1934 Act Registration No. 1-14418

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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 JANUARY 2006

 

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 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 o                                         No þ

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

 

 

January 24, 2006

Seoul, Korea, January 24, 2006 — SK Telecom Co., Ltd. (KSE: 017670, NYSE: SKM) (“SKT” or “the Company”), the leading wireless telecommunications company in Korea, today announced the results of its operations for the year ended December 31, 2005.

This material contains forward-looking statements with respect to the financial condition, results of operations and business of SK Telecom and plans and objectives of the management of SK Telecom. Statements that are not historical facts, including statements about SK Telecom’s beliefs and expectations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of SK Telecom to be materially different from any future results or performance expressed or implied by such forward-looking statements. SK Telecom does not make any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this management presentation, and nothing contained herein is, or shall be relied upon as, a promise or representation, whether as to the past or the future.

Such forward-looking statements were based on current plans, estimates and projections of SK Telecom and the political and economic environment in which SK Telecom will operate in the future, and, therefore, you should not place undue reliance on them. Forward-looking statements speak only as of the date they are made, and SK Telecom undertakes no obligation to update publicly any of them in light of new information or future events. Additional information concerning these and other risk factors are contained in SK Telecom’s latest annual report on Form 20-F and in SK Telecom’s other filings with the U.S. Securities and Exchange Commission (SEC).

Contents

I. Financial Highlights			1
II. Financial Results			2
1. Income Statement
2. Capital Expenditure
3. Balance Sheet
III. Operating Result			6
IV. Appendix (Financial statements)			7
V. IR Contacts			9

I. Financial Highlights

l Summary of Income Statement

(KRW bn)		2005				2004				Change				Q4.’05				Q3.’05				Change
Operating revenue			10,161				9,704				5	%			2,627				2,595				1	%
Operating expenses			7,508				7,344				2	%			1,972				1,925				2	%
Operating income			2,654				2,360				12	%			655				671				-2	%
Operating margin			26.1	%			24.3	%			1.8	%p			24.9	%			25.9	%			-0.9	%p
Other income			410				237				73	%			79				232				-66	%
Other expenses			509				481				6	%			166				113				47	%
Ordinary income			2,555				2,116				21	%			567				790				-28	%
Net income			1,871				1,495				25	%			448				588				-24	%
Net margin			18.4	%			15.4	%			3.0	%p			17.1	%			22.7	%			-5.6	%p
EBITDA 1)			4,288				4,059				6	%			1,120				1,080				4	%
EBITDA margin			42.2	%			41.8	%			0.4	%p			42.7	%			41.6	%			1.0	%p

l Other Main Items

(KRW bn)		2005				2004				Change				Q4.’05				Q3.’05				Change
Wireless Internet sales			2,459				1,823				35	%			661				653				1	%
% of Cellular revenue			26.6	%			20.6	%			6.0	%p			27.7	%			27.6	%			0.1	%p
Marketing expenses			1,750				1,860				-6	%			419				453				-7	%
- Marketing commissions			1,489				1,532				-3	%			348				386				-10	%
- Advertising			261				329				-21	%			71				67				6	%
% of Revenue			17.2	%			19.2	%			-1.9	%p			16.0	%			17.5	%			-1.5	%p
Capital expenditure			1,466				1,607				-9	%			673				425				59	%
% of Revenue			14.4	%			16.6	%			-2.1	%p			25.6	%			16.4	%			9.3	%p
Interest-bearing debt			3,134				3,790				-17	%			3,134				3,308				-5	%
Debt/Equity ratio			38.0	%			53.2	%			-15.2	%p			38.0	%			42.0	%			-4.0	%p

II. Financial Results

1. Income Statement

A. Operating revenue

(KRW bn)		2005				2004				Change				Q4.’05				Q3.’05				Change
Sign-up fees			232				198				17	%			54				58				-7	%
Monthly fees			2,616				2,940				-11	%			647				651				-1	%
Call charges			3,539				3,528				0	%			922				897				3	%
VAS & others			403				355				14	%			105				106				-1	%
Wireless Internet sales			2,459				1,823				35	%			661				653				1	%
% of Cellular service			26.6	%			20.6	%			6.0	%p			27.7	%			27.6	%			0.1	%p
Total cellular service			9,250				8,845				5	%			2,390				2,365				1	%
Interconnection revenue			912				859				6	%			236				230				3	%
L -> M			409				432				-5	%			102				103				0	%
M -> M			503				427				18	%			134				127				5	%
Operating revenue			10,161				9,704				5	%			2,627				2,595				1	%

1) Sign-up fees

-

The YoY increase was due to increase in subscriber addition.

2) Monthly fees

	-		The YoY decrease was due to the tariff cut in monthly fees implemented in September 1, 2004 and increase in phone mail discounts from increased usage, as phone mail discounts are reflected in monthly fees.
	-		The QoQ decrease was due to increase in phone mail discounts (Phone mail discounts ‘05 3Q KRW 187.1 bn®‘05 4Q KRW 206.1 bn)

3) Call charges

	-		The YoY increase was caused by increase in MOU and in the number of average subscribers.
	-		The QoQ increase was due to increase in MOU from the seasonal effect.

4) VAS & others

-

The YoY increase was mainly due to increase in VAS users and the introduction of new VASs and increased usage of international roaming service.

5) Wireless Internet sales

-

The YoY growth was due to increase in offering of a variety of new services such as Mobile Cyworld and Melon and increased subscriptions to data flat rate packages

6) Interconnection revenue

-

The YoY increase was due to increase in call traffic despite the lower interconnection settlement rates.

B. Operating expenses

(KRW bn)		2005				2004				Change				Q4.’05				Q3.’05				Change
Labor cost			433				448				-3	%			99				112				-12	%
Commissions paid			2,895				2,827				2	%			718				747				-4	%
Marketing commissions			1,489				1,532				-3	%			348				386				-10	%
Initial commissions			590				437				35	%			162				149				9	%
Monthly commissions			357				398				-10	%			89				94				-6	%
Retention commissions			543				697				-22	%			97				142				-32	%
Other commissions			1,406				1,296				9	%			370				362				2	%
Advertising			261				329				-21	%			71				67				6	%
Depreciation1)			1,634				1,700				-4	%			466				409				14	%
Network interconnection			935				859				9	%			238				239				0	%
M -> M			749				645				16	%			199				189				5	%
M -> L			186				214				-13	%			38				49				-22	%
Leased line			393				365				7	%			103				98				4	%
Others2)			956				817				17	%			278				252				10	%
Operating expenses			7,508				7,344				2	%			1,972				1,925				2	%

1) Includes R&D related depreciation

2) For details, please refer to non-consolidated statements of income in appendix

1) Labor cost

-

The YoY and QoQ decrease was due to decrease in incentive bonus.

2) Commissions paid

	-		Marketing commissions: The YoY and QoQ decrease was due to company’s efficient marketing resource allocation strategy in response to changes in market environment.
			Initial commission increased YoY due to increase in subscriber addition. Retention commission decreased YoY compared to previous year in which Mobile Number Portability (MNP) started.
	-		Other commissions: The increase was due to increase in the payment of Information Usage Fee to Content Providers as wireless internet usage increased and increase in international roaming commissions.

3) Advertising cost

	-		Advertising cost decreased YoY because SKT placed its resources more on marketing activities directly related to subscriber Acquisition.
	-		Advertising cost increased QoQ due to increase in year-end promotional activities.

4) Depreciation

	-		The YoY decrease was due to decrease in depreciable assets resulting from decreased capex.
	-		The QoQ increase resulted from the increased capex in 4Q.

5) Network interconnection cost

	-		The YoY increase was due to the MM traffic increase.
	-		The QoQ decrease resulted as Universal Service Fund (USF) for 2004 was finalized in ‘05 4Q and the difference was reflected in the ML expenses of ‘05 4Q despite the MM traffic increase.

6) Leased line

-

Leased line expense increased QoQ and YoY as more lines were leased to accommodate the increase in subscriber and data traffic along with WCDMA network rollout.

C. Non-operating items

(KRW bn)		2005				2004				Change				Q4.’05				Q3.’05				Change
Other income			410				237				73	%			79				232				-66	%
Interest income			55				68				-20	%			19				13				53	%
Equity in earnings of affiliates 1)			56				54				4	%			15				22				-31	%
Others 2)			299				115				160	%			44				197				-78	%
Other expenses			509				481				6	%			166				113				47	%
Interest			252				302				-17	%			61				60				2	%
Equity in losses of affiliates 1)			91				—				N/A				33				20				64	%
R&D contribution & donations			145				88				64	%			62				30				103	%
Others 2)			21				90				-77	%			10				3				272	%

     Net amount from the earnings and losses of affiliates was posted until 2004.

2) For details, please refer to non-consolidated statements of income in appendix

1) Equity in earnings and losses of affiliates

-

Despite the earnings improvement in subsidiaries such as SK Communications and SK Telink, the amount of losses increased due to losses at several subsidiaries such as Helio and TU Media.

2) Interest income / expense

-

The YoY decrease in interest income and expense was due to decrease in average balance of cash and interest-bearing debt and lower interest rate.

3) Others in Non-Operating Income / Expenses

-

The YoY increase and QoQ decrease of others in non-operating income were mainly due to the gain from the sale of SK Teletech (KRW 175.5 bn) in ‘05 3Q.

2. Capital Expenditure

(KRW bn)		2005				2004				Change				Q4.’05				Q3.’05				Change
Network			1,109				1,153				-4	%			458				377				22	%
2G / 1X / EV-DO			376				728				-48	%			152				119				27	%
WCDMA			575				220				161	%			210				219				-4	%
Backbone & others			159				205				-22	%			96				38				151	%
Non-Network			356				454				-22	%			215				48				349	%
Wireless Internet & marketing			240				181				32	%			134				39				247	%
General supporting			117				273				-57	%			82				9				770	%
Total Capex			1,466				1,607				-9	%			673				425				59	%

3. Balance Sheet

(KRW bn)		2005. 12				2004. 12				Change				2005. 12				2005. 9				Change
Total assets			14,461				14,021				3	%			14,461				14,114				2	%
Current assets			4,111				3,854				7	%			4,111				4,192				-2	%
Cash & marketable securities			970				761				27	%			970				940				3	%
Investment assets			2,367				2,112				12	%			2,367				2,142				10	%
Property & equipment			4,596				4,605				0	%			4,596				4,409				4	%
Intangible assets			3,387				3,449				-2	%			3,387				3,370				0	%
Total liabilities			6,203				6,894				-10	%			6,203				6,227				0	%
Current liabilities			2,747				2,860				-4	%			2,747				2,266				21	%
Short-term borrowings			—				400				N/A				—				200				N/A
Current portion of long-term debt			809				498				62	%			809				348				133	%
Long-term liabilities			3,455				4,034				-14	%			3,455				3,962				-13	%
Bond payable & long-term borrowings			2,324				2,892				-20	%			2,324				2,761				-16	%
Total shareholders’ equity			8,258				7,127				16	%			8,258				7,886				5	%
Debt/Equity ratio 1)			38.0	%			53.2	%			-15.2	%p			38.0	%			42.0	%			-4.0	%p

1) Debt/Equity Ratio = Interest-bearing debt / Shareholders’ equity

*

Interest-bearing debt = Short-term borrowings + Current portion of long-term debt + Corporate bonds

1) Cash & marketable securities

-

The YoY increase was due to relatively low year-end balance in 2004 resulting from the debt repayment.

2) Investment assets

-

The YoY increase was due mainly to purchase of long-term investment securities such as Helio and Seoul Record.

3) Total liabilities

	-		Long-term liabilities decreased as corporate bonds with less than 1-year maturity were reclassified as current long-term liabilities.
	-		As of December 2005, debt to equity ratio decreased to 38.0% due to the reduction of debt.

III. Operating Result

		2005				2004				Change				Q4.’05				Q3.’05				Change
Subscribers (‘000)			19,530				18,783				4	%			19,530				19,342				1	%
Net adds			747				470				59	%			188				146				29	%
Activations			5,057				4,407				15	%			1,196				1,278				-6	%
Deactivations			4,310				3,937				9	%			1,007				1,132				-11	%
Monthly churn rate			1.8	%			1.7	%			0.1	%p			1.7	%			2.0	%			-0.2	%p
Average subscribers(‘000)			19,172				18,572				3	%			19,436				19,260				1	%
ARPU (KRW)			44,167				43,542				1	%			45,046				44,921				0	%
Sign-up fee			1,010				890				13	%			925				1,009				-8	%
Monthly fee & call charge			26,754				29,023				-8	%			26,922				26,797				0	%
VAS & others			1,753				1,594				10	%			1,805				1,833				-2	%
Wireless Internet			10,689				8,182				31	%			11,345				11,301				0	%
Interconnection			3,962				3,853				3	%			4,049				3,981				2	%
MOU (Minutes)
Outgoing			197	1			194				1	%			204	1			198				3	%
Incoming			112	1			112				0	%			116	1			111				5	%
Subscribers by handset feature(‘000)
1x (Including EV-DO)			18,547				17,048				9	%			18,547				18,256				2	%
EV-DO (Including June)			8,126				6,484				25	%			8,126				7,760				5	%
June			6,701				3,622				85	%			6,701				5,759				16	%
Color			17,250				14,843				16	%			17,250				16,830				2	%
Data ARPU by handset (KRW) 2) 2G			2,405				1,650				46	%			2,939				2,615				12	%
1X(Including EV-DO)			10,766				8,243				31	%			11,305				11,349				0	%
Color			11,666				9,614				21	%			12,015				12,206				-2	%

1) MOU for November and December of 2005 is an estimate.

2) Excludes others in wireless internet sales such as financial enabler, Solution/Platform sales, etc.

IV. Appendix (Non-Consolidated Statements of Income)

(KRW mn)		2005				2004				Q4.’05				Q3.’05
Operating revenue			10,161,129				9,703,681				2,626,557				2,595,485
Operating expenses			7,507,559				7,344,100				1,971,773				1,924,552
Labor cost 1)			433,039				448,099				98,732				112,107
Commissions paid			2,895,214				2,827,159				718,229				747,222
Advertising			260,699				328,552				71,112				67,234
Depreciation 2)			1,634,254				1,699,531				465,658				409,068
Network interconnection			935,217				858,754				237,898				238,966
Leased line			392,834				365,444				102,524				98,252
Rent			179,726				167,671				48,829				43,814
Frequency usage fees			156,098				143,047				39,810				38,555
Bad debt			104,089				22,544				37,715				31,407
Others			516,389				483,298				151,265				137,927
Operating income			2,653,570				2,359,581				654,784				670,933
Other income			409,793				237,129				78,680				231,770
Interest income			54,988				68,319				19,158				12,521
Equity in earnings of affiliates			55,943				53,825				15,459				22,318
Dividend income			26,515				23,843				5,009				5,076
Foreign exchange & translation gains			1,862				10,897				478				771
Others			270,484				80,245				38,575				191,085
Other expenses			508,749				480,932				166,341				113,112
Interest			252,464				302,491				60,943				59,588
R&D contribution & donations			144,508				88,345				62,038				30,489
Equity in losses of affiliates			90,801				—				33,277				20,326
Foreign exchange & translation losses			2,223				6,248				1,155				254
Loss on impairment of investment securities			1,793				32,074				1,793				—
Loss on disposal of investment assets, & property/equipment			8,344				19,154				4,300				499
Others			8,616				32,620				2,835				1,956
Ordinary income			2,554,613				2,115,778				567,122				789,591
Income before income taxes			2,554,613				2,115,778				567,122				789,591
Income taxes			683,233				620,926				119,148				201,714
Net income			1,871,380				1,494,852				447,975				587,878

1)

Includes salary, severance pay and other benefits

2)

Includes R&D related depreciation

IV. Appendix (Non-Consolidated Balance Sheets)

(KRW mn)		2005				2004				2005.12				2005.9
Total assets			14,460,524				14,020,705				14,460,524				14,113,637
Current assets			4,111,333				3,854,345				4,111,333				4,192,212
Cash and marketable securities1)			970,188				761,055				970,188				940,245
Accounts receivable — trade			1,607,596				1,562,774				1,607,596				1,572,027
Accounts receivable — other			1,333,238				1,365,226				1,333,238				1,404,327
Short-term loans			64,150				55,613				64,150				66,527
Inventories			5,986				10,961				5,986				13,991
Other			130,175				98,716				130,175				195,095
Investment assets			2,366,760				2,112,488				2,366,760				2,142,437
Investment securities 2)			2,129,237				1,749,783				2,129,237				1,917,573
Long-term loans			14,204				28,284				14,204				16,513
Guarantee deposits			122,846				242,387				122,846				127,329
Other			100,474				92,033				100,474				81,022
Property & equipment			4,595,883				4,605,253				4,595,883				4,409,145
Land			461,513				463,656				461,513				465,375
Building & fixture			1,145,497				1,163,070				1,145,497				1,147,266
Machinery			2,429,564				2,585,118				2,429,564				2,128,014
Vehicles & others			295,000				255,407				295,000				425,522
Construction in progress			264,309				138,002				264,309				242,968
Intangible assets			3,386,547				3,448,619				3,386,547				3,369,844
Total liabilities			6,202,644				6,893,613				6,202,644				6,227,499
Current liabilities			2,747,268				2,859,711				2,747,268				2,265,700
Short-term borrowings			—				400,000				—				200,000
Accounts payable			971,558				1,070,588				971,558				690,430
Income taxes payable			366,579				267,797				366,579				251,117
Accrued expenses			362,178				378,303				362,178				492,992
Current portion of long-term debt			809,490				498,278				809,490				347,609
Other			237,464				244,745				237,464				283,553
Long-term liabilities			3,455,376				4,033,902				3,455,376				3,961,798
Bond payable & long-term borrowings			2,324,412				2,891,843				2,324,412				2,760,639
Facility deposits			23,770				31,440				23,770				24,602
Accrued severance indemnities			64,029				75,409				64,029				97,727
Others			1,043,165				1,035,210				1,043,165				1,078,831
Total shareholders’ equity			8,257,881				7,127,091				8,257,881				7,886,139
Capital stock			44,639				44,639				44,639				44,639
Capital surplus			2,966,198				2,983,166				2,966,198				2,966,198
Retained earnings			7,269,861				6,156,708				7,269,861				6,821,886
Capital adjustments			(2,022,817	)			(2,057,422	)			(2,022,817	)			(1,946,584	)
Treasury stock			(2,047,105	)			(2,047,105	)			(2,047,105	)			(2,047,105	)
Unrealized gain(loss) on valuation of investment securities etc.			20,808				(15,150	)			20,808				97,040
Stock options			3,480				4,833				3,480				3,480

1)

Cash & marketable securities : Cash & cash equivalent, marketable securities & short-term financial instruments are included

2)

Investment securities : Investments in affiliates with more than 20% interest, listed companies & non-listed companies are included

V. IR Contacts

IR Office		Title		Telephone		Email (CHAINES CHARACTERS)
Tae-Geon Park		Manager		02)6100-1632		parktg@sktelecom.com
Hannah Kim		Assistant Manager		02)6100-1640		hannah@sktelecom.com

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/ Hyun Jong Song
		Name: Hyun Jong Song Title: Vice President

Date: January 27, 2006