NewNew 3G3G ServicesServices StrategyStrategy TowardToward GrowthGrowth
MayMay 24,24, 20062006
3G CDMA Latin America Regional Conference 0 TableTable ofof ContentsContents
WirelessWireless IndustryIndustry inin KoreaKorea
StrategyStrategy towardtoward GrowthGrowth
What’sWhat’s Next?Next?
1 KoreanKorean WirelessWireless MarketMarket SK Telecom Remains the Undisputed Leader
Market Share by Subscribers Revenue (US$mn) (‘000s, %) B Co 17.0% 10,161 6,510 5,008 SKT 19,530 50.9% 2,675 12,302 A Co 32.1% SKT A Co B Co
Marketing Expense to Sales EBITDA (Margin)
(%) (US$mn)
% of 4,288 17.2% 19.1% 21.8% Revenue
(42.2%) 1,945 719 (38.8%) (26.9%)
SKT A Co B Co SKT A Co B Co As of 2005 End 2 Source: MIC, Earnings release WirelessWireless DataData ServiceService SKT has higher data revenue portion than most global peers. It also leads data service in Korean market including EV-DO service
Global Leadership in Data Services Comparison to Domestic Peers
15% 8% 26% 26.7% 25.1% 24.8% 92% 74% 85%
SKT A Co B Co Peer Avg.: 16.1% Voice Revenue Data Revenue 12.2% Source: 2Q ’05 earnings release for the companies, respectively
8.4% 8.3% EVDO Subscribers
A Co 34% SKT Verizon Sprint Telefonica Vodafone Docomo SKTSKT 66%66%
Source: Global Mobile, As of 3Q ’05 Source: 2Q ’05 earnings release for the companies, respectively 3 MaturingMaturing Korean Korean WirelessWireless MarketMarket Limited Potential for Growth in the Conventional Voice Market
Korean Wireless Market Trend SK Telecom’s Revenue Growth
(‘000s, %) (US$mn) 10,161 10,500 9,520 9,704 8,634 79.1% 38.7% 75.9% 6,227 70.1% 67.9% 38,342 36,586 61.2% 10.3% 33,592 32,342 1.9% 4.7% 3.3% 29,047 2001 2002 20032004 2005 2006E Revenue Annual Growth SK Telecom’s ARPU Trend (US$) 44.5 44.2 43.9 43.5
2001 2002 2003 2004 2005 Subscribers Penetration Source: MIC, NSO 2002 2003 2004 2005 4 StrategyStrategy towardtoward GrowthGrowth SKSK Telecom’s Telecom’s GrowthGrowth StrategyStrategy Domestic Business Complemented by New Business to Enhance Growth
Data Business
Convergence DomesticDomestic GXG MNOMNO BusinessBusiness Satellite DMB Cyworld Melon Telematics Global Business
NewNew BusinessBusiness
Digital Home US & Vietnam
Reinforce Domestic MNO Business through Introduction of New Services under a Convergence Environment and Enhance Global Business Initiatives to Create New Business Opportunities 6 StrengtheningStrengthening DataData BusinessBusiness Data Business to Fuel Top-line Growth
SK Telecom’s Major Brands for Its Wireless Data Services
Online & Mobile Integrated Services
Music Portal Cinema Portal Game Portal Telematics Financial Services Service
3G Multimedia Security Service Messaging Mobile Blogging Smart UI Service Service Service Color Mail
SK Telecom’s Terminal Platform
7 LeadingLeading DataData ServicesServices
MelOn is Korea’s Number One Paid Music Site in Terms of Revenue and Subscriber Base
PC
Mobile Phone MP3 Player
World 1st Convergent Music Portal Innovative Business Model Performance Update (’05) Monthly flat rate for unlimited 4.2M members with 600K Over-the-air music download service paying subscribers Real-time music listening Partnership with Intel to Revenue of US$45 million Music playable on mobile integrate with Intel’s Digital 2006 Target: 8 mn members, handset, PC and MP3 player Home Platform “Vive,” 900K paying subscribers and enabling access from TV revenue of ~US$70 million 8 LeadingLeading DataData ServicesServices
“Cyworld” is a popular wired & wireless community & blog service which became the trademark of ubiquitous and convergence service among Korean youths
메뉴
Mobile Cyworld Access Mini Homepage http://www.cyworld.com & Mini Homepage Main page with mobile phone
Web-based Community & Evolution to Convergence by Performance Update (’05) Personal Blog Service Mobile Integration
Decoration of Mini Homepage Access to the same online 1.2M cumulative mobile with photos, music and avatar service thru mobile phones Cyworld users Revenue of US$50 million Successful item sales model Ubiquitous features such as 2006 Target: 1.9mn cumulative Easy to navigate friends’ Mini updating Mini Homepage anytime anywhere mobile Cyworld users and Homepages revenue of US$55 million
9 LeadingLeading DataData ServicesServices
SKT’s premium game service portal, GXG, allows game manias to experience the extreme in mobile 3D games through various GXG- enabled mobile handsets
GXG Game Phone Models
3D game portal site launched in April 2005 Expect increased use in line with Popular PC, arcade & console aggressive expansion of HSDPA in 2006 games enjoyed any time, any where via mobile phone! 10 Convergence/UbiquitousConvergence/Ubiquitous BusinessesBusinesses Satellite DMB & Other New Businesses to Provide Platform for Growth
11 MobileMobile ConvergenceConvergence ServiceService Satellite DMB to Provide Platform for Growth
Satellite DMB 2005 Performance Service Feature Overview Commercialized in May 2005 to Price Plan strengthen top line growth via rental, Subscription US$20 Monthly US$13 monthly and activation fees Fee Fee
2005 Operating Performance Channel Lineup
► Subscriber: 400,000 Subscribers Movie, Music, Drama, Video 11ch Sports, Game, News, ► Revenue: US$21.5 million Education, Business, Etc. 2006 Subscriber Target: 1.2 million Music, News, Education Audio 26ch (Non-stop Music, DJ Music, Subscribers Variety, Etc.)
Satellite DMB has many advantages as; 25 Terminal Line-up by the End of 2005 ► It provides more extensive contents ► Numerous handsets facilitate Satellite DMB ► Provides a wider geographical coverage
12 MobileMobile ConvergenceConvergence ServiceService
Financial Services
Take out the chip from the credit card
Insert the chip into the back of “Multi-purpose Card” handset
It is ready to use now • Credit card, e-cash, bus & subway card Multi- • Membership: TTL, OK Cashbag™, etc. feature • Future: ID, medical insurance card, In partnership with banking, etc. Credit Cards E-cash Mileage • 0.9% of every credit card transaction -Visa Cash Point amount is put into mileage -LG
All-channel - Samsung • Off-line, online, mobile payment Payment -Korea Exchange Bank - Koram Bank -HanaBank
13 MobileMobile ConvergenceConvergence ServiceService
Telematics - NATE Drive
Personalized Navigation Service • Finds shortest route based on real time traffic information - traffic jam, emergency
• Voice-activated navigation • Launched in Mar 2002 - 300,000 subscribers (June 2005)
• Launched telematics service in Jeju island (Dec 2004)
14 DataData BusinessBusiness PerformancePerformance Revenue from Wireless Data Services Showing Robust Growth
Wireless Data Revenue* (US$mn) Wireless Data Revenue as % of Cellular Revenue
27.7% 27.6% 26.0% 25.0% 23.9% 661.5 653.0 597.0 547.7 544.2
'04 4Q '05 1Q '05 2Q '05 3Q '05 4Q
* Excluding revenues from connection fees 15 DataData BusinessBusiness PerformancePerformance
SKT’s Data Service Revenue Comes Mostly from Rich Contents 100% 14% 10% Data ARPU Portion* Sub-total: 86% 8% 8% 10% 4% 28% 18% 8% 5% 3% 9% 90% 31% 72% 82%
SKT KTF LGT y Voice Revenue Data Revenue it g ic e o S lt re n in rs s m e u u u g e SMS u a id B d t a h L A ic m s t * As of 2005 4Q M G V P m s O o e C M Data ARPU by Handset Type
(Million Subs) 18.8 19.5 18.3 EV-DO 50 (US$) 19.5% 34.5% 41.6% 18 36% of Total ARPU
59.3% 56.2% 53.4% 1X 35 8 22.3% of Total ARPU 21.2% 9.3% 5.0% 1xEV-DO / June 1X (4Q 05) 2003 2004 2005 IS-95A Total ARPU Data ARPU 16 GlobalGlobal BusinessBusiness
Building Global Value Network for Economies of Scale and Cross Benchmarking
Platform Licensing Network Consulting Portal ► Israel (Pelephone) ► Telstra in Australia ► UNISK and Viatech in China ► Taiwan (APBW) ► China Unicom - UNISK: JV with China Unicom ► Thailand (TA Orange) ► KDDI and NEC’s Operation - Viatech: Community Portal ► Singapore (SingTel, M1) Partner ► Indonesia (TelkomSel) ► Philippine (SMART)
Mongolia
Israel China Japan USA
Vietnam Taiwan Philippines Thailand Singapore MNO Indonesia ► S Telecom in Vietnam - Committed to build nation- wide coverage Australia ► SkyTel in Mongolia MVNO ► HELIO in US
17 GlobalGlobal BusinessBusiness Closer Look at Helio JV in the US
Tech-Savvy Youth & Young Adults Target Customer (Fun& Entertainment Seekers/Prosumer /Affluent) Korean American Community
Nationwide services leveraging the nationwide network coverage of Target Coverage host wireless carriers
Entertainment data services (VoD, M0D, Game, Etc.) leveraging its Killer Contents proximity to Hollywood and Silicon Valley
Distribution Building sales channel strategy aligned with new brand Channel Partnering with leading youth portals to maximize online sales
Building the company’s own wireless Internet platform, billing & Infrastructure customer care system, etc. led by SK Telecom
18 19 20 What’sWhat’s NextNext ?? SuccessSuccess FactorsFactors
Broadband Network • optimal portfolio of broadband Integrated Service NetworkNetwork networks suitable for each service characteristics • convergence services driven from customer’s needs Service
Convergent Terminal TerminalTerminal • Hybrid functionalities • Highly flexible to new services
22 IntegratedIntegrated ServiceService Each industry’s characteristics, such as communication’s interactivity, internet’s content and community, are integrated to create new services
NATE Drive SatelliteSatellite TelematicsTelematics Interactivity DMBDMB
MobileMobile InternetInternet
WirelineWireline WirelineWireline InternetInternet Content Community InternetInternet
• Melon(music) • Cizle(movie) • ddangkong(game) • Cyworld(homepage) • Nate on(messaging)
23 NetworkNetwork PortfolioPortfolio Growth from Technology Leadership
Multi-access Technologies Optimal Network Portfolio
Improve Data Rate & Mobility High-speed Data Demand
WLAN Hot Spot Mobility 95A/B EV-DO EV-DO rA 1X WCDMA HSDPA WiBro Hot Zone
WiBro WCDMA Cities
WLAN 2G/1X/DO Nationwide Coverage
Data Rate Coverage
Combination of networks Optimal Network Portfolio Service Convergence Seamless handover
24 ConvergentConvergent TerminalTerminal -- EvolutionEvolution
’04’04 4Q4Q ’05’05 1Q1Q ’05’05 2Q2Q
SCH W-120 SCH B-100 IM-8200 • WCDMA • S-DMB • S-DMB Ubiquitous MMMB • 1X/DO • JUNE • JUNE • JUNE • QVGA • QVGA Interface • WiBro PH-S4 • RFID MONETA • MONETA • ZigBee SCH V-650 M-Bank • 2 mega pixel SCH V-600 • JUNE,MP3 • QVGA • JUNE,MP3 • WIPI2.0 • MONETA Perceptual SV-520 • QVGA • 1.3 mega pixel Interface • JUNE,MP3 • MONETA Multimedia • 1.3 mega pixel • Healthcare A-GPS (Sensor) • Mini SDm • JUNE • QVGA SCH S-250 Integrated • 5 mega pixel Camera • 5 mega pixel Function • Intenna • 3X Zoom • Mini-HDD • QVGA • 7 mega pixel • VGA PH-S3500 PH-S6000 • Smart chip • GIGA GIGA Game • Bluetooth • 86M memory • 2 mega pixel • GIGA • WIPI1.2
25 SummarySummary
High quality 3G networks and capable terminals enabled value added services with increased ARPU
Convergence is the key word for the future
Strengthening global partnership to identify new business opportunity together
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