5G heading for tomorrow SK Telecom Annual Report 2017 3 4 About This Report 5G heading for tomorrow As an Integrated Annual Report prepared for the purpose between January 1 and December 31, 2017. This Report, The long-awaited 5G era is finally here. SK Telecom has been of reporting the annual performance to the investors and however, may disclose a portion of the qualitative data stakeholders, this Report comprises not only the financial generated until May 2018. In case of any changes in the performance records of SK Telecom, but also comprehen- previously reported data requiring attention, such data sive information on value creation including non-financial were re-calculated based on the 2017 data. The reporting preparing for the 5G era by expanding technology investments 5G technology performance, future prospects and efforts to improve period of this Report is one fiscal year, and the preceding company value (Value Creation Story). The BOD gave the report was the <SK Telecom Annual Report 2016> issued in final approval for this Report in June of 2018. July 2017. and strengthening global partnerships, in preparation of the world's Integrated Reporting According to International Guide- Third Party Assurance and Disclaimer lines Financial data in this Report have been audited by an first commercialization in 2019. Boasting ultra-high speed, ultra- This Report was prepared in accordance with the guid- independent audit corporation, and non-financial data for a better life ing principles and report content suggested in the <IR> have been assured independently by a third-party entity Framework. The International Integrated Reporting Coun- to secure the credibility of the Report. Greenhouse gas large capacity, and ultra-low latency, 5G is a core infrastructure which will lead the cil provides the International Integrated Reporting <IR> data have been separately assured as well. This Report Framework, a standard framework for the Integrated Re- contains predictive statements regarding SK Telecom’s porting of both financial and non-financial performances. and subsidiaries’ financial conditions, operating and sales innovation of the Fourth Industrial Revolution through the application of ICT to the This Report was also prepared in accordance with the performances, and plans and goals of management. De- comprehensive option of the GRI Standards, the first glob- spite external assurances, there might be gaps between al standard for sustainability reporting provided by the the future performance specified or inferred through offline world. SK Telecom will introduce unprecedented changes to Global Reporting Initiative (GRI). As one of the UN Global predictive statements and the company’s actual perfor- Compact (UNGC) LEAD companies, SK Telecom has been mance due to political, economic, and circumstantial un- undertaking management activities conforming to the 10 certainties surrounding business management. people and their homes, industries, and society through the conver- principles of UNGC, and this Report was prepared in ac- 5G technology cordance with the documentation principles prescribed in Global Initiatives and Partnerships the Communication on Progress (COP) of UNGC. In 2007, SK Telecom became a member of the UN Global gence of the 5G network and state-of-the-art information and Compact (UNGC), which was created through coopera- Scope and Boundary of the Report tion between UN organizations and businesses to improve In this Report, the terms, “SK Telecom” and “the com- social ethics and the international environment. Since pany,” refer to SK Telecom, excluding its subsidiaries that 2011, SK Telecom has participated as a GC LEAD company communication technology (ICT) such as arti- ficial intelligence for expanded industries are subject to consolidated financial statements in accor- to develop and expand best practices in accordance with dance with the Korean International Financial Reporting the UNGC Blueprint for Corporate Sustainability Leader- Standards (K-IFRS). The financial data is based on con- ship. Furthermore, SK Telecom complies with the manage- (AI), Internet of things (IoT), big data, augmented reality (AR), and virtual reality (VR). solidated financials, while the non-financial data on the ment system standard for social responsibility, ISO 26000, environmental performance and fulfillment of the corpo- and participates in the Carbon Disclosure Project (CDP) rate social responsibility is based on a non-consolidated and the business network program of the International In- The daily lives of individuals and business competitiveness will be enhanced through basis. The data presented in this Report exclude those of tegrated Reporting Council (IIRC). In recognition of its ef- SK Telecom’s overseas branches, subsidiaries and invested forts to achieve excellence in sustainability management, companies unless otherwise indicated in the general de- SK Telecom was listed in the Dow Jones Sustainability the changes created by 5G and ICT, to help society to grow in a scriptions and information section. Such data, however, Indices (DJSI) World Index for ten consecutive years since were included on a separate basis in cases in which they 2008. are likely to have a significant impact on the stakehold- healthy way. As a 5G leader, SK Telecom will evolve into a global ers’ decisions, in consideration of SK Telecom’s financial 5G technology and operational control and the actual influence and ef- fects of its business. As for the geographical boundaries, New ICT company and open the doors to a future that everyone has been this Report covers data for the company’s major places of business where over 99% of revenue is generated, which is in the Republic of Korea, while the temporal scope is dreaming of. We invite you to take a look at the exciting new 5G era that we are creating. for social value 5 6 SK TELECOM ANNUAL REPORT 2017 5G HEADING FOR TOMORROW SK Telecom’s 5G is a futuristic infrastructure designed for people who dream of a better life. An exciting new future that has existed only in our imaginations will 5G for soon unfold with the use of connected cars, smart homes, a better life and next-generation media services. 5G will bring a great deal of convenience and joy to the daily lives of its users. Connected cars, the hub of a hyper-connected society Connected cars, the hub of a hyper-connected society, are intelligent automobiles with autonomous driving capability. Following the introduction of a connected car which uses core infrastructure and technologies such as 5G, Vehicle to Everything (V2X), 3D ultra-high definition maps, and quantum cryptography, in November 2016, we have succeeded in operating multiple 5G autonomous driving vehicles in February 2018. 5G networks are expediting the realization of the vision of connected cars that connect drivers with automobiles and cities. 7 8 SK TELECOM ANNUAL REPORT 2017 5G HEADING FOR TOMORROW Realizing Artificial Intelligent platform-centered smart homes NUGU, which was introduced by SK Telecom as the first AI platform in Korea, is continuously learning and growing to create optimal smart homes for individuals. A wide variety of smart home services are already available, ranging from voice searches, music broadcasts, and news briefings to weather forecasts, product delivery orders, grocery shopping, and home and electrical appliance controls. SK Telecom is continuously expanding its network of service areas, including the introduction of T map x NUGU and B tv x NUGU. The addition of 5G networks to our AI platform will enable the realization of perfect smart homes to make people’s lives even more exciting and convenient. 9 10 SK TELECOM ANNUAL REPORT 2017 5G HEADING FOR TOMORROW Experiencing vivid impressions with immersive media SK Telecom’s “oksusu” mobile media platform is evolving into a next-generation immersive media platform through its convergence with 5G. Our newly introduced “oksusu Social VR” allows users to watch video content and interact with other users for an incredibly realistic viewing experience. We are creating excitement through 5G-based next-generation media technologies such as high-definition content combining AR and VR technologies, and AI speakers that use holograms. 11 12 SK TELECOM ANNUAL REPORT 2017 5G HEADING FOR TOMORROW Transforming traditional agro-livestock businesses into forward-thinking enterprises Traditional industries are transforming into the most futuristic industries with 5G. SK Telecom’s Smart Farm technology is creating intelligent farms that can dramatically boost their productivity. This is being done by equipping the agro-livestock industry with IoT and other cutting-edge ICT technologies, leading to innovations within the industry and healthy growth in farming incomes. We will promote Smart Farm, where next-generation ICT technologies are combined with agriculture and livestock, as the leading business in the Fourth Industrial Revolution. SK Telecom’s 5G is also an innovative infrastructure that can enhance the digital transformation of many industries. The deployment of cutting-edge ICT to industries such as agro-livestock, manufacturing, and distribution has the potential to boost their productivity exponentially. The 5G network will be the most reliable infrastructure 5G for in the Fourth Industrial Revolution that requires digital transformation. expanded industries 13 14 SK TELECOM ANNUAL REPORT 2017 5G HEADING FOR TOMORROW Enhancing productivity in the livestock industry with IoT-based domestic animal management