794
Derivative financial liabilities		199,479		199,479		199,479
	￦	307,273		307,273		307,273
Financial liabilities that cannot be measured at fair value
Borrowings	￦	790,682		789,041		789,041
Debentures		4,655,263		4,867,836		4,867,836
Accounts payableother and others(*1)		2,265,394
	￦	7,711,339		5,656,877		5,656,877

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

2) Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of December 31, 2013 are as follows:

(In millions of won)	December 31, 2013 — Carrying amount	Level 1	Level 2	Level 3	Total
Financial assets that can be measured at fair value
Financial assets at fair value through profit or loss	￦	20,532		20,532		20,532
Derivative financial assets		41,712		41,712		41,712
Available-for-sale financial assets		715,053	574,321	46,414	94,318	715,053
	￦	777,297	574,321	108,658	94,318	777,297
Financial assets that cannot be measured at fair value
Cash and cash equivalents(*1)	￦	448,459
Available-for-sale financial assets(*1,2)		96,160
Accounts receivabletrade and others(*1)		2,171,475
Financial instruments(*1)		173,569
	￦	2,889,663
Financial liabilities that can be measured at fair value
Financial liabilities at fair value through profit or loss	￦	96,147	96,147			96,147
Derivative financial liabilities		121,380		121,380		121,380
	￦	217,527	96,147	121,380		217,527
Financial liabilities that cannot be measured at fair value
Borrowings	￦	356,688		369,810		369,810
Debentures		4,529,770		4,621,010		4,621,010
Accounts payableother and others(*1)		3,279,604
	￦	8,166,062		4,990,820		4,990,820

(*1) Does not include fair values of financial assets and liabilities of which fair values have not been measured as carrying amounts are closed to the reasonable approximate fair values.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(3) Fair value, Continued

Fair value of the financial instruments that are traded in an active market (available-for-sale financial assets, financial liabilities at fair value through profit or loss, etc.) is measured based on the bid price at the end of the reporting date.

The Company uses various valuation methods for valuation of fair value of financial instruments that are not traded in an active market. Fair value of available-for-sale securities is determined using the market approach methods and financial assets through profit or loss are measured using the option pricing model. In addition, derivative financial contracts and long-term liabilities are measured using the present value methods. Inputs used to such valuation methods include swap rate, interest rate, and risk premium, and the Company performs valuation using the inputs which are consistent with natures of assets, liabilities being evaluated.

Interest rates used by the Company for the fair value measurement as of June 30, 2014 are as follows:

	Interest rate
Derivative instruments	2.30 ~ 2.73%
Borrowings and Debentures	3.10 ~ 3.28%

3) There have been no transfers from Level 2 to Level 1 for the six-month period ended June 30, 2014 and changes of financial assets classified as Level 3 for the six-month period ended June 30, 2014 are as follows:

(In millions of won)	Balance at Jan. 1	Valuation		Disposal		Balance at June 30
Available-for-sale financial assets	￦	94,318	(8,080	)	(39,266	)	46,972

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Financial Risk Management, Continued

(4) Enforceable master netting agreement or similar agreement

Carrying amount of financial instruments recognized of which offset agreements are applicable as of June 30, 2014 and December 31, 2013 are as follows:

| (In millions of won) | June 30, 2014 — Gross financial instruments recognized | Gross offset financial instruments recognized | | Net financial instruments presented on the statements
of financial position | Relevant amount not offset on the statements of financial
position | | | Net amount | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | Financial instruments | | Cash collaterals received | | |
| Financial assets: | | | | | | | | | |
| Derivatives() | ￦ | 16,241 | | | 16,241 | (16,241 | ) | | |
| Accounts receivable trade and others | | 147,473 | (132,495 | ) | 14,978 | | | | 14,978 |
| | ￦ | 163,714 | (132,495 | ) | 31,219 | (16,241 | ) | | 14,978 |
| Financial liabilities: | | | | | | | | | |
| Derivatives() | | 56,956 | | | 56,956 | (16,241 | ) | | 40,715 |
| Accounts payable other and others | | 132,495 | (132,495 | ) | | | | | |
| | ￦ | 189,451 | (132,495 | ) | 56,956 | (16,241 | ) | | 40,715 |

| (In millions of won) | December 31, 2013 — Gross financial instruments recognized | Gross offset financial instruments recognized | | Net financial instruments presented on the statements
of financial position | Relevant amount not offset on the statements of financial
position | | | Net amount | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | | | | Financial instruments | | Cash collaterals received | | |
| Financial assets: | | | | | | | | | |
| Derivatives() | ￦ | 28,870 | | | 28,870 | (28,870 | ) | | |
| Accounts receivable trade and others | | 138,897 | (127,055 | ) | 11,842 | | | | 11,842 |
| | ￦ | 167,767 | (127,055 | ) | 40,712 | (28,870 | ) | | 11,842 |
| Financial liabilities: | | | | | | | | | |
| Derivatives() | ￦ | 43,536 | | | 43,536 | (28,870 | ) | | 14,666 |
| Accounts payable other and others | | 127,055 | (127,055 | ) | | | | | |
| | ￦ | 170,591 | (127,055 | ) | 43,536 | (28,870 | ) | | 14,666 |

(*) The amount applicable by enforceable master netting agreement according to ISDA (International Swap and Derivatives Association).

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Transactions with Related Parties

(1) List of related parties

Relationship	Interest rate
Ultimate Controlling Entity	SK Holding Co., Ltd.
Subsidiaries	SK Planet Co., Ltd. and 28 others(*)
Joint venture	Dogus Planet, Inc. and three others
Associates	SK hynix Inc. and 64 others
Affiliates	The Ultimate Controlling Entitys investor using the equity method and the Ultimate Controlling Entitys subsidiaries and associates, etc.

(*) As of June 30, 2014, subsidiaries of the Company are as follows:

Type	Company		Types of business
Subsidiaries	SK Telink Co., Ltd.	83.5	Telecommunication and MVNO service
	M&Service Co., Ltd.	100.0	Data base and internet website service
	SK Communications Co., Ltd.	64.6	Internet website services
	Stonebridge Cinema Fund	56.0	Investment association
	Commerce Planet Co., Ltd.	100.0	Online shopping mall operation agency
	SK Broadband Co., Ltd.	50.6	Telecommunication services
	K-net Culture and Contents Venture Fund	59.0	Investment association
	Fitech Focus Limited Partnership II	66.7	Investment association
	Open Innovation Fund	98.9	Investment association
	PS&Marketing Corporation	100.0	Communications device retail business
	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	Internet website services
	SK Planet Co., Ltd.	100.0	Telecommunication service
	Neosnetworks Co., Ltd.	66.7	Guarding of facilities
	SK Telecom China Holdings Co., Ltd.	100.0	Investment association
	Shenzhen E-eye High Tech Co., Ltd.	65.5	Manufacturing
	SK Global Healthcare Business Group., Ltd.	100.0	Investment association
	SK Planet Japan	100.0	Digital contents sourcing service
	SKT Vietnam PTE. Ltd.	73.3	Telecommunication service
	SK Planet Global PTE. Ltd.	100.0	Digital contents sourcing service
	SKP GLOBAL HOLDINGS PTE. LTD.	100.0	Investment association
	SKT Americas, Inc.	100.0	Information gathering and consulting
	SKP America LLC.	100.0	Digital contents sourcing service
	YTK Investment Ltd.	100.0	Investment association
	Atlas Investment	100.0	Investment association
	Technology Innovation Partners, L.P.	100.0	Investment association
	SK Telecom China Fund I L.P.	100.0	Investment association

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Transactions with Related Parties, Continued

(2) Compensation for the key management

The Company considers registered directors who have substantial role and responsibility in planning, operating, and controlling of the business as key management. The considerations given to such key management for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	2014 — Three-month period ended June 30	Six-month period ended June 30	Three-month period ended June 30	Six-month period ended June 30
Salaries	￦	287	1,626	340	1,594
Provision for retirement benefits		113	681	97	817
	￦	400	2,307	437	2,411

Compensation for the key management includes salaries, non-monetary salaries and contributions made in relation to the pension plan.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Transactions with Related Parties, Continued

(3) Transactions with related parties for the three and six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)		2014
		Operating revenue and others		Operating expense and others(*)		Acquisition of property and equipment		Cash Advances
Scope	Company	Three- month period ended June 30	Six- month period ended June 30	Three- month period ended June 30	Six- month period ended June 30	Three- month period ended June 30	Six- month period ended June 30	Three- month period ended June 30	Six- month period ended June 30
Ultimate Controlling Entity	SK Holding Co., Ltd.(*)	￦	123	234	6,936	184,425
Subsidiaries	SK Broadband Co., Ltd.		41,146	72,100	135,525	255,641	46	46
	PS&Marketing Corporation		4,090	6,785	181,452	341,566	841	841
	Network O&S Co., Ltd.		623	1,272	38,256	70,143
	SK Planet Co., Ltd.		15,325	28,188	156,730	298,062	545	1,045
	SK Telink Co., Ltd.		11,910	23,129	3,679	11,352	224	227
	Service Ace Co., Ltd.		1,792	3,542	32,629	69,559
	Service Top Co., Ltd.		1,661	3,303	35,509	75,200
	Others		2,602	3,708	5,543	13,014	50	50
			79,149	142,027	589,323	1,134,537	1,706	2,209
Associates	F&UCredit information Co., Ltd.		415	893	9,354	21,018
	HappyNarae Co., Ltd.				599	1,502	2,725	3,492
	SK hynix Inc.		1,312	3,171		879
	SK USA, Inc.				301	960
	SK Wyverns Baseball Club Co., Ltd.		5	8		8,921
	HanaSK Card Co., Ltd.		6,448	13,419	744	1,512
	Others		1,223	1,299	2,294	3,378			45	45
			9,403	18,790	13,292	38,170	2,725	3,492	45	45
Other	SK Engineering & Construction Co., Ltd		670	1,296	11,474	11,474	55,586	55,586
	SK C&C Co., Ltd.		1,167	1,853	56,382	112,694	13,736	37,092
	SK Networks Co., Ltd.		5,171	9,994	51,334	195,274	2,452	2,454
	SK Networks Service		5,293	5,293	9,400	14,279	435	435
	SK Telesys Co., Ltd.		25	81	1,708	1,976	36,200	57,399
	Others		3,133	5,379	1,860	6,711	3,490	3,847
			15,459	23,896	132,158	342,408	111,899	156,813
		￦	104,134	184,947	741,709	1,699,540	116,330	162,514	45	45

(*) Operating expense and others include ￦171,053 million of dividends paid by the Company.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Transactions with Related Parties, Continued

(3) Transactions with related parties for the three and six-month periods ended June 30, 2014 and 2013 are as follows, continued,

(In millions of won)		2013
		Operating revenue and others		Operating expense and others(*)		Acquisition of property and equipment
Scope	Company	Three-month period ended June 30	Six-month period ended June 30	Three-month period ended June 30	Six-month period ended June 30	Three-month period ended June 30	Six-month period ended June 30
Ultimate Controlling Entity	SK Holding Co., Ltd.(*)	￦	307	502	6,480	184,419
Subsidiaries	SK Broadband Co., Ltd.		33,209	47,497	128,210	238,711	434	457
	PS&Marketing Corporation		1,907	3,680	120,510	257,862	35	70
	Network O&S Co., Ltd.		983	1,498	39,367	65,077
	SK Planet Co., Ltd.		6,093	15,367	133,467	267,809
	SK Telink Co., Ltd.		10,377	18,278	5,279	17,592	23	23
	Service Ace Co., Ltd.		1,901	3,837	30,275	63,109
	Service Top Co., Ltd.		1,600	3,318	30,155	52,662
	Others		2,852	6,206	8,687	19,105
			58,922	99,681	495,950	981,927	492	550
Associates	F&UCredit information Co., Ltd.		387	742	10,184	20,064
	HappyNarae Co., Ltd.				338	1,258	1,572	1,806
	SK hynix Inc.		540	1,335	17	17
	SK USA, Inc.					520
	SK Wyverns Baseball Club Co., Ltd.				910	9,410
	HanaSK Card Co., Ltd.		8,774	17,179	626	1,349
	Others		98	1,534	4,416	8,410
			9,799	20,790	16,491	41,028	1,572	1,806
Other	SK Engineering & Construction Co., Ltd		2,819	3,629	13,165	13,376	51,105	65,001
	SK C&C Co., Ltd.		775	1,498	59,563	123,949	22,454	43,230
	SK Networks Co., Ltd.		10,865	21,960	128,039	232,377	1,073	1,095
	SK Networks Service		2,495	5,677	4,555	9,330	15	15
	SK Telesys Co., Ltd.		35	87	2,765	3,488	7,244	19,877
	Others		3,273	6,128	6,388	7,180	513	513
			20,262	38,979	214,475	389,700	82,404	129,731
		￦	89,290	159,952	733,396	1,597,074	84,468	132,087

(*) Operating expense and others include ￦171,053 million of dividends paid by the Company.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Transactions with Related Parties, Continued

(4) Account balances as of June 30, 2014 and December 31, 2013 are as follows:

(In millions of won)		June 30, 2014
		Accounts receivable		Accounts payable
Scope	Company	Loans	Accounts receivable-trade, and others	Accounts payable trade,
and others
Ultimate Controlling Entity	SK Holding Co., Ltd.	￦		98
Subsidiaries	SK Broadband Co., Ltd.			11,993	17,931
	PS&Marketing Corporation			3,674	81,717
	Network O&S Co., Ltd.			51	143
	SK Planet Co., Ltd.			8,516	31,805
	SK Telink Co., Ltd.			4,017	6,796
	Service Ace Co., Ltd.			283	14,724
	Service Top Co., Ltd.			959	16,335
	Others			4,819	16,923
				34,312	186,374
Associates	HappyNarae Co., Ltd.				476
	SK hynix Inc.			730
	SK Wyverns Baseball Club., Ltd.		1,425
	Wave City Development Co., Ltd.		1,200	38,412
	SK USA Inc				626
	Daehan Kanggun BcN Co., Ltd.		22,148
	HanaSK Card Co., Ltd.			2,152	165
	Others			276	676
			24,773	41,570	1,943
Other	SK Engineering and Construction Co., Ltd.			61	2,485
	SK C&C Co., Ltd.			776	33,147
	SK Networks Co., Ltd.			4,566	1,114
	SK Networks Service				6,953
	SK Telesys Co., Ltd.			156	591
	SK Innovation Co., Ltd.			1,056	148
	Others			968	7,314
				7,583	51,752
		￦	24,773	83,563	240,069

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Transactions with Related Parties, Continued

(4) Account balances as of June 30, 2014 and December 31, 2013 are as follows, continued

(In millions of won)		December 31, 2013
		Accounts receivable		Accounts payable
Scope	Company	Loans	Accounts receivable-trade, and others	Accounts payable trade,
and others
Ultimate Controlling Entity	SK Holding Co., Ltd.	￦		193
Subsidiaries	SK Broadband Co., Ltd.			4,779	81,243
	PS&Marketing Corporation			464	32,573
	Network O&S Co., Ltd.			1,271	12,450
	SK Planet Co., Ltd.			10,882	116,927
	SK Telink Co., Ltd.			232	5,346
	Service Ace Co., Ltd.			269	18,019
	Service Top Co., Ltd.			1,258	15,375
	Others			3,975	21,713
				23,130	303,646
Associates	HappyNarae Co., Ltd.				2,238
	SK hynix Inc.			392
	SK Wyverns Baseball Club., Ltd.		1,425
	Wave City Development Co., Ltd.		1,200	38,412
	SK USA Inc				436
	Daehan Kanggun BcN Co., Ltd.		22,102
	HanaSK Card Co., Ltd.			284
	Others			266
			24,727	39,354	2,674
Other	SK Engineering and Construction Co., Ltd.			767	11,374
	SK C&C Co., Ltd.			140	64,071
	SK Networks Co., Ltd.			5,920	53,807
	SK Networks Service				2,290
	SK Telesys Co., Ltd.			372	6,438
	SK Innovation Co., Ltd.			1,368
	Others			2,367	8,189
				10,934	146,169
		￦	24,727	73,611	452,489

(5) As of June 30, 2014, there are no collateral or guarantee provided by related parties to the Company nor by the Company to related parties.

(6) There was an additional investment on the related parties. (Refer to Note 8)

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Sale and Leaseback

For the year ended December 31, 2012, the Company disposed a portion of its property and equipment and investment property, and entered into lease agreements with respect to those assets. This sale and leaseback transaction is considered as an operating lease.

The Company recognized lease payment of ￦7,038 million and ￦6,851 million, respectively, relating to the above operating lease agreement and lease revenue of ￦4,516 million and ￦4,231 million, respectively, through a sublease agreement for the six-month periods ended June 30, 2014 and 2013. Future lease payments and lease revenue from the above operating lease agreement and sublease agreement are as follows:

(In millions of won) — Less than 1 year	Lease payments — ￦	14,327	9,031
1~5 years		56,489	32,207
More than 5 years		47,130	22,469
	￦	117,946	63,707

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Statements of Cash Flows

(1) Adjustments for income and expenses from operating activities for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2014		June 30, 2013
Gain on foreign currency translations	￦	(115	)	(1,468	)
Interest income		(12,827	)	(16,471	)
Dividends		(10,567	)	(12,643	)
Gain relating to financial assets at fair value through profit or loss				(3,365	)
Gain on disposal of long-term investment securities		(5,851	)	(1,292	)
Gain on disposal of investments in subsidiaries and associates				(71,200	)
Gain on disposal of property and equipment and intangible assets		(600	)	(858	)
Gain on valuation of derivatives		(6,017	)
Gain on settlement of derivatives		(118	)	(2,274	)
Other income				(2,315	)
Loss on foreign currency translation		1,741		128
Bad debt for accounts receivabletrade		16,034		16,365
Bad debt for accounts receivableother		8,123		16,326
Loss on disposal of long-term investments securities		6		73
Loss relating to financial assets at fair value through profit or loss		1,352
Depreciation and amortization		1,083,590		1,035,469
Loss on disposal of property and equipment and intangible assets		2,709		11,457
Interest expenses		132,372		143,098
Loss relating to financial liabilities at fair value through profit or loss		7,798		104,601
Loss on settlement of derivatives		335
Provision for retirement benefits		16,804		17,541
Income tax expense		123,472		161,471
Other expenses		3,149		1,529
	￦	1,361,390		1,396,172

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2014 and 2013

Statements of Cash Flows, Continued

(2) Changes in assets and liabilities from operating activities for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended — June 30, 2014		June 30, 2013
Accounts receivabletrade	￦	(100,450	)	(89,841	)
Accounts receivableother		40,419		(60,610	)
Advance payments		(22,336	)	(25,960	)
Prepaid expenses		4,888		4,277
Inventories		2,426		5,604
Long-term prepaid expenses		(4,905	)	404
Guarantee deposits		3,202		9,921
Accounts payableother		(485,253	)	(173,635	)
Advanced receipts		7,281		2,650
Withholdings		184,824		(95,661	)
Deposits		(462	)	(272	)
Accrued expenses		(53,559	)	4,483
Unearned revenue		(56,706	)	(83,427	)
Provisions		4,710		(143,489	)
Long-term provisions		32,880		(53,775	)
Plan assets		(884	)	74
Retirement benefit payment		(10,710	)	(13,554	)
Others		1,933		2,339
	￦	(452,702	)	(710,472	)

(3) Significant non-cash transactions for the six-month periods ended June 30, 2014 and 2013 are as follows:

(In millions of won)	For the six-month period ended — June 30, 2014	June 30, 2013
Transfer of other property and equipment and others to construction in progress	￦	363,931	483,671
Transfer of construction in progress to property and equipment and intangible assets		795,529	924,076
Accounts payableother related to acquisition of property and equipment and intangible assets		278,349	307,978

Subsequent Events

On July 24, 2014, the Board of Directors of the Company resolved to pay interim cash dividends of ￦1,000 per share totaling ￦70,936 million (Market dividend rate: 0.42%). The ex-dividend date was June 30, 2014 and the interim dividends are expected to be paid within twenty days after the date of the Board of Directors resolution.

Table of Contents

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 T ELECOM C O ., L TD . ( Registrant )
By: /s/ Soo Cheol Hwang
( Signature )
Name:	Soo Cheol Hwang
Title:	Senior Vice President

Date: September 12, 2014

AI assistant

SK TELECOM CO LTD Interim / Quarterly Report 2014

30710_ffr_2014-09-15_ef5784ef-13f4-48c9-b166-e09c534ae015.zip

AI assistant

SK TELECOM CO LTD — Interim / Quarterly Report 2014

30710_ffr_2014-09-15_ef5784ef-13f4-48c9-b166-e09c534ae015.zip

More from SK TELECOM CO LTD

SK TELECOM CO LTD Interim / Quarterly Report 2014