##### Table of Contents



As filed
    with the Securities and Exchange Commission on June 29,
    2007
     UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 20-F
      (Mark One)o

REGISTRATION STATEMENT PURSUANT
    TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF
    1934ORþ

ANNUAL REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934For the fiscal year ended
    December 31, 2006ORo

TRANSITION REPORT PURSUANT TO
    SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934ORo

SHELL COMPANY REPORT PURSUANT
    TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934Date of event requiring this
    shall company
    reportFor the transition period
    from          to   Commission file number
    1-14418
      SK Telecom Co., Ltd.
 (Exact name of Registrant as
    specified in its charter)
      SK Telecom Co., Ltd.
 (Translation of
    Registrants name into English)
      The Republic of Korea
    (Jurisdiction of incorporation or organization)
    11, EULJIRO 2-GA, JUNG-GU
    SEOUL, KOREA (Address of principal
    executive offices)
  Securities registered or to be
    registered pursuant to Section 12(b) of the Act.
  Title of Each Class

Name of Each Exchange on Which RegisteredAmerican Depositary Shares, each
    representing one-ninth of one
    share of Common Stock
    Common Stock, par value W500 per share

New York Stock Exchange, Inc.
    New York Stock Exchange, Inc.*   *
    
    Not for trading, but only in
    connection with the registration of the American Depositary
    Shares.  Securities registered or to be
    registered pursuant to Section 12(g) of the Act.
    None
    Securities for which there is a reporting obligation pursuant to
    Section 15(d) of the Act.
    None
        81,193,711 shares of common
    stock, par value W500 per share
  þ o
  o þ
  þ o
  Rule 12b-2
 Large accelerated
    filer þ     Accelerated
    filer o     Non-accelerated
    filer o
  o þ
  Rule 12b-2 o þ
  (APPLICABLE ONLY TO ISSUERS
    INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE
    YEARS)
  o o




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##### Table of Contents



TABLE OF
    CONTENTS
  
  Certain Defined
    Terms And Conventions Used In This Report


1Forward-Looking
    Statements


2PART I


3Item 1.


IDENTITY OF
    DIRECTORS, SENIOR MANAGEMENT AND ADVISERS


3Item 1.A.


Directors and
    Senior Management


3Item 1.B.


Advisers


3Item 1.C.


Auditors


3Item 2.


OFFER STATISTICS
    AND EXPECTED TIMETABLE


3Item 3.


KEY
    INFORMATION


3Item 3.A.


Selected Financial
    Data


3Item 3.B.


Capitalization and
    Indebtedness


7Item 3.C.


Reasons for the
    Offer and Use of Proceeds


7Item 3.D.


Risk
    Factors


7Item 4.


INFORMATION ON THE
    COMPANY


20Item 4.A.


History and
    Development of the Company


20Item 4.B.


Business
    Overview


24Item 4.C.


Organizational
    Structure


48Item 4.D.


Property, Plants
    And Equipment


48Item 4A.


UNRESOLVED STAFF
    COMMENTS


48Item 5.


OPERATING AND
    FINANCIAL REVIEW AND PROSPECTS


49Item 5.A.


Operating
    Results


49Item 5.B.


Liquidity and
    Capital Resources


56Item 5.C.


Research and
    Development


67Item 5.D.


Trend
    Information


68Item 5.E.


Off-Balance Sheet
    Arrangements


68Item 5.F.


Tabular Disclosure
    of Contractual Obligations


68Item 6.


DIRECTORS, SENIOR
    MANAGEMENT AND EMPLOYEES


68Item 6.A.


Directors and
    Senior Management


68Item 6.B.


Compensation


71Item 6.C.


Board
    Practices


71Item 6.D.


Employees


74Item 6.E.


Share
    Ownership


75Item 7.


MAJOR SHAREHOLDERS
    AND RELATED PARTY TRANSACTIONS


76Item 7.A.


Major
    Shareholders


76Item 7.B.


Related Party
    Transactions


78Item 7.C.


Interests of
    Experts and Counsel


79Item 8.


FINANCIAL
    INFORMATION


80Item 8.A.


Consolidated
    Statements and Other Financial Information


80Item 8.B.


Significant
    Changes


84Item 9.


THE OFFER AND
    LISTING


84Item 9.A.


Offering and
    Listing Details


84Item 9.B.


Plan of
    Distribution


84Item 9.C.


Markets


84 i




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##### Table of Contents



Item 9.D.


Selling
    Shareholders


92Item 9.E.


Dilution


92Item 9.F.


Expenses of the
    Issue


92Item 10.


ADDITIONAL
    INFORMATION


92Item
    10.A.


Share
    Capital


92Item
    10.B.


Memorandum and
    Articles of Association


92Item
    10.C.


Material
    Contracts


105Item
    10.D.


Exchange
    Controls


105Item
    10.E.


Taxation


109Item
    10.F.


Dividends and
    Paying Agents


113Item
    10.G.


Statements by
    Experts


113Item
    10.H.


Documents on
    Display


114Item
    10.I.


Subsidiary
    Information


114Item 11.


QUANTITATIVE AND
    QUALITATIVE DISCLOSURES ABOUT MARKET RISK


114Item 12.


DESCRIPTION OF
    SECURITIES OTHER THAN EQUITY SECURITIES


115PART II


116Item 13.


DEFAULTS, DIVIDEND
    ARREARAGES AND DELINQUENCIES


116Item 14.


MATERIAL
    MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
    PROCEEDS


116Item 15.


CONTROLS AND
    PROCEDURES


116Item 16.


RESERVED


117Item 16A.


AUDIT COMMITTEE
    FINANCIAL EXPERT


117Item 16B.


CODE OF
    ETHICS


117Item 16C.


PRINCIPAL
    ACCOUNTANT FEES AND SERVICES


117Item 16D.


EXEMPTIONS FROM THE
    LISTING STANDARDS FOR AUDIT COMMITTEES


118Item 16E.


PURCHASES OF EQUITY
    SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS


118PART III


120Item 17.


FINANCIAL
    STATEMENTS


120Item 18.


FINANCIAL
    STATEMENTS


120Item 19.


EXHIBITS


120EX-8.1 LIST OF SUBSIDIARIESEX-12.1 CERTIFICATION OF CEOEX-12.2 CERTIFICATION OF CFOEX-13.1 CERTIFICATION OF CEOEX-13.2 CERTIFICATION OF CFOEX-15.1 TELECOMMUNICATIONS BASIC ACTEX-15.2 ENFORCEMENT DECREEEX-15.3 TELECOMMUNICATIONS BUSINESS ACTEX-15.4 ENFORCEMENT DECREEEX-99.1 CONSENT OF DELOITTE ANJIN LLC   ii




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##### Table of Contents



CERTAIN
    DEFINED TERMS AND CONVENTIONS USED IN THIS REPORT        W
     1




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##### Table of Contents



FORWARD-LOOKING
    STATEMENTS      
    our ability to anticipate and respond to various competitive
    factors affecting the wireless telecommunications industry,
    including new services that may be introduced, changes in
    consumer preferences, economic conditions and discount pricing
    strategies by competitors;
    our implementation of high-speed download packet access, or
    HSDPA, technology, high-speed upload packet access, or HSUPA,
    technology and wireless broadband internet, or WiBro, technology;
    our plans to spend approximately Won 1.55 trillion for capital
    expenditures in 2007 for a range of projects, including
    investments in our backbone networks (and our WCDMA and WiBro
    networks in particular),investments in our wireless
    Internet-related and convergence businesses and funding for
    mid-to long-term research and development projects, as well as
    other initiatives, primarily related to our ongoing businesses
    and in the ordinary course;
    our efforts to make significant investments to build, develop
    and broaden our businesses, including developing and providing
    wireless data, multimedia, mobile commerce and Internet services;
    our ability to comply with governmental rules and regulations,
    including the regulations of the Ministry of Information and
    Communication, or the MIC, related to telecommunications
    providers, rules related to our status as a
    market-dominating business entity under the Korean
    Monopoly Regulation and Fair Trade Act, or the Fair Trade Act,
    and the effectiveness of steps we have taken to comply with such
    regulations;
    our ability to manage effectively our bandwidth and to implement
    timely and efficiently new bandwidth-efficient technologies;
    our expectations and estimates related to interconnection fees;
    tariffs charged by our competitors; regulatory fees; operating
    costs and expenditures; working capital requirements; principal
    repayment obligations with respect to long-term borrowings,
    bonds and obligations under capital leases; and research and
    development expenditures and other financial estimates;
    the success of our various joint ventures and investments in
    other telecommunications service providers; and
    the growth of the telecommunications industry in Korea and other
    markets in which we do business and the effect that economic,
    political or social conditions have on our number of
    subscribers, call volumes and results of operations.   2




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##### Table of Contents



PART I  Item 1.
    IDENTITY
    OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS  Item 1.A.
    Directors
    and Senior Management  Not applicable
  Item 1.B.
    Advisers  Not applicable.
  Item 1.C.
    Auditors  Not applicable.
  Item 2.
    OFFER
    STATISTICS AND EXPECTED TIMETABLE  Not applicable.
  Item 3.
    KEY
    INFORMATION  Item 3.A.
    Selected
    Financial Data      As of or for the Year Ended December 31,2002

2003

2004

2005

2006

2006(In billions of Won and millions of dollars, except per share
    and percentage data)INCOME STATEMENT DATAKorean GAAP:Total Operating
    Revenue(1)

W
9,324
.0

W
10,272
.1

W
10,570
.6

W
10,721
.8

W
11,028
.0

US$
11,858
.0Cellular
    Service(1)


9,156
.8


10,091
.8


10,297
.6


10,361
.9


10,515
.6


11,307
.0Other(2)


167
.2


180
.3


273
.0


359
.9


512
.4


551
.0Operating Expenses


6,526
.4


7,167
.0


8,130
.9


8,051
.2


8,406
.9


9,039
.6Operating Income


2,797
.6


3,105
.1


2,439
.7


2,670
.6


2,621
.1


2,818
.4Income before Income Taxes and
    Minority Interest


2,218
.8


2,754
.3


2,123
.2


2,561
.6


2,021
.6


2,173
.7Income before Minority Interest


1,520
.3


1,965
.3


1,493
.4


1,868
.3


1,449
.6


1,558
.7Net Income


1,487
.2


1,966
.1


1,491
.5


1,873
.0


1,451
.5


1,560
.7Net Income per Share of Common
    Stock(3)


17,647



26,187



20,261



25,443



19,801



21
.29Diluted Net Income per Share of
    Common
    Stock(3)


17,647



26,187



20,092



25,036



19,523



20
.99Dividends Declared per Share of
    Common Stock


1,800



5,500



10,300



9,000



8,000



8
.60Weighted Average Number of Shares


84,270,450



75,078,219



73,614,297



73,614,296



73,305,026



73,305,026 3




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##### Table of Contents



As of or for the Year Ended December 31,2002

2003

2004

2005

2006

2006(In billions of Won and millions of dollars, except per share
    and percentage data)U.S. GAAP:Total Operating Revenue

W
9,219
.7

W
10,225
.1

W
10,534
.6

W
10,701
.4

W
10,541
.8

US$
11,335
.3Operating Expenses


6,643
.4


7,044
.5


8,137
.6


7,847
.7


7,720
.0


8,301
.1Operating Income


2,576
.3


3,180
.6


2,397
.0


2,853
.7


2,821
.8


3,034
.2Net Income


1,301
.1


2,062
.7


1,553
.1


2,027
.6


1,880
.5


2,022
.0Net Income per Share of Common
    Stock(3)


15,440



27,475



21,097



27,543



25,653



27
.58Diluted Net Income per Share of
    Common
    Stock(3)


15,439



27,475



20,918



27,089



25,236



27
.14BALANCE SHEET DATAKorean GAAP:Working Capital
    (Deficiency)(4)

W
(189
.7)

W
(461
.4)

W
1,323
.8

W
1,735
.2

W
1,455
.5

US$
1,565
.1Property and Equipment, Net


4,569
.4


4,641
.5


4,703
.9


4,663
.4


4,507
.3


4,846
.6Total Assets


14,228
.7


13,818
.2


14,283
.4


14,704
.8


16,240
.0


17,462
.3Long-term
    Liabilities(5)


3,693
.4


3,193
.5


4,010
.7


3,513
.9


3,548
.5


3,815
.6Capital Stock


44
.6


44
.6


44
.6


44
.6


44
.6


48
.0Total Shareholders Equity


6,231
.9


6,093
.8


7,205
.7


8,327
.5


9,483
.1


10,196
.9U.S. GAAP:Working Capital (Deficiency)


(108
.2)


(445
.5)


1,311
.3


1,587
.2


1,286
.2


1,383
.0Total Assets


15,720
.7


15,586
.2


15,576
.8


16,351
.2


17,929
.5


19,279
.1Total Shareholders Equity


6,356
.2


7,014
.7


8,237
.0


9,472
.4


10,738
.5


11,546
.8OTHER FINANCIAL DATAKorean GAAP:EBITDA(6)

W
3,954
.1

W
4,706
.4

W
4,085
.8

W
4,434
.2

W
3,881
.0

US$
4,173
.1Capital
    Expenditures(7)


2,024
.7


1,647
.6


1,631
.9


1,416
.6


1,498
.1


1,610
.9R&D
    Expenses(8)


253
.3


300
.7


336
.1


321
.1


279
.0


300
.0Internal R&D


194
.3


235
.8


267
.1


252
.0


212
.0


228
.0External R&D


59
.0


64
.9


69
.0


69
.1


67
.0


72
.0Depreciation and Amortization


1,543
.3


1,646
.3


1,752
.5


1,675
.5


1,698
.4


1,826
.2Cash Flow from Operating Activities


4,268
.4


3,329
.4


2,527
.9


3,407
.1


3,589
.8


3,860
.0Cash Flow from Investing Activities


(3,064
.0)


(1,415
.1)


(1,470
.3)


(1,938
.2)


(2,535
.2)


(2,726
.0)Cash Flow from Financing Activities


(1,418
.2)


(2,261
.0)


(968
.6)


(1,429
.0)


(952
.4)


(1,024
.1)Margins (% of total sales):EBITDA
    Margin(6)


42
.4%


45
.8%


38
.7%


41
.4%


35
.2%


35
.2%Operating Margin


30
.0


30
.2


23
.1


24
.9


23
.8


23
.8Net Margin


15
.9


19
.1


14
.1


17
.5


13
.2


13
.2U.S. GAAP:EBITDA(6)


3,620
.7


4,679
.1


3,970
.4


4,412
.2


4,529
.6


4,870
.5Capital
    Expenditures(7)


2,024
.7


1,668
.0


1,656
.9


1,429
.3


1,538
.0


1,653
.8Cash Flow from Operating Activities


3,606
.2


3,144
.3


3,237
.9


3,296
.8


3,614
.8


3,886
.9Cash Flow from Investing Activities


(2,892
.5)


(1,285
.5)


(1,634
.1)


(1,816
.5)


(2,560
.6)


(2,753
.3)Cash Flow from Financing Activities


(927
.5)


(2,205
.5)


(1,514
.8)


(1,439
.3)


(940
.6)


(1,011
.4)   4




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##### Table of Contents



As of or for the Year Ended December 31,2002


2003


2004


2005


2006


2006SELECTED OPERATING
    DATAPopulation of Korea
    (millions)(9)


47
.6



47
.9



48
.2



48
.3



48
.3



48
.3Our Wireless
    Penetration(10)


36
.1



38
.2



39
.0



40
.4



42
.0



42
.0Number of
    Employees(11)


6,241




6,286




7,353




6,646




7,676




7,676Total Sales per Employee (millions)


W1,494
.0



W1,634
.1



W1,437
.6



W1,613
.3



W1,436
.7


US$
1,544
.8Wireless
    Subscribers(12)


17,219,562




18,313,135




18,783,338




19,530,117




20,271,133




20,271,133Average Monthly Outgoing Voice
    Minutes per
    Subscriber(13)


191




197




194




197




201




201Average Monthly Revenue per
    Subscriber(14)


W38,383




W39,739




W39,689




W40,205




W40,220



US$
43,247
.3Average Monthly Churn
    Rate(15)


1
.4
%


1
.2
%


1
.7
%


1
.8
%


2
.0
%


2
.0
%Digital Cell Sites


7,384




8,310




9,458




10,142




12,359




12,359     *
    
    The conversion into Dollars was
    made at the rate of Won 930.0 to US$1.00. See note 2(a) of
    the notes to our consolidated financial statements.(1)
    
    Includes revenues from SK Teletech
    Co., Ltd. of Won 534.0 billion for 2002, Won
    612.0 billion for 2003, Won 649.8 billion for
    2004 and Won 294.6 billion for 2005 from the sale of
    digital handsets and Won 1,043.2 billion for 2002, Won
    1,017.1 billion for 2003, Won 849.4 billion for 2004,
    Won 898.6 billion for 2005 and Won 1,033.4 billion for
    2006 of interconnection revenue. Following our sale of a 60%
    equity interest in SK Teletech to Pantech & Curitel in
    July 2005, our equity interest in the company was reduced to
    29.1% (which subsequently became a 22.7% interest in Pantech
    following the merger of SK Teletech into Pantech in December
    2005) and SK Teletech ceased to be our consolidated
    subsidiary. Following the exclusion of SK Teletech from
    consolidation, we no longer derive revenues from digital handset
    sales. See Item 4.B. Business Overview 
    Interconnection.(2)
    
    For more information about our
    other revenue, see Item 5. Operating and Financial
    Review and Prospects and Item 4.B. Business
    Overview.(3)
    
    Income per share of common stock is
    calculated by dividing net income by the weighted average number
    of shares outstanding during the period. Diluted net income per
    share of common stock is calculated by dividing adjusted net
    income by adjusted weighted average number of shares outstanding
    during the period, taking into account the dilutive effect of
    stock options in 2002 and issuance of convertible bonds in 2004,
    2005 and 2006.(4)
    
    Working capital means current
    assets minus current liabilities.(5)
    
    Our monetary assets and liabilities
    denominated in foreign currencies are valued at the exchange
    rate of Won 1,200 to US$1.00 as of December 31, 2002,
    Won 1,198 to US$1.00 as of December 31, 2003, Won 1,044 to
    US$1.00 as of December 31, 2004, Won 1,013 to US$1.00 as of
    December 31, 2005 and Won 930 to US$1.00 as of
    December 31, 2006, the rates of exchange permitted under
    Korean GAAP as of those dates. See note 2(w) of the notes
    to our consolidated financial statements.(6)
    
    EBITDA refers to income before
    interest income, interest expense, taxes, depreciation and
    amortization. EBITDA is commonly used in the telecommunications
    industry to analyze companies on the basis of operating
    performance, leverage and liquidity. Since the
    telecommunications business is a very capital intense business,
    capital expenditures and level of debt and interest expenses may
    have a significant impact on net income for companies with
    similar operating results. Therefore, for a telecommunications
    company such as ourselves, we believe that EBITDA provides a
    useful reflection of our operating results. We use EBITDA as a
    measurement of operating performance because it assists us in
    comparing our performance on a consistent basis as it removes
    from our operating results the impact of our capital structure,
    which includes interest expense from our outstanding debt, and
    our asset base, which includes depreciation and amortization of
    our property and equipment. However, EBITDA should not be
    construed as an alternative to operating income or any other
    measure of performance determined in accordance with Korean GAAP
    or U.S. GAAP or as an indicator of our operating performance,
    liquidity or cash flows generated by operating, investing and
    financing activities. Other companies may define EBITDA
    differently than we do. EBITDA under U.S. GAAP is computed using
    interest income, interest expense, depreciation, amortization
    and income taxes under U.S. GAAP, which may differ from Korean
    GAAP for these items.(7)
    
    Consists of investments in
    property, plant and equipment. Under U.S. GAAP, interest costs
    incurred during the period required to complete an asset or
    ready an asset for its intended use are capitalized based on the
    interest rates a company pays on its outstanding borrowings.
    Under Korean GAAP, beginning January 1, 2003, such interest
    costs are expensed as incurred. Through the end of 2002, the
    accounting treatment for capitalizing interest costs under
    Korean GAAP was consistent with that under U.S. GAAP.(8)
    
    Includes donations to Korean
    research institutes and educational organizations. See
    Item 5.C. Research and Development.(9)
    
    Population estimates based on
    historical data published by the National Statistical Office of
    Korea.(10)
    
    Wireless penetration is determined
    by dividing our subscribers by total estimated population, as of
    the end of the period.(11)
    
    Includes regular employees and
    temporary employees. See Item 6.D. Employees.(12)
    
    Wireless subscribers include those
    subscribers who are temporarily deactivated, including
    (1) subscribers who voluntarily deactivate temporarily for
    a period of up to three months no more than twice a year and
    (2) subscribers with delinquent accounts who may be
    involuntarily deactivated up to two months before permanent
    deactivation, which we determine based on various factors,
    including prior payment history. 5




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##### Table of Contents



(13)
    
    The average monthly outgoing voice
    minutes per subscriber is derived by dividing the total minutes
    of outgoing voice usage for the period by the monthly weighted
    average number of subscribers for the period, then dividing that
    number by the number of months in the period. The monthly
    weighted average number of subscribers is derived by dividing
    (i) the sum of the average number of subscribers for each
    month in the period, calculated as the average of the number of
    subscribers on the first and last days of the relevant month, by
    (ii) the number of months in the period.(14)
    
    The average monthly revenue per
    subscriber excludes interconnection revenue and is derived by
    dividing the sum of total initial subscription fees, monthly
    plan-based fees, usage charges for outgoing voice calls, usage
    charges for wireless data services, value-added service fees and
    other miscellaneous revenues for the period by the monthly
    weighted average number of subscribers for the period, then
    dividing that number by the number of months in the period.
    Including interconnection revenue, average monthly revenue per
    subscriber was Won 43,958 for 2002, Won 44,546 for 2003,
    Won 43,542 for 2004, Won 44,167 for 2005 and Won 44,599 for 2006.(15)
    
    The average monthly churn rate for
    a period is the number calculated by dividing the sum of
    voluntary and involuntary deactivations during the period by the
    simple average of the number of subscribers at the beginning and
    end of the period, then dividing that number by the number of
    months in the period. Churn includes subscribers who upgrade to
    CDMA lxRTT or CDMA 1xEV/ DO-capable handsets by terminating
    their service and opening a new subscriber account.    As of or for the Year Ended December 31,2002


2003


2004


2005


2006


2006(1)(In billions of Won and millions of dollars)Net Income

W
1,301.1


W
2,062.7


W
1,553.1


W
2,027.6


W
1,880.5


US$
2,022.0ADD: Interest income


(90.8
)


(93.9
)


(86.7
)


(62.6
)


(86.8
)


(93.3
)Interest expense


396.6



387.1



291.0



226.8



241.7



259.9Taxes


585.0



811.5



611.1



667.1



686.8



738.5Depreciation and Amortization


1,428.8



1,511.7



1,601.9



1,553.3



1,807.4



1,943.4EBITDA

W
3,620.7


W
4,679.1


W
3,970.4


W
4,412.2


W
4,529.6


US$
4,870.5     (1)
    
    The conversion into Dollars was
    made at the rate of Won 930.0 to US$1.00. See note 2(a) of
    the notes to our consolidated financial statements.    As of or for the Year Ended December 31,2002


2003


2004


2005


2006


2006(1)(In billions of Won and millions of dollars)Net Income

W
1,487.2


W
1,966.1


W
1,491.5


W
1,873.0


W
1,451.5


US$
1,560.7ADD: Interest income


(86.0
)


(86.5
)


(80.5
)


(61.1
)


(80.0
)


(86.0
)Interest expense


311.1



391.5



303.4



253.5



239.1



257.1Taxes


698.5



789.0



629.8



693.3



572.0



615.1Depreciation and Amortization


1,543.3



1,646.3



1,741.6



1,675.5



1,698.4



1,826.2EBITDA

W
3,954.1


W
4,706.4


W
4,085.8


W
4,434.2


W
3,881.0


US$
4,173.1     (1)
    
    The conversion into Dollars was
    made at the rate of Won 930.0 to US$1.00. See note 2(a) of
    the notes to our consolidated financial statements.  Exchange
    Rates
   6




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##### Table of Contents



At End ofYear Ended December 31,

Period


Average Rate(1)


High


Low2002


1,186



1,250



1,332



1,1612003


1,192



1,193



1,262



1,1462004


1,035



1,145



1,195



1,0352005


1,010



1,023



1,060



9972006


930



951



1,003



914   Past Six Months

High


Low(Won per US$1.00)January 2007


942.2



925.4February 2007


942.3



932.5March 2007


949.1



937.2April 2007


937.0



926.1May 2007


934.0



922.3June 2007 (through June 28, 2007)


932.3



926.1     (1)
    
    The average rates for the annual
    periods were calculated based on the average noon buying rate on
    the last day of each month (or portion thereof) during the
    period. The average rate for the monthly periods were calculated
    based on the average noon buying rate of each day of the month
    (or portion thereof).    Item 3.B.
    Capitalization
    and Indebtedness  Not applicable
  Item 3.C.
    Reasons
    for the Offer and Use of Proceeds  Not applicable
  Item 3.D.
    Risk
    Factors  Competition
    may reduce our market share and harm our results of operations
    and financial condition.
     7




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##### Table of Contents



Inability
    to successfully implement or adapt our network and technology to
    meet the continuing technological advancements affecting the
    wireless industry will likely have a material adverse effect on
    our financial condition, results of operation and
    business.
   8




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##### Table of Contents



Implementation
    of 3G and WiBro technologies has required, and may continue to
    require, significant capital and other expenditures, which we
    may not recoup.
       9




---



##### Table of Contents



Our
    growth strategy calls for significant investments in new
    businesses and regions, including businesses and regions in
    which we have limited experience.
      Due to
    the existing high penetration rate of wireless services in
    Korea, we are unlikely to maintain our subscriber growth rate,
    which could adversely affect our results of
    operations.
    Our
    business and results of operations may be adversely affected if
    we fail to acquire adequate additional spectrum or use our
    bandwidth efficiently to accommodate subscriber growth and
    subscriber usage.
   10




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##### Table of Contents



We may
    have to make further financing arrangements to meet our capital
    expenditure requirements and debt payment
    obligations.
        Termination
    or impairment of our relationship with a small number of key
    suppliers for network equipment and for leased lines could
    adversely affect our results of operations.
   11




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##### Table of Contents



Our
    businesses are subject to extensive Government regulation and
    any change in Government policy relating to the
    telecommunications industry could have a material adverse effect
    on our results of operations and financial
    condition.
         12




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##### Table of Contents



We are
    subject to additional regulation as a result of our dominant
    market position in the wireless telecommunications sector, which
    could harm our ability to compete effectively.
   13




---



##### Table of Contents



Financial
    difficulties and charges of financial statement irregularities
    at our affiliate, SK Networks (formerly SK Global), may cause
    disruptions in our business.
     14




---



##### Table of Contents



Concerns
    that radio frequency emissions may be linked to various health
    concerns could adversely affect our business and we could be
    subject to litigation relating to these health
    concerns.
    Our
    businesses may be adversely affected by developments affecting
    the Korean economy.
      
    a deterioration of the Korean consumer or corporate sector;
    a failure of the restructuring of large troubled chaebolsor companies;
    adverse changes or volatility in commodity prices (including an
    increase in oil prices), exchange rates, interest rates, stock
    markets or foreign currency reserves; 15




---



##### Table of Contents




    adverse developments in the economies of countries such as the
    United States and Japan to which Korea exports, or in emerging
    market economies in Asia or elsewhere that result in a loss of
    confidence in the Korean economy;
    an increase in lay-offs or unemployment rates or a reduction in
    income levels, which could adversely affect consumer spending or
    lead to social or labor unrest;
    a decrease in tax revenues and a substantial increase in the
    Governments expenditures for unemployment compensation and
    other social programs that together lead to an increased
    Government budget deficit;
    political uncertainty or increasing strife among and within
    political parties in Korea, particularly in the
    lead-up to
    the presidential elections in late 2007;
    a deterioration in economic or diplomatic relations between
    Korea and its trading partners or allies, including as a result
    of trade disputes or disagreements in foreign policy; and
    an increase in the level of tensions or an outbreak of
    hostilities between Korea and North Korea.  Depreciation
    of the value of the Won against the Dollar and other major
    foreign currencies may have a material adverse effect on our
    results of operations and on the prices of our common stock and
    the ADSs.
    
    an increase in the amount of Won required by us to make interest
    and principal payments on our foreign currency-denominated debt,
    which accounted for approximately 24.0% of our total
    consolidated long-term debt, including current portion, as of
    December 31, 2006; and
    an increase, in Won terms, of the costs of equipment that we
    purchase from overseas sources which we pay for in Dollars or
    other foreign currencies.    
    the amounts a registered holder or beneficial owner of ADSs will
    receive from the ADR depositary in respect of dividends, which
    will be paid in Won to the ADR depositary and converted by the
    ADR depositary into Dollars;
    the Dollar value of the proceeds that a holder will receive upon
    sale in Korea of the shares; and
    the secondary market price of the ADSs.    Increased
    tensions with North Korea could have an adverse effect on us and
    the prices of our common stock and the ADSs.
     16




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##### Table of Contents



If SK
    Corporation causes us to breach the foreign ownership
    limitations on shares of our common stock, we may experience a
    change of control.
      
    revoke our business license;
    suspend all or part of our business; or
    if the suspension of business is deemed to result in significant
    inconvenience to our customers or to be detrimental to the
    public interest, impose a one-time administrative penalty of up
    to 3% of the average of our annual revenue for the preceding
    three fiscal years.   17




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##### Table of Contents



If our
    convertible notes are converted by foreign holders and the
    conversion would cause a violation of the foreign ownership
    restrictions of the Telecommunications Business Act, or in
    certain other circumstances, we may sell common stock in order
    to settle the converting holders conversion rights in cash
    in lieu of delivering common stock to them, and these sales
    might adversely affect the market price of our common stock or
    ADRs.
    Sales
    of our shares by companies in the SK Group, POSCO and/or other
    large shareholders may adversely affect the prices of our common
    stock and ADSs.
      Koreas
    new legislation allowing class action suits related to
    securities transactions may expose us to additional litigation
    risk.
    If an
    investor surrenders his ADSs to withdraw the underlying shares,
    he may not be allowed to deposit the shares again to obtain
    ADSs.
   18




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##### Table of Contents



An
    investor in our ADSs may not be able to exercise preemptive
    rights for additional shares and may suffer dilution of his
    equity interest in us.
    
    a registration statement filed by us under the
    U.S. Securities Act of 1933, as amended, is in effect with
    respect to those shares; or
    the offering and sale of those shares is exempt from, or is not
    subject to, the registration requirements of the
    U.S. Securities Act.    Short
    selling of our ADSs by purchasers of securities convertible or
    exchangeable into our ADSs could materially adversely affect the
    market price of our ADSs.
    After
    the exchange of ADSs into our underlying common shares, seller
    or purchasers of the underlying common shares may have to pay
    securities transaction tax upon the transfer of the
    shares.
   19




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##### Table of Contents



A
    holder of our ADSs may not be able to enforce a judgment of a
    foreign court against us.
    We are
    generally subject to Korean corporate governance and disclosure
    standards, which may differ from those in other
    countries.
    Item 4.
    INFORMATION
    ON THE COMPANY  Item 4.A.
    History
    and Development of the Company   20




---



##### Table of Contents



100-999, 82-2-6100-2114.
  Korean
    Telecommunications Industry
     21




---



##### Table of Contents



As of or for the Year Ended December 31,2002


2003


2004


2005


2006(In thousands, accept for per population amounts)Population of
    Korea(1)


47,615



47,849



48,082



48,294



48,297Wireless
    Subscribers(2)


32,342



33,592



36,586



38,342



40,197Wireless Subscribers per 100
    Population


67
.9


70
.2


76
.1


79
.4


83
.2Telephone Lines in
    Service(2)


23,490



22,877



22,871



22,920



23,119Telephone Lines per 100 Population


49
.3


47
.8


47
.6


47
.5


47
.9     (1)
    
    Source: National Statistical Office
    of Korea(2)
    
    Source: MIC   22




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##### Table of Contents



Asia
    Pacific Wireless Penetration Rates as of December 31,
    2006(1)
  
     (1)
    
    Percentages may differ depending on
    method selected for determining population.    As of December 31,2002


2003


2004


2005


2006(In thousands)Number of Wireless Internet
    Enabled Handsets


29,085



31,431



35,017



37,202



38,894Total Number of Wireless
    Subscribers


32,342



33,592



36,586



38,342



40,197Penetration of Wireless Internet
    Enabled Handsets


89
.9%


93
.6%


95
.7%


97
.0%


96
.8%      23




---



##### Table of Contents



As of December 31,2002


2003


2004


2005


2006Number of Internet
    Users(1)


26,270



29,220



31,580



33,010



34,120Number of Broadband
    Subscribers(2)


10,405



11,172



11,921



12,191



14,043     (1)
    
    Source: KRNIC.(2)
    
    Source: MIC. Includes subscribers
    accessing Internet service using digital subscriber line, or
    xDSL, connections; cable modem connections; local area network,
    or LAN, connections; and satellite connections.  Item 4.B.
    Business
    Overview  Overview
    
    Cellular voice services.  We provide wireless
    voice transmission services to our subscribers through our
    backbone cellular networks and also offer wireless global
    roaming services though service agreements with various foreign
    wireless telecommunications service providers. (Accordingly,
    while cellular voice services principally refer to
    our core wireless voice transmission services, they also
    comprise our wireless global voice and data roaming services.)
    Wireless data services.  We also provide
    wireless data transmission services, including wireless Internet
    access services, which allow subscribers to access a wide range
    of online digital contents and services, as well as to send and
    receive text and multimedia messages, using their mobile phones.
    Digital convergence and new businesses.  We
    have pioneered new services that reflect the growing convergence
    between the telecommunications sector and other industries,
    including satellite DMB service, which enables satellite
    broadcasting to mobile devices, Telematics service,
    which makes use of global positioning system, or GPS, technology
    and Digital Home service, which brings home
    maintenance and security into the mobile digital era.      Our
    Business Strategy
  Core
    Business Strategies
   24




---



##### Table of Contents




    Enhance the technical capabilities of our wireless networks
    to improve data transmission rates and service quality and to
    enable us to offer an increased range of services, including in
    connection with our development of new and advanced wireless
    technologies.  We believe we have the most
    extensive and advanced wireless telecommunications network in
    Korea and we are committed to ensuring that our delivery
    platforms keep pace with the latest technological advancements.
    In March 2007, we completed the nationwide build-out of our
    HSDPA-capable WCDMA network and are currently expanding the
    coverage area of our WiBro service. In June 2007, we also began
    HSUPA upgrades to our WCDMA network. We plan to continue
    upgrading and expanding our backbone network infrastructure in
    line with new developments in wireless telecommunications
    technology. We believe that ensuring the quality and technical
    sophistication of our wireless networks will, among other
    things, allow us to provide our subscribers with top quality
    service, enable us to more quickly introduce the latest wireless
    telecommunications products and services and allow us to
    efficiently implement new wireless technologies as market
    opportunities arise.  
    Offer a broad range of new and innovative wireless data
    contents and services.  We plan to improve the
    service quality and expand the range of our wireless data
    contents and services, principally through our integrated
    wireless and fixed-line Internet portal, NATE, with a view to
    increasing revenues from these services to complement our core
    cellular revenues. In particular, we believe demand for wireless
    access to entertainment-related digital contents and services,
    as well as wireless access to financial-related contents and
    services, or m-commerce services, will continue to
    grow. We continue to actively seek partnerships with, as well as
    strategic investments in, digital media content providers,
    financial services providers and wireless application developers
    to improve the breadth and quality of the wireless data contents
    and services we offer to our subscribers.  
    Leverage our extensive network infrastructure, technical
    know-how and leading market position to create new opportunities
    that arise from an increasingly convergent and ubiquitous era in
    mobile communications and to pioneer new
    businesses.  We believe we are a leader in the
    development and implementation of wireless technologies in Korea
    and that convergence among communications technologies, as well
    as between telecommunications and other industries, creates
    growth opportunities for incumbent telecommunications service
    providers, like us, whose existing infrastructure, know-how and
    extensive subscriber base will provide a competitive advantage.
    We further believe that digital convergence will support demand
    for increasingly integrated products and services. We plan to
    leverage our competitive strengths in the wireless
    telecommunications sector to ensure we continue to maintain a
    leading market position in the increasingly integrated digital
    media space, including by improving our existing
    convergent services, such as Telematics and Digital
    Home, as well as the DMB satellite broadcasting service operated
    by our subsidiary, TU Media, and by developing new products and
    services.  
    Continue global expansion by seeking opportunities in
    overseas markets.  We continue to seek
    opportunities to expand into various overseas markets. In light
    of the high saturation of the Korean wireless market, we believe
    that strategic expansion into overseas markets offers important
    opportunities for future growth. We plan to leverage our
    homegrown technical expertise and operational know-how to gain
    entry into foreign markets  particularly those with
    less mature
    and/or
    rapidly growing wireless telecommunications sectors. To this
    end, we have made selective majority and minority investments in
    mobile telecommunications companies operating in key foreign
    markets and formed strategic alliances with many leading
    international telecommunications service providers. We have also
    actively participated in regional and international cooperative
    organizations to reinforce our global competencies and keep pace
    with advancements in overseas telecommunications markets. In
    addition, we believe that our continued expansion into
    international markets will better position us to ensure that our
    network technologies and wireless applications remain compatible
    with emerging global standards. We believe this will provide us
    with a competitive advantage as the wireless telecommunications
    paradigm moves toward increasingly interconnected regional
    networks responsive to growing consumer demands for seamless
    universal access to wireless products and services. 25




---



##### Table of Contents



Our
    Services
            Cellular
    Voice Services
     26




---



##### Table of Contents



Wireless
    Data Services (including Wireless Internet
    Services)
    SMS and MMS Services.
  Wireless Internet Services.
  
    Wireless Entertainment Services:  We
    offer our subscribers a wide range of wireless
    entertainment-related contents and services, primarily through
    content-specific portal sites that we operate, including:  Ø
    MelOn, a music portal that provides wireless access to a
    wide range of digital music contents. To aggregate and manage
    our digital music contents offerings, we also operate an
    integrated wireless and fixed-line MelOn website, which
    subscribers can access using wireless devices, such as their
    mobile phones, as well as fixed-line devices, such as personal
    computers. As of December 31, 2006, we had approximately
    7.3 million subscribers to our MelOn service;Ø
    GXG, a 3D mobile game, which allows subscribers to
    download advanced 3D games to mobile phones and other wireless
    devices equipped with a mobile gaming-specific chip. We
    currently offer more than 78 3D mobile games; and 27




---



##### Table of Contents



Ø
    Cizle, a movie portal, which provides subscribers access
    to a broad range of movie-related contents. As with our MelOn
    service, we operate an integrated wireless and fixed-line Cizle
    website, which subscribers can access using both wireless and
    fixed-line devices. Subscribers can also purchase movie tickets
    through our Cizle portal. We had approximately 73,000
    subscribers to our Cizle service as of December 31, 2006.Ø
    Mobile Cyworld, a wireless web community portal site,
    which is a mobile version of the Cyworld community site operated
    by our subsidiary SK Communications. For a more detailed
    description of the fixed-line Cyworld portal, see 
    Other Products and Services  Other Portal
    Services  Community Portal Service.    
    Wireless Financial Services:  We also
    offer our subscribers a range of wireless finance-related
    contents and m-commerce services. Our wireless financial
    businesses include:  Ø
    Moneta, a financial portal that allows subscribers to use
    their mobile phones to access an array of financial contents and
    services relating to securities trading, insurance, real estate
    and personal asset management;Ø
    Mobile T-moneyservice, a mobile payment technology that
    allows subscribers to use their mobile phones to pay for public
    transportation fares in lieu of cash payment or pre-paid
    transportation cards. Mobile T-money service requires a
    WCDMA-capable handset with a built-in universal subscriber
    identity module, or USIM, card;Ø
    M-Bank, a banking portal, which provides access to
    certain electronic banking services operated by participating
    commercial banks, and, accordingly, enables subscribers to
    perform certain banking transactions, such as wire transfers and
    account inquiries, through their mobile phones; andØ
    NATE Auction, a real-time auction platform that allows
    subscribers to sell or bid on items using their mobile phones
    and other wireless devices.  Digital
    Convergence and New Businesses
    Satellite DMB Business.
   28




---



##### Table of Contents



Telematics Service.
      Digital Home.
  Global
    Business
      United States.
   29




---



##### Table of Contents



China.
  U-Land Chinese-language
  TD-SCDMA
  Vietnam.
    Mongolia.
  Regional and International Strategic
    Alliances.
 30




---



##### Table of Contents



T-Mobile
  Provision of Wireless Internet Platforms and Cellular Network
    Solutions to Foreign Cellular Network
    Operators
  Other
    Products and Services
  International Calling Services.
  Other
    Portal Services.
  
    Fixed-line NATE portal service.  Our
    subsidiary, SK Communications, offers a fixed-line portal
    service under our NATE brand name and at the website
    www.NATE.com. NATE.com includes information and content
    formerly offered under our Netsgo brand as well as the content
    and services formerly available on Lycos Korea, which our
    subsidiary, SK Communications Co., Ltd., acquired in 2002.
    NATE.com offers a wide variety of content and services,
    including an Internet search engine as well as access to free
    e-mail
    accounts. SK Communications also operates NATE-ON, an instant
    messaging service available to NATE users. NATE-ON allows users
    to chat online using a variety of wireless, as well as wired,
    devices, such as mobile phones, personal digital assistants and
    portable computers.
    Community Portal
    Service.  Cyworld, also operated
    by SK Communications, is one of the most popular online
    community portal services in Korea. Cyworld is a social
    networking site that encompasses an ever-expanding virtual forum
    where subscribers can meet to exchange information and ideas and
    share multimedia contents, including through the publication of
    personal homepages and blog sites. As of December 31, 2006,
    our Cyworld portal service had approximately 20 million
    subscribers. We have also sought to expand our global reach by
    launching Cyworld service in overseas markets, including the
    United States, Japan, China and Taiwan. While retaining many
    aspects of the original Korean version that make Cyworld unique
    among social networking sites, we have redesigned foreign
    versions of Cyworld to make it more appealing to local
    audiences. We plan to continue expanding our Global
    Cyworld community, including to other countries in Asia
    and Europe.   31




---



##### Table of Contents



Revenues,
    Rates and Facility Deposits
    As of or for the Year Ended December 31,2004


2005


2006(In billions of Won)Initial Subscription Fees

W
198.4


W
232.3


W
252.4Monthly Fees


3,266.1



3,365.1



3,629.5Usage
    Charges(1)


5,300.7



5,538.8



5,565.9Interconnection Revenue


849.4



898.6



1,033.4Revenue from Sales of Digital
    Handsets(2)


649.8



294.6



Other Cellular
    Revenue(3)


33.2



32.5



34.4Total

W
10,297.6


W
10,361.9


W
10,515.6Additional Facility Deposits

W
31.8


W
3.4


W
9.0Refunded Facility Deposits


44.6



11.0



11.7Facility Deposits at Period End


31.4



23.8



21.1     (1)
    
    Usage charges principally include
    revenues from initial subscription fees, monthly plan-based
    fees, usage charges for outgoing voice calls, usage charges for
    wireless data services, value-added-service fees, as well as
    international charges and interest on overdue subscriber
    accounts (net of telephone tax).(2)
    
    Until its sale to
    Pantech & Curitel in July 2005, our revenue from
    handset sales consisted of sales by our former subsidiary, SK
    Teletech.(3)
    
    Other cellular revenue includes
    revenue from the sale and licensing of Internet platform
    solutions.  and/or
    
    Standard Rate Plans, for subscribers to our 2G services,
    which we provide primarily using our CDMA 1xRTT and CDMA 1xEV/DO
    networks. We offer a variety of differentiated Standard Rate
    Plans that are designed to meet a wide range of subscriber needs
    and interests. Popular Standard Rate Plans include our couples
    discount plan, region discount plan, family discount plan, and
    travel- and cinema-lover discount plans. The basic monthly fee
    for our Standard Rate Plans ranges from Won 12,500 to Won 51,000.
    Videoconferencing Plans, for subscribers to our 3G
    services, which we provide primarily using our WCDMA network.
    The basic monthly fee for our Videoconference Service Plans
    ranges between Won 10,000 and Won 30,000.    
    Data Plans, which target subscribers with high usage
    patterns for wireless data transmission and wireless Internet
    services. We offer four Data Plans that provide unlimited
    wireless data services for fixed monthly fees ranging from Won
    14,000 to Won 26,000. Our Data Plans include NATE
    only plans, as well as NATE + June
    plans. We also offer a Data Plan that allows subscribers to use
    up to Won 50,000 of wireless data services each month for a
    fixed monthly fee of Won 10,000. 32




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##### Table of Contents




    Free Plans, which target subscribers who
    either make long calls during weekdays or make long calls during
    weekends. Subscribers of our Free plans purchase 11
    extra hours of weekend-only or weekday-only voice call time for
    a flat monthly charge of Won 15,000.
    Convergence Service Plans, which target subscribers of
    our Satellite DMB and Telematics services. Monthly fees for
    these plans generally range from Won 5,000 to Won 41,000.               33




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##### Table of Contents



Subscribers
    
    our expansion and technical enhancement of our digital networks,
    including with high-speed data capabilities;
    increasing consumer awareness of the benefits of wireless
    telecommunications;
    an effective marketing strategy;
    our focus on customer service;
    the introduction of new, value-added services, such as voicemail
    services, call-forwarding, Caller ID, three-way calling and
    wireless Internet services provided by NATE; and
    our acquisition of Shinsegi in January 2002.    As of or for the Year Ended December 31,2004

2005

2006Subscribers


18,783,338



19,530,117



20,271,133Subscribers Growth Rate


2
.6%


4
.0%


3
.8%Activations


4,407,087



5,057,176



5,573,799Deactivations


3,936,884



4,310,397



4,832,783Average Monthly Churn
    Rate(1)


1
.7%


1
.8%


2
.0%     (1)
    
    Average monthly churn rate for a
    period is the number calculated by dividing the sum of
    deactivations during the period by the simple average of the
    number of subscribers at the beginning and end of the period and
    dividing the quotient by the number of months in the period.
    Churn includes subscribers who upgrade to CDMA 1xRTT or CDMA
    lxEV/DO-capable handsets by terminating their service and
    opening a new subscriber account.    Market
    Share Limitations
   34




---



##### Table of Contents



Number
    Portability
            Marketing
    and Service Distribution
  Marketing,
    Sales and Service Network
     35




---



##### Table of Contents



Marketing
    Strategies and Marketing Information Management
  Next Generation Marketing Project.
  www.tworld.co.kr
  New T-brand Marketing Strategy.
  Interconnection
     36




---



##### Table of Contents



Domestic
    Calls
    Wireless-to-Fixed-line.
  Fixed-line-to-Wireless.
    Rate per MinuteApplicable Year

SK Telecom


KTF


LGT2004

W
31.81


W
47.66


W
58.552005


31.19



46.70



54.982006


32.13



40.06



47.012007


32.78



39.60



45.13     Wireless-to-Wireless.
  International
    Calls
    International
    Roaming Arrangements
   37




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##### Table of Contents



Digital
    Cellular Network
    CDMA
    Networks
      CDMA
    1xRTT and CDMA 1x EV/DO Networks
      WCDMA
    Network
  HSDPA-upgraded
   38




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##### Table of Contents



WiBro
    Network
    infrastructure
    
    Cell sites, which are physical locations equipped with
    transmitters, receivers and other equipment that communicate by
    radio signals with wireless handsets within range of the cell
    (typically a 3 to 40 kilometer radius);
    Switching stations, which switch voice and data
    transmissions to their proper destinations, which may be, for
    instance, a mobile phone of one of our subscribers (for which
    transmissions would originate and terminate on our wireless
    networks), a mobile phone of a KTF or LGT subscriber (for which
    transmissions would be routed to KTFs or LGTs
    wireless networks, as applicable), a fixed-line telephone number
    (for which calls would be routed to the public switched
    telephone network of a fixed-line network operator), an
    international number (for which calls would be routed to the
    network of a long distance service provider) or an Internet site
    (for which transmissions may be routed through our NATE
    portal); and
    Transmission lines, which link cell sites to switching
    stations and switching stations with other switching stations.    SwitchingCell Sites


StationsCDMA Network (excluding CDMA lxRTT
    and CDMA 1xEV/DO)


4.794



55CDMA 1xRTT Network and CDMA 1xEV/DO


3.797



60WCDMA


3.768



6WiBro(1)


156



6     (1)
    
    We first launched WiBro service in
    May 2006. 39




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##### Table of Contents



Other
    Investments and Relationships
    Wireless
    Content Providers and Application Providers
    Digital Content Providers.
      Wireless Application Developers.
 40




---



##### Table of Contents



Other
    Investments
    
    POSCO.  We currently own a 2.8% interest in the
    outstanding capital stock of POSCO, with a book value as of
    December 31, 2006 of Won 766.7 billion. POSCO is the
    largest fully integrated steel producer in Korea, and one of the
    largest steel producers in the world.
    hanarotelecom.  We currently own a 4.8%
    interest in the outstanding capital stock of hanarotelecom, with
    a book value as of December 31, 2006 of Won
    88.6 billion. hanarotelecom is one of Koreas largest
    fixed-line telephone and high-speed broadband Internet access
    service providers.
    LG Powercomm.  We currently own a 5.0% interest
    in LG Powercomm (formerly Powercomm Corporation), with a book
    value as of December 31, 2006 of Won 80.4 billion.
    Powercomm is an operator of fixed-line networks that provides
    wholesale fixed-line network services, such as leased lines, to
    telecommunications, Internet and cable television service
    providers in Korea. We have no current plans to either increase
    or decrease our investment in Powercomm.
    SKC&C.  We currently own a 30.0% equity
    interest in SKC&C, with a book value as of
    December 31, 2006 of Won 268.3 billion. SKC&C is
    an information technologies services provider. We are party to
    several service contracts with SKC&C related to development
    and maintenance of our information technologies systems. See
    Item 7.B. Related Party Transactions.    Competition
             41




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##### Table of Contents



Law and
    Regulation
  Overview
    
    entry into the telecommunications industry;
    scope of services provided by telecommunications service
    providers;
    allocation of radio spectrum;
    setting of technical standards and promotion of technical
    standardization;
    rates, terms and practices of telecommunications service
    providers;
    customer complaints;
    interconnection and revenue-sharing between telecommunications
    service providers;
    disputes between telecommunications service providers;
    research and development budgeting and objectives of
    telecommunications service providers; and
    competition among telecommunications service providers.         42




---



##### Table of Contents



Competition
    Regulation
      and/or
  Number Portability.
      Prohibitions on Handset Subsidies.
 43




---



##### Table of Contents




    a telecommunications service provider may provide subsidies to
    subscribers who have maintained their subscription with the same
    telecommunications service provider for at least 18 months,
    provided that no separate subsidy is provided to the same
    subscriber for two years thereafter; or
    a telecommunications service provider that has provided a
    particular telecommunications service for less than six years
    may provide subsidies to subscribers of such service.    Rate Regulation.
     44




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##### Table of Contents



Interconnection.
  Frequency Allocation.
    Mandatory
    Contributions and Obligations
  Contributions to the Fund for Development of Information
    Telecommunications.
    Universal Service Obligation.
   45




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##### Table of Contents



Contribution to 114 Directory
    Service.
  Foreign
    Ownership and Investment Restrictions and
    Requirements
        
    revoke our business license;
    suspend all or part of our business; or
    if the suspension of business is deemed to result in significant
    inconvenience to our customers or to be detrimental to the
    public interest, impose a one-time administrative penalty of up
    to 3% of the average of our annual revenue for the preceding
    three fiscal years.   46




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##### Table of Contents




    the acquisition by an entity (and its related parties) of 15% or
    more of the equity of a network services provider;
    a change in the largest shareholder of a network services
    provider;
    agreements by a network service provider or its shareholders
    with foreign governments or parties regarding important business
    matters of such network services provider, such as the
    appointment of officers and directors and transfer of
    businesses; and
    a change in the shareholder that actually controls a network
    services provider.    Patents
    and Licensed Technology
        Organizational
    Structure
   47




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##### Table of Contents



Significant
    Subsidiaries
    Item 4.C.
    Organizational
    Structure    Item 4.D.
    Property,
    Plants And Equipment    Approximate AreaLocation

Primary Use

in Square FeetSeoul Metropolitan Area

Corporate Headquarters


988,455Regional Headquarters


1,095,992Customer Service Centers


384,223Training Centers


397,574Central Research and Development
    Center


482,725Others


639,791Busan

Regional Headquarters


363,272Others


245,811Daegu

Regional Headquarters


153,578Others


317,440Cholla and Jeju Provinces

Regional Headquarters


265,595Others


359,784Choongchung Province

Regional Headquarters


565,421Others


481,978         Item 4A.
    UNRESOLVED
    STAFF COMMENTS   48




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##### Table of Contents



Item 5.
    OPERATING
    AND FINANCIAL REVIEW AND PROSPECTS    Item 5.A.
    Operating
    Results  Overview
  Revenue
      Market Share Limitations.
  Number Portability and Common Prefix Identification
    System.
   49




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##### Table of Contents



Handset Subsidies.
  Changes in Tariffs and Interconnection
    Fees.
    Average Monthly Outgoing Voice Minutes and Revenue per
    Subscriber.
  Year Ended December 31,2004


2005


2006Outgoing voice minutes (in
    thousands)(1)


43,184,944



45,241,348



48,670,674Average monthly outgoing voice
    minutes per
    subscriber(2)


194



197



201Average monthly revenue per
    subscriber, excluding interconnection
    revenue(3)

W
39,689


W
40,205


W
40,220Average monthly revenue per
    subscriber, including interconnection
    revenue(4)

W
43,542


W
44,167


W
44,599     (1)
    
    Does not include minutes of
    incoming calls or minutes of use relating the use of SMS, MMS
    and other wireless data services.(2)
    
    The average monthly outgoing voice
    minutes per subscriber is derived by dividing the total minutes
    of outgoing voice usage for the period by the monthly weighted
    average number of subscribers for the period, then dividing that
    number by the number of months in the period. The monthly
    weighted average number of subscribers is derived by dividing
    (i) the sum of the average number of subscribers for each
    month in the period, calculated as the average of the number of
    subscribers on the first and last days of the relevant month, by
    (ii) the number of months in the period.(3)
    
    The average monthly revenue per
    subscriber, excluding interconnection revenue, is derived by
    dividing the sum of total initial subscription fees, monthly
    plan-based fees, usage charges for outgoing voice calls, usage
    charges for wireless data services, value-added service fees and
    other miscellaneous revenues for the period by the monthly
    weighted average number of subscribers for the period, then
    dividing that number by the number of months in the period.(4)
    
    The average monthly revenue per
    subscriber, including interconnection revenue, is derived by
    dividing the sum of total initial subscription fees, monthly
    plan-based fees, usage charges for outgoing voice and wireless
    data transmissions, charges for purchases of digital contents,
    value-added service fees, other miscellaneous revenues and
    interconnection revenue for the period by the monthly weighted
    average number of subscribers for the period, then dividing that
    number by the number of months in the period. 50




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##### Table of Contents



Operating Expenses and Operating Margins.
  Operating
    Results
    For the Year Ended December 31,2004


2005


2006(In billions of Won, except percentage data)Operating Revenue

W
10,570.6



100.00
%

W
10,721.8



100.00
%

W
11,028.0



100.00
%Operating Expenses


8,130.9



76.92



8,051.2



75.09



8,406.9



76.23Operating Income


2,439.7



23.08



2,670.6



24.91



2,621.1



23.77Other Income


199.4



1.89



392.6



3.66



284.9



2.58Other Expenses


516.0



4.88



501.6



4.68



884.4



8.02Income Before Income Taxes and
    Minority Interest


2,123.1



20.09



2,561.6



23.89



2,021.6



18.33Income Taxes


629.7



5.96



693.3



6.47



572.0



5.19Minority Interest


(1.9
)


(0.02
)


4.7



0.04



1.9



0.02Net Income

W
1,491.5



14.10
%

W
1,873.0



17.47
%

W
1,451.5



13.16Depreciation and
    Amortization(1)

W
1,607.5



15.20
%

W
1,546.3



14.42
%

W
1,553.6



14.09
%     (1)
    
    Excludes the depreciation and
    amortization allocated to internal research and development
    costs and manufacturing costs of Won 134.1 billion, Won
    126.9 billion and Won 144.8 billion for the years
    ended December 31, 2004, 2005 and 2006, respectively. 51




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##### Table of Contents



Year Ended December 31,2004


2005


2006Percentage





Percentage





Percentageof Total





of Total





of TotalRevenue


Revenue


Revenue


Revenue


Revenue


Revenue(In billions of Won, except percentages)Cellular
    Revenue:Wireless
    Services(1)

W
8,798.4



83.2
%

W
9,168.7



85.5
%

W
9,482.2



86.0
%Interconnection


849.4



8.0



898.6



8.4



1,033.4



9.4Digital Handset
    Sales(2)


649.8



6.2



294.6



2.7







0.0Total Cellular Revenue


10,297.6



97.4



10,361.9



96.6



10,515.6



95.4Other Revenue:International Calling
    Service(3)


126.3



1.2



138.7



1.3



176.4



1.6Portal
    Service(4)


85.0



0.8



126.9



1.2



165.6



1.5Miscellaneous


61.7



0.6



94.3



0.9



170.4



1.5Total Other Revenue


273.0



2.6



359.9



3.4



512.4



4.6Total Operating
    Revenue

W
10,570.6



100.0
%

W
10,721.8



100.0
%

W
11,028.0



100.0
%Total Operating Revenue Growth


2.9
%






1.4
%






2.9
%     (1)
    
    Wireless services revenue includes
    initial subscription fees, monthly plan-based fees, usage
    charges for outgoing voice calls, usage charges for wireless
    data services, value-added-service fees and other miscellaneous
    cellular revenues, including international interconnection
    charges, interest on overdue subscriber accounts (net of
    telephone tax) and revenue from the sale and licensing of
    Internet platform solutions.(2)
    
    Until July 2005, we consolidated
    revenues derived from sales of digital handsets made through our
    former subsidiary, SK Teletech. In July 2005, we sold
    4,542,000 shares of SK Teletech owned by us to
    Pantech & Curitel, Inc., a Korean mobile handset
    manufacturer, reducing our equity interest in SK Teletech from
    89.1% to 29.1%, which became a 22.7% equity interest in Pantech
    following the merger of SK Teletech (renamed SKY Teletech
    following our sale of the company to Pantech &
    Curitel) into Pantech in December 2005.(3)
    
    Provided by SK Telink Co. See
    Item 4.B. Business Overview  Our
    Services  Other Products and Services 
    International Calling Services.(4)
    
    Portal service revenue attributable
    to our subsidiaries (including SK Communications and Paxnet Co.,
    Ltd., which operates a financial portal site, in 2004, and since
    2005, SK Communications, Paxnet Co., Ltd. and
    U-Land
    Company Limited, the Hong Kong-incorporated holding company
    through which we hold our interest in ViaTech).  2006
    Compared to 2005
  Operating Revenue.
     52




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##### Table of Contents



www.NATE.com
    Operating Expenses.
        Operating Income.
  Other Income.
  Other Expenses.
 53




---



##### Table of Contents



Income Tax.
  Net Income.
  2005
    Compared to 2004
  Operating Revenue.
             54




---



##### Table of Contents



Operating Expenses.
                  Operating Income.
  Other Income.
 55




---



##### Table of Contents



Other Expenses.
  Income Tax.
  Net Income.
  Item 5.B.
    Liquidity
    and Capital Resources  Capital
    Resources
  Liquidity
     56




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##### Table of Contents



Year Ended December 31,


ChangeCash Flow Analysis

2004


2005


2006


2004 to 2005


2005 to 2006(In billions of Won, except percentages)Net Cash Flow from Operating
    Activities

W
2,527.9


W
3,407.1


W
3,589.8


W
879.2



34.8
%

W
182.7



5.4
%Net Cash Used in Investing
    Activities


(1,470.3
)


(1,938.2
)


(2,535.1
)


(467.9
)


(31.8
)


(596.9
)


(30.8
)Net Cash Used in Financing
    Activities


(968.6
)


(1,429.0
)


(952.4
)


(460.4
)


(47.5
)


476.6



33.4Effect of Exchange Rate Changes on
    Cash and Cash Equivalents Held in Foreign Currencies


(11.1
)


(3.0
)


(9.3
)


8.1



(73.0
)


(6.3
)


210.0Net Cash Flow due to Changes in
    Consolidated Subsidiaries


(24.8
)


(29.1
)


14.6



(4.3
)


(17.3
)


43.7



150.1Net Increase (Decrease) in Cash
    and Cash Equivalents

W
53.1


W
7.8


W
107.6


W
(45.3
)


(85.3
)

W
99.8



1,279.5Cash and Cash Equivalents at
    Beginning of Period


317.5



370.6



378.4



53.1



16.7



7.8



2.1Cash and Cash Equivalents at End
    of Period

W
370.6


W
378.4


W
486.0


W
7.8



2.1
%

W
107.6



28.4
%   Net Cash Flow from Operating Activities.
  Net Cash from Investing Activities.
  Net Cash from Financing Activities.
 57




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##### Table of Contents



91-day
 58




---



##### Table of Contents



Capital
    Requirements
      Capital Expenditures.
  Year Ended December 31,2004


2005


2006(In billions of Won)CDMA
    Networks(1)

W
728


W
376


W
280WCDMANetwork


220



575



781WiBro(2)










53Others(3)


684



466



384Total(4)

W
1,632


W
1,417


W
1,498     (1)
    
    Includes our basic CDMA, CDMA 1xRTT
    and CMDA EV/DO networks.(2)
    
    We commenced WiBro service in May
    2006.(3)
    
    Includes investments in
    infrastructure consisting of equipment necessary for the
    provision of data services and marketing.(4)
    
    Also, see note 7 of the notes
    to our consolidated financial statements.   59




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##### Table of Contents



,
  Repayment of Outstanding Debt.
  Year Ending December 31,

Total(In billions of Won)2007

W
711.02008


320.32009


656.4After 2009


1,371.8     Investments in Convergence Businesses and Global Expansion
    and Other Needs.
       60




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##### Table of Contents



Acquisition of Treasury Shares.
      Severance Payments.
      Dividends.
   61




---



##### Table of Contents



Contractual
    Obligations and Commitments
    Payments Due by
    Period(1)Less Than








AfterTotal


1 Year


1-3 Years


4-5 Years


5 Years(In billions of Won)BondsPrincipal

W
2,756.0


W
702.4


W
974.7


W
678.9


W
400.0Interest


350.3



106.9



112.1



67.8



63.5Long-term borrowingsPrincipal


293.2



0.1



0.1



200.0



93.0Interest


72.6



15.5



31.0



15.6



10.5Capital lease obligations


10.5



8.6



1.9







Operating leases


















Purchase obligations


















Facility deposits


38.7



17.6











21.1Derivatives


113.4







22.5



90.2



0.7Investment commitment to HELIO


18.1



18.1











Other long-term
    payables(2)Principal


650.0



90.0



240.0



320.0



Interest


86.9



26.3



40.8



19.8



Total contractual cash
    obligations(3)

W
4,389.7


W
985.5


W
1,423.1


W
1,392.3


W
588.8     (1)
    
    We are contractually obligated to
    make severance payments to eligible employees we have employed
    for more than one year, upon termination of their employment,
    regardless of whether such termination is voluntary or
    involuntary. Accruals for severance indemnities are recorded
    based on the amount we would be required to pay in the event the
    employment of all our employees were to terminate at the balance
    date. However, we have not yet estimated cash flows for future
    periods. Accordingly, payments due in connection with severance
    indemnities have been excluded from this table.(2)
    
    Related to acquisition of IMT-2000
    license. See note 2(i) and note 8 of the notes to our
    consolidated financial statements.(3)
    
    This amount does not include our
    future investments in the CDMA market in Vietnam, which we
    expect to make through our overseas subsidiary SLD Telecom under
    a business cooperation contract with Saigon Post &
    Telecommunication Service Corporation. See Item 4.B.
    Business Overview  Global Business 
    Overseas Operations and  Critical
    Accounting Policies, Estimates And Judgments 
    Off-Balance Sheet Arrangements.    Inflation
    U.S.
    GAAP Reconciliation
     62




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##### Table of Contents



New
    Accounting Pronouncements under U.S. GAAP
  No. 06-3, No. 06-3). No. 06-3 No. 06-3 No. 06-3 No. 06-3
      instrument-by-instrument
 63




---



##### Table of Contents



Significant
    Changes in Korean GAAP
      
    Through 2004, when our equity interests in the equity method
    investees were diluted as a result of the equity method
    investees direct sales of their unissued shares to third
    parties, the changes in the our proportionate equity of
    investees were accounted for as capital transactions. Effective
    January 1, 2005, such transactions are accounted for as
    income statement treatment, pursuant to adoption of SKAS
    No. 15, Investments: Equity Method. As a result
    of adopting SKAS No. 15, net income for the year ended
    December 31, 2005 increased by Won 6.3 billion (net of
    tax effect of Won 2.4 billion).
    Through 2004, tax effects of temporary differences related to
    capital surplus or capital adjustments were excluded in
    determining the deferred tax assets or liabilities. Effective
    January 1, 2005, such tax effects of temporary differences
    are included in determining the deferred tax assets or
    liabilities, pursuant to adoption of SKAS No. 16
    Income Taxes. Accordingly, adjustments made directly
    to capital surplus or capital adjustments, which result in
    temporary differences, are recorded net of related tax effects.
    In addition, effective January 1, 2005, deferred income tax
    assets and liabilities which were presented on the balance sheet
    as a single non-current net number through 2004, are separated
    into current and non-current portions. As a result of adopting
    SKAS No. 16, total assets and total liabilities as of
    December 31, 2005 increased by Won 67.6 billion and
    Won 97.8 billion, respectively, and total
    stockholders equity as of December 31, 2005 decreased
    by Won 30.2 billion, which was directly reflected in
    capital surplus or capital adjustments. See note 18 of the
    notes to our consolidated financial statements.
    Through 2004, provisions were recorded at nominal value.
    Effective January 1, 2005, provisions are recorded at the
    present value when the effect of the time value of money is
    material, pursuant to adoption of SKAS No. 17
    Provisions, Contingent Liabilities and Contingent
    Assets. SKAS No. 17 is prospectively applied and as a
    result of adopting such accounting standard, total liabilities
    as of December 31, 2005 decreased by Won 7.4 billion
    and ordinary income and net income for the year ended
    December 31, 2005 increased by Won 5.4 billion. See
    note 25 of the notes to our consolidated financial
    statements.       64




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##### Table of Contents



Critical
    Accounting Policies, Estimates And Judgments
    Allowances
    for Doubtful Accounts
    Estimated
    Useful Lives
    Impairment
    of Long-lived Assets Including the WCDMA Frequency Usage
    Right
      Impairment
    of Investment Securities
   65




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##### Table of Contents



Employee
    Stock Option Compensation Plan
    Income
    Taxes
      Off-Balance
    Sheet Arrangements
     66




---



##### Table of Contents



Item 5.C.
    Research
    and Development      As of and for the Year Ended December 31,2004


2005


2006(In billions of Won)Internal R&D Expenses

W
267.1


W
252.0


W
212.0External R&D Expenses


69.0



69.1



67.0Total R&D Expenses

W
336.1


W
321.1


W
279.0       Internal
    Research and Development
      
    The access technology R&D center, which has
    pioneered the development of 3G and 3.5G technologies. This
    center is developing next-generation technologies, including
    with a view toward leading global standardization of mobile
    telecommunications technologies. Current projects include the
    development of multimedia handsets and location-based services,
    as well as development of network technologies, including with
    respect to WiBro, personal area network, ubiquitous sensor and
    broadband convergence networks, The access technology R&D
    center is also spearheading our joint development of TD-SCDMA
    technology with the Chinese government.
    The service technology R&D center, which focuses on
    improving the quality and operation of our core networks;
    building a flexible service infrastructure that will support the
    introduction of new products and services and enable easy
    maintenance; and developing new services based on customer
    needs. Specifically, this center has been developing an array of
    value-added services, including COLORing services and developing
    new wireless data and convergent products and services. 67




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##### Table of Contents




    The information technology R&D center, which is
    responsible for developing and maintaining our overall
    management and information technology infrastructure, including
    billing and subscriber information security systems. The
    information technology R&D center is also currently
    upgrading our customer relationship management system.      External
    Research and Development
    Item 5.D.
    Trend
    Information    Item 5.E.
    Off-Balance
    Sheet Arrangements    Item 5.F.
    Tabular
    Disclosure of Contractual Obligations    Item 6.
    DIRECTORS,
    SENIOR MANAGEMENT AND EMPLOYEES  Item 6.A.
    Directors
    and Senior Management          100-999,
 68




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##### Table of Contents



Other PrincipalDirector


Expiration




Directorships andName

Date of Birth

Since


of Term


Position

Positions

Business ExperienceJung Nam Cho

Nov. 20, 1941


1995



2010


Vice-chairman, Chief Executive
    Officer & Joint Representative Director



President & COO (SK Telecom)Shin Bae Kim

Oct. 15, 1954


2002



2008


President, Chief Executive Officer,
    Chief Growth Officer &
    Joint Representative Director

Chairman, Korea Association of
    RFID/USN

Senior Vice President and Head of
    Strategic Planning Group (SK Telecom); Director, KORMSBang Hyung Lee

Aug. 20, 1955


2005



2008


Executive Vice-President, Chief
    Operating Officer & Head of Mobile Network Operations
    Business



Chief Marketing Officer, Head of
    Business Center, Head of Business Group, Head of Internet
    Business Group, Head of Marketing Group (SK Telecom); Senior
    Accountant, Deloitte Haskin & Sells, USASung Min Ha

Mar. 24, 1957


2004



2010


Senior Vice President, Chief
    Financial Officer &
    Head of Corporate Center

Representative Director, SK Capital

Head of Strategic Planning Group,
    SK Telecom; Director, SK Telin; Auditor, SK C&C; Chairman
    and Representative Director, SLD Telecom; Auditor, SK Teletech     Other PrincipalDirector


Expiration




Directorships andName

Date of Birth

Since


of Term


Position

Positions

Business ExperienceDae Sik Kim

Jan. 11, 1955


2005



2008


Independent Non-executive Director

Professor, Hanyang University;
    Auditor, Korean Finance Association; Auditor, Korea Money and
    Finance Association; Member of Public Funds Oversight Committee;
    outside director of Shinhan Bank and Daehan Life Insurance

University of Pennsylvania, MBA
    (1981), Ph.D. (1987)Yong Woon Kim

Oct. 4, 1943


2003



2009


Independent
    Non-executive
    Director

Auditor, Pohang University of
    Science and Technology Foundation;

Senior Executive Vice President
    (Legal Department, Seoul Office, Investment and Finance) and
    Director, POSCO; Standing Advisor, POSCO Research Institute 69




---



##### Table of Contents



Other PrincipalDirector


Expiration




Directorships andName

Date of Birth

Since


of Term


Position

Positions

Business ExperienceDae Kyu Byun

Mar. 8, 1960


2005



2008


Independent
    Non-executive
    Director

Chief Executive Officer &
    Representative Director, Humax Co., Ltd.

Director, the Federation of Korea
    Information Industries; Representative Director, Guin Co.;
    President and
    co-founder,
    Venture Leaders ClubSeung Taik Yang

Oct. 24, 1939


2005



2008


Independent
    Non-executive
    Director

President, Tong-Myung University of
    Information Technology

Polytechnic Institute of
    Brooklyn, Ph.D.; 7th Minister, Ministry of Information
    and Communication; President, Electronics
    and Telecommunications Research InstituteJae Seung Yoon

Nov. 9, 1962


2002



2008


Independent
    Non-executive
    Director

Vice-chairman & Representative
    Director; Daewoong Pharmaceutical Co., Ltd.; Vice-president,
    Insung Information Co., Ltd.

Public Prosecutor, The Seoul/Busan
    District Public Prosecutors Office; Auditor and Vice
    President, Daewoong Pharmaceutical Co., Ltd.Sang Chin Lee

Jan. 24, 1941


1999



2008


Independent
    Non-executive
    Director

IT Consultant

Chairman, Communication Network
    Interface, Inc.; Chairman and Chief Executive Officer, Spectron
    Corp.; President, Scovill Fasteners, Inc.; Director of
    Organization, ITT Worldwide Corp.; Vice President, ITT Asia
    Pacific Corp.Hyun Chin Lim

Apr. 26, 1949


2006



2009


Independent
    Non-executive
    Director

Dean, College of Social Science,
    Seoul National University

President, Korea Sociological
    Association; Dean, Faculty of Liberal Education, Seoul National
    University; President, Korean Association of NGO StudiesDal Sup Shim

Jun. 27, 1950


2007



2010


Independent
    Non-executive
    Director

Research Member, Institute for
    Global Economics

Auditor, Korea Credit Guarantee
    Fund; Financial Attaché, Korean Embassy in the United
    States; Audit Officer, Korea Customs Service; Tax &
    Customs Office, Ministry of Finance and Economy  70




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##### Table of Contents



Involvement
    In Certain Legal Proceedings
    Item 6.B.
    Compensation        Item 6.C.
    Board
    Practices    Termination
    of Directors, Services
    Audit
    Committee
    
    examine the agenda for the general meeting of shareholders; 71




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##### Table of Contents




    examine financial statements and other reports to be submitted
    by the board of directors to the general meeting of shareholders;
    review the administration by the board of directors of our
    affairs; and
    examine the operations and asset status of us and our
    subsidiaries.      Independent
    Non-executive Director Nomination Committee
    Capex
    Review Committee
    Compensation
    Committee
    Globalization
    Committee
   72




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##### Table of Contents



Differences
    in Corporate Governance Practices
    NYSE Corporate Governance Standards

Our Corporate Governance PracticeDirector IndependenceListed companies must have a
    majority of independent directors.

Of the 12 members of our board of
    directors, 8 are independent directors.Executive SessionListed companies must hold
    meetings solely attended by non-management directors to more
    effectively check and balance management directors.

Our Audit Committee, which is
    comprised solely of four independent directors, holds meetings
    whenever there are matters related to management directors, and
    such meetings are generally held once every month.Nomination/Corporate Governance
    CommitteeListed companies must have a
    nomination/corporate governance committee composed entirely of
    independent directors.

Although we do not have a separate
    nomination/ corporate governance committee, we maintain an
    Independent Director Recommendation Committee composed of
    independent directors and management directors.Audit CommitteeListed companies must have an
    audit committee that satisfies the requirements of
    Rule 10A-3
    under the Exchange Act.

We maintain an Audit Committee
    comprised solely of four independent directors.Audit Committee Additional
    RequirementsListed companies must have an
    audit committee that is composed of more than three directors.

Our Audit Committee has four
    independent directors.Shareholder Approval of Equity
    Compensation PlanListed companies must allow its
    shareholders to exercise their voting rights with respect to any
    material revision to the companys equity compensation plan.

We currently have two equity
    compensation plans: a stock option plan for officers and
    directors and employee stock ownership plan for employees
    (ESOP). We manage such compensation plans in
    compliance with the applicable laws and our articles of
    association, provided that, under certain limited circumstances,
    the grant of stock options or matters relating to ESOP are not
    subject to shareholders approval under Korean law.Corporate Governance
    GuidelinesListed companies must adopt and
    disclose corporate governance guidelines.

Although we do not maintain
    separate corporate governance guidelines, we are in compliance
    with the Korean Commercial Code in connection with such matters,
    including the governance of the board of directors.Code of Business Conduct and
    EthicsListed companies must adopt and
    disclose a code of business conduct and ethics for directors,
    officers and employees and promptly disclose any waivers of the
    code for directors or executive officers.

We have adopted a Code of Business
    Conduct and Ethics for all of our directors, officers and
    employees, and such code is also available on our website at
    www.sktelecom.com.  73




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##### Table of Contents



Item 6.D.
    Employees    Regular Employees(1)


Temporary Employees


TotalDecember 31, 2004


6,421



932



7,353December 31, 2005


5,727



919



6,646December 31, 2006


6,178



1,498



7,676     (1)
    
    The number of our regular employees
    decreased in 2005 due to our divestiture of SK Teletech.    Marketing


Production


Research


Support


New Business


TotalRegular Employees


1,779



2,075



559



959



806



6,178Temporary Employees


813



433



32



190



30



1,498Total


2,592



2,508



591



1,149



836



7,676   Labor
    Relations
    Employee
    Stock Ownership Association and Other Benefits
       74




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##### Table of Contents



on-site
  Item 6.E.
    Share
    Ownership    Number of


Percentage of


SpecialShares


Total Shares


VotingName

Position

Owned


Outstanding


Rights

OptionsStanding
    Directors:Jung Nam Cho

Vice-Chairman, Chief Executive
    Officer, and Representative Director


0



0


None

NoneShin Bae Kim

President, Chief Executive Officer,
    Chief Growth Officer and Representative Director


1,270



0


None

NoneBang Hyung Lee

Executive Vice-President, Chief
    Operating Officer and Head of Mobile Network Operations Business


400



0


None

NoneSung Min Ha

Senior Vice President, Chief
    Financial Officer and Head of Corporate Center


738



0


None

NoneNon-Standing
    Directors:Dae Sik Kim

Independent Non-executive Director


0



0


None

NoneYong Woon Kim

Independent Non-executive Director


0



0


None

NoneDae Kyu Byun

Independent Non-executive Director


50



0


None

NoneSeung Taik Yang

Independent Non-executive Director


0



0


None

NoneJae Seung Yoon

Independent Non-executive Director


200



0


None

NoneSang C. Lee

Independent Non-executive Director


0



0


None

NoneHyun Chin Lim

Independent Non-executive Director


0



0


None

NoneDal Sup Shim

Independent Non-executive Director


0



0


None

None  75




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##### Table of Contents



Item 7.
    MAJOR
    SHAREHOLDERS AND RELATED PARTY TRANSACTIONS  Item 7.A.
    Major
    Shareholders    PercentageNumber of


Percentage Total


Total SharesShareholder/Category

Shares


Shares Issued


OutstandingDomestic ShareholdersSK
    Group(1)


18,748,452



23.09
%


25.80
%POSCO


2,341,569



2.88



3.22Employees(2)


197,291



0.24



0.27Treasury
    shares(3)


8,526,252



10.50



N/AOfficers and Directors


3,528



0.00



0.00Other Domestic Shareholders


12,807,563



15.77



17.62Foreign
    Shareholders(4)


38,569,056



47.50



53.08Total Issued Shares


81,193,711



100.00
%


100.00
%     (1)
    
    The SK Groups ownership
    interest consists of the following as of December 31, 2006:  Percentage


PercentageNumber of


Total Shares


Total SharesSK Group Member(a)

Shares


Issued


OutstandingSK Corporation


17,663,127



21.75
%


24.31
%SK Networks


1,085,325



1.34



1.4918,748,452



23.09
%


25.80
%     (a)
    The SK Group is a group of affiliated entities. As of
    December 31, 2006, the ownership interests among the SK
    Group included, among others: 
    SK Corporation owned: 21.75% of SK Telecom, 40.59% of SK
    Networks, 44.19% of SKC and 72.13% of SK Shipping Co., Ltd.
    SK Networks owned 1.34% of SK Telecom, 17.71% of SK Shipping,
    15.00% of SK Computer & Communications Co., Ltd., and
    22.71% of SK Securities Co., Ltd.
    SK Chemicals owned 58.03% of SK Engineering and Construction. 
    SKC owned 2.90% of SK Chemicals, 10.16% of SK Shipping Co., Ltd.
    and 12.41% of SK Securities Co., Ltd. 
    SK Securities owned 0.17% of SK Corporation and 0.06% of SKC.
    SK Computer & Communications Co., Ltd. owned 11.16% of
    SK Corporation.
    We owned 30.00% of SK Computer & Communications Co.,
    Ltd. (2)
    
    Represents shares owned by our
    employee stock ownership association. See Item 6.D.
    Employees.(3)
    
    Treasury shares do not have any
    voting rights; includes 1,688,842 treasury shares that were
    deposited with Korea Securities Depository to be reserved and
    used to satisfy the conversion rights of the holders of
    US$329.5 million in zero coupon convertible notes that were
    sold in May 2004.(4)
    
    We understand that in April 2007,
    Brandes Investment Partners L.P., an investment advisory firm
    based in the United States, increased its shareholding in us to
    5.003%. 76




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##### Table of Contents



As of December 31,Shareholder

2004


2005


2006(As a percentage of total issued
    shares)(1)SK Group


24.03
%


22.79
%


23.09
%SK Corporation


21.47



21.47



21.75SK
    Networks(2)


2.55



1.32



1.34POSCO(3)


4.98



3.64



2.88     (1)
    
    Includes 8,662,415, 8,662,415 and
    8,526,252 shares held in treasury as of December 31,
    2004, 2005 and 2006, respectively.(2)
    
    SK Networks sold
    418,000 shares in January 2004 and currently owns
    1,085,325 shares.(3)
    
    POSCO acquired these shares in
    connection with our acquisition of a 27.7% equity interest in
    Shinsegi.           77




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##### Table of Contents




    revoke our business license;
    suspend all or part of our business; or
    if the suspension of business is deemed to result in significant
    inconvenience to our customers or to be detrimental to the
    public interest, impose a one-time administrative penalty of up
    to 3% of the average of our annual revenue for the preceding
    three fiscal years.        Item 7.B.
    Related
    Party Transactions  SK
    Networks
          Other
    Related Parties
   78




---



##### Table of Contents



Item 7.C.
    Interests
    of Experts and Counsel  Not applicable
 79




---



##### Table of Contents



Item 8.
    FINANCIAL
    INFORMATION  Item 8.A.
    Consolidated
    Statements and Other Financial Information    Legal
    Proceedings
  FTC
    Proceedings
        MIC
    Proceedings
         80




---



##### Table of Contents



30-day 30-day 20-day
             81




---



##### Table of Contents



Multinet
    Litigation
        Coloring
    Litigation
    GNI
    Enterprise Litigation
   82




---



##### Table of Contents



Dividends
        Number of SharesTotal Amount of


Entitled toYear Ended December 31,

Dividend per Share


Dividends


Dividend(In
    Won)(1)


(In billions of Won)1997

W
90


W
5.6



62,169,7201998


118



7.6



64,258,6701999


185



15.4



83,284,1102000


540



48.1



89,079,0342001


690



57.3



82,993,4042002


1,800



151.7



84,299,6982003


5,500



404.9



73,614,3082004


10,300



758.2



73,614,2962005


9,000



662.5



73,614,2962006


8,000



582.4



72,667,459     (1)
    
    Dividend per share and amount of
    shares entitled to dividend have been adjusted to give effect to
    the 10-for-1
    stock split of our common shares which became effective on
    April 21, 2000.     83




---



##### Table of Contents



Item 8.B.
    Significant
    Changes  Not applicable
  Item 9.
    THE OFFER
    AND LISTING  Item 9.A.
    Offering
    and Listing Details    Item 9.B.
    Plan
    of Distribution  Not applicable
  Item 9.C.
    Markets     84




---



##### Table of Contents



Shares of
    Common Stock
    Average DailyTrading VolumeCalendar Year

High(1)


Low(1)


Close


(Number of Shares)(Won per share)2002


299,000



209,500



229,000



261,482First Quarter


299,000



242,000



290,000



263,168Second Quarter


292,000



239,000



269,500



227,115Third Quarter


279,500



209,500



237,000



241,154Fourth Quarter


252,500



220,000



229,000



314,0192003


235,000



142,000



199,000



327,689First Quarter


235,000



142,000



153,000



497,115Second Quarter


210,000



157,500



204,000



298,346Third Quarter


216,000



183,000



184,000



267,821Fourth Quarter


212,500



185,000



199,000



247,3322004


238,500



154,500



197,000



179,712First Quarter


238,500



207,500



214,500



243,681Second Quarter


213,000



179,000



190,000



188,095Third Quarter


186,000



154,500



175,500



137,559Fourth Quarter


205,000



174,500



197,000



151,9032005


216,500



163,500



181,000



187,053First Quarter


200,500



171,000



171,000



203,869Second Quarter


192,500



163,500



182,000



137,021Third Quarter


216,500



178,500



202,500



156,019Fourth Quarter


209,500



181,000



181,000



249,5502006


235,000



177,000



222,500



190,565First Quarter


203,500



177,000



192,500



177,491Second Quarter


235,000



190,000



204,000



216,607Third Quarter


204,500



181,000



201,500



204,167Fourth Quarter


233,000



195,000



222,500



163,5342007 (through June 29)


223,000



188,500



213,000



213,115First Quarter


223,000



190,500



191,500



206,155January


223,000



196,500



200,000



181,997February


205,500



193,500



196,500



243,110March


196,500



190,500



191,500



198,027Second Quarter (through June 29)


215,000



188,500



213,000



220,075April


197,000



188,500



196,500



233,355May


215,000



200,500



202,000



213,992June 29


213,000



200,000



213,000



212,518      (1)
    
    Both high and low prices are based
    on the daily closing prices for the period. 85




---



##### Table of Contents



American
    Depositary Shares
    Prices(1)Average DailyTrading VolumeCalendar Year

High(1)


Low(1)


Close


(Number of Shares)(US$ per ADS)





(Number of ADSs)2002


26.75



19.25



21.35



684,421First Quarter


24.70



20.30



24.60



488,958Second Quarter


26.75



20.20



24.40



555,865Third Quarter


26.36



19.25



21.23



963,578Fourth Quarter


22.81



19.30



21.35



717,8592003


21.85



12.83



18.65



743,316First Quarter


21.85



12.83



13.62



971,259Second Quarter


19.40



14.07



18.86



723,959Third Quarter


20.83



17.71



17.84



724,406Fourth Quarter


19.90



17.46



18.65



564,0232004


25.01



17.28



22.25



911,823First Quarter


25.01



19.43



21.30



1,331,177Second Quarter


21.83



19.15



20.99



832,175Third Quarter


20.76



17.28



19.45



768,117Fourth Quarter


23.10



19.30



22.25



727,6832005


23.14



18.96



20.29



882,342First Quarter


22.19



19.41



19.72



798,390Second Quarter


21.84



18.96



20.40



618,870Third Quarter


23.14



20.06



21.84



1,071,227Fourth Quarter


21.95



19.74



20.29



1,039,3982006


27.70



20.62



26.48



866,527First Quarter


24.56



20.62



23.59



952,819Second Quarter


27.70



22.54



23.42



1,045,503Third Quarter


24.16



21.14



23.63



789,033Fourth Quarter


27.42



22.89



26.48



680,1242007 (through June 28)


28.02



22.46



27.36



1,280,777First Quarter


26.41



22.46



23.42



1,046,780January


26.41



23.03



23.75



847,110February


24.14



22.46



22.81



1,170,862March


23.70



22.51



23.42



1,121,137Second Quarter (through June 28)


28.02



23.41



27.36



1,511,000April


24.83



23.41



24.83



1,579,377May


27.76



25.46



26.86



1,785,642June 28


28.02



26.11



27.36



1,140,517      (1)
    
    Both high and low prices are based
    on the daily closing prices for the period. 86




---



##### Table of Contents



The
    Korean Securities Market
  The
    Korea Exchange Inc.
           87




---



##### Table of Contents



Period AverageDividend


Price EarningsYear

Opening


High


Low


Closing


Yield(1)(%)


Ratio(2)1980


100.00



119.36



100.00



106.87



20.9



2.61981


97.95



165.95



93.14



131.37



13.2



3.11982


123.60



134.49



106.00



127.31



10.5



3.41983


122.52



134.46



115.59



121.21



6.9



3.81984


116.73



142.46



114.37



142.46



5.1



4.51985


139.53



163.37



131.40



163.37



5.3



5.21986


161.40



279.67



153.85



272.61



4.3



7.61987


264.82



525.11



264.82



525.11



2.6



10.91988


532.04



922.56



527.89



907.20



2.4



11.21989


919.61



1,007.77



844.75



909.72



2.0



13.91990


908.59



928.77



566.27



696.11



2.2



12.81991


679.75



763.10



586.51



610.92



2.6



11.21992


624.23



691.48



459.07



678.44



2.2



10.91993


697.41



874.10



605.93



866.18



1.6



12.71994


879.32



1,138.75



860.47



1,027.37



1.2



16.21995


1,013.57



1,016.77



847.09



882.94



1.2



16.41996


888.85



986.84



651.22



651.22



1.3



17.81997


653.79



792.29



350.68



376.31



1.5



17.01998


385.49



579.86



280.00



562.46



1.9



10.81999


587.57



1,028.07



498.42



1,028.07



1.1



13.52000


1,059.04



1,059.04



500.60



504.62



2.1



12.92001


520.95



704.50



468.76



693.70



1.7



16.42002


724.95



937.61



584.04



829.44



1.6



15.22003


635.17



822.16



515.24



810.71



2.0



11.82004


821.26



936.06



719.59



895.92



2.0



13.82005


893.71



1,379.37



870.84



1,379.37



1.8



10.62006


1,389.27



1,464.70



1,192.09



1,434.46



1.7



11.42007 (through June 29)


1,438.89



1,807.85



1,355.79



1,743.60



1.6



14.5      (1)
    
    Dividend yields are based on daily
    figures. Before 1983, dividend yields were calculated at the end
    of each month. Dividend yields after January 3, 1984
    include cash dividends only.(2)
    
    The price to earnings ratio is
    based on figures for companies that record a profit in the
    preceding year.(3)
    
    Starting in April 2000, dividend
    yield and price earnings ratio of KOSPI 200, an index of 200
    equity securities listed on the KRX Stock Market. Starting in
    April 2000, excludes classified companies, companies that did
    not submit annual reports to the KRX, and companies which
    received disqualified opinion from external auditors.   88




---



##### Table of Contents



Previous Days Closing Price W

Rounded Down to WLess than 5,000

W
55,000 to less than 10,000


1010,000 to less than 50,000


5050,000 to less than 100,000


100100,000 to less than 500,000


500500,000 or more


1,000      89




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##### Table of Contents



Market Capitalization on the Last Day of Each Period


Average Trading Volume & ValueNumber ofListed


(Millions of


(Thousands of


Thousands of


(Millions of


(Thousands ofYear

Companies


Won)


Dollars)(1)


Shares


Won)


Dollars)(1)1980


352


W
2,526,553


US $
3,828,691



5,654


W
3,897


US $
5,9051981


343



2,959,057



4,224,207



10,565



8,708



12,4331982


334



3,000,494



4,407,711



9,704



6,667



8,9041983


328



3,489,654



4,386,743



9,325



5,941



7,4681984


336



5,148,460



6,222,456



14,847



10,642



12,8621985


342



6,570,404



7,380,818



18,925



12,315



13,8341986


355



11,994,233



13,924,115



31,755



32,870



38,1591987


389



26,172,174



33,033,162



20,353



70,185



88,5841988


502



64,543,685



94,348,318



10,367



198,364



289,9631989


626



95,476,774



140,489,660



11,757



280,967



414,4311990


669



79,019,676



110,301,055



10,866



183,692



256,5001991


686



73,117,833



96,182,364



14,022



214,263



281,8501992


688



84,711,982



107,502,515



24,028



308,246



391,1751993


693



112,665,260



139,419,948



35,130



574,048



676,9541994


699



151,217,231



191,729,721



36,862



776,257



984,2231995


721



141,151,399



182,201,367



26,130



487,762



629,6141996


760



117,369,988



139,031,021



26,571



486,834



575,7331997


776



70,988,897



50,161,742



41,525



555,759



392,7071998


748



137,798,451



114,090,455



97,716



660,429



471,4321999


725



349,503,966



305,137,040



278,551



3,481,620



3,039,6542000


704



188,041,490



150,162,898



306,163



2,602,211



2,078,0282001


689



225,850,076



194,784,979



473,241



1,997,420



1,520,6852002


683



258,680,756



218,167,122



851,242



3,041,592



2,414,3622003


684



355,362,626



297,960,530



542,010



2,216,636



1,858,5802004


683



412,588,138



427,069,982



372,894



2,232,108



2,310,4552005


702



655,074,595



648,588,707



467,629



3,157,662



3,126,3982006


731



704,587,508



757,620,976



279,096



3,435,180



3,693,7422007 (through June 28)


733



867,495,474



936,213,548



331,571



4,291,101



4,631,018      (1)
    
    Converted at the noon buying rate
    in The City of New York for cable transfers in Won per US$1.00
    as certified for customs purposes by the Federal Reserve Bank of
    New York.   90




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Further
    Opening of the Korean Securities Market
            Protection
    of Customers Interest in Case of Insolvency of Securities
    Companies
           91




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Item 9.D.
    Selling
    Shareholders  Not applicable
  Item 9.E.
    Dilution  Not applicable
  Item 9.F.
    Expenses
    of the Issue  Not applicable
  Item 10.
    ADDITIONAL
    INFORMATION  Item 10.A.
    Share
    Capital  Not applicable
  Item 10.B.
    Memorandum
    and Articles of Association  Description
    of Capital Stock
    General
  110111-0371346.
  
    information and communication business;
    sale and lease of subscriber handsets;
    new media business;
    advertising business;
    mail order business;
    business of leasing available and real estate property;
    research and technology development relating to the first four
    items above;
    overseas and import/export business relating to the first four
    items above;
    manufacture and distribution business relating to the first four
    items above;
    tourism; and 92




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##### Table of Contents




    any business or undertaking incidental or conducive to the
    attainment of the objectives stated above.    Board
    of Directors
    
    investment by us or any of our subsidiaries in a foreign company
    or equity or other overseas assets in an amount equal to 5.0% or
    more of our shareholders equity under our most recent
    balance sheet; and
    contribution of capital, loans or guarantees, acquisition of our
    subsidiaries assets or similar transactions with our
    affiliated companies in excess of Won 10 billion through
    one or a series of transactions.        Dividends
       93




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Distribution
    of Free Shares
    Preemptive
    Rights and Issuance of Additional Shares
     94




---



##### Table of Contents



General
    Meeting of Shareholders
    
    as necessary;
    at the request of holders of an aggregate of 3.0% or more of our
    outstanding common shares;
    at the request of shareholders holding an aggregate of 3.0% or
    more of our outstanding shares for at least six months; or
    at the request of our audit committee.        Voting
    Rights
      
    amending our articles of association; 95




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
    removing a director;
    effecting any dissolution, merger or consolidation of us;
    transferring the whole or any significant part of our business;
    effecting our acquisition of all of the business of any other
    company or a part of the business of any other company having a
    material effect on our business;
    reducing our capital; or
    issuing any new shares at a price lower than their par value.          Rights
    of Dissenting Shareholders
  20-day
  Registry
    of Shareholders and Record Dates
   96




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##### Table of Contents



and/or
  Annual
    Report
      Transfer
    of Shares
      24-3,
  Restrictions
    Applicable to Shares
    Acquisition
    of Shares by Us
   97




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##### Table of Contents



Liquidation
    Rights
    Description
    of American Depositary Shares
  Form F-3 No. 333-91304)
  American
    Depositary Receipts
  411-770, 150-884,
  Deposit
    and Withdrawal of Shares of Common Stock
   98




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##### Table of Contents




    before or at the time of the pre-release, the person to whom the
    pre-release is being made must represent to the ADR depositary
    in writing that it or its customer owns the shares of common
    stock or ADSs to be deposited and show evidence of the ownership
    to the ADR depositarys satisfaction;
    before or at the time of such pre-release, the person to whom
    the pre-release is being made must agree in writing that he will
    hold the shares of common stock or ADSs in trust for the ADR
    depositary until their delivery to the ADR depositary or
    custodian, reflect on his records the ADR depositary as owner of
    such shares of common stock or ADSs and deliver such shares of
    common stock upon the ADR depositarys request;
    the pre-release must be fully collateralized with cash or
    U.S. government securities;
    the ADR depositary must be able to terminate the pre-release on
    not more than five business days notice; and
    the pre-release is subject to further indemnities and credit
    regulations as the ADR depositary deems appropriate. 99




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Dividends,
    Other Distributions and Rights
         100




---



##### Table of Contents



Record
    Dates
    
    any cash dividend or other cash distribution becomes payable;
    any distribution other than cash is made;
    rights are issued with respect to deposited shares of common
    stock;
    the ADR depositary causes a change in the number of shares of
    common stock that are represented by each ADS; or
    the ADR depositary receives notice of any shareholders
    meeting.    Voting
    of the Underlying Shares of Common Stock
    
    the information contained in our notice to the ADR depositary
    including an English translation, or, if requested by us, a
    summary of the information provided by us;
    a statement that the ADR holders as of the close of business on
    a specified record date will be entitled to instruct the ADR
    depositary as to how to exercise their voting rights for the
    number of shares of deposited shares of common stock, subject to
    the provisions of applicable Korean law and our articles of
    association, which provisions, if any, will be summarized in the
    notice to the extent that they are material; and
    a statement as to the manner in which the ADR holders may give
    their instructions.   101




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Inspection
    of Transfer Books
    Reports
    and Notices
        Changes
    Affecting Deposited Shares of Common Stock
  split-up,
 102




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Amendment
    and Termination of the Deposit Agreement
        
    to collect dividends and other distributions pertaining to the
    deposited shares of common stock;
    to sell property and rights and the conversion of deposited
    shares of common stock into cash as provided in the deposit
    agreement; and
    to deliver deposited shares of common stock, together with any
    dividends or other distributions received with respect to the
    deposited shares of common stock and the net proceeds of the
    sale of any rights or other property represented by those ADSs
    in exchange for surrendered ADRs.    Charges
    of ADR Depositary
    
    taxes and other governmental charges;
    registration fees applicable to transfers of shares of common
    stock on our shareholders register, or that of any entity
    acting as registrar for the shares, to the name of the ADR
    depositary or its nominee, or the Custodian or its nominee, when
    making deposits or withdrawals under the deposit agreement;
    cable, telex and facsimile transmission expenses that are
    expressly provided in the deposit agreement;
    expenses incurred by the ADR depositary in the conversion of
    foreign currency into Dollars under the deposit agreement;
    a fee of up to US$5.00 per 100 ADSs, or portion thereof, for
    execution and delivery of ADSs and the surrender of ADRs under
    the deposit agreement; and
    a fee of up to US$0.02 per ADS held for cash distributions, a
    sale or exercise of rights or the taking of any other corporate
    action involving distributions to shareholders.  General
   103




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split-up,
      Governing
    Law
       104




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Information
    Relating to the ADR Depositary
      Form 10-K Forms 10-Q. Form 10-K Forms 10-Q
    Item 10.C.
    Material
    Contracts    Item 10.D.
    Exchange
    Controls  Korean
    Foreign Exchange Controls and Securities Regulations
  General
      
    if the Government deems it necessary on account of war, armed
    conflict, natural disaster or grave and sudden and significant
    changes in domestic or foreign economic circumstances or similar
    events or circumstances, the MOFE may temporarily suspend
    performance under any or all foreign exchange transactions, in
    whole or in part, to which the Foreign Exchange Transaction Laws
    apply (including suspension of payment and receipt of foreign
    exchange) or impose an obligation to deposit, safe-keep or
    sell any means of payment to The Bank of Korea or certain other
    governmental agencies or financial institutions; and
    if the Government concludes that the international balance of
    payments and international financial markets are experiencing or
    are likely to experience significant disruption or that the
    movement of capital between Korea and other countries are likely
    to adversely affect the Won, exchange rate or other
    macroeconomic policies, the MOFE may take action to require any
    person who intends to effect or effects a capital 105




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##### Table of Contents



transaction to deposit all or a portion of the means of payment
    acquired in such transactions with The Bank of Korea or certain
    other governmental agencies or financial institutions.  Government
    Review of Issuances of ADSs
    
    Under current Korean laws and regulations, the depositary is
    required to obtain our prior consent for any proposed deposit of
    common shares if the number of shares to be deposited in such
    proposed deposit exceeds the number of common shares initially
    deposited by us for the issuance of ADSs (including deposits in
    connection with the initial and all subsequent offerings of ADSs
    and stock dividends or other distributions related to the ADSs).
    We can give no assurance that we would grant our consent, if our
    consent is required. In addition to such restrictions under
    Korean laws and regulations, there are also restrictions on the
    deposits of our common shares for issuance of ADSs. See
    Item 10.B. Memorandum and Articles of
    Association  Description of American Depositary
    Shares. Therefore, a holder of ADRs who surrenders ADRs
    and withdraws shares may not be permitted subsequently to
    deposit those shares and obtain ADRs.  Reporting
    Requirements for Holders of Substantial Interests
      his/her
   106




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Restrictions
    Applicable to ADSs
      Restrictions
    Applicable to Shares
    
    odd-lot trading of shares;
    acquisition of shares by a foreign company as a result of a
    merger;
    acquisition or disposal of shares in connection with a tender
    offer;
    acquisition of shares by exercise of warrant, conversion right
    under convertible bonds, exchange right under exchangeable bonds
    or withdrawal right under depositary receipts issued outside of
    Korea by a Korean company (Converted Shares);
    acquisition of shares through exercise of rights under
    securities issued outside of Korea;
    acquisition of shares as a result of inheritance, donation,
    bequest or exercise of shareholders rights, including
    preemptive rights or rights to participate in free distributions
    and receive dividends;
    over-the-counter transactions between foreigners of a class of
    shares for which the ceiling on aggregate acquisition by
    foreigners, as explained below, has been reached or
    exceeded; and
    acquisition of shares by direct investment under the Foreign
    Investment Promotion Law.     107




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108




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##### Table of Contents



Item 10.E.  Taxation  United
    States Taxation
    
    a dealer in securities or currencies;
    a trader in securities that elects to use a mark-to-market
    method of accounting for securities holdings;
    a bank;
    a life insurance company;
    a tax-exempt organization;
    a person that holds common shares or ADSs that are a hedge or
    that are hedged against interest rate or currency risks;
    a person that holds common shares or ADSs as part of a straddle
    or conversion transaction for tax purposes; 109




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
    a person whose functional currency for tax purposes is not the
    U.S. dollar; or
    a person that owns or is deemed to own 10% or more of any class
    of our stock.        
    a citizen or resident of the United States; ) a
    U.S. domestic corporation; or
    otherwise subject to U.S. federal income tax on a net
    income basis with respect to income from the common share or ADS.    Dividends
        Sale
    or Other Disposition
   110




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##### Table of Contents



Foreign
    Tax Credit Considerations
  16-day
        U.S.
    Information Reporting and Backup Withholding Rules
  U.S.-related non-U.S. status U.S.-related
  Korean
    Taxation
    
    a resident of Korea;
    a corporation organized under Korean law; or
    engaged in a trade or business in Korea through a permanent
    establishment or a fixed base to which the relevant income is
    attributable or with which the relevant income is effectively
    connected.  Dividends
    on the Shares or ADSs
  provided that
 111




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Taxation
    of Capital Gains
    Korea-United
   112




---



##### Table of Contents



Inheritance
    Tax And Gift Tax
      Securities
    Transaction Tax
          Item 10.F.
    Dividends
    and Paying Agents  Not applicable
  Item 10.G.
    Statements
    by Experts  Not applicable
 113




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##### Table of Contents



Item 10.H.
    Documents
    on Display  Form 20-F, 1-800-SEC-0330. http://www.sec.gov
  100-999,
 Item 10.I.  Subsidiary
    Information  Not applicable
  Item 11.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Exchange
    Rate and Interest Rate Risks
          Exchange
    Rate Risk
   114




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##### Table of Contents



Interest
    Rate Risk
    Maturities2007


2008


2009


2010


2011


There-after


Total


FairValue(In billions of Won, except for percentage data)Local currency:Fixed rate

W
754.8


W
298.7


W
298.4


W
195.8


W
191.0


W
385.2


W
2,123.9


W
1,745.5Average weighted rate(1)


5.56
%


5.00
%


5.00
%


4.00
%


3.00
%


4.50
%Variable rate














200.0











200.0



200.0Average weighted rate(1)














5.11
%














Sub-total

W
754.8


W
298.7


W
298.4


W
395.8


W
191.0


W
385.2


W
2,323.9


W
1,945.5Foreign currency:Fixed rate


1.6



16.5



333.1







276.7







627.9



610.6Average weighted rate(1)


5.11
%


0.01
%


0.00
%


N/A



4.25
%


N/AVariable rate


0.9



















93.0



93.9



93.9Average weighted rate(1)


6.86
%


N/A



N/A



N/A







5.66
%Sub-total

W
2.5


W
16.5


W
333.1


W



W
276.7


W
93.0


W
721.8


W
704.5Total

W
757.3


W
315.2


W
631.5


W
395.8


W
467.7


W
478.2


W
3,045.7


W
2,650.0     (1)
    
    Weighted average rates of the
    portfolio at the period end.    Item 12.
    DESCRIPTION
    OF SECURITIES OTHER THAN EQUITY SECURITIES  Not applicable.
 115




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PART II  Item 13.
    DEFAULTS,
    DIVIDEND ARREARAGES AND DELINQUENCIES  None.
  Item 14.
    MATERIAL
    MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
    PROCEEDS  None.
  Item 15.
    CONTROLS
    AND PROCEDURES  Rules 13a-15(e) 15d-15(e)
  Managements
    Annual Report on Internal Control Over Financial
    Reporting
  Rules 13a-15(f) 15d-15(f)
  Attestation
    Report of the Registered Public Accounting Firm
  Form 20-F.
  Changes
    in Internal Control Over Financial Reporting
   116




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##### Table of Contents



Item 16.  RESERVED Item 16A.  AUDIT
    COMMITTEE FINANCIAL EXPERT    Item 16B.
    CODE OF
    ETHICS  Code of
    Ethics for Chief Executive Officer, Chief Financial Officer and
    Controller
  www.sktelecom.com
  Item 16C.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    Years Ended December 31,2005


2006Audit

W
838.9


W
1,220.5Audit Related

W
86.7


W
81.1Tax

W
139.4


W
277.0All Other Fees

W
900.0


W
Total

W
1,965.0


W
1,578.6   Audit Fees
  Audit-Related Fees
  Tax Fees
 117




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##### Table of Contents



Pre-Approval
    of Audit and Non-Audit Services Provided by Independent
    Registered Public Accounting Firm
    de minimis Rule 2-01 Regulation S-X
  Item 16D.
    EXEMPTIONS
    FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES  Not applicable.
  Item 16E.
    PURCHASES
    OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS    Rule 10b-18(a)(3)
  Total Number of


Maximum Number ofShares Purchased as


Shares That May yetAverage


Part of Publicly


be Purchased UnderPeriod

Total Number of


Price Paid


Announced Plans or


the Plans or2006

Shares Purchased


per Share


Program


ProgramJanuary





W








February





W








March





W








April





W








May





W








June





W








July





W








August


491,000


W
188,428







September


592,000


W
196,890







October





W








November





W








December





W








Total


1,083,000


W
193,054







    118




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119




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##### Table of Contents



PART III  Item 17.
    FINANCIAL
    STATEMENTS  Not applicable.
  Item 18.
    FINANCIAL
    STATEMENTS  Report of
    Independent Registered Public Accounting Firm on Consolidated
    Financial Statements


F-2Report of
    Independent Registered Public Accounting Firm on Internal
    Control over Financial Reporting


F-3Consolidated
    balance sheets as of December 31, 2004, 2005 and
    2006


F-4Consolidated
    statements of income for the years ended December 31, 2004,
    2005 and 2006


F-6Consolidated
    statements of changes in stockholders equity for the years
    ended December 31, 2004, 2005 and 2006


F-7Consolidated
    statements of cash flows for the years ended December 31,
    2004, 2005 and 2006


F-9Notes to
    consolidated financial statements


F-11   Item 19.
    EXHIBITS  Number

Description1
.1*

Memorandum and Articles of
    Association2
.1*

Deposit Agreement dated as of
    May 31, 1996, as amended by Amendment No. 1 dated as
    of March 15, 1999, Amendment No. 2 dated as of
    April 24, 2000 and Amendment No. 3 dated as of
    July 24, 2002, entered into among SK Telecom Co., Ltd.,
    Citibank, N.A., as Depositary, and all Holders and Beneficial
    Owners of American Depositary Shares8
.1

List of Subsidiaries of SK Telecom
    Co., Ltd.12
.1

Certification of Principal
    Executive Officer Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200212
.2

Certification of Principal
    Financial Officer Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200213
.1

Certification of Principal
    Executive Officer Pursuant to 18 U.S.C. Section 1350,
    As Adopted Pursuant to Section 906 of the Sarbanes-Oxley
    Act of 200213
.2

Certification of Principal
    Financial Officer Pursuant to 18 U.S.C. Section 1350,
    As Adopted Pursuant to Section 906 of the Sarbanes-Oxley
    Act of 200215
.1

Telecommunications Basic Act of
    1983, as amended (English translation)15
.2

Enforcement Decree of the
    Telecommunications Basic Act, as amended (English translation)15
.3

Telecommunications Business Act of
    1983, as amended (English translation)15
.4

Enforcement Decree of the
    Telecommunications Business Act (English translation)99
.1

Consent of Deloitte Anjin LLC     *
    
    Filed previously as exhibits to our
    Form 20-F
    filed on June 30, 2006. 120




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##### Table of Contents



SIGNATURES
  Form 20-F
  (Registrant)
  
   Title:
    President, Chief Executive Officer,     121




---



##### Table of Contents



INDEX OF
    FINANCIAL STATEMENTS
  SK
    TELECOM CO., LTD.
  Report of
    Independent Registered Public Accounting Firm on Consolidated
    Financial Statements


F-2Report of
    Independent Registered Public Accounting Firm on Internal
    Control over Financial Reporting


F-3Consolidated
    balance sheets as of December 31, 2004, 2005 and
    2006


F-4Consolidated
    statements of income for the years ended December 31, 2004,
    2005 and 2006


F-6Consolidated
    statements of changes in stockholders equity for the years
    ended December 31, 2004, 2005 and 2006


F-7Consolidated
    statements of cash flows for the years ended December 31,
    2004, 2005 and 2006


F-9Notes to
    consolidated financial statements


F-11  F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    ON CONSOLIDATED FINANCIAL STATEMENTS               Internal Control 
    Integrated Framework
     F-2




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    ON INTERNAL CONTROL OVER FINANCIAL REPORTING     Internal Control 
    Integrated Framework
        Internal
    Control  Integrated Framework Internal Control  Integrated
    Framework
       F-3




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS
 DECEMBER 31, 2004, 2005 AND 2006
  In Thousandsof U.S. dollarsIn Millions of Korean Won


(Note 2 a)2004


2005


2006


2006ASSETSCURRENT ASSETS:Cash and cash equivalents
    (Notes 2 and 13)

W
370,630


W
378,426


W
485,972


$
522,551Short-term financial instruments
    (Notes 13, 21 and 22)


12,730



106,592



98,085



105,468Trading securities (Notes 2
    and 4)


654,779



777,472



665,312



715,389Current portion of long-term
    investment securities (Notes 2 and 4)


3,709



1



335



360Accounts receivable 
    trade, net of allowance for doubtful accounts of
    W71,090 million,
    W133,499 million and
    W106,737 million at December 31,
    2004, 2005 and 2006, respectively (Notes 2 ,13 and 24)


1,720,201



1,684,119



1,800,606



1,936,135Short-term loans, net of allowance
    for doubtful accounts of W564 million,
    W1,350 million and
    W9,629 million at December 31, 2004,
    2005 and 2006, respectively (Notes 2 and 6)


55,355



65,539



69,745



74,995Accounts receivable 
    other, net of allowance for doubtful accounts of
    W15,622 million,
    W17,526 million and
    W31,233 million at December 31, 2004,
    2005 and 2006, respectively (Notes 2, 13 and 24)


1,406,553



1,369,691



1,305,284



1,403,531Inventories, net (Notes 2, 3,
    23 and 24)


52,321



7,784



19,778



21,267Prepaid expenses


84,933



104,124



116,727



125,513Current deferred income tax assets,
    net (Notes 2 and 18)






66,117



49,940



53,699Currency swap (Notes 2 and 27)










16,660



17,914Accrued income and other


29,482



38,715



35,518



38,191Total Current Assets


4,390,693



4,598,580



4,663,962



5,015,013NON-CURRENT ASSETS:Property and equipment, net
    (Notes 2, 7, 12, 22, 23 and 24)


4,703,922



4,663,369



4,507,335



4,846,597Intangible assets, net
    (Notes 2 and 8)


3,522,903



3,452,889



3,518,411



3,783,238Long-term investment securities
    (Notes 2 and 4)


948,101



1,220,208



2,475,418



2,661,740Equity securities accounted for
    using the equity method (Notes 2 and 5)


304,028



471,879



750,921



807,442Long-term bank deposits
    (Note 21)


10,351



1,479



10,445



11,231Long-term loans, net of allowance
    for doubtful accounts of W19,273 million,
    W19,130 million and
    W19,117 million at December 31, 2004,
    2005 and 2006, respectively (Notes 2 and 6)


30,442



18,430



18,569



19,967Guarantee deposits (Notes 13
    and 24)


289,015



168,559



139,619



150,128Non-current deferred income tax
    assets (Notes 2 and 18)






1,495



2,655



2,855Other


83,903



107,884



152,633



164,120Total Non-Current Assets


9,892,665



10,106,192



11,576,006



12,447,318TOTAL ASSETS

W
14,283,358


W
14,704,772


W
16,239,968


$
17,462,331    F-4




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEETS (CONTINUED)
 DECEMBER 31, 2004, 2005 AND 2006
  In Thousandsof U.S. DollarsIn Millions of Korean Won


(Note 2 a)2004


2005


2006


2006Liabilities and
    Shareholders EquityCURRENT LIABILITIES:Accounts payable (Notes 13, 22
    and 24)

W
1,205,682


W
1,047,779


W
1,221,704


$
1,313,660Short-term borrowings
    (Notes 13 and 22)


425,496



972



58,344



62,735Income taxes payable


273,495



370,822



336,536



361,867Accrued expenses (Notes 2, 13
    and 26)


394,354



364,830



375,063



403,294Dividend payable


263



298



268



288Withholdings


196,534



216,622



339,144



364,671Current portion of long-term debt,
    net (Notes 8, 9, 10 and 12)


498,278



809,573



797,042



857,034Current portion of subscription
    deposits (Note 11)


13,405



14,875



17,576



18,899Current deferred income tax
    liabilities (Notes 2 and 18)






44







Advanced receipts and other


59,386



37,558



62,739



67,461Total Current Liabilities


3,066,893



2,863,373



3,208,416



3,449,909LONG-TERM LIABILITIES:Bonds payable, net (Notes 2
    and 9)


2,891,843



2,314,208



1,995,323



2,145,509Long-term borrowings (Notes 10
    and 22)






155



293,026



315,082Subscription deposits (Note 11)


31,440



23,770



21,140



22,731Long-term payables 
    other, net of present value discount of 72,663 million,
    58,413 million and 42,461 million at December 31,
    2004, 2005 and 2006, respectively (Notes 2 and 8)


577,337



591,587



517,539



556,494Obligations under capital leases
    (Notes 2, 12 and 13)






10,204



1,860



2,000Accrued severance indemnities, net
    (Note 2)


80,984



71,284



22,284



23,961Non-current deferred income tax
    liabilities (Notes 2 and 18)


306,052



401,156



532,639



572,730Long-term currency swap
    (Notes 2 and 27)


96,743



73,450



112,970



121,473Long-term interest rate swap
    (Notes 2 and 27)










454



488Guarantee deposits received and
    other (Notes 22, 24 and 26)


26,322



28,045



51,229



55,085Total Long-Term Liabilities


4,010,721



3,513,859



3,548,464



3,815,553Total Liabilities


7,077,614



6,377,232



6,756,880



7,265,462COMMITMENTS AND CONTINGENCIES
    (Note 22)SHAREHOLDERS EQUITY:Common stock 
    W500 par value:
    Issued and outstanding  73,614,296 shares, 73,614,296
    shares and 72,667,459 shares at December 31, 2004, 2005 and
    2006, respectively (Notes 1 and 14)


44,639



44,639



44,639



47,999Capital surplus (Note 14)


2,968,301



2,954,840



2,950,327



3,172,395Retained earnings (Note 15)


6,152,898



7,267,649



7,847,434



8,438,101Capital adjustments :Treasury stock (Note 16)


(2,047,105
)


(2,047,105
)


(2,014,927
)


(2,166,588
)Unrealized gains (loss) on
    valuation of long-term investment securities, net (Notes 2
    and 4)


(92,975
)


(42,093
)


429,228



461,536Equity in capital adjustment of
    affiliates, net (Notes 2 and 5)


134,376



61,368



107,324



115,402Loss on valuation of currency swap,
    net (Notes 2 and 27)


(49,452
)


(14,177
)


(16,487
)


(17,728
)Loss on valuation of interest swap,
    net (Notes 2 and 27)










(329
)


(354
)Loss on disposal of treasury stock
    (Notes 16 and 18)










(7,887
)


(8,481
)Stock options (Notes 2 and 17)


4,833



3,480



3,246



3,490Foreign-based operations
    translation adjustment (Note 2)


(7,969
)


(9,988
)


(29,726
)


(31,963
)Minority interest in equity of
    consolidated subsidiaries (Note 2)


98,198



108,927



170,246



183,060Total Shareholders Equity


7,205,744



8,327,540



9,483,088



10,196,869TOTAL LIABILITIES AND
    SHAREHOLDERS EQUITY

W
14,283,358


W
14,704,772


W
16,239,968


$
17,462,331    F-5




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF INCOME
 YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
  In Thousandsof U.S. Dollars,Except forIn Millions of Korean Won,


Income perExcept for Income per Share


Share (Note 2 a)2004


2005


2006


2006OPERATING REVENUE (Notes 2, 24
    and 29)

W
10,570,615


W
10,721,820


W
11,027,977


$
11,858,040OPERATING EXPENSES (Notes 2,
    22 and 24)Labor cost


(464,778
)


(464,764
)


(491,839
)


(528,859
)Commissions paid


(2,812,318
)


(2,859,638
)


(3,293,197
)


(3,541,072
)Depreciation and amortization
    (Notes 7 and 8)


(1,607,478
)


(1,546,285
)


(1,553,635
)


(1,670,575
)Network interconnection (Note 29)


(913,688
)


(989,417
)


(1,014,913
)


(1,091,304
)Leased line


(375,227
)


(407,043
)


(412,902
)


(443,981
)Advertising


(352,877
)


(279,390
)


(307,190
)


(330,312
)Research and development (Note 2)


(267,107
)


(252,046
)


(211,961
)


(227,915
)Rent


(178,310
)


(190,134
)


(206,708
)


(222,267
)Frequency usage


(143,047
)


(156,098
)


(158,958
)


(170,923
)Repair


(112,094
)


(131,719
)


(150,848
)


(162,202
)Provision for bad debts


(29,181
)


(112,792
)


(61,457
)


(66,083
)Cost of goods sold


(479,257
)


(240,746
)


(121,381
)


(130,517
)Other


(395,504
)


(421,132
)


(421,856
)


(453,608
)Sub-total


(8,130,866
)


(8,051,204
)


(8,406,845
)


(9,039,618
)OPERATING INCOME


2,439,749



2,670,616



2,621,132



2,818,422OTHER INCOME :Interest income (Note 4)


80,459



61,143



79,969



85,988Dividends


23,843



26,515



20,351



21,883Commissions


26,891



32,738



33,226



35,727Equity in earnings of affiliates
    (Notes 2 and 5)






20,949



45,787



49,233Foreign exchange and translation
    gains (Note 2)


20,559



4,167



4,412



4,744Reversal of allowance for doubtful
    accounts


759



450



789



848Gain on disposal and valuation of
    trading securities (Note 2)


2,548



1







Gain on disposal of investment
    assets (Notes 4 and 5)


2,004



24,613



27,490



29,559Gain on disposal of consolidated
    subsidiary






178,689



1,556



1,673Gain on disposal of property,
    equipment and intangible assets


2,067



4,693



4,507



4,846Gain on transactions and valuation
    of currency forward and swap (Notes 2 and 27)


2,850



2,578



16,660



17,914Other


37,439



36,016



50,111



53,884Sub-total


199,419



392,552



284,858



306,299OTHER EXPENSES :Interest and discounts


(303,410
)


(253,472
)


(239,138
)


(257,138
)Donations


(20,216
)


(76,185
)


(103,348
)


(111,127
)Equity in losses of affiliates
    (Notes 2 and 5)


(11,954
)


(71,825
)


(211,464
)


(227,381
)Foreign exchange and translation
    losses (Note 2)


(9,074
)


(4,178
)


(4,139
)


(4,451
)Loss on disposal and valuation of
    trading securities (Note 2)


(232
)


(16
)






Loss on disposal of investment
    assets


(1,539
)


(4,017
)


(6,096
)


(6,555
)Loss on disposal and impairment of
    property, equipment and intangible assets (Note 2)


(19,208
)


(6,783
)


(24,178
)


(25,998
)Loss on impairment of long-term
    investment securities (Notes 2 and 4)


(33,654
)


(3,422
)


(27,696
)


(29,781
)Loss on transactions and valuation
    of currency forward and swap (Notes 2 and 27)


(15,818
)






(9,258
)


(9,955
)Special severance indemnities
    (Note 2)










(144,021
)


(154,861
)External research and development
    costs


(69,016
)


(69,140
)


(67,021
)


(72,066
)Other


(31,872
)


(12,564
)


(48,053
)


(51,668
)Sub-total


(515,993
)


(501,602
)


(884,412
)


(950,981
)INCOME BEFORE INCOME TAXES AND
    MINORITY  INTEREST

W
2,123,175


W
2,561,566


W
2,021,578


$
2,173,740INCOME TAXES (Notes 2 and 18)


(629,761
)


(693,259
)


(572,026
)


(615,082
)INCOME BEFORE MINORITY INTEREST


1,493,414



1,868,307



1,449,552



1,558,658MINORITY INTEREST IN NET LOSS
    (GAIN) OF CONSOLIDATED SUBSIDIARIES


(1,935
)


4,671



1,939



2,085NET INCOME

W
1,491,479


W
1,872,978


W
1,451,491


$
1,560,743NET INCOME PER SHARE (Notes 2
    and 19)
    (In Korean Won and U.S. dollars)

W
20,261


W
25,443


W
19,801


$
21.29DILUTED NET INCOME PER SHARE
    (Notes 2 and 19)
    (In Korean Won and U.S. dollars)

W
20,092


W
25,036


W
19,523


$
20.99    F-6




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF SHAREHOLDERS
    EQUITY
 YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
  TotalCommon


Capital


Retained


Capital


Minority


ShareholdersStock


Surplus


Earnings


Adjustments


Interest


Equity(In millons of Korean
    Won)Balance, January 1, 2004

W
44,639


W
2,911,556


W
5,139,911


W
(2,158,244
)

W
155,985


W
6,093,847Net income










1,491,479







1,935



1,493,414Cash dividends paid (Note 20)










(404,878
)










(404,878
)Interim cash dividends paid
    (Note 20)










(73,614
)










(73,614
)Excess unallocated purchase price
    (Note 14)






(77
)














(77
)Consideration for conversion rights
    (Notes 2 and 14)






67,279















67,279Acquisition of treasury stock
    (Note 16)














(2
)






(2
)Equity in capital surplus and
    capital adjustment changes of affiliates (Note 2)






(10,457
)






91,795







81,338Unrealized gain on valuation of
    long-term investment securities (Notes 2 and 4)














67,647







67,647Loss on valuation of currency swap
    (Note 2)














(49,452
)






(49,452
)Stock compensation plans
    (Notes 2 and 17)














1,092







1,092Foreign-based operations
    translation adjustment (Note 2)














(11,128
)






(11,128
)Decrease in minority interest in
    equity of consolidated subsidiaries


















(59,722
)


(59,722
)Balance, December 31, 2004

W
44,639


W
2,968,301


W
6,152,898


W
(2,058,292
)

W
98,198


W
7,205,744Net income










1,872,978







(4,671
)


1,868,307Cash dividends paid (Note 20)










(684,613
)










(684,613
)Interim cash dividends paid
    (Note 20)










(73,614
)










(73,614
)Deferred tax effect of temporary
    differences related to conversion rights (Note 14)






(18,502
)














(18,502
)Transfer of stock option from
    capital adjustments to capital surplus (Notes 14 and 17)






1,533







(1,533
)






Equity in capital surplus and
    capital adjustment changes of affiliates (Notes 2 and 5)






3,508







(73,008
)






(69,500
)Unrealized gain on valuation of
    long-term investment securities (Notes 2 and 4)














50,882







50,882Gain on valuation of currency swap
    (Note 2)














35,276







35,276Stock compensation plans
    (Notes 2 and 17)














180







180Foreign-based operations
    translation adjustment (Note 2)














(2,020
)






(2,020
)Increase in minority interest in
    equity of consolidated subsidiaries


















15,400



15,400Balance, December 31, 2005

W
44,639


W
2,954,840


W
7,267,649


W
(2,048,515
)

W
108,927


W
8,327,540 F-7




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF SHAREHOLDERS
    EQUITY  (Continued)
 YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
  TotalCommon


Capital


Retained


Capital


Minority


ShareholdersStock


Surplus


Earnings


Adjustments


Interest


EquityBalance, January 1, 2006

W
44,639


W
2,954,840


W
7,267,649


W
(2,048,515
)

W
108,927


W
8,327,540Net income










1,451,491







(1,939
)


1,449,552Cash dividends paid (Note 20)










(588,914
)










(588,914
)Interim cash dividends paid
    (Note 20)










(73,714
)










(73,714
)Transfer of stock option from
    capital adjustments to capital surplus (Notes 14 and 17)






234







(234
)






Equity in capital surplus and
    capital adjustment changes of affiliates (Notes 2 and 5)






(1,014
)






45,956







44,942Conversion of convertible bonds
    (Note 9)






(3,733
)






24,291







20,558Acquisition and retirement of
    treasury stock (Note 16)










(209,078
)










(209,078
)Unrealized gain on valuation of
    long-term investment securities (Notes 2 and 4)














471,321







471,321Loss on valuation of currency swap
    (Note 2)














(2,640
)






(2,640
)Foreign-based operations
    translation adjustment (Note 2)














(19,737
)






(19,737
)Increase in minority interest in
    equity of consolidated subsidiaries


















63,258



63,258Balance, December 31, 2006

W
44,639


W
2,950,327


W
7,847,434


W
(1,529,558
)

W
170,246


W
9,483,088(In thousands of U.S. dollars)
    (Note 2 a)Balance, January 1, 2006

$
47,999


$
3,177,247


$
7,814,676


$
(2,202,704
)

$
117,126


$
8,954,344Net income










1,560,743







(2,085
)


1,558,658Cash dividends paid (Note 20)










(633,241
)










(633,241
)Interim cash dividends paid
    (Note 20)










(79,262
)










(79,262
)Transfer of stock option from
    capital adjustments to capital surplus (Notes 14 and 17)






252







(252
)






Equity in capital surplus and
    capital adjustment changes of affiliates (Notes 2 and 5)






(1,090
)






49,415







48,325Conversion of convertible bonds
    (Note 9)






(4,014
)






26,119







22,105Acquisition and retirement of
    treasury stock (Note 16)










(224,815
)










(224,815
)Unrealized gain on valuation of
    long-term investment securities (Notes 2 and 4)














506,797







506,797Loss on valuation of currency swap
    (Note 2)














(2,839
)






(2,839
)Foreign-based operations
    translation adjustment (Note 2)














(21,222
)






(21,222
)Increase in minority interest in
    equity of consolidated subsidiaries


















68,019



68,019Balance, December 31, 2006

$
47,999


$
3,172,395


$
8,438,101


($
1,644,686
)

$
183,060


$
10,196,869    F-8




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006
  In Thousandsof U.S. DollarsIn Millions of Korean Won


(Note 2 a)2004


2005


2006


2006CASH FLOWS FROM OPERATING
    ACTIVITIES:Net income

W
1,491,479


W
1,872,978


W
1,451,491


$
1,560,743Expenses not involving cash
    payments :Provision for severance indemnities


58,151



47,073



47,370



50,935Depreciation and amortization


1,752,530



1,675,528



1,698,364



1,826,198Provision for bad debts


43,144



115,731



86,321



92,818Foreign currency translation loss


2,179



981



1,106



1,189Loss on disposal and valuation of
    trading securities


232



16







Loss on transactions and valuation
    of currency forward and swap


15,818







9,258



9,955Equity in losses of affiliates


11,954



71,825



211,464



227,381Loss on impairment of long-term
    investment securities


33,654



3,422



27,696



29,781Loss on disposal of investment
    assets


1,539



4,017



6,096



6,555Loss on disposal and impairment of
    property, equipment and intangible assets


19,208



6,783



24,178



25,998Minority interest in net gain of
    consolidated subsidiaries


1,935











Amortization of discounts on bonds
    and other


46,274



51,846



51,077



54,921Sub-total


1,986,618



1,977,222



2,162,930



2,325,731Income not involving cash receipts :Reversal of allowance for doubtful
    accounts


(759
)


(450
)


(789
)


(848
)Foreign currency translation gain


(3,367
)


(658
)


(924
)


(994
)Gain on disposal and valuation of
    trading securities


(2,548
)


(1
)






Gain on disposal of investment
    assets


(2,004
)


(24,613
)


(27,490
)


(29,559
)Gain on disposal of consolidated
    subsidiary






(178,689
)


(1,556
)


(1,673
)Gain on disposal of property,
    equipment and intangible assets


(2,067
)


(4,693
)


(4,507
)


(4,846
)Gain on transactions and valuation
    of currency forward and swap


(2,850
)


(2,545
)


(16,660
)


(17,914
)Equity in earnings of affiliates






(20,949
)


(45,787
)


(49,233
)Minority interest in net loss of
    consolidated subsidiaries






(4,671
)


(1,939
)


(2,086
)Other


(1,074
)


(765
)


(3,075
)


(3,306
)Sub-total


(14,669
)


(238,034
)


(102,727
)


(110,459
)Changes in assets and liabilities
    related to operating activities:Accounts receivable 
    trade


(170,891
)


(210,957
)


(161,914
)


(174,101
)Accounts receivable 
    other


(552,343
)


22,284



57,253



61,562Inventories


(20,982
)


8,297



(9,145
)


(9,833
)Prepaid expenses


638



9,016



61,148



65,751Accrued income and other


(6,187
)


(24,938
)


5,865



6,306Accounts payable


(90,977
)


(34,441
)


161,611



173,775Income taxes payable


(125,430
)


88,477



(44,637
)


(47,997
)Accrued expenses


(26,622
)


(12,944
)


37,985



40,844Withholdings


11,828



19,717



123,003



132,261Current portion of subscription
    deposits


2,580



1,495



885



952Advance receipts and other


10,780



(22,221
)


21,585



23,210Deferred income taxes


78,356



7,640



(76,423
)


(82,175
)Severance indemnity payments


(27,582
)


(24,365
)


(262,948
)


(282,740
)Dividends received from affiliates


755



785



1,318



1,417Deposits for group severance
    indemnities and other deposits


(19,489
)


(32,869
)


162,545



174,780Sub-total


(935,566
)


(205,024
)


78,131



84,012Net Cash Provided by Operating
    Activities


2,527,862



3,407,142



3,589,825



3,860,027 F-9




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED DECEMBER 31, 2004, 2005 AND
    2006  (Continued)
  In Thousandsof U.S. DollarsIn Millions of Korean Won


(Note 2 a)2004


2005


2006


2006CASH FLOWS FROM INVESTING
    ACTIVITIES:Decrease (increase) in short-term
    financial instruments

W
90,034


W
(75,261
)

W
4,470


$
4,806Decrease in long-term financial
    instruments


50,006



2



2



2Decrease (increase) in trading
    securities


240,204



(122,710
)


80,060



86,086Decrease in current portion of
    long-term investment securities


85,861



53,608







Collection of short-term loans


89,447



60,530



96,892



104,185Collection of long-term loans


4,746



57



654



703Proceeds from disposal of long-term
    investment securities


17,658



40,889



305,953



328,982Proceeds from disposal of equity
    securities accounted for using the equity method


268



7,539



80,014



86,037Proceeds from disposal of
    consolidated subsidiary






290,966



39,062



42,002Decrease in guarantee deposits


22,096



142,131



71,164



76,520Decrease in other non-current assets


36,287



36,110



19,940



21,441Proceeds from disposal of property
    and equipment


10,116



34,179



14,353



15,433Proceeds from disposal of
    intangible assets


2,291



107



1,630



1,753Increase in short-term loans


(56,428
)


(59,008
)


(92,753
)


(99,734
)Increase in long-term loans


(35,291
)


(5,766
)


(12,623
)


(13,573
)Increase in long-term financial
    instruments


(60,005
)


(1,140
)


(10,091
)


(10,851
)Acquisition of long-term investment
    securities


(54,132
)


(319,061
)


(1,127,396
)


(1,212,254
)Acquisition of equity securities
    accounted for using the equity method


(21,086
)


(231,793
)


(244,333
)


(262,724
)Increase in guarantee deposits


(40,957
)


(75,295
)


(30,290
)


(32,570
)Increase in other non-current assets


(82,843
)


(86,803
)


(132,349
)


(142,310
)Acquisition of property and
    equipment


(1,631,941
)


(1,416,622
)


(1,498,142
)


(1,610,905
)Acquisition of intangible assets


(72,376
)


(199,494
)


(73,964
)


(79,531
)Acquisition of minority interest


(64,247
)


(11,352
)


(27,406
)


(29,469
)Net Cash Used in Investing
    Activities


(1,470,292
)


(1,938,187
)


(2,535,153
)


(2,725,971
)CASH FLOWS FROM FINANCING
    ACTIVITIES:Increase in short-term borrowings

W



W



W
51,230


$
55,086Issuance of bonds payable


1,205,727



193,683



384,990



413,968Proceeds from long-term borrowings










294,800



316,989Repayment of short-term borrowings


(359,133
)


(376,929
)






Repayment of current portion of
    long-term debt


(1,370,611
)


(500,033
)


(815,287
)


(876,653
)Repayment of bonds payable


(5,068
)






(1,230
)


(1,323
)Payment of dividends


(478,318
)


(758,192
)


(662,815
)


(712,704
)Decrease in facility deposits


(12,757
)


(7,670
)


(2,630
)


(2,828
)Transaction of currency forward and
    swap


2,821











Acquisition and retirement of
    treasury stock


(2
)






(209,078
)


(224,815
)Increase in minority interest in
    equity of consolidated subsidiaries


45,065



21,243



19,050



20,484Other


3,706



(1,140
)


(11,407
)


(12,266
)Net Cash Used in Financing
    Activities


(968,570
)


(1,429,038
)


(952,377
)


(1,024,062
)THE EFFECT OF EXCHANGE RATE
    CHANGES  ON CASH AND CASH EQUIVALENTS HELD IN FOREIGN CURRENCIES
    (Note 2)


(11,055
)


(3,036
)


(9,317
)


(10,018
)NET INCREASE (DECREASE) IN CASH
    AND  CASH EQUIVALENTS DUE TO CHANGES IN CONSOLIDATED SUBSIDIARIES


(24,803
)


(29,085
)


14,568



15,665NET INCREASE (DECREASE) IN CASH
    AND CASH EQUIVALENTS


53,142



7,796



107,546



115,641CASH AND CASH EQUIVALENTS  AT
    BEGINNING OF THE YEAR


317,488



370,630



378,426



406,910CASH AND CASH EQUIVALENTS AT END OF
    THE YEAR

W
370,630


W
378,426


W
485,972


$
522,551    F-10




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 YEARS
    ENDED DECEMBER 31, 2004, 2005 AND 2006
  1.
    GENERAL    Percentage ofNumber of


Total SharesShares


Issued (%)SK Group


18,748,452



23.09POSCO


2,341,569



2.88Institutional investors and other
    minority shareholders


51,577,438



63.53Treasury stock


8,526,252



10.5081,193,711



100.00   2.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES    a.
    Basis
    of Presentation  W
 F-11




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  b.
    Principles
    of Consolidation    Year of




Ownership Percentage (%)Subsidiary

Establishment


Primary Business

2004


2005


2006SK Capital Co., Ltd.


1995


Finance


100.00



100.00



SK Telink Co., Ltd.


1998


Telecommunication services


90.77



90.77



90.77SK Communications Co., Ltd.


1999


Internet website services


93.44



92.37



87.08SK Wyverns Baseball Club Co.,
    Ltd.


2000


Business related sports


99.99



99.99



99.99Centurion IT Investment Association


2001


Investment association


37.50



37.50



37.50Global Credit & information
    Corp.


1998


Credit and collection Services


50.00



50.00



50.00PAXNet Co., Ltd.


1999


Internet website services


67.10



67.10



59.74Seoul Records, Inc.


1982


Release of music disc






60.00



60.00IHQ, Inc.


1962


Business related Entertainment






21.60



34.08YTN Media, Inc


2000


Broadcasting services










51.42SK Telecom International Inc.


1995


Internet website services


100.00



100.00



100.00SLD Telecom PTE Ltd.


2000


Telecommunication services


55.10



55.10



73.32SK Telecom China Co., Ltd.


2002


Telecommunication services


100.00



100.00



100.00ULand Company Limited


2004


Telecommunication services


100.00



100.00



100.00SK Telecom USA Holdings, Inc.


2005


Telecommunication services






100.00



100.00The First Music Investment Fund of
    SK-PVC


2005


Investment association






99.00



99.00The Second Music Investment Fund of
    SK-PVC


2005


Investment association






99.00



99.00SK-KTB Music Investment Fund


2005


Investment association






99.00



99.00IMM Cinema Fund


2005


Investment association






48.39



60.84SK Teletech Co., Ltd.


1995


Handset manufacturing


89.13







           W
 F-12




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  W
  c.
    Use of
    Estimates    d.
    Cash
    Equivalents    e.
    Allowance
    for Doubtful Accounts      2004


2005


2006Beginning balance

W
65,327


W
71,090


W
133,499Write-offs


(23,418
)


(49,181
)


(90,780
)41,909



21,909



42,719Provision for doubtful accounts
    receivable-trade


29,181



112,792



61,457Increase (decrease) due to the
    changes in consolidated subsidiaries






(1,202
)


2,561End of year

W
71,090


W
133,499


W
106,737   f.
    Inventories  W W
  g.
    Securities
    (excluding securities accounted for using the equity method of
    accounting)     F-13




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        h.
    Equity
    Securities Accounted for Using the Equity Method of
    Accounting  and/or
      i.
    Property
    and Equipment       F-14




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  j.
    Intangible
    Assets      k.
    Convertible
    Bonds and Bonds with Stock Purchase Warrants    l.
    Discounts
    on Bonds    m.
    Valuation
    of Long-Term Payables    n.
    Provisions,
    Contingent Liabilities and Contingent Assets      
    Possible obligations related to past events, for which the
    existence of a liability can only be confirmed upon occurrence
    of uncertain future event or events outside the control of the
    Company.
    Present obligations arising out of past events or transactions,
    for which i) a disbursement of economic resources to
    fulfill such obligations is not probable or ii) a
    disbursement of economic resources is probable, but the related
    amount cannot be reasonably estimated. F-15




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     o.
    Accrued
    Severance Indemnities    W W W
  W W W
  W W
 F-16




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2004


2005


2006Beginning net balance

W
67,824


W
80,984


W
71,284Provision


58,151



47,073



47,370Payments to employees


(27,582
)


(24,365
)


(262,948
)Net increase due to the changes in
    consolidated subsidiaries


2,372



594



4,010Changes in deposits for severance
    indemnities


(19,781
)


(33,002
)


162,568Ending net balance

W
80,984


W
71,284


W
22,284Ending balance:Accrued severance indemnities

W
251,314


W
267,855


W
51,243Deposits with insurance companies


(164,643
)


(191,354
)


(28,868
)National Pension Fund


(5,687
)


(5,217
)


(91
)Net balance

W
80,984


W
71,284


W
22,284   p.
    Accounting
    fort Leases      q.
    Research
    and Development Costs  W W W W W W
  r.
    Derivative
    Instruments    s.
    Revenue
    Recognition   F-17




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      t.
    Income
    Taxes      u.
    Net
    Income Per Share    v.
    Foreign-Based
    Operations Translation Adjustment    w.
    Accounting
    for Foreign Currency Transactions and Translation  W W W
  x.
    Accounting
    for Employee Stock Option Compensation Plan   F-18




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    y.
    Handset
    Subsidies to Long-term Mobile Subscribers    z.
    Adoption
    of New Statements of Korea Accounting Standards
    (SKAS)    
    Through 2004, when the Companys equity interests in the
    equity method investees were diluted as a result of the equity
    method investees new issuance of their common stocks to
    third parties, the changes in the Companys proportionate
    equity of investees were accounted for as capital transactions.
    Effective January 1, 2005, such transactions are accounted
    for as income statement treatment, pursuant to adoption of
    SKAS No. 15, Investments : Equity Method.
    As a result of adopting SKAS No. 15, net income for the
    year ended December 31, 2005 increased by
    W6,262 million (net of tax effect of
    W2,375 million).
    Through 2004, tax effects of temporary differences related to
    capital surplus or capital adjustments were excluded in
    determining the deferred tax assets or liabilities. Effective
    January 1, 2005, such tax effects of temporary differences
    are included in determining the deferred tax assets or
    liabilities, pursuant to adoption of SKAS No. 16
    Income Taxes. Accordingly, adjustments made directly
    to capital surplus or capital adjustments, which result in
    temporary differences, are recorded net of related tax effects.
    In addition, effective January 1, 2005, deferred income tax
    assets and liabilities which were presented on the balance sheet
    as a single non-current net number through 2004, are separated
    into current and non-current portions. As a result of adopting
    SKAS No. 16, total assets and total liabilities as of
    December 31, 2005 increased by
    W67,612 million and
    W97,768 million, respectively, and total
    stockholders equity as of December 31, 2005 decreased
    by W30,156 million, which was directly
    reflected in capital surplus or capital adjustments (see
    Note 18).
    Through 2004, provisions were recorded at nominal value.
    Effective January 1, 2005, provisions are recorded at the
    present value when the effect of the time value of money is
    material, pursuant to adoption of SKAS No. 17
    Provisions, Contingent Liabilities and Contingent
    Assets. SKAS No. 17 is prospectively applied and as a
    result of adopting such accounting standard, total liabilities
    as of December 31, 2005 decreased by
    W7,415 million and ordinary income and net
    income for the year ended December 31, 2005 increased by
    W5,376 million (see Note 25).   F-19




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        available-for-sale
  aa.
    Reclassifications      2004


2005Cash flows from operating
    activities, as previously reported

W
2,516,807


W
3,404,106Revision


11,055



3,036Cash flows from operating
    activities, as revised

W
2,527,862


W
3,407,142The effect of exchange rate
    changes on cash and cash equivalents held in foreign currencies,
    as previously reported

W



W
Revision


(11,055
)


(3,036
)The effect of exchange rate
    changes on cash and cash equivalents held in foreign currencies,
    as revised

W
(11,055
)

W
(3,036
)  F-20




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  3.
    INVENTORIES    2004


2005


2006Merchandise

W
164


W
863


W
1,167Finished goods


19,286



766



2,282Semi-finished goods


7,019







41Raw materials


14,791



493



313Supplies


11,061



6,301



16,782Total


52,321



8,423



20,585Less allowance for valuation loss






(639
)


(807
)Net

W
52,321


W
7,784


W
19,778   4.
    INVESTMENT
    SECURITIES  a.
    Trading
    Securities    Acquisition Cost


Fair Valueat December 31,


at December 31,


Carrying Amount2006


2006


2004


2005


2006Stocks

W
12


W
12


W
368


W
12


W
12Beneficiary certificates


665,300



665,300



654,411



777,460



665,300Total

W
665,312


W
665,312


W
654,779


W
777,472


W
665,312   b.
    Long-term
    Investment Securities    2004


2005


2006Available-for-sale equity
    securities

W
896,508


W
923,821


W
1,011,971Available-for-sale debt securities


5,158



296,273



1,463,636Held-to-maturity securities


50,144



115



146Total


951,810



1,220,209



2,475,753Less current portion


(3,709
)


(1
)


(335
)Long-term portion

W
948,101


W
1,220,208


W
2,475,418  F-21




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  b-(1).
    Available-for-sale
    Equity Securities    Ownership


AcquisitionNumber


Percentage (%)


Cost


Fair Value


Carrying Amountof Shares


at Dec. 31, 2006


at Dec. 31, 2006


at Dec. 31, 2006


2004


2005


2006(Investments in listed
    companies)Digital Chosunilbo Co., Ltd.


2,890,630



7.8


W
5,781


W
5,897


W
2,023


W
5,796


W
5,897hanarotelecom incorporated


11,045,000



4.8



121,677



88,581



71,019



56,440



88,581KRTnet Corporation


234,150



4.4



1,171



2,517



2,178



2,646



2,517POSCO


2,481,310



2.8



332,662



766,725



464,005



501,225



766,725Comas Interactive Co., Ltd.
    (Formerly INNOTG Co., Ltd.)


59,473



0.4



1,695



83



152



83



83eXtended Computing Environment Co.,
    Ltd. (note a)


133,333



3.3



10



876







10



876ZeroOne Interactive Co., Ltd.


2,472,999



7.2



4,500



3,845











3,845HB Entertainment Co., Ltd.


752,692



3.8



2,258



1,137







2,408



1,137SK SECURITIES CO., Ltd.














(note b
)


2,418







SINJISOFT Corporation














(note b
)


590







CoWon System, Inc.














(note b
)


1,600







sub-total










469,754







543,985



568,608



869,661(Investments in non-listed
    companies)LG Powercomm Co., Ltd. (note c)
    (Formerly Powercomm Co., Ltd.)


7,500,000



5.0



240,243



80,370



71,565



77,130



80,370Japan MBCO


54,000



7.3



27,332



(note d
)


27,332



27,332



Eonex Technologies Inc.


144,000



12.3



3,600



(note e
)


4,593



4,593



4,593The Korea Economic Daily


2,792,759



13.8



13,964



(note e
)


2,077



13,964



13,964Cheongsol


4,328



7.7



5,000



(note e
)










5,000Mirae Asset Life Insurance Co.,
    Ltd.














(note b
)


14,890







WiderThan Co., Ltd.














(note f
)


3,188







Other










143,394



(notes e and g
)


32,472



32,202



34,367sub-total










433,533







156,117



155,221



138,294(Investments in funds)Korea IT Fund














(note h
)


190,000



190,000



Others














(notes e and i
)


6,406



9,992



4,016sub-total


















196,406



199,992



4,016Total

















W
896,508


W
923,821


W
1,011,971     (note a)
    
    The common stocks of eXtended
    Computing Environment Co., Ltd. were listed on the Korea
    Securities Dealers Automated Quotation in the Korea Stock
    Exchange for the year ended December 31, 2006.(note b)
    
    The investments in common stock of
    SK Securities Co., Ltd., SINJISOFT Corporation, CoWon Systems,
    Inc. and Mirae Asset Life Insurance Co., Ltd. were all sold
    during the year ended December 31, 2005.(note c)
    
    The Company recorded its
    investments in common stock of LG Powercomm Co., Ltd. at its
    fair value, which was estimated by an outside professional
    valuation company using the present value of expected future
    cash flows and the unrealized loss on valuation of investments
    amounting to W168,678 million,
    W163,113 million and
    W159,873 million as of December 31,
    2004, 2005 and 2006, respectively, were recorded as a capital
    adjustment.(note d)
    
    Due to the impairment of the
    Companys investments in common stock of Japan MBCO, the
    Company recorded impairment loss on such investments of
    W27,332 million for the year ended
    December 31, 2006.(note e)
    
    As a reasonable estimate of fair
    value could not be made, the investment is stated at acquisition
    cost. The investment in common stock of Eonex Technologies Inc.
    was reclassified to available-for-sale securities from equity
    securities accounted for using the equity method during the year
    ended December 31, 2003, as the Companys ownership in
    such investees decreased to less than 20% and the Company no
    longer exercises significant influence. Such securities were
    transferred to available-for-sale securities at the carrying
    amount valued using the equity method of accounting prior to the
    reclassification. F-22




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (note f)
    
    The investment in common stock of
    WiderThan Co., Ltd. was reclassified to equity securities
    accounted for using the equity method during 2005. Although the
    Companys ownership in WiderThan Co., Ltd. is less than
    20%, the Company exercises significant influence on the
    selection of directors and the investee has significant
    transactions with the Company.(note g)
    
    Due to the impairment of their
    investments in common stock of Mobilewelcom Co., Ltd., CXP Inc.,
    LoveHunt Inc. and others in 2004, TeleMerc.com, Fibernett Co.,
    Ltd. and others in 2005 and Astro Nest Inc., D&D Media Inc.
    and others in 2006, the Company recorded impairment losses of
    W2,580 million,
    W3,057 million and
    W364 million for the years ended
    December 31, 2004, 2005 and 2006, respectively.(note h)
    
    The investment in Korea IT Fund was
    reclassified to equity securities accounted for using the equity
    method for the year ended December 31, 2006 as the Company
    has the ability to exercise significant influence on the
    investee.(note i)
    
    Due to the impairment of their
    investments in cinema projects, the Company and certain
    subsidiaries recorded impairment losses of
    W235 million for the year ended
    December 31, 2005.  b-(2).
    Available-for-sale
    Debt Securities    Acquisition Costat December 31,


Carrying AmountMaturity

2006


2004


2005


2006Public bonds

(note a)

W
51,317


W
1,328


W
1,599


W
51,313Currency stabilization bonds

(note b)


49,882







294,674



49,894Convertible bonds of Real Telecom
    Co., Ltd. (note c)

Mar. 29, 2007


10,656











Convertible bonds of China Unicom
    Ltd. (note d)

Jul. 5, 2007


957,055











1,276,703Convertible bonds of Empas Corp.
    (note e)

Oct. 18, 2009


44,850











78,670Others




6,984



3,830







7,056Total








5,158



296,273



1,463,636Less current portion of
    available-for-sale debt securities








(3,700
)






(256
)Long-term available-for-sale debt
    securities







W
1,458


W
296,273


W
1,463,380     W W W
 (note a)
    
    The maturities of public bonds as
    of December 31, 2006 are within 5 years for
    W169 million and within 10 years for
    W51,144 million.(note b)
    
    The maturities of currency
    stabilization bonds as of December 31, 2006 are within
    5 years.(note c)
    
    The convertible bonds of Real
    Telecom Co., Ltd. with a principal amount of
    W10,656 million can be converted into
    371,018 shares of common stock of Real Telecom Co., Ltd. at
    W28,721 per share during the period from
    September 29, 2004 to March 28, 2007. Due to the
    impairment of such bonds, the Company recorded an impairment
    loss of W10,656 million prior to
    December 31, 2004.(note d)
    
    On July 5, 2006, the Company
    purchased zero coupon convertible bonds of China Unicom Ltd.
    with maturity of three years and principal amount of
    US$1,000,000,000 for US$1,000,000,000. Such convertible bonds
    have initial conversion price of US$1.111426 per share of common
    stock of China Unicom Ltd. The bond holders may redeem their
    notes at 102.82% of the principal amount on July 5, 2008
    (2 years from the issuance date). The conversion right may
    be exercised during the period from July 5, 2007 to
    June 29, 2009 and the number of common shares to be
    converted as of December 31, 2006 is
    899,745,075 shares. Unless either previously redeemed or
    converted, the notes are redeemable at 104.26% of the principal
    amount at maturity. The Company recorded the convertible bonds
    of China Unicom Ltd. at its fair value, which was estimated by
    an outside professional valuation company using Cox,
    Ross & Rubinstein Model (1979) and discount rate
    of 5.9138%. If all such bonds are converted, the Companys
    equity interest in China Unicom Ltd. will be 6.67%. The Company
    is not allowed to, at any time after the date of issuance of the
    conversion shares, sell or otherwise transfer or dispose of any
    conversion shares that represents more than 2 percent of
    the share capital of China Unicom Ltd. in any calendar quarter,
    except for any placing of shares outside of Hong Kong Stock
    Exchange.(note e)
    
    On October 19, 2006, SK
    Communications Co., Ltd., a subsidiary of the Company, purchased
    convertible bonds of Empas Corporation. Such convertible bonds
    can be converted into 3,450,000 shares of common stock of
    Empas Corporation at W13,000 per share during
    the period from October 20, 2007 to October 18, 2009.
    Unless converted, the notes are redeemable at 105% of the
    principal amount at maturity. The Company recorded the
    convertible bonds of Emaps Corporation at its fair value, which
    was estimated by an outside professional valuation company using
    Cox, Ross & Rubinstein Model (1979) and discount
    rate of 6.31%. If all such bonds are converted, the
    Companys equity interest in Empas Corporation will
    increase to 42.97%. F-23




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   b-(3).
    Held-to-maturity
    Securities    Acquisition Costat December 31,


Carrying AmountMaturity


2006


2004


2005


2006Public bonds


(note a
)

W
146


W
144


W
115


W
146Subordinated bonds of Mirae Asset
    Life Insurance Co., Ltd.


(note b
)






50,000







Total










50,144



115



146Less current portion of
    held-to-maturity securities










(9
)


(1
)


(79
)Long-term held-to-maturity
    securities









W
50,135


W
114


W
67     W W W
 (note a)
    
    The maturities of public bonds as
    of December 31, 2006 are within 1 year for
    W79 million, within 5 years for
    W31 million and within 10 years for
    W36 million.(note b)
    
    The Subordinated bonds of Mirae
    Asset Life Insurance Co., Ltd. were all early paid during 2005.  b-(4).
    Changes
    in Unrealized Gains (Losses) on Valuation on Long-term
    Investment Securities    For the Year Ended December 31, 2004Beginning


Increase/


Transferred to


EndingBalance


(Decrease)


Realized Gain (Loss)


BalanceDigital Chosunilbo Co., Ltd.

W
(2,934
)

W
(824
)

W



W
(3,758
)hanarotelecom incorporated


(55,468
)


4,811







(50,657
)KRTnet Corporation


1,498



(491
)






1,007POSCO


71,792



59,551







131,343Comas Interactive Co., Ltd.
    (Formerly INNOTG Co., Ltd.)






(1,543
)






(1,543
)SINJISOFT Corporation






460







460LG Powercomm Co., Ltd. (Formerly
    Powercomm Co., LTd.)


(171,836
)


3,158







(168,678
)Eonex Technologies Inc.






2,011







2,011WiderThan Co., Ltd.






(27
)






(27
)SK Securities Co., Ltd.


(3,674
)


541







(3,133
)Total

W
(160,622
)

W
67,647


W



W
(92,975
)   F-24




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For the Year Ended December 31, 2005Minority InterestTransferred


in Equity ofBeginning


Increase/


to Realized


Consolidated


EndingBalance


(Decrease)


Gain (Loss)


Subsidiaries


BalanceDigital Chosunilbo Co., Ltd.

W
(3,758
)

W
3,772


W



W



W
14hanarotelecom incorporated


(50,657
)


(14,580
)










(65,237
)KRTnet Corporation


1,007



468











1,475POSCO


131,343



37,220











168,563Comas Interactive Co., Ltd.
    (Formerly INNOTG Co., Ltd.)


(1,543
)


(68
)










(1,611
)HB Entertainment Co., Ltd.






150







(94
)


56SK Securities Co., Ltd.


(3,133
)


3,610



(477
)






SINJISOFT Corporation


460







(460
)






CoWon Systems, Inc.






585



(585
)






LG Powercomm Co., Ltd. (Formerly
    Powercomm Co., LTd.)


(168,678
)


5,565











(163,113
)Eonex Technologies Inc.


2,011















2,011WiderThan Co., Ltd.


(27
)


27











Currency stabilization bonds






(217
)










(217
)Sub-total


(92,975
)


36,532



(1,522
)


(94
)


(58,059
)Less tax effect (note a)


25,568



(10,046
)


418



26



15,966Total

W
(67,407
)

W
26,486


W
(1,104
)

W
(68
)

W
(42,093
)   F-25




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For the Year Ended December 31, 2006Minority InterestTransferred


in Equity ofBeginning


Increase/


to Realized


Consolidated


EndingBalance


(Decrease)


Gain (Loss)


Subsidiaries


BalanceDigital Chosunilbo Co., Ltd.

W
14


W
102


W



W



W
116hanarotelecom incorporated


(65,237
)


32,141











(33,096
)KRTnet Corporation


1,475



(129
)










1,346POSCO


168,563



265,500











434,063Comas Interactive Co., Ltd.
    (Formerly INNOTG Co., Ltd.)


(1,611
)














(1,611
)eXtended Computing Environment
    Co., Ltd.






866











866ZeroOne Interactive Co.,Ltd.






(655
)






71



(584
)HB Entertainment Co., Ltd.


56



(1,272
)






795



(421
)LG Powercomm Co., Ltd. (Formerly
    Powercomm Co., Ltd.)


(163,113
)


3,240











(159,873
)Eonex Technologies Inc.


2,011















2,011Public bonds






(4
)










(4
)Currency stabilization bonds


(217
)


906



(677
)






12Convertible bonds of China Unicom
    Ltd.






319,648











319,648Convertible bonds of Empas
    Corp.






33,820







(4,218
)


29,602Sub-total


(58,059
)


654,163



(677
)


(3,352
)


592,075Less tax effect(note a)


15,966



(179,894
)


186



895



(162,847
)Total

W
(42,093
)

W
474,269


W
(491
)

W
(2,457
)

W
429,228     (note a)
    
    Represents adjustments to reflect
    the tax effect of temporary differences directly charged or
    credited to unrealized gains (losses) on valuation of long-term
    investment securities, which are capital adjustment items, in
    accordance with SKAS No. 16 Income Taxes, which
    is effective form January 1, 2005. F-26




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   5.
    EQUITY
    SECURITIES ACCOUNTED FOR USING THE EQUITY METHOD    Number


Ownership


Acquisition


Net Assetof Shares


Percentage (%) at


Cost at


Value atat December 31,


December 31,


December 31,


December 31,


Carrying Amount2006


2006


2006


2006


2004


2005


2006Pantech Co., Ltd. (formerly SK
    Teletech Co., Ltd.)


25,570,306



22.7


W
26,309


W

(note a)

W



W
55,732


W
SK C&C Co., Ltd.


300,000



30.0



19,071



263,814



201,484



168,244



268,278STIC Ventures Co., Ltd.


1,600,000



21.9



8,000



8,611



7,477



8,379



8,611TU Media Corp.


12,922,266



29.6



64,611



6,430



34,592



32,343



7,214Aircross Co., Ltd.


600,000



38.1



300



1,477



940



966



1,477WiderThan Co., Ltd.






















11,503



IHQ, Inc.















(note b)






14,755



Harex Info Tech, Inc.


225,000



21.2



3,375



753
(note c)


3,375



2,530



1,805SK Mobile






42.5



10,322



4,666
(note d)


1,151







4,666Skytel Co., Ltd.


1,756,400



28.6



2,159



5,823



3,713



4,786



5,823SK China Company Ltd.


28,160



20.7



3,195



1,076



830



485



Helio, LLC


50,650,001



48.1



200,147



80,130
(note e)






102,272



80,130SK USA, Inc.


49



49.0



3,184



3,016



3,056



3,279



3,016Korea IT Fund






14.3



190,000



193,061
(note f)










193,061Michigan Global Cinema Fund






36.4



4,000



3,773







4,000



3,7733rd Fund of Isu Entertainment






31.3



2,500



2,419







2,500



2,419SKT-QC Wireless Development Fund


















5,146







SKT-HP Ventures, LLC


















5,281



5,290



CDMA Mobile Phone Center






50.0



146,261



84,689



25,117



40,810



84,689Empas Corporation


2,592,402



24.4



37,092



13,523











36,474SK i-media Co., Ltd.


24,000,000



60.0



12,000



11,312
(note g)










11,312Cyworld Japan Co., Ltd.


1,250,000



100.0



10,584



6,999
(note h)






726



4,362Etoos Group Inc.






















2,586



Cyworld Incorporated


9,500,000



100.0



9,071



5,386
(note h)






524



3,592Other investments in affiliates










32,001







11,866



10,169



30,219Total









W
784,182






W
304,028


W
471,879


W
750,921     (note a)
    
    60% equity interests in SK Teletech
    Co., Ltd. were sold to Curitel Communications, Inc. and the
    Company recorded a gain of
    W178,689 million for the year ended
    December 31, 2005. As the Companys ownership in SK
    Teletech Co., Ltd. decreased from 89.1% to 29.1%, SK Teletech
    Co., Ltd. was excluded from the consolidation, effective
    July 1, 2005. And, the investments in common stock of SK
    Teletech Co., Ltd. were accounted for using the equity method of
    accounting for the six months ended December 31, 2005. In
    addition, effective December 1, 2005, SK Teletech Co., Ltd
    was merged into Pantech Co., Ltd. and the Companys
    ownership interest decreased from 29.1% to 22.7%. The difference
    between the Companys portion of the merged companys
    equity and the carrying amount at the date of merger of
    W269 million was recorded as a loss on
    disposal of investment assets for the year ended
    December 31, 2005. On December 11, 2006, Pantech Co.,
    Ltd. requested its creditor banks for a debt restructuring due
    to deterioration of its liquidity.(note b)
    
    As the Companys ownership in
    IHQ, Inc increased from 21.3% to 34.1% in the second half of
    2006, IHQ, Inc was consolidated effective July 1, 2006, in
    accordance with Korean GAAP.(note c)
    
    Effective January 1, 2005, the
    Company recorded its investments in Harex Info Tech, Inc. using
    the equity method of accounting as changes in the Companys
    portion of such investees equity amounts resulting from
    applying the equity method of accounting is material.(note d)
    
    On March 31, 2006, the Company
    acquired 42.5% interests of common stock of SK Mobile from
    Pantech Co., Ltd. and others.(note e)
    
    In the first quarter of 2005, the
    Company incorporated SK Telecom USA Holdings, Inc. with an
    initial investment of US$83 million in order to invest in
    and manage Helio, LLC, a joint venture company in the Untied
    States of America, which was established in order to provide
    wireless telecommunication services in the United States of
    America. F-27




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  (note f)
    
    The investment in Korea IT Fund was
    reclassified to equity securities accounted for using the equity
    method for the year ended December 31, 2006 as the Company
    has ability to exercise significant influence on the investee.
    In accordance with the Agreement of Korea IT Fund, the Company
    has voting rights of 14.3%, while the Company invested 63.3% of
    total capital contribution and has profit sharing rights of 63.3%(note g)
    
    Even though the Companys
    ownership interest is 60%, SK i-media Co., Ltd. is excluded from
    the consolidation and accounted for using the equity method as
    its initial capital at its inception date were less than
    W7 billion, in accordance with Korean GAAP.(note h)
    
    Even though the Companys
    ownership interest is 100%, Cyworld Japan Co., Ltd. and Cyworld
    Incorporated are excluded from the consolidation and accounted
    for using the equity method as its total assets at the beginning
    of the fiscal year were less than
    W7 billion, in accordance with Korean GAAP.    For the Year Ended December 31, 2004Equity inEquity in


Capital SurplusBeginning





Earnings


and Capital


Dividend


Other


EndingBalance


Acquisition


(Losses)


Adjustments


Received


Decrease


BalanceSK C&C Co., Ltd.


(note a
)

W
92,844


W
-


W
13,322


W
95,918


W
(600
)

W



W
201,484STIC Ventures Co., Ltd.






7,086







(123
)


514











7,477TU Media Corp.


(note b
)










(4,213
)


124







38,681



34,592VCASH Co., Ltd.






1,048







(657
)










(391
)


Aircross Co., Ltd.


(note c
)


300







659



(19
)










940WiderThan Co., Ltd.


(note d
)


3,188



















(3,188
)


Skytel Co., Ltd.


(note a
)


3,401







1,070



(603
)


(155
)






3,713SK China Co., Ltd.






1,683







(595
)


(258
)










830SK USA, Inc.


(note c
)


3,184







168



(296
)










3,056SK-QC Wireless Development Fund






5,901







4



(759
)










5,146SKT-HP Ventures, LLC






5,960







62



(741
)










5,281CDMA Mobile Phone Center


(note e
)


49,444



5,979



(21,651
)










(8,655
)


25,117Other investment in affiliates






9,670



15,107















(8,385
)


16,392W
183,709


W
21,086


W
(11,954
)

W
93,880


W
(755
)

W
18,062


W
304,028     (note a)
    
    The Company received dividends from
    SK C&C Co., Ltd. and Skytel Co., Ltd. and the corresponding
    amount was deducted from its equity method securities.(note b)
    
    Effective January 1, 2004, TU
    Media Corp. that was consolidated for the year ended
    December 31, 2003 is excluded from the consolidation due to
    the decrease in ownership interest. Other increase in
    investments in equity securities of TU Media Corp. represents
    the carrying amount of the investment in TU Media Corp. as of
    December 31, 2003.(note c)
    
    As their total assets at the
    beginning of 2004 were over W7 billion,
    effective January 1, 2004, investments in equity securities
    of SK USA, Inc. and Aircross Co., Ltd. are accounted for using
    the equity method of accounting.(note d)
    
    As the Companys ownership in
    WiderThan Co., Ltd. decreased to 14.3% from 20% in 2004,
    investments in common stock of WiderThan Co., Ltd. are
    reclassified to available-for-sale securities in 2004.(note e)
    
    SLD Telecom PTE Ltd.
    (SLD), an oversea subsidiary of the Company,
    accounted for the in-kind contribution of network equipment to
    CDMA Mobile Phone Center as an increase in the investment
    securities and the reimbursement in the amount equal to
    depreciation of such network equipment in accordance with the
    Business Co-Operation Contract between SLD and Saigon Post and
    Telecommunication Service Corp., a Vietnamese counterparty, was
    accounted for as a decrease in the investment. For the year
    ended December 31, 2004, SLD received a reimbursement
    related to depreciation in accordance with related joint venture
    agreement of W4,046 million from CDMA
    Mobile Phone Center, and such reimbursement decreased SLDs
    investment in CDMA Mobile Phone Center by the same amount. In
    addition, translation loss of
    W4,609 million incurred from translating
    the foreign currency financial statement of SLD Telecom PTE Ltd.
    into Korean Won was accounted for as a decrease in the
    investment in CDMA Mobile Phone Center.  F-28




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For the Year Ended December 31, 2005Equity inEquity in


Capital Surplus





OtherBeginning





Earnings


and Capital


Dividend


Increase


EndingBalance


Acquisition


(Losses)


Adjustments


Received


(Decrease)


BalancePantech Co., Ltd.


(note a
)

W



W



W
93


W
(183
)

W



W
55,822


W
55,732SK C&C Co., Ltd.


(note b
)


201,484







18,102



(50,742
)


(600
)






168,244STIC Ventures Co., Ltd.


(note c
)


7,477







(779
)


317







1,364



8,379TU Media Corp.






34,592



25,611



(27,852
)


(8
)










32,343Aircross Co., Ltd.






940







26















966WiderThan Co., Ltd.


(note d
)










868



7







10,628



11,503IHQ, Inc.


(note c
)






14,440



(197
)


410







102



14,755Harex Info Tech, Inc.


(note e
)


3,375







(845
)














2,530Skytel Co., Ltd.


(note b
)


3,713







1,377



(120
)


(184
)






4,786SK China Company Ltd.






830







(295
)


(50
)










485Helio, LLC


(note f
)






123,586



(21,550
)










236



102,272SK USA, Inc.






3,056







316



(93
)










3,279SKT-QC Wireless Development Fund


(note g
)


5,146



















(5,146
)


SKT-HP Ventures, LLC






5,281







167



(158
)










5,290CDMA Mobile Phone Center


(note h
)


25,116



33,950



(13,376
)










(4,880
)


40,810SK Mobile


(note i
)


1,151



14,213



(2,566
)


(22
)






(12,776
)


Cyworld Japan Co., Ltd.










4,466



(3,867
)


127











726Etoos Group Inc.










3,095



(498
)


(11
)










2,586Other investment in affiliates






11,867



12,432















(7,106
)


17,193W
304,028


W
231,793


W
(50,876
)

W
(50,526
)

W
(784
)

W
38,244


W
471,879     (note a)
    
    Other increase in investments in
    equity securities of Pantech Co., Ltd. is net of the carrying
    amount of the investment in equity securities of SK Teletech
    Co., Ltd. amounting to W56,091 million
    reclassified to equity securities accounted for using the equity
    method as a result of the decrease in the Companys
    ownership in SK Teletech Co., Ltd. to less than 50% and the
    dilution of the Companys equity portion of
    W269 million as a result of the merger
    between Pantech Co., Ltd. and SK Teletech Co., Ltd.(note b)
    
    The Company received dividends from
    SK C&C Co., Ltd. and Skytel Co., Ltd. and the corresponding
    amount was deducted from its equity method securities.(note c)
    
    Other increases in investments in
    equity securities of STIC Ventures Co., Ltd. and IHQ, Inc.
    represent gains on disposal of investments in equity securities
    resulting from the dilution of the Companys ownership as a
    result of the fact that investees sold its unissued shares to
    third parties directly.(note d)
    
    Other increase in investments in
    equity securities of WiderThan Co., Ltd. represents the carrying
    amount of the investment in equity securities of WiderThan Co.,
    Ltd. amounting to W3,188 million
    reclassified to equity securities accounted for using the equity
    method from available-for-sale securities and gains on disposal
    of investments in equity method investee of
    W7,440 million resulting from the dilution
    of the Companys ownership as a result of the fact that
    investees sold its unissued shares to third parties directly.(note e)
    
    Effective January 1, 2005, the
    Company recorded its investments in Harex Info Tech, Inc. using
    the equity method of accounting as changes in the Companys
    portion of such investees equity amounts resulting from
    applying the equity method of accounting is material.(note f)
    
    The increase in investments in
    equity securities of Helio, LLC represents a translation gain
    incurred from translating the financial statements of SK Telecom
    USA Holdings, Inc. denominated in foreign currency, which makes
    investments in Helio, LLC, into Korean Won.(note g)
    
    Investment was fully liquidated due
    to dissolution of SKT-QC Wireless Development Fund during the
    year ended December 31, 2005.(note h)
    
    For the year ended
    December 31, 2005, SLD received a reimbursement related to
    depreciation in accordance with related joint venture agreement
    of W3,956 million from CDMA Mobile Phone
    Center, and such reimbursement decreased SLDs investment
    in CDMA Mobile Phone Center by the same amount. In addition,
    translation loss of W924 million incurred
    from translating the foreign currency financial statement of SLD
    Telecom PTE Ltd. into Korean Won was accounted for as a decrease
    in the investment in CDMA Mobile Phone Center.(note i)
    
    Effective January 1, 2005, SK
    Mobile became an equity method investee of SK Teletech Co.,
    Ltd., a former subsidiary of the Company as changes in SK
    Teletech Co., Ltd.s portion of such investees equity
    amounts resulting from applying the equity method of accounting
    was material. Effective July 1, 2005, the investment in
    equity securities of SK Teletech Co., Ltd. was reclassified to
    equity securities F-29




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  accounted for using the equity
    method, which resulted in the exclusion of SK Mobile from equity
    securities accounted for using the equity method.  For the Year Ended December 31, 2006Equity inCapitalEquity in


Surplus and





BalanceBeginning





Earnings


Capital


Dividend


Other


EndingBalance


Acquisition


(Losses)


Adjustments


Received


Increase


(Decrease)Pantech Co., Ltd.


(note a
)

W
55,732


W
-


W
(55,902
)

W
170


W
-


W
-


W
-SK C&C Co., Ltd.


(note b
)


168,244







37,825



63,199



(990
)






268,278STIC Ventures Co., Ltd.






8,379







845



(613
)










8,611TU Media Corp.






32,343







(25,129
)














7,214Aircross Co., Ltd.






966







511















1,477WiderThan Co., Ltd.


(note c
)


11,503



















(11,503
)


IHQ, Inc.






14,755







(1,346
)


84







(13,493
)


Harex Info Tech, Inc.






2,530







(725
)














1,805SK Mobile










10,322



(5,520
)


(136
)










4,666Skytel Co., Ltd.


(note b
)


4,786







1,970



(605
)


(328
)






5,823SK China Company Ltd.






485







(380
)


(105
)










Helio, LLC


(note d
)


102,272



76,933



(88,309
)










(10,766
)


80,130SK USA, Inc.






3,279







7



(270
)










3,016Korea IT Fund


(note e
)










2,339



722







190,000



193,061Michigan Global Cinema Fund






4,000







(227
)














3,7733rd Fund of Isu Entertainment






2,500







(81
)














2,419SKT-HP Ventures, LLC


(note f
)


5,290



















(5,290
)


CDMA Mobile Phone Center


(note g
)


40,810



76,039



(21,474
)










(10,686
)


84,689Empas Corporation










37,092



(1,369
)


751











36,474SK i-media Co., Ltd.










12,000



(636
)


(52
)










11,312Cyworld Japan Co., Ltd.






726



6,118



(2,549
)


67











4,362Etoos Group Inc.


(note h
)


2,586







(259
)










(2,327
)


Cyworld Incorporated






524



8,547



(5,358
)


(121
)










3,592Other investments in affiliates






10,169



17,282



90



(640
)






3,318



30,219W
471,879


W
244,333


W
(165,677
)

W
62,451


W
(1,318
)

W
139,253


W
750,921     (note a)
    
    Pantech Co., Ltd. suffered a
    significant loss due to deterioration of its liquidity for the
    three months ended December 31, 2006, which resulted in the
    Companys investments in Pantech Co., Ltd. to be reduced to
    zero. Equity in losses of affiliates that exceeded the carrying
    amount was W43,543 million for the year
    ended December 31, 2006.(note b)
    
    The Company received dividends from
    SK C&C Co., Ltd. and Skytel Co., Ltd. and the corresponding
    amount was deducted from its equity method securities.(note c)
    
    The Company sold all of investments
    in equity securities of WiderThan Co., Ltd. for the year ended
    December 31, 2006 and recognized gains on disposal of
    investment in equity securities of
    W21,780 million.(note d)
    
    Other decrease in investments in
    equity securities of Helio, LLC. represents losses from disposal
    of investments in equity securities of Helio, LLC. amounting to
    W1,991 million resulting from the dilution
    of the Companys ownership as a result of the fact that
    investees sold its unissued shares to third parties directly,
    and translation loss of W8,776 million
    incurred from translating the foreign currency financial
    statements of Helio, LLC. into Korean Won.(note e)
    
    Other increase in investments in
    Korea IT Fund is the carrying amount transferred from
    available-for-sale equity securities.(note f)
    
    Investment was fully liquidated due
    to dissolution of SKT-HP Ventures, LLC for the year ended
    December 31, 2006.(note g)
    
    For the year ended
    December 31, 2006, SLD received a reimbursement related to
    depreciation in accordance with related joint venture agreement
    of W5,978 million from CDMA Mobile Phone
    Center, and such reimbursement decreased SLDs investment
    in CDMA Mobile Phone Center by the same amount. In addition,
    translation loss of W4,708 million
    incurred from translating the foreign F-30




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  currency financial statement of SLD
    Telecom PTE Ltd. into Korean Won and such translation loss was
    accounted for as a decrease in the investment in CDMA Mobile
    Phone Center.(note h)
    
    For the year ended
    December 31, 2006, Etoos Group Inc. was merged into SK
    Communications Co., Ltd., the Companys subsidiary.    For the Year Ended December 31, 2004Beginning





EndingBalance

Increase

Amortization

BalanceSK C&C Co., Ltd.

W
5,682


W
-


W
(406
)

W
5,276   For the Year Ended December 31, 2005Beginning








EndingBalance


Increase


Amortization


BalancePantech Co., Ltd.

W



W
820


W
(27
)

W
793SK C&C Co., Ltd.


5,276







(406
)


4,870TU Media Corp.






1,045



(52
)


993IHQ, Inc.






7,377



(1,110
)


6,267Harex Info Tech, Inc.






1,752



(350
)


1,402Etoos Group Inc.






1,914



(333
)


1,581Total

W
5,276


W
12,908


W
(2,278
)

W
15,906   For the Year Ended December 31, 2006Beginning








EndingBalance


Increase


Amortization


BalancePantech Co., Ltd.

W
793


W



W
(793
)

W
SK C&C Co., Ltd.


4,870







(406
)


4,464TU Media Corp.


993







(209
)


784IHQ, Inc.


6,267



(5,533
)


(734
)


Harex Info Tech, Inc.


1,402







(351
)


1,051SK Mobile






3,192



(3,192
)


Helio, LLC






38







38Empas Corporation






24,159



(1,208
)


22,951Etoos Group Inc.


1,581



(1,553
)


(28
)


Other investments in affiliates






12,531



(1,086
)


11,445Total

W
15,906


W
32,834


W
(8,007
)

W
40,733     For the Year Ended December 31, 2004Beginning








EndingBalance


Increase


Decrease


BalanceSK China Company Ltd.

W



W
1,086


W



W
1,086   F-31




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For the Year Ended December 31, 2005Beginning








EndingBalance


Increase


Decrease


BalanceSK China Company Ltd.

W
1,086


W



W



W
1,086Cyworld Japan Co., Ltd.






2,569



(43
)


2,526Total

W
1,086


W
2,569


W
(43
)

W
3,612   For the Year Ended December 31, 2006Beginning








EndingBalance


Increase


Decrease


BalancePantech Co., Ltd.

W



W
271


W
(271
)

W
SK China Company Ltd.


1,086











1,086Cyworld Japan Co., Ltd.


2,526



681



(570
)


2,637Cyworld Incorporated






1,888



(94
)


1,794Other investments in affiliates






892



(104
)


788Total

W
3,612


W
3,732


W
(1,039
)

W
6,305     Market Price


Sharesper Share


Owned by the(In Korean Won)


Company


Market PricePantech Co., Ltd.

W
930



25,570,306


W
23,780Empas Corporation


18,000



2,592,402



46,663  F-32




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Total


Total





NetAssets


Liabilities


Revenue


Income (Loss)Pantech Co., Ltd.


705,516



893,400



1,269,215



(432,390
)SK C&C Co., Ltd.


1,906,231



1,026,851



1,107,910



87,324STIC Ventures Co., Ltd.


53,066



13,719



12,355



3,863TU Media Corp.


343,078



321,340



88,756



(84,240
)Aircross Co., Ltd.


13,898



10,020



21,446



1,341Harex Info Tech, Inc.


4,654



1,095



4,831



(1,770
)SK Mobile


12,234



1,256



1,157



(6,421
)Skytel Co., Ltd.


6,268



1,072



3,967



(1,883
)SK China Company Ltd.


246,316



77,847



44,536



(183,341
)Helio, LLC


7,262



1,108



6,589



14SK USA, Inc.


304,833







9,125



1,376Korea IT Fund


10,376







438



(624
)Michigan Global Cinema Fund


7,740







223



(268
)3rd Fund of Isu Entertainment


281,753



112,374



43,490



(42,946
)CDMA Mobile Phone Center


107,443



52,091



42,561



4,553Empas Corporation


19,018



165







(1,060
)SK i-media Co., Ltd.


5,753



241



81



(3,018
)Cyworld Japan Co., Ltd.


3,891



15



11



(4,943
)Cyworld Incorporated


705,516



893,400



1,269,215



(432,390
)   6.
    LOANS TO
    EMPLOYEES    2004


2005


2006Loans to employees stock
    ownership association

W
22,546


W
14,586


W
7,526Loans to employees for housing and
    other


8,859



4,799



4,580W
31,405


W
19,385


W
12,106  F-33




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  7.
    PROPERTY
    AND EQUIPMENT    Useful Lives(Years)


2004


2005


2006Land





W
466,459


W
466,562


W
473,109Buildings and structures


15, 30



1,445,593



1,484,360



1,502,755Machinery


3-6



9,584,526



10,510,486



11,380,257Vehicles


3-4



21,710



21,680



25,695Other


3-4



791,829



825,133



978,501Construction in progress






138,002



264,309



132,831Total






12,448,119



13,572,530



14,493,148Less accumulated depreciation






(7,744,197
)


(8,909,161
)


(9,985,813
)Property and equipment, net





W
4,703,922


W
4,663,369


W
4,507,335   W W W
    For the Year Ended December 31, 2004Beginning














EndingBalance


Acquisition


Disposal


Transfer


Depreciation


BalanceLand

W
449,377


W
3,395


W
(2,684
)

W
16,372


W



W
466,460Buildings and structures


843,801



7,239



(7,849
)


366,296



(42,945
)


1,166,542Machinery


2,670,968



108,238



(8,098
)


1,143,335



(1,271,336
)


2,643,107Vehicles


4,168



3,744



(425
)


674



(3,370
)


4,791Other


349,743



740,752



(5,481
)


(697,135
)


(102,859
)


285,020Construction in progress


323,490



768,573



(756
)


(953,305
)






138,002Total

W
4,641,547


W
1,631,941


W
(25,293
)

W
(123,763
)

W
(1,420,510
)

W
4,703,922   For the Year Ended December 31, 2005Beginning














EndingBalance


Acquisition


Disposal


Transfer


Depreciation


BalanceLand

W
466,460


W
723


W
(4,698
)

W
4,077


W



W
466,562Buildings and structures


1,166,542



12,581



(8,095
)


35,472



(55,406
)


1,151,094Machinery


2,643,107



54,681



(18,990
)


983,489



(1,182,664
)


2,479,623Vehicles


4,791



1,620



(250
)


(232
)


(2,530
)


3,399Other


285,020



766,708



(3,741
)


(657,328
)


(92,277
)


298,382Construction in progress


138,002



580,309







(454,002
)






264,309Total

W
4,703,922


W
1,416,622


W
(35,774
)

W
(88,524
)

W
(1,332,877
)

W
4,663,369   F-34




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For the Year Ended December 31, 2006Beginning














EndingBalance


Acquisition


Disposal


Transfer


Depreciation


BalanceLand

W
466,562


W
115


W
(645
)

W
7,077


W



W
473,109Buildings and structures


1,151,094



4,664



(849
)


14,262



(55,947
)


1,113,224Machinery


2,479,623



65,819



(8,571
)


1,014,646



(1,152,632
)


2,398,885Vehicles


3,399



2,320



(273
)


1,472



(2,504
)


4,414Other


298,382



836,964



(17,035
)


(638,338
)


(95,101
)


384,872Construction in progress


264,309



588,260







(719,738
)






132,831Total

W
4,663,369


W
1,498,142


W
(27,373
)

W
(320,619
)

W
(1,306,184
)

W
4,507,335   8.
    INTANGIBLE
    ASSETS    AccumulatedAcquisition


Amortization


AccumulatedCost at


at


Impairment atDecember 31,


December 31,


December 31,


Carrying Amounts2006


2006


2006


2004


2005


2006Goodwill

W
2,455,254


W
(679,509
)

W
(50
)

W
1,994,339


W
1,868,932


W
1,775,695Frequency use rights


1,385,120



(308,287
)






1,163,319



1,184,292



1,076,833Software development costs


242,163



(196,009
)


(501
)


105,955



65,991



45,653Other


1,022,787



(401,016
)


(1,541
)


259,290



333,674



620,230W
5,105,324


W
(1,584,821
)

W
(2,092
)

W
3,522,903


W
3,452,889


W
3,518,411     For the Year Ended December 31, 2004Beginning

















EndingBalance


Acquisition


Disposal


Transfer


Amortization


Impairment


BalanceGoodwill

W
2,129,980


W
647


W



W



W
(136,288
)

W



W
1,994,339Frequency use rights


1,251,278











7,800



(95,759
)






1,163,319Software development costs


137,810



6,235



(3,349
)


10,545



(45,244
)


(42
)


105,955Other


155,876



65,494



(865
)


93,514



(54,729
)






259,290W
3,674,944


W
72,376


W
(4,214
)

W
111,859


W
(332,020
)

W
(42
)

W
3,522,903   For the Year Ended December 31, 2005Beginning

















EndingBalance


Acquisition


Disposal


Transfer


Amortization


Impairment


BalanceGoodwill

W
1,994,339


W



W



W
9,223


W
(134,630
)

W



W
1,868,932Frequency use rights


1,163,319



117,380











(96,407
)






1,184,292Software development costs


105,955



1,472











(41,436
)






65,991Other


259,290



80,642



(342
)


64,522



(70,178
)


(260
)


333,674W
3,522,903


W
199,494


W
(342
)

W
73,745


W
(342,651
)

W
(260
)

W
3,452,889   F-35




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  For the Year Ended December 31, 2006Beginning

















EndingBalance


Acquisition


Disposal


Transfer


Amortization


Impairment


BalanceGoodwill

W
1,868,932


W
1,672


W



W
44,947


W
(139,806
)

W
(50
)

W
1,775,695Frequency use rights


1,184,292



687











(108,146
)






1,076,833Software development costs


65,991



1,946







9,340



(31,624
)






45,653Other


333,674



69,659



(1,250
)


330,866



(112,604
)


(115
)


620,230W
3,452,889


W
73,964


W
(1,250
)

W
385,153


W
(392,180
)

W
(165
)

W
3,518,411     Amount


Description

Residual Useful LivesGoodwill

W
1,692,222


Goodwill related to acquisition of
    Shinsegi Telecomm, Inc.

13 years and 3 monthsIMT license


964,168


Frequency use rights relating to
    W-CDMA Service

(note a)WiBro license


105,948


WiBro Service

(note b)DMB license


6,717


DMB Service

9 years and 6 monthsSoftware development costs


45,653


Software for business use

15 years     (note a)
    
    With its application for a license
    to provide IMT services, the Company has a commitment to pay
    W1,300,000 million to the Ministry of
    Information Communication (MIC). SK IMT Co., Ltd.,
    which was merged into SK Telecom on May 1, 2003, paid
    W650,000 million in March 2001 and SK
    Telecom is required to pay the remainder over 10 years with
    an annual interest rate equal to the
    3-year-maturity
    government bond rate minus 0.75% (4.04% as of December 31,
    2006). The future payment obligations are
    W90,000 million in 2007,
    W110,000 million in 2008,
    W130,000 million in 2009,
    W150,000 million in 2010 and
    W170,000 million in 2011. On
    December 4, 2001, SK IMT Co., Ltd. received the IMT license
    from the MIC, and recorded the total license cost (measured at
    present value) as an intangible asset. Amortization of the IMT
    license commenced when the Company started its commercial IMT
    2000 service in December 2003, using the straight-line method
    over the estimated useful life (13 years) of the IMT
    license which expires in December 2016. The Company determined
    the IMT license has a finite life, considering that renewal cost
    is expected to be substantial. As of December 31, 2006, the
    present value discount related to the current portion and
    long-term portion of payments to be made to MIC totaled
    W557 million and
    W42,461 million, respectively.(note b)
    
    The Company purchased the WiBro
    license from MIC on March 30, 2005. The license period is
    seven years from that date. Amortization of the WiBro license
    will be on a straight line basis over the remaining useful life
    from the commencement date of the Companys commercial
    WiBro services. F-36




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   9.
    BONDS
    PAYABLE    AnnualMaturity


InterestYear


Rate (%)

2004


2005


2006Domestic general bonds


2005


6.0

W
500,000


W



W
2


2006


5.0-6.0


800,000



800,000



2


2007


5.0-6.0


700,000



700,000



700,0002


2008


5.0


300,000



300,000



300,0002


2009


5.0


300,000



300,000



300,0002


2010


4.0






200,000



200,0002


2011


3.0


200,000



200,000



200,0002


2013


4.0










200,0002


2016


5.0










200,000Dollar denominated bonds
    (US$300,000)


2011


4.25


313,140



303,900



278,880Private bonds (¥125,000)


2007


4.65










684Convertible bonds (SK Telecom)
    (note a)


2009





385,885



385,885



356,356Convertible bonds (IHQ, Inc.)


2008













18,356Convertible bonds (YTN Media, Inc.)


2007


1.0










1,000Bond with stock purchase warrant
    (SK Communication Co., Ltd.)


2007


4.65










6843,499,025



3,189,785



2,755,960Less discounts on bonds








(51,467
)


(40,016
)


(39,422
)Less conversion right adjustments








(82,245
)


(65,218
)


(46,079
)Less warrant right adjustments
















(23
)Add long-term accrued interest








24,808



24,808



23,854Net








3,390,121



3,109,359



2,694,290Less portion due within one year








(498,278
)


(795,151
)


(698,967
)Long-term portion







W
2,891,843


W
2,314,208


W
1,995,323     (note a)
    The principal amount of these convertible bonds denominated in
    U.S. Dollars as of December 31, 2004, 2005 and 2006
    are US$329,450,000, US$329,450,000 and US$304,240,000,
    respectively.    Convertible
    Bonds Issued by SK Telecom
  W W
 F-37




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
       Convertible
    Bonds and Bonds with Stock Purchase Warrants Issued by
    Subsidiaries
  W W W
  W
  10.
    LONG-TERM
    BORROWINGS    Final

Annual InterestLender

Maturity Year

Rate (%)(Note a)

2004


2005


2006Shinhan Bank

2011

91 days CD yield + 0.25

W



W



W
200,000Calyon Bank

2013

6M Libor + 0.29

US$



US$



US$
50,000DBS Bank

2

2









US$
25,000SMBC

2

2









US$
25,000Industrial Bank of Korea

2008

3.503.90

¥




¥14,802



¥8,8802

2009

3.11






¥12,800



¥9,100Total





W



W



W
200,000US$



US$



US$
100,000¥




¥27,602



¥17,980Equivalent in Korean Won





W



W
237


W
293,101Less portion due within one year










(82
)


(75
)Long-term portion





W



W
155


W
293,026     (note a)
    
    At December 31, 2006, the
    91 days CD yield and the 6M LIBOR rate are 4.86% and 5.37%,
    respectively. F-38




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Long-Term BorrowingLong-Term


in Foreign CurrenciesBorrowing in


Foreign


Korean WonYear Ending December 31,

Korean Won


Currencies


Equivalent


Total2007

W



¥
9,562


W
75


W
752008





¥
6,598



52



522009





¥
1,820



14



142010














2011 and thereafter


200,000


US$
100,000



92,960



292,960¥
17,980Total

W
200,000


US$
100,000


W
93,101


W
293,101   11.  SUBSCRIPTION
    DEPOSITS
      Deposit perService Type

Subscriber


2004


2005


2006Cellular

W
200,000


W
31,440


W
23,770


W
21,140     12.
    LEASES  W
  W
 F-39




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  W
  Annual LeaseYear Ending December 31,

Payments


Interest


Principal2007

W
8,918


W
362


W
8,5562008


1,884



27



1,8572009


3







3Total

W
10,805


W
389



10,416Less portion due within one year










(8,556
)Capital lease liabilities









W
1,860   W
  13.
    ASSETS
    AND LIABILITIES DENOMINATED IN FOREIGN CURRENCIES    Foreign Currencies


Korean Won Equivalent2004


2005


2006


2004


2005


2006Cash and cash equivalents

US$
4,875


US$
11,826


US$
1,330


W
5,088


W
11,980


W
1,2362






EUR3



EUR2







3



22






VND902,819











58



2






SG$30











18



2

¥
6



















Accounts receivable 
    trade

US$
19,284


US$
31,334


US$
30,849



20,129



31,741



28,6772









¥
800











62






EUR248



EUR248







298



303Accounts receivable 
    other

US$
2,989


US$
3,364


US$
1,657



3,120



3,408



1,5412






VND6,173,479











394



Guarantee deposits

US$
142






US$
17



149







162

¥
15,756


¥
16,156


¥
21,536



159



139



168Total assets













W
28,645


W
48,039


W
31,949   F-40




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Foreign Currencies


Korean Won Equivalent2004


2005


2006


2004


2005


2006Accounts payable  trade

US$
17,406


US$
28,360






W
18,169


W
28,728


W
2

¥
26,240











266







Short-term borrowings

US$
19,392











20,241







2

¥
438,499











4,438







2


EUR207











294







2


GBP260











522







Accounts payable  other

US$
13,539


US$
15,737


US$
36,373



14,132



15,942



33,8122

¥
60,678


¥
8,498


¥
19,956



614



73



1562


HK$217



HK$254



HK$190



29



33



232


CNY1







CNY 2











2


GBP 118



GBP453



GBP 48



237



791



882


SG$5



SG$22



SG$6



3



13



42


EUR348



EUR504



EUR 813



495



604



9932






CHF19



CHF250







15



1902






CAD2



CAD2







2



12






VND11,823,640











755



2










FRF11











2Accrued expenses

US$
84











88







Total liabilities













W
59,528


W
46,956


W
35,269   14.
    CAPITAL
    STOCK AND CAPITAL SURPLUS  W
  2004


2005


2006Authorized shares


220,000,000



220,000,000



220,000,000Issued shares


82,276,711



82,276,711



81,193,711Outstanding shares, net of
    treasury stock


73,614,296



73,614,296



72,667,459    F-41




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Number of





CapitalShares Issued


Common Stock


SurplusAt January 1, 2004


82,276,711


W
44,639


W
2,911,556Excess unallocated purchase
    price(note a)










(77
)Considerations for conversion
    right(note b)










67,279Equity in capital surplus changes
    of affiliates










(10,457
)At December 31, 2004


82,276,711



44,639



2,968,301Deferred tax effect of temporary
    difference related to conversion rights(note c)










(18,502
)Transfer of stock option from
    capital adjustment(note d)










1,533Equity in capital surplus changes
    of affiliates










3,508At December 31, 2005


82,276,711



44,639



2,954,840Retirement of treasury stock(note
    e)


(1,083,000
)






Conversion of convertible
    bonds(note f)










(3,733
)Transfer of stock options from
    capital adjustment(note g)










234Equity in capital surplus changes
    of affiliates










(1,014
)At December 31, 2006


81,193,711


W
44,639


W
2,950,327     (note a)
    
    For the year ended
    December 31, 2004, the Company paid
    W77 million to certain former shareholders
    of Shinsegi Telecomm, Inc. in accordance with the ruling of the
    court and deducted it from capital surplus.(note b)
    
    The Company issued zero coupon
    convertible bonds in the principal amount of US$329,450,000 at
    US$324,923,469 with an initial conversion price of
    W235,625 per share of the Companys common
    stock on May 27, 2004 and the considerations for conversion
    right of W67,279 million was added to
    capital surplus.(note c)
    
    The tax effect of temporary
    difference related to consideration for conversion rights was
    deducted directly from related components of stockholders
    equity, pursuant to adoption of SKAS No. 16 for the year
    ended December 31, 2005.(note d)
    
    For the year ended
    December 31, 2005, the exercisable period for the stock
    options representing 17,800 shares, of which recognized
    compensation costs was W1,533 million,
    expired and the related stock options of
    W1,533 million in capital adjustments were
    transferred to capital surplus.(note e)
    
    The Company retired
    491,000 shares and 592,000 shares of treasury stock on
    August 17, 2006 and September 29, 2006, respectively,
    and reduced retained earnings before appropriation in accordance
    with Korean Commercial laws.(note f)
    
    For the year ended
    December 31, 2006, the convertible bonds with a face value
    of US$25,210,000 were converted into 136,163 shares of the
    Companys common stock. Such conversion was settled by the
    Company by using its treasury stocks (See Note 16). Related
    to this conversion transaction, the capital surplus amount
    decreased by W3,733 million.(note g)
    
    For the year ended
    December 31, 2006, the exercisable period for the stock
    options representing 43,390 shares, of which recognized
    compensation costs were W234 million,
    expired and the related stock options of
    W234 million in capital adjustments were
    transferred to capital surplus.  15.
    RETAINED
    EARNINGS    2004


2005


2006Appropriated

W
4,733,936


W
5,470,701


W
6,679,235Unappropriated


1,418,962



1,796,948



1,168,199W
6,152,898


W
7,267,649


W
7,847,434  F-42




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2004


2005


2006Legal reserve

W
22,320


W
22,320


W
22,320Reserve for improvement of
    financial structure


33,000



33,000



33,000Reserve for loss on disposal of
    treasury stock


477,182



477,182



477,182Reserve for research and manpower
    development


776,296



822,061



880,595Reserve for business expansion


3,425,138



4,116,138



5,266,138W
4,733,936


W
5,470,701


W
6,679,235   a.
    Legal
    Reserve    b.
    Reserve
    for Improvement of Financial Structure    c.
    Reserves
    for Loss on Disposal of Treasury Stock and Research and Manpower
    Development    d.
    Reserve
    for Business Expansion    16.
    TREASURY
    STOCK  W W W W
  W
 F-43




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  W W
  17.
    STOCK
    OPTIONS  W W W W
  W
  Total


Recognized


Compensation


Stock Option inCompensation


Compensation Cost


Cost to be


Capital AdjustmentGrant date

Cost


2004


2005


2006


Recognized


2004


2005


2006March 17, 2000 (note a)

W
1,533


W



W



W



W



W
1,533


W



W
March 16, 2001 (note b)


234



10















234



234



March 8, 2002


3,246



1,082



180











3,066



3,246



3,246W
5,013


W
1,092


W
180


W



W



W
4,833


W
3,480


W
3,246     (note a)
    
    For the year ended
    December 31, 2005, the exercisable period for stock options
    representing 17,800 shares, for which the Company had
    recognized compensation cost of
    W1,533 million, expired and the related
    stock options of W1,533 million in capital
    adjustments were transferred to capital surplus.(note b)
    
    For the year ended
    December 31, 2006, the exercisable period for stock options
    representing 43,820 shares, for which the Company had
    recognized compensation cost of
    W234 million expired and the stock options
    of W234 million in capital adjustments
    were transferred to capital surplus.  W W W W
  2004


2005Pro forma ordinary income (in
    millions of Koran Won)

W
2,121,238


W
2,561,268Pro forma ordinary income per
    common shares


20,234



25,439Pro forma net income (in millions
    of Korean Won)


1,489,542



1,872,680Pro forma net income per common
    shares


20,234



25,439  F-44




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (note)
    
    There is no effect on the net
    income and net income per common share for the year ended
    December 31, 2006 in connection with the volatility factor
    discussed above.  18.
    INCOME
    TAXES    2004


2005


2006Currently

W
551,405


W
685,541


W
615,959Changes in net deferred tax
    liabilities


78,356



7,718



(43,933
)Income tax expenses

W
629,761


W
693,259


W
572,026     2004


2005


2006Income taxes at statutory income
    tax rate of 27% in 2004 and 25% in 2005 and 2006

W
573,257


W
640,391


W
505,394Resident surtax payable


57,326



64,039



50,539Tax credit for investments,
    technology and human resource development and others


(89,080
)


(100,160
)


(110,785
)Special surtax for agriculture and
    fishery industries and other


13,736



18,838



20,183Goodwill amortization not
    deductible for tax purpose


37,479



37,023



38,447Undistributed earnings
    (unrecognized deficit) of subsidiaries


11,011



4,846



1,496Other permanent differences


26,484



11,332



24,717Increase (decrease) in valuation
    allowance


(452
)


16,950



42,035Recorded income taxes

W
629,761


W
693,259


W
572,026Effective tax rate


29.66
%


27.06
%


28.30
%  F-45




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2004


2005


2006Current(note a):Allowance for doubtful accounts

W



W
39,334


W
21,701Write-off of doubtful accounts






9,239



Accrued interest income






(1,229
)


(1,605
)Net operating loss carryforwards






17



1,121Tax credit carryforwards






89



19Other






18,623



28,704Net deferred tax
    assets  current






66,073



49,940Non-Current(note a):Allowance for doubtful accounts


19,649







Write-off doubtful accounts


9,764







Accrued interest income


(2,463
)






Trading securities


(561
)






Depreciation


(40,220
)


(47,472
)


(51,437
)Loss on impairment of investment
    securities


32,851



32,959



33,269Loss on disposition of properties


11,480







Equity in losses of affiliates


(12,671
)


(10,244
)


3,968Unrecognized deficit
    (undistributed earnings) of subsidiaries


(9,434
)


13,732



34,005Tax free reserve for research and
    manpower development


(195,103
)


(211,208
)


(211,215
)Tax free reserve for loss on
    disposal of treasury stock


(130,372
)


(130,372
)


(70,395
)Loss on valuation of foreign
    currency swap






3,642



6,188Loss on valuation of derivatives
    (capital adjustment)






5,377



6,668Considerations for conversion right






(18,502
)


(17,086
)Equity in capital adjustments of
    affiliates






(21,967
)


(34,077
)Unrealized gains (loss) on
    valuation of long-term investment securities(capital adjustment)


842



15,966



(163,992
)Net operating loss carryforwards


25,371



24,108



66,319Tax credit carryforwards


5,003







48Other


17,668



(875
)


8,926Total deferred tax liabilities


(268,196
)


(344,856
)


(388,811
)Valuation allowance for:Depreciation


(5,321
)


(6,022
)


183Net operating loss carryforwards


(24,980
)


(23,523
)


(60,142
)Other


(7,555
)


(25,260
)


(81,214
)Net deferred tax assets
    liabilities  non-current

W
(306,052
)

W
(399,661
)

W
(529,984
)     (note a)
    
    Effective January 1, 2005,
    deferred income tax assets and liabilities which were presented
    on the balance sheet as a single non-current net number through
    2004, are separated into current and non-current portions,
    pursuant to adoption of SKAS No. 16 Income
    Taxes. Such newly adopted accounting standards are
    prospectively applied as allowed by SKAS No. 16. As a
    result, the deferred income tax liabilities at December 31,
    2004 were not separated into current and non-current portions to
    reflect the effect of such new adoption of SKAS No. 16. F-46




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Net Operating Loss


Tax CreditYear Ending December 31,

Carryforwards


Carryforwards2007

W
3,096


W
242008


38,440



2009


45,194



2010


13,674



202011


107,912



23Total

W
208,316


W
67     2005


2006Considerations for conversion right

W
(18,502
)

W
(17,086
)Unrealized loss (gain) on
    valuation of long-term investment securities, net


15,966



(164,007
)Equity in capital adjustment of
    affiliates, net


(24,119
)


(41,403
)Loss on valuation of currency swap


5,377



6,668Loss on valuation of interest rate
    swap






125Loss on disposal of treasury stock






(7,764
)Foreign-based operations
    translation adjustment


2



(22
)Total

W
(21,276
)

W
(223,489
)   19.  INCOME
    PER SHARE
    Net
    income and ordinary income per share
  2004


2005


2006Net income

W
1,491,479


W
1,872,978


W
1,451,491Weighted average number of common
    shares outstanding


73,614,297



73,614,296



73,305,026Net income per share

W
20,261


W
25,443


W
19,801  F-47




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted


WeightedNumber of


Number of


NumberDate


Shares


Days


of SharesFor 2004:At January 1, 2004






82,276,711



366/366



82,276,711Treasury stock, at the beginning
    of the year






(8,662,403
)


366/366



(8,662,403
)Purchase of fractional shares


Feb. 20



(12
)


316/366



(11
)Total






73,614,296







73,614,297For 2005:At January 1, 2005






82,276,711



365/365



82,276,711Treasury stock, at the beginning
    of the year






(8,662,415
)


365/365



(8,662,415
)Total






73,614,296







73,614,296For 2006:At January 1, 2006






82,276,711



365/365



82,276,711Treasury stock, at the beginning
    of the year






(8,662,415
)


365/365



(8,662,415
)Retirement of treasury stock


(note a
)


(1,083,000
)






(373,546
)Conversion of convertible bonds


(note b
)


136,163







64,276Total






72,667,459







73,305,026     (note a)
    
    Such treasury stock was acquired
    and retired on two different dates in 2006 and weighted number
    of shares was calculated considering each transaction date.(note b)
    
    The convertible bonds were
    converted into its common stocks by using treasury stocks on
    several times in 2006 and the weighted number of shares was
    calculated considering each transaction date.    Diluted
    net income and ordinary income per share
  2004


2005


2006Adjusted net income

W
1,498,797


W
1,886,033


W
1,464,768Adjusted weighted average number
    of common shares outstanding


74,596,777



75,332,996



75,025,926Diluted net income per share

W
20,092


W
25,036


W
19,523  F-48




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Diluted
    net income and ordinary income per share
  Net Income(In millions of


Average Weighted


Per-Share AmountKorean Won)


Number of Shares


(In Korean Won)For 2004Basic net income per share

W
1,491,479



73,614,297


W
20,261Effect of stock option(note a)






Effect of convertible bonds(note b)


7,318



982,480Diluted net income per share

W
1,498,797



74,596,777


W
20,092For 2005Basic net income per share

W
1,872,978



73,614,296


W
25,443Effect of stock option(note a)






Effect of convertible bonds(note b)


13,055



1,718,700Diluted net income per share

W
1,886,033



75,332,996


W
25,036For 2006Basic net income per share

W
1,451,491



73,305,026


W
19,801Effect of stock option(note a)






Effect of convertible bonds(note b)


13,277



1,720,900Diluted net income per share

W
1,464,768



75,025,926


W
19,523     (note a)
    
    For the years ended
    December 31, 2004, 2005 and 2006, the outstanding stock
    options did not have a dilutive effect because the exercise
    price exceeded the average market price of common stock for the
    years ended December 31, 2004, 2005 and 2006, respectively.(note b)
    
    The effect of convertible bonds is
    increase in net income related to interest expenses that would
    not have incurred, and increase in the weighted average number
    of common shares outstanding related to common shares that would
    have been issued, assuming that the conversion of convertible
    bonds were made at the beginning of the period.  20.
    DIVIDEND
    DISCLOSURE    Fiscal




Number of Shares


Face


DividendYear


Dividend Type

Outstanding


Value


Ratio


Dividends2004


Cash dividends (interim)


73,614,308


W
500



200
%

W
73,614Cash dividends (year-end)


73,614,296


W
500



1,860
%

W
684,613Total













W
758,2272005


Cash dividends (interim)


73,614,296


W
500



200
%

W
73,614Cash dividends (year-end)


73,614,296


W
500



1,600
%

W
588,914Total













W
662,5282006


Cash dividends (interim)


73,713,657


W
500



200
%

W
73,714Cash dividends (year-end)


72,667,459


W
500



1,400
%

W
508,672Total













W
582,386  F-49




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2004


2005


2006Dividends

W
758,227


W
662,528


W
582,386Net income


1,491,479



1,872,978



1,451,491Dividends payout ratio


50.84
%


35.37
%


40.12
%     2004


2005


2006Dividend per share

W
10,300


W
9,000


W
8,000Stock price at the year-end


197,000



181,000



222,500Dividends yield ratio


5.23
%


4.97
%


3.60
%   21.
    RESTRICTED
    DEPOSITS  W W
  W
  W
  22.
    COMMITMENTS
    AND CONTINGENCIES  W W
  W
  W W
  W W W
 F-50




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   W W
    W
    W
 F-51




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   23.
    INSURANCE    Asset

Risk


Book Value


CoverageUS$
62,115Inventories and property and
    equipment


Fire and comprehensive liability


W
3,711,019


W
7,786,924  F-52




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  24.
    TRANSACTIONS
    WITH AFFILIATED COMPANIES    Description

2004


2005


2006TransactionsSK Corporation:Purchases of property and equipment


4,071



1,302



2,158Commissions paid and other expense


55,921



48,266



40,694Commission income and other income


8,826



9,243



13,877SK Engineering &
    Construction Co., Ltd.:Construction


419,871



257,823



235,872Commissions paid and other expense


6,148



6,593



7,086Commission income and other income


1,348



2,580



2,385SK Networks Co., Ltd.(formerly
    known as SK Global):Purchases of property and equipment


3,144



10,020



9,249Commissions paid, leased line and
    other expense


411,053



432,967



490,437Sales of handsets and other income


1,177,249



279,197



11,897SK Telesys Co., Ltd.:Purchases of property and equipment


188,822



294,829



231,233Commissions paid and other expenses


3,102



7,410



6,567Commission income and other income


879



575



2,170SKC:Purchases of property and equipment


899,260



219,767



Commissions paid and other expenses


2,192



13,316



21Commission income and other income


584



32



1,155Innoace Co., Ltd.:Purchases of property and equipment


23,776



13,652



23,986Commissions paid and other expenses


4,337



2,109



7,447Commission income and other income


296



218



218SK C&C Co., Ltd.:Purchases of property and equipment


130,243



249,633



215,820Commissions paid and other expenses


295,562



322,856



287,647Commission income and other income


7,918



7,853



7,732TU Media Corp.:Purchases of property and equipment










573Commissions paid and other expenses






1,950



1,798Commission income and other income






22,381



57,866Aircross Co., Ltd.:Commissions paid and other expenses






13,062



19,494Commission income and other income






165



616Pantech Co., Ltd.:Purchases of property and equipment


91







Commissions paid and other expenses


2,623



737



400Commission income and other income


3,131







16,605Helio, LLC:Commissions paid and other expenses






876



1,087Commission income and other income






11,914



18,243   F-53




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Description

2004


2005


2006BalancesSK Engineering &
    Construction Co., Ltd.:Accounts receivable


76



97



258Accounts payable


135,213



21,326



1,635Guarantee deposits received


408



942



942SK Networks Co., Ltd. (formerly
    known as SK Global):Accounts receivable


216,412



1,787



780Guarantee deposits


113



113



113Accounts payable


20,047



22,237



71,160Guarantee deposits received


955



2,700



3,123SK Corporation:Accounts receivable


4,843



1,643



5,058Guarantee deposits


103,720



37,703



291Accounts payable


20,165



6,914



7,999Guarantee deposits received


10,194



6,174



6,465SK Telesys Co., Ltd.:Accounts receivable


53



3



34Accounts payable


51,954



65,819



51,663SKC:Accounts receivable


15,549







121Guarantee deposits


10,266







Accounts payable


115,839







Innoace Co., Ltd.:Accounts payable


15,199



6,100



13,574Guarantee deposits received


2,138



2,138



2,291SK C&C Co., Ltd.:Accounts receivable


480



91



Accounts payable


77,871



174,884



88,056Guarantee deposits received


346



346



346TU Media Corp.:Accounts payable






5,299



886Guarantee deposits received






3,016



3,016Aircross Co., Ltd.:Accounts receivable






3,497



Accounts payable






3,866



3,513Guarantee deposits received






226



226Pantech Co., Ltd.:Accounts payable


422







440  F-54




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  25.
    COMPENSATION
    FOR THE KEY MANAGEMENT    For the Year Ended December 31, 2006SeverancePayee

Payroll


Indemnities


Total12 registered directors (including
    outside directors)

W
4,472


W
935


W
5,407     (note)
    
    Compensation for an ex-outside
    director who resigned during the year ended December 31,
    2006 is included.  W
  26.
    PROVISION
    FOR MILEAGE POINTS  W W W
    2004


2005


2006Beginning balance

W
103,679


W
61,596


W
52,172Present value discount (note a)






(7,415
)


Increase


34,283



7,265



10,757Decrease


(76,366
)


(9,274
)


(10,336
)Ending Balance

W
61,596


W
52,172


W
52,593     (note a)
    
    Effective January 1, 2005,
    pursuant to adoption of SKAS No. 17 (see Note 2(z)),
    Rainbow Points provision is recorded at the present value, which
    was recorded at nominal value through 2004.    Estimated AmountExpected Usage for the

to be Paid in


Present ValueYear Ended December 31,

Nominal Value (Note b)


(Note b)2007

W
26,786


W
25,4572008


16,022



14,4712009


8,534



7,3262010


4,406



3,5952011


2,249



1,744Ending balance

W
57,997


W
52,593  F-55




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (note b)
    
    The above expected year of the
    usage and the present value of the estimated amount to be paid
    are estimated based on historical usage experience.  27.
    DERIVATIVE
    INSTRUMENTS  a.
    Currency
    Swap Contract to which the Cash Flow Hedge Accounting Is
    Applied  W W W
  W W
  b.
    Currency
    Swap Contract to which the Cash Flow hedge Accounting Is Not
    Applied  W W
  W
  c.
    Interest
    Rate Swap  W W W
 F-56




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fair ValueDesignatedFace

Duration

as Cash


NotType

Hedged Item

Amount

of Contract

Flow Hedge


Designated


TotalCurrent assets:Fix-to-fixed cross currency swap

U.S. dollar denominated convertible
    bond issued by China Unicom

US$1,000,000

July 5, 2006 
    July 5, 2007

W



W
16,660


W
16,660W



W
16,660


W
16,660Non-current
    liabilities:Fix-to-fixed cross currency swap

U.S. dollar denominated bonds

US$300,000

March 23, 2004 April 1, 2011

W
89,721


W



W
89,721Fix-to-fixed cross currency swap

U.S. dollar denominated convertible
    bond

US$100,000

May 27, 2004 
    May 27, 2009






22,503



22,503Floating-to-fixed cross currency
    interest rate swap

U.S. dollar denominated long-term
    borrowings

US$100,000

October 10, 2006 October 10, 2013


746







74690,467



22,503



112,970Floating-to-fixed interest rate swap

Long-term floating rate discounted
    bill

W200,000

June 29, 2006 
    June 29, 2010


454







454W
90,921


W
22,503


W
113,424   28.
    MERGERS
    AND ACQUISITIONS  a.
    Acquisition
    of Seoul Records, Inc.      In Millions ofKorean WonFair value of net assets acquired

W
23,796Goodwill


4,078Acquisition cost

W
27,874   b.
    Merger
    with Etoos Group, Inc   F-57




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      In Millions ofDescription

Korean WonFair value of acquired assets

W
10,196Fair value of assumed liabilities


(9,851
)Fair value of net assets

W
345Consideration for mergerFair value of delivered stock

W
11,586Incidental cost


1Total


11,587Goodwill

W
11,242   c.  Merger
    with SM The Data Co., Ltd.
  W
  d.  Acquisition
    of Egloos business from OnNet Co., Ltd and Etoos M business from
    Netus
  W W
    In Millions ofAccounts

Korean WonFair value of net assets acquired

W
29Goodwill


1,642Acquisition cost

W
1,671   29.
    NETWORK
    INTERCONNECTION CHARGES   F-58




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  W W W W W W
  30.
    SUBSEQUENT
    EVENT  W
  31.
    RECONCILIATION
    TO UNITED STATES GENERALLY ACCEPTED ACCOUNTING
    PRINCIPLES    a.
    Deferred
    Income Taxes    W
  b.
    Deferred
    Charges  W
  c.
    Leases  W W
 F-59




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  d.
    Marketable
    Securities and Investments Securities    e.
    Impairment
    of Investment Securities and Recoveries  W W W W W
    W W W
  f.
    Comprehensive
    Income    g.
    Business
    Combinations and Intangible Assets     F-60




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    W
    h.
    Determination
    of Acquisition Cost of Equity Interest in
    Subsidiary  W W W
  i.
    Additional
    Equity Investment in Subsidiaries  W W W
  j.
    Capitalization
    of Foreign Exchange Losses (or Gains) and Interest
    Expenses  W W W
 F-61




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  W W W
  k.
    Nonrefundable
    Activation Fees      W W W
  l.
    Employee
    Stock Option Compensation Plan    W W W
  m.
    Loans
    Receivable for Stock Issued to Employee    n.
    Discount
    on Leasehold Deposits    o.
    Asset
    Securitization Transactions   F-62




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  
    The transferred assets have been isolated from the transferor
    and put beyond the reach of the transferor, or any consolidated
    affiliated of the transferor, and their creditors even in the
    event of bankruptcy or receivership of the transferor or any
    consolidated affiliate.
    The transferee is a qualifying special-purpose entity
    (QSPE) and each holder of its beneficial interests
    (including both debt and equity securities) has the right to
    pledge, or the right to exchange its interests. If the issuing
    vehicle is not a QSPE, then sale accounting is only permitted if
    the issuing vehicle itself has the right to pledge or the right
    to exchange the transferred assets.
    The transferor does not effectively maintain control over the
    transferred assets either through;          p.
    Convertible
    Bonds Payable  W W W
  W
  q.
    Currency
    and Interest Rate Swap   F-63




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  W W W
  r.
    Foreign
    Currency Translation    s.
    Sale
    of Stock by Equity Method Investee  W W
  t.
    Subscription
    Payable  W
  u.
    Equity
    Instrument to Be Received in Conjunction with Providing
    Services  W
 F-64




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  v.
    Consolidation
    of Variable Interest Entities      w.
    Remeasurement
    of Stock Option    x.
    Convertible
    Notes Receivable  W
  y.
    Presentation
    of Minority Interest as a Component of Shareholders
    Equity    z.
    Scope
    of Consolidations  W
   F-65




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    aa.
    Handset
    Subsidies to Long-time Mobile Subscribers   F-66




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2004


2005


2006Net income based on Korean GAAP

W
1,491,479


W
1,872,978


W
1,451,491Adjustments:Deferred income tax adjustments
    due to difference in accounting principles


(3,827
)


30,857



Deferred charges


(60
)


(2,037
)


2,037Capital leases


1,534



(925
)


(847
)Intangible assets


(18,546
)


(16,046
)


(260
)Reversal of amortization of
    goodwill


136,694



137,389



128,327Capitalization of foreign exchange
    losses and interest expenses related to tangible assets


24,454



3,231



9,266Capitalization of interest
    expenses related to purchases of intangible assets


5,285



5,272



5,272Nonrefundable activation fees


(36,048
)


(34,681
)


(16,139
)Discount on leasehold deposits


422



230



Loss on sale of accounts
    receivable and other in asset securitization


(14,476
)






Loss on impairment of investment
    securities


(8,434
)


3,065



(421
)Loss on valuation of currency and
    interest rate swap


(49,452
)


29,898



(4,056
)Convertible bonds payable


1,016



14,044



48,118Foreign currency translation


2,458



(2,458
)


Sales of stock by the equity
    method investee






(8,637
)


7,440Consolidation of variable interest
    entity






38



(38
)Stock option compensation plan


(1,938
)


49



(144
)Convertible notes receivable










365,751Tax effect of the reconciling items


22,515



(4,717
)


(115,268
)Net income based on U.S. GAAP

W
1,553,076


W
2,027,550


W
1,880,529Weighted average number of common
    shares outstanding


73,614,297



73,614,296



73,305,026Earnings per share based on U.S.
    GAAP:Basic earnings per share

W
21,097


W
27,543


W
25,653Diluted earnings per share

W
20,918


W
27,089


W
25,236   F-67




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December 31,2004


2005


2006Shareholders equity based on
    Korean GAAP Adjustments:

W
7,205,744


W
8,327,540


W
9,483,088Deferred income tax adjustments
    due to difference In accounting principles


(70,067
)






Deferred charges






(2,037
)


Capital leases


1,773



847



Intangible assets


1,009,591



993,547



993,802Reversal of amortization of
    goodwill


410,292



547,681



676,008Capitalization of foreign exchange
    losses and interest expenses related to tangible assets


44,294



47,522



56,788Capitalization of interest
    expenses related to purchase of intangible assets


(63,660
)


(58,388
)


(53,116
)Nonrefundable activation fees


(275,222
)


(309,903
)


(326,042
)Loans receivable for stock issued
    to employees investor association


(22,546
)


(14,586
)


(7,526
)Discount on leasehold deposits


(231
)






Convertible bonds payable


(66,263
)


(52,220
)


(1,347
)Foreign currency translation


2,458







Consolidation of variable interest
    entity






228



1,396Minority interest in equity of
    consolidated affiliates


(98,198
)


(108,927
)


(170,246
)Tax effect of the reconciling items


159,032



101,130



85,674Shareholders equity based on
    U.S. GAAP

W
8,236,997


W
9,472,434


W
10,738,479     Year Ended December 31,2004


2005


2006Balance, beginning of the year

W
7,014,668


W
8,236,997


W
9,472,434Net income for the year


1,553,076



2,027,550



1,880,529Dividends


(478,492
)


(758,227
)


(662,628
)Unrealized gains on valuation of
    securities, net of tax


55,156



23,042



206,457Equity in capital surplus,
    retained earnings and capital adjustments of affiliates (note a)


89,448



(63,370
)


38,651Conversion of convertible bonds
    payable










23,624Treasury stock transactions


(2
)






(209,078
)Foreign-based operations
    translation adjustments


(11,128
)


(1,792
)


(18,570
)Stock compensation plan


3,030



274



Decrease in loans receivable for
    stock issued to employees investor association


11,241



7,960



7,060Balance, end of the year

W
8,236,997


W
9,472,434


W
10,738,479     (note a)
    
    This line item consists of the
    adjustments to the carrying amount of equity method investments
    based on the Companys proportionate pickup in affiliates
    using the equity method of accounting, which are directly
    adjusted to stockholders equity of affiliates, such as F-68




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  unrealized gains or losses on
    valuation of available-for-sale securities, foreign-based
    operations translation adjustments in affiliates and stock
    transactions by affiliates.    December 31,2004


2005


2006Current assets:As reported

W
4,390,693


W
4,598,580


W
4,663,962U.S. GAAP adjustments : loans receivable for
    stock issued to employees investor association


(4,123
)


(3,249
)


(2,208
) deferred tax
    adjustments due to difference in accounting principles


51,344







 tax effect of the
    reconciling items


25,234



31,381



39,241 discount on leasehold
    deposits


1,119







 consolidation of
    variable interest entity






(4,889
)


(8,809
) scope of consolidation










(40,189
)Current assets based on U.S. GAAP


4,464,267



4,621,823



4,651,997Non-current assets:As reported


9,892,665



10,106,192



11,576,006U.S. GAAP adjustments : loans receivable for
    stock issued to employees investor association


(18,423
)


(11,337
)


(5,318
) intangible assets


1,004,808



988,763



989,595 reverse of
    amortization of goodwill


410,292



547,681



677,371 discount on leasehold
    deposits


(1,349
)






 nonrefundable
    activation fees


9,129



8,571



8,108 capital lease


1,773



847



(576
) capitalization of
    foreign exchange losses and interest expense related to tangible
    assets


44,294



47,522



56,788 capitalization of
    interest expenses related to purchase of intangible assets


(63,660
)


(58,388
)


(53,116
) deferred charges


12,969



7,933



7,812 subscription payable






40,014



 equity instrument to
    be received in conjunction with providing services






(2,055
)


 consolidation of
    variable interest entity






53,626



54,731 convertible bonds
    payable










(1,133
) scope of consolidation










(32,735
)Non-current assets based on U.S.
    GAAP


11,292,498



11,729,369



13,277,533Total assets based on U.S. GAAP

W
15,756,765


W
16,351,192


W
17,929,530   F-69




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  December, 312004


2005


2006Current liabilities:As reported

W
3,066,893


W
2,863,373


W
3,208,416U.S. GAAP adjustments: nonrefundable
    activation fees


86,082



114,111



142,697 foreign currency
    translation


(26
)






 subscription payable






40,014



 equity instrument to
    be received in conjunction with providing services






(525
)


 consolidation of
    variable interest entity






17,671



32,078 scope of consolidation










(17,389
)Current liabilities based on U.S.
    GAAP


3,152,949



3,034,644



3,365,802Long-term liabilities:As reported


4,010,721



3,513,859



3,548,464U.S. GAAP adjustments: deferred charges


12,969



9,970



7,812 nonrefundable
    activation fees


198,269



204,363



191,453 deferred tax
    adjustments due to difference in accounting principles


123,911







 tax effect of the
    reconciling items


(141,080
)


(74,532
)


(51,216
) convertible bonds
    payable


66,263



52,220



214 foreign currency
    translation


(2,432
)






 equity instrument to
    be received in conjunction with providing services






(1,530
)


 consolidation of
    variable interest entity






631



227 scope of consolidation










(19,563
)Long-term liabilities based on
    U.S. GAAP


4,268,621



3,704,981



3,677,391Total liabilities based on U.S.
    GAAP

W
7,421,570


W
6,739,625


W
7,043,193Minority interests:As reported

W
98,198


W
108,927


W
170,246U.S. GAAP adjustments : consolidation of
    variable interest entity






30,206



12,221 reverse of
    amortization of goodwill










1,363 scope of consolidation










(35,972
)Total minority interests based on
    U.S. GAAP

W
98,198


W
139,133


W
147,858  F-70




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2004


2005


2006Cash flows from operating
    activities based on Korean GAAP

W
2,527,862


W
3,407,142


W
3,589,825Adjustments:Asset securitization transactions


469,883







Trading security cash flows


240,204



(122,710
)


80,061Consolidation of variable interest
    entity






12,444



(48,721
)Scope of consolidation










(6,384
)Cash flows from operating
    activities based on US GAAP

W
3,237,949


W
3,296,876


W
3,614,781Cash flows from investing
    activities based on Korean GAAP

W
(1,470,292
)

W
(1,938,187
)

W
(2,535,153
)Adjustments:Asset securitization transactions


76,347







Trading security cash flows


(240,204
)


122,710



(80,061
)Consolidation of variable interest
    entity






(1,004
)


37,611Scope of consolidation










17,035Cash flows from investing
    activities based on US GAAP

W
(1,634,149
)

W
(1,816,481
)

W
(2,560,568
)Cash flows from financing
    activities based on Korean GAAP

W
(968,570
)

W
(1,429,038
)

W
(952,377
)Adjustments:Asset securitization transactions


(546,230
)






Consolidation of variable interest
    entity






(10,243
)


17,716Scope of consolidation










(5,946
)Cash flows from financing
    activities based on US GAAP

W
(1,514,800
)

W
(1,439,281
)

W
(940,607
)The effect of exchange rate changes
    on cash and cash equivalents held in foreign currencies based on
    Korean GAAP

W
(11,055
)

W
(3,036
)

W
(9,317
)Adjustments:Consolidation of variable interest
    entity










(5,302
)The effect of exchange rate changes
    on cash and cash equivalents held in foreign currencies based on
    US GAAP

W
(11,055
)

W
(3,036
)

W
(14,619
)Net increase(decrease) in cash and
    cash equivalents due to changes in consolidated subsidiaries
    based on Korean GAAP

W
(24,803
)

W
(29,085
)

W
14,568Adjustments:Scope of consolidation










(14,246
)Net increase(decrease) in cash and
    cash equivalents due to changes in consolidated subsidiaries
    based on US GAAP

W
(24,803
)

W
(29,085
)

W
322Cash and cash equivalents at
    beginning of the year based on Korean GAAP

W
317,488


W
370,630


W
378,426Adjustments:Consolidation of variable interest
    entity










1,197Cash and cash equivalents at
    beginning of the year based on US GAAP

W
317,488


W
370,630


W
379,623Cash and cash equivalents at end of
    the year based on Korean GAAP

W
370,630


W
378,426


W
485,972Adjustments:Consolidation of variable interest
    entity






1,197



2,501Scope of consolidation










(9,541
)Cash and cash equivalents at end of
    the year based on US GAAP

W
370,630


W
379,623


W
478,932  F-71




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  32.
    ADDITIONAL DISCLOSURES REQUIRED BY U.S. GAAP
  a.  Income
    Taxes
    Year Ended December 31,2004


2005


2006Currently payable

W
551,405


W
685,541


W
615,959Deferred


59,669



(18,422
)


70,871W
611,074


W
667,119


W
686,830     Year Ended December 31,2004


2005


2006Income taxes at statutory income
    tax rate of 27% in 2004 and 25% in 2005 and 2006

W
584,843


W
670,776


W
641,840Resident surtax payable


58,484



67,078



64,184Tax credit for investments,
    technology, human resource development and others


(89,080
)


(100,160
)


(110,785
)Special surtax for agriculture and
    fishery industries and other


13,736



18,850



20,183Undistributed earnings of
    subsidiaries


11,011



4,846



1,777Other permanent differences


28,705



19,637



27,602Change in valuation allowance


3,375



(13,908
)


42,029Recorded income taxes

W
611,074


W
667,119


W
686,830Effective tax rate


28.21
%


24.86
%


26.75
%  F-72




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##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,2004


2005


2006Current:Allowance for doubtful accounts

W
19,649


W
39,334


W
21,251Write-off of doubtful accounts


9,764



9,239



Marketable trading securities


(561
)






Accrued income


(2,463
)


(1,229
)


(1,544
)Net operating loss carryforwards






17



1,121Tax credit carryforwards






89



19Accrued expenses and other


50,189



50,004



68,26476,578



97,454



89,111Non-current:Depreciation


(34,371
)


(58,745
)


(65,098
)Loss on disposition of properties


11,480







Loss on impairment and valuation
    of investment securities


58,419



32,959



33,269Equity in losses (earnings) of
    affiliates


(12,671
)


(7,471
)


4,593Undistributed earnings of
    subsidiaries


(9,434
)


13,732



34,289Tax free reserve for technology
    development


(195,103
)


(211,208
)


(211,215
)Tax free reserve for loss on
    disposal of treasury stock


(130,372
)


(130,372
)


(70,396
)Tax credit carryforwards


5,003







24Net operating loss carryforwards


25,371



24,108



64,306Deferred charges and other


(7,205
)


11,867



(269,334
)(288,883
)


(325,130
)


(479,562
)Total deferred tax assets
    (liabilities)

W
(212,305
)

W
(227,676
)

W
(390,451
)  F-73




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  b.  Information
    under U.S. GAAP with respect to Investments under
    SFAS No. 115
  available-for-sale held-to-maturity
  Gross


GrossCost


Unrealized


Unrealized


Impairment


Fair(Amortized Cost)


Gains


Losses


Losses


ValueAt December 31, 2004:Available-for-saleEquity securities

W
470,266


W
137,621


W



W
(63,902
)

W
543,985Debt securities


15,813











(10,655
)


5,158Held-to-maturity Securities


50,144















50,144W
536,223


W
137,621


W



W
(74,557
)

W
599,287At December 31, 2005:Available-for-saleEquity securities

W
465,244


W
173,960


W
(9,768
)

W
(60,838
)

W
568,598Debt securities


307,375







(217
)


(10,885
)


296,273Held-to-maturity Securities


115















115W
772,734


W
173,960


W
(9,985
)

W
(71,723
)

W
864,986At December 31, 2006:Available-for-saleEquity securities

W
469,754


W
462,521


W



W
(62,614
)

W
869,661Debt securities


1,083,914



33,903



(46,107
)


(10,656
)


1,061,054Held-to-maturity Securities


134















134W
1,553,802


W
496,424


W
(46,107
)

W
(73,270
)

W
1,930,849   available-for-sale W W W W W W W W W
  W W
  c.  Fair
    Value of Financial Instruments
    Cash
    and Cash Equivalents, Accounts Receivable (trade and other),
    Short-Term Loans, Accounts Payable and Short-term
    Borrowings
   F-74




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Trading
    Securities and Long-term Investment Securities
    Long-Term
    Bank Deposits
    Long-Term
    Loans
    Bonds
    Payable, Bonds with Stock Warrant, Convertible Bonds, Long-Term
    Borrowings, Long-Term Payable  Other and Obligation
    under Capital Leases
      2004


2005


2006Carrying





Carrying





CarryingAmount


Fair


Amount


Fair


Amount


Fair(Note a)


Value


(Note a)


Value


(Note a)


ValueFinancial assets:Cash and cash equivalents and
    short-term
    financial instruments

W
383,360


W
383,360


W
486,215


W
486,215


W
576,017


W
576,017Trading securities


654,779



654,779



777,472



777,472



665,312



665,312Accounts receivable (trade and
    other)


3,126,754



3,126,754



3,038,936



3,038,936



3,065,481



3,065,481Short-term loans


51,232



51,232



62,290



62,290



60,440



60,440Investment securities:Listed equity and debts


599,287



599,287



864,986



864,986



1,930,849



1,930,849Non- listed equity(note b)


352,523



N/A



353,168



N/A



141,138



N/ALong-term bank deposits


10,351



10,351



1,479



1,479



10,430



10,430Long-term loans


12,019



9,014



7,093



5,320



13,250



9,938W
5,190,305






W
5,591,639






W
6,462,917Financial liabilities:Accounts payable

W
1,205,682


W
1,205,682


W
1,094,855


W
1,094,855


W
1,224,536


W
1,224,536Short-term borrowings


425,496



425,496



4,614



4,614



63,612



63,612Bonds payable, long-term
    borrowings, convertible bonds, long-term
    payables  other and obligation under capital
    leases, including current portion


4,044,258



4,211,926



3,763,135



3,825,813



3,595,880



3,667,748W
9,234,563






W
4,862,604






W
4,884,028  F-75




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    (note a)
    
    These carrying amounts represent
    the amounts determined under U.S. GAAP.(note b)
    
    Fair value of investments in
    non  listed equity securities are not readily
    determinable with the exception of the investments in the common
    stock of LG Powercomm Co., Ltd.
    (LG Powercomm). The fair value of common stock
    of LG Powercomm as of December 31, 2004, 2005 and 2006
    was estimated by an outside professional valuation company using
    the present value of expected future cash flows. As of
    December 31, 2004, 2005 and 2006, the fair value of the
    investment in the common stock of LG Powercomm is
    W71,565 million,
    W77,130 million and
    W80,370, respectively.  d.  Comprehensive
    Income
    2004


2005


2006Net income

W
1,553,076


W
2,027,550


W
1,880,529Other comprehensive income:Available-for-sale securitiesUnrealized gain on investment
    securities


67,645



34,915



284,359Less impact of realized
    losses(gains)


8,434



(3,065
)


446Tax effect


(20,923
)


(8,808
)


(78,348
)Net change from available-for-sale
    securities


55,156



23,042



206,457Foreign-based operations
    translation adjustments


(11,128
)


(1,792
)


(18,570
)Total other comprehensive income


44,028



21,250



187,887Comprehensive income

W
1,597,104


W
2,048,800


W
2,068,416   e.  Goodwill
    and other intangible assets
    Goodwill
    2004


2005


2006Beginning of period

W
3,400,155


W
3,408,989


W
3,418,212Goodwill acquired during the period


8,834



9,223



13,426Goodwill impairment losses










(12,524
)Ending of period

W
3,408,989


W
3,418,212


W
3,419,114  F-76




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Other
    Intangible Assets
    December 31, 2004


December 31, 2005


December 31, 2006Accumulated





AccumulatedGross





Gross


Amortization


Gross


AmortizationCarrying


Accumulated


Carrying


and


Carrying


andAmount


Amortization


Amount


Impairment


Amount


ImpairmentAmortized intangible assets:IMT license (13 years)

W
1,188,547


W
(98,183
)

W
1,188,547


W
(188,193
)

W
1,188,547


W
(278,521
)Customer lists (4 years)


99,783



(83,686
)


99,783



(99,783
)


99,783



(99,783
)Other (2 to 20 years)


718,291



(354,021
)


1,036,165



(455,505
)


1,433,915



(604,729
)Total

W
2,066,621


W
(535,890
)

W
2,324,495


W
(743,481
)

W
2,722,245


W
(983,033
)   W W W W W W W W
  f.  Condensed
    Consolidated Income Statements under U.S. GAAP
    2004


2005


2006Operating revenue:Wireless services

W
8,762,376


W
9,148,363


W
9,025,209Interconnection


849,407



898,621



1,033,390Digital handset sales


649,809



294,557



Other


272,974



359,911



483,203Total operating revenue


10,534,566



10,701,452



10,541,802Total operating expenses


(8,137,570
)


(7,847,705
)


(7,720,028
)Operating income


2,396,996



2,853,747



2,821,774Equity in earnings of
    unconsolidated businesses


(11,550
)


(44,289
)


(140,441
)Other income(expenses), net


(219,361
)


(125,898
)


(135,726
)Income before income taxes and
    minority interests


2,166,085



2,683,560



2,545,607Provision for income taxes


(611,074
)


(667,119
)


(686,830
)Income before minority interests


1,555,011



2,016,441



1,858,777Minority interests in losses
    (earnings) of consolidated subsidiaries


(1,935
)


11,109



21,752Net income

W
1,553,076


W
2,027,550


W
1,880,529   g.  Segment
   F-77




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    h.  Supplemental
    Information relating to Cash Flows
    2004


2005


2006Cash paid for interest (net of
    amounts capitalized)

W
264,224


W
203,259


W
226,442Cash paid for income taxes


679,262



588,296



660,188   i. Accrued
    Severance Indemnities
    Year Ending December 31,2007

W
2,8312008


342009


182010


9102011


83220122016


17,617Total

W
22,242     j.  New
    Accounting Pronouncements
    No. 06-3, No. 06-3 No. 06-3 No. 06-3 No. 06-3
 F-78




---



##### Table of Contents



SK
    TELECOM CO., LTD. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     F-79