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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF NOVEMBER 2004
COMMISSION FILE NUMBER: 1-14418
SK TELECOM CO., LTD.
(Translation of registrant's name into English)
99, Seorin-dong
Jongro-gu
Seoul, Korea
(Address of principal executive offices)
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(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 whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes - [ ] No [x]
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):82- .)
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This report on Form 6-K shall be deemed to be incorporated by reference
in the prospectuses included in Registration Statements on Form F-3 (File Nos.
333-91034 and 333-99073) filed with the Securities and Exchange Commission and
to be a part thereof from the date on which this report is filed, to the extent
not superseded by documents or reports subsequently filed or furnished.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 6-K contains "forward-looking statements", as
defined in Section 27A of the U.S. Securities Act of 1933, as amended, and
Section 21E of the U.S. Securities Exchange Act of 1934, as amended, that are
based on our current expectations, assumptions, estimates and projections about
our company and our industry. The forward-looking statements are subject to
various risks and uncertainties. Generally, these forward-looking statements can
be identified by the use of forward-looking terminology such as "anticipate",
"believe", "consider", "depends", "estimate", "expect", "intend", "plan",
"project" and similar expressions, or that certain events, actions or results
"will", "may", "might", "should" or "could" occur, be taken or be achieved.
Forward-looking statements in this report on Form 6-K include, but are
not limited to, statements related to the following:
o our ability to anticipate and respond to various competitive
factors affecting the industry, including new services that
may be introduced, changes in consumer preferences, economic
conditions and discount pricing strategies by competitors;
o our implementation of CDMA 1xEV/DO technology and other
technologies such as W-CDMA, which is commonly referred to
as third generation, or 3G, wireless technology;
o our plans to spend approximately Won 1.7 trillion for
capital expenditures in 2004 for a range of projects,
including expansion and improvement of our wireless
networks, investments in our Internet-related businesses and
expansion of our W-CDMA network and our expected future
capital expenditures on various initiatives;
o our ability to comply with governmental rules and
regulations, including Korean Ministry of Information
Communication (MIC) regulations related to
telecommunications providers and rules related to our status
as a "market-dominating business entity" under the Fair
Trade Commission of Korea's Korean Monopoly Regulation and
Fair Trade Act;
o our expectations and estimates related to: interconnection
fees; tariffs charged by wireless operators; regulatory
fees; operating costs and expenditures; working capital
requirements; principal repayment obligations with respect
to long-term borrowings, bonds and obligations under capital
leases; research and development expenditures; and other
financial estimates;
2
o the effect of the number portability system that allows
wireless subscribers to switch wireless service operators
while retaining the same mobile phone number and the use of
the common prefix identification system;
o the telecommunications industry in Korea and other markets
in which we do business and the effect economic, political
or social conditions have on our number of subscribers, call
volumes and results of operations; and
o our plans to pay dividends in 2004, and statements related
to estimates of contractual obligations and commitments,
financing activities and plans and other information more
specifically detailed in "Management's Discussion and
Analysis of Financial Condition and Results of Operations".
We caution you that reliance on any forward-looking statement involves
risks and uncertainties, and that although we believe that the assumptions on
which our forward-looking statements are based are reasonable, any of those
assumptions could prove to be inaccurate, and, as a result, the forward-looking
statements based on those assumptions could be incorrect. Risks and
uncertainties associated with our business include, but are not limited to,
risks related to changes in the regulatory environment; technology changes;
potential litigation and governmental actions; changes in the competitive
environment; political changes; currency risks; foreign ownership limitations;
credit risks and other risks and uncertainties that are more fully described
under the heading "Key Information -- Risk Factors" beginning on page 11 of our
annual report on Form 20-F filed with the United States Securities and Exchange
Commission on June 1, 2004. In light of these and other uncertainties, you
should not conclude that we will necessarily achieve any plans and objectives or
projected financial results referred to in any of the forward-looking
statements. We do not undertake to release the results of any revisions of these
forward-looking statements to reflect future events or circumstances.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
We must file quarterly reports with the Financial Supervisory
Commission of Korea and the Korean Stock Exchange. These quarterly reports
contain our unaudited, reviewed and non-consolidated financial statements as of
and for the nine months ended September 30, 2003 and 2004, that are prepared in
accordance with Korean GAAP, which differs in some respects from U.S. GAAP. You
should read the following discussion together with our unaudited
non-consolidated financial statements included in this report.
The financial information described below and in our unaudited
non-consolidated financial statements as of December 31, 2003 and September 30,
2004 and for the nine months ended September 30, 2003 and 2004 is
non-consolidated, and therefore does not reflect the results of operations of
our subsidiaries other than those reflected under the equity method of
accounting. While non-consolidated net income reflects the results of our
consolidated subsidiaries, our other non-consolidated financial data, including
operating revenue and operating income, do not. Accordingly, we believe that
while there should not be any material differences between our net income on a
non-consolidated basis and our net income on a consolidated basis, our other
financial
3
data, including those items noted above, may be materially different on a
consolidated basis. As a result, the financial information below is not
comparable with the consolidated financial information presented in our annual
report on Form 20-F for the year ended December 31, 2003, filed with the United
States Securities and Exchange Commission on June 1, 2004.
Under Korean GAAP, our non-consolidated revenues accounted for
approximately 92.6% and 92.7% of our consolidated revenues in the years ended
December 31, 2002 and 2003, respectively, and at December 31, 2002 and 2003, our
non-consolidated assets were approximately 89.4% and 96.8% of our consolidated
assets and our non-consolidated current assets were approximately 66.8% and
85.0% of our consolidated current assets, respectively. We can give no assurance
as to what the ratios will be for the year ending December 31, 2004. In
addition, results of operations for the first nine months of 2004 may not be
indicative of results of operations for the full year 2004.
Accounting principles and their application in practice vary among
countries. The following discussion and our interim non-consolidated financial
statements are not intended to present the financial position, results of
operations and cash flows in accordance with accounting principles and practices
generally accepted in countries other than the Republic of Korea. Accordingly,
this report and the accompanying interim non-consolidated financial statements
are for use by those knowledgeable about Korean accounting principles and review
standards and their application in practice.
SELECTED FINANCIAL DATA
The following table sets forth selected financial data derived from our
interim non-consolidated financial statements as of and for the nine months
ended September 30, 2004. You should read the selected non-consolidated
financial data below in conjunction with our interim non-consolidated financial
statements included in this report.
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
2003 2004
--------- ---------
NON-CONSOLIDATED INCOME STATEMENT DATA (IN BILLIONS OF WON)
Operating Revenue W 7,039.8 W 7,218.8
Wireless Service (1) 6,265.2 6,572.7
Interconnection 774.7 646.1
Operating Expenses 4,651.9 5,453.6
Operating Income 2,387.9 1,765.2
Other Income 197.2 196.0
Other Expenses 430.9 326.8
Income Taxes 644.6 487.6
--------- ---------
Net Income W 1,509.5 W 1,146.8
========= =========
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(1) Includes revenues from line leases and solution sales.
4
NON-CONSOLIDATED BALANCE SHEET DATA AS OF AS OF
DECEMBER 31, SEPTEMBER 30,
2003 2004
------------- -------------
(IN BILLIONS OF WON)
Total Current Assets W 3,460.7 W 3,982.3
Total Non-Current Assets 9,915.3 9,904.2
Total Assets 13,376.0 13,886.5
Total Current Liabilities 4,232.0 3,288.3
Total Long-Term Liabilities 3,202.1 3,849.4
Total Stockholders' Equity 5,941.8 6,748.8
RESULTS OF OPERATIONS
Non-Consolidated Revenue. We earn revenue principally from initial
connection fees and monthly access fees, usage charges and value-added service
fees paid by subscribers to our wireless services and interconnection fees paid
to us by other telecommunications operators. The amount of our revenue depends
principally upon the number of wireless subscribers, the rates we charge for our
services, subscriber usage of our services, and the terms of our interconnection
with other telecommunications operators. Government regulation also affects our
revenues.
Non-Consolidated Operating Revenue. Our operating revenue increased by
2.5% to Won 7,218.8 billion in the nine months ended September 30, 2004 from Won
7,039.8 billion in the corresponding period in 2003. This increase was
principally a result of a 4.9% increase in our wireless service revenue to Won
6,572.7 billion in the nine months ended September 30, 2004, up from Won 6,265.2
billion in the corresponding period in 2003, as a result of an increase in the
number of our wireless subscribers and the average monthly revenue per
subscriber, which was offset by a 16.6 % decrease in interconnection revenue due
in part to the adjusted interconnect rates announced by the MIC on July 9, 2004
(described below).
In January 2003, the MIC announced its plan to implement number
portability with respect to wireless telecommunications service in Korea. The
number portability system allows wireless subscribers to switch wireless service
operators while retaining the same mobile phone number. Subscribers who switch
operators to or from SK Telecom must purchase a new handset, as we use a
different frequency than our competitors, KT Freetel and LG Telecom. In
accordance with the plan published by the MIC, we were required to permit number
portability first, beginning on January 1, 2004. The following number of
subscribers have transferred to the service of our competitors during each month
following our implementation of the number portability system:
* Number of Subscribers Transferred to Other Operator
Month SKT - > KTF SKT - > LGT KTF - > SKT KTF - > LGT Total
----- ------------ ------------ ------------ ------------ ------------
Jan 203,853 101,414 -- -- 305,267
Feb 102,282 81,594 -- -- 183,876
Mar 111,077 103,155 -- -- 214,232
Apr 139,508 122,146 -- -- 261,654
May 167,228 92,414 -- -- 259,642
5
Month SKT - > KTF SKT - > LGT KTF - > SKT KTF - > LGT Total
----- ------------ ------------ ------------ ------------ ------------
Jun 137,489 73,100 -- -- 210,589
Jul 53,611 23,116 277,751 20,504 374,982
Aug 29,698 60,240 67,743 45,724 203,405
Sep 90,075 49,959 5,744 42,995 188,773
Oct 64,563 46,169 62,131 39,701 212,564
Total 1,099,384 753,307 413,369 148,924 2,414,984
Subscribers who choose to transfer to a different wireless operator
have the right to return to us without paying any penalties within 14 days of
the initial transfer. KT Freetel introduced number portability beginning on July
1, 2004 and LG Telecom will be required to introduce number portability
beginning on January 1, 2005. Notwithstanding our implementation of number
portability on January 1, 2004, our total number of wireless subscribers
increased to approximately 18.6 million as of September 30, 2004, up from
approximately 18.3 million as of December 31, 2003 and 18.0 million as of
September 30, 2003. We believe that the increase in the number of wireless
subscribers resulted in part from our service quality and marketing efforts.
On June 15, 2004, the Minister of Information and Communication (MIC)
issued a suspension that prohibited us from acquiring new subscribers for a
period of 40 days beginning on August 20, 2004. The MIC also issued suspensions
to our three largest competitors that prohibited them from acquiring new
subscribers for periods ranging from 20 days to 30 days. KT Freetel Co. Ltd. was
issued a 30 day suspension beginning on July 21, 2004; LG Telecom Ltd. was
issued a 30 day suspension beginning on June 21, 2004; and Korea Telecom was
issued a 20 day suspension beginning on July 21, 2004. These suspensions
resulted from MIC's determination that we violated the ban on providing
subsidies to handset purchasers. During the suspensions, each company was able
to continue regular business activities, including replacement of handsets,
changes in user names, changes in mobile phone numbers and changes in tariff
plans applicable to the existing subscribers. Because of the length and timing
of our suspension relative to our competitors, we believe the suspension had a
negative impact on the number of new subscribers to our services in August and
September. Only 5,744 subscribers switched to our service from KT Freetel under
the number portability program in September.
On an aggregate basis, interconnection revenue decreased by 16.6% to
Won 646.1 billion in the nine months ended September 30, 2004, down from Won
774.7 billion in the corresponding period in 2003. This decrease was due in part
to the new adjusted interconnect rates announced by the MIC on July 9, 2004,
which were applied retroactively. The new interconnect rates are as follows:
YEAR SK TELECOM KT FREETEL LG TELECOM
---- ---------- ---------- ----------
2003 41.02 47.99 52.89
2004 31.81 47.66 58.55
2005 31.19 46.70 54.98
6
The interconnection rates were adjusted based on the original cost of
individual operators under Long Run Incremental Cost (LRIC) method and the
competitive market situation in the telecommunication service industry of Korea.
The LRIC method is designed to calculate costs of interconnection of individual
telecommunication service providers within a network using certain models called
"bottom-up" and "top-down." The LRIC method was adopted by other countries such
as the United States, the United Kingdom and Japan. Assuming that the factors
affecting the interconnection revenues and expenses such as call volumes and
call patterns are the same as those of 2003, we estimate that the new rates will
have a negative impact on our operations in this year in the amount of
approximately Won 244 billion, resulting from an estimated Won 206 billion
reduction in revenue and Won 38 billion increase in interconnection expenses.
The Won 38 billion increase in the interconnection expenses includes the
expected increase in the land-to-mobile (LM) interconnection expenses that we
will have to pay to fixed-line service providers.
Our non-consolidated average monthly revenue per subscriber (excluding
interconnection revenue) increased by 0.06% to Won 39,367 in the nine months
ended September 30, 2004, up from Won 39,342 in the corresponding period in
2003. The increase is principally due to increases in average monthly revenue
per subscriber from wireless Internet services, which were partially offset by a
decrease in average monthly revenue per subscriber from call charges and
value-added services.
Our non-consolidated average monthly revenue per subscriber from monthly
fee and call charges decreased by 4.7% to Won 29,211 in the nine months ended
September 30, 2004, down from Won 30,644 in the corresponding period in 2003.
The decrease is primarily due to the reduction in monthly fee effective
September 1, 2004.
Our non-consolidated average monthly revenue per subscriber from
wireless Internet services sales (including line lease and solution sales)
increased by 34.2% to Won 7,661 in the nine months ended September 30, 2004, up
from Won 5,707 in the corresponding period in 2003. Wireless Internet services
sales increased by 40.7% to Won 1,279.1 billion in the nine months ended
September 30, 2004 (representing 19.5% of our wireless service revenue), up from
Won 908.9 billion in the corresponding period in 2003, primarily due to the
increased number of subscribers who use wireless Internet-enabled handsets.
Our non-consolidated average monthly revenue per subscriber from
value-added services and other sales decreased by 26.6% to Won 1,584 in the nine
months ended September 30, 2004, down from Won 2,159 in the corresponding period
in 2003. Value-added services and other sales decreased by 23.1% to Won 264.5
billion in the nine months ended September 30, 2004 down from Won 343.9 billion
in the corresponding period in 2003, primarily due to a decrease in caller ID
rates from Won 2,000 to Won 1,000 that took effect in October 2003.
Non-Consolidated Operating Expenses. Our operating expenses in the nine
months ended September 30, 2004 increased by 17.2% to Won 5,453.6 billion
compared to Won 4,651.9 billion in the corresponding period in 2003, primarily
due to increases in commissions paid, depreciation and amortization expenses,
labor costs, leased line expenses and miscellaneous operating expenses, which
more than offset decreases in cost of goods sold and advertising expenses.
7
Commissions paid to our authorized dealers increased by 30.6% to Won
2,168.6 billion in the nine months ended September 30, 2004, compared to Won
1,661.1 billion in the corresponding period in 2003, primarily due to the 4.8%
increase in the average number of subscribers during the period and increases in
commissions in an effort to retain existing subscribers that were affected by
the number portability system introduced this year and to acquire new
subscribers. We also increased our marketing activities to maintain our market
leadership in 2G and 2.5G services, to promote our 3G services and to counter
the effects of number portability.
Labor costs increased by 27.5% to Won 324.4 billion in the nine months
ended September 30, 2004, compared to Won 254.4 billion in the corresponding
period in 2003. The increase was primarily due to an increase in performance
bonuses and an increase in salaries.
Depreciation and amortization expense increased by 8.5% to Won 1,113.4
billion in the nine months ended September 30, 2004, compared to Won 1,026.7
billion in the corresponding period in 2003. The increase in depreciation and
amortization expenses was primarily due to the continued expansion of our CDMA
1xRTT network.
Leased line expenses increased by 18.4% to Won 266.6 billion in the
nine months ended September 30, 2004, up from Won 225.3 billion in the
corresponding period in 2003, primarily due to higher call volumes.
Miscellaneous operating expenses increased by 18.2% to Won 716.3
billion in the nine months ended September 30, 2004, compared to Won 606.2
billion in the corresponding period in 2003, primarily due to increases in taxes
and other dues and rent expenses.
Network interconnection expenses increased by 1.1 % to Won 613.5
billion in the nine months ended September 30, 2004, compared to Won 606.7
billion in the corresponding period in 2003, primarily due to a decrease in
interconnection rates and a decrease in the level of interconnection fees that
we must pay to other operators for calls using their networks, which was
partially offset by the higher subscriber numbers. Mobile-to-mobile
interconnection expenses increased by 20.1% to Won 464.9 billion in the nine
months ended September 30, 2004, compared to Won 387.2 billion in the
corresponding period in 2003. Mobile-to-land interconnection expenses decreased
by 18.0% to Won 124.8 billion in the nine months ended September 30, 2004,
compared to Won 152.1 billion in the corresponding period in 2003.
Cost of goods sold decreased by 83.6% to Won 2.6 billion in the nine
months ended September 30, 2004, compared to Won 16.0 billion in the
corresponding period in 2003. The decrease was primarily due to a decrease in
sales of wireless Internet solutions (including software, hardware and service)
following the completion of our obligation to provide wireless Internet
solutions to Asia Pacific Broadband Wireless Communications (APBW) at the end of
2003.
Advertising expenses decreased by 2.9% to Won 248.3 billion in the nine
months ended September 30, 2004, compared to Won 255.6 billion in the
corresponding period in 2003. We reduced advertising and focused our efforts on
managing our distribution network to mitigate the effect of number portability.
8
Non-Consolidated Operating Income. Our operating income decreased by
26.1% to Won 1,765.2 billion in the nine months ended September 30, 2004, down
from Won 2,387.9 billion in the corresponding period in 2003. Our operating
income decreased principally because our operating expenses increased at a
faster rate than our operating revenue, primarily due to an increase in
marketing expenses as required to keep our market share under the number
portability system that were introduced this year.
Non-Consolidated Other Income. Other income, consisting primarily of
equity in earnings of affiliates, interest income, dividend income, commission
income and foreign exchange and translation gains, decreased by 0.6% to Won
196.0 billion in the nine months ended September 30, 2004, compared to Won 197.2
billion in the corresponding period in 2003, primarily due to decreases in
commissions and other miscellaneous income, which were partially offset by an
increase in equity in earnings of affiliates.
Non-Consolidated Other Expenses. Other expenses include interest and
discount expenses, loss on disposal of property, equipment and intangible assets
and donations. Other expenses decreased by 24.2% to Won 326.8 billion in the
nine months ended September 30, 2004, compared to Won 430.9 billion in the
corresponding period in 2003. The decrease was primarily due to decreases in
interest and discounts, equity in losses of affiliates and other miscellaneous
expenses, which more than offset increases in loss on disposal of investment
assets. As a percentage of operating revenue, other expenses decreased to 4.5%
in the nine months ended September 30, 2004, from 6.1% in the corresponding
period in 2003.
Non-Consolidated Income Tax. Provision for income taxes decreased by
24.4% to Won 487.6 billion in the nine months ended September 30, 2004, from Won
644.6 billion in the corresponding period in 2003. Our effective tax rate
decreased to 29.8% in the nine months ended September 30, 2004, from an
effective tax rate of 29.9% in the corresponding period in 2003.
Non-Consolidated Net Income. Principally as a result of the factors
discussed above, our net income decreased by 24.0% to Won 1,146.8 billion in
nine months ended September 30, 2004, down from Won 1,509.5 billion in the
corresponding period in 2003, with net income as a percentage of operating
revenues at 15.6% in the nine months ended September 30, 2004 as compared to
21.4% in the corresponding period in 2003.
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY
We had a working capital (current assets minus current liabilities)
surplus of Won 694.0 billion as of September 30, 2004 and a deficit of Won 771.3
billion as of December 31, 2003. We had cash, cash equivalents, short-term
financial instruments and trading securities of Won 635.1 billion as of
September 30, 2004 and Won 987.6 billion as of December 31, 2003. We had
outstanding short-term borrowings of Won 490.0 billion as of September 30, 2004
and Won 728.7 billion as of December 31, 2003.
9
Operating cash flow is our principal source of liquidity. Cash and cash
equivalents increased by Won 26.5 billion to Won 54.9 billion at September 30,
2004, up from Won 28.4 billion at December 31, 2003.
Net Cash Flow from Operating Activities. Our principal source of
liquidity is cash flow from operations. Cash flow provided by operations was Won
1,225.7 billion in the nine month period ended September 30, 2004, compared to
Won 1,819.1 billion during the same period in 2003.
Net Cash from Investing Activities. Investing activities used cash of
Won 632.1 billion in the nine month period ended September 30, 2004, compared to
Won 1,066.7 billion during the same period in 2003. Cash inflows from investing
activities were Won 673.1 billion in the nine month period ended September 30,
2004, compared to Won 949.1 billion during the same period in 2003, and the
primary contributor to such inflows related to a decrease in trading securities
of Won 440.9 billion in the nine month period ended September 30, 2004, compared
to Won nil during the same period in 2003. Cash outflows for investing
activities were Won 1,305.2 billion in the nine month period ended September 30,
2004, compared to Won 2,015.8 billion during the same period in 2003. The
primary contributors to the overall cash outflows for investing activities were
expenditures related to the acquisition of property and equipment, which were
Won 879.4 billion in the nine month period ended September 30, 2004, compared to
Won 851.4 billion during the same period in 2003; acquisition of long-term
investment securities, which were Won 52.4 billion in the nine month period
ended September 30, 2004, compared to Won 473.7 billion during the same period
in 2003; and increase of trading securities, which were nil in the nine month
period ended September 30, 2004, compared to Won 163.2 billion during the same
period in 2003.
Net Cash from Financing Activities. Financing activities used cash of
Won 567.1 billion in the nine month period ended September 30, 2004, compared to
using cash of Won 750.3 billion during the same period in 2003. Cash inflows
from financing activities included net increase in issuance of bonds, which
provided cash of Won 1,018.0 billion in the nine month period ended September
30, 2004, compared to Won 442.5 billion during the same period in 2003, and an
increase in short-term borrowings, which provided cash of Won nil in the nine
month period ended September 30, 2004, compared to using cash of Won 838.7
billion during the same period in 2003. Cash outflows for financing activities
included, among other items, net repayment of short-term borrowing of Won 238.7
billion in the nine month period ended September 30, 2004, compared to nil
during the same period in 2003; repayment of the current portion of long-term
debt, which used cash of Won 868.4 billion in the nine month period ended
September 30, 2004, compared to Won 471.5 billion during the same period in
2003; acquisition of treasury stock, which used cash of Won 2 million in the
nine month period ended September 30, 2004, compared to Won 1,379.3 billion
during the same period in 2003; and payment of dividends which used cash of Won
478.3 billion in the nine month period ended September 30, 2004, compared to Won
151.7 billion during the same period in 2003.
The net increase in cash and cash equivalents was Won 26.5 billion in
the nine month period ended September 30, 2004, compared to Won 2.1 billion
during the same period in 2003.
10
LONG TERM DEBT
We had total non-consolidated long-term debt (excluding current portion
and facility deposits) of Won 3,849.4 billion as of September 30, 2004 and Won
3,202.1 billion as of December 31, 2003. Our non-consolidated long-term debt as
of September 30, 2004 included, among other items, bonds payable in the net
amount of Won 2,727.5 billion, facility deposits of Won 33.3 billion, long-term
payables of Won 574.0 billion and deferred income tax liabilities of Won 340.3
billion. Our non-consolidated long-term debt as of December 31, 2003 included,
among other items, bonds payable in the net amount of Won 2,256.6 billion,
facility deposits of Won 44.2 billion, long-term payables of Won 564.1 billion,
deferred income tax liabilities of Won 242.1 billion and bank and institutional
loans of Won 1.6 billion. As of September 30, 2004, substantially all of our
foreign currency-denominated long-term debt was denominated in Dollars.
Depreciation of the Won against the Dollar will result in net foreign exchange
and translation losses. Changes in foreign currency exchange rates will also
affect our liquidity because of the effect of such changes on the amount of
funds required for us to make interest and principal payments on our foreign
currency-denominated debt.
In June 2002 and December 2002, we sold Won 631.4 billion and Won 650.6
billion, respectively, of accounts receivable resulting from our mobile phone
dealer financing plan to Nate First Special Purpose Company and Nate Second
Special Purpose Company, respectively, in asset-backed securitization
transactions, and recorded a loss on disposal of accounts receivable-other of
Won 10.9 billion and Won 12.9 billion, respectively. Nate First Special Purpose
Company and Nate Second Special Purpose Company were liquidated in August 2003
and April 2004, respectively.
On September 4, 2003 and December 15, 2003, we sold Won 549.3 billion
and Won 498.4 billion of accounts receivable resulting from our mobile phone
dealer financing plan Nate Fourth Special Purpose Company and Nate Fifth Special
Purpose Company, respectively, in asset-backed securitization transactions, and
recorded a loss on disposal of accounts receivable-other of Won 12.9 billion and
Won 9.9 billion, respectively. In connection with these asset-backed
securitization transactions, we have obligations to repurchase up to 13.3% and
13.2% of the receivables for Nate Fourth Special Purpose Company and Nate Fifth
Special Purpose Company, respectively, if receivables become past due for three
months or the debtors become insolvent. At June 30, 2004, the uncollected
balances of accounts receivable sold to Nate Fourth Special Purpose Company and
Nate Fifth Special Purpose Company were Won 14.4 billion and Won 101.3 billion,
respectively.
In May, July, August and November 2002, we issued Won 500.0 billion,
Won 200.0 billion, Won 200.0 billion and Won 300.0 billion principal amount of
unsecured and unguaranteed Won-denominated bonds, respectively. These bonds
mature in May 2005, July 2007, August 2007 and November 2007, and have an annual
interest rate of 6.0%, 6.0%, 6.0% and 5.0%, respectively. We issued
Won-denominated bonds with a principal amount of Won 300.0 billion, Won 150.0
billion and Won 250.0 billion in March, August and November 2003, respectively.
These bonds mature in March 2008, August 2006 and November 2006, respectively,
and have an annual interest rate of 5.0%.
11
In March 2004, we issued Won-denominated bonds with a principal amount
of Won 150.0 billion. These bonds will mature in 2009 and have an annual
interest rate of 5.0%. We used the net proceeds from the sale of these bonds to
repay commercial paper which matured at the end of March 2004.
During the quarter ended June 30, 2004, we completed the following debt
offerings:
In April 2004, we issued notes in the principal amount of
US$300,000,000 with a maturity of seven years and an interest rate of
4.25%. The proceeds from the offering in April 2004 were used to pay
maturing debt.
In May 2004, we issued Won-denominated notes in the principal amount of
Won 150.0 billion with a maturity of five years and an interest rate of
5.0%. The proceeds of the Won-denominated note offering in May 2004
were used for our operations.
On May 27, 2004, we issued our US$329,450,000 Zero Coupon Convertible
Notes due 2009, pursuant to an indenture dated as of May 27, 2004
between us and Citibank, N.A. Holders of Zero Coupon Convertible Notes
will have the right to convert their notes (or any portion thereof
being US$100,000 in principal amount or an integral multiple of
US$10,000 in excess thereof) into shares of our common stock at the
initial conversion price of Won 235,625 per share, subject to
adjustments for stock splits, dividends, sub-divisions and similar
distributions, at any time on or after July 7, 2004 up to the close of
business on May 13, 2009, subject to our right of redemption. In
connection with the issuance of the zero coupon convertible notes, we
deposited 1,645,000 shares of our common stock with Korea Securities
Depository to be reserved and used to satisfy the note holders'
conversion rights. This will be deemed as the repurchase of treasury
stock and cancellation thereof for the purposes of Korean law. If (1)
the exercise by the holder of the conversion right would be prohibited
by Korean law or we reasonably conclude that the delivery of common
stock upon conversion of these notes would result in a violation of
applicable Korean law or (2) we do not have a sufficient number of
shares of our common stock to ratify the conversion right, then we will
pay a converting holder a cash settlement payment. In such situations,
we intend to sell such number of treasury shares held in trust for us
that corresponds to the number of shares of common stock that would
have been deliverable in the absence of the 49% foreign shareholding
restrictions imposed by the Telecommunications Law or other legal
restrictions. We entered into a swap agreement to reduce our exposure
with respect to cash settlement payments exceeding the proceeds from
sales of treasury shares held in trust.
During the quarter ended September 30, 2004, we did not complete any
debt offerings.
CAPITAL REQUIREMENTS AND RESOURCES
We estimate that we will spend a total of approximately Won 1.7
trillion for capital expenditures in 2004, primarily for the expansion and
upgrading of our CDMA 1xRTT network, for our initial investment in the
satellite-based digital multimedia broadcasting (DMB) business, the roll-out of
our W-CDMA network, and for the development and introduction of wireless data
12
services. We have spent approximately Won 880 billion on capital expenditures in
the nine month period ended September 30, 2004. Of the Won 1.7 trillion for
capital expenditures in 2004, we plan to spend up to Won 800 billion, of which
we have spent approximately Won 491 billion as of September 30, 2004, on capital
expenditures related to expansion and improvement of our 95A/B and CDMA 1xRTT
Network; Won 250 billion, of which we have spent approximately Won 62 billion as
of September 30, 2004, on capital expenditures related to construction of our
W-CDMA network and provision of W-CDMA services, which began service on a
limited basis in Seoul at the end of 2003; and Won 600 billion, of which we have
spent approximately Won 327 billion as of September 30, 2004, on other capital
expenditures and projects. We may also make additional capital expenditure
investments as opportunities arise. In addition, we may increase, reduce or
suspend our planned capital expenditures for 2004 or change the timing and area
of our capital expenditure spending in response to market conditions or for
other reasons.
In addition, we expect that construction of our new headquarters will
be completed by the end of 2004. As a result, our capital expenditures related
to construction of buildings are expected to decrease substantially starting
next year.
The actual scope and timing of our planned full nationwide roll-out of
our W-CDMA network and expenditures related to the rollout will depend on
several factors, including the availability of network equipment, progress on
the development of dual band/dual mode handsets, ability to overcome technical
problems currently affecting W-CDMA performance, adoption of CDMA 1xEV/DO
service, regulatory decisions, our assessment of the market opportunities for
W-CDMA technology-based services and the competitive landscape in the Korean
wireless market. At the time we applied for the W-CDMA license, we estimated
that the construction of a nationwide W-CDMA network would require capital
expenditures amounting to approximately Won 3.1 trillion over a six-year period.
We have not subsequently revised or updated this estimate. Accordingly, our
actual construction costs are likely to differ significantly from this original
estimate. Our actual capital expenditures for the construction of the W-CDMA
network will depend upon many factors, including the scope and timing of the
network roll-out, whether W-CDMA technology is widely implemented worldwide
(which could lower the cost of network equipment) and other factors. Our future
capital expenditures will be fixed after we have reviewed the progress of the
introduction and marketability of our W-CDMA service.
In September 2003, we entered into an agreement with Mobile
Broadcasting Corporation for the purposes of co-owning and launching a satellite
for the satellite DMB business. Under the terms of the agreement, SK Telecom is
committed to fund 34.7% of the cost of launching and maintaining the operations
of the satellite, which is expected to be approximately Won 92.0 billion. We
launched the satellite in March 2004. Although actual implementation of the
satellite DMB business will depend on many factors, including government
approvals that have yet to be obtained, our current expectations are to begin
commercial service in the middle of the first half of 2005.
From time to time, we may make other investments in telecommunications
or other businesses, in Korea or abroad, where we perceive attractive
opportunities for investment. From time to time, we may also dispose of existing
investments when we believe that doing so would be in our best interest.
13
As of December 31, 2003, our principal repayment obligations (on a
consolidated basis) with respect to long-term borrowings, bonds and obligations
under capital leases outstanding were as follows for the periods indicated:
TWELVE MONTHS ENDING DECEMBER 31, TOTAL
(In Billions of Won)
2004....................................... W 1,368.4
2005....................................... 501.6
2006....................................... 805.3
Thereafter................................. 1,000.0
We also intend to incur research and development expenses, which are
influenced by the MIC, which makes annual recommendations concerning the level
of our research and development spending. Our research and development expenses
(including donations to research institutes and educational organizations)
equaled 2.8% of operating revenue in 2003 and 2.8% of operating revenue for the
nine month period ended September 30, 2004.
We anticipate that capital expenditures, repayment of outstanding debt
and research and development expenditures will represent our most significant
use of funds during the remainder of 2004 and thereafter. To fund our scheduled
debt repayment and planned capital expenditures over the next several years, we
intend to rely primarily on funds provided by operations, as well as bank and
institutional borrowings, and offerings of debt or equity in the domestic or
international markets. In particular, we expect that we will require external
sources of financing to fund our construction of the W-CDMA network. We believe
that these sources will be sufficient to fund our planned capital expenditures
for the remainder of 2004. Our ability to rely on these alternatives could be
affected by the liquidity of the Korean financial markets or by government
policies regarding Won and foreign currency borrowings and the issuance of
equity and debt. Our failure to make needed expenditures would adversely affect
our ability to sustain subscriber growth and provide quality services and,
consequently, our results of operations.
No commercial bank in Korea may extend credit (including loans,
guarantees and purchase of bonds) in excess of 20% of its shareholders' equity
to any one borrower. In addition, no commercial bank in Korea may extend credit
exceeding 25% of the bank's shareholders' equity to any one borrower and to any
person with whom the borrower shares a credit risk. We believe that we have
never operated near our limit with any Korean commercial bank.
We generally collect refundable, non-interest bearing deposits from our
customers as a condition to activating their service. Subject to the approval of
the MIC, we set the amounts to be collected for deposits for cellular services.
Effective February 1, 1996, we generally require cellular subscribers to pay a
facility deposit of Won 200,000. These deposits were an important source of
interest-free capital for us and historically funded a substantial portion of
our capital expenditures. Since 1997, we have been offering existing and new
cellular subscribers the option of obtaining facility insurance from the Seoul
Guarantee Insurance Company, instead of paying the facility deposit. In order to
obtain this facility insurance, subscribers must meet Seoul Guarantee Insurance
Company's credit requirements and pay a Won 10,000 premium for three
14
years of coverage. Since August 1, 2002, SK Telecom has been paying initial
premium for the first three years as well as renewal premium on behalf of the
subscriber who elects to have facility insurance. For each defaulting insured
subscriber, Seoul Guarantee Insurance Company reimburses us up to Won 350,000.
We refund the facility deposit to any existing subscriber who elects to have
facility insurance. As a result of the facility insurance program, we have
refunded a substantial amount of facility deposits, and facility deposits
decreased from Won 44.2 billion as of December 31, 2003 to Won 33.3 billion as
of September 30, 2004. We do not expect to have a significant amount of facility
deposits available for capital expenditures in the future.
DIVIDEND POLICY
In 2004, we amended our articles of incorporation to permit payment of
interim dividends in accordance with relevant laws. On July 23, 2004, SKT's
board of directors approved the interim dividend rate of 1,000 Korean Won per
common stock for the first half of fiscal year 2004. The shareholders who are
registered in the SKT's shareholders registry as of June 30, 2004 were entitled
to receive the interim dividends. The interim dividend was paid in August 2004.
The total amount of the interim dividend paid was 73,614,296,000 Korean Won. The
overall dividend payout ratio with respect to dividends for 2004 is currently
expected to be up to 25% of net income from 2004.
DERIVATIVE INSTRUMENTS
In connection with the issuance of our US$300 million notes in April
2004, we entered into currency swap agreements and currency forward contracts
with three banks to reduce our foreign currency exposure.
In May 2004, we sold US$329.5 million in zero coupon convertible notes
due 2009. These convertible notes are convertible by the holders into shares of
our common stock at the rate of Won 235,625 per share. In connection with the
issuance of the zero coupon convertible notes, we deposited 1,645,000 shares of
our common stock with Korea Securities Depository to be reserved and used to
satisfy the note holders' conversion rights. If (1) the exercise by the holder
of the conversion right would be prohibited by Korean law or we reasonably
conclude that the delivery of common stock upon conversion of these notes would
result in a violation of applicable Korean law or (2) we do not have a
sufficient number of shares of our common stock to ratify the conversion right,
then we will pay a converting holder a cash settlement payment. In such
situations, we intend to sell such number of treasury shares held in trust for
us that corresponds to the number of shares of common stock that would have been
deliverable in the absence of the 49% foreign shareholding restrictions imposed
by the Telecommunications Law or other legal restrictions. We entered into a
swap agreement to reduce our exposure with respect to cash settlement payments
exceeding the proceeds from sales of treasury shares held in trust.
We may consider in the future entering into additional currency swap
agreements, currency forward contracts transactions and other arrangements
solely for hedging purposes.
15
OTHER INFORMATION
As a condition to the approval of the merger of Shinsegi into SK
Telecom in January 2002, the MIC imposed certain conditions on us. The MIC
periodically reviews our compliance with the conditions to our merger with
Shinsegi. On May 25, 2004, a policy advisory committee to the MIC announced the
results of its review and stated that the committee believed that our market
dominance may significantly restrict competition in the telecommunications
market and that we have violated a merger condition related to our acquisition
of Shinsegi by providing subsidies to handset buyers. The advisory committee
subsequently recommended that the MIC extend the post-merger monitoring period
by two years until January 2007 and take appropriate corrective measures against
us for providing subsidies to handset buyers. On June 7, 2004, MIC imposed a Won
11.9 billion fine on us and extended the post-merger monitoring period until
January 2007.
On May 25, 2004, we voluntarily undertook to limit our market share to
52.3% of the wireless telecommunications market through the end of 2005, the
level of our market share at the time of the approval of our merger with
Shinsegi in January 2002. As of September 30, 2004, we had approximately 18.6
million subscribers, representing a market share of approximately 51.5%. If we
are subject to additional market share limitations in the future, our ability to
compete effectively will be impeded.
16
SK TELECOM CO., LTD.
NON-CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2004 AND DECEMBER 31, 2003
In millions of Korean won
----------------------------------
As of Dec. 31, As of Sep 30,
ASSETS 2003 2004
--------------- ---------------
CURRENT ASSETS :
Cash and cash equivalents W 28,393 W 54,881
Short-term financial instruments 100,513 159,884
Trading securities 858,739 420,376
Current portion of long-term investment securities 85,861 27,090
Accounts receivable - trade (net of allowance
for doubtful accounts of W67,424 million in 2004
and W56,805 million in 2003) 1,438,836 1,359,706
Short-term loans (net of allowance for doubtful
accounts of W562 million in 2004 and
W516 million in 2003) 51,102 55,694
Accounts receivable - others (net of allowance
for doubtful accounts of W16,172 million in 2004
and W15,979 million in 2003) 811,496 1,785,905
Inventories 8,024 13,779
Accrued income and others 77,742 105,018
--------------- ---------------
Total Current Assets 3,460,706 3,982,333
--------------- ---------------
NON-CURRENT ASSETS :
Property and equipment, net 4,551,626 4,397,871
Intangible assets, net 3,600,268 3,438,343
Long-term investment securities 855,195 915,350
Equity securities accounted for using the equity method 563,539 796,387
Long-term loans (net of allowance for doubtful
accounts of W19,152 million in 2004 and
W19,502 million in 2003) 41,591 26,169
Guarantee deposits 246,004 245,078
Long-term deposits and others 57,030 84,994
--------------- ---------------
Total Non-Current Assets 9,915,253 9,904,193
--------------- ---------------
TOTAL ASSETS W 13,375,959 W 13,886,526
=============== ===============
(Continued)
17
SK TELECOM CO., LTD.
NON-CONSOLIDATED BALANCE SHEETS (CONTINUED)
SEPTEMBER 30, 2004 AND DECEMBER 31, 2003
In millions of Korean won
---------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY As of Dec. 31, As of Sep 30,
2003 2004
-------------- --------------
CURRENT LIABILITIES :
Accounts payable W 1,117,835 W 1,011,729
Short-term borrowings 728,669 490,000
Income taxes payable 399,852 120,097
Accrued expenses 401,245 402,091
Current portion of long-term debt, net 1,364,264 998,347
Current portion of facility deposits 10,824 14,491
Others 209,285 251,578
-------------- --------------
Total Current Liabilities 4,231,974 3,288,332
-------------- --------------
LONG-TERM LIABILITIES :
Bonds payable, net 2,256,644 2,727,513
Long-term borrowings 1,633 --
Facility deposits 44,197 33,316
Long-term payables - others, net of present value
discount of W76,042 million in 2004 564,119 573,958
W85,881 million in 2003)
Accrued severance indemnities, net 63,663 96,390
Deferred income tax liabilities 242,057 340,269
Others 29,834 77,982
-------------- --------------
Total Long-Term Liabilities 3,202,147 3,849,428
-------------- --------------
Total Liabilities 7,434,121 7,137,759
-------------- --------------
STOCKHOLDERS' EQUITY :
Capital stock 44,639 44,639
Capital surplus 2,915,964 2,983,166
Retained earnings :
Appropriated 4,743,822 4,733,936
Unappropriated 396,527 1,074,700
Capital adjustments :
Treasury stock (2,047,103) (2,047,105)
Unrealized loss on valuation of long-term
investment securities (156,948) (134,612)
Equity in capital adjustments of affiliates 41,196 125,843
Stock options 3,742 4,565
Unrealized loss on valuation of currency swap
-- (36,367)
-------------- --------------
Total Stockholders' Equity 5,941,838 6,748,767
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY W 13,375,959 W 13,886,526
============== ==============
18
SK TELECOM CO., LTD.
NON-CONSOLIDATED STATEMENTS OF INCOME
NINE MONTH ENDED SEPTEMBER 30, 2003 AND 2004
In millions of Korean won
------------------------------
2003 2004
------------- -------------
OPERATING REVENUE W 7,039,847 W 7,218,832
------------- -------------
OPERATING EXPENSES
Labor cost 254,382 324,409
Commissions paid 1,661,094 2,168,565
Depreciation and amortization 1,026,651 1,113,416
Network interconnection 606,740 613,477
Leased line 225,261 266,597
Advertising 255,629 248,286
Cost of goods sold 15,958 2,618
Others 606,229 716,264
------------- -------------
Sub-total 4,651,945 5,453,631
------------- -------------
OPERATING INCOME 2,387,902 1,765,201
------------- -------------
OTHER INCOME :
Interest income 46,714 52,590
Dividends 25,923 22,704
Commissions 72,674 24,356
Foreign exchange and translation gains 11,576 10,135
Reversal of allowance for doubtful accounts 161 453
Gain on disposal of property and equipment 1,449 1,629
Equity in earnings of affiliates -- 58,240
Others 38,667 25,903
------------- -------------
Sub-total 197,164 196,009
------------- -------------
OTHER EXPENSES :
Interest and discounts 284,241 235,477
Donations 12,421 7,656
Foreign exchange and translation losses 2,661 2,718
Loss on disposal and impairment of property,
equipment and intangible assets 10,816 8,936
Loss on impairment of long-term investment securities 18,717 12,782
Loss on disposal of investment assets 77 806
Equity in losses of affiliates 18,063 --
Others 83,940 58,413
------------- -------------
Sub-total 430,935 326,787
------------- -------------
ORDINARY INCOME 2,154,131 1,634,423
INCOME BEFORE INCOME TAXES 2,154,131 1,634,423
PROVISION FOR INCOME TAXES 644,611 487,643
------------- -------------
NET INCOME W 1,509,520 W 1,146,780
============= =============
19
SK TELECOM CO., LTD.
NON-CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTH ENDED SEPTEMBER 30, 2003 AND 2004
In millions of Korean won
-------------------------------
2003 2004
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES : W 1,819,109 W 1,225,715
Net income 1,509,520 1,146,780
Expenses not involving cash payments : 1,261,842 1,324,995
Depreciation and amotization 1,118,445 1,204,097
interest expense 23,492 31,511
Provision for severance indemnities 31,921 41,851
Allowance for doubtful accounts 11,740 19,383
Foreign translation loss 1,984 1,899
Equity in losses of affiliates 18,063 --
Loss on impairment of long-term investment securities 18,717 12,782
Loss on disposal and impairment of property, -- --
and equipment and intangible assets 10,816 8,936
others 26,663 4,535
Income not involving cash receipts : 13,526 66,393
Foreign translation gain 10,675 175
Reversal of allowance for doubtful accounts 161 453
Equity in earnings of affiliates -- 58,240
Gain on disposal of property and equipment 1,449 1,629
others 1,242 5,896
Changes in assets and liabilities related to
operating activities: (938,727) (1,179,666)
Accounts receivable - trade (110,962) 59,738
Accounts receivable - others (127,836) (974,531)
Accrued income and others (42,318) (7,100)
Inventories 4,656 (5,814)
Accounts payable (878,114) (106,010)
Accrued expenses 115,040 846
Income taxes payable 3,224 (279,513)
Current portion of facility deposits (3,392) 3,666
Other current liabilities 100,921 50,220
Deferred income taxes 11,832 97,970
Severance indemnity payments (11,779) (19,139)
(Continued)
20
SK TELECOM CO., LTD.
NON-CONSOLIDATED STATEMENTS OF CASH FLOWS(CONTINUED)
NINE MONTH ENDED SEPTEMBER 30, 2003 AND 2004
In millions of Korean won
-----------------------------
2003 2004
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES : W (1,066,717) W (632,115)
Cash inflows from investing activities : 949,130 673,116
Decrease in short-term financial instruments -- --
Decrease in trading securities -- 440,894
Decrease in current portion of long-term investment securities 43,006 62,371
Decrease in short-term loans 33,260 60,197
Decrease in long-term financial instruments 3 50,000
Proceeds from sales of long-term investment securities 731,469 1,426
Proceeds from sales of equity securities accounted
for using the equity method 3,440 2,710
Decrease in long-term loans 650 --
Decrease in guarantee deposits 31,270 17,915
Decrease in other non-current assets 97,368 30,952
Proceeds from disposal of property and equipment 4,012 6,649
Proceeds from disposal of intangible assets 4,652 1
Cash outflows for investing activities : 2,015,846 1,305,231
Increase in short-term financial instruments 208,279 60,946
Increase of trading securities 163,234 --
increase in current portion of long-term debt 52,857 --
Increase in short-term loans 17,701 43,744
increase in long-term financial instruments 50,003 60,000
Increase in long-term loans 61 5,338
Acquisition of long-term investment securities 473,720 52,406
Acquisition of equity securities accounted for using
the equity method 30,648 95,252
Increase in guarantee deposits and other non-current assets 147,945 85,995
Acquisition of property and equipment 851,444 879,388
Increase in intangible assets 19,955 21,161
(Continued)
21
SK TELECOM CO., LTD.
NON-CONSOLIDATED STATEMENTS OF CASH FLOWS(CONTINUED)
NINE MONTH ENDED SEPTEMBER 30, 2003 AND 2004
In millions of Korean won
-------------------------------
2003 2004
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES : W (750,267) W (567,113)
Cash inflows from financing activities : 1,283,019 1,034,342
Increase in short-term borrowings 838,669 --
Issuance of bonds 442,472 1,018,020
Others 1,878 16,322
Cash outflows for financing activities : 2,033,286 1,601,455
Repayment of short-term borrowings -- 238,669
Repayment of current portion of long-term debt 471,534 868,403
Repayment of bonds 19,840 --
Decrease in facility deposits 1,246 10,880
Payment of dividends 151,739 478,279
Acquisition of treasury stock 1,379,337 2
others 9,590 5,222
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 2,125 26,488
CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE YEAR 6,228 28,393
NET INCREASE IN CASH AND CASH
EQUIVALENTS FROM THE MERGED ENTITY 43,224 --
CASH AND CASH EQUIVALENTS
------------- -------------
AT END OF THE PERIOD W 51,577 W 54,881
============= =============
22
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.
By /s/ Dong Hyun Jang
-----------------------------
Name: Dong Hyun Jang
Title: Vice President
Date: November 18, 2004
23