CONTENTS 01 PARTNER FOR NEW POSSIBILITIES TODAY’S RAPIDLY-CHANGING TELECOM INDUSTRY 14 FINANCIAL HIGHLIGHTS 16 LETTER TO SHAREHOLDERS LANDSCAPE PRESENTS NEW THREATS AND OPPORTUNITIES. 20 BOARD OF DIRECTORS 22 CORPORATE GOVERNANCE AT SK TELECOM, WE SEE THOSE THREATS AS BIG 24 MATERIALITY ANALYSIS 2011 REPORT ANNUAL NEW POSSIBILITIES FOR PARTNER 26 2011 AT A GLANCE OPPORTUNITIES. BUILDING ON THE THREE AXES OF OUR BUSINESS OVERVIEW 30 MARKETING TELECOM NETWORKS, SK PLANET PLATFORMS, AND SK TELECOM 32 NETWORKS 34 B2B SK HYNIX HARDWARE, WE ARE NOW LAYING A DYNAMIC 36 SK PLANET 38 SK HYNIX 40 SK BROADBAND / SK TELINK NEW FOUNDATION FOR GROWTH AS WE PREPARE FOR OUR SUSTAINABILITY MANAGEMENT NEXT LEAP FORWARD. 44 SUSTAINABILITY MANAGEMENT 46 CUSTOMER RELATIONSHIP MANAGEMENT 48 WIN-WIN PARTNERSHIPS OUR NEW VISION—PARTNER FOR NEW POSSIBILITIES—IS 50 ETHICS MANAGEMENT 52 ENVIRONMENTAL PRESERVATION ABOUT CREATING A BRIGHTER, MORE PROMISING FUTURE BY 54 COMMUNITY INVOLVEMENT MAKING THE DREAMS OF EVERYDAY LIFE A REALITY. FINANCIAL REVIEW 58 MD&A 67 FINANCIAL STATEMENTS AND OUR INNOVATION AND TRANSFORMATION HAVE ONLY 74 CORPORATE MILESTONES JUST BEGUN. 78 GLOBAL NETWORK 79 INVESTOR INFORMATION PLATFORMS PARTNER WE ARE BUILDING GLOBAL PLATFORMS THAT OFFER A DIVERSE RANGE OF COMPELLING SERVICES TO TENS OF MILLIONS OF USERS AROUND THE WORLD THROUGH SK PLANET. 03 FOR NEW POSSIBILITIES FOR PARTNER WE ARE EXPANDING CONNECTIONS BETWEEN CONSUMERS, BUSINESSES, AND DEVICES TO DRIVE THE INNOVATIONS THAT WILL TRANSFORM EVERY ASPECT OF LIFE. 02 NEW NETWORKS ANNUAL REPORT 2011 REPORT ANNUAL NEW POSSIBILITIES FOR PARTNER POSSIBILITIES SK HYNIX WILL BE A NEW CHANNEL HARDWARE FOR GROWTH THAT WILL ACCELERATE OUR EMERGENCE AS A GLOBAL SK TELECOM ICT PLAYER. PLATFORMS PARTNER WE ARE BUILDING GLOBAL PLATFORMS THAT OFFER A DIVERSE RANGE OF COMPELLING SERVICES TO TENS OF MILLIONS OF USERS AROUND THE WORLD THROUGH SK PLANET. 03 FOR NEW POSSIBILITIES FOR PARTNER WE ARE EXPANDING CONNECTIONS CONNECTIONS EXPANDING ARE WE BETWEEN CONSUMERS, BUSINESSES, BUSINESSES, CONSUMERS, BETWEEN AND DEVICES TO DRIVE THE INNOVATIONS INNOVATIONS THE DRIVE TO DEVICES AND THAT WILL TRANSFORM EVERY ASPECT ASPECT EVERY TRANSFORM WILL THAT OF LIFE. OF 02 NEW NETWORKS ANNUAL REPORT 2011 REPORT ANNUAL NEW POSSIBILITIES FOR PARTNER POSSIBILITIES SK HYNIX WILL BE A NEW CHANNEL HARDWARE FOR GROWTH THAT WILL ACCELERATE OUR EMERGENCE AS A GLOBAL SK TELECOM ICT PLAYER. PLATFORMS PARTNER PLATFORMS GLOBAL BUILDING ARE WE THAT OFFER A DIVERSE RANGE OF OF RANGE DIVERSE A OFFER THAT COMPELLING SERVICES TO TENS OF OF TENS TO SERVICES COMPELLING MILLIONS OF USERS AROUND THE THE AROUND USERS OF MILLIONS WORLD THROUGH SK PLANET. SK THROUGH WORLD 03 FOR NEW POSSIBILITIES FOR PARTNER WE ARE EXPANDING CONNECTIONS CONNECTIONS EXPANDING ARE WE BETWEEN CONSUMERS, BUSINESSES, BUSINESSES, CONSUMERS, BETWEEN AND DEVICES TO DRIVE THE INNOVATIONS INNOVATIONS THE DRIVE TO DEVICES AND THAT WILL TRANSFORM EVERY ASPECT ASPECT EVERY TRANSFORM WILL THAT OF LIFE. OF 02 NEW NETWORKS ANNUAL REPORT 2011 REPORT ANNUAL NEW POSSIBILITIES FOR PARTNER POSSIBILITIES SK HYNIX WILL BE A NEW CHANNEL HARDWARE FOR GROWTH THAT WILL ACCELERATE OUR EMERGENCE AS A GLOBAL SK TELECOM ICT PLAYER. POSSIBILITIES 02 NEW NEW 03 FOR FOR PARTNER PARTNER WE ARE BUILDING GLOBAL PLATFORMS PLATFORMS GLOBAL BUILDING ARE WE THAT OFFER A DIVERSE RANGE OF OF RANGE DIVERSE A OFFER THAT COMPELLING SERVICES TO TENS OF OF TENS TO SERVICES COMPELLING MILLIONS OF USERS AROUND THE THE AROUND USERS OF MILLIONS SK HYNIX WILL BE A NEW CHANNEL WORLD THROUGH SK PLANET. SK THROUGH WORLD PLATFORMS PLAYER.ICT OUR EMERGENCE AS A GLOBAL FOR GROWTH THAT WILL ACCELERATE HARDWARE OF LIFE. THAT WILL TRANSFORM EVERY ASPECT AND DEVICES TO DRIVE THE INNOVATIONS BETWEEN CONSUMERS, BUSINESSES, NETWORKS WE ARE EXPANDING CONNECTIONS SK TELECOM ANNUAL REPORT 2011 PARTNER FOR NEW POSSIBILITIES PARTNER FOR NEW POSSIBILITIES AT SK TELECOM, WEE HAVEHA TAKEN THE CHALLENGING ROADR TO MAKE TOMORROW’S DREAMS A REALITY. WE HAVE HA FIRMLY MAINTAINED OURUR MARKET LEADERSHIP ALONG THE WAY IN THE RAPIDLY-CHANGINGLY-CH ICT LANDSCAPE.PE. TODAY, WE ARE RISING TO THE CHALLENGE TO MAKE HISTORYTORY ONCE AGAIN IN 20200 WITHW A CLEAR VISION. BUILDING ON OUR STRONG CORE BUSINESSSS INFINFRASTRUCTURE ANAND TALENTED PEOPLE, THE ULTIMATE GOAL OF VISION 2020 IS TO CREATEEATE A MORE SATISFYINGSF AND PROSPEROUS LIFE FOR OUR CUSTOMERS. BY BRINGING CONTINUOUSINUOU INNOVATIONVAT TO EVERYDAY LIFE AND ELIMINATING BARRIERS BETWEEN INDUSTRIES, WE WWILL CRCREATE NEW VALUE AS AN ICT LEADER AND A FUTURE FULL OF NEW POSSIBILITIES.S. DELIVERVEERE 05 TOMORROWMO RO NEW POSSIBILITIES FOR PARTNER 04 SK TELECOM GROUP SHAREHOLDER VALUE TARGETSRGET ANNUAL REPORT 2011 REPORT ANNUAL SK TELECOM 2011 2015 2020 KRW 100 tn KRW 50 tn KRW 26.2 tn AT SK TELECOM, OUR STRONGNG AANANDN GROWING ICT BUSINESS PORTFOLIO SPANS THE FIELDS OF NETWORKS, PLATFORMS,MS, ANDA HARDWARE.H OUR FIXED AND WIRELESS NETWORKS ARE EXPANDING CONNECTIONSNS AMONGAM CONSUMERS,CON BUSINESSES, AND DEVICES OF ALL KINDS. GOING FORWARD, WE WILL BBE A "MOTHERSHIP"ER FOR ICT CONVERGENCE, R&BD, AND SYNERGY WITHIN OUR PORTFOLIO.LIO. SSK PLANET PLATFORMSTF WILL ATTRACT TENS OF MILLIONS OF USERS AROUND THE WORLD.LD. SSK HYNIX WILL BE A GLGLOBALLY COMPETITIVE MAKER OF MEMORY AND MOBILE DEVICE CHIPSETS.CHIP EACH OF THESE BUSINESSESB IS A WORLD-CLASS PLAYER IN ITS OWN RIGHT. TOGETHER,OGET WE BELIEVE THEY ANDND FUTURE NEW BUSINESSES WILL CREATE SYNERGY THATHAT WWILL GROW OUR COMBINED SHAREHOLDERRE VALUE FROM KRW 26.2 TRILLION IN 2011 TOO KRW 100 TRILLION IN 2020. STRENGTHENST T 07 PORTFOLIOP IO NEW POSSIBILITIES FOR PARTNER 06 2020 BUSINESS PORTFOLIO SERVICE PLATFORMS HARDWARE ANNUAL REPORT 2011 REPORT ANNUAL SK PLANET SK HYNIX TELCO SK TELECOM B2B SOLUTIONS FIXED M2M NETWORKS NETWORKS SMART NETWORK DEVICES R&D PERSONAL R&BD MARKETING ICT CONVER- GENCE NEW POSSIBILITIES AT SK TELECOM, WE AREA NOW ACTIVELY TRANSFORMINGNG OUR EXISTING TELECOM BUSINESS AS WE SHARPENRPE OUR CORE TELECOM CAPABILITIESLIT AND LEAD THE INDUSTRY INTO A FUTURE WHERE THTHERE ARE NO LIMITS. THIS TRTRANSFORMATION WILL ENABLE US TO DELIVER UNIQUE PRODUCTSPR BUILT WITH SUPERIORUP CONNECTIONS THROUGH SUCCESSFUL MARKETING, NETNETWORK, AND SOLUTIONON POSITIONING. IN MARKETING, WE WILL BE AN ICT INNOVATOR, DEVELOPINGEVE PRODUCTSTS THAT SATISFY CUSTOMER NEEDS. IN NETWORKS, WE WILL BE AN INTELLIGENTLLI POWERHOUSE,RH CREATING UNIQUE CONNECTIONS THAT ENHANCE OPENNESS AND EFFICIENCY.FFI ANAND IN SOLUTIONS, WE WILL BE A PARTNER FOR GROWTH, DELIVERING AND MANAGINGANA G TOTAL SOLUTIONS THAT FULLY ADDRESS ENTERPRISE CUSTOMER NEEDS. MAXIMIZEMIZM 09 CONNECTIVITYNN CT NEW POSSIBILITIES FOR PARTNER 08 TRANSFORMATION-DRIVEN TELECOM GROWTH ANNUAL REPORT 2011 REPORT ANNUAL SK TELECOM PAST TOMORROW MARKETING VOICE SERVICES ICT INNOVATOR NETWORKS COMMODITY CONNECTIONS INTELLIGENT POWERHOUSE SOLUTIONS CORPORATE SALES PARTNER FOR GROWTH AT SK TELECOM, WE CONTINUE TO SECURE NEW GROWTH ENGINES AS WE STEADILY EXPAND OUR CURRENT BUSINESS PORTFOLIO AND MOVE INTO ENTIRELY NEW FIELDS. ICT CONVERGENCE WILL ENABLE US TO CREATE PRODUCTS AND SERVICES THAT DELIVER NENEW VALUE BY BRINGING CONNECTIVITY TO MORE INDUSTRIES. TECHNOLOGY-DRIVENN GROGROWTH WILL ENABLE US TO CREATE INNOVATIVE NEW BUSINESSES AS WE CONDUCTCT WORLD-CLASSRLD R&BD IN DIVERSE TECHNICAL FIELDS. PORTFOLIO SYNERGY WILL ENABLEABL US TOO LLEAD THE ICT INDUSTRY IN CREATING INNOVATIVE VALUE AS WE BRING TOGETHERET NETWORKS,ORK SERVICES, AND HARDWARE. NEW MARKET ENTRY WILL ENABLEE US TO OVERCOMEME BUSINESS AND GEOGRAPHIC BARRIERS TO CREATE NEW ICT BUSINESSESSI THAT OPEN THETH DOOR TO NEW OPPORTUNITIES IN MARKETS AROUND THE GLOBE.OB EXPANDXP 11 OPPORTUNITIESPO N NEW POSSIBILITIES FOR PARTNER 10 SOCIAL & INDUSTRIALNDU RIA GROWTH ANNUAL REPORT 2011 REPORT ANNUAL SK TELECOM NEW ECO- SYSTEMS SK TELECOM OPEN COLLABORATIVE WIN-WIN SK PLANET PLAN K HYN SK HYNIX AT SK TELECOM, WE RECOGNIZE THAT OUR CORPORATE CULTURE AND PEOPLE MUSTT ALSO UNDERGO A TRANSFORMATION TO ACHIEVE OUR VISION 2020 GOALS. BUILDING ON THE PRINCIPLES OF THE SK MANAGEMENT SYSTEM AND OUR OWN VALUES OF SPEED,PE ACTION, AND TEAMWORK, WE ARE NOW FOCUSING ON CUSTOMERS, INVESTING IN PEOPLE,EO AND INSTITUTIONALIZING INNOVATION. OUR FOCUS ON CUSTOMERS AND THE PRINCIPLESIN TO ENSURE THIS VALUE WILL ALWAYS BE OUR TOP PRIORITY. OUR INVESTMENTSTM IN PPEOPLE WILL ELEVATE THE SKILLS AND CAPABILITIES OF EACH EMPLOYEE.EE AND OUR INSINSTITUTIONALIZED INNOVATION WILL INSTILL A BASIC ATTITUDE THAT CCONTINUALLY STRIVESTRIV TO MAKE THINGS BETTER. DRIVEDR 13 INNOVATIONN IO NEW POSSIBILITIES FOR PARTNER 12 PEOPLE & CULTURE INNOVATION ANNUAL REPORT 2011 REPORT ANNUAL SK TELECOM CULTURE & SYSTEM INNOVATION FOCUS INVEST INSTITU- ON IN TIONALIZE CUSTOMERS EMPLOYEES INNOVATION SKMS ACTUALIZATION FINANCIAL HIGHLIGHTS 2011 FINANCIAL HIGHLIGHTS 2011 SK TELECOM SHAREHOLDERS In billions of KRW 2010 2011 Operating Results Other Domestic Revenue 15,599.2 15,988.3 Shareholders 15 EBITDA (1) 4,464.8 4,518.0 20.4% Net income 1,766.8 1,582.1 Balance Sheets Foreign Shareholders Total assets 23,132.4 24,366.0 40.3% Cash & marketable securities 1,627.1 2,725.2 Treasury Shares 14 Total liabilities 10,724.4 11,633.3 13.7% Interest-bearing debt 5,805.0 5,796.0 Shareholders’ equity 12,408.0 12,732.7 Financial Ratios AL SK Holdings H ldi EBITDA margin 28.6% 28.3% 25.2% 2011 REPORT ANNUAL NEW POSSIBILITIES FOR PARTNER Net income margin 11.3% 9.9% Debt-to-equity ratio (2) 46.8% 45.5% SK TELECOM (1) EBITDA = Operating income + Depreciation + R&D related depreciation within R&D expense (2) Debt-to-equity ratio = Interest-bearing debt / Shareholders’ equity Employees 0.4% LETTER TO SHAREHOLDERS The year 2011 was a particularly meaningful year as we proactively adapted to the changes in our industry unleashed by the full-scale arrival of the “smart age”, generating visible results as we laid the groundwork for new growth. 17 We faced tough competition with explosive growth NEW POSSIBILITIES FOR PARTNER in smartphone subscribers and an expanding mobile data market during the year.