SK TELECOM CO LTD - Interim / Quarterly Report 2015

6-K 1 d88267d6k.htm FORM 6-K Form 6-K

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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 2015

COMMISSION FILE NUMBER 333-04906

SK Telecom Co., Ltd.

(Translation of registrants name into English)

Euljiro 65 (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-

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SEMI-ANNUAL BUSINESS REPORT

(From January 1, 2015 to June 30, 2015)

THIS IS A SUMMARY OF THE SEMI-ANNUAL BUSINESS REPORT ORIGINALLY PREPARED IN KOREAN WHICH 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.

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COMPANY OVERVIEW

1. Company Overview

Since the first quarter of 2011, the Company has reported 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, 2015 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	324,028	Material
M&Service Co., Ltd.	Feb. 10, 2000	Online information services	78,826	Material
SK Communications Co., Ltd.	Sep. 19, 1996	Internet portal and other Internet information services	176,168	Material
Stonebridge Cinema Fund	Sep. 30, 2005	Investment partnership	11,137
Commerce Planet Co., Ltd.	Jul. 1, 1997	Online shopping mall operation services	26,078
SK Broadband Co., Ltd.	Sep. 26, 1997	Fixed-line telecommunication services, multimedia and IPTV services	3,109,991	Material
K-net Culture and Contents Venture Fund	Nov. 24, 2008	Investment partnership	21,094
Hwaitec Focus Investment Partnership 2	Dec. 12, 2008	Investment partnership	19,301
Open Innovation Fund	Dec. 22, 2008	Investment partnership	21,765
PS&Marketing Co., Ltd.	Apr. 3, 2009	Sale of telecommunication devices	544,292	Material
Service Ace Co., Ltd.	Jul. 1, 2010	Customer center management services	66,336
Service Top Co., Ltd.	Jul. 1, 2010	Customer center management services	57,032
Network O&S Co., Ltd.	Jul. 1, 2010	Network maintenance services	71,348
BNCP Co., Ltd.	Dec. 7, 2009	Internet services	6,785
Iconcube, Inc.	Sep. 14, 2011	Online information services	1,382
Iconcube Holdings, Inc.	Sep. 5, 2014	Consulting services	1,934
Iriver Ltd.	Jul. 12, 2000	Audio device manufacturing	65,252
groovers Japan Co. Ltd.	Feb. 25, 2015	Contents and information distribution	46
SK Planet Co., Ltd.	Oct. 1, 2011	Telecommunication and platform services	2,579,286	Material
SK Planet Japan, K.K.	Mar. 14, 2012	Digital contents sourcing services	5,222
SK Planet Global PTE, LTD.	Aug. 4, 2012	Digital contents sourcing services	4,215
SK Planet America LLC	Jan. 27, 2012	Digital contents sourcing services	297,981	Material
SKP Global Holdings PTE, LTD.	Aug. 10, 2012	Holding company for overseas commerce	29,529
SK Global Healthcare Business Group, Ltd.	Sep. 14, 2012	Investment	25,784
Technology Innovation Partners, L.P.	Jun. 24, 2011	Investment	33,194

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Name	Date of Establishment	Principal Business		Material Subsidiary*
SK Telecom China Fund I L.P.	Sep. 14, 2011	Investment	14,290
SK Telecom China Holdings Co., Ltd.	Jul. 12, 2007	Investment	37,877
Iriver China Co., Ltd.	Jun 24, 2004	Electronic device manufacturing	4,519
DongGuan Iriver Electronics Co., Ltd.	Jul. 6, 2006	Electronic device manufacturing	394
Iriver Enterprise Ltd.	Jan. 14, 2014	Wholesale and retail	4,931
Iriver Inc.	Feb. 15, 2007	Wholesale and retail	3,008
Iriver America Inc.**	May 1, 2005	Wholesale and retail
SKT Vietnam PTE., Ltd.	Apr. 5, 2000	Telecommunication services	4,242
SKT Americas, Inc.	Dec. 29, 1995	Information collection and management consulting services	42,159
YTK Investment Ltd.	Jul. 1, 2010	Investment	27,944
Atlas Investment	Jun. 24, 2011	Investment	66,596
Neosnetworks Co., Ltd.	Jun. 12, 2008	Security system services	31,633
Shopkick Management Company, Inc.	Oct. 9, 2014	Investment	230,925	Material
Shopkick, Inc.	Jun. 1, 2009	Mileage based e-commerce application development	28,216

Material Subsidiary means a subsidiary with total assets of Won 75 billion or more as of the end of the latest fiscal year.

** Iriver America Inc. is currently in liquidation proceedings and possesses no assets.

Changes in subsidiaries are set forth below.

Change	Name	Remarks
Additions	groovers Japan Co. Ltd.	Established by Iriver Ltd. (Iriver) in the first half of 2015
Exclusions	Iriver CS Co., Ltd.	Merged into Iriver
	Shenzen E-eye High Tech Co., Ltd. (Shenzen E-eye)	Disposed of equity investment

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

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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 its technological leadership by becoming the first to provide commercial 225 Mbps wideband LTE-A services, which is three times faster than LTE. In December 2014, the Company launched tri-band LTE-A, which is four times faster than LTE. The Company also 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), reflecting the data pattern usage of customers and their lifestyles. T-Phone, T-outdoor and T Kids Phone Joon, introduced in 2014, are customer-focused products that create additional value for customers. In addition, the Company released Pet Fit, a smart healthcare device for pets in April 2015 and T-Pet, which provides a variety of services such as a pets live location information through a device embedded with USIM and positioning modules in May 2015. The Company expects that these products will have a lock-in effect on existing customers.

The Company plans to increase its profitability by strengthening its retention policy, which is the fundamental basis of competitiveness for telecommunication companies in this data-intensive era. The Company will lead the information and communication technology (ICT) trend by providing products through which customers can have a distinctive experience and by providing innovative services, such as the T-Phone, to transition to service-based competition.

In the business-to-business (B2B) area, the Company has strengthened 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. In 2014, the number of its mobile IPTV service subscribers increased by 1.56 million to reach 2.37 million subscribers by the end of the year, and as of June 30, 2015, the number of subscribers was 3.19 million.

In the area of healthcare, the Company achieved several tangible milestones in 2014: point-of-care diagnostic devices manufactured by a company of which the Company is the largest shareholder received approval from the U.S. Food and Drug Administration; the Company entered the Chinese healthcare market; and the Company was the first Korean company to export medical information systems. The Company plans to continue to find and develop new growth engines in the mid- to long-term. The Company also plans to seek out new growth engines in existing businesses, including the intelligence business, by utilizing its technologies relating to big data.

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 services 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.

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(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 39.0 million members as of June 30, 2015, 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 its predecessor service, Smart Wallet, reached 14.1 million users as of June 30, 2015 and leads the online-to-offline commerce business.

In the location-based services business area, users of the Companys T-Map Navigation service reached 19.6 million as of June 30, 2015. 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 23.8 million subscribers as of June 30, 2015 and which the Company plans to expand.

In the media business area, the Company provides the optimum environment for subscribers to access multimedia contents according to personal taste and preference through Hoppin and Btv mobile, available on various digital devices such as personal computers and mobile 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. SK Planet Co., Ltd. (SK Planet) will continue to provide value to customers by constantly developing and improving its 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 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.

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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 |
| October 15, 2014 | Corporate bond | AAA | Korea Ratings | Current rating |
| October 15, 2014 | Corporate bond | AAA | Korea Investors Service, Inc. | Current rating |
| October 15, 2014 | Corporate bond | AAA | NICE Investors Service, Co., Ltd. | Current rating |
| February 9, 2015 | Corporate bond | AAA | Korea Ratings | Current rating |
| February 9, 2015 | Corporate bond | AAA | Korea Investors Service, Inc. | Current rating |
| February 9, 2015 | Corporate bond | AAA | NICE Investors Service, Co., Ltd. | Current rating |
| May 21, 2015 | Corporate bond | AAA | Korea Ratings | Regular rating |
| May 27, 2015 | Corporate bond | AAA | Korea Investors Service, Inc. | Regular rating |
| June 10, 2015 | Corporate bond | AAA | NICE Investors Service, Co., Ltd | Regular rating |
| July 6, 2015 | Corporate bond | AAA | Korea Ratings | Current rating |
| July 6, 2015 | Corporate bond | AAA | Korea Investors Service, Inc. | Current rating |
| July 6, 2015 | 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 |

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| Credit rating date | Subject of rating | Credit rating | Credit rating entity (Credit rating
range) | Rating classification |
| --- | --- | --- | --- | --- |
| 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 |
| October 15, 2014 | CP | A1 | Korea Ratings | Regular rating |
| October 15, 2014 | CP | A1 | Korea Investors Service, Inc. | Regular rating |
| October 15, 2014 | CP | A1 | NICE Investors Service Co., Ltd. | Regular rating |
| May 21, 2015 | CP | A1 | Korea Ratings | Current rating |
| May 27, 2015 | CP | A1 | Korea Investors Service, Inc. | Current rating |
| June 10, 2015 | 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.

(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

On August 9, 2013, Moodys Investors Service raised the outlook on the Companys rating from A3 (Negative) to A3 (Stable).
On April 8, 2014, S&P raised the outlook on the Companys rating from A- (Stable) to A- (Positive).

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.

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.)

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June 2015: Consummation of the comprehensive share exchange transaction (the Share Exchange) through which the Company acquired all of the shares of SK Broadband that it did not otherwise own in exchange for its treasury shares such that SK Broadband became a wholly-owned subsidiary of the Company.

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 28th General Meeting of Shareholders held on March 23, 2012, Young Tae Kim and Dong Seob Jee were elected as inside directors, and Hyun Chin Lim was re-elected as an independent director and 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. At the 31st General Meeting of Shareholders held on March 20, 2015, Dong Hyun Jang was elected as an inside director.

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

(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

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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

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

Protection of creditors

In accordance with Article 530-9 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.

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(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 date of investment was April 2, 2014, and the cumulative investment amount totaled Won 330 billion.

(5) Disposition of shares of iHQ Inc.

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

(6) Acquisition of shares of Neosnetworks Co., Ltd. (Neosnetworks)

In order to acquire a new growth engine, the Company acquired a controlling stake in Neosnetworks, a building security company, with the purchase of 31,310 shares (a 66.7% equity interest) of Neosnetworks on April 2, 2014. The Company acquired an additional 50,377 shares in Neosnetworks in April 2015 through a rights offering, resulting in an increase of its ownership to 83.9%.

(7) Acquisition of shares of Iriver

On August 13, 2014, the Company purchased 10,241,722 shares (a 39.3% equity interest) of Iriver Ltd. (Iriver) from Vogo-Rio Investment Holdings Co., Ltd. and KGF-Rio Limited in order to foster application development and smartphone accessories as part of the Companys growth engines. As of December 31, 2014, the Company holds a 48.9% equity interest of Iriver by acquiring additional shares in its rights offering. The Company does not hold a majority of the voting rights of Iriver, but the Company has concluded that it has effective control, as it holds significantly more voting rights than any other shareholder or any organized group of shareholders.

(8) Acquisition of shares of Shopkick, Inc. (Shopkick)

On October 10, 2014, SK Planet America LLC, a subsidiary of the Company, acquired (through its 95.2%-owned subsidiary Shopkick Management Company, Inc.) a 100.0% ownership interest in Shopkick, a developer of a shopping app for mobile devices that provides benefits to customers for visiting stores, in order to penetrate the mobile commerce market in the United States.

(9) Disposition of Shenzen E-Eye shares

In 2014, the Company entered into an agreement to dispose of its equity interest in Shenzen E-eye in order to focus its business portfolio on high-growth business areas in the Chinese ICT market. The sale was completed on March 23, 2015.

(10) Disposition of a portion of KEB Hana Card shares

On April 3, 2015, the Company sold 27,725,264 shares (10.4% out of the 25.4% equity interest the Company held prior to the sale) of KEB Hana Card Co., Ltd. to Hana Financial Group in cash. With the proceeds of such sale (Won 180 billion), the Company acquired equity interests in Hana Financial Group on April 17, 2015 through participation in a rights offering by Hana Financial Group. The Company plans to maintain its strategic alliance and pursue opportunities to create synergies with Hana Financial Group.

(11) SK Broadband - Comprehensive Share Exchange

On March 20, 2015, the Companys board of directors resolved to approve the Share Exchange.

Share Exchange ratio: Shareholders of one common share of SK Broadband will be allotted 0.0168936 common shares of SK Telecom

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Shares exchanged: 2,471,883 registered common shares of SK Telecom

Date of Share Exchange agreement: March 23, 2015

Record date: April 6, 2015

Announcement date for the proceeding of the Share Exchange as a small-scale share swap: April 6, 2015

Meeting of board of directors for approval of the Share Exchange: May 6, 2015

Date of the Share Exchange: June 9, 2015

[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.

(2) Share Exchange

On March 20, 2015, the board of directors of SK Broadband resolved to approve the Share Exchange. The Share Exchange was approved at the extraordinary shareholders meeting held on May 6, 2015. Subsequent to the Share Exchange, the Company became the parent company of SK Broadband with 100% ownership and remained a listed corporation on the KRX KOSPI Market, and SK Broadband became a wholly-owned subsidiary of the Company and was delisted from the KRX KOSDAQ Market. There was no change in the share ownership interest of the Companys existing shareholders or the Companys management in connection with the Share Exchange.

Share Exchange ratio: Shareholders of one common share of SK Broadband were allotted 0.0168936 common shares of SK Telecom

Shares exchanged: 2,471,883 registered common shares of SK Telecom

Date of Share Exchange agreement: March 23, 2015

Record date: April 6, 2015

Announcement date for the proceeding of the Share Exchange as a small-scale share swap: April 6, 2015

Meeting of board of directors for approval of the Share Exchange: May 6, 2015

Date of the Share Exchange: June 9, 2015

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[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 Communications]

(1) Disposition of shares of SK i-media

Pursuant to the resolution of its board of directors on October 17, 2011, SK Communications sold all of the shares of SK i-media Co., Ltd. it owns to LK Media Tec Co., Ltd. for Won 1 million of cash.

(2) Disposition of shares of U-Land

Pursuant to the resolution of its board of directors on December 21, 2011, SK Communications sold all of the shares of U-Land Co., Ltd. (a 29.85% equity interest) it owns to SK Planet for Won 10 million.

(3) Disposition of the Cyworld service

Pursuant to the resolution of its board of directors on March 6, 2014, SK Communications sold its Cyworld service and certain related assets to Cyworld Co., Ltd. for Won 2.8 billion on April 8, 2014.

(4) 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 a 100% equity stake in M&Service, and SK Planet on February 1, 2013, SK Planet holds a 100% equity stake in M&Service.

[Neosnetworks]

On March 31, 2015, Neos Networks acquired the unmanned electronic security business of Joeun Safe to expand its unmanned security business. The acquisition cost, which had been reported on January 5, 2015 as Won 19.4 billion, is subject to adjustment depending on the customer transfer rate and is currently determined to be Won 14.0 billion. The final acquisition cost will be determined on September 30, 2015, based on the customer transfer rate as of such date. Joeun Safe was spun off from its parent company Joeun System in 2006 and has the fourth largest market share in the Korean unmanned security industry. Upon this acquisition, it is expected that the Company will quickly expand into the unmanned security market.

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[Iriver]

(1) Merger of Iriver CS Co., Ltd. (Iriver CS)

Pursuant to the resolution of its board of directors on November 18, 2014, Iriver decided to merge with Iriver CS, its wholly-owned subsidiary, with Iriver as the surviving entity. The merger was completed based on the merger ratio of 1:0 with no capital increase. The merger and merger registration were completed on January 31, 2015 and February 2, 2015, respectively.

(2) New Establishment of groovers Japan Co. Ltd. (groovers Japan)

On February 25, 2015, Iriver newly established its overseas subsidiary, groovers Japan, for the purpose of strengthening new business opportunities in Japan.

E. Other Important Matters related to Management Activities

[SK Telecom]

(1) Issuance of bonds

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).

On October 28, 2014, the Company issued three tranches of fixed-rate unsecured bonds in the principal amounts of Won 160 billion (with an annual interest rate of 2.53% and a maturity date of October 28, 2019), Won 150 billion (with an annual interest rate of 2.66% and a maturity date of October 28, 2021), and Won 190 billion (with an annual interest rate of 2.82% and a maturity date of October 28, 2024).

On February 26, 2015, the Company issued three tranches of fixed-rate unsecured bonds in the principal amounts of Won 100 billion (with an annual interest rate of 2.40% and a maturity date of February 26, 2022), Won 150 billion (with an annual interest rate of 2.49% and a maturity date of February 26, 2025), and Won 50 billion (with an annual interest rate of 2.61% and a maturity date of February 26, 2030).

On July 17, 2015, the Company issued four tranches of fixed-rate unsecured bonds in the principal amounts of Won 90 billion (with an annual interest rate of 1.89% and a maturity date of July 17, 2018), Won 70 billion (with an annual interest rate of 2.66% and a maturity date of July 17, 2025), Won 90 billion (with an annual interest rate of 2.82% and a maturity date of July 17, 2030), and Won 50 billion (with an annual interest rate of 3.40% and a maturity date of July 17, 2030).

(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 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.

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(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 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. 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 paid in full as of January 6, 2014 and currently there is 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 the purchase of subscriberships, SK Broadband did not believe that 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.

3. Total Number of Shares

A. Total Number of Shares

(As of June 30, 2015) (Unit: in shares)

Classification	Share type — Common shares	Total
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	8,116,551	8,116,551
VI. Number of shares outstanding (IV-V)	72,629,160	72,629,160

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B. Treasury Shares

(1) Acquisitions and dispositions of treasury shares

(As of June 30, 2015) (Unit: in shares)

Acquisition methods			Type of shares
					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
		Sub-total	Common shares	7,086,028					7,086,028
			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	)		(1,692,824	)	(2,856,187	)
			Preferred shares
Total			Common shares	9,809,375					8,116,551
			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.

** The change in treasury shares through other acquisitions was a result of the Share Exchange.

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4. Status of Voting Rights

(As of June 30, 2015) (Unit: in shares)

Classification — Total shares (A)	Common share	80,745,711
	Preferred share
Number of shares without voting rights (B)	Common share	8,116,551	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 rights (F = A - B - C - D + E)	Common share	72,629,160
	Preferred share

5. Dividends and Others

A. Dividends

(1) 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.

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

(3) 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.

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

(5) Distribution of cash dividends was approved during the 31st General Meeting of Shareholders held on March 20, 2015.

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 378th Board of Directors Meeting on July 23, 2015.

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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
(Consolidated) Net income		840,635	1,799,320	1,609,549
Net income per share (Won)		11,695	25,154	23,211
Total cash dividend		72,629	666,802	666,374
Total stock dividends
(Consolidated) Percentage of cash dividend to available income (%)		8.6	37.1	41.4
Cash dividend yield ratio (%)	Common share	0.4	3.5	4.1
	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

Net income per share means basic net income per share. The cash dividend per share of Won 9,400 includes the interim cash dividend per share of Won 1,000.

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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
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, Syrup, T Store and T-Map Navigation in the application and commerce areas
	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
	SK Planet America LLC	System software development, distribution and investments
	Shopkick Management Company, Inc.	System software development, distribution and investments

[Wireless Business]

A. Industry Characteristics

As of June 30, 2015, 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 on December 29, 2014, tri-band LTE-A service with a maximum speed of 300 Mbps was also commercialized. Such achievements were the building blocks towards the Companys LTE penetration reaching 62% as of June 30, 2015.

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B. Growth Potential

Classification	As of June 30, 2015	(Unit: in 1,000 persons) — As of December 31,
		2014	2013	2012
Number of subscribers	SK Telecom	26,238	26,468	26,286	26,555
	Others (KT, LGU+)	26,322	26,125	25,909	25,793
	MVNO	5,308	4,584	2,485	1,276
	Total	57,868	57,177	54,680	53,624

Source: Ministry of Science, ICT and Future Planning (MSIP) website.

C. Domestic and Overseas Market Conditions

The Korean mobile communication market includes the entire population of Korea with mobile communication service needs, and almost every Korean is considered a potential user. Sales revenue related to data services is expected to increase due to the increasing popularity of smartphones and high-speed wireless networks. There is also a growing importance to the business-to-business segment, which creates added value by selling and developing various solutions. 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, 2015	As of December 31,
		2014	2013	2012
Mobile communication services	49.5	50.0	50.0	50.3

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, 2015, the Company recorded Won 8.5 trillion in revenue and Won 0.8 trillion in operating income on a consolidated basis and Won 6.3 trillion in revenue and Won 0.8 trillion in operating income on a separate basis.

The number of subscribers (including MVNO subscribers) as of June 30, 2015 was 28.7 million, an increase of approximately 290,000 from the previous quarter due to the popularity of the newly launched data-centric tariff plans. In particular, the number of smartphone subscribers as of June 30, 2015 was 20.0 million, an increase of approximately 220,000 from the previous quarter propelled by 17.9 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. In December 2014, the Company launched tri-band LTE-A services. 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 18 years, 17 years and 16 years, respectively.

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.

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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 that 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 continue 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 ultra-high definition 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 have 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, 2015	2014	2013
Fixed-line Subscribers	High-speed Internet	19,470	19,199	18,738
	Fixed-line telephone	16,641	16,939	17,620
	IPTV (real-time)	11,338	10,840	8,522

Source: MSIP website and Korea Communications Commission website

** The number of IPTV subscribers as of June 30, 2015 has not been announced by the MSIP, and the number shown above is as of March 31, 2015.

C. Cyclical Nature and Seasonality

High-speed Internet, fixed-line telephone and IPTV services are mature markets that are comparatively less sensitive to cyclical economic changes as such services have become more of a necessity and the market has matured. 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	(Unit: in percentages) — As of December 31,
	June 30, 2015	2014	2013	2012
High-speed Internet (including resales)	25.4	25.1	24.4	24.1
Fixed-line telephone (including Voice over Internet Protocol (VoIP))	17.1	17.0	16.9	16.7
IPTV	26.6	26.1	23.8	22.0

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Source: MSIP website and the Korea Communications Commission website.
With respect to VoIP services, the market share was calculated based on the number of VoIP subscribers among the Company, KT and LG U+.
The audience share for IPTV as of June 30, 2015 has not been announced by the MSIP, and the number shown above is as of March 31, 2015.

D. Business Overview and Competitive Strengths

In 1999, the Company was the first in the world to commence commercial ADSL services. 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, the Company has reinforced its leadership in the ultra-high definition broadcasting market by launching ultra-high definition services that require no set-top boxes in April 2014 and by commercializing ultra-high definition set-top boxes for the first time in Korea in September 2014. Furthermore, the Company was the first in the industry to adopt solutions to upgrade full high definition to ultra-high definition, and the Company also strengthened the line-up of ultra-high definition contents by securing access to diverse contents provided by Sony and NBC Universal. Moreover, the Company provides the greatest number of channels in full high definition in the IPTV market due to its recent upgrade of all 130 live high definition channels to full high definition.

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, a provider of international telecommunications service, 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 by providing quality solutions at reasonable prices.

[Other Business]

A. Industry Characteristics

As the number of smartphones distributed in Korea exceeds 40 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.

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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 with which to utilize this database and provide differentiated services to customers.

B. Growth Potential

The scope and value generated by the platform business, including application and content marketplaces and N-screen services, continue 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.

(3) Media

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, 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 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. In October 2014, SK Planet and Celcom Axiata Berhad, which is a leading telecommunications service provider in Malaysia, established a joint venture, Celcom Planet, and launched online commerce services tailored to the Malaysian market in April 2015.

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Syrup is a consumer-oriented commerce service with the goal of minimizing its customers time and efforts while maximizing the economic benefits 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. Furthermore, Syrup is strengthening its service foundation and competitiveness through the continual release of vertical products such as Syrup Pay, Syrup Order and Syrup Table and the expansion of Merchant.

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 39.0 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 19.6 million as of June 30, 2015, T-Map Navigation is one of the leading location-based service platforms in Korea. By entering the Online to Offline service area with T map Taxi, T map Public Transportation and others, the Company is expanding its mobile platform foundation that connects day-to-day life. 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 23.8 million subscribers and cumulative downloads of 2.8 billion as of June 30, 2015, 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.

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

The Companys instant messenger service, Nate-On, had a market share of 27.6% in the instant messenger market in Korea, with 4.6 million net users who logged in during the month of June 2015. The Companys Internet search portal service, Nate, had a page-view market share of 4.5% as of June 30, 2015. (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.

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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	6,622,093	(78%)
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	1,232,229	(15%)
Other	SK Planet Co., Ltd , SK Communications Co., Ltd., Iriver Inc. M&Service Co., Ltd.,	Internet portal service and e-commerce	OK Cashbag, NATE, T Store, T-Map Navigation and others	641,703	(7%)
Total				8,496,025	(100%)

[Wireless Business]

As of June 30, 2015, based on the Companys standard monthly subscription plan, the basic service fee was Won 11,000, 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, 2015, broadband Internet and TV services comprised 54.7% of SK Broadbands revenue, telephony service 20.0%, corporate data services 24.4% and other telecommunications services 0.9%. 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.

[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, OK Cashbag and others
Advertisement (Display, Search)	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	2015	Network, systems and others	Capacity increase and quality improvement; systems improvement	20,000	6,672
Total					20,000	6,672

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B. Future Investment Plan

(Unit: in 100 millions of Won)

Business	Expected investment amount — Asset type	Amount	Expected investment for each year — 2015	2016	2017	Investment effect
Network/Common	Network, systems and others	20,000	20,000	To be determined	To be determined	Upgrades to the existing services and expanded provision of services including wideband LTE-A
Total		20,000	20,000	To be determined	To be determined

[Fixed-line Business]

A. Investment in Progress

For the six months ended June 30, 2015, the Company made the capital expenditures set out below in order to expand its client base and network infrastructure, and the Company expects that the total amount of capital investments in 2015 will be similar to that of 2014.

(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, 2015	Backbone and subscriber network / others	Expand subscriber networks and facilities	2,261	733	To be determined
Telephone						21
Television						450
Corporate Data				Increase leased-line and integrated information system		725
Others				Expand networks and required space		332
Total					2,261	2,261

4. Revenues

(Unit: in millions of Won)

Business — Wireless	Sales type — Services	Item — Mobile communication	Export	6,533	6,773	2,526
			Domestic	6,615,560	13,521,108	13,313,006
			Subtotal	6,622,093	13,527,881	13,315,532
Fixed-line	Services	Fixed-line, B2B data, High-speed Internet, TV	Export	38,759	63,608	28,002
			Domestic	1,193,470	2,386,312	2,296,387
			Subtotal	1,232,229	2,449,920	2,324,389
Other	Services	Display and Search ad., Content	Export	23,226	20,798	14,049
			Domestic	618,477	1,165,199	948,084
			Subtotal	641,703	1,185,997	962,133
Total			Export	68,518	91,179	44,577
			Domestic	8,427,507	17,072,619	16,557,477
			Total	8,496,025	17,163,798	16,602,054

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(Unit: in millions of Won)

For the six months ended June 30, 2015 — Total sales	7,469,465	1,533,405	997,767		10,000,637	(1,504,612	)	8,496,025
Internal sales	847,372	301,176	356,064		1,504,612	(1,504,612	)
External sales	6,622,093	1,232,229	641,703		8,496,025			8,496,025
Operating income (loss)	815,120	42,805	(42,399	)	815,526			815,526
Profit (loss) for the period								1,075,605
Total assets	23,580,421	3,516,376	3,214,927		30,311,724	(2,270,218	)	28,041,506
Total liabilities	9,483,378	2,242,744	897,624		12,623,746	100,173		12,723,919

5. Derivative Transactions

A. Current Swap Contract Applying Cash Flow Risk Hedge Accounting

Currency swap and interest rate swap contracts under cash flow hedge accounting as of June 30, 2015 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
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
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 loan face value of US$80,577,000)	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, 2015, 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 50 billion)								5,380	5,380
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of US$400,000,000)	(55,930	)	(17,856	)	(7,724	)	129,806		48,296

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Hedged item
Cash flow hedge							Trading purposes	Total
Accumulated gain (loss) on valuation of derivatives		Tax effect		Foreign currency translation gain (loss)		Others (*1)
Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of US$300,000,000)	(5,992	)	(1,913	)	12,112				4,207
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of US$300,000,000)	(8,992	)			18,603				9,611
Total assets									67,494
Non-current liabilities:
Fixed-to-fixed cross currency swap (Swiss Franc denominated bonds face value of CHF 300,000,000)	(6,361	)	(2,031	)	749				(7,643	)
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of US$700,000,000)	(22,835	)	(7,290	)	23,372				(6,753	)
Fixed-to-fixed cross currency swap (Australia dollar denominated bonds face value of AUD 300,000,000)	2,149		686		(76,321	)			(73,486	)
Fixed-to-fixed cross currency swap (U.S. dollar denominated loan face value of US$80,577,000)	(4,640	)	(1,482	)	5,506				(616	)
Total liabilities									(88,498	)

(*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.

6. Major Contracts

[SK Telecom]

(Unit: in 100 millions of Won)

Category	Vendor	Start Date	Completion Date	Contract Title	Contract Amount
Goods	Telcoware Co.	January 22, 2015	December 31, 2015	2014 B2B GOP Unmanned Security System Installation in eastern Korea	118
	Cremotech Co.	April 9, 2015	September 30, 2015	2015 Purchase of Smart Beam Laser Products	58
	Noori Telecom	November 8, 2012	April 30, 2015	2012 B2B Unit Price Contract for Wireless Modems to Remotely Read Meters of KEPCOs Transformer Users	52
Construction	Kocom	January 9, 2015	December 31, 2015	2014 B2B GOP Unmanned Security System Installation in eastern Korea	60
Equipment	Oracle Korea	January 1, 2015	December 31, 2017	2015 B2B SK Planet Oracle DBMS ULA	49
Real Estate	SK Broadband Co., Ltd.	February 1, 2015	January 31, 2016	Namsan Office Building Lease Contract	52
Real Estate	Individuals	January 1, 2015	March 31, 2015	Purchase of land (Jeonju region and 10 others)	113
Subtotal					502

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[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 Jan. 2015 to Dec. 2015 (Unless special reasons arise, the usage period will be renewed annually)	Use of electricity poles
Seoul City Railway	Use of telecommunication line conduits	From Jan. 2012 to Dec. 2014 (Renewal in progress, expected to enter into a contract after deciding technical service unit price, to be applied retroactively to 2015 payments)	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, currently in the process of transitioning to private network system, plans to enter into a contract once completed
and the remaining work is confirmed)	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, currently in discussion to decide usage unit price, future plans to enter into a contract)	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, in the completion stage of transitioning to private network system, currently reviewing whether to renew contract at
the end of 2015)	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 Kakao Corp.	Cost-per-click Internet search advertisement		Amount determined based on the number of clicks

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

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7. R&D Investments

Set forth below are the Companys R&D expenditures.

(Unit: in millions of Won except percentages)

Category
		2014	2013
Raw material		775	530	38
Labor		33,883	71,224	79,865
Depreciation		71,386	176,975	158,158
Commissioned service		18,495	67,802	22,923
Others		26,867	81,221	102,668
Total R&D costs		151,406	397,752	363,652
Accounting	Sales and administrative expenses	147,422	390,943	352,385
	Development expenses (Intangible assets)	3,984	6,809	11,267
R&D cost / sales amount ratio (Total R&D costs / Current sales amount×100)		1.78 %	2.32 %	2.19 %

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 by providing solutions such as registering and licensing of the brands.

B. Business-related Intellectual Property

[SK Telecom]

The Company holds 5,495 Korean-registered patents, 345 U.S.-registered patents, 234 Chinese-registered patents (all including patents held jointly with other companies) and more patents with other countries. The Company holds 944 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 411 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, 2015, SK Planet held 2,603 registered patents, 117 registered design marks, 1,242 registered trademarks and five copyrights (including those held jointly with other companies) in Korea. It also holds 117 U.S.-registered patents, 88 Chinese-registered patents, 63 Japanese-registered patents, 31 E.U.-registered patents (all including patents held jointly with other companies) and 295 registered trademarks, along with a number of other intellectual property rights in other countries.

[SK Communications]

As of June 30, 2015, SK Communications held 81 registered patents, 26 registered design rights and 703 registered trademarks in Korea.

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.

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III. FINANCIAL INFORMATION

1. Summary Financial Information (Consolidated and Separate)

A. Summary Financial Information (Consolidated)

Below is the summary consolidated financial information of the Company as of June 30, 2015, December 31, 2014 and December 31, 2013 and for the six months ended June 30, 2015 and 2014 and the years ended December 31, 2014 and 2013. The Companys reviewed consolidated financial statements as of June 30, 2015 and December 31, 2014 and for the six months ended June 30, 2015 and 2014, which are prepared in accordance with K-IFRS, are attached hereto.

As of March 31, 2015	(Unit: in millions of Won except number of companies) — As of December 31, 2014		As of December 31, 2013
Assets
Current Assets	5,180,521	5,083,148		5,123,415
Cash and Cash Equivalents	829,659	834,429		1,398,639
Accounts Receivable Trade, net	2,443,502	2,392,150		2,257,316
Accounts Receivable Other, net	697,103	690,527		643,603
Others	1,210,257	1,166,042		823,857
Non-Current Assets	22,860,985	22,858,085		21,453,100
Long-Term Investment Securities	1,149,319	956,280		968,527
Investments in Associates and Joint Ventures	6,581,767	6,298,088		5,325,297
Property and Equipment, net	10,252,498	10,567,701		10,196,607
Intangible Assets, net	2,298,574	2,483,994		2,750,782
Goodwill	1,930,205	1,917,595		1,733,261
Others	648,622	634,427		478,626
Total Assets	28,041,506	27,941,233		26,576,515
Liabilities
Current Liabilities	5,308,391	5,420,310		6,069,220
Non-Current Liabilities	7,415,528	7,272,653		6,340,738
Total Liabilities	12,723,919	12,692,963		12,409,958
Equity
Equity Attributable to Owners of the Parent Company	15,187,526	14,506,739		13,452,372
Share Capital	44,639	44,639		44,639
Capital Surplus (Deficit) and Other Capital Adjustments	662,455	277,998		317,508
Retained Earnings	14,421,043	14,188,591		13,102,495
Reserves	59,389	(4,489	)	(12,270	)
Non-controlling Interests	130,061	741,531		714,185
Total Equity	15,317,587	15,248,270		14,166,557
Total Liabilities and Equity	28,041,506	27,941,233		26,576,515
Number of Companies Consolidated	39	40		28

| For the six months ended June 30, 2015 | (Unit: in millions of Won except per share amounts) — For the six months ended June 30, 2014 | | For the year ended December
31, 2014 | | For the year ended December
31, 2013 | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Operating Revenue | 8,496,025 | 8,507,288 | | 17,163,798 | | 16,602,054 | |
| Operating Income | 815,526 | 798,490 | | 1,825,105 | | 2,011,109 | |
| Profit Before Income Tax | 1,075,605 | 940,583 | | 2,253,828 | | 1,827,101 | |
| Profit for the Period | 840,635 | 764,948 | | 1,799,320 | | 1,609,549 | |
| Profit for the Period Attributable to Owners of the Parent Company | 840,334 | 768,350 | | 1,801,178 | | 1,638,964 | |
| Profit for the Period Attributable to Non-controlling Interests | 301 | (3,402 | ) | (1,858 | ) | (29,415 | ) |
| Basic Earnings Per Share (Won) | 11,695 | 10,713 | | 25,154 | | 20,708 | |
| Diluted Earnings Per Share (Won) | 11,695 | 10,713 | | 25,154 | | 23,211 | |

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B. Summary Financial Information (Separate)

Below is the summary separate financial information of the Company as of June 30, 2015, December 31, 2014 and December 31, 2013 and for the six months ended June 30, 2015 and 2014 and the years ended December 31, 2014 and 2013. The Companys reviewed separate financial statements as of June 30, 2015 and December 31, 2014 and for the six months ended June 30, 2015 and 2014, which are prepared in accordance with K-IFRS, are attached hereto.

As of June 30, 2015	(Unit: in millions of Won)	As of December 31, 2014	As of December 31, 2013
Assets
Current Assets	2,685,875		2,689,913	2,817,782
Cash and Cash Equivalents	155,687		248,311	448,459
Accounts Receivable Trade, net	1,597,007		1,559,281	1,513,138
Accounts Receivable Other, net	300,037		305,990	388,475
Others	633,144		576,331	467,710
Non-Current Assets	20,177,570		20,022,549	20,009,637
Long-Term Investment Securities	731,379		608,797	729,703
Investments in Subsidiaries and Associates	8,674,128		8,181,769	8,010,121
Property and Equipment, net	7,423,274		7,705,906	7,459,986
Intangible Assets, net	1,755,891		1,928,169	2,239,167
Goodwill	1,306,236		1,306,236	1,306,236
Others	286,662		291,672	264,424
Total Assets	22,863,445		22,712,462	22,827,419
Liabilities
Current Liabilities	3,456,046		3,378,046	4,288,073
Non-Current Liabilities	5,601,032		5,792,195	5,223,938
Total Liabilities	9,057,078		9,170,241	9,512,011
Equity
Share Capital	44,639		44,639	44,639
Capital Surplus and Other Capital Adjustments	845,966		433,894	433,894
Retained Earnings	12,917,835		12,996,790	12,665,699
Reserves	(2,073	)	66,898	171,176
Total Equity	13,806,367		13,542,221	13,315,408
Total Liabilities and Equity	22,863,445		22,712,462	22,827,419

| For the six months ended June 30, 2015 | (Unit: in millions of Won except per share amounts) — For the six months ended June 30, 2014 | For the year ended December
31, 2014 | For the year ended December 31, 2013 | |
| --- | --- | --- | --- | --- |
| Operating Revenue | 6,277,222 | 6,528,313 | 13,012,644 | 12,860,379 |
| Operating Income | 803,916 | 778,959 | 1,737,160 | 1,969,684 |
| Profit Before Income Tax | 698,142 | 640,379 | 1,321,750 | 1,220,797 |
| Profit for the Period | 527,783 | 516,907 | 1,028,541 | 910,157 |
| Basic Earnings Per Share (Won) | 7,301 | 7,168 | 14,262 | 12,837 |
| Diluted Earnings Per Share (Won) | 7,301 | 7,168 | 14,262 | 12,837 |

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2. Other Matters Related to Financial Information

A. Restatement of the Financial Statements

Not applicable.

B. Allowance for Doubtful Accounts

(1) Allowance for Doubtful Accounts of Trade and Other Receivables

	(Unit: in millions of Won)
For the six months ended June 30, 2015
Gross amount	Allowance for Doubtful Accounts	Percentage
Accounts receivable trade	2,743,758	235,262	9 %
Loans	118,296	27,350	23 %
Accounts receivable other	780,748	79,987	10 %
Accrued income	10,264		0 %
Guarantee deposits	301,121		0 %
Total	3,954,187	342,599	9 %
	(Unit: in millions of Won)
For the year ended December 31, 2014
Gross amount	Allowance for Doubtful Accounts	Percentage
Accounts receivable trade	2,682,595	221,909	8 %
Loans	157,934	27,694	18 %
Accounts receivable other	772,711	78,588	10 %
Accrued income	10,134		0 %
Guarantee deposits	289,009		0 %
Total	3,912,383	328,191	8 %

	(Unit: in millions of Won)
For the year ended December 31, 2013
Gross amount	Allowance for Doubtful Accounts	Percentage
Accounts receivable trade	2,495,155	224,685	9 %
Loans	164,306	27,469	17 %
Accounts receivable other	715,405	71,802	10 %
Accrued income	11,970	29	0 %
Guarantee deposits	252,148		0 %
Total	3,638,984	323,985	9 %

(2) Movements in Allowance for Doubtful Accounts of Trade and Other Receivables

For the six months ended June 30, 2015	(Unit: in millions of Won)	For the year ended December 31, 2014		For the year ended December 31, 2013
Beginning balance	328,191		323,985		300,668
Increase of allowance for doubtful accounts	39,029		63,697		79,330
Reversal of allowance for doubtful accounts					(359	)
Write-offs	(38,911	)	(89,529	)	(76,697	)
Other	14,250		30,039		21,042
Ending balance	342,599		328,191		323,985

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(3) Policies for Allowance for Doubtful Accounts

The Company establishes allowances for doubtful accounts based on the likelihood of recoverability of trade and other receivables based on their aging at the end of the period and past customer default experience for the past two years. With respect to trade receivables relating to wireless telecommunications services, the Company considers the likelihood of recovery based on past customer default experience and the length of default in connection with the type of default (e.g., whether the customers service has been terminated or is continued). For such trade receivables that have been overdue for more than two years after the customers service has been terminated, the Company records an allowance of 100% of such receivables. For such trade receivables that have been overdue for less than two years after the customers service has been terminated, or relates to a customer that is continuing his service, the Company records an allowance of a certain percentage of such receivable. Consistent with customary practice, the Company writes off trade and other receivables for which the prescription period has passed or that are determined to be impossible or economically too costly to collect, including receivables that are less than Won 200,000 and more than six months overdue and receivables that have been determined to be the subject of identity theft.

(4) Aging of Accounts Receivable

	(Unit: in millions of Won)
As of June 30, 2015
Six months or less	From six months to one year	From one year to three years	More than three years	Total
Accounts receivable trade	2,446,490	56,741	159,779	80,748	2,743,758
Percentage	89.2 %	2.1 %	5.8 %	2.9 %	100.0 %

C. Inventories

(1) Detailed Categories of Inventories

Account Category	(Unit: in millions of Won) — For the six months ended June 30, 2015	For the year ended December 31, 2014	For the year ended December 31, 2013
Merchandise	249,932	246,738	161,928
Goods in transit
Other inventories	32,939	20,929	15,192
Total	282,871	267,667	177,120
Percentage of inventories to total assets [ Inventories / Total assets ]	1.01 %	0.96 %	0.67 %
Inventory turnover [ Cost of sales / { ( Beginning balance of inventories + Ending balance of inventories ) / 2}
]	6.84	7.55	6.20

(2) Reporting of Inventories

The Company holds handsets, ICT equipment for offline sales, etc. in inventory. The Company conducts physical due diligence of its inventories with its auditors at the end of each year.

D. Fair Value Measurement

See notes 4(5) to 4(7) and 4(16) of the notes to our audited consolidated financial statements as of and for the years ended December 31, 2014 and 2013 for more information.

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IV. AUDITORS OPINION

1. Auditor (Consolidated)

| Six months ended June 30, 2015 | Year ended December
31, 2014 | Year ended December
31, 2013 |
| --- | --- | --- |
| 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, 2015
Year ended December 31, 2014	Unqualified	N/A
Year ended December 31, 2013	Unqualified	N/A

3. Auditor (Separate)

| Six months ended March 31, 2015 | Year ended December
31, 2014 | Year ended December
31, 2013 |
| --- | --- | --- |
| KPMG Samjong Accounting Corp. | KPMG Samjong Accounting Corp. | KPMG Samjong Accounting Corp. |

4. Audit Opinion (Separate)

Period — Six months ended June 30, 2015
Year ended December 31, 2014	Unqualified	N/A
Year ended December 31, 2013	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, 2015	KPMG Samjong Accounting Corp.	Semi-annual review	1,320,000	19,008
		Quarterly review
		Separate financial statements audit
		Consolidated financial statements audit
		English financial statements review and other audit task
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

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B. Non-Audit Services Contract with External Auditors

(Unit: in millions of Won) — Period	Contract date	Service provided	Service duration	Fee
Year ended December 31, 2015	January 9, 2015	Audit of public WiFi	Jan. 9-Jan. 23, 2015	85
Year ended December 31, 2014	March 18, 2014	Due diligence of assets	March 18- April 2, 2014	50
	May 28, 2014	Tax advice	May 28- September 23, 2014	42
	June 12, 2014	Review revised local tax laws	June 12- July 14, 2014	22
Year ended December 31, 2013	N/A

6. Change of Independent Auditors

Not applicable.

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V. MANAGEMENTS DISCUSSION AND ANALYSIS

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

VI. CORPORATE ORGANIZATION INCLUDING BOARD OF DIRECTORS

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 six members: four independent directors and two 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 July 31,
2015) — Total number of persons | Inside directors | Independent directors |
| --- | --- | --- |
| 6 | Dong Hyun Jang, Dae Sik Cho | Jae Hyeon Ahn, Dae Shick Oh, Jae Hoon Lee, Jay Young Chung |

At the 31st General Meeting of Shareholders held on March 20, 2015, Dong Hyun Jang was newly elected as an inside director. At the meeting of the Board of Directors held on March 20, 2015, Jay Young Chung was appointed as the chairman of the Board of Directors.

B. Significant Activities of the Board of Directors

Meeting	Date	Agenda	Approval
371st (the 1st meeting of 2015)	February 5, 2015	Financial statements as of and for the year ended December 31, 2014 Annual
business report as of and for the year ended December 31, 2014 Bond offering Lease contract of Namsan office building with SK Broadband Report of
internal accounting management Report for the period after the fourth quarter of 2014	Approved as proposed Approved as proposed Approved as proposed Approved as proposed
372nd (the 2nd meeting of 2015)	February 24, 2015	Convocation of the 31st General Meeting of
Shareholders Report of internal accounting management	Approved as proposed
373rd (the 3rd meeting of 2015)	March 20, 2015	Election of the representative director Election of
the chairman of the Board of Directors Election of committee members Financial transactions with affiliated company (SK Securities) Share Exchange
with SK Broadband Disposal of treasury shares	Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed
374th (the 4th meeting of 2015)	April 23, 2015	Additional investment in Neosnetworks Reappointment
of compliance officer Provision of funds for management of the 2015 SUPEX meetings Report for the
period after the first quarter of 2015	Approved as proposed Approved as proposed Approved as proposed
375th (the 5th meeting of 2015)	May 6, 2015	Approval of Share Exchange Agreement with SK Broadband	Approved as proposed
376th (the 6th meeting of 2015)	May 29, 2015	Purchase of SK Broadband shares Report in
relation to the equity spinoff for SK Planets cloud streaming business	Approved as proposed

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Meeting	Date	Agenda
377 th (the 7th meeting of 2015)	June 25, 2015	Transactions with SK C&C in the third quarter of 2015 Transactions
with INFOSEC Co., Ltd. in the third quarter of 2015 Bond offering Transactions regarding corporate shares with affiliated company (SK
Securities) Financial transactions with affiliated company (SK Securities)	Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed
378th (the 8th meeting of 2015)	July 23, 2015	Service transactions with SK (China) Enterprise Management
Co., Ltd. Investment in Entrix Co., Ltd. Extension of
maturity of KIF (Korea IT Fund) Extension of SK Telecoms CVC Payment of
interim dividends Report on the financial results for the first half of 2015 Report for the
period after the second quarter of 2015 Status of SK Telecoms media business	Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed

The line items that do not show approval are for reporting purposes only.
The term of Hyun Jin Lim ended on March 20, 2015.

C. Committees within Board of Directors

(1) Committee structure (as of July 31, 2015)

(a) Compensation Review Committee

Total number of persons	Members		Task
	Inside Directors	Independent Directors
3		Jay Young Chung, Jae Hoon Lee, Dae Shick Oh	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
4		Jae Hoon Lee, Jay Young Chung, Dae Shick Oh, Jae Hyeon Ahn	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
3		Jae Hyeon Ahn, Jay Young Chung, Dae Shick Oh	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	Dong Hyun Jang	Jae Hyeon Ahn, 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.

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(e) Audit Committee

Total number of persons	Members		Task
	Inside Directors	Independent Directors
3		Dae Shick Oh, Jae Hoon Lee, 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, Jae Hoon Lee and Jae Hyeon Ahn.

Major activities of the Audit Committee as of July 31, 2015 are set forth below.

Meeting	Date	Agenda	Approval
The 1st meeting of 2015	February 4, 2015	Report of internal accounting management system Review of
business and audit results for the second half of 2014 and business and audit plans for 2015 Evaluation of internal monitoring controls based on the opinion of the members of
the Audit Committee Service contract with SKTCH Transactions
with INFOSEC Co., Ltd. in the first quarter of 2015 Engagement of Independent Auditing Firm for 2015 to 2017	Approved as proposed Approved as proposed Approved as proposed Approved as proposed
The 2nd meeting of 2015	February 23, 2015	Report on the IFRS audit of fiscal year 2014 Report on
review of 2014 internal accounting management system Evaluation of internal accounting management system operation Agenda and document review for the 31st General Meeting of Shareholders Auditors
report for fiscal year 2014 Construction of fixed-line and wireless networks in 2015 Contract for
payment of customer appreciation gifts in 2015	Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed
The 3rd meeting of 2015	March 19, 2015	Transactions with SK C&C Co., Ltd. in the second quarter
of 2015 Transactions with INFOSEC Co., Ltd. in the second quarter of 2015 Transaction
with SK Planet Co., Ltd. for VIP program in 2015	Approved as proposed Approved as proposed Approved as proposed
The 4th meeting of 2015	April 22, 2015	Election of the chairman Purchase of
maintenance, repair and operations items from Happynarae Co., Ltd. Remuneration for outside auditors for fiscal year 2015 Outside auditor service plan for fiscal year 2015 Audit plan for
fiscal year 2015	Approved as proposed Approved as proposed Approved as proposed Approved as proposed
The 5th meeting of 2015	May 29, 2015	Construction of fixed-line and wireless networks in 2015	Approved as proposed
The 6th meeting of 2015	July 22, 2015	Remuneration increase for outside auditors for fiscal year
2015 Review report of outside auditors for the first half of fiscal year 2015 Review of
business and audit results for the first half of 2015 and business and audit plans for the second half of 2015	Approved as proposed

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

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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.

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VII. SHAREHOLDERS

1. Shareholdings of the Largest Shareholder and Related Persons

A. Shareholdings of the Largest Shareholder and Related Persons

(As of June 30, 2015) — 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	4,000	0.00	1,067	0.00
Dong Hyun Jang	Officer of the Company	Common share	0	0.00	251	0.00
Myung Hyun Cho	Officer of affiliated company	Common share	0	0.00	136	0.00
Total		Common share	20,367,552	25.22	20,365,006	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, 2015, has nine subsidiaries: SK Innovation Co., Ltd., SK Telecom Co., Ltd., SK Networks Co., Ltd., SKC Co., Ltd., SK E&C Co., Ltd., SK Shipping 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	Trading and Energy	Publicly Listed
SKC Co., Ltd.	41.9 %	254,632	PET Film Manufacturing and Chemical Products	Publicly Listed
SK E&C Co., Ltd.	44.5 %	470,014	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, 2015.

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.

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The rule is applicable to subsidiaries whose book value of the holding companys shareholding exceeds 10% of their total assets based on the financial statements as of December 31, 2014. SK Innovation Co., Ltd. and SK Telecom Co., Ltd. are two such subsidiaries.

2. Matters Relevant to the Largest Shareholder

SK Holdings, the companys largest shareholder, resolved to merge with and into SK C&C through the approval of the board of directors on April 20, 2015 and the approval of the shareholders on June 26, 2015. On August 3, 2015, SK Holdings merged with and into SK C&C such that SK Holdings was dissolved and SK C&C (which was renamed SK Holdings) became the largest shareholder of the Company.

It is expected that the combination of SK C&Cs growth potential based on ICT capabilities and SK Holdings resources will lead to an improved financial structure and provide for enhanced capacity to discover new growth engines, thus leading to greater competitiveness of the two companies.

Surviving entity: SK C&C
Name of the surviving entity after the merger: SK Holdings
Merger Ratio:
Common share of SK C&C : Common share of SK Holdings = 1 : 0.7367839
Preferred share of SK C&C : Preferred share of SK Holdings = 1 : 1.1102438

3. Changes in Shareholdings of the Largest Shareholder

Changes in shareholdings of the largest shareholder are as follows.

| (As of June 30, 2015) — 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 Holdings | January 31, 2012 | 20,366,290 | 25.22 | Retirement of Bang Hyung Lee, a former officer of an affiliated company (ownership of 200 shares of the Company) |
| | January 2, 2014 | 20,367,290 | 25.22 | Shin Won Chey, SKCs Chairman, purchased 1,000 shares |
| | March 24, 2014 | 20,368,290 | 25.23 | Shin Won Chey, SKCs Chairman, purchased 1,000 shares |
| | January 2, 2015 | 20,364,290 | 25.22 | Shin Won Chey, SKCs Chairman, disposed of 4,000 shares |
| | March 20, 2015 | 20,363,803 | 25.22 | Appointment of CEO Dong Hyun Jang (ownership of 251 shares of the Company), Retirement of Sung Min Ha |
| | June 9, 2015 | 20,365,006 | 25.22 | Purchase through the Share Exchange between SK Broadband and SK Telecom (Shin Won Chey, SKCs Chairman, purchased 1,067 shares, and Myung Hyun Cho, SK
Broadbands independent director, purchased 136 shares) |

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

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4. Distribution of Shares

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

(As of June 30, 2015) — Rank	Name (title)	Common share
		Number of shares	Ownership ratio	Remarks
1	Citibank ADR	9,974,658	12.35
2	SK Holdings	20,363,452	25.22
3	SK Telecom	8,116,551	10.05	Treasury shares
4	National Pension Service	6,403,901	7.93
Shareholdings under the Employee Stock Ownership Program		209	0.00

B. Shareholder Distribution

(As of June 30, 2015) — Classification	Number of shareholders	Ratio (%)	Number of shares	Ratio (%)	Remarks
Total minority shareholders*	56,778	99.87 %	34,906,951	43.23 %

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

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

A. Domestic Securities Market

(Unit: in Won and shares) — Types	June 2015	May 2015	April 2015	March 2015	February 2015	January 2015
Common stock	Highest	262,500	281,500	293,500	290,500	301,000	290,000
	Lowest	240,500	246,500	262,500	269,000	274,000	264,000
Monthly transaction volume		3,727,042	4,782,569	4,506,099	3,612,290	2,153,718	3,341,160

B. Foreign Securities Market

New York Stock Exchange — Types	June 2015	(Unit: in U.S. dollars and number of American Depositary Receipts) — May 2015	April 2015	March 2015	February 2015	January 2015
Depository Receipt	Highest	26.00	29.61	30.07	29.30	29.76	29.27
	Lowest	23.96	24.44	26.49	26.22	27.65	26.78
Monthly transaction volume		11,842,065	13,521,822	12,349,916	14,783,781	14,057,769	19,189,999

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VIII. EMPLOYEES AND DIRECTORS

1. Employees

(As of June 30, 2015)	Number of employees				Average	Aggregate	Average
Classification	Regular employees	Contract employees	Others	Total	service year	wage for the year 2015	wage per person	Remarks
Male	3,372	190		3,562	12.5	232,063	64
Female	475	103		578	9.4	26,606	45
Total	3,847	293		4,140	12.1	258,669	62

Based on Section 9-1-2 (Employee Status) of the Corporate Disclosure Guidelines (amended as of February 2015).
Average wage per person was calculated based on the average number of employees for the six months ended June 30, 2015 (Total: 4,199, Male: 3,612 Female: 587)

2. Compensation of Directors

A. Amount Approved at the Shareholders Meeting

(As of June 30, 2015) — Classification	Number of Directors	Aggregate Amount Approved
Directors	6	12,000

B. Amount Paid

(As of June 30, 2015) — Classification	Number of Directors*	Aggregate Amount Paid	Average Amount Paid Per Director
Insider Directors	4	1,927	482
Independent Directors	2	70	35
Audit Committee Members	3	105	35
Total	9	2,102

Includes three directors whose terms have expired as of March 31, 2015.

3. Individual Compensation of Directors

(As of June 30, 2015)	(Unit: in millions of Won)
Name	Title	Aggregate Amount Paid
Sung Min Ha	Chief Executive Officer and President	716
Dong Seob Jee	Head of Strategy & Planning Office	527

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IX. RELATED PARTY TRANSACTIONS

1. Line of Credit Extended to the Largest Shareholder

(Unit: in millions of Won)

Name (Corporate name)		Account category — Beginning	Increase	Decrease	Ending	interest
SK Wyverns	Affiliate	Long-term and short-term loans	1,221			1,221

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

A. Investment and Disposition of Investment

(Unit: in millions of Won)

Name (Corporate name)		Investment	Transaction date	Base date	Transaction items
Neosnetworks	Affiliate	Acquisition of shares	April 29, 2015		Registered common shares	39,999

B. Acquisition and Sale of Securities

(Unit: in millions of Won)

Name (Corporate name)		Investment	Transaction date	Base date	Transaction items
SK Broadband	Affilate	Purchase of shares	June 1, 2015		Registered common shares	186,817

C. Transfer of Assets

(Unit: in millions of Won)

Name (Corporate name)		Details — Transferred Assets	Purpose of Transfer	Date of Transfer	Sale Price
SK Broadband	Affiliate	Vehicles and transportation equipment	Disposition of assets	March 17, 2015	32
SK Planet	Affiliate	Machinery and equipment	Disposition of assets	March 31, 2015	1
PS&Marketing	Affiliate	Vehicles, computer software and trademark rights	Transfer of Business	April 30, 2015	152
Total					185

D. Transfer of Business

None.

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3. Transactions with the Largest Shareholder

(Unit: in millions of Won)

Name (Corporate name) — PS&Marketing	Affiliate	Sales/Purchases	Transaction period — January 1, 2015 to June 30, 2015	Transaction items — Marketing commissions, etc.	416,028
SK Broadband	Affiliate	Sales/Purchases	January 1, 2015 to June 30, 2015	Interconnection revenues, etc.	325,277

4. Related Party Transactions

See note 33 of the notes to our consolidated financial statements attached hereto for more information regarding related party transactions.

5. 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	interest
Baekmajang and others	Agency	Long-term and short-term loans	82,739	153,283	(203,887	)	32,135
Daehan Kanggun BCN Inc.	Investee	Long-term loans	22,147				22,147
Wave City Development, Inc.	Investee	Short-term loans	1,200	500			1,700

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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
27th 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)
1st 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)
28th 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)
29th 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)
30th 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)

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Date	Agenda	Resolution
31st Fiscal Year Meeting of Shareholders (March 20, 2015)	1. Approval of the financial statements for the year ended
December 31, 2014 2. Amendments to Articles of Incorporation 3. Election of
directors Election of an inside 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 (Dong Hyun Jang) Approved (Jae Hoon Lee) Approved (Won 12 billion)

2. Contingent Liabilities

[SK Telecom]

A. Material Legal Proceedings

(1) Claim for copyright license fees regarding Coloring services

On May 7, 2010, Korea Music Copyright Association (KOMCA) filed a lawsuit with the court demanding that the Company pay KOMCA license fees for the 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 which ruled in favor of the Company on September 4, 2014. KOMCA filed an appeal at the Supreme Court of Korea, and on January 15, 2015, the Supreme Court of Korea affirmed the Seoul High Courts decision. There is no impact on the Companys business or results of operation as the final outcome of this litigation has been rendered in favor of the Company.

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
Dispute to dismiss an order to compensate for damages	October 2014	715,121	Pending before district
court
Others		287,364
Total		1,002,485

(2) SK Broadband as the defendant

Description of Proceedings	(Unit: in thousands of Won) — Date of Commencement of Proceedings	Amount of Claim	Status
Damages claim by Haein Networks Co., Ltd.	March 2013	101,000	Pending before district court
Damages claim by Mag Telecom Co., Ltd. and others	January 2012	606,000	Pending before district court
Damages claim by GT Com Co., Ltd.	March 2014	101,000	Pending before district court
Others		278,358
Total		1,086,358

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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 1,775 million to support employees funding for the Employee Stock Ownership Program.

Additionally, SK Broadband has provided geun mortgage amounting to Won 16.1 billion to others, including Ilsan Guksa, on a part of its buildings in connection with the leasing of the buildings. Seoul Guarantee Insurance Company has provided a performance guarantee of Won 16.6 billion to SK Broadband in connection with the performance of certain contracts and the repair of any defects.

[SK Planet]

A. Material Legal Proceedings

As of June 30, 2015, there were three pending cases proceeding with SK Planet as the defendant, and the aggregate amount of the claim was Won 43.9 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, 2015, the aggregate amount of claims was Won 1.4 billion. The Company successfully defended some but not all suits relating to a leak of personal information of subscribers of NATE. Relevant proceedings remain pending at various courts in Korea. The management cannot reasonably forecast the outcome of the pending proceedings, and as a result, adjustments were not made in the financial statements of the Company. The Company does not believe that the outcome of any of the proceedings in which SK Communications is named as a defendant will have a material effect on the Companys financial statements.

B. Other Contingent Liabilities

The material payment guarantees provided by third parties to SK Communications as of June 30, 2015 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
	Provisional deposit guarantee insurance for bonds	873,000
	Support for production and publication of cartoon series	160,000
Total		1,733,000

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[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.

3. Status of sanctions, etc.

[SK Telecom]

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 filed an administrative proceeding to appeal the order and the Seoul High Court ruled against it on October 29, 2014. The Company appealed the decision, and the case is currently pending before the Supreme Court of Korea.

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.

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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.

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 between April 5, 2014 and 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 suspended acquisition of new customers during the period beginning September 11, 2014 and ending September 17, 2014, and reported to the Korea Communications Commission on the implementation of actions pursuant to the correctional order by September 2014.

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.

On August 21, 2014, the Korea Communications Commission imposed on the Company a fine of Won 37.1 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 September 2014.

On December 4, 2014, the Korea Communications Commission imposed on the Company a fine of Won 800 million and issued a correctional order for violating the Mobile Device Distribution Improvement Act. 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 2015.

On March 12, 2015, the Korea Communications Commission imposed on the Company a fine of Won 934 million and issued a correctional order for violating the Mobile Device Distribution Improvement Act with respect to the Companys compensation programs for used handsets. 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 2015.

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On March 26, 2015, the Korea Communications Commission imposed on the Company a fine of Won 23.5 billion, imposed a suspension on acquiring new customers for seven days, and issued a correctional order for violating the Mobile Device Distribution Improvement Act. The Company paid the fine and implemented the improvement of the procedures and reported to the Korea Communications Commission on the implementation of actions pursuant to the correctional order in May 2015. The suspension on acquiring new customers will be implemented hereafter.

On May 13, 2015, the Korea Communications Commission imposed on the Company a fine of Won 3.56 billion and issued a correctional order for violating its obligations to protect personal information (a fine of Won 360 million imposed for violation of its obligations to protect personal information and Won 3.2 billion imposed for damaging users interests). The Company paid the fine in July 2015 and plans to report to the Korea Communications Commission on the implementation of actions pursuant to the correctional order in the future. Whether the correctional order on the violation of obligations to protect personal information will be enforced depends on the Courts ruling following the Companys filing of an administrative proceeding to appeal the order on June 24, 2015.

On May 28, 2015, the Korea Communications Commission imposed on the Company a fine of Won 350 million and issued a correctional order for damaging users interests through misleading and exaggerated advertisement of bundled media and telecommunications products. The Company plans to pay the fine and report to the Korea Communications Commission on the implementation of actions pursuant to the correctional order in the future.

[SK Broadband]

(1) Violation of the Telecommunications Business Act

Date: May 28, 2015

Subject: SK Broadband

Sanction: SK Broadband received a correctional order (corrective measures for damaging users interests through misleading and exaggerated advertisement of bundled media and telecommunications products).

Reason and the Relevant Law: Violated Article 50-1 Paragraph 5 of the Telecommunications Business Act and Article 42-1 of its enforcement ordinance by inducing subscribers through misleading and exaggerated advertisements.

Status of Implementation: Established plans to manage distribution network related to the misleading and exaggerated advertisements.

Companys Plan: Make an official announcement about having received the correctional order and improve operational procedures.

(2) Violation of the Act on Consumer Protection in Electronic Commerce

Date: July 11, 2014

Subject: SK Broadband

Sanction: SK Broadband received a correctional order (relating to the failure to notify consumers of information relating to cancellations of purchases) and a fine of Won 1 billion.

Reason and the Relevant Law: Violated Article 13 of the Act on Consumer Protection in Electronic Commerce by not having notified consumers of the procedures for cancellation of purchases for paid IPTV contents.

Status of Implementation: Implemented voluntary improvements to notify consumers of cancellation procedures for such purchase prior to a decision by the Fair Trade Commission.

Companys Plan: Implement the correctional order and pay the fine.

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

Date: June 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, provided contact information on the Companys website, and paid the fine.

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

(4) 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. Has distributed information sheets on current terms and conditions to new subscribers since November 25, 2013.

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

(5) 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.

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(6) 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.

(7) 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

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.

(8) 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.

4. Important Matters That Occurred After June 30, 2015

(1) On July 1, 2015, the Companys material consolidated subsidiary SK Broadband delisted in accordance with Articles 45 and 46 of the KOSDAQ stock markets listing regulations pursuant to its voluntary application to delist in connection with the Share Exchange of its 295,959,087 ordinary shares.

(2) SK Broadbands resolution to acquire the Hoppin business from SK Planet through a spin-off and subsequent merger transaction pursuant to Article 530-2 of the Korean Commercial Code was approved by its board of directors on July 29, 2015 and its shareholders on July 30, 2015. The transaction closed on September 1, 2015.

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A. Use of Proceeds from Public Offerings

Not applicable.

B. Use of Proceeds from Private Offerings

(As of June 30, 2015) (Unit: in millions of Won)

Classification — Convertible Bonds*	April 7, 2009	437,673	Planned Use of Proceeds — Refinancing of convertible bonds issued in May 2004	Actual Use of Proceeds — 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.

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SK TELECOM CO., LTD. AND SUBSIDIARIES

Condensed Consolidated Interim Financial Statements

(Unaudited)

June 30, 2015 and 2014

(With Independent Auditors Review Report Thereon)

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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

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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, 2015, the related condensed consolidated statements of income and comprehensive income for the three and six-month periods ended June 30, 2015 and 2014, the condensed consolidated interim statements of changes in equity and cash flows for the six-month periods ended June 30, 2015 and 2014, and notes, comprising a summary of significant accounting policies and other explanatory information.

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 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 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 Korean Standards on Auditing 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, 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.

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Other matters

The consolidated statement of financial position of the Group as of December 31, 2014, 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 in accordance with Korean Standards on Auditing and our report thereon, dated February 23, 2015, expressed an unqualified opinion. The accompanying condensed consolidated statement of financial position of the Group as of December 31, 2014, 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 7, 2015

This report is effective as of August 7, 2015, 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.

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SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Statements of Financial Position

As of June 30, 2015 and December 31, 2014

(In millions of won)		June 30, 2015
Assets
Current Assets:
Cash and cash equivalents	32,33	￦	829,659	834,429
Short-term financial instruments	5,32,33,34,35		285,587	313,068
Short-term investment securities	8,32,33		342,795	280,161
Accounts receivabletrade, net	6,32,33,34		2,443,502	2,392,150
Short-term loans, net	6,32,33,34		32,195	74,512
Accounts receivableother, net	6,32,33,34		697,103	690,527
Prepaid expenses			140,256	134,404
Inventories, net	7,35		282,871	267,667
Assets classified as held for sale	9			10,510
Advanced payments and other	6,8,32,33,34		126,553	85,720
Total Current Assets			5,180,521	5,083,148
Non-Current Assets:
Long-term financial instruments	5,32,33,35		631	631
Long-term investment securities	8,32,33		1,149,319	956,280
Investments in associates and joint ventures	11		6,581,767	6,298,088
Property and equipment, net	12,34,35		10,252,498	10,567,701
Investment property, net	13		16,147	14,997
Goodwill	14		1,930,205	1,917,595
Intangible assets, net	15		2,298,574	2,483,994
Long-term loans, net	6,32,33,34		58,751	55,728
Long-term accounts receivableother	6,32,33		3,658	3,596
Long-term prepaid expenses	35		61,400	51,961
Guarantee deposits	5,6,32,33,34		296,436	285,144
Long-term derivative financial assets	21,32,33		67,494	70,035
Deferred tax assets	30		24,905	25,083
Other non-current assets	6,32,33		119,200	127,252
Total Non-Current Assets			22,860,985	22,858,085
Total Assets		￦	28,041,506	27,941,233

See accompanying notes to the condensed consolidated interim financial statements.

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SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Statements of Financial Position, Continued

As of June 30, 2015 and December 31, 2014

(In millions of won)		June 30, 2015
Liabilities and Equity
Current Liabilities:
Short-term borrowings	16,32,33	￦	929,300	366,600
Current installments of debentures and long-term borrowings, net	16,32,33		560,331	590,714
Current installments of finance lease liabilities	19,32,33		1,744	3,804
Current installments of long-term payablesother	17,32,33		118,955	189,389
Accounts payabletrade	32,33,34		291,316	275,495
Accounts payableother	32,33,34		1,066,880	1,381,850
Withholdings	32,33,34		887,656	1,053,063
Accrued expenses	32,33		786,418	952,418
Income tax payable	30		224,673	99,236
Unearned revenue			270,809	327,003
Provisions	18		39,285	51,075
Advanced receipts			126,791	129,255
Liabilities classified as held for sale	9			408
Other current liabilities			4,233
Total Current Liabilities			5,308,391	5,420,310
Non-Current Liabilities:
Debentures, excluding current installments, net	16,32,33		5,887,803	5,649,158
Long-term borrowings, excluding current installments	16,32,33		131,302	149,720
Long-term payablesother	17,32,33		577,406	684,567
Long-term unearned revenue			4,688	19,659
Finance lease liabilities	19,32,33			26
Defined benefit liabilities	20		121,729	91,587
Long-term derivative financial liabilities	21,32,33		88,498	130,889
Long-term provisions	18		29,907	36,013
Deferred tax liabilities	30		511,611	444,211
Other non-current liabilities	32,33		62,584	66,823
Total Non-Current Liabilities			7,415,528	7,272,653
Total Liabilities			12,723,919	12,692,963
Equity
Share capital	1,22		44,639	44,639
Capital surplus and other capital adjustments	22,23,24		662,455	277,998
Retained earnings	25		14,421,043	14,188,591
Reserves	26		59,389	(4,489	)
Equity attributable to owners of the Parent Company			15,187,526	14,506,739
Non-controlling interests			130,061	741,531
Total Equity			15,317,587	15,248,270
Total Liabilities and Equity		￦	28,041,506	27,941,233

See accompanying notes to the condensed consolidated interim financial statements.

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SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Statements of Income

For the three and six-month periods ended June 30, 2015 and 2014

(In millions of won except for per share data)
	June 30, 2015				June 30, 2014
Note	Three-month period ended		Six-month period ended		Three-month period ended		Six-month period ended
Operating revenue:	4,34
Revenue	￦	4,255,739		8,496,025		4,305,368		8,507,288
Operating expense:	34
Labor cost		543,881		1,018,862		401,137		830,276
Commissions paid		1,262,168		2,609,298		1,364,310		2,991,953
Depreciation and amortization	4	703,859		1,396,447		668,435		1,324,263
Network interconnection		239,857		474,109		280,736		556,533
Leased line		93,393		196,390		101,176		207,337
Advertising		120,452		197,438		99,883		185,233
Rent		117,037		239,488		113,376		222,576
Cost of products that have been resold		449,918		940,850		393,957		729,654
Other operating expenses	27	312,296		607,617		336,264		660,973
		3,842,861		7,680,499		3,759,274		7,708,798
Operating income	4	412,878		815,526		546,094		798,490
Finance income	4,29	29,053		61,302		35,167		75,162
Finance costs	4,29	(89,690	)	(171,040	)	(110,919	)	(199,699	)
Gains relating to investments in subsidiaries, associates and joint ventures, net	1,4,11	208,066		452,323		149,647		294,702
Other non-operating income	4,28	7,176		15,363		16,731		36,574
Other non-operating expenses	4,28	(51,891	)	(97,869	)	(28,714	)	(64,646	)
Profit before income tax	4	515,592		1,075,605		608,006		940,583
Income tax expense	30	117,704		234,970		110,367		175,635
Profit for the period	￦	397,888		840,635		497,639		764,948
Attributable to :
Owners of the Parent Company	￦	395,839		840,334		498,536		768,350
Non-controlling interests		2,049		301		(897	)	(3,402	)
Earnings per share	31
Basic earnings per share (in won)	￦	5,432		11,695		6,909		10,713
Diluted earnings per share (in won)	￦	5,432		11,695		6,909		10,713

See accompanying notes to the condensed consolidated interim financial statements

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SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

For the three and six-month periods ended June 30, 2015 and 2014

(In millions of won)
	Three- month period ended		Six-month period ended		Three-month period ended		Six-month period ended
Profit for the period	￦	397,888		840,635		497,639		764,948
Other comprehensive income (loss)
Items that will never be reclassified to profit or loss, net of taxes:
Remeasurement of defined benefit liabilities	20	5,527		(3,092	)	(7,841	)	(11,994	)
Items that are or may be reclassified subsequently to profit or loss, net of taxes:
Net change in unrealized fair value of available-for-sale financial assets	26	71,167		53,048		13,579		(537	)
Net change in other comprehensive income of investments in associates and joint ventures	26	23,435		27,880		(52,638	)	(53,469	)
Net change in unrealized fair value of derivatives	21,26	(32,321	)	(20,673	)	(23,433	)	(18,813	)
Foreign currency translations differences for foreign operations	26	8,288		9,419		(12,023	)	(10,416	)
Other comprehensive income (loss) for the period, net of taxes		76,096		66,582		(82,356	)	(95,229	)
Total comprehensive income	￦	473,984		907,217		415,283		669,719
Total comprehensive income attributable to:
Owners of the Parent Company	￦	469,790		904,733		417,499		674,619
Non-controlling interests		4,194		2,484		(2,216	)	(4,900	)

See accompanying notes to the condensed consolidated interim financial statements.

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SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity

For the six-month periods ended June 30, 2015 and 2014

(In millions of won)
	Controlling Interest									Non-controlling interests		Total equity
	Share capital	Capital surplus (deficit) and other capital adjustments		Retained earnings		Reserves		Sub-total
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	)
					756,413		(81,794	)	674,619		(4,900	)	669,719
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
Balance, January 1, 2015	￦	44,639	277,998		14,188,591		(4,489	)	14,506,739		741,531		15,248,270
Cash dividends					(595,865	)			(595,865	)	(143	)	(596,008	)
Total comprehensive income
Profit for the period					840,334				840,334		301		840,635
Other comprehensive income (loss)					(2,765	)	67,164		64,399		2,183		66,582
					837,569		67,164		904,733		2,484		907,217
Interest on hybrid bond					(8,420	)			(8,420	)			(8,420	)
Treasury stock			412,072						412,072				412,072
Changes in consolidation scope											(5,226	)	(5,226	)
Changes in ownership in subsidiaries			(27,615	)	(832	)	(3,286	)	(31,733	)	(608,585	)	(640,318	)
Balance, June 30, 2015	￦	44,639	662,455		14,421,043		59,389		15,187,526		130,061		15,317,587

See accompanying notes to the condensed consolidated interim financial statements.

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SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

For the six-month periods ended June 30, 2015 and 2014

(In millions of won)
Cash flows from operating activities:
Cash generated from operating activities
Profit for the period	￦	840,635		764,948
Adjustments for income and expenses	36	1,479,292		1,528,742
Changes in assets and liabilities related to operating activities	36	(786,942	)	(710,051	)
Sub-total		1,532,985		1,583,639
Interest received		25,052		23,348
Dividends received		59,349		10,567
Interest paid		(137,412	)	(141,322	)
Income tax paid		(65,923	)	(100,204	)
Net cash provided by operating activities		1,414,051		1,376,028
Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term financial instruments, net		27,448
Decrease in short-term investment securities, net				55,007
Collection of short-term loans		203,599		73,766
Decrease in long-term financial instruments		3		11
Proceeds from disposal of long-term investment securities		116,256		47,431
Proceeds from disposal of investments in associates and joint ventures		176,037		4
Proceeds from disposal of property and equipment		13,772		4,049
Proceeds from disposal of intangible assets		1,101		1,441
Proceeds from disposal of assets held for sale		990		1,056
Collection of long-term loans		1,501		2,398
Decrease of deposits		10,618		4,136
Proceeds from disposal of other non-current assets		2,548		90
Increase in cash due to acquisition of a subsidiary		10,148
Sub-total		564,021		189,389
Cash outflows for investing activities:
Increase in short-term financial instruments, net				(9,379	)
Increase in short-term investment securities, net		(69,842	)
Increase in short-term loans		(155,582	)	(88,101	)
Increase in long-term loans		(10,583	)	(2,450	)
Increase in long-term financial instruments		(5	)
Acquisition of long-term investment securities		(232,887	)	(19,805	)
Acquisition of investments in associates and joint ventures		(20,570	)	(29,809	)
Acquisition of property and equipment		(1,103,196	)	(1,331,556	)
Acquisition of intangible assets		(39,935	)	(38,114	)
Increase in deposits		(11,037	)	(2,643	)
Increase in other non-current assets		(436	)
Acquisition of business, net of cash acquired		(13,957	)	(118,667	)
Sub-total		(1,658,030	)	(1,640,524	)
Net cash used in investing activities	￦	(1,094,009	)	(1,451,135	)

See accompanying notes to the condensed consolidated interim financial statements.

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SK TELECOM CO., LTD. and Subsidiaries

Condensed Consolidated Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2015 and 2014

(In millions of won)	June 30, 2015
Cash flows from financing activities:
Cash inflows from financing activities:
Proceeds from short-term borrowings, net	￦	562,700		608,000
Proceeds from issuance of debentures		507,799		627,970
Proceeds from long-term borrowings				13,552
Cash inflows from settlement of derivatives		189		119
Sub-total		1,070,688		1,249,641
Cash outflows for financing activities:
Repayments of long-term account payables-other		(190,603	)	(207,668	)
Repayments of debentures		(370,000	)	(406,149	)
Repayments of long-term borrowings		(14,953	)	(11,916	)
Cash outflows from settlement of derivatives		(474	)	(373	)
Payments of finance lease liabilities		(1,789	)	(10,250	)
Payments of dividends		(595,865	)	(595,865	)
Payments of interest on hybrid bond		(8,420	)	(8,420	)
Decrease in cash from the consolidated capital transaction		(218,394	)
Sub-total		(1,400,498	)	(1,240,641	)
Net cash provided by (used in) financing activities		(329,810	)	9,000
Net decrease in cash and cash equivalents		(9,768	)	(66,107	)
Cash and cash equivalents at beginning of the period		834,429		1,398,639
Effects of exchange rate changes on cash and cash equivalents		4,998		(1,269	)
Cash and cash equivalents at end of the period	￦	829,659		1,331,263

See accompanying notes to the condensed consolidated interim financial statements.

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SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

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, 2015, 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	52,265,708	64.73
Treasury stock	8,116,551	10.05
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, 2015 and December 31, 2014 is as follows:

Subsidiary	Location	Primary business	Ownership (%) — June 30, 2015	December 31, 2014
SK Telink Co., Ltd.	Korea	Telecommunication and MVNO service	83.5	83.5
M&Service Co., Ltd.	Korea	Data base and internet website service	100.0	100.0
SK Communications Co., Ltd.	Korea	Internet website services	64.6	64.6
Stonebridge Cinema Fund	Korea	Investment association	55.2	56.0
Commerce Planet Co., Ltd.	Korea	Online shopping mall operation agency	100.0	100.0
SK Broadband Co., Ltd.(*1)	Korea	Telecommunication services	100.0	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

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SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Reporting Entity, Continued

(2) List of subsidiaries, Continued

The list of subsidiaries as of June 30, 2015 and December 31, 2014 is as follows, Continued:

Subsidiary	Location	Primary business	Ownership (%) — June 30, 2015	December 31, 2014
Iconcube Holdings, Inc.	Korea	Investment association	100.0	100.0
Iconcube, Inc.	Korea	Internet website services	100.0	100.0
SK Planet Co., Ltd.	Korea	Telecommunication service	100.0	100.0
Neosnetworks Co., Ltd.(*2)	Korea	Guarding of facilities	83.9	66.7
IRIVER LIMITED(*3)	Korea	Manufacturing digital audio players and other portable media devices.	49.0	49.0
Iriver CS Co., Ltd.(*4)	Korea	After-sales service and logistics agency		100.0
iriver Enterprise Ltd.	Hong Kong	Management of Chinese subsidiary	100.0	100.0
iriver America Inc.	USA	Marketing and sales in North America	100.0	100.0
iriver Inc.	USA	Marketing and sales in North America	100.0	100.0
iriver China Co., Ltd.	China	Sales and manufacturing MP3,4 in China	100.0	100.0
Dongguan iriver Electronics Co., Ltd.	China	Sales and manufacturing e-book in China	100.0	100.0
Groovers JP Ltd.(*4)	Japan	Digital music contents sourcing and distribution service	100.0
SK Telecom China Holdings Co., Ltd.	China	Investment association	100.0	100.0
Shenzhen E-eye High Tech Co., Ltd.(*4)	China	Manufacturing		65.5
SK Global Healthcare Business Group., Ltd.	Hong Kong	Investment association	100.0	100.0
SK Planet Japan, K. K.	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
shopkick Management Company, Inc.	USA	Investment association	95.2	95.2
shopkick, Inc.	USA	Mileage-based online transaction application development	100.0	100.0

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SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Reporting Entity, Continued

(2) List of subsidiaries, Continued

(*1) On March 20, 2015, the Board of Directors of the Parent Company decided to grant 0.0168936 share of its treasury stock in exchange for 1 share of SK Broadband Co., Ltd., a subsidiary of the Parent Company, to the shareholders of SK Broadband Co., Ltd. as of June 9, 2015. After the stock exchange, SK Broadband Co., Ltd. became a wholly-owned subsidiary of the Parent Company.

(*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. The Parent Company newly acquired 50,377 and 326,748 shares of Neosnetworks Co., Ltd. by participating in the capital increase and capital increase without consideration respectively during the six-month period ended June 30, 2015.

(*3) Although the Group has less than 50% of the voting rights of IRIVER LIMITED, it is considered to have de facto control since the Group holds significantly more voting rights than any other vote holder or organized group of vote holders, and the other shareholdings are widely dispersed.

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

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 the Groups consolidated financial statements are not material considering both individual and overall quantitative and qualitative effects.

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SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

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, 2015 is as follows:

(In millions of won) — Subsidiary	Total assets	Total liabilities	Total equity (deficit)		Revenue	Profit (loss)
SK Telink Co., Ltd.	￦	338,182	159,654	178,528		218,424	40,041
M&Service Co., Ltd.		73,574	29,054	44,520		62,655	2,398
SK Communications Co., Ltd.		168,285	38,866	129,419		41,408	(5,667	)
Stonebridge Cinema Fund		11,344	399	10,945			2,729
Commerce Planet Co., Ltd.		31,693	32,049	(356	)	44,068	836
SK Broadband Co., Ltd.		3,178,193	2,083,091	1,095,102		1,314,981	(4,079	)
K-net Culture and Contents Venture Fund		13,377		13,377			(212	)
Fitech Focus Limited Partnership II		18,576		18,576			(735	)
Open Innovation Fund		20,829		20,829			(948	)
PS&Marketing Corporation		518,410	310,136	208,274		896,876	184
Service Ace Co., Ltd.		68,214	37,400	30,814		104,181	2,407
Service Top Co., Ltd.		65,282	42,037	23,245		97,674	3,668
Network O&S Co., Ltd.		64,441	36,097	28,344		93,513	2,769
BNCP Co., Ltd.		5,701	5,417	284		5,366	(614	)
Iconcube Holdings, Inc.(*1)		1,202	448	754		836	(143	)
SK Planet Co., Ltd.		2,663,395	735,693	1,927,702		767,803	(9,704	)
Neosnetworks Co., Ltd.		69,365	13,157	56,208		25,945	(2,104	)
IRIVER LIMITED(*2)		63,949	16,011	47,938		28,386	503
SK Telecom China Holdings Co., Ltd.		33,811	1,103	32,708		3,919	(12,890	)
SK Global Healthcare Business Group., Ltd.		24,620		24,620			(1,254	)
SK Planet Japan, K. K.		3,656	253	3,403		283	(2,263	)
SKT Vietnam PTE. Ltd.		4,338	1,315	3,023
SK Planet Global PTE. Ltd.		1,809	180	1,629		1	(2,324	)
SKP GLOBAL HOLDINGS PTE. LTD.		36,384	9	36,375			(8,511	)
SKT Americas, Inc.		43,029	860	42,169		4,457	(370	)
SKP America LLC.		347,454	82	347,372			(102	)
YTK Investment Ltd.		15,651		15,651			(3,118	)
Atlas Investment(*3)		69,476	136	69,340			(1,170	)
shopkick Management Company, Inc.		279,214	6	279,208			(2,384	)
shopkick, Inc.		35,305	30,859	4,446		13,761	(24,535	)

(*1) The condensed financial information of Iconcube Holdings, Inc. includes financial information of Iconcube, Inc., a subsidiary of Iconcube Holdings, Inc.

(*2) The condensed financial information of IRIVER LIMITED includes financial information of iriver Enterprise Ltd., iriver America Inc., iriver Inc., iriver China Co., Ltd., Dongguan iriver Electronics Co., Ltd. and Groovers JP Ltd. subsidiaries of IRIVER LIMITED.

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

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, 2015 and 2014

Reporting Entity, Continued

(3) Condensed financial information of subsidiaries, Continued

Condensed financial information of subsidiaries as of and for the year ended December 31, 2014 is as follows:

(In millions of won) — Subsidiary	Total assets	Total liabilities	Total equity (deficit)		Revenue	Profit (loss)
SK Telink Co., Ltd.	￦	324,028	184,074	139,954		465,463	13,073
M&Service Co., Ltd.		78,826	36,817	42,009		133,789	7,492
SK Communications Co., Ltd.		176,168	41,987	134,181		93,910	(18,386	)
Stonebridge Cinema Fund		11,137	320	10,817			383
Commerce Planet Co., Ltd.		26,078	27,259	(1,181	)	64,509	933
SK Broadband Co., Ltd.		3,109,991	1,988,379	1,121,612		2,654,381	4,307
K-net Culture and Contents Venture Fund		21,094	4	21,090			4,920
Fitech Focus Limited Partnership II		19,301		19,301			(2,055	)
Open Innovation Fund		21,765		21,765			(6,266	)
PS&Marketing Corporation		544,292	336,221	208,071		1,627,217	2,817
Service Ace Co., Ltd.		66,336	37,770	28,566		207,427	3,570
Service Top Co., Ltd.		57,032	36,723	20,309		188,835	3,503
Network O&S Co., Ltd.		71,348	45,770	25,578		211,916	3,823
BNCP Co., Ltd.		6,785	5,887	898		12,869	(1,505	)
Iconcube Holdings, Inc.(*1)		1,415	515	900		630	(2,284	)
SK Planet Co., Ltd.		2,579,286	746,832	1,832,454		1,512,492	1,593
Neosnetworks Co., Ltd.		31,633	13,251	18,382		33,302	(1,989	)
IRIVER LIMITED(*2)		61,945	14,392	47,553		53,192	2,345
SK Telecom China Holdings Co., Ltd.		37,877	2,335	35,542		12,420	1,058
Shenzhen E-eye High Tech Co., Ltd.		15,566	408	15,158		3,637	(1,143	)
SK Global Healthcare Business Group., Ltd.		25,874		25,874			(689	)
SK Planet Japan, K. K.		5,222	1,638	3,584		93	(4,561	)
SKT Vietnam PTE. Ltd.		4,242	1,286	2,956			(73	)
SK Planet Global PTE. Ltd.		4,215	64	4,151		87	(2,543	)
SKP GLOBAL HOLDINGS PTE. LTD.		29,529	11	29,518			(9,716	)
SKT Americas, Inc.		42,159	554	41,605		9,100	(5	)
SKP America LLC.		297,981	67	297,914			(2,370	)
YTK Investment Ltd.		27,944		27,944			(15,259	)
Atlas Investment(*3)		66,825	94	66,731			(6,626	)
shopkick Management Company, Inc.		230,925		230,925
shopkick, Inc.		28,216	13,698	14,518

(*1) The condensed financial information of Iconcube Holdings, Inc. includes financial information of Iconcube, Inc., a subsidiary of Iconcube Holdings, Inc.

(*2) The condensed financial information of IRIVER LIMITED includes financial information of iriver CS Co. Ltd., iriver Enterprise Ltd., iriver America Inc., iriver Inc., iriver China Co., Ltd., and Dongguan iriver Electronics Co., Ltd., subsidiaries of IRIVER LIMITED.

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

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, 2015 and 2014

Reporting Entity, Continued

(4) Changes in subsidiaries

The list of subsidiaries that were newly included in consolidation during the six-month period ended June 30, 2015 is as follows:

Subsidiary	Reason
Groovers JP Ltd.	Established by IRIVER LIMITED during the six-month period ended June 30, 2015.

The list of subsidiaries that were excluded from subsidiaries during the six-month period ended June 30, 2015 is as follows:

Subsidiary	Reason
Iriver CS Co., Ltd.	Merged into IRIVER LIMITED during the six-month period ended June 30, 2015.
Shenzhen E-eye High Tech Co., Ltd.	Disposed during the six-month period ended June 30, 2015.

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, 2015 and 2014

Reporting Entity, Continued

(5) The information of significant non-controlling interests of the Group as of and for the six-month period ended June 30, 2015, and as of and for the year ended December 31, 2014 is as follows. There were no dividends paid during the six-month period ended June 30, 2015 and year ended December 31, 2014 by subsidiaries of which non-controlling interests are significant.

(In millions of won)
	June 30, 2015
	SK
Communications Co., Ltd.
Ownership of non-controlling interests (%)		35.4
Current assets	￦	83,445
Non-current assets		84,840
Current liabilities		(36,248	)
Non-current liabilities		(2,618	)
Net assets		129,419
Net assets of consolidated entities		129,419
Carrying amount of non-controlling interests		45,889
Revenue	￦	41,408
Loss for the period		(5,667	)
Loss of the consolidated entities		(5,667	)
Total comprehensive loss		(4,761	)
Loss attributable to non-controlling interests		(2,009	)
Net cash used in operating activities	￦	(1,635	)
Net cash provided by investing activities		14,324
Net cash provided by financing activities
Net increase in cash and cash equivalents		12,689

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, 2015 and 2014

Reporting Entity, Continued

(In millions of won)
	December 31, 2014
	SK Communications Co., Ltd.		SK Broadband Co., Ltd.
Ownership of non-controlling interests (%)		35.4		49.4
Current assets	￦	89,135		463,764
Non-current assets		87,033		2,646,227
Current liabilities		(41,252	)	(881,886	)
Non-current liabilities		(735	)	(1,106,493	)
Net assets		134,181		1,121,612
Adjustment for fair value				111,561
Net assets of consolidated entities		134,181		1,233,173
Carrying amount of non-controlling interests		47,577		609,638
Revenue	￦	93,910		2,654,381
Profit (loss) for the period		(18,386	)	4,307
Amortization of fair value adjustment				(1,916	)
Profit (loss) of the consolidated entities		(18,386	)	2,391
Total comprehensive income (loss)		530		(10,324	)
Profit (loss) attributable to non-controlling interests		(6,519	)	1,182
Net cash provided by (used in) operating activities	￦	(5,962	)	431,760
Net cash used in investing activities		(17,927	)	(599,016	)
Net cash provided by financing activities				119,484
Net decrease in cash and cash equivalents		(23,889	)	(47,772	)

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, 2015 and 2014

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, 2014. 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) Critical judgments, 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, 2014.

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SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Basis of Preparation, Continued

(2) Use of estimates and judgments, Continued

2) Fair value measurement

Groups accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the finance executive.

The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of K-IFRS, including the level in the fair value hierarchy in which such valuations should be classified.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

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

ü Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

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

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Information about assumptions used for fair value measurements are included in Note 33.

(3) Common control transactions

SK Holdings Co., Ltd. (the Ultimate Controlling Entity) is the Ultimate Controlling Entity of the Parent Company because it controls 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.

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SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

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, 2014. 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, 2015.

(1) Changes in accounting policies

The following amendment to existing standards has been published and are mandatory for the Group for annual periods beginning on or after July 1, 2014.

1) K-IFRS 1019 Employee Benefits Employee contributions Amendments to K-IFRS 1019 introduced a practical expedient to accounting for defined benefit plan, when employees or third parties pay contributions if certain criteria are met. According to the amendments, the entity is permitted to recognize those contributions as a reduction of the service cost in the period in which the related service is rendered, instead of forecast future contributions from employees or third parties and attribute them to periods or service as negative benefits.

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

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SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

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 Others.

(1) Details of the segment information as of and for the six-month period ended June 30, 2015 are as follows:

(In millions of won)	Cellular Services	Fixed-line Telecommunication services	Others		Sub-total	Consolidation adjustments		Consolidated amount
Total revenue	￦	7,469,465	1,533,405	997,767		10,000,637	(1,504,612	)	8,496,025
Inter-segment revenue		847,372	301,176	356,064		1,504,612	(1,504,612	)
External revenue		6,622,093	1,232,229	641,703		8,496,025			8,496,025
Depreciation and amortization		1,066,285	261,845	68,317		1,396,447			1,396,447
Operating income (loss)		815,120	42,805	(42,399	)	815,526			815,526
Finance income and costs, net									(109,738	)
Gain related to investments in subsidiaries, associates and joint ventures, net									452,323
Other non-operating income and expense, net									(82,506	)
Profit before income tax									1,075,605
Total assets		23,580,421	3,516,376	3,214,927		30,311,724	(2,270,218	)	28,041,506
Total liabilities		9,483,378	2,242,744	897,624		12,623,746	100,173		12,723,919

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SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Operating Segments, Continued

(2) 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	Others		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 and costs, net									(124,537	)
Gain related to investments in subsidiaries, associates and joint ventures, net									294,702
Other non-operating income and expense, net									(28,072	)
Profit 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

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, 2015 and 2014.

Restricted Deposits

Deposits which are restricted in use as of June 30, 2015 and December 31, 2014 are summarized as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Short-term financial instruments(*)	￦	89,525	90,321
Long-term financial instruments(*)		607	612
Guarantee deposits		280	280
	￦	90,412	91,213

(*) Financial instruments include charitable trust fund established by the Group. Profits from the fund are donated to charitable institutions. As of June 30, 2015, the funds cannot be withdrawn.

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SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Trade and Other Receivables

(1) Details of trade and other receivables as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015 — Gross amount	Allowances for impairment		Carrying amount
Current assets:
Accounts receivabletrade	￦	2,677,060	(233,558	)	2,443,502
Short-term loans		32,414	(219	)	32,195
Accounts receivableother		777,090	(79,987	)	697,103
Accrued income		10,264			10,264
Others		4,685			4,685
		3,501,513	(313,764	)	3,187,749
Non-current assets:
Long-term loans		85,882	(27,131	)	58,751
Long-term accounts receivableother		3,658			3,658
Guarantee deposits		296,436			296,436
Long-term accounts receivabletrade		66,698	(1,704	)	64,994
		452,674	(28,835	)	423,839
	￦	3,954,187	(342,599	)	3,611,588

(In millions of won)	December 31, 2014 — Gross amount	Allowances for impairment		Carrying amount
Current assets:
Accounts receivabletrade	￦	2,614,059	(221,909	)	2,392,150
Short-term loans		75,199	(687	)	74,512
Accounts receivableother		769,115	(78,588	)	690,527
Accrued income		10,134			10,134
Others		3,865			3,865
		3,472,372	(301,184	)	3,171,188
Non-current assets:
Long-term loans		82,735	(27,007	)	55,728
Long-term accounts receivableother		3,596			3,596
Guarantee deposits		285,144			285,144
Long-term accounts receivabletrade		68,536			68,536
		440,011	(27,007	)	413,004
	￦	3,912,383	(328,191	)	3,584,192

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SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Trade and Other Receivables, Continued

(2) Changes in allowances for doubtful accounts of trade and other receivables during the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2015		June 30, 2014
Balance at January 1	￦	328,191		323,984
Increase of bad debt allowances		39,069		31,678
Write-offs		(38,911	)	(38,532	)
Others		14,250		12,898
Balance at June 30	￦	342,599		330,028

(3) Details of overdue but not impaired, and impaired trade and other receivables as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)
	June 30, 2015				December 31, 2014
	Accounts receivable - trade		Other receivables		Accounts receivable - trade		Other receivables
Neither overdue nor impaired	￦	1,901,690		1,061,411		1,831,243		1,089,001
Overdue but not impaired		77,171		5,146		76,671		3,481
Impaired		764,897		143,872		774,681		137,306
		2,743,758		1,210,429		2,682,595		1,229,788
Allowances for doubtful accounts		(235,262	)	(107,337	)	(221,909	)	(106,282	)
	￦	2,508,496		1,103,092		2,460,686		1,123,506

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

(4) The aging of overdue but not impaired accounts receivable as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)
	June 30, 2015		December 31, 2014
	Accounts receivable
- trade	Other receivables	Accounts receivable - trade	Other receivables
Less than 1 month	￦	26,992	1,721	25,254	1,795
1 ~ 3 months		23,080	1,849	26,469	213
3 ~ 6 months		11,108	92	11,641	608
More than 6 months		15,991	1,484	13,307	865
	￦	77,171	5,146	76,671	3,481

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, 2015 and 2014

Inventories

Details of inventories as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)
	June 30, 2015				December 31, 2014
	Acquisition cost	Write-down of inventory		Carrying amount	Acquisition cost	Write-down of inventory		Carrying amount
Merchandise	￦	255,690	(5,758	)	249,932	252,063	(5,325	)	246,738
Finished goods		2,553	(131	)	2,422	1,930	(216	)	1,714
Work in process		1,212	(102	)	1,110	1,144	(131	)	1,013
Raw materials and supplies		30,469	(1,062	)	29,407	19,242	(1,040	)	18,202
	￦	289,924	(7,053	)	282,871	274,379	(6,712	)	267,667

Investment Securities

(1) Details of short-term investment securities as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Beneficiary certificates(*)	￦	267,140	277,003
Current installments of long-term investment securities		75,655	3,158
	￦	342,795	280,161

(*) The distributions arising from beneficiary certificates as of June 30, 2015 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, 2015 and 2014

Investment Securities, Continued

(2) Details of long-term investment securities as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)
	June 30, 2015		December 31, 2014
Equity securities:
Marketable equity securities	￦	912,704		657,286
Unlisted equity securities(*1)		65,601		56,236
Equity investments(*2)		198,418		209,120
		1,176,723		922,642
Debt securities:
Public bonds(*3)				158
Investment bonds(*4)		48,251		36,638
		48,251		36,796
Total		1,224,974		959,438
Less current installments of long-term investment securities		(75,655	)	(3,158	)
Long-term investment securities	￦	1,149,319		956,280

(*1) Unlisted equity securities whose fair value cannot be measured reliably are recorded at cost.

(*2) Equity investments are recorded at cost.

(*3) Details of maturity for the public bonds as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Less than 1 year	￦		158

(*4) During the six-month period ended June 30, 2015, the Parent Company exercised the conversion right for the convertible bonds of Health Connect Co., Ltd., which were classified as available-for-sale financial assets. Health Connect Co., Ltd. has been classified as investments in associates (￦5,900 million) as the Parent Company obtained significant influence over the company. As a result of this transaction, investments in associates have increased by ￦5,900 million and the remaining convertible bonds of ￦560 million was fully redeemed.

Assets and Liabilities Classified as Held for Sale

During the year ended December 31, 2014, the Group entered into a disposal contract regarding the Groups ownership interests in Shenzhen E-eye High Tech Co., Ltd., the Parent Companys subsidiary. Assets and liabilities of the subsidiary amounting to ￦10,510 million and ￦408 million, were reclassified to assets and liabilities held for sale, respectively, and the carrying amount in excess of the fair value less cost to sell was recognized as impairment loss. The ownership interests of Shenzhen E-eye High Tech Co., Ltd. were disposed during the six-month period ended June 30, 2015.

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, 2015 and 2014

Business Combinations

(1) General information

On April 1, 2015, Neosnetworks Co., Ltd., a subsidiary of the Parent Company, acquired an unmanned machine security business of Joeun Safe Co., Ltd., which manages facility guarding services, in order to expand infrastructure and enhance competitiveness of its security business.

The Group recognized the acquired assets and liabilities as fair value and the difference between the consideration and fair value of net assets as goodwill.

(2) Consideration paid and assets and liabilities transferred

Consideration paid and assets in succession recognized at the acquisition date are as follows:

(In millions of won)
	2015
Consideration paid
Cash and cash equivalents	￦	13,957
Accounts payableother		2,302
	￦	16,259
Assets transferred
Property and equipment	￦	3,641
Intangible assets		8,219
Other assets		2,525
	￦	14,385

The fair value of such intangible assets transferred has been provisionally recorded and subject to change since the independent valuation process of the intangible assets has not been completed as of June 30, 2015.

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, 2015 and 2014

Investments in Associates and Joint Ventures

(1) Investments in associates and joint ventures accounted for using the equity method as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	Country	June 30, 2015 — Ownership percentage	Carrying amount	Ownership percentage		Carrying amount
Investments in associates
SK China Company Ltd.(*1)	China	9.6	￦	38,560	9.6	￦	35,817
Korea IT Fund(*2)	Korea	63.3		242,170	63.3		240,676
KEB HanaCard Co., Ltd.(*1,3)	Korea	15.0		253,707	25.4		425,140
Candle Media Co., Ltd.	Korea	35.1		19,766	35.1		19,486
NanoEnTek, Inc.	Korea	26.0		35,854	26.0		36,527
SK Industrial Development China Co., Ltd.	Hongkong	21.0		80,661	21.0		79,394
Packet One Network(*1)	Malaysia	13.6		44,391	13.6		53,670
SK Technology Innovation Company	Cayman	49.0		44,888	49.0		44,052
HappyNarae Co., Ltd.	Korea	42.5		16,268	42.5		15,551
SK hynix Inc.	Korea	20.1		5,293,292	20.1		4,849,159
SK MENA Investment B.V.	Netherlands	32.1		14,326	32.1		14,015
SKY Property Mgmt. Ltd.	Virgin Island	33.0		256,897	33.0		248,534
Xinan Tianlong Science and Technology Co., Ltd.	China	49.0		24,620	49.0		25,874
Daehan Kanggun BcN Co., Ltd. and others				160,491			158,725
Sub-total				6,525,891			6,246,620
Investments in joint ventures
Dogus Planet, Inc.(*4)	Turkey	50.0		8,995	50.0		11,441
PT. Melon Indonesia	Indonesia	49.0		3,806	49.0		3,564
Television Media Korea Ltd.	Korea	51.0		6,712	51.0		6,944
Celcom Planet	Malaysia	51.0		12,449	51.0		16,605
PT XL Planet Digital(*4)	Indonesia	50.0		23,914	50.0		12,914
Sub-total				55,876			51,468
Total			￦	6,581,767		￦	6,298,088

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, 2015 and 2014

Investments in Associates and Joint Ventures, Continued

(1) Investments in associates and joint ventures accounted for using the equity method as of June 30, 2015 and December 31, 2014 are as follows, Continued:

(*1) Classified as investments in associates as the Group can exercise significant influence through its participation on the board of directors even though the Group has less than 20% of equity interests.

(*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) During the six-month period ended June 30, 2015, the Group disposed of 27,725,264 shares of KEB HanaCard Co., Ltd.

(*4) There were additional investments in associates and joint ventures during the six-month period ended June 30, 2015.

(2) The market price of investments in listed associates as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won, except for share data)
	June 30, 2015			December 31, 2014
	Market value per share (In won)	Number of shares	Market price	Market value per share (In
won)	Number of shares	Market price
Candle Media Co., Ltd.	￦	892	21,620,360	19,285	734	21,620,360	15,869
NanoEnTek, Inc.		9,200	5,870,290	54,007	5,710	5,870,290	33,519
SK hynix Inc.		42,300	146,100,000	6,180,030	47,750	146,100,000	6,976,275

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, 2015 and 2014

Investments in Associates and Joint Ventures, Continued

(3) The financial information of the significant investees as of and for the six-month period ended June 30, 2015 and as of and for the year ended December 31, 2014 are as follows:

(In millions of won)	As of and for the six-month period ended June 30, 2015 — SK hynix Inc.	KEB HanaCard Co., Ltd.		SKY Property Mgmt. Ltd.		Korea IT Fund
Current assets	￦	9,656,987	6,344,737		158,150		122,165
Non-current assets		18,806,717	779,000		676,461		260,364
Current liabilities		5,268,876	1,317,903		235,268
Non-current liabilities		2,899,276	4,466,298		37,401
Revenue		9,456,920	746,127		43,601		16,935
Profit for the period		2,403,866	11,002		11,043		10,869
Other comprehensive income (loss)		73,785	(5,074	)	(249	)
Total comprehensive income		2,477,651	5,928		10,794		10,869

(In millions of won)	As of and for the year ended December 31, 2014 — SK hynix Inc.		KEB HanaCard Co., Ltd.(*)		SKY Property Mgmt. Ltd.		Korea IT Fund
Current assets	￦	10,363,514		6,716,612		172,775		122,026
Non-current assets		16,519,764		568,065		667,560		258,144
Current liabilities		5,765,304		848,140		62,868
Non-current liabilities		3,081,671		5,109,888		242,116
Revenue		17,125,566		305,756		81,502		18,883
Profit (loss) for the period		4,195,169		(11,196	)	15,006		5,470
Other comprehensive income (loss)		(52,360	)	(734	)	(6,090	)	4,837
Total comprehensive income (loss)		4,142,809		(11,930	)	8,916		10,307

(*) Revenue and net profit of Hana SK Card Co., Ltd. for pre-merger period, amounting to ￦853,506 million and ￦3,521 million, respectively, were not included.

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, 2015 and 2014

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, 2015 and as of and for the year ended December 31, 2014 are as follows:

(In millions of won)	As of and for the six-month period ended June 30, 2015
	Television Media Korea Ltd.		Dogus Planet, Inc.		PT. Melon Indonesia		PT XL Planet Digital		Celcom Planet
Current assets	￦	15,178		21,262		9,939		25,819		21,416
Cash and cash equivalents		2,383		2		5,116		22,344		19,371
Non-current assets		3,697		15,706		2,692		29,129		3,483
Current liabilities		6,185		18,901		4,674		7,633		7,900
Account payable, other payables and provisions		5,737		4,626		4,674		5,252		5,889
Non-current liabilities				75		139		424
Account payable, other payables and provisions
Revenue		9,136		15,404		7,550		1,717		221
Depreciation and amortization		(1,642	)	(1,628	)	(71	)	(1,279	)	(420	)
Interest income		96		308		152				197
Interest expense
Income tax benefit								2,940
Profit (loss)		(455	)	(8,338	)	845		(8,512	)	(8,311	)
Total comprehensive income (loss)		(455	)	(8,338	)	845		(8,512	)	(8,311	)

(In millions of won)	As of and for the year ended December 31, 2014
	Television Media Korea Ltd.		Dogus Planet, Inc.		PT. Melon Indonesia		PT XL Planet Digital		Celcom Planet
Current assets	￦	16,252		38,641		10,022		9,241		30,407
Cash and cash equivalents		5,104		6		4,763		6,710		30,400
Non-current assets		4,543		13,011		3,094		14,589		3,343
Current liabilities		7,188		28,406		5,689		4,198		1,182
Account payable, other payables and provisions		265		3,648
Non-current liabilities		464		377		102		124
Account payable, other payables and provisions		464		377				124
Revenue		16,403		23,897		11,826		1,019
Depreciation and amortization		(3,732	)	(2,402	)	(928	)	(1,452	)	(1	)
Interest income		254		1,154		268
Interest expense				(6	)
Income tax expense								(5,334	)
Profit (loss)		(3,361	)	(37,146	)	523		(15,596	)	(1,479	)
Total comprehensive income (loss)		(3,361	)	(37,146	)	523		(15,596	)	(1,479	)

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, 2015 and 2014

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, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015 — Net assets	Ownership interests (%)	Net assets attributable to the ownership interests	Cost-book value differentials	Carrying amount
Associates:
SK hynix Inc.(*)	￦	20,295,754	20.1	4,073,077	1,220,215	5,293,292
KEB HanaCard Co., Ltd.		1,339,536	15.0	200,931	52,776	253,707
SKY Property Mgmt. Ltd.(*)		554,016	33.0	182,825	74,072	256,897
Korea IT Fund		382,529	63.3	242,170		242,170

(In millions of won)	December 31, 2014 — Net assets	Ownership interests (%)	Net assets attributable to the ownership interests	Cost-book value differentials	Carrying amount
Associates:
SK hynix Inc.(*)	￦	18,036,453	20.1	3,619,666	1,229,493	4,849,159
KEB HanaCard Co., Ltd.		1,326,649	25.4	337,266	87,874	425,140
SKY Property Mgmt. Ltd.(*)		527,479	33.0	174,068	74,466	248,534
Korea IT Fund		380,170	63.3	240,676		240,676

(*) 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, 2015 and 2014

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, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended June 30, 2015 — Beginning balance	Acquisition and Disposal		Share of profits (losses)		Other comprehensive income (loss)		Other increase (decrease)		Ending balance
Investments in associates
SK China Company Ltd.	￦	35,817			(1,093	)	3,836				38,560
Korea IT Fund(*)		240,676			5,041		(1,444	)	(2,103	)	242,170
KEB HanaCard Co., Ltd.		425,140	(174,475	)	2,481		561				253,707
Candle Media Co., Ltd.		19,486			259		21				19,766
NanoEnTek, Inc.		36,527			(848	)	175				35,854
SK Industrial Development China Co., Ltd.		79,394			(587	)	1,854				80,661
Packet One Network		53,670			(8,714	)	(565	)			44,391
SK Technology Innovation Company		44,052			(1,970	)	2,806				44,888
HappyNarae Co., Ltd.		15,551			808		(91	)			16,268
SK hynix Inc.(*)		4,849,159			473,132		14,831		(43,830	)	5,293,292
SK MENA Investment B.V.		14,015			(1	)	312				14,326
SKY Property Mgmt. Ltd.		248,534			3,939		4,424				256,897
Xian Tianlong Science and Technology Co., Ltd.		25,874			(1,254	)					24,620
Others(*)		158,725	840		(7,678	)	720		7,884		160,491
Sub-total		6,246,620	(173,635	)	463,515		27,440		(38,049	)	6,525,891
Investments in joint ventures
Dogus Planet, Inc.		11,441	4,389		(7,516	)	681				8,995
PT. Melon Indonesia		3,564			414		(172	)			3,806
Television Media Korea Ltd.		6,944			(232	)					6,712
Celcom Planet		16,605			(4,156	)					12,449
PT XL Planet Digital		12,914	15,341		(4,341	)					23,914
Sub-total		51,468	19,730		(15,831	)	509				55,876
Total	￦	6,298,088	(153,905	)	447,684		27,949		(38,049	)	6,581,767

(*) Dividends paid by the associate are deducted from the carrying amount during the six-month period ended June 30, 2015.

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, 2015 and 2014

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, 2015 and 2014 are as follows, Continued:

(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
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, 2015 and 2014

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, 2015 are as follows:

(In millions of won)	Unrealized loss — Period ended June 30, 2015	Accumulated	Period ended June 30, 2015
Wave City Development Co., Ltd.	￦	2,658	4,302
Gemini and others		1,673	6,990	365
	￦	4,331	11,292	365

Property and Equipment

Changes in property and equipment for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)
	For the six-month period ended June 30, 2015
	Beginning balance	Acquisition	Disposal		Transfer		Depreciation		Business combination	Ending balance
Land	￦	766,780	2,198	(2,025	)	4,874					771,827
Buildings		933,867	4,360	(6,838	)	23,333		(24,581	)		930,141
Structures		352,789	761	(33	)	11,911		(17,044	)		348,384
Machinery		7,310,815	179,819	(2,858	)	594,637		(1,045,697	)	3,641	7,040,357
Other		499,050	435,518	(2,574	)	(308,958	)	(69,688	)		553,348
Construction in progress		704,400	295,862			(391,821	)				608,441
	￦	10,567,701	918,518	(14,328	)	(66,024	)	(1,157,010	)	3,641	10,252,498

(In millions of won)
	For the six-month period ended June 30, 2014
	Beginning balance	Acquisition	Disposal		Transfer		Depreciation		Impairment		Others	Business acquisition	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

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, 2015 and 2014

Investment Property

Changes in investment property for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended June 30, 2015 — Beginning balance	Transfer	Depreciation		Ending balance
Land	￦	10,418	886			11,304
Buildings		4,579	385	(121	)	4,843
	￦	14,997	1,271	(121	)	16,147

(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

Goodwill

(1) Goodwill as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
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		265,526	252,916
	￦	1,930,205	1,917,595

(2) Changes in goodwill for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended — June 30, 2015		June 30, 2014
Beginning balance	￦	1,917,595		1,733,261
Impairment loss on goodwill		(1,976	)
Others		14,586		17,814
	￦	1,930,205		1,751,075

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, 2015 and 2014

Intangible Assets

(1) Changes in intangible assets for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)
	For the six-month period ended June 30, 2015
	Beginning balance	Acquisition	Disposal		Transfer		Amortization		Business combination	Ending balance
Frequency use rights	￦	1,384,044						(140,264	)		1,243,780
Land use rights		25,353	4,647	(148	)			(4,608	)		25,244
Industrial rights		107,760	9,334			1,089		(3,105	)		115,078
Development costs		8,331	1,262			32		(2,278	)		7,347
Facility usage rights		52,636	515	(12	)	271		(4,216	)		49,194
Customer relations		6,404				(29	)	(1,939	)	8,219	12,655
Memberships		94,119	549	(804	)	67					93,931
Other		805,347	23,929	(106	)	76,794		(154,619	)		751,345
	￦	2,483,994	40,236	(1,070	)	78,224		(311,029	)	8,219	2,298,574

(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 rights		58,828	615	(16	)	379	(4,190	)					55,616
Customer relations		6,333	272				(1,731	)			692	1,702	7,268
Memberships		128,452	2,690	(44	)							267	131,365
Other		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

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, 2015 and 2014

Intangible Assets, Continued

(2) The carrying amount and residual useful lives of frequency usage rights as of June 30, 2015 are as follows, all of which are depreciated on a straight-line basis:

(In millions of won)	Amount		Description	Commencement of amortization	Completion of amortization
W-CDMA license	￦	150,691	Frequency use rights relating to W-CDMA service	Dec. 2003	Dec. 2016
W-CDMA license		24,466	Frequency use rights relating to W-CDMA service	Oct. 2010	Dec. 2016
800MHz license		243,264	Frequency use rights relating to CDMA and LTE service	Jul. 2011	Jun. 2021
1.8GHz license		816,530	Frequency use rights relating to LTE service	Sep. 2013	Dec. 2021
WiBro license		8,829	WiBro service	Mar. 2012	Mar. 2019
	￦	1,243,780

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, 2015 and 2014

Borrowings and Debentures

(1) Short-term borrowings as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	Lender	Annual interest rate (%)	June 30, 2015	December 31, 2014
Commercial Paper	Woori Investment Bank Co., Ltd., etc.	1.64~2.37	￦	630,000	206,000
Short-term borrowings	Korea Development Bank, etc.	2.11~3.08		299,300	160,600
			￦	929,300	366,600

(2) Long-term borrowings as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won and thousands of U.S. dollars) — Lender	Annual interest rate (%)	Maturity	June 30, 2015		December 31, 2014
Shinhan Bank	2.39	Jun. 15, 2015	￦			1,712
Kookmin Bank	2.13	Jun. 15, 2016		3,250		4,874
Kookmin Bank	2.13	Mar. 15, 2017		3,498		4,496
Kookmin Bank	2.13	Mar. 15, 2018		7,883		8,600
Shinhan Bank (*1)	6M bank debenture rate + 1.58	Apr. 30, 2016		10,000		10,000
Korea Development Bank	3.32	Jul. 30 ,2019		39,000		39,000
Korea Development Bank	2.94	Jul. 30 ,2019		10,000		10,000
Export Kreditnamnden (*2)	1.7	Apr. 29, 2022		90,577		94,903
				(USD 80,577	)	(USD 86,338	)
Sub-total				164,208		173,585
Less present value discount on long-term borrowings				(2,352	)	(2,623	)
				161,856		170,962
Less current installments of long-term borrowings				(30,554	)	(21,242	)
Long-term borrowings			￦	131,302		149,720

(*1) As of June 30, 2015, the 6M bank debenture rate of Shinhan Bank is 1.75%.

(*2) For the years ended December 31, 2014 and 2013, the Group obtained long-term borrowings from Export Kreditnamnden, an export credit agency. The long-term borrowings are redeemed by installments 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, 2015 and 2014

Borrowings and Debentures, Continued

(3) Debentures as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won, thousands of U.S. dollars and thousands of other currencies)	Purpose	Maturity	Annual interest rate (%)	June 30, 2015		December 31, 2014
Unsecured private bonds	Refinancing fund	2016	5.00	￦	200,000		200,000
Unsecured private bonds	Other fund	2015	5.00				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		50,000
Unsecured private bonds		2024	3.64		150,000		150,000
Unsecured private bonds(*5,6)		2029	4.73				55,188
Unsecured private bonds(*5)		2029	4.72		55,351		55,177
Unsecured private bonds	Refinancing fund	2019	2.53		160,000		160,000
Unsecured private bonds		2021	2.66		150,000		150,000
Unsecured private bonds		2024	2.82		190,000		190,000
Unsecured private bonds	Operating and refinancing fund	2022	2.40		100,000
Unsecured private bonds		2025	2.49		150,000
Unsecured private bonds		2030	2.61		50,000
Unsecured private bonds(*1)	Operating fund	2015	4.62		10,000		10,000
Unsecured private bonds(*2)		2015	4.09				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		80,000
Unsecured private bonds(*2)		2019	3.49		210,000		210,000
Unsecured private bonds(*2)		2019	2.76		130,000		130,000
Unsecured private bonds(*2)		2018	2.23		50,000
Unsecured private bonds(*2)		2020	2.49		160,000
Unsecured private bonds(*3)		2015	3.12				10,000
Unsecured private bonds(*3)		2016	3.24		10,000		10,000
Unsecured private bonds(*3)		2017	3.48		20,000		20,000
Foreign global bonds		2027	6.63		449,640		439,680
					(USD 400,000	)	(USD 400,000	)
Swiss unsecured private bonds		2017	1.75		364,257		333,429
					(CHF 300,000	)	(CHF 300,000	)
Foreign global bonds		2018	2.13		786,870		769,440
					(USD 700,000	)	(USD 700,000	)
Australia unsecured private bonds		2017	4.75		258,858		269,727
					(AUD 300,000	)	(AUD 300,000	)
Floating rate notes(*4)		2020	3M Libor + 0.88		337,230		329,760
					(USD 300,000	)	(USD 300,000	)

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, 2015 and 2014

Borrowings and Debentures, Continued

(3) Debentures as of June 30, 2015 and December 31, 2014 are as follows, Continued:

(In millions of won, thousands of U.S. dollars and thousands of other currencies)	Purpose	Maturity	Annual interest rate (%)	June 30, 2015		December 31, 2014
Foreign global bonds(*2)	Operating fund	2018	2.88		337,230		329,760
					(USD 300,000	)	(USD 300,000	)
Sub-total					6,449,436		6,252,161
Less discounts on bonds					(31,856	)	(33,531	)
					6,417,580		6,218,630
Less current installments of bonds					(529,777	)	(569,472	)
				￦	5,887,803		5,649,158

(*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, 2015, 3M Libor rate is 0.28%.

(*5) The Group settled the difference of the measurement bases of accounting profit or loss between the bonds and related derivatives by designating the structured bonds as 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 ￦5,351 million as of June 30, 2015.

(*6) As of December 31, 2014, the principal amount and the fair value of the structured bonds were ￦50,000 million and ￦55,188 million, respectively. The entire bonds were early redeemed during the six-month period ended June 30, 2015.

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, 2015 and 2014

Long-term Payablesother

(1) Long-term payablesother as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Payables related to acquisition of W-CDMA licenses	￦	545,013	657,001
Other(*)		32,393	27,566
	￦	577,406	684,567

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

(2) As of June 30, 2015 and December 31, 2014, long-term payablesother which consist of payables related to the acquisition of W-CDMA licenses for 800MHz, 2.3GHz and 1.8GHz frequencies are as follows (See Note 15):

(In millions of won)	Period of repayment	Coupon rate	Annual effective interest rate(*)	June 30, 2015		December 31, 2014
800MHz	2013~2015	3.51%	5.69%	￦			69,416
2.3GHz	2014~2016	3.00%	5.80%		2,882		5,766
1.8GHz	2012~2021	2.43~3.00%	4.84~5.25%		707,006		824,841
					709,888		900,023
Present value discount on long-term payablesother					(45,920	)	(53,633	)
					663,968		846,390
Current installments of long-term payablesother					(118,955	)	(189,389	)
Carrying amount at period end				￦	545,013		657,001

(*) 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 related to acquisition of W-CDMA licenses as of June 30, 2015 is as follows:

(In millions of won)
	Amount
Less than 1 year	￦	120,718
1~3 years		235,669
3~5 years		235,669
More than 5 years		117,832
	￦	709,888

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, 2015 and 2014

Provisions

Changes in provisions for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)
	For the six-month period ended June 30, 2015								As of June 30, 2015
	Beginning balance	Increase	Utilization		Reversal		Other	Ending balance	Current	Non-current
Provision for handset subsidy	￦	26,799		(2,696	)	(18,173	)		5,930	3,368	2,562
Provision for restoration		59,727	1,844	(375	)	(962	)	868	61,102	34,658	26,444
Other provisions		562	1,921	(323	)				2,160	1,259	901
	￦	87,088	3,765	(3,394	)	(19,135	)	868	69,192	39,285	29,907

(In millions of won)
	For the six-month period ended June 30, 2014									As of June 30, 2014
	Beginning balance	Increase	Utilization		Reversal		Other		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	(347	)	(909	)	(145	)	40,634	17,812	22,822
Other provisions		451		(99	)			(45	)	307		307
	￦	94,881	87,777	(49,652	)	(909	)	(190	)	131,907	75,855	56,052

The Group has provided handset subsidy to subscribers who purchase handsets on an installment basis and recognized provision for subsidy amounts which the Group is expected to pay in future periods.

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, 2015 and 2014

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, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Finance Lease Liabilities
Current installments of long-term finance lease liabilities	￦	1,744	3,804
Long-term finance lease liabilities			26
	￦	1,744	3,830

The Groups related interest and principal as of June 30, 2015, December 31, 2014 are as follows:

(In millions of won)	June 30, 2015 — Minimum lease payment	Present value		Minimum lease payment	Present value
Less than 1 year	￦	1,775	1,744	3,909	3,804
1~5 years				26	26
Sub-total		1,775	1,744	3,935	3,830
Current installments of long-term finance lease liabilities			(1,744	)	(3,804	)
Long-term finance lease liabilities	￦				26

(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 as of June 30, 2015 are as follows:

(In millions of won)	Lease payments	Lease revenues
Less than 1 year	￦	28,935	3,496
1~5 years		75,089	1,026
More than 5 years		41,481	641
	￦	145,505	5,163

(3) Sale 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 explained in Note 19-(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, 2015 and 2014

Defined Benefit Liabilities

(1) Details of defined benefit liabilities as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)
	June 30, 2015		December 31, 2014
Present value of defined benefit obligations	￦	471,040		437,844
Fair value of plan assets		(349,311	)	(346,257	)
	￦	121,729		91,587

(2) Principal actuarial assumptions as of June 30, 2015 and December 31, 2014 are as follows:

	June 30, 2015	December 31, 2014
Discount rate for defined benefit obligations	2.13%~3.70%	2.23%~3.70%
Expected rate of salary increase	2.51%~7.39%	2.51%~7.39%

Discount rate for defined benefit obligations is determined based on the Groups credit ratings and yield rate of corporate bonds with similar maturities for estimated payment term of defined benefit obligations. 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, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2015		June 30, 2014
Beginning balance	￦	437,844		312,494
Current service cost		52,278		64,192
Interest cost		5,957		5,126
Remeasurement
- Demographic assumption		(6	)
- Financial assumption		760
- Adjustment based on experience		3,522		14,600
Benefit paid		(33,513	)	(33,361	)
Others(*)		4,198		4,078
Ending balance	￦	471,040		367,129

(*) Others for the six-month period ended June 30, 2015 include the liabilities of ￦4,491 million and ￦1,289 million succeeded due to transfer of employees from associates, and transfer to construction in progress, etc. Others for the six-month period ended June 30, 2014 include the liabilities of ￦3,151 million succeeded due to transfer of employees from associates, and transfer to construction in progress, etc.

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, 2015 and 2014

Defined Benefit Liabilities, Continued

(4) Changes in plan assets for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2015		June 30, 2014
Beginning balance	￦	346,257		238,293
Interest income		4,721		4,596
Actuarial loss		(2,567	)	(214	)
Contributions by employer directly to plan assets		29,033		6,415
Benefit paid		(30,334	)	(8,830	)
Others		2,201		1,040
Ending balance	￦	349,311		241,300

(5) Expenses recognized in profit and loss for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended — June 30, 2015	June 30, 2014
Current service cost	￦	52,278	64,192
Net interest cost		1,236	530
	￦	53,514	64,722

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, 2015 and 2014

Derivative Instruments

(1) Currency swap contracts under cash flow hedge accounting as of June 30, 2015 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
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	Fixed-to-fixed cross currency 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	Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 80,577)	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, 2015 and 2014

Derivative Instruments, Continued

(2) As of June 30, 2015, 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 translation (gain) loss		Others (*)
Non-current assets:
Structured bond (face value of KRW 50,000)	￦								5,380	5,380
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 400,000)		(55,930	)	(17,856	)	(7,724	)	129,806		48,296
Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 300,000)		(5,992	)	(1,913	)	12,112				4,207
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 300,000)		(8,992	)			18,603				9,611
Total assets									￦	67,494
Non-current liabilities:
Fixed-to-fixed cross currency swap (Swiss Franc denominated bonds face value of CHF 300,000)	￦	(6,361	)	(2,031	)	749				(7,643	)
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 700,000)		(22,835	)	(7,290	)	23,372				(6,753	)
Fixed-to-fixed cross currency swap (Australia dollar denominated bonds face value of AUD 300,000)		2,149		686		(76,321	)			(73,486	)
Fixed-to-fixed long-term borrowings (U.S. dollar denominated bonds face value of USD 80,577)		(4,640	)	(1,482	)	5,506				(616	)
Total liabilities									￦	(88,498	)

(*) Cash flow hedge accounting has been applied to the relevant contracts 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 May 12, 2010.

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, 2015 and 2014

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, 2015 and December 31, 2014 are as follows:

(In millions of won, except for share data)
	June 30, 2015		December 31, 2014
Authorized shares		220,000,000		220,000,000
Issued shares(*1)		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 23)		(1,770,434	)	(2,139,683	)
Loss on disposal of treasury stock				(18,087	)
Hybrid bond (Note 24)		398,518		398,518
Others(*2)		(881,516	)	(878,637	)
	￦	662,455		277,998

(*1) During the years ended December 31, 2003, 2006 and 2009, the Parent Company retired 7,002,235 shares, 1,083,000 shares and 448,000 shares, respectively, of treasury stock which reduced its retained earnings before appropriation in accordance with the Korean Commercial Act. 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, 2015 and the year ended December 31, 2014 and details of shares outstanding as of June 30, 2015 and 2014 are as follows:

(In shares) — Issued shares	Treasury stock		Outstanding shares	Issued shares	Treasury stock	Outstanding shares
Beginning issued shares	80,745,711	9,809,375		70,936,336	80,745,711	9,809,375	70,936,336
Disposal of treasury stock		(1,692,824	)	1,692,824
Ending issued shares	80,745,711	8,116,551		72,629,160	80,745,711	9,809,375	70,936,336

(*2) Others primarily consist of the excess of the consideration paid by the Group over the carrying values of net assets acquired from common control transactions with entities within the control of the Ultimate Controlling Entity.

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, 2015 and 2014

Treasury Stock

The Parent 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, 2015 and December 31, 2014 are as follows:

(In millions of won, shares)	June 30, 2015	December 31, 2014
Number of shares		8,116,551	9,809,375
Amount	￦	1,770,434	2,139,683

On June 9, 2015, the Parent Company granted 1,692,824 shares of its treasury stock in order to acquire shares of SK Broadband Co., Ltd.

Hybrid Bond

Hybrid bonds classified as equity as of June 30, 2015 are 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 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.

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, 2015 and 2014

Retained Earnings

(1) Retained earnings as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Appropriated:
Legal reserve	￦	22,320	22,320
Reserve for research & manpower development		87,300	151,533
Reserve for business expansion		9,671,138	9,476,138
Reserve for technology development		2,616,300	2,416,300
		12,397,058	12,066,291
Unappropriated		2,023,985	2,122,300
	￦	14,421,043	14,188,591

(2) Legal reserve

The Korean Commercial Act 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

The reserve for research and manpower development was 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, 2015 and 2014

Reserves

(1) Details of reserves, net of taxes, as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)
	June 30, 2015		December 31, 2014
Unrealized fair value of available-for-sale financial assets	￦	288,101		235,385
Other comprehensive loss of investments in associates and joint ventures		(135,931	)	(163,808	)
Unrealized fair value of derivatives		(102,602	)	(77,531	)
Foreign currency translations differences for foreign operations		9,821		1,465
	￦	59,389		(4,489	)

(2) Change in reserves for the six-month periods ended June 30, 2015 and 2014 are as follows:

| (In millions of won) — Balance at January 1, 2014 | Unrealized fair value of available-for- sale
financial assets — ￦ | 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 | ) |
| Balance at January 1, 2015 | ￦ | 235,385 | | (163,808 | ) | (77,531 | ) | 1,465 | | (4,489 | ) |
| Changes | | 69,215 | | 27,946 | | (29,988 | ) | 8,356 | | 75,529 | |
| Tax effect | | (16,499 | ) | (69 | ) | 4,917 | | | | (11,651 | ) |
| Balance at June 30, 2015 | ￦ | 288,101 | | (135,931 | ) | (102,602 | ) | 9,821 | | 59,389 | |

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, 2015 and 2014

Other Operating Expenses

Details of other operating expenses for the three and six-month periods ended June 30, 2015 and 2014 are as follows:

| (In millions of won) | 2015 — 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 | ￦ | 11,512 | 24,051 | 14,828 | 29,132 |
| Utilities | | 60,476 | 126,608 | 51,936 | 114,734 |
| Taxes and dues | | 8,114 | 16,468 | 6,522 | 14,760 |
| Repair | | 79,975 | 145,832 | 69,872 | 134,481 |
| Research and development | | 77,952 | 147,422 | 104,054 | 204,960 |
| Training | | 7,128 | 14,569 | 9,017 | 16,594 |
| Bad debt for accounts receivabletrade | | 21,982 | 34,995 | 17,362 | 23,553 |
| Travel | | 7,154 | 13,965 | 7,806 | 14,563 |
| Supplies and other | | 38,003 | 83,707 | 54,867 | 108,196 |
| | ￦ | 312,296 | 607,617 | 336,264 | 660,973 |

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, 2015 and 2014 are as follows:

| (In millions of won) | 2015 — 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 | ￦ | 201 | 323 | 4,449 | 5,964 |
| Gain on disposal of property and equipment and intangible assets | | 1,842 | 2,765 | 1,385 | 3,411 |
| Others | | 5,133 | 12,275 | 10,897 | 27,199 |
| | ￦ | 7,176 | 15,363 | 16,731 | 36,574 |
| Other Non-operating Expenses: | | | | | |
| Loss on impairment of property and equipment and intangible assets | ￦ | 953 | 1,976 | 237 | 3,166 |
| Loss on disposal of property and equipment and intangible assets | | 1,281 | 3,290 | 1,696 | 3,980 |
| Donations | | 24,937 | 30,769 | 18,663 | 27,052 |
| Bad debt for accounts receivableother | | 6,226 | 4,074 | 5,154 | 8,125 |
| Loss on disposal of investment securities | | | | 7 | 7 |
| Loss on impairment of investment assets | | 9,398 | 18,668 | | 127 |
| Others(*) | | 9,096 | 39,092 | 2,957 | 22,189 |
| | ￦ | 51,891 | 97,869 | 28,714 | 64,646 |

(*) Others for the six-month periods ended June 30, 2015 and 2014 primarily consists of penalties amounting to ￦28.3 billion and ￦16.7 billion, respectively.

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, 2015 and 2014

Finance Income and Costs

(1) Details of finance income and costs for the three and six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	2015 — 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	￦	12,380	25,181	14,274	29,756
Dividends		43	13,339	939	10,567
Gain on foreign currency transactions		2,815	6,288	2,364	6,663
Gain on foreign currency translations		3,243	4,024	14,400	15,926
Gain on disposal of long-term investment securities		3,606	6,252	1,223	6,114
Gain on valuation of derivatives			1,030	1,967	6,017
Gain on settlement of derivatives					119
Gain on relating to financial liabilities at fair value through profit or loss		6,966	5,188
	￦	29,053	61,302	35,167	75,162

(In millions of won)	2015 — 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	￦	74,706	150,222	82,593	161,229
Loss on foreign currency transactions		2,880	8,193	5,526	9,552
Loss on foreign currency translations		2,088	3,132	117	5,186
Loss on disposal of long-term investment securities		1,649	1,651		2,112
Loss on valuation of derivatives		699		12,135	12,135
Loss on settlement of derivatives		4,517	4,517	335	335
Loss relating to financial assets at fair value through profit or loss				2,419	1,352
Loss relating to financial liabilities at fair value through profit or loss			174	7,794	7,798
Other finance costs		3,151	3,151
	￦	89,690	171,040	110,919	199,699

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, 2015 and 2014

Finance Income and Costs, Continued

(2) Details of interest income included in finance income for the three and six-month periods ended June 30, 2015 and 2014 are as follows:

| (In millions of won) | 2015 — 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 | ￦ | 5,010 | 10,393 | 8,602 | 18,250 |
| Interest income on installment receivables and others | | 7,370 | 14,788 | 5,672 | 11,506 |
| | ￦ | 12,380 | 25,181 | 14,274 | 29,756 |

(3) Details of interest expense included in finance costs for the three and six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	2015 — 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	￦	8,536	12,722	8,735	13,994
Interest expense on debentures		56,610	116,514	61,749	122,035
Interest on finance lease liabilities		19	47	149	349
Others		9,541	20,939	11,960	24,851
	￦	74,706	150,222	82,593	161,229

(4) Details of impairment losses for financial assets for the three and six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	2015 — 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	￦	3,151	3,151
Accounts receivabletrade		21,982	34,995	17,304	23,494
Other receivables		6,226	4,074	5,154	8,125
	￦	31,359	42,220	22,458	31,619

Income Tax Expense

Income tax expense was recognized as current tax expense adjusted to changes in estimates related to prior periods, deferred tax expenses by origination and reversal 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, 2015 and 2014

Earnings per Share

(1) Basic earnings per share

1) Basic earnings per share for the three and six-month periods ended June 30, 2015 and 2014 are calculated as follows:

(In millions of won, shares)	2015
	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:
Profit attributable to owners of the Parent Company on common shares	￦	395,839		840,334		498,536		768,350
Interest on hybrid bonds		(8,420	)	(8,420	)	(8,420	)	(8,420	)
Profit for the period on common shares		387,419		831,914		490,116		759,930
Weighted average number of common shares outstanding		71,326,988		71,132,741		70,936,336		70,936,336
Basic earnings per share (In won)	￦	5,432		11,695		6,909		10,713

2) The weighted average number of common shares outstanding for the three and six-month periods ended June 30, 2015 and 2014 are calculated as follows:

(In shares)
		Three-month period ended June 30		Six-month period ended June 30
Outstanding common shares at January 1, 2015	80,745,711		80,745,711		80,745,711
Effect of treasury stock	(8,116,551	)	(9,418,723	)	(9,612,970	)
Weighted average number of common shares outstanding at June 30, 2015	72,629,160		71,326,988		71,132,741

(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

(2) Diluted earnings per share

For the six-month periods ended June 30, 2015 and 2014, there were no potentially dilutive shares. Therefore, diluted earnings per share for the six-month periods ended June 30, 2015 and 2014 are the same as basic earnings per share.

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, 2015 and 2014

Categories of Financial Instruments

(1) Financial assets by categories as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)
	June 30, 2015
	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	￦			829,659		829,659
Financial instruments				286,218		286,218
Short-term investment securities			342,795			342,795
Long-term investment securities			1,149,319			1,149,319
Accounts receivabletrade				2,508,496		2,508,496
Loans and other receivables(*)				1,103,092		1,103,092
Derivative financial assets		5,380			62,114	67,494
	￦	5,380	1,492,114	4,727,465	62,114	6,287,073

(In millions of won)
	December 31, 2014
	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	￦			834,429		834,429
Financial instruments				313,699		313,699
Short-term investment securities			280,161			280,161
Long-term investment securities		7,817	948,463			956,280
Accounts receivabletrade				2,460,686		2,460,686
Loans and other receivables(*)				1,123,507		1,123,507
Derivative financial assets		8,713			61,322	70,035
	￦	16,530	1,228,624	4,732,321	61,322	6,038,797

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, 2015 and 2014

Categories of Financial Instruments, Continued

(1) Financial assets by categories as of June 30, 2015 and December 31, 2014 are as follows, Continued:

(*) Details of loans and other receivables as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Short-term loans	￦	32,195	74,512
Accounts receivable other		697,103	690,527
Accrued income		10,264	10,134
Other current assets		4,685	3,866
Long-term loans		58,751	55,728
Long-term accounts receivable other		3,658	3,596
Guarantee deposits		296,436	285,144
	￦	1,103,092	1,123,507

(2) Financial liabilities by categories as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015 — 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	￦		291,316		291,316
Derivative financial liabilities				88,498	88,498
Borrowings			1,091,156		1,091,156
Debentures(*1)		55,351	6,362,229		6,417,580
Accounts payableother and others(*2)			2,577,647		2,577,647
	￦	55,351	10,322,348	88,498	10,466,197

(In millions of won)	December 31, 2014 — 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	￦		275,495		275,495
Derivative financial liabilities				130,889	130,889
Borrowings			537,562		537,562
Debentures(*1)		110,365	6,108,265		6,218,630
Accounts payableother and others(*2)			3,241,615		3,241,615
	￦	110,365	10,162,937	130,889	10,404,191

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, 2015 and 2014

Categories of Financial Instruments, Continued

(2) Financial liabilities by categories as of June 30, 2015 and December 31, 2014 are as follows, Continued:

(*1) Bonds classified as financial liabilities at fair value through profit or loss as of June 30, 2015 and December 31, 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) Details of accounts payable and other payables as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Accounts payable other	￦	1,066,880	1,381,850
Withholdings		1,914	1,760
Accrued expenses		786,418	952,418
Current installments of long-term payablesother		120,699	193,193
Long-term payables other		577,406	684,567
Finance lease liabilities			26
Other non-current liabilities		24,330	27,801
	￦	2,577,647	3,241,615

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, 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 Group is exposed to currency risk mainly on exchange fluctuations on recognized assets and liabilities. The Group manages currency risk by currency forward, etc. if needed to hedge currency risk on business transactions. Currency risk occurs on forecasted transaction and recognized assets and liabilities which are denominated in a currency other than the functional currency of the Group.

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, 2015 and 2014

Financial Risk Management, Continued

(1) Financial risk management, Continued

1) Market risk, Continued

(i) Currency risk, Continued

Monetary foreign currency assets and liabilities as of June 30, 2015 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	181,643	￦	210,357	1,885,459	￦	2,119,442
EUR	10,841		13,995	28		36
JPY	35,507		326	1,897		17
AUD				298,776		257,802
CHF				299,163		363,241
Others	1,411		487	1		1
		￦	225,165		￦	2,740,539

In addition, the Group has entered into cross currency swaps to hedge against currency risk related to foreign currency borrowings and debentures. (See Note 21)

As of June 30, 2015, 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	￦	7,049	(7,049	)
EUR		1,363	(1,363	)
JPY		31	(31	)
Others		48	(48	)
	￦	8,491	(8,491	)

(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, 2015, available-for-sale equity instruments measured at fair value amount to ￦1,097,621 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, 2015 and 2014

Financial Risk Management, Continued

(1) Financial risk management, Continued

1) Market risk, Continued

(iii) Interest rate risk, Continued

The Groups interest rate risk arises from floating-rate borrowings and debentures. As of June 30, 2015, floating-rate borrowings and debentures amount to ￦29,300 million and ￦337,230 million respectively, the Group has entered into interest rate swaps to hedge interest rate risk related to floating-rate debentures. (See Note 21) If interest rate only increases (decreases) by 1%, income before income taxes for the six-month period ended June 30, 2015 would have been changed ￦293 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, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Cash and cash equivalents	￦	829,462	833,129
Financial instruments		286,218	313,699
Available-for-sale financial assets		30,805	15,498
Accounts receivabletrade		2,508,496	2,460,686
Loans and receivables		1,103,092	1,123,507
Derivative financial assets		67,494	70,035
Financial assets at fair value through profit or loss			7,817
	￦	4,825,567	4,824,371

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, 2015, 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 derivatives. 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, 2015.

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 29.

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, 2015 and 2014

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, 2015 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	￦	291,316	291,317	291,317
Borrowings(*1)		1,091,156	1,108,746	967,561	114,659	26,526
Debentures(*1)		6,417,580	7,685,893	746,696	4,382,877	2,556,320
Accounts payable-other and others(*2)		2,577,647	2,644,084	1,932,024	584,515	127,545
	￦	10,377,699	11,730,040	3,937,598	5,082,051	2,710,391

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, 2015, periods which cash flows from cash flow hedge derivatives are expected to occur are as follows:

(In millions of won)
	Carrying amount		Contractual cash flows		Less than 1 year		1 - 5 years		More than 5 years
Assets	￦	62,114		60,232		3,253		57,930		(951	)
Liabilities		(88,498	)	(91,506	)	(10,258	)	(80,648	)	(600	)
	￦	(26,384	)	(31,274	)	(7,005	)	(22,718	)	(1,551	)

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, 2015 and 2014

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 December 31, 2014.

The Group monitors its debt-equity ratio as a capital management indicator. This ratio is calculated as total liabilities divided by total equity; the total liabilities and equity is derived from the financial statements.

Debt-equity ratio as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Liabilities	￦	12,723,919	12,692,963
Equity		15,317,587	15,248,270
Debt-equity ratio		83.07 %	83.24 %

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, 2015 and 2014

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, 2015 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	￦	5,380		5,380		5,380
Derivative financial assets		62,114		62,114		62,114
Available-for-sale financial assets		1,097,621	912,704	47,140	137,777	1,097,621
	￦	1,165,115	912,704	114,634	137,777	1,165,115
Financial assets that cannot be measured at fair value
Cash and cash equivalents(*1)	￦	829,659
Available-for-sale financial assets(*1,2)		394,493
Accounts receivable trade and others(*1)		3,611,588
Financial instruments(*1)		286,218
	￦	5,121,958
Financial liabilities that can be measured at fair value
Financial liabilities at fair value through profit or loss	￦	55,351		55,351		55,351
Derivative financial liabilities		88,498		88,498		88,498
	￦	143,849		143,849		143,849
Financial liabilities that cannot be measured at fair value
Accounts payable trade(*1)	￦	291,316
Borrowings		1,091,156		1,095,444		1,095,444
Debentures		6,362,229		6,791,982		6,791,982
Accounts payableother and others(*1)		2,577,647
	￦	10,322,348		7,887,426		7,887,426

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, 2015 and 2014

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, 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
Financial assets at fair value through profit or loss	￦	16,530		8,713	7,817	16,530
Derivative financial assets		61,322		61,322		61,322
Available-for-sale financial assets		846,614	657,286	47,002	142,326	846,614
	￦	924,466	657,286	117,037	150,143	924,466
Financial assets that cannot be measured at fair value
Cash and cash equivalents(*1)	￦	834,429
Available-for-sale financial assets(*1,2)		382,010
Accounts receivable trade and others(*1)		3,584,193
Financial instruments(*1)		313,699
	￦	5,114,331
Financial liabilities that can be measured at fair value
Financial liabilities at fair value through profit or loss	￦	110,365		110,365		110,365
Derivative financial liabilities		130,889		130,889		130,889
	￦	241,254		241,254		241,254
Financial liabilities that cannot be measured at fair value
Accounts payable trade(*1)	￦	275,495
Borrowings		537,562		549,083		549,083
Debentures		6,108,265		6,514,832		6,514,832
Accounts payableother and others(*1)		3,241,615
	￦	10,162,937		7,063,915		7,063,915

(*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.

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.

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, 2015 and 2014

Financial Risk Management, Continued

(3) Fair value, Continued

The Group 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 Group performs valuation using the inputs which are consistent with natures of assets and liabilities being evaluated.

Interest rates used by the Group for the fair value measurement as of June 30, 2015 are as follows:

Derivative instruments	1.57 ~ 1.87 %
Borrowings and debentures	2.33 ~ 2.48 %

3) There have been no transfers from Level 2 to Level 1 for the six-month period ended June 30, 2015 and changes of financial assets classified as Level 3 for the six-month period ended June 30, 2015 are as follows:

| (In millions of won) | Balance at January 1 | Acquisition | Other comprehensive loss | | Balance at June
30 | |
| --- | --- | --- | --- | --- | --- | --- |
| Available-for-sale financial assets | ￦ | 142,326 | 2,544 | (7,093 | ) | 137,777 |

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, 2015 and 2014

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, 2015 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(*)	￦	37,578			37,578	(36,494	)		1,084
Accounts receivabletrade and others		115,214	(106,599	)	8,615				8,615
	￦	152,792	(106,599	)	46,193	(36,494	)		9,699
Financial liabilities:
Derivatives(*)	￦	36,494			36,494	(36,494	)
Accounts payabletrade and others		106,599	(106,599	)
	￦	143,093	(106,599	)	36,494	(36,494	)

Carrying amount of financial instruments recognized of which offset agreements are applicable as of December 31, 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(*)	￦	48,057			48,057	(45,892	)		2,165
Accounts receivabletrade and others		128,794	(117,568	)	11,226				11,226
	￦	176,851	(117,568	)	59,283	(45,892	)		13,391
Financial liabilities:
Derivatives(*)	￦	45,892			45,892	(45,892	)
Accounts payabletrade and others		117,568	(117,568	)
	￦	163,460	(117,568	)	45,892	(45,892	)

(*) 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, 2015 and 2014

Transactions with Related Parties

(1) List of related parties

Relationship	Company
Ultimate Controlling Entity	SK Holding Co., Ltd.
Subsidiaries	SK Planet Co., Ltd. and 38 others (See Note 1)
Joint ventures	Dogus Planet, Inc. and four others
Associates	SK hynix Inc. and 51 others
Affiliates	The Ultimate Controlling Entitys investee under equity method, 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 compensation given to such key management for the three and six-month periods ended June 30, 2015 and 2014 are as follows:

| (In millions of won) | 2015 — Three-month period ended June 30,
2015 | Six-month period ended June 30,
2015 | Three-month period ended June 30,
2014 | Six-month period ended June 30,
2014 | |
| --- | --- | --- | --- | --- | --- |
| Salaries | ￦ | 203 | 1,560 | 287 | 1,626 |
| Provision for retirement benefits | | 421 | 542 | 113 | 681 |
| | ￦ | 624 | 2,102 | 400 | 2,307 |

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, 2015 and 2014

Transactions with Related Parties, Continued

(3) Transactions with related parties for the three and six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)		2015
		Operating revenue and others		Operating expense and others		Acquisition of property and equipment		Loans
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.(*1)	￦	1,090	1,244	9,240	189,121
Associates	F&U Credit information Co., Ltd.		662	1,331	10,127	22,366
	HappyNarae Co., Ltd.		68	139	2,001	2,959	2,481	2,869
	SK hynix Inc.(*2)		2,627	50,178	2,194	2,199
	SK Wyverns Baseball Club Co., Ltd.		1,278	3,130	1,606	11,435
	KEB HanaCard Co., Ltd.		5,418	10,850	2,496	8,223
	Xian Tianlong Science and Technology Co., Ltd.								121	7,153
	Others(*3)		3,663	5,056	4,995	9,512	11	1,141		500
			13,716	70,684	23,419	56,694	2,492	4,010	121	7,653
Other	SK Engineering & Construction Co., Ltd.		1,177	4,759	11,077	13,057	73,059	125,394
	SK C&C Co., Ltd.		3,438	7,379	79,359	160,928	49,150	90,384
	SK Networks Co., Ltd.		4,318	6,023	255,918	620,717
	SK Networks service Co., Ltd.		2,483	4,830	24,893	37,774	522	526
	SK Telesys Co., Ltd.		110	212	9,659	21,101	12,342	73,359
	SK Energy Co., Ltd.		1,877	3,015	227	443
	SK Gas Co., Ltd.		813	1,885
	Others		6,628	13,094	10,180	19,660	4,214	4,563
			20,844	41,197	391,313	873,680	139,287	294,226
Total		￦	35,650	113,125	423,972	1,119,495	141,779	298,236	121	7,653

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

(*2) Operating revenue and others include ￦43,830 million of dividends paid by SK hynix Inc. and deducted from the investment in associates.

(*3) Operating revenue and others include ￦2,103 million and ￦227 million of dividends paid by Korea IT Fund and UniSK, respectively, and deducted from the investment in associates.

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, 2015 and 2014

Transactions with Related Parties, Continued

(3) Transactions with related parties for the three and six-month periods ended June 30, 2015 and 2014 are as follows, Continued:

(In millions of won)		2014
		Operating revenue and others		Operating expense and others		Acquisition of property and equipment		Loans
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.(*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	3,157	4,050
	SK hynix Inc.		2,208	4,922		879
	SK Wyverns Baseball Club Co., Ltd.		180	228	120	9,041
	HanaSK Card Co., Ltd.(*2)		11,179	21,436	1,078	2,297
	Others		2,138	3,433	5,133	8,602			45	45
			16,249	31,141	17,143	45,418	3,157	4,050	45	45
Other	SK Engineering & Construction Co., Ltd.		821	1,669	23,544	23,544	70,063	100,126
	SK C&C Co., Ltd.		4,689	8,595	71,056	154,140	25,364	51,409
	SK Networks Co., Ltd.		6,229	12,354	551,082	928,615	2,452	3,251
	SK Networks service Co., Ltd.		5,359	5,423	22,880	41,511	716	716
	SK Telesys Co., Ltd.		80	202	25,677	46,113	54,873	78,838
	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	4,623	5,150
			31,434	54,577	699,644	1,209,084	158,091	239,490
Total		￦	47,813	85,973	725,741	1,443,196	161,248	243,540	45	45

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

(*2) During the year ended December 31, 2014, due to the merger with Hana SK Card Co., Ltd., the Parent Companys associate and KEB Card Co., Ltd., the Group exchanged 57,647,058 shares of Hana SK Card Co., Ltd., with 67,627,587 shares of the surviving company, KEB HanaCard Co., 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, 2015 and 2014

Transactions with Related Parties, Continued

(4) Account balances as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)		June 30, 2015
		Accounts receivable		Accounts payable
Scope	Company	Loans	Accounts receivable-trade, and others	Accounts payable-trade, and others
Ultimate Controlling Entity	SK Holding Co., Ltd.	￦		433
Associates	HappyNarae Co., Ltd.			13	959
	F&U Credit information Co., Ltd.			39	1,439
	SK hynix Inc.			1,346	2,414
	SK Wyverns Baseball Club Co., Ltd.		1,221	303	435
	Wave City Development Co., Ltd.		1,700	38,412
	Daehan Kanggun BcN Co., Ltd.		22,148
	KEB HanaCard Co., Ltd.			1,869	4,868
	Xian Tianlong Science and Technology Co., Ltd.		7,153
	Others			817	1,847
			32,222	42,799	11,962
Other	SK Engineering & Construction Co., Ltd.			3,847	20,363
	SK C&C Co., Ltd.			1,416	65,032
	SK Networks. Co., Ltd.			5,691	174,880
	SK Networks Services Co., Ltd.			15	2,921
	SK Telesys Co., Ltd.			231	9,341
	SK Innovation Co., Ltd.			1,761	282
	SK Energy Co., Ltd.			1,624	62
	SK Gas Co., Ltd.			59	9
	Others			2,129	14,399
				16,773	287,289
Total		￦	32,222	60,005	299,251

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, 2015 and 2014

Transactions with Related Parties, Continued

(4) Account balances as of June 30, 2015 and December 31, 2014 are as follows, Continued:

(In millions of won)		December 31, 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.	￦		90
Associates	HappyNarae Co., Ltd.			13	2,650
	F&U Credit information Co., Ltd.			148	797
	SK hynix Inc.			2,800	2,840
	SK Wyverns Baseball Club Co., Ltd.		1,221
	Wave City Development Co., Ltd.		1,200	38,412
	Daehan Kanggun BcN Co., Ltd.		22,148
	KEB HanaCard Co., Ltd.			1,998	59
	Others			543	1,285
			24,569	43,914	7,631
Other	SK Engineering & Construction Co., Ltd.			897	27,282
	SK C&C Co., Ltd.			1,393	121,145
	SK Networks. Co., Ltd.			2,608	238,351
	SK Networks Services Co., Ltd.			16	2,922
	SK Telesys Co., Ltd.			321	3,037
	SK Innovation Co., Ltd.			1,641	271
	SK Energy Co., Ltd.			4,781	79
	SK Gas Co., Ltd.			2,143	47
	Others			2,813	9,342
				16,613	402,476
Total		￦	24,569	60,617	410,107

(5) As of June 30, 2015, collateral and guarantee provided by the Group for the related parties financing purposes are as follows. 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) During the year ended December 31, 2014, the Group acquired convertible bonds with a face value of ￦6,000 million from Health Connect Co., Ltd. at the face value. During the six-month period ended June 30, 2015, the Parent Company exercised the conversion right for the convertible bonds of Health Connect Co., Ltd. As a result of this transaction, investments in associates have increased by ￦5,900 million.

(8) There were additional investments in associates and joint ventures during the six-month period ended June 30, 2015. (See Note 11)

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, 2015 and 2014

Commitments and Contingencies

(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 ￦16,102 million as of June 30, 2015.

SK Broadband Co., Ltd., has guaranteed for employees borrowings relating to employee stock ownership and provided short-term financial instruments amounting to ￦1,775 million as collateral as of June 30, 2015.

(2) Contingencies

As of June 30, 2015, the claim amount of pending litigations of SK Communications Co., Ltd., a subsidiary of the Parent Company, amounts to ￦1,440 million. The ultimate outcome of such litigation is not expected to have a material effect on the Groups financial position or performance results.

(3) Guarantee provided

PS&Marketing Corporation, a subsidiary of the Parent Company, obtained ￦3,000 million of payment guarantees from Shinhan Bank, in relation to handsets purchased from the Apple Computer Korea Ltd.

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SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Statements of Cash Flows

(1) Adjustments for income and expenses from operating activities for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2015		June 30, 2014
Interest income	￦	(25,181)		(29,756	)
Dividends		(13,339	)	(10,567	)
Gain on foreign currency translation		(4,024	)	(15,926	)
Gain on disposal of long-term investments assets		(6,252	)	(6,114	)
Gain on valuation of derivatives		(1,030	)	(6,017	)
Gain on settlement of derivatives				(119	)
Gain related to investments in subsidiaries, associates and joint ventures, net		(452,323	)	(294,702	)
Gain on disposal of property, equipment and intangible assets		(2,765	)	(3,411	)
Gain on relating to financial liabilities at fair value through profit or loss		(5,188	)
Other income		(131	)	(6	)
Interest expenses		150,222		161,229
Loss on foreign currency translation		3,132		5,186
Loss on disposal of long-term investments securities		1,651		2,112
Other finance costs		3,151
Loss on valuation of derivatives				12,135
Loss on settlement of derivatives		4,517		335
Income tax expense		234,970		175,635
Provision for retirement benefits		53,514		64,722
Depreciation and amortization		1,468,160		1,420,648
Bad debt expenses		34,995		23,553
Loss on disposal of property and equipment and intangible assets		3,290		3,980
Loss on impairment of property and equipment and intangible assets		1,976		3,166
Loss relating to financial assets at fair value through profit or loss				1,352
Loss relating to financial liabilities at fair value through profit or loss		174		7,798
Bad debt for accounts receivableother		4,074		8,125
Loss on disposal of investments assets				7
Loss on impairment of investment assets		18,668		127
Other expenses		7,031		5,250
	￦	1,479,292		1,528,742

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SK TELECOM CO., LTD. and Subsidiaries

Notes to the Condensed Consolidated Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Statements of Cash Flows, Continued

(2) Changes in assets and liabilities from operating activities for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2015		June 30, 2014
Accounts receivabletrade	￦	(79,987	)	(195,944	)
Accounts receivableother		(42,198	)	(106,246	)
Accrued income				57
Advance payments		(34,860	)	(31,938	)
Prepaid expenses		(14,154	)	(14,301	)
V.A.T. refund receivable		27		7,949
Inventories		(16,676	)	(142,872	)
Guarantee deposits		(12,118	)	(5,876	)
Accounts payabletrade		36,889		118,439
Accounts payableother		(132,104	)	(491,376	)
Advanced receipts		(3,289	)	11,668
Withholdings		(178,717	)	218,630
Deposits received		(7,475	)	(1,275	)
Accrued expenses		(162,490	)	(35,025	)
V.A.T. payable		13,419		8,019
Unearned revenue		(71,067	)	(56,921	)
Provisions		(29,665	)	4,710
Long-term provisions		(9,137	)	32,304
Plan assets		1,301		2,415
Retirement benefit payment		(33,513	)	(33,361	)
Others		(11,128	)	893
	￦	(786,942	)	(710,051	)

(3) Significant non-cash transactions for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2015		June 30, 2014
Transfer of other property and equipment and others to construction in progress	￦	720,259		943,978
Transfer of construction in progress to property and equipment, and intangible assets		328,438		364,744
Decrease of accounts payableother related to acquisition of property and equipment and intangible assets		(184,377	)	(316,164	)
Increase of accounts receivableother related to disposal of property and equipment and intangible assets				2,015

Subsequent Events

(1) Interim dividends

On July 23, 2015, the Board of Directors of the Parent Company resolved to pay interim cash dividends of ￦1,000 per share totaling ￦72,629 million (Market dividend rate: 0.40%). The ex-dividend date was June 30, 2015 and the interim dividends are expected to be paid within twenty days after the date of the Board of Directors resolution.

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SK TELECOM CO., LTD.

Condensed Separate Interim Financial Statements

(Unaudited)

June 30, 2015 and 2014

(With Independent Auditors Review Report Thereon)

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

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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, 2015, the related condensed separate statements of income and comprehensive income for the three and six-month periods ended June 30, 2015 and 2014, the condensed separate interim statements of changes in equity and cash flows for the six-month periods ended June 30, 2015 and 2014, and notes, comprising a summary of significant accounting policies and other explanatory information.

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.

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Other matters

The separate statement of financial position of the Company as of December 31, 2014, 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 in accordance with Korean Standards on Auditing and our report thereon, dated February 23, 2015, expressed an unqualified opinion. The accompanying condensed separate statement of financial position of the Company as of December 31, 2014, 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 separate interim financial statements may differ from those generally accepted and applied in other countries.

KPMG Samjong Accounting Corp.

Seoul, Korea

August 7, 2015

This report is effective as of August 7, 2015, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

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SK TELECOM CO., LTD.

Condensed Separate Statements of Financial Position

As of June 30, 2015 and December 31, 2014

(In millions of won)		June 30, 2015
Assets
Current Assets:
Cash and cash equivalents	26,27	￦	155,687	248,311
Short-term financial instruments	4,26,27		133,000	143,000
Short-term investment securities	6,26,27		267,140	197,161
Accounts receivabletrade, net	5,26,27,28		1,597,007	1,559,281
Short-term loans, net	5,26,27,28		21,758	67,989
Accounts receivableother, net	5,26,27,28		300,037	305,990
Prepaid expenses			82,509	86,070
Inventories, net			34,401	23,694
Advanced payments and other	5,26,27		94,336	58,417
Total Current Assets			2,685,875	2,689,913
Non-Current Assets:
Long-term financial instruments	4,26,27		69	69
Long-term investment securities	6,26,27		731,379	608,797
Investments in subsidiaries and associates	7		8,674,128	8,181,769
Property and equipment, net	8,28		7,423,274	7,705,906
Goodwill	9		1,306,236	1,306,236
Intangible assets, net	10		1,755,891	1,928,169
Long-term loans, net	5,26,27,28		34,874	38,457
Long-term prepaid expenses			29,847	28,551
Guarantee deposits	4,5,26,27,28		163,891	156,807
Long-term derivative financial assets	15,26,27		57,883	67,728
Other non-current assets			98	60
Total Non-Current Assets			20,177,570	20,022,549
Total Assets		￦	22,863,445	22,712,462

See accompanying notes to the condensed separate interim financial statements.

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SK TELECOM CO., LTD.

Condensed Separate Statements of Financial Position, Continued

As of June 30, 2015 and December 31, 2014

(In millions of won)		June 30, 2015
Liabilities and Equity
Current Liabilities:
Short-term borrowings	11,26,27	￦	770,000		200,000
Current installments of debentures and long-term borrowings, net	11,26,27		282,297		211,863
Current installments of long-term payablesother	12,26,27		118,955		189,389
Accounts payableother	26,27,28		848,511		1,086,485
Withholdings	26,27		640,045		801,119
Accrued expenses	26,27		434,316		615,488
Income tax payable	24		219,152		91,315
Unearned revenue			49,081		92,783
Provisions	13		37,576		50,456
Advanced receipts			56,113		39,148
Total Current Liabilities			3,456,046		3,378,046
Non-Current Liabilities:
Debentures, excluding current installments, net	11,26,27		4,686,412		4,655,137
Long-term borrowings, excluding current installments	11,26,27		75,786		80,147
Long-term payablesother	12,26,27		545,013		657,001
Long-term unearned revenue			4,503		19,544
Defined benefit liabilities	14		12,862		15,555
Long-term derivative financial liabilities	15,26,27		88,498		130,889
Long-term provisions	13		20,497		27,676
Deferred tax liabilities	24		109,910		144,876
Other non-current liabilities	26,27		57,551		61,370
Total Non-Current Liabilities			5,601,032		5,792,195
Total Liabilities			9,057,078		9,170,241
Equity
Share capital	1,16		44,639		44,639
Capital surplus and other capital adjustments	16,17,18		845,966		433,894
Retained earnings	19		12,917,835		12,996,790
Reserves	20		(2,073	)	66,898
Total Equity			13,806,367		13,542,221
Total Liabilities and Equity		￦	22,863,445		22,712,462

See accompanying notes to the condensed separate interim financial statements.

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SK TELECOM CO., LTD.

Condensed Separate Statements of Income

For the three and six-month periods ended June 30, 2015 and 2014

(In millions of won except for per share data)
	June 30, 2015				June 30, 2014
Note	Three-month period ended		Six-month period ended		Three-month period ended		Six-month period ended
Operating revenue:	28
Revenue	￦	3,143,766		6,277,222		3,264,610		6,528,313
Operating expense:	28
Labor cost		249,706		423,033		147,178		313,216
Commissions paid		1,228,049		2,571,119		1,305,216		2,894,331
Depreciation and amortization		531,639		1,056,576		518,153		1,027,207
Network interconnection		182,446		352,367		219,888		434,763
Leased line		85,383		181,586		92,490		189,352
Advertising		58,398		91,028		57,108		96,546
Rent		95,663		193,593		92,520		185,243
Cost of products that have been resold		110,599		224,108		121,630		235,573
Other operating expenses	21	205,793		379,896		182,762		373,123
		2,747,676		5,473,306		2,736,945		5,749,354
Operating income		396,090		803,916		527,665		778,959
Finance income	23	19,735		82,519		15,102		40,706
Finance costs	23	(67,890	)	(133,598	)	(86,279	)	(152,387	)
Other non-operating income	22	3,737		6,969		13,569		28,592
Other non-operating expenses	22	(32,291	)	(61,664	)	(25,622	)	(55,491	)
Profit before income tax		319,381		698,142		444,435		640,379
Income tax expense	24	87,384		170,359		81,061		123,472
Profit for the period	￦	231,997		527,783		363,374		516,907
Earnings per share	25
Basic earnings per share (in won)	￦	3,135		7,301		5,004		7,168
Diluted earnings per share (in won)	￦	3,135		7,301		5,004		7,168

See accompanying notes to the condensed separate interim financial statements.

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SK TELECOM CO., LTD.

Condensed Separate Statements of Comprehensive Income

For the three and six-month periods ended June 30, 2015 and 2014

(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	￦	231,997		527,783		363,374		516,907
Other comprehensive loss
Items that will never be reclassified to profit or loss, net of taxes:
Remeasurement of defined benefit liabilities	14	(410	)	(2,453	)	(6,467	)	(9,585	)
Items that are or may be reclassified subsequently to profit or loss, net of taxes:
Net change in unrealized fair value of available-for-sale financial assets	20	(28,520	)	(53,569	)	(9,136	)	(51,431	)
Net change in unrealized fair value of derivatives	15,20	(24,802	)	(15,402	)	(21,064	)	(16,693	)
Other comprehensive loss for the period, net of taxes		(53,732	)	(71,424	)	(36,667	)	(77,709	)
Total comprehensive income	￦	178,265		456,359		326,707		439,198

See accompanying notes to the condensed separate interim financial statements.

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SK TELECOM CO., LTD.

Condensed Separate Statements of Changes in Equity

For the six-month periods ended June 30, 2015 and 2014

(In millions of won)
	Share capital	Capital surplus (deficit) and other capital adjustments								Retained earnings		Reserves		Total equity
		Paid-in surplus	Treasury stock		Loss on disposal of treasury stock		Hybrid bond	Other
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	)
Total comprehensive income
Profit for the period											516,907				516,907
Other comprehensive loss											(9,585	)	(68,124	)	(77,709	)
											507,322		(68,124	)	439,198
Interest on hybrid bond											(8,420	)			(8,420	)
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
Balance, January 1, 2015	￦	44,639	2,915,887	(2,139,683	)	(18,087	)	398,518	(722,741	)	12,996,790		66,898		13,542,221
Cash dividends											(595,865	)			(595,865	)
Total comprehensive income
Profit for the period											527,783				527,783
Other comprehensive loss											(2,453	)	(68,971	)	(71,424	)
											525,330		(68,971	)	456,359
Treasury stock				369,249		18,087			24,736						412,072
Interest on hybrid bond											(8,420	)			(8,420	)
Balance, June 30, 2015	￦	44,639	2,915,887	(1,770,434	)			398,518	(698,005	)	12,917,835		(2,073	)	13,806,367

See accompanying notes to the condensed separate interim financial statements.

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SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows

For the six-month periods ended June 30, 2015 and 2014

(In millions of won)
Cash flows from operating activities:
Cash generated from operating activities
Profit for the period	￦	527,783		516,907
Adjustments for income and expenses	30	1,383,546		1,361,390
Changes in assets and liabilities related to operating activities	30	(647,987	)	(452,702	)
Sub-total		1,263,342		1,425,595
Interest received		11,819		9,065
Dividends received		56,561		10,567
Interest paid		(111,951	)	(115,795	)
Income tax paid		(68,359	)	(96,712	)
Net cash provided by operating activities		1,151,412		1,232,720
Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term investment securities, net				55,002
Decrease in short-term financial instruments, net		10,000		10,000
Collection of short-term loans		199,853		69,413
Proceeds from disposal of long-term investment securities		5,235		44,572
Proceeds from disposal of investments in subsidiaries and associates		185,557
Proceeds from disposal of property and equipment		5,739		9,350
Proceeds from disposal of intangible assets		72		275
Proceeds from disposal of assets held for sale				1,056
Collection of long-term loans				1,988
Proceeds from disposal of other non-current assets				90
Sub-total		406,456		191,746
Cash outflows for investing activities:
Increase in short-term investment securities, net		(69,842	)
Increase in short-term loans		(150,164	)	(85,960	)
Acquisition of long-term investment securities		(202,424	)	(8,357	)
Acquisition of investments in subsidiaries and associates		(246,271	)	(146,536	)
Acquisition of property and equipment		(789,708	)	(1,024,367	)
Acquisition of intangible assets		(9,859	)	(23,489	)
Increase in other non-current assets		(38	)
Increase in long-term loans				(45	)
Sub-total		(1,468,306	)	(1,288,754	)
Net cash used in investing activities	￦	(1,061,850	)	(1,097,008	)

See accompanying notes to the condensed separate interim financial statements.

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SK TELECOM CO., LTD.

Condensed Separate Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2015 and 2014

(In millions of won)	June 30, 2015
Cash flows from financing activities:
Cash inflows from financing activities:
Increase in short-term borrowings, net	￦	570,000		440,000
Proceeds from long-term borrowings				3,552
Proceeds from issuance of debentures		298,718		299,354
Cash inflows from settlement of derivatives		175		118
Sub-total		868,893		743,024
Cash outflows for financing activities:
Repayments of long-term borrowings		(6,407	)	(6,407	)
Repayments of long-term account payablesother		(190,134	)	(207,668	)
Repayments of debentures		(250,000	)	(96,151	)
Payments of cash dividends		(595,865	)	(595,865	)
Payments of interest on hybrid bonds		(8,420	)	(8,420	)
Cash outflows from settlement of derivatives		(329	)	(335	)
Sub-total		(1,051,155	)	(914,846	)
Net cash used in financing activities		(182,262	)	(171,822	)
Net decrease in cash and cash equivalents		(92,700	)	(36,110	)
Cash and cash equivalents at beginning of the period		248,311		448,459
Effects of exchange rate changes on cash and cash equivalents		76		(155	)
Cash and cash equivalents at end of the period	￦	155,687		412,194

See accompanying notes to the condensed separate interim financial statements.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

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, 2015, 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	52,265,708	64.73
Treasury stock	8,116,551	10.05
Total number of shares	80,745,711	100.00

Basis of Preparation

(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, 2014. 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 with joint control of, of significant influence over, an investee, in which the investments are accounted for at cost.

(2) Use of estimates and judgments

1) Critical judgments, 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, 2014.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Basis of Preparation, Continued

(2) Use of estimates and judgments, Continued

2) Fair value measurement

A number of the Companys accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. The Company has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the finance executive.

When measuring the fair value of an asset or a liability, the Company uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

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

ü Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

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

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Information about assumptions used for fair value measurements are included in Note 27.

(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.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

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, 2014. 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, 2015.

(1) Changes in accounting policies

The following amendment to existing standards has been published and are mandatory for the Company for annual periods beginning on or after July 1, 2014.

1) K-IFRS 1019 Employee BenefitsEmployee contributions

Amendments to K-IFRS 1019 introduced a practical expedient to accounting for defined benefit plan, when employees or third parties pay contributions if certain criteria are met. According to the amendments, the entity is permitted to recognize those contributions as a reduction of the service cost in the period in which the related service is rendered, instead of forecast future contributions from employees or third parties and attribute them to periods or service as negative benefits.

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

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Restricted Deposits

Deposits which are restricted in use as of June 30, 2015 and December 31, 2014 are summarized as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Short-term financial instruments(*)	￦	85,500	85,500
Long-term financial instruments(*)		69	69
Guarantee deposits		280	280
	￦	85,849	85,849

(*) Financial instruments include charitable trust fund established by the Company. Profits from the fund are donated to charitable institutions. As of June 30, 2015, the funds cannot be withdrawn.

Trade and Other Receivables

(1) Details of trade and other receivables as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015 — Gross amount	Allowances for impairment		Carrying amount
Current assets:
Accounts receivabletrade	￦	1,718,223	(121,216	)	1,597,007
Short-term loans		21,978	(220	)	21,758
Accounts receivableother		362,204	(62,167	)	300,037
Accrued income		6,924			6,924
		2,109,329	(183,603	)	1,925,726
Non-current assets:
Long-term loans		56,511	(21,637	)	34,874
Guarantee deposits		163,891			163,891
		220,402	(21,637	)	198,765
	￦	2,329,731	(205,240	)	2,124,491

(In millions of won)	December 31, 2014 — Gross amount	Allowances for impairment		Carrying amount
Current assets:
Accounts receivabletrade	￦	1,665,941	(106,660	)	1,559,281
Short-term loans		68,676	(687	)	67,989
Accounts receivableother		366,821	(60,831	)	305,990
Accrued income		6,354			6,354
		2,107,792	(168,178	)	1,939,614
Non-current assets:
Long-term loans		60,130	(21,673	)	38,457
Guarantee deposits		156,807			156,807
		216,937	(21,673	)	195,264
	￦	2,324,729	(189,851	)	2,134,878

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Trade and Other Receivables, Continued

(2) Changes in allowances for doubtful accounts of trade and other receivables during the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2015		June 30, 2014
Balance at January 1	￦	189,851		174,480
Increase of bad debt allowances		27,697		24,157
Write-offs		(22,319	)	(25,391	)
Collection of receivables previously written-off		10,011		9,578
Balance at June 30	￦	205,240		182,824

(3) Details of overdue but not impaired, and impaired trade and other receivables as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015
	Accounts receivable
- trade		Other receivables		Accounts receivable
- trade		Other receivables
Neither overdue nor impaired	￦	1,215,386		499,520		1,182,627		553,014
Overdue but not impaired		51,496				47,663
Impaired		451,341		111,988		435,651		105,774
		1,718,223		611,508		1,665,941		658,788
Allowances for doubtful accounts		(121,216	)	(84,024	)	(106,660	)	(83,191	)
	￦	1,597,007		527,484		1,559,281		575,597

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

(4) The aging of overdue but not impaired accounts receivable as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Less than 1 month	￦	9,900	12,045
1 ~ 3 months		16,852	15,222
3 ~ 6 months		9,854	8,591
More than 6 months		14,890	11,805
	￦	51,496	47,663

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Investment Securities

(1) Details of short-term investment securities as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Beneficiary certificates(*)	￦	267,140	197,003
Current installments of long-term investment securities			158
	￦	267,140	197,161

(*) The distributions arising from beneficiary certificates as of June 30, 2015, were accounted for as accrued income.

(2) Details of long-term investment securities as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Equity securities:
Marketable equity securities	￦	607,306	490,741
Unlisted equity securities(*1)		42,877	28,696
Equity investments(*2)		72,039	73,054
		722,222	592,491
Debt securities:
Public bonds(*3)			158
Investment bonds(*4)		9,157	16,306
		9,157	16,464
Total		731,379	608,955
Less current installments of long-term investment securities			(158	)
Long-term investment securities	￦	731,379	608,797

(*1) Unlisted equity securities whose fair value cannot be measured reliably are recorded at cost.

(*2) Equity investments are recorded at cost.

(*3) Details of maturity for the public bonds as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Less than 1 year	￦		158

(*4) During the six-month period ended June 30, 2015, the Company exercised the conversion right for the convertible bonds of Health Connect Co., Ltd., which were classified as available-for-sale financial assets. Health Connect Co., Ltd. has been classified as investments in associates (￦5,900 million) as the Company obtained significant influence over the investee. As a result of this transaction, investments in associates have increased by ￦5,900 million and the remaining convertible bonds of ￦560 million was fully redeemed. Also, the Company classified the convertible bonds of IRIVER LIMITED, amounting to ￦7,128 million, as financial assets at fair value through profit or loss and the difference between carrying amount and fair value was accounted for as gain or loss relating to financial assets at fair value through profit or loss.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Investments in Subsidiaries and Associates

(1) Investments in subsidiaries and associates as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Investments in subsidiaries	￦	4,287,049	3,614,750
Investments in associates		4,387,079	4,567,019
	￦	8,674,128	8,181,769

(2) Details of investments in subsidiaries as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won, except for share data) — 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.(*1)	295,959,080	100.0		1,860,398	1,242,247
PS&Marketing Corporation	66,000,000	100.0		313,934	313,934
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)	408,435	83.9		63,967	23,968
IRIVER LIMITED	15,202,039	49.0		54,503	54,503
SK Telecom China Holdings Co., Ltd.		100.0		38,652	29,116
SKT Vietnam PTE. Ltd.	180,476,700	73.3		2,364	2,364
SKT Americas, Inc.	122	100.0		83,871	83,871
YTK Investment Ltd.		100.0		18,693	27,945
Atlas Investment		100.0		77,050	77,050
SK Global Healthcare Business Group Ltd.		100.0		39,649	25,784
			￦	4,287,049	3,614,750

(*1) On March 20, 2015, the Board of Directors of the Company decided to grant 0.0168936 share of its treasury stock in exchange for 1 share of SK Broadband Co., Ltd., a subsidiary of the Company, to the shareholders of SK Broadband Co., Ltd. as of June 9, 2015. After the stock exchange, SK Broadband Co., Ltd. became a wholly-owned subsidiary of the Company.

(*2) The Company newly acquired 50,377 and 326,748 shares of Neosnetworks Co., Ltd. by participating in the capital increase and capital increase without consideration respectively during the six-month period ended June 30, 2015.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Investments in Subsidiaries and Associates, Continued

(3) Details of investments in associates as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won, except for share data) — 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)	393,460	19.1		1,532	1,532
KEB HanaCard Co., Ltd.(*1,3)	39,902,323	15.0		253,739	430,044
Daehan Kanggun BcN Co., Ltd.	1,675,126	29.0		8,340	8,340
NanoEnTek, Inc.	5,870,290	26.0		37,959	37,959
SK Industrial Development China Co., Ltd.	77,762,360	21.0		83,691	83,691
Packet One Network(*1)	2,265,944	13.6		60,706	60,706
SK Technology Innovation Company	14,700	49.0		45,864	45,864
SK hynix Inc.	146,100,000	20.1		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				65,102	68,737
			￦	4,387,079	4,567,019

(*1) Classified as investments in associates as the Company can exercise significant influence through its participation on the board of directors even though the Company has less than 20% of equity interests.

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

(*3) During the six-month period ended June 30, 2015, the Company disposed of 27,725,264 shares of KEB HanaCard Co., Ltd.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Investments in Subsidiaries and Associates, Continued

(4) The market price of investments in listed subsidiaries as of June 30, 2015 and December 31, 2014 are as follows:

| (In millions of won, except for share data) | June 30, 2015 — Market value per share (In won) | Number of shares | Market price | Market value per share (In
won) | Number of shares | Market price | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| IRIVER LIMITED | ￦ | 5,590 | 15,202,039 | 84,979 | 6,370 | 15,202,039 | 96,837 |
| SK Broadband Co., Ltd.(*) | | | 295,959,080 | | 4,380 | 149,638,354 | 655,416 |

(*) Due to the voluntary delisting of SK Broadband Co., Ltd. during the six-month period ended June 30, 2015, the market price is not disclosed as of June 30, 2015.

Property and Equipment

Changes in property and equipment for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)
	For the six-month period ended June 30, 2015
	Beginning balance	Acquisition	Disposal		Transfer		Depreciation		Ending balance
Land	￦	448,255	828	(328	)	5,155				453,910
Buildings		568,874	782	(4,131	)	21,997		(17,409	)	570,113
Structures		350,915	761	(33	)	11,911		(17,013	)	346,541
Machinery		5,277,929	22,013	(689	)	525,155		(791,819	)	5,032,589
Other		430,478	421,932	(1,730	)	(309,165	)	(54,630	)	486,885
Construction in progress		629,455	200,553			(296,772	)			533,236
	￦	7,705,906	646,869	(6,911	)	(41,719	)	(880,871	)	7,423,274

(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

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Goodwill

Goodwill as of June 30, 2015 and December 31, 2014 is as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Goodwill related to acquisition of Shinsegi Telecom, Inc.	￦	1,306,236	1,306,236

Intangible Assets

(1) Changes in intangible assets for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)
	For the six-month period ended June 30, 2015
	Beginning balance	Acquisition	Disposal		Transfer	Amortization		Ending balance
Frequency use rights	￦	1,384,044					(140,264	)	1,243,780
Land use rights		14,016	1,412				(2,431	)	12,997
Industrial rights		10,583	3,507	(2	)		(2,109	)	11,979
Facility usage rights		15,843	515	(12	)	271	(1,276	)	15,341
Memberships		63,465	62						63,527
Other		440,218	4,363	(5	)	50,721	(87,030	)	408,267
	￦	1,928,169	9,859	(19	)	50,992	(233,110	)	1,755,891

(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

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Intangible Assets, Continued

(2) The carrying amount and residual useful lives of frequency usage rights as of June 30, 2015 are as follows, all of which are depreciated on a straight-line basis:

(In millions of won)	Amount		Description	Commencement of amortization	Completion of amortization
W-CDMA license	￦	150,691	Frequency use rights relating to W-CDMA service	Dec. 2003	Dec. 2016
W-CDMA license		24,466	Frequency use rights relating to W-CDMA service	Oct. 2010	Dec. 2016
800MHz license		243,264	Frequency use rights relating to CDMA and LTE service	Jul. 2011	Jun. 2021
1.8GHz license		816,530	Frequency use rights relating to LTE service	Sep. 2013	Dec. 2021
WiBro license		8,829	WiBro service	Mar. 2012	Mar. 2019
	￦	1,243,780

Borrowings and Debentures

(1) Short-term borrowings as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won) — Lender	Annual interest rate (%)	Maturity	June 30, 2015	December 31, 2014
Korea Development Bank	2.48	Apr. 30, 2015	￦		100,000
	2.11	Sep. 30, 2015		100,000
	2.11	Oct. 30, 2015		100,000
Kookmin Bank	2.56	Jul. 17, 2015		70,000
CP	2.37	Jan. 15, 2015			100,000
	1.80	Jul. 16, 2015		300,000
	1.64	Jul. 17, 2015		200,000
			￦	770,000	200,000

(2) Long-term borrowings as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won and thousands of U.S. dollars) — Lender	Annual interest rate (%)	Maturity	June 30, 2015	December 31, 2014
Export Kreditnamnden(*)	1.70	Apr. 29, 2022	￦90,577 (USD 80,577	)	94,903 (USD 86,338	)
Less present value discount on long-term borrowings			90,577 (2,352	)	94,903 (2,623	)
			88,225		92,280
Less current installments of long-term borrowings			(12,439	)	(12,133	)
			￦75,786		80,147

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

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Borrowings and Debentures, Continued

(3) Debentures as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won, thousands of U.S. dollars, and thousands of other currencies)	Purpose	Maturity	Annual interest rate (%)	June 30, 2015		December 31, 2014
Unsecured private bonds	Refinancing fund	2016	5.00	￦	200,000		200,000
Unsecured private bonds	Other fund	2015	5.00				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		50,000
Unsecured private bonds		2024	3.64		150,000		150,000
Unsecured private bonds(*2, 3)		2029	4.73				55,188
Unsecured private bonds(*2)		2029	4.72		55,351		55,177
Unsecured private bonds	Refinancing fund	2019	2.53		160,000		160,000
Unsecured private bonds		2021	2.66		150,000		150,000
Unsecured private bonds		2024	2.82		190,000		190,000
Unsecured private bonds	Operating and refinancing fund	2022	2.40		100,000
Unsecured private bonds		2025	2.49		150,000
Unsecured private bonds		2030	2.61		50,000
Foreign global bonds	Operating fund	2027	6.63		449,640		439,680
					(USD 400,000	)	(USD 400,000	)
Swiss unsecured private bonds		2017	1.75		364,257		333,429
					(CHF 300,000	)	(CHF 300,000	)
Foreign global bonds		2018	2.13		786,870		769,440
					(USD 700,000	)	(USD 700,000	)
Australian unsecured private bonds		2017	4.75		258,858		269,727
					(AUD 300,000	)	(AUD 300,000	)
Floating rate notes(*1)		2020	3M Libor + 0.88		337,230		329,760
					(USD 300,000	)	(USD 300,000	)
Sub-total					4,982,206		4,882,401
Less discounts on bonds					(25,936	)	(27,534	)
					4,956,270		4,854,867
Less current installments of bonds					(269,858	)	(199,730	)
				￦	4,686,412		4,655,137

(*1) As of June 30, 2015, 3M Libor rate is 0.28%.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Borrowings and Debentures, Continued

(3) Debentures as of June 30, 2015 and December 31, 2014 are as follows, Continued:

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

(*3) As of December 31, 2014, the principal amount and the fair value of the structured bonds were ￦50,000 million and ￦55,188 million, respectively. The entire bonds were early redeemed during the six-month period ended June 30, 2015.

Long-term Payablesother

(1) As of June 30, 2015 and December 31, 2014, long-term payablesother which consist of payables related to the acquisition of W-CDMA licenses for 800MHz, 2.3GHz and 1.8GHz frequencies are as follows (See Note 10):

(In millions of won) — Period of repayment	Coupon rate	Annual effective interest rate(*)		June 30, 2015		December 31, 2014
800MHz	2013~2015	3.51 %	5.69 %	￦			69,416
2.3GHz	2014~2016	3.00 %	5.80 %		2,882		5,766
1.8GHz	2012~2021	2.43~3.00 %	4.84~5.25 %		707,006		824,841
					709,888		900,023
Present value discount on long-term payablesother					(45,920	)	(53,633	)
					663,968		846,390
Less current installments of long-term payablesother					(120,718	)	(190,134	)
Current installments of present value discount on long-term payablesother					1,763		745
Carrying amount at period end				￦	545,013		657,001

(*) 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 payablesother.

(2) The repayment schedule of long-term payablesother as of June 30, 2015 is as follows:

(In millions of won)	Amount
Less than 1 year	￦	120,718
1~3 years		235,669
3~5 years		235,669
More than 5 years		117,832
	￦	709,888

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Provisions

Changes in provisions for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended June 30, 2015 — Beginning balance	Increase	Utilization		Reversal		Ending balance	Current	Non- current
Provision for handset subsidy	￦	26,799		(2,696	)	(18,173	)	5,930	3,368	2,562
Provision for restoration		51,333	2,116	(344	)	(962	)	52,143	34,208	17,935
	￦	78,132	2,116	(3,040	)	(19,135	)	58,073	37,576	20,497

(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

The Company has provided handset subsidy to subscribers who purchase handsets on an installment basis and recognized a provision for subsidy amounts which the Company is expected to pay in future periods.

Defined Benefit Liabilities

(1) Details of defined benefit liabilities as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)
	June 30, 2015		December 31, 2014
Present value of defined benefit obligations	￦	197,898		195,130
Fair value of plan assets		(185,036	)	(179,575	)
	￦	12,862		15,555

(2) Principal actuarial assumptions as of June 30, 2015 and December 31, 2014 are as follows:

Discount rate for defined benefit obligations	2.91 %	2.91 %
Expected rate of salary increase	3.80 %	3.80 %

Discount rate for defined benefit obligations is determined based on the Companys credit ratings and yield rate of corporate bonds with similar maturities for estimated payment term of defined benefit obligations. 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.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Defined Benefit Liabilities, Continued

(3) Changes in defined benefit obligations for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2015		June 30, 2014
Beginning balance	￦	195,130		154,460
Current service cost		17,610		16,294
Interest cost		2,707		2,990
Remeasurement
- Demographic assumption		16
- Adjustment based on experience		834		12,086
Benefit paid		(20,266	)	(10,710	)
Others(*)		1,867		1,437
Ending balance	￦	197,898		176,557

(*) Others for the six-month periods ended June 30, 2015 and 2014 include transfer to construction in progress and liabilities in relation to executives transferred from affiliates.

(4) Changes in plan assets for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2015		June 30, 2014
Beginning balance	￦	179,575		131,574
Interest income		2,491		2,480
Actuarial loss		(2,387	)	(560	)
Contributions by employer directly to plan assets		25,000		4,000
Benefit paid		(19,643	)	(3,116	)
Ending balance	￦	185,036		134,378

(5) Expenses recognized in profit and loss for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended — June 30, 2015	June 30, 2014
Current service cost	￦	17,610	16,294
Net Interest cost		216	510
	￦	17,826	16,804

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

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Derivative Instruments

(1) Currency swap contracts under cash flow hedge accounting as of June 30, 2015 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
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 (U.S. dollar denominated bonds face value of USD 80,577)	Foreign currency risk	Currency swap	Deutsche bank	Dec. 16, 2013 ~ Apr. 29, 2022

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Derivative Instruments, Continued

(2) As of June 30, 2015, 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 (gain) loss on foreign currency translation		Others(*)
Non-current assets:
Structured bond (face value of KRW 50,000)	￦								5,380	5,380
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 400,000)		(55,930	)	(17,856	)	(7,724	)	129,806		48,296
Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 300,000)		(5,992	)	(1,913	)	12,112				4,207
Total assets									￦	57,883
Non-current liabilities:
Fixed-to-fixed cross currency swap (Swiss Franc denominated bonds face value of CHF 300,000)	￦	(6,361	)	(2,031	)	749				(7,643	)
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 700,000)		(22,835	)	(7,290	)	23,372				(6,753	)
Fixed-to-fixed cross currency swap (Australia dollar denominated bonds face value of AUD 300,000)		2,149		686		(76,321	)			(73,486	)
Fixed-to-fixed long-term borrowings (U.S. dollar denominated bonds face value of USD 80,577)		(4,640	)	(1,482	)	5,506				(616	)
Total liabilities									￦	(88,498	)

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

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, 2015 and December 31, 2014 are as follows:

(In millions of won, except for share data)
	June 30, 2015		December 31, 2014
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 17)		(1,770,434	)	(2,139,683	)
Loss on disposal of treasury stock				(18,087	)
Hybrid bond (Note 18)		398,518		398,518
Others		(698,005	)	(722,741	)
	￦	845,966		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 Act. 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, 2015 and the year ended December 31, 2014 and details of shares outstanding as of June 30, 2015 and 2014 are as follows:

(In shares) — Issued shares	Treasury stock		Outstanding shares	Issued shares	Treasury stock	Outstanding shares
Beginning issued shares	80,745,711	9,809,375		70,936,336	80,745,711	9,809,375	70,936,336
Disposal of treasury stock		(1,692,824	)	1,692,824
Ending issued shares	80,745,711	8,116,551		72,629,160	80,745,711	9,809,375	70,936,336

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, 2015 and December 31, 2014 are as follows:

(In millions of won, shares)	June 30, 2015	December 31, 2014
Number of shares		8,116,551	9,809,375
Amount	￦	1,770,434	2,139,683

On June 9, 2015, the Company granted 1,692,824 shares of its treasury stock (acquisition cost: ￦369,249 million) in order to acquire shares of SK Broadband Co., Ltd.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Hybrid Bond

Hybrid bonds classified as equity as of June 30, 2015 are 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. The 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, 2015 and December 31 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Appropriated:
Legal reserve	￦	22,320	22,320
Reserve for research & manpower development		87,300	151,534
Reserve for business expansion		9,671,138	9,476,138
Reserve for technology development		2,616,300	2,416,300
		12,397,058	12,066,292
Unappropriated		520,777	930,498
	￦	12,917,835	12,996,790

(2) Legal reserve

The Korean Commercial Act 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

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Reserves

(1) Details of reserves, net of taxes, as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)
	June 30, 2015		December 31, 2014
Unrealized fair value of available-for-sale financial assets	￦	91,537		145,106
Unrealized fair value of derivatives		(93,610	)	(78,208	)
	￦	(2,073	)	66,898

(2) Changes in reserves for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended June 30, 2015
	Unrealized fair value of available-for-sale financial assets		Unrealized fair value of derivatives		Total
Balance at January 1, 2015	￦	145,106		(78,208	)	66,898
Changes		(70,672	)	(20,319	)	(90,991	)
Tax effect		17,103		4,917		22,020
Balance at June 30, 2015	￦	91,537		(93,610	)	(2,073	)

(In millions of won)	For the six-month period ended June 30, 2014
	Unrealized fair value of available-for-sale financial assets		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

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Other Operating Expenses

Details of other operating expenses for the three and six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	2015 — 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	￦	8,475	18,058	10,671	21,863
Utilities		45,979	95,260	37,588	83,713
Taxes and dues		5,116	9,509	4,043	8,809
Repair		53,017	91,491	45,074	86,517
Research and development		62,071	110,954	57,254	108,358
Training		4,421	10,161	5,751	11,968
Bad debt for accounts receivabletrade		16,347	23,612	12,039	16,034
Other		10,367	20,851	10,342	35,861
	￦	205,793	379,896	182,762	373,123

Other Non-operating Income and Expenses

Details of other non-operating income and expenses for the three and six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	2015 — 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	￦	866	937	489	600
Others		2,871	6,032	13,080	27,992
	￦	3,737	6,969	13,569	28,592
Other Non-operating Expenses:
Loss on disposal of property and equipment and intangible assets	￦	884	2,056	1,146	2,709
Donations		18,116	23,562	18,581	26,560
Bad debt for accounts receivableother		6,239	4,085	5,153	8,123
Others(*)		7,052	31,961	742	18,099
	￦	32,291	61,664	25,622	55,491

(*) Others for the six-month period ended June 30, 2015 and 2014 primarily consists of penalties amounting to ￦28.3 billion and ￦16.7 billion, respectively.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Finance Income and Costs

(1) Details of finance income and costs for the three and six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	2015 — 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	￦	5,465	11,160	5,999	12,827
Dividends		2,308	56,731	939	10,567
Gain on foreign currency transactions		2,308	4,484	1,212	5,211
Gain on foreign currency translation		1,197	1,098		115
Gain relating to financial liabilities at fair value through profit or loss		6,965	5,188
Gain on disposal of long-term investment securities		1,492	2,828	935	5,851
Gain on valuation of derivatives			1,030	6,017	6,017
Gain on settlement of derivatives					118
	￦	19,735	82,519	15,102	40,706
Finance Costs:
Interest expense	￦	59,906	121,132	68,473	132,372
Loss on foreign currency transactions		2,378	7,027	5,148	8,783
Loss on foreign currency translation			25	2,106	1,741
Loss on disposal of long-term investment securities			2	5	6
Loss on valuation of derivatives		699
Loss on settlement of derivatives		4,517	4,517	335	335
Loss relating to financial assets at fair value through profit or loss		358	689	2,419	1,352
Loss relating to financial liabilities at fair value through profit or loss			174	7,793	7,798
Other finance costs		32	32
	￦	67,890	133,598	86,279	152,387

(2) Details of interest income included in finance income three and six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	2015 — 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	￦	1,668	3,483	3,128	6,674
Interest income on installment receivables and others		3,797	7,677	2,871	6,153
	￦	5,465	11,160	5,999	12,827

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Finance Income and Costs, Continued

(3) Details of interest expense included in finance costs for the three and six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	2015 — 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	￦	6,981	10,010	7,648	11,983
Interest expense on debentures		44,050	91,353	49,378	96,536
Others		8,875	19,769	11,447	23,853
	￦	59,906	121,132	68,473	132,372

(4) Details of impairment losses for financial assets for the three and six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	2015 — Three-month period ended June 30	Six-month period ended June 30	Three-month period ended June 30	Six-month period ended June 30
Accounts receivabletrade	￦	16,347	23,612	12,039	16,034
Other receivables		6,239	4,085	5,153	8,123
Available-for-sale financial assets		32	32
	￦	22,618	27,729	17,192	24,157

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

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, 2015 and 2014 are calculated as follows:

(In millions of won, shares)	2015
	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	￦	231,997		527,783		363,374		516,907
Interest on hybrid bond		(8,420	)	(8,420	)	(8,420	)	(8,420	)
Profit for the period on common shares		223,577		519,363		354,954		508,487
Weighted average number of common shares outstanding		71,326,988		71,132,741		70,936,336		70,936,336
Basic earnings per share (In won)	￦	3,135		7,301		5,004		7,168

2) The weighted average number of common shares outstanding for the three and six-month periods ended June 30, 2015 and 2014 are calculated as follows:

(In shares)
		Three-month period ended June 30		Six-month period ended June 30
Outstanding common shares at January 1, 2015	80,745,711		80,745,711		80,745,711
Effect of treasury stock	(8,116,551	)	(9,418,723	)	(9,612,970	)
Weighted average number of common shares outstanding at June 30, 2015	72,629,160		71,326,988		71,132,741

(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

(2) Diluted earnings per share

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Categories of Financial Instruments

(1) Financial assets by categories as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)
	June 30, 2015
	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	￦			155,687		155,687
Financial instruments				133,069		133,069
Short-term investment securities			267,140			267,140
Long-term investment securities(*1)		7,128	724,251			731,379
Accounts receivabletrade				1,597,007		1,597,007
Loans and other receivables(*2)				527,484		527,484
Derivative financial assets		5,380			52,503	57,883
	￦	12,508	991,391	2,413,247	52,503	3,469,649

(In millions of won)
	December 31, 2014
	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	￦			248,311		248,311
Financial instruments				143,069		143,069
Short-term investment securities			197,161			197,161
Long-term investment securities(*1)		7,817	600,980			608,797
Accounts receivabletrade				1,559,281		1,559,281
Loans and other receivables(*2)				575,597		575,597
Derivative financial assets		8,713			59,015	67,728
	￦	16,530	798,141	2,526,258	59,015	3,399,944

(*1) Long-term investment securities were designated as financial assets at fair value through profit of loss since the embedded derivative (conversion right option), which should be separated from the host contract, could not be separately measured.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Categories of Financial Instruments, Continued

(1) Financial assets by categories as of June 30, 2015 and December 31, 2014 are as follows, Continued:

(*2) Details of loans and other receivables as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Short-term loans	￦	21,758	67,989
Accounts receivableother		300,037	305,990
Accrued income		6,924	6,354
Long-term loans		34,874	38,457
Guarantee deposits		163,891	156,807
	￦	527,484	575,597

(2) Financial liabilities by categories as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)
	June 30, 2015
	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	￦			88,498	88,498
Borrowings			858,225		858,225
Debentures(*1)		55,351	4,900,919		4,956,270
Accounts payableother and others(*2)			1,978,004		1,978,004
	￦	55,351	7,737,148	88,498	7,880,997

(In millions of won)
	December 31, 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	￦			130,889	130,889
Borrowings			292,280		292,280
Debentures(*1)		110,365	4,744,502		4,854,867
Accounts payableother and others(*2)			2,582,608		2,582,608
	￦	110,365	7,619,390	130,889	7,860,644

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Categories of Financial Instruments, Continued

(2) Financial liabilities by categories as of June 30, 2015 and December 31, 2014 are as follows, Continued:

(*2) Details of accounts payable and other payables as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Accounts payableother	￦	848,511	1,086,485
Withholdings			3
Accrued expenses		434,316	615,488
Current installments of long-term payablesother		118,955	189,389
Long-term payablesother		545,013	657,001
Other non-current liabilities		31,209	34,242
	￦	1,978,004	2,582,608

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.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Financial Risk Management, Continued

(1) Financial risk management, Continued

1) Market risk, Continued

(i) Currency risk, Continued

Monetary foreign currency assets and liabilities as of June 30, 2015 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	59,027	￦	72,525	1,472,341	￦	1,655,058
EUR	10,716		13,837	19		24
JPY	33,489		307
AUD				298,776		257,802
CHF				299,163		363,241
Others	1,411		487
		￦	87,156		￦	2,276,125

In addition, the Company has entered into cross currency swaps to hedge against currency risk related to foreign currency borrowings and debentures. (See Note 15)

As of June 30, 2015, 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	￦	5,981	(5,981	)
EUR		1,348	(1,348	)
JPY		31	(31	)
Others		48	(48	)
	￦	7,408	(7,408	)

(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, 2015, available-for-sale equity instruments measured at fair value amount to ￦696,010 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.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Financial Risk Management, Continued

(1) Financial risk management, Continued

1) Market risk, Continued

(iii) Interest rate risk, Continued

The Companys interest rate risk arises from floating-rate borrowings and payables. As of June 30, 2015, floating-rate debentures amount to ￦337,230 million and the Company has entered into interest rate swaps to hedge interest rate risk related to floating-rate borrowings and debentures (See Note 15). If interest rate only increases (decreases) by 1%, income before income taxes for the six-month period ended June 30, 2015 would not have been changed due to the interest expense from floating-rate borrowings and 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, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Cash and cash equivalents	￦	155,657	248,281
Financial instruments		133,069	143,069
Available-for-sale financial assets		2,030	8,648
Accounts receivable - trade		1,597,007	1,559,281
Loans and receivables		527,484	575,597
Derivative financial assets		57,883	67,728
Financial assets at fair value through profit or loss		7,128	7,817
	￦	2,480,258	2,610,421

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, 2015, 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 derivatives. 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, 2015.

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 23.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

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, 2015 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)	￦	858,225	870,166	787,590	56,050	26,526
Debentures (*1)		4,956,270	6,085,519	444,044	3,085,155	2,556,320
Accounts payable - other and others (*2)		1,978,004	2,045,116	1,375,465	548,532	121,119
	￦	7,792,499	9,000,801	2,607,099	3,689,737	2,703,965

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, 2015, periods which cash flows from cash flow hedge derivatives are expected to occur are as follows:

(In millions of won)
	Carrying amount		Contractual cash flows		Less than 1 year		1 - 5 years		More than 5 years
Assets	￦	52,503		52,226		5,187		47,990		(951	)
Liabilities		(88,498	)	(91,506	)	(10,258	)	(80,648	)	(600	)
	￦	(35,995	)	(39,280	)	(5,071	)	(32,658	)	(1,551	)

(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, 2014.

The Company monitors its debt-equity ratio as a capital management indicator. This ratio is calculated as total liabilities divided by total equity; the total liabilities and equity is derived from the financial statements.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Financial Risk Management, Continued

(2) Capital management, Continued

Debt-equity ratio as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)	June 30, 2015	December 31, 2014
Liabilities	￦	9,057,078	9,170,241
Equity		13,806,367	13,542,221
Debt-equity ratio		65.60 %	67.72 %

(3) Fair value

1) Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of June 30, 2015 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	￦	12,508		5,380	7,128	12,508
Derivative financial assets		52,503		52,503		52,503
Available-for-sale financial assets		696,010	607,306	47,140	41,564	696,010
	￦	761,021	607,306	105,023	48,692	761,021
Financial assets that cannot be measured at fair value
Cash and cash equivalents(*1)	￦	155,687
Available-for-sale financial assets(*1,2)		295,381
Accounts receivabletrade and others(*1)		2,124,491
Financial instruments(*1)		133,069
	￦	2,708,628
Financial liabilities that can be measured at fair value
Financial liabilities at fair value through profit or loss	￦	55,351		55,351		55,351
Derivative financial liabilities		88,498		88,498		88,498
	￦	143,849		143,849		143,849
Financial liabilities that cannot be measured at fair value
Borrowings	￦	858,225		859,322		859,322
Debentures		4,900,919		5,267,575		5,267,575
Accounts payableother and others(*1)		1,978,004
	￦	7,737,148		6,126,897		6,126,897

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

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, 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
Financial assets at fair value through profit or loss	￦	16,530		8,713	7,817	16,530
Derivative financial assets		59,015		59,015		59,015
Available-for-sale financial assets		586,675	490,741	47,002	48,932	586,675
	￦	662,220	490,741	114,730	56,749	662,220
Financial assets that cannot be measured at fair value
Cash and cash equivalents(*1)	￦	248,311
Available-for-sale financial assets(*1,2)		211,466
Accounts receivabletrade and others(*1)		2,134,878
Financial instruments(*1)		143,069
	￦	2,737,724
Financial liabilities that can be measured at fair value
Financial liabilities at fair value through profit or loss	￦	110,365		110,365		110,365
Derivative financial liabilities		130,889		130,889		130,889
	￦	241,254		241,254		241,254
Financial liabilities that cannot be measured at fair value
Borrowings	￦	292,280		300,048		300,048
Debentures		4,744,502		5,103,527		5,103,527
Accounts payableother and others(*1)		2,582,608
	￦	7,619,390		5,403,575		5,403,575

(*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.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Financial Risk Management, Continued

(3) Fair value, Continued

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 and liabilities being evaluated.

Interest rates used by the Company for the fair value measurement as of June 30, 2015 are as follows:

	Interest rate
Derivative instruments	1.57 ~ 1.87%
Borrowings and debentures	2.33 ~ 2.48%

(In millions of won)	Balance at January 1	Loss for the period		Other comprehensive loss		Balance at June 30
Financial assets at fair value through profit or loss	￦	7,817	(689	)			7,128
Available-for-sale financial assets		48,932			(7,368	)	41,564

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

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, 2015 are as follows:

(In millions of won)	Gross financial instruments recognized
					Financial instruments		Cash collaterals received
Financial assets:
Derivatives(*)	￦	37,578			37,578	(36,494	)	1,084
Accounts receivable trade and others		115,214	(106,599	)	8,615			8,615
	￦	152,792	(106,599	)	46,193	(36,494	)	9,699
Financial liabilities:
Derivatives(*)	￦	36,494			36,494	(36,494	)
Accounts payable other and others		106,599	(106,599	)
	￦	143,093	(106,599	)	36,494	(36,494	)

Carrying amount of financial instruments recognized of which offset agreements are applicable as of December 31, 2014 are as follows:

(In millions of won)	Gross financial instruments recognized
					Financial instruments		Cash collaterals received
Financial assets:
Derivatives(*)	￦	48,057			48,057	(45,892	)	2,165
Accounts receivable trade and others		128,794	(117,568	)	11,226			11,226
	￦	176,851	(117,568	)	59,283	(45,892	)	13,391
Financial liabilities:
Derivatives(*)	￦	45,892			45,892	(45,892	)
Accounts payable other and others		117,568	(117,568	)
	￦	163,460	(117,568	)	45,892	(45,892	)

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

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Transactions with Related Parties

(1) List of related parties

Relationship	Company
Ultimate Controlling Entity	SK Holding Co., Ltd.
Subsidiaries	SK Planet Co., Ltd. and 38 others(*)
Joint ventures	Dogus Planet, Inc. and four others
Associates	SK hynix Inc. and 51 others
Affiliates	The Ultimate Controlling Entitys investor using the equity method and the Ultimate Controlling Entitys subsidiaries and associates, etc.

(*) As of June 30, 2015, subsidiaries of the Company are as follows:

Company		Types of business
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	55.2	Investment association
Commerce Planet Co., Ltd.	100.0	Online shopping mall operation agency
SK Broadband Co., Ltd.	100.0	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
Icon Cube Holdings Co., Ltd.	100.0	Investment association
Icon Cube Co., Ltd.	100.0	Internet website services
SK Planet Co., Ltd.	100.0	Telecommunication service
Neosnetworks Co., Ltd.	83.9	Guarding of facilities
IRIVER LIMITED	49.0	Manufacturing of media and sound equipment
iriver Enterprise Ltd.	100.0	Management of Chinese subsidiary
iriver America Inc.	100.0	Sales and marketing in North America
iriver Inc.	100.0	Sales and marketing in North America
iriver China Co., Ltd.	100.0	Manufacturing of MP3,4 and domestic sales in China
Dongguan iriver Electronics Co., Ltd.	100.0	Manufacturing of e-book and domestic sales in China
Groovers JP Ltd.	100.0	Digital music contents sourcing and distribution service
SK Telecom China Holdings Co., Ltd.	100.0	Investment association
SK Global Healthcare Business Group., Ltd.	100.0	Investment association
SK Planet Japan, K. K.	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
shopkick Management Company, Inc.	95.2	Investment association
shopkick, Inc.	100.0	Mileage-based online transaction application development

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

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 compensation given to such key management for the three and six-month periods ended June 30, 2015 and 2014 are as follows:

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

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Transactions with Related Parties, Continued

(3) Transactions with related parties for the three and six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)		2015
		Operating revenue and others		Operating expense and others		Acquisition of property and equipment		Loans
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.(*1)	￦	206	347	6,847	184,576
Subsidiaries	SK Broadband Co., Ltd.		38,684	64,378	133,507	260,899	1,977	2,000
	PS&Marketing Corporation		2,995	5,621	170,365	416,028	249	315
	Network O&S Co., Ltd.		656	1,559	47,674	79,673
	SK Planet Co., Ltd.		16,013	27,183	134,795	266,743	1,640	1,720
	SK Telink Co., Ltd.		16,242	30,296	5,575	13,507
	Service Ace Co., Ltd.		1,907	3,805	35,472	75,406
	Service Top Co., Ltd.		2,138	4,121	39,238	78,122
	Others		3,206	6,235	7,149	15,040	72	150
			81,841	143,198	573,775	1,205,418	3,938	4,185
Associates	F&U Credit information Co., Ltd.		404	853	9,205	20,718
	HappyNarae Co., Ltd.		16	34	1,340	1,755	2,323	2,643
	SK hynix Inc.(*2)		1,610	48,198	2,194	2,199
	SK Wyverns Baseball Club Co., Ltd.		279	561	1,302	10,908
	KEB HanaCard Co., Ltd.		5,418	10,850	2,837	8,223
	Others(*3)		2,429	2,544	1,715	3,437	11	11		500
			10,156	63,040	18,593	47,240	2,334	2,654		500
Other	SK Engineering & Construction Co., Ltd.		764	4,138	7,594	8,590	56,071	83,615
	SK C&C Co., Ltd.		806	2,026	63,560	121,686	34,720	63,442
	SK Networks Co., Ltd.		3,506	4,446	4,368	8,276
	SK Networks service Co., Ltd.		2,433	4,731	14,282	17,160	423	427
	SK Telesys Co., Ltd.		46	95	1,639	3,854	8,830	47,948
	Others		3,785	6,331	6,898	12,734	1,575	1,882
			11,340	21,767	98,341	172,300	101,619	197,314
Total		￦	103,543	228,352	697,556	1,609,534	107,891	204,153		500

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

(*2) Operating revenue and others include ￦43,830 million of dividends received from SK hynix Inc.

(*3) Operating revenue and others include ￦2,103 million and ￦227 million of dividends received from Korea IT Fund and UniSK, respectively.

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Transactions with Related Parties, Continued

(3) Transactions with related parties for the three and six-month periods ended June 30, 2015 and 2014 are as follows, Continued:

(In millions of won)		2014
		Operating revenue and others		Operating expense and others		Acquisition of property
and equipment		Loans
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.(*1)	￦	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 Wyverns Baseball Club Co., Ltd.		5	8		8,921
	HanaSK Card Co., Ltd.(*2)		6,448	13,419	744	1,512
	Others		1,223	1,299	2,595	4,338			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 Co., Ltd.		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
Total		￦	104,134	184,947	741,709	1,699,540	116,330	162,514	45	45

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

(*2) During the year ended December 31, 2014, due to the merger with Hana SK Card Co., Ltd., the Companys associate and KEB Card Co., Ltd., the Company exchanged 57,647,058 shares of Hana SK Card Co., Ltd., with 67,627,587 shares of the surviving company, KEB HanaCard Co., Ltd.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Transactions with Related Parties, Continued

(4) Account balances as of June 30, 2015 and December 31, 2014 are as follows:

(In millions of won)		June 30, 2015
		Accounts receivable		Accounts payable
Scope	Company	Loans	Accounts receivable-trade, and others	Accounts payable trade, and others
Ultimate Controlling Entity	SK Holding Co., Ltd.	￦		284
Subsidiaries	SK Broadband Co., Ltd.			1,487	12,328
	PS&Marketing Corporation			2,331	87,533
	Network O&S Co., Ltd.			90	23,456
	SK Planet Co., Ltd.			9,243	33,217
	SK Telink Co., Ltd.			9,676	3,258
	Service Ace Co., Ltd.				20,624
	Service Top Co., Ltd.				21,638
	Others			4,865	13,645
				27,692	215,699
Associates	HappyNarae Co., Ltd.				666
	SK hynix Inc.			1,346	2,413
	SK Wyverns Baseball Club., Ltd.		1,221	265	2
	Wave City Development Co., Ltd.		1,700	38,412
	Daehan Kanggun BcN Co., Ltd.		22,147
	KEB HanaCard Co., Ltd.			1,869	4,051
	Others			109	1,065
			25,068	42,001	8,197
Other	SK Engineering and Construction Co., Ltd.			3,092	13,680
	SK C&C Co., Ltd.			903	34,633
	SK Networks Co., Ltd.			4,133	1,066
	SK Networks Services Co., Ltd.			12	2,674
	SK Telesys Co., Ltd.			220	1,258
	SK Innovation Co., Ltd.			1,623	265
	Others			1,683	9,357
				11,666	62,933
Total		￦	25,068	81,643	286,829

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Transactions with Related Parties, Continued

(4) Account balances as of June 30, 2015 and December 31, 2014 are as follows, Continued:

(In millions of won)		December 31, 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.	￦		89
Subsidiaries	SK Broadband Co., Ltd.			3,236	38,432
	PS&Marketing Corporation			566	101,431
	Network O&S Co., Ltd.			1,201	12,981
	SK Planet Co., Ltd.			9,711	51,991
	SK Telink Co., Ltd.			10,306	5,665
	Service Ace Co., Ltd.			436	19,972
	Service Top Co., Ltd.			887	21,386
	Others			8,890	15,042
				35,233	266,900
Associates	HappyNarae Co., Ltd.				1,780
	SK hynix Inc.			2,561	2,763
	SK Wyverns Baseball Club., Ltd.		1,221
	Wave City Development Co., Ltd.		1,200	38,412
	Daehan Kanggun BcN Co., Ltd.		22,147
	KEB HanaCard Co., Ltd.			1,867	38
	Others			226	840
			24,568	43,066	5,421
Other	SK Engineering and Construction Co., Ltd.			359	3,754
	SK C&C Co., Ltd.			718	76,777
	SK Networks Co., Ltd.			2,027	4,766
	SK Networks Services Co., Ltd.			12	2,004
	SK Telesys Co., Ltd.			282	1,559
	SK Innovation Co., Ltd.			1,510	247
	Others			2,592	6,108
				7,500	95,215
Total		￦	24,568	85,888	367,536

(5) As of June 30, 2015, there are no collateral or guarantee provided by related parties to the Company, nor by the Company to related parties.

(6) For the year ended December 31, 2014, the Company acquired convertible bonds with a face value of ￦5,000 million and ￦6,000 million, respectively, from IRIVER LIMITED and Health Connect Co., Ltd. at the face value. During the six-month period ended June 30, 2015, the Company exercised the conversion right for the convertible bonds of Health Connect Co., Ltd. As a result of this transaction, investments in associates have increased by ￦5,900 million.

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SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

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 accounted for as an operating lease and the gain on disposal of the property and equipment is recognized as profit or loss.

The Company recognized lease payment of ￦7,270 million and ￦7,038 million, respectively, in relation to the above operating lease agreement and lease revenue of ￦4,770 million and ￦4,516 million, respectively, in relation to the sublease agreement for the six-month periods ended June 30, 2015 and 2014. 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 — ￦	14,757	9,540
1~5 years		54,718	31,180
More than 5 years		34,144	16,870
	￦	103,619	57,590

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Statements of Cash Flows

(1) Adjustments for income and expenses from operating activities for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2015		June 30, 2014
Interest income	￦	(11,160	)	(12,827	)
Dividends		(56,731	)	(10,567	)
Gain on foreign currency translation		(1,098	)	(115	)
Gain relating to financial liabilities at fair value through profit or loss		(5,188	)
Gain on disposal of long-term investment securities		(2,828	)	(5,851	)
Gain on disposal of property and equipment and intangible assets		(937	)	(600	)
Gain on valuation of derivatives		(1,030	)	(6,017	)
Gain on settlement of derivatives				(118	)
Loss on foreign currency translation		25		1,741
Bad debt for accounts receivabletrade		23,612		16,034
Bad debt for accounts receivableother		4,085		8,123
Loss on disposal of long-term investments securities		2		6
Loss relating to financial assets at fair value through profit or loss		689		1,352
Other finance costs		32
Depreciation and amortization		1,113,981		1,083,590
Loss on disposal of property and equipment and intangible assets		2,056		2,709
Interest expenses		121,132		132,372
Loss relating to financial liabilities at fair value through profit or loss		174		7,798
Loss on settlement of derivatives		4,517		335
Provision for retirement benefits		17,826		16,804
Income tax expense		170,359		123,472
Other expenses		4,028		3,149
	￦	1,383,546		1,361,390

Table of Contents

SK TELECOM CO., LTD.

Notes to the Condensed Separate Interim Financial Statements

For the six-month periods ended June 30, 2015 and 2014

Statements of Cash Flows, Continued

(2) Changes in assets and liabilities from operating activities for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2015		June 30, 2014
Accounts receivabletrade	￦	(61,178	)	(100,450	)
Accounts receivableother		2,495		40,419
Advance payments		(32,173	)	(22,336	)
Prepaid expenses		3,561		4,888
Inventories		(11,100	)	2,426
Long-term prepaid expenses		(1,296	)	(4,905	)
Guarantee deposits		(8,397	)	3,202
Accounts payableother		(95,177	)	(485,253	)
Advanced receipts		16,966		7,281
Withholdings		(161,073	)	184,824
Deposits received		(7,164	)	(462	)
Accrued expenses		(189,574	)	(53,559	)
Unearned revenue		(58,743	)	(56,706	)
Provisions		(11,476	)	4,710
Long-term provisions		(9,393	)	32,880
Plan assets		(5,357	)	(884	)
Retirement benefit payment		(20,266	)	(10,710	)
Others		1,358		1,933
	￦	(647,987	)	(452,702	)

(3) Significant non-cash transactions for the six-month periods ended June 30, 2015 and 2014 are as follows:

(In millions of won)	For the six-month period ended
	June 30, 2015		June 30, 2014
Transfer of other property and equipment and others to construction in progress	￦	327,678		363,931
Transfer of construction in progress to property and equipment and intangible assets		624,450		795,529
Decrease of accounts payableother related to acquisition of property and equipment and intangible assets		(142,839	)	(278,349	)

Subsequent Events

(1) Interim dividends

On July 23, 2015, the Board of Directors of the Company resolved to pay interim cash dividends of ￦1,000 per share totaling ￦72,629 million (Market dividend rate: 0.40%). The ex-dividend date was June 30, 2015 and the interim dividends are expected to be paid within twenty days after the date of the Board of Directors resolution.

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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/ Yong Hwan Lee
( Signature )
Name:	Yong Hwan Lee
Title:	Chief Financial Officer

Date: September 17, 2015

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SK TELECOM CO LTD Interim / Quarterly Report 2015

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SK TELECOM CO LTD — Interim / Quarterly Report 2015

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