Sk Telecom Co., Ltd. · KRX:017670

Sk Telecom — Investor Presentation (October 2016)

23 slides from Sk Telecom's investor presentation, October 2016

  1. Slide 1: SK telecom Investor Presentation

    9 CONSECUTIVE MEMBER OF SK telecom Investor Presentation October 2016 April 2016

  2. Slide 2: Disclaimer

    Disclaimer This presentation contains forward-looking statements with respect to the financial condition, results of operations and business of SK Telecom and its subsidiaries (the “Company”) and plans and objectives of the management of the Company. The aforementioned forward-looking statements are

  3. Slide 3: Table of Contents

    Table of Contents Ⅰ. Business 3 - Telco 3 - Lifestyle Enhancement 8 - Media 9 - IoT 11 - e-Commerce 12 Ⅱ. Capital Management 13 Ⅲ. Consolidated Results 14 Ⅳ. Non-consolidated Results 16 Appendix 18

  4. Slide 4: Telco - Subscribers

    Ⅰ. Business Telco - Subscribers  Differentiated services and fundamental competitiveness continue to boost LTE expansion  Creating new demand with 2nd devices LTE Subs 2nd Device Subs LTE Penetration(%) (Unit : thousands) Total Subs(mn) 29.5 +14.9% 29.2 28.9 28.6 28.3 69.8% 1,026 68.7% 67.5% 66.3%

  5. Slide 5: Telco - ARPU

    Ⅰ. Business Telco - ARPU  LTE data usage per sub reached 5.1GB, reflecting growing demand for multimedia consumption  ARPU decreased slightly due to increase in 2nd devices and tariff discount plan subscribers Monthly LTE Data Usage per Sub ARPU Trend (Unit: GB) (Unit : KRW thousands) +1.2GB 5.1 3

  6. Slide 6: Telco – Marketing Expense/Churn Rate

    Ⅰ. Business Telco – Marketing Expense/Churn Rate  Benign market condition allows marketing expense and churn rate to remain stable Marketing Expense Churn Rate Marketing Expense to Revenue(%) Marketing Expense (KRW bn) 27.5% 24.3% 23.1% 23.3% 23.2% 893.3 2.1% 763.7 716.6 720.9 719.8 1.5% 1.5% 1.5%

  7. Slide 7: Telco – Spectrum/CAPEX

    Ⅰ. Business Telco – Spectrum/CAPEX  Acquisition of 60MHz in the 2.6GHz band has enabled SKT to solely provide 5 Band CA*services in Korea  CAPEX guidance adjusted to KRW 2.1 trillion from KRW 2 trillion SKT’s LTE Spectrum 50MHz 30MHz 70MHz CAPEX CAPEX to Sales(%) CAPEX (KRW tn) Pre Auction Current

  8. Slide 8: Telco - 5G

    Ⅰ. Business Telco - 5G  5G standardization expected in 2018, commercialization in 2020; SK Telecom is developing technologies to launch a trial network by the end of 2016  Faster speed and lower latency enable new business models applicable to VR, AR, and self-driving cars 5G Roadmap Features of 5

  9. Slide 9: Lifestyle Enhancement

    Ⅰ. Business Lifestyle Enhancement  T Map & T Phone opened to non-SKT users to expand the Big Data-based Lifestyle Enhancement Platform 11번가 T Map 2Q 현황 T Phone  Utilize Big Data from the largest domestic subscriber base  Launched iOS version (Oct. ‘16) to create new business models  Expand the c

  10. Slide 10: Media

    Ⅰ. Business Media  SK Broadband earnings are on a upward trajectory with IPTV services showing robust results SKB Earnings IPTV Revenues Revenues (KRW bn) IPTV revenues (KRW bn) Operating Profits (KRW bn) % of paid contents and platform biz (VoD, home shopping, advertisement, T commerce, VAS, mobil

  11. Slide 11: Media

    Ⅰ. Business Media  Platform/Contents competitiveness boosts IPTV subscribers and UV - the number of cumulative net adds until 3Q was the highest (0.4mn) in the industry  High value subscriber base is steadily growing Btv Subscribers Oksusu UV* Btv subs (mn, ex-VoD service subs) (Unit : mn, pre-1Q1

  12. Slide 12: IoT

    Ⅰ. Business IoT  Creating ecosystems in the IoT infrastructure, business solutions and Smart Home arenas IoT Revenue Smart Home (Unit: KRW bn)  Targeting the new housing market by partnering with 12 domestic construction companies +40.7% YoY 55 45.4 46.3 [Smart Home partners] 48 44.4 46 39.7 32.9

  13. Slide 13: e-Commerce

    Ⅰ. Business e-Commerce  SK Planet is showing solid growth in the highly coveted e-commerce industry Domestic e-Commerce 11번가 2Q 현황Market GMV* Domestic e-Commerce Company UV* (Unit : KRW tn) (Unit : mn) Total GMV of e-Commerce market App. UV % of mobile GMV Total UV 19.7 19.4 60 (E) (Web + App.) 54

  14. Slide 14: Capital Mgmt. Shareholder Return

    Ⅱ. Capital Mgmt. Shareholder Return  Enhancing shareholder value is a long-standing priority for SK Telecom Shareholder Return Global Telco Dividend Yield (Unit: KRW bn) ※ Source: Thomson One (average, from ‘13~’15) Payout ratio(%)* Share buyback Cash dividend 73% 7.7% 65% 64% 53% 53% 53% 42% 39% 3

  15. Slide 15: Consolidated Results

    Consolidated Results  Summary of Income Statement (Consolidated) (KRW bn) 3Q16 3Q15 YoY 3Q16 2Q16 QoQ  Consolidated revenue : Declined by 0.4% YoY due to the Operating revenues 4,244 4,261 (18) -0.4% 4,244 4,267 (23) -0.6% decrease in revenues of SK Telecom and PS&M, but SK Operating expenses 3,82

  16. Slide 16: Consolidated Results

    Consolidated Results  Operating Expenses (Consolidated) (KRW bn) 3Q16 3Q15 YoY 3Q16 2Q16 QoQ  Labor cost : Increased by 5.3% YoY due to the rise in new recruits of SK Telecom and other subsidiaries Labor cost 449 426 22 5.3% 449 466 (17) -3.6% Commissions paid 1,315 1,274 40 3.1% 1,315 1,327 (12)

  17. Slide 17: Non-consolidated Results

    Non-consolidated Results  Operating Revenues (Non-consolidated)  SK Telecom’s standalone revenue : Declined by 1.3% YoY (KRW bn) 3Q16 3Q15 YoY 3Q16 2Q16 QoQ Total operating revenues 3,102 3,142 (40) -1.3% 3,102 3,092 10 0.3% due to the abolition of activation fees, increased by 0.3% Mobile service

  18. Slide 18: Non-consolidated Results

    Non-consolidated Results  Marketing Expense & CAPEX (KRW bn) 3Q16 3Q15 YoY 3Q16 2Q16 QoQ  Marketing expense : Decreased by 3.8% YoY in line with 1) Marketing expenses 720 749 (29) -3.8% 720 721 (1) -0.1% stable market trends % of operating revenue 23.2% 23.8% -0.6%p 23.2% 23.3% -0.1%p  CAPEX : In

  19. Slide 19: Appendix

    Appendix  Subscriber Numbers1) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 YoY QoQ Subscribers ('000) 2) 28,026 28,313 28,474 28,626 28,921 29,150 29,451 977 3.4% 301 1.0% Net adds (253) 287 162 152 295 229 301 138 85.3% 71 31.2% Activations 1,872 1,431 1,373 1,317 1,552 1,536 1,503 130 9.5% (33) -2.1% Deac

  20. Slide 20: Appendix. Consolidated Income Statement

    Appendix. Consolidated Income Statement (in KRW bn) 1Q15 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 Operating revenues 4,240.3 4,255.7 4,261.4 4,379.3 17,136.7 4,228.5 4,267.3 4,243.8 Operating expenses 3,837.6 3,842.9 3,770.7 3,977.5 15,428.7 3,826.3 3,859.9 3,819.5 Labor cost 475.0 543.9 426.4 448.5 1,893

  21. Slide 21: Appendix. SK Telecom's Non-consolidated Income Statement

    Appendix. SK Telecom’s Non-consolidated Income Statement (in KRW bn) 1Q15 2Q15 3Q15 4Q15 2015 1Q16 2Q16 3Q16 Operating revenues 3,133.5 3,143.8 3,141.8 3,138.0 12,557.0 3,098.3 3,092.0 3,101.8 Operating expenses 2,725.6 2,747.7 2,675.6 2,749.3 10,898.2 2,668.4 2,613.8 2,624.7 Labor cost 176.6 257.3

  22. Slide 22: Appendix. Consolidated Balance Sheet

    Appendix. Consolidated Balance Sheet (in KRW bn) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Total assets 27,824.4 28,041.5 28,558.7 28,581.4 28,490.4 28,529.4 29,555.7 Current assets 5,228.5 5,180.5 5,573.2 5,160.2 5,805.8 6,118.6 5,777.7 Cash and marketable securities1) 1,264.4 1,335.2 1,643.5 1,505.0 1,62

  23. Slide 23: Appendix. SK Telecom's Non-Consolidated Balance Sheet

    Appendix. SK Telecom's Non-Consolidated Balance Sheet (in KRW bn) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Total assets 22,464.6 22,863.4 23,144.7 23,146.9 23,120.0 23,181.8 24,247.6 Current assets 2,854.1 2,685.9 3,133.1 2,713.5 3,144.4 3,560.0 3,255.5 Cash and marketable securities1) 496.3 508.7 736.8 5

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