Edgar Filing: SK TELECOM CO LTD

Form 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

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

THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF OCTOBER 2012

COMMISSION FILE NUMBER 333-04906

SK Telecom Co., Ltd.

(Translation of registrant’s name into English)

11, Euljiro2-ga, Jung-gu

Seoul 100-999, Korea

(Address of principal executive offices)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F x Form 40-F ¨

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

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

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

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

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ¨ No x

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

SEMI-ANNUAL BUSINESS REPORT

(From January 1, 2012 to June 30, 2012)

THIS IS A SUMMARY OF THE SEMI-ANNUAL BUSINESS REPORT ORIGINALLY PREPARED IN KOREAN AND IS IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SERVICES COMMISSION.

IN THE TRANSLATION PROCESS, SOME PARTS OF THE REPORT WERE REFORMATTED, REARRANGED OR SUMMARIZED FOR THE CONVENIENCE OF READERS.

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

I. COMPANY OVERVIEW

1. Company Overview

Starting in the first quarter of 2011, SK Telecom Co., Ltd. (the “Company”) prepares and reports its financial statements under the International Financial Reporting Standards as adopted for use in Korea (“K-IFRS”). The transition date of the Company and its consolidated subsidiaries to K-IFRS is January 1, 2010 and the adoption date is January 1, 2011. The Company’s semi-annual business report for the six months ended June 30, 2012 includes the following consolidated subsidiaries:


Name	Date of Establishment	Principal Business	Total Asset as of Dec. 31, 2011 (millions of Won)		Material Subsidiary*
SK Telink Co., Ltd.	Apr. 9, 1998	Telecommunication and satellite broadcasting services		420,829	Material
SK Communications Co., Ltd.	Sep. 19, 1996	Internet portal and other Internet information services		319,948	Material
PAXNet Co., Ltd.	May 18, 1999	Database and online information services		33,949
Loen Entertainment, Inc.	Jul. 7, 1982	Music and audio publication		157,104	Material
Stonebridge Cinema Fund	Sep. 30, 2005	Investment partnership		18,506
Commerce Planet Co., Ltd.	Jul. 1, 1997	Information technology and computer services		49,729
SK Broadband Co., Ltd.	Sep. 26, 1997	Multimedia and IP TV services		3,318,699	Material
Broadband D&M Co., Ltd.	Feb. 5, 1998	Management of telecommunication facilities		11,872
Broadband Media Co., Ltd.	Aug. 25, 2005	Telemarketing services		89,915	Material
Broadband CS Co., Ltd.	Oct. 1, 1998	Call center operation		6,948
K-net Culture and Contents Venture Fund	Nov. 24, 2008	Investment partnership		48,057
Hwaitec Focust Investment Partnership 2	Dec. 12, 2008	Investment partnership		21,663
Open Innovation Fund	Dec. 22, 2008	Investment partnership		44,716
PS&Marketing Corporation	Apr. 3, 2009	Resale of telecommunication services		289,062	Material
Service Ace Co., Ltd.	Jul. 1, 2010	Call center operation and telemarketing services		43,447
Service Top Co., Ltd.	Jul 1, 2010	Call center operation and telemarketing services		37,165
Network O&S Co., Ltd.	Jul. 1, 2010	Wireless telecommunication services		80,249	Material
Service In Co., Ltd.	Apr. 4, 2011	Internet services		3,247
BNCP Co., Ltd.	Dec. 7, 2009	Software development		28,631


Name	Date of Establishment	Principal Business	Total Asset as of Dec. 31, 2011 (millions of Won)		Material Subsidiary*
SK Planet Co., Ltd.	Oct. 5,2011	Platform service		1,677,730	Material
SK Telecom China Holdings Co., Ltd.	Jul. 12, 2007	Investment		36,810
Sky Property Mgmt., Ltd.	Jun. 20, 2007	Real estate rental		820,639	Material
Shenzhen E-eye High Tech Co., Ltd.	Apr. 1, 2000	Telematics services		23,569
SK China Real Estate Co., Limited	Mar. 19, 2009	Real estate investment		295
SKT Vietnam PTE., Ltd.	Apr. 5, 2000	Wireless telecommunication services		42,539
SKT Americas, Inc.	Dec. 29, 1995	Management consulting and investment		42,681
YTK Investment Ltd.	Jul. 1, 2010	Investment		51,218	Material
Atlas Investment	Jun. 24, 2011	Investment		50,643	Material
Technology Innovation Partners, LP	Jun. 24, 2011	Investment		0
SK Telecom China Fund I L.P.	Sep. 14, 2011	Investment		687

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

**	Formerly known as 2nd Benex Focus Investment Fund.

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

B. Date of Incorporation: March 29, 1984

C. Location of Headquarters

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

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

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

D. Major Businesses

(1) Wireless Business

The Company provides wireless telecommunications services, characterized by its competitive strengths in handheld device, affordable pricing, network coverage and an extensive contents library. 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 increased. Having reached over four million LTE subscribers as of July 30, 2012, the Company is solidifying its leadership position in LTE services based on its technology and network operating expertise. The Company is also improving the profitability of its wireless business through efficient capital expenditures and marketing and enhancement of marketing network and products. In the business-to-business area, the Company plans to develop and commercialize industry-specific solutions focused on healthcare and education through strategic alliances.

In addition, in order to strengthen our sales channels, the Company has been offering a variety of fixed-line and wireless telecommunication convergence products to its customers through PS&Marketing Corporation, one of its subsidiaries. Furthermore, Network O&S Co., Ltd., the Company’s subsidiary responsible for the operation of the Company’s 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 is engaged in providing telecommunications, broadcasting and new media services and various other services that are permitted to be carried out by SK Broadband under relevant regulations, as well as business activities that are directly or indirectly related to providing those services. With the adoption of K-IFRS in 2011, our broadband and fixed-line services segment also includes the following services provided by certain other subsidiaries of SK Telecom subject to consolidation under K-IFRS: multimedia services and IP TV services (Broadband Media Co., Ltd.); telemarketing services (Broadband CS Co., Ltd.); and telecommunications-related construction and lease services (Broadband D&M Co., Ltd.).

(3) Other Businesses

The Company is pursuing customer satisfaction by providing the best service and generating new values in diverse areas in contents delivery, location based service, media, mobile commerce and advertisement. In contents delivery service, the Company provides high-quality digital contents in its leading mobile contents marketplace, T store, which had more than 15 million subscribers and plans to expand globally.

In the location based service business, users of the Company’s T map service surpassed 13.7 million as of June 2012. T map provides real time traffic information and various local information. In the media business, the Company provides “hoppin” service that enables subscribers to access various multimedia contents through personal computers, mobile and other digital devices. In the commerce and advertising area, the Company’s 11 Street provides platform service that connects various sellers and purchasers on-line, which continues to increase its market share. In addition, the Company pursues new business opportunities in comprehensive advertising service comprising on-line and wireless, such as its “T ad” service.

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

The Company is also one of the leaders in the music services industry with the continued growth of Melon, its online music service, and its investments in music distribution and production.

In order to find future growth engines and strengthen the Company’s competitiveness, the Company has made strategic investments in YTK Investment Ltd., an investment fund company, and SKY Property Management Ltd., which owns SK Tower in Bejing, China.

See “II. Business Overview” for more information.

E. Credit Ratings

(1) Corporate Bonds


Credit rating date	Subject of rating	Credit rating	Credit rating entity (Credit rating range)	Rating classification
February 20, 2008	Corporate bond	AAA	Korea Ratings	Current rating
February 21, 2008	Corporate bond	AAA	Korea Investors Service, Inc.	Current rating
February 21, 2008	Corporate bond	AAA	Korea Information Services, Inc.	Current rating
June 3, 2008	Corporate bond	AAA	Korea Ratings	Regular rating
June 17, 2008	Corporate bond	AAA	Korea Investors Service, Inc.	Regular rating
June 30, 2008	Corporate bond	AAA	Korea Information Services, Inc.	Regular rating
October 20, 2008	Corporate bond	AAA	Korea Ratings	Current rating
October 20, 2008	Corporate bond	AAA	Korea Investors Service, Inc.	Current rating
October 20, 2008	Corporate bond	AAA	Korea Information Services, Inc.	Current rating
January 13, 2009	Corporate bond	AAA	Korea Ratings	Current rating
January 13, 2009	Corporate bond	AAA	Korea Investors Service, Inc.	Current rating
January 13, 2009	Corporate bond	AAA	Korea Information Services, Inc.	Current rating
February 23, 2009	Corporate bond	AAA	Korea Ratings	Current rating
February 23, 2009	Corporate bond	AAA	Korea Investors Service, Inc.	Current rating
February 23, 2009	Corporate bond	AAA	Korea Information Services, Inc.	Current rating
June 24, 2009	Corporate bond	AAA	Korea Information Services, Inc.	Regular rating
June 26, 2009	Corporate bond	AAA	Korea Ratings	Regular rating
June 30, 2009	Corporate bond	AAA	Korea Investors Service, Inc.	Regular rating
June 22, 2010	Corporate bond	AAA	Korea Ratings	Regular rating
June 29, 2010	Corporate bond	AAA	Korea Investors Service, Inc.	Regular rating
June 29, 2010	Corporate bond	AAA	NICE Investors Service Co, Ltd.	Regular rating
May 27, 2011	Corporate bond	AAA	Korea Ratings	Regular rating
June 13, 2011	Corporate bond	AAA	NICE Investors Service Co, Ltd.	Regular rating


Credit rating date	Subject of rating	Credit rating	Credit rating entity (Credit rating range)	Rating classification
June 23, 2011	Corporate bond	AAA	Korea Investors Service, Inc.	Regular rating
December 12, 2011	Corporate bond	AAA	Korea Investors Service, Inc.	Current rating
December 13, 2011	Corporate bond	AAA	NICE Investors Service Co, Ltd.	Current rating
December 16, 2011	Corporate bond	AAA	Korea Ratings	Current rating
June 21, 2012	Corporate bond	AAA	Korea Ratings	Current rating
June 22, 2012	Corporate bond	AAA	Korea Investors Service, Inc.	Current rating
June 29, 2012	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 in that there is no influence of any environmental change under reasonable expectation conditions.

(2) Commercial Paper (“CP”)


Credit rating date	Subject of rating	Credit rating	Credit rating entity (Credit rating range)	Rating classification
June 3, 2008	CP	A1	Korea Ratings	Current rating
June 16, 2008	CP	A1	Korea Information Services, Inc.	Current rating
June 17, 2008	CP	A1	Korea Investors Service, Inc.	Current rating
October 20, 2008	CP	A1	Korea Ratings	Regular rating
October 20, 2008	CP	A1	Korea Investors Service, Inc.	Regular rating
October 20, 2008	CP	A1	Korea Information Services, Inc.	Regular rating
June 24, 2009	CP	A1	Korea Information Services, Inc.	Current rating
June 26, 2009	CP	A1	Korea Ratings	Current rating
June 30, 2009	CP	A1	Korea Investors Service, Inc.	Current rating
December 15, 2009	CP	A1	Korea Ratings	Regular rating
December 30, 2009	CP	A1	Korea Investors Service, Inc.	Regular rating
December 30, 2009	CP	A1	Korea Information Services, Inc.	Regular rating
June 22, 2010	CP	A1	Korea Ratings	Current rating
June 29, 2010	CP	A1	Korea Investors Service, Inc.	Current rating
June 29, 2010	CP	A1	NICE Investors Service Co, Ltd.	Current rating
December 16, 2010	CP	A1	Korea Ratings	Regular rating
December 27, 2010	CP	A1	Korea Investors Service, Inc.	Regular rating


Credit rating date	Subject of rating	Credit rating	Credit rating entity (Credit rating range)	Rating classification
December 29, 2010	CP	A1	NICE Investors Service Co, Ltd.	Regular rating
May 27, 2011	CP	A1	Korea Ratings	Current rating
June 13, 2011	CP	A1	NICE Investors Service Co, Ltd.	Current rating
June 23, 2011	CP	A1	Korea Investors Service, Inc.	Current rating
December 12, 2011	CP	A1	Korea Investors Service, Inc.	Regular rating
December 13, 2011	CP	A1	NICE Investors Service Co, Ltd.	Regular rating
December 16, 2011	CP	A1	Korea Ratings	Regular rating
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

*	Rating definition: “A1” - Timely repayment capability is at the highest level with extremely low investment risk, and is stable in that there is no influence of any environmental change under reasonable expectation conditions.

(3) International Credit Ratings


Date of credit rating	Subject of rating	Credit rating of securities	Credit rating company	Rating type
June 6, 2012	Bonds denominated in Swiss Franc	A-	Fitch		Current rating
June 4, 2012	Bonds denominated in Swiss Franc	A3	Moody’s		Current rating
June 7, 2012	Bonds denominated in Swiss Franc	A-	S&P		Current rating

2. Company History

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

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

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

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

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

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

A. Location of Headquarters

•

22 Dohwa-dong, Mapo-gu, Seoul (July 11, 1988)

•

16-49 Hangang-ro 3-ga, Yongsan-gu, Seoul (November 19, 1991)

•

267 Namdaemun-ro 5-ga, Jung-gu, Seoul (June 14, 1995)

•

99 Seorin-dong, Jongro-gu, Seoul (December 20, 1999)

•

11 Euljiro 2-ga, Jung-gu, Seoul (December 13, 2004)

B. Significant Changes in Management

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

C. Change in Company Name

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

D. Mergers, Acquisitions and Restructuring

[SK Telecom Co., Ltd.]

(1) Spin-off

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


Description		Detail
Method of Spin-off		Simple vertical spin-off
Resulting Companies		SK Telecom Co., Ltd. (Surviving Company) SK Planet Co., Ltd. (Spin-off Company)
Effective Date		October 1, 2011

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


Description	Before spin-off (As of September 30, 2011)		After spin-off (As of October 1, 2011)
Description	SK Telecom Co., Ltd.		SK Telecom Co., Ltd.		SK Planet Co., Ltd.
Total Assets		19,400,114		19,084,651		1,545,537
Total Liabilities		7,673,828		7,358,365		315,463
Total Shareholders’ Equity		11,726,286		11,726,286		1,230,074

Schedule of spin-off


Category		Date
Board resolution on spin-off		July 19, 2011
Record Date for Determination of Shareholders for the Shareholders’ Meeting for Spin-off		August 4, 2011
Shareholders’ Meeting for Approval of Spin-off Plan		August 31, 2011
Date of Spin-off		October 1, 2011
Shareholders’ Meeting for Report of Spin-off or Inaugural Meeting of Shareholders		October 4, 2011
Registration of Spin-off		October 5, 2011
Others	Notice of closure of shareholders register 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 530-1 Paragraph 1, both SK Telecom and SK Planet will be jointly and severally liable for the payment of all obligations of SK Telecom incurred prior to the spin-off.

•

Allocation of new shares

•

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

(2) Acquisition of Shares of Hynix Semiconductor

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

[SK Telink Co., Ltd.]

(1) Merger

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

[SK Communications Co., Ltd.]

(1) Merger

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

(2) Spin off

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

(3) Disposition and acquisition of businesses

1. Disposition of publishing business division

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

2. Acquisition of the “KUKU” division

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

3. Disposition of the Spicus division

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

(4) Disposition of shares

1. Disposition of shares of Etoos

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

2. Disposition of shares of SK i-Media

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

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

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

E. Other Important Matters related to Management Activities

[SK Telecom Co., Ltd.]

(1) Bank loans

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

[SK Broadband Co., Ltd.]

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

[SK Communications Co., Ltd.]

(1) Leak of personal information

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

[SK Telink Co., Ltd.]

On July 2, 2012, Telink, one of the Company’s consolidated subsidiaries, submitted a proposal to suspend its broadcasting division to the Korea Communications Commission. On July 5, 2012, the Korea Communications Commission accepted Telink’s proposal.

3. Total Number of Shares

A. Total number of shares


(As of June 30, 2012)		(Unit: shares)


	Share type
Classification	Common shares		—		Total		Remarks
I. Total number of authorized shares		220,000,000		—		220,000,000		—
II. Total number of shares issued to date		89,278,946		—		89,278,946		—
III. Total number of shares retired to date		8,533,235		—		8,533,235		—
a. reduction of capital		—		—		—		—
b. retirement with profit		8,533,235		—		8,533,235		—
c. redemption of redeemable shares		—		—		—		—
d. others		—		—		—		—
IV. Total number of shares (II-III)		80,745,711		—		80,745,711		—
V. Number of treasury shares		11,050,712		—		11,050,712		—
VI. Number of shares outstanding (IV-V)		69,694,999		—		69,694,999		—

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

B. Treasury Stock

(1) Acquisitions and Dispositions of Treasury Stocks


(As of June 30, 2012)		(Unit: shares)



				At the beginning of period		Changes						At the end of period
Acquisition methods			Type of shares	At the beginning of period		Acquired (+)		Disposed (-)		Retired (-)		At the end of period
Acquisition pursuant to the Financial Investment Services and Capital Markets Act of Korea (“FSCMA”)	Direct acquisition	Direct acquisition from market	Common shares		7,086,028		—		—		—		7,086,028
		Direct acquisition from market	Preferred shares		—		—		—		—		—
		Tender offer	Common shares		—		—		—		—		—
		Tender offer	Preferred shares		—		—		—		—		—
		Appraisal rights of dissenting shareholder	Common shares		—		—		—		—		—
		Appraisal rights of dissenting shareholder	Preferred shares		—		—		—		—		—
		Sub-total	Common shares		7,086,028		—		—		—		7,086,028
		Sub-total	Preferred shares		—		—		—		—		—
	Acquisition through trust and other agreements	Held by trustee	Common shares		—		—		—		—		—
		Held by trustee	Preferred shares		—		—		—		—		—
		Held in actual stock	Common shares		3,886,710		—		—		—		3,886,710
		Held in actual stock	Preferred shares		—		—		—		—		—
		Sub-total	Common shares		3,886,710		—		—		—		3,886,710
		Sub-total	Preferred shares		—		—		—		—		—
Other acquisition			Common shares		77,974		—		—		—		77,974
Other acquisition			Preferred shares		—		—		—		—		—
Total			Common shares		11,050,712		—		—		—		11,050,712
Total			Preferred shares		—		—		—		—		—

*	Among 11,050,712 shares directly acquired by the Company, 2,308,406 shares were deposited with the Korea Securities Depository as of June 30, 2012 for issuance upon conversion of the overseas convertible bonds.

4. Status of Voting Rights


(As of June 30, 2012)	(Unit: shares)
Classification			Number of shares		Remarks
Total shares (A)		Common share		80,745,711		—
Total shares (A)		Preferred share		—		—
Number of shares without voting rights (B)		Common share		11,050,712		Treasury shares
Number of shares without voting rights (B)		Preferred share		—		—
Shares without voting rights pursuant to the Company’s 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		—		—
Shares with reestablished voting rights (E)		Preferred share		—		—
The number of shares with exercisable voting right s (F = A - B - C - D + E)		Common share		69,694,999		—
		Preferred share		—		—

5. Dividends and Others

A. Dividends

(1)

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

•

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

(2)

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

(3)

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

•

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

(4)

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

(5)

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

•

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

(6)

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

B. Dividends for the Last 3 Fiscal Years

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


Classification		As of and for the six months ended June 30, 2012		As of and for the year ended December 31, 2011		As of and for the year ended December 31, 2010
Par value per share (Won)			500		500		500
Net income			576,338		1,694,363		1,947,008
Net income per share (Won)			8,269		24,002		27,063
Total cash dividend			69,695		656,533		669,534
Total stock dividends			—		—		—
Percentage of cash dividend to available income (%)			12.1		38.7		34.4
Cash dividend yield ratio (%)	Common share		0.8		6.6		5.4
Cash dividend yield ratio (%)	Preferred share		—		—		—
Stock dividend yield ratio (%)	Common share		—		—		—
Stock dividend yield ratio (%)	Preferred share		—		—		—
Cash dividend per share (Won)	Common share		1,000		9,400		9,400
Cash dividend per share (Won)	Preferred share		—		—		—
Stock dividend per share (share)	Common share		—		—		—
Stock dividend per share (share)	Preferred share		—		—		—

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

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

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

*	Total amount of interim dividend for the six months ended June 30, 2012 was Won 69,695 million, and the interim cash dividend amount per share was Won 1,000.

II. BUSINESS

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

1. Business Overview

[Wireless Business]

A. Industry Characteristics

As of June 30, 2012, the number of domestic mobile phone subscribers reached 53.96 million and, with more than 100% penetration rate, the Korean mobile communication market can be considered to have reached its maturation stage. However, the penetration rate is expected to increase further due to increased use of mobile phones by corporate users resulting from the rapid growth of smartphone markets, as well as the increasing popularity of high-tech mobile devices based on wireless data services such as tablet PC.

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

B. Growth Potential


			(Unit: 1,000 persons)

Classification		As of June 30, 2012		As of December 31,
Classification		As of June 30, 2012		2011		2010	2009		2008
Number of subscribers	SK Telecom		26,659		26,553	25,705		24,270		23,032
	Others (KT, LGU+)		26,340		25,954	25,062		23,675		22,575
	Total		52,999		52,507	50,767		47,944		45,607

(Source: Korea Communications Commission website)

C. Domestic and Overseas Market Conditions

The Korean mobile communication market includes the entire population of Korea with mobile communication service needs, and almost every Korean is considered a potential user. Sales revenue related to data services is expected to increase due to the increasing popularity of smartphones and wireless Internet. Business-to-business segment that creates added values by adding additional solutions and applications is also growing. Seasonal and economic fluctuations have much less impact on the Korean mobile communication market compared to other industries.

Historical market share of the Company:

(Unit: %)

Classification

As of June
30, 2012

As of December 31,

2011

2010

2009

Mobile communication services

50.3

50.6

Comparative market share:

(As of June 30, 2012)

(Unit: %)

Classification

SK Telecom

LGU+

Market share

50.3

31.1

18.6

(Source: Korea Communications Commission website)

D. Business Overview and Competitive Strengths

The Company is seeking to transform itself from a telecommunication service provider into a comprehensive information and communication technology (“ICT”) service provider. It has continued to expand the scope of its services and achieved strong growth in subscribers amid fierce competition and rate cuts. As of June 30, 2012, the Company recorded Won 8 trillion in revenue and Won 850 billion in operating income on a consolidated basis and Won 6.09 trillion in revenue, Won 800 billion in operating income and Won 580 billion in net profit on a non-consolidated basis.

The number of subscribers as of June 30, 2012 was 26.66 million, an increase of 103 thousand from the previous quarter. In particular, the number of smartphone subscribers as of June, 30 of 2012 was 14 million, an increase of 1.24 million from the previous quarter, including 3.34 million LTE subscribers, solidifying the Company’s market leadership. The Company upgraded the quality of smartphone services by providing commercial LTE services, which enable streaming service of high-quality videos, high-definition video conference calls and wireless on-line gaming services. The Company also plans to enhance customer satisfaction by improving network quality.

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

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

PS&Marketing Corporation, a subsidiary of the Company involved in wholesale, retail and online sales, offers fixed-line and wireless telecommunication products and services to meet the lifestyle needs of customers.

[Fixed Line Business]

A. Industry Characteristics

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

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

B. Growth Potential

(Unit: 1,000 persons)


				As of December 31,
Classification		As of June 30, 2012		2011		2010
Fixed Line Subscribers	High Speed Internet		18,011		17,860		17,224
	Fixed Line		18,467		18,633		19,273
	IPTV (real-time)		5,404		3,591		2,740

(Source: Korea Communications Commission website)

C. Cyclical Nature and Seasonality

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

We expect that the accelerated transition to digital TV services as a result of the termination of terrestrial analog TV broadcast, as well as the entrance of Google Inc. and Apple Inc. into the television market and the introduction of Smart TV products, would present opportunities by expanding the market size and increasing consumers’ interests. We are strengthening our competitiveness by improving the performance of our set boxes and expanding the number of popular channels, as well as introducing mobile IPTV services using N Screen.

Historical market share of the Company:


		(Unit: %)

Classification	As of		As of December 31,
Classification	June 30, 2012		2011		2010
High Speed Internet (include Resale)	23.9			23.5		23.2
Fixed Line (include VOIP)	15.2			14.6		13.7
IPTV (real-time)	20.7			19.3		23.8

(Source: Korea Communications Commission website)

D. Business Overview and Competitive Strengths

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

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

[Other Business]

A. Industry Characteristics

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

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

B. Growth Potential

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


<Global Smartphone and Tablet Sales Forecast>													(in million units)

Classification	2008		2009		2010		2011		2012		2013		2014		2015
Smartphone		252		285		269		366		455		555		670		774
Tablet		—		—		18		70		108		160		223		294

(Source: Gartner, April 2011)


<Korea Smartphone and Tablet Subscriber Forecast>							(in ten thousand subscribers)

Classification	2010		2011		2012		2013		2014		2015
Smartphone		733		1,883		2,706		3,324		3,820		4,213
Tablet		18		180		383		563		744		982

(Source: Korea Communications Commission, December 2010)

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

In addition, as more people opt to watch online videos instead of satellite television, the number of subscribers to the Company’s satellite DMB services, which began broadcasting in May 2005, has drastically decreased. As of June 30, 2012, there were only 40 thousand subscribers to the Company’s satellite DMB services.

C. Domestic and Overseas Market Conditions

(1) Competition

•

Application Marketplace

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

•

Commerce Markets

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


<Size of Korea Commerce Market>					(unit: Won trillion)

Classification	2010		2011(F)		2012(F)		2014(F)
Total Commerce Markets		197.0		223.0		238.0		252.0
Online Commerce		24.8		29.6		34.1		45.2
Department Stores and Supermarkets		57.2		60.1		63.7		75.1
TV home shopping		5.2		5.9		6.3		7.2
Convenience Stores		7.0		7.8		8.8		11.2
Small Stores		101.0		103.3		119.2		113.3

(Source: National Statistical Office, 2010)

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


<Korea Advertising Market by Media>			(unit: Won trillion)

Classification	2001		2005		2010		2015(F)
Total Advertisement Market		5.5		6.3		7.4		10.0
TV, Radio, Newspaper, Magazine		4.4		4.5		4.3		4.9
Internet		0.1		0.6		1.5		2.3
Mobile		—		—		0.3		0.8
Others (including cable television)		0.9		1.2		1.6		2.0

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

•

Media Contents Market

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

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

(2) Market Share

“CyWorld” service, our social networking website in Korea, had 26 million cumulative subscribers, 10 million net users and a page view of 2.3 billion as of June 2012. Our “Nate-On” service had the largest market share of 72.4% in the instant messenger market in Korea with 10 million net users as of June 2012. Our “Nate” search portal service had a market share of 2.2% as of June 2012. (Source: Korean Click, company data).

D. Business Overview and Competitive Strengths

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

•

Digital Content Marketplace

T store, launched in September 2009, reached 15.23 million subscribers and cumulative downloads of 880 million as of June 2012, solidifying its leadership position in the Korean application market and plans to widen its services to tablets and navigation devices.

•

Commerce (Open Market)

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

•

Location-based Service

T map provides map, local information, real-time traffic information and navigation services. With cumulative subscribers of 13.68 million as of June 30, 2012, T map is one of the leading location based service platforms in Korea. The Company plans to further develop T map platform by initiating open services, providing services to more diverse types of devices and providing local services.

•

Media Platform

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

•

Satellite DMB

The Company launched its Hanbyul satellite in 2004 and received government approval in December 30, 2004 to provide satellite DMB services. In May 2005, the Company began broadcasting, but as an increasing number of customers has opted to watch online videos rather than satellite television, the number of subscribers to the Company’s satellite DMB services has drastically decreased. As of June 30, 2012, there were only 40 thousand subscribers to the Company’s satellite DMB services.

•

Web Search through Nate.com

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

•

Mobile Social Networking Service

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

•

Music industry

The Company’s online music site, Melon, has continued to increase its sales and, for the past four years, has been recognized as having the largest market share and the highest brand recognition in the digital music sales market in Korea. As of June 30, 2012, the Company supports all major smartphone and tablet devices introduced in Korea, including iPhone and iPad, and is strengthening its support for its mobile customers who use Melon services in a multi-device environment.

The Company plans to strengthen its leadership in the mobile market and increase the number of its subscribers by responding to changes in the smart device and 4G LTE network environment, providing reliable service operations and continually improving service, offering relevant and special music related contents to its customers and engaging in diverse and differentiated marketing promotion activities.

2. Major Products & Services

A. Updates on Major Products and Services

(Unit: in thousands of Won, %)


Business fields	Major companies	Item	Major trademarks	Sales amount (ratio)
Mobile	SK Telecom Co., Ltd., PS&Marketing Corporation, Service Ace Co., Ltd., Service Top Co. Ltd., Network O&S Co., Ltd.	Mobile Phone Service, Wireless Data Service, Information Telecommunication Service	T Store, NATE and others		6,451,734,236	(81%)
Fixed Line	SK Broadband Co., Ltd., Broadband D&M Co., Ltd., Broadband Media Co., Ltd., Broadband CS Co., Ltd., SK Telink Co., Ltd.	Fixed-line Phone, High Speed Internet, Data and Network Lease Service	B tv, 00700 international call and others		1,099,921,223	(14%)
Other	SK Planet Co., Ltd , Commerce Planet Co., Ltd , SK Communications Co., Ltd., PAXNet Co., Ltd., Loen Entertainment, Inc., SKT Americas, Inc., SK Telecom China Holdings Co., Ltd.	Internet Portal Service, Game Service	NATE, Cyworld and others		448,928,677	(6%)
Total					8,000,584,136	(100%)

B. Price Fluctuation Trend of Major Products and Services

[Mobile Business]

Previously, based on the Company’s Basic Plan for monthly subscription, the basic service fee was Won 13,000 per month and the usage fee was Won 20 per 10 seconds and based on the Company’s Standard Plan, basic service fee was Won 12,000 per month and the usage fee was Won 18 per 10 seconds. As of June 30, 2012, based on the Company’s Standard Plan, basic service fee was Won 11,000 per month and the usage fee was Won 1.8 per 1 second.

[Fixed Line Business]

SK Broadband provides broadband Internet access service, telephony, TV, corporate data services and other services for both individual and corporate customers. For the six months ended June 30, 2012, broadband Internet and TV services comprised 49.2% of SK Broadband’s revenue, telephony service 25.9%, corporate data services 21.2% and other telecommunications services 3.7%.

[Other Business]

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

3. Investment Status

[Mobile Business]

A. Investment in Progress

(Unit: in 100 millions of Won)

Business field

Classification

Investment
period

Subject of
investment

Investment effect

Total
investments

Amount
already
invested

Future
investment

Network/Common

Upgrade/
New installation

2012

Network,
systems and
others

Capacity increase and
quality improvement;
systems improvement

To be
determined

10,979

To be
determined

Total

—

To be
determined

10,979

To be
determined

B. Future Investment Plan

(Unit: in 100 millions of Won)

Business field

Expected investment amount

Expected investment for each year

Investment effect

Asset type

Amount

2012

2013

2014

Network/Common

Network,
systems
and others

23,000

To be
determined

Upgrades to the existing
services and provision
of new services

Total

23,000

To be
determined

Upgrades to the existing
services and provision
of new services

[Fixed Line Business]

A. Investment in Progress

(Unit: in 100 millions of Won)

Business field

Classification

Investment
period

Subject of
investment

Investment effect

Total
investments

Amount
already
invested

Future
investment

High-speed Internet

Upgrade/
New installation

2012

Backbone
and
subscriber
network /
others

Expand subscriber
networks and facilities

1,017

206

To be
determined

Telephone

Television

294

Corporate Data

Increase leased-line
and integrated
information system

270

Others

Expand networks

222

Total

1,017

4. Revenues

(Unit: in millions of Won)


Business field	Sales type	Item		For the six months ended June 30, 2012		For the year ended December 31, 2011		For the year ended December 31, 2010
Mobile	Services	Mobile communication	Export		8,409		1,331		599
			Domestic		6,443,326		13,100,614		12,919,663
			Subtotal		6,451,734		13,101,945		12,920,262
Fixed Line	Services	Fixed line, B2B data, High speed Internet, TV	Export		15,252		28,070		30,883
			Domestic		1,084,669		2,134,498		2,196,424
			Subtotal		1,099,921		2,162,568		2,227,307
Other	Services	Display and Search ad., Content	Export		1,963		12,036		12,000
			Domestic		446,965		711,729		439,726
			Subtotal		448,929		723,765		451,726
Total			Export		25,624		41,437		43,482
			Domestic		7,974,960		15,946,841		15,555,813
			Total		8,000,584		15,988,278		15,599,295

(Unit: in thousands of Won)


For the six months ended June 30, 2012	Wireless		Fixed		Other		Sub total		Internal transaction		After consolidation
Total revenue		7,005,933,510		1,421,599,759		811,106,921		9,238,640,190		-1,238,056,054		8,000,584,136
Internal revenue		554,199,274		321,678,536		362,178,244		1,238,056,054		-1,238,056,054		—
External revenue		6,451,734,236		1,099,921,223		448,928,677		8,000,584,136		—		8,000,584,136
Operating income (loss)		804,009,082		33,389,095		12,401,898		849,800,075		—		849,800,075
Net profit (loss)		523,844,204		-117,359,312		14,452,480		420,937,372		—		420,937,372
Total asset		22,763,618,470		3,347,833,993		3,339,487,418		29,450,939,881		-3,677,548,160		25,773,391,721
Total liabilities		10,662,153,307		2,154,858,872		842,107,498		13,659,119,677		-386,371,723		13,272,747,954

5. Derivative Transactions

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

The Company has entered into a currency and interest rate swap contract with Credit Agricole Corporate & Investment Bank to hedge the foreign currency risk and the interest rate risk of U.S. dollar denominated floating rate long-term borrowings with face amounts totaling US$100,000,000 borrowed on October 10, 2006. As of June 30, 2012, in connection with this unsettled currency and interest rate swap contract, an accumulated loss on valuation of derivatives amounting to Won 3,082,256,000 (excluding tax effect totaling Won 483,895,000 and foreign exchange translation loss arising from U.S. dollar denominated long-term borrowings totaling Won 20,580 million) was accounted for as accumulated other comprehensive loss.

In addition, the Company has entered into a currency and interest rate swap contract with two banks including HSBC in order to hedge the foreign currency risk and the interest rate risk of unguaranteed Japanese yen denominated bonds (56-2) with face amounts totaling JPY 12,500,000,000 issued on November 13, 2007. As of June 30, 2012, in connection with this unsettled currency and interest rate swap contracts, an accumulated gain on valuation of derivatives amounting to Won 3,223,070,000 (excluding tax effect totaling Won 699,058,000 and foreign exchange translation loss arising from unguaranteed Japanese yen denominated bonds totaling Won 77,662,639,000) was accounted for as accumulated other comprehensive gain.

In addition, the Company has entered into a currency swap contract with six banks including Morgan Stanley to hedge the foreign currency risk of unguaranteed U.S. dollar denominated bonds (with face amounts totaling US$400,000,000) issued on July 20, 2007, and has applied cash flow risk hedge accounting to this foreign currency swap contract starting from May 12, 2010. Accordingly, as of June 30, 2012, in connection with this unsettled foreign currency swap contract, an accumulated loss on valuation of currency swap of Won 21,609,427,000 that has accrued since May 12, 2010 (excluding tax effect totaling Won 6,899,052,000 and foreign exchange translation loss arising from unguaranteed U.S. dollar denominated bonds totaling Won 3,932,602,000) was accounted for as accumulated other comprehensive loss. Meanwhile, a gain on valuation of currency swap of Won 129,806,021,000 incurred prior to the date of applying cash flow risk hedge accounting was charged to current operations.

The Company has entered into a currency and interest rate swap contract with two banks including DBS in order to hedge the foreign currency risk and the interest rate risk of floating rate foreign currency bonds with face amounts totaling US$250,000,000 issued on December 15, 2011. As of June 30, 2012, in connection with this unsettled currency and interest rate swap contract, an accumulated gain on valuation of derivatives of Won 6,321,413,000 (excluding tax effect totaling Won 2,018,182,000 and foreign exchange translation gain arising from this floating rate foreign currency bonds totaling Won 1,160,496,000) was accounted for as accumulated other comprehensive gain.

The Company has entered into a currency and interest rate swap contract with United Overseas Bank in order to hedge the foreign currency risk and the interest rate risk of floating rate foreign currency bonds with face amounts totaling SGD 65,000,000 issued on December 15, 2011. As of June 30, 2012, in connection with this unsettled currency and interest rate swap contract, an accumulated loss on valuation of derivatives of Won 229,278,000 (excluding tax effect totaling Won 73,200,000 and foreign exchange translation loss arising from this floating rate foreign currency bonds totaling Won 1,063,035,000) was accounted for as accumulated other comprehensive loss.

The Company has entered into a currency swap contract with six banks including Citibank in order to hedge the foreign currency risk of its fixed rate foreign currency bonds with face amounts totaling CHF 300,000,000 issued on June 12, 2012. As of June 30, 2012, in connection with this unsettled currency swap contract, an accumulated loss on valuation of derivatives of Won 13,982,566,000 (excluding tax effect totaling Won 4,464,091,000 and foreign exchange translation gain arising from this fixed rate foreign currency bonds totaling Won 5,082,759,000) was accounted for as accumulated other comprehensive loss.

(2) The fair values of the derivative instruments described above as of June 30, 2012 are recognized as derivative assets or derivative liabilities under current assets, non-current assets or current liabilities on the Company’s balance sheet. Details are as follows:


(Unit: Won in thousands)
Category	Subject of Risk Hedge	Contract Period	Fair Value of Derivative Instruments
Category	Subject of Risk Hedge	Contract Period	Designated as Hedging Instrument		Not Designated as Hedging Instrument		Total
Currency Swap (Current Asset)	Unguaranteed Japanese Yen-denominated Bonds (face amount of JPY 12,500,000,000)	From Nov. 13, 2007 to Nov. 13, 2012		80,186,651		—		80,186,651
Currency Swap (Non-current Assets)	Floating-rate Long-term Borrowing (principal amount of USD 100,000,000)	From Oct. 10, 2006 to Oct. 10, 2013		17,013,849		—		17,013,849
	Unguaranteed Foreign Currency Bonds (face amount of USD 400,000,000)	From Jul. 20, 2007 to Jul. 20, 2027		105,230,144		—		105,230,144
	Floating-rate Foreign Currency Bonds (face amount of USD 250,000,000)	From Dec. 15, 2011 to Dec. 12, 2014		7,179,098		—		7,179,098
	Floating-rate Foreign Currency Bonds (face amount of SGD 65,000,000)	From Dec. 15, 2011 to Dec. 12, 2014		760,558		—		760,558
Conversion Right (Non-current Asset)	Convertible Bonds (Available-for-sale Securities)(*) (face amount of Won 50,000,000 thousand)	From Sep. 1, 2009 to Aug. 31, 2014		—		532,169		532,169
Total derivative assets:				210,370,300		532,169		210,902,469

(Unit: Won in thousands)

Category

Subject of Risk

Hedge

Contract Period

Fair Value of Derivative Instruments

Designated
as Hedging
Instrument

Not
Designated
as Hedging
Instrument

Total

Currency Swap(Non-current Liability)

Fixed rate Foreign Currency Bonds (face amount of CHF 300,000,000)

From Jun. 12, 2012
to Jun. 12, 2017

23,529,416

—

23,529,416

Total derivative liabilities:

23,529,416

—

23,529,416

(*)	The fair value of Won 532,169,000 of the conversion rights of the convertible bonds held by SK Communications, a subsidiary of the Company, was recognized as non-current derivative asset.

6. Major Contracts

[SK Telecom]


Category	Vendor	Start Date	Completion Date	Contract Title	Contract Amount (Won in 100 million)
Service	SK Planet Co., Ltd.	January 1, 2012	December 31, 2012	B2B contents contract for 2012 with SK Planet (T-map, T-Gift, Nate FZ, T-Cloud)	6,167
Service	Service Ace Co., Ltd.	April 1, 2012	April 1, 2013	Operation of Roaming Centers in 2012	54
Goods	HAPPYNARAE Co., Ltd.	May 1, 2012	April 30, 2013	Maintenance, repair and operations purchasing and agency services	150
Real Estate	Individual	First half 2012	—	Purchase of regional centers (Gangdong regional center and ten others)	81
Subtotal					6,452

[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	—	Interconnection among telecommunication service providers
KEPCO	Provision of electric facilities	From Dec. 2004 until terminated	Use of electricity poles
Seoul City Railway	Use of telecommunication line conduits	From Jan. 2009 to Dec. 2012	Use of railway telecommunication conduit
Seoul Metro	Use of telecommunication line conduits	From May 2010 to May 2013	Use of railway telecommunication conduit
Busan Transportation Corporation	Use of telecommunication line conduits	From July 2009 to July 2012	Use of railway telecommunication conduit
Gwangju City Railway	Use of telecommunication line conduits	From Sep. 2010 to Dec. 2012	Use of railway telecommunication conduit

[SK Planet]


Counterparty	Contract Contents	Contract Period	Amount
SK Communications	Operation of shopping business at Nate.com website	From Jul. 1, 2011 to Dec. 31, 2013	Variable depending on the NATE shopping revenues and other factors

Note.

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

[SK Communications]


Counterparty	Purpose	Contract Period	Contract Amount
Overture Korea	Agency agreement for search advertisement	—	Amount determined based on the number of clicks
SK Construction Co., Ltd.	Construction of Pangyo Office Building	23 months	Won 61.9 billion
SK Planet Co., Ltd.	Operation of shopping business at nate.com website	From Jul. 1, 2011 to Dec. 31, 2013	Minimum guarantee of Won 18.4 billion for the period from Jul. 1, 2011 to Dec. 31, 2011; Amounts for 2012 and 2013 are to be determined depending on the NATE shopping revenues and other factors.
Daum Communications	Business and service cooperation regarding search advertisement	—	Revenues are allocated in accordance with certain set percentages.

Note.

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

7. R&D Investments

(Unit: in million Won)


Category		For the six months ended June 30, 2012			For the year ended December 31, 2011			For the year ended December 31, 2010			Remarks
Raw material			20			45			41			—
Labor			22,042			48,656			49,441			—
Depreciation			66,228			149,850			143,131			—
Commissioned service			6,515			40,257			98,545			—
Others			43,663			57,118			64,755			—
Total R&D costs			138,468			295,927			355,913			—
Accounting	Sales and administrative expenses		137,164			289,979			352,186			—
Accounting	Development expenses (Intangible assets)		1,034			5,948			3,727			—
R&D cost / sales amount ratio (Total R&D costs / Current sales amount×100)			1.73	%		1.85	%		2.28	%

8. Other information relating to investment decisions

[SK Telecom]

A. Trademark Policies

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

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

B. Business-related Intellectual Properties

The Company holds 4,667 Korean registered patents, 255 U.S. registered patents, 125 Chinese registered patents (all including patents held jointly with other companies) and more patents with other countries. The Company holds 822 Korean registered trademarks and owns intellectual property rights to the design of alphabet “T”. The designed alphabet “T” is registered in all business categories for trademarks (total of 45) and is being used as the primary brand of the Company.

[SK Broadband]

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

[SK Planet]

As of June 30, 2012, SK Planet held 1,816 Korean registered patents, 91 registered design marks, 671 registered trademarks and one copyright (including those held jointly with other companies). It also holds 20 U.S. registered patents, 31 Chinese registered patents, 8 Japanese registered patents, 13 E.U. registered patents (all including patents held jointly with other companies) and 94 registered trademarks, along with a number of other intellectual property rights, in other countries.

[SK Communications]

As of June 30, 2012, SK Communications held 58 Korean registered patents, 26 registered design rights and 696 registered trademarks.

III. FINANCIAL INFORMATION

1. Summary Financial Information (Consolidated)

A. Summary Financial Information (Consolidated)


		(Unit: in thousand Won)

Classification/Fiscal Year	As of June 30, 2012			As of December 31, 2011			As of December 31, 2010
Current Assets		4,754,447,425			6,117,478,958			6,653,991,923
• Cash and Cash Equivalent		1,176,948,384			1,650,793,876			659,404,935
• Accounts Receivable – Trade		1,843,465,243			1,823,169,889			1,949,397,279
• Accounts Receivable – Other		612,219,552			908,836,454			2,531,847,155
• Others		1,121,814,246			1,734,678,739			1,513,342,554
Non-Current Assets		21,018,944,296			18,248,557,471			16,478,397,157
• Long Term Investment		1,427,869,866			1,537,945,216			1,680,582,091
• Investments in Associates		4,714,676,250			1,384,605,401			1,204,691,805
• Property and Equipment		8,771,148,441			9,030,998,201			8,153,412,683
• Intangible Assets		2,834,024,498			2,995,803,300			1,884,955,652
• Goodwill		1,740,251,485			1,749,932,878			1,736,649,137
• Others		1,530,973,756			1,549,272,475			1,818,105,789
Total Assets		25,773,391,721			24,366,036,429			23,132,389,080
Current Liabilities		5,322,259,126			6,673,589,809			6,202,170,452
Non-Current Liabilities		7,950,488,828			4,959,737,573			4,522,219,358
Total Liabilities		13,272,747,954			11,633,327,382			10,724,389,810
Controlling Shareholders’ Equity		11,471,831,668			11,661,880,863			11,329,990,900
Capital		44,639,473			44,639,473			44,639,473
Share Premium		(290,688,417	)		(285,347,419	)		(78,952,875	)
Retained Earnings		11,500,952,510			11,642,525,267			10,721,249,327
Reserves		216,928,102			260,063,542			643,054,975
Non-controlling Interests		1,028,812,099			1,070,828,184			1,078,008,370
Total Stockholders’ Equity		12,500,643,767			12,732,709,047			12,407,999,270
Number of Companies Consolidated		30			31			32


Classification/Fiscal Year	For the six months ended June 30, 2012			For the six months ended June 30, 2011			For the year ended December 31, 2011			For the year ended December 31, 2010
Revenue		8,000,584,136			7,942,445,955			15,976,197,456			15,569,898,702
Operating Income (or Loss)		849,800,075			1,301,313,284			2,189,289,110			2,341,044,360
Income (or Loss) From Continuing Operation Before Income Tax		705,323,772			1,444,216,759			2,240,689,573			2,373,223,839
Consolidated Total Net Income		420,937,372			1,002,704,547			1,582,073,280			1,582,073,280
Net Income (or Loss) Attributable to Controlling Interests		449,820,077			1,010,328,469			1,612,889,086			1,841,612,790
Net Income (or Loss) Attributable to Non-controlling Interests		(28,882,705	)		(7,623,922	)		(30,815,806	)		(74,778,036	)
Net Income Per Share (Won)		6,454			14,211			22,848			25,598
Diluted Net Income Per Share (Won)		6,221			13,474			22,223			24,942

2. Summary Financial Information (Non-Consolidated)


		(Unit: in thousand Won)

Classification/Fiscal Year	As of June 30, 2012			As of December 31, 2011			As of December 31, 2010
Current Assets		2,590,181,366			3,948,077,706			5,316,976,799
• Cash and Cash Equivalent		369,378,171			895,557,654			357,469,908
• Accounts Receivable – Trade		1,336,185,838			1,282,233,900			1,453,060,673
• Accounts Receivable – Other		419,595,393			774,221,266			2,499,969,010
• Others		465,021,964			996,064,886			1,006,477,208
Non Current Assets		19,681,680,486			16,572,449,699			14,410,149,512
• Long Term Investment		1,219,646,397			1,312,437,834			1,517,029,011
• Investments in Associates		7,972,908,937			4,647,505,583			3,584,394,790
• Property and Equipment		6,249,883,100			6,260,168,675			5,469,747,495
• Intangible Assets		2,285,113,380			2,364,795,182			1,424,968,542
• Goodwill		1,306,236,299			1,306,236,299			1,308,422,097
• Others		647,892,373			681,306,126			1,105,587,577
Total Assets		22,271,861,852			20,520,527,405			19,727,126,311
Current Liabilities		3,667,248,789			4,467,005,877			4,561,013,611
Non Current Liabilities		6,698,954,898			4,087,219,816			3,585,155,050
Total Liabilities		10,366,203,687			8,554,225,693			8,146,168,661
Capital		44,639,473			44,639,473			44,639,473
Share Premium		(236,160,557	)		(236,016,201	)		(24,643,471	)
Retained Earnings		11,822,197,779			11,837,184,788			10,824,355,758
Reserves		274,981,470			320,493,652			736,605,890
Total Shareholders’ Equity		11,905,658,165			11,966,301,712			11,580,957,650


Classification/Fiscal Year	For the six months ended June 30, 2012		For the six months ended June 30, 2011		For the year ended December 31, 2011		For the year ended December 31, 2010
Revenue		6,086,494,134		6,326,041,425		12,575,129,190		12,550,496,552
Operating Income (or Loss)		803,260,241		1,229,018,512		2,086,648,941		2,355,027,851
Income (or Loss) From Continuing Operation Before Income Tax		729,569,328		1,438,324,635		2,274,421,557		2,503,637,367
Net Income (or Loss)		576,337,713		1,035,058,437		1,694,363,093		1,947,007,919
Net Income Per Share (Won)		8,269		14,559		24,002		27,063
Diluted Net Income Per Share (Won)		7,978		13,811		23,343		26,366

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

•

Transition to K-IFRS

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

IV. AUDITOR’S OPINION

1. Auditor (Consolidated)

Six months ended June 30,

2012

Year ended December 31,

2011

Year ended December 31,

2010

KPMG Samjong Accounting Corp.

Deloitte Anjin LLC

2. Audit Opinion (Consolidated)


Term	Auditor’s opinion	Issues noted
Six months ended June 30, 2012	—	—
Year ended December 31, 2011	Unqualified	—
Year ended December 31, 2010	Unqualified	—

3. Auditor (Non-Consolidated)

Six months ended June 30,

2012

Year ended December 31,

2011

Year ended December 31,

2010

KPMG Samjong Accounting Corp.

Deloitte Anjin LLC

4. Audit Opinion (Non-Consolidated)


Term	Auditor’s opinion	Issues noted
Six months ended June 30, 2012	—	—
Year ended December 31, 2011	Unqualified	—
Year ended December 31, 2010	Unqualified	—

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

A. Audit Contracts

(Unit: in thousands of Won / hour)

Fiscal Year

Auditors

Contents

Fee

Total
number of
hours
accumulated
for the fiscal
year

Year ended December 31, 2012

KPMG Samjong
Accounting Corp.

Semi-annual review

1,220,000

16,160

Quarterly review

Non-consolidated financial statements audit

Consolidated financial statements audit

English financial statements review and other audit task

Year ended December 31, 2011

Deloitte Anjin LLC

Semi-annual review

1,364,000

14,033

Quarterly review

Non-consolidated financial statements audit

Consolidated financial statements audit

English financial statements review and other audit task

Year ended December 31, 2010

Deloitte Anjin LLC

Semi-annual review

1,563,770

16,810

Quarterly review

Non-consolidated financial statements audit

Consolidated financial statements audit

IFRS-based financial statements review

English financial statements review and other audit task

B. Non-Audit Services Contract with External Auditors

(Unit: in thousands of Won)

Term

Contract date

Service provided

Service
duration

Fee

Six months ended June 30, 2012

—

Year ended December 31, 2011

April 11, 2011

April 28, 2011

Tax consulting

30 days

45,000

Year ended December 31, 2010

July 20,2010

Management consulting

4 days

5,000

July 28, 2010

Tax consulting

15 days

18,000

July 28, 2010

Tax consulting

5 days

6,600

July 28, 2010

Tax consulting

30 days

40,000

July 28, 2010

Tax consulting

20 days

23,100

December 23, 2010

Tax consulting

3 days

7,700

December 23, 2010

Tax consulting

20 days

24,600

December 29, 2010

Tax consulting

15 days

17,000

6. Change of Independent Auditors

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

V. MANAGEMENT DISCUSSION AND ANALYSIS

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

VI. CORPORATE ORGANIZATION INCLUDING BOARD OF DIRECTORS AND AFFILIATED COMPANIES

1. Board of Directors

A. Overview of Board of Directors Composition

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

The number

of persons

Inside directors

Independent directors

Sung Min Ha, Young Tae Kim,

Dong Seob Jee

Dal Sup Shim, Rak Yong Uhm, Hyun Chin Lim, Jay Young Chung, Jae Ho Cho

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

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


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

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


Meeting	Date	Agenda	Approval
341th (the 3rd meeting of 2012)	March 23, 2012	• Election of Chairman of the Board of Directors • Amendment to the Company’s internal rules • Election of committee members • Asset Management Transaction with Affiliated Company (SK Securities) • Donation to Happiness Sharing Institute	Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed
342th (the 4th meeting of 2012)	April 26, 2012	• Adoption of internal compliance rules and the appointment of chief compliance officer • Amendment of board regulations • Issuance of overseas bonds • Report for Subsequent Events following 1Q 2012	Approved as proposed Approved as proposed Approved as proposed —
343th (the 5th meeting of 2012)	June 21, 2012	• Asset management transaction with affiliated company (SK Securities) • Compliance support operating plan	— Approved as proposed —
344th (the 6th meeting of 2012)	July 25, 2012	• Interim dividend • Bond offering • Agreement on the operation of Voluntary Responsible Management Support Group. • Financial results for the first half of 2012 • Report for the period after the second quarter of 2012	— Approved as proposed Approved as proposed Approved as proposed — —

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

C. Committees within Board of Directors

(1) Committee Structure (As of August 24, 2012)

a) Compensation Review Committee


Number of Persons	Members		Task
Number of Persons	Inside Directors	Independent Directors	Task
5	—	Dal Sup Shim, Rak Yong Uhm, Hyun Chin Lim, Jay Young Chung, Jae Ho Cho	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


Number of Persons	Members		Task
Number of Persons	Inside Directors	Independent Directors	Task
5	Dong Seob Jee	Dal Sup Shim, Rak Yong Uhm, Jay Young Chung, Jae Ho Cho	Review major investment plans and changes thereto.

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

c) Corporate Citizenship Committee


Number of Persons	Members		Task
Number of Persons	Inside Directors	Independent Directors	Task
5	Dong Seob Jee	Dal Sup Shim, Rak Yong Uhm, Hyun Chin Lim, Jay Young Chung	Review guidelines on “Corporate Social Responsibility” (“CSR”) programs, etc.

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

d) Independent Director Nomination Committee


Number of Persons	Members		Task
Number of Persons	Inside Directors	Independent Directors	Task
3	Sung Min Ha	Rak Yong Uhm, Jae Ho Cho	Nomination of independent directors

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

e) Audit Committee


Number of Persons	Members		Task
Number of Persons	Inside Directors	Independent Directors	Task
4	—	Dal Sup Shim, Hyun Chin Lim, Jay Young Chung, Jae Ho Cho	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 Korean Commercial Code.

2. Audit System

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

Major activities of the Audit Committee are as follows.


Meeting	Date	Agenda	Approval	Remarks
The first meeting of 2012	February 1, 2012	• Preparation for audit report for the 28^th Annual General Meeting of Shareholders	—
The second meeting of 2012	February 8, 2012	• Business-to-business contract with SK Telink • Construction of Mobile Phone Facilities for 2012 • Construction of Network Facilities for 2012 • Evaluation of Internal Accounting Controls based on the Opinion of the Members of the Audit Committee • 2^nd half 2011 Management Audit Results and Management Audit Plan for 2012 • Reports on Internal Accounting Management System	Approved as proposed Approved as proposed Approved as proposed Approved as proposed — —
The third meeting of 2012	February 22, 2012	• Reports on 2011 IFRS Audit • Report on Review of 2011 Internal Accounting Management System • Evaluation of Internal Accounting Management System Operation • Auditor’s Report for Fiscal Year 2011 • Agenda and Document Review for the 28^th Annual General Meeting of Shareholders • Purchase of Mobile Phone Relay Devices for 2012 • Purchase of Mobile Phone Transmission Devices for 2012 • 2012 IT SM contract • Engagement of Independent Auditing Firm for 2012 to 2014	— — Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed Approved as proposed
The fourth meeting of 2012	March 22, 2012	• 2012 2Q Transactions with SK C&C Co., Ltd. • Asset Management Transaction with Affiliated Company (SK Securities)	Approved as proposed —
The fifth meeting of 2012	April 26, 2012	• Election of Chairman — Jae Ho Cho • Remuneration of outside auditor for the Fiscal Year 2012 • Outside auditor service plan for the Fiscal Year 2012 • Audit plan for the Fiscal Year 2012 • Purchase of maintenance, repair and operations items from Happy Narae Co., Ltd.	Approved as proposed Approved as proposed Approved as proposed — Approved as proposed
The sixth meeting of 2012	May 23, 2012	• Construction of Mobile Phone Facilities for 2012 • Construction of Network Facilities for 2012 • Service contract for handset customer service for 2012	Approved as proposed Approved as proposed Approved as proposed
The seventh meeting of 2012	June 20, 2012	• Transaction with SK C&C in the third quarter of 2012 • Plans for asset management transaction with affiliate (SK Securities)	Approved as proposed —


Meeting	Date	Agenda	Approval	Remarks
The eighth meeting of 2012	July 24, 2012	• Financial results for the first half of 2012 • Results of operation for the first half of 2012 • Results of fiscal year 2012 IFRS half year review	— —
The ninth meeting of 2012	August 22, 2012	• Plans for the construction of cell phone facilities in 2012 • Plans for the construction of transmission facilities in 2012 • Results of management audit in the first half of 2012	Approved as proposed Approved as proposed —

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

3. Shareholders’ Exercises of Voting Rights

A. Voting System and Exercise of Minority Shareholders’ Rights

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


Articles of Incorporation		Description
Article 32 (3) (Election of Directors)		Cumulative voting under Article 382-2 of the Korean Commercial Code will not be applied for the election of directors.

Article 4 of the 12^th Supplement to the Articles of Incorporation (Interim Regulation)		Article 32 (3) of the Articles of Incorporation shall remain effective until the day immediately preceding the date of the general shareholders’ meeting of 2003.

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

4. Affiliated Companies

A. Capital Investments between Affiliated Companies

(As of June 30, 2012)


Investing company	Invested companies
Investing company	SK Corporation			SK Innovation			SK Energy			SK Global Chemical			SK Telecom			SK Networks			SKC			SK E&C			SK Shipping			SK Securities
SK Corporation					33.4	%								25.2	%		39.1	%		42.5	%		40.0	%		83.1	%
SK Innovation								100/0	%		100/0	%
SK Energy
SK Global Chemical
SK Networks																													22.7	%
SK Telecom
SK Chemicals																	0.02	%					25.4	%
SKC
SK E&C
SK Gas
SK C&C		31.8	%
SK E&S
SK Communications
SK Broadband
SK D&D
SK Marketing & Company
SK Lubricant
SK Shipping
SK Planet
SK Hynix
Hynix Engineering
Total affiliated companies		31.8	%		33.4	%		100/0	%		100.0	%		25.2	%		39.2	%		42.5	%		65.4	%		83.1	%		22.7	%


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


	Invested companies
Investing company	Gangwon City Gas			JBES			M & Service			SK Wyverns			Infosec			Happynarae (formerly, MRO Korea)			SK Telesys			Encar network			F&U Credit Info			Paxnet
SK Corporation
SK Innovation																	42.5	%
SK Energy																							0.0	%
SK Global Chemical
SK Networks
SK Telecom											100.0	%					42.5	%								50.0	%
SK Chemicals
SK C																				47.5	%
SK E&C
SK Gas																	5.0	%
SK C&C														100.0	%		5.0	%					91.7	%
SK E&S		100.0	%		100.0	%
SK Communications
SK Broadband
SK D&D
SK Marketing & Company								100.0	%
SK Lubricant
SK Shipping
SK Planet																													59.7	%
SK Hynix
Hynix Engineering
Total affiliated companies		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		95.0	%		47.5	%		91.7	%		50.0	%		59.7	%


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


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


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


Investing company	Invested companies
Investing company	SK Seentec			Daejeon Pure Water			Gwangju Pure Water			SKW			Television Media Korea	Network O&S			Service Ace			Service Top			SK Pinx			U base Manufacturing Asia
SK Corporation
SK Innovation
SK Energy
SK Global Chemical
SK Networks																								100.0	%
SK Telecom															100.0	%		100.0	%		100.0	%
SK Chemicals		100.0	%
SK C											65.0	%
SK E&C					32.0	%		42.0	%
SK Gas


SK C&C
SK E&S
SK Communications
SK Broadband
SK D&D
SK Marketing & Company
SK Lubricant																			100.0	%
SK Shipping
SK Planet									51.0	%
SK Hynix
Hynix Engineering
Total affiliated companies	100.0	%	32.0	%	42.0	%	65.0	%	51.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%


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


Investing company	Invested companies
Investing company	SK Planet			Highway Star			SK Hynix			Hynix Engineering			HYSTEC			HYLogitec			Hynix Human Resources			QRT Semiconductor			Silicon File			Ami Power
SK Corporation
SK Innovation
SK Energy					100.0	%
SK Global Chemical
SK Networks
SK Telecom		100.0	%					21.1	%
SK Chemicals
SK C
SK E&C
SK Gas
SK C&C
SK E&S
SK Communications
SK Broadband
SK D&D
SK Marketing & Company
SK Lubricant
SK Shipping
SK Planet
SK Hynix											99.6	%		99.6	%		99.6	%		99.6	%					28.8	%		99.6	%
Hynix Engineering																							100.0	%
Total affiliated companies		100.0	%		100.0	%		21.1	%		99.6	%		99.6	%		99.6	%		99.6	%		100.0	%		28.8	%		99.6	%


Investing company	Invested companies
Investing company	Mad Smart			Telsk
SK Corporation
SK Innovation
SK Energy
SK Global Chemical
SK Networks
SK Telecom
SK Chemicals
SK C
SK E&C
SK Gas
SK C&C					99.0	%
SK E&S
SK Communications
SK Broadband
SK D&D
SK Marketing & Company
SK Lubricant
SK Shipping
SK Planet		100.0	%
SK Hynix
Hynix Engineering
Total affiliated companies		100.0	%		99.0	%

VII. SHAREHOLDERS INFORMATION

1. Shareholdings of the Largest Shareholder and Related Persons

A. Shareholdings of the Largest Shareholder and Related Persons


(As of June 30, 2012)	(Unit: Shares, %)

Name	Relationship	Type of share	Number of shares owned and ownership ratio
			Beginning of Period				End of Period
			Number of shares		Ownership ratio		Number of shares		Ownership ratio
SK Corporation	Largest Shareholder	Common share		20,363,452		25.22		20,363,452		25.22
Tae Won Chey	Officer of affiliated company	Common share		100		0.00		100		0.00
Shin Won Chey	Officer of affiliated company	Common share		2,000		0.00		2,000		0.00
Sung Min Ha	Officer of affiliated company	Common share		738		0.00		738		0.00
Bang Hyung Lee*	Officer of affiliated company	Common share		200		0.00		0		0.00
Total-		Common share		20,366,490		25.22		20,366,290		25.22

*	Resigned on January 31, 2012.

B. Overview of the Largest Shareholder

SK Corporation is a holding company and as of June 30, 2012, has nine subsidiaries: SK Innovation Co., Ltd., SK Telecom Co., Ltd., SK Networks Co., Ltd., SKC Co., Ltd., SK Shipping Co., Ltd., SK E&C Co., Ltd., SK E&S Co., Ltd., SK Biofarm Co., Ltd. and SK Forest Co., Ltd.

Details of SK Corporation’s subsidiaries are as follows:


		(Unit: in millions of Won)

Affiliates	Share Holdings			Book Value (million Won)		Industry	Description
SK Innovation Co., Ltd.		33.4	%		3,944,657	Energy and Petrochemical	Publicly Listed
SK Telecom Co., Ltd.		25.2	%		3,091,125	Telecommunication	Publicly Listed
SK Networks Co., Ltd.		39.1	%		1,165,759	Trading, Energy Sale	Publicly Listed
SKC Co., Ltd.		42.5	%		254,632	Synthetic Resin Manufacturing	Publicly Listed
SK E&C Co., Ltd.		40.0	%		485,171	Construction	Privately Held
SK Shipping Co., Ltd.		83.1	%		607,643	Ocean Freight	Privately Held
SK E&S Co., Ltd.		94.1	%		1,026,307	Gas Company Holdings and Power Generation	Privately Held
SK Biofarm Co., Ltd.		100.0	%		228,702	Biotechnology	Privately Held
SK Forest Co., Ltd.**		100.0	%		60,200	Forestry and landscaping	Privately Held

*	The above share holdings are based on common stock holdings as of June 30, 2012.

**	Acquired from SK E&C on June 29, 2012.

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

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

2. Changes in shareholdings of the Largest Shareholder

Changes in shareholdings of the largest shareholder are as follows.


(As of June 30, 2012)						(Unit: Shares, %)

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

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

3. Distribution of Shares

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


(As of June 30, 2012)			(Unit: shares, %)

Rank	Name (title)	Common share
Rank	Name (title)	Number of shares		Ownership ratio
1	Citibank ADR		23,938,004		29.65
2	SK Corporation		20,363,452		25.22
3	SK Telecom		11,050,712		13.69
Shareholdings under the Employee Stock Ownership Program			299,241		0.37

B. Shareholder Distribution


(As of June 30, 2012)		(Unit: shares, %)

Classification	Number of shareholders		Ratio (%)			Number of shares		Ratio (%)			Remarks
Total minority shareholders *		32,908		99.97	%		35,201,362		43.60	%		—

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

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

A. Domestic Securities Market


(Unit: Won, shares)

Types		June 2012		May 2012		April 2012		March 2012		February 2012		January 2012
Common stock	Highest		142,500		138,500		126,500		146,000		145,500		143,000
	Lowest		134,500		120,500		120,500		131,500		136,000		134,500
Monthly transaction volume			7,871,677		5,027,374		4,468,381		4,037,305		3,970,688		4,221,433

B. Foreign Securities Market


New York Stock Exchange									(Unit: US$, ADR)

Types		June 2012		May 2012		April 2012		March 2012		February 2012		January 2012
Depository Receipt	Highest		12.10		13.59		14.13		14.60		14.45		14.08
	Lowest		11.38		11.44		13.25		13.51		13.40		12.90
Monthly transaction volume			31,605,816		45,556,433		46,985,251		40,978,400		30,905,000		30,029,400

VIII. EMPLOYEES AND MANAGEMENT COMPENSATION

1. EMPLOYEES


(As of June 30, 2012)		(Unit: persons, in millions of Won)

	Number of employees								Average		Aggregate wage for the six months		Average
Classification	Regular employees		Contract employees		Others		Total		service year		ended June 30, 2012		wage per person		Remarks
Male		3,400		51		—		3,451		12.8		118,995		35		—
Female		509		67		—		576		10.6		14,308		25		—
Total		3,909		118		—		4,027		12.5		133,303		33		—

2. Management Compensation

A. Amount Approved at the Shareholders’ Meeting


(Unit: Won million)

Classification	Number of Directors		Aggregate Amount Approved
Directors		8		12,000

2. Amount Paid


(As of June 30, 3012)		(Unit: Won million)

Classification	Number of Directors		Aggregate Amount Paid		Average Amount Paid Per Director
Insider Directors		3		8,726		2,909
Independent Directors*		1		43		43
Audit Committee Members		4		161		40
Total		8		8,930		—

*	Excludes Independent Directors who are Audit Committee Members.

IX. TRANSACTIONS WITH PARTIES WITH INTERESTS

1. Loans to the Largest Shareholder and Related Persons

(As of June 30, 2012)

(Unit: in millions of Won)

Name (Corporate name)

Relationship

Account category

Change details

Accrued
interest

Remarks

Beginning

Increase

Decrease

Ending

SK Wyverns

Affiliated
company

Long-term and short-term loans

1,832

—

1,832

—

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

A. Investment and Disposition of Investment

None.

B. Transfer of Assets

(Units: in millions of Won)

Name (Corporate Name)

Relation-ship

Details

Remarks

Transferred

Objects

Purpose of

Transfer

Date of
Transfer

Amount
Transferred
From Largest
Shareholder

Amount
Transferred
to Largest
Shareholder

Encar Network Co., Ltd.

Affiliated
Company

Used car sale

Sale of assets not in use

March 21, 2012

—

Total

—

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

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

(Unit: in millions of Won)

Name (Corporate name)

Relationship

Account category

Change details

Accrued
interest

Remarks

Beginning

Increase

Decrease

Ending

Midus and others

Agency

Long-term and short-term loans

118,919

120,022

138,028

100,913

—

(Unit: in millions of Won)

Name (Corporate name)

Relationship

Account
category

Change details

Accrued
interest

Remarks

Beginning

Increase

Decrease

Ending

Daehan Kanggun BcN Co., Ltd.

Investee

Long-term
loans

22,102

—

22,102

—

X. OTHER INFORMATION RELATING TO THE PROTECTION OF INVESTORS

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

A. Status and Progress of Major Management Events

None.

B. Summary Minutes of the General Meeting of Shareholders


Date	Agenda	Resolution
24^th Fiscal Year Meeting of Shareholders (March 14, 2008)	1. Approval of the Financial Statements for the year ended December 31, 2007 2. Amendment to Articles of Incorporation 3. Approval of Remuneration Limit for Directors 4. Election of Directors • Election of inside directors • Election of independent directors • Election of independent directors as Audit Committee member	Approved (Cash dividend, Won 8,400 per share) Approved Approved (Won 12 billion) Approved (Shin Bae Kim, Young Ho Park) Approved (Rak Yong Uhm, Jay Young Chung) Approved (Jae Ho Cho)
25^th Fiscal Year Meeting of Shareholders (March 13, 2009)	1. Approval of the financial statements for the year ended December 31, 2008 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 member	Approved (Cash dividend, Won 8,400 per share) Approved (Won 12 billion) Approved Approved (Jae Won Chey, Man Won Jung) Approved (Hyun Chin Lim) Approved (Hyun Chin Lim)
26^th Fiscal Year Meeting of Shareholders (March 12, 2010)	1. Approval of the financial statements for the year ended December 31, 2009 2. Amendment to Articles of Incorporation 3. Approval of Remuneration Limit for Directors 4. Election of Directors • Election of inside directors • Election of independent directors • Election of independent directors as Audit Committee member	Approved (Cash dividend, Won 8,400 per share) Approved Approved (Won 12 billion) Approved (Ki Haeng Cho) Approved (Dal Sup Shim) Approved (Dal Sup Shim, Jay Young Chung)


27^th Fiscal Year Meeting of Shareholders (March 11, 2011)	1. Approval of the financial statements for the year ended December 31, 2010 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 member	Approved (Cash dividend, Won 8,400 per share) Approved Approved (Won 12 billion) Approved (Sung Min Ha, Jin Woo So) Approved (Rak Young Uhm, Jay Young Chung, Jae Ho Cho) Approved (Jay Young Chung, Jae Ho Cho)
1^st Extraordinary Meeting of Shareholders (August 31, 2011)	1. Approval of the Spin-off Plan 2. Election of Directors	Approved (Spin-off of SK Planet) Approved (Jun Ho Kim)

28^th Fiscal Year Meeting of Shareholders (March 23, 2012)	1. Approval of the financial statements for the year ended December 31, 2011 2. Amendment to Articles of Incorporation 3. Election of Directors • Election of inside directors • Election of inside directors • Election of independent directors 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)

2. Contingent Liabilities

[SK Telecom]

A. Material Legal Proceedings

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

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

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

B. Other Matters

(1) Pledged Assets and Covenants

In 2011, SK Broadband, a consolidated subsidiary of the Company, pledged its real estate and short term financial instruments as collateral for one year in connection with the borrowing by Broadband Media, another consolidated subsidiary. As of June 30, 2012, the amount of real estate provided as collateral was as follows: Won 65 billion to Hana Bank, Won 78 billion to IBK Capital and Won 52 billion to Kookmin Bank; the amount of short term financial instruments provided as collateral was as follows: Won 60 billion to Korea Exchange Bank, Won 35 billion to Hana Bank, Won 39 billion to National Agricultural Cooperative Federation and Won 20 billion to Woori Bank.

In addition, in 2011, SK Broadband, a consolidated subsidiary of the Company, pledged its real estate as collateral for one year in connection with the borrowing by Broadband CS, another consolidated subsidiary. As of June 30, 2012, the amount of real estate provided as collateral was Won 16.9 billion to Kookmin Bank.

SK Broadband, a consolidated subsidiary of the Company, has also provided “geun” mortgage amounting to Won 17.4 billion to others, including Ilsan Guksa, on a part of its buildings in connection with the leasing of the buildings.

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

As of June 30, 2012, SKY Property Mgmt, Ltd. pledged CNY532 million of its buildings and land-use rights as collateral to Korea Exchange Bank and China Merchants Bank in connection with a long-term borrowing of CNY525 million. In the first six months of 2012, SKY Property Mgmt, Ltd. newly borrowed long-term loans of US$30 million and HKD 234 million from Standard Chartered Bank (HK) Ltd. and pledged its interests in its subsidiary, Shanghai Fujita Tianshan Housing Development Co., Ltd., as collateral.

(2) Payment Guarantee by the Company

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

[SK Broadband]

A. Material Legal Proceedings

(1) SK Broadband as the Plaintiff


				(Unit: thousand won)

Description of Proceedings	Date of Commencement of Proceedings	Amount of Claim		Status
Claim for Cancellation of Korea Fair Trade Commission’s Penalty Reassessment	September 2009		1,810,000	Pending before Supreme Court
Claim relating to Gangamgu District Office Cable-Burying Project	March 2010		345,271	Pending before Supreme Court
Administrative Proceeding relating to Gangnamgu District Office	April 2010		703,440	Pending before Administrative Court
Claim for Sales Price by Sambo Motors	April 2011		321,200	Pending before Appellate Court
Damages Claims against Golden Young and Others	April 2011		454,267	Pending before District Court
Damages Claim relating to Hyundai Construction	December 2010		561,283	Pending before Appellate Court
Other claims and proceedings	—		265,364
Total	—		4,460,825	—

(2) SK Broadband as the Defendant


				(Unit: thousand won)

Description of Proceedings	Date of Commencement of Proceedings	Amount of Claim		Status
Damage Claim by Sun Technology and One Other	October 2011		1,006,429	Pending before Appellate Court
Claim for Return of Unfair Benefit from One Call	October 2010		471,302	Pending before Appellate Court
Damages Claim from Jin Man Cho and One Other	January 2011		200,000	Pending before Appellate Court
Claim for Commission by i-Media Valley and Five Other Companies	July 2010		313,764	Pending before Appellate Court
Claim for Commission by Vialty and Four Other Companies	November 2010		125,000	Pending before Appellate Court
Damage Claim by On-nuri Co., Ltd.	December 2011		101,000	Pending before District Court
Damage Claim by Mac Telecom and Five Other Companies	January 2012		606,000	Pending before District Court
Claim for damages by the Seoul Metropolitan Office of Education	March 2012		100,000	Pending before District Court
Other claims and proceedings	—		64,967	—
Total	—		2,988,462	—

The management believes that the final results of the litigations listed above would not have a material impact on the company’s financial statements. In addition, in 2011, SK Broadband partly lost in a litigation relating to the leak of personal information at the district court, which ordered SK Broadband to pay damages of Won 5,072 million (out of the plaintiffs’ claims of Won 24,689 million), and recognized such damage order as other accounts payable.

(3) Broadband Media as the Defendant


			(Unit: thousand Won)

Description of Proceedings	Date of Commencement of Proceedings		Amount of Claim		Status
Claim for commission by i-Media Valley and five other companies		July 2010		300,869	Pending before Appellate Court
Total		—		300,869	—

[SK Communications]

A. Material Legal Proceedings

As of June 30, 2012, the aggregate amount of claim was Won 9,841 million. The management cannot reasonably forecast the outcome of the pending cases.

[Loen Entertainment]

The following sets forth the important financial agreements Loen Entertainment has entered into as of June 30, 2012.


Financial Institution	Amount (Unit: thousand Won)		Type of Agreement
Hana Bank		2,000,000	Loan facility
Total		2,000,000	—

3. Status of sanctions, etc.

[SK Telecom]

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

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

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

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

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

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

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

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

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

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

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

On March 14, 2012, the Company received a correctional order from the Fair Trade Commission of Korea for an alleged violation of Article 23 of the Fair Trade Act relating to the handset subsidy practice and distribution of handsets and was imposed a fine of Won 21,928 million. The Company appealed the order and filed a suit with the administrative court. The suit is currently pending.

On February 6, 2012, the Company received three penalty points and was imposed a fine of Won 3 million from the Korea Exchange for a violation of Article 35 of Korea Exchange’s 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 plans to work with the Korea Communications Commission to comply with the correction order by the end of 2012.

On July 4, 2012, the Company received a correctional order and a fine of Won 23,987 million from the Fair Trade Commission of Korea for alleged violation of Article 23 of the Fair Trade Act relating to the payment of system management and operation fees. The Company plans to evaluate its legal options after it receives the opinion from the Fair Trade Commission.

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

[SK Broadband]

(1) 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.

•

Company’s plan : Continuous management of the company’s distribution network and improve the company’s distribution structure.

•

(2) Violation of Accounting Rules

•

Date: January 20, 2012

•

Subject Company: SK Broadband

•

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

•

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

•

Status of Implementation: Paid the fine.

•

Company’s Plan: Will improve accounting management system.

•

(3) Violation of the Telecommunication Business Act

•

Date: November 23, 2011

•

Subject Company: SK Broadband

•

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

•

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

•

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

•

Company’s Plan: Will improve operating procedures.

•

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

•

Date: July 14, 2011

•

Subject: SK Broadband and a former officer of SK Broadband

•

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

•

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

•

Status of Implementation: Paid the fine.

•

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

•

(5) Violation of the Telecommunication Business Act

•

Date: February 21, 2011

•

Subject Company: SK Broadband

•

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

•

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

•

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

•

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

•

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

•

Date: June 10, 2010

•

Subject Company: SK Broadband

•

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

•

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

•

Status of Implementation: Paid the fine.

•

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

[SK Communications]

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

4. Important Matters That Occurred After June 30, 2012

(1) Interim dividend

On July 25, 2012, the Company’s board of directors resolved to declare interim dividends as follows:


Classification		Description
Dividend amount		Cash dividend of Won 1,000 per share (total dividend amount: Won 69,694,999,000)
Market dividend rate		0.82%
Record date		June 30, 2012
Date of dividend payment		Within 20 days following the resolution of the board of directors

(2) Acquisition of Broadband D&M Co., Ltd.

On July 13, 2012, in an extraordinary shareholders’ meeting, the shareholders of Broadband D&M resolved to sell its power facilities management and new business opening and maintenance services to the Company’s subsidiary Network O&S.

On July 26, 2012, in an extraordinary shareholders’ meeting, the shareholders of SK Broadband resolved to acquire and merge with Broadband D&M.

5. Use of Proceeds

A. Use of Proceeds from Public Offerings

•

Not applicable.

B. Use of Proceeds from Private Offerings

(Unit: Won million)


Classification	Closing Date	Proceeds	Planned Use of Proceeds	Actual Use of Proceeds	Reasons for Change
Convertible Bonds	April 7, 2009	437,673	Refinancing of convertible bonds issued in May 2004	Refinancing and working capital	—

SK TELECOM CO., LTD.

Condensed Consolidated Interim Financial Statements

(Unaudited)

June 30, 2012

(With Independent Auditors’ Review Report Thereon)

Contents


	Page

Independent Auditors’ Review Report		1

Unaudited Condensed Consolidated Interim Statements of Financial Position		3

Unaudited Condensed Consolidated Interim Statements of Income		6

Unaudited Condensed Consolidated Interim Statements of Comprehensive Income		8

Unaudited Condensed Consolidated Interim Statements of Changes in Equity		9

Unaudited Condensed Consolidated Interim Statements of Cash Flows		10

Notes to Unaudited Condensed Interim Consolidated Financial Statements		13

Independent Auditors’ Review Report

Based on a report originally issued in Korean

To The Board of Directors and Shareholders

SK Telecom Co., Ltd.:

Reviewed financial statements

We have reviewed the accompanying condensed consolidated interim financial statements of SK Telecom Co., Ltd. and its subsidiaries (the “Group”), expressed in Korean won, which comprise the condensed consolidated interim statement of financial position as of June 30, 2012, the condensed consolidated interim statements of income and comprehensive income for the three-month and six-month periods ended June 30, 2012, the condensed consolidated interim statements of changes in equity and cash flows for the six-month period ended June 30, 2012, and notes, comprising a summary of significant accounting policies and other explanatory information.

We did not review the financial statements of SK Broadband Co., Ltd., a domestic subsidiary, two other domestic subsidiaries and an associate, whose financial statements constitute 26.1% of consolidated total assets as of June 30, 2012, and 15.6% of consolidated total operating revenue for the six-month period ended June 30, 2012. Those financial statements were reviewed by other auditors whose reports have been furnished to us, and our report, insofar as it relates to the amounts included for those subsidiaries and associate, is based solely on the reports of those other auditors.

Management’s responsibility for the Condensed Interim Financial Statements

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

Auditors’ review responsibility

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

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

Conclusion

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

Other matters

The condensed consolidated statements of income, comprehensive income for the three-month and six-month periods ended June 30, 2011, and the condensed consolidated statements of changes in equity and cash flows for the six-month period ended June 30, 2011, were reviewed by other auditors and their report thereon, dated August 26, 2011, stated that nothing has come to their attention that causes them to believe that the condensed consolidated interim financial statements referred to above were not prepared, in all material respects, in accordance with K-IFRS No.1034, ‘Interim Financial Reporting’.

In addition, the consolidated statement of financial position of the Group as of December 31, 2011, 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 other auditors and their report thereon, dated March 13, 2012, expressed an unqualified opinion. The accompanying consolidated statement of financial position of the Group as of December 31, 2011, presented for comparative purposes, is not different from that audited by other auditors in all material respects.

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

KPMG Samjong Accounting Corp.

Seoul, Korea

August 6, 2012

This report is effective as of August 6, 2012, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed consolidated interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

SK TELECOM CO., LTD.

Unaudited Condensed Consolidated Statements of Financial Position

As of June 30, 2012 and December 31, 2011


(In millions of won)	Note		June 30, 2012		December 31, 2011
Assets

Current Assets:
Cash and cash equivalents		28,29	￦	1,176,948		1,650,794
Short-term financial instruments		5,28,29,31		506,646		979,564
Short-term investment securities		8,28,29		55,620		94,829
Accounts receivable—trade, net		6,28,29,30		1,843,465		1,823,170
Short-term loans, net		6,28,29,30		86,424		100,429
Accounts receivable—other, net		6,28,29,30		612,220		908,836
Prepaid expenses				102,168		118,200
Derivative financial assets		19,28,29		80,187		148,038
Inventories, net		7,31		226,429		219,590
Advanced payments and other		6,8,28,29,30		64,340		74,029

Total Current Assets				4,754,447		6,117,479

Non-Current Assets:
Long-term financial instruments		5,28,29,31		7,636		7,628
Long-term investment securities		8,28,29		1,427,870		1,537,945
Investments in associates		9		4,714,676		1,384,605
Property and equipment, net		10,30,31		8,771,148		9,030,998
Investment property		11		264,701		271,086
Goodwill		12		1,740,251		1,749,933
Intangible assets		13		2,834,024		2,995,803
Long-term loans, net		6,28,29,30		84,751		95,565
Long-term accounts receivable—other		6,28,29		694		5,393
Long-term prepaid expenses		31		559,945		567,762
Guarantee deposits		6,28,29,30		239,322		245,218
Long-term derivative financial assets		19,28,29		130,716		105,915
Deferred tax assets		26		219,269		227,578
Other non-current assets		6,28,29		23,941		23,128

Total Non-Current Assets				21,018,944		18,248,557

Total Assets			￦	25,773,391		24,366,036

See accompanying notes to the unaudited condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Unaudited Condensed Consolidated Statements of Financial Position, Continued

As of June 30, 2012 and December 31, 2011


(In millions of won)	Note		June 30, 2012			December 31, 2011
Liabilities and Equity

Current Liabilities:
Short-term borrowings		14,28,29	￦	784,464			700,713
Current portion of long-term debt, net		14,15,17,28,29		366,782			1,662,841
Accounts payable—trade		28,29,30		313,129			195,391
Accounts payable—other		28,29,30		1,192,607			1,507,877
Withholdings		28,29		625,385			496,860
Accrued expenses		28,29,31		921,864			744,673
Income tax payable		26		166,241			293,725
Unearned revenue				264,151			290,791
Derivative financial liabilities		19,28,29		—			4,645
Provisions		16		573,543			657,198
Advanced receipt and other		30		114,093			118,876

Total Current Liabilities				5,322,259			6,673,590

Non-Current Liabilities:
Debentures, net, excluding current portion		14,28,29		4,301,168			3,229,009
Long-term borrowings, excluding current portion		14,28,29		2,381,325			323,852
Long-term payables—other		15,28,29,30		710,731			847,496
Long-term unearned revenue				205,540			212,172
Finance lease liabilities		17,28,29		31,765			41,940
Defined benefit obligation		18		102,322			85,941
Long-term derivative financial liabilities		19,28,29		23,529			—
Long-term provisions		16		122,524			142,361
Other non-current liabilities		28,29,30		71,584			76,966

Total Non-Current Liabilities				7,950,488			4,959,737

Total Liabilities				13,272,747			11,633,327

Equity
Share capital		1,20		44,639			44,639
Share deficit		20,21		(290,688	)		(285,347	)
Retained earnings		22		11,500,953			11,642,525

SK TELECOM CO., LTD.

Unaudited Condensed Consolidated Statements of Financial Position, Continued

As of June 30, 2012 and December 31, 2011


Reserves	23		216,928	260,064

Equity attributable to owners of the Parent Company			11,471,832	11,661,881
Non-controlling interests			1,028,812	1,070,828

Total Equity			12,500,644	12,732,709

Total Liabilities and Equity		￦	25,773,391	24,366,036

See accompanying notes to the unaudited condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Unaudited Condensed Consolidated Statements of Income

For the three and six-month periods ended June 30, 2012 and 2011


			June 30, 2012				June 30, 2011
(In millions of won except for per share data)	Note		Three-month period ended		Six-month period ended		Three-month period ended		Six-month period ended
Continuing operations
Operating revenue:		4,30
Revenue			￦	4,007,863		7,977,574		4,025,769		7,922,777
Other operating income		24		7,414		23,010		11,819		19,669

Sub-total				4,015,277		8,000,584		4,037,588		7,942,446

Operating expense:		30
Labor cost				292,918		648,450		253,379		566,965
Commissions paid				1,548,229		2,962,672		1,417,359		2,768,038
Depreciation and amortization				575,620		1,155,880		583,212		1,149,630
Network interconnection				273,467		569,619		323,503		642,244
Leased line				112,824		231,759		110,435		224,329
Advertising				99,651		169,554		85,277		140,552
Rent				100,393		207,268		93,662		192,934
Cost of products that have been resold				299,334		570,770		217,050		403,524
Other operating expenses		24		328,224		634,812		280,817		552,917

Sub-total				3,630,660		7,150,784		3,364,694		6,641,133

Operating income		4		384,617		849,800		672,894		1,301,313
Finance income		25		54,491		117,992		83,558		327,414
Finance costs		25		110,621		216,871		85,320		163,801
Losses related to investments in associates, net		1,9		18,014		45,597		9,898		20,709

Income before income tax			￦	310,473		705,324		661,234		1,444,217

See accompanying notes to the unaudited condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Unaudited Condensed Consolidated Statements of Income, Continued

For the three and six-month periods ended June 30, 2012 and 2011


			June 30, 2012						June 30, 2011
(In millions of won except for per share data)	Note		Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Income tax expense from continuing operations		26	￦	66,106			150,683			184,526			418,643

Net income from continuing Operations				244,367			554,641			476,708			1,025,574
Discontinued operation

Loss from discontinued operation, net of income taxes		32		123,810			133,704			11,272			22,869

Net income for the period		4	￦	120,557			420,937			465,436			1,002,705

Attributable to :
Owners of the Parent Company			￦	143,396			449,820			467,794			1,010,329
Non-controlling interests				(22,839	)		(28,883	)		(2,358	)		(7,624	)
Earnings per share
Basic earnings per share		27	￦	2,057			6,454			6,580			14,211

Diluted earnings per share		27	￦	1,909			6,221			6,172			13,474

Earnings per share—Continuing operations
Basic earnings per share		27	￦	3,569			8,101			6,743			14,542

Diluted earnings per share		27	￦	3,372			7,815			6,330			13,795

See accompanying notes to the unaudited condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Unaudited Condensed Consolidated Statements of Comprehensive Income

For the three and six-month periods ended June 30, 2012 and 2011


			June 30, 2012						June 30, 2011
(In millions of won)	Note		Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Net income for the period			￦	120,557			420,937			465,436			1,002,705

Other comprehensive income (loss)
Net change in fair value of available-for-sale financial assets		23		(36,267	)		(50,500	)		(92,818	)		(178,148	)
Net change in other comprehensive income of investments in associates		9, 23		742			7,177			(5,036	)		(8,844	)
Gains (losses) on valuation of derivatives		19, 23		17,087			(894	)		(35,282	)		3,287
Foreign currency translation differences for foreign operations		23		7,821			(2,496	)		(9,641	)		(23,048	)
Actuarial losses, net on defined benefit obligations		18, 22		(1,254	)		(4,945	)		(4,632	)		(8,225	)

				(11,871	)		(51,658	)		(147,409	)		(214,978	)

Total comprehensive income			￦	108,686			369,279			318,027			787,727

Total Comprehensive Income Attributable to:
Owners of the Parent Company			￦	129,098			400,730			324,178			802,086
Non-controlling interests				(20,412	)		(31,451	)		(6,151	)		(14,359	)

See accompanying notes to the unaudited condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Unaudited Condensed Consolidated Statements of Changes in Equity

For the six-month periods ended June 30, 2012 and 2011


	Controlling interest																	Total equity
(In millions of won)	Share capital		Share premium (deficit)			Retained earnings			Reserves			Sub-total			Non-controlling interests			Total equity
Balance, January 1, 2011	￦	44,639		(78,953	)		10,721,249			643,055			11,329,990			1,078,008			12,407,998
Cash dividends		—		—			(597,198	)		—			(597,198	)		—			(597,198	)
Total comprehensive income
Net income		—		—			1,010,329			—			1,010,329			(7,624	)		1,002,705
Other comprehensive loss		—		—			(8,125	)		(200,118	)		(208,243	)		(6,735	)		(214,978	)
Changes in subsidiaries		—		6,043			—			—			6,043			544			6,587

Balance, June 30, 2011	￦	44,639		(72,910	)		11,126,255			442,937			11,540,921			1,064,193			12,605,114

Balance, January 1, 2012	￦	44,639		(285,347	)		11,642,525			260,064			11,661,881			1,070,828			12,732,709
Cash dividends		—		—			(585,438	)		—			(585,438	)		(2,144	)		(587,582	)
Total comprehensive income
Net income		—		—			449,820			—			449,820			(28,883	)		420,937
Other comprehensive loss		—		—			(5,954	)		(43,136	)		(49,090	)		(2,568	)		(51,658	)
Changes in subsidiaries		—		(5,341	)		—			—			(5,341	)		(8,421	)		(13,762	)

Balance, June 30, 2012	￦	44,639		(290,688	)		11,500,953			216,928			11,471,832			1,028,812			12,500,644

See accompanying notes to the unaudited condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Unaudited Condensed Consolidated Statements of Cash Flows

For the six-month periods ended June 30, 2012 and 2011


(In millions of won)	Note		2012			2011
Cash flows from operating activities:
Cash generated from operating activities
Net income for the period			￦	420,937			1,002,705
Adjustments for income and expenses		33		1,744,239			1,592,155
Changes in assets and liabilities related to operating activities		33		197,401			960,344

Sub-total				2,362,577			3,555,204
Interest received				52,141			81,278
Dividends received				22,947			20,222
Interest paid				(186,757	)		(158,538	)
Income tax paid				(248,509	)		(355,786	)

Net cash provided by operating activities				2,002,399			3,142,380

Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term financial instruments, net				464,201			—
Decrease in short-term investment securities, net				50,179			147,000
Collection of short-term loans				141,971			92,562
Decrease in long-term financial instruments, net				—			3
Proceeds from disposal of long-term investment securities				55,055			250,075
Proceeds from disposal of investments in associates				1,850			8,782
Proceeds from disposal of property and equipment				6,089			13,251
Proceeds from disposal of intangible assets				5,429			2,711
Collection of long-term loans				5,748			8,738
Decrease of deposits				3,921			—
Proceeds from disposal of other non-current assets				47			673
Proceeds from disposal of a subsidiary				88,641			—

Sub-total				823,131			523,795
Cash outflows for investing activities:
Increase in short-term investment securities, net				—			(206,431	)
Increase in other investment securities, net				(2,000	)		—
Increase in short-term loans				(121,122	)		(126,587	)
Increase in long-term loans				(1,907	)		(2,113	)

SK TELECOM CO., LTD.

Unaudited Condensed Consolidated Statements of Cash Flows

For the six-month periods ended June 30, 2012 and 2011


Increase in long-term financial instruments, net	(9	)	(7,500	)
Acquisition of long-term investment securities	(18,913	)	(276,286	)
Acquisition of investments in associates	(3,109,475	)	(42,338	)
Acquisition of property and equipment	(1,213,409	)	(1,176,383	)
Acquisition of investment property	—		(61,240	)
Acquisition of intangible assets	(50,224	)	(38,318	)
Increase in deposits	(7,477	)	—
Increase in other non-current assets	(752	)	(17,640	)
Acquisition of business	—		(129,190	)
Decrease in cash due to disposal	(11,867	)	—

Sub-total	(4,537,155	)	(2,084,026	)

Net cash used in investing activities	(3,714,024	)	(1,560,231	)

See accompanying notes to the unaudited condensed consolidated interim financial statements.

SK TELECOM CO., LTD.

Unaudited Condensed Consolidated Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2012 and 2011


(In millions of won)	Note	2012			2011
Cash flows from financing activities:
Cash inflows from financing activities:
Proceeds from short-term borrowings		￦	895,404			349,018
Issuance of debentures			688,666			363,038
Proceeds from long-term borrowings			2,060,180			186,734
Cash inflows from settlement of derivatives			1,517			—
Cash inflows from other financial activities			48			—
Increase in cash from the consolidated capital transaction			—			6,407

Sub-total			3,645,815			905,197
Cash outflows for financing activities:
Repayment of short-term borrowings			(810,965	)		(390,012	)
Repayment of current portion of long-term debt			(98,278	)		(538,458	)
Repayment of bonds payable			(888,124	)		(642,160	)
Repayment of long-term borrowings			(5,387	)		(6,990	)
Cash outflows from transaction of derivatives			(5,415	)		(17,695	)
Payment of finance lease liabilities			(10,061	)		—
Payment of dividends			(587,582	)		(597,198	)
Cash outflows from other financial activities			(41	)		—
Decrease in cash from the consolidated capital transaction			(1,025	)		—

Sub-total			(2,406,878	)		(2,192,513	)

Net cash provided by (used in) financing activities			1,238,937			(1,287,316	)

Net increase (decresse) in cash and cash equivalents			(472,688	)		294,833
Cash and cash equivalents at beginning of the period			1,650,794			659,405
Effects of exchange rate changes on cash and cash equivalents			(1,158	)		3,833

Cash and cash equivalents at end of the period		￦	1,176,948			958,071

See accompanying notes to the unaudited condensed consolidated interim financial statements.

1.	Reporting Entity

(1) General

SK Telecom Co., Ltd. (“the Parent Company”) was incorporated in March 1984 under the laws of Republic of Korea (“Korea”) to engage in providing cellular telephone communication services in Korea. The Parent Company mainly provides wireless telecommunications in Korea. The Parent Company’s common shares and depositary receipts (DRs) are listed on the Stock Market of Korea Exchange, the New York Stock Exchange and the London Stock Exchange. As of June 30, 2012, the Parent Company’s total issued shares are held by the following:


	Number of shares		Percentage of total shares issued (%)
SK Holdings Co., Ltd.		20,363,452		25.22
Tradewinds Global Investors, LLC		3,241,956		4.01
Institutional investors and other minority stockholders		46,089,591		57.08
Treasury stock		11,050,712		13.69

Total number of shares		80,745,711		100.00

These unaudited 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 because it has de facto control of the Parent Company. An entity is viewed to have de facto control when the balance of holdings is dispersed and the other shareholders have not organized their interests in such a way that they exercise more votes than the minority holder.

(2) List of subsidiaries

The list of subsidiaries as of June 30, 2012 and December 31, 2011 is as follows:

Ownership(%)

Subsidiary

Location

Primary business

June 30,
2012

December 31,
2011

SK Telink Co., Ltd.

Korea

Telecommunication service

83.5

SK Communications Co., Ltd.

Korea

Internet website services

64.6

PAXNet Co., Ltd.

Korea

Internet website services

59.7

Loen Entertainment, Inc.

Korea

Release of music disc

67.6

Stonebridge Cinema Fund

Korea

Investment association

57.0

Ntreev Soft Co., Ltd.

Korea

Game software production

—

63.7

Commerce Planet Co., Ltd.

Korea

Online shopping mall operation agency

100.0

SK Broadband Co., Ltd.

Korea

Telecommunication services

50.6

Broadband D&M Co., Ltd.

Korea

Base station maintenance service

100.0

Broadband Media Co., Ltd.

Korea

Multimedia TV portal service

100.0

Broadband CS Co., Ltd.

Korea

Customer Q&A and Service

100.0

K-net Culture and Contents Venture Fund

Korea

Investment association

59.0

Fitech Focus Limited Partnership II(*)

Korea

Investment association

66.7

Open Innovation Fund

Korea

Investment association

98.9

PS&Marketing Corporation

Korea

Communications device retail business

100.0

Service Ace Co., Ltd.

Korea

Customer center management service

100.0

1.	Reporting Entity, Continued

(2) List of subsidiaries, Continued

Ownership(%)

Subsidiary

Location

Primary business

June 30,
2012

December 31,
2011

Service Top Co., Ltd.

Korea

Customer center management service

100.0

Network O&S Co., Ltd.

Korea

Base station maintenance service

100.0

BNCP Co., Ltd.

Korea

Internet website services

100.0

Service-In Co., Ltd.

Korea

Database & on-line information service

100.0

SK Planet Co., Ltd.

Korea

Telecommunication service and new media business

100.0

SK Telecom China Holdings Co., Ltd.

China

Equity investment

100.0

SKY Property Mgmt. Ltd.

China

Real Estate Investment

60.0

Shenzhen E-eye High Tech Co., Ltd.

China

Manufacturing

65.5

SK China Real Estate Co., Ltd.

Hong Kong

Real Estate Investment

99.4

SKT Vietnam PTE. Ltd.

Singapore

Telecommunication service

73.3

SKT Americas, Inc.

USA

Information gathering and consulting

100.0

YTK Investment Ltd.

Cayman

Investment Association

100.0

Atlas Investment

Cayman

Investment Association

100.0

Technology Innovation Partners, LP

Cayman

Investment Association

100.0

SK Telecom China Fund I L.P.

Cayman

Investment Association

100.0

(*)	Name of the company has been changed from Benex Focus Limited Partnership II to Fitech Focus Limited Partnership II during the six-month period ended June 30, 2012.

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

1.	Reporting Entity, Continued

(3) Financial information of subsidiaries

Financial information of subsidiaries as of and for the six-month period ended June 30, 2012 is as follows:



(In millions of won) Subsidiary	Total assets		Total liabilities		Total equity			Revenue		Net income (loss)
SK Telink Co., Ltd.	￦	292,649		200,450		92,199			160,370		(96,405	)
SK Communications Co., Ltd.		311,840		88,539		223,301			106,169		(10,294	)
PAXNet Co., Ltd.		32,942		10,230		22,712			18,002		265
Loen Entertainment, Inc.		166,420		48,819		117,601			89,966		13,244
Stonebridge Cinema Fund		22,418		71		22,347			74		4,613
Commerce Planet Co., Ltd.		33,017		34,664		(1,647	)		24,528		(64	)
SK Broadband Co., Ltd.		2,964,546		1,581,629		1,382,917			1,159,918		11,195
Broadband D&M Co., Ltd.		12,723		7,964		4,759			24,579		352
Broadband Media Co., Ltd.		72,682		347,600		(274,918	)		40,159		(8,075	)
Broadband CS Co., Ltd.		6,518		18,185		(11,667	)		36,574		154
K-net Culture and Contents Venture Fund		45,162		10		45,152			—		(389	)
Fitech Focus Limited Partnership II(*1)		19,851		282		19,569			—		(1,975	)
Open Innovation Fund		44,289		428		43,861			—		(423	)
PS&Marketing Corporation		364,259		233,715		130,544			684,966		(14,358	)
Service Ace Co., Ltd.		43,728		19,231		24,497			69,584		2,663
Service Top Co., Ltd.		37,658		18,915		18,743			64,645		5,024
Network O&S Co., Ltd.		49,127		27,103		22,024			100,243		3,337
BNCP Co., Ltd.		25,102		7,771		17,331			15,644		273
Service-In Co., Ltd.		3,438		939		2,499			5,387		11
SK Planet Co., Ltd.		1,598,876		321,812		1,277,064			494,501		23,237
SK Telecom China Holdings Co., Ltd.		35,029		883		34,146			11,963		(147	)
SKY Property Mgmt. Ltd.(*2)		819,589		314,303		505,286			34,303		4,008
Shenzhen E-eye High Tech Co., Ltd.		21,937		2,747		19,190			4,326		20
SKT Vietnam PTE. Ltd.		41,648		9,675		31,973			—		(803	)
SKT Americas, Inc.		34,313		510		33,803			6,244		(7,594	)
YTK Investment Ltd.		51,241		—		51,241			—		—
Atlas Investment(*3)		51,116		425		50,691			—		(1,163	)

(*1)	Name of the company has been changed from Benex Focus Limited Partnership II to Fitech Focus Limited Partnership II during the six-month period ended June 30, 2012.

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

(*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.

1.	Reporting Entity, Continued

(3) Financial information of subsidiaries, Continued

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



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

(*1)	Name of the company has been changed from Benex Focus Limited Partnership II to Fitech Focus Limited Partnership II during the six-month period ended June 30, 2012.

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

(*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.

1.	Reporting Entity, Continued

(4) Changes in subsidiaries

There are no subsidiaries that were newly acquired during the six-month period ended June 30, 2012 and the list of subsidiary that is newly excluded during the same period is as follows:


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

The Parent Company sold 2,064,970 shares (ownership interest of 63.7%) of investment in the above subsidiary to NCsoft Corporation and recognized a gain on the disposal of ￦66,006 million during the six- month period ended June 30, 2012, which is included in losses related to investments in associates, net in the accompanying condensed consolidated statements of income.

2.	Basis of Preparation

(1) Statement of compliance

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 Group’s 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 of and for the year ended December 31, 2011. These unaudited condensed consolidated interim financial statements do not include all of the disclosures required for full annual financial statements.

(2) Use of estimates and judgments

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

(3) Common Control Transactions

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

3.	Significant Accounting Policies

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

4.	Operating Segments

The Group’s operating segments are its business units, which generates separately identifiable revenue and costs, and its discrete financial information is regularly reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance. The Group’s reportable segments are: 1) cellular services, which include cellular voice service, wireless data service and wireless internet services, 2) fixed-line telecommunication services, which include telephone services, internet services, and leased line services and 3) other, which includes the Group’s Internet portal services and other operations, which do not meet the quantitative thresholds to be considered reportable segments.

(1) Segment information as of and for the six-month period ended June 30, 2012 is as follows:


(In millions of won)	Cellular services		Fixed-line Telecommunication Services			Other		Total segments		Consolidation Adjustments			Consolidated amount
Total sales	￦	7,005,933		1,421,600			811,107		9,238,640		(1,238,056	)		8,000,584
Internal sales		554,199		321,679			362,178		1,238,056		(1,238,056	)		—
External sales		6,451,734		1,099,921			448,929		8,000,584		—			8,000,584
Operating income		804,009		33,389			12,402		849,800		—			849,800
Net income (loss)		523,844		(117,359	)		14,452		420,937		—			420,937
Total assets		22,763,618		3,347,834			3,339,487		29,450,939		(3,677,548	)		25,773,391
Total liabilities		10,662,153		2,154,859			842,107		13,659,119		(386,372	)		13,272,747

(2) Segment information as of and for the six-month period ended June 30, 2011 is as follows:


(In millions of won)	Cellular services		Fixed-line Telecommunication Services			Other		Total segments		Consolidation Adjustments			Consolidated amount
Total sales	￦	7,021,793		1,374,584			300,798		8,697,175		(754,729	)		7,942,446
Internal sales		406,042		287,181			61,506		754,729		(754,729	)		—
External sales		6,615,751		1,087,403			239,292		7,942,446		—			7,942,446
Operating income		1,229,513		51,743			20,057		1,301,313		—			1,301,313
Net income (loss)		1,006,092		(18,074	)		14,687		1,002,705		—			1,002,705
Total assets		19,599,504		3,462,453			1,766,514		24,828,471		(2,216,156	)		22,612,315
Total liabilities		7,538,926		2,171,214			549,858		10,259,998		(252,797	)		10,007,201

4.	Operating Segments, Continued

The Group principally operates wireless and fixed-line business in its domestic market in Korea and the amounts outside of Korea are immaterial, therefore no entity-wide geographical information is presented.

5.	Restricted Deposits

Deposits which are restricted in use as of June 30, 2012 and December 31, 2011 are summarized as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Short-term financial instruments(*1)	￦	233,143		232,462
Long-term financial instruments(*2)		7,589		7,589

	￦	240,732		240,051

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

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

6.	Trade and Other Receivables

(1) Details of trade and other receivables as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012
(In millions of won)	Gross amount		Allowances for impairment			Carrying amount
Current assets:
Accounts receivable—trade	￦	2,061,497		(218,032	)		1,843,465
Short-term loans		88,305		(1,881	)		86,424
Accounts receivable—other		672,767		(60,547	)		612,220
Accrued income		17,814		(142	)		17,672
Others		448		—			448

		2,840,831		(280,602	)		2,560,229
Non-current assets:
Long-term loans		115,634		(30,883	)		84,751
Long-term accounts receivable—other		694		—			694
Guarantee deposits		239,322		—			239,322
Long-term accounts receivable—trade		13,435		—			13,435

		369,085		(30,883	)		338,202

Total	￦	3,209,916		(311,485	)		2,898,431

6.	Trade and Other Receivables, Continued


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

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

		389,635		(30,988	)		358,647

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

(2)

The movement in allowance for doubtful accounts in respect of trade and other receivables during the six-month periods ended June 30, 2012 and 2011 was as follows:


	For the six-month period ended
(In millions of won)	June 30, 2012			June 30, 2011
Balance at January, 1	￦	318,820			327,382
Increase of bad debt		46,666			39,182
Reversal of allowance for doubtful accounts		(5,530	)		(1,939	)
Write-off		(66,347	)		(39,514	)
Others(*)		17,876			4,601

Balance at June, 30	￦	311,485			329,712

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

6.	Trade and Other Receivables, Continued

(3)

Details of trade and other receivables, overdue but not impaired, and impaired accounts receivable as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012						December 31, 2011
(In millions of won)	Accounts receivable - trade			Other receivables			Accounts receivable - trade			Other receivables
Accounts receivable	￦	1,537,872			836,378			1,417,574			1,287,607
Overdue but not impaired accounts receivable		59,619			2,779			34,030			32,144
Impaired accounts receivable		477,441			295,827			624,478			136,378

		2,074,932			1,134,984			2,076,082			1,456,129
Allowance for doubtful accounts		(218,032	)		(93,453	)		(240,441	)		(78,379	)

	￦	1,856,900			1,041,531			1,835,641			1,377,750

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

(4)

The aging of overdue but not impaired accounts receivable as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012				December 31, 2011
(In millions of won)	Accounts receivable - trade		Accounts receivable - other		Accounts receivable - trade		Accounts receivable - other
Less than 1 month	￦	24,362		743		9,125		15,384
1 ~ 3 months		7,916		171		8,063		3,147
3 ~ 6 months		11,034		204		4,124		713
More than 6 months		16,307		1,661		12,718		12,900

	￦	59,619		2,779		34,030		32,144

7.	Inventories

Details of Inventories as of June 30, 2012 and December 31, 2011 are as follows:



(In millions of won)	June 30, 2012							December 31, 2011
(In millions of won)	Acquisition cost		Write-down of inventory			Carrying amount		Acquisition cost		Write-down of inventory			Carrying amount
Merchandise	￦	211,856		(3,552	)		208,304		216,452		(4,551	)		211,901
Finished goods		3,657		(684	)		2,973		3,371		(547	)		2,824
Work in process		101		—			101		286		—			286
Raw materials and supplies		15,109		(58	)		15,051		4,630		(51	)		4,579

Total	￦	230,723		(4,294	)		226,429		224,739		(5,149	)		219,590

8.	Investment Securities

(1)

Details of short-term investment securities as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Beneficiary certificates(*)	￦	45,792		91,539
Current portion of long-term investment securities		9,828		3,290

	￦	55,620		94,829

(*) The distributions arising from beneficiary certificates as of June 30, 2012 were accounted for as accrued income.

(2)

Details of long-term investment securities as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012			December 31, 2011
Equity securities:
Marketable equity securities	￦	1,052,372			1,100,847
Unlisted equity securities		74,998			97,397
Equity investments		225,128			281,877

		1,352,498			1,480,121
Debt securities:
Public bonds(*1)		421			413
Investment bonds(*2)		84,779			60,701

		85,200			61,114

Total		1,437,698			1,541,235
Less current portion of long-term investment securities		(9,828	)		(3,290	)

Long-term investment securities	￦	1,427,870			1,537,945

(*1)	Details of maturity for the public bonds as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Less than 1 year	￦	45		45
1 ~ 5 years		376		368

	￦	421		413

(*2)

The Group classified convertible bonds of NanoEnTek, Inc. (carrying amount as of June 30, 2012: ￦16,800 million), which were acquired during the year ended December 31, 2011, as financial assets at fair value through profit or loss. The difference between acquisition cost and fair value is accounted for as finance income (loss).

On February 2, 2012, SK Communications Co., Ltd, a subsidiary of the Parent Company, disposed ￦20,000 million of convertible securities issued by Etoos Co., Ltd. to Shinhan the 2nd Private Investment Company for ￦19,000 million. In relation to this transaction, the Group recognized a gain on the disposal of available-for-sale financial assets of W 2,812 million.

9.	Investments in Associates

(1)

Investments in associates accounted for using the equity method as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012								December 31, 2011
(In millions of won, except for share data)	Number of shares		Ownership (%)		Acquisition cost		Carrying amount		Carrying amount
SK Marketing & Company Co., Ltd.		5,000,000		50.0	￦	190,000		132,951		128,320
SK China Company Ltd.		720,000		22.5		49,529		47,569		48,488
SK USA, Inc.		49		49.0		3,184		4,858		4,534
Fitech Sector Limited Partnership IV (*1)		2,500		49.7		25,000		24,016		24,907
F&U Credit information Co., Ltd.		300,000		50.0		2,410		4,694		3,565
Korea IT Fund(*2)		190		63.3		190,000		227,047		230,980
JYP Entertainment Corporation		691,680		25.5		4,150		4,201		4,008
Konan Technology		78,550		29.5		13,456		3,910		4,760
Etoos Co., Ltd.(*3)		701,000		15.6		18,993		12,650		13,928
BMC Digital Culture Contents Fund		100		39.8		10,000		7,549		8,415
Wave City Development Co., Ltd. (*3)		382,000		19.1		1,967		—		1,124
IBKC-bmc Cultural Contents Fund		—		25.0		2,500		2,320		2,326
Hanhwa No.2 Daisy Entertainment Investment Fund		—		20.0		2,000		1,149		1,165
BMC Korea Movie Fund		135		46.6		13,500		14,700		13,926
HanaSK Card Co., Ltd.		57,647,058		49.0		400,000		395,119		396,553
Television Media Korea Ltd.(*4)		18,564,000		51.0		18,568		13,875		15,262
Candle Media Co., Ltd.		21,620,360		44.3		33,746		18,330		11,814
NanoEnTek, Inc.(*3)		1,807,130		9.3		11,000		9,695		10,470
UNISK(Beijing) Information Technology Co., Ltd.		49		49.0		3,475		6,394		5,886
PT. Melon Indonesia		4,900,000		49.0		6,492		4,821		5,326
Packet One Network		1,151,556		28.2		137,751		93,429		103,408
Mobile Money Venture, LLC		—		50.0		12,762		953		982
SK Technology Innovation Company		—		49.0		85,873		72,703		75,974
LightSquared Inc.(*3)		3,387,916		3.3		72,096		—		49,441
SK Industrial Development China Co., Ltd.		—		35.0		83,691		83,635		83,691
HappyNarae Co., Ltd.(*1)		680,000		42.0		12,250		12,327		12,250
SK Hynix Inc.(*5)		146,100,000		21.1		3,374,726		3,343,788		—
SK MENA Investment B.V.(*6)		—		32.1		14,485		14,692		—
SK Latin America Investment(*7)		—		32.1		14,243		14,243		—
TR Entertainment and others		—		—		204,538		143,058		123,102

					￦	5,012,385		4,714,676		1,384,605

9.	Investments in Associates, Continued

(*1)	Name of the company has been changed from Benex Sector Limited Partnership IV and MRO Korea Co., Ltd. to Fitech Sector Limited Partnership IV and HappyNarae Co., Ltd., respectively, during the six-month period ended June 30, 2012.

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

(*3)

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

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

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

(*6)	The Group acquired 32.1% of ownership interest of SK MENA Investment B.V. during the six-month period ended June 30, 2012.

(*7)	The Group acquired 32.1% of ownership interest of SK Latin America Investment during the six-month period ended June 30, 2012.

(2)

The market price of investments in listed associates as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won, except for share and per share data)	June 30, 2012						December 31, 2011
(In millions of won, except for share and per share data)	Market value per share		Number of shares		Market price		Market value per share		Number of shares		Market price
Candle Media Co., Ltd.	￦	1,225		21,620,360		26,485		1,435		11,010,280		15,800
NanoEnTek, Inc.		4,455		1,807,130		8,051		4,160		1,807,130		7,518
SK Hynix Inc.		23,850		146,100,000		3,484,485		—		—		—

9.	Investments in Associates, Continued

(3)

The condensed financial information of the investees as of and for the six-month periods ended June 30, 2012 and 2011 is as follows:


	As of and for the six-month period ended June 30, 2012
(In millions of won)	Total assets		Total liabilities		Total equity			Revenue		Net income (loss) for the period
SK Marketing & Company Co., Ltd.	￦	743,995		478,093		265,902			333,275		8,398
SK China Company Ltd.		229,358		11,067		218,291			32,349		(2,279	)
SK USA, Inc.		21,436		11,521		9,915			6,697		(235	)
Fitech Sector Limited Partnership IV(*1)		48,559		472		48,087			398		(498	)
F&U Credit information Co., Ltd.		15,080		6,613		8,467			31,586		2,380
Korea IT Fund		360,444		—		360,444			—		1,969
JYP Entertainment Corporation		20,740		16,112		4,628			10,817		1,517
Konan Technology		12,598		3,634		8,964			3,200		(2,921	)
Etoos Co., Ltd.		96,428		73,267		23,161			52,789		596
BMC Digital Culture Contents Fund		21,190		161		21,029			228		(94	)
Wave City Development Co., Ltd.		123,588		132,150		(8,562	)		—		(802	)
IBKC-bmc Cultural Contents Fund		9,337		58		9,279			93		(26	)
Hanhwa No.2 Daisy Entertainment Investment Fund		5,846		101		5,745			27		(81	)
BMC Korea Movie Fund		31,725		147		31,578			1,957		1,663
HanaSK Card Co., Ltd.		10,241,729		9,525,885		715,844			512,668		(514	)
Television Media Korea Ltd.		31,389		4,654		26,735			5,611		(2,700	)
Candle Media Co., Ltd.		34,515		9,613		24,902			6,665		(3,185	)
NanoEnTek, Inc.		46,895		19,432		27,463			6,387		(1,778	)
UNISK(Beijing) Information Technology Co., Ltd.		24,183		11,218		12,965			10,000		1,085
PT. Melon Indonesia		10,912		1,073		9,839			585		(792	)
Packet One Network		297,284		222,998		74,286			59,214		(24,863	)
Mobile Money Venture, LLC		2,006		99		1,907			201		(57	)
SK Technology Innovation Company		169,407		17,624		151,783			—		(5,098	)
LightSquared Inc.		4,484,504		3,125,885		1,358,619			8,343		(162,631	)
SK Industrial Development China Co., Ltd.		341,529		102,572		238,957			—		(4,453	)
HappyNarae Co., Ltd.(*1)		29,634		20,451		9,183			56,951		184
SK Hynix Inc.(*2)		19,835,172		9,975,570		9,859,602			5,020,341		(324,530	)
SK MENA Investment B.V.		45,235		2		45,233			—		27
SK Latin America Investment		44,437		—		44,437			—		—

(*1)	Name of the company has been changed from Benex Sector Limited Partnership IV and MRO Korea Co., Ltd. to Fitech Sector Limited Partnership IV and HappyNarae Co., Ltd., respectively, during the six-month period ended June 30, 2012.

9.	Investments in Associates, Continued

(*2)

Financial information of SK Hynix Inc. used when applying the equity method represents financial information after the acquisition date, February 14, 2012 and revenue and net loss for the period recognized from the acquisition date to June 30, 2012 are ￦4,068,430 million and ￦237,283 million, respectively.


	As of and for the year ended December 31, 2011
(In millions of won)	Total assets		Total liabilities		Total equity		Revenue		Net income (loss) for the period
SK Marketing & Company Co., Ltd.	￦	753,508		496,867		256,641		652,749		21,543
SK China Company, Ltd.		281,579		58,124		223,455		43,526		4,542
SK USA, Inc.		20,184		10,932		9,252		10,623		(2,133	)
Fitech Sector Limited Partnership IV(*)		50,357		478		49,879		—		(1,717	)
F&U Credit information Co., Ltd.		13,511		7,303		6,208		50,554		110
Korea IT Fund		364,706		—		364,706		—		10,502
JYP Entertainment Corporation		17,467		14,424		3,043		17,722		407
Konan Technology		15,507		3,622		11,885		11,790		651
Etoos Co., Ltd.		69,994		67,889		2,105		107,174		(743	)
BMC Digital Culture Contents Fund		21,288		166		21,122		187		(621	)
Wave City Development Co., Ltd.		129,768		123,882		5,886		431		(1,399	)
IBKC-bmc Cultural Contents Fund		9,387		82		9,305		638		106
Hanhwa No.2 Daisy Entertainment Investment Fund		5,877		51		5,826		92		(1,518	)
BMC Korea Movie Fund		30,068		153		29,915		4,690		1,019
HanaSK Card Co., Ltd.		9,810,720		9,094,326		716,394		849,719		25,593
Television Media Korea Ltd.		34,606		5,150		29,456		4,919		(6,481	)
Candle Media Co., Ltd.		25,978		5,588		20,390		27,494		(5,650	)
NanoEnTek, Inc.		52,649		20,379		32,270		13,088		(8,809	)
UNISK(Beijing) Information Technology Co., Ltd.		20,401		8,388		12,013		16,028		1,202
PT. Melon Indonesia		12,112		1,242		10,870		803		(1,860	)
Packet One Network		269,362		197,049		72,313		99,918		(72,307	)
Mobile Money Venture, LLC		2,191		227		1,964		6,294		1,189
SK Technology Innovation Company		159,745		4,695		155,050		—		(11,556	)
LightSquared Inc.		4,647,136		3,125,885		1,521,251		33,374		(669,558	)
HappyNarae Co., Ltd.(*)		31,335		22,095		9,240		124,986		1,001

(*)	Name of the company has been changed from Benex Sector Limited Partnership IV and MRO Korea Co., Ltd. to Fitech Sector Limited Partnership IV and HappyNarae Co., Ltd., respectively, during the six-month period ended June 30, 2012.

9.	Investments in Associates, Continued

(4)

Details of changes in investments in associates accounted for using the equity method for the six-month periods ended June 30, 2012 and 2011 are as follows:


	For the six-month period ended June 30, 2012
(In millions of won)	Beginning balance		Acquisition		Disposal			Share of profits (losses)			Other comprehensive income			Impairment loss			Other increase (decrease)			Ending balance
SK Marketing & Company Co., Ltd.	￦	128,320		—		—			4,896			(265	)		—			—			132,951
SK China Company, Ltd.		48,488		—		—			(716	)		(203	)		—			—			47,569
SK USA, Inc.		4,534		—		—			259			65			—			—			4,858
Fitech Sector Limited Partnership IV(*)		24,907		—		—			(239	)		(652	)		—			—			24,016
F&U Credit information Co., Ltd.		3,565		—		—			1,129			—			—			—			4,694
Korea IT Fund		230,980		—		—			(4,253	)		320			—			—			227,047
JYP Entertainment Corporation		4,008		—		—			250			(57	)		—			—			4,201
Konan Technology		4,760		—		—			(850	)		—			—			—			3,910
Etoos Co., Ltd.		13,928		—		—			(1,278	)		—			—			—			12,650
BMC Digital Culture Contents Fund		8,415		—		—			(866	)		—			—			—			7,549
Wave City Development Co., Ltd.		1,124		—		—			(1,124	)		—			—			—			—
IBKC-bmc Cultural Contents Fund		2,326		—		—			(6	)		—			—			—			2,320
Hanhwa No.2 Daisy Entertainment Investment Fund		1,165		—		—			(16	)		—			—			—			1,149
BMC Korea Movie Fund		13,926		—		—			774			—			—			—			14,700
HanaSK Card Co., Ltd.		396,553		—		—			(1,448	)		14			—			—			395,119
Television Media Korea Ltd.		15,262		—		—			(1,387	)		—			—			—			13,875
Candle Media Co., Ltd.		11,814		8,000		(588	)		(1,070	)		174			—			—			18,330
NanoEnTek, Inc.		10,470		—		—			(864	)		89			—			—			9,695
UNISK(Beijing) Information Technology Co., Ltd.		5,886		—		—			747			(239	)		—			—			6,394
PT. Melon Indonesia		5,326		—		—			(304	)		(201	)		—			—			4,821
Packet One Network		103,409		—		—			(9,999	)		20			—			—			93,429
Mobile Money Venture, LLC		982		—		—			(18	)		—			—			(11	)		953
SK Technology Innovation Company		75,974		—		—			(3,246	)		(25	)		—			—			72,703
LightSquared Inc.		49,441		—		—			(10,571	)		1,513			(40,383	)		—			—
SK Industrial Development China Co., Ltd.		83,691		—		—			472			(528	)		—			—			83,635
HappyNarae Co., Ltd.(*)		12,250		—		—			96			(19	)		—			—			12,327
SK Hynix Inc.		—		3,374,725		—			(37,865	)		6,928			—			—			3,343,788
SK MENA Investment B.V.		—		14,485		—			7			200			—			—			14,692
SK Latin America Investment		—		14,243		—			—			—			—			—			14,243
TR Entertainment and others		123,100		23,307		(1,850	)		(3,141	)		36			—			1,606			143,058

	￦	1,384,605		3,434,760		(2,438	)		(70,632	)		7,169			(40,383	)		1,595			4,714,676

9.	Investments in Associates, Continued

(*)	Name of the company has been changed from Benex Sector Limited Partnership IV and MRO Korea Co., Ltd. to Fitech Sector Limited Partnership IV and HappyNarae Co., Ltd., respectively, during the six-month period ended June 30, 2012.


	For the six-month period ended June 30, 2011
(In millions of won)	Beginning balance		Acquisition		Disposal			Share of profits(losses)			Othe rcomprehensive income			Other increase (decrease)			Ending balance
SK Marketing & Company Co., Ltd.	￦	117,905		—		—			3,972			—			(462	)		121,415
SK China Company, Ltd.		46,573		—		—			65			(2,531	)		—			44,107
SK USA, Inc.		5,972		—		—			(343	)		(292	)		—			5,337
Fitech Sector Limited Partnership IV(*)		24,953		—		—			(878	)		(214	)		—			23,861
F&U Credit information Co., Ltd.		4,529		—		—			27			—			—			4,556
Korea IT Fund		226,633		—		—			5,455			1,144			—			233,232
JYP Entertainment Corporation		4,150		—		—			(88	)		—			—			4,062
Konan Technology		4,410		—		—			(466	)		—			—			3,944
Etoos Co., Ltd.		14,339		—		—			(122	)		299			—			14,516
BMC Digital Culture Contents Fund		8,925		—		—			(346	)		—			—			8,579
Wave City Development Co., Ltd.		1,392		—		—			(191	)		—			—			1,201
IBKC-bmc Cultural Contents Fund		2,292		—		—			15			—			—			2,307
Hanhwa No.2 Daisy Entertainment Investment Fund		2,008		—		—			(547	)		—			—			1,461
BMC Korea Movie Fund		13,977		—		—			(71	)		—			—			13,906
HanaSK Card Co., Ltd.		386,417		—		—			(949	)		115			—			385,583
BNCP Co., Ltd.		7,264		—		—			—			—			—			7,264
Television Media Korea Ltd.		18,568		—		—			(425	)		—			—			18,143
Candle Media Co., Ltd.		19,313		—		—			—			320			291			19,924
NanoEnTek, Inc.		—		11,000		—			(133	)		17			—			10,884
UNISK(Beijing) Information Technology Co., Ltd.		4,714		—		—			330			(185	)		—			4,859
PT. Melon Indonesia		6,210		—		—			(289	)		(65	)		—			5,856
Packet One Network		116,160		—		—			(15,059	)		(1,489	)		—			99,612
Mobile Money Venture, LLC		3,206		—		—			(1,155	)		—			(146	)		1,905
SK Technology Innovation Company		25,052		—		—			(2,269	)		(1,282	)		—			21,501
Lightsquared Inc.		72,096		—		—			(7,903	)		(2,864	)		—			61,329
SK Wyverns Baseball Club Co., Ltd. and others		67,634		31,338		(2,320	)		(733	)		(2,374	)		1,407			94,952

	￦	1,204,692		42,338		(2,320	)		(22,103	)		(9,401	)		1,090			1,214,296

(*)	Name of the company has been changed from Benex Sector Limited Partnership IV to Fitech Sector Limited Partnership IV during the six-month period ended June 30, 2012.

9.	Investments in Associates, Continued

(5)

As the Group discontinued the application of the equity method due to the carrying amount of the Group’s share being reduced to zero, the unrecognized accumulated equity losses as of June 30, 2012 are as follows:


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

	￦	4,532		383

There is no unrealized change in equity which has not been recognized for the six-month period ended June 30, 2012.

10.

Property and Equipment

(1)

Property and equipment as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012										December 31, 2011
(In millions of won)	Acquisition cost		Accumulated depreciation			Accumulated impairment loss			Carrying amount		Carrying amount
Land	￦	734,639		—			—			734,639		730,361
Buildings		1,518,900		(551,763	)		—			967,137		989,078
Structures		594,260		(302,265	)		—			291,995		301,115
Machinery		22,077,404		(16,424,616	)		(109,926	)		5,542,862		5,493,572
Other		1,626,978		(950,829	)		(462	)		675,687		711,461
Construction in progress		558,828		—			—			558,828		805,411

	￦	27,111,009		(18,229,472	)		(110,388	)		8,771,148		9,030,998

(2)

Changes in property and equipment for the six-month periods ended June 30, 2012 and 2011 are as follows:


	For the six-month period ended June 30, 2012
(In millions of won)	Beginning balance		Acquisition		Disposal			Transfer			Depreciation			*Impairment()**			Change of consolidation scope			Ending balance
Land	￦	730,361		2		(956	)		5,232			—			—			—			734,639
Buildings		989,078		340		(1,178	)		5,455			(26,558	)		—			—			967,137
Structures		301,115		2,808		(4	)		5,615			(17,539	)		—			—			291,995
Machinery		5,493,572		112,916		(3,638	)		904,156			(856,145	)		(107,999	)		—			5,542,862
Other		711,461		743,763		(1,422	)		(714,884	)		(61,228	)		(448	)		(1,555	)		675,687
Construction in progress		805,411		353,580		(811	)		(595,113	)		—			(4,239	)		—			558,828

	￦	9,030,998		1,213,409		(8,009	)		(389,539	)		(961,470	)		(112,686	)		(1,555	)		8,771,148

10.

Property and Equipment, Continued

(*)	The Group recognized ￦ 108,899 million of impairment loss on property and equipment in relation to the discontinuance of the Digital Multimedia Broadcasting service and included the amount in profit (loss) from discontinued operation.


	For the six-month period ended June 30, 2011
(In millions of won)	Beginning balance		Acquisition		Disposal			Transfer			Depreciation			Ending balance
Land	￦	707,970		2,109		(1,947	)		(2,304	)		—			705,828
Buildings		1,018,508		14,829		(5,941	)		1,852			(26,609	)		1,002,639
Structures		242,125		6,774		(4	)		1,099			(15,805	)		234,189
Machinery		5,167,143		86,188		(4,662	)		660,340			(849,343	)		5,059,666
Other		570,187		623,915		(1,523	)		(452,137	)		(49,485	)		690,957
Construction in progress		447,480		658,870		(4,923	)		(253,170	)		—			848,257

	￦	8,153,413		1,392,685		(19,000	)		(44,320	)		(941,242	)		8,541,536

11.

Investment Property

(1)

Investment property as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012							December 31, 2011
(In millions of won)	Acquisition cost		Accumulated depreciation			Carrying amount		Carrying amount
Land	￦	23,182		—			23,182		23,153
Buildings		293,344		(51,825	)		241,519		247,933

	￦	316,526		(51,825	)		264,701		271,086

(2)

Changes in investment property for the six-month periods ended June 30, 2012 and 2011 are as follows:


	For the six-month period ended June 30, 2012
(In millions of won)	Beginning balance		Transfer			Depreciation			Ending balance
Land	￦	23,153		29			—			23,182
Buildings		247,933		(2,627	)		(3,787	)		241,519

	￦	271,086		(2,598	)		(3,787	)		264,701


	For the six-month period ended June 30, 2011
(In millions of won)	Beginning balance		Acquisition		Transfer			Depreciation			Ending balance
Land	￦	29,179		—		2,305			—			31,484
Buildings		168,128		61,240		(4,834	)		(3,002	)		221,532

	￦	197,307		61,240		(2,529	)		(3,002	)		253,016

11.

Investment Property, Continued

(3)

Details of fair value of investment property as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012				December 31, 2011
(In millions of won)	Carrying amount		Fair value		Carrying amount		Fair value
Land	￦	23,182		40,590		23,153		40,540
Buildings		241,519		265,737		247,933		272,794

	￦	264,701		306,327		271,086		313,334

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

12.

Goodwill

(1)

Goodwill as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Goodwill related to acquisition of Shinsegi Telecom, Inc.	￦	1,306,236		1,306,236
Goodwill related to acquisition of SK Broadband Co., Ltd.		358,443		358,443
Other goodwill		75,572		85,254

	￦	1,740,251		1,749,933

(2)

Details of changes in goodwill for the six-month periods ended June 30, 2012 and 2011 are as follows:


	For the six-month period ended
(In millions of won)	June 30, 2012			June 30, 2011
Beginning balance	￦	1,749,933			1,736,649
Goodwill increase (decrease) due to acquisition (disposal)		(9,685	)		18,389
Other increase (decrease)(*)		3			(177	)

	￦	1,740,251			1,754,861

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

13.

Intangible Assets

(1)

Intangible assets as of June 30, 2012 and December 31, 2011 are as follows:



	June 30, 2012										December 31, 2011
(In millions of won)	Acquisition cost		Accumulated depreciation			Accumulated impairment			Carrying amount		Carrying amount
Frequency use rights	￦	2,837,385		(1,014,304	)		(2,907	)		1,820,174		1,889,102
Land use rights		40,725		(22,514	)		—			18,211		19,327
Industrial rights		89,048		(27,782	)		(6	)		61,260		59,473
Development costs		179,087		(154,630	)		(6,526	)		17,931		20,961
Facility usage rights		139,027		(73,241	)		—			65,786		69,491
Customer relations		99,217		(4,009	)		—			95,208		141,819
Memberships(*1)		116,485		—			—			116,485		117,711
Other(*2)		2,302,776		(1,650,311	)		(13,496	)		638,969		677,919

	￦	5,803,750		(2,946,791	)		(22,935	)		2,834,024		2,995,803

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

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

(2)

Details of changes in intangible assets for the six-month periods ended June 30, 2012 and 2011 are as follows:



	For the six-month period ended June 30, 2012
(In millions of won)	Beginning balance		Acquisition		Disposal			Transfer		Amortization			Impairment (*)			Change of consolidation scope			Ending balance
Frequency use rights	￦	1,889,102		16,659		—			—		(82,680	)		(2,907	)		—			1,820,174
Land use rights		19,327		2,382		(80	)		—		(3,418	)		—			—			18,211
Industrial rights		59,473		3,659		—			477		(2,295	)		(6	)		(48	)		61,260
Development costs		20,961		755		—			—		(3,785	)		—			—			17,931
Facility usage rights		69,491		385		(41	)		13		(4,062	)		—			—			65,786
Customer relations		141,819		145		—			—		(46,756	)		—			—			95,208
Memberships		117,711		2,500		(2,942	)		—		—			—			(784	)		116,485
Other		677,919		31,747		(2,570	)		84,455		(141,613	)		(9,260	)		(1,709	)		638,969

	￦	2,995,803		58,232		(5,633	)		84,945		(284,609	)		(12,173	)		(2,541	)		2,834,024

(*)	The Group recognized ￦12,101 million of impairment loss on intangible assets in relation to the frequency use rights of the discontinuance of Digital Multimedia Broadcasting service and included the amount in profit (loss) from discontinued operation.

13.

Intangible Assets, Continued




	For the six-month period ended June 30, 2011
(In millions of won)	Beginning balance		Acquisition		Disposal			Transfer			Amortization			Impairment			Ending balance
Frequency use rights	￦	709,043		—		—			(469	)		(66,421	)		—			642,153
Land use rights		17,551		2,774		(98	)		—			(2,718	)		—			17,509
Industrial rights		60,740		859		—			323			(1,847	)		—			60,075
Development costs		26,470		1,348		(511	)		—			(4,464	)		(459	)		22,384
Facility usage rights		73,760		248		(69	)		31			(3,942	)		(777	)		69,251
Customer relations		226,940		87		—			—			(46,148	)		—			180,879
Memberships		111,736		5,927		(2,422	)		—			—			—			115,241
Other		658,716		27,075		(35	)		72,426			(169,966	)		(323	)		587,893

	￦	1,884,956		38,318		(3,135	)		72,311			(295,506	)		(1,559	)		1,695,385

(3)

The carrying amount and residual useful lives of major intangible assets as of June 30, 2012 are as follows:


(In millions of won)	Amount		Description	Residual useful lives
W-CDMA license	￦	437,800	Frequency use rights relating to W-CDMA service	(*1)
W-CDMA license		73,399	Frequency use rights relating to W-CDMA service	(*2)
800MHz license		364,896	Frequency use rights relating to CDMA and LTE service	(*3)
1.8GHz license		928,203	Frequency use rights relating to LTE service	(*4)
WiBro license		—	WiBro service	(*5)
WiBro license		15,876	WiBro service	(*6)
Customer relationships related to acquisition of SK Broadband Co., Ltd.		88,065	Customer relationships	1 year and 3 months

(*1)

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

13.

Intangible Assets, Continued

(*2)

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

(*3)

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

(*4)

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

(*5)	The WiBro license was used for seven years from the purchase date when the Group started its commercial WiBro services on March 30, 2005. The amortization is completed during the six-month period ended June 30, 2012 as the useful life matures.

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

14.

Borrowings and Debentures

(1)	Short-term borrowings as of June 30, 2012 and December 31, 2011 are as follows:

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

Lender

Annual
interest
rate (%)

June 30,
2012

December 31,
2011

Commercial Paper

—

3.43~3.85

￦

400,000

200,000

Short-term borrowings (Korean won)

Kookmin Bank, etc.

4.47~6.65

346,965

394,033

Short-term borrowings (Foreign currency)

SK China Company, Ltd.

—

37,499

(USD 32,500

)

106,680

(USD 92,500

)

￦

784,464

700,713

14.

Borrowings and Debentures, Continued

(2)	Long-term borrowings as of June 30, 2012 and December 31, 2011 are as follows:


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

Lender	Annual interest rate (%)	Maturity	June 30, 2012			December 31, 2011
Bank of Communications (*1,2)	6M Libor + 0.29	Oct. 10, 2013	￦	34,614 (USD 30,000	)		34,599 (USD 30,000	)
Bank of China(*1)	6M Libor + 0.29	Oct. 10, 2013		23,076 (USD 20,000	)		23,066 (USD 20,000	)
DBS Bank(*1)	6M Libor + 0.29	Oct. 10, 2013		28,845 (USD 25,000	)		28,833 (USD 25,000	)
SMBC(*1)	6M Libor + 0.29	Oct. 10, 2013		28,845 (USD 25,000	)		28,833 (USD 25,000	)
China Merchants Bank	5.35	Jan. 27, 2018		65,672 (CNY 360,000	)		65,893 (CNY 360,000	)
Korea Exchange Bank	5.18	Jan. 28, 2015		30,100 (CNY 170,000	)		31,116 (CNY 170,000	)
Hana Bank HK(*3)	3M Libor + 3.2	Mar. 3, 2014		86,535 (USD 75,000	)		86,498 (USD 75,000	)
SCB Bank HK(*3)	3M Libor + 3.3	Nov. 3, 2014		34,614 (USD 30,000	)		—
SCB Bank HK(*3)	3M Libor + 3.3	Nov. 3, 2014		34,773 (HKD 234,000	)		—
Kookmin Bank and 13 others	4.48	Feb. 14, 2015		2,000,000			—
Kookmin Bank	3.55	Jun. 15, 2012		—			1,977
Korea Development Bank	3.55	Jun. 17, 2013		3,526			5,288
Korea Development Bank	3.55	Jun. 16, 2014		6,590			8,237
Shinhan Bank	3.55	Jun. 15, 2015		10,273			10,273
Kookmin Bank	3.55	Jun. 15, 2016		9,749			9,749
Kookmin Bank	3.55	Mar. 15, 2017		5,996			—

Sub-total				2,403,207			334,362
Less present value discount on long-term borrowings				(11,637	)		—

				2,391,570			334,362
Less current portion of long-term borrowings				(10,245	)		(10,510	)

Long-term borrowings			￦	2,381,325			323,852

(*1)	As of June 30, 2012, 6M Libor rate is 0.73%.

(*2)	As of June 30, 2012, the Group’s lender is Bank of Communications as Credit Agricole transferred the loans to Bank of Communications during the six-month period ended June 30, 2012.

(*3)	As of June 30, 2012, 3M Libor rate is 0.46%.

14.

Borrowings and Debentures, Continued

(3)

Debentures as of June 30, 2012 and December 31, 2011 are as follows:


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

	Purpose	Maturity	Annual interest rate (%)	June 30, 2012			December 31, 2011
Unsecured private bonds	Refinancing fund	2016	5.00	￦	200,000			200,000
Unsecured private bonds		2013	4.00		200,000			200,000
Unsecured private bonds		2014	5.00		200,000			200,000
Unsecured private bonds(*1)		2012	3M Euro Yen Libor + 0.55		181,724 (JPY 12,500,000	)		185,645 (JPY 12,500,000	)
Unsecured private bonds	Other fund	2015	5.00		200,000			200,000
Unsecured private bonds		2018	5.00		200,000			200,000
Unsecured private bonds		2013	6.92		250,000			250,000
Unsecured private bonds		2016	5.54		40,000			40,000
Unsecured private bonds		2012	3M Euro Yen Libor + 2.50		—			44,555 (JPY 3,000,000	)
Unsecured private bonds		2016	5.92		230,000			230,000
Unsecured private bonds		2012	3M Euro Yen Tibor + 2.50		—			74,258 (JPY 5,000,000	)
Unsecured private bonds	Operating fund	2016	3.95		110,000			110,000
Unsecured private bonds		2021	4.22		190,000			190,000
Unsecured private bonds(*2)		2014	4.86		50,000			50,000
Unsecured private bonds(*2)		2015	4.62		50,000			50,000
Unsecured private bonds(*3)		2013	3.99		150,000			150,000
Unsecured private bonds(*3)		2014	4.53		290,000			290,000
Unsecured private bonds(*3)		2014	4.40		100,000			100,000
Unsecured private bonds(*3)		2015	4.09		110,000			—
Unsecured private bonds(*3)		2015	4.14		110,000			—
Unsecured private bonds(*3)		2017	4.28		100,000			—
Foreign global bonds		2027	6.63		461,520 (USD 400,000	)		461,320 (USD 400,000	)
Foreign global bonds		2012	7.00		—			576,650 (USD 500,000	)
Exchangeable bonds(*6,7)	Refinancing fund	2014	1.75		392,112 (USD 332,528	)		397,886 (USD 332,528	)
Floating rate notes(*4)	Operating fund	2012	3M Libor + 3.15		—			253,726 (USD 220,000	)
Floating rate notes(*4)		2014	3M Libor + 1.60		288,450 (USD 250,000	)		288,325 (USD 250,000	)
Floating rate notes(*5)		2014	SOR rate + 1.20		58,534 (SGD 65,000	)		57,618 (SGD 65,000	)
Swiss unsecured private bonds		2017	1.75		358,434 (CHF 300,000	)		—

Sub-total					4,520,774			4,799,983
Less discounts on bonds					(37,930	)		(39,095	)

					4,482,844			4,760,888
Less current portion of bonds payable					(181,676	)		(1,531,879	)

				￦	4,301,168			3,229,009

14.

Borrowings and Debentures, Continued

(*1)	As of June 30, 2012, 3M Euro Yen Libor rate is 0.19%.

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

(*3)

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

(*4)	As of June 30, 2012, 3M Libor rate is 0.46%.

(*5)	As of June 30, 2012, SOR rate is 0.38%.

(*6)

As of June 30, 2012, exchangeable bonds are classified as financial liabilities at fair value through profit or loss. As of December 31, 2011, the exchangeable bonds were classified as current as the bond holders would be eligible to redeem their notes at 100% of the principal amount on April 7, 2012. However, as of June 30, 2012, the exchangeable bonds are reclassified as non-current liabilities as the bond holders have not exercised and have lost their early redemption right.

(*7)

On April 7, 2009, the Group issued exchangeable bonds with a maturity of five years in the principal amount of USD 332,528,000 for USD 326,397,463 with a coupon rate of 1.75%. As of June 30, 2012, fair value of the exchangeable bonds is USD 352,978,472. The exchange price could be adjusted and the exchange price is ￦199,280 with the exchange rate of ￦ 1,383.40 per USD 1.

The Group may redeem the principal amount after 3 years from the issuance date if the market price exceeds 130% of the exchange price during a predetermined period. On the other hand, the bond holders may redeem their notes at 100% of the principal amount on April 7, 2012 (3 years from the issuance date). The exchange right may be exercised during the period from May 18, 2009 to March 24, 2014 and the number of common shares that can be exchanged as of June 30, 2012 is 2,308,406 shares.

Exchange of notes to common shares may be prohibited under the Telecommunications Law or other legal restrictions which restrains foreign governments, individuals and entities from owning more than 49% of the Group’s voting stock. If such 49% ownership limitation is violated due to the exercise of exchange rights, the Group will pay the bond holder a cash settlement which will be determined at the average price of one day after a holder exercises its exchange right or the weighted average price for the following five or twenty business days. Unless either previously redeemed or exchanged, the notes are redeemable at 100% of the principal amount at maturity.

In accordance with a resolution of the Board of Directors on February 9, 2012, the exchange price has changed from ￦ 209,853 to ￦199,280 and the number of common shares that can be exchanged was changed from 2,192,102 shares to 2,308,406 shares due to the payment of periodic dividends. During the six-month period ended June 30, 2012, no exchange was made.

14.

Borrowings and Debentures, Continued

(4)

Details of issuance or repayments of borrowings and debentures for the six-month period ended June 30, 2012 are as follows:

(In millions of won, thousands of U.S. dollars, thousands of Japanese Yen, and thousands of Hong Kong dollars)


	Lender	Annual interest rate (%)		Maturity		Coupon value			Carrying amount
January 1, 2012						￦	5,835,058			5,795,962
Issues:
Short-term borrowings	Kookmin Bank and other		3.43 ~6.50		—		895,404			895,404
Long-term borrowings	Kookmin Bank and other		4.48		2015		2,000,000			2,000,000
	Kookmin Bank		3.55		2017		5,996			5,996
	SCB Bank HK		3M Libor + 3.3		2014		34,134	(USD 30,000)		34,134 (USD 30,000	)
	SCB Bank HK		3M Libor + 3.3		2014		34,291	(HKD 234,000)		34,291 (HKD 234,000	)
Debentures			4.09		2015		110,000			109,581
			4.14		2015		110,000			109,576
			4.28		2017		100,000			99,605
			1.75		2017		363,552	(CHF 300,000)		363,552 (CHF 300,000	)
Fees, etc.	—		—		—		—			(15,200	)
Repayments:
Short-term borrowings(*1)	Hana Bank and other		4.57~8.03		—		(810,965	)		(810,965	)
Long-term borrowings	Korea Development Bank and other		3.55		—		(5,387	)		(5,387	)
Unsecured private bonds			3M Euro Yen Libor + 2.50		2012		(44,555	)(JPY 3,000,000)		(44,555 (JPY 3,000,000	) )
Unsecured private bonds			3M Euro Yen Tibor + 2.50		2012		(74,258	)(JPY 5,000,000)		(74,258 (JPY 5,000,000	) )
Foreign global bond			7.00		2012		(576,650	)(USD 500,000)		(576,650 (USD 500,000	) )
Floating rate notes			3M Libor + 3.15		2012		(253,726	)(USD 220,000)		(253,726 (USD 220,000	) )
Other:
Foreign translation gain (loss) and others(*2)			—		—		(14,449	)		(8,482	)

June 30, 2012						￦	7,708,445			7,658,878

(*1)	For the six-month period ended June 30, 2012, the Group early redeemed the short-term borrowings amounting to ￦ 500,000 million while the contractual maturity is February 14, 2013.

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

15.

Long-term Payables—other

(1)

Long-term payables as of June 30, 2012 and December 31, 2011 are as follows:



(In millions of won)	June 30, 2012		December 31, 2011
Payables related to acquisition of W-CDMA licenses	￦	702,780		840,974
Other(*)		7,951		6,522

Total	￦	710,731		847,496

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

(2)

As of June 30, 2012 and December 31, 2011, long-term payables consist of payables related to acquisition of W-CDMA licenses for 2.1GHz, 800MHZ, 1.8GHz and 2.3GHz frequency and other details are as follows:


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

Present value of long-term payables—other at the time of acquisition		49,363			197,190			679,453			8,009			934,015
Nominal value		52,600			208,250			746,250			—			1,007,100
Present value discount on long-term payables—other		(3,237	)		(11,060	)		(66,797	)		—			(81,094	)
Current portion of long-term payables—other		(17,533	)		—			(74,625	)		—			(92,158	)
Accumulated amortization of present value discount at December 31, 2011		2,065			1,925			3,136			—			7,126
Carrying amount as of December 31, 2011		33,895			199,115			607,964			—			840,974
Increase		—			—			—			8,650			8,650
Present value discount on long-term payables—other		—			—			—			(641	)		(641	)
Amortization of present value discount on long-term payables—other		301			1,233			1,770			52			3,356
Less current portion of long-term payables—other		(16,998	)		(66,481	)		(66,080	)		—			(149,559	)

Carrying amount at June 30, 2012	￦	17,198			133,867			543,654			8,061			702,780

15.

Long-term Payables—other, Continued

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

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

(3)

The repayment schedule of long-term payables—other as of June 30, 2012 is as follows:


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

	￦	923,591

16.

Provisions

Change in provisions for the six-month periods ended June 30, 2012 and 2011 are as follows:


	For the six-month period ended June 30, 2012									As of June 30, 2012
(In millions of won)	Beginning balance		Increase		Utilization			Ending balance		Current		Non-current
Provision for handset subsidy	￦	762,238		262,346		(374,143	)		650,441		568,298		82,143
Provision for point programs		639		—		(213	)		426		—		426
Provision for restoration		36,378		8,998		(360	)		45,016		5,176		39,840
Provision for warranty		154		—		(39	)		115		—		115
Provision for sales return		81		18		(30	)		69		69		—
Other provisions		69		—		(69	)		—		—		—

	￦	799,559		271,362		(374,854	)		696,067		573,543		122,524


	For the six-month period ended June 30, 2011									As of June 30, 2011
(In millions of won)	Beginning balance		Increase		Utilization			Ending balance		Current		Non-current
Provision for handset subsidy	￦	732,042		470,235		(427,513	)		774,764		657,820		116,944
Provision for point programs		87		—		—			87		—		87
Provision for restoration		32,522		2,120		—			34,642		375		34,267
Provision for warranty		140		—		(15	)		125		—		125
Provision for sales return		48		42		(32	)		58		58		—
Other provisions		11		32		(11	)		32		32		—

	￦	764,850		472,429		(427,571	)		809,708		658,285		151,423

16.

Provisions, Continued

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

17.

Finance Lease Liabilities

(1)

The Group has leased certain telecommunication equipment under the finance lease agreement with Cisco Systems Capital Korea Ltd. Finance lease liabilities as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Finance Lease Liabilities
Current portion of long-term finance lease liabilities	￦	25,302		31,308
Long-term finance lease liabilities		31,765		41,940

	￦	57,067		73,248

(2)

The Group’s related interest and principal as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012					December 31, 2011
(In millions of won)	Minimum lease payment		Present value			Minimum lease payment		Present value
Less than 1 year	￦	27,379		25,302			34,198		31,308
1~5 years		33,100		31,765			44,119		41,940

Subtotal		60,479		57,067			78,317		73,248

Current portion of long-term finance lease liabilities				(25,302	)				(31,308	)

Long-term finance lease liabilities			￦	31,765					41,940

18.

Defined Benefit Liabilities

(1)

Details of defined benefit liabilities as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012			December 31, 2011
Present value of defined benefit obligations	￦	206,718			188,120
Fair value of plan assets		(104,396	)		(102,179	)

	￦	102,322			85,941

(2)

Principal actuarial assumptions as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012	December 31, 2011
Discount rate for defined benefit obligations	3.95%~6.15%	4.11%~6.15%
Inflation rate	3.00%	3.00%
Expected rate of return on plan assets	3.50%~7.00%	2.00%~8.11%
Expected rate of salary increase	2.00%~6.98%	3.50%~5.10%

18.

Defined Benefit Liabilities, Continued

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

(3)

Changes in defined benefit obligations for the six-month periods ended June 30, 2012 and 2011 are as follows:


	For the six-month period ended
(In millions of won)	June 30, 2012			June 30, 2011
Beginning balance	￦	188,120			160,363
Current service cost		37,169			31,559
Interest cost		4,101			4,383
Actuarial gain or loss		7,160			7,875
Benefit paid		(27,410	)		(21,465	)
Others(*)		(2,422	)		42

Ending balance	￦	206,718			182,757

(*)	Others include effects of changes in consolidation scope of (-) W 4,185 million in relation to the disposal of Ntreev Soft Co., Ltd. and transfer to construction in progress during the six-month period ended June 30, 2012

(4)

Changes in plan assets for the six-month periods ended June 30, 2012 and 2011 are as follows:


	For the six-month period ended
(In millions of won)	June 30, 2012			June 30, 2011
Beginning balance	￦	102,179			92,493
Expected return on plan assets		1,864			2,071
Actuarial gain or loss		620			(681	)
Contributions by employer directly to plan assets		3,988			—
Benefit paid		(4,177	)		(7,685	)
Others		(78	)		30

Ending balance	￦	104,396			86,228

(5)

Expenses recognized in profit and loss for the six-month periods ended June 30, 2012 and 2011 are as follows:


	For the six-month period ended
(In millions of won)	June 30, 2012			June 30, 2011
Current service cost	￦	37,169			31,559
Interest cost		4,101			4,383
Expected return on plan assets		(1,864	)		(2,071	)

	￦	39,406			33,871

18.

Defined Benefit Liabilities, Continued

(6)

Details of plan assets as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Equity instruments	￦	314		—
Debt instruments		25,086		12,455
Short-term financial instruments, etc.		78,996		89,724

	￦	104,396		102,179

Actual return on plan assets for the six-month periods ended June 30, 2012 and 2011 amounted to ￦2,484 million and ￦ 1,390 million, respectively.

19.

Derivative Instruments

(1)

Currency swap contracts under cash flow hedge accounting

The Group has entered into a floating-to-fixed cross currency swap contract with Credit Agricole Corporate & Investment Bank to hedge the foreign currency risk and the interest rate risk of U.S. dollar denominated long-term borrowings with face amounts totaling USD 100,000,000 borrowed on October 10, 2006. As of June 30, 2012, in connection with unsettled cross currency interest rate swap contracts to which cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to ￦3,082 million (net of tax effect totaling ￦484 million and foreign currency translation loss arising from U.S. dollar denominated long-term borrowings totaling ￦20,580 million) is accounted for as accumulated other comprehensive loss.

In addition, the Group has entered into a floating-to-fixed cross currency swap contract with HSBC and SMBC Bank to hedge the foreign currency risk and the interest rate risk of its unguaranteed Japanese yen denominated bonds with face amounts totaling JPY 12,500,000,000 issued on November 13, 2007. As of June 30, 2012, in connection with unsettled cross currency interest rate swap contracts to which cash flow hedge accounting is applied, an accumulated gain on valuation of derivatives amounting to ￦3,223 million (net of tax effect totaling ￦699 million and foreign currency translation loss arising from unguaranteed Japanese yen denominated bonds totaling ￦77,663 million) is accounted for as accumulated other comprehensive income.

In addition, the Group has entered into a fixed-to-fixed cross currency swap contract with Morgan Stanley and five other banks to hedge the foreign currency risk of unguaranteed U.S. dollar denominated bonds with face amounts totaling USD 400,000,000 at annual fixed interest rate of 6.63% issued on July 20, 2007. As of June 30, 2012, in connection with unsettled foreign currency swap contract to which cash flow hedge accounting is applied since May 12 2010, an accumulated loss on valuation of derivatives amounting to ￦21,609 million (net of tax effect totaling ￦6,899 million and foreign currency translation loss arising from unguaranteed U.S. dollar denominated bonds totaling ￦3,933 million) is accounted for as accumulated other comprehensive loss. In connection with the currency swap contract, gain on valuation of currency swap which was incurred before application of hedge accounting, amounting to ￦129,806 million was recognized in profit or loss.

In addition, the Group has entered into a floating-to-fixed cross currency swap contract with DBS Bank and Citi Bank to hedge the foreign currency risk and the interest rate risk of its unguaranteed U.S. dollar denominated bonds with face amounts USD 250,000,000 issued on December 15, 2011. As of June 30, 2012, in connection with unsettled cross currency interest rate swap contract, an accumulated gain on valuation of derivatives amounting to ￦6,321 million (net of tax effect totaling ￦2,018 million and foreign currency translation gain arising from unguaranteed U.S. dollar denominated bonds totaling ￦1,160 million) is accounted for as other comprehensive income.

In addition, the Group has entered into a floating-to-fixed cross currency swap contract with United Overseas Bank to hedge the foreign currency risk and the interest rate risk of its Singapore dollar denominated bonds with face amounts totaling SGD 65,000,000 issued on December 15, 2011. As of June 30, 2012, in connection with unsettled cross currency interest rate swap contract, an accumulated loss on valuation of derivatives amounting to ￦229 million (net of tax effect totaling ￦73 million and foreign currency translation loss arising from unguaranteed Singapore dollar denominated bonds totaling ￦1,063 million) is accounted for as accumulated other comprehensive loss.

In addition, the Group has entered into a fixed-to-fixed cross currency swap contract with Citi Bank and five other banks to hedge the foreign currency risk of its Swiss Franc denominated bonds with face amounts totaling CHF 300,000,000 issued on June 12, 2012. As of June 30, 2012, in connection with unsettled cross currency interest rate swap contract, an accumulated loss on valuation of derivatives amounting to ￦13,983 million (net of tax effect totaling ￦4,464 million and foreign currency translation gain arising from unguaranteed Swiss Franc denominated bonds totaling ￦5,083 million) is accounted for as accumulated other comprehensive loss.

19.

Derivative Instruments, Continued

(2)

As of June 30, 2012, fair values of above derivatives recorded in assets or liabilities and details of derivative instruments are as follows:

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

Fair value

Hedged item

Amount

Duration of
Contract

Designated as
Cash Flow
Hedge

Not
Designated

Total

Current assets:

Floating-to-fixed cross currency swap

Japanese yen denominated bonds

JPY 12,500,000

Nov. 13, 2007 ~ Nov. 13, 2012

￦

80,187

—

80,187

Non-current assets:

Floating-to-fixed cross currency swap

U.S. dollar denominated long-term borrowings

USD 100,000

Oct. 10, 2006 ~ Oct. 10, 2013

17,014

—

17,014

Fix-to-fixed cross currency swap

U.S. dollar denominated bonds

USD 400,000

Jul. 20, 2007 ~ Jul. 20, 2027

105,230

—

105,230

Floating-to-fixed cross currency swap

U.S. dollar denominated bonds

USD 250,000

Dec. 15, 2011 ~ Dec. 12, 2014

7,179

—

7,179

Floating-to-fixed cross currency swap

Singapore dollar denominated bonds

SGD 65,000

Dec. 15, 2011 ~ Dec. 12, 2014

760

—

760

Convertible option

Convertible bonds (*)

KRW 50,000

Sep. 01, 2009 ~ Aug. 31, 2014

—

533

Total assets

￦

210,370

533

210,903

Current liabilities:

Fixed-to-fixed cross currency swap

Swiss Franc

denominated bonds

CHF 300,000

Jun. 12, 2012 ~ Jun. 12, 2017

23,529

—

23,529

Total liabilities

￦

23,529

—

23,529

(*)	Fair value of the conversion option of convertible bonds held by SK Communications Co., Ltd., a subsidiary, amounting to ￦ 533 million was accounted for as non-current derivative financial assets.

20.

Share Capital and Share Premium (Deficit)

The Parent Company’s outstanding share capital consists entirely of common stock with a par value of ￦500. The number of authorized, issued and outstanding common shares and share premium as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won, except for share data)	June 30, 2012			December 31, 2011
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
Share premium:
Paid-in surplus		2,915,887			2,915,887
Treasury stock		(2,410,451	)		(2,410,451	)
Loss on disposal of treasury stock		(18,855	)		(18,855	)
Others(*2)		(777,269	)		(771,928	)

	￦	(290,688	)		(285,347	)

(*1)

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

(*2)

Others primarily consist of gains and losses from common control transactions. The Group transfers the carrying amounts of businesses acquired under common control and recognizes the difference between the consideration paid and carrying value of net assets as other equity, within share premium.

There were no changes in share capital for the six-month period ended June 30, 2012 and for the year ended December 31, 2011.

21.

Treasury Stock

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

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

As a result of these treasury stock transactions, as of June 30, 2012 and December 31, 2011, the Parent Company has 11,050,712 shares of treasury stock at ￦2,410,451 million.

22.

Retained Earnings

(1)

Retained earnings as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Appropriated:
Legal reserve	￦	22,320		22,320
Reserve for research & manpower development		220,000		535,595
Reserve for business expansion		9,106,138		8,009,138
Reserve for technology development		1,901,300		1,524,000

		11,249,758		10,091,053
Unappropriated		251,195		1,551,472

	￦	11,500,953		11,642,525

(2)

Legal reserve

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

(3)

Reserve for research & manpower development

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

23.

Reserves

(1)

Details of reserves as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012			December 31, 2011
Net change in fair value of available-for-sale financial assets	￦	305,299			354,951
Net change in other comprehensive income of associates		(86,463	)		(93,598	)
Losses on valuation of derivatives		(24,185	)		(25,099	)
Foreign currency translations differences for foreign operations		22,277			23,810

	￦	216,928			260,064

23.

Reserves, Continued

(2)

Change in reserves for the six-month periods ended June 30, 2012 and 2011 are as follows:


(In millions of won)	Net change in fair value of available-for- sale financial assets			Net change in other comprehensive income of investment in associates			Losses on valuation of derivatives			Foreign currency translation differences for foreign operations			Total
Balance at January 1, 2011	￦	793,645			(91,413	)		(56,862	)		(2,315	)		643,055
Changes		(233,309	)		(8,458	)		7,242			(16,816	)		(251,341	)
Tax effect		54,281			(556	)		(2,502	)		—			51,223

Balance at June 30, 2011		614,617			(100,427	)		(52,122	)		(19,131	)		442,937

Balance at January 1, 2012		354,951			(93,598	)		(25,099	)		23,810			260,064
Changes		(65,359	)		6,866			1,797			(1,533	)		(58,229	)
Tax effect		15,707			269			(883	)		—			15,093

Balance at June 30, 2012	￦	305,299			(86,463	)		(24,185	)		22,277			216,928

24.

Other Operating Income and Expenses

Details of other operating income and expenses for the three-month and six-month periods ended June 30, 2012 and 2011 are as follows:


	2012				2011
(In millions of won)	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 Income:
Reversal of allowance for doubtful accounts	￦	—		5,149		634		1,939
Gain on disposal of property and equipment and intangible assets		1,822		2,832		2,834		3,935
Others		5,592		15,029		8,351		13,795

	￦	7,414		23,010		11,819		19,669

Other Operating Expenses:
Communication expenses	￦	16,427		33,754		13,814		27,196
Utilities		44,222		88,673		38,392		77,612
Taxes and dues(*)		32,365		63,486		8,863		19,846
Repair		60,884		121,664		58,513		122,910
Research and development		70,620		137,164		58,723		118,088
Training		8,992		15,068		6,577		11,698
Bad debt for accounts receivable—trade		16,369		23,626		18,818		36,036
Travel		7,710		14,795		8,424		14,960
Supplies and others		31,801		53,695		33,572		54,640
Loss on disposal of property and equipment and intangible assets		2,962		4,956		8,097		10,108
Loss on impairment of property and equipment and intangible assets		441		3,869		621		1,559
Donations		28,101		41,008		21,399		45,380
Bad debt for accounts receivable—other		3,353		23,040		—		3,146
Others		3,977		10,014		5,004		9,738

	￦	328,224		634,812		280,817		552,917

24.

Other Operating Income and Expenses, Continued

(*)”

Includes ￦20.3 billion fined against the Company for allegedly colluding with other third parties to inflate the prices of handsets while advertising that the handsets are offered at a discount through subsidy plans. The Company appeal of the case is currently pending.

25.

Finance Income and Costs

(1)

Details of finance income and costs for the three-month and six-month periods ended June 30, 2012 and 2011 are as follows:


	2012				2011
(In millions of won)	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	￦	24,857		57,253		41,896		90,543
Dividends		613		22,947		295		20,969
Gain on foreign currency transactions		3,527		5,480		1,493		2,867
Gain on foreign currency translation		227		714		—		16,171
Gain on valuation of financial asset at fair value through profit or loss		823		183		—		1,150
Gain on disposal of long-term investment securities		6,535		12,947		1,693		160,377
Gain on valuation of derivatives		—		—		16,125		2,088
Gain on settlement of derivatives		8,402		12,694		—		—
Gain on valuation of financial liability at fair value through profit or loss		9,507		5,774		22,056		33,249

	￦	54,491		117,992		83,558		327,414

Finance Costs:
Interest expense	￦	102,404		199,439		71,014		151,958
Loss on foreign currency transactions		4,333		5,516		2,778		3,653
Loss on foreign currency translation		—		527		9,367		2,501
Loss on disposal of long-term investment securities		1,629		9,134		156		156
Loss on impairment of long-term investment securities		580		580		—		—
Loss on valuation of derivatives		443		443		—		397
Loss on settlement of derivatives		1,232		1,232		2,005		5,136

	￦	110,621		216,871		85,320		163,801

(2)

Details of interest income included in finance income for the three-month and six-month periods ended June 30, 2012 and 2011 are as follows:


	2012				2011
(In millions of won)	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	￦	15,812		36,600		13,664		27,163
Interest income on installment receivables and others		9,045		20,653		28,232		63,380

	￦	24,857		57,253		41,896		90,543

25.

Finance Income and Costs, Continued

(3)

Details of interest expense included in finance costs for the three-month and six-month periods ended June 30, 2012 and 2011 are as follows:


	2012				2011
(In millions of won)	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	￦	44,746		60,293		14,218		32,435
Interest expense on debentures		47,844		100,199		52,478		106,570
Interest on finance lease liabilities		702		1,513		1,134		2,477
Others		9,112		37,434		3,184		10,476

	￦	102,404		199,439		71,014		151,958

(4)

Details of impairment losses for financial assets for the three-month and six-month periods ended June 30, 2012 and 2011 are as follows.


	2012				2011
(In millions of won)	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Bad debt for accounts receivable—trade	￦	16,369		23,626		18,818		36,036
Bad debt for accounts receivable—other		3,353		23,040		—		3,146

	￦	19,722		46,666		18,818		39,182

26.

Income Tax Expense

Income tax expense was recognized as current tax expense adjusted to changes in estimates related to prior periods, deferred tax expenses by origination and reversal, temporary differences, and income tax recognized in other comprehensive income. The Group’s effective tax rate is higher in 2011 than in 2012 primarily due to additional tax expense recognized as a result of the resolution of various tax matters during the finalization of Tax Authorities audits of the Parent Company’s tax returns from 2005 to 2009

27.

Earnings per Share

(1)

Basic earnings per share

1) Basic earnings per share for the three-month and six-month periods ended June 30, 2012 and 2011 are calculated as follows:


	2012				2011
(In millions of won, shares)	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Basic earnings per share attributable to owners of the Parent Company from continuing operation:
Net income attributable to owners of the Parent Company from continuing operations	￦	248,754		564,576		479,419		1,033,877
Weighted average number of common shares outstanding		69,694,999		69,694,999		71,094,999		71,094,999

Basic earnings per share from continuing operations (In won)	￦	3,569		8,101		6,743		14,542

Basic earnings per share attributable to owners of the Parent Company:
Net income attributable to owners of the Parent Company	￦	143,396		449,820		467,794		1,010,329
Weighted average number of common shares outstanding		69,694,999		69,694,999		71,094,999		71,094,999

Basic earnings per share (In won)	￦	2,057		6,454		6,580		14,211

27.

Earnings per Share, Continued

Net income attributable to owners of the Parent Company from continuing operation for the three-month and six-month periods ended June 30, 2012 and 2011 are calculated as follows:


	2012				2011
(In millions of won)	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Net income attributable to owners of the Parent Company	￦	143,396		449,820		467,794		1,010,329
Results of discontinued operation attributable to owners of the Parent Company		105,358		114,756		11,625		23,548

Net income attributable to owners of the Parent Company from continuing operation	￦	248,754		564,576		479,419		1,033,877

The weighted average number of common shares outstanding for the three-month and six-month periods ended June 30, 2012 and 2011 are calculated as follows:


	Number of shares			Weighted number of days				Weighted number of shares
	Number of shares			Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30			Six-month period ended June 30
Outstanding common shares at January 1, 2012		80,745,711			91/91		182/182		80,745,711			80,745,711
Effect of treasury stock		(11,050,712	)		91/91		182/182		(11,050,712	)		(11,050,712	)

Number of shares at June 30, 2012		69,694,999							69,694,999			69,694,999

27.

Earnings per Share, Continued

(1)

Basic earnings per share, Continued


	Number of shares			Weighted number of days				Weighted number of shares
	Number of shares			Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30			Six-month period ended June 30
Outstanding common shares at January 1, 2011		80,745,711			91/91		181/181		80,745,711			80,745,711
Effect of treasury stock		(9,650,712	)		91/91		181/181		(9,650,712	)		(9,650,712	)

Number of shares at June 30, 2011		71,094,999							71,094,999			71,094,999

(2)

Diluted earnings per share

1) Diluted earnings per share for the three-month and six-month periods ended June 30, 2012 and 2011 are calculated as follows:


	2012				2011
(In millions of won, shares)	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Diluted earnings per share attributable to owners of the Parent Company from continuing operations:
Diluted net income attributable to owners of the Parent Company from continuing operations	￦	242,811		562,695		463,840		1,010,806
Weighted average number of common shares outstanding		72,003,405		72,003,405		73,272,388		73,272,388

Diluted earnings per share from continuing operations (In won)	￦	3,372		7,815		6,330		13,795

Diluted earnings per share attributable to owners of the Parent Company:
Diluted net income attributable to owners of the Parent Company	￦	137,453		447,939		452,215		987,258
Weighted average number of common shares outstanding		72,003,405		72,003,405		73,272,388		73,272,388

Diluted earnings per share (In won)	￦	1,909		6,221		6,172		13,474

Diluted net income attributable to owners of the Parent Company from continuing operations for the three-month and six-month periods ended June 30, 2012 and 2011 are calculated as follows:


	2012
	Continuing operations						Discontinued operation						Total
(In millions of won)	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
Net income attributable to owners of the Parent Company	￦	248,754			564,576			(105,358	)		(114,756	)		143,396			449,820
Effect of exchangeable bonds		(5,943	)		(1,881	)		—			—			(5,943	)		(1,881	)

Diluted net income attributable to owners of the Parent Company	￦	242,811			562,695			(105,358	)		(114,756	)		137,453			447,939

27.

Earnings per Share, Continued

(2)

Diluted earnings per share, Continued


	2011
	Continuing operations						Discontinued operation						Total
(In millions of won)	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
Net income attributable to owners of the Parent Company	￦	479,419			1,033,877			(11,625	)		(23,548	)		467,794			1,010,329
Effect of exchangeable bonds		(15,579	)		(23,071	)		—			—			(15,579	)		(23,071	)

Diluted net income attributable to owners of the Parent Company	￦	463,840			1,010,806			(11,625	)		(23,548	)		452,215			987,258

Adjusted weighted average number of common shares outstanding for the three-month and six-month periods ended June 30, 2012 and 2011 are calculated as follows:


	2012				2011
(In shares)	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Weighted average number of common shares outstanding		69,694,999		69,694,999		71,094,999		71,094,999
Effect of exchangeable bonds(*)		2,308,406		2,308,406		2,177,389		2,177,389

Adjusted weighted average number of common shares outstanding		72,003,405		72,003,405		73,272,388		73,272,388

(*)	Effect of exchangeable bonds represents weighted average number of common shares outstanding in respect of the exchangeable common shares of exchangeable bonds, which could be exchanged to treasury stock

(3)

Basic loss per share from discontinued operation


	2012				2011
(In millions of won, shares)	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Loss from discontinued operation attributable to owners of the Parent Company	￦	105,358		114,756		11,625		23,548
Weighted average number of common shares outstanding		69,694,999		69,694,999		71,094,999		71,094,999

Basic loss per share (In won)	￦	1,512		1,647		164		331

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

28.

Categories of Financial Instruments

(1)

Financial assets by categories as of June 30, 2012 and December 31, 2011 are as follows:



	June 30, 2012
(In millions of won)	Financial assets at fair value through profit or loss		Available- for-sale financial assets		Loans and receivables		Derivative financial instruments designated as hedged item		Total
Cash and cash equivalents	￦	—		—		1,176,948		—		1,176,948
Financial instruments		—		—		514,282		—		514,282
Short-term investment securities		—		55,620		—		—		55,620
Long-term investment securities(*1)		16,800		1,411,070		—		—		1,427,870
Accounts receivable—trade		—		—		1,856,900		—		1,856,900
Loans and receivables(*2)		—		—		1,041,531		—		1,041,531
Derivative financial assets(*3)		533		—		—		210,370		210,903

	￦	17,333		1,466,690		4,589,661		210,370		6,284,054


	December 31, 2011
(In millions of won)	Financial assets at fair value through profit or loss		Available- for-sale financial assets		Loans and receivables		Derivative financial instruments designated as hedged item		Total
Cash and cash equivalents	￦	—		—		1,650,794		—		1,650,794
Financial instruments		—		—		987,192		—		987,192
Short-term investment securities		—		94,829		—		—		94,829
Long-term investment securities(*1)		16,617		1,521,328		—		—		1,537,945
Accounts receivable—trade		—		—		1,835,641		—		1,835,641
Loans and receivables(*2)		—		—		1,377,750		—		1,377,750
Derivative financial assets(*3)		1,018		—		—		252,935		253,953

	￦	17,635		1,616,157		5,851,377		252,935		7,738,104

(*1)	The entire amount of long-term investment securities was designated as financial assets at fair value through profit or loss as the embedded derivative (conversion right option), which should be separated from the main contract, could not be separately measured.

28.

Categories of Financial Instruments, Continued

(*2)	Details of loans and receivables as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Short-term loans	￦	86,424		100,429
Accounts receivable – other		612,220		908,836
Accrued income		17,672		21,847
Other current assets		448		462
Long-term loans		84,751		95,565
Long-term accounts receivable—other		694		5,393
Guarantee deposits		239,322		245,218

	￦	1,041,531		1,377,750

(*3)	Derivative financial assets classified as financial assets at fair value through profit or loss is the fair value of conversion right of convertible bonds held by SK Communications Co., Ltd., a subsidiary of the Parent Company.

(2)

Financial liabilities by categories as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012
(In millions of won)	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	￦	—		313,129		—		313,129
Derivative financial liabilities		—		—		23,529		23,529
Borrowings		—		3,176,034		—		3,176,034
Debentures(*1)		392,112		4,090,732		—		4,482,844
Accounts payable—other and others (*2)		—		3,079,876		—		3,079,876

	￦	392,112		10,659,771		23,529		11,075,412


	December 31, 2011
(In millions of won)	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	￦	—		195,391		—		195,391
Derivative financial liabilities		—		—		4,645		4,645
Borrowings		—		1,035,074		—		1,035,074
Debentures(*1)		397,886		4,363,002		—		4,760,888
Accounts payable—other and others (*2)		—		3,312,642		—		3,312,642

	￦	397,886		8,906,109		4,645		9,308,640

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

(*2)	Details of accounts payable and other payables as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Accounts payable – other	￦	1,192,607		1,507,458
Withholdings		10,752		10,835
Accrued expenses		921,864		744,673
Current portion of long-term payables—other		174,861		120,452
Long-term payables – other		710,731		847,496
Finance lease liabilities		31,765		41,940
Other non-current liabilities		37,296		39,788

	￦	3,079,876		3,312,642

29.

Financial Risk Management

(1)

Financial risk management

The Group is exposed to credit risk, liquidity risk and market risk. Market risk is the risk related to the changes in market prices, such as foreign exchange rates, interest rates and equity prices. The Group implements a risk management system to monitor and manage these specific risks.

The Group’s financial assets under financial risk management consist of cash and cash equivalents, financial instruments, financial assets available-for-sale, trade and other receivables. Financial liabilities consist of trade and other payables, borrowings, and debentures.

Market risk

(i)

Currency risk

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

Monetary foreign currency assets and liabilities as of June 30, 2012 are as follows:

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


	Assets				Liabilities
	Foreign currencies		Won translation		Foreign currencies		Won translation
USD		94,553	￦	109,095		1,150,965	￦	1,327,983
EUR		273		392		1,302		1,868
JPY		209,152		3,041		12,496,692		181,676
CNY		—		—		2		—
SGD		—		—		64,533		58,114
CHF		—		—		297,966		356,004
Others		1		2		44		7

			￦	112,530			￦	1,925,652

29.

Financial Risk Management, Continued

(1)

Financial risk management, continued

In addition, the Group has entered into cross currency swaps to hedge against currency risk related to foreign currency borrowings and debentures. (Refer to Note 19)

As of June 30, 2012, effects on income (loss) before income tax as a result of change in exchange rate by 10% are as follows:


(In millions of won)	If increased by 10%			If decreased by 10%
USD	￦	(36,386	)		36,386
EUR		(148	)		148
JPY		304			(304	)
CNY		—			—
Others		(5	)		5

	￦	(36,235	)		36,235

(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, 2012, available-for-sale equity instruments measured at fair value amount of ￦1,222,863 million.

(iii) Interest rate risk

Since the Group’s interest bearing assets are mostly fixed-interest bearing assets, as such, the Group’s revenue and operating cash flow are not influenced by the changes in market interest rates. However, the Group still has interest rate risk arising from borrowings and debentures.

Accordingly, the Group performs various analysis of interest rate risk, which includes refinancing, renewal, alternative financing and hedging instrument option, to reduce interest rate risk and to optimize its financing.

The Group’s interest rate risk arises from floating-rate borrowings and payables. As of June 30, 2012, floating-rate debentures and borrowings amount to ￦528,708 million and ￦317,436 million, respectively, and the Group has entered into interest rate swaps to hedge interest rate risk related to floating-rate borrowings and debentures. (Refer to Note 19) If interest rate only increases (decreases) by 1%, income before income taxes for the six-month period ended June 30, 2012 would have been decreased (increased) by W2,021 million due to the interest expense from floating-rate borrowings and bonds payables.

29.

Financial Risk Management, Continued

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet his/her contractual obligations. To manage credit risk, the Group evaluates the credit worthiness of each customer or counterparty considering the party’s financial information, its own trading records and other factors; based on such information, the Group establishes credit limits for each customer or counterparty.

For the six-month period ended June 30, 2012, the Group has no trade and other receivables or loans which have indications of significant impairment loss or are overdue for a prolonged period. As a result, the Group believes that the possibility of default is remote. Also, the Group’s credit risk can rise due to transactions with financial institutions related to its cash and cash equivalents, financial instruments and derivates. To minimize such risk, the Group has a policy to deal with high credit worthy financial institutions. The amount of maximum exposure to credit risk of the Group is the carrying amount of financial assets as of June 30, 2012.

In addition, the aging of trade and other receivables that are over due at the end of the reporting period but not impaired is stated in Note 6 and the analysis of financial assets that are individually determined to be impaired at the end of the reporting period is stated in Note 25.

Liquidity risk

The Group’s approach to managing liquidity is to ensure that it will always maintain sufficient cash and cash equivalents balances and have enough liquidity through various committed credit lines. The Group maintains flexibly enough liquidity under credit lines through active operating activities. The Group’s current liabilities are greater than current assets by W 567.8 billion and W 556.1 billion as of June 30, 2012 and December 31, 2011, respectively. This was primarily caused by the acquisition of ownership interests in SK Hynix in February 2012. The Group plans to fund current liabilities with the cash flows generated by operations and through additional borrowings, as necessary.

Contractual maturities of financial liabilities as of June 30, 2012 are as follows:


(In millions of won)	Carrying amount		Contractual cash flows		Less than 1 year		1 - 5 years		More than 5 years
Accounts payable-trade	￦	313,129		313,129		313,117		12		—
Derivative financial liabilities		23,529		23,529		—		23,529		—
Borrowings		3,176,034		3,429,382		889,201		2,474,509		65,672
Debentures(*1)		4,482,844		5,493,857		372,756		3,918,296		1,202,805
Accounts payable-other and others(*2)		3,079,876		3,101,084		2,147,599		587,138		366,347

	￦	11,075,412		12,360,981		3,722,673		7,003,484		1,634,824

29.

Financial Risk Management, Continued

(1)

Financial risk management, continued

The Group does not expect that the cash flows included in the maturity analysis could occur significantly earlier or at different amounts.

(*1)	Includes estimated interest to be paid and excludes discounts on bonds.

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

(2)

Capital management

The Group manages its capital to ensure that it will be able to continue as a business while maximizing the return to shareholders through the optimization of its debt and equity balance. The overall strategy of the Group is the same as that of the group as of and for the year ended December 31, 2011.

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

Debt-equity ratio as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012			December 31, 2011
Liabilities	￦	13,272,747			11,633,327
Equity		12,500,644			12,732,709

Debt-equity ratio		106.18	%		91.37	%

(3)

Fair value

Fair value of the financial instruments that are traded in an active market is measured based on the quoted market price at the end of the reporting date. Disclosed market price of the financial assets held by the Group is the bid price.

29.

Financial Risk Management, Continued

(3)

Fair value, Continued

Fair value of the financial instruments that are not traded in an active market is determined using the valuation method. The Group uses the various valuation methods and makes assumptions that are mainly based on market conditions existing at the end of each reporting period. Fair value of financial instruments such as long-term liabilities is measured using the various methods including estimated discounted cash flow method.

Fair values of accounts receivable – trade, and accounts payable—trade are considered to be carrying amount less impairment and fair value of financial liabilities for the disclosure purpose is estimated by discounting contractual future cash flows using the current market interest rate used for the similar financial instruments by the Group.

Interest rates used by the Group for the fair value measurement as of June 30, 2012 are as follows:


		Interest rate
Derivative instruments		3.15%~5.59%
Borrowings and debentures		3.92%~4.09%

Fair value and carrying amount

Carrying amount and fair value of financial assets and liabilities are as follows:


	June 30, 2012				December 31, 2011
(In millions of won)	Carrying amount		Fair value		Carrying amount		Fair value
Assets carried at fair value
Financial assets at fair value through profit or loss	￦	17,333		17,333		17,635		17,635
Derivative financial assets		210,370		210,370		252,935		252,935
Available-for-sale financial assets		1,222,863		1,222,863		1,129,928		1,129,928

	￦	1,450,566		1,450,566		1,400,498		1,400,498

Assets carried at amortized cost
Cash and cash equivalents	￦	1,176,948		1,176,948		1,650,794		1,650,794
Available-for-sale financial assets		243,827		243,827		486,229		486,229
Accounts receivable – trade and others		2,898,431		2,898,431		3,213,391		3,213,391
Financial instruments		514,282		514,282		987,191		987,191

	￦	4,833,488		4,833,488		6,337,605		6,337,605

Liabilities carried at fair value
Financial liabilities at fair value through profit or loss	￦	392,112		392,112		397,886		397,886
Derivative financial liabilities		23,529		23,529		4,645		4,645

	￦	415,641		415,641		402,531		402,531

Liabilities carried at amortized cost
Accounts payable – trade	￦	313,129		313,129		195,391		195,391
Borrowings		3,176,034		3,225,011		1,035,075		1,035,075
Debentures		4,090,732		4,330,096		4,363,002		4,562,156
Accounts payable—other and others		3,079,876		3,079,876		3,312,642		3,312,642

	￦	10,659,771		10,948,112		8,906,110		9,105,264

29.

Financial Risk Management, Continued

(3)

Fair value, continued

Fair value hierarchy

The different levels have been defined as follows:

•

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

•

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

•

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

The table below analyzes financial instruments carried at fair value, by fair value hierarchy as of June 30, 2012.


(In millions of won)	Level 1		Level 2		Level 3		Total
Financial assets at fair value through profit or loss	￦	—		16,800		533		17,333
Derivative financial assets		—		210,370		—		210,370
Available-for-sale financial assets		1,052,372		28,136		142,355		1,222,863
Financial liabilities at fair value through profit or loss		392,112		—		—		392,112
Derivative financial liabilities		—		23,529		—		23,529

There have been no transfers from Level 2 to Level 1 in 2012 and changes of financial assets classified as Level 3 for the six-month period ended June 30, 2012 are as follows:


(In millions of won)	Balance at January 1		Acquisition		Profit(loss) for the period			Other comprehensive income			Disposal			Balance at June 30
Financial assets at fair value through profit or loss	￦	1,018		—		(485	)		—			—			533
Available-for-sale financial assets		197,019		7,702		—			(29,481	)		(32,885	)		142,355

30.

Transactions with Related Parties

Transactions among consolidated entities have been eliminated upon the consolidation and significant related party transactions of the Group for the three-month and six-month periods ended June 30, 2012 and 2011, and account balances as of June 30, 2012 and December 31, 2011 are as follows:

(1)

Transactions


	2012
	Purchases of property and equipment				Commissions paid and other expenses				Commissions earned and other income
(In millions of won)	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(1):**

SK Holdings Co., Ltd.	￦	—		—		8,404		16,171		202		302

Associates:
SK Marketing & Company Co., Ltd.		1,911		1,935		36,524		68,697		2,334		5,088
F&U Credit information Co., Ltd.		—		—		11,881		25,077		440		805
SK Wyverns Baseball Club Co., Ltd.		—		—		64		9,480		—		—
HanaSK Card Co., Ltd.		5		7		71,112		148,143		42,711		90,390
HappyNarae Co., Ltd.(*2)		2,194		2,238		4,156		5,120		6		11
SK China Company, Ltd.		—		—		—		—		432		505
Others		232		386		1,542		2,344		84		92

Others:
SK C&C Co., Ltd.		48,488		104,716		72,077		148,619		3,514		6,879
SK Innovation Co., Ltd.		—		—		189		371		1,566		2,433
M&Service Co., Ltd.		12		27		3,429		6,883		2,988		3,517
SK Engineering and Construction Co., Ltd.		139,171		193,921		15,156		20,525		923		2,525
SKC Ltd.		—		—		—		—		176		422
SK Telesys Co., Ltd.		93,871		107,840		17,375		22,108		130		213
SK Networks Co., Ltd.		1,161		3,085		315,091		617,051		4,600		9,314
SK Networks Internet, Inc.		110		110		2,992		4,016		57		57
SK Shipping Co., Ltd.		—		—		—		—		819		1,599
SK Securities Co., Ltd.		—		—		—		600		803		1,487
Others		1,018		1,164		29,197		50,439		2,443		4,003

	￦	288,173		415,429		589,189		1,145,644		64,228		129,642

(*1)	SK Holdings Co., Ltd. is the Ultimate Controlling Entity because of its de facto control over the Parent Company.

(*2)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the six-month period ended June 30, 2012.

30.

Transactions with Related Parties, Continued

(1)

Transactions, Continued


	2011
	Purchases of property and equipment				Commissions paid and other expenses				Commissions earned and other income
(In millions of won)	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 Holdings Co., Ltd.	￦	—		—		10,938		18,370		305		383

Associates:
SK Marketing & Company Co., Ltd.		2,200		2,208		35,287		65,698		2,825		5,173
F&U Credit information Co., Ltd.		—		—		11,444		21,583		426		846
SK Wyverns Baseball Club Co., Ltd.		—		—		1,200		10,994		—		13
HanaSK Card Co., Ltd.		9		10		114,189		158,503		6,168		24,041
HappyNarae Co., Ltd.(*)		2,525		2,759		2,012		2,944		5		16
Others		29		29		5,374		10,745		218		446

Others:
SK C&C Co., Ltd.		62,821		88,826		79,123		147,520		4,145		8,154
SK Innovation Co., Ltd.		—		—		184		392		680		1,505
M&Service Co., Ltd.		3		5		4,556		7,369		1,454		1,461
SK Engineering and Construction Co., Ltd.		54,499		64,292		8,523		14,195		680		2,249
SKC Ltd.		—		—		—		—		330		682
SK Telesys Co., Ltd.		80,234		97,470		7,296		13,710		19,329		56,644
SK Mobile energy Co., Ltd.		290		561		—		—		2		3
SK Networks Co., Ltd.		3,196		3,374		308,516		588,541		3,763		8,172
SK Networks Service Co., Ltd.		591		591		25,499		36,560		62		192
SK Pinx Co., Ltd.		—		—		10		475		4		7
SK Shipping Co., Ltd.		—		—		—		—		781		1,611
Others		699		699		1,436		24,558		1,195		2,001

	￦	207,096		260,824		615,587		1,122,157		42,372		113,599

(*)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the six-month period ended June 30, 2012.

30.

Transactions with Related Parties, Continued

(2)

Account balances


	June 30, 2012
(In millions of won)	Accounts receivable		Guarantee deposits		Accounts payable		Guarantee deposits received
Ultimate Controlling Entity:
SK Holdings Co., Ltd.	￦	115		—		23		—

Associates:
SK Marketing & Company Co., Ltd.		4,964		—		36,562		—
F&U Credit information Co., Ltd.		280		—		3,941		—
SK Wyverns Baseball Club Co., Ltd.		—		—		40		—
Wave City Development Co., Ltd.		38,412		—		—		—
HanaSK Card Co., Ltd.		7,215		14		17,504		—
SK China Company, Ltd.		—		—		37,499		—
Television Media Korea Ltd.		—		—		852		—
HappyNarae Co., Ltd.(*1)		16		—		1,828		—
Others		99		10		3,922		—

Others:
SK C&C Co., Ltd.		448		438		60,774		3,585
SK Innovation Co., Ltd.		1,019		91		1		—
M&Service Co., Ltd.		1,516		—		1,595		—
SK Engineering and Construction Co., Ltd.		990		—		11,271		82
SKC Ltd.		73		—		—		—
SK Telesys Co., Ltd.		246		—		32,684		—
SK Networks Co., Ltd.		25,628		1,013		397,704		865
SK Networks Service Co., Ltd.		8		—		10,987		—
SK Energy Co., Ltd.		528		—		2,546		—
SK Securities Co., Ltd.		102		—		—		—
SKY Investment Co., Ltd.(*2)		14,849		—		138		—
Others		770		—		1,576		525

	￦	97,278		1,566		621,447		5,057

(*1)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the six-month period ended June 30, 2012.

(*2)	The amount represents remaining balance of the loans to SKY Investment Co., Ltd. as of June 30, 2012.

30.

Transactions with Related Parties, Continued

(2)

Account balances, Continued


	December 31, 2011
(In millions of won)	Accounts receivable		Guarantee deposits		Accounts payable		Guarantee deposits received
Ultimate Controlling Entity:
SK Holdings Co., Ltd.	￦	147		—		—		—

Associates:
SK Marketing & Company Co., Ltd.		9,876		—		36,901		10
F&U Credit information Co., Ltd.		—		—		3,736		—
SK Wyverns Baseball Club Co., Ltd.		3,812		—		—		—
Wave City Development Co., Ltd.		38,412		—		—		—
HanaSK Card Co., Ltd.		8,683		14		2,358		—
Daehan Kanggun BcN Co., Ltd.		20,562		—		—		—
HappyNarae Co., Ltd.(*)		1		—		1,768		—
Others		69		—		1,539		222

Others:
SK C&C Co., Ltd.		3,330		—		172,047		3,585
SK Innovation Co., Ltd.		954		91		2		—
M&Service Co., Ltd.		644		—		4,679		—
SK Engineering and Construction Co., Ltd.		1,271		—		39,215		82
SKC Ltd.		184		—		—		—
SK Telesys Co., Ltd.		132		—		65,619		—
SK Mobile energy Co., Ltd.		1		—		71		—
SK Networks Co., Ltd.		24,403		5,513		158,884		896
SK Networks Service Co., Ltd.		6		—		4,754		—
SK Shipping Co., Ltd.		365		—		—		—
Others		5,088		—		10,876		433

	￦	117,940		5,618		502,449		5,228

(*)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the six-month period ended June 30, 2012.

(3)

Compensation for the key management

The Parent Company considers registered directors who have substantial roles and responsibility in planning, operating, and controlling of the business as key management. The considerations given to such key management for the three-month and six-month periods ended June 30, 2012 and 2011 are as follows:


	2012				2011
(In millions of won)	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Salaries	￦	297		8,287		1,676		8,832
Provision for retirement benefits		77		643		107		623

	￦	374		8,930		1,783		9,455

31.

Commitments and Contingencies

(1)

Collateral assets and commitments

SK Broadband Co., Ltd., a subsidiary of the Parent Company, agreed to provide guarantees for Broadband Media Co., Ltd.’s loans as of June 30, 2012. For the guarantee, SK Broadband Co., Ltd. has provided its properties as collaterals as follows: ￦65,000 million to Hana Bank, ￦78,000 million to IBK Capital and ￦52,000 million to Kookmin Bank, respectively. SK Broadband Co., Ltd., has also provided its short-term financial instruments as collaterals as follows: ￦60,000 million to Korea Exchange Bank, ￦35,000 million to Hana Bank, ￦39,000 million to NH Bank and ￦20,000 million to Woori Bank, respectively.

SK Broadband Co., Ltd. has provided guarantees for loans of Broadband CS Co., Ltd. For the guarantee, SK Broadband Co., Ltd. has pledged its properties as collateral in the amount of ￦16,900 million to Kookmin Bank as of June 30, 2012.

SK Broadband Co., Ltd. has pledged its properties as collateral for leases on buildings in the amount of ￦17,400 million as of June 30, 2012.

PS & Marketing Corporation, a subsidiary of the Parent Company, has obtained a line of credit for ￦60,000 million from Shinhan Bank for operational purposes. In relation to the line of credit, PS & Marketing Corporation pledged ￦78,000 million of inventory as collateral to Shinhan Bank as of June 30, 2012.

As of June 30, 2012, SKY Property Mgmt. Ltd., a subsidiary, has pledged CNY 532 million of building and land use right (long-term prepaid expenses) as collateral for its long-term borrowing amounting to CNY 525 million to Korea Exchange Bank and China Merchants Bank. In relation to the newly obtained long-term borrowings of USD 30 million and HKD 234 million during the six-month period ended June 30, 2012, the Parent Company has provided interests in Shanghai Fujita Tianshan Housing Development Co., Ltd., a subsidiary, as collateral to Standard Chartered Bank (HK) Ltd.

(2)

Guarantee provided

As of June 30, 2012, the Parent Company has participated in “Tactical Airship” program of the Defense Acquisition Program Administration with Joint Defense Corporation. For an advance receipt amounting to ￦4,200 million, which Joint Defense Corporation received from the Defense Acquisition Program Administration, the Parent Company provides payment guarantees to the Defense Acquisition Program Administration.

(3)

Contingencies

As of June 30, 2012, the Group recorded ￦5,072 million of indemnities as accrued expense as SK Broadband Co., Ltd., a subsidiary, has partially lost the first trial relating to the violation of customer’s privacy (plaintiff’s claims of ￦24,689 million) during the year ended December 31, 2011.

As of June 30, 2012, the claim amount of pending litigations of SK Communications Co., Ltd., a subsidiary, amounts to ￦9,841 million and the final outcome of such litigation currently cannot be predicted.

32.

Discontinued Operation

(1)

Discontinued operation

During the six-month period ended June 30, 2012, SK Telink Co., Ltd., a subsidiary, finalized its decision to cease the broadcasting business due to the rapid decrease in satellite Digital Multimedia Broadcasting subscribers along with the effects from smart phones, etc. In relation to this event, SK Telink Co., Ltd. submitted its business cessation plan to Korea Communications Commission on July 2, 2012 and the business cessation plan was accepted without amendment on July 5, 2012.

(2)

Results of discontinued operation

Results of discontinued operation included in the unaudited condensed consolidated interim statements of income for the six-month periods ended June 30, 2012 and 2011 are as follows. The unaudited condensed consolidated interim statements of income presented for comparative purposes were restated in order to present discontinued operation segregated from the continuing operation.


(In millions of won)	2012			2011
Results of discontinued operation:
Revenue	￦	1,314			7,369
Expenses		(147,678	)		(34,618	)


Operating loss generated by discontinued operation		(146,364	)		(27,249	)
Income tax benefit		12,660			4,380


Loss generated by discontinued operation	￦	(133,704	)		(22,869	)


Attributable to :
Owners of the Parent Company		(114,756	)		(23,548	)
Non-controlling interests		(18,948	)		679

(3)

Cash flow from (used in) discontinued operation

Cash flow from (used in) discontinued operation for the six-month periods ended June 30, 2012 and 2011 are as follows:


(In millions of won)	2012			2011
Cash flow from (used in) discontinued operation:
Net cash used in operating activities	￦	(1,840	)		(9,396	)
Net cash from (used in) investing activities		1,593			(6,019	)
Net cash used in financing activities		(29,574	)		(64,460	)

Net cash used in discontinued operation	￦	(29,821	)		(79,875	)

33.

Statements of Cash Flows

(1)

Adjustments for income and expenses from operating activities for the six-month periods ended June 30, 2012 and 2011 are as follows:


(In millions of won)	2012			2011
Interest income	￦	(57,253	)		(90,543	)
Dividend		(22,947	)		(20,969	)
Gain on foreign currency translation		(714	)		(16,171	)
Gain on valuation of financial assets at fair value through profit or loss		(183	)		(1,150	)
Gain on valuation of financial liabilities at fair value through profit or loss		(5,774	)		(33,249	)
Gain on disposal of long-term investments securities		(12,947	)		(160,377	)
Gain on valuation of derivatives		—			(2,088	)
Gain on settlement of derivatives		(12,694	)		—
Gain on disposal of property, equipment and intangible assets		(2,832	)		(3,935	)
Reversal of allowance for doubtful accounts		(5,530	)		(1,939	)
Other income		(1,216	)		(2,921	)
Interest expenses		199,439			151,958
Loss on foreign currency translation		527			2,501
Loss on disposal of long-term investments securities		9,134			156
Impairment loss on long-term investment securities		580			—
Loss on valuation of derivatives		443			397
Loss on settlement of derivatives		1,232			5,136
Equity in losses of investments in affiliates		45,597			20,709
Income tax expense		138,023			414,263
Provision for retirement benefits		39,406			33,871
Depreciation and amortization		1,249,866			1,239,750
Bad debt for accounts receivable—trade		23,626			36,036
Loss on disposal of property and equipment and intangible assets		4,956			10,108
Impairment loss on property, equipment and intangible assets		124,859			1,559
Bad debt for accounts receivable—other		23,040			3,146
Other expenses		5,601			5,907

	￦	1,744,239			1,592,155

33.

Statements of Cash Flows, Continued

(2)

Changes in assets and liabilities from operating activities for the six-month periods ended June 30, 2012 and 2011 are as follows:


(In millions of won)	2012			2011
Accounts receivable – trade	￦	(46,986	)		(93,441	)
Accounts receivable – other		280,449			751,677
Accrued income		2,715			16,783
Advance payments		20,902			20,093
Prepaid expenses		19,024			35,322
Proxy paid V.A.T.		(570	)		42,227
Inventories		(46,269	)		(48,883	)
Long-term accounts receivables—other		4,699			463,128
Guarantee deposits		13,837			(819	)
Accounts payable – trade		143,264			139,666
Accounts payable – other		(338,120	)		(497,886	)
Advanced receipts		(1,512	)		19,751
Withholdings		120,170			101,301
Deposits received		(4,097	)		—
Accrued expenses		187,666			34,161
Advanced V.A.T.		8,219			(124,336	)
Unearned revenue		(33,267	)		(27,694	)
Provisions		(88,311	)		2,601
Long-term provisions		(18,377	)		119,276
Plan assets		189			7,685
Retirement benefit payment		(27,410	)		(21,465	)
Others		1,186			21,197

	￦	197,401			960,344

(3)

Significant non-cash transactions for the six-month periods ended June 30, 2012 and 2011 are as follows:


(In millions of won)	2012		2011
Accounts payable—other related to acquisition of tangible assets and others	￦	8,010		216,301

34.

Subsequent Events

(1)

Interim Dividends

On July 25, 2012, the Board of Directors of the Parent Company resolved to pay interim cash dividends of ￦1,000 per share totaling ￦69,695 million (Market dividend rate: 0.82%). The ex-dividend date was June 30, 2012 and the interim dividends are expected to be paid within twenty days after the date of the Board of Directors’ resolution.

(2)

Transfer of Business and Merger of Broadband D&M Co., Ltd.

Transfer of business

On July 13, 2012, shareholders of Broadband D&M Co., Ltd., a subsidiary of the Parent Company, resolved to transfer its power source equipment management, corporate service opening and maintenance tasks for SK Broadband Co., Ltd. to Network O&S Co., Ltd., a subsidiary of the Parent Company at extraordinary shareholders meeting.

Merger

On July 26, 2012, the board of directors of SK Broadband Co., Ltd. resolved to merge Broadband D&M Co., Ltd., a subsidiary of the Parent Company, into SK Broadband Co., Ltd., a subsidiary of the Parent Company.

These subsequent events represent transactions under common control of the SK Telecom consolidated group that have no impact on the consolidated financial statements of the Group.

SK TELECOM CO., LTD.

Condensed Separate Interim Financial Statements

(Unaudited)

June 30, 2012

(With Independent Auditors’ Review Report Thereon)

Contents


	Page

Independent Auditors’ Review Report		1

Unaudited Condensed Separate Interim Statements of Financial Position		3

Unaudited Condensed Separate Interim Statements of Income		5

Unaudited Condensed Separate Interim Statements of Comprehensive Income		7

Unaudited Condensed Separate Interim Statements of Changes in Equity		8

Unaudited Condensed Separate Interim Statements of Cash Flows		9

Notes to the Unaudited Condensed Interim Separate Financial Statements		12

Independent Auditors’ Review Report

Based on a report originally issued in Korean

To The Board of Directors and Shareholders

SK Telecom Co., Ltd.:

Reviewed financial statements

We have reviewed the accompanying condensed separate interim financial statements of SK Telecom Co., Ltd. (the “Company”), expressed in Korean won, which comprise the condensed separate interim statement of financial position as of June 30, 2012, the condensed separate interim statements of income and comprehensive income for the three-month and six-month periods ended June 30, 2012, the condensed separate interim statements of changes in equity and cash flows for the six-month period ended June 30, 2012, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the Condensed Interim Financial Statements

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

Auditors’ review responsibility

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

Conclusion

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

Other matters

The condensed separate statements of income, comprehensive income for the three-month and six-month periods ended June 30, 2011, and the condensed separate statements of changes in equity and cash flows for the six-month period ended June 30, 2011, were reviewed by other auditors and their report thereon, dated August 26, 2011, stated that nothing has come to their attention that causes them to believe that the condensed separate interim financial statements referred to above were not prepared, in all material respects, in accordance with K-IFRS No.1034, ‘Interim Financial Reporting’.

In addition, the separate statement of financial position of the Company as of December 31, 2011, 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 other auditors and their report thereon, dated March 13, 2012, expressed an unqualified opinion. The accompanying separate statement of financial position of the Company as of December 31, 2011, presented for comparative purposes, is not different from that audited by other auditors in all material respects.

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

KPMG Samjong Accounting Corp.

Seoul, Korea

August 6, 2012

This report is effective as of August 6, 2012, the review report date. Certain subsequent events or circumstances, which may occur between the review report date and the time of reading this report, could have a material impact on the accompanying condensed separate interim financial statements and notes thereto. Accordingly, the readers of the review report should understand that the above review report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

SK TELECOM CO., LTD.

Unaudited Condensed Separate Statements of Financial Position

As of June 30, 2012 and December 31, 2011


(In millions of won)	Note		June 30, 2012		December 31, 2011
Assets
Current Assets:
Cash and cash equivalents		25,26	￦	369,378		895,558
Short-term financial instruments		4,25,26		162,000		627,500
Short-term investment securities		6,25,26		49,945		90,573
Accounts receivable—trade, net		5,25,26,27		1,336,186		1,282,234
Short-term loans, net		5,25,26,27		75,381		88,236
Accounts receivable—other, net		5,25,26,27		419,595		774,221
Prepaid expenses				68,286		79,668
Derivative financial assets		16,25,26		80,187		83,708
Inventories, net				14,398		8,407
Advanced payments and other		5,25,26		14,825		17,972

Total Current Assets				2,590,181		3,948,077

Non-Current Assets:
Long-term financial instruments		4,25,26		7,569		7,569
Long-term investment securities		6,25,26		1,219,646		1,312,438
Investments in subsidiaries and associates		7		7,972,909		4,647,506
Property and equipment, net		8,27		6,249,883		6,260,169
Investment property		9		30,701		30,699
Goodwill		10		1,306,236		1,306,236
Intangible assets		11		2,285,113		2,364,795
Long-term loans, net		5,25,26,27		65,687		75,282
Long-term accounts receivable—other		5,25,26		694		5,393
Long-term prepaid expenses				21,921		20,939
Guarantee deposits		5,25,26,27		146,343		155,389
Long-term derivative financial assets		16,25,26		130,183		104,897
Deferred tax assets		23		244,017		280,380
Other non-current assets				778		758

Total Non-Current Assets				19,681,680		16,572,450

Total Assets			￦	22,271,861		20,520,527

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Unaudited Condensed Separate Statements of Financial Position, Continued

As of June 30, 2012 and December 31, 2011


(In millions of won)	Note		June 30, 2012			December 31, 2011
Liabilities and Equity
Current Liabilities:
Short-term borrowings		12,25,26	￦	200,000			—
Current portion of long-term debt, net		12,13,25,26		331,235			1,044,518
Accounts payable—other		25,26,27		1,084,184			1,361,473
Withholdings		25,26		432,890			330,674
Accrued expenses		25,26		598,332			468,313
Income tax payable		23		150,675			277,836
Unearned revenue				258,313			282,891
Derivative financial liabilities		16,25,26		—			4,645
Provisions		14		573,005			656,597
Advanced receipt and other				38,615			40,059

Total Current Liabilities				3,667,249			4,467,006

Non-Current Liabilities:
Debentures, net, excluding current portion		12,25,26		3,344,084			2,590,630
Long-term borrowings, excluding current portion		12,25,26		2,103,743			115,330
Long-term payables—other		13,25,26		702,780			840,974
Long-term unearned revenue				205,540			212,172
Defined benefit obligation		15		40,173			26,740
Long-term derivative financial liabilities		16,25,26		23,529			—
Long-term provisions		14		114,749			134,264
Other non-current liabilities		25,26,27		164,356			167,109

Total Non-Current Liabilities				6,698,954			4,087,219

Total Liabilities				10,366,203			8,554,225

Equity
Share capital		1,17		44,639			44,639
Share deficit		17,18		(236,160	)		(236,016	)
Retained earnings		19		11,822,198			11,837,185
Reserves		20		274,981			320,494

Total Equity				11,905,658			11,966,302

Total Liabilities and Equity			￦	22,271,861			20,520,527

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Unaudited Condensed Separate Statements of Income

For the three and six-month periods ended June 30, 2012 and 2011


	Note		June 30, 2012				June 30, 2011
(In millions of won except for per share data)			Three-month period ended		Six-month period ended		Three-month period ended		Six-month period ended
Operating revenue:		27
Revenue			￦	3,068,575		6,076,014		3,189,593		6,319,543
Other operating income		21		1,472		10,480		4,915		6,498

Sub-total				3,070,047		6,086,494		3,194,508		6,326,041

Operating expense:		27
Labor cost				118,460		288,195		110,355		287,817
Commissions paid				1,449,868		2,721,222		1,282,394		2,522,309
Depreciation and amortization				400,316		801,272		430,230		843,885
Network interconnection				206,661		432,412		249,280		491,775
Leased line				103,448		210,884		96,271		194,123
Advertising				61,683		97,881		59,336		94,724
Rent				80,967		161,855		74,872		153,972
Cost of products that have been resold				55,310		117,255		42,697		83,607
Other operating expenses		21		247,775		452,258		218,035		424,810

Sub-total				2,724,488		5,283,234		2,563,470		5,097,022

Operating income				345,559		803,260		631,038		1,229,019

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Unaudited Condensed Separate Statements of Income, Continued

For the three and six-month periods ended June 30, 2012 and 2011


	Note		June 30, 2012				June 30, 2011
(In millions of won except for per share data)			Three-month period ended		Six-month period ended		Three-month period ended		Six-month period ended
Finance income		22	￦	35,099		82,839		64,018		315,549
Finance costs		22		84,925		164,916		47,639		108,233
Gain on disposal of investments in subsidiaries and associates		7		—		80,482		1,869		1,990
Impairment loss on investments in associates		7		—		72,096		—		—

Income before income tax				295,733		729,569		649,286		1,438,325

Income tax expense		23		64,367		153,231		174,899		403,267

Net income for the period			￦	231,366		576,338		474,387		1,035,058

Basic earnings per share		24	￦	3,320		8,269		6,673		14,559

Diluted earnings per share		24	￦	3,131		7,978		6,262		13,811

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Unaudited Condensed Separate Statements of Comprehensive Income

For the three and six-month periods ended June 30, 2012 and 2011


	Note		June 30, 2012						June 30, 2011
(In millions of won)			Three-month period ended			Six-month period ended			Three-month period ended			Six-month period ended
Net income for the period			￦	231,366			576,338			474,387			1,035,058

Other comprehensive income(loss)
Net change in fair value of available-for-sale financial assets		20		(36,577	)		(48,276	)		(95,379	)		(180,734	)
Gains (losses) on valuation of derivatives		16,20		17,086			2,763			(32,493	)		6,227
Actuarial losses, net on defined benefit obligations		15,19		(1,202	)		(5,887	)		(1,541	)		(5,620	)

				(20,693	)		(51,400	)		(129,413	)		(180,127	)

Total comprehensive income			￦	210,673			524,938			344,974			854,931

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Unaudited Condensed Separate Statements of Changes in Equity

For the six-month periods ended June 30, 2012 and 2011


			Share premium											Retained earnings			Reserves			Total equity
(In millions of won)	Share capital		Paid-in surplus		Treasury stock			Loss on disposal of treasury stock			Other			Retained earnings			Reserves			Total equity
Balance, January 1, 2011	￦	44,639		2,915,887		(2,202,439	)		(15,875	)		(722,216	)		10,824,356			736,606			11,580,958
Cash dividends		—		—		—			—			—			(597,198	)		—			(597,198	)
Total comprehensive income
Net income		—		—		—			—			—			1,035,058			—			1,035,058
Other comprehensive loss		—		—		—			—			—			(5,620	)		(174,507	)		(180,127	)

Balance, June 30, 2011	￦	44,639		2,915,887		(2,202,439	)		(15,875	)		(722,216	)		11,256,596			562,099			11,838,691

Balance, January 1, 2012	￦	44,639		2,915,887		(2,410,451	)		(18,855	)		(722,597	)		11,837,185			320,494			11,966,302
Cash dividends		—		—		—			—			—			(585,438	)		—			(585,438	)
Transfer of business		—		—		—			—			(144	)		—			—			(144	)
Total comprehensive income
Net income		—		—		—			—			—			576,338			—			576,338
Other comprehensive loss		—		—		—			—			—			(5,887	)		(45,513	)		(51,400	)

Balance, June 30, 2012	￦	44,639		2,915,887		(2,410,451	)		(18,855	)		(722,741	)		11,822,198			274,981			11,905,658

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Unaudited Condensed Separate Statements of Cash Flows

For the six-month periods ended June 30, 2012 and 2011


(In millions of won)	Note		2012			2011
Cash flows from operating activities:
Cash generated from operating activities
Net income for the period			￦	576,338			1,035,058
Adjustments for income and expenses		29		1,136,953			1,154,167
Changes in assets and liabilities related to operating activities		29		119,367			1,185,950

Sub-total				1,832,658			3,375,175
Interest received				31,315			68,835
Dividends received				25,780			26,472
Interest paid				(127,328	)		(102,875	)
Income tax paid				(227,427	)		(336,969	)

Net cash provided by operating activities				1,534,998			3,030,638

Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term investment securities, net				50,179			147,000
Decrease in short-term financial instruments, net				465,500			—
Collection of short-term loans				138,028			88,506
Proceeds from disposal of long-term investment securities				14,185			214,512
Proceeds from disposal of investments in subsidiaries and associates				88,602			6,529
Proceeds from disposal of property and equipment				763			1,204
Proceeds from disposal of intangible assets				2,195			2,118
Collection of long-term loans				5,348			7,037
Proceeds from disposal of other non-current assets				—			386

Sub-total				764,800			467,292
Cash outflows for investing activities:
Increase in short-term financial instruments, net				—			(205,500	)
Increase in short-term loans				(120,000	)		(124,974	)
Increase in long-term financial instruments				—			(7,500	)
Acquisition of long-term investment securities				(3,305	)		(215,158	)

SK TELECOM CO., LTD.

Unaudited Condensed Separate Statements of Cash Flows

For the six-month periods ended June 30, 2012 and 2011


Acquisition of investments in subsidiaries and associates	(3,082,544	)	(38,288	)
Acquisition of property and equipment	(1,097,496	)	(1,096,007	)
Acquisition of intangible assets	(21,897	)	(15,586	)
Increase in long-term loans	(22	)	(562	)
Cash outflows from transfer of business	(3,387	)	—
Increase in other non-current assets	(19	)	—

Sub-total	(4,328,670	)	(1,703,575	)

Net cash used in investing activities	(3,563,870	)	(1,236,283	)

See accompanying notes to the condensed separate interim financial statements.

SK TELECOM CO., LTD.

Unaudited Condensed Separate Statements of Cash Flows, Continued

For the six-month periods ended June 30, 2012 and 2011


(In millions of won)	Note	2012			2011
Cash flows from financing activities:
Cash inflows from financing activities:
Proceeds from short-term borrowings		￦	700,000			—
Proceeds from long-term borrowings			1,986,800			—
Issuance of debentures			369,970			—
Cash inflows from settlement of derivatives			1,517			—

Sub-total			3,058,287			—
Cash outflows for financing activities:
Repayment of short-term borrowings			(500,000	)		—
Repayment of current portion of long-term debt			(92,158	)		(520,000	)
Repayment of debentures			(372,539	)		(332,160	)
Payment of cash dividends			(585,437	)		(597,198	)
Cash outflows from settlement of derivatives			(5,415	)		(17,694	)

Sub-total			(1,555,549	)		(1,467,052	)

Net cash provided by (used in) financing activities			1,502,738			(1,467,052	)

Net increase (decrease) in cash and cash equivalents			(526,134	)		327,303
Cash and cash equivalents at beginning of the period			895,558			357,470
Effects of exchange rate changes on cash and cash equivalents			(46	)		(1	)

Cash and cash equivalents at end of the period		￦	369,378			684,772

See accompanying notes to the condensed separate interim financial statements.

1.	Reporting Entity

SK Telecom Co., Ltd. (“the Company”) was incorporated in June 1984 under the laws of Republic of Korea (“Korea”) to engage in providing cellular telephone communication services in Korea. The Company mainly provides wireless telecommunications in Korea. The Company’s common shares and depositary receipts (DRs) are listed on the Stock Market of Korea Exchange, the New York Stock Exchange and the London Stock Exchange. As of June 30, 2012, the Company’s total issued shares are held by the following:


	Number of shares		Percentage of total shares issued (%)
SK Holdings, Co., Ltd.		20,363,452		25.22
Tradewinds Global Investors, LLC		3,241,956		4.01
Institutional investors and other minority stockholders		46,089,591		57.08
Treasury stock		11,050,712		13.69

Total number of shares		80,745,711		100.00

2.	Basis of Preparation

(1) Statement of compliance

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 Company’s 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 of and for the year ended December 31, 2011. These unaudited 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, ‘Consolidated and Separate Financial Statements’ presented by a parent, an investor in an associate or a venturer in a jointly controlled entity, in which the investments are accounted for on the basis of the direct equity interest rather than on the basis of the reported results and net assets of the investees.

2.	Basis of Preparation, Continued

(2) Use of estimates and judgments

The preparation of the unaudited 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 unaudited condensed separate interim financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements as of and for the year ended December 31, 2011.

(3) Common Control Transactions

SK Holdings Co, Ltd. (“the Ultimate Controlling Entity”) is the Ultimate Controlling Entity of the Company because it has de facto control of 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.

3.	Significant Accounting Policies

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

4.	Restricted Deposits

Deposits which are restricted in use as of June 30, 2012 and December 31, 2011 are summarized as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Short-term financial instruments (*)	￦	70,000		70,000
Long-term financial instruments (*)		7,569		7,569

	￦	77,569		77,569

(*)	These financial instruments include financial instruments restricted in use in relation to the various charitable contributions which are non-cancellable until maturity.

5.	Trade and Other Receivables

(1)

Details of trade and other receivables as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012
(In millions of won)	Gross amount		Allowances for impairment			Carrying amount
Current assets:
Accounts receivable—trade	￦	1,431,577		(95,391	)		1,336,186
Short-term loans		76,401		(1,020	)		75,381
Accounts receivable—other		462,236		(42,641	)		419,595
Accrued income		3,881		—			3,881

		1,974,095		(139,052	)		1,835,043
Non-current assets:
Long-term loans		89,190		(23,503	)		65,687
Long-term accounts receivable—other		694		—			694
Guarantee deposits		146,343		—			146,343

		236,227		(23,503	)		212,724

Total	￦	2,210,322		(162,555	)		2,047,767


	December 31, 2011
(In millions of won)	Gross amount		Allowances for impairment			Carrying amount
Current assets:
Accounts receivable—trade	￦	1,400,758		(118,524	)		1,282,234
Short-term loans		89,387		(1,151	)		88,236
Accounts receivable—other		802,581		(28,360	)		774,221
Accrued income		5,278		—			5,278

		2,298,004		(148,035	)		2,149,969
Non-current assets:
Long-term loans		98,886		(23,604	)		75,282
Long-term accounts receivable—other		5,393		—			5,393
Guarantee deposits		155,389		—			155,389

		259,668		(23,604	)		236,064

Total	￦	2,557,672		(171,639	)		2,386,033

5.	Trade and Other Receivables, Continued

(2)

The movement in allowance for doubtful accounts in respect of trade and other receivables during the six-month periods ended June 30, 2012 and 2011 was as follows:


	For the six-month period ended
(In millions of won)	June 30, 2012			June 30, 2011
Balance at January, 1	￦	171,639			210,996
Increase of bad debt		27,925			23,470
Reversal of allowance for doubtful accounts		(4,475	)		—
Write-off		(51,203	)		(31,008	)
Collection of receivables written-off		18,669			4,573

Balance at June, 30	￦	162,555			208,031

(3)

Details of trade and other receivables, overdue but not impaired, and impaired accounts receivable as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012						December 31, 2011
(In millions of won)	Accounts receivable - trade			Other receivables			Accounts receivable - trade			Other receivables
Accounts receivable	￦	1,025,466			714,393			944,178			1,072,199
Overdue but not impaired accounts receivable		37,464			—			24,880			—
Impaired accounts receivable		368,647			64,352			431,700			84,715

		1,431,577			778,745			1,400,758			1,156,914
Allowance for doubtful accounts		(95,391	)		(67,164	)		(118,524	)		(53,115	)

	￦	1,336,186			711,581			1,282,234			1,103,799

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

5.	Trade and Other Receivables, Continued

(4)

The aging of overdue but not impaired accounts receivable as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Less than 1 month	￦	15,225		4,229
1 ~ 3 months		5,331		6,979
3 ~ 6 months		5,650		3,336
More than 6 months		11,258		10,336

	￦	37,464		24,880

6.	Investment Securities

(1)

Details of short-term investment securities as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Beneficiary certificates (*)	￦	41,069		90,287
Current portion of long-term investment securities		8,876		286

	￦	49,945		90,573

(*)	The distributions arising from beneficiary certificates as of June 30, 2012, were accounted for as accrued income.

(2)

Details of long-term available-for-sale financial assets as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012			December 31, 2011
Equity securities:
Marketable equity securities	￦	1,052,372			1,095,747
Unlisted equity securities		18,737			15,903
Equity investments		131,622			175,466

		1,202,731			1,287,116
Debt securities:
Public bonds (*1)		401			401
Investment bonds (*2)		25,390			25,207

		25,791			25,608

Total		1,228,522			1,312,724
Less current portion of long-term investment securities		(8,876	)		(286	)

Long-term investment securities	￦	1,219,646			1,312,438

(*1) Details of maturity for the public bonds as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Less than 1 year	￦	45		45
1 ~ 5 years		356		356

	￦	401		401

(*2)

The Company classified convertible bonds of NanoEnTek, Inc. (carrying amount as of June 30, 2012: W 16,799 million), which were acquired during the year ended December 31, 2011, as financial assets at fair value through profit or loss. The difference between acquisition cost and fair value is accounted for as finance income (loss).

6.	Investment Securities, Continued

On February 2, 2012, SK Communications Co., Ltd, a subsidiary of the Company, disposed W 20,000 million of convertible securities issued by Etoos Co., Ltd. to Shinhan the 2nd Private Investment Company for W 19,000 million. In relation to this transaction, the Company recognized a gain on the disposal of available-for-sale financial assets of W 2,812 million.

7.	Investments in Subsidiaries and Associates

(1)

Investments in subsidiaries and associates as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Investments in subsidiaries	￦	3,376,985		3,382,939
Investments in associates		4,595,924		1,264,567

	￦	7,972,909		4,647,506

(2)

Details of investments in subsidiaries as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012						December 31, 2011
(In millions of won)	Number of shares		Ownership (%)		Carrying amount		Carrying amount
SK Telink Co., Ltd.		1,082,272		83.5	￦	144,740		144,740
Ntreev Soft Co., Ltd.(*1)		—		—		—		7,708
SK Broadband Co., Ltd.		149,638,354		50.6		1,242,246		1,242,247
PS&Marketing Corporation		46,000,000		100.0		213,934		213,934
Service Ace Co., Ltd.		4,385,400		100.0		21,927		21,927
Service Top Co., Ltd.		2,856,200		100.0		14,281		14,281
Network O&S Co., Ltd.		3,000,000		100.0		15,000		15,000
SK Planet Co., Ltd.		60,000,000		100.0		1,234,884		1,234,884
SK Telecom China Holdings Co., Ltd.		—		100.0		29,116		29,116
SKY Property Mgmt. Ltd.		22,980		60.0		264,850		264,850
SKT Vietnam PTE. Ltd.		180,476,700		73.3		26,264		26,264
SKT Americas, Inc.		122		100.0		65,379		65,379
YTK Investment Ltd.		—		100.0		52,123		52,123
Atlas Investment(*2)		—		100.0		52,241		50,486

					￦	3,376,985		3,382,939

7.	Investments in Subsidiaries and Associates, Continued

(*1)	During the six-month period ended June 30, 2012, the Company sold 2,064,970 shares (ownership interest of 63.7%) of investment in Ntreev Soft Co., Ltd. to NCsoft Corporation and recognized gain on disposal of W 80,482 million.

(*2)	During the six-month period ended June 30, 2012, the Company additionally invested W 1,754 million in Atlas Investment.

(3)

Details of investments in associates as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012						December 31, 2011
(In millions of won)	Number of shares		Ownership percentage (%)		Carrying amount		Carrying amount
SK Marketing & Company Co., Ltd.		5,000,000		50.0	￦	112,531		112,531
SK China Company Ltd.		720,000		22.5		47,830		47,830
SK USA, Inc.		49		49.0		5,498		5,498
HappyNarae Co., Ltd. (*1)		680,000		42.5		12,250		12,250
F&U Credit information Co., Ltd.		300,000		50.0		4,482		4,482
Korea IT Fund(*2)		190		63.3		220,957		220,957
Wave City Development Co., Ltd.(*3)		382,000		19.1		1,532		1,532
HanaSK Card Co., Ltd.		57,647,058		49.0		400,000		400,000
Daehan Kanggun BcN Co., Ltd.		1,461,486		29.0		8,340		8,340
NanoEnTek, Inc.(*3)		1,807,130		9.3		11,000		11,000
Health Connect Co., Ltd.		141,000		49.5		1,410		1,410
UNISK (Beijing) Information Technology Co., Ltd.		49		49.0		4,247		4,247
TR Entertainment		—		42.2		7,560		7,560
SK Industrial Development China Co., Ltd.		—		35.0		83,691		83,691
Packet One Network		1,151,556		28.2		137,751		137,751
SK Technology Innovation Company		9,800		49.0		85,873		85,873
Lightsquared Inc.(*3,4)		3,387,916		3.3		—		72,096
SK Hynix Inc.(*5)		146,100,000		21.1		3,374,726		—
SK MENA Investment B.V.(*6)		—		32.1		14,485		—
SK Latin America Investment S.A.(*7)		—		32.1		14,242		—
SK Wyverns Baseball Club Co., Ltd. and others		—		—		47,519		47,519

					￦	4,595,924		1,264,567

7.	Investments in Subsidiaries and Associates, Continued

(*1)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the six-month period ended June 30, 2012.

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

(*3)	Investments in these associates were classified as investments in associates as the Company has the ability to exercise significant influence on these associates through participation on their board of directors.

(*4)	The Company recognized impairment loss of W 72,096 million during the six-month period ended June 30, 2012.

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

(*6)	The Company acquired 32.1% of ownership interest of SK MENA Investment B.V. during the six-month period ended June 30, 2012.

(*7)	The Company acquired 32.1% of ownership interest of SK Latin America Investment S.A. during the six-month period ended June 30, 2012.

(4)

The market price of investments in listed subsidiaries as of June 30, 2012 and December 31, 2011 are as follows:

(In millions of won, except for share data)

June 30, 2012

December 31, 2011

Market
value per
share

Number of
shares

Market
price

Market
value per
share

Number of
shares

Market
price

SK Broadband Co., Ltd.

￦

2,915

149,638,354

436,196

3,460

149,638,354

517,749

8.	Property and Equipment

(1)

Property and equipment as of June 30, 2012 and December 31, 2011 are as follows:



	June 30, 2012										December 31, 2011
(In millions of won)	Acquisition cost		Accumulated depreciation			Accumulated impairment			Carrying amount		Carrying amount
Land	￦	414,055		—			—			414,055		409,696
Buildings		1,083,563		(423,968	)		—			659,595		676,095
Structures		594,103		(302,228	)		—			291,875		300,995
Machinery		16,227,782		(12,371,809	)		(12,531	)		3,843,442		3,581,275
Other		1,442,737		(833,049	)		—			609,688		640,317
Construction in progress		431,228		—			—			431,228		651,791

Total	￦	20,193,468		(13,931.054	)		(12,531	)		6,249,883		6,260,169

(2)

Changes in property and equipment for the six-month periods ended June 30, 2012 and 2011 are as follows:



	For the six-month period ended June 30, 2012
(In millions of won)	Beginning balance		*Acquisition(1)**		Disposal			Transfer			Depreciation			Impairment loss(*2)			Ending balance
Land	￦	409,696		3		(44	)		4,400			—			—			414,055
Buildings		676,095		340		(23	)		3,308			(20,125	)		—			659,595
Structures		300,995		2,808		(4	)		5,615			(17,539	)		—			291,875
Machinery		3,581,275		53,844		(442	)		833,129			(611,833	)		(12,531	)		3,843,442
Other		640,317		732,880		(1,068	)		(715,880	)		(46,561	)		—			609,688
Construction in progress		651,791		308,886		(810	)		(528,639	)		—			—			431,228

	￦	6,260,169		1,098,761		(2,391	)		(398,067	)		(696,058	)		(12,531	)		6,249,883

(*1)	Acquisition for the six-month period ended June 30, 2012 includes assets transferred of W 1,265 million in relation to the transfer of Imagine business from SK Planet Co., Ltd.

(*2)	The Company recognized impairment loss on property and equipment of W 12,531 million in relation to the Digital Multimedia Broadcasting service.

8.	Property and Equipment, Continued


	For the six-month period ended June 30, 2011
(In millions of won)	Beginning balance		Acquisition		Disposal			Transfer			Depreciation			Ending balance
Land	￦	402,702		2,109		(92	)		508			—			405,227
Buildings		686,645		14,749		(48	)		3,989			(19,301	)		686,034
Structures		242,004		6,774		(4	)		1,099			(15,805	)		234,068
Machinery		3,240,001		17,059		(1,211	)		605,631			(623,584	)		3,237,896
Other		521,499		609,904		(992	)		(454,068	)		(39,084	)		637,259
Construction in progress		376,896		642,601		(4,922	)		(221,801	)		—			792,774

	￦	5,469,747		1,293,196		(7,269	)		(64,642	)		(697,774	)		5,993,258

9.	Investment Property

(1)

Investment property as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012							December 31, 2011
(In millions of won)	Acquisition cost		Accumulated depreciation			Carrying amount		Carrying amount
Land	￦	9,259		—			9,259		9,001
Buildings		44,739		(23,297	)		21,442		21,698

	￦	53,998		(23,297	)		30,701		30,699

(2)

Changes in investment property for the six-month periods ended June 30, 2012 and 2011 are as follows:


	For the six-month period ended June 30, 2012
(In millions of won)	Beginning balance		Transfer		Depreciation			Ending balance
Land	￦	9,001		258		—			9,259
Buildings		21,698		488		(744	)		21,442

	￦	30,699		746		(744	)		30,701


	For the six-month period ended June 30, 2011
(In millions of won)	Beginning balance		Transfer			Depreciation			Ending balance
Land	￦	9,508		(507	)		—			9,001
Buildings		25,291		(1,086	)		(1,639	)		22,566

	￦	34,799		(1,593	)		(1,639	)		31,567

9.	Investment Property, Continued

(3)

Details of fair value of investment property as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012				December 31, 2011
(In millions of won)	Carrying amount		Fair value		Carrying amount		Fair value
Land	￦	9,259		57,490		9,001		51,731
Buildings		21,442		24,092		21,698		21,679

	￦	30,701		81,582		30,699		73,410

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

10.

Goodwill

Goodwill as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Goodwill related to acquisition of Shinsegi Telecom, Inc.	￦	1,306,236		1,306,236

11.

Intangible Assets

(1)

Intangible assets as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012										December 31, 2011
(In millions of won)	Acquisition cost		Accumulated amortization			Accumulated impairment			Carrying amount		Carrying amount
Frequency use rights	￦	2,837,385		(1,014,304	)		(2,907	)		1,820,174		1,889,102
Land use rights		30,413		(19,054	)		—			11,359		12,739
Industrial rights		31,217		(20,748	)		—			10,469		8,328
Development costs		124,545		(124,501	)		—			44		1,186
Facility usage rights		38,551		(24,258	)		—			14,293		15,058
Memberships(*1)		79,865		—			—			79,865		80,607
Other(*2)		1,423,991		(1,075,082	)		—			348,909		357,775

Total	￦	4,565,967		(2,277,947	)		(2,907	)		2,285,113		2,364,795

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

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

11.

Intangible Assets, Continued

(2)

Details of changes in intangible assets for the six-month periods ended June 30, 2012 and 2011 are as follows:


	For the six-month period ended June 30, 2012
(In millions of won)	Beginning balance		*Acquisition(1)**		Disposal			Transfer		Amortization			Impairment loss(*2)			Ending balance
Frequency use rights	￦	1,889,102		16,659		—			—		(82,680	)		(2,907	)		1,820,174
Land use rights		12,739		1,140		(80	)		—		(2,440	)		—			11,359
Industrial rights		8,328		3,624		—			—		(1,483	)		—			10,469
Development costs		1,186		—		—			—		(1,142	)		—			44
Facility usage rights		15,058		385		(41	)		13		(1,122	)		—			14,293
Memberships		80,607		—		(742	)		—		—			—			79,865
Other		357,775		8,298		(1,430	)		53,140		(68,874	)		—			348,909

	￦	2,364,795		30,106		(2,293	)		53,153		(157,741	)		(2,907	)		2,285,113

(*1)	Acquisition for the six-month period ended June 30, 2012 includes assets transferred of W 200 million in relation to the transfer of Imagine business from SK Planet Co., Ltd.

(*2)	The Company recognized impairment loss on intangible assets of W 2,907 million in relation to the frequency use rights of the discontinued Digital Multimedia Broadcasting service.


	For the six-month period ended June 30, 2011
(In millions of won)	Beginning balance		Acquisition		Disposal			Transfer			Amortization			Ending balance
Frequency use rights	￦	709,043		—		—			(470	)		(66,421	)		642,152
Land use rights		11,130		2,547		(98	)		—			(1,979	)		11,600
Industrial rights		14,748		843		—			322			(1,713	)		14,200
Development costs		4,898		—		—			—			(1,813	)		3,085
Facility usage rights		16,702		248		(71	)		31			(1,113	)		15,797
Memberships		90,108		2,981		(2,383	)		—			—			90,706
Other		578,340		8,967		—			66,899			(143,299	)		510,907

	￦	1,424,969		15,586		(2,552	)		66,782			(216,338	)		1,288,447

11.

Intangible Assets, Continued

(3)

The carrying amount and residual useful lives of frequency usage rights as of June 30, 2012 are as follows:



(In millions of won)	Amount		Description	Residual useful lives
W-CDMA license	￦	437,800	Frequency use rights relating to W-CDMA service		(*1)
W-CDMA license		73,399	Frequency use rights relating to W-CDMA service		(*2)
800MHz license		364,896	Frequency use rights relating to CDMA and LTE service		(*3)
1.8GHz license		928,203	Frequency use rights relating to LTE service		(*4)
WiBro license		—	WiBro service		(*5)
WiBro license		15,876	WiBro service		(*6)

	￦	1,820,174

(*1)

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

(*2)

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

(*3)

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

(*4)

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

11.

Intangible Assets, Continued

(*5)	The WiBro license was used for seven years from the purchase date when the Company started its commercial WiBro services on March 30, 2005. The amortization is completed during the six-month period ended June 30, 2012 as the useful life matures.

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

12.

Borrowings and Debentures

(1)

Short-term borrowings as of June 30, 2012 and December 31, 2011 are as follows:

(In millions of won)

Type

Annual interest
rate (%)

Maturity

June 30,
2012

December 31,
2011

Commercial paper

3.43

Jul. 26, 2012

￦

200,000

—

(2)

Long-term borrowings as of June 30, 2012 and December 31, 2011 are as follows:

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

Lender

Annual interest
rate (%)

Maturity

June 30, 2012

December 31,
2011

Bank of Communications (*1,2)

6M Libor + 0.29

Oct. 10, 2013

￦34,614
(USD 30,000

)

34,599

(USD 30,000

)

Bank of China(*1)

6M Libor + 0.29

Oct. 10, 2013

23,076
(USD 20,000

)

23,066

(USD 20,000

)

DBS Bank(*1)

6M Libor + 0.29

Oct. 10, 2013

28,845
(USD 25,000

)

28,833

(USD 25,000

)

SMBC(*1)

6M Libor + 0.29

Oct. 10, 2013

28,845
(USD 25,000

)

28,832

(USD 25,000

)

Kookmin Bank and 13 others

4.48

Feb. 14, 2015

2,000,000

—

2,115,380

115,330

Less present value discount on long-term borrowings

(11,637

)

—

￦2,103,743

115,330

(*1)	As of June 30, 2012, 6M Libor rate is 0.73%.

12.

Borrowings and Debentures, Continued

(*2)	As of June 30, 2012, the Company’s lender is Bank of Communications as Credit Agricole transferred the loans to Bank of Communications during the six-month period ended June 30, 2012.

(3)

Debentures as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won, thousands of U.S. dollars, thousands of Japanese Yen, thousands of other currencies)
	Purpose	Maturity		Annual interest rate (%)			June 30, 2012			December 31, 2011
Unsecured private bonds	Refinancing		2016		5.00	￦		200,000			200,000
Unsecured private bonds	fund		2013		4.00			200,000			200,000
Unsecured private bonds			2014		5.00			200,000			200,000
Unsecured private bonds (*1)			2012		3M Euro Yen Libor + 0.55			181,724 (JPY 12,500,000	)		185,645 (JPY 12,500,000	)
Unsecured private bonds	Other fund		2015		5.00			200,000			200,000
Unsecured private bonds			2018		5.00			200,000			200,000
Unsecured private bonds			2013		6.92			250,000			250,000
Unsecured private bonds			2016		5.54			40,000			40,000
Unsecured private bonds			2012		3M Euro Yen Libor + 2.50			—			44,555 (JPY 3,000,000	)
Unsecured private bonds			2016		5.92			230,000			230,000
Unsecured private bonds			2012		3M Euro Yen Tibor + 2.50			—			74,258 (JPY 5,000,000	)
Unsecured private bonds	Operating fund		2016		3.95			110,000			110,000
Unsecured private bonds			2021		4.22			190,000			190,000
Foreign global bonds			2027		6.63			461,520 (USD 400,000	)		461,320 (USD 400,000	)
Exchangeable bonds (*4,5)	Refinancing fund		2014		1.75			392,112 (USD 332,528	)		397,886 (USD 332,528	)
Floating rate notes (*2)	Operating fund		2012		3M Libor + 3.15			—			253,726 (USD 220,000	)
Floating rate notes (*2)			2014		3M Libor + 1.60			288,450 (USD 250,000	)		288,325 (USD 250,000	)
Floating rate notes (*3)			2014		SOR rate + 1.20			58,534 (SGD 65,000	)		57,619 (SGD 65,000	)

12.

Borrowings and Debentures, Continued


Swiss unsecured private bonds	2017	1.75		358,434 (CHF 300,000	)	—

Sub-total				3,560,774		3,583,334
Less discounts on bonds				(35,014	)	(37,329	)

				3,525,760		3,546,005
Less current portion of bonds				(181,676	)	(955,375	)

			￦	3,344,084		2,590,630

(*1)	As of June 30, 2012, 3M EURO Yen Libor rate is 0.19%.

(*2)	As of June 30, 2012, 3M Libor rate is 0.46%.

(*3)	As of June 30, 2012, SOR rate is 0.38%.

(*4)

As of June 30, 2012, exchangeable bonds are classified as financial liabilities at fair value through profit or loss. As of December 31, 2011, the exchangeable bonds were classified as current liabilities as the bond holders would be eligible to redeem their notes at 100% of the principal amount on April 7, 2012. However, as of June 30, 2012, the exchangeable bonds are reclassified as non-current liabilities as the bond holders have not exercised and have lost their early redemption right.

12.

Borrowings and Debentures, Continued

(*5)

On April 7, 2009, the Company issued exchangeable bonds with a maturity of five years in the principal amount of USD 332,528,000 for USD 326,397,463 with a coupon rate of 1.75%. As of June 30, 2012, fair value of the exchangeable bonds is USD 352,978,472. The exchange price could be adjusted and the exchange price is ￦199,280 with the exchange rate of ￦1,383.40 per USD 1.

The Company may redeem the principal amount after 3 years from the issuance date if the market price exceeds 130% of the exchange price during a predetermined period. On the other hand, the bond holders may redeem their notes at 100% of the principal amount on April 7, 2012 (3 years from the issuance date). The exchange right may be exercised during the period from May 18, 2009 to March 24, 2014 and the number of common shares that can be exchanged as of June 30, 2012 is 2,308,406 shares.

Exchange of notes to common shares may be prohibited under the Telecommunications Law or other legal restrictions which restrains fo reign governments, individuals and entities from owning more than 49% of the Company’s voting stock. If such 49% ownership limitation is violated due to the exercise of exchange rights, the Company will pay the bond holder a cash settlement which will be determined at the average price of one day after a holder exercises its exchange right or the weighted average price for the following five or twenty business days. Unless either previously redeemed or exchanged, the notes are redeemable at 100% of the principal amount at maturity.

In accordance with a resolution of the Board of Directors on February 9, 2012, the exchange price has changed from ￦209,853 to ￦199,280 and the number of common shares that can be exchanged was changed from 2,192,102 shares to 2,308,406 shares due to the payment of periodic dividends. During the six-month period ended June 30, 2012, no exchange was made.

(4)

Details of issuance or repayments of borrowings and debentures for the six-month period ended June 30, 2012 are as follows:


(In millions of won, thousands of Japanese yen)
Lender	Annual interest rate (%)	Maturity		Coupon value		Carrying amount
January 1, 2012				￦	3,698,663		3,661,334
Issues:
Short-term borrowings	4.29		2013		500,000		500,000
Commercial paper	3.43		2012		200,000		200,000
Long-term borrowings	4.48		2015		2,000,000		2,000,000

12.

Borrowings and Debentures, Continued


Swiss unsecured private bonds	1.75	2017		363,552 (CHF 300,000	)	363,552 (CHF 300,000	)
Commissions and others	—	—		—		(15,201	)
Redemption
Short-term borrowings(*1)	4.29	2013		(500,000	)	(500,000	)
Unsecured private bonds	3M Euro Yen Libor + 2.50	2012		(44,555 (JPY 3,000,000	) )	(44,555 (JPY 3,000,000	) )
Unsecured private bonds	3M Euro Yen Tibor + 2.50	2012		(74,258 (JPY 5,000,000	) )	(74,258 (JPY 5,000,000	) )
Floating rate notes	3M Libor + 3.15	2012		(253,726 (USD 220,000	) )	(253,726 (USD 220,000	) )
Other:
Foreign translation gain (loss) and others(*2)				(13,522	)	(7,643	)

June 30, 2012			￦	5,876,154		5,829,503

(*1)	For the six-month period ended June 30, 2012, the Company early redeemed the short-term borrowings while the contractual maturity is February 14, 2013.

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

13.

Long-term Payables—other

(1)


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

Present value of long-term payables – other at the time of acquisition		49,363			197,190			679,453			8,009			934,015

13.

Long-term Payables—other, Continued


Nominal value		52,600		208,250		746,250		—		1,007,100
Present value discount on long-term payables—other		(3,237	)	(11,060	)	(66,797	)	—		(81,094	)
Current portion of long-term payables—other		(17,533	)	—		(74,625	)	—		(92,158	)
Accumulated amortization of present value discount at December 31, 2011		2,065		1,925		3,136		—		7,126
Carrying amount as of December 31, 2011		33,895		199,115		607,964		—		840,974
Increase		—		—		—		8,650		8,650
Present value discount on long-term payables—other		—		—		—		(641	)	(641	)
Amortization of present value discount on long-term payables—other		300		1,233		1,770		52		3,355
Less current portion of long-term payables—other		(16,997	)	(66,481	)	(66,080	)	—		(149,558	)

Carrying amount at June 30, 2012	￦	17,198		133,867		543,654		8,061		702,780

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

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

(2)

The repayment schedule of long-term payables—other as of June 30, 2012 is as follows:


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

	￦	923,591

14.

Provisions

Change in provisions for the six-month periods ended June 30, 2012 and 2011 are as follows:


	For the six-month period ended June 30, 2012									As of June 30, 2012
(In millions of won)	Beginning balance		Increase		Utilization			Ending balance		Current		Non-current
Provision for handset subsidy	￦	762,238		262,346		(374,143	)		650,441		568,298		82,143
Provision for restoration		28,623		8,822		(132	)		37,313		4,707		32,606

	￦	790,861		271,168		(374,275	)		687,754		573,005		114,749


	For the six-month period ended June 30, 2011									As of June 30, 2011
(In millions of won)	Beginning balance		Increase		Utilization			Ending balance		Current		Non-current
Provision for handset subsidy	￦	732,042		470,235		(427,513	)		774,764		657,820		116,944
Provision for restoration		27,740		1,872		—			29,612		—		29,612

	￦	759,782		472,107		(427,513	)		804,376		657,820		146,556

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

15.

Defined Benefit Liabilities

(1)

Details of defined benefit liabilities as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012			December 31, 2011
Present value of defined benefit obligations	￦	110,003			95,359
Fair value of plan assets		(69,830	)		(68,619	)

	￦	40,173			26,740

(2)

Principal actuarial assumptions as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012			December 31, 2011
Discount rate for defined benefit obligations		4.53	%		4.53	%
Inflation rate		3.00	%		3.00	%
Expected rate of return on plan assets		3.67	%		4.74	%
Expected rate of salary increase		5.92	%		5.62	%

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

15.

Defined Benefit Liabilities, Continued

(3)

Changes in defined benefit obligations for the six-month periods ended June 30, 2012 and 2011 are as follows:


	For the six-month period ended
(In millions of won)	June 30, 2012			June 30, 2011
Beginning balance	￦	95,359			105,966
Current service cost		14,365			15,085
Interest cost		2,169			2,910
Actuarial gain or loss		8,380			4,989
Benefit paid		(11,113	)		(12,996	)
Others(*)		843			220

Ending balance	￦	110,003			116,174

(*)	Others include transfer to construction in progress and transfer from SK Planet Co., Ltd. in relation to the transfer of Imagine business.

(4)

Changes in plan assets for the six-month periods ended June 30, 2012 and 2011 are as follows:


	For the six-month period ended
(In millions of won)	June 30, 2012			June 30, 2011
Beginning balance	￦	68,619			84,584
Expected return on plan assets		1,044			1,911
Actuarial gain or loss		614			(631	)
Benefit paid		(1,636	)		(6,588	)
Contributions to the plan		1,000			—
Others(*)		189			—

Ending balance	￦	69,830			79,276

(*)	Others include transfer from SK Planet Co., Ltd. in relation to the transfer of Imagine business.

(5)

Expenses recognized in profit and loss for the six-month periods ended June 30, 2012 and 2011 are as follows:


	For the six-month period ended
(In millions of won)	June 30, 2012			June 30, 2011
Current service cost	￦	14,365			15,085
Interest cost		2,169			2,910
Expected return on plan assets		(1,044	)		(1,911	)

	￦	15,490			16,084

15.

Defined Benefit Liabilities, Continued

Expenses recognized in profit or loss are recognized in labor cost, research and development, and construction-in-progress.

(6)

Details of plan assets as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Equity instruments	￦	27		—
Debt instruments		15,788		—
Short-term financial instruments, etc.		54,015		68,619

	￦	69,830		68,619

Actual return on plan assets for the six-month periods ended June 30, 2012 and 2011 amounted to ￦1,659 million and ￦1,281 million, respectively.

16.

Derivative Instruments

(1)

Currency swap contracts under cash flow hedge accounting

The Company has entered into a floating-to-fixed cross currency swap contract with Credit Agricole Corporate & Investment Bank to hedge the foreign currency risk and the interest rate risk of U.S. dollar denominated long-term borrowings with face amounts totaling USD 100,000,000 borrowed on October 10, 2006. As of June 30, 2012, in connection with unsettled cross currency interest rate swap contracts to which cash flow hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to ￦3,082 million (net of tax effect totaling ￦484 million and foreign currency translation loss arising from U.S. dollar denominated long-term borrowings totaling ￦20,580 million) is accounted for as accumulated other comprehensive loss.

In addition, the Company has entered into a floating-to-fixed cross currency swap contract with HSBC and SMBC Bank to hedge the foreign currency risk and the interest rate risk of its unguaranteed Japanese yen denominated bonds with face amounts totaling JPY 12,500,000,000 issued on November 13, 2007. As of June 30, 2012, in connection with unsettled cross currency interest rate swap contracts to which cash flow hedge accounting is applied, an accumulated gain on valuation of derivatives amounting to ￦3,223 million (net of tax effect totaling ￦699 million and foreign currency translation loss arising from unguaranteed Japanese yen denominated bonds totaling ￦77,663 million) is accounted for as accumulated other comprehensive income.

In addition, the Company has entered into a fixed-to-fixed cross currency swap contract with Morgan Stanley and five other banks to hedge the foreign currency risk of unguaranteed U.S. dollar denominated bonds with face amounts totaling USD 400,000,000 at annual fixed interest rate of 6.63% issued on July 20, 2007. As of June 30, 2012, in connection with unsettled foreign currency swap contract to which cash flow hedge accounting is applied since May 12, 2010, an accumulated loss on valuation of derivatives amounting to ￦21,609 million (net of tax effect totaling ￦6,899 million and foreign currency translation gain arising from unguaranteed U.S. dollar denominated bonds totaling ￦3,932 million) is accounted for as accumulated other comprehensive loss. In connection with the currency swap contract, gain on valuation of currency swap which was incurred before application of hedge accounting, amounting to ￦ 129,806 million was recognized in profit or loss.

16.

Derivative Instruments, Continued

In addition, the Company has entered into a floating-to-fixed cross currency swap contract with DBS Bank and Citi Bank to hedge the foreign currency risk and the interest rate risk of its unguaranteed U.S. dollar denominated bonds with face amounts totaling USD 250,000,000 issued on December 15, 2011. As of June 30, 2012, in connection with unsettled cross currency interest rate swap contract, an accumulated gain on valuation of derivatives amounting to ￦6,321 million (net of tax effect totaling ￦2,018 million and foreign currency translation gain arising from unguaranteed U.S. dollar denominated bonds totaling ￦1,160 million) is accounted for as other comprehensive income.

In addition, the Company has entered into a floating-to-fixed cross currency swap contract with United Overseas Bank to hedge the foreign currency risk and the interest rate risk of its Singapore dollar denominated bonds with face amounts totaling SGD 65,000,000 issued on December 15, 2011. As of June 30, 2012, in connection with unsettled cross currency interest rate swap contract, an accumulated loss on valuation of derivatives amounting to ￦229 million (net of tax effect totaling ￦73 million and foreign currency translation loss arising from unguaranteed Singapore dollar denominated bonds totaling ￦1,063 million) is accounted for as accumulated other comprehensive loss.

In addition, the Company has entered into a fixed-to-fixed cross currency swap contract with Citi Bank and five other banks to hedge the foreign currency risk of its Swiss Franc denominated bonds with face amounts totaling CHF 300,000,000 issued on June 12, 2012. As of June 30, 2012, in connection with unsettled cross currency interest rate swap contract, an accumulated loss on valuation of derivatives amounting to ￦13,983 million (net of tax effect totaling ￦4,464 million and foreign currency translation gain arising from unguaranteed Swiss Franc denominated bonds totaling ￦5,082 million) is accounted for as accumulated other comprehensive loss.

(2)

As of June 30, 2012, fair values of above derivatives recorded in assets or liabilities and details of derivative instruments are as follows:


(In millions of won, thousands of U.S. dollars, Japanese yen, and Singapore dollars)				Fair value
	Hedged item	Amount	Duration of Contract	Designated as Cash Flow Hedge
Current assets:
Floating-to-fixed cross currency swap	Japanese yen denominated bonds	JPY 12,500,000	Nov. 13, 2007 ~ Nov. 13, 2012	￦	80,187
Non-current assets:
Floating-to-fixed cross currency swap	U.S. dollar denominated long-term borrowings	USD 100,000	Oct. 10, 2006 ~ Oct. 10, 2013		17,014
Fixed-to-fixed cross currency swap	U.S. dollar denominated bonds	USD 400,000	Jul. 20, 2007 ~ Jul. 20, 2027		105,230
Floating-to-fixed cross currency swap	U.S. dollar denominated bonds	USD 250,000	Dec. 15, 2011 ~ Dec. 12, 2014		7,179
Floating-to-fixed cross currency swap	Singapore dollar denominated bonds	SGD 65,000	Dec. 15, 2011 ~ Dec. 12, 2014		760

Total assets				￦	210,370

Non-current liabilities:
Fixed-to-fixed cross currency swap	Swiss Franc denominated bonds	CHF 300,000	Jun. 12, 2012 ~ Jun. 12, 2017		23,529

Total liabilities				￦	23,529

17.

Share Capital and Share Premium (Deficit)

The Company’s outstanding share capital consists entirely of common stock with a par value of W 500. The number of authorized, issued and outstanding common shares and share premium as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won, except for share data)	June 30, 2012			December 31, 2011
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
Share premium:
Paid-in surplus		2,915,887			2,915,887
Treasury stock		(2,410,451	)		(2,410,451	)
Loss on disposal of treasury stock		(18,855	)		(18,855	)
Others(*2)		(722,741	)		(722,597	)

	￦	(236,160	)		(236,016	)

(*1)

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

(*2)	Others represent the difference between net assets and considerations paid in relation to the transfer of Imagine business from SK Planet Co., Ltd., a subsidiary.

There were no changes in share capital for the six-month period ended June 30, 2012 and for the year ended December 31, 2011.

18.

Treasury Stock

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

18.

Treasury Stock, Continued

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

As a result of these treasury stock transactions, as of June 30, 2012 and December 31, 2011, the Company has 11,050,712 shares of treasury stock at W 2,410,451 million.

19.

Retained Earnings

(1)

Retained earnings as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Appropriated:	￦
Legal reserve		22,320		22,320
Reserve for research & manpower development		220,000		535,595
Reserve for business expansion		9,106,138		8,009,138
Reserve for technology development		1,901,300		1,524,000

		11,249,758		10,091,053
Unappropriated		572,440		1,746,132

	￦	11,822,198		11,837,185

(2)

Legal reserve

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

(3)

Reserve for research & manpower development

20.

Reserves

(1)

Details of reserves as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012			December 31, 2011
Net change in fair value of available-for-sale financial assets	￦	304,340			352,616
Losses on valuation of derivatives		(29,359	)		(32,122	)

	￦	274,981			320,494

(2)

Change in reserves for the six-month periods ended June 30, 2012 and 2011 are as follows:


(In millions of won)	Loss on valuation of available-for- sale financial assets			Loss on valuation of derivatives			Total
Balance at January 1, 2011	￦	803,075			(66,469	)		736,606
Changes		(235,014	)		8,728			(226,286	)
Tax effect		54,280			(2,501	)		51,779

Balance at June 30, 2011		622,341			(60,242	)		562,099

Balance at January 1, 2012		352,616			(32,122	)		320,494
Changes		(63,689	)		3,645			(60,044	)
Tax effect		15,413			(882	)		14,531

Balance at June 30, 2012	￦	304,340			(29,359	)		274,981

21.

Other Operating Income and Expenses

Details of other operating income and expenses for the three-month and six-month periods ended June 30, 2012 and 2011 are as follows:


	2012				2011
(In millions of won)	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 Income:
Reversal of allowance for doubtful accounts	￦	173		4,475		—		—
Gain on disposal of property and equipment and intangible assets		127		358		741		856
Others		1,172		5,647		4,174		5,642

	￦	1,472		10,480		4,915		6,498

21.

Other Operating Income and Expenses, Continued


Other Operating Expenses:
Communication expenses	￦	15,435	31,606	13,730	27,411
Utilities		33,316	65,316	28,782	56,552
Taxes and dues (*)		30,003	57,413	6,061	13,482
Repair		44,891	84,128	52,333	94,247
Research and development		48,778	92,523	58,031	115,767
Training		6,436	11,195	5,010	9,213
Bad debt for accounts receivables—trade		8,264	8,554	9,032	20,560
Supplies and other		11,614	22,815	15,139	27,523
Loss on disposal of property and equipment and intangible assets		1,323	2,085	6,789	7,355
Loss on impairment of property and equipment and intangible assets		15,438	15,438	—	—
Donations		28,213	40,482	21,315	44,594
Bad debt for accounts receivable—other		3,411	19,371	—	2,910
Others		653	1,332	1,813	5,196

	￦	247,775	452,258	218,035	424,810

(*)

Includes W 20.3 billion fined against the Company for allegedly colluding with other third parties to inflate the prices of handsets while advertising that the handsets are offered at a discount through subsidy plans. The Company appeal of the case is currently pending.

22.

Finance Income and Costs

(1)

Details of finance income and costs for the three-month and six-month periods ended June 30, 2012 and 2011 are as follows:


	2012				2011
(In millions of won)	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	￦	12,780		33,771		35,306		78,321
Dividends		613		25,780		—		26,472
Gain on foreign currency transactions		2,749		3,900		1,187		2,422
Gain on foreign currency translation		225		267		4,644		13,352
Gain on valuation of financial asset at fair value through profit or loss		823		183		—		1,150
Gain on disposal of long-term investment securities		—		470		—		158,495

22.

Finance Income and Costs, Continued


Gain on valuation of derivatives		—	—	825	2,088
Gain on settlement of derivatives		8,402	12,694	—	—
Gain on valuation of financial liability at fair value through profit or loss		9,507	5,774	22,056	33,249

	￦	35,099	82,839	64,018	315,549

Finance Costs:
Interest expense	￦	79,580	150,583	44,827	99,910
Loss on foreign currency transactions		2,477	3,850	660	2,867
Loss on foreign currency translation		7	117	145	318
Loss on disposal of long-term investment securities		1,629	9,134	2	2
Loss on settlement of derivatives		1,232	1,232	2,005	5,136

	￦	84,925	164,916	47,639	108,233

(2)

Details of interest income included in finance income for the three-month and six-month periods ended June 30, 2012 and 2011 are as follows:


	2012				2011
(In millions of won)	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	￦	7,365		19,790		9,916		20,007
Interest income on installment receivables and others		5,415		13,981		25,390		58,314

	￦	12,780		33,771		35,306		78,321

(3)

Details of interest expense included in finance costs for the three-month and six-month periods ended June 30, 2012 and 2011 are as follows:


	2012				2011
(In millions of won)	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	￦	33,807		37,272		7,059		16,787
Interest expense on debentures		38,345		79,247		36,840		78,268
Others		7,428		34,064		928		4,855

	￦	79,580		150,583		44,827		99,910

22.

Finance Income and Costs, Continued

(4)

Details of impairment losses for financial assets for the three-month and six-month periods ended June 30, 2012 and 2011 are as follows.


	2012				2011
(In millions of won)	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Bad debt for accounts receivable - trade	￦	8,264		8,554		9,032		20,560
Bad debt for accounts receivable - other		3,411		19,371		—		2,910

	￦	11,675		27,925		9,032		23,470

23.

Income Tax Expense

Income tax expense was recognized as current tax expense adjusted to changes in estimates related to prior periods, deferred tax expenses by origination and reversal, temporary differences, and income tax recognized in other comprehensive income. The Company’s effective tax rate is higher in 2011 than in 2012 primarily due to additional tax expense recognized as a result of the resolution of various tax matters during the finalization of Tax Authorities audits of the Company’s tax returns from 2005 to 2009

24.

Earnings per Share

(1)

Basic earnings per share

Basic earnings per share for the three-month and six-month periods ended June 30, 2012 and 2011 are calculated as follows:


	2012				2011
(In millions of won, shares)	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Net income for the period	￦	231,366		576,338		474,387		1,035,058
Weighted average number of common shares outstanding		69,694,999		69,694,999		71,094,999		71,094,999

Basic earnings per share (In won)	￦	3,320		8,269		6,673		14,559

The weighted average number of common shares outstanding for the three-month and six-month periods ended June 30, 2012 and 2011 are calculated as follows:

24.

Earnings per Share, Continued


				Weighted number of days				Weighted number of shares
(In shares)	Number of shares			Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30			Six-month period ended June 30
Outstanding common shares at January 1, 2012		80,745,711			91/91		182/182		80,745,711			80,745,711
Effect of treasury stock		(11,050,712	)		91/91		182/182		(11,050,712	)		(11,050,712	)

Number of shares at June 30, 2012		69,694,999							69,694,999			69,694,999


				Weighted number of days				Weighted number of shares
(In shares)	Number of shares			Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30			Six-month period ended June 30
Outstanding common shares at January 1, 2011		80,745,711			91/91		181/181		80,745,711			80,745,711
Effect of treasury stock		(9,650,712	)		91/91		181/181		(9,650,712	)		(9,650,712	)

Number of shares at June 30, 2011		71,094,999							71,094,999			71,094,999

(2)

Diluted earnings per share

Diluted net income per share for the three-month and six-month periods ended June 30, 2012 and 2011 are calculated as follows:


	2012				2011
(In millions of won, shares)	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Diluted net income for the period	￦	225,423		574,457		458,809		1,011,988
Diluted weighted average number of common shares outstanding		72,003,405		72,003,405		73,272,388		73,272,388

Diluted net income per share (In Won)	￦	3,131		7,978		6,262		13,811

Adjusted net income for the three-month and six-month periods ended June 30, 2012 and 2011 are calculated as follows:

24.

Earnings per Share, Continued


	2012						2011
(In millions of won)	Three-month period ended June 30			Six-month period ended June 30			Three-month period ended June 30			Six-month period ended June 30
Net income	￦	231,366			576,338			474,387			1,035,058
Effect of exchangeable bonds		(5,943	)		(1,881	)		(15,578	)		(23,070	)

Adjusted net income	￦	225,423			574,457			458,809			1,011,988

Adjusted weighted average number of common shares outstanding for the three-month and six-month periods ended June 30, 2012 and 2011 are calculated as follows:


	2012				2011
(In shares)	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Weighted average number of common shares outstanding		69,694,999		69,694,999		71,094,999		71,094,999
Effect of exchangeable bonds (*)		2,308,406		2,308,406		2,177,389		2,177,389

Adjusted weighted average number of common shares outstanding		72,003,405		72,003,405		73,272,388		73,272,388

(*)	Effect of exchangeable bonds represents weighted average number of common shares outstanding in respect of the exchangeable common shares of exchangeable bonds, which could be exchanged to treasury stock.

25.

Categories of Financial Instruments

(1)

Financial assets by categories as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012
(In millions of won)	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	￦	—		—		369,378		—		369,378
Financial instruments		—		—		169,569		—		169,569
Short-term investment securities		—		49,945		—		—		49,945
Long-term investment securities (*1)		16,800		1,202,846		—		—		1,219,646
Accounts receivable—trade		—		—		1,336,186		—		1,336,186
Loans and receivables (*2)		—		—		711,581		—		711,581
Derivative financial assets		—		—		—		210,370		210,370

	￦	16,800		1,252,791		2,586,714		210,370		4,066,675


	December 31, 2011
(In millions of won)	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	￦	—		—		895,558		—		895,558
Financial instruments		—		—		635,069		—		635,069
Short-term investment securities		—		90,573		—		—		90,573
Long-term investment securities (*1)		16,617		1,295,821		—		—		1,312,438
Accounts receivable—trade		—		—		1,282,234		—		1,282,234
Loans and receivables (*2)		—		—		1,103,799		—		1,103,799
Derivative financial assets		—		—		—		188,605		188,605

	￦	16,617		1,386,394		3,916,660		188,605		5,508,276

(*1)	The entire amount of long-term investment securities was designated as financial assets at fair value through profit or loss as the embedded derivative (conversion right option), which should be separated from the main contract, could not be separately measured.

25.

Categories of Financial Instruments, Continued

(*2)

Details of loans and receivables as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Short-term loans	￦	75,381		88,236
Accounts receivable—other		419,595		774,221
Accrued income		3,881		5,278
Long-term loans		65,687		75,282
Long-term accounts receivable—other		694		5,393
Guarantee deposits		146,343		155,389

	￦	711,581		1,103,799

(2)

Financial liabilities by categories as of June 30, 2012 and December 31, 2011 are as follows:


	June 30, 2012
(In millions of won)	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	￦	—		—		23,529		23,529
Borrowings		—		2,303,743		—		2,303,743
Debentures (*1)		392,112		3,133,648		—		3,525,760
Accounts payable – other and others (*2)		—		2,675,412		—		2,675,412

	￦	392,112		8,112,803		23,529		8,528,444

25.

Categories of Financial Instruments, Continued


	December 31, 2011
(In millions of won)	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	￦	—		—		4,645		4,645
Borrowings		—		115,330		—		115,330
Debentures(*1)		397,887		3,148,118		—		3,546,005
Accounts payable – other and others(*2)		—		2,901,123		—		2,901,123

	￦	397,887		6,164,571		4,645		6,567,103

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

(*2)

Details of accounts payable and other payables as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012		December 31, 2011
Accounts payable—other	￦	1,084,184		1,361,473
Withholdings		18		18
Accrued expenses		598,332		468,313
Current portion of long-term payables—other		149,558		89,144
Long-term payables—other		702,780		840,974
Other non-current liabilities		140,540		141,201

	￦	2,675,412		2,901,123

26.

Financial Risk Management

(1)

Financial risk management

The Company is exposed to credit risk, liquidity risk and market risk. Market risk is the risk related to the changes in market prices, such as foreign exchange rates, interest rates and equity prices. The Company implements a risk management system to monitor and manage these specific risks.

The Company’s financial assets under financial risk management consist of cash and cash equivalents, financial instruments, available-for-sale financial assets, trade and other receivables. Financial liabilities consist of trade and other payables, borrowings, and debentures.

1) Market risk

(i) Currency risk

26.

Financial Risk Management, Continued

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.

Monetary foreign currency assets and liabilities as of June 30, 2012 are as follows:

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


	Assets				Liabilities
	Foreign currencies		Korean won equivalent		Foreign currencies		Korean won equivalent
USD		17,865	￦	20,613		1,086,801	￦	1,253,951
EUR		222		319		1,302		1,868
JPY		207,493		3,017		12,496,692		181,676
SGD		—		—		64,533		58,114
CHF		—		—		297,966		356,004
Others		1		1		46		7

			￦	23,950			￦	1,851,620

In addition, the Company has entered into cross currency swaps to hedge against currency risk related to foreign currency borrowings and debentures. (Refer to Note 16)

As of June 30, 2012, effects on income (loss) before income tax as a result of change in exchange rate by 10% are as follows:


(In millions of won)	If increased by 10%			If decreased by 10%
USD	￦	(37,831	)		37,831
EUR		(154	)		154
JPY		302			(302	)
SGD		(1	)		1
CHF		(4	)		4
Others		(1	)		1

	￦	(37,689	)		37,689

26.

Financial Risk Management, Continued

(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, 2012, available-for-sale equity instruments measured at fair value amounts to ￦1,196,227 million.

(iii) Interest rate risk

Since the Company’s interest bearing assets are mostly fixed-interest bearing assets, as such, the Company’s revenue and operating cash flow are not influenced by the changes in market interest rates. However, the Company still has interest rate risk arising from borrowings and debentures.

Accordingly, the Company performs various analysis of interest rate risk, which includes refinancing, renewal, alternative financing and hedging instrument option, to reduce interest rate risk and to optimize its financing.

The Company’s interest rate risk arises from floating-rate borrowings and payables. As of June 30, 2012, floating-rate debentures and borrowings amount to ￦528,708 million and ￦115,380 million, respectively, and the Company has entered into interest rate swaps to hedge interest rate risk related to floating-rate borrowings and debentures (Refer to Note 16). If interest rate only increases (decreases) by 1%, income before income taxes for the six-month period ended June 30, 2012 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. To manage credit risk, the Company evaluates the credit worthiness of each customer or counterparty considering the party’s financial information, its own trading records and other factors; based on such information, the Company establishes credit limits for each customer or counterparty.

For the six-month period ended June 30, 2012, the Company has no trade and other receivables or loans which have indications of significant impairment loss or are overdue for a prolonged period. As a result, the Company believes that the possibility of default is remote. Also, the Company’s credit risk can rise due to transactions with financial institutions related to its cash and cash equivalents, financial instruments and derivates. To minimize such risk, the Company has a policy to deal with high credit worthy financial institutions. The amount of maximum exposure to credit risk of the Company is the carrying amount of financial assets as of June 30, 2012.

26.

Financial Risk Management, Continued

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 22.

3) Liquidity risk

The Company’s approach to managing liquidity is to ensure that it will always maintain sufficient cash equivalents balance and have enough liquidity through various committed credit lines. The Company maintains flexibly enough liquidity under credit lines through active operating activities. The Company’s current liabilities are greater than current assets by W 1,077 billion and W 518.9 billion as of June 30, 2012 and December 31, 2011, respectively. This was primarily caused by the acquisition of ownership interests in SK Hynix in February 2012. The Company plans to fund current liabilities with the cash flows generated by operations and through additional borrowings, as necessary.

Contractual maturities of financial liabilities as of June 30, 2012 are as follows:


(In millions of won)	Carrying amount		Contractual cash flows		Less than 1 year		1 - 5 years		More than 5 years
Derivative financial liabilities	￦	23,529		23,529		—		23,529		—
Borrowings		2,303,743		2,552,506		291,319		2,261,187		—
Debentures (*1)		3,525,760		4,431,027		331,046		2,897,176		1,202,805
Accounts payable - other and others (*2)		2,675,412		2,734,649		1,844,091		529,449		361,109

	￦	8,528,444		9,741,711		2,466,456		5,711,341		1,563,914

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 bonds.

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

26.

Financial Risk Management, Continued

(2)

Capital management

The Company manages its capital to ensure that it will be able to continue as a business while maximizing the return to shareholders through the optimization of its debt and equity balance. The overall strategy of the Company is the same as that of the Company as of and for the year ended December 31, 2011.

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

Debt-equity ratio as of June 30, 2012 and December 31, 2011 are as follows:


(In millions of won)	June 30, 2012			December 31, 2011
Liability	￦	10,366,203			8,554,225
Equity		11,905,658			11,966,302

Debt-equity ratio		87.07	%		71.49	%

(3) Fair value

Fair value of the financial instruments that are not traded in an active market is determined using the valuation method. The Company uses the various valuation methods and makes assumptions that are mainly based on market conditions existing at the end of each reporting period. Fair value of financial instruments such as long-term liabilities is measured using the various methods including estimated discounted cash flow method.

Interest rates used by the Company for the fair value measurement as of June 30, 2012 are as follows:


	Interest rate
Derivative instruments		3.15%~5.59%
Borrowings and Debentures		3.92%

26.

Financial Risk Management, Continued

Fair value and carrying amount

Carrying amount and fair value of financial assets and liabilities are as follows:


	June 30, 2012				December 31, 2011
(In millions of won)	Carrying amount		Fair value		Carrying amount		Fair value
Assets carried at fair value
Financial assets at fair value through profit or loss	￦	16,800		16,800		16,617		16,617
Derivative financial assets		210,370		210,370		188,605		188,605
Available-for-sale financial assets		1,196,226		1,196,226		1,273,132		1,273,132

	￦	1,423,396		1,423,396		1,478,354		1,478,354

Assets carried at amortized cost
Cash and cash equivalents	￦	369,378		369,378		895,558		895,558
Available-for-sale financial assets		56,565		56,565		113,262		113,262
Accounts receivable – trade and others		2,047,767		2,047,767		2,386,033		2,386,033
Financial instruments		169,569		169,569		635,069		635,069

	￦	2,643,279		2,643,279		4,029,922		4,029,922

Liabilities carried at fair value
Financial liabilities at fair value through profit or loss	￦	392,112		392,112		397,887		397,887
Derivative financial liabilities		23,529		23,529		4,645		4,645

	￦	415,641		415,641		402,532		402,532

Liabilities carried at amortized cost
Borrowings	￦	2,303,743		2,354,847		115,330		115,330
Debentures		3,133,648		3,368,061		3,148,118		2,985,078
Accounts payable—other and others		2,675,412		2,675,412		2,901,123		2,901,123

	￦	8,112,803		8,398,320		6,164,571		6,001,531

Fair value hierarchy

The different levels have been defined as follows:

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

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

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

26.

Financial Risk Management, Continued

The table below analyzes financial instruments carried at fair value, by fair value hierarchy as of June 30, 2012.


(In millions of won)	Level 1		Level 2		Level 3		Total
Financial assets at fair value through profit or loss	￦	—		16,800		—		16,800
Derivative financial assets		—		210,370		—		210,370
Available-for-sale financial assets		1,052,372		26,069		117,785		1,196,226
Financial liabilities at fair value through profit or loss		392,112		—		—		392,112
Derivative financial liabilities		—		23,529		—		23,529

There have been no transfers from Level 2 to Level 1 in 2012 and changes of financial assets classified as Level 3 for the six-month period ended June 30, 2012 are as follows:


(In millions of won)	Balance at January 1		Other comprehensive income			Disposal			Balance at June 30
Available-for-sale financial assets	￦	162,097		(30,227	)		(14,085	)		117,785

27.

Transactions with Related Parties

(1)

As of June 30, 2012, the parent company and subsidiaries of the Company are as follows:


Type	Company	Ownership percentage (%)			Types of business
Ultimate Controlling Entity(*1)	SK Holdings Co., Ltd.		25.2	(*2)	Holding company
Subsidiaries	SK Telink Co., Ltd.		83.5		Telecommunication service
	SK Communications Co., Ltd.		64.6	(*3)	Internet website services
	PAXNet Co., Ltd.		59.7	(*3)	Internet website services
	Loen Entertainment, Inc.		67.6	(*3)	Release of music disc
	Stonebridge Cinema Fund		45.6		Investment association

27.

Transactions with Related Parties, Continued


Commerce Planet Co., Ltd.	100.0	(*3)	Online shopping mall operation agency
SK Broadband Co., Ltd.	50.6		Telecommunication services
Broadband D&M Co., Ltd.	100.0	(*3)	Base station maintenance service
Broadband Media Co., Ltd.	100.0	(*3)	Multimedia TV portal service
Broadband CS Co., Ltd.	100.0	(*3)	Customer Q&A and Service
K-net Culture and Contents Venture Fund	59.0	(*3)	Investment association
Fitech Focus Limited Partnership II (*4)	66.7	(*3)	Investment association
Open Innovation Fund	98.9	(*3)	Investment association
PS&Marketing Corporation	100.0		Retail
Service Ace Co., Ltd.	100.0		Customer center management service
Service Top Co., Ltd.	100.0		Customer center management service
Network O&S Co., Ltd.	100.0		Base station maintenance service
BNCP Co., Ltd.	100.0	(*3)	Software development and distribution service
Service-In Co., Ltd.	100.0	(*3)	Data base and internet website service
SK Planet Co., Ltd.	100.0		Telecommunication service and new media business
SK Telecom China Holdings Co., Ltd.	100.0		Equity investment (Holding company)
SKY Property Mgmt. Ltd.	60.0		Equity investment
Shenzhen E-eye High Tech Co., Ltd.	65.5	(*3)	GPS manufacturing and selling
SK China Real Estate Co., Ltd.	99.4		Equity investment
SKT Vietnam PTE. Ltd.	73.3		Telecommunication service
SKT Americas, Inc.	100.0		Telecommunication service
YTK Investment Ltd.	100.0		Investment
Atlas Investment	100.0		Investment
Technology Innovation Partners, LP.	100.0	(*3)	Investment
SK Telecom China Fund I L.P.	100.0	(*3)	Investment

(*1)	SK Holdings Co., Ltd. is the Ultimate Controlling Entity because of its de facto control over the Company.

(*2)	The ownership percentage represents parent company’s ownership over the Company.

(*3)	The ownership percentage represents subsidiaries’ ownership over their subsidiaries, in which the Company has no direct investment.

27	Transactions with Related Parties, Continued

(*4)	Name of the company has been changed from Benex Focus Limited Partnership II to Fitech Focus Limited Partnership II during the six-month period ended June 30, 2012.

(2)

Transactions


	Purchases of property and equipment				Commissions paid and other expenses				Commissions earned and other income
	2012
(In millions of won)	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 Holdings Co., Ltd.(*1)	￦	—		—		6,471		162,871		184		283
Subsidiaries:
SK Telink Co., Ltd.(*2)		—		—		14,380		24,325		12,754		28,122
SK Communications Co., Ltd.		—		—		—		—		1,434		3,130
Loen Entertainment, Inc.		—		—		273		276		1,529		2,849
Commerce Planet Co., Ltd.		—		—		292		292		5		8
SK Broadband Co., Ltd.		15,637		15,992		92,115		179,214		30,512		57,639
PS&Marketing Corporation		128		128		129,495		193,899		1,249		1,983
Service Ace Co., Ltd.		—		—		33,069		67,432		2,131		4,209
Service Top Co., Ltd.		—		—		30,013		63,215		1,930		3,591
Network O&S Co., Ltd.		27,188		27,188		46,913		72,931		1,014		1,602
SK Planet Co., Ltd.		—		—		129,636		260,270		12,102		25,646
SK Telecom China Holdings Co., Ltd.		—		—		11,775		11,775		—		—
SKT Americas, Inc.		—		—		6,200		6,200		—		—
Others		—		—		—		149		39		69
Associates:
SK Marketing & Company Co., Ltd.		72		97		30,021		54,098		1,262		3,261
F&U Credit information Co., Ltd.		—		—		11,355		24,029		463		804
SK Wyverns Baseball Club Co., Ltd.		—		—		43		9,443		—		—
HanaSK Card Co., Ltd.		3		3		70,046		146,299		42,711		90,387
HappyNarae Co., Ltd. (*3)		1,908		1,911		3,143		3,572		—		—
Others		—		—		—		1,995		63		63
Others:
SK C&C Co., Ltd.		39,312		91,384		59,995		123,627		882		2,137
SK Innovation Co., Ltd.		—		—		186		371		1,511		2,336
M&Service Co., Ltd.		—		—		332		487		177		400

27	Transactions with Related Parties, Continued


SK Engineering and Construction Co., Ltd.		132,927	175,809	12,642	12,723	899	2,467
SK Telesys Co., Ltd.		88,585	100,929	—	6,367	37	68
SK Networks Co., Ltd.		1,994	1,994	138,080	221,561	4,341	8,494
SK Networks Service Co., Ltd.		—	—	11,525	18,243	—	—
Others		545	548	—	3,741	2,361	4,346

	￦	308,299	415,983	838,000	1,669,405	119,590	243,894

(*1)	Dividends paid amounted to W 150,169 million were included in commissions paid and other expenses.

(*2)	Dividends received amounted to W 2,834 million were included in commissions earned and other income.

(2)

Transactions, Continued

(*3)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the six-month period ended June 30, 2012.


	Purchases of property and equipment				Commissions paid and other expenses				Commissions earned and other income
	2011
(In millions of won)	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 Holdings Co., Ltd.(*1)	￦	—		—		6,631		151,556		289		364
Subsidiaries:
SK Telink Co., Ltd.(*2)		—		—		26,983		52,096		16,017		37,619
SK Communications Co., Ltd.		—		—		8,830		11,084		1,744		3,863
Loen Entertainment, Inc.		—		—		10,905		20,743		1,545		2,496
Ntreev Soft Co., Ltd.(*3)		—		—		—		—		4,368		7,364
Commerce Planet Co., Ltd.		46		46		36,660		78,660		12,623		15,006
SK Broadband Co., Ltd.		12,296		12,296		69,722		121,187		23,764		43,725
PS&Marketing Corporation		—		—		49,951		113,418		669		1,291
Service Ace Co., Ltd.		—		—		28,940		57,111		2,007		4,784
Service Top Co., Ltd.		—		—		27,230		54,677		2,096		3,708
Network O&S Co., Ltd.		7,066		7,066		32,596		51,475		427		994

27	Transactions with Related Parties, Continued


SK Telecom China Holdings Co., Ltd.		—	—	7,066	11,586	—	—
SKT Americas, Inc.		—	—	5,802	9,110	—	—
Others		—	—	355	605	88	132
Associates:
SK Marketing & Company Co., Ltd.		2,183	2,183	25,415	52,798	1,561	3,743
F&U Credit information Co., Ltd.		—	—	10,994	20,737	327	710
SK Wyverns Baseball Club Co., Ltd.		—	—	1,200	10,994	—	12
HanaSK Card Co., Ltd.		9	10	79,731	124,045	16,201	33,995
HappyNarae Co., Ltd.(*4)		1,893	2,059	1,615	2,203	—	3
Others		29	29	5,109	9,272	—	1
Others:
SK C&C Co., Ltd.		56,608	82,184	71,043	133,727	655	1,979
SK Innovation Co., Ltd.		—	—	14	25	336	487
M&Service Co., Ltd.		—	—	3,601	5,970	1,265	1,269
SK Engineering and Construction Co., Ltd.		51,841	59,864	3,090	3,173	447	1,398
SK Telesys Co., Ltd.		70,399	79,417	2,920	5,177	19,187	56,395
SK Networks Co., Ltd.		2,747	2,914	81,323	167,569	3,433	7,566
SK Networks Service Co., Ltd.		—	—	12,358	15,525	—	79
Others		989	1,260	2,473	26,098	1,467	2,956

	￦	206,106	249,328	612,557	1,310,621	110,516	231,939

(*1)	Dividends paid amounted to W 138,669 million were included in commissions paid and other expenses.

(*2)	Dividends received amounted to W 3,340 million were included in commissions earned and other income.

(*3)	The Company sold its investment during the six-month period ended June 30, 2012.

(*4)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the six-month period ended June 30, 2012.

27	Transactions with Related Parties, Continued

(3)

Account balances


	June 30, 2012
(In millions of won)	Accounts receivable		Guarantee deposits		Accounts payable		Guarantee deposits received
Ultimate Controlling Entity:
SK Holdings Co., Ltd.	￦	113		—		—		—
Subsidiaries:
SK Telink Co., Ltd.		1,675		—		27,442		—
SK Communications Co., Ltd.		2,495		—		2,907		5,524
Loen Entertainment, Inc.		330		—		315		—
Commerce Planet Co., Ltd.		—		—		49		—
SK Broadband Co., Ltd.		5,241		1,151		26,916		39,444
PS&Marketing Corporation		767		—		35,813		7,059
Service Ace Co., Ltd.		762		—		11,894		3,997
Service Top Co., Ltd.		569		—		11,770		3,367
Network O&S Co., Ltd.		—		—		12,141		164
SK Planet Co., Ltd.		17,470		—		20,613		66,816
SK Vietnam PTE. Ltd.		3,790		—		—		—
SKT Americas, Inc.		—		—		1,855		—
Others		—		—		7		150
Associates:
SK Marketing & Company Co., Ltd.		112		—		26,094		—
F&U Credit information Co., Ltd.		280		—		3,941		—
SK Wyverns Baseball Club Co., Ltd.		—		—		3		—
Wave City Development Co., Ltd.		38,412		—		—		—
HanaSK Card Co., Ltd.		7,192		—		17,036		—
HappyNarae Co., Ltd.(*)		—		—		1,608		—
SK USA, Inc.		—		—		3,660
Others		70		10		44		—
Others:
SK C&C Co., Ltd.		425		—		44,104		197
SK Innovation Co., Ltd.		999		91		1		—
M&Service Co., Ltd.		192		—		903		—
SK Engineering and Construction Co., Ltd.		988		—		5,371		83
SK Telesys Co., Ltd.		176		—		20,806		—
SK Networks Co., Ltd.		—		1,013		33,798		696
SK Networks Service Co., Ltd.		—		—		10,888		—
Others		1,150		—		1,298		47

	￦	83,208		2,265		321,277		127,544

27.

Transactions with Related Parties, Continued

(*)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the six-month period ended June 30, 2012.

(3)

Account balances, Continued


	December 31, 2011
(In millions of won)	Accounts receivable		Guarantee deposits		Accounts payable		Guarantee deposits received
Ultimate Controlling Entity:
SK Holdings Co., Ltd.	￦	146		—		—		—
Subsidiaries:
SK Telink Co., Ltd.		2,664		—		7,749		3,281
SK Communications Co., Ltd.		1,221		—		2,508		5,524
Loen Entertainment, Inc.		472		—		764		—
Ntreev Soft Co., Ltd.(*1)		1,629		—		—		—
Commerce Planet Co., Ltd.		1		—		363		—
SK Broadband Co., Ltd.		7,244		982		78,286		40,401
PS&Marketing Corporation		371		—		40,311		6,249
Service Ace Co., Ltd.		735		—		13,213		3,997
Service Top Co., Ltd.		438		—		14,733		2,462
Network O&S Co., Ltd.		575		—		50,210		170
SK Planet Co., Ltd.		85,902		—		177,809		66,805
SK Telecom China Holdings Co., Ltd.		3,788		—		—		—
SKT Americas, Inc.		—		—		4,062		—
Others		—		—		591		150
Associates:
SK Marketing & Company Co., Ltd.		262		—		22,977		—
F&U Credit information Co., Ltd.		—		—		3,736		—
SK Wyverns Baseball Club Co., Ltd.		3,812		—		—		—
Wave City Development Co., Ltd.		38,412		—		—		—
HanaSK Card Co., Ltd.		8,627		—		1,600		—
HappyNarae Co., Ltd.(*2)		—		—		1,057		—
Daehan Kanggun BcN Co., Ltd.		20,562		—		—		—
Others		—		—		1,060		—

27.

Transactions with Related Parties, Continued


Others:
SK C&C Co., Ltd.		2,452	—	89,784	197
SK Innovation Co., Ltd.		940	91	2	—
M&Service Co., Ltd.		332	—	2,346	—
SK Engineering and Construction Co., Ltd.		486	—	27,808	83
SK Telesys Co., Ltd.		106	—	35,371	—
SK Networks Co., Ltd.		696	4,613	29,296	696
SK Networks Service Co., Ltd.		—	—	3,530	—
Others		2,141	—	1,322	—

	￦	184,014	5,686	610,488	130,015

(*1)	The Company sold its investment during the six-month period ended June 30, 2012.

(*2)	Name of the company has been changed from MRO Korea Co., Ltd. to HappyNarae Co., Ltd. during the six-month period ended June 30, 2012.

(4)

Compensation for the key management

The Company considers registered directors who have substantial roles and responsibility in planning, operating, and controlling of the business as key management. Considerations given to key management for the three-month and six-month periods ended June 30, 2012 and 2011 are as follows:


	2012				2011
(In millions of won)	Three-month period ended June 30		Six-month period ended June 30		Three-month period ended June 30		Six-month period ended June 30
Salaries	￦	296		8,287		1,676		8,832
Provision for retirement benefits		78		643		107		623

	￦	374		8,930		1,783		9,455

28.

Commitments and Contingencies

As of June 30, 2012, the Company has participated in “Tactical Airship” program of the Defense Acquisition Program Administration with Joint Defense Corporation. For an advance receipt amounting to W 4,200 million, which Joint Defense Corporation received from the Defense Acquisition Program Administration, the Company provides payment guarantees to the Defense Acquisition Program Administration.

29.

Statements of Cash Flows

(1)

Adjustments for income and expenses from operating activities for the six-month periods ended June 30, 2012 and 2011 are as follows:


(In millions of won)	2012			2011
Interest income	￦	(33,771	)		(78,321	)
Dividends		(25,780	)		(26,472	)
Gain on foreign currency translation		(267	)		(13,352	)
Gain on valuation of financial assets at fair value through profit or loss		(183	)		(1,150	)
Gain on valuation of financial liabilities at fair value through profit or loss		(5,774	)		(33,249	)
Gain on disposal of long-term investments securities		(470	)		(158,495	)
Gain on valuation of derivatives		—			(2,088	)
Gain on settlement of derivatives		(12,694	)		—
Gain on disposal of investments in associates		(80,482	)		(1,990	)
Gain on disposal of property and equipment and intangible assets		(358	)		(856	)
Reversal of allowance for doubtful accounts		(4,475	)		—
Other income		(667	)		(2,491	)
Interest expenses		150,583			99,910
Loss on foreign currency translation		117			318
Loss on disposal of long-term investments securities		9,134			2
Loss on settlement of derivatives		1,232			5,136
Impairment loss on investment in associates		72,096			—
Income tax expense		153,231			403,267
Provision for retirement benefits		15,490			16,084
Depreciation and amortization		854,543			915,751
Bad debt for accounts receivable—trade		8,554			20,560
Loss on disposal of property and equipment and intangible assets		2,085			7,355
Impairment loss on property and equipment and intangible assets		15,438			—
Bad debt for accounts receivable—other		19,371			2,910
Other expenses		—			1,338

	￦	1,136,953			1,154,167

29.

Statements of Cash Flows, Continued

(2)

Changes in assets and liabilities from operating activities for the six-month periods ended June 30, 2012 and 2011 are as follows:


(In millions of won)	2012			2011
Accounts receivable—trade	￦	(57,941	)		89,221
Accounts receivable—other		335,259			804,399
Advance payments		23,878			43,451
Prepaid expenses		10,695			44,937
Inventories		(5,038	)		(5,255	)
Long-term accounts receivables—other		4,699			461,495
Guarantee deposits		14,135			(1,711	)
Accounts payable—other		(278,841	)		(373,898	)
Advanced receipts		(1,444	)		8,782
Withholdings		102,216			120,613
Deposits received		(2,162	)		35
Accrued expenses		119,296			(10,541	)
Unearned revenue		(31,209	)		(27,286	)
Provisions		(88,299	)		(6,323	)
Long-term provisions		(15,391	)		44,203
Plan assets		636			6,588
Retirement benefit payment		(11,113	)		(12,996	)
Others		(9	)		236

	￦	119,367			1,185,950

(3)

Significant non-cash transactions for the six-month periods ended June 30, 2012 and 2011 are as follows:


(In millions of won)	2012		2011
Accounts payable—other related to acquisition of tangible assets and others	￦	8,010		197,189

30.

Subsequent Events

On July 25, 2012, the Board of Directors of the Company resolved to pay interim cash dividends of W 1,000 per share totaling W 69,695 million (Market dividend rate: 0.82%). The ex-dividend date was June 30, 2012 and the interim dividends are expected to be paid within twenty days after the date of the Board of Directors’ resolution.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


SK TELECOM CO., LTD. (Registrant)

By: /s/ Soo Cheol Hwang
(Signature)
Name:		Soo Cheol Hwang
Title:		Senior Vice President

Date: October 9, 2012