FOR THE MONTH OF APRIL 2011
COMMISSION FILE NUMBER 333-04906

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 o		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 BUSINESS REPORT

(From January 1, 2010 to December 31, 2010)

THIS IS A SUMMARY OF THE ANNUAL BUSINESS REPORT ORIGINALLY PREPARED IN KOREAN AND IS IN SUCH FORM AS REQUIRED BY THE KOREAN FINANCIAL SERVICES 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.

 

 

I. COMPANY OVERVIEW

1. Company Overview

A.

Corporate Legal Business Name: SK Telecom Co., Ltd. (The “Company”)

B.

Date of Incorporation: March 29, 1984

C.

Location of Headquarters

	(1)		Address: 11 Euljiro 2-ga, Jung-gu, Seoul, Korea
	(2)		Phone: +82-2-6100-2114
	(3)		Website: http://www.sktelecom.com

D.

Corporate Purpose of 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. Real estate business(development, maintenance, leasing, etc.) and chattel leasing 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. Electronic financial business

12. Motion picture business (Production, Importation, Distribution, Screening)

13. Lifetime education and lifetime educational facilities management

14. Electric related construction business

15. Information and communication related work business

16. Ubiquitous city construction and service business

17. Any business or undertaking incidental or conducive to the attainment of the objects above

E. Credit Ratings

(1)

Corporate Bonds

						Credit rating entity
Credit rating date		Subject of rating		Credit rating		(Credit rating range)		Rating classification
February 20, 2008		Corporate bond		AAA		Korea Ratings		Current rating
February 21, 2008		Corporate bond		AAA		Korea Investors Service, Inc.		Current rating
February 21, 2008		Corporate bond		AAA		Korea Information Services, Inc.		Current rating
June 3, 2008		Corporate bond		AAA		Korea Ratings		Regular rating
June 17, 2008		Corporate bond		AAA		Korea Investors Service, Inc.		Regular rating
June 30, 2008		Corporate bond		AAA		Korea Information Services, Inc.		Regular rating
October 20, 2008		Corporate bond		AAA		Korea Ratings		Current rating
October 20, 2008		Corporate bond		AAA		Korea Investors Service, Inc.		Current rating
October 20, 2008		Corporate bond		AAA		Korea Information Services, Inc.		Current rating
January 13, 2009		Corporate bond		AAA		Korea Ratings		Current rating
January 13, 2009		Corporate bond		AAA		Korea Investors Service, Inc.		Current rating
January 13, 2009		Corporate bond		AAA		Korea Information Services, Inc.		Current rating
February 23, 2009		Corporate bond		AAA		Korea Ratings		Current rating
February 23, 2009		Corporate bond		AAA		Korea Investors Service, Inc.		Current rating
February 23, 2009		Corporate bond		AAA		Korea Information Services, Inc.		Current rating
June 24, 2009		Corporate bond		AAA		Korea Information Services, Inc.		Regular rating
June 26, 2009		Corporate bond		AAA		Korea Ratings		Regular rating
June 30, 2009		Corporate bond		AAA		Korea Investors Service, Inc.		Regular rating
June 22, 2010		Corporate bond		AAA		Korea Ratings		Regular rating
June 29, 2010		Corporate bond		AAA		Korea Investors Service, Inc.		Regular rating
June 29, 2010		Corporate bond		AAA		NICE Investors Service Co, Ltd.		Regular rating

(2)

Commercial Paper (“CP”)

						Credit rating entity
Credit rating date		Subject of rating		Credit rating		(Credit rating range)		Rating classification
June 3, 2008		CP		A1		Korea Ratings		Current rating
June 16, 2008		CP		A1		Korea Information Services, Inc.		Current rating
June 17, 2008		CP		A1		Korea Investors Service, Inc.		Current rating
October 20, 2008		CP		A1		Korea Ratings		Regular rating
October 20, 2008		CP		A1		Korea Investors Service, Inc.		Regular rating
October 20, 2008		CP		A1		Korea Information Services, Inc.		Regular rating
June 24, 2009		CP		A1		Korea Information Services, Inc.		Current rating
June 26, 2009		CP		A1		Korea Ratings		Current rating
June 30, 2009		CP		A1		Korea Investors Service, Inc.		Current rating
December 15, 2009		CP		A1		Korea Ratings		Regular rating
December 30, 2009		CP		A1		Korea Investors Service, Inc.		Regular rating
December 30, 2009		CP		A1		Korea Information Services, Inc.		Regular rating
June 22, 2010		CP		A1		Korea Ratings		Current rating
June 29, 2010		CP		A1		Korea Investors Service, Inc.		Current rating
June 29, 2010		CP		A1		NICE Investors Service Co, Ltd.		Current rating
December 16, 2010		CP		A1		Korea Ratings		Regular rating
December 27, 2010		CP		A1		Korea Investors Service, Inc.		Regular rating
December 29, 2010		CP		A1		NICE Investors Service Co, Ltd.		Regular rating

(3)

International Credit Ratings

				Credit rating		Credit rating company
Date of credit rating		Subject of rating		of securities		(Credit rating range)		Rating type
April 7, 2009		Offshore Convertible Bonds		A		Fitch (England)		Current rating
April 7, 2009		Offshore Convertible Bonds		A2		Moody’s (U.S.A.)		Current rating
April 7, 2009		Offshore Convertible Bonds		A		S&P (U.S.A.)		Current rating

2. Company History

	A.		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.		Significant Changes in Management
			At the 27th General Shareholders’ Meeting held on March 11, 2011, (1) Sung Min Ha and Jin Woo So were elected as inside directors, (2) Rak Yong Uhm, Jay Young Chung and Jae Ho Cho were re-elected as independent directors, and (3) Jay Young Chung and Jae Ho Cho were re-elected as members of the audit committee. Man Won Jung and Ki Haeng Cho resigned from the Board on March 11, 2011.
	C.		Other Important Matters related to Management Activities

(1) Sale of IHQ, Inc. shares.

In accordance with the resolution of the Board of Directors on April 26, 2010, the Company entered into an agreement pursuant to which the Company sold 10,930,844 shares (Estimated total sale price: Won 18,582,435,000) of IHQ, Inc.’s common stock at Won 1,700 per share outside of the Korea Exchange. After such sale of IHQ, Inc. shares, the Company’s equity stake in IHQ, Inc. decreased from 37.10% to 9.99%.

(2) Interim Dividends

In accordance with the resolution of the Board of Directors on July 22, 2010, the Company decided to distribute interim dividends.

- Amount of interim dividends: Cash dividends of Won 1,000 per share (Total amount of interim dividend: Won 72,344,999,000)

- Market dividend rate: 0.61%

- Record date: June 30, 2010

- Dividend payment date: Within 20 days from the date of the resolution of the Board of Directors.

(3) Acquisition of Treasury Stock

In accordance with the resolution of the Board of Directors on July 22, 2010, the Company decided to buy back 1,250,000 shares of the Company’s common stock for the purpose of enhancing shareholder value. The Company acquired 1,250,000 shares of its common stock on the KRX KOSPI Market from July 26, 2010 through October 20, 2010. Please refer to the result of treasury stock acquisition disclosed on October 21, 2010 through the Korean Financial Supervisory Service.

(4) SK C&C stock sale

On October 8, 2010, the Company sold 2,450,000 shares of SK C&C Co., Ltd. (“SK C&C”) out of 4,500,000 shares of SK C&C previously held, through an over-the-counter market transaction, at a price of Won 83,000 per share (total sales price of Won 203,350 million). After the sale, the Company’s ownership interest in SK C&C decreased to 4.1% from 9%.

(5) Additional sale of SK C&C stock

On February 11, 2011, the Company sold entire 2,050,000 shares (ownership interest 4.1%) of SK C&C Co., Ltd. (“SK C&C”) held by the Company, at a price of Won 97,900 per share (total sales price of Won 200,695 million).

3. Total Number of Shares

A. Total number of shares

(As of December 31, 2010)		(Unit: shares)

		Share type
Classification		Common shares				—				Total				Remarks
I. Total number of authorized 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			8,533,235				—				8,533,235				—
a. reduction of capital			—				—				—				—
b. retirement with profit			8,533,235				—				8,533,235				—
c. redemption of redeemable shares			—				—				—				—
d. others			—				—				—				—
IV. Total number of shares (II-III)			80,745,711				—				80,745,711				—
V. Number of treasury shares			9,650,712				—				9,650,712				—
VI. Number of shares outstanding (IV-V)			71,094,999				—				71,094,999				—

On July 22, 2010, the Company publicly disclosed its decision to acquire shares of treasury stock. The Company acquired 1,250,000 shares of its common stock on the KRX KOSPI Market from July 26, 2010 through October 20, 2010. Please refer to the result of treasury stock acquisition disclosed on October 21, 2010 through the Korean Financial Supervisory Service.

B.

Treasury Stock

(1)

Acquisitions and Dispositions of Treasury Stocks

(As of December 31, 2010)		(Unit: Shares)

														At the
										Type of				beginning of				Changes												At the end of
Acquisition methods										shares				period				Acquired (+)				Disposed (-)				Retired (-)				period
Acquisition pursuant to the Financial Investment Services and Capital Markets Act of Korea (“FSCMA”)		Direct acquisition				Direct acquisition from market
										Common shares					4,436,028				1,250,000				—				—				5,686,028
										Preferred shares					—				—				—				—				—
						Tender offer				Common shares					—				—				—				—				—
										Preferred shares					—				—				—				—				—
						Appraisal rights of dissenting shareholder
										Common shares					—				—				—				—				—
						Sub-total				Preferred shares					—				—				—				—				—
										Common shares					4,436,028				1,250,000				—				—				5,686,028
										Preferred shares					—				—				—				—				—
		Acquisition through trust and other agreements
						Held by trustee				Common shares					3,886,710				—				3,886,710				—				—
										Preferred shares					—				—				—				—				—
						Held in actual stock				Common shares					—				3,886,710				—				—				3,886,710
										Preferred shares					—				—				—				—				—
						Sub-total				Common shares					3,886,710				3,886,710				3,886,710				—				3,886,710
										Preferred shares					—				—				—				—				—
Other acquisition										Common shares					77,974				—				—				—				—
										Preferred shares					—				—				—				—				—
Total										Common shares					8,400,712				5,136,710				3,886,710				—				9,650,712
										Preferred shares					—				—				—				—				—

In addition, due to the termination of trust agreements for acquisition of treasury stock, the Company directly holds shares of treasury stock that it acquired through trust agreements. For more information, please refer to the reports on termination of trust agreements previously disclosed between October 26, 2010 and November 3, 2010 through the Korean Financial Supervisory Service.

4. Status of Voting Rights

(As of December 31, 2010)		(Unit: shares)

Classification						Number of shares				Remarks
Total shares (A)		Common share					80,745,711				—
		Preferred share					—
Number of shares without voting rights (B)		Common share					9,650,712			Treasury shares
		Preferred share					—
Shares with restricted voting rights under the Korean law (C)			—				—				—
Shares with reestablished voting rights (D)			—				—				—
The number of shares with exercisable voting right s (E = A – B – C + D)		Common share					71,094,999				—
		Preferred share					—

5. Dividends and Others

A. Dividends

	(1)		Distribution of cash dividends was approved during the 25th General Meeting of Shareholders held on March 13, 2009.
			- Distribution of cash dividends per share of Won 8,400 (exclusive of an interim dividend of Won 1,000) was approved.
	(2)		Distribution of interim dividends of Won 1,000 was approved during the 305th Board of Directors’ Meeting on July 23, 2009.
	(3)		Distribution of cash dividends was approved during the 26th General Meeting of Shareholders held on March 12, 2010.
			- Distribution of cash dividends per share of Won 8,400 (exclusive of an interim dividend of Won 1,000) was approved.
	(4)		Distribution of interim dividends of Won 1,000 was approved during the 318th Board of Directors’ Meeting on July 22, 2010.
	(5)		Distribution of cash dividends was approved during the 27th General Meeting of Shareholders held on March 11, 2011.
			- Distribution of cash dividends per share of Won 8,400 (exclusive of an interim dividend of Won 1,000) was approved.

B. Dividends for the Last 3 Fiscal Years

(Unit: in millions of Won, except per share value)

			As of and for				As of and for				As of and for the
			the year ended				the year ended				year ended
			December 31,				December 31,				December 31,
Classification			2010				2009				2008
Par value per share (Won)				500				500				500
Net income				1,410,968				1,288,340				1,277,658
Net income per share (Won)				19,612				17,808				17,559
Total cash dividend				669,534				680,043				681,996
Total stock dividends				—				—				—
Percentage of cash dividend to available income (%)				47.5				52.8				53.4
Cash dividend yield ratio (%)	Common share			5.4				5.6				4.5
	Preferred share			—				—				—
Stock dividend yield ratio (%)	Common share			—				—				—
	Preferred share			—				—				—
Cash dividend per share (Won)	Common share			9,400				9,400				9,400
	Preferred share			—				—				—
Stock dividend per share (share)	Common share			—				—				—
	Preferred share			—				—				—

II. BUSINESS

1. Business Overview

A. Industry Characteristics

As of December 31, 2010, the number of domestic mobile phone subscribers reached 50.77 million and, with more than 100% penetration rate, the Korean mobile communication market can be considered to have reached its maturation stage. However, the penetration rate is expected to increase further due to increased use of mobile phones by corporate users resulting from the rapid growth of smart phone markets, as well as the increasing popularity of high-tech mobile devices based on wireless data services such as tablet PC.

The Korean mobile communications market continues to improve in the quality of services 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, including various smart phones, that enable the provision of convergence services for multimedia contents, mobile commerce, telematics, satellite Digital Multimedia Broadcasting (“DMB”), digital home services, connected workforce services and other related services. In addition, through HSPA+ network commercialized in October 2010 and the LTE network expected to be introduced from the next year, the “industry productivity enhancement” (“IPE”) business directly resulting in the enhancement of productivity, such as the corporate “connected workforce” business, is expected to grow rapidly.

B. Growth Potential

(Unit: 1,000 persons)
						As of
						December				As of December 31,
Classification						31, 2010				2009				2008				2007				2006
Number of subscribers		SK Telecom					25,705				24,270				23,032				21,968				20,271
		Others (KT, LGU+)					25,062				23,675				22,575				21,529				19,926
		Total					50,767				47,944				45,607				43,497				40,197

(Source: Korea Communications Commission website)

C. Domestic and Overseas Market Conditions

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. Although demand

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. In addition, sales revenue related to data services is expected to increase due to the increasing popularity of smart phones and wireless Internet. Business-to-business segment that creates added values by adding additional solutions and applications is also growing. Seasonal and economic fluctuations have much less impact on the Korean mobile communication market compared to other industries.

Historical market share of the Company:

(As of December 31, 2010)						(Unit: %)
		As of				As of December 31,
Classification		December 31, 2010				2009				2008				2007
Mobile communication services			50.6				50.6				50.5				50.5

Comparative market share:

(As of December 31, 2010)

(Unit: %)

Classification

SK Telecom

KT

LG U+

Market share

50.6

31.6

17.8

(Source: Korea Communications Commission website)

D. Business Overview and Competitive Strengths

The Company’s revenue in 2010 amounted to Won 12,460.0 billion, an increase of Won 359.0 billion compared to 2009. This increase in revenue was meaningful since it was achieved despite a number of negative factors, including the charging of voice calls on a per-second basis from March 2010, the reduction of sign-up fees by 28% from December 2009 and the expansion of various discount plans. Operating income for 2010 amounted to Won 2,035.0 billion, which was lower than 2009, due among others to the increase in marketing and depreciation expenses. In 2010, however, the Company achieved meaningful business performance such as securing 3.91 million smart phone subscribers as of December 31, 2010. Net income in 2010 amounted to Won 1,411.0 billion, which increased from 2009.

The Company will comply with the guideline set by the Korea Communications Commission that limits marketing expenses of mobile communication business operators to stabilize the competition in the mobile service markets, while maintaining its competitive advantage based on fundamental strengths deriving from handsets, price plans, networks and contents. In 2010, the Company consistently strived to facilitate wireless Internet communication and enhance customers’ benefits through the expansion of smart phone offerings, provision of unlimited data service and introduction of data-only frequency assignment, one-

person multi-device price plans and T-Store, which is an open marketplace for mobile applications. The vitalization of the Company’s T-Store, which has grown rapidly in the number of subscribers, contents and downloads, has enhanced the Company’s competitiveness in the wireless data market.

As of December 31, 2010, the Company reached a subscriber number of approximately 25,710,000 and a 50.6% market share of the wireless market in Korea in terms of the number of subscribers. The Company plans to establish its leadership among users of smart phones by introducing various mobile platforms and streamlining the subscription process and pricing structures to enable subscribers to easily access their mobile content from multiple devices. The Company also plans to maintain its leadership in wireless Internet market by providing innovative user interface for content access and through investment in data networks, network sharing and support of the content production.

In 2010, the Company established platforms for future growth in business-to-business markets, such as “industry productivity enhancement” (“IPE”) business, in domestic and foreign markets. The Company currently provides more than 600 Korean companies with mobile office services, while the Company has achieved tangible results in certain industries including education, finance and medical services where the Company has focused its efforts. In 2011 the Company aims to become a global business-to-business service provider by providing its services to new industries, such as security, construction, heavy industries, farming and fishing.

The Company will also continue its efforts to become a global leader in information and communication technology. It plans to actively respond to secular changes such as the growing popularity of smart phones and wireless Internet, as well as gaining competitive strengths in the IPE business. In particular, the Company intends to pursue opportunities to grow the wireless broadband and IPE businesses in Korea and abroad.

2. Major Products & Services

A. Updates on Major Products and Services

(Unit: in millions of Won, %)
										Sales amount
Business fields		Sales type		Item		Specific Usage		Major trademarks		(ratio)
Information and communication		Services		Mobile communication		Mobile Phone		NATE, T store and others		11,981,528(96.2%)
—		—		Others		—		Others		478,462(3.8%)

B. Price Fluctuation Trend of Major Products and Services

Previously, based on the Company’s Basic Plan for monthly subscription, the basic service fee was Won 13,000 per month and the usage fee was Won 20 per 10 seconds and based on the Company’s Standard Plan, basic service fee was Won 12,000 per month and the usage fee was Won 18 per 10 seconds. As of December 31, 2010, based on the Company’s Basic Plan for monthly subscription, the basic service fee was Won 13,000 per month and the usage fee was Won 2 per 1 second and based on the Company’s Standard Plan, basic service fee was Won 12,000 per month and the usage fee was Won 1.8 per 1 second.

3. Investment Status

A. Investment in Progress

(Unit: in 100 millions of Won)

Amount

Investment

Subject of

Total

already

Future

Business field

Classification

period

investment

Investment effect

investments

invested

investment

Network/Common

Upgrade/New installation

2010

Network, systems and others

Capacity increase and quality improvement; systems improvement

To be determined

18,453

To be determined

Total

—

To be determined

18,453

To be determined

B. Future Investment Plan

(Unit: in 100 millions of Won)

Expected investment amount

Expected investment for each year

Business field

Asset type

Amount

2011

2012

2013

Investment effect

Network/Common

Network, systems and others

20,000

20,000

To be determined

To be determined

Upgrades to the existing services and provision of new services

Total

20,000

20,000

To be determined

To be determined

Upgrades to the existing services and provision of new services

4. Revenues

(Unit: in millions of Won)

Business field		Sales type				Item								2010				2009				2008
Information and communication		Services				Mobile communication				Export					—				—				—
										Domestic					11,981,528				11,820,202				11,492,832
										Subtotal					11,981,528				11,820,202				11,492,832
			—			Others				Export					599				2,339				5,855
										Domestic					477,863				278,643				175,975
										Subtotal					478,462				280,982				181,830
		Total								Export					599				2,339				5,855
										Domestic					12,459,391				12,098,845				11,668,807
										Total					12,459,990				12,101,184				11,674,662

5. Derivative Transactions

In order to hedge risks related to fluctuations in currency exchange rates and interest rates, the Company enters into currency swap contracts and interest rate swap contracts. The gain or loss generated from the derivatives contracts is recognized as the gains/losses for the current period or other comprehensive income/loss, in accordance with Korean GAAP. Fair value of the Company’s derivatives is calculated using the Company’s valuation models. In accordance with the derivatives contracts, the Company’s estimated gain/loss on the date of expiration is zero.

A. Currency Swap

(1) Purpose of Contracts: Hedging of risks related to fluctuations in currency exchange rates and interest rates

(2) Contract Terms

- Currency swap contract applying cash flow risk hedge accounting

The Company has entered into a currency swap contract with three banks including Citibank in order to hedge the foreign currency risk of unguaranteed U.S. dollar denominated bonds (face amounts totaling US $300,000,000) issued on April 1, 2004. As of December 31, 2010, in connection with the unsettled foreign currency swap contract to which the cash flow risk hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to Won 3,321,342,000 (excluding tax effect totaling Won 1,477,824,000 and foreign exchange translation gain arising from unguaranteed U.S. dollar denominated bonds totaling Won 3,048,654,000) was accounted for as accumulated other comprehensive loss.

In addition, the Company has entered into a currency and interest rate swap contract with Credit Agricole Corporate & Investment Bank to hedge the foreign currency risk and the interest rate risk of U.S. dollar denominated floating rate long-term borrowings with face amounts totaling US$100,000,000 borrowed on October 10, 2006. As of December 31, 2010, in connection with this unsettled currency and interest rate swap contract, an accumulated loss on valuation of derivatives amounting to Won 5,797,522,000 (excluding tax effect totaling Won 1,193,341,000 and foreign exchange translation loss arising from U.S. dollar denominated long-term borrowings totaling Won 19,090 million) was accounted for as accumulated other comprehensive loss.

In addition, the Company has entered into a currency and interest rate swap contract with two banks including HSBC in order to hedge the foreign currency risk and the interest rate risk of unguaranteed Japanese yen denominated bonds (56-2) with face amounts totaling JPY 12,500,000,000 issued on November 13, 2007. As of December 31, 2010, in connection with this unsettled currency and interest rate swap contracts, an accumulated gain on valuation of derivatives amounting to Won 5,804,000 (excluding tax effect totaling Won 1,525,007,000 and foreign exchange translation loss arising from unguaranteed Japanese yen denominated bonds totaling Won 70,580,613,000) was accounted for as accumulated other comprehensive gain.

In addition, the Company has entered into a currency and interest rate swap contract with Mizuho Corporate Bank in order to hedge the foreign currency risk and the interest rate risk of unguaranteed Japanese yen denominated bonds (59-2) with face amounts totaling JPY 3,000,000,000 issued on January 22, 2009. As of December 31, 2010, in connection with this unsettled currency and interest rate swap contract, an accumulated gain on valuation of derivatives amounting to Won 2,076,230,000 (excluding tax effect totaling Won 585,603,000 and foreign exchange translation gain arising from unguaranteed Japanese yen denominated bonds totaling Won 4,218,822,000) was accounted for as accumulated other comprehensive gain.

In addition, the Company has entered into a currency and interest rate swap contract with The Bank of Tokyo-Mitsubishi in order to hedge the foreign currency risk and the interest rate risk of unguaranteed Japanese yen denominated bonds (60-2) with face amounts totaling JPY 5,000,000,000 issued on March 5, 2009. As of December 31, 2010, in connection with this unsettled currency and interest rate swap contract, an accumulated gain on valuation of derivatives amounting to Won 465,690,000 (excluding tax effect totaling Won 131,348,000 and foreign exchange translation gain arising from unguaranteed Japanese yen denominated bonds totaling Won 8,758,083,000) was accounted for as accumulated other comprehensive gain.

In addition, the Company has entered into a currency swap contract with six banks including Morgan Stanley to hedge the foreign currency risk of unguaranteed U.S. dollar denominated bonds (with face amounts totaling US$400,000,000) issued on July 20, 2007, and has applied cash flow risk hedge

accounting to this foreign currency swap contract starting from May 12, 2010. Accordingly, as of December 31, 2010, in connection with this unsettled foreign currency swap contract, an accumulated loss on valuation of currency swap of Won 54,178,521,000 that has accrued since May 12, 2010 (excluding tax effect totaling Won 15,281,121,000 and foreign exchange translation gain arising from unguaranteed U.S. dollar denominated bonds totaling Won 1,930,203,000) was accounted for as accumulated other comprehensive loss. Meanwhile, a loss on valuation of currency swap of Won 129,806,021,000 incurred prior to the date of applying cash flow risk hedge accounting was charged to current operations.

B. Interest Rate Swap

(1) Purpose of Contracts: Hedging of risks related to fluctuations in interest rates

(2) Contract Terms

- Interest rate swap contract to which the cash flow risk hedge accounting is applied:

The Company has entered into an interest rate swap contract with three banks including Nonghyup Bank in order to hedge the interest rate risk of long-term borrowings (totaling Won 500 billion) during the period between July 28, 2008 and August 12, 2011. As of December 31, 2010, in connection with unsettled interest rate swap contract to which the cash flow risk hedge accounting is applied, an accumulated loss on valuation of derivatives amounting to Won 5,719,556,000 (excluding tax effect totaling Won 1,826,032,000) was accounted for as accumulated other comprehensive loss.

- Interest rate swap contract to which the hedge accounting is not applied

The Company has entered into an interest rate swap contract with two banks including DBS in order to hedge the interest rate risk of floating rate foreign currency bonds with face amounts totaling US$220,000,000 issued on April 29, 2009. In connection with this unsettled interest rate swap contract, losses on valuation of interest rate swap of Won 1,670,606,000 and Won 3,371,949,000 for the year ended December 31, 2010 and December 31, 2009, respectively, were charged to current operations.

6. Major Contracts

						Completion		Contract		Contract Amount
Category		Vendor		Start Date		Date		Title		(Won 100M)
		SK E&C		January 1, 2010		December 31, 2010		2010 Base Transceiver Station (“BTS”) Facility Construction (Seoul Metropolitan Area)		855
Construction		SK E&C		January 1, 2010		December 31, 2010		2010 RF Relay Facility Construction (Seoul Metropolitan Area)		546
		SK Broadband		January 1, 2010		December 31, 2010		2010 Network, B2B building Facility Construction (SORO)		241
Service		SK C&C		January 1, 2010		December 31, 2010		2010 IT SM Contract		2,010

						Completion		Contract		Contract Amount
Category		Vendor		Start Date		Date		Title		(Won 100M)
		SK Marketing & Company		January 1, 2010		December 31, 2010		2010 Membership Collaboration Program		717
		Network O&S		July 1, 2010		December 31, 2010		2010 BTS Maintenance		604
Product/ Equipment		SK Telesys		March 12, 2010		December 24, 2010		Relay Facility Investment		315
		SK Telesys		March 12, 2010		December 24, 2010		2010 1st RF Relay Facility Investment		297
		Samsung Electronics		May 31, 2010		September 20, 2010		2010 2nd Main Equipment W 5/6FA UHPA Samsung		222
				Subtotal						5,807

7. R&D Investments

										(Unit: in millions of Won)
		For the year				For the year				For the year
		ended				ended				ended
		December 31,				December				December
Category		2010				31, 2009				31, 2008				Remarks
Raw material			41				55				89				—
Labor			42,514				47,183				38,063				—
Depreciation			142,994				134,201				138,512				—
Commissioned service			96,920				69,750				85,837				—
Others			64,146				39,593				34,540				—
Total R&D costs			346,615				290,782				297,040				—
Accounting           Sales and administrative expenses			344,891				288,997				293,443				—
Development expenses (Intangible assets)			1,724				1,785				3,597				—
R&D cost / sales amount ratio (Total R&D costs / Current sales amount×100)			2.78	%			2.40	%			2.54	%

8. Other information relating to investment decisions

A. Trademark Policies

The Company manages its corporate brand and other product brands such as “T” in a comprehensive way to protect and increase their value.

The Company’s ‘Brand Management Council’ in charge of overseeing its systematic corporate branding operates full time to execute decisions involving major brands and operates ‘Brandnet’, an intranet system to manage corporate brands which provides solutions including licensing of the brands and downloading of the Company logos.

B. Business-related Intellectual Properties

The Company owns intellectual property rights to the design of alphabet “T”. The rights are based on domestic trademark laws and the Company has proprietary and exclusive use of the trademark for 10 years and the rights are renewable. The designed alphabet “T” is registered in all business categories for trademarks (total of 45) and is being used as the primary brand of the Company.

III. FINANCIAL INFORMATION

1. Summary Financial Information (Non-consolidated)

(Unit: in millions of Won)
		As of and for the year ended December 31,
Classification / Fiscal Year		2010				2009				2008				2007				2006
Current assets			5,482,863				4,983,052				3,990,503				4,094,059				4,189,325
• Quick assets			5,473,844				4,960,396				3,976,576				4,075,378				4,172,887
• Inventory			9,019				22,656				13,927				18,681				16,438
Non-current assets			13,477,050				14,314,581				14,626,992				14,038,451				11,624,728
• Investments			4,941,204				5,107,653				5,668,127				5,940,045				3,547,942
• Property and Equipment			5,027,567				5,196,521				4,698,214				4,594,413				4,418,112
• Intangible assets			2,513,724				2,665,936				2,941,592				3,174,942				3,405,158
• Other non-current assets			994,555				1,344,471				1,319,059				329,051				253,516
Total assets			18,959,912				19,297,633				18,617,495				18,132,510				15,814,053
Current liabilities			4,259,963				3,294,633				3,412,490				2,484,548				2,985,620
Non-current liabilities			3,245,533				4,761,550				4,475,998				4,221,016				3,522,006
Total liabilities			7,505,495				8,056,183				7,888,488				6,705,564				6,507,626
Capital			44,639				44,639				44,639				44,639				44,639
Capital surplus			3,031,780				3,032,009				2,957,095				2,954,829				2,962,699
Capital adjustment			(-)2,954,371				(-)2,708,407				(-)2,147,530				(-)2,072,486				(-)2,019,568
Other Cumulative Profit and Loss			642,153				913,919				373,784				1,594,099				473,904
Retained earnings			10,690,215				9,959,290				9,501,018				8,905,865				7,844,753
Total stockholders’ equity			11,454,417				11,241,450				10,729,007				11,426,946				9,306,427
Sales			12,459,990				12,101,184				11,674,662				11,285,900				10,650,952
Operating Income (or Loss)			2,034,992				2,179,337				2,059,896				2,171,543				2,584,370
Current Period’s Net Income (or Loss)			1,410,968				1,288,339				1,277,658				1,642,451				1,446,598

(Unit: Won)
		For the year ended December 31,
Classification / Fiscal Year		2010				2009				2008				2007				2006
Earnings per share			19,612				17,808				17,559				22,607				19,734
Diluted earnings per share			19,312				17,599				17,395				22,289				19,458

     2. Summary Financial Information (Consolidated)

(Unit: in millions of Won)
		As of and for the year ended December 31,
Classification / Fiscal Year		2010				2009				2008				2007				2006
Current assets			6,972,989				6,370,631				5,422,447				4,813,072				4,663,962
• Quick assets			6,823,345				6,250,741				5,387,473				4,766,020				4,644,184
• Inventory			149,643				119,890				34,974				47,052				19,778
Non-current assets			15,678,716				16,835,625				17,051,224				14,235,863				11,576,006
• Investments			2,906,464				3,059,902				4,025,429				5,446,711				3,236,783
• Property and Equipment			7,864,594				8,165,879				7,437,689				4,969,353				4,507,335
• Intangible assets			3,740,643				3,992,325				3,978,145				3,433,962				3,518,411
• Other non-current assets			1,167,014				1,617,519				1,609,961				385,836				313,477
Total assets			22,651,704				23,206,256				22,473,671				19,048,935				16,239,968
Current liabilities			5,915,301				4,894,937				4,628,821				3,016,874				3,208,416
Non-current liabilities			4,257,754				5,966,695				6,020,410				4,344,428				3,548,464
Total liabilities			10,173,055				10,861,631				10,649,231				7,361,302				6,756,880
Capital			44,639				44,639				44,639				44,639				44,639
Capital surplus			3,031,780				3,031,947				2,958,854				2,956,106				2,950,327
Capital adjustment			(-)2,993,850				(-)2,746,886				(-)2,159,389				(-)2,072,723				(-)2,019,567
Other Cumulative Profit/Loss			639,631				915,306				356,192				1,591,258				490,010
Retained earnings			10,603,399				9,909,752				9,448,185				8,914,970				7,847,434
Minority interest			1,153,049				1,189,866				1,175,959				253,383				170,245
Total stockholders’ equity			12,478,649				12,344,625				11,824,440				11,687,633				9,483,088
Sales			15,435,373				14,512,347				13,951,013				11,821,508				10,979,575
Operating Profit (or Loss)			1,942,303				1,881,234				1,760,307				2,110,175				2,623,378
Profit (or Loss) from continuing operation before tax			1,673,688				1,405,751				1,277,514				2,284,530				2,026,575
Current Period’s Net Profit			1,297,176				1,055,606				972,338				1,562,265				1,449,552
Net income attributable to majority interests			1,379,613				1,247,182				1,215,719				1,648,876				1,451,491
Number of Consolidated Companies			33				29				35				26				18

IV. AUDITOR’S OPINION

     1. Auditor

Year ended December 31,
2010		2009		2008
Deloitte Anjin LLC		Deloitte Anjin LLC		Deloitte Anjin LLC

     2. Audit Opinion

Term		Auditor’s opinion				Issues noted
Year ended December 31, 2010		Unqualified					—
Year ended December 31, 2009		Unqualified					—
Year ended December 31, 2008		Unqualified					—

     3. Remuneration for Independent Auditors for the Past Three Fiscal Years

     A. Audit Contracts

(Unit: in thousands of Won)

Term

Auditors

Contents

Fee

Total hours

Year ended December 31, 2010

Deloitte Anjin LLC

Semi-annual review

1,563,770

16,810

Quarterly review

Non-consolidated financial statements audit

Consolidated financial statements audit

IFRS-based financial statements review

English financial statements review and other audit task

Year ended December 31, 2009

Deloitte Anjin LLC

Semi-annual review

1,308,356

13,982

Quarterly review

Non-consolidated financial statements audit

Consolidated financial statements audit

English financial statements review and other audit task

Year ended December 31, 2008

Deloitte Anjin LLC

Semi-annual review

1,310,097

13,346

Quarterly review

Non-consolidated financial statements audit

Consolidated financial statements audit

English financial statements review and other audit task

     B. Non-Audit Services Contract with External Auditors

(Unit: in thousands of Won)

Service

Term

Contract date

Service provided

duration

Fee

Year ended December 31, 2010

July 20,2010

Management consulting

4 days

5,000

July 28, 2010

Tax consulting

15 days

18,000

July 28, 2010

Tax consulting

5 days

6,600

July 28, 2010

Tax consulting

30 days

40,000

July 28, 2010

Tax consulting

20 days

23,100

December 23, 2010

Tax consulting

3 days

7,700

December 23, 2010

Tax consulting

20 days

24,600

December 29, 2010

Tax consulting

15 days

17,000

Year ended December 31, 2009

May 13, 2009

Tax consulting

30 days

40,000

May 22, 2009

Tax consulting

10 days

10,000

May 22, 2009

Tax adjustment for fiscal year 2008

20 days

34,000

May 22, 2009

Review of deferred corporate income tax for 1Q and 2Q

10 days

14,000

September 14, 2009

Review of quarterly tax adjustments

5 days

7,000

September 14, 2009

Tax consulting

20 days

20,000

December 28, 2009

Review of quarterly tax adjustments

5 days

7,000

December 28, 2009

Tax consulting

10 days

12,000

Year ended December 31, 2008

November 20, 2007

Set up services for agency tax manual

60 days

48,000

March 3, 2008

Tax adjustment for fiscal year 2007

10 days

33,000

May 15, 2008

Tax consulting

5 days

7,500

June 24, 2008

Foreign tax consulting re indirect taxes

4 days

6,000

August 13, 2008

Tax consulting

10 days

9,400

November 1, 2008

Tax consulting

4 days

5,000

November 19, 2008

Tax consulting

10 days

10,800

November 19, 2008

Review of deferred corporate income tax for 1Q and 2Q

10 days

18,000

December 24, 2008

Review of deferred corporate income tax for 3Q

3 days

6,000

December 24, 2008

Tax consulting

3 days

3,600

December 24, 2008

Tax consulting

3 days

3,000

     V. MANAGEMENT DISCUSSION AND ANALYSIS

1. BUSINEESS RESULTS (NON-CONSOLIDATED)

										Change from												Change from
(Unit: in billions of Won)		2010				2009				2010 to 2009				2009				2008				2008 to 2009
Sales			12,460				12,101				3	%			12,101				11,675				4	%
Operating expense			10,425				9,922				5	%			9,922				9,615				3	%
Operating income			2,035				2,179				-7	%			2,179				2,060				6	%
Operating Margin			16.3	%			18.0	%			-1.7	%p			18.0	%			17.6	%			0.4	%p
Other gain			561				786				-29	%			786				1,015				-23	%
Other loss			779				1,308				-40	%			1,308				1,569				-17	%
Income from continuing operation before tax			1,817				1,657				10	%			1,657				1,506				10	%
Net income			1,411				1,288				10	%			1,288				1,278				1	%
Net income margin			11.3	%			10.6	%			0.7	%p			10.6	%			10.9	%			-0.3	%p
EBIDTA			4,221				4,209				0	%			4,209				4,003				5	%
EBIDTA margin			33.9	%			34.8	%			-0.9	%p			34.8	%			34.3	%			0.5	%p

     2. ANALYSIS OF OPERATING DATA

										Change from												Change from
		2010				2009				2010 to 2009				2009				2008				2008 to 2009
Subscribers (in thousands)			25,705				24,270				6	%			24,270				23,032				5	%
Net subscriber additions			1,435				1,238				16	%			1,238				1,064				16	%
Activations			9,651				8,822				9	%			8,822				8,493				4	%
Deactivations			8,216				7,584				8	%			7,584				7,429				2	%
Monthly churn rate			2.7	%			2.6	%			0.1	%p			2.6	%			2.7	%			-0.1	%p
Average subscribers (in thousands)			25,097				23,745				6	%			23,745				22,617				5	%
Average revenue per user (ARPU) (Won)			41,374				42,469				-3	%			42,469				43,016				-1	%
Sign-up fees			1,083				1,417				-24	%			1,417				1,474				-4	%
Monthly fees & call charges			24,063				26,038				-8	%			26,038				26,802				-3	%
Value-added & other service fees			2,145				1,382				55	%			1,382				1,269				9	%
Wireless Internet			9,996				9,334				7	%			9,334				8,982				4	%
Interconnection			4,086				4,298				-5	%			4,298				4,490				-4	%
Minutes of usage (MOU) (Minutes)
Outgoing			199				197				1	%			197				200				-1	%
Incoming			102				103				-2	%			103				108				-5	%

		As of December 31, 2010, the Company reached a subscriber number of approximately 25.7 million and the Company’s revenue in 2010 amounted to Won 12.46 trillion, despite rapid changes in the management environment, including a merger of a competitor. The Company’s marketing expenses in 2010 (calculated in accordance with the Korea Communications Commission’s guideline) amounted to Won 2.97 trillion, or 24.2% of the Company’s revenue, which decreased 0.5%p from 2009. Operating income for 2010 amounted to Won 2.04 trillion, which was lower than 2009, due among others to the increase in depreciation expenses and a one-time increase in commissions paid in connection with the change of purchasing entity of handset installment receivables . Net income in 2010 amounted to Won 1.41 trillion. The Company spent Won 1.85 trillion for capital expenditures in 2010, which were used to expand Wi-Fi facilities and expand and upgrade the Company’s WCDMA network, among others.
		As of December 31, 2010, the Company held a 50.6% market share of the wireless market in Korea in terms of the number of subscribers. The Company plans to establish its leadership among users of smart phones by introducing various mobile platforms and streamlining the subscription process and pricing structures to enable subscribers to easily access their mobile content from multiple devices. The Company also plans to maintain its leadership in wireless Internet market by providing innovative user interface for content access and through investment in data networks, network sharing and support of the content production.
		In 2010, the Company established platforms for future growth in business-to-business markets, such as “industry productivity enhancement” (“IPE”) business, in domestic and foreign markets. The Company currently provides more than 600 Korean companies with mobile office services, while the Company has achieved tangible results in certain industries including education, finance and medical services where the Company has focused its efforts. In 2011 the Company aims to become a global business-to-business service provider by providing its services to new industries, such as security, construction, heavy industries, farming and fishing.

     3. ANALYSIS OF OPERATING REVENUE

										Change from												Change from
(Unit: in billions of Won)		2010				2009				2010 to 2009				2009				2008				2008 to 2009
Sign-up fees			326				404				-19	%			404				400				1	%
Monthly fees			4,502				4,161				8	%			4,161				3,591				16	%
Call charges			2,745				3,259				-16	%			3,259				3,683				-12	%
Value-added & other service fees			646				394				64	%			394				344				14	%
Wireless Internet			3,010				2,660				13	%			2,660				2,438				9	%
% of Cellular service			26.8	%			24.5	%			2.4	%p			24.5	%			23.4	%			1.1	%p
Total Cellular service			11,229				10,877				3	%			10,877				10,456				4	%
Interconnection revenue			1,231				1,225				0	%			1,225				1,218				1	%

										Change from												Change from
(Unit: in billions of Won)		2010				2009				2010 to 2009				2009				2008				2008 to 2009
Land to Mobile			455				451				1	%			451				473				-5	%
Mobile to Mobile			776				774				0	%			774				745				4	%
Total operating revenue			12,460				12,101				3	%			12,101				11,675				4	%

          Sign-up fees decreased in 2010 mainly due to the reduction of the Company’s sign-up fee from November 2009. Monthly fees increased mainly due to increases in the average number of subscribers and in the number of premium flat rate plan subscribers in 2010. Call charges decreased in 2010 from the previous year mainly due to the introduction of per second billing and increased subscription to call plans with higher monthly basic charges and lower call charges, while call charges decreased in 2009 from the previous year due primarily to increased subscription to call plans with higher monthly basic charges and lower call charges. Revenues from value-added and other services increased in each of 2010 and 2009 from the previous year mainly due to increases in revenues from roaming services and leased line business, as well as an increase in revenue from line resales in 2010. Wireless Internet revenue increased in 2010 from the previous year due primarily to increased subscription to fixed-price data plans and an increase in content fees, while it increased in 2009 from the previous year due primarily to increased subscription to fixed-price data plans. Interconnection revenue increased in 2010 from the previous year due primarily to an increase in interconnection traffic volume resulting from the increase in the average subscriber base despite decreases in interconnection rates.

     4. ANALYSIS OF OPERATING EXPENSES

										Change from												Change from
(Unit: in billions of Won)		2010				2009				2010 to 2009				2009				2008				2008 to 2009
Labor cost			559				520				8	%			520				477				9	%
Commissions paid			4,961				4,595				8	%			4,595				4,419				4	%
Marketing commissions			3,065				2,985				3	%			2,985				2,763				8	%
Initial commissions			1,942				1,834				6	%			1,834				1,677				9	%
Monthly commissions			470				430				9	%			430				388				11	%
Retention commissions			652				721				-10	%			721				698				3	%
Other commissions			1,896				1,610				18	%			1,610				1,656				-3	%
Advertising			259				265				-3	%			265				301				-12	%
Depreciation			2,186				2,030				8	%			2,030				1,943				4	%
Network interconnection			1,030				1,068				-4	%			1,068				1,039				3	%
Mobile to Mobile			825				850				-3	%			850				821				3	%
Land to Mobile			205				219				-6	%			219				218				0	%
Leased line			189				333				-43	%			333				391				-15	%
Others			1,241				1,111				12	%			1,111				1,044				6	%
Total operating expenses			10,425				9,922				5	%			9,922				9,615				3	%