SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

SK Telecom Co., Ltd.

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 þ Form 40-F o

     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): o

     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): o

     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 o       No þ

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

 

 

ANNUAL REPORT

(From January 1, 2006 to December 31, 2006)

THIS IS A SUMMARY OF THE ANNUAL REPORT ORIGINALLY PREPARED IN KOREAN AND IS IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SUPERVISORY 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 NON-CONSOLIDATED BASIS IN ACCORDANCE WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN KOREA, OR KOREAN GAAP, 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.

Contents

I. Overview

II. Business

III. Financial Information

IV. Auditor’s Opinion

V. Management Structure

VI. Shares

VII. Employees

VIII. Transactions with Interested Parties

IX. Other Relevant Matters

Attachment: Korean GAAP Non-consolidated Financial Statements

I. OVERVIEW

1. Corporate Purpose of SK Telecom Co., Ltd. (the “Company”)

Business Objectives

1. Information and communication business

2. Handset sales and lease business

3. New media business

4. Advertisement business

5. Communication sales business

6. Personal property and real property lease business

7. Research and technology development related to Clause 1 through 4

8. Overseas business and trading business related to Clause 1 through 4

9. Manufacturing and distribution business related to Clause 1 through 4

10. Tourism

11. Other businesses related to the above

2. Company History

A. Changes Since Incorporation

(1) Date of Incorporation

 - March 29, 1984 (date of shareholders’ meeting for the incorporation): Incorporated as Korea Mobile
 Communications Service Co., Ltd.
 (Authorized capital: Won 500 million / Paid-in capital: Won 250 million)

(2) 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. Mergers

(1) Target: Shinsegi Communication Co., Ltd.

 - Date: January 13, 2002

 - Registration: January 16, 2002

(2) Target: SK IMT Co., Ltd.

 - Date: May 1, 2003

 - Registration: May 7, 2003

C. Significant Recent Business Events

 (1) Provision of Subsidies to Long-term Subscribers

Pursuant to the Telecommunications Business Act, as amended, telecommunications service providers may provide a one-time subsidy to subscribers who have contracts with terms of over 18 consecutive months within 2 years, beginning March 27, 2006. The Company has stated in its standard subscription contract the Company’s obligation to notify the subscribers at least 30 days prior to the cancellation of such subsidy provision.

(2) Acquisition of China Unicom Convertible Bonds

On July 5, 2006, the Company purchased zero coupon convertible bonds of China Unicom Ltd. (principal amount US$1,000,000,000) at the purchase price of Won 995,119 million, with the objective of fostering business cooperation that will build a foundation for the Company’s entry into the Chinese market. The conversion rights of the bonds are exercisable beginning on the 1 year anniversary of the issuance up to 7 days prior to the maturity date. The number of common shares of China Unicom which the Company would acquire pursuant to conversion would be 899,745,075 shares, which would represent, post-conversion, 6.67% of the outstanding common shares of China Unicom.

(3) Cancellation of Treasury Stock

Pursuant to the resolutions of the Company’s board of directors dated July 28, 2006 and August 31, 2006, the Company acquired 491,000 shares of the Company’s common stock (at a purchase price of Won 92,518,373,000) between August 1 and August 14, 2006 and 592,000 shares of the Company’s common stock (at a purchase price of Won 116,559,060,000) between September 4 and September 27, 2006, respectively, and cancelled such shares of treasury stock as of August 17 and September 29, 2006, respectively.

3. Information Regarding Shares

A. Total number of shares

(As of December 31, 2006)		(Unit: shares)

		Share type
Classification		Common shares				—				Total					Remarks
I. Total number of issuable 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			8,085,235				—				8,085,235				—
1. Capital reduction			—				—				—				—
2. Share cancellation			8,085,235				—				8,085,235				—
3. Redeemed shares			—				—				—				—
4. Others			—				—				—				—
IV. Total number of shares (II-III)			81,193,711				—				81,193,711				—
V. Number of treasury shares			8,526,252				—				8,526,252				—
VI. Number of shares outstanding (IV-V)			72,667,459				—				72,667,459				—

B. Capital Stock and Price per Share

(As of December 31, 2006)		(Unit: Won, shares)

Capital (total face value)

Price per share

Capital amount

Total amount

Capital/

Capital/

Total number of

Par value

Classification

Type

in financial

of distributed

Total number of

Number of distributed

issued shares

per share

statements

shares

issued shares

shares

(IV of A×b)

(b)

(a)

(VI of A×b )

(a / IV of A.)

(a / VI of A.)

Registered

Common shares

44,639,473,000

40,596,855,500

36,333,729,500

500

549.8

614.3

Total

44,639,473,000

40,596,855,500

36,333,729,500

500

549.8

614.3

Acquisition method						Amount at the												Retirement				Amount at the end of
		Type of share				beginning of period				Acquisition (+)				Disposition (-)(1)				(-)				period
Direct acquisition pursuant to Article 189-2		Common share					4,697,735				1,083,000				136,163				1,083,000				4,561,572
(1) of the relevant Act		Preferred share					—				—				—				—				—
Direct acquisition based		Common share					77,970				—				—				—				77,970
on causes other than
those stipulated in Article
189-2 (1) of the relevant Act		Preferred share					—				—				—				—				—
		Common share					4,775,705				1,083,000				136,163				1,083,000				4,639,542
Sub-total
		Preferred share					—				—				—				—				—
Indirect acquisition		Common share					3,886,710				—				—				—				3,886,710
through trust and other		Preferred share					—				—				—				—				—
agreements
		Common share					8,662,415				1,083,000				136,163				1,083,000				8,526,252
Total
		Preferred share					—				—				—				—				—

* Of the 4,639,542 shares of treasury stocks directly acquired based on causes other than those provided in Article 189-2 (1) of the relevant Act, 1,649,014 shares were deposited with the Korea Securities Depository as of December 31, 2006 for any exchange of the Company’s overseas exchangeable bonds.

D. Employee Stock Ownership Program

(1) Transactions with the Employee Stock Ownership Program

 a) On August 23, 1999, the Company lent Won 118.6 billion of purchase funds for employee stock ownership to the Employee Stock Ownership Program, and the Employee Stock Ownership Program re-lent the amount to the Company’s employees in accordance with its internal allotment standards.

	—		Terms of the loan: 8-year installment repayment plan following a three-year grace period
	—		The loan is deducted from wages for each individual to repay the Employee Stock Ownership Program, and is subsequently repaid to the company.

b) Repayment amount for the year ended December 31, 2006: Won 7,056,652

     — Details of the loan repayment

(As of December 31, 2006)		(Unit: in thousand Won)

Classification		Amount				Remarks
Initial loan amount			118,577,755			Lent on August 23, 1999 to 3,540 persons
Accumulated repayment amount			111,048,200			Includes Won 7.06 billion repaid during 2006
Balance			7,529,555			Expected full repayment by July 2010

(2) Voting Rights of the Employee Stock Ownership Program

During a designated period, to be 7 days or longer, each individual member of the Program may exercise his voting rights by expressing his intention on the shareholders’ meeting agenda through a written power of attorney to a designated proxy.

(3) Shareholdings of the Employee Stock Ownership Program

		(Unit: shares)

Account

Balance at the beginning

classification

Types of share

of period

Balance at the end of period

E.S.O.P. account

—

—

—

Member account

Common share

297,246

197,240

* As the relevant law requires an immediate transfer of the shares directly purchased by the employees to the account of the individual purchasers, the Company transfers and holds the employees’ stocks in separate individual accounts within the program once the number of shares for each individual member is determined.

4. Status of Voting Rights

(As of December 31, 2006)		(Unit: shares)

Classification

Number of shares

Remarks

Common share

81,193,711

Total outstanding shares (A)

—

Preferred share

—

Number of shares without voting

Common share

8,526,252

right (B)

Treasury shares

Preferred share

—

Shares with restricted voting

right under the Stock

Exchange Act and other laws

Common share

—

—

(C)

Shares with reestablished

voting right (D)

—

—

—

The number of shares with

Common share

72,667,459

exercisable voting right

—

Preferred share

—

(E = A — B — C + D)

5. Dividends and Others

		(Unit: in million Won except per share value)

						Year ended December 31,
Classification						2006				2005				2004
Par value per share							500				500				500
Current net income							1,446,598				1,871,380				1,494,852
Net income per share							19,734				25,421				20,307
Income available for distribution as dividend							1,608,891				1,930,626				1,377,007
Total cash dividend							582,386				662,529				758,227
Total stock dividend							—				—				—
Percentage of cash dividend to available income (%)							40.3				35.4				50.7
		Common share					3.6				4.9				5.2
Cash dividend yield ratio(%)		Preferred share					—				—				—
		Common share					—				—				—
Stock dividend yield ratio (%)		Preferred share					—				—				—
		Common share					8,000				9,000				10,300
Cash dividend per share		Preferred share					—				—				—
Stock dividend per share		Common share					—				—				—
		Preferred share					—				—				—

* The total amount of cash dividend for the year ended December 31, 2006 includes the interim dividend amount of Won 73,714 million, and the cash dividend amount per share of Won 8,000 for the same period includes the interim dividend amount of Won 1,000 per share.

* The total amount of cash dividend for the year ended December 31, 2005 includes the interim dividend amount of Won 73,614 million, and the cash dividend amount per share of Won 9,000 for the same period includes the interim dividend amount of Won 1,000 per share.

* The cash dividend per share of Won 10,300 for the year ended December 31, 2004 includes the regular dividend of Won 5,100 (including the interim dividend amount of Won 1,000) and a special dividend of Won 5,200.

II. BUSINESS

1. Business Summary

A. Industry Status

(1) Characteristics of the Industry

     As of December 31, 2006, the number of domestic mobile phone subscribers reached 40.2 million and with a 83.2% penetration rate, and the Korean mobile communication market can be considered to have reached its maturation stage. However, considering the number of European countries with penetration rates exceeding 90%, additional future growth of the domestic market may be possible.

     The Korean mobile communications market continues to improve with the help of advances in network-related technology evidenced by the world’s first commercialization of CDMA2000 1x, CDMA 1x EV-DO, and the development of highly advanced handsets that enables the provision of convergence services for multimedia contents, mobile commerce, telematics, satellite DMB, digital home services and other related contents.

(2) Industry Growth

		(Unit: 1,000 persons)

Classification						End of 2006				End of 2005				End of 2004				End of 2003				End of 2002
Penetration rate (%)							83.2				79.4				75.9				70.1				67.9
		SK Telecom					20,271				19,530				18,783				18,313				17,220
Number of		PCS					19,926				18,812				17,803				15,279				15,123
subscribers		Total					40,197				38,342				36,586				33,592				32,342

(Data: Ministry of Information and Communication website)

(3) Market Characteristics

     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. With the market penetration rate reaching as high as 83.2% (as of the end of December 2006), the customer base is continuing to expand to include elementary school and pre-school children. Although demand to date has primarily been in the domestic market, as the business territory expands to overseas market, the size of overseas sales is expected to grow in the near future. Seasonal and economic fluctuations have much less impact on the Korean mobile communication market compared to other industries.

B. Company Status

(1) Market Share

* Historical market share of the Company

		(Unit: %)

Classification		2006				2005				2004
Mobile phone			50.4				50.9				51.3

* Comparative market share

(As of December 31, 2006)		(Unit:%)

Classification

SK Telecom

KTF

LG Telecom

Market share

50.4

32.1

17.5

(Data: Ministry of Information and Communication website)

(2) New Business Contents and Prospects

a) Expansion of U.S. market operations through commencement of “Helio” service

	—		Resolution for capital investment regarding Mobile Virtual Network Operator (MVNO) service in the U.S. (January 26, 2005)
	—		Investment amount: US$220 million (From 2005 to 2007)
	—		Investment method: Establishment of a joint venture with EarthLink, which is one of the three major Internet service providers in the U.S.
	—		Service provided: MVNO (Mobile Virtual Network Operator)
		•	Subscriber recruitment and service provision based on service facilities and fee plans
		•	Combination of the Company’s mobile communications business capabilities and data service technology with the local customer base, marketing infrastructure and brand power of EarthLink
		•	Planning to provide additional services related with music, games and messaging for target customers
	—		Status: As of December 31, 2006, the Helio service had approximately 70,000 subscribers and average revenue per user (ARPU) of approximately US$100.

b) Commencement of Commercial High Speed Downlink Packet Access (“HSDPA”) Service (May, 2006)

	—		Building on an advanced WCDMA network for data transmission, improve the Company’s long-term growth base through the development of new products with strong visual components (such as video phones and other video content) and the expansion of global roaming services;
	—		Planning to increase customer preference for HSDPA by capturing the early adopter and heavy user markets and to raise awareness of HSDPA as a premium service;
	—		Nationwide HSDPA network expected to be completed in March 2007.
	c)		Commencement of Commercial Wireless Broadband (“WiBro”) Service (June 2006)
	—		On January 20, 2005, the Company, along with Korea Telecom, obtained rights to the WiBro business following the review of the Information and Communications Policy Review Committee
	—		Currently servicing six HotZone areas in the Korea University, Shinchon, Hanyang University, Myungdong and Euljiro areas in Seoul;
	—		Plan to expand HotZone service and to introduce partial flat rate plans in light of various customers’ different usage patterns.

2. Major Products

A. Status of Major Products as of December 31, 2006

		(Unit: in million Won, %)

Business field

Sales type

Item

Major trademarks

Sales amount (ratio)

Information and communication

10,497,773

Mobile phone

June, NATE and others

(98.56

%)

Services

Others

Others

153,179 (1.44

%)

B. Price Trend of Major Products

Item				During 2006				During 2005				During 2004
Mobile phone		Basic fee (per month)			13,000				13,000				13,000
(Based on standard call charge)		Service fee (per 10 seconds)			20				20				20

* Caller ID service became free of charge beginning January 2006.

3. Investment Status

A. Investments in Progress

(Unit: Won 100 million)

Amount

Subject of

Total

already

Future

Business field

Classification

Investment period

investment

Investment effect

investments

invested

investment

Network,

Capacity increase and

Upgrade/

systems and

quality improvement;

Network/Common

New installation

2006

others

systems improvement

16,000

15,175

—

B. Future Investment Plan

Expected investment amount

Expected investment for each year

(Unit: Won 100 million)

Business field

Asset type

Amount

2007

2008

Investment effect

Network, systems

Upgrades to the existing services

Network/Common

and others

15,500

15,500

N/A

and provision of new services

Total

15,500

15,500

N/A

—

4. Derivative Products and Others

A. Derivatives Contracts

(1) FX Swap

a) Purpose of Contracts: Currency Exchange Risk Hedging

b) Contract Terms

- Cross Currency Swap

(As of December 31, 2006)										(Unit: in million Won)
										Income/loss on
Contract amount		Contract party		Contract date				Proceeds payment method		valuation
								Exchange on the date immediately
								preceding the principal and interest
US$125 million		Citibank		March 23, 2004				payment date		(37,470)
US$125 million		Credit Suisse		March 23, 2004				Same as above		(37,289)
US$50 million		BNP Paribas		March 23, 2004				Same as above		(14,962)
US$100 million		Calyon		October 10, 2006				Same as above		(747)
Total: US$400 million		—			—			—		(90,468)

- FX Swap

(As of December 31, 2006)						(Unit: in million Won)
Contract amount		Contract party		Contract date		Proceeds payment method		Income on valuation
US$100 million		Credit Suisse		May 27, 2004		Exchange before principal payment date			(22,503	)
US$300 million		Hana Bank
US$140 million		Shinhan Bank
US$140 million		Woori Bank		June 30, 2006		Payment of US Dollars and receipt of Korean Won on July 5, 2007			16,660
US$140 million		Korea Exchange Bank
US$140 million		Citibank
US$140 million		Barclays Capital

(2) Interest Rate Swap

a) Purpose of Contracts: Interest Rate Risk Hedging

b) Contract Terms

- IRS

								(Unit: in million Won)
(As of December 31, 2006)								Income/loss on
Contract amount		Contract party		Contract date		Proceeds payment method		valuation
2,000		Shinhan Bank		June 28, 2006		Fixing of interest payment date / exchange of floating interest rate			(454	)

5. R&D Investments

														(Unit: in thousand Won)
Category						2006				2005				2004				Remarks
Raw material							184,969				234,889				255,320				—
Labor							33,986,701				35,191,759				36,026,539				—
Depreciation							134,461,257				121,335,301				122,097,858				—
Commissioned service							83,751,223				86,536,635				85,646,995				—
Others							35,680,197				41,730,732				39,951,341				—
Total R&D costs							288,064,347				285,029,316				283,978,053				—
Accounting		Sales and administrative expenses					277,807,352				273,223,885				272,290,385				—
		Development expenses (Intangible assets)					10,256,995				11,805,431				11,687,668				—
R&D cost / sales amount ratio (Total R&D costs / Current sales amount×100)							2.70%				2.81%				2.93%				—

6. Other Matters

A. External Fund Procurement Summary

* Domestic procurement

		Beginning								Reduction from				(Unit: in million Won)
Source of procurement		balance				New procurement				repayment				Ending balance				Remarks
Bank			—				200,000				—				200,000				—
Insurance company			—				—				—				—				—
Merchant banking			—				—				—				—				—
Loan specialty financial company			—				—				—				—				—
Mutual savings bank			—				—				—				—				—
Other financial institutions			24,543				—				14,704				9,839				—
Total procurement from financial institutions			24,543				200,000				14,704				209,839				—
Corporate bond (public offering)			2,500,000				200,000				800,000				2,100,000				—
Corporate bond (private offering)			—				—				—				—				—
Paid-in capital increase (public offering)			—				—				—				—				—

		Beginning					New			Reduction from				(Unit: in million Won)
Source of procurement		balance				procurement				repayment				Ending balance				Remarks
Paid-in capital increase (private offering)			—				—				—				—				—
Asset —backed securitization (public offering)			—				—				—				—				—
Asset —backed securitization (private offering)			—				—				—				—				—
Others			—				—				—				—				—
Total procurement from capital market			2,500,000				400,000				800,000				2,100,000				—
Borrowings from shareholder, officer and affiliated company			—				—				—				—				—
Others			—				—				—				—				—
Total			2,524,543				600,000				814,704				2,309,839				—

										Reduction in
		Beginning								repayment and				(Unit: in million Won)
Procurement source		balance				New procurement				others				Ending balance				Remarks
Financial institutions			—				94,800				1,840				92,960			Exchange rate adjustment
Overseas securities(Corporate bonds)			303,900				—				25,020				278,880			Exchange rate adjustment
Overseas securities (shares and others)			385,885				—				29,529				356,356			Stock conversion
Asset —backed securitization			—				—				—				—				—
Others			—				—				—				—				—
Total			689,785				94,800				56,389				728,196				—

B. Credit Ratings

(1) Corporate Bonds

		Subject of				Credit rating entity		Evaluation
Credit rating date		valuation		Credit rating		(Credit rating range)		classification
March 12, 2004		Corporate bond		AAA		Korea Ratings		Current valuation
March 15, 2004		Corporate bond		AAA		National Information on Credit Evaluation, Inc.		Current valuation
April 23, 2004		Corporate bond		AAA		Korea Investors Service, Inc.		Current valuation
April 23, 2004		Corporate bond		AAA		Korea Ratings		Current valuation
December 6, 2004		Corporate bond		AAA		Korea Investors Service, Inc.		Current valuation
December 6, 2004		Corporate bond		AAA		National Information on Credit Evaluation, Inc.		Current valuation
March 11, 2005		Corporate bond		AAA		Korea Investors Service, Inc.		Current valuation
March 11, 2005		Corporate bond		AAA		Korea Ratings		Current valuation
March 14, 2005		Corporate bond		AAA		Korea Ratings		Regular valuation
June 14, 2005		Corporate bond		AAA		National Information on Credit Evaluation, Inc.		Regular valuation
June 13, 2006		Corporate bond		AAA		National Information on Credit Evaluation, Inc.		Regular valuation
June 21, 2006		Corporate bond		AAA		Korea Ratings		Regular valuation
June 22, 2006		Corporate bond		AAA		Korea Investors Service, Inc.		Regular valuation
September 1, 2006		Corporate bond		AAA		National Information on Credit Evaluation, Inc.		Current valuation
September 1, 2006		Corporate bond		AAA		Korea Ratings		Current valuation
September 1, 2006		Corporate bond		AAA		Korea Investors Service, Inc.		Current valuation
October 27, 2006		Corporate bond		AAA		National Information on Credit Evaluation, Inc.		Current valuation
October 27, 2006		Corporate bond		AAA		Korea Ratings		Current valuation

(2) Commercial Paper (“CP”)

		Subject of				Credit rating entity		Evaluation
Credit rating date		valuation		Credit rating		(Credit rating range)		classification
January 26, 2004		CP		A1		National Information on Credit Evaluation, Inc.		Regular valuation
June 8, 2004		CP		A1		National Information on Credit Evaluation, Inc.		Current valuation
June 11, 2004		CP		A1		Korea Ratings		Current valuation
June 11, 2004		CP		A1		Korea Investors Service, Inc.		Current valuation

		Subject of				Credit rating entity		Evaluation
Credit rating date		valuation		Credit rating		(Credit rating range)		classification
June 13, 2005		CP		A1		Korea Investors Service, Inc.		Current valuation
June 14, 2005		CP		A1		National Information on Credit Evaluation, Inc.		Current valuation
June 16, 2005		CP		A1		Korea Ratings		Current valuation
June 13, 2006		CP		A1		Korea Investors Service, Inc.		Current valuation
June 21, 2006		CP		A1		National Information on Credit Evaluation, Inc.		Current valuation
June 22, 2006		CP		A1		Korea Investors Service, Inc.		Current valuation
September 1, 2006		CP		A1		Korea Ratings		Current valuation
December 27, 2006		CP		A1		National Information on Credit Evaluation, Inc.		Current valuation
December 27, 2006		CP		A1		Korea Investors Service, Inc.		Current valuation

(3) International Credit Ratings

				Credit rating		Credit rating company
Date of credit rating		Subject of valuation		of securities		(Credit rating range)		Evaluation type
June 14, 2005		Issuer Rating		A		Fitch (England)		Current valuation
July 14, 2005		Global Bonds		A2		Moody’s (U.S.A.)		Current valuation
July 14, 2005		Exchangeable Bonds		A2		Moody’s (U.S.A.)		Current valuation
July 27, 2005		Global Bonds		A		S&P (U.S.A.)		Current valuation
July 27, 2005		Exchangeable Bonds		A		S&P (U.S.A.)		Current valuation

III. FINANCIAL INFORMATION

1. Summary Financial Statements

(Unit: in million Won)

		Year ended December 31,
Classification		2006				2005				2004				2003				2002
Current assets			4,189,325				4,172,485				3,854,345				3,460,706				2,746,991
• Quick assets			4,172,887				4,166,500				3,843,384				3,452,682				2,736,273
• Inventory			16,438				5,985				10,961				8,024				10,718
Fixed assets			11,624,728				10,349,191				10,166,360				9,915,253				9,974,227
• Investments			3,801,458				2,366,760				2,112,488				1,763,359				3,132,330
• Tangible assets			4,418,112				4,595,884				4,605,253				4,551,626				4,451,548
• Intangible assets			3,405,158				3,386,547				3,448,619				3,600,268				2,390,350

		(Unit in million Won)
		Year ended December 31,
Classification		2006				2005				2004				2003				2002
Total assets			15,814,053				14,521,676				14,020,705				13,375,959				12,721,218
Current liabilities			2,985,620				2,747,268				2,859,711				4,231,974				4,015,859
Fixed liabilities			3,522,006				3,516,528				4,033,902				3,202,147				3,168,412
Total liabilities			6,507,626				6,263,796				6,893,613				7,434,121				7,184,271
Capital			44,639				44,639				44,639				44,639				44,576
Capital surplus			2,962,699				2,966,198				2,983,166				2,915,964				2,884,385
• Surplus from share issuance			2,915,887				2,915,887				2,915,887				2,915,964				2,884,385
• Other capital surplus			46,812				50,311				67,279				—				—
Income surplus			7,844,753				7,269,861				6,156,708				5,140,349				4,897,099
Capital adjustment			(1,545,664	)			(2,022,817	)			(2,057,422	)			(2,159,114	)			(2,289,112	)
Total capital			9,306,427				8,257,881				7,127,091				5,941,838				5,536,948
Sales			10,650,952				10,161,129				9,703,681				9,520,244				8,634,049
Operation income			2,584,370				2,653,570				2,359,581				3,080,660				2,683,676
Ordinary income			2,021,643				2,554,613				2,115,778				2,714,194				2,179,993
Current net income			1,446,598				1,871,380				1,494,852				1,942,750				1,511,278

IV. AUDITOR’S OPINION

1. Auditor

2006		2005				2004
Deloitte Anjin LLC		Deloitte Anjin LLC				Deloitte Hana Anjin LLC

2. Audit Opinion

Term		Auditor’s opinion				Issues noted
Year ended December 31, 2006		Appropriate					—
Year ended December 31, 2005		Appropriate					—
Year ended December 31, 2004		Appropriate					—

3. Remuneration for Independent non-executive Auditors for the Past Three Fiscal Years

A. Audit Contracts

(Unit: in thousand Won)

Term

Auditors

Contents

Fee

Total hours

Year ended December 31, 2006

Deloitte Anjin LLC

Semi-annual review Quarterly review Non-consolidated financial statements audit Consolidated financial statements audit

656,000

6,206 (excluding time spent on consolidated and US GAAP audit)

Year ended December 31, 2005

Deloitte Anjin LLC

Semi-annual review Quarterly review Non-consolidated financial statements audit Consolidated financial statements audit

447,000

5,177

Year ended December 31, 2004

Deloitte Hana Anjin LLC

Semi-annual review Quarterly review Non-consolidated financial statements audit Consolidated financial statements audit

360,000

4,808

B. Non-Audit Services Contract with External Auditors

(Unit: in thousand Won)

Term		Contract date		Service provided		Service period		Fee
Year ended December 31, 2006		January 1, 2006		Tax consulting service for fiscal year 2006		25 days			20,000
		February 7, 2006		Tax training for employees of authorized exclusive dealers		50 days			45,000
		April 30, 2006		Tax consulting		7 days			45,000
		July 26, 2006		Financial consulting		7 days			40,000
		October 13, 2006		Evaluation of and preparation of recommendations for improvement of subsidiaries’ financial system infrastructure		10 days			49,500
		November 13, 2006		Preparation of responses to the U.S. S.E.C. comments on the Company’s Form 20-F for 2005		10 days			25,500
Year ended December 31, 2005		February 4, 2005		Advisory service regarding the set up of the internal control		9 days			46,080
		March 30, 2005		-Form 20-F for the year ended December 31, 2003		10 days			20,200
				-Response to the U.S. S.E.C. comments regarding the Form 6-K including the U.S. GAAP consolidated financial statements for the six months ended June 30, 2004
		March 31, 2005		Tax adjustment for the year ended December 31, 2004		7 days			24,920
		April 15, 2005		Tax consulting		3 days			5,000
		April 29, 2005		Tax consulting		7 days			19,000
		June 1, 2005		2004 English audit		20 days			86,000
		July 18, 2005		Tax consulting		5 days			13,500
		December 31, 2005		Tax consulting		All year (100 hours)			10,000
Year ended December 31, 2004		March 2, 2004		Consulting on the issuance of overseas unsecured debenture		17 days			49,500
		March 30, 2004		Tax adjustment for the year ended December 31, 2003		5 days			22,650
		April 1, 2004		Financial due diligence		6 days			6,100
		April 10, 2004		Thailand tax consulting		4 days			12,000
		April 14, 2004		Consulting on issuance of overseas exchangeable bond		15 days			48,800
		May 10, 2004		Indonesia tax consulting		4 days			9,600
		September 30, 2004		U.S. GAAP Consolidated Audit (yearly basis)		20 days			86,000
		September 30, 2004		U.S. GAAP Consolidated Audit (Semi-annual basis)		30 days			114,000
		October 15, 2004		Consulting on internal control recommendations		50 days			171,000

V. MANAGEMENT STRUCTURE

1. Summary of Management Structure

A. Board of Directors

(1) Authority of the Board of Directors

a)

Authority of the board of directors under Article 7 of the Regulations of the Board of Directors

	-		Convocation of shareholders’ meeting and submission of agenda
	-		Prior approval of financial statements
	-		Decisions on issuance of new shares
	-		Long-term borrowings, issuance of corporate bonds and redemptions
	-		Capital transfer of reserves
	-		Election of CEO and representatives
	-		Appointment of executive directors
	-		Establishment, transfer or closure of branches
	-		Enactment of and revision to the Regulations for the Board of Directors
	-		Annual business plan and budgeting
	-		Approval of investments of Won 15 billion or above
	-		Planned budget increases and changes for investments or Won 15 billion or above
	-		Diversification into new businesses
	-		Investments and joint ventures of Won 15 billion or above (excluding matters subject to prior approval by independent non-executive directors)
	-		Establishment of subsidiaries
	-		Guarantees of Won 15 billion or above (excluding matters subject to prior approval by independent non-executive directors)
	-		Transactions undertaken with related parties equal to or above the lesser of an amount equivalent to 10% of capital or Won 10 billion, and any material changes to such transactions in accordance with the Anti-trust Law and Fair Trade Act
	-		Enactment of and amendment to the Internal Trading Procedures

- Other matters considered necessary by the Board of Directors and those requiring Board of Directors’ approval under applicable laws

b)

Reporting items under Article 7.2 of the Regulations of the Board of Directors

-The representative director must report the following to the Board of Directors within two months after the date of occurrence:

	•		Results for the six months ended June 30 of each year
	•		Execution of investments between Won 5 billion and Won 15 billion
	•		New investments and joint ventures under Won 15 billion
	•		Acquisition of non-operational fixed assets
	•		Disposition of fixed assets of Won 15 billion or above
	•		Matters related to guarantees of under Won 15 billion
	•		Internal trading not subject to approval by the Board of Directors
	•		Matters delegated to the representative director that the Board of Directors requires to be reported

(2) Publication of Information on Director Candidates Prior to the Shareholders’ Meeting for the Election of Directors and Shareholders’ Nomination

	a)		On February 13, 2007, in the notice of the annual general meeting of shareholders, information on Jung Nam Cho, Sung Min Ha and Dal Sup Shim, candidates for the Board of Directors, was publicly disclosed.
	b)		There was no nomination by the shareholders.

(3) Significant Activities of the Board of Directors

Meeting		Date		Agenda		Approval
264th (the first meeting of 2006)		January 23, 2006		- Financial statements for the year ended December 31, 2005 - Annual business report for the year ended December 31, 2005 - Organization of Independent non-executive Director Nomination Committee - Amendment of regulation for the Compensation Review Committee		Approved as proposed Approved as proposed Approved as proposed Amendment to be proposed to the Board of Directors in April, 2006
265th (the second meeting of 2006)		February 14, 2006		- Convocation of the 22nd General Meeting of Shareholders		Approved as proposed
266th (the third meeting of 2006)		March 31, 2006		- Election of committee members		Approved as proposed

Meeting		Date		Agenda		Approval
267th (the fourth meeting of 2006)		April 26, 2006		- Amendment of regulations for the Compensation Review Committee - Election of committee member for the Compensation Review Committee - Establishment of the Service & Technology Center (STC) - Exercise of the iHQ call option		Approved after amendment Approved as proposed Approved as proposed Approved as proposed
268th (the fifth meeting of 2006)		May 26, 2006		- Issuance of overseas convertible bonds and approval of related treasury stock disposition plan, as amended		Approved as proposed
269th (the sixth meeting of 2006)		June 20, 2006		- Acquisition of China Unicom convertible bonds - Long-term borrowings		Approved as proposed Approved as proposed
270th (the seventh meeting of 2006)		July 28, 2006		- Interim dividends - Acquisition of the Company’s common stock for cancellation		Approved as proposed Approved as proposed
271st (the eighth meeting of 2006)		August 31, 2006		- Establishment of Global Committee and election of members - Issuance of corporate bonds and long-term borrowings - Acquisition of the Company’s common stock for cancellation - Expansion of WCDMA investment - Construction of TD-SCDMA Test-bed and investment for development of related services		Approved after amendment Approved as proposed Approved as proposed Approved as proposed Approved as proposed
272nd (the ninth meeting of 2006)		September 29, 2006		- Report on activities in July and August 2006		—
273rd (the tenth meeting of 2006)		October 27, 2006		- Issuance of corporate bonds		Approved as proposed
274th (the eleventh meeting of 2006)		November 24, 2006		- 2006 Operation Results and 2007 Plan for the Fair Trade Voluntary Compliance Program		—

Meeting		Date		Agenda		Approval
275 th				- Establishment of SKT China Holding Company		Approved as proposed
(the twelfth meeting		December 22, 2006		- Participation in capital increase of TU Media;		Approved as proposed
of 2006)				- 2007 Business Management Plan		Approved as proposed
276 th (the first meeting of 2007)		January 25, 2007		- Financial statements for the year ended December 31, 2006 - Annual business report for the year ended December 31, 2006		Approved as proposed Approved as proposed
277 th (the second meeting of 2007)		February 13, 2007		- Organization of the Independent Non-Executive Director Nomination Committee		Approved as proposed
278 th (the third meeting of 2007)		February 13, 2007		- Convocation of the 23rd General Meeting of Shareholders - Change in the Fair Trade Voluntary Compliance Program manager		Approved as proposed Approved as proposed
279 th (the fourth meeting of 2007)		March 9, 2007		- Election of the representative director and appointments of executive directors - Election of committee members		Approved as proposed Approved as proposed

(4) Committee Structure and Activities of the Board of Directors

a)

Independent non-executive Director Nomination Committee

- Organization

(As of February 13, 2007)

		Members
Number of Persons		Company Directors		Independent non-executive Directors
4		Shin Bae Kim, Sung Min Ha		Seung Taik Yang, Sang Jin Lee

          - Activities

Meeting		Date		Number of Attendees		Details
7th Meeting (the first meeting of 2006)		February 14, 2006		3 persons/4 persons		- Election of the Chairman: Jung Nam Cho - 22nd General Meeting of Shareholders: Nomination of Independent non-executive director candidates - Yong Woon Kim, Hyun Chin Lim
8th Meeting (the first meeting of 2007)		February 13, 2007		4 persons /4 persons		- Election of the Chairman: Seung Taik Yang - 23nd General Meeting of Shareholders: Nomination of Independent non-executive director candidates Dal Sup Shim

          * The Independent Non-executive Director Nomination Committee is a committee established under the provisions of the Articles of Incorporation.

     b) Compensation Review Committee

          - Organization

(As of March 9, 2007)

		Members
Number of Persons		Company Directors		Independent non-executive Directors
8 persons		-		Dae Sik Kim, Yong Woon Kim, Dae Kyu Byun, Dal Sup Shim, Seung Taik Yang, Jae Seung Yoon, Sang Jin Lee, Hyun Chin Lim

          - Activities

Meeting		Date		Number of Attendees		Details
The first meeting of 2006		May 25, 2006		7 persons/ 7persons		Election of chairman
The second meeting of 2006		June 20, 2006		5persons/ 7persons		Discussion of operation of the Compensation Review Committee
The third meeting of 2006		July 27, 2006		7 persons/ 7persons		same as above
The fourth meeting of 2006		August 30, 2006		7 persons/ 7persons		same as above
The fifth meeting of 2006		October 26, 2006		6persons/ 7persons		same as above

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

     c) Capex Review Committee

          - Organization

(As of March 9, 2007))

		Members
Number of Persons		Company Directors		Independent non-executive Directors
5 persons		Lee Bang Hyung		Dae Kyu Byun, Seung Taik Yang, Jae Seung Yoon, Sang Chin Lee

          - Activities

Meeting		Date		Number of Attendees		Details
The first meeting of 2006		February 13, 2006		4 persons/5 persons		- Additional report on the investment plan for 2006
The second meeting of 2006		April 25, 2006		4 persons/5 persons		- Establishment of the Service & Technology Center - Exercise of the iHQ call option
The third meeting of 2006		April 26, 2006		4 persons/5 persons		- Election of chairman - Approval of plans for investment in contents business and restrictions thereof
The fourth meeting of 2006		August 30, 2006		5 persons/5 persons		- Construction of TD-SCDMA Test-bed and investment for development of related services - Expansion of WCDMA investment
The fifth meeting of 2006		December 21, 2006		4 persons/ 5 persons		- Investment plan for 2007

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

     d) Globalization Committee

          - Organization

(As of March 9, 2007)

		Members
Number of Persons		Company Directors		Independent non-executive Directors
4 persons		Ha Sung Min		Dae Sik Kim, Dae Kyu Byun, Sang Chin Lee

          - Activities

Meeting		Date		Number of Attendees		Details
The first meeting of 2006		July 27, 2006		4 persons/ 4persons		- Report on Vietnam (S-Fone) and United States (HELIO) operations - Discussion on operation of Globalization Committee
The second meeting of 2006		September 28, 2006		4 persons/ 4 persons		- Election of chairman

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

e)

Audit Committee: See “B. Audit System” below.

   * The Audit Committee is a committee established under the provisions of the Articles of Incorporation.

B. Audit System

(1) Establishment and Organization of the Audit Committee

a)

The Audit Committee is composed of three or more directors. However, independent non-executive directors must account for 2/3 or more, and the members are elected by the resolution of the Board of Directors each year.

b) The Audit Committee is convened when deemed necessary by the chairman or is requested by two or more of the committee members.

c) The quorum for resolution is majority attendance with majority consent of the attending members.

(2) Authority of the Audit Committee

     Includes authority to inquire on the subsidiary companies, right to investigate the business operations and asset conditions, and right to request for a business status report pursuant to the Audit Committee Regulations.

(3) Members of the Audit Committee

     Audit Committee Members are directors Dae Sik Kim, Yong Woon Kim, Dal Sup Shim and Hyun Chin Lim.

(4) Major Activities of the Audit Committee

Meeting		Date		Agenda		Approval		Remarks
The first meeting of 2006		January 20, 2006		- Report on operation of internal accounting controls		—		—
The second meeting of 2006		February 13, 2006		- Audit report for the year ended December 31, 2005 - Evaluation of internal accounting controls		Approved as proposed Approved as proposed		—
The third meeting of 2006		February 27, 2006		- Auditor’s opinion on the internal audit system - Management audit schedule for 2006 - Proposal for the election of outside auditor for 2006-2008 period		Approved as proposed — —		—
The fourth meeting of 2006		March 8, 2006		- Election of outside auditor for 2006-2008 period		Approved as proposed		—
The fifth meeting of 2006		April 25, 2006		- Election of chairman - Remuneration for outside auditor - Collective re-approval of outside auditor’s service schedule for 2006 - Management report		Approved as proposed Approved as proposed Approved as proposed —		—
The sixth meeting of 2006		May 25, 2006		- Report on issuance of overseas convertible bonds and approval of related treasury stock disposition plan, as amended		—		—