1934 Act Registration No. 1-14418
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF NOVEMBER 2003
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SK TELECOM CO., LTD.
(Translation of registrant's name into English)
99, Seorin-dong
Jongro-gu
Seoul, Korea
(Address of principal executive offices)
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(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 [X] Form 40-F [ ]
(Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.)
Yes [ ] No [X]
(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):82-_________________.)
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This report on Form 6-K shall be deemed to be incorporated by reference in
the prospectuses included in Registration Statements on Form F-3 (File Nos.
333-91034 and 333-99073) filed with the Securities and Exchange Commission and
to be a part thereof from the date on which this report is filed, to the extent
not superseded by documents or reports subsequently filed or furnished.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
In this report on Form 6-K, unless the context indicates or otherwise
requires, references to "we", "us", "our" or the "Company" shall mean SK Telecom
Co., Ltd. and its consolidated subsidiaries, and references to "SK Telecom"
shall mean SK Telecom Co., Ltd., but shall not include its consolidated
subsidiaries. Unless otherwise indicated, references to our number of
subscribers shall include Shinsegi Telecomm, Inc.'s subscribers from April 1,
2000. All references to "Korea" contained in this report shall mean The Republic
of Korea and all references to the "Government" shall mean the government of The
Republic of Korea.
The financial information appearing in this report and in our accompanying
consolidated financial statements is stated in Korean won. All references to
"Won" or "W" in this report are to the currency of Korea. Any discrepancies in
any table between totals and the sums of the amounts listed are due to rounding.
This report contains "forward-looking statements", as defined in Section 27A
of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S.
Securities Exchange Act of 1934, as amended, that are based on our current
expectations, assumptions, estimates and projections about our company and our
industry. The forward-looking statements are subject to various risks and
uncertainties. Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "anticipate", "believe",
"estimate", "expect", "intend", "project", "should", and similar expressions. We
caution you that reliance on any forward-looking statement involves risks and
uncertainties, and that although we believe that the assumptions on which our
forward-looking statements are based are reasonable, any of those assumptions
could prove to be inaccurate, and, as a result, the forward-looking statements
based on those assumptions could be incorrect. In light of these and other
uncertainties, you should not conclude that we will necessarily achieve any
plans and objectives or projected financial results referred to in any of the
forward-looking statements. We do not undertake to release the results of any
revisions of these forward-looking statements to reflect future events or
circumstances.
NON-CONSOLIDATED FINANCIAL INFORMATION AS OF AND FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2002 AND 2003
We must file quarterly reports with the Financial Supervisory
Commission of Korea and the Korea Stock Exchange. The unaudited, non-reviewed
and non-consolidated income statement data as of and for the nine months ended
September 30, 2002 and 2003 and balance sheet data as of December 31, 2002 and
September 30, 2003 shown below were prepared pursuant to generally accepted
accounting principles in Korea ("Korean GAAP") and were derived from the
financial statements included in the quarterly reports filed with the Financial
Supervisory Commission of Korea and the Korea Stock Exchange.
The financial information below is non-consolidated and includes the
results of operations of our subsidiaries using the equity method of accounting.
Therefore, our operating revenue, total assets and total liabilities, if
prepared on a consolidated basis, could be significantly different from those in
our non-consolidated financial statements, even though net income in our
consolidated financial statements may be similar to that in our non-consolidated
financial statements. Under Korean GAAP, for the years ended December 31, 2000,
2001 and 2002, SK Telecom's non-consolidated revenues accounted for 77.6%, 74.4%
and 92.6%, respectively, of our consolidated revenues. We can give no assurance
as to what the actual ratios will be for 2003. In addition, results of
operations for the first nine months of 2003 may not be indicative of results of
operations for the full year 2003.
We merged Shinsegi into SK Telecom with effect from January 13, 2002.
As a result, our results of operations from that date include the results of
operations of the business that was previously operated by Shinsegi and
accounted for using the equity method of accounting in our non-consolidated
financial information. Consequently, it may be difficult to compare our
non-consolidated income statement data as of and for the nine months ended
September 30, 2002 to that as of and for the nine months ended September 30,
2003.
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
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2002 2003
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(IN BILLIONS OF WON)
NON-CONSOLIDATED INCOME STATEMENT DATA
Operating Revenue............................................. W 6,268.4 W 7,039.8
Operating Expenses............................................ 4,177.7 4,651.9
Operating Income.............................................. 2,090.7 2,387.9
Other Income.................................................. 204.0 197.2
Other Expenses................................................ 352.5 430.9
Income Taxes.................................................. 593.6 644.6
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Net Income.................................................... W 1,348.6 W 1,509.5
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AS OF DECEMBER AS OF SEPTEMBER
31, 30, 2003
2002
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(IN BILLIONS OF WON)
NON-CONSOLIDATED BALANCE SHEET DATA
Total Current Assets.......................................... W 2,747.0 W 3,698.4
Total Non-Current Assets...................................... 9,974.2 9,764.4
Total Assets.................................................. 12,721.2 13,462.8
Total Current Liabilities..................................... 4,015.9 4,577.9
Total Long-Term Liabilities................................... 3,168.4 3,355.2
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Total Shareholders' Equity.................................... W 5,536.9 W 5,529.7
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Non-Consolidated Operating Revenue. SK Telecom's operating revenue
increased by 12.3% to Won 7,039.8 billion for the nine months ended September
30, 2003 from Won 6,268.4 billion for the nine months ended September 30, 2002,
principally reflecting a 14.9% increase in cellular revenue to Won 6,244.1
billion for the nine months ended September 30, 2003 from Won 5,432.4 billion
for the nine months ended September 30, 2002, which was offset in part by a 4.3%
decrease in interconnection revenue.
The increase in SK Telecom's cellular revenue was principally due to an
increase in the number of SK Telecom's wireless subscribers, as well as an
increase in the average monthly revenue per subscriber. The number of SK
Telecom's subscribers increased to approximately 18.0 million as of September
30, 2003 reflecting a market share of approximately 54.3% from approximately
17.0 million as of September 30, 2002.
Wireless Internet sales increased by 88.1% to Won 908.9 billion for the
nine months ended September 30, 2003 from Won 483.3 billion for the nine months
ended September 30, 2003, representing 14.6% of SK Telecom's cellular revenue,
primarily due to the increased number of wireless internet-enabled handset
holders.
SK Telecom's non-consolidated average monthly revenue per subscriber
(including interconnection revenue) increased by 0.7% to Won 43,193 for the nine
months ended September 30, 2003 from Won 42,876 for the nine months ended
September 30, 2002. The increase is principally due to increases in average
monthly revenue per subscriber from wireless Internet sales and average monthly
revenue per subscriber from value-added services and other sales, which was
partially offset by the reduction in tariffs by 7.3 % (based on a reduction in
the standard tariff plan) from January 2003 and the decrease in interconnection
rates.
On an aggregate basis, interconnection revenue decreased by 4.3% to Won
774.7 billion for the nine months ended September 30, 2003 from Won 809.8
billion for the nine months ended September 30, 2002. The decrease was primarily
due to lower
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interconnection rates during the nine months ended September 30, 2003 compared
to the nine months ended September 30, 2002.
Non-Consolidated Operating Income. SK Telecom's operating income increased
by 14.2% to Won 2,387.9 billion for the nine months ended September 30, 2003
from Won 2,090.7 billion for the nine months ended September 30, 2002.
Non-Consolidated Operating Expenses. SK Telecom's operating expenses
increased by 11.4% to Won 4,651.9 billion for the nine months ended September
30, 2003 from Won 4,177.7 billion for the nine months ended September 30, 2002
primarily due to increases in commissions paid, fees and commissions, network
interconnection expenses, depreciation and amortization expenses, leased line
expenses, labor costs and miscellaneous operating expenses.
Commissions increased by 19.5% to Won 1,661.1 billion for the nine months
ended September 30, 2003 compared to Won 1,390.6 billion for the nine months
ended September 30, 2002. The increase was primarily due to the increase in
average subscribers by 9.0% during the period, increase in commissions paid to
retail agents and wireless Internet content providers as wireless internet sales
increase, increase in the number of handsets sold and our aggressive marketing
activities to maintain our market leadership in 2G and 2.5G services as well as
3G services going forward.
Network interconnection expenses increased by 12.1% to Won 606.7 billion
for the nine months ended September 30, 2003 compared to Won 541.2 billion for
the nine months ended September 30, 2002. The increase was primarily due to
higher subscriber numbers and an increase in the amount of mandated payment in
Universal Service Obligation fund, which were only partially offset by a
decrease in interconnection fees and the level of interconnection fees that SK
Telecom must pay to other operators for calls using their networks.
Additionally, SK Telecom reflected as an expense in the second quarter of 2003
all of the amounts due to be paid to KT Corporation for the years 1998, 1999,
2000 and 2001 pursuant to a cost sharing arrangement regarding the provision of
directory assistance services by KT Corporation to our subscribers. SK Telecom
will discuss with KT Corporation the amounts to be paid for directory assistance
services provided to SK Telecom's subscribers during 2002 and the six months
ended June 30, 2003.
Depreciation & amortization expenses increased by 3.8% to Won 1,026.7
billion for the nine months ended September 30, 2003 compared to 989.2 billion
for the nine months ended September 30, 2002. The increase in depreciation
expenses was primarily due to the expansion of SK Telecom's CDMA 1xRTT network.
Labor cost increased by 17.6% to Won 287.9 billion for the nine months
ended September 30, 2003 compared to Won 244.8 billion for the nine months ended
September 30, 2002. The increase was primarily due to payment of performance
bonuses to employees in 2003.
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Leased line expenses increased by 14.6% to Won 225.3 billion for the nine
months ended September 30, 2003 compared to Won 196.6 billion for the nine
months ended September 30, 2002, primarily due to an increase in wireless
traffic.
Miscellaneous operating expenses increased by 2.2% to Won 231.0 billion for
the nine months ended September 30, 2003 compared to Won 225.9 billion for the
nine months ended September 30, 2002, primarily due to increases in
communications related expenses which increased by 23.8% to Won 36.5 billion for
the nine months ended September 30, 2003 from Won 29.5 billion for the nine
months ended September 30, 2002. This increase was offset in part by a 19.4%
decrease in taxes and public dues.
Advertising expenses decreased by 10.3% to Won 255.6 billion for the nine
months ended September 30, 2003 compared to Won 284.9 billion for the nine
months ended September 30, 2002 primarily due to the increased marketing
expenses during the FIFA World Cup soccer tournament and the Asian Games, both
of which were held in Korea during the nine months ended September 30, 2002.
Non-Consolidated Other Income. Other income, consisting primarily of
dividend income, commission income and interest income, decreased by 3.4% to Won
197.2 billion for the nine months ended September 30, 2003 compared to Won 204.0
billion for the nine months ended September 30, 2002. Other income decreased
primarily due to declines in the gain on equity method, foreign exchange and
translation gains and collection of previously written off accounts receivable,
which were partially offset by increases in interest income, dividend income and
miscellaneous income.
Non-Consolidated Other Expenses. Other expenses, consisting primarily of
interest expense, donations, foreign exchange and translation losses, loss on
disposal and impairment of property and equipment and miscellaneous expenses,
increased by 22.3 % to Won 430.9 billion for the nine months ended September 30,
2003 compared to Won 352.5 billion for the nine months ended September 30, 2002.
Other expenses increased primarily as a result of increases in interest expense,
loss on equity method and loss on the impairment of long-term investment
securities, which were only partially offset by a decrease in loss on disposal
of property and equipment. As a percentage of operating revenue, other expenses
increased to 6.1% for the nine months ended September 30, 2003 from 5.6% for the
nine months ended September 30, 2002.
Non-Consolidated Income Tax. Provision for income taxes increased by 8.6%
to Won 644.6 billion for the nine months ended September 30, 2003 from Won 593.6
billion for the nine months ended September 30, 2002.
Non-Consolidated Net Income. Principally as a result of the factors
discussed above, SK Telecom's net income increased by 11.9% to 1,509.5 billion
for the nine months ended September 30, 2003 from Won 1,348.6 billion for the
nine months ended September 30, 2002.
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INCOME STATEMENT
(KRW MM)
JAN~SEP 03 JAN~SEP 02
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CELLULAR REVENUE 6,244,121 5,432,435
INTERCONNECTION REVENUE 774,686 809,822
OTHERS 21,040 26,154
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REVENUE 7,039,847 6,268,411
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OPERATING EXPENSES 4,651,945 4,177,720
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WAGE AND EMPLOYEE BENEFITS 287,948 244,801
COMMISSIONS 1,661,094 1,390,616
ADVERTISING 255,629 284,909
DEPRECIATION 1,026,651 989,241
NETWORK INTERCONNECTION 606,740 541,231
LEASED LINE 225,261 196,611
R&D EXPENSES 147,973 111,998
RENT 101,023 103,782
FREQUENCY USAGE FEES 97,379 88,583
BAD DEBT 11,250 --
OTHERS 230,996 225,948
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OPERATING INCOME 2,387,902 2,090,691
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OTHER INCOME 197,164 204,037
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INTEREST INCOME 46,714 32,587
INCOMING FEES 91,564 78,407
GAIN ON DISPOSAL OF PROPERTY AND EQUIPMENT 1,449 2,646
GAIN ON EQUITY METHOD -- 36,399
FOREIGN EXCHANGE AND TRANSLATION GAINS 11,576 28,582
OTHERS 45,861 25,416
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OTHER EXPENSES 430,935 352,498
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INTEREST EXPENSES 284,241 227,334
DONATIONS 12,421 9,491
LOSS ON DISPOSAL OF PROPERTY AND EQUIPMENT 10,816 40,981
LOSS ON EQUITY METHOD 18,063 --
FOREIGN EXCHANGE AND TRANSLATION LOSS 2,661 4,223
LOSS ON IMPAIRMENT OF INVESTMENT SECURITIES 18,717 400
LOSS ON DISPOSAL OF INVESTMENT ASSETS 179 2,252
OTHERS 83,838 67,817
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ORDINARY INCOME 2,154,131 1,942,229
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INCOME BEFORE INCOME TAXES 2,154,131 1,942,229
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INCOME TAXES 644,611 593,592
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NET INCOME 1,509,520 1,348,638
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BALANCE SHEET
(KRW MM)
03-SEP 02-DEC
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TOTAL ASSETS 13,462,839 12,721,218
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CURRENT ASSETS 3,698,425 2,746,991
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CASH AND MARKETABLE SECURITIES 1,175,663 476,115
ACCOUNTS RECEIVABLE - TRADE 1,390,129 1,290,475
SHORT-TERM LOANS 27,813 29,623
ACCOUNTS RECEIVABLE - OTHER 913,105 809,616
INVENTORIES 6,062 10,718
OTHERS 185,654 130,444
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INVESTMENT ASSETS 1,909,838 3,132,330
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LONG-TERM INVESTMENT SECURITIES 1,524,573 2,806,963
LONG-TERM LOANS 44,554 57,984
GUARANTEE DEPOSITS 239,707 221,815
OTHERS 101,003 45,568
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PROPERTY AND EQUIPMENT 4,288,124 4,451,548
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LAND 441,744 439,915
BUILDING AND FIXTURE 790,199 778,833
EQUIPMENT 2,295,792 2,432,552
CONSTRUCTION IN PROGRESS 318,408 345,063
OTHERS 441,981 455,186
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INTANGIBLE ASSETS 3,566,451 2,390,350
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LIABILITIES 7,933,160 7,184,271
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CURRENT LIABILITIES 4,577,949 4,015,859
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ACCOUNTS PAYABLE 713,179 1,587,532
SHORT-TERM BORROWINGS 1,458,669 620,000
INCOME TAXES PAYABLE 386,013 362,365
ACCRUED EXPENSES 473,269 354,716
CURRENT PORTION OF LONG-TERM DEBT 1,287,749 920,745
OTHERS 259,070 170,502
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LONG-TERM LIABILITIES 3,355,210 3,168,412
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LONG-TERM DEBT 2,505,427 2,913,801
FACILITY DEPOSITS 45,605 46,850
ACCRUED SEVERANCE INDEMNITIES 73,975 45,861
OTHERS 730,203 161,899
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SHAREHOLDERS' EQUITY 5,529,679 5,536,948
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CAPITAL STOCK 44,639 44,576
CAPITAL SURPLUS 2,916,150 2,884,385
RETAINED EARNINGS 4,706,334 4,897,099
CAPITAL ADJUSTMENTS (2,137,445) (2,289,112)
TREASURY STOCK (2,047,103) (2,192,449)
UNREALIZED LOSS ON VALUATION OF (93,792) (99,115)
LONG-TERM INVESTMENT SECURITIES
STOCK OPTIONS 3,450 2,452
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SK TELECOM CO., LTD.
By: /s/ Chi Woo Han
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Name: Chi Woo Han
Title: Vice President
Finance Management Office
Date: November 14, 2003
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