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New 3G ServicesStrategy Toward Growth

New 3G ServicesStrategy Toward Growth

May 24, 2006May 24, 2006

3G CDMA Latin America Regional Conference3G CDMA Latin America Regional Conference

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Table of ContentsTable of Contents

Wireless Industry in Korea

Strategy toward Growth

What’s Next?

Wireless Industry in Korea

Strategy toward Growth

What’s Next?

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Korean Wireless MarketKorean Wireless Market

B Co17.0%

SKT50.9%

A Co32.1%

19,530

12,302

6,510

SKT A Co B Co

17.2% 19.1% 21.8%

2,6755,008

10,161

SKT A Co B Co

% ofRevenue

SKT A Co B Co

4,288

1,945719

Market Share Market Share by Subscribersby Subscribers RevenueRevenue

Marketing ExpenseMarketing Expense to Salesto Sales EBITDA (Margin)EBITDA (Margin)

As of 2005 EndSource: MIC, Earnings release

(US$mn)(‘000s, %)

(US$mn)(%)

SK Telecom Remains the Undisputed Leader

(42.2%)

(38.8%)(26.9%)

3

A Co34%

Wireless Data Service Wireless Data Service

74% 85% 92%

26%15% 8%

SKT A Co B CoVoice Revenue Data Revenue

66%66%

SKT has higher data revenue portion than most global peers. It also leads data service in Korean market including EV-DO service

SKTSKT

Source: 2Q ’05 earnings release for the companies, respectively

Source: 2Q ’05 earnings release for the companies, respectively

Source: Global Mobile, As of 3Q ’05

Global Leadership in Data ServicesGlobal Leadership in Data Services Comparison to Domestic PeersComparison to Domestic Peers

EVDO SubscribersEVDO Subscribers

Peer Avg.: 16.1%

25.1%

8.4% 8.3%

12.2%

26.7%24.8%

SKT Verizon Sprint Telefonica Vodafone Docomo

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Maturing Korean Wireless MarketMaturing Korean Wireless Market

29,04732,342 33,592

36,58638,342

61.2%67.9% 70.1%

75.9%79.1%

2001 2002 2003 2004 2005

Subscribers Penetration

(‘000s, %) (US$mn)

Source: MIC, NSO

Limited Potential for Growth in the Conventional Voice Market

Korean WirelessKorean Wireless Market TrendMarket Trend SK TelecomSK Telecom’’s Revenue Growths Revenue Growth

6,227

8,6349,520 9,704 10,161 10,500

38.7%

10.3%

1.9% 4.7% 3.3%

2001 2002 2003 2005 2006E2004Revenue Annual Growth

SK TelecomSK Telecom’’s ARPU Trends ARPU Trend

43.944.5

43.544.2

2002 2003 2004 2005

(US$)

Strategy toward GrowthStrategy toward Growth

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SK Telecom’s Growth StrategySK Telecom’s Growth Strategy

Reinforce Domestic MNO Business through Introduction of New ServReinforce Domestic MNO Business through Introduction of New Services under a ices under a Convergence Environment and Enhance Global Business Initiatives Convergence Environment and Enhance Global Business Initiatives to Create New to Create New Business OpportunitiesBusiness Opportunities

Domestic Business Complemented by New Business to Enhance Growth

US & Vietnam

Satellite DMB

Telematics

Domestic MNO

Business

Domestic MNO

Business

New BusinessNew Business

Digital Home

ConvergenceData Business

Global Business

GXG

Cyworld Melon

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Strengthening Data BusinessStrengthening Data BusinessData Business to Fuel Top-line Growth

Financial Services

Smart UI

Music Portal Game PortalCinema Portal

3G Multimedia Service

Telematics Service

Online & Mobile Integrated Services

Security Service Messaging Service

Color Mail

Mobile BloggingService

SK Telecom’s Terminal Platform

SK TelecomSK Telecom’’s Major Brands for Its Wireless Data Servicess Major Brands for Its Wireless Data Services

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Leading Data ServicesLeading Data ServicesMelOn is Korea’s Number One Paid Music Site in Terms of Revenue and Subscriber Base

MP3 PlayerMP3 PlayerMobile PhoneMobile Phone

PCPC

Monthly flat rate for unlimited servicePartnership with Intel to integrate with Intel’s Digital Home Platform “Vive,”enabling access from TV

Over-the-air music downloadReal-time music listeningMusic playable on mobile handset, PC and MP3 player

World 1World 1stst Convergent Music PortalConvergent Music Portal Innovative Business ModelInnovative Business Model Performance Update (Performance Update (’’05)05)

4.2M members with 600K paying subscribersRevenue of US$45 million2006 Target: 8 mn members, 900K paying subscribers and revenue of ~US$70 million

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http://www.cyworld.com & Mini Homepage Mobile Cyworld

Main pageAccess Mini Homepage

with mobile phone

“Cyworld” is a popular wired & wireless community & blog service which became the trademark of ubiquitous and convergence serviceamong Korean youths

메뉴

Leading Data ServicesLeading Data Services

Access to the same online service thru mobile phonesUbiquitous features such as updating Mini Homepage anytime anywhere

Decoration of Mini Homepage with photos, music and avatarSuccessful item sales modelEasy to navigate friends’ Mini Homepages

WebWeb--based Community & based Community & Personal Personal BlogBlog ServiceService

Evolution to Convergence by Evolution to Convergence by Mobile IntegrationMobile Integration Performance Update (Performance Update (’’05)05)

1.2M cumulative mobile Cyworld usersRevenue of US$50 million2006 Target: 1.9mn cumulative mobile Cyworld users and revenue of US$55 million

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Leading Data ServicesLeading Data Services

Popular PC, arcade & console games enjoyed any time, any where via mobile phone!

3D game portal site launched in April 2005

Expect increased use in line with aggressive expansion of HSDPA in 2006

SKT’s premium game service portal, GXG, allows game manias to experience the extreme in mobile 3D games through various GXG-enabled mobile handsets

GXG Game Phone Models

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Convergence/Ubiquitous BusinessesConvergence/Ubiquitous BusinessesSatellite DMB & Other New Businesses to Provide Platform for Growth

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Commercialized in May 2005 to strengthen top line growth via rental, monthly and activation fees

2005 Operating Performance

► Subscriber: 400,000 Subscribers

► Revenue: US$21.5 million

2006 Subscriber Target: 1.2 million Subscribers

Satellite DMB has many advantages as;

► It provides more extensive contents

► Numerous handsets facilitate Satellite DMB

► Provides a wider geographical coverage

Mobile Convergence ServiceMobile Convergence ServiceSatellite DMB to Provide Platform for Growth

Service Feature OverviewService Feature OverviewSatellite DMB 2005 PerformanceSatellite DMB 2005 Performance

11ch

26ch

Movie, Music, Drama, Sports, Game, News, Education, Business, Etc.

Music, News, Education(Non-stop Music, DJ Music, Variety, Etc.)

Video

Audio

Channel Lineup

25 Terminal Line-up by the End of 2005

Price PlanSubscription

FeeMonthly

FeeUS$20 US$13

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“Multi-purpose Card”

- LG - Samsung- Korea

Exchange Bank- Koram Bank- Hana Bank

- Visa Cash

In partnership withIn partnership withCredit Cards E-cash

MileagePoint

• 0.9% of every credit card transaction amount is put into mileage

• Off-line, online, mobile paymentAll-channel

Payment

• Credit card, e-cash, bus & subway card• Membership: TTL, OK Cashbag™, etc.• Future: ID, medical insurance card,banking, etc.

Multi-feature

Take out the chip from the Take out the chip from the credit cardcredit card

Insert the chip into the back of Insert the chip into the back of handsethandset

It is ready to use nowIt is ready to use now

Mobile Convergence ServiceMobile Convergence ServiceFinancial Services

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• Finds shortest routebased on real time traffic information

Personalized Navigation Service

• Launched telematics servicein Jeju island (Dec 2004)

• Launched in Mar 2002

- traffic jam, emergency

- 300,000 subscribers (June 2005)

• Voice-activated navigation

Telematics - NATE Drive

Mobile Convergence ServiceMobile Convergence Service

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Data Business PerformanceData Business PerformanceRevenue from Wireless Data Services Showing Robust Growth

* Excluding revenues from connection fees

23.9%25.0%

26.0%27.6%

27.7%

661.5

544.2547.7

597.0

653.0

'04 4Q '05 1Q '05 2Q '05 3Q '05 4Q

Wireless Data Revenue as % of Cellular RevenueWireless Data Revenue*

(US$mn)

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Data Business PerformanceData Business PerformanceSKT’s Data Service Revenue Comes Mostly from Rich Contents

* As of 2005 4Q

Data ARPU Portion*Data ARPU Portion*

72% 82% 90%

28% 18%10%

SKT KTF LGTVoice Revenue Data Revenue

(4Q 05)

EV-DO 5036% of Total ARPU

1X 3522.3% of Total ARPU

Total ARPU Data ARPU

(US$)

(Million Subs)

IS-95A1X1xEV-DO / June

18.818.3

59.3%

19.5% 34.5%

19.5

53.4%

41.6%

Data ARPU by Handset TypeData ARPU by Handset Type

21.2%

56.2%

9.3% 5.0%2003 2004 2005

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8

31%9%

5%

10%8%

3%8% 4%

8%

MusicGam

eVideo

Messa

gingLBS

Adult

Picture

Community

Others SMS

Sub-total: 86%

100%

14%

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Global Business Global Business Building Global Value Network for Economies of Scale and Cross Benchmarking

USAIsrael

Mongolia

China Japan

Australia

TaiwanPhilippines

Indonesia

SingaporeThailand

Vietnam

Platform Licensing► Israel (Pelephone)► Taiwan (APBW)► Thailand (TA Orange)► Singapore (SingTel, M1)► Indonesia (TelkomSel)► Philippine (SMART)

Network Consulting► Telstra in Australia► China Unicom► KDDI and NEC’s Operation

Partner

MVNO► HELIO in US

MNO► S Telecom in Vietnam

- Committed to build nation-wide coverage

► SkyTel in Mongolia

Portal

► UNISK and Viatech in China- UNISK: JV with China Unicom- Viatech: Community Portal

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Global Business Global Business Closer Look at Helio JV in the US

Nationwide services leveraging the nationwide network coverage oNationwide services leveraging the nationwide network coverage of f host wireless carriershost wireless carriers

Entertainment data services (Entertainment data services (VoDVoD, M0D, Game, Etc.) leveraging its , M0D, Game, Etc.) leveraging its proximity to Hollywood and Silicon Valleyproximity to Hollywood and Silicon Valley

Building sales channel strategy aligned with new brandBuilding sales channel strategy aligned with new brandPartnering with leading youth portals to maximize online salesPartnering with leading youth portals to maximize online sales

TechTech--Savvy Youth & Young Adults Savvy Youth & Young Adults ((Fun& Entertainment Seekers/Fun& Entertainment Seekers/ProsumerProsumer /Affluent)/Affluent)

Korean American CommunityKorean American Community

Building the companyBuilding the company’’s own wireless Internet platform, billing & s own wireless Internet platform, billing & customer care system, etc. led by SK Telecomcustomer care system, etc. led by SK Telecom

Target CustomerTarget Customer

Target CoverageTarget Coverage

Killer ContentsKiller Contents

Distribution Distribution ChannelChannel

InfrastructureInfrastructure

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What’s Next ?What’s Next ?

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NetworkNetwork

ServiceService

Broadband Network• optimal portfolio of broadband

networks suitable for each service characteristics

Convergent Terminal• Hybrid functionalities • Highly flexible to new services

• convergence servicesdriven from customer’sneeds

Integrated Service

TerminalTerminal

Success FactorsSuccess Factors

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Each industry’s characteristics, such as communication’s interactivity, internet’s content and community, are integrated to create new services

MobileInternetMobileInternet

TelematicsTelematics

WirelineInternetWirelineInternet

SatelliteDMB

SatelliteDMB

WirelineInternetWirelineInternetCommunityContent

InteractivityNATE Drive

• Cizle(movie)• Melon(music) • ddangkong(game) • Cyworld(homepage) • Nate on(messaging)

Integrated ServiceIntegrated Service

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Network PortfolioNetwork PortfolioGrowth from Technology Leadership

Combination of networksService Convergence Seamless handover

2G/1X/DO

WCDMA

WiBro

WLAN

Cities

Nationwide Coverage

Hot Zone

Hot Spot

High-speed Data Demand

Improve Data Rate & Mobility

Mob

ility

EV-DO rAHSDPA

EV-DOWCDMA

95A/B1X

WiBro

WLAN

Optimal Network Portfolio

MultiMulti--access Technologiesaccess Technologies Optimal Network PortfolioOptimal Network Portfolio

CoverageData Rate

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• WiBro• RFID• ZigBee

PerceptualInterface

• Healthcare(Sensor)

IntegratedFunction

• Mini-HDD• 7 mega pixel• VGA• Smart chip

UbiquitousInterface

PH-S4• MONETA• 2 mega pixel• QVGA

SV-520• JUNE,MP3• 1.3 mega pixel• Mini SDm

SCH S-250• 5 mega pixel• Intenna• QVGA

PH-S3500• GIGA• 86M memory• WIPI1.2

SCH V-600• JUNE,MP3• MONETA• 1.3 mega pixel

SCH W-120• WCDMA• 1X/DO• JUNE

SCH B-100• S-DMB• JUNE• QVGA

SCH V-650• JUNE,MP3• WIPI2.0• QVGA• MONETA

IM-8200• S-DMB• JUNE• QVGA

PH-S6000• Bluetooth• GIGA

GIGA• 2 mega pixel

• 5 mega pixel• 3X Zoom

A-GPS• JUNE• QVGA

MONETAM-Bank

Multimedia

Camera

Game

MMMB

’05 1Q’05 1Q’04 4Q’04 4Q ’05 2Q’05 2Q

Convergent Terminal - EvolutionConvergent Terminal - Evolution

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Strengthening global partnership to identify new business opportunity together

High quality 3G networks and capable terminals enabled value added services with increased ARPU

Convergence is the key word for the future

SummarySummary