##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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Form 20-F

ANNUAL REPORT PURSUANT TO

SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934




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FOR THE FISCAL YEAR ENDED DECEMBER 31,
2003

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)


99, SEORIN-DONG

JONGRO-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 registered
|                                                                                             |  |                                          
|AMERICAN DEPOSITARY SHARES,
    EACH REPRESENTING ONE-NINTH
    OF ONE SHARE OF COMMON STOCK |  |                                           | NEW YORK STOCK EXCHANGE, INC.  | 
|COMMON STOCK, PAR VALUE
    WON 500 PER SHARE                                                |  |                                           | NEW YORK STOCK EXCHANGE, INC.* | 

Securities registered or to be registered
pursuant to Section 12(g) of the Act.

NONE

(Title of Class)


Securities for which there is a reporting
obligation pursuant to Section 15(d) of the Act.

NONE

(Title of Class)


Indicate the number of outstanding shares of each
of the issuers classes of capital or common stock as of
the close of the period covered by the annual report.

82,276,711 SHARES OF COMMON STOCK, PAR VALUE WON
500 PER SHARE

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past 90 days.

|      |  |     
|----- |  | ----
|þ Yes |  | o No

Indicate by check mark which financial statement
item the registrant has elected to follow.

|          |  |          
|--------- |  | ---------
|o Item 17 |  | þ Item 18

* Not for trading, but only in connection with
the registration of the American Depositary Shares.



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TABLE OF CONTENTS

|                                                |  |                                                                                  |     |  |     | 
|----------------------------------------------- |  | -------------------------------------------------------------------------------- | --- |  | --- | 
|Item. 1                                         |  | Identity of Directors,
    Senior Management and Advisers                        |     |  | 5   | 
|Item. 2                                         |  | Offer Statistics and
    Expected Timetable                                      |     |  | 5   | 
|Item. 3                                         |  | Key Information                                                                  |     |  | 5   | 
|Item. 4                                         |  | Information on the
    Company                                                   |     |  | 26  | 
|Item. 5                                         |  | Operating and Financial
    Review and Prospects                                 |     |  | 53  | 
|Item. 6                                         |  | Directors, Senior Management
    and Employees                                   |     |  | 79  | 
|Item. 7                                         |  | Major Shareholders and
    Related Party Transactions                            |     |  | 84  | 
|Item. 8                                         |  | Financial Information                                                            |     |  | 89  | 
|Item. 9                                         |  | The Offer and Listing                                                            |     |  | 94  | 
|Item. 10                                        |  | Additional Information                                                           |     |  | 102 | 
|Item. 11                                        |  | Quantitative and Qualitative
    Disclosures About Market Risk                   |     |  | 129 | 
|Item. 12                                        |  | Description of Securities
    Other than Equity Securities                       |     |  | 130 | 
|Item. 13                                        |  | Defaults, Dividend Arrearage
    and Delinquencies                               |     |  | 130 | 
|Item. 14                                        |  | Material Modifications to
    the Rights of Security Holders and Use of Proceeds |     |  | 130 | 
|Item. 15                                        |  | Controls and Procedures                                                          |     |  | 130 | 
|Item. 16A                                       |  | Audit Committee Financial
    Expert                                             |     |  | 130 | 
|Item. 16B                                       |  | Code of Ethics                                                                   |     |  | 131 | 
|Item. 16C                                       |  | Principal Accountant Fees
    and Services                                       |     |  | 131 | 
|Item. 16D                                       |  | Exemptions from the Listing
    Standards for Audit Committees                   |     |  | 132 | 
|Item. 16E                                       |  | Purchases of Equity
    Securities by the Issuer and Affiliated Purchasers       |     |  | 132 | 
|Item. 17                                        |  | Financial Statements                                                             |     |  | 133 | 
|Item. 18                                        |  | Financial Statements                                                             |     |  | 133 | 
|INDEX TO FINANCIAL
    STATEMENTS               |  |                                                                                  | F-1 | 
|Item. 19                                        |  | Exhibits                                                                         |     |  | E-1 | 
|EX-1.1 ARTICLES OF INCORPORATION               
|EX-4.5 AMD TO TELECOMMUNICATIONS BUSINESS LAW  
|EX-11.1 CODE OF ETHICS OF SK TELECOM CO., LTD. 
|EX-12.1 CERTIFICATION OF CEO                   
|EX-12.2 CERTIFICATION OF CFO                   
|EX-13.1 CERTIFICATION OF CEO                   
|EX-13.2 CERTIFICATION OF CFO                   
|EX-99.1 CONSENT OF DELOITTE & TOUCHE LLC (HANA)
|EX-99.2 CONSENT OF YOUNG WHA CORPORATION       



1



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##### Table of Contents



OVERVIEW OF THE COMPANYS WIRELESS
NETWORK

We are Koreas leading wireless
telecommunications services provider and a pioneer in the
commercial development and provision of high-speed wireless data
and Internet services. We provide our services principally
through networks using CDMA (code division multiple access)
technology. In October 2000, we became the worlds first
wireless operator to commercially launch CDMA 1xRTT, a
CDMA-based advanced radio transmission technology for high-speed
wireless data and wireless Internet services. CDMA 1xRTT allows
transmission of data at speeds of up to 144 Kbps, compared
to the 64 Kbps currently possible over our CDMA network. In
addition to higher data transfer speeds, CDMA 1xRTT technology
uses packet-based data transmission, which permits more
efficient use of wireless spectrum and packet-based pricing of
data services.

In the first half of 2002, we launched an upgrade
of our CDMA 1xRTT network in 26 cities in Korea to CDMA
1xEV/ DO. CDMA 1xEV/ DO is a more advanced CDMA-based technology
which enables data to be transmitted at speeds of up to
2.4 Mbps. CDMA 1xEV/ DO technology allows us to provide
advanced wireless data services such as streaming color video
and streaming audio services. CDMA 1xEV/ DO-capable handsets
became available in Korea in June 2002. We completed our CDMA
1xEV/ DO network upgrade in 84 cities in Korea at the end
of 2003.

In December 2001, we acquired a license to
develop, construct and operate a wide-band code division
multiple access, or W-CDMA, digital cellular network using 2 X
20 MHz of radio frequency spectrum (i.e., 20 MHz for
transmissions from handsets to cell sites and 20 MHz for
transmissions from cell sites to handsets) in the 2 GHz
band. We have commenced construction of the W-CDMA network and
began providing W-CDMA service on a limited basis in Seoul at
the end of 2003.

In January 2002, we acquired the remaining 29.6%
interest in Shinsegi Telecomm, Inc., which we did not own and
merged Shinsegi into SK Telecom. As a result of this merger
we have a combined 2 X 25 MHz of spectrum in the
800 MHz range.

In this report, we refer to third generation or
3G mobile communications systems. Second generation
systems or 2G systems were designed primarily with voice
communications in mind. 3G systems are designed to facilitate
voice, high speed data and multimedia service.

CERTAIN DEFINED TERMS AND CONVENTIONS USED IN
THIS REPORT

All references to Korea contained in
this report shall mean The Republic of Korea. All references to
the Government shall mean the government of The
Republic of Korea. All references to we,
us, our or the Company shall
mean SK Telecom Co., Ltd. and its consolidated subsidiaries.
References to SK Telecom shall mean SK Telecom
Co., Ltd., but shall not include its consolidated subsidiaries.
All references to U.S. shall mean the United States
of America. Unless otherwise indicated, all references to our
number of subscribers shall include Shinsegi Telecomm,
Inc.s subscribers from April 1, 2000.

All references to KHz contained in
this report shall mean kilohertz, a unit of frequency denoting
one thousand cycles per second, used to measure band and
bandwidth. All references to MHz shall mean
megahertz, a unit of frequency denoting one million cycles per
second. All references to GHz shall mean gigahertz,
a unit of frequency denoting one billion cycles per second. All
references to Kbps shall mean one thousand binary
digits, or bits, of information per second. All references to
Mbps shall mean one million bits of information per
second. Any discrepancies in any table between totals and the
sums of the amounts listed are due to rounding.

All references to Won or
W in this report are to the currency of Korea, all
references to Dollars, $ or
US$ are to the currency of the United States of
America and all references to Yen or
¥ are to the currency of Japan.

Unless otherwise indicated, all financial
information in this report is presented in accordance with
Korean generally accepted accounting principles (Korean
GAAP).

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Unless otherwise indicated, translations of Won
amounts into Dollars in this report were made 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. Unless otherwise stated, the translations of
Won into Dollars were made at the noon buying rate in effect on
December 31, 2003, which was Won 1,192.0 to US$1.00. On
December 31, 2002, the noon buying rate was Won 1,186.3 to
US$1.00. On May 25, 2004, the noon buying rate was Won
1,179.5 to US$1.00. See Item 3. Key
Information  Exchange Rates.

SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS

This report contains forward-looking
statements, as defined in Section 27A of the
U.S. Securities Act of 1933, as amended, and
Section 21E of the U.S. Securities Exchange Act of
1934, as amended, that are based on our current expectations,
assumptions, estimates and projections about our company and our
industry. The forward-looking statements are subject to various
risks and uncertainties. Generally, these forward-looking
statements can be identified by the use of forward-looking
terminology such as anticipate, believe,
considering, depends,
estimate, expect, intend,
plan, planning, planned,
project and similar expressions, or that certain
events, actions or results will, may,
might, should or could
occur, be taken or be achieved.

Forward-looking statements in this annual report
include, but are not limited to, the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to anticipate and respond to various
    competitive factors affecting the industry, including new
    services that may be introduced, changes in consumer
    preferences, economic conditions and discount pricing strategies
    by competitors;                                                                                                                                                                                                     
|
| |  | our implementation of CDMA 1xEV/ DO technology
    and other technologies such as W-CDMA, which is commonly
    referred to as third generation, or 3G, wireless technology;                                                                                                                                                                                                                                                                                         
|
| |  | our plans to spend approximately Won 1.7 trillion
    for capital expenditures in 2004 for a range of projects,
    including expansion and improvement of our wireless networks,
    investments in our Internet-related businesses and expansion of
    our W-CDMA network and our expected future capital expenditures
    on various initiatives;                                                                                                                
|
| |  | 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 Korean Ministry of Information
    Communication (MIC) regulations related to
    telecommunications providers, rules related to our status as a
    market-dominating business entity under the Fair
    Trade Commission of Koreas Korean Monopoly Regulation and
    Fair Trade Act, or the FTA, 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 wireless operators;
    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 effect of the number portability system that
    allows wireless subscribers to switch wireless service operators
    while retaining the same mobile phone number and the use of the
    common prefix identification system;                                                                                                                                                                                                                                   
|
| |  | the effect of the resignation of four of our
    board members and executives resulting from charges of financial
    statement irregularities by certain directors and executives at
    SK Networks and our ability to protect our reputation through
    our corporate governance reform efforts;                                                                                                                                                                 

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| |   |                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | statements related to the telecommunications
    industry in Korea and other markets in which we do business and
    the effect economic, political or social conditions have on our
    number of subscribers, call volumes and results of
    operations; and                                                                                                                              
|
| |  | our plans to pay an interim dividend in 2004,
    after amending our Articles of Incorporation to permit payment
    of interim dividends, and statements related to credit ratings,
    estimates of contractual obligations and commitments, financing
    activities and plans and other information more specifically
    detailed in Operating and Financial Review and
    Prospects.

We caution you that reliance on any
forward-looking statement involves risks and uncertainties, and
that although we believe that the assumptions on which our
forward-looking statements are based are reasonable, any of
those assumptions could prove to be inaccurate, and, as a
result, the forward-looking statements based on those
assumptions could be incorrect. Risks and uncertainties
associated with our business, include but are not limited to,
risks related to changes in the regulatory environment;
technology changes; potential litigation and governmental
actions; changes in the competitive environment; political
changes; currency risks; foreign ownership limitations; credit
risks and other risks and uncertainties that are more fully
described under the heading Key Information 
Risk Factors beginning on page 11 of this report, and
elsewhere in this report. In light of these and other
uncertainties, you should not conclude that we will necessarily
achieve any plans and objectives or projected financial results
referred to in any of the forward-looking statements. We do not
undertake to release the results of any revisions of these
forward-looking statements to reflect future events or
circumstances.

ENFORCEABILITY OF CIVIL LIABILITIES

We are a corporation with limited liability
organized under the laws of Korea. All of our directors and
officers and certain other persons named in this annual report
reside in Korea, and all or a significant portion of the assets
of the directors and officers and certain other persons named in
this annual report and substantially all of our assets are
located in Korea. As a result, it may not be possible for you to
effect service of process within the United States upon such
persons or to enforce against them or against us in
U.S. courts judgments predicated upon the civil liability
provisions of the federal securities laws of the United States.
There is doubt as to the enforceability in Korea, either in
original actions or in actions for enforcement of judgments of
U.S. courts, of civil liabilities predicated on the
U.S. federal securities laws.

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PART I






|        |                                                          
|------- | ---------------------------------------------------------
|Item. 1 | Identity of Directors, Senior Management
    and Advisers

Not applicable.






|        |                                            
|------- | -------------------------------------------
|Item. 2 | Offer Statistics and Expected
    Timetable

Not applicable.






|        |                
|------- | ---------------
|Item. 3 | Key Information

SELECTED FINANCIAL DATA

You should read the selected consolidated
financial data below in conjunction with the consolidated
financial statements and the related notes included elsewhere in
this report. The selected consolidated financial data for the
five years ended December 31, 2003 are derived from our
audited consolidated financial statements and related notes.
Information as of and for the years ended December 31, 2000
and 2001 includes information as of and for the nine months
ended December 31, 2000 and the year ended
December 31, 2001, respectively, for Shinsegi Telecomm,
Inc. unless otherwise specified.

Our consolidated financial statements are
prepared in accordance with Korean generally accepted accounting
principles, or Korean GAAP, which differ in certain respects
from United States generally accepted accounting principles, or
U.S. GAAP. For more detailed information you should refer
to notes 32 and 33 of the notes to our audited consolidated
financial statements included in this annual report.

|                                                 |                     |                                                                                    |            |         |  |      |            |         |  |      |            |         |  |   |            |         |  |   |            |          |  |     |            |         | 
|------------------------------------------------ | ------------------- | ---------------------------------------------------------------------------------- | ---------- | ------- |  | ---- | ---------- | ------- |  | ---- | ---------- | ------- |  | - | ---------- | ------- |  | - | ---------- | -------- |  | --- | ---------- | ------- | 
|                                                 |                     |                                                                                   
|                                                 |                     | As of or for the Year Ended December 31,                                          
|                                                 |                     |                                                                                   
|                                                 |                     | 1999                                                                               |            | 2000    |  | 2001 |            | 2002    |  | 2003 |            | 2003*  
|                                                 |                     |                                                                                    |            |         |  |      |            |         |  |      |            |        
|                                                 |                     |                                                                                   
|                                                 |                     | (In billions of won and millions of dollars, except per share and percentage data)
|INCOME STATEMENT DATA                            |                     |                                                                                    |            |         |  |      |            |         |  |      |            |         |  |   |            |         |  |   |            |          |  |     |            |        
|Korean GAAP:                                     |                     |                                                                                    |            |         |  |      |            |         |  |      |            |         |  |   |            |         |  |   |            |          |  |     |            |        
|Total Operating Revenue(1)                       |                     | W                                                                                  | 4,441.9    |         |  | W    | 7,423.1    |         |  | W    | 8,371.9    |         |  | W | 9,324.0    |         |  | W | 10,272.1   |          |  | US$ | 8,617.5    |        
|                                                 | Cellular Service(1) |                                                                                    |            | 4,141.5 |  |      |            | 7,245.1 |  |      |            | 8,203.0 |  |   |            | 9,156.8 |  |   |            | 10,091.8 |  |     |            | 8,466.3 | 
|                                                 | Paging Service(2)   |                                                                                    |            | 215.3   |  |      |            | 57.7    |  |      |            | 8.8     |  |   |            |        |  |   |            |         |  |     |            |        | 
|                                                 | Other(3)            |                                                                                    |            | 85.1    |  |      |            | 120.3   |  |      |            | 160.1   |  |   |            | 167.2   |  |   |            | 180.3    |  |     |            | 151.2   | 
|Operating Expenses                               |                     |                                                                                    | 4,134.7    |         |  |      | 5,927.6    |         |  |      | 6,047.4    |         |  |   | 6,526.4    |         |  |   | 7,167.0    |          |  |     | 6,012.5    |        
|Operating Income                                 |                     |                                                                                    | 307.2      |         |  |      | 1,495.5    |         |  |      | 2,324.5    |         |  |   | 2,797.6    |         |  |   | 3,105.1    |          |  |     | 2,065.0    |        
|Income before Income Taxes and Minority Interest |                     |                                                                                    | 385.0      |         |  |      | 1,287.8    |         |  |      | 1,976.7    |         |  |   | 2,218.8    |         |  |   | 2,754.3    |          |  |     | 2,310.7    |        
|Income before Minority Interest                  |                     |                                                                                    | 283.8      |         |  |      | 920.5      |         |  |      | 1,126.4    |         |  |   | 1,520.3    |         |  |   | 1,965.3    |          |  |     | 1,648.7    |        
|Net Income                                       |                     |                                                                                    | 282.2      |         |  |      | 972.3      |         |  |      | 1,146.0    |         |  |   | 1,487.2    |         |  |   | 1,966.1    |          |  |     | 1,649.4    |        
|Income per Share of Common Stock(4)              |                     |                                                                                    | 3,835      |         |  |      | 11,146     |         |  |      | 13,242     |         |  |   | 17,647     |         |  |   | 26,187     |          |  |     | 21.97      |        
|Diluted Net Income per Share of Common Stock     |                     |                                                                                    | 3,830      |         |  |      | 11,146     |         |  |      | 13,242     |         |  |   | 17,647     |         |  |   | 26,187     |          |  |     | 21.97      |        
|Dividends per Share of Common Stock(5)           |                     |                                                                                    | 185        |         |  |      | 540        |         |  |      | 690        |         |  |   | 1,800      |         |  |   | 5,500      |          |  |     | 4.6        |        
|Weighted Average Number of Shares                |                     |                                                                                    | 73,579,890 |         |  |      | 87,226,559 |         |  |      | 86,545,041 |         |  |   | 84,270,450 |         |  |   | 75,078,219 |          |  |     | 75,078,219 |        
|U.S. GAAP:                                       |                     |                                                                                    |            |         |  |      |            |         |  |      |            |         |  |   |            |         |  |   |            |          |  |     |            |        
|Net Income                                       |                     | W                                                                                  | 284.1      |         |  | W    | 895.4      |         |  | W    | 1,111.6    |         |  | W | 1,301.1    |         |  | W | 2,062.7    |          |  | US$ | 1730.4     |        
|Income per Share of Common Stock(4)              |                     |                                                                                    | 3,862      |         |  |      | 10,265     |         |  |      | 12,844     |         |  |   | 15,440     |         |  |   | 27,475     |          |  |     | 23.05      |        
|Diluted Net Income per Share of Common Stock     |                     |                                                                                    | 3,857      |         |  |      | 10,265     |         |  |      | 12,844     |         |  |   | 15,439     |         |  |   | 27,475     |          |  |     | 23.05      |        
|Dividends per Share of Common Stock(5)           |                     |                                                                                    | 185        |         |  |      | 540        |         |  |      | 690        |         |  |   | 1,800      |         |  |   | 5,500      |          |  |     | 4.6        |        
|Weighted Average Number of Shares                |                     |                                                                                    | 73,579,890 |         |  |      | 87,226,559 |         |  |      | 86,545,041 |         |  |   | 84,270,450 |         |  |   | 75,078,219 |          |  |     | 75,078,219 |        

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|                                    |                  |                                                                                    |          |      |   |      |          |      |   |      |          |       |   |   |          |       |   |   |          |       |   |     |          |       |  
|----------------------------------- | ---------------- | ---------------------------------------------------------------------------------- | -------- | ---- | - | ---- | -------- | ---- | - | ---- | -------- | ----- | - | - | -------- | ----- | - | - | -------- | ----- | - | --- | -------- | ----- | -
|                                    |                  |                                                                                   
|                                    |                  | As of or for the Year Ended December 31,                                          
|                                    |                  |                                                                                   
|                                    |                  | 1999                                                                               |          | 2000 |   | 2001 |          | 2002 |   | 2003 |          | 2003*
|                                    |                  |                                                                                    |          |      |   |      |          |      |   |      |          |      
|                                    |                  |                                                                                   
|                                    |                  | (In billions of won and millions of dollars, except per share and percentage data)
|BALANCE SHEET DATA                  |                  |                                                                                    |          |      |   |      |          |      |   |      |          |       |   |   |          |       |   |   |          |       |   |     |          |      
|Korean GAAP:                        |                  |                                                                                    |          |      |   |      |          |      |   |      |          |       |   |   |          |       |   |   |          |       |   |     |          |      
|Working Capital (Deficiency)(6)     |                  | W                                                                                  | 253.9    |      |   | W    | (374.6   | )    |   | W    | 668.2    |       |   | W | (189.7   | )     |   | W | (461.4   | )     |   | US$ | (387.1   | )    
|Fixed Assets  Net                  |                  |                                                                                    | 2,441.8  |      |   |      | 4,543.2  |      |   |      | 4,174.7  |       |   |   | 4,569.4  |       |   |   | 4,641.5  |       |   |     | 3,893.9  |      
|Total Assets                        |                  |                                                                                    | 6,263.9  |      |   |      | 11,044.2 |      |   |      | 13,326.3 |       |   |   | 14,228.7 |       |   |   | 13,818.2 |       |   |     | 11,592.5 |      
|Long-term Liabilities(7)            |                  | W                                                                                  | 1,021.5  |      |   | W    | 1,727.2  |      |   | W    | 3,498.4  |       |   | W | 3,693.4  |       |   | W | 3,193.5  |       |   | US$ | 2,679.1  |      
|Total Shareholders Equity          |                  |                                                                                    | 3,752.6  |      |   |      | 6,142.7  |      |   |      | 6,149.3  |       |   |   | 6,231.9  |       |   |   | 6,093.8  |       |   |     | 5,112.3  |      
|U.S. GAAP:                          |                  |                                                                                    |          |      |   |      |          |      |   |      |          |       |   |   |          |       |   |   |          |       |   |     |          |      
|Working Capital (Deficiency)        |                  |                                                                                    | 286.4    |      |   |      | (332.5   | )    |   |      | 729.6    |       |   |   | (108.2   | )     |   |   | (445.5   | )     |   |     | (373.7   | )    
|Total Assets                        |                  |                                                                                    | 6,143.7  |      |   |      | 11,182.8 |      |   |      | 13,841.0 |       |   |   | 15,720.7 |       |   |   | 15,586.2 |       |   |     | 13,075.7 |      
|Total Shareholders Equity          |                  |                                                                                    | 3,616.6  |      |   |      | 6,117.9  |      |   |      | 5,820.1  |       |   |   | 6,356.2  |       |   |   | 7,014.7  |       |   |     | 5,884.8  |      
|OTHER FINANCIAL DATA                |                  |                                                                                    |          |      |   |      |          |      |   |      |          |       |   |   |          |       |   |   |          |       |   |     |          |      
|Korean GAAP:                        |                  |                                                                                    |          |      |   |      |          |      |   |      |          |       |   |   |          |       |   |   |          |       |   |     |          |      
|EBITDA(8)                           |                  | W                                                                                  | 1,133.8  |      |   | W    | 2,941.7  |      |   | W    | 3,932.4  |       |   | W | 3,954.1  |       |   | W | 4,706.4  |       |   | US$ | 3,948.4  |      
|Capital Expenditures(9)             |                  |                                                                                    | 1,123.8  |      |   |      | 2,241.1  |      |   |      | 1,382.1  |       |   |   | 2,024.7  |       |   |   | 1,647.6  |       |   |     | 1,382.2  |      
|R&D Expenses(10)                    |                  |                                                                                    | 96.6     |      |   |      | 117.1    |      |   |      | 153.7    |       |   |   | 253.3    |       |   |   | 300.2    |       |   |     | 251.8    |      
|                                    | Internal R&D     |                                                                                    |          | 66.4 |   |      |          | 78.8 |   |      |          | 130.7 |   |   |          | 194.3 |   |   |          | 235.8 |   |     |          | 197.8 |  
|                                    | External R&D     |                                                                                    |          | 30.2 |   |      |          | 38.3 |   |      |          | 23.0  |   |   |          | 59.0  |   |   |          | 64.4  |   |     |          | 54.0  |  
|Depreciation and Amortization       |                  |                                                                                    | 709.1    |      |   |      | 1,456.4  |      |   |      | 1,759.7  |       |   |   | 1,543.3  |       |   |   | 1,646.3  |       |   |     | 1,381.1  |      
|Cash Flow from Operating Activities |                  |                                                                                    | 1,123.6  |      |   |      | 3,043.5  |      |   |      | 2,423.9  |       |   |   | 4,267.8  |       |   |   | 3,328.8  |       |   |     | 2,792.6  |      
|Cash Flow from Investing Activities |                  |                                                                                    | (2,120.8 | )    |   |      | (4,667.8 | )    |   |      | (1,972.8 | )     |   |   | (3,063.4 | )     |   |   | (1,414.4 | )     |   |     | (1,186.6 | )    
|Cash Flow from Financing Activities |                  |                                                                                    | 1,075.8  |      |   |      | 1,629.3  |      |   |      | 331.2    |       |   |   | (1,418.2 | )     |   |   | (2,261.0 | )     |   |     | (1,896.8 | )    
|Margins (% of total sales):         |                  |                                                                                    |          |      |   |      |          |      |   |      |          |       |   |   |          |       |   |   |          |       |   |     |          |      
|                                    | EBITDA Margin(8) |                                                                                    |          | 25.5 | % |      |          | 39.6 | % |      |          | 47.0  | % |   |          | 42.4  | % |   |          | 45.8  | % |     |          | 45.8  | %
|                                    | Operating Margin |                                                                                    |          | 6.9  |   |      |          | 20.1 |   |      |          | 27.8  |   |   |          | 30.0  |   |   |          | 30.2  |   |     |          | 30.2  |  
|                                    | Net Margin       |                                                                                    |          | 6.4  |   |      |          | 13.1 |   |      |          | 13.7  |   |   |          | 15.9  |   |   |          | 19.1  |   |     |          | 19.1  |  
|U.S. GAAP:                          |                  |                                                                                    |          |      |   |      |          |      |   |      |          |       |   |   |          |       |   |   |          |       |   |     |          |      
|EBITDA(8)                           |                  |                                                                                    | 1,137.0  |      |   |      | 2,930.5  |      |   |      | 3,859.1  |       |   |   | 3,620.7  |       |   |   | 4,679.1  |       |   |     | 3,925.4  |      
|Capital Expenditures(9)             |                  |                                                                                    | 1,123.8  |      |   |      | 2,241.1  |      |   |      | 1,382.1  |       |   |   | 2,024.7  |       |   |   | 1,647.6  |       |   |     | 1,382.2  |      
|Cash Flow from Operating Activities |                  |                                                                                    | 1,123.6  |      |   |      | 3,043.5  |      |   |      | 2,423.8  |       |   |   | 3,708.9  |       |   |   | 3,281.3  |       |   |     | 2,752.8  |      
|Cash Flow from Investing Activities |                  |                                                                                    | (2,120.8 | )    |   |      | (4,667.8 | )    |   |      | (1,972.8 | )     |   |   | (2,995.2 | )     |   |   | (1,422.5 | )     |   |     | (1,193.4 | )    
|Cash Flow from Financing Activities |                  |                                                                                    | 1,075.8  |      |   |      | 1,629.3  |      |   |      | 331.2    |       |   |   | (927.5   | )     |   |   | (2,205.5 | )     |   |     | (1,850.3 | )    

6



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##### Table of Contents



|                                           |                            |                                          |            |            |  |      |            |            |  |      |            |            |  |   |            |            |  |   |            |            | 
|------------------------------------------ | -------------------------- | ---------------------------------------- | ---------- | ---------- |  | ---- | ---------- | ---------- |  | ---- | ---------- | ---------- |  | - | ---------- | ---------- |  | - | ---------- | ---------- | 
|                                           |                            |                                         
|                                           |                            | As of or for the Year Ended December 31,
|                                           |                            |                                         
|                                           |                            | 1999                                     |            | 2000       |  | 2001 |            | 2002       |  | 2003
|                                           |                            |                                          |            |            |  |      |            |            |  |     
|SELECTED OPERATING DATA                    |                            |                                          |            |            |  |      |            |            |  |      |            |            |  |   |            |            |  |   |            |           
|Population of Korea (millions)(11)         |                            |                                          | 46.9       |            |  |      | 47.1       |            |  |      | 47.4       |            |  |   | 47.6       |            |  |   | 47.9       |           
|Our Wireless Penetration(12)               |                            |                                          | 21.6       | %          |  |      | 30.7       | %          |  |      | 32.0       | %          |  |   | 36.1       | %          |  |   | 38.2       | %         
|Number of Employees(13)                    |                            |                                          | 6,736      |            |  |      | 7,279      |            |  |      | 5,693      |            |  |   | 6,241      |            |  |   | 6,286      |           
|Total Sales per Employee (millions)        |                            | W                                        | 659.4      |            |  | W    | 1,019.8    |            |  | W    | 1,470.6    |            |  | W | 1,494.0    |            |  | W | 1,634.1    |           
|Wireless Subscribers(14)                   |                            |                                          | 10,110,371 |            |  |      | 14,452,683 |            |  |      | 15,179,163 |            |  |   | 17,219,562 |            |  |   | 18,313,315 |           
|                                           | Digital(14)                |                                          |            | 10,110,371 |  |      |            | 14,452,683 |  |      |            | 15,179,163 |  |   |            | 17,219,562 |  |   |            | 18,313,315 | 
|                                           | Analog(15)                 |                                          |            |           |  |      |            |           |  |      |            |           |  |   |            |           |  |   |            |           | 
|Average Monthly Outgoing Voice             |                            |                                          |            |            |  |      |            |            |  |      |            |            |  |   |            |            |  |   |            |           
|                                           | Minutes per Subscriber(16) |                                          |            | 143        |  |      |            | 148        |  |      |            | 172        |  |   |            | 191        |  |   |            | 197        | 
|Average Monthly Revenue per Subscriber(17) |                            | W                                        | 33,473     |            |  | W    | 32,906     |            |  | W    | 36,400     |            |  | W | 38,383     |            |  | W | 39,739     |           
|Average Monthly Churn Rate(18)             |                            |                                          | 2.2        | %          |  |      | 2.8        | %          |  |      | 1.4        | %          |  |   | 1.4        | %          |  |   | 1.2        | %         
|Digital Cell Sites(19)                     |                            |                                          | 3,255      |            |  |      | 7,008      |            |  |      | 6,056      |            |  |   | 7,384      |            |  |   | 8,309      |           



---



| |   |                                                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | The conversion into Dollar was made at the rate
    of Won 1,192.0 to US$1.00. See note 2(a) of the notes to
    our consolidated financial statements.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes Won 116.5 billion for 1999, Won
    494.0 billion for 2000, Won 702.4 billion for
    2001, Won 534.0 billion for 2002 and Won
    612.0 billion for 2003 from the sale of digital handsets
    and Won 801.0 billion for 1999,
    Won 1,312.4 billion for 2000, Won 1,339.9 billion
    for 2001, Won 1,043.2 billion for 2002 and Won
    1,017.1 billion for 2003 of interconnection revenue
    (including interconnection revenue in respect of calls between
    mobile users starting in 2000). Shinsegi was merged into us on
    January 13, 2002. See Information on the
    Company  Business overview 
    Interconnection.                                 
|   
|(2) | In March 2001, we transferred our paging business
    to Real Telecom Co., Ltd. (formerly known as INTEC Telecom Co.,
    Ltd.) in exchange for 9.9% of Real Telecoms newly issued
    shares and bonds with a principal amount of Won 9.5 billion
    that can be converted into an additional 7.8% interest in Real
    Telecom.                                                                                                                                                                                                                                                                                                                                                   
|   
|(3) | For more information about our other revenue, see
    Operating and Financial Review and Prospects and
    Information on the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(4) | Income per share of common stock is calculated by
    dividing net income by the weighted average number of shares
    outstanding during the period, giving effect to the 10-for-1
    stock split of our common shares which became effective on
    April 21, 2000 and resulted in the par value of each share
    being reduced from Won 5,000 to Won 500.                                                                                                                                                                                                                                                                                                                        
|   
|(5) | Dividend per share has been adjusted to give
    effect to the 10-for-1 stock split of our common shares which
    became effective on April 21, 2000. On January 1,
    2002, we early adopted Statement of Korea Accounting Standards
    (SKAS) No. 6, Events Occurring after
    Balance Sheet Date. This statement requires that proposed
    cash dividends be reflected on the balance sheet when the
    appropriations are approved by shareholders which is similar to
    U.S. GAAP. In order to reflect this accounting change,
    prior years financial statements have been restated. See
    note 2(u) of the notes to our consolidated financial
    statements.
|   
|(6) | Working capital means current assets minus
    current liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(7) | Our monetary assets and liabilities denominated
    in foreign currencies are valued at the exchange rate of Won
    1,145 to US$1.00 as of December 31, 1999, Won 1,260 to
    US$1.00 as of December 31, 2000, Won 1,326 to US$1.00
    as of December 31, 2001, Won 1,200 to US$1.00 as of
    December 31, 2002 and Won 1,198 to US$1.00 as of
    December 31, 2003, the rates of exchange permitted under
    Korean GAAP as of those dates. See note 2(s) of the notes
    to our consolidated financial statements.                                                                                                                                                           

7



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##### Table of Contents





|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(8) | 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 intensive 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. 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 income, interest expense, depreciation, amortization and
    income taxes under U.S. GAAP which may differ from Korean
    GAAP for these items. Part of the funds depicted by EBITDA are
    used for repayment of indebtedness and related interest expenses
    and payment of income tax. In addition, we have used, and will
    continue to use, a substantial portion of the funds depicted by
    EBITDA for capital expenditures on our wireless network
    construction.

As a measure of our operating performance, we
believe that the most directly comparable U.S. and Korean GAAP
measure to EBITDA is net income. The following table reconciles
our net income under U.S. GAAP to our definition of EBITDA
on a consolidated basis for the five years ended
December 31, 1999, 2000, 2001, 2002 and 2003.

RECONCILIATION OF NET INCOME TO EBITDA UNDER
US GAAP

|                     |                               |                                              |         |       |  |      |         |         |  |      |         |         |  |   |         |         |  |   |         |         |  |     |         |         | 
|-------------------- | ----------------------------- | -------------------------------------------- | ------- | ----- |  | ---- | ------- | ------- |  | ---- | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- |  | --- | ------- | ------- | 
|                     |                               |                                             
|                     |                               | As of or for the Year Ended December 31,    
|                     |                               |                                             
|                     |                               | 1999                                         |         | 2000  |  | 2001 |         | 2002    |  | 2003 |         | 2003   
|                     |                               |                                              |         |       |  |      |         |         |  |      |         |        
|                     |                               |                                             
|                     |                               | (In billions of won and millions of dollars)
|Net Income           |                               | W                                            | 284.1   |       |  | W    | 895.4   |         |  | W    | 1,111.6 |         |  | W | 1,301.1 |         |  | W | 2,062.7 |         |  | US$ | 1,730.5 |        
|ADD: Interest income |                               |                                              | (84.2   | )     |  |      | (67.6   | )       |  |      | (101.8  | )       |  |   | (90.8   | )       |  |   | (93.9   | )       |  |     | (78.7   | )      
|                     | Interest expense              |                                              |         | 125.6 |  |      |         | 215.1   |  |      |         | 274.4   |  |   |         | 396.6   |  |   |         | 387.1   |  |     |         | 324.7   | 
|                     | Taxes                         |                                              |         | 102.1 |  |      |         | 408.5   |  |      |         | 791.3   |  |   |         | 585.0   |  |   |         | 811.4   |  |     |         | 680.7   | 
|                     | Depreciation and Amortization |                                              |         | 709.4 |  |      |         | 1,479.1 |  |      |         | 1,783.6 |  |   |         | 1,428.8 |  |   |         | 1,511.7 |  |     |         | 1,268.2 | 
|                     |                               |                                              |         |       |  |      |         |         |  |      |         |         |  |   |         |         |  |   |         |         |  |     |         |        
|EBITDA               |                               | W                                            | 1,137.0 |       |  | W    | 2,930.5 |         |  | W    | 3,859.1 |         |  | W | 3,620.7 |         |  | W | 4,679.0 |         |  | US$ | 3,925.4 |        
|                     |                               |                                              |         |       |  |      |         |         |  |      |         |         |  |   |         |         |  |   |         |         |  |     |         |        

The following table reconciles our net income
under Korean GAAP to our definition of EBITDA on a consolidated
basis for the five years ended December 31, 1999, 2000,
2001, 2002 and 2003.

RECONCILIATION OF NET INCOME TO EBITDA UNDER
KOREAN GAAP

|                     |                               |                                              |         |       |  |      |         |         |  |      |         |         |  |   |         |         |  |   |         |         |  |     |         |         | 
|-------------------- | ----------------------------- | -------------------------------------------- | ------- | ----- |  | ---- | ------- | ------- |  | ---- | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- |  | --- | ------- | ------- | 
|                     |                               |                                             
|                     |                               | As of or for the Year Ended December 31,    
|                     |                               |                                             
|                     |                               | 1999                                         |         | 2000  |  | 2001 |         | 2002    |  | 2003 |         | 2003   
|                     |                               |                                              |         |       |  |      |         |         |  |      |         |        
|                     |                               |                                             
|                     |                               | (In billions of won and millions of dollars)
|Net Income           |                               | W                                            | 282.2   |       |  | W    | 972.3   |         |  | W    | 1,146.0 |         |  | W | 1,487.2 |         |  | W | 1,966.1 |         |  | US$ | 1,649.4 |        
|ADD: Interest income |                               |                                              | (84.2   | )     |  |      | (67.6   | )       |  |      | (97.4   | )       |  |   | (86.0   | )       |  |   | (86.5   | )       |  |     | (72.6   | )      
|                     | Interest expense              |                                              |         | 125.5 |  |      |         | 213.3   |  |      |         | 273.9   |  |   |         | 311.1   |  |   |         | 391.5   |  |     |         | 328.4   | 
|                     | Taxes                         |                                              |         | 101.2 |  |      |         | 367.3   |  |      |         | 850.3   |  |   |         | 698.5   |  |   |         | 789.0   |  |     |         | 662.0   | 
|                     | Depreciation and Amortization |                                              |         | 709.1 |  |      |         | 1,456.4 |  |      |         | 1,759.6 |  |   |         | 1,543.3 |  |   |         | 1,646.3 |  |     |         | 1,381.1 | 
|                     |                               |                                              |         |       |  |      |         |         |  |      |         |         |  |   |         |         |  |   |         |         |  |     |         |        
|EBITDA               |                               | W                                            | 1,133.8 |       |  | W    | 2,941.7 |         |  | W    | 3,932.4 |         |  | W | 3,954.1 |         |  | W | 4,706.4 |         |  | US$ | 3,948.3 |        
|                     |                               |                                              |         |       |  |      |         |         |  |      |         |         |  |   |         |         |  |   |         |         |  |     |         |        

8



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##### Table of Contents



As a measure of our liquidity, we believe that
the most directly comparable U.S. and Korean GAAP measure to
EBITDA is net cash provided by operating activities. The
following table reconciles our cash provided by operating
activities under U.S. GAAP to our definition of EBITDA on a
consolidated basis for the five years ended December 31,
1999, 2000, 2001, 2002 and 2003.

RECONCILIATION OF NET CASH PROVIDED BY
OPERATING ACTIVITIES

TO EBITDA UNDER US GAAP


|                                                                      |  |                                              |         |      |  |      |         |      |  |      |         |      |  |   |         |   |  |   |         |   |  |     |         |  
|--------------------------------------------------------------------- |  | -------------------------------------------- | ------- | ---- |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  | - | ------- | - |  | - | ------- | - |  | --- | ------- | -
|                                                                      |  |                                             
|                                                                      |  | As of or for the Year Ended December 31,    
|                                                                      |  |                                             
|                                                                      |  | 1999                                         |         | 2000 |  | 2001 |         | 2002 |  | 2003 |         | 2003
|                                                                      |  |                                              |         |      |  |      |         |      |  |      |         |     
|                                                                      |  |                                             
|                                                                      |  | (In billions of won and millions of dollars)
|Net Cash Provided By Operating
    Activities                         |  | W                                            | 1,123.6 |      |  | W    | 3,043.5 |      |  | W    | 2,423.9 |      |  | W | 3,708.9 |   |  | W | 3,281.3 |   |  | US$ | 2,752.7 |  
|Provision for severance indemnities                                   |  |                                              | (26.1   | )    |  |      | (34.7   | )    |  |      | (56.9   | )    |  |   | (45.5   | ) |  |   | (65.4   | ) |  |     | (54.8   | )
|Loss on disposal and impairment of property and
    equipment         |  |                                              | (25.2   | )    |  |      | (18.1   | )    |  |      | (41.8   | )    |  |   | (213.4  | ) |  |   | (13.8   | ) |  |     | (11.6   | )
|Loss on disposal and impairment of investment
    assets              |  |                                              | (71.2   | )    |  |      |        |      |  |      | (24.0   | )    |  |   | (372.5  | ) |  |   | (33.4   | ) |  |     | (28.0   | )
|Provision for bad debts                                               |  |                                              | (20.9   | )    |  |      | (35.3   | )    |  |      | (56.7   | )    |  |   | (21.0   | ) |  |   | (23.3   | ) |  |     | (19.6   | )
|Other expenses not involving cash payments                            |  |                                              | (72.1   | )    |  |      | (92.8   | )    |  |      | (54.3   | )    |  |   | (76.1   | ) |  |   | (83.8   | ) |  |     | (70.3   | )
|Income not involving cash receipts                                    |  |                                              | 70.0    |      |  |      | 106.6   |      |  |      | 35.8    |      |  |   | 58.4    |   |  |   | 20.0    |   |  |     | 16.8    |  
|Changes in assets and liabilities related to
    operating activities |  |                                              | 38.1    |      |  |      | (260.2  | )    |  |      | 984.4   |      |  |   | (327.4  | ) |  |   | 629.1   |   |  |     | 527.8   |  
|Interest income                                                       |  |                                              | (84.2   | )    |  |      | (67.6   | )    |  |      | (101.8  | )    |  |   | (90.8   | ) |  |   | (93.9   | ) |  |     | (78.7   | )
|Interest expense                                                      |  |                                              | 125.6   |      |  |      | 215.1   |      |  |      | 274.4   |      |  |   | 396.6   |   |  |   | 387.1   |   |  |     | 324.7   |  
|Income taxes paid                                                     |  |                                              | 79.4    |      |  |      | 74.0    |      |  |      | 476.2   |      |  |   | 603.5   |   |  |   | 675.1   |   |  |     | 566.4   |  
|                                                                      |  |                                              |         |      |  |      |         |      |  |      |         |      |  |   |         |   |  |   |         |   |  |     |         |  
|EBITDA                                                                |  | W                                            | 1,137.0 |      |  | W    | 2,930.5 |      |  | W    | 3,859.1 |      |  | W | 3,620.7 |   |  | W | 4,679.0 |   |  | US$ | 3,925.4 |  
|                                                                      |  |                                              |         |      |  |      |         |      |  |      |         |      |  |   |         |   |  |   |         |   |  |     |         |  

9



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##### Table of Contents



The following table reconciles our net cash
provided by operating activities under Korean GAAP to our
definition of EBITDA on a consolidated basis for the five years
ended December 31, 1999, 2000, 2001, 2002 and 2003.

RECONCILIATION OF NET CASH PROVIDED BY
OPERATING ACTIVITIES

TO EBITDA UNDER KOREAN GAAP


|                                              |                                                                       |                                              |         |       |   |      |         |        |   |      |         |         |   |   |         |        |   |   |         |       |   |     |         |       |  
|--------------------------------------------- | --------------------------------------------------------------------- | -------------------------------------------- | ------- | ----- | - | ---- | ------- | ------ | - | ---- | ------- | ------- | - | - | ------- | ------ | - | - | ------- | ----- | - | --- | ------- | ----- | -
|                                              |                                                                       |                                             
|                                              |                                                                       | As of or for the Year Ended December 31,    
|                                              |                                                                       |                                             
|                                              |                                                                       | 1999                                         |         | 2000  |   | 2001 |         | 2002   |   | 2003 |         | 2003   
|                                              |                                                                       |                                              |         |       |   |      |         |        |   |      |         |        
|                                              |                                                                       |                                             
|                                              |                                                                       | (In billions of won and millions of dollars)
|Net Cash Provided By Operating
    Activities |                                                                       | W                                            | 1,123.6 |       |   | W    | 3,043.5 |        |   | W    | 2,423.9 |         |   | W | 4,267.8 |        |   | W | 3,328.8 |       |   | US$ | 2,792.6 |      
|Reconciliation:                               |                                                                       |                                              |         |       |   |      |         |        |   |      |         |         |   |   |         |        |   |   |         |       |   |     |         |      
|                                              | Provision for severance indemnities                                   |                                              |         | (26.1 | ) |      |         | (34.7  | ) |      |         | (56.9   | ) |   |         | (45.5  | ) |   |         | (65.4 | ) |     |         | (54.8 | )
|                                              | Loss on disposal and impairment of property and
    equipment         |                                              |         | (25.2 | ) |      |         | (18.1  | ) |      |         | (41.8   | ) |   |         | (212.1 | ) |   |         | (13.8 | ) |     |         | (11.6 | )
|                                              | Loss on disposal and impairment of investment
    assets              |                                              |         | (71.2 | ) |      |         |       |   |      |         | (24.0   | ) |   |         | (120.5 | ) |   |         | (58.1 | ) |     |         | (48.8 | )
|                                              | Provision for bad debts                                               |                                              |         | (20.9 | ) |      |         | (35.3  | ) |      |         | (56.7   | ) |   |         | (21.0  | ) |   |         | (23.3 | ) |     |         | (19.5 | )
|                                              | Other expenses not involving cash payments                            |                                              |         | (72.1 | ) |      |         | (92.9  | ) |      |         | (54.4   | ) |   |         | (99.7  | ) |   |         | (83.8 | ) |     |         | (70.3 | )
|                                              | Income not involving cash receipts                                    |                                              |         | 70.0  |   |      |         | 106.5  |   |      |         | 35.8    |   |   |         | 58.4   |   |   |         | 20.0  |   |     |         | 16.8  |  
|                                              | Changes in assets and liabilities related to
    operating activities |                                              |         | 34.9  |   |      |         | (247.1 | ) |      |         | 1,053.8 |   |   |         | (701.9 | ) |   |         | 621.9 |   |     |         | 521.7 |  
|                                              | Interest income                                                       |                                              |         | (84.2 | ) |      |         | (67.6  | ) |      |         | (97.4   | ) |   |         | (86.0  | ) |   |         | (86.5 | ) |     |         | (72.6 | )
|                                              | Interest expense                                                      |                                              |         | 125.6 |   |      |         | 213.4  |   |      |         | 273.9   |   |   |         | 311.1  |   |   |         | 391.5 |   |     |         | 328.4 |  
|                                              | Income taxes paid                                                     |                                              |         | 79.4  |   |      |         | 74.0   |   |      |         | 476.2   |   |   |         | 603.5  |   |   |         | 675.1 |   |     |         | 566.4 |  
|                                              |                                                                       |                                              |         |       |   |      |         |        |   |      |         |         |   |   |         |        |   |   |         |       |   |     |         |      
|EBITDA                                        |                                                                       | W                                            | 1,133.8 |       |   | W    | 2,941.7 |        |   | W    | 3,932.4 |         |   | W | 3,954.1 |        |   | W | 4,706.4 |       |   | US$ | 3,948.3 |      
|                                              |                                                                       |                                              |         |       |   |      |         |        |   |      |         |         |   |   |         |        |   |   |         |       |   |     |         |      



---



| |     |                                                              
| | --- | -------------------------------------------------------------
| | (9) | Consists of investments in property, plant and
    equipment.



|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Includes donations to Korean research institutes
    and educational organizations. See Information on the
    Company  Research and Development.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    
|(11) | Population estimates based on historical data
    published by the National Statistical Office of Korea.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    
|(12) | Wireless penetration is determined by dividing
    subscribers by total estimated population, as of the end of the
    period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    
|(13) | Includes regular employees and temporary
    employees. See Information on the Company 
    Employees. Includes 1,687 and 1,332 Shinsegi employees as
    of December 31, 2000 and 2001, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    
|(14) | 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.
    Wireless subscribers also include 3,517,831 Shinsegi subscribers
    as of December 31, 2000 and 3,311,874 as of
    December 31, 2001. Shinsegi was merged into SK Telecom on
    January 13, 2002.
|    
|(15) | We discontinued our analog service on
    December 31, 1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(16) | The average monthly outgoing voice minutes per
    subscriber is computed by dividing the total minutes of outgoing
    voice usage for the period by the monthly weighted average
    number of subscribers for the period and dividing the quotient
    by the number of months in the period. The monthly weighted
    average number of subscribers is the sum of the average number
    of subscribers for the month, calculated by taking the simple
    average number of subscribers at the beginning of the month and
    at the end of the month, divided by the number of months in the
    period. Shinsegis subscribers and outgoing voice minutes
    are included from April 1, 2000.                                                                                                                                                                                                             
|    
|(17) | The average monthly revenue per subscriber
    excludes interconnection revenue and is computed by dividing
    total initial connection fees, monthly access fees, usage
    charges for voice and data, international charges, value-added
    service fees; and interest on overdue accounts (net of telephone
    tax) for the period by the monthly weighted average number of
    subscribers for the period and dividing the quotient by the
    number of months in the period. Including interconnection
    revenue, consolidated average monthly revenue per subscriber was
    Won 43,958 for 2002 and won 44,546 for 2003. Shinsegis
    subscribers and revenue are included from April 1, 2000.
    For information about the average monthly revenue per subscriber
    of SK Telecom and Shinsegi on a stand-alone basis, see
    Operating and Financial Review and Prospects 
    Overview.
|    
|(18) | 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 and dividing the quotient 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.                                                                                                                                                                                                                                                                                                                                                                                                            
|    
|(19) | Includes 2,532 cell sites of Shinsegi as of
    December 31, 2000 and 1,685 cell sites as of
    December 31, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

EXCHANGE RATES

The following table sets forth, for the periods
and dates indicated, certain information concerning 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. We make no representation that the Won
or Dollar amounts we refer to in this report could have been or
could be converted into Dollars or Won, as the case may be, at
any particular rate or at all.

|                        |  |                   |       |         |  |      |       |     |  |  |       |  |  |  |       | 
|----------------------- |  | ----------------- | ----- | ------- |  | ---- | ----- | --- |  |  | ----- |  |  |  | ----- | 
|                        |  | At End            |       | Average |  |      |       |    
|Year Ended December 31, |  | Of Period         |       | Rate(1) |  | High |       | Low
|                        |  |                   |       |         |  |      |       |    
|                        |  |                  
|                        |  | (Won per US$1.00)
|1999                    |  |                   | 1,136 |         |  |      | 1,188 |     |  |  | 1,243 |  |  |  | 1,125 | 
|2000                    |  |                   | 1,267 |         |  |      | 1,140 |     |  |  | 1,267 |  |  |  | 1,106 | 
|2001                    |  |                   | 1,314 |         |  |      | 1,293 |     |  |  | 1,369 |  |  |  | 1,234 | 
|2002                    |  |                   | 1,186 |         |  |      | 1,250 |     |  |  | 1,332 |  |  |  | 1,161 | 
|2003                    |  |                   | 1,192 |         |  |      | 1,193 |     |  |  | 1,262 |  |  |  | 1,146 | 

|                     |  |                   |         |     |  |  |         | 
|-------------------- |  | ----------------- | ------- | --- |  |  | ------- | 
|Past Six Months      |  | High              |         | Low
|                     |  |                   |         |    
|                     |  |                  
|                     |  | (Won per US$1.00)
|November 2003        |  |                   | 1,207   |     |  |  | 1,171   | 
|December 2003        |  |                   | 1,200   |     |  |  | 1,183   | 
|January 2004         |  |                   | 1,195.1 |     |  |  | 1,172   | 
|February 2004        |  |                   | 1,180   |     |  |  | 1,152.2 | 
|March 2004           |  |                   | 1,181   |     |  |  | 1,146.7 | 
|April 2004           |  |                   | 1,173.6 |     |  |  | 1,141.4 | 
|through May 25, 2004 |  |                   | 1,191   |     |  |  | 1,167   | 

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---



|    |                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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).

On May 25, 2004, the noon buying rate was
Won 1,179.5 to US$1.00.

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RISK FACTORS

An investment in our American Depositary Shares,
or ADSs, and our debt securities involves various risks. If you
own or are considering purchasing our ADSs or our debt
securities, you should carefully review the information
contained in this report. You should particularly refer to the
following:



| |                                                                                                           
| | ----------------------------------------------------------------------------------------------------------
| | Competition may reduce our market share and
    harm our results of operation and financial
    condition.

We face substantial competition in the wireless
telecommunications sector in Korea. We expect competition to
intensify as a result of consolidation of market leaders and the
development of new technologies, products and services.
Continued competition from the other wireless and fixed-line
service providers has resulted in, and may continue to result
in, a substantial level of deactivations among our subscribers.
Subscriber deactivations, or churn, may
significantly harm our business and results of operations. In
addition, increased competition may cause our marketing expenses
to increase as a percentage of sales, reflecting higher
advertising expenses and other costs of new marketing activities
which may be introduced to attract and retain subscribers.

Prior to April 1996, we were the only wireless
telecommunications service provider in Korea. Since then,
several new providers have entered the market, offering wireless
voice and data services that compete directly with our own.
Together, these providers had a market share of approximately
48.0%, in terms of numbers of wireless service subscribers, as
of April 30, 2004. Furthermore, in 2001, the Government
awarded to three companies licenses to provide high-speed third
generation, or 3G, wireless telecommunications services. One of
these licenses was awarded to SK Telecoms former
subsidiary, SK IMT Co., Ltd., which was merged into SK Telecom
on May 1, 2003, and the other two licenses were awarded to
consortia led by or associated with KT Corporation (formerly
known as Korea Telecom Corp.), Koreas principal fixed-line
operator and the parent of KT Freetel Co., Ltd., one of our
principal wireless competitors, and to LG Telecom, Ltd. In
addition, our wireless voice businesses compete with
Koreas fixed-line operators, and our wireless data and
Internet businesses compete with providers of fixed-line data
and Internet services.

Beginning in 2000, there has been considerable
consolidation in the wireless telecommunications industry
resulting in the emergence of stronger competitors. In 2000, KT
Corporation acquired a 47.9% interest in Hansol M.Com (formerly
Hansol PCS Co., Ltd.), which was the fifth largest wireless
operator in terms of numbers of wireless service subscribers at
such time. Hansol M.Com subsequently changed its name to
KT M.Com and merged into KT Freetel in May 2001. In May
2002, the Government sold its remaining 28.4% stake in KT
Corporation. KT Corporation has a 46.9% interest in KT Freetel
as of December 31, 2003. It is widely believed that KT
Corporation is likely to operate more efficiently and be managed
more effectively and profitably following its privatization.
Such consolidation has created large, well-capitalized
competitors with substantial financial, technical, marketing and
other resources to respond to our business offerings.

We expect competition to intensify as a result of
such consolidation and the rapid development of new
technologies, products and services. Our ability to compete
successfully will depend on our ability to anticipate and
respond to various competitive factors affecting the industry,
including new services that may be introduced, changes in
consumer preferences, economic conditions and discount pricing
strategies by competitors. Future business combinations and
alliances in the telecommunications industry may create
significant new competitors and could harm our business and
results of operations.

Significant
technological advancements affecting the wireless industry may
harm our business.

Significant advances in technology are occurring
that may affect our business, including the roll-out by us and
our competitors of advanced high-speed wireless
telecommunications networks based on CDMA 1xEV/DO technology and
other technologies such as W-CDMA and cdma2000, both of which
are commonly referred to as third generation, or 3G, wireless
technology. W-CDMA service is also known as IMT-2000 service in
Korea. Such networks are expected to support data transmission
services with more advanced features and significantly higher
data transmission rates than our principal data network, which
uses a technology called CDMA 1xRTT. We commenced provision of
our W-CDMA services on a limited basis in Seoul at the end of
2003. The successful introduction and operation of a 3G network
by a competitor could

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materially and adversely affect our existing
wireless businesses as well as the returns on future investments
we may make in a 3G network or our other businesses. We could
also be harmed if we fail to adapt to technological or other
changes in the telecommunications sector in a timely manner. For
an explanation of some of the difficulties that we are facing
with respect to W-CDMA, see  W-CDMA technology
may require significant capital and other expenditures for
implementation which we may not recoup and may be difficult to
integrate with our other businesses.




| |                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | W-CDMA technology may require significant
    capital and other expenditures for implementation which we may
    not recoup and may be difficult to integrate with our other
    businesses.

W-CDMA is a high-speed wireless communication
technology that we believe will allow us to offer even more
sophisticated wireless data transmission services at faster
speeds than our current CDMA 1xRTT network. Under the terms of
our W-CDMA license received in 2001, we were required to
commence provision of W-CDMA services by the end of 2003. We
commenced provision of our IMT-2000 services based on our W-CDMA
network on a limited basis in Seoul at the end of 2003. However,
the actual scope and timing of the full nationwide roll-out of
our W-CDMA network will depend on several factors, including the
availability of network equipment, progress on the development
of dual band/dual mode handsets, ability to overcome technical
problems currently affecting W-CDMA performance, adoption of
CDMA 1xEV/ DO service, regulatory decisions, our assessment of
the market opportunities for W-CDMA technology-based services
and the competitive landscape in the Korean wireless market.

We cannot assure you that we will be able to
construct a nationwide W-CDMA network or provide W-CDMA services
in a timely, effective and cost efficient manner. Several
companies in other countries have announced delays in the
roll-out of their 3G services as a result of technological
problems and difficulties with software, equipment and handset
supply. We are vulnerable to similar problems, and if such
problems are not resolved effectively as they arise, our
financial condition or results of operations could be adversely
affected. In addition, the MIC is empowered to take various
measures against us ranging from the suspension of our business
to the revocation of our W-CDMA license if we fail to comply
with the terms of our W-CDMA license. We believe that we are
currently in compliance with all material terms of the license.
Also, we cannot assure you that there will be sufficient demand
for our W-CDMA services, as a result of competition or
otherwise, to permit us to recoup or profit from our investment
in the W-CDMA license and network. In addition, demand for our
W-CDMA services will depend in part on the availability of
attractive content and services. We cannot assure you that such
content and services will become available in a timely manner,
or at all. If W-CDMA services are not widely implemented, we may
have to record an impairment loss on the license fee that we
paid and our equipment relating to W-CDMA.

We expect that any future expansion of our W-CDMA
network may require external funding, and we cannot assure you
that such funding will be available at a cost acceptable to us,
or at all. In addition, we cannot assure you that we will be
able to successfully integrate W-CDMA services into our existing
businesses in a timely or cost-effective manner or that the
W-CDMA business will not adversely affect our current wireless
businesses, including the services currently provided on our
networks and new services. The MIC also awarded the W-CDMA
license to provide 3G services based on a technology different
from ours to LG Telecom for a fee lower than the fee we are
required to pay for our W-CDMA license and on terms generally
more favorable than the terms of our license, which may give LG
Telecom a competitive advantage. See Information on the
Company  W-CDMA Network and Operating and
Financial Review and Prospects  Liquidity and Capital
Resources.



| |                                                                                                                                                                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our business environment requires us to
    continually invest in the growth of our business, and as a
    result, we may make significant investments in new businesses
    and regions, including businesses and regions in which we have
    limited experience.

We believe that we must continue to make
significant investments to build, develop and broaden our
businesses, including developing and providing wireless data,
multimedia, mobile commerce and Internet services. We will need
to respond to market and technological changes and the
development of services which we may have little or no
experience in providing. We may also make investments in
wireless telecommunica-

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tions and other businesses outside of Korea.
Entering these new businesses and regions may require us to make
substantial investments and no assurance can be given that we
will be successful in our efforts.




| |                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Due to the existing high penetration rate
    of wireless services in Korea and the Korean governments
    prohibition on handset subsidies, we are unlikely to maintain
    our subscriber growth rate, which could adversely affect our
    results of operations.

According to data published by the MIC and our
population estimates based on historical data published by the
National Statistical Office of Korea, the penetration rate for
the Korean wireless telecommunications service industry as of
April 30, 2004 was approximately 74.1%, which is high
compared to many industrialized countries. In the past, wireless
telecommunications service providers provided handsets at below
retail prices to attract new subscribers, offsetting a
significant portion of the cost of handsets. The rapid growth in
penetration rate in recent years can, at least in part, be
attributed to such subsidies on handsets given to new
subscribers. The MIC prohibited all wireless telecommunications
service providers from providing any such handset subsidies
beginning June 1, 2000. In March 2002, the MIC concluded
that certain incentive payments made to wireless handset dealers
by us and other wireless network service providers were being
passed on to purchasers of wireless handsets and therefore
constituted improper handset subsidies. In May 2002, we,
KT Freetel and LG Telecom were fined an aggregate of
Won 20.0 billion by the MIC in respect of these incentive
payments. We were assessed and have paid in full a fine of Won
10.0 billion. On November 15, 2002, we received an
order from the MIC prohibiting us from signing up new
subscribers for 30 days (from November 21, 2002
through December 20, 2002) for violating MICs handset
subsidy regulation. KT Freetel and LG Telecom were also
prohibited from signing up new subscribers for 20 days. In
February 2004, the MIC imposed upon us a fine of Won
21.7 billion with respect to certain incentive payments
that were deemed by the MIC to constitute improper handset
subsidies. We paid the fine in March 2004. In February 2004,
KT Freetel and KT Corporation were also fined Won
7.5 billion and Won 4.1 billion, respectively, in
respect of such incentive payments.

On May 25, 2004, a policy advisory committee
to the MIC announced the results of its review of the merger
conditions related to our acquisition of Shinsegi in January
2002 and stated that the committee believed that our market
dominance may significantly restrict competition in the
telecommunications market and that we have violated a merger
condition by providing subsidies to handset buyers. The
committee stated that it will recommend that the MIC extend the
post-merger monitoring period by two years until January 2007
and take appropriate corrective measures against us. Although
the MIC has not yet made a formal determination, on May 31,
2004, the Minister of MIC stated that MIC intends to impose a
Won 11.9 billion fine on us and extend the post-merger
monitoring period until January 2007 pursuant to the advisory
committees recommendation. When the MIC makes its formal
determination, the MIC, at its discretion, may impose additional
restrictions on our business pursuant to telecommunications
related laws and regulations in order to facilitate fair
competition in the telecommunications industry. The MIC is
expected to make a formal decision as to the advisory
committees findings and recommendation in early June 2004.
On May 25, 2004, we voluntarily undertook to limit our
market share to 52.3% of the wireless telecommunications market
through the end of 2005, the level of our market share at the
time of the approval of our merger with Shinsegi in January 2002.

As a result of the already high penetration rates
in Korea for wireless services, our large market share, the
MICs handset subsidy regulation and the steps we have
taken to comply with such regulation, we expect our subscriber
growth rate to decrease, which could adversely affect our
results of operations.



| |                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our business and results of operations may
    be adversely affected if we fail to acquire adequate spectrum or
    use efficiently our bandwidth to accommodate subscriber growth
    and subscriber usage.

One of the principal limitations on a wireless
networks subscriber capacity is the amount of spectrum
available for use by the system. SK Telecoms networks have
been allocated 2 x 25 Mhz of spectrum in the 800 Mhz band.

15



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As a result of bandwidth constraints, SK
Telecoms CDMA 1xRTT network is currently operating near
its capacity in the Seoul metropolitan area. While we believe
that we can address this through system upgrades and efficient
allocation of bandwidth, the inability to address such capacity
constraints may adversely affect our business and results of
operations.

The growth of our wireless data businesses has
increased our utilization of our bandwidth, since wireless data
applications can be more bandwidth-intensive than voice
services. This trend has been offset in part by the
implementation of our CDMA 1xRTT network, which uses bandwidth
more efficiently for voice and data traffic than our CDMA
networks. If current upward trends in data transmission by our
subscribers continue, our bandwidth capacity requirements could
increase further. Growth of our wireless business will depend in
part upon our ability to manage effectively our bandwidth and to
implement timely and efficiently new bandwidth-efficient
technologies if they become available. We cannot assure you that
bandwidth constraints will not adversely affect the growth of
our wireless businesses.



| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | We may have to make further financing
    arrangements to meet our capital requirements and contractual
    payment obligations.

We estimate that we will spend approximately Won
1.7 trillion for capital expenditures in 2004 for a range of
projects, including expansion and improvement of our wireless
networks, investments in our Internet-related businesses and
expansion of our W-CDMA network. We expect to plan our future
capital expenditures after we have reviewed the progress of the
introduction and marketability of our W-CDMA service which we
commenced on a limited basis in Seoul at the end of 2003. For a
more detailed discussion of our capital expenditure plans and a
discussion of other factors which may affect our capital
expenditures in the future, see Operating and Financial
Review and Prospects  Liquidity and Capital
Resources. At December 31, 2003, we had approximately
Won 1.4 trillion in contractual payment obligations due in 2004
of which almost all involve repayment of debt obligations. We
have substantial cash payment in future years. See
Operating and Financial Review and Prospects 
Contractual Obligation & Commitments.

We have not arranged firm financing for all of
our capital expenditure plans. We have in the past obtained
funds for our proposed capital investments and cash payment
obligations from various sources, including our cash flow from
operations as well as debt and equity financing transactions. We
believe that we have sufficient capital resources, including our
ability to sell debt and equity securities, to meet our capital
requirements and payment obligations in the near term. However,
if, for any reason, adequate capital is not available at the
time it is needed, our business and prospects could be adversely
affected. If the overall cost of our proposed capital investment
projects increases above expected levels or if spending is
required at a different rate than we now project, we may not be
able to finance the projects in the manner currently intended,
and we may be required to seek additional sources of funding for
these projects. We cannot assure you that these additional funds
will be available at a cost acceptable to us, or at all.



| |                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------
| | Termination or impairment of our
    relationship with a small number of key suppliers could
    adversely affect our results of operations.

We purchase wireless network equipment from a
small number of suppliers. We purchase our principal wireless
network equipment from Samsung Electronics Co., Ltd., LG
Electronics Inc. and Hyundai Syscomm Inc. (formerly Hyundai
Electronics Industries Co., Ltd.). To date, we have purchased
substantially all of the equipment for our CDMA 1xRTT network
from Samsung Electronics. Samsung Electronics also currently
manufactures more than 50% of the wireless handsets sold to our
subscribers. Although other manufacturers sell the equipment we
require, sourcing such equipment from other manufacturers could
result in delays and additional costs in our roll-out or
expansion of the CDMA 1xRTT network. Carriers globally have had
difficulty in obtaining adequate quantities of various types of
3G equipment, including handsets, from suppliers. In addition,
we rely on KT Corporation and SK Networks to provide a
substantial majority of our leased lines. In 2003, KT
Corporation and SK Networks provided approximately 33% and 39%,
respectively, of our leased lines. In order to reduce our
dependence on our competitor, KT Corporation, we are considering
leasing a majority of our fixed lines from SK Networks in the
future. We cannot assure you that we will be able to continue to
obtain the necessary equipment from one or more of our
suppliers. Any discontinuation or

16



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interruption in the availability of equipment
from our suppliers for any reason could have an adverse effect
on our results of operations.




| |                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

The MIC has periodically reviewed the tariffs
charged by wireless operators and has from time to time
suggested tariff reductions. Although these suggestions are not
binding, we have in the past implemented some level of tariff
reductions in response to these suggestions. After discussions
with the MIC, effective January 1, 2003, we reduced our
standard rate plans monthly access fee by Won 1,000,
increased our free air time from 7 minutes to 10 minutes
per month and reduced our peak usage charges from Won 21 to Won
20 per minute. After discussions with the MIC, in October
2003, we reduced our monthly charges for caller ID service from
Won 2,000 to Won 1,000.

The Korean government plays an active role in the
selection of technology to be used by telecommunications
operators in Korea. The MIC has adopted the W-CDMA and cdma2000
technologies as the only standards available in Korea for
implementing 3G services. The MIC may impose similar
restrictions on the choice of technology used in future
telecommunications services and we can give no assurance that
the technologies promoted by the Government will provide the
best commercial returns for us.

Our wireless telecommunications services depend,
in part, on our interconnection arrangements with domestic and
international fixed-line and other wireless networks. Charges
for interconnection affect our revenues and operating results.
The MIC determines the basic framework for interconnection
arrangements in Korea and has changed this framework several
times in the past. We cannot assure you that we will not be
adversely affected by future changes in the MICs
interconnection policies. Under our interconnection agreements,
we are required to make payments in respect of calls from our
subscribers which are routed through networks of other Korean
telecommunications operators, and the other operators are
required to make payments to us in respect of calls which
originate in their networks and terminate in our network. With
respect to the interconnection arrangement for calls from
fixed-line networks to wireless networks, for the years 1999
through 2001, fixed-line operators payments to wireless
network service providers were calculated based on the actual
imputed costs in 1998 of the leading wireless network service
provider, which is us. For 2002, these payments were calculated
based on each wireless operators actual imputed costs in
2001. This change reduced the interconnection revenue we
received from each call made from a fixed-line network
terminating on our network, adversely affecting our
interconnection revenue compared to previous years. For 2003,
pursuant to a new MIC policy, an operators interconnection
fees are derived from that operators actual
interconnection charges for 2001 and actual imputed costs for
2001. The MIC also implemented interconnection charges for calls
between wireless network service providers beginning in January
2000, affecting both our revenue and our expenses. These charges
were also reduced beginning in January 2002 and in January 2003.
The MIC is expected to introduce a new method of calculating
interconnection payments, based on the terminators
long-run incremental cost in 2004. We believe that our
interconnection revenue may be reduced even further under the
new framework. For more information about our interconnection
revenue and expenses, see Information on the
Company  Interconnection  Domestic
Calls.

In January 2003, the MIC announced its plan to
implement number portability with respect to wireless
telecommunications service in Korea. The number portability
system allows wireless subscribers to switch wireless service
operators while retaining the same mobile phone number. However,
subscribers who switch operators must purchase a new handset, as
we use a different frequency than KT Freetel and LG Telecom. In
accordance with the plan published by the MIC, the number
portability system was adopted by SK Telecom first, starting
from January 1, 2004. Following the implementation of the
number portability system, 305,267, 183,876, 214,232 and 261,654
of our subscribers transferred to the services of our
competitors in January 2004, February 2004, March 2004 and April
2004, respectively. Subscribers who choose to transfer to a
different wireless operator have the right to return to us
without paying any penalties within 14 days of the initial
transfer. KT Freetel and LG Telecom will be required to
introduce number portability starting from July 1, 2004 and
January 1, 2005, respectively.

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In addition, in order to manage the availability
of phone numbers efficiently and to secure phone number
resources for the new services, the MIC plans to integrate
mobile telephone identification numbers into a common prefix
identification number 010 and to gradually retract
the current mobile service identification numbers which had been
unique to each wireless telecommunications service provider,
including 011 for our cellular services, starting
from 2004. All new subscribers were given the 010
prefix starting in January 2004.

The following table sets forth, based on MIC
data, new subscribers for each of the major wireless cellular
providers following the adoption of the 010 prefix
in January 2004:

|              |  |                                                  |              |            |  |            |              |   |  |  |              |  
|------------- |  | ------------------------------------------------ | ------------ | ---------- |  | ---------- | ------------ | - |  |  | ------------ | -
|              |  |                                                 
|              |  | Number of New Wireless Subscribers/Percentage of
|              |  | New Wireless Subscribers                        
|              |  |                                                 
|Month         |  | SK Telecom                                       |              | KT Freetel |  | LG Telecom
|              |  |                                                  |              |            |  |           
|January 2004  |  |                                                  | 382,420/42.1 | %          |  |            | 375,181/41.3 | % |  |  | 149,737/16.5 | %
|February 2004 |  |                                                  | 422,816/43.6 | %          |  |            | 329,066/33.9 | % |  |  | 218,435/22.5 | %
|March 2004    |  |                                                  | 405,199/39.0 | %          |  |            | 356,003/34.3 | % |  |  | 276,537/26.6 | %
|April 2004    |  |                                                  | 448,997/41.2 | %          |  |            | 330,441/30.3 | % |  |  | 309,736/28.4 | %

We believe that the use of the common prefix
identification system may pose a greater risk to us compared to
the other wireless telecommunications providers because
011 has a very high brand recognition in Korea as
the premium wireless telecommunications service. The MICs
adoption of number portability system could also result in a
deterioration of our market share as a result of weakened
customer loyalty, increased competition among wireless service
providers and higher costs as a result of maintaining the number
portability system, increased subscriber deactivations,
increased churn rate and higher marketing costs, all of which
had, and may continue to have, an adverse effect on our results
of operations. See Operating and Financial Review and
Prospects. See Information on the
Company  Law and Regulation  Number
Portability. In February 2004, the MIC imposed a total
fine of Won 2.0 billion on us in connection with our
marketing efforts related to the number portability system. For
details, see Financial Information  Legal
Proceedings  MIC Proceedings.

In December 2002, the MIC implemented a wireless
Internet network co-share system that permits the wireless
application protocol gateway, or WAP gateway, of a fixed-line
operator to connect to a wireless network service
providers IWF (inter-working function) device. IWF is a
device that connects cellular network with an IP (Internet
Protocol) network while WAP Gateway converts hypertext transfer
protocol, or HTTP protocol, into WAP protocol. This co-share
system would allow subscribers of a wireless network service
provider to have access to wireless Internet content provided by
a fixed-line operator. In December 2002, KT Corporation
connected to our IWF but has not yet commenced service. In July
2003, the MIC approved the basic terms regarding the
implementation of a network co-system. In January 2004, we
entered into a memorandum of understanding with Onse to
establish a co-share system. We and Onse have not yet decided
when to launch these services. Currently, our subscribers can
access portals provided by outside parties. In addition, the MIC
has requested that a third party oversee wireless
operators customer billing procedures with respect to
third-party content providers who are seeking to provide their
content directly to subscribers without going through an
individual operators portal, as third-party content
providers have experienced difficulties in the past in providing
their content service directly to subscribers due to the lack of
resources for billing users. We believe that such a co-share
system, if widely adopted, will have the effect of giving our
users access to a wide variety of content using their handsets
which may in turn increase revenues attributable to our data
services. However, this system could also place significant
competitive pressure on the revenues and profits attributable to
our NATE platform.



| |                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------
| | We are subject to additional regulation as
    a result of our market position, which could harm our ability to
    compete effectively.

The MICs policy is to promote competition
in the Korean telecommunications markets through measures
designed to prevent the dominant service provider in a
telecommunications market from exercising its market power to
prevent the emergence and development of viable competitors. SK
Telecom is currently designated by the MIC as a market
dominant service provider in respect of our wireless
telecommunications

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business. As such, we are subject to more
stringent regulation than our competitors. For example, under
current government regulations, we must obtain prior approval
from the MIC to change our existing rates or introduce new rates
although our competitors may generally change their rates or
introduce new rates at their discretion. See Information
on the Company  Law and Regulation  Rate
Regulation. As of April 30, 2004, our standard peak
usage charge rate was approximately 11.1% higher than those
charged by our competitors. We could also be required by the MIC
to charge higher usage rates than our competitors for future
services. In addition, we were required to introduce number
portability earlier than our competitors, KT Freetel and LG
Telecom. The MIC also awarded the W-CDMA license to provide 3G
services based on a technology different from ours to LG Telecom
for a fee lower than the fee we are required to pay for our
W-CDMA license and on terms generally more favorable than the
terms of our license. As a result, our wireless businesses may
operate at a competitive disadvantage to that of LG Telecom.


The MIC approved the merger of SK IMT into SK
Telecom on April 30, 2003, subject to the satisfaction of
certain conditions imposed by the MIC to ensure fair competition
and customer protection. These conditions included, among
others, commencing provision of W-CDMA IMT-2000 services using 2
X 20 MHz of spectrum in the 2GHz band by the end of 2003,
obtaining approval from the MIC on the initial tariff plan for
the W-CDMA services, submission of an implementation plan to
open our wireless Internet network to other telecommunications
operators and an implementation plan for number portability. On
May 1, 2003 SK IMT was merged into SK Telecom. See
Operating and Financial Review and Prospects 
Overview. We believe that we are currently in compliance
with all material terms of the license.

In addition, when the MIC approved the merger of
Shinsegi into SK Telecom in January 2002, the MIC imposed
certain conditions on SK Telecom. The MIC periodically reviews
our compliance with the conditions to our merger with Shinsegi.
On May 25, 2004, a policy advisory committee to the MIC
announced the results of its review and stated that the
committee believed that our market dominance may significantly
restrict competition in the telecommunications market and that
we have violated a merger condition related to our acquisition
of Shinsegi by providing subsidies to handset buyers. The
committee stated that it will recommend that the MIC extend the
post-merger monitoring period by two years until January 2007
and take appropriate corrective measures against us for
providing subsidies to handset buyers. Although the MIC has not
yet made a formal determination, on May 31, 2004, the
Minister of the MIC stated that MIC intends to impose a
Won 11.9 billion fine on us and extend the post-merger
monitoring period until January 2007. The MIC is expected to
make a formal decision as to the advisory committees
findings and recommendation in early June 2004 and may impose
additional restrictions on our business. We can give no
assurance that the MIC will not take action that may have a
material adverse effect on our business, operations and
financial condition.

In addition, we qualify as a
market-dominating business entity under the Korean
Monopoly Regulation and Fair Trade Act, or the Fair Trade Act.
The Fair Trade Commission of Korea, or the FTC, approved our
acquisition of Shinsegi on various conditions, one of which was
that SK Telecoms and Shinsegis combined market share
of the wireless telecommunications market, based on numbers of
subscribers, be less than 50.0% as of June 30, 2001. In
order to satisfy this condition, we reduced the level of our
subscriber activations and adopted more stringent involuntary
subscriber deactivation policies beginning in 2000 and ceased
accepting new subscribers from April 1, 2001 through
June 30, 2001. We complied with this requirement by
reducing our market share to approximately 49.7% as of
June 30, 2001. We are not currently subject to any market
share limitations; however, on May 25, 2004, we voluntarily
undertook to limit our market share to 52.3% of the wireless
telecommunications market through the end of 2005, the level of
our market share at the time of the approval of our merger with
Shinsegi in January 2002. We can give no assurances that the
Government will not impose restrictions on our market share in
the future or that we will not undertake to voluntarily restrict
our market share in the future. If we are subject to market
share limitations in the future, our ability to compete
effectively will be impeded. The FTC, also as a condition to the
Shinsegi acquisition, imposed a maximum limit of 1,200,000 on
the number of digital handsets we may purchase annually from our
subsidiary, SK Teletech Co., Ltd., until December 31, 2005.
The limitation on the number of handsets we may purchase
annually from SK Teletech does not apply to W-CDMA handsets.

The additional regulation to which we are subject
has affected our competitiveness in the past and may hurt our
profitability and impede our ability to compete effectively
against out competitors in the future.

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

Charges of financial statement irregularities by
certain directors and executives at SK Networks have culminated
in the resignation of four of our board members and executives,
although none of these resignations were related to any
allegations of wrongdoing in connection with their role in our
business, and SK Telecom was not implicated in any of the
charges against SK Networks management. Furthermore,
continuing financial difficulties at SK Networks could result in
our having to look for alternative sources for handset
distribution and fixed network line needs. In February 2004,
Mr. Kil Seung Son and Mr. Tae Won Chey, who both
received prison terms of three years in the court of first
instance in connection with allegations of financial misconduct
at SK Networks, resigned from our board of directors, along with
Mr. Moon Soo Pyo, our president and Mr. Jae Won Chey,
our executive vice president. See Directors, Senior
Management and Employees  Certain Legal
Proceedings.

The financial future of SK Networks remains
uncertain. In March 2003, the principal creditor banks of SK
Networks commenced corporate restructuring procedures against SK
Networks after the company announced that its financial
statements understated its total debt by Won 1.1 trillion and
overstated its profits by Won 1.5 trillion. These banks agreed
to a temporary rollover of approximately Won 6.6 trillion of
SK Networks debt until June 18, 2003 and
subsequently decided to put SK Networks into corporate
restructuring. In October 2003, SK Networks foreign and
domestic creditors agreed to a restructuring plan which, among
other things, allowed the foreign creditors to cash out their
debts at a buyout rate of 43% of the face value of the
outstanding debt owed to them. In November 2003, SK Networks
underwent a capital reduction and sold approximately Won 1
trillion of its assets as part of its restructuring plan, and
SK Corporation approved a Won 850 billion
debt-for-equity swap. SK Networks is currently under the
joint management of its domestic creditors in accordance with
its business normalization plan.

SK Networks is the exclusive distributor of all
of the handsets sold by our subsidiary, SK Teletech, to our
nationwide network of dealers. SK Networks also serves as a
distributor of handsets manufactured by third parties to our
nationwide network of dealers. Samsung Electronics Co. Ltd., LG
Electronics Inc., Motorola Korea, Inc. and Pantech &
Curitel suspended their supply of handsets to SK Networks from
the beginning of April 2002 for two to three weeks because of
the credit risk of SK Networks. In May 2003, all suppliers
resumed their supply of handsets on the condition that payment
on their mobile phones be made in cash within one week of
delivery. Although we believe that we will be able to find
another distributor to replace SK Networks, in the event SK
Networks is no longer able to distribute handsets, we may
encounter difficulties in efficiently distributing the handsets
to our subscribers and other customers in the short term. See
Major Shareholders and Related Party
Transactions  Certain Relationships and Related Party
Transactions  SK Networks.

In addition, in 2003, we leased approximately 39%
of our fixed network lines, which connect our various cell sites
and switching stations, from SK Networks. In order to reduce our
dependence on the fixed network lines of our competitor, KT
Corporation, we are considering leasing a majority of our fixed
lines from SK Networks in the future. If there is a
material disruption of SK Networks ability to maintain and
operate this business due to its financial difficulties, we may
need to seek alternative sources. Although we do not believe
that this will have a materially adverse effect on our business,
this may result in a disruption of our services in the short
term.



| |                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Concerns that radio frequency emissions may
    be linked to various health concerns could adversely affect the
    market prices of our ADSs and common stock and we could be
    subject to litigation relating to these health
    concerns.

In the past, allegations that serious health
risks may result from the use of wireless telecommunications
devices or other transmission equipment have adversely affected
share prices of some wireless telecommunications companies in
the United States. We cannot assure you that these health
concerns will not adversely affect our business. Several class
action and personal injury lawsuits have been filed in the
United States against several wireless phone manufacturers and
carriers, asserting product liability, breach of warranty and

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other claims relating to radio transmissions to
and from wireless phones. Certain of these lawsuits have been
dismissed. We could be subject to liability or incur significant
costs defending lawsuits brought by our subscribers or other
parties who claim to have been harmed by or as a result of our
services. In addition, the actual or perceived risk of wireless
telecommunications devices could have an adverse effect on us by
reducing our number of subscribers or our usage per subscriber.




| |                                                                                           
| | ------------------------------------------------------------------------------------------
| | Our businesses may be adversely affected by
    developments affecting the Korean economy.

We generate substantially all of our revenue from
operations in Korea. Our future performance will depend in large
part on Koreas future economic growth. Adverse
developments in Koreas economy or in political or social
conditions in Korea may have an adverse effect on our number of
subscribers, call volumes and results of operations, which could
have an adverse effect on our business.

In 1997 and 1998, Korea experienced a significant
increase in the number and size of companies filing for
corporate reorganization and protection from their creditors. As
a result of these corporate failures, high levels of short-term
foreign currency borrowings from foreign financial institutions
and the consideration of non-market oriented factors in making
lending decisions, Koreas financial institutions
experienced a sharp increase in non-performing loans and a
deterioration in their capital adequacy ratios. These
developments led to a substantial increase in the number of
unemployed workers, reducing the purchasing power of consumers
in Korea. These developments also led international credit
rating agencies to downgrade the credit ratings of Korea and
various companies and financial institutions in Korea to below
investment grade, although Standard & Poors, or
S&P, and Moodys raised the credit rating of Korea back
to investment grade levels in early 1999. The current long-term
foreign currency rating of Korea by S&P is A- and the
current foreign currency rating on bond obligations of Korea by
Moodys is A3. Prompted by heightened security concerns
stemming from nuclear weapons program of Democratic
Peoples Republic of Korea, or North Korea, Moodys
changed the outlook on the long-term ratings of Korea from
positive to negative in February 2003.

Although the Korean economy began to experience a
recovery in 1999, the pace of the recovery has since slowed and
has been volatile. The economic indicators in 2001, 2002 and
2003 have shown mixed signs of recovery and uncertainty, and
future recovery or growth of the economy is subject to many
factors beyond our control. Events related to terrorist attacks
in the United States that took place on September 11, 2001,
recent developments in the Middle East, including the war in
Iraq, higher oil prices, the general weakness of the global
economy and the outbreak of severe acute respiratory syndrome,
or SARS, in Asia and other parts of the world have increased the
uncertainty of world economic prospects in general and continue
to have an adverse effect on the Korean economy. Any future
deterioration of the Korean economy would adversely affect our
financial condition and results of operations.

Developments that could hurt Koreas economy
in the future include:



| |   |                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | financial problems relating to Korean
    conglomerates, or chaebols, or their suppliers, and their
    potential adverse impact on Koreas financial sector,
    including as a result of recent investigations relating to
    unlawful political contributions by chaebols;
|
| |  | failure of restructuring of large troubled
    companies, including LG Card and other troubled credit card
    companies and financial institutions;                                                                                                                          
|
| |  | adverse changes or volatility in foreign currency
    reserve levels, commodity prices (including oil prices),
    exchange rates (including depreciation of the Dollar or Yen),
    interest rates and stock markets;                                                        
|
| |  | increased reliance on exports to service foreign
    currency debts, which could cause friction with Koreas
    trading partners;                                                                                                                                            
|
| |  | adverse developments in the economies of
    countries such as the United States, China and Japan to which
    Korea exports, or in emerging market economies in Asia or
    elsewhere that could result in a loss of confidence in the
    Korean economy;                   

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| |   |                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the continued emergence of China, to the extent
    its benefits (such as increased exports to China) are outweighed
    by its costs (such as competition in export markets or for
    foreign investment and the relocation of the manufacturing base
    from Korea to China);
|
| |  | social and labor unrest or declining consumer
    confidence or spending resulting from lay-offs, increasing
    unemployment and lower levels of income;                                                                                                                        
|
| |  | another widespread outbreak of severe acute
    respiratory syndrome, or SARS, or any similar contagion, in Asia
    and other parts of the world;                                                                                                                               
|
| |  | a decrease in tax revenues and a substantial
    increase in the Korean 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
    or within political parties in Korea; and                                                                                                                                                                                   
|
| |  | a deterioration in economic or diplomatic
    relations between Korea and its trading partners or allies,
    including such deterioration resulting from trade disputes or
    disagreements in foreign policy.                                                                 
|
| |  | Any developments that could adversely affect
    Koreas economic recovery will likely also decrease demand
    for our services and adversely affect our results of operations.                                                                                                 



| |                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

Substantially all of our revenues are denominated
in Won. Depreciation of the Won may materially affect our
results of operations because, among other things, it causes:



| |   |                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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
    6.9% of our total consolidated long-term debt, including current
    portion, as of December 31, 2003; 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.                                                                                                                               

Fluctuations in the exchange rate between the Won
and the Dollar will affect the Dollar equivalent of the Won
price of the shares of our common stock on the Korea Stock
Exchange. These fluctuations also will affect 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.

Relations between Korea and North Korea have been
tense over most of Koreas history. The level of tension
between Korea and North Korea has fluctuated and may increase or
change abruptly as a result of current and future events,
including ongoing contacts at the highest levels of the
governments of Korea and North Korea and increasing hostility
between North Korea and the United States. In December 2002,
North Korea removed the seals and surveillance equipment from
its Yongbyon nuclear power plant and evicted inspectors from the
United Nations International Atomic Energy Agency, and has
reportedly resumed activity at its Yongbyon power plant. In
January 2003, North Korea announced its intention to withdraw
from the Nuclear Non-Proliferation Treaty, demanding that the
United States sign a non-aggression pact as a condition to North
Korea dismantling its nuclear program. In August 2003,
representatives of Korea, the United States,

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North Korea, China, Japan and Russia held
multilateral talks in an effort to resolve issues relating to
North Koreas nuclear weapons program. While the talks
concluded without resolution, participants in the August meeting
indicated that further negotiations may take place in the future
and, in February 2004, six party talks resumed in Beijing,
China. Any further increase in tensions, resulting for example
from a break-down in contacts or an outbreak in military
hostilities, could hurt our business, results of operations and
financial condition and could lead to a decline in the market
value of our common stock and the ADSs.




| |                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | If SK Corporation causes us to breach the
    foreign ownership limitations on shares of our common stock, we
    may experience a change of control.

There is currently a 49% limit on the aggregate
foreign ownership of our issued shares. As of December 31,
2003, SK Corporation owned 17,663,127 shares of our common
stock, or approximately 21.5%, of our issued shares. As of
December 31, 2003, a foreign investment fund and its
related parties collectively held a 14.99% stake in SK
Corporation. Under a newly adopted amendment to the
Telecommunications Business Law, which became effective on
May 9, 2004, a Korean entity, such as SK Corporation, is
deemed to be a foreign entity if its largest shareholder
(determined by aggregating the shareholdings of such shareholder
and its related parties) is a foreigner and such shareholder
(together with the shareholdings of its related parties) holds
15% or more of the issued voting stock of the Korean entity.
Thus, effective from May 9, 2004, if the foreign investment
fund and its related parties increase their shareholdings in SK
Corporation to 15% or more and if such foreign investment fund
and its related parties collectively constitute the largest
shareholder of SK Corporation, SK Corporation will be considered
a foreign shareholder of SK Telecom, and its shareholding in SK
Telecom would be included in the calculation of the aggregate
foreign shareholding of SK Telecom. If SK
Corporations shareholding in SK Telecom is included in the
calculation of the aggregate foreign shareholding of SK Telecom,
then the aggregate foreign shareholding in SK Telecom based on
our foreign ownership level as of December 31, 2003 (which
we believe was 47.0%), would reach 68.5%, exceeding the 49%
ceiling on foreign shareholding. We also could breach the
foreign ownership limitations if the number of shares of our
common stock or ADSs owned by other foreign persons
significantly increases.

If the aggregate foreign shareholding limit in SK
Telecom is exceeded, the MIC may issue a corrective order to SK
Telecom, the breaching shareholder (including SK Corporation if
the breach is caused by an increase in foreign ownership of SK
Corporation) and the foreign investment fund and its related
parties who own in the aggregate 15% or more of SK Corporation.
Furthermore, if SK Corporation is considered a foreign
shareholder, it may not exercise its voting rights with respect
to the shares held in excess of the 49% ceiling, which may
result in a change in control of us. In addition, the MIC may
refuse to grant us licenses or permits necessary for entering
into new telecommunications businesses until the aggregate
foreign shareholding of SK Telecom is reduced to below 49%.
If a corrective order is issued to us by the MIC arising from
the violation of the foregoing foreign ownership limit, and we
do not comply within the prescribed period under such corrective
order, the MIC may (1) suspend all or part of our business,
or (2) if the suspension of business is deemed to result in
significant inconvenience to our customers or be detrimental to
the public interest, impose a one-time administrative penalty of
up to 3% of our sales revenues. The amendment to the
Telecommunications Business Law in May 2004 also authorizes the
MIC to assess monetary penalties of up to 0.3% of the purchase
price of the shares for each day the corrective order is not
complied with, as well as a prison term of up to one year and a
penalty of Won 50 million. For a description of further
actions that the MIC could take, see Information on the
Company  Law and Regulation  Foreign
Ownership and Investment Restrictions and Requirements.

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 Law, or in certain other circumstances, we may have to
    sell common stock in order to settle the converting
    holders conversion rights in cash rather than by issuing
    common stock to them, and these sales might adversely affect the
    market price of our common stock or ADRs.

In May 2004, we sold US$329.5 million in
zero coupon convertible notes due 2009. These convertible notes
are convertible by the holders into shares of our common stock
at the rate of Won 235,625 per share. These notes are held
principally by foreign holders. If (1) the exercise by the
holder of the conversion right would be prohibited by Korean law
or we reasonably conclude that the delivery of common stock upon
conversion of these notes would result in a violation of
applicable Korean law or (2) we do not have a sufficient
number of shares of our common stock to ratify the conversion
right, then we will pay a converting holder a cash settlement
payment. In such situations, we intend to sell such number of
treasury shares held in trust for us that corresponds to the
number of shares of common stock that would have been
deliverable in the absence of the 49% foreign shareholding
restrictions imposed by the Telecommunications Law or other
legal restrictions. The number of shares sold in these
circumstances might be substantial. We cannot assure you that
such sales would not adversely affect the market prices of our
common stock or ADSs.



| |                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Sales of SK Telecom shares by companies in
    the SK Group, POSCO and/or other large shareholders may
    adversely affect the prices of SK Telecoms common stock
    and the ADSs.

Sales of substantial amounts of shares of our
common stock in the public market, or the perception that such
sales may occur, could adversely affect the prevailing market
price of the shares of our common stock or the ADSs or our
ability to raise capital through an offering of our equity
securities.

As of December 31, 2003, POSCO owned 4.9% of
our issued common stock. POSCO has not agreed to any
restrictions on its ability to dispose of our shares. See
Major Shareholders and Related Party
Transactions  Major Shareholders. Companies in
the SK Group, which collectively owned 24.6% of our issued
common stock as of December 31, 2003, may sell their shares
of our common stock in order to comply with the Korean Fair
Trade Acts limits on the total investments that companies
in a large business group, such as the SK Group, may hold in
other domestic companies. See Information on the
Company  Business Overview  Law and
Regulation  Competition Regulation. We can make
no prediction as to the timing or amount of any sales of our
common stock. We cannot assure you that future sales of shares
of our common stock, or the availability of shares of our common
stock for future sale, will not adversely affect the market
prices of the shares of our common stock or ADSs prevailing from
time to time.



| |                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------
| | Koreas new legislation allowing class
    action suits related to securities transactions may expose us to
    additional litigation risk.

A new law enacted on January 12, 2004 allows
class action suits to be brought by shareholders of companies
listed on the Korea Stock Exchange (including us) for losses
incurred in connection with purchases and sales of securities
and other securities transactions arising from (i) false or
inaccurate statements provided in registration statements,
prospectuses, business reports and audit reports;
(ii) insider trading and (iii) market manipulation.
This law would become effective starting from January 1,
2005 with respect to companies whose total assets are equal to
or greater than Won 2.0 trillion as of the end of the fiscal
year immediately preceding January 1, 2005. This law
permits 50 or more shareholders who collectively hold 0.01% of
the shares of a company to bring a class action suit against,
among others, the issuer and its directors and officers. It is
uncertain how the courts will apply this law. Litigation can be
time-consuming and expensive to resolve, and can divert
management time and attention from the operation of a business.
We are not aware of any basis under which such suit may be
brought against us, nor are any such suits pending or
threatened. Any such litigation brought against us could have a
material adverse effect on our business, financial condition and
results of operations.

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| |                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------
| | If an investor surrenders his ADSs to
    withdraw the underlying shares, he may not be allowed to deposit
    the shares again to obtain ADSs.

Under the deposit agreement, holders of shares of
our common stock may deposit those shares with the ADR
depositarys custodian in Korea and obtain ADSs, and
holders of ADSs may surrender ADSs to the ADR depositary and
receive shares of our common stock. However, under the terms of
the deposit agreement, as amended, the depositary bank is
required to obtain our prior consent to any such deposit if,
after giving effect to such deposit, the total number of shares
of our common stock on deposit exceeds a specified maximum,
which was 13,598,554 shares as of October 1, 2002, subject
to adjustment under certain circumstances. In addition, the
depositary bank or the custodian may not accept deposits of our
common shares for issuance of ADSs under certain circumstances,
including (1) if it has been determined by us that we
should block the deposit to prevent a violation of applicable
Korean laws and regulations or our articles of incorporation or
(2) if a person intending to make a deposit has been
identified as a holder of at least 3% of our common stock on
October 7, 2002. See Additional
Information  Description of American Depositary
Shares. It is possible that we may not give the consent.
Consequently, an investor who has surrendered his ADSs and
withdrawn the underlying shares may not be allowed to deposit
the shares again to obtain ADSs.



| |                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

The Korean Commercial Code and our articles of
incorporation require us, with some exceptions, to offer
shareholders the right to subscribe for new shares in proportion
to their existing ownership percentage whenever new shares are
issued. If we offer any rights to subscribe for additional
shares of our common stock or any rights of any other nature,
the ADR depositary, after consultation with us, may make the
rights available to an ADS holder or use reasonable efforts to
dispose of the rights on behalf of the ADS holder and make the
net proceeds available to the ADS holder. The ADR depositary,
however, is not required to make available to an ADS holder any
rights to purchase any additional shares unless it deems that
doing so is lawful and feasible and:



| |   |                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.

We are under no obligation to file any
registration statement with respect to any ADSs. If a
registration statement is required for an ADS holder to exercise
preemptive rights but is not filed by us, the ADS holder will
not be able to exercise his preemptive rights for additional
shares. As a result, ADS holders may suffer dilution of their
equity interest in us.



| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.

SK Corporation, through one or more special
purpose vehicles, has engaged and may in the future engage in
monetization transactions relating to its ownership interest in
us. These transactions have included and may include offerings
of securities that are convertible or exchangeable into our
ADSs. Many investors in convertible or exchangeable securities
seek to hedge their exposure in the underlying equity securities
at the time of acquisition of the convertible or exchangeable
securities, often through short selling of the underlying equity
securities or through similar transactions. Since a monetization
transaction could involve debt securities linked to a
significant number of our ADSs, we expect that a sufficient
quantity of ADSs may not be immediately available for borrowing
in the market to facilitate settlement of the likely volume of
short selling activity that would accompany the commencement of
a monetization transaction. This short selling and similar
hedging activity could place significant downward pressure on
the market price of our ADSs, thereby having a material adverse
effect on the market value of ADSs owned by you.

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| |                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | After the exchange of ADSs into the
    underlying common shares of the company, seller or purchasers of
    the underlying common shares may have to pay securities
    transaction tax upon the transfer of the shares.

Under Korean tax law, transfer of the
companys common shares after the exchange of ADSs into the
underlying common shares of the company will be subject to
securities transaction tax (including an agricultural and
fishery special tax) at the rate of 0.3% of the sales price if
traded on the Korea Stock Exchange.

Securities transaction tax, if applicable,
generally must be paid by the transferor of the shares or the
rights to subscribe to such shares. When the transfer is
effected through a securities settlement company, such
settlement company is generally required to withhold and pay the
tax to the tax authority. When such transfer is made through a
securities company, such securities company is required to
withhold and pay the tax. In case the sale takes place outside
the Korea Stock Exchange, without going through a securities
settlement company or a securities company, between two
non-residents or between a non-resident seller and a Korean
resident purchaser, the purchaser will have to withhold
securities transaction tax at the rate of 0.5% of the sales
price of the common shares.

The failure to pay the securities transaction
will result in a penalty of 10% of the tax due. The penalty is
imposed on the party responsible for paying the securities
transaction tax or, if the securities transaction tax is to be
paid via withholding, the penalty is imposed on the party that
has the withholding obligation. See Additional
Information  Taxation  Korean
Taxation.






|        |                           
|------- | --------------------------
|Item. 4 | Information on the Company

HISTORY AND DEVELOPMENT OF THE
COMPANY

Introduction

We are Koreas leading wireless
telecommunications services provider and a pioneer in the
commercial development and provision of high-speed wireless data
and Internet services. We served approximately 18.5 million
subscribers throughout Korea as of April 30, 2004,
including 17.5 million subscribers who owned data-capable
handsets. As of April 30, 2004, our share of the Korean
wireless market was approximately 52.0%, based on the number of
subscribers.

We provide our services principally through
networks using CDMA technology. In October 2000, we became the
worlds first wireless operator to commercially launch CDMA
1xRTT, a CDMA-based advanced radio transmission technology for
high-speed wireless data and wireless Internet services. CDMA
1xRTT allows transmission of data at speeds of up to
144 Kbps, compared to the 64 Kbps currently possible
over our CDMA network. In addition to higher data transfer
speeds, CDMA 1xRTT technology uses packet-based data
transmission, which permits more efficient use of wireless
spectrum and packet-based pricing of data services. As of
April 30, 2004, approximately 15.8 million of our
subscribers had handsets capable of accessing our CDMA 1xRTT
network.

In the first half of 2002, we launched an upgrade
of our CDMA 1xRTT network in 26 cities in Korea to CDMA
1xEV/ DO. CDMA 1xEV/ DO is a more advanced CDMA-based technology
which enables data to be transmitted at speeds of up to
2.4 Mbps. CDMA 1xEV/ DO technology allows us to provide
advanced wireless data services such as streaming color video
and streaming audio services. CDMA 1xEV/ DO-capable handsets
became available in Korea in June 2002. We completed our CDMA
1xEV/ DO network upgrade in 84 cities in Korea at the end
of 2003.

In December 2001, we acquired a license to
develop, construct and operate a wide-band code division
multiple access, or W-CDMA, digital cellular network using 2 X
20 MHz of radio frequency spectrum (i.e., 20 MHz for
transmissions from handsets to cell sites and 20 MHz for
transmissions from cell sites to handsets) in the 2 GHz
band. In May 2003, we merged SK IMT, a subsidiary established
for the principal purpose of operating and developing our W-CDMA
services, into SK Telecom because we felt that we could better
manage the technology, marketing and operations of the W-CDMA
business as one entity. We have

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commenced construction of the W-CDMA network and
began providing W-CDMA service on a limited basis in Seoul at
the end of 2003.


In January 2002, we acquired the remaining 29.6%
interest in Shinsegi, the second wireless operator to introduce
wireless voice services in Korea, which we did not yet own, and
merged Shinsegi into SK Telecom. As a result of this merger, we
now have a combined 2 X 25 MHz of spectrum in the
800 MHz range.

In 2003, we commenced construction of our W-CDMA
network and began providing W-CDMA service on a limited basis in
Seoul at the end of 2003.

On May 24, 2004, we had a market
capitalization of approximately Won 15.9 trillion
(US$13.5 billion) or approximately 4.4% of the total market
capitalization on the Korea Stock Exchange, making us the second
largest company listed on the Korea Stock Exchange based on
market capitalization on that date. Our ADSs, each representing
one-ninth of one share of our common stock, have traded on the
New York Stock Exchange since June 27, 1996.

We established our telecommunications business in
March 1984 under the name of Korea Mobile Telecommunications
Co., Ltd., under the laws of Korea. We changed our name to SK
Telecom Co., Ltd., effective March 21, 1997.

Our registered office is at 99 Seorin-dong,
Jongro-gu, Seoul 110-728, Korea and our telephone number is
82-2-2121-2843.

Our Business Strategy

We believe that trends in the Korean
telecommunications industry during the next decade will mirror
those in the global market and that the industry will be
characterized by rapid technological change, reduced regulatory
barriers and increased competition. Our business strategy is to
enhance shareholder value by maintaining and consolidating our
leading position in the Korean market for wireless services,
including voice, data and Internet services. As the Korean
market continues to mature, we will continue to focus on these
core businesses in order to expand and enhance the range and
quality of our wireless telecommunications services. Our
principal strategies are to:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.We are expanding the
    geographic coverage and subscriber capacity of our existing CDMA
    1xRTT network and are progressively upgrading this network to
    employ CDMA 1xEV/ DO technology, capable of data transmission at
    speeds of up to 2.4 Mbps.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |  | Offer a broad range of new and innovative
    wireless data and Internet services.Through our integrated wireless and on-line portal, NATE, we
    plan to continue expanding the range of our wireless data and
    Internet services with a view to increasing revenue from these
    services. Our strategy includes the introduction of
    sophisticated multimedia services (such as June, a premium
    wireless data service that provides streaming multimedia video
    content through our CDMA 1xEV/ DO technology), mobile commerce
    services (such as Moneta and Liquid Screen Small Payment
    Service, wireless credit and payment systems which allow
    subscribers to provide merchants with credit card information
    and payment authorization using chips embedded in their wireless
    handsets) and mobile finance services (such as Nemo, a mobile
    payment solution which allows subscribers to transfer money from
    their accounts to the accounts of other Nemo subscribers by
    typing in the recipients wireless handset number) that can
    be accessed using handsets and other devices such as personal
    computers, personal digital assistants and vehicle mounted
    terminals.
|
| |  | Retain and capitalize on our large,
    high-quality wireless subscriber base.With approximately 18.5 million subscribers as of
    April 30, 2004, we have the largest wireless subscriber
    base in Korea. We focus on maintaining and expanding our
    high-quality subscriber base through the provision of enhanced
    wireless services, particularly advanced wireless data and
    Internet based applications, at                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | higher speeds than previously available. As part
    of this strategy, we encourage our CDMA subscribers to migrate
    to our CDMA 1xRTT network.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Position ourselves to be a leader in
    implementing new and improved wireless
    technologies.We pursue a research and
    development program designed to allow us to implement new
    wireless technologies as market opportunities arise. We operate
    a network research and development center which is focused on
    wireless network design, digital cellular technologies and
    wireless telecommunications applications. This center includes a
    research team that is helping to develop fourth generation
    wireless technology, which is expected to enable wireless data
    transmission at speeds of up to 155 Mbps, 70 times faster
    than 3G technology. We have acquired a license to develop and
    operate a W-CDMA network using 2 X 20 MHz of
    spectrum in the 2 GHz band. We have commenced provision of
    our IMT-2000 services based on our W-CDMA network on a limited
    basis in Seoul at the end of 2003.

Merger with Shinsegi

In a series of transactions between December 1999
and April 2000, we acquired a 51.2% interest in the common stock
of Shinsegi. In subsequent transactions between March and
September 2001, we increased our interest to 70.4%. On
January 13, 2002, Shinsegi merged into SK Telecom.
Shinsegis business has been fully integrated into our
business.

The attractiveness of our merger with Shinsegi
derived in large measure from the synergies, growth
opportunities and cost savings we hope to achieve by integrating
Shinsegis former operations and customer base with those
of SK Telecom and our plans to use the spectrum formerly owned
and operated by Shinsegi in SK Telecoms networks.

In 2001, we began integrating Shinsegis
operations with those of SK Telecom. In 2002, we completed the
following steps to realize additional benefits from our merger
with Shinsegi:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Decommissioned Shinsegis former network and
    transfer Shinsegis former subscribers to
    SK Telecoms networks. We have allowed transferred
    subscribers to continue receiving services under their existing
    rate plans. However, after the merger, no new subscribers have
    been accepted under Shinsegis plans and further marketing
    efforts have been limited to the SK Telecom brands.
    Shinsegis subscribers did not have to purchase new
    handsets, were allowed to use the same telephone numbers
    assigned to them and had access to the same services as before
    the merger.
|
| |  | Re-allocated the spectrum formerly used by
    Shinsegis network to SK Telecoms CDMA and CDMA 1xRTT
    networks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | A portion of Shinsegis former network
    equipment was re-deployed in SK Telecoms CDMA network or
    sold for use outside Korea. The remainder of Shinsegis
    former network equipment was discarded and written off and an
    impairment loss of Won 185.8 billion was recorded in 2002.                                                                                                                                                                                                                                                                                                                      

We also identified and implemented other cost
saving measures, such as the elimination of redundant
distribution centers.

BUSINESS OVERVIEW

Cellular Services

SK Telecom was the sole provider of cellular
services in Korea from 1988, when we began network operations,
to April 1996, when Shinsegi began operating a digital cellular
system in several regions of Korea. In October 1997, three
additional companies commenced providing wireless
telecommunications services. As a result of consolidation in the
wireless telecommunications industry in Korea since 2000, there
are currently three providers of wireless telecommunications
services in Korea, SK Telecom, KT Freetel, whose largest
shareholder is KT Corporation, and LG Telecom.

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We introduced our digital cellular service using
CDMA technology in the Seoul metropolitan area in January 1996
and substantially completed the geographic build out of the
network in 1998. On December 31, 1999, we terminated our
analog service. Our digital network provides service to an area
covering approximately 99.0% of the Korean population. We
continue to increase the capacity of our wireless networks to
keep pace with the growth of our subscriber base and the
resulting increase in usage of voice and wireless data services
by our subscribers.

To complement the services we provide to our
subscribers in Korea, we have entered into roaming service
agreements with various foreign wireless telecommunications
service providers, including Verizon Wireless, Sprint and Alltel
in the United States, KDDI in Japan, Telstra in Australia, China
Unicom in China, Hutchison Telecom in Hong Kong, Telecom New
Zealand in New Zealand, Telus Mobility and Bell Mobility in
Canada, Guamcell in Guam, Guamcell in Saipan, Hutchison CAT
Wireless Multimedia in Thailand, Iuacell in Mexico, VIVO in
Brazil, Telefonica Moviles del Peru in Peru, Pelephone in
Israel, Asia Pacific Broadband Wireless in Taiwan and Mobile 8
in Indonesia.

In order to enhance our ability to provide
wireless data services to our customers, we constructed and are
expanding a new wireless network based on CDMA 1xRTT technology.
CDMA 1xRTT is an improved code division multiple access add-on
technology which allows wireless data transmission at speeds of
up to 144 Kbps compared to 64 Kbps for CDMA
technology. Subscribers to our new CDMA 1xRTT based services, in
addition to having access to our wireless data services at
higher speeds, also have access to other enhanced wireless data
applications, such as the ability to download music videos from
the Internet to their handsets. To enjoy these services,
subscribers must purchase CDMA 1xRTT-capable handsets. As of
April 30, 2004, approximately 15.8 million of our
subscribers owned handsets capable of accessing our CDMA 1xRTT
network. Over time, we intend to continue migrating our existing
CDMA subscribers to this new network.

In the first half of 2002, we launched an upgrade
of our CDMA 1xRTT network in 26 cities in Korea to an
advanced technology called CDMA 1xEV/ DO. CDMA 1xEV/ DO is a
CDMA-based technology, which enables data to be transmitted at
speeds up to 2.4 Mbps, which is 16 times faster than CDMA
1xRTTs maximum transmission speed. CDMA 1xEV/ DO-capable
handsets became available in Korea in June 2002. CDMA 1xEV/ DO
technology allows us to provide advanced wireless data services
such as streaming color video and streaming audio services. We
completed the expansion of our CDMA 1xEV/ DO network in
84 cities in Korea at the end of 2003. The CDMA 1xEV/ DO
technology allows us to provide wireless data services which
require faster transmission speeds to our subscribers, as well
as allow us to use our spectrum more efficiently.

Wireless Internet Services

We are a world leader in developing and
commercializing wireless Internet services. We were the first in
the world to commercialize CDMA 1xRTT and CDMA 1xEV/ DO
technologies and are a pioneer in developing and commercializing
various wireless commerce services. In terms of revenue, we are
the leading wireless Internet service provider in Korea. We have
also demonstrated a pilot service of the next generation
2.3 GHz Portable Internet Service that allows users to surf
the Internet at an average speed of 1Mbps.

On Line Services and Internet Access

We offer a wide variety of Internet content and
services as well as provide our wireless subscribers access to
the Internet.

Under our brand name NATE, we offer
our wireless subscribers access to the Internet, where
subscribers can access a wide variety of content including
current news and stock quotes and other information, as well as
have access to a wide variety of services including securities
trading as well as online banking services. Subscribers can
purchase goods and services through their wireless devices as
well as send and receive email and have access to various third
party Internet websites configured to work with wireless
technology. Subscribers access NATE using wireless application
protocol, or WAP, technology. WAP is a technology that allows
wireless data transmission and has been adopted by over 200
major telecommunications

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operators worldwide. As of April 30, 2004,
approximately 17.1 million, or 92.2%, of our subscribers
owned WAP-enabled handsets including approximately
15.8 million, or 85.2%, of which are capable of accessing
our CDMA 1xRTT network.


Under our NATE.com brand name, we
offer a portal service at our website, www.NATE.com. NATE.com
includes information and content formerly offered under our
Netsgo brand as well as those 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 email accounts. In the
month of February 2004, approximately 10.1 million users
have visited this website at least once.

We offer an instant messaging service to our
Nate.com and NATE users. This service, which we call
NATE-ON allows users to chat online through a
variety of devices, including personal computers, wireless
handsets and personal digital assistants. We continue to seek to
introduce new wireless data services and innovations with a view
to increasing revenue from these businesses.

We are also seeking to market our NATE wireless
Internet platform to other CDMA operators worldwide. In April
2002, we entered into an agreement with Pelephone Communications
Ltd., an Israeli CDMA operator, to supply our NATE wireless
Internet platform to Pelephone on a turnkey basis. In May 2002,
we entered into a memorandum of understanding with Openwave of
the United States, a wireless Internet-based communication
software and application provider that currently has more than a
50% share in the wireless Internet gateway and mobile browser
markets, to form a strategic alliance in order to carry out
co-marketing of our NATE wireless Internet platform solutions in
overseas markets. In November 2002, we entered into an agreement
with Asia Pacific Broadband Wireless Communications (APBW), one
of five companies licensed to offer 3G mobile services in
Taiwan, to offer wireless Internet solution on a turn-key basis.
Under the agreement, APBW will license software and applications
used to offer mobile Internet access and multimedia services.

Financial Enabler

In April 2002, we introduced Moneta, a wireless
credit and payment system, which allows holders of mobile credit
cards to provide merchants with credit card information and
payment authorization using chips embedded in their wireless
handsets instead of a traditional plastic credit card with a
magnetic stripe. The wireless handset contains an infrared
transmitter which transmits transaction information to the
merchants reader system. Users do not need to manually
enter their credit card number when they make payments using
this system. The system is based on an international
technological standard developed by Europay, Mastercard and
Visa. We receive a fee from the card issuer for each card issued
and a transaction fee, based on the transaction value, for each
transaction effected using the mobile commerce card. In May
2002, we entered into a technological cooperation agreement with
Visa pursuant to which Visa has agreed to adopt our wireless
credit and payment system as the international standard for
Visas worldwide operations. In addition, we have
established payment system with major department stores and
discount stores (such as E-Mart) and affiliated merchant stores
(such as Starbucks and TGI). We currently plan to expand the
commercial use of Moneta payment system to 70% of affiliated
merchant stores by the end of 2004.

In October 2002, we acquired Paxnet, an on-line
financial portal offering services related to securities
trading. We expect to expand our services provided through
Paxnet to include a vast array of financial services relating to
insurance, real estate, personal asset management and investment
trust funds. We are also developing other uses for mobile credit
card technology to provide other services, such as payment for
transportation and to serve as a secure means of identification.

In August and November 2003, we launched Mobile
Trading System and Stock Investment Information Service,
respectively. Unlike other trading services where customers had
to use stock trading programs and terminals designated by
securities firms, the Mobile Trading System service provides a
program that permits customers to carry out a variety of stock
trading, including futures, options and ECN trading transactions
anytime through a universal software.

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In December 2003, we entered into a memorandum of
understanding with Shinhan Bank, Chohung Bank, Woori Bank and
Hana Bank for chip-based mobile banking services. The services
offered in conjunction with Shinhan Bank, Woori Bank and Chohung
Bank were launched in March 2004. We are considering entering
into similar alliances with regional banks in Korea. Through
this service, we plan to introduce e-bankbook services as well
as a variety of e-commerce services.

Multimedia

In November 2002, we introduced June, a wireless
data service that provides multimedia content through streaming
method using our CDMA 1xEV/ DO technology. Content provided
through the June service includes Video on Demand (VOD), Music
on Demand (MOD), TV broadcastings and multimedia messaging. June
furnishes subscribers with real-time news aired by a Korean news
channel and permits subscribers to view regular TV programs
aired by the four main domestic broadcasting stations on
cellular phones. In addition, subscribers to June can access the
Internet through NATE, our wired and wireless integrated
Internet platform. As of April 30, 2004, June had
2.5 million subscribers.

In September 2003, we also invested in a
satellite-based digital multimedia broadcasting
(DMB) business, a service which allows broadcasting of
multimedia content through transmission by satellite to various
wireless channels, including to satellite DMB handsets. With
this technology, our subscribers would be able to view satellite
TV broadcasts on their cellular handsets or from their cars. We
launched the satellite in March 2004. Although actual
implementation of the satellite DMB business will depend on many
factors, including government approvals that have yet to be
obtained, our current expectations are to begin commercial
service by August 2004. We believe that this business, if
implemented, will enable us to improve the breadth of services
that we already offer and remain competitive in the face of
increasing convergence in the telecommunications, finance and
broadcasting industries. See Operating and Financial
Review and Prospects  Liquidity and Capital
Resources  Capital Requirements and Resources,
 Other Investments and Relationships and
Key Information  Risk Factors  Our
business environment requires us to continually invest in the
growth of our business, and as a result, we may make significant
investments in new businesses and regions, including businesses
and regions in which we have limited experience.

Other Products and Services



| |                      
| | ---------------------
| | Handset Manufacturing

Through our subsidiary, SK Teletech Co., Ltd., of
which we owned 61.7% at December 31, 2003, we design,
market and sell digital handsets under the brand name
Sky. The handsets are principally manufactured by
third parties under contracts with SK Teletech. We established
SK Teletech together with Kyocera Corporation of Japan, which,
as of December 31, 2003, held a significant minority
interest in SK Teletech. We increased our stake in SK Teletech
to 89.1% in March 2004. Currently, all of SK Teletechs
domestic sales of digital handsets are to our affiliate, SK
Networks, which distributes them principally to our network of
dealers for sale to our subscribers and other consumers. Due to
an FTC-imposed condition to our acquisition of Shinsegi, until
the end of 2005, SK Teletech may not sell more than 1,200,000
handsets (excluding W-CDMA handsets) per year to SK Telecom and
its affiliates.



| |                                   
| | ----------------------------------
| | International calling
    services

Through our 90.8% owned subsidiary, SK Telink
Co., Ltd., we provide international telecommunications services,
including direct-dial as well as pre-and post-paid card calling
services, bundled services for corporate customers, voice
services using internet protocol, Web-to-phone services, and
data services. SK Telink handled approximately 546 million
total call minutes in 2003, which generated Won
101.0 billion in revenues. In 2000, we established SK
Telink America, Inc., to extend our international
telecommunications service to the United States. We closed down
our business operations of SK Telink America, Inc. in June 2003
because the business proved to be unprofitable. We recorded
US$1.2 million in losses relating to impairment of our
investment in common stock of SK Telink America, Inc. in our
consolidated financial statements for 2003.

31



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##### Table of Contents





| |           
| | ----------
| | Telematics

In February 2002, we introduced a Telematics
service called NATE Drive. NATE Drive is an interactive
communication service designed to guide vehicle drivers using
the satellite-based global positioning system (GPS) and a
wireless network to provide drivers with real-time location and
traffic information. In April 2002, we entered into an agreement
with Renault Samsung Motors and Samsung Electronics to jointly
develop a Telematics business and launched a commercial product
in September 2003. Pursuant to the agreement, we provide the
cellular phone network and NATE Drive service, Samsung
Electronics provides Telematics terminals for vehicles and
Renault Samsung Motors installs Telematics-enabled terminals in
the vehicles it sells.

W-CDMA Network

In December 2000, the MIC awarded a consortium we
lead the right to acquire a license to operate a W-CDMA network
using 2 X 20 MHz of spectrum in the 2 GHz band. W-CDMA
is a high-speed wireless communication technology that we
believe will allow us to offer even more sophisticated data
transmission services at faster speeds than our current CDMA
1xRTT network. In March 2001, we incorporated SK IMT to hold the
license and develop our W-CDMA business and we, together with
Shinsegi, invested Won 985.2 billion for a 61.6%
interest in SK IMT. In December 2001, we disposed of
144,000 shares of SK IMT worth Won 3.9 billion. On
May 1, 2003, SK IMT merged into SK Telecom.

The W-CDMA license was awarded by the MIC to SK
IMT on December 4, 2001. The total license cost to SK IMT
was Won 1.3 trillion. SK IMT paid Won 650 billion of this
amount in March 2001, and we are required to pay the remainder
of the license cost in annual installments from 2007 through
2011. For more information, see note 2(i) of the notes to
our consolidated financial statements. In accordance with the
terms of the license, we commenced provision of our IMT-2000
services based on our W-CDMA network on a limited basis in Seoul
at the end of 2003. Currently, we have less than 500 subscribers
for our W-CDMA service. We believe that we are currently in
compliance with all material terms of the license.

On April 30, 2003, the MIC approved the
proposed merger of SK IMT into SK Telecom, subject to the
satisfaction of certain conditions imposed by the MIC to ensure
fair competition and to protect customer interests. We believe
that we have satisfied these conditions. In addition, if such
merger is determined by the MIC to seriously impair fair market
competition or harm subscribers due to factors such as increased
market share or discrimination between cellular subscribers and
W-CDMA service subscribers, the MIC may implement additional
measures to remedy such situation.

On May 23, 2003, we selected Samsung
Electronics to supply W-CDMA network equipment in respect of our
W-CDMA services in Seoul (which we commenced at the end of 2003)
and LG Electronics to supply W-CDMA network equipment which will
be used to provide our W-CDMA services in areas to be decided by
us at a later date. In addition, we are currently negotiating
with Nortel, our pre-selected potential supplier, in order to
ensure the adequate and timely supply of W-CDMA network
equipment to us. However, the actual scope and timing of the
full nationwide roll-out of our W-CDMA network will depend on
several factors, including the availability of network
equipment, progress of dual band/dual mode handsets, ability to
overcome technical problems currently affecting W-CDMA
performance, adoption of CDMA 1xEV/ DO service, regulatory
decisions, our assessment of the market opportunities for W-CDMA
technology-based services and the competitive landscape in the
Korean wireless market. See Key Information 
Risk Factors  W-CDMA technology may require
significant capital and other expenditures for implementation
which we may not recoup and may be difficult to integrate with
our other businesses.

Revenues, Rates and Facility
Deposits

Our wireless revenues are generated principally
from initial connection fees, monthly access fees, usage charges
for outgoing calls and wireless data, interconnection fees and
access fees for value-added services. The

32



---



##### Table of Contents



following table sets forth information regarding
our cellular revenues (net of taxes) and facility deposits for
the periods indicated:


|                                          |       |                                           |         |            |  |      |         |         |  |   |         |          | 
|----------------------------------------- | ----- | ----------------------------------------- | ------- | ---------- |  | ---- | ------- | ------- |  | - | ------- | -------- | 
|                                          |       |                                          
|                                          |       | As of and for the Year Ended December 31,
|                                          |       |                                          
|                                          |       | 2001(1)(2)                                |         | 2002(1)(2) |  | 2003
|                                          |       |                                           |         |            |  |     
|                                          |       |                                          
|                                          |       | (In billions of Won)                     
|Initial Connection Fees                   |       | W                                         | 146.7   |            |  | W    | 230.4   |         |  | W | 176.6   |         
|Monthly Access Fees                       |       |                                           | 2,733.8 |            |  |      | 3,055.4 |         |  |   | 3,132.2 |         
|Usage Charges                             |       |                                           | 3,071.2 |            |  |      | 3,415.6 |         |  |   | 3,615.1 |         
|Interconnection Revenue                   |       |                                           | 1,339.9 |            |  |      | 1,043.2 |         |  |   | 1,017.1 |         
|Revenue from Sales of Digital Handsets(3) |       |                                           | 702.4   |            |  |      | 534.0   |         |  |   | 612.0   |         
|Other Revenue(4)                          |       |                                           | 209.0   |            |  |      | 878.2   |         |  |   | 1,538.8 |         
|                                          |       |                                           |         |            |  |      |         |         |  |   |         |         
|                                          | Total |                                           | W       | 8,203.0    |  |      | W       | 9,156.8 |  |   | W       | 10,091.8 | 
|                                          |       |                                           |         |            |  |      |         |         |  |   |         |         
|Additional Facility Deposits              |       | W                                         | 74.0    |            |  | W    | 11.0    |         |  | W | 5.0     |         
|Refunded Facility Deposits                |       |                                           | 79.2    |            |  |      | 20.6    |         |  |   | 7.7     |         
|Facility Deposits at Period End           |       |                                           | 56.5    |            |  |      | 46.9    |         |  |   | 44.2    |         



---



|    |                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Information as of and for the year ended
    December 31, 2001 includes information as of and for the
    year ended December 31, 2001 for Shinsegi.     
|   
|(2) | The following table sets forth information
    regarding Shinsegis cellular revenues (net of taxes) and
    facility deposits for the periods indicated:

|                                       |       |                      |       |         | 
|-------------------------------------- | ----- | -------------------- | ----- | ------- | 
|                                       |       | As of and for the   
|                                       |       | Year Ended          
|                                       |       | December 31, 2001   
|                                       |       |                     
|                                       |       | (In billions of Won)
|Initial Connection Fees                |       | W                    | 33.4  |        
|Monthly Access Fees                    |       |                      | 590.0 |        
|Usage Charges                          |       |                      | 548.9 |        
|Interconnection Revenue                |       |                      | 269.0 |        
|Revenue from Sales of Digital Handsets |       |                      | 376.1 |        
|Other Revenue                          |       |                      | 78.5  |        
|                                       |       |                      |       |        
|                                       | Total |                      | W     | 1,895.9 | 
|                                       |       |                      |       |        
|Additional Facility Deposits           |       |                      | 15.1  |        
|Refunded Facility Deposits             |       |                      | 14.9  |        
|Facility Deposits at Period End        |       |                      | 6.8   |        



---



|  |                                                                                                                                                                                         
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Other revenue includes revenue from value-added
    services offered by Shinsegi, including voice-activated dialing,
    caller ID, call forwarding, call waiting and three-way calling.



|    |                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Our revenue from handset sales consists of sales
    by our subsidiary, SK Teletech.                                                                                
|   
|(4) | Other revenue includes revenue from value-added
    services, including voice-activated dialing, caller ID, call
    forwarding, call waiting and three-way calling.

On their initial subscription, we charge our new
customers an initial connection fee for service activation.
After their initial connection, we require our customers to pay
a monthly access fee and usage, or airtime, charges for outgoing
calls and access to wireless data services. Prior to
April 1, 1999, all network service providers had mandatory
subscription periods. However, since April 1, 1999, in
accordance with MIC guidelines, new wireless service subscribers
cannot be subjected to any mandatory subscription periods. We do
not charge our customers for incoming calls, although we do
receive interconnection charges from KT Corporation and
other companies for calls from the fixed-line network
terminating on our networks and, since 2000,

33



---



##### Table of Contents



interconnection revenues from other wireless
network operators. See  Interconnection.
Monthly access fees for some plans include free airtime and/or
discounts for designated calling numbers.


SK Telecom currently offers six basic types of
service plans: the Speed011 rate plans, the TTL plans, the Ting
plans, the UTO plans, the CARA plans and the long-term contract
discount plans. We also offer June plans, designed for
multimedia wireless data service using CDMA2000 1xEV-DO
technology, and Free plans offering free airtime on weekends or
between 12 a.m. and 6 a.m. on weekdays for an
additional monthly fee of Won 10,000 to Won 15,000.

Higher rate plans generally include a fixed
monthly amount of usage time while the lower rate plans are
generally usage-based. The monthly access fees for the Speed011
plans range from Won 12,000 to Won 15,500, and generally
target the adult market segment. The monthly access fees for the
TTL plans range from Won 16,000 to Won 17,500 and target young
adults between the ages of 19 and 24. The monthly access fees
for the Ting plans range from Won 13,500 to Won 16,000 and
generally target youths between the ages of 13 and 18. The
monthly access fees for the UTO plans range from Won 15,000 to
Won 18,000 and generally target wireless users between the ages
of 25 and 35.

Following the successful 2001 launch of the Ting
plans and the UTO plans, we introduced a new service plan, CARA
in August 2002. The monthly access fees for the CARA plans range
from Won 13,500 to Won 18,000 and is exclusive to female
subscribers. CARA plans offer benefits designed for women, such
as discounts to hair salons, spas, on-line shopping, restaurants
and offers free gift certificates and discounts for Lotte
department store, womens magazines, personal hygiene
products and travel packages.

In November 2002, we introduced the June plans, a
new set of rates designed for subscribers using our CDMA 1xEV/
DO service. These plans charge monthly access fees of between
Won 9,500 and Won 50,000. Under a standard rate plan,
subscribers to June are charged based on the amount of data
transmitted, measured in packets of 512 bytes. The rates per
packet differ according to the type of content.

In January 2004, we introduced discount plans for
subscribers committing to long-term contracts with a duration of
18 months or 24 months based on usage levels.
Subscribers with the highest usage per month (whose monthly
charges are above Won 70,000) on a two-year contract benefit
from the highest level of discount.

After discussions with the MIC, effective from
January 1, 2003, we reduced our Speed011 Standard rate
plans monthly access fee by Won 1,000, included 10 minutes
of free air time per month and reduced our peak usage charges
from Won 21 to Won 20 per minute. After discussions with
the MIC, in October 2003, we reduced our monthly charges for
caller ID service from Won 2,000 to Won 1,000. See
Operating and Financial Review and Prospects 
Overview.

For all calls made from our subscribers
handsets in Korea to any destination in Korea, we charge usage
fees based on the subscribers cellular rate plan (as
described in the table below). The fees are the same whether the
call is local or long distance. With respect to international
calls placed by a subscriber, we bill the subscriber the
international rate charged by the Korean international telephone
service provider through which the call is routed. We remit to
that provider the international charge less our usage charges.
See  Interconnection.

34



---



##### Table of Contents



The following table summarizes some of SK
Telecoms cellular rate plans as of December 31, 2003:

|                               |  |            |               |                   |  |                            |                    |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|------------------------------ |  | ---------- | ------------- | ----------------- |  | -------------------------- | ------------------ | ------------------- | -- | ---------------- | ----- |  | -- | - | ----- |  | -- | - | ----- | 
|                               |  |            |               |                   |  | Peak Usage                 |                    | Off-Peak Usage      |    | Night-Time      
|                               |  | Monthly    |               | Included Airtime/ |  | Charges                    |                    | Charges             |    | Usage Charges   
|                               |  | Access fee |               | Discount(1)(2)    |  | (per 10 seconds)(2)        |                    | (per 10 seconds)(2) |    | (per 10 seconds)
|                               |  |            |               |                   |  |                            |                    |                     |    |                 
|Speed 011 Plans                |  |            |               |                   |  |                            |                    |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|Standard                       |  | W          | 14,000-15,500 |                   |  |                            | 10 minutes         |                     |    | W                | 20    |  |    | W | 13    |  |    | W | 10    | 
|Premium                        |  |            | 52,000-55,000 |                   |  |                            | 380 minutes        |                     |    |                  | 17    |  |    |   | 11    |  |    |   | 9     | 
|Family                         |  |            | 14,000        |                   |  |                            | 5 minutes          |                     |    |                  | 18    |  |    |   | 12    |  |    |   | 9     | 
|Silver(3)                      |  |            | 12,000        |                   |  |                            | 30 minutes         |                     |    |                  | 38    |  |    |   | 38    |  |    |   | 38    | 
|View(4)                        |  |            | 9,100         |                   |  |                            | 10 minutes         |                     |    |                  | 60    |  |    |   | 60    |  |    |   | 60    | 
|TTL Plans                      |  |            |               |                   |  |                            |                    |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|TTL Discount(5)                |  |            | 16,000-17,500 |                   |  |                            | 7 minutes          |                     |    |                  | 9-21  |  |    |   | 9-20  |  |    |   | 9-12  | 
|Ting Plans                     |  |            |               |                   |  |                            |                    |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|Ting                           |  |            | 13,500-16,000 |                   |  |                            | 50-60 minutes      |                     |    |                  | 12-37 |  |    |   | 12-24 |  |    |   | 9-18  | 
|UTO Plans                      |  |            |               |                   |  |                            |                    |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|Time Plan & Number Plan        |  |            | 16,000-18,000 |                   |  |                            | Free text messages |                     |    |                  | 21    |  |    |   | 17    |  |    |   | 12-13 | 
|Leisure                        |  |            | 15,000-16,500 |                   |  |                            | Free text messages |                     |    |                  | 40    |  |    |   | 9     |  |    |   | 9     | 
|Cara Plans                     |  |            |               |                   |  |                            |                    |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|Standard                       |  |            | 14,000-15,500 |                   |  |                            | 10 minutes         |                     |    |                  | 20    |  |    |   | 13    |  |    |   | 10    | 
|                               |  |            |               |                   |  |                            | 7 minutes and      |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|Daytime discount               |  |            | 14,000-15,500 |                   |  |                            | 30% discount       |                     |    |                  | 34    |  |    |   | 15    |  |    |   | 15    | 
|Discount on Designated Numbers |  |            | 13,500-15,000 |                   |  | 7 minutes and 40% discount |                    |                     | 36 |                  |       |  | 18 |   |       |  | 18 |  
|June Plans(6)                  |  |            |               |                   |  |                            |                    |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|June 95                        |  |            | 9,500         |                   |  |                            | (7)                |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|June 150                       |  |            | 15,000        |                   |  |                            | (8)                |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|June 250                       |  |            | 25,000        |                   |  |                            | (9)                |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|June 350                       |  |            | 35,000        |                   |  |                            | (10)               |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|June 500                       |  |            | 50,000        |                   |  |                            | (11)               |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|Free Plans                   |  |            |               |                   |  |                            |                    |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|Free Holiday                   |  |            |              |                   |  |                            | (12)               |                     |    |                  |       |  |    |   |       |  |    |   |       | 
|Free Eleven                    |  |            |              |                   |  |                            | (13)               |                     |    |                  |       |  |    |   |       |  |    |   |       | 



---



| |     |                                                                                                                                                                                                                                                                                                                                      
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Discounts may include free text messages, ring
    tone downloads, colorings and NATE minutes.                                                                                                                                                                                                                                       
|
| | (2) | Excludes a 5% discount on domestic calls for
    customers who have subscribed to our cellular services for over
    2 years; a 7% discount for customers who have subscribed to
    our cellular services for 3 to 4 years; and a 10%, discount
    for customers who have subscribed to our cellular services for
    over 5 years.
|
| | (3) | Subscribers must be 65 years old or older
    and each subscriber is limited to one silver Plan.                                                                                                                                                                                                                                     
|
| | (4) | Plan for hearing and speech impaired subscribers.
    Additional benefits include free activation and 35% discount for
    voice service, data service and text messages.                                                                                                                                                            
|
| | (5) | Includes TTL plan for designated numbers,
    designated area and TTL plan for couples.                                                                                                                                                                                                                                              
|
| | (6) | June plan is only applicable to data services.
    Subscribers who elect June plans must also subscribe to one of
    the basic plans.                                                                                                                                                                                               
|
| | (7) | Includes 13,500 kilobytes of data; 50% discount
    on additional data.                                                                                                                                                                                                                                                              
|
| | (8) | Includes 27,500 kilobytes of data; 70% discount
    on additional data.                                                                                                                                                                                                                                                              
|
| | (9) | Includes 75,000 kilobytes of data; 80% discount
    on additional data.                                                                                                                                                                                                                                                              



|     |                                                                             
|---- | ----------------------------------------------------------------------------
|(10) | Includes 135,000 kilobytes of data; 85% discount
    on additional data.    
|    
|(11) | Includes 250,000 kilobytes of data; 90% discount
    on additional data.    
|    
|(12) | 11 hours of free weekend airtime for an
    additional Won 10,000 per month.

35



---



##### Table of Contents





|     |                                                                                                                                                 
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(13) | 11 hours of free airtime exceeding the
    average number of minutes used November and December 2003 for an
    additional Won 15,000 per month.

We offer a variety of value-added services
including voice-activated calling, voice mail, text messaging,
caller ID and call waiting. Depending on the rate plan selected
by the subscriber, the monthly fee may or may not include these
value-added services.

We offer wireless data services to our
subscribers through NATE. Subscribers using SK Telecoms
CDMA network may elect to pay a monthly fee, which includes a
fixed amount of airtime or data packets, or may elect to pay on
a per-use basis. Standard rates for NATE range from Won 7 to Won
15 for ten seconds of airtime. Since April 23, 2001,
subscribers using our CDMA 1xRTT network are charged based on
the amount of data that is transmitted to the subscribers
handset. The data transmitted is measured in packets of
512 bytes. We charge Won 6.5 per text packet and Won
1.3 per multimedia packet. Prior to April 23, 2001,
our CDMA 1xRTT subscribers were charged time-based fees.

We offer wireless multimedia data services
through June. Under a standard rate plan, subscribers to June
are charged based on the amount of data transmitted, measured in
packets of 512 bytes. The rates per packet differ according to
the type of content. Text data, voicemail, VOD/ MOD and Internet
service are charged at Won 6.5, Won 2.5, Won 1.3
and Won 1.5 per packet, respectively. For a limited
time until the end of June 2003, subscribers were allowed to
elect to pay a fixed monthly fee for a certain amount of airtime
and be charged for data usage per content, ranging from Won 200
to Won 1,500. We offered this special rate plan to promote this
new service.

We generally require new subscribers (other than
some corporate and government subscribers) to pay a non-interest
bearing facility deposit of Won 200,000, which we may utilize to
offset a defaulting subscribers outstanding account
balance. In lieu of paying the facility deposit, subscribers who
meet the credit qualifications required by the Seoul Guarantee
Insurance Company may elect to be covered under insurance
provided by the Seoul Guarantee Insurance Company. We pay a
Won 10,000 premium to the Seoul Guarantee Insurance Company
on behalf of such subscribers. Seoul Guarantee Insurance Company
reimburses us up to Won 350,000 for each insured subscriber
that defaults on any payment obligations. We refund the facility
deposit to any existing subscriber who had initially made a
facility deposit and later elects the facility insurance option.
We bill subscribers on a monthly basis and subscribers may make
payment at a bank, post office, any of our regional headquarters
or sales offices, or at any of our authorized dealers. As a
result of the facility insurance program, we have refunded a
substantial amount of facility deposits, and facility deposits
decreased from Won 61.8 billion as of
December 31, 2000 to Won 44.2 billion as of
December 31, 2003. We do not expect to have a significant
amount of facility deposits available for capital expenditures
in the future.

Because we have been designated by the MIC as a
market dominant service provider, our establishment
or amendment of fees, charges, and terms and conditions of
service, including promotional rates and facility deposits,
requires prior approval by the MIC.

In December 2000, with effect from
September 1, 2001, the National Assembly abolished the
10.0% telephone tax previously charged to our customers as part
of their monthly service charges. Since September 1, 2001,
we have instead charged our customers a 10.0% value-added tax.
We can offset the value-added tax we collect from our customers
against value-added tax refundable to us by the Korean tax
authorities. We remit taxes we collect from our customers to the
Korean tax authorities. We record revenues in our financial
statements net of such taxes.

Subscribers

We had 18.5 million subscribers as of
April 30, 2004, representing a market share of 52.0%, the
largest market share among Korean wireless service providers. We
believe that, historically, our subscriber growth has been due
to many factors, including:



| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | our expansion and technical enhancement of our
    digital network, including with high-speed data capabilities;

36



---



##### Table of Contents





| |   |                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increasing consumer awareness of the benefits of
    wireless telecommunications;                                                                                                                                                 
|
| |  | until June 2000, when the MIC prohibited
    subsidies on handset sales, the decline in handset prices in
    Korea through the payment of subsidies to subscribers, which
    effectively lowered the cost of initiating service;
|
| |  | 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 data and Internet services
    provided by NATE; and                                
|
| |  | our acquisition of Shinsegi.                                                                                                                                                                                                      

The following table sets forth selected
historical information about our subscriber base for the periods
indicated:

|                              |  |                                          |            |      |  |      |            |   |  |  |            |  
|----------------------------- |  | ---------------------------------------- | ---------- | ---- |  | ---- | ---------- | - |  |  | ---------- | -
|                              |  |                                         
|                              |  | As of or for the Year Ended December 31,
|                              |  |                                         
|                              |  | 2001                                     |            | 2002 |  | 2003
|                              |  |                                          |            |      |  |     
|Subscribers                   |  |                                          | 15,179,063 | (1)  |  |      | 17,219,562 |   |  |  | 18,313,153 |  
|Subscriber Growth Rate        |  |                                          | 5.0        | %    |  |      | 13.4       | % |  |  | 6.4        | %
|Activations                   |  |                                          | 3,822,278  | (2)  |  |      | 4,769,612  |   |  |  | 3,688,312  |  
|Deactivations                 |  |                                          | 3,095,898  | (3)  |  |      | 2,729,113  |   |  |  | 2,594,721  |  
|Average Monthly Churn Rate(4) |  |                                          | 1.8        | %    |  |      | 1.4        | % |  |  | 1.2        | %



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes 3,311,774 Shinsegi subscribers as of
    December 31, 2001.                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(2) | Includes number of activations for Shinsegi,
    which amounted to 810,585 for the year ended December 31,
    2001.                                                                                                                                                                                                                                                                                                                                                
|   
|(3) | Includes number of deactivations for Shinsegi,
    which amounted to 1,016,642 for the year ended December 31,
    2001.                                                                                                                                                                                                                                                                                                                                            
|   
|(4) | 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.

We had 18.3 million subscribers as of
December 31, 2003. For the year ended December 31,
2003, we had 3,688,312 activations and 2,594,721 deactivations,
representing an average monthly churn rate of 1.2% during the
same period. Our 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.

Our subscriber growth rate was adversely affected
by actions we took to comply with certain requirements of the
FTC regarding our acquisition of Shinsegi. The FTC approved our
acquisition of Shinsegi on the condition that SK Telecoms
and Shinsegis combined market share of the wireless
telecommunications market, based on numbers of subscribers, be
less than 50.0% as of June 30, 2001. In order to satisfy
this condition, we reduced the level of our subscriber
activations and adopted more stringent involuntary subscriber
deactivation policies beginning in 2000 and ceased accepting new
subscribers from April 1, 2001 through June 30, 2001.
We complied with this requirement by reducing our market share
to approximately 49.7% as of June 30, 2001. We are not
currently subject to any market share limitations; however, on
May 25, 2004, we voluntarily undertook to limit our market
share to 52.3% of the wireless telecommunications market through
the end of 2005, the level of our market share at the time of
the approval of our merger with Shinsegi in January 2002. We can
give no assurances that the Government will not impose
restrictions on our market

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share in the future. If we are subject to market
share limitations in the future, our ability to compete
effectively will be impeded. As a result, our subscriber growth
rate may decline in future periods.


In January 2003, the MIC announced its plan to
implement number portability with respect to wireless
telecommunications service in Korea. The number portability
system allows wireless subscribers to switch wireless service
operators while retaining the same mobile phone number. However,
subscribers who switch operators must purchase a new handset, as
we use a different frequency than KT Freetel and LG Telecom. In
accordance with the plan published by the MIC, the number
portability system was adopted by SK Telecom first, starting
from January 1, 2004. According to MIC data, following the
implementation of the number portability system, 305,267,
183,876, 214,232 and 261,654 of our subscribers transferred to
the services of our competitors in January 2004, February 2004,
March 2004 and April 2004, respectively. Subscribers who choose
to transfer to a different wireless operator have the right to
return to us without paying any penalties within 14 days of
the initial transfer. KT Freetel and LG Telecom will be required
to introduce number portability starting from July 1, 2004
and January 1, 2005, respectively.

In addition, in order to manage the availability
of phone numbers efficiently and to secure phone number
resources for the new services, the MIC plans to integrate
mobile telephone identification numbers into a common prefix
identification number 010 and to gradually retract
the current mobile service identification numbers which had been
unique to each wireless telecommunications service provider,
including 011 for our cellular services, starting
from 2004. All new subscribers were given the 010
prefix starting in January 2004. The following table sets forth,
based on MIC data, new subscribers for each of the major
wireless cellular providers following the adoption of the
010 prefix in January 2004:

|              |  |                                                   |                |            |  |            |                |  |  |  |                | 
|------------- |  | ------------------------------------------------- | -------------- | ---------- |  | ---------- | -------------- |  |  |  | -------------- | 
|              |  |                                                  
|              |  | Number of New Wireless Subscribers/ Percentage of
|              |  | New Wireless Subscribers                         
|              |  |                                                  
|Month         |  | SK Telecom                                        |                | KT Freetel |  | LG Telecom
|              |  |                                                   |                |            |  |           
|January 2004  |  |                                                   | 382,420/ 42.1% |            |  |            | 375,181/ 41.3% |  |  |  | 149,737/ 16.5% | 
|February 2004 |  |                                                   | 422,816/ 43.6% |            |  |            | 329,066/ 33.9% |  |  |  | 218,435/ 22.5% | 
|March 2004    |  |                                                   | 405,199/ 39.0% |            |  |            | 356,003/ 34.3% |  |  |  | 276,537/ 26.6% | 
|April 2004    |  |                                                   | 448,997/ 41.2% |            |  |            | 330,441/ 30.3% |  |  |  | 309,736/ 28.4% | 

As of April 30, 2004, approximately
17.1 million, or 92.2%, of our subscribers owned
WAP-enabled handsets including approximately 15.8 million,
or 85.2%, of which owned handsets capable of accessing our CDMA
1xRTT network.

Marketing and Service Distribution

We market our services and provide after-sales
service support to customers through 29 sales centers,
52 branch offices and a network of 1,533 authorized
exclusive dealers located throughout Korea. Our dealers are
connected via computer to our database and are capable of
assisting customers with account information. In addition,
approximately 200,000 independent retailers (principally handset
dealers) assist new subscribers to complete activation
formalities, which includes completing subscription applications
and accepting facility deposits or arranging for insurance with
Seoul Guarantee Insurance Company.

Currently, authorized dealers are entitled to an
initial commission for each new subscriber registered by the
dealer as well as an average ongoing commission calculated as a
percentage of that subscribers monthly access and usage
charges from domestic calls for the first four years. In order
to strengthen our relationships with our exclusive dealers, we
offer a dealer financing plan, which provides interest-free or
low-interest loans of up to Won 1.0 billion with a
repayment period of up to three years. From July 2004, the
maximum amount of such loans will be reduced to Won
700 million.

We operate a customer information system designed
to provide us with an extensive customer database. Our customer
information system includes a billing system which provides us
with comprehensive account information for internal purposes and
enables us to efficiently respond to customer requests. In May
2000, we launched 011e-station.co.kr, a website through which SK
Telecom customers can change their service plans,

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verify the charges accrued on their accounts,
receive their bills online and send text messages to our other
subscribers.


When we were the only cellular service provider
in Korea, we were able to maintain a low level of marketing and
advertising expenses. Over the last several years, competition
in the wireless telecommunications business has caused us to
increase significantly our marketing and advertising expenses
and, with continuing competition, we expect that such expenses
will remain high. We have implemented a range of marketing
measures, including more extensive promotions to attract new
customers as well as to encourage loyalty of our existing
subscribers and discourage migration to other service providers.
In 2001, advertising expenditures as a percentage of revenues
amounted to 4.1%, principally for promotion of our voice and
wireless data services. Our marketing expenses were lowered
during the first half of 2001 due to the elimination of handset
subsidies and our efforts to satisfy the FTC-imposed condition
that SK Telecoms and Shinsegis combined market share
of the wireless telecommunications market, based on numbers of
subscribers, be less than 50.0% as of June 30, 2001. We
complied with this requirement by reducing our market share to
approximately 49.7% as of June 30, 2001, and thus, we are
not subject to any market share limitations. In 2002 and 2003
advertising expenditures amounted to 4.1% and 3.7% of our
revenues, respectively.

In March 2004, we entered into a Won
120 billion agreement with IBM Business Consulting Services
for a term of two years in connection with our efforts to
improve our marketing system. IBM will implement a new process
and application infrastructure consisting of a new customer
relationship management system, as well as billing, partner
relationship management and content management systems.

Interconnection

Our networks interconnect with the public
switched telephone networks operated by KT Corporation, Hanaro
Telecom, DACOM and Onse, as well as the networks of the other
wireless telecommunications service providers in Korea. These
connections enable our subscribers to make and receive calls
from telephones outside our networks. Under Korean law, service
providers are required to permit other service providers to
interconnect to their networks. If the new service provider
desires interconnection with the networks of incumbent service
provider but the parties are unable to reach an agreement within
90 days, the new service provider can appeal to the Korea
Communications Commission, a government agency under the MIC. We
estimate that approximately 43.1% in 2001, approximately 39.7%
in 2002 and approximately 37.9% in 2003 of our incoming and
outgoing calls originated from or were routed to the networks of
KT Corporation and Hanaro Telecom or the international gateways
of KT Corporation, DACOM and Onse. With respect to the
interconnection arrangement for calls from fixed-line networks
to wireless networks, for the years 2000 through 2001,
fixed-line operators payments to wireless network service
providers were calculated based on the actual imputed costs in
1998 of the leading wireless network service provider, which is
us. For 2002, these payments were calculated based on each
wireless operators actual imputed costs in 2001. This
change reduced the interconnection revenue we received from each
call made from a fixed-line network terminating on our network,
adversely affecting our interconnection revenue compared to
previous years. For 2003, pursuant to a new MIC policy, an
operators interconnection fees were derived from that
operators actual interconnection fees for 2001 and actual
imputed costs for 2001. The MIC also implemented interconnection
charges for calls between wireless network service providers
beginning in January 2000, affecting both our revenue and our
expenses. These charges were also reduced beginning in January
2002 and in January 2003. The MIC is expected to introduce a new
method of calculating interconnection payments, based on the
terminators long-run incremental cost in 2004. See
 Law and Regulation 
Interconnection and Operating and Financial Review
and Prospects  Overview  Revenue.

For 2002, our total interconnection revenues were
Won 1,043.2 billion and our total interconnection expenses
were Won 752.1 billion. For 2003, our total interconnection
revenues were Won 1,017.1 billion and our total
interconnection expenses were Won 771.5 billion.

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| |               
| | --------------
| | Domestic calls

Guidelines issued by the MIC require that all
interconnection charges levied by a regulated carrier take into
account (i) the actual costs to that carrier of carrying a
call or (ii) imputed costs. The interconnecting parties are
required to calculate the relevant imputed costs on an annual
basis. In the event of a dispute regarding the imputed costs,
the Korea Communications Commission is empowered to act as
arbitrator.

Wireless-to-Fixed-line.According to our interconnection arrangement with KT
Corporation, for a call from our wireless network to KT
Corporations fixed-line network, we collect the usage rate
from our wireless subscriber and in turn pay KT Corporation the
interconnection charges based on KT Corporations imputed
costs.

Fixed-line-to-Wireless.In December 1997, the MIC announced new interconnection
arrangements for calls from a fixed-line network to a wireless
network. Under these arrangements, effective January 1,
1998, for a call initiated by a fixed-line user to one of our
wireless service subscribers, the fixed-line network operator
was to collect our usage fee from the fixed-line user and pay us
an interconnection charge based on our related revenue.
Interconnection with KT Corporation accounts for substantially
all of our fixed-line-to-wireless interconnection revenue and
expenses.

For 2000, KT Corporations payments to
network service providers were calculated based on a discount of
7.76% to our actual imputed costs in 1998 and for 2001, a
discount of 14.92%. According to this calculation, KT
Corporation was required to pay interconnection charges of Won
68.94 per minute (exclusive of value-added taxes) for
fixed-line to mobile calls to network operators in 2000 and Won
63.59 per minute in 2001.

In April 2002, the MIC announced new
interconnection arrangements effective January 1, 2002
which reduced the interconnection fees payable among Korean
wireless operators by between 10.2% and 28.1%, depending upon
the operators involved. For 2002, KT Corporations payments
to network service providers were calculated based on a discount
of 28.1% to our actual imputed costs for 2000. According to this
calculation, KT Corporation was required to pay interconnection
charges of Won 45.7 per minute (exclusive of value-added
taxes). This was reduced to Won 41.0 per minute for 2003.
The MIC determines the charges and notifies the wireless
operators.

Wireless-to-Wireless.The MIC did not determine interconnection charges for calls
between wireless telephone networks in Korea prior to 2000;
instead, the interconnection charges were negotiated among the
operators. The MIC implemented interconnection charges for such
calls starting in January 2000. Under these arrangements, the
operator originating the call pays an interconnection charge to
the operator terminating the call. For all operators, the amount
of the charge is derived from SK Telecoms imputed cost,
which was Won 45.7 per minute for 2002. This was
reduced to Won 41.0 per minute for 2003. The charge for
2004 has not been determined yet. Our revenues from the
wireless-to-wireless charge were Won 365.6 billion
(including Won 86.1 billion for Shinsegi) in 2000, Won
435.2 billion (including Won 86.6 billion for
Shinsegi) in 2001, Won 350.9 billion in 2002 and Won
412.2 billion in 2003. Our expenses from these charges were
Won 429.6 billion (including Won 106.7 billion
for Shinsegi), Won 496.0 billion (including Won
105.5 billion for Shinsegi) in 2001, Won 482.7 billion
in 2002 and Won 518.2 billion in 2003. The charges above
have been agreed among the parties involved and confirmed by the
MIC.



| |                    
| | -------------------
| | International calls

With respect to international calls, if a call is
initiated by a wireless subscriber, we bill the wireless
subscriber for the international charges of KT Corporation,
DACOM or Onse, and we receive interconnection charges from such
operators. If an international call is received by our
subscriber, KT Corporation, DACOM or Onse pays interconnection
charges to us based on our imputed costs.



| |                                       
| | --------------------------------------
| | International roaming
    arrangements

We currently have CDMA automatic roaming
agreements with several wireless telecommunications service
providers, including Verizon Wireless, Sprint and Alltel in the
United States, KDDI in Japan, Telstra in Australia, China Unicom
in China, Hutchison Telecom in Hong Kong, Telecom New Zealand in
New

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Zealand, Telus Mobility and Bell Mobility in
Canada, Guamcell in Guam, Guamcell in Saipan, Hutchison CAT
Wireless Multimedia in Thailand, Iuacell in Mexico, VIVO in
Brazil, Telefonica Moviles del Peru in Peru, Pelephone in
Israel, Asia Pacific Broadband Wireless in Taiwan and Mobile 8
in Indonesia. We plan to enter into similar arrangements with
other wireless telecommunications service providers.


We have also begun to introduce inter-standard
roaming which allows our subscribers to roam on networks
employing GSM technology and vice-versa. From March 2002, we
have established a roaming arrangement with Telefonica Moviles
Espana S.A. of Spain. Under this arrangement, GSM subscribers
can use their own SIM cards (Subscriber Information Module Card)
with CDMA handsets that are compatible with such GSM SIM cards
by renting such CDMA handsets from us. Roaming users are able to
receive calls made to their normal mobile telephone numbers. We
are seeking to enter into these arrangements with many GSM
operators worldwide. As of April 30, 2004, we had entered
into inter-standard roaming agreements with 166 operators in 89
nations.

Digital Cellular Network

We offer wireless voice and data
telecommunications services throughout Korea using digital
wireless networks. SK Telecom operates a CDMA network which
currently reaches approximately 99% of the population, and a
CDMA 1xRTT network which currently reaches approximately 90% of
the population. Shinsegi operated a CDMA network prior to its
merger into SK Telecom that we completed decommissioning in July
2002.

CDMA Networks

In January 1996, SK Telecom introduced a digital
wireless network based on CDMA technology. This network has been
the core platform for our wireless telecommunications business.
CDMA technology is a continuous digital transmission technology
that accommodates higher throughput than analog technology by
using various coding sequences to allow concurrent transmission
of voice and data signals for wireless communication. CDMA
technology provides customers with a high degree of call quality
and security.

CDMA technology is currently in commercial
operation in several countries including Korea, Hong Kong and
the United States. A majority of the digital wireless networks
currently in use around the world are based on either the
European Global System for Mobile Communication standard or
other time division multiple access technologies. Unlike the
continuous digital transmission method of CDMA technology, these
technologies break voice signals into sequential pieces of a
defined length, place each piece into an information conduit at
specific intervals and then reconstruct the pieces at the end of
the conduit.

We completed decommissioning the CDMA network
formerly owned and operated by Shinsegi in July 2002. In areas
where Shinsegis former network no longer operates,
Shinsegis former subscribers are able to roam on SK
Telecoms CDMA network.



| |                   
| | ------------------
| | CDMA 1xRTT Network

In October 2000, we began offering wireless voice
and data services on our CDMA 1xRTT network. CDMA 1xRTT is an
advanced CDMA-based technology which allows transmission of data
at speeds of up to 144 Kbps (compared to a maximum of
64 Kbps for our CDMA networks) and constitutes what is
sometimes referred to as a 2.5G network. As of December 31,
2003, our CDMA 1xRTT network currently covers 84 cities in
Korea, approximately 90% of the population. In areas where the
CDMA 1xRTT network is currently unavailable, CDMA 1xRTT-enabled
handsets are capable of accessing the CDMA network.

Unlike our CDMA network, our CDMA 1xRTT network
has been designed to be upgraded in step with advances in
wireless technology. In the first half of 2002, we launched an
upgrade of our CDMA 1xRTT network in 26 cities in Korea to
an advanced technology called CDMA 1xEV/ DO. CDMA 1xEV/ DO is a
CDMA-based technology, similar to CDMA 1xRTT, which enables data
to be transmitted at speeds of up to 2.4 Mbps. This speed
permits interactive transmission of data required for videophone
services, a high-speed wireless Internet connection, as well as
a multitude of multimedia services. CDMA 1xEV/ DO-capable

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handsets became available in Korea in June 2002.
We are expanding our CDMA 1xEV/ DO network and completed the
upgrade in 84 cities in Korea as of the end of 2003. This
network permits 3G capabilities. A significant portion of our
capital expenditures is expected to be used for the future
expansion and upgrading of our CDMA 1xRTT network as well as our
CDMA 1xEV/ DO network. For details of our capital expenditure
plans relating to CDMA 1xRTT, see Operating and Financial
Review and Prospects  Liquidity and Capital
Resources.




| |               
| | --------------
| | W-CDMA Network

W-CDMA is a 3G level high capacity wireless
communication system that is expected to enable us to offer a
wider range of telecommunications services, including cellular,
paging, data communications, video-conferencing, multimedia
services and satellite communications. We commenced provision of
our IMT-2000 services based on our W-CDMA network on a limited
basis in Seoul at the end of 2003. However, the actual scope and
timing of the full nationwide roll-out of our W-CDMA network
will depend on several factors, including the availability of
network equipment, progress on the development of dual band/dual
mode handsets, ability to overcome technical problems currently
affecting W-CDMA performance, adoption of CDMA 1xEV/ DO service,
regulatory decisions, our assessment of the market opportunities
for W-CDMA technology-based services and the competitive
landscape in the Korean wireless market. For more information
about our capital expenditure plans relating to W-CDMA, see
Operating and Financial Review and Prospects 
Liquidity and Capital Resources and for more information
about risks relating to W-CDMA, see Key
Information  Risk Factors  W-CDMA
technology may require significant capital and other
expenditures for implementation which we may not recoup and may
be difficult to integrate with our other businesses.



| |                       
| | ----------------------
| | Network infrastructure

The principal components of our wireless networks
are:



| |   |                                                                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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);
|
| |  | base station transceiver
    subsystems, which manage the radio
    transmission by the equipment located at one or more cell sites,
    including radio-channel management, message transport and
    hand-off of calls between cell sites;
|
| |  | switching stations,
    which switch calls to the proper destinations; and                                                                                                                                                                  
|
| |  | leased lines,
    microwave links or other connections which link the switching
    stations, cell sites and the public switched telephone networks
    of KT Corporation and Hanaro Telecom.                                               

The following table sets forth some basic
information about our wireless networks at December 31,
2003:

|                                                         |  |            |       |                    |  |  |    | 
|-------------------------------------------------------- |  | ---------- | ----- | ------------------ |  |  | -- | 
|                                                         |  | Cell Sites |       | Switching Stations
|                                                         |  |            |       |                   
|CDMA Network (excluding CDMA lxRTT and
    CDMA 1xEV/DO) |  |            | 5,094 |                    |  |  | 56 | 
|CDMA 1xRTT Network and CDMA 1xEV/ DO                     |  |            | 2,825 |                    |  |  | 50 | 
|W-CDMA                                                   |  |            | 390   |                    |  |  | 2  | 

We purchase our principal digital wireless
equipment for our CDMA networks from LG Electronics, Hyundai
Syscomm and Samsung Electronics. We have purchased from Samsung
Electronics substantially all of the equipment for our CDMA
1xRTT network. Several manufacturers, including Samsung
Electronics, Hyundai Syscomm, LG Electronics, Motorola Korea,
Inc., and Sewon Telecom Ltd., currently produce handsets for use
on our CDMA and CDMA 1xRTT networks. Samsung Electronics, SK
Teletech and Motorola Korea, Inc. currently manufacture most of
the handsets for use on our CDMA 1xEV/ DO Network.

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Under applicable Korean law, Korean fixed-line
operators may not decline to provide leased line services to us
without reasonable cause. We have completed installation of
substantially all optical fiber lines between our switching
stations. In addition, we own several microwave links in areas
to serve certain sections of the network formerly owned and
operated by Shinsegi. We have also installed optical fiber lines
linking base stations with switching stations and other base
stations. Where we have not installed optical fiber lines, we
continue to use lines leased by us from KT Corporation. KT
Corporations fixed charges for the leased lines are based
on line capacity, length and type.

We use a cellular network surveillance system.
This system oversees the operation of cell sites and allows us
to monitor our main equipment located throughout the country
from one monitoring station. The automatic inspection and
testing provided to the cell sites lets the system immediately
rebalance to the most suitable setting, and the surveillance
system provides automatic dispatch of repair teams and quick
recovery in emergency situations.

Other Investments and Relationships

We have investments in several other businesses
and companies and have entered into various business
arrangements with other companies. Our principal investments
fall into the following categories:



| |                                                                                                                                                                                                                                                                                                                                                                         
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Wireless Application Developers and Content
    Providers.As part of our strategy
    to develop additional applications and content for our wireless
    data services, we invest in companies which develop wireless
    applications and provide Internet content, including content
    accessible by users of our wireless networks. These investments
    include:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Information Technology and Content
    Providers.We hold investments in
    approximately 39 companies, with an aggregate book value of
    approximately Won 31.4 billion as of December 31,
    2003, which develop technology and content for use in our
    fixed-line and wireless data and Internet businesses and for
    continuing development of our multimedia platforms and networks.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Joint Ventures.We
    own a 50% interest in a joint venture with Hewlett-Packard
    Company to support development of next generation wireless
    multi-media and mobile commerce services and a 50% interest in a
    joint venture with Qualcomm Incorporated, formed for the purpose
    of funding venture startup companies engaged in development and
    commercialization of new applications or services utilizing CDMA
    technology. We have committed to invest US$5 million in
    each of these ventures. As of December 31, 2003, we
    invested Won 5.9 billion in our joint venture with Qualcomm
    and Won 6.0 billion in our joint venture with
    Hewlett-Packard. In addition, pursuant to an agreement entered
    into on March 20, 2003, we established in December 2003,
    UniSK, a joint venture company with China Unicom, Chinas
    second largest mobile phone operator and exclusive CDMA wireless
    service provider, to develop wireless Internet platform and
    content. We and China Unicom have a 49% interest and 51%
    interest, respectively, in UniSK. UniSK, which had an initial
    capitalization of US$6 million, commenced offering portal
    services in February 2004. In September 2003, we reached a
    business cooperation agreement with Teliasonera for the purpose
    of jointly developing and commercializing new businesses
    cross-licensing, partnership exchange and joint advancement into
    overseas markets. On September 16, 2003, we signed a
    memorandum of understanding with Alcatel for a joint development
    of a Mobile Payment Service by combining our Nemo with
    Alcatels Prepayment Instant Billing System.
|
| |  | Mobile Broadcasting
    Corporation.In September 2003, we
    entered into an agreement with Mobile Broadcasting Corporation,
    a wireless multi-media company in Japan, for the purposes of
    co-owing and launching a satellite for the satellite DMB
    business. MBCO is a developer and provider of content and
    technology related to wireless multimedia services and is
    planning to develop new services in Satellite DMB. Under the
    terms of the agreement, SK Telecom is committed to fund 34.7% of
    the cost of launching and maintaining the operations of the
    satellite, which is expected to be approximately
    Won 100.8 billion. As of December 31, 2003, we
    have invested a total of Won 42.5 billion, and had a
    13.5% interest in MBCO. We launched the satellite in March 2004.
    Although actual implementation of the satellite DMB business
    will depend on many factors,                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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| |  |                                                                                                                                                                                                 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | including government approvals that have yet to
    be obtained, our current expectations are to begin commercial
    service by August 2004. See Information on the
    Company  Multimedia.



| |                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------
| | Foreign Wireless Telecommunications
    Operators.We have investments in
    the following wireless telecommunications operators:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Skytel.In July
    1999, we acquired a 27.8% equity interest in Skytel,
    Mongolias second-largest cellular service provider, by
    providing approximately Won 1.5 billion worth of analog
    infrastructure. As of December 31, 2003, Skytel had
    approximately 55,000 subscribers. We, together with Skytel, have
    been providing cellular service in Mongolia since July 1999, and
    CDMA service since February 2001. In April 2001, we completed
    installing the equipment necessary to provide WAP service. Other
    investors have invested in Skytel. As a result, as of
    December 31, 2003, our equity interest in Skytel is 28.6%.                                                                                                                                                                                                                                                                                                                                                                                                
|
| |  | SLD Telecom.In a
    series of transactions during 2000, we entered the Vietnam CDMA
    market through the acquisition of a 53.8% equity interest of SLD
    Telecom Pte. Ltd. in return for an investment of
    US$1.35 million. SLD Telecom entered into a business
    cooperation contract with Saigon Post &
    Telecommunication Services Corporation to provide CDMA service
    throughout Vietnam. We commenced CDMA service through Saigon
    Post & Telecommunication Service Corporation in July
    2003. Under the business cooperation contract, SLD Telecom will
    contribute no less than $150 million to the investment
    capital for the joint CDMA business in Vietnam through 2016,
    which amount will include capital expenditures as well as
    contribution to the working capital. Our contribution amount
    will be determined according to our equity interests in SLD
    Telecom from time to time. We have invested US$29.4 million
    as of December 31, 2003 and plan to invest up to
    US$12.9 million in 2004.



| |                                                 
| | ------------------------------------------------
| | Other Investments.Our other investments include:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Hanaro.As of
    December 31, 2003, we owned a 1.8% interest in the
    outstanding capital stock of Hanaro Telecom, a consortium led by
    DACOM which was awarded Koreas second local fixed-line
    service license in 1997. On September 2, 2003, we purchased
    Won 120.0 billion of Hanaro Telecom commercial paper in
    order to provide Hanaro Telecom with short-term liquidity while
    it attempted to secure a foreign investor that would inject new
    capital into the company. The decision to provide liquidity
    support to Hanaro Telecom was made to protect the value of our
    stake in Hanaro Telecom, due to our stake in Hanaro Telecom.
    Following an investment in Hanaro Telecom by a consortium led by
    AIG and Newbridge, we disposed of the Hanaro Telecom commercial
    paper in December 2003. In May 2004, we purchased from Samsung
    Electronics Co., Ltd. 13,870,000 shares of Hanaro Telecom,
    representing 3.0% of the outstanding shares of Hanaro for Won
    39.3 billion as part of our strategic efforts in
    consideration of increasing convergence between wireless and
    fixed-line services. As a result of the acquisition, our equity
    interest in Hanaro increased to 4.8% from 1.8% as of
    December 31, 2003.
|
| |  | Powercomm.We
    currently own a 5.0% interest in Powercomm Corporation with a
    book value as of December 31, 2003 of Won
    68.4 billion. For more information, see note 3 of the
    notes to our consolidated financial statements. 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 Co., Ltd.
    with a book value as of December 31, 2003 of Won
    93.4 billion. SKC&C is an information technologies
    services provider. Substantially all of SKC&Cs revenue
    is generated from services provided to member companies of the
    SK business group, including us. We are party to several service
    contracts with SKC&C related to development and maintenance
    of our information technologies systems. See Major
    Shareholders and Related Party Transactions  Certain
    Relationships and Related Party Transactions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | SK Group Japan Co., Ltd.In December 2001, we invested Won
    5.3 billion in SK Group Japan Co., Ltd., a trading company.
    We held a 16.5% equity interest in SK Group Japan with an
    acquisition cost of Won 16.4 billion, which was written off
    due to an impairment. We expect that SK Group Japan will be
    dissolved by the end of 2004.                                                                                                                                                                                                                          
|
| |  | SK Communications.In August 2002, we purchased a 44.5%
    interest from Mirae Corporation in Lycos Korea, one of
    Koreas leading Internet portals, for Won
    12.3 billion. Subsequently, we subscribed for additional
    shares in Lycos Korea and increased our interest in Lycos Korea
    to 90.3%. Lycos Korea was renamed SK Communications after it
    acquired Netsgo Co., Ltd. and business rights to Nate.com
    service in November 2002. SK Communications subsequently
    consolidated services from Lycos and Nate.com to offer portal
    service on-line.

In February 2001, we transferred our paging
business to Real Telecom and received a 9.9% interest in Real
Telecom, as well as convertible bonds with a principal amount of
Won 9.5 billion. Such convertible bonds and accrued
interest were exchanged for bonds issued by Real Telecom in May
2003 with a principal amount of Won 10.6 billion which can
be converted into 371,018 shares of common stock of Real
Telecom as of April 2004.

We have from time to time engaged in discussions
with several wireless telecommunications services providers
about strategic relationships of various types and have certain
technology development and sharing agreements with NTT DoCoMo
and Sprint PCS.

Competition

We were Koreas only provider of cellular
telecommunications services until April 1996, when Shinsegi
began offering its CDMA service using 10 MHz of spectrum in
the 800 MHz band under a license issued in 1994. In 1996,
the Government issued three additional licenses to KT Freetel,
LG Telecom and Hansol PCS to operate CDMA services, each using
10 MHz of spectrum in the 1700-1800 MHz band. Each of
KT Freetel, LG Telecom and Hansol PCS commenced operation
of its CDMA service in October 1997.

Beginning in 2000, there has been considerable
consolidation in the wireless telecommunications industry
resulting in the emergence of stronger competitors. In 2000, KT
Corporation acquired 47.9% of Hansol M.Coms outstanding
shares and renamed the company KT M.Com. KT M.Com merged into KT
Freetel in May 2001. In May 2002, the Government sold its
remaining 28.4% stake in KT Corporation. It is widely believed
that KT Corporation is likely to operate more efficiently and be
managed more effectively and profitably following its
privatization. KT Corporation had a 46.9% interest in KT Freetel
as of December 31, 2003.

Significant advances in technology are occurring
that may affect our businesses, including the roll-out or the
planned roll-out by us and our competitors of advanced
high-speed wireless telecommunications networks based on CDMA
1xEV/ DO technology and other technologies such as W-CDMA and
cdma2000, both of which are commonly referred to as third
generation, or 3G, wireless technology. In October 2000, we
launched the worlds first CDMA 1xRTT network, which
enables us to provide advanced data services. Since then our two
principal competitors, KT Freetel and LG Telecom, have also
launched networks using CDMA 1xRTT technology. We completed the
upgrading of our networks to CDMA 1xEV/ DO technology in
84 cities in Korea as of the end of 2003. KT Freetel has
expanded its CDMA 1xEV/ DO network to cover 45 cities in
Korea as of December 31, 2003. In addition, we and our
competitors also have the rights to acquire licenses to provide
3G services using W-CDMA technology (in the case of us and KT
Freetel) or cdma2000 technology (in the case of LG Telecom).
Such networks are expected to support data transmission services
with more advanced features and significantly higher data
transmission rates than our principal data network, which uses a
technology called CDMA 1xRTT. We commenced provision of our
IMT-2000 services based on our W-CDMA network on a limited basis
in Seoul at the end of 2003. However, the actual scope and
timing of the full nationwide roll-out of our W-CDMA network
will depend on several factors, including the availability of
network equipment, progress on the development of dual band/dual
mode handsets, ability to overcome technical problems currently
affecting W-CDMA performance, adoption of CDMA 1xEV/ DO service,
regulatory decisions, our assessment of the market opportunities
for W-CDMA technology-based services and

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the competitive landscape in the Korean wireless
market. See Key Information  Risk
Factors  Competition may reduce our market share and
harm our results of operations and financial condition.


As of April 30, 2004, according to the MIC,
KT Freetel and LG Telecom had 11.5 million and
5.5 million subscribers, respectively, representing
approximately 32.4% and 15.6%, respectively, of the total number
of wireless subscribers in Korea on such date. As of
April 30, 2004, we had 18.5 million subscribers,
representing a market share of approximately 52.0%. On
May 25, 2004, we voluntarily undertook to limit our market
share to 52.3% of the wireless telecommunications market through
the end of 2005, the level of our market share at the time of
the approval of our merger with Shinsegi in January 2002.

For a description of the risks associated with
the competitive environment in which we operate, see Key
Information  Risk Factors  Competition may
reduce our market share and harm our results of operations and
financial condition.

Under current government regulations, as the
designated market dominant service provider for wireless network
services, we must obtain prior MIC approval for a change in our
wireless telecommunications service rates, although our
competitors may change their rates at their discretion. The MIC
gave new entrants similar price advantages when DACOM started
competing with KT Corporation in international long distance
service in 1991 and domestic long distance service in 1996. On
April 9, 2003, the MIC announced its plan to adopt a
reserved reporting system for setting new rates as a
measure to relax the stringent regulation on pricing. Under the
reserved reporting system, we would have to report
our proposed new rate plan with the MIC in order to change our
rates. Unless the MIC objected to the proposed rate plan within
a certain period of time, such rates would be automatically
adopted. We believe that this system, if implemented, would give
us greater flexibility in setting our wireless communications
service rates in response to market conditions in a timely
manner, but we can give no assurance that such a system will be
adopted as currently contemplated, or at all, or that the rates
allowed by such a system will allow us to remain profitable.

For a description of our rates and subscription
plans, see  Revenues, Rates and Facility
Deposits. In addition, the FTC approved our acquisition of
Shinsegi on two conditions. First, the FTC required that
SK Telecoms and Shinsegis combined market share
of the wireless telecommunications market, based on numbers of
subscribers, be less than 50.0% as of June 30, 2001. As a
result, we reduced the level of our subscriber activations and
adopted more stringent involuntary subscriber deactivation
policies beginning in 2000 and ceased accepting new subscribers
for three months, from April 1, 2001 through June 30,
2001. We complied with this requirement by reducing our market
share to approximately 49.7% as of June 30, 2001, and thus,
we are not subject to any market share limitations. On
May 25, 2004, we voluntarily undertook to limit our market
share to 52.3% of the wireless telecommunications market through
the end of 2005, the level of our market share at the time of
the approval of our merger with Shinsegi in January 2002. As of
April 30, 2004, we had approximately 18.5 million
subscribers, representing a market share of approximately 52.0%.
Second, the FTC imposed a maximum limit of 1,200,000 on the
number of digital handsets we may purchase annually from our
subsidiary, SK Teletech, until December 31, 2005. This
restriction does not apply to W-CDMA handsets.

In February 1997, member governments of the World
Trade Organization, or WTO, reached the WTO Agreement on Basic
Telecommunications Services, which became effective in November
1997. As part of this agreement and to expedite the opening of
the telecommunications market and promote competition, the
Government has amended the Telecommunications Business Law
several times to, among other things, increase the allowed
foreign shareholding ownership threshold (up to an aggregate of
49.0%) and participation in telecommunications service
providers, including us.

While we believe that these measures will enable
us to more easily take advantage of opportunities for
investments in overseas telecommunications projects, they have
increased and may in the future increase competition and the
financial and technological resources of our competitors in the
domestic market.

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Law and Regulation



| |         
| | --------
| | Overview

Koreas telecommunications industry is
subject to comprehensive regulation by the MIC, which is
responsible for information and telecommunications policies,
radio and broadcasting management, postal services and postal
finances. The MIC regulates and supervises a broad range of
communications issues, including:



| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | 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.                                       

Telecommunications service providers are
currently classified into three categories: network service
providers, value-added service providers, and specific service
providers. We are classified as a network service provider
because we provide telecommunications services with our own
telecommunications networks and related facilities. As a network
service provider, we are required to obtain a license from the
MIC for each of the services we provide. Our licenses permit us
to provide cellular services and third generation wireless
services using W-CDMA technology. Our cellular license is valid
for an indefinite term and our W-CDMA license is valid for
15 years starting from 1999.

The MIC may revoke our licenses or suspend any of
our businesses if we fail to comply with its rules, regulations
and corrective orders, including the rules restricting
beneficial ownership and control and corrective orders issued in
connection with any violation of rules restricting beneficial
ownership and control, or the conditions of our licenses.
Alternatively, in lieu of suspension of our business, the MIC
may levy a monetary penalty of up to 3% of our revenues. A
network services provider that wants to cease its business or
dissolve must obtain MIC approval.

The MIC has stated that its policy is to promote
competition in the Korean telecommunications market through
measures designed to prevent the dominant service provider in
any such market from exercising its market power in such a way
as to prevent the emergence and development of viable
competitors. While all network service providers are subject to
MIC regulation, we are subject to increased regulation because
of our position as the dominant wireless telecommunications
services provider in Korea.



| |                
| | ---------------
| | Rate Regulation

Most network service providers must report to the
MIC the rates and contractual terms for each type of service
they provide, but generally set rates at their discretion.
However, as the dominant network services provider for specific
services (based on having the largest market share in terms of
number of subscribers and meeting certain revenue thresholds),
we must obtain prior approval of our rates and terms of service
from the MIC. In each of the years in which this requirement has
been applicable, the MIC has designated us, for wireless
telecommunications service, and KT Corporation, for local
telephone service, as dominant network service providers subject
to this approval requirement. As a condition to its approval of
SK Telecoms merger with SK IMT, the MIC required that we
submit the rates for our third generation mobile services using
W-CDMA technology to MIC for approval prior to the launch of
such services. The MICs policy is to

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approve rates if they are appropriate, fair and
reasonable and if they are calculated in a transparent and
appropriate manner. It may order changes if it deems the rates
to be significantly unreasonable or against public policy.




| |                
| | ---------------
| | Interconnection

Dominant network service providers such as
ourselves that own essential infrastructure facilities or that
possess a certain market share are required to provide
interconnection of their telecommunications network facilities
to other service providers upon request. The MIC sets and
announces the standards for determining the scope, procedures,
compensation and other terms and conditions of such provision,
interconnection or co-use. We have entered into interconnection
agreements with KT Corporation, DACOM, Onse and other network
service providers permitting these entities to interconnect with
our network. We expect that we will be required to enter into
additional agreements with new operators as the MIC grants
permits to additional telecommunications service providers.



| |                                       
| | --------------------------------------
| | Wireless Internet Network
    Co-Share

In December 2002, the MIC implemented a wireless
Internet network co-share system that permits the wireless
application protocol gateway, or WAP Gateway, of a fixed-line
operator to connect to a wireless network service
providers IWF (inter-working function) device. IWF is a
device that connects cellular network with an IP (Internet
Protocol) network while WAP Gateway converts hypertext transfer
protocol, or HTTP protocol, into WAP protocol. This co-share
system would allow subscribers of a wireless network service
provider to have access to wireless Internet content provided by
a fixed-line operator. In December 2002, KT Corporation
connected to our IWF but has not yet commenced service. In July
2003, the MIC approved the basic terms regarding the
implementation of a network co-system. In January 2004, we
entered into a memorandum of understanding with Onse to
establish a co-share system. We and Onse have not decided when
to launch these services. Currently, our subscribers can access
portals provided by outside parties. In addition, the MIC has
requested that a third party oversee wireless operators
customer billing procedures with respect to third-party content
providers who are seeking to provide their content directly to
subscribers without going through an individual operators
portal, as third-party content providers have experienced
difficulties in providing their content service directly to
subscribers due to the lack of resources for billing users. We
believe that such a co-share system, if widely adopted, will
have the effect of giving our users access to a wide variety of
content using their handsets which may in turn increase revenues
attributable to our data services. However, this system could
also place significant competitive pressure on the services
available on our NATE platform.



| |                                                                            
| | ---------------------------------------------------------------------------
| | Contributions to Fund for Development of
    Information Telecommunications

The MIC has the authority to recommend to network
service providers that they provide funds for national research
and development of telecommunications technology and related
projects. For 2004, the MIC recommends that we contribute 0.75%
of budgeted revenues (calculated pursuant to MIC guidelines that
differ from our accounting practices) to the Fund for
Development of Information Telecommunications operated by the
MIC. Although these recommendations were not mandatory prior to
2002, we have in the past contributed recommended amounts. Our
contribution to this fund in 2000 was Won 38.3 billion
(including Won 0.6 billion for Shinsegi) based on the MIC
recommendation of 1.5% of MIC-calculated revenues for 2000. Our
contribution to this fund in 2001 was Won 23.0 billion
(including nil for Shinsegi) based on the MIC-recommended
minimum level of contribution of 1.0% of MIC-calculated revenues
for 2001.

In May 2002, the MIC announced significant
changes to the government contribution system. Starting from
2002, the contributions became mandatory, and the annual
contribution which was set at 1.0% of total revenues for the
previous year was lowered to 0.5% (0.75% for market dominant
service providers like us) of total revenues for the previous
year, and will be applicable only to those network service
providers who have Won 30 billion in total sales and
recorded net profits for the previous year. Under the policy,
the amount of the annual contribution does not need to exceed
the net profit of each company. Our contribution to this fund in

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2002 and 2003 was Won 58.6 billion and Won
64.4 billion based on the new MIC requirement of 0.75% of
MIC-calculated revenues for 2002 and 2003, respectively.




| |                             
| | ----------------------------
| | Universal Service Obligation

All telecommunications service providers other
than value-added service providers, specific service providers
and regional paging service providers whose net annual revenue
is less than an amount determined by the MIC (currently set at
Won 5 billion) are required to provide
universal telecommunications services including
local telephone services, local public telephone services,
telecommunications services for remote islands and wireless
communication services for ships and telephone services for the
handicapped and low-income citizens or contribute toward the
supply of such universal services. The MIC designates universal
services and the service provider who is required to provide
each service. Currently, we are required to offer free
subscription fee and 30% discount of our monthly fee for
cellular services to the handicapped and the low-income
citizens. In addition to such universal services for the
handicapped and low-income citizens, we are also required to
make certain monetary contributions to compensate for other
service providers costs for the universal services. The
size of a service providers contribution is based on its
net annual revenue (calculated pursuant to MIC guidelines which
differ from our accounting practices). In 2002, we paid Won
28.9 billion, which was our estimated contribution amount
based on our net annual revenue for our fiscal year 2001
pursuant to MIC guidelines. We received a refund in the amount
of Won 1.8 billion from the MIC after calculating our
required contribution amount based on our net annual revenue for
our fiscal year 2001, which effectively reduced our actual
contribution amount to Won 27.1 billion. In 2003, our
contribution amount was Won 80.7 billion for our fiscal
year 2002. Our contribution amount for 2004 has not yet been
determined, but is expected to be Won 31.8 billion. In May
2004, the MIC stated that it may increase the contribution
amount to be paid by us as a market-dominating business entity
up to 10% of the total contributions. As a wireless
telecommunications services provider, we are not considered a
provider of universal telecommunications services and do not
receive funds for providing universal service. Other network
service providers that do provide universal services make all or
a portion of their contribution in the form of
expenses related to the universal services they provide.



| |                     
| | --------------------
| | Frequency Allocation

The MIC has the discretion to allocate and adjust
the frequency band for each type of service. Upon allocation of
new frequency bands or adjustment of frequency bands, the MIC is
required to give a public notice. The MIC also regulates the
frequency to be used by each radio station, including our base
stations, by the terms of its approval for each radio station.
All of our frequency allocations are for an indefinite term. We
pay fees to the MIC for our frequency usage which are determined
based upon our number of subscribers, frequency usage by our
networks and other factors. For 2001, 2002 and 2003 the fee
amounted to Won 78.9 billion,
Won 119.2 billion and Won 129.5 billion,
respectively.

In addition, we have paid Won 650 billion of
the Won 1.3 trillion cost of the W-CDMA license in March 2001.
We are required to pay the remainder of the license cost in
annual installments for a five-year period from 2007 through
2011. For more information, see note 2(i) of the notes to
our consolidated financial statements for the years ended
December 31, 2001, 2002 and 2003.



| |                       
| | ----------------------
| | Competition Regulation

The Korea Communications Commission is charged
with ensuring that network service providers engage in fair
competition, and has broad powers to carry out this goal. If a
network service provider is found to be in violation of the fair
competition requirement, the Korea Communications Commission may
take corrective measures it deems necessary, including, but not
limited to, the prohibition of further violation, the amendment
to the articles of incorporation or the service contracts with
customers, the execution or performance of, or amendment to, the
interconnection agreements with other network service providers.

In addition, we qualify as a market-dominating
business entity under the Korean Fair Trade Act. Accordingly, we
are prohibited from engaging in any act of abuse, such as
unreasonably determining,

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maintaining or altering service rates,
unreasonably controlling the rendering of services, unreasonably
interfering with business activities of other business entities,
hindering unfairly the entry of newcomers or substantially
restricting competition to the detriment of the interests of
consumers.


Under the Fair Trade Act, a company that is a
member of a large business group as designated by the FTC, such
as ourselves, as a company in the SK Group, is generally
required to limit its total investments in other domestic
companies to 25.0% of its non-consolidated net assets.
Investment in companies engaging in similar business is not
included in calculating the 25% limit. Depending on the time
frame in which such a company acquired shares in excess of the
25% ceiling, the FTC may issue corrective orders such as
disposition of the shares held in excess of the 25.0% ceiling or
the limitation on the voting rights for such shares and/or
impose monetary sanctions. SK Telecoms total investments
in other domestic companies (excluding investments in Hanaro
Telecom and Powercomm, companies engaging in similar business)
amounted to Won 714.0 billion, or 5.2% of our consolidated
net assets as of December 31, 2003.



| |                   
| | ------------------
| | Number Portability

Previously, Koreas wireless
telecommunications system was based on a network-specific prefix
system in which a unique prefix is assigned to all the phone
numbers of a network operator. We were assigned the
011 prefix, and all of our subscribers mobile
phone numbers began with 011 (former Shinsegi
subscribers use the 017 prefix) and our subscribers
could not change their wireless phone service to another
wireless operator and keep their existing numbers. In January
2003, the MIC announced its plan to implement number portability
with respect to wireless telecommunications services in Korea.
The number portability system allows wireless subscribers to
switch wireless service operators while retaining the same
mobile phone number. However, subscribers who switch operators
must purchase a new handset, as we use a different frequency
than KT Freetel and LG Telecom. In accordance with the plan
published by the MIC, the number portability system was adopted
by SK Telecom starting from January 1, 2004. KT Freetel and
LG Telecom will be required to introduce number portability
starting from July 1, 2004 and January 1, 2005,
respectively.

In addition, in order to manage the availability
of phone numbers efficiently and to secure phone number
resources for the new services, the MIC plans to integrate
mobile telephone identification numbers into a common prefix
identification number 010 and to gradually retract
the current mobile service identification numbers which had been
unique to each wireless telecommunications service provider,
including 011 for our cellular services, starting
from January 1, 2004. All new subscribers have been given
the 010 prefix starting in January 2004. The
following table sets forth, based on MIC data, new subscribers
for each of the major wireless cellular providers following the
adoption of the 010 prefix in January 2004:

|              |  |                                                   |                |            |  |            |                |  |  |  |                | 
|------------- |  | ------------------------------------------------- | -------------- | ---------- |  | ---------- | -------------- |  |  |  | -------------- | 
|              |  |                                                  
|              |  | Number of New Wireless Subscribers/ Percentage of
|              |  | New Wireless Subscribers                         
|              |  |                                                  
|Month         |  | SK Telecom                                        |                | KT Freetel |  | LG Telecom
|              |  |                                                   |                |            |  |           
|January 2004  |  |                                                   | 382,420/ 42.1% |            |  |            | 375,181/ 41.3% |  |  |  | 149,737/ 16.5% | 
|February 2004 |  |                                                   | 422,816/ 43.6% |            |  |            | 329,066/ 33.9% |  |  |  | 218,435/ 22.5% | 
|March 2004    |  |                                                   | 405,199/ 39.0% |            |  |            | 356,003/ 34.3% |  |  |  | 276,537/ 26.6% | 
|April 2004    |  |                                                   | 448,997/ 41.2% |            |  |            | 330,441/ 30.3% |  |  |  | 309,736/ 28.4% | 

For risks relating to number portability, see
Key Information  Risk Factors  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.



| |                                          
| | -----------------------------------------
| | Contribution to 114 Directory
    Service

The MIC has been negotiating with network service
providers on sharing the cost of providing 114 directory
services through KT Corporation. Prior to 1998, this cost was
shared among service providers through the NTS Participation
Program. The NTS (Non-traffic Sensitive) Participation Program
included both the Universal Service Provider Program and
contributions to 114 directory service before it came to a
halt due to disagreements between network service providers and
the MIC. The MIC has determined

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SK Telecoms share of such cost for the
period between 1998 and 2001 to be Won 40.6 billion, based
on the number of calls made to 114 directory service
through its network. KT Freetel and LG Telecom were charged Won
16.8 billion and Won 6.7 billion, respectively. This
amount is to be paid in monthly installments over a 20-month
period. Contribution to the 114 directory service for 2002,
2003 and 2004 have not been determined yet.




| |                                                                   
| | ------------------------------------------------------------------
| | Foreign Ownership and Investment
    Restrictions and Requirements

Because we are a network service provider,
foreign governments, individuals, and entities (including Korean
entities that are deemed foreigners, as discussed below) are
prohibited from owning more than 49% of our voting stock.
Effective from May 9, 2004, Korean entities where a foreign
government or a foreigner (together with any of its related
parties) (i) is the largest shareholder and (ii) owns
15% or more of the outstanding voting stock are deemed
foreigners. If this 49% ownership limitation is violated,
certain of our foreign shareholders will not be permitted to
exercise voting rights in excess of the limitation and the MIC
may require other corrective action.

As of December 31, 2003, SK Corporation owns
17,663,127 shares of our common stock, or approximately
21.5%, of our issued shares. As of December 31, 2003, a
foreign investment fund and its related parties collectively
held a 14.99% stake in SK Corporation. Effective from
May 9, 2004, if the foreign investment fund and its related
parties increase their shareholdings in SK Corporation to 15% or
more and such foreign investment fund and its related parties
collectively constitute the largest shareholder of SK
Corporation, SK Corporation will be considered a foreign
shareholder of SK Telecom, and its shareholding in
SK Telecom would be included in the calculation of the
aggregate foreign shareholding of SK Telecom. If
SK Corporations shareholding in SK Telecom is
included in the calculation of the aggregate foreign
shareholding of SK Telecom, then the aggregate foreign
shareholding in SK Telecom assuming foreign ownership level
as of December 31, 2003 (which we believe was 47.0%), would
reach 68.5%, exceeding the 49% ceiling on foreign shareholding.

If the aggregate foreign shareholding limit in SK
Telecom is exceeded, the MIC may issue a corrective order to SK
Telecom, the breaching shareholder (including SK Corporation if
the breach is caused by an increase in foreign ownership of SK
Corporation) and the foreign investment fund and its related
parties who own in the aggregate 15% or more of SK Corporation.
Furthermore, SK Corporation may not exercise its voting rights
with respect to the shares held in excess of the 49% ceiling,
which may result in a change in control of us. In addition, the
MIC may refuse to grant us licenses or permits necessary for
entering into new telecommunications businesses until the
aggregate foreign shareholding of SK Telecom is reduced to below
49%. If a corrective order is issued to us by the MIC arising
from the violation of the foregoing foreign ownership limit, and
we do not comply within the prescribed period under such
corrective order, the MIC may (1) suspend all or part of
our business, or (2) if the suspension of business is deemed to
result in significant inconvenience to our customers or be
detrimental to the public interest, impose a one-time
administrative penalty of up to 3% of our sales revenues.
Additionally, an amendment to the Telecommunications Business
Law in May 2004 also authorizes the MIC to assess monetary
penalties of up to 0.3% of the purchase price of the shares for
each day the corrective order is not complied with, as well as a
prison term of up to one year and a penalty of Won
50 million. See Key Information  Risk
Factors  If SK Corporation breaches the foreign
ownership limitations on SK Telecom, it may result in a change
of control of us.

We are required under the Foreign Exchange
Transaction Act to file a report with a designated foreign
exchange bank or with the Ministry of Finance and Economy, or
the MOFE, in connection with any issue of foreign currency
denominated securities by us in foreign countries. Issuances of
US$30 million or less require the filing of a report with a
designated foreign exchange bank, and issuances that are over
US$30 million require the filing of a report with the MOFE.



| |                                                               
| | --------------------------------------------------------------
| | Restrictions on Investment in
    Telecommunications Companies

A newly adopted amendment to the
Telecommunications Business Law, that has taken effect from
May 9, 2004, provides for the creation of a Public Interest
Review Committee under the MIC to review

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investments in or changes in the control of
network services providers. The following events would be
subject to review by the Public Interest Review Committee:
(i) the acquisition by an entity (and its related parties)
of 15% or more of the equity of a network services provider,
(ii) a change in the largest shareholder of a network
services provider, (iii) 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 (iv) a change in the entity that
actually controls a network services provider. If the Public
Interest Review Committee determines that any of the foregoing
transactions or events would be detrimental to the public
interest, then the MIC may issue orders to stop the transaction,
amend any agreements, suspend voting rights, or divest the
shares of the relevant network services provider. Additionally,
effective from May 9, 2004, if a dominant network services
provider (which would currently include us and KT Corporation)
holds more than 5% of the equity of another dominant network
services provider, the voting rights on the shares held in
excess of the 5% limit may not be exercised.


Patents and Licensed Technology

Access to the latest relevant technology is
critical to our ability to offer the most advanced wireless
services and to design and manufacture competitive products. In
addition to active internal and external research and
development efforts as described in Operating and
Financial Review and Prospects  Research and
Development, our success depends in part on our ability to
obtain patents, licenses and other intellectual property rights
covering our products. We own numerous patents and trademarks
worldwide, in addition to applications for patents pending in
many countries, including Korea, Japan, China, the United
States, and Europe. Our patents are mainly related to CDMA
technology and wireless Internet applications. We also acquired
a number of patents related to W-CDMA technology.

We also license a number of patented processes
and trademarks under cross-licensing, technical assistance and
other agreements. The most important agreement is with Qualcomm
Inc. and relates mainly to CDMA applications technology. This
agreement generally grants us a non-exclusive license to
manufacture handsets in return for royalty payment or a
sub-license to manufacture and sell certain products both in
Korea and overseas during a fixed, but usually renewable term.
We consider our technical assistance and licensing agreements to
be important to our business and believe that we will be able to
renew this agreement on commercially reasonable terms that will
not adversely affect our ability to use the relevant
technologies.

We are not currently involved in any material
litigation regarding patent infringement.

Organizational Structure

We are a member of the SK Group (formerly the
Sunkyong Group), whose members collectively owned in aggregate
24.6% of the shares of our issued and outstanding common stock
as of December 31, 2003. The SK Group is a group of
companies incorporated in Korea with interests in, among other
things, telecommunications, trading, energy, chemicals,
engineering and leisure industries.



| |                         
| | ------------------------
| | Significant subsidiaries

We currently do not have any significant
subsidiaries. For information regarding our subsidiaries, see
note 2(b) of the notes to our consolidated financial
statements.

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PROPERTY, PLANTS AND EQUIPMENT

The following table sets forth certain
information concerning our principal properties as of
May 20, 2004:

|        |  |                  |           |             |  |                                             |                         |  |           |  |           | 
|------- |  | ---------------- | --------- | ----------- |  | ------------------------------------------- | ----------------------- |  | --------- |  | --------- | 
|        |  | Approximate Area |           |             |  | Nature of                                  
|        |  | in Square Feet   |           | Primary Use |  | Interest                                   
|        |  |                  |           |             |  |                                            
|Seoul   |  |                  | 369,786   |             |  |                                             | Corporate Headquarters  |  |           |  | Rental    | 
|Seoul   |  |                  | 1,095,991 |             |  |                                             | Regional Headquarters   |  |           |  | Ownership | 
|Seoul   |  |                  | 384,190   |             |  |                                             | Customer Service Center |  |           |  | Ownership | 
|Taegu   |  |                  | 332,060   |             |  |                                             | Regional Headquarters   |  |           |  | Ownership | 
|Taejon  |  |                  | 309,821   |             |  |                                             | Regional Headquarters   |  |           |  | Ownership | 
|Kwangju |  |                  | 265,616   |             |  |                                             | Regional Headquarters   |  |           |  | Ownership | 
|Pusan   |  |                  | 373,479   |             |  |                                             | Regional Headquarters   |  |           |  | Ownership | 
|Sungnam |  |                  | 482,722   |             |  | Central Research and Development Laboratory |                         |  | Ownership | 
|Ichon   |  |                  | 277,049   |             |  |                                             | Training Center         |  |           |  | Ownership | 
|Wonju   |  |                  | 116,427   |             |  |                                             | Regional Headquarters   |  |           |  | Ownership | 

We are also in the process of constructing a new
building with an area of approximately 82,624 square feet
for use as our corporate headquarters in which we expect to have
full ownership. We plan to relocate our corporate offices into
the new building upon completion expected in 2004. In addition,
we own or lease various locations for cell sites and switching
equipment. We do not anticipate that we will need a significant
number of new cell sites in connection with the expansion of our
networks which is planned for 2004 and we expect to lease or
acquire new sites as needed. We expect that we will need new
cell sites in constructing our W-CDMA network. Our current plan
is to share sites with our existing network and therefore do not
at this time expect to have to obtain a significant number of
new cell site locations. We do not anticipate that we will
encounter material difficulties in meeting our future needs for
any existing or prospective leased space for our cell sites. See
 Cellular Services.

We maintain a range of insurance policies to
cover our assets and employees, including our directors and
officers. We are insured against business interruption, fire,
lightening, flooding, theft, vandalism, public liability and
certain other risks that may affect our assets and employees. We
believe that the types and amounts of our insurance are in
accordance with general business practices in Korea.






|        |                                                 
|------- | ------------------------------------------------
|ITEM. 5 | Operating and Financial Review and
    Prospects

You should read the following discussion together
with our consolidated financial statements and the related notes
which appear elsewhere in this annual report. We prepare our
financial statements in accordance with Korean GAAP, which
differs in some respects from U.S. GAAP. Note 32 of
the notes to our consolidated financial statements provides a
description of the significant differences between Korean GAAP
and U.S. GAAP as they relate to us and provides a
reconciliation to U.S. GAAP of our net income and
shareholders equity for fiscal years 2001, 2002 and 2003.
In addition, you should read carefully the section titled
 Critical Accounting Policies, Estimates and
Judgments as well as note 2 of the notes to our
consolidated financial statements which provide summaries of
certain critical accounting policies that require our management
to make difficult, complex or subjective judgments relating to
matters which are highly uncertain and that may have a material
impact on our financial conditions and results of operations.

Overview

Revenue.We earn
revenue principally from initial connection fees and monthly
access fees, usage charges and value-added service fees paid by
subscribers to our wireless services, interconnection fees paid
to us by other telecommunications operators and sales of
wireless handsets by our subsidiary, SK Teletech. The amount of
our revenue depends principally upon the number of our wireless
subscribers, the rates we charge

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for our services, subscriber usage of our
services and the terms of our interconnection with other
telecommunications operators.


The following table sets forth certain revenue
information about our wireless operations during the periods
indicated:

|                  |                                                |                                          |   |         |         |      |   |         |         |  |   |          |          | 
|----------------- | ---------------------------------------------- | ---------------------------------------- | - | ------- | ------- | ---- | - | ------- | ------- |  | - | -------- | -------- | 
|                  |                                                |                                         
|                  |                                                | Year Ended December 31,                 
|                  |                                                |                                         
|                  |                                                | 2001                                     |   | 2002    |         | 2003
|                  |                                                |                                          |   |         |         |     
|                  |                                                |                                         
|                  |                                                | (In billions of Won, except percentages)
|Cellular Revenue: |                                                |                                          |   |         |         |      |   |         |         |  |   |         
|                  | Wireless Services(1)                           |                                          | W | 6,160.7 |         |      | W | 7,579.6 |         |  | W | 8,462.7  |         
|                  | Interconnection                                |                                          |   | 1,339.9 |         |      |   | 1,043.2 |         |  |   | 1,017.1  |         
|                  | Digital Handset Sales                          |                                          |   | 702.4   |         |      |   | 534.0   |         |  |   | 612.0    |         
|                  |                                                |                                          |   |         |         |      |   |         |         |  |   |         
|                  | Total Cellular Revenue                         |                                          |   | 8,203.0 |         |      |   | 9,156.8 |         |  |   | 10,091.8 |         
|Other Revenue:    |                                                |                                          |   |         |         |      |   |         |         |  |   |         
|                  | Paging Revenue(2)                              |                                          |   | 8.8     |         |      |   |        |         |  |   |         |         
|                  | International Calling Service(3)               |                                          |   | 85.9    |         |      |   | 101.6   |         |  |   | 97.4     |         
|                  | Portal Service(4)                              |                                          |   | 36.1    |         |      |   | 22.8    |         |  |   | 42.0     |         
|                  | Miscellaneous                                  |                                          |   | 38.1    |         |      |   | 42.8    |         |  |   | 40.9     |         
|                  |                                                |                                          |   |         |         |      |   |         |         |  |   |         
|                  | Total Other Revenue                            |                                          |   | 168.9   |         |      |   | 167.2   |         |  |   | 180.3    |         
|                  |                                                |                                          |   |         |         |      |   |         |         |  |   |         
|                  |                                                | Total Operating Revenue:                 |   | W       | 8,371.9 |      |   | W       | 9,324.0 |  |   | W        | 10,272.1 | 
|                  |                                                |                                          |   |         |         |      |   |         |         |  |   |         
|                  | Cellular Revenue as a percent of Total Revenue |                                          |   | 98.0    | %       |      |   | 98.2    | %       |  |   | 98.2     | %       
|                  | Total Operating Revenue Growth                 |                                          |   | 12.8    | %       |      |   | 11.4    | %       |  |   | 10.2     | %       



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Wireless service revenue includes initial
    connection fees, monthly access fees, usage charges,
    international charges, wireless Internet service fees,
    value-added-service fees and interest on overdue subscriber
    accounts (net of telephone tax).                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(2) | Prior to March 2001, we also earned revenue from
    initial connection fees and monthly access fees, usage charges
    and value-added service fees paid by our subscribers for our
    paging services. In March 2001, we sold our entire paging
    business to Real Telecom in exchange for 9.9% of Real
    Telecoms newly issued shares and bonds with a principal
    amount of Won 9.5 billion that can be converted into an
    additional 7.8% interest in Real Telecom. Consequently, the
    results of the paging business are no longer included in the
    revenue from March 2001. Our paging revenue for the year ended
    December 31, 2001 was negligible.
|   
|(3) | Provided by our 90.8%-owned subsidiary, SK Telink
    Co., Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(4) | Portal service revenue attributable to SK
    Communications Co., Ltd. and since 2003, Paxnet Co., Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

Our wireless subscriber base has been increasing
rapidly in recent years, growing from approximately
10.1 million subscribers at the end of 1999 to
approximately 14.5 million subscribers (including
approximately 3.5 million Shinsegi subscribers),
15.2 million subscribers (including approximately
3.3 million Shinsegi subscribers), 17.2 million
subscribers and 18.3 million subscribers at the end of
2000, 2001, 2002 and 2003, respectively. As a condition to its
approval of our acquisition of Shinsegi, the FTC required that
SK Telecoms and Shinsegis combined market share of
the wireless telecommunications market, based on numbers of
subscribers, be less than 50% as of June 30, 2001. As a
result, we reduced the level of our subscriber activations and
adopted more stringent involuntary subscriber deactivation
policies beginning in 2000 and ceased accepting new subscribers
for three months, from April 1, 2001 through June 30,
2001. We complied with this requirement by reducing our market
share to approximately 49.7% as of June 30, 2001. On
May 25, 2004, a policy advisory committee to the MIC
announced the results of its review and stated that the
committee believed that our market dominance may significantly
restrict competition in the telecommunications market and that
we have violated a merger condition related to our acquisition
of Shinsegi by providing subsidies to handset buyers. The
committee stated that it will recommend that the MIC extend the
post-

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merger monitoring period by two years until
January 2007 and take appropriate corrective measures against us
for providing subsidies to handset buyers. Although the MIC has
not yet made a formal determination, on May 31, 2004, the
Minister of the MIC has stated that MIC intends to impose a
Won 11.9 billion fine on us and extend the post-merger
monitoring period until January 2007. When the MIC makes a
formal determination, the MIC may take additional actions
against us pursuant to telecommunications related laws and
regulations in order to facilitate fair competition in the
telecommunications industry. The MIC is expected to make a
formal decision as to the advisory committees findings and
recommendation in early June 2004. On May 25, 2004, we
voluntarily undertook to limit our market share to 52.3% of the
wireless telecommunications market through the end of 2005, the
level of our market share at the time of the approval of our
merger with Shinsegi in January 2002. As of April 30, 2004,
we had approximately 18.5 million subscribers, representing
a market share of approximately 52.0%.


In the past, wireless telecommunications service
providers provided handsets at below retail prices to attract
new subscribers, offsetting a significant portion of the cost of
handsets. The MIC prohibited all wireless telecommunications
service providers from providing handset subsidies beginning
June 1, 2000. In March 2002, the MIC concluded that certain
incentive payments made to wireless handset dealers by us and
other wireless network service providers were being passed on to
purchasers of wireless handsets, and therefore constituted
improper handset subsidies. In May 2002, we, KT Freetel, LG
Telecom and KT Corporation were fined an aggregate of Won
20.0 billion by the MIC in respect of these incentive
payments. We were assessed and have paid in full a fine of Won
10.0 billion. On November 15, 2002, we received an
order from the MIC prohibiting us from signing on new
subscribers for 30 days (from November 21, 2002
through December 2002) for violating MICs handset subsidy
regulation. KT Freetel and LG Telecom were also prohibited from
signing on new subscribers for 20 days. In February 2004,
the MIC imposed upon us a fine of Won 21.7 billion with
respect to certain incentive payments that were deemed by the
MIC to constitute improper handset subsidies. We paid the fine
in March 2004. In February 2004, KT Freetel and KT Corporation
were also fined Won 7.5 billion and Won 4.1 billion,
respectively, in respect of such incentive payments.

As a result of the MICs handset subsidy
regulation and steps we have taken as a result, we experienced a
significant reduction in our gross and net additions of new
subscribers in April and May 2002. The MICs November 2002
order also resulted in a reduction in our gross and net
additions of new subscribers in November and December 2002. We
believe that our competitors have also experienced similar
reductions and our market share has not been adversely affected.
We cannot assure you that the elimination of dealer incentives
will not continue to adversely affect the rate at which we
attract new subscribers or the rate at which existing
subscribers upgrade their wireless handsets to take advantage of
the higher data transmission capabilities of our CDMA 1xRTT and
CDMA 1xEV/ DO network technologies. We also believe that
beginning in March 2002, there was an expectation among dealers
that dealer incentives would soon be eliminated or reduced as a
result of the MICs actions. This expectation contributed
to the unusually high number of gross and net subscriber
additions and the higher churn rate that we experienced in March
2002, which was 2.3%, compared to 1.2% in January 2002 and 1.1%
in February 2002. Churn rate increased in part because many
existing subscribers chose to upgrade their handsets by
terminating their service and opening a new subscriber account.
For 2003, our churn rate has ranged from 0.9% (in February and
December 2003) to 1.6% (in May 2003), with churn rate for
December 2003 at 0.9%. We cannot assure you that our churn rates
will not increase in the future.

Previously, Koreas wireless
telecommunications system was based on a network-specific prefix
system in which a unique prefix is assigned to all the phone
numbers of a network operator. We were assigned the
011 prefix, and all of our subscribers mobile
phone numbers began with 011 (former Shinsegi
subscribers use the 017 prefix) and our subscribers
could not change their wireless phone service to another
wireless operator and keep their existing numbers. In January
2003, the MIC announced its plan to implement number portability
with respect to wireless telecommunications services in Korea.
The number portability system allows wireless subscribers to
switch wireless service operators while retaining the same
mobile phone number. However, subscribers who switch operators
must purchase a new handset, as we use a different frequency
than KT Freetel and LG Telecom. In accordance with the plan
published by the MIC, the number portability system was adopted
by SK Telecom starting from January 1, 2004. According to
MIC data, following the

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implementation of the number portability system,
305,267, 183,876, 214,232 and 261,654 of our subscribers
transferred to the services of our competitors in January 2004,
February 2004, March 2004 and April 2004, respectively.
Subscribers who choose to transfer to a different wireless
operator have the right to return to us without paying any
penalties within 14 days of the initial transfer. KT
Freetel and LG Telecom will be required to introduce number
portability starting from July 1, 2004 and January 1,
2005, respectively.


In addition, in order to manage the availability
of phone numbers efficiently and to secure phone number
resources for the new services, the MIC plans to integrate
mobile telephone identification numbers into a common prefix
identification number 010 and to gradually retract
the current mobile service identification numbers which had been
unique to each wireless telecommunications service provider,
including 011 for our cellular services, starting
from January 1, 2004. All new subscribers have been given
the 010 prefix starting in January 2004. The
following table sets forth, based on MIC data, new subscribers
for each of the major wireless cellular providers following the
adoption of the 010 prefix in January 2004:

|              |  |                                                   |                |            |  |            |                |  |  |  |                | 
|------------- |  | ------------------------------------------------- | -------------- | ---------- |  | ---------- | -------------- |  |  |  | -------------- | 
|              |  |                                                  
|              |  | Number of New Wireless Subscribers/ Percentage of
|              |  | New Wireless Subscribers                         
|              |  |                                                  
|Month         |  | SK Telecom                                        |                | KT Freetel |  | LG Telecom
|              |  |                                                   |                |            |  |           
|January 2004  |  |                                                   | 382,420/ 42.1% |            |  |            | 375,181/ 41.3% |  |  |  | 149,737/ 16.5% | 
|February 2004 |  |                                                   | 422,816/ 43.6% |            |  |            | 329,066/ 33.9% |  |  |  | 218,435/ 22.5% | 
|March 2004    |  |                                                   | 405,199/ 39.0% |            |  |            | 356,003/ 34.3% |  |  |  | 276,537/ 26.6% | 
|April 2004    |  |                                                   | 448,997/ 41.2% |            |  |            | 330,441/ 30.3% |  |  |  | 309,736/ 28.4% | 

We believe that the adoption of the common prefix
identification system may pose a greater risk to us as compared
to the other wireless telecommunications providers because
011 has a very high brand recognition in Korea as
the premium wireless telecommunications service. Adoption of
number portability system could also result in a deterioration
of our market share as a result of weakened customer loyalty,
increased competition among wireless service providers and
higher costs as a result of maintaining the number portability
system, increased subscriber deactivations, increased churn rate
and higher marketing costs. See Key
Information  Risk Factors  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. In February 2004, the
MIC imposed a total fine of Won 2.0 billion on us in
connection with our marketing efforts related to the number
portability system. For details, see Financial
Information  Legal Proceedings  MIC
Proceedings.

For cellular services, we charge initial
connection fees, monthly access fees, usage charges, wireless
Internet service fees and monthly charges for value-added
services. Under current regulations, we must obtain prior MIC
approval of the terms on which we may offer our services,
including all rates and fees charged for these services. Each of
our competitors, however, is permitted to offer its services at
rates set at its discretion without having to obtain the MIC
approval. See Information on the Company  Law
and Regulation  Rate Regulation and Key
Information  Risk Factors  We are subject
to more stringent regulation than our competitors as a result of
our market position, which could harm our ability to compete
effectively. Generally, the rates we charge for our
services have been declining. In September 1997 and April 2000,
we implemented revised rate plans which generally offer rates
lower than our previous rates. Effective June 8, 1998, we
have been providing a 20% discount for calls made between our
cellular customers. Effective May 1, 2001, we implemented a
new charge system based on the amount of data that is
transmitted to the subscribers handsets, with respect to
subscribers using our CDMA 1xRTT network. CDMA 1xRTT is an
advanced CDMA-based technology which allows transmissions of
data at speeds of up to 144 Kbps (compared to a maximum of
64 Kbps for our CDMA networks). After discussions with the
MIC, effective January 1, 2003, we reduced our Standard
rate plans monthly access fee by Won 1,000, included 10
minutes of free air time per month and reduced our peak usage
charges from Won 21 to Won 20 per minute. After discussions
with the MIC, in October 2003, we reduced our monthly charges
for caller ID service from Won 2,000 to Won 1,000. As of
April 30, 2004, our standard peak usage rate was
approximately 11.1% higher than those charged by our
competitors. We can give no assurance that these rate changes
will not negatively affect our results of

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operations. For more information about the rates
we charge, see Information on the Company 
Overview  Revenues, Rates and Facility Deposits.


Our wireless telecommunications services depend,
in part, on our interconnection arrangements with domestic and
international fixed-line and other wireless networks. Charges
for interconnection affect our revenues and operating results.
The MIC determines the basic framework for interconnection
arrangements in Korea and has changed this framework several
times in the past. We cannot assure you that we will not be
adversely affected by future changes in the MICs
interconnection policies. Under our interconnection agreements,
we are required to make payments in respect of calls which
originate from our networks and terminate in the networks of
other Korean telecommunications operators, and the other
operators are required to make payments to us in respect of
calls which originate in their networks and terminate in our
network. See Information on the Company 
Overview  Interconnection. With respect to the
interconnection arrangement for calls from fixed-line networks
to wireless networks, for the years 1999 through 2001,
fixed-line operators payments to wireless network service
providers were calculated based on the actual imputed costs in
1998 of the leading wireless network service provider, which is
us. For 2002, these payments were calculated based on each
wireless operators actual imputed costs in 2001. This
change reduced the interconnection revenue we received from each
call made from a fixed-line network terminating on our network,
adversely affecting our interconnection revenue compared to
previous years. For 2003, pursuant to a new MIC policy, an
operators interconnection fees are derived from that
operators actual interconnection fees for 2001 and actual
imputed costs for 2001. The MIC also implemented interconnection
charges for calls between wireless network service providers
beginning in January 2000, affecting both our revenue and our
expenses. These charges were also reduced beginning in January
2002 and in January 2003. The MIC is expected to introduce a new
method of calculating interconnection payments, based on the
terminators long-run incremental cost in 2004. We believe
that our interconnection revenue may be reduced even further
under the new framework. For more information about our
interconnection revenue and expenses, see Information on
the Company  Interconnection  Domestic
Calls.

The following table sets forth selected
information concerning our wireless telecommunications network
during the periods indicated:

|                                                              |                                            |                         |   |            |     |      |   |            |  |  |   |            | 
|------------------------------------------------------------- | ------------------------------------------ | ----------------------- | - | ---------- | --- | ---- | - | ---------- |  |  | - | ---------- | 
|                                                              |                                            |                        
|                                                              |                                            | Year Ended December 31,
|                                                              |                                            |                        
|                                                              |                                            | 2001                    |   | 2002(1)    |     | 2003
|                                                              |                                            |                         |   |            |     |     
|Outgoing Voice Minutes (In
    Thousands):(2)                 |                                            |                         |   |            |     |      |   |            |  |  |   |           
|                                                              | SK Telecom                                 |                         |   | 24,251,205 |     |      |   | 37,629,656 |  |  |   | 42,175,874 | 
|                                                              | Shinsegi                                   |                         |   | 5,309.182  |     |      |   |           |  |  |   |           | 
|                                                              | Combined SK Telecom and Shinsegi           |                         |   | 29,560,387 | (3) |      |   | 37,629,656 |  |  |   | 42,175,874 | 
|Average Monthly Outgoing Voice Minutes Per
    Subscriber:(4) |                                            |                         |   |            |     |      |   |            |  |  |   |           
|                                                              | SK Telecom                                 |                         |   | 182        |     |      |   | 191        |  |  |   | 197        | 
|                                                              | Shinsegi                                   |                         |   | 137        |     |      |   |           |  |  |   |           | 
|                                                              | Combined SK Telecom and Shinsegi           |                         |   | 172        | (3) |      |   | 191        |  |  |   | 197        | 
|Average Monthly Revenue Per
    Subscriber:(5)                |                                            |                         |   |            |     |      |   |            |  |  |   |           
|                                                              | SK Telecom                                 |                         | W | 37,640     |     |      | W | 38,383     |  |  | W | 39,739     | 
|                                                              | Shinsegi                                   |                         |   | 31,898     |     |      |   |           |  |  |   |           | 
|                                                              | Consolidated SK Telecom and Shinsegi(5)(6) |                         |   | 36,400     | (3) |      |   | 38,383     |  |  |   | 39,739     | 



---



|    |                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Excludes information relating to Shinsegi for a
    period of 12 days, from January 1, 2002 to
    January 12, 2002. Shinsegi merged into SK Telecom on
    January 13, 2002.
|   
|(2) | Does not include minutes of incoming calls or
    minutes of use relating the use of text messaging and data
    services.                                                   
|   
|(3) | Includes information relating to Shinsegi.                                                                                                                                   

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | The average monthly outgoing voice minutes per
    subscriber is computed by dividing the total minutes of outgoing
    voice usage for the period by the monthly weighted average
    number of subscribers for the period and dividing the quotient
    by the number of months in the period. The monthly weighted
    average number of subscribers is the sum of the average number
    of subscribers for the months calculated by taking the simple
    average number of subscribers at the beginning of the month and
    at the end of the month, divided by the number of months in the
    period.
|   
|(5) | The average monthly revenue per subscriber
    excludes interconnection revenue and is computed by dividing
    total initial connection fees, monthly access fees, usage
    charges for voice and data, international charges, value-added
    service fees and interest on overdue subscriber accounts (net of
    telephone tax) for the period by the monthly weighted average
    number of subscribers for the period and dividing the quotient
    by the number of months in the period.                                                                                                             
|   
|(6) | Including interconnection revenue, consolidated
    average monthly revenue per subscriber was Won 45,441 for 2001,
    Won 43,958 for 2002 and Won 44,546 for 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                          

Our average monthly outgoing minutes of voice
traffic increased by 16.2% in 2001, 11.0% in 2002 and 12.1% in
2003. We believe that this trend principally reflects generally
lower overall tariff levels and increased use of wireless
telecommunications as a substitute for fixed-line
communications. Due to the existing high penetration rate of
wireless services in Korea, we expect the rate of increase to be
comparatively lower in 2004 and the near future.

Our consolidated average monthly revenue per
subscriber increased in 2002 by 5.4% to Won 38,383 compared to
Won 36,400 in 2001. Our consolidated average monthly revenue per
subscriber also increased by 3.5% to Won 39,739 in 2003 compared
to Won 38,383 in 2002. These changes reflect the net effect of
several offsetting trends, including:



| |   |                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | increased usage of our data services by our
    subscribers, which we attribute principally to the lower overall
    tariff levels and our introduction of an increased range of
    wireless data and wireless Internet services as well as other
    value-added services such as caller ID service and the increase
    in the number of our subscribers using our CDMA 1xRTT network;
|
| |  | increased usage of our voice services by our
    subscribers, which we attribute principally to lower overall
    tariff levels and increased use of wireless telecommunications
    as a substitute for fixed-line communications;                                                                                                                                                      
|
| |  | our adoption of more stringent subscriber
    deactivation policies in 2000, which we believe positively
    affected revenue per subscriber since the policies favored
    deactivation of low-usage subscribers; and                                                                                                                                                                   
|
| |  | decreases in the rates we charge subscribers to
    use our wireless services.                                                                                                                                                                                                                                                                                                           

We cannot assure you that the increases in our
average monthly revenue per subscriber experienced in 2001, 2002
and 2003 will continue or that revenue per subscriber will not
decrease in future periods.

Operating Expenses and Operating
Margins.Our operating expenses
consist principally of depreciation, commissions paid to
authorized dealers, network interconnection and leased line
expenses, the cost of manufacturing handsets, advertising costs
and labor costs. Operating income represented 27.8% of operating
revenue in 2001, 30.0% in 2002 and 30.2% in 2003. In 2002, our
operating margin increased, primarily due to an increase in the
number of our subscribers and decreases in the number of leased
lines and depreciation expenses due to the write-off of
Shinsegis unused network equipment. Our operating margin
increased slightly from 30.0% in 2002 to 30.2% in 2003,
primarily due to the fact that our operating revenues increased
at a faster rate than our operating expenses. We cannot assure
you that our operating margin will not decrease in future
periods.

Acquisition of
Shinsegi.On April 27, 2000, we
completed the acquisition of a 51.2% interest in Shinsegi. In
subsequent transactions between March and September 2001, we
increased our interest to 70.4%. The results of operations of
Shinsegi have been consolidated with our results of operations
beginning in April 2000. Shinsegi accounted for 12.8% of our
consolidated assets and 22.6% of our consolidated revenue as of
and

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for the year ended December 31, 2001. In
January 2002, we acquired the remaining 29.6% interest in
Shinsegi which we did not yet own, and merged Shinsegi into SK
Telecom on January 13, 2002.


Industry
Consolidation.Beginning in 2000,
there has been considerable consolidation in the wireless
telecommunications industry resulting in the emergence of
stronger competitors. In July 2000, KT Corporation acquired a
47.9% interest in KT M.Com and merged KT M.Com into KT Freetel
in May 2001. In May 2002, the Government sold its remaining
28.4% stake in KT Corporation. It is widely believed that
KT Corporation is likely to operate more efficiently and be
managed more effectively and profitably as a privatized business
following its privatization. Such consolidations have created
large, well-capitalized competitors with substantial financial,
technical, marketing and other resources to respond to our
business offerings. See Key Information  Risk
Factors  Competition may reduce our market share and
harm our results of operations and financial condition.

On May 1, 2003, we merged with SK IMT, in
accordance with a resolution of our board of directors on
December 20, 2002 and the approval of shareholders of SK
IMT on February 21, 2003. The exchange ratio of common
stock between us and SK IMT was 0.11276 share of our common
stock with a par value of Won 500 shares to
1 share of common stock of SK IMT with a par value of Won
5,000. Using such exchange ratio, we distributed
126,276 shares of new issued common stock to minority
shareholders of SK IMT and we cancelled all shares of SK IMT
owned by us and SK IMT upon the merger. The assets and
liabilities transferred from SK IMT were accounted for at the
carrying amounts of SK IMT. See note 24 of the notes to our
consolidated financial statements. The SK IMT merger resulted in
an increase in our cash and cash equivalents by Won
328.9 billion and had no impact on our liabilities. Until
the date of the merger, SK IMT was not generating any revenue.

On May 23, 2002, we acquired a 9.6% equity
interest (29,808,333 shares of common stock) in
KT Corporation for Won 1,609 billion. Pursuant to the
terms of an agreement between us and KT Corporation dated
November 14, 2002, we sold all of our shares of KT
Corporation. Under the terms of the agreement, we exchanged
29,808,333 shares of KT Corporations common stock for
8,266,923 shares of our common stock and settled the
difference in the price in cash on December 30, 2002 and
January 10, 2003. The exchange was made at Won
50,900 per share of KT Corporations common stock and
Won 224,000 per share of our common stock.

On September 2, 2003, we purchased Won
120.0 billion of Hanaro Telecom commercial paper in order
to provide Hanaro Telecom with short-term liquidity while it
attempted to secure a foreign investor that would inject new
capital into the company. The decision to provide liquidity
support to Hanaro Telecom was made to protect the value of our
stake in Hanaro Telecom, as we held a 1.8% stake in Hanaro
Telecom as of December 31, 2003. Following an investment in
Hanaro Telecom by a consortium led by AIG and Newbridge, we
disposed of the Hanaro Telecom commercial paper in December
2003. In May 2004, we purchased from Samsung Electronics Co.,
Ltd. 13,870,000 shares of Hanaro Telecom, representing 3.0%
of the outstanding shares of Hanaro for Won 39.3 billion as
part of our strategic efforts in consideration of increasing
convergence between wireless and fixed-line services. As a
result of the acquisition, our equity interest in Hanaro
increased to 4.8% from 1.8% as of December 31, 2003.

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Results of Operations

The following table sets forth selected income
statement data, including data expressed as a percentage of
operating revenue, for the periods indicated:

|                                                 |  |                                              |         |      |  |      |        |   |  |   |         |   |  |  |        |   |  |   |          |  |  |  |        |  
|------------------------------------------------ |  | -------------------------------------------- | ------- | ---- |  | ---- | ------ | - |  | - | ------- | - |  |  | ------ | - |  | - | -------- |  |  |  | ------ | -
|                                                 |  |                                             
|                                                 |  | For the Year Ended December 31,             
|                                                 |  |                                             
|                                                 |  |                                              |         |      |  |     
|                                                 |  | 2001(1)                                      |         | 2002 |  | 2003
|                                                 |  |                                              |         |      |  |     
|                                                 |  |                                              |         |      |  |      |        |   |  |  
|                                                 |  |                                             
|                                                 |  | (In billions of Won, except percentage data)
|Operating Revenue                                |  | W                                            | 8,371.9 |      |  |      | 100.00 | % |  | W | 9,324.0 |   |  |  | 100.00 | % |  | W | 10,272.1 |  |  |  | 100.00 | %
|Operating Expenses                               |  |                                              | 6,047.4 |      |  |      | 72.23  |   |  |   | 6,526.4 |   |  |  | 70.00  |   |  |   | 7,167.0  |  |  |  | 69.77  |  
|                                                 |  |                                              |         |      |  |      |        |   |  |   |         |   |  |  |        |   |  |   |          |  |  |  |        |  
|Operating Income                                 |  |                                              | 2,324.5 |      |  |      | 27.77  |   |  |   | 2,797.6 |   |  |  | 30.00  |   |  |   | 3,105.1  |  |  |  | 30.23  |  
|Other Income                                     |  |                                              | 231.2   |      |  |      | 2.76   |   |  |   | 259.7   |   |  |  | 2.79   |   |  |   | 261.4    |  |  |  | 2.54   |  
|Other Expenses                                   |  |                                              | 579.0   |      |  |      | 6.92   |   |  |   | 838.5   |   |  |  | 8.99   |   |  |   | 612.2    |  |  |  | 5.96   |  
|                                                 |  |                                              |         |      |  |      |        |   |  |   |         |   |  |  |        |   |  |   |          |  |  |  |        |  
|Income Before Income Taxes and Minority Interest |  |                                              | 1,976.7 |      |  |      | 23.61  |   |  |   | 2,218.8 |   |  |  | 23.80  |   |  |   | 2,754.3  |  |  |  | 26.81  |  
|Income Taxes                                     |  |                                              | 850.3   |      |  |      | 10.16  |   |  |   | 698.5   |   |  |  | 7.49   |   |  |   | 789.0    |  |  |  | 7.68   |  
|Minority Interest                                |  |                                              | 19.6    |      |  |      | 0.23   |   |  |   | (33.1   | ) |  |  | (0.35  | ) |  |   | 0.8      |  |  |  | 0.01   |  
|                                                 |  |                                              |         |      |  |      |        |   |  |   |         |   |  |  |        |   |  |   |          |  |  |  |        |  
|Net Income                                       |  |                                              | 1,146.0 |      |  |      | 13.68  | % |  |   | 1,487.2 |   |  |  | 15.96  | % |  |   | 1,966.1  |  |  |  | 19.14  | %
|                                                 |  |                                              |         |      |  |      |        |   |  |   |         |   |  |  |        |   |  |   |          |  |  |  |        |  
|Depreciation and Amortization(2)                 |  | W                                            | 1,690.7 |      |  |      | 20.19  | % |  | W | 1,435.0 |   |  |  | 15.39  | % |  |   | 1,510.5  |  |  |  | 14.70  | %
|                                                 |  |                                              |         |      |  |      |        |   |  |   |         |   |  |  |        |   |  |   |          |  |  |  |        |  



---



|    |                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Information for the year ended December 31,
    2001 includes information for the year ended December 31,
    2001 for Shinsegi.                                                                                                                
|   
|(2) | Excludes the depreciation and amortization
    allocated to internal research and development costs of
    Won 69.0 billion, Won 108.3 billion and
    Won 135.8 billion for the years ended
    December 31, 2001, 2002 and 2003, respectively.



| |                      
| | ---------------------
| | 2003 Compared to 2002

Operating Revenue.Our operating revenue increased by 10.2% to Won
10,272.1 billion in 2003 from Won 9,324.0 billion in
2002 principally reflecting a 10.2% increase in our cellular
revenue to Won 10,091.8 billion in 2003 from
Won 9,156.8 billion in 2002.

The increase in our cellular revenue was
principally due to an increase in our wireless services revenue
resulting from an increase in the number of our wireless
subscribers, as well as an increase in our consolidated average
monthly revenue per subscriber, which was partially offset by a
2.5% decrease in interconnection revenue. Our wireless services
revenue increased by 11.7% to Won 8,462.7 billion in 2003
from Won 7,579.6 billion in 2002. The number of our
wireless subscribers increased to approximately
18.3 million as of December 31, 2003 from
approximately 17.2 million as of December 31, 2002.

On an aggregate basis, interconnection revenue
decreased by 2.5% to Won 1,017.1 billion in 2003 from Won
1,043.2 billion in 2002. The decrease was primarily due to
lower interconnection rates in 2003 compared 2002.

Our consolidated average monthly revenue per
subscriber (excluding interconnection revenue) increased by 3.5%
to Won 39,739 in 2003 from Won 38,383 in 2002. The increase is
principally due to increases in average monthly revenue per
subscriber from wireless Internet services sales and average
monthly revenue per subscriber from value-added services and
other sales, which was partially offset by the reduction in
rates by 7.3% (based on a reduction in the standard rate plan)
from January 2003 and the 10.3% decrease in interconnection
rates in 2003 as compared to 2002.

Our consolidated average monthly revenue per
subscriber from wireless Internet services sales increased by
66.0% to Won 6,177 in 2003 from Won 3,720 in 2002. Wireless
Internet services sales increased by 80.1%

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to Won 1,320.1 billion in 2003 (representing
13.1% of our cellular revenue) from Won 732.8 billion in
2002, primarily due to the increased number of subscribers who
use wireless Internet-enabled handsets.


Our consolidated average monthly revenue per
subscriber from value-added services and other sales increased
by 18.3% to Won 1,988 in 2003 from Won 1,681 in 2002.
Value-added services and other sales increased by 28.6% to Won
424.8 billion in 2003 from Won 330.4 billion in 2002
primarily due to the increased number of subscribers who use
wireless Internet-enabled handsets through which we can also
provide value-added and other services.

Operating Expenses.Our operating expenses in 2003 increased by 9.8% to Won
7,167.0 billion compared to Won 6,526.4 billion in
2002 primarily due to increases in commissions paid, labor
costs, depreciation and amortization expenses, cost of goods
sold, leased line expenses, network interconnection expenses and
miscellaneous operating expenses, which more than offset
decreases in advertising expenses.

Commissions paid to our authorized dealers
increased by 17.8% to Won 2,314.6 billion in 2003 compared
to Won 1,964.8 billion in 2002, primarily due to the
increase in average number of subscribers by 8.7% during the
period, increases in commissions paid to wireless Internet
content providers and retail agents, increase in the number of
handsets sold and our aggressive marketing activities to
maintain our market leadership in 2G and 2.5G services as well
as 3G services going forward.

Labor costs increased by 27.9% to Won
407.2 billion in 2003 compared to Won 318.3 billion in
2002. The increase was primarily due to payment of performance
bonuses to employees in 2003 and salary increases.

Depreciation and amortization expenses increased
by 5.3% to Won 1,510.5 billion in 2003 compared to Won
1,435.0 billion in 2002. The increase in depreciation and
amortization expenses was primarily due to the continuing
expansion of our CDMA 1xRTT network.

Cost of goods sold increased by 10.2% in 2003 to
Won 560.9 billion in 2003 compared to
Won 509.1 billion in 2002. The increase was primarily
due to an increase in the sales of handsets by SK Teletech.

Leased line expenses increased by 9.4% to Won
306.5 billion in 2003 compared to Won 280.1 billion in
2002 primarily due to higher call volumes.

Network interconnection expenses increased by
2.6% to Won 771.6 billion in 2003 compared to
Won 752.1 billion in 2002, primarily due to the higher
subscriber numbers, which were only partially offset by a
decrease in interconnection rates and a decrease in the level of
interconnection fees that we must pay to other operators for
calls using their networks. Additionally, we reflected as an
expense in the second quarter of 2003 all of the amounts due to
be paid to KT Corporation for the years 1998, 1999, 2000 and
2001 pursuant to a cost sharing arrangement regarding the
provision of directory assistance services by KT Corporation to
our subscribers. We will discuss with KT Corporation the amounts
to be paid by us for directory assistance services provided to
our subscribers during 2002 and 2003.

Miscellaneous operating expenses increased by
12.4% to Won 919.3 billion in 2003 compared to
Won 818.1 billion in 2002 primarily due to increases
in research and development expenses, frequency usage fees and
communications expenses.

Advertising expenses decreased by 16.1% to Won
376.4 billion in 2003 compared to Won 448.8 billion in
2002, primarily due to the marketing expenses incurred during
the World Cup soccer tournament and the Asian Games, both of
which were held in Korea in 2002.

Operating Income.Our operating income increased by 11.0% to Won
3,105.1 billion in 2003 from Won 2,797.6 billion
in 2002. Our operating income increased at a faster rate than
our operating revenue principally because we were able to limit
a corresponding increase in our operating expenses, as explained
above.

Other Income.Other
income, consisting primarily of dividend income, commission
income and interest income, increased by 0.8% to Won
261.4 billion in 2003 compared to Won 259.2 billion in
2002, primarily due

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to increases in dividends, commissions and other
income, which were partially offset by decreases in foreign
exchange and translation gains and equity in earnings of
affiliates.


Other Expenses.Other expenses include interest expenses, foreign exchange and
translation losses, loss on disposal and impairment of property,
equipment and intangible assets, donations, loss on impairment
of long-term investment securities, loss on disposal of
investment assets, equity loss in affiliates and miscellaneous
expenses. Other expenses decreased by 27.0% to Won
612.2 billion in 2003 compared to Won 838.5 billion in
2002. The decrease was primarily due to decreases on loss on
disposal and impairment of property, equipment and intangible
assets, loss on impairment of long-term investment securities
and donations, which more than offset an increase in interest
expense. As a percentage of operating revenue, other expenses
decreased to 6.0% in 2003 from 9.0% in 2002.

Income Tax.Provision for income taxes increased by 13.0% to Won
789.1 billion in 2003 from Won 698.5 billion in
2002. Our effective tax rate in 2003 decreased to 28.7% from an
effective tax rate of 31.5% in 2002. See note 18 of the
notes to our consolidated financial statements.

Net Income.Principally as a result of the factors discussed above, our net
income increased by 32.2% to Won 1,966.1 billion in 2003
from Won 1,487.2 billion in 2002, with net income as a
percentage of operating revenues at 19.1% in 2003 as compared to
16.0% in 2002.



| |                      
| | ---------------------
| | 2002 Compared to 2001

Operating Revenue.Our operating revenue increased by 11.4% to Won
9,324.0 billion in 2002 from Won 8,371.9 billion in
2001, reflecting a 11.6% increase in our cellular revenue to Won
9,156.8 billion in 2002 from Won 8,203.0 billion in
2001.

The increase in our cellular revenue was due
primarily to an increase in our wireless services revenue
resulting from an increase in the number of our subscribers, as
well as an increase in our consolidated average monthly revenue
per subscriber, which was partially offset by a 22.1% decrease
in interconnection revenue. Our wireless services revenue
increased by 23.0% to Won 7,579.6 billion in 2002 from Won
6,160.7 billion in 2001. The number of our subscribers
increased to approximately 17.2 million as of
December 31, 2002 from approximately 15.2 million as
of December 31, 2001. Wireless Internet services sales
increased by 183.3% to Won 732.8 billion in 2002 from Won
258.7 billion in 2001, representing 8.0% of our cellular
revenue in 2002, primarily due to the increased number of
wireless Internet-enabled handset holders.

Interconnection revenue decreased by 22.1% to Won
1,043.2 billion in 2002 compared to
Won 1,339.9 billion in 2001. The decrease was the
result of lower interconnection rates in 2002, which was only
partially offset by higher subscriber numbers and usage.

Our consolidated average monthly revenue per
subscriber (excluding interconnection revenue) increased by 5.4%
to Won 38,383 in 2002 (excluding 12 days attributable to
Shinsegi prior to Shinsegis merger into us on
January 13, 2002) compared to Won 36,400 in 2001. The
increase in consolidated average monthly revenue per subscriber
is principally the result of increases in wireless Internet
average monthly revenue per subscriber and average monthly
revenue per subscriber from value-added service, which was
partially offset by the reduction in rates by 8.3% (based on the
reduction in our standard rate plan) from January 2002.

Operating Expenses.Operating expenses increased by 7.9% to Won 6,526.4 billion
in 2002 from Won 6,047.4 billion in 2001. Increases in
commissions, advertising expenses, network interconnection
expenses and labor expenses, more than offset decreases in cost
of goods and materials sold, depreciation expenses, leased line
expenses and miscellaneous expenses.

Commissions paid to our authorized dealers
increased by 39.9% to Won 1,964.8 billion in 2002 compared
to Won 1,404.1 billion in 2001, primarily as a result of an
increase in new subscribers by 49.2% and in average subscribers
by 17.6% during the period. In addition, commissions paid to our
authorized dealers for the fourth quarter of 2002 were higher as
a result of our aggressive marketing activities to retain our
existing customers during the 30-day business suspension period
(from November 21, 2002 to December 20, 2002) imposed
on

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us by the MIC for violating its handset subsidy
regulation and to maintain our market leadership in 2G and 2.5G
service as well as 3G service going forward.


Advertising expenses increased by 42.0% to Won
448.8 billion in 2002 compared to Won 316.1 billion in
2001. We increased advertising expenses as a result of our
promotion of new services and the marketing activities related
to the World Cup soccer tournament in Korea. Advertising
expenses for the first half of 2001 also were unusually low as a
result of our efforts to satisfy the FTCs condition to our
acquisition of Shinsegi that our wireless market share be less
than 50.0% as of June 30, 2001. In addition, advertising
expenses for the fourth quarter of 2002 were higher as a result
of our aggressive marketing activities to retain our existing
customers during the 30-day business suspension period and to
maintain our market leadership in 2G and 2.5G service as well as
3G service going forward.

Interconnection expenses increased by 12.6% to
Won 752.1 billion in 2002 compared to Won
667.7 billion in 2001, primarily due to higher subscriber
numbers and an increase in the mandated payment to the Universal
Service Obligation fund in the amount of Won 87.4 billion,
which were only partially offset by a decrease in the level of
interconnection fees that we must pay to other operators for
calls using their networks.

Labor expenses increased by 17.7% to Won
318.3 billion in 2002 compared to Won 270.4 billion in
2001. The increase was primarily due to higher wage levels and
an increase in the number of our employees.

Cost of goods and materials sold decreased by
20.6% to Won 509.1 billion in 2002 compared to
Won 641.1 billion in 2001, primarily because, prior to
Shinsegis merger into us in January 2002, the cost of
goods sold associated with Shinsegis handset sales were
included in our cost of sales. Following the merger, however,
such expenses were no longer included in our cost of sales.

Depreciation and amortization expenses decreased
by 15.1% to Won 1,435.0 billion in 2002 compared to Won
1,690.7 billion in 2001. The decrease in depreciation and
amortization expenses was primarily due to the write-off of
Shinsegis unused network equipment in 2000, which was
partially offset by the depreciation attributable to expansion
of our CDMA 1xRTT network.

Leased line expenses decreased by 8.2% to Won
280.1 billion in 2002 compared to Won 305.2 billion in
2001, primarily due to our efficient use of leased lines network
resulting from the integration of Shinsegis network into
our network, which was partially offset by an increase in
wireless traffic.

Miscellaneous operating expenses decreased by
7.9% to Won 818.1 billion in 2002 compared to
Won 887.8 billion in 2001.

Operating Income.Our operating income increased by 20.4% to Won
2,797.6 billion in 2002 from Won 2,324.5 billion.
Our operating income increased at a faster rate than our
operating revenue principally because we were able to limit a
corresponding increase in our operating expenses, as explained
above.

Other Income.Other
income increased by 12.1% to Won 259.2 billion in 2002
compared to Won 231.2 billion in 2001. Other income
increased primarily due to significant increases in commission
income and foreign exchange and translation gains which were
partially offset by decreases in interest income and
miscellaneous other income.

Other Expenses.Other expenses increased by 44.8% to Won 838.5 billion in
2002 compared to Won 579.1 billion in 2001. Other
expenses increased primarily due to increases in loss on
disposal and impairment of property and equipment, loss on
impairment of investment securities, interest and discounts and
loss on disposal of investment securities, which were partially
offset by decreases in donations, foreign exchange and
translation losses and miscellaneous other expenses. As a
percentage of operating revenue, other expenses increased to
9.0% in 2002 from 6.9% in 2001.

Loss on disposal and impairment of property,
equipment and intangible assets increased to
Won 221.7 billion in 2002 compared to Won
41.8 billion in 2001, primarily due to loss on disposal of
Shinsegis unused network equipment.

Loss on impairment of investment securities
increased to Won 68.9 billion in 2002 compared to
Won 3.3 billion primarily due to our share exchange
transaction with KT Corporation.

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Interest and discounts increased by 13.6% to Won
311.1 billion in 2002 compared to Won 273.9 billion in
2001, principally reflecting an increase in debt in 2002 that
resulted from the merger of Shinsegi into us in January 2003.
Such debt carried higher interest rates than SK Telecoms
debt.

Loss on disposal of investment assets increased
by 191.5% to Won 51.6 billion in 2002 compared to
Won 17.7 billion primarily due to our share exchange
transaction with KT Corporation.

Income Tax.Our
statutory income tax rate, including resident surtax, decreased
to 29.7% in 2002. Our effective tax rate in 2002 decreased to
31.5% from an effective rate of 43.0% in 2001. The decrease in
our effective tax rate as compared to 2001 was primarily due to
the recording, in 2001, of a valuation allowance of Won
303.8 billion on deferred tax assets due to the Shinsegi
merger. See note 18 of the notes to our consolidated
financial statements.

Net Income.Principally as a result of the factors discussed above, our net
income increased by 29.8% to Won 1,487.2 billion in 2002
compared to Won 1,146.0 billion in 2001, increasing as a
percentage of operating revenue to 15.9% in 2002 compared to
13.7% in 2001.

Liquidity and Capital Resources



| |          
| | ---------
| | Liquidity

We had a working capital (current assets minus
current liabilities) surplus of Won 668.2 billion as of
December 31, 2001, a working capital deficit of Won
189.7 billion as of December 31, 2002 and a working
capital deficit of Won 461.4 billion as of
December 31, 2003.

We had cash, cash equivalents, short-term
financial instruments and trading securities of
Won 1,935.7 billion as of December 31, 2001, Won
1,621.2 billion as of December 31, 2002 and
Won 1,365.1 billion as of December 31, 2003. We
had outstanding short-term borrowings of
Won 1,167.3 billion as of December 31, 2001,
Won 687.3 billion as of December 31, 2002 and
Won 786.1 billion as of December 31, 2003. As of
December 31, 2003, we had availability under unused credit
lines of approximately Won 871.2 billion. We funded our
investment in shares and exchangeable bonds of
KT Corporation in May 2002 with Won 901.7 billion
of cash and by incurring Won 1,040.0 billion of
short-term debt.

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| |                   
| | ------------------
| | Cash Flow Analysis

|                                                              |  |                                      |          |        |  |      |          |              |  |              |          |   |  |   |          |   |  |  |       |    |  |   |         |   |  |  |       |   
|------------------------------------------------------------- |  | ------------------------------------ | -------- | ------ |  | ---- | -------- | ------------ |  | ------------ | -------- | - |  | - | -------- | - |  |  | ----- | -- |  | - | ------- | - |  |  | ----- | --
|                                                              |  |                                      |          |       
|                                                              |  | Year Ended December 31,              |          | Change
|                                                              |  |                                      |          |       
|                                                              |  |                                      |          |        |  |     
|                                                              |  | 2001                                 |          | 2002   |  | 2003 |          | 2001 to 2002 |  | 2002 to 2003
|                                                              |  |                                      |          |        |  |      |          |              |  |             
|                                                              |  |                                      |          |        |  |      |          |              |  |              |          |   |  |  
|                                                              |  |                                     
|                                                              |  | (In billions Won except percentages)
|Net Cash Flow from Operating Activities                       |  | W                                    | 2,423.9  |        |  | W    | 4,267.8  |              |  | W            | 3,328.8  |   |  | W | 1,843.9  |   |  |  | 76.1  | %  |  | W | (939.0  | ) |  |  | (22.0 | %)
|Net Cash Used in Investing Activities                         |  |                                      | (1,972.8 | )      |  |      | (3,063.4 | )            |  |              | (1,414.4 | ) |  |   | (1,090.6 | ) |  |  | 55.3  | %  |  |   | 1,649.0 |   |  |  | (53.8 | %)
|Net Cash Provided by (Used in) Financing
    Activities       |  |                                      | 331.2    |        |  |      | (1,418.2 | )            |  |              | (2,261.0 | ) |  |   | (1,749.4 | ) |  |  | N/A   |    |  |   | (842.8  | ) |  |  | 59.4  | % 
|Net Cash Flow due to Changes in Consolidated
    Subsidiaries |  |                                      | (5.5     | )      |  |      | 10.7     |              |  |              | 0.1      |   |  |   | 16.2     |   |  |  | N/A   |    |  |   | (10.6   | ) |  |  | (99.1 | %)
|                                                              |  |                                      |          |        |  |      |          |              |  |              |          |   |  |   |          |   |  |  |       |    |  |   |         |   |  |  |       |   
|Increase (Decrease) in cash and cash equivalents              |  | W                                    | 776.8    |        |  | W    | (203.2   | )            |  | W            | (346.6   | ) |  | W | (980.0   | ) |  |  | N/A   |    |  | W | 143.4   |   |  |  | 70.6  | % 
|Cash and Cash Equivalents at beginning of period              |  |                                      | 90.5     |        |  |      | 867.3    |              |  |              | 664.1    |   |  |   | 776.8    |   |  |  | 858.3 | %  |  |   | (203.2  | ) |  |  | (23.4 | %)
|                                                              |  |                                      |          |        |  |      |          |              |  |              |          |   |  |   |          |   |  |  |       |    |  |   |         |   |  |  |       |   
|Cash and Cash Equivalents at end of period                    |  | W                                    | 867.3    |        |  | W    | 664.1    |              |  | W            | 317.5    |   |  | W | (203.2   | ) |  |  | (23.4 | %) |  | W | (346.6  | ) |  |  | (52.2 | %)
|                                                              |  |                                      |          |        |  |      |          |              |  |              |          |   |  |   |          |   |  |  |       |    |  |   |         |   |  |  |       |   

Net Cash Flow from Operating
Activities.Our principal sources of
funds have been operating cash flow and debt financing. Cash
flow provided by operations was Won 2,423.9 billion in
2001, Won 4,267.8 billion in 2002 and Won
3,328.8 billion in 2003.

Net Cash from Investing
Activities.Net cash used in investing
activities was Won 1,972.8 billion in 2001, Won
3,063.4 billion in 2002 and Won 1,414.4 billion in
2003. The primary contributors to the overall changes in net
cash used in investing activities were expenditures related to
the acquisition of property and equipment, which were Won
1,382.1 billion in 2001, Won 2.024.7 billion in 2002
and Won 1,647.6 billion in 2003 and acquisition of
long-term investment securities, which changed from Won
107.6 billion in 2001 to Won 2,062.4 billion in 2002
to Won 437.1 billion in 2003. Cash inflows related to
proceeds from sale of long-term investment securities changed
from Won 24.7 billion in 2001 to Won 1,084.9 billion
in 2002 to Won 762.9 billion in 2003.

Net Cash from Financing
Activities.Financing activities
provided cash of Won 331.2 billion in 2001, compared to net
cash used in financing activities of Won 1,418.2 billion in
2002 and Won 2,261.1 billion in 2003. The primary
components of the cash used in or provided by financing
activities were payment of short-term borrowings of
Won 355.2 billion in 2001, Won 578.7 billion in 2002
and Won 12.1 billion in 2003; payment of the current
portion of long-term debt of Won 1,235.2 billion in 2001,
Won 719.8 billion in 2002 and Won 939.2 billion in
2003; the issuance of bonds payable of Won 1,716.6 billion
in 2001, Won 1,166.5 billion in 2002 and Won 688.7
billion in 2003; and net increase in treasury stock of
Won 1,421.0 billion in 2001, Won 1,351.2 billion in
2002 and Won 1,379.3 billion in 2003.

Depreciation and amortization were Won
1,759.7 billion in 2001, Won 1,543.3 billion in 2002
and Won 1,646.3 billion in 2003.

We had total long-term debt (excluding current
portion and facility deposits) of Won 2,695.3 billion as of
December 31, 2001. As of December 31, 2002, we had
total long-term debt (excluding current portion and facility
deposits) outstanding of Won 2,918.9 billion. As of
December 31, 2003, we had total long-term debt (excluding
current portion and facility deposits) outstanding of Won
2,263.5 billion. Our long-term debt as of December 31,
2003 included bonds in the amount of Won 2,261.9 billion
and bank and institutional

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borrowings in the amount of Won 1.6 billion.
For a description of our long-term liabilities, see notes 9
and 10 of the notes to our consolidated financial statements.


As of December 31, 2003, substantially all
of our foreign currency-denominated long-term debt, which
amounted to approximately 6.9% of our total outstanding
long-term debt, including current portion, as of such date, was
denominated in Dollars. Depreciation of the Won against the
Dollar will result in net foreign exchange and translation
losses. Changes in foreign currency exchange rates will also
affect our liquidity because of the effect of such changes on
the amount of funds required for us to make interest and
principal payments on our foreign currency-denominated debt.

In addition, in May, July, August and November
2002, we issued Won 500.0 billion, Won 200.0 billion,
Won 200.0 billion and Won 300.0 billion principal
amount of unsecured and unguaranteed Won-denominated bonds,
respectively. These bonds mature in May 2005, July 2007, August
2007 and November 2007, and have an annual interest rate of 6%,
6%, 6% and 5%, respectively. We used the net proceeds from the
sale of these bonds to repay maturing long-term indebtedness. We
issued Won-denominated bonds with a principal amount of Won
300.0 billion, Won 150.0 billion and Won
250.0 billion in March, August and November 2003,
respectively. These bonds mature in March 2008, August 2006 and
November 2006, respectively, and have an annual interest rate of
5.0%. We also issued Won-denominated bonds with a principal
amount of Won 150.0 billion in March 2004. These bonds
will mature in 2009 and have an annual interest rate of 5.0%. We
used the net proceeds from the sale of these bonds to repay
commercial paper maturing at the end of March 2004. See
note 31 of the notes to our consolidated financial
statements.

In April 2004, we issued notes in the principal
amount of US$300,000,000 with a maturity of seven years and an
interest rate of 4.25%. The proceeds from the offering in April
2004 were used to pay maturing debt. In May 2004, we issued
Won-denominated notes in the principal amount of Won
150.0 billion with a maturity of five years and an interest
rate of 5.0%. The proceeds of the Won-denominated note offering
in May 2004 were used for our operations.

In late May 2004, we issued zero coupon
convertible notes with a maturity of five years in the principal
amount of US$329,450,000, with an initial conversion price of
Won 235,625 per share of our common stock, subject to
certain redemption rights. In connection with the issuance of
the zero coupon convertible notes, we deposited
1,645,000 shares of our common stock with Korea Securities
Depository to be reserved and used to satisfy the note
holders conversion rights. This will be deemed as the
repurchase of treasury stock and cancellation thereof for the
purposes of Korean law. We intend to use the proceeds of the
zero coupon convertible notes for general corporate purposes,
including for measures to improve shareholders return in
their investment in our common stock through payment of
dividends or share repurchase programs.

We also have long-term liabilities in respect of
facility deposits received from subscribers, which stood at Won
56.5 billion at December 31, 2001, Won
46.9 billion at December 31, 2002 and Won
44.2 billion at December 31, 2003. These non-interest
bearing deposits are collected from some subscribers when they
initiate service and returned (less unpaid amounts due from the
subscriber for our services) when the subscribers service
is deactivated. See Information on the Company 
Revenues, Rates and Facility Deposits.

In June 2002 and December 2002, we sold Won
631.4 billion and Won 650.6 billion, respectively, of
accounts receivable resulting from our mobile phone dealer
financing plan to Nate First Special Purpose Company and Nate
Second Special Purpose Company, respectively, in asset-backed
securitization transactions and recorded a loss on disposal of
accounts receivable-other of Won 10.9 billion and Won
12.9 billion, respectively. Nate First Special Purpose
Company and Nate Second Special Purpose Company were liquidated
in August 2003 and April 2004, respectively.

On May 2, 2003, September 4, 2003 and
December 15, 2003, we sold Won 577.3 billion,
Won 549.3 billion and Won 498.4 billion of
accounts receivable resulting from our mobile phone dealer
financing plan to Nate Third Special Purpose Company, Nate
Fourth Special Purpose Company and Nate Fifth Special Purpose
Company, respectively, in asset-backed securitization
transactions and recorded a loss on disposal of accounts
receivable-other of Won 10.8 billion,
Won 12.9 billion and Won 9.9 billion,

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respectively. In connection with these
asset-backed securitization transactions, we have obligations to
repurchase up to 13.2%, 13.3% and 13.2% of the receivables for
Nate Third Special Purpose Company, Nate Fourth Special Purpose
Company and Nate Fifth Special Purpose Company, respectively, if
receivables become past due for three months or the debtors
become insolvent. At December 31, 2003, the uncollected
balances of accounts receivable sold to Nate Third Special
Purpose Company, Nate Fourth Special Purpose Company and Nate
Fifth Special Purpose Company were Won 32.9 billion,
Won 215.6 billion and Won 402.3 billion,
respectively. See notes 3 and 21 of the notes to our
consolidated financial statements.




| |                                       
| | --------------------------------------
| | Capital Requirements and
    Resources

The following table sets forth our actual capital
expenditures for 2001, 2002 and 2003 as well as our currently
planned capital expenditures for 2004:

|                      |       |                         |     |       |  |      |       |       |  |   |     |       |  |   |     |       | 
|--------------------- | ----- | ----------------------- | --- | ----- |  | ---- | ----- | ----- |  | - | --- | ----- |  | - | --- | ----- | 
|                      |       |                        
|                      |       | Year Ended December 31,
|                      |       |                        
|                      |       | 2001                    |     | 2002  |  | 2003 |       | 2004 
|                      |       |                         |     |       |  |      |       |      
|                      |       |                        
|                      |       | (In billions of Won)   
|CDMA Network          |       | W                       | 185 |       |  | W    | 175   |       |  | W | 96  |       |  | W |    |      
|CDMA 1xRTT Network(2) |       |                         | 601 |       |  |      | 1,186 |       |  |   | 641 |       |  |   | 800 | (1)  
|Wireless Data(3)      |       |                         | 64  |       |  |      | 221   |       |  |   | 175 |       |  |   | 650 |      
|W-CDMA(4)             |       |                         | 40  |       |  |      | 15    |       |  |   | 204 |       |  |   | 250 |      
|Other(3)(5)           |       |                         | 492 |       |  |      | 428   |       |  |   | 532 |       |  |   |    |      
|                      |       |                         |     |       |  |      |       |       |  |   |     |       |  |   |     |      
|                      | Total |                         | W   | 1,382 |  |      | W     | 2,025 |  |   | W   | 1,648 |  |   | W   | 1,700 | 
|                      |       |                         |     |       |  |      |       |       |  |   |     |       |  |   |     |      



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Our capital expenditures for our CDMA network in
    2004 are included in our estimated capital expenditures for our
    CDMA 1xRTT network.                                                                                                                                                                                                                                                                                  
|   
|(2) | Includes upgrades to CDMA 1xEV/ DO Network
    technology which were Won 200 billion for 2002 and
    Won 36 billion for 2003. See note (1) above.                                                                                                                                                                                                                                                                            
|   
|(3) | Consists principally of equipment necessary for
    the provision of data services. Our estimated wireless data
    capital expenditures in 2004 include other
    miscellaneous capital expenditures referred to in note (5)
    below.                                                                                                                                                                                    
|   
|(4) | Provision of W-CDMA services commenced on a
    limited basis in Seoul at the end of 2003.                                                                                                                                                                                                                                                                                                                                    
|   
|(5) | Other capital expenditure amount
    includes investments in Internet-related businesses, real estate
    for our headquarters and information technology systems.
    Other capital expenditure amount also includes
    actual capital expenditures of our consolidated subsidiaries
    which were Won 12 billion, Won 61 billion
    and Won 37 billion for 2001, 2002 and 2003,
    respectively. See note (3) above.

Our capital expenditures in 2001 were
Won 1,382 billion, primarily for the construction and
expansion of our CDMA 1xRTT network and the expansion of SK
Telecoms CDMA network. Our actual capital expenditures in
2002 were Won 2,025 billion, primarily for the
expansion and upgrading of our CDMA 1xRTT network and for the
development and introduction of new wireless data services. Our
actual capital expenditures in 2003 were
Won 1,648 billion, primarily for the expansion and
upgrading of our CDMA 1xRTT network, for our initial investment
in the satellite-based digital multimedia broadcasting (DMB)
business and for the development and introduction of wireless
data services.

We estimate that we will spend approximately
Won 1.7 trillion for capital expenditures in 2004 for a
range of projects, including primarily for the expansion and
improvement of our wireless networks, investments in our
Internet-related businesses and the satellite-based DMB business
and the roll-out of our W-CDMA network. In addition, we expect
that construction of our new headquarters will be completed by
the end of 2004. See Certain Relationships and Related
Party Transactions. We may also make additional capital
expenditure investments as opportunities arise. In addition, we
may increase, reduce or suspend our planned capital expenditures
for 2004 or change the timing and area of our capital
expenditure spending from the estimates reflected in the table
above in response to market conditions or for other reasons.

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We currently plan to spend up to Won
250 billion in 2004 on capital expenditures related to
construction of our W-CDMA network and provision of W-CDMA
services which began service on a limited basis in Seoul at the
end of 2003. However, the actual scope and timing of the full
nationwide roll-out of our W-CDMA network will depend on several
factors, including the availability of network equipment,
progress on the development of dual band/dual mode handsets,
ability to overcome technical problems currently affecting
W-CDMA performance, adoption of CDMA 1xEV/ DO service,
regulatory decisions, our assessment of the market opportunities
for W-CDMA technology-based services and the competitive
landscape in the Korean wireless market. At the time we applied
for the W-CDMA license, we estimated that the construction of a
nationwide W-CDMA network would require capital expenditures
amounting to approximately Won 3.1 trillion over a six-year
period. We have not subsequently revised or updated this
estimate. Accordingly, our actual construction costs are likely
to differ significantly from this original estimate. Our actual
capital expenditures for the construction of the W-CDMA network
will depend upon many factors, including the scope and timing of
the network roll-out, whether W-CDMA technology is widely
implemented worldwide (which could lower the cost of network
equipment) and other factors.

Our future capital expenditures will be fixed
after we have reviewed the progress of the introduction and
marketability of our W-CDMA service. See Key
Information  Risk Factors  W-CDMA
technology may require significant capital and other
expenditures for implementation which we may not recoup and may
be difficult to integrate with our other businesses.

In September 2003, we entered into an agreement
with Mobile Broadcasting Corporation for the purposes of
co-owning and launching a satellite for the satellite DMB
business. Under the terms of the agreement, SK Telecom is
committed to fund 34.7% of the cost of launching and maintaining
the operations of the satellite, which is expected to be
approximately Won 92.0 billion. We launched the satellite
in March 2004. Although actual implementation of the satellite
DMB business will depend on many factors, including government
approvals that have yet to be obtained, our current expectations
are to begin commercial service by August 2004.

In May 2002, the Government sold its remaining
28.4% stake in KT Corporation. By participating in this
privatization, we acquired 9.6% of KT Corporations common
stock and Won 332.0 billion aggregate principal amount of
exchangeable bonds issued by KT Corporation exchangeable at our
option for 1.8% of KT Corporations common stock. We
purchased 29,808,333 shares of common stock of KT
Corporation for Won 1.6 trillion and bonds
exchangeable into 5,589,666 shares of such common stock for
Won 332.0 billion. We funded our investment in shares and
bonds of KT Corporation in May 2002 with Won 901.7 billion
of cash and by incurring Won 1,040.0 billion of short-term
debt. On July 16, 2002, we sold all of the exchangeable
bonds of KT Corporation which we owned to several Korean
institutional investors for an aggregate sale price of
Won 340.3 billion. We used the proceeds of the sale to
repay our short-term debt and for general corporate purposes. We
exchanged 29,808,333 shares of KT Corporations common
stock at Won 50,900 per share for 8,266,923 shares of
our common stock at Won 224,000 per share and settled the
difference of Won 334.5 billion between the aggregate
sale and purchase prices in cash on December 30, 2002 and
January 10, 2003, under a mutual agreement on stock
exchange between us and KT Corporation dated November 14,
2002. Related to these stock exchanges, a loss on exchange of
investments in 15,454,659 shares of KT Corporation for
4,457,635 shares of our common stock on December 31,
2002, amounting to Won 47.9 billion, was recorded as a
loss on disposal of investments during the year ended
December 31, 2002. An impairment loss amounting to Won
44.5 billion, which was related to the investments in
14,353,674 shares of KT Corporations common
stock as of December 31, 2002, was also recorded during the
year ended December 31, 2002. 4,457,635 shares were
subsequently cancelled and 3,809,288 shares were designated
as treasury stock for use in future mergers and acquisitions
transactions and strategic alliances or for other corporate
purposes to be determined by us. As a result of the share swap,
all cross-shareholdings between KT Corporation and us have
been completely eliminated.

On July 22, 2003, we acquired
2,481,310 shares of POSCO common stock held by SK
Corporation at a price of Won 134,000 per share in
accordance with a resolution of our board of directors dated
July 22, 2003. We elected to purchase the shares for
strategic reasons in order to address overhang concerns arising
from POSCOs ownership of our shares. As of
December 31, 2003, POSCO owned 5.0% of our shares.

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From time to time, we may make other investments
in telecommunications or other businesses, in Korea or abroad,
where we perceive attractive opportunities for investment. From
time to time, we may also dispose of existing investments when
we believe that doing so would be in our best interest.

As of December 31, 2003, our principal
repayment obligations with respect to long-term borrowings,
bonds and obligations under capital leases outstanding were as
follows for the periods indicated:

|                         |  |                      |         | 
|------------------------ |  | -------------------- | ------- | 
|Year Ending December 31, |  | Total               
|                         |  |                     
|                         |  | (In billions of Won)
|2004                     |  |                      | 1,368.4 | 
|2005                     |  |                      | 501.6   | 
|2006                     |  |                      | 805.3   | 
|After 2006               |  |                      | 1,000.0 | 

Our research and development expenses have been
influenced by the MIC, which makes annual recommendations
concerning the level of our research and development spending.
Our research and development expenses (including donations to
research institutes and educational organizations) equaled 1.8%
in 2001, 2.7% in 2002 and 2.9% in 2003, respectively, of
operating revenue. See Operating and Financial Review and
Prospects  Research and Development.

We anticipate that capital expenditures,
repayment of outstanding debt and research and development
expenditures will represent our most significant use of funds in
2004 and thereafter. To fund our scheduled debt repayment and
planned capital expenditures over the next several years, we
intend to rely primarily on funds provided by operations, as
well as bank and institutional borrowings, and offerings of debt
or equity in the domestic or international markets. In
particular, we expect that we will require external sources of
financing to fund SK IMTs planned construction of the
W-CDMA network. We believe that these sources will be sufficient
to fund our planned capital expenditures for 2004. Our ability
to rely on these alternatives could be affected by the liquidity
of the Korean financial markets or by government policies
regarding Won and foreign currency borrowings and the issuance
of equity and debt. Our failure to make needed expenditures
would adversely affect our ability to sustain subscriber growth
and provide quality services and, consequently, our results of
operations.

No commercial bank in Korea may extend credit
(including loans, guarantees and purchase of bonds) in excess of
20% of its shareholders equity to any one borrower. In
addition, no commercial bank in Korea may extend credit
exceeding 25% of the banks shareholders equity to
any one borrower and to any person with whom the borrower shares
a credit risk.

We generally collect refundable, non-interest
bearing deposits from our customers as a condition to activating
their service. Subject to the approval of the MIC, we set the
amounts to be collected for deposits for cellular services.
Effective February 1, 1996, we generally require cellular
subscribers to pay a facility deposit of Won 200,000. These
deposits were an important source of interest-free capital for
us and historically funded a substantial portion of our capital
expenditures. Since 1997, we have been offering existing and new
cellular subscribers the option of obtaining facility insurance
from the Seoul Guarantee Insurance Company, instead of paying
the facility deposit. In order to obtain this facility
insurance, subscribers must meet Seoul Guarantee Insurance
Companys credit requirements and pay a Won 10,000 premium
for three years of coverage. After three years, we pay the cost
of such insurance on the subscribers behalf. For each
defaulting insured subscriber, Seoul Guarantee Insurance Company
reimburses us up to Won 350,000. We refund the facility deposit
to any existing subscriber who elects to have facility
insurance. As a result of the facility insurance program, we
have refunded a substantial amount of facility deposits, and
facility deposits decreased from Won 46.9 billion as
of December 31, 2002 to Won 44.2 billion as of
December 31, 2003. We do not expect to have a significant
amount of facility deposits available for capital expenditures
in the future.

On April 27, 2001, in accordance with the
approval of our board of directors, we announced a treasury
stock purchase program to acquire 4% of our total outstanding
common stock during the period from May 2, 2001 to
June 28, 2001 in order to stabilize our stock price.
Pursuant to this program, we acquired an aggregate of
3,566,100 shares of our common stock in 2001 for an
aggregate of purchase price of Won 789.7 billion. We

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acquired these shares at market prices on
different dates and hold them as treasury stock. On
August 11, 2003, we concluded a stock buyback program which
we commenced on June 30, 2003. We acquired a total of
2,544,600 shares of our outstanding common stock, all of
which were cancelled on August 20, 2003. The total purchase
price for the stock buyback was Won 525.2 billion (or an
average of approximately Won 206,388 per share), with the
price per share ranging from Won 192,000 (on July 24, 2003)
to Won 216,000 (on July 15-16, 2003). As a result of the
stock buyback and subsequent cancellation of shares, the total
number of our outstanding common stock declined from 82,993,404
as of December 31, 2001 to 73,614,308 as of
December 31, 2003.


In October 2001, in accordance with the approval
of our board of directors, we established trust funds with four
Korean banks with a total funding of Won 1.3 trillion for the
purpose of acquiring our shares at market prices plus or minus
five percent. Each of the trust funds has an initial term of
three years but is terminable at our option six months after the
establishment of the trust fund and at the end of each
succeeding six-month period thereafter. While held by the trust
funds, our shares are not entitled to voting rights and do not
bear dividends. Upon termination of the trust funds, we are
required to resell the shares acquired by the trust funds. On
November 6, 2001, these funds purchased an aggregate of
2,674,580 of our shares of common stock, or approximately 3.0%
of our issued shares, from KT Corporation. On January 31,
2002, these funds purchased from SK Networks an aggregate of
1,367,180 shares of our common stock, or approximately 1.5%
of our issued shares.

The total accrued and unpaid retirement and
severance benefits for all of our employees as of
December 31, 2003 of Won 67.8 billion was reflected in
our consolidated financial statements as a liability, which is
net of deposits with insurance companies totaling Won
144.9 billion to fund a portion of the employees
severance indemnities. See Information on the
Company  Employees and note 2(l) of the
notes to our consolidated financial statements.

Dividends declared on our common stock amounted
to Won 57.3 billion, Won 151.7 billion and
Won 404.9 billion, respectively, in 2001, 2002 and
2003. In 2004, we amended our articles of incorporation to
permit payment of interim dividends in accordance with relevant
laws. We have not decided whether we will pay an interim
dividend for 2004. The overall dividend payout ratio with
respect to dividends to be paid for 2004 is currently expected
to be up to 25% of net income from 2004.

Substantially all of our revenue and operating
expenses are denominated in Won. We generally pay for imported
capital equipment in Dollars.

We did not have any outstanding swap or
derivative transactions as of December 31, 2003. In the
first quarter of 2004, we entered into currency swap agreements
and currency forward contracts to reduce our foreign currency
exposure with respect to our issuance of US$300 million
notes on April 1, 2004. See note 31 of the notes to
our consolidated financial statements.

In May 2004, we sold US$329.5 million in
zero coupon convertible notes due 2009. These convertible notes
are convertible by the holders into shares of our common stock
at the rate of Won 235,625 per share. In connection with
the issuance of the zero coupon convertible notes, we deposited
1,645,000 shares of our common stock with Korea Securities
Depository to be reserved and used to satisfy the note
holders conversion rights. This will be deemed as the
disposition of treasury stock and cancellation thereof for the
purposes of Korean law. If (1) the exercise by the holder
of the conversion right would be prohibited by Korean law or we
reasonably conclude that the delivery of common stock upon
conversion of these notes would result in a violation of
applicable Korean law or (2) we do not have a sufficient
number of shares of our common stock to ratify the conversion
right, then we will pay a converting holder a cash settlement
payment. In such situations, we intend to sell such number of
treasury shares held in trust for us that corresponds to the
number of shares of common stock that would have been
deliverable in the absence of the 49% foreign shareholding
restrictions imposed by the Telecommunications Law or other
legal restrictions. We plan to enter into a swap agreement to
reduce our exposure with respect to cash settlement payments
exceeding the proceeds from sales of treasury shares held in
trust.

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We may consider in the future entering into
additional currency swap agreements, currency forward contracts
transactions and other arrangements solely for hedging purposes.

Contractual Obligations and
Commitments

The following summarizes our contractual cash
obligations at December 31, 2003, and the effect such
obligations are expected to have on liquidity and cash flow in
future periods:

|                                      |  |                        |         |           |  |           |         |           |  |         |         |  |  |   |         |  |  |   |       | 
|------------------------------------- |  | ---------------------- | ------- | --------- |  | --------- | ------- | --------- |  | ------- | ------- |  |  | - | ------- |  |  | - | ----- | 
|                                      |  |                       
|                                      |  | Payments Due by Period
|                                      |  |                       
|                                      |  |                        |         | Less Than |  |           |         | After    
|                                      |  | Total                  |         | 1 Year    |  | 1-3 Years |         | 4-5 Years |  | 5 Years
|                                      |  |                        |         |           |  |           |         |           |  |        
|                                      |  |                       
|                                      |  | (In billions of Won)  
|Bonds(1)                              |  | W                      | 3,664.4 |           |  | W         | 1,359.6 |           |  | W       | 1,304.8 |  |  | W | 1,000.0 |  |  | W |      | 
|Long-term Borrowings                  |  |                        | 10.3    |           |  |           | 8.6     |           |  |         | 1.7     |  |  |   |        |  |  |   |      | 
|Capital lease Obligations             |  |                        | 0.1     |           |  |           | 0.1     |           |  |         |        |  |  |   |        |  |  |   |      | 
|Operating Leases                      |  |                        | 0.3     |           |  |           | 0.3     |           |  |         |        |  |  |   |        |  |  |   |      | 
|Purchase Obligations(2)               |  |                        | 20.4    |           |  |           | 20.4    |           |  |         |        |  |  |   |        |  |  |   |      | 
|Other Long-term Payables(3)           |  |                        | 650.0   |           |  |           |        |           |  |         |        |  |  |   | 200.0   |  |  |   | 450.0 | 
|                                      |  |                        |         |           |  |           |         |           |  |         |         |  |  |   |         |  |  |   |       | 
|Total Contractual Cash Obligations(4) |  | W                      | 4,345.5 |           |  | W         | 1,389.0 |           |  | W       | 1,306.5 |  |  | W | 1,200.0 |  |  | W | 450.0 | 
|                                      |  |                        |         |           |  |           |         |           |  |         |         |  |  |   |         |  |  |   |       | 



---



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In March 2004, we issued Won-denominated notes in
    the principal amount of Won 150.0 billion with a
    maturity of five years and an interest rate of 5.0%. In April
    2004, we issued notes in the principal amount of US$300,000,000
    with a maturity of seven years and an interest rate of 4.25%. In
    May 2004, we issued Won-denominated notes in the principal
    amount of Won 150.0 billion with a maturity of five
    years and an interest rate of 5.0%. The proceeds of the
    offerings in March and April 2004 were used to pay maturing
    debt. The proceeds of the offering in May 2004 were used for our
    operations. In late May 2004, we sold US$329.5 million in
    zero coupon convertible notes due 2009. We intend to use the
    proceeds of the zero coupon convertible notes for general
    corporate purposes, including for measures to improve
    shareholders return in their investment in our common
    stock through payment of dividends or share repurchase programs.
|   
|(2) | Related to the contract for joint-ownership of a
    satellite with Japan MBCO in order to enter into the satellite
    digital multi-media broadcasting business. See note 21(h)
    of the notes to our consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(3) | Related to acquisition of IMT license. See
    note 2(i) of the notes to our consolidated financial
    statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(4) | This amount does not include our future
    investments in the CDMA market in Vietnam through our subsidiary
    SLD Telecom Pte. Ltd. under a business cooperation contract with
    Saigon Post & Telecommunication Service Corporation.
    See Information on the Company  Business
    Overview  Other Investments and Relationships
    and Operating and Financial Review and
    Prospectus  Off Balance Sheet Arrangements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

Subsequent Note Obligations



| |                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------
| | Unguaranteed Domestic Bonds due
    March 23, 2009 and Unguaranteed U.S. Dollar
    Denominated Bonds due April 1, 2011

We issued unguaranteed domestic bonds with face
amounts totaling Won 150,000 million and unguaranteed
U.S. dollar denominated bonds with face amounts totaling
US$300 million on March 23, 2004 and April 1,
2004, respectively. The domestic bonds were issued at an annual
rate of 5% for Won 148,155 million and will be repaid
in full at its maturity on March 23, 2009. The
U.S. dollar denominated bonds were issued at an annual rate
of 4.5% for US$297.8 million and will be repaid in full at
its maturity on April 1, 2011.

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| |                                           
| | ------------------------------------------
| | Zero Coupon Convertible Notes due
    2009

On May 27, 2004, we issued our
US$329,450,000 Zero Coupon Convertible Notes due 2009, pursuant
to an indenture dated as of May 27, 2004 between us and
Citibank, N.A. Holders of Zero Coupon Convertible Notes will
have the right to convert their notes (or any portion thereof
being US$100,000 in principal amount or an integral multiple of
US$10,000 in excess thereof) into shares of our common stock at
the initial conversion price of Won 235,625 per share,
subject to adjustments for stock splits, dividends,
sub-divisions and similar distributions, at any time on or after
July 7, 2004 up to the close of business on May 13,
2009, subject to our right of redemption. In connection with the
issuance of the zero coupon convertible notes, we deposited
1,645,000 shares of our common stock with Korea Securities
Depository to be reserved and used to satisfy the note
holders conversion rights. This will be deemed as the
disposition of treasury stock and cancellation thereof for the
purposes of Korean law. If (1) the exercise by the holder
of the conversion right would be prohibited by Korean law or we
reasonably conclude that the delivery of common stock upon
conversion of these notes would result in a violation of
applicable Korean law or (2) we do not have a sufficient
number of shares of our common stock to ratify the conversion
right, then we will pay a converting holder a cash settlement
payment. In such situations, we intend to sell such number of
treasury shares held in trust for us that corresponds to the
number of shares of common stock that would have been
deliverable in the absence of the 49% foreign shareholding
restrictions imposed by the Telecommunications Law or other
legal restrictions. We plan to enter into a swap agreement to
reduce our exposure with respect to cash settlement payments
exceeding the proceeds from sales of treasury shares held in
trust.

Under the terms of certain of our debt
obligations, our ability to grant security interest in certain
of our property is limited, which may affect our ability to
borrow funds in the future.

Inflation

We do not consider that inflation in Korea has
had a material impact on our results of operations in recent
years. According to data published by The Bank of Korea, annual
inflation in Korea was 4.1% in 2001, 2.7% in 2002 and 3.6% in
2003.

U.S. GAAP Reconciliation

Our consolidated financial statements are
prepared in accordance with Korean GAAP, which differs in
certain significant respects from U.S. GAAP. For a
discussion of significant differences between Korean GAAP and
U.S. GAAP, see notes 32 and 33 of our notes to
consolidated financial statements.

Our net income in 2001 under U.S. GAAP is
lower than under Korean GAAP by Won 34.5 billion,
primarily due to differences in the treatment of deferred
charges, intangible assets and nonrefundable activation fees.
Our net income in 2002 under U.S. GAAP is lower than under
Korean GAAP by Won 186.0 billion, primarily due to
differences in the treatment of nonrefundable activation fees
and loss on impairment of investment securities which were
partially off-set by non-amortization of goodwill under
U.S. GAAP. Our losses on impairment of investment
securities for the year ended December 31, 2002 were higher
by Won 252.0 billion under U.S. GAAP due to
differences in the treatment of write-down for declines of fair
value. Such write-downs were made in connection with securities
held in Powercomm and Hanaro Telecom. See note 3 of our
notes to consolidated financial statements. Our net income in
2003 under U.S. GAAP is higher than under Korean GAAP by
Won 90.6 billion, primarily due to non-amortization of
goodwill under U.S. GAAP and capitalization under
U.S. GAAP of interest expense related to tangible assets,
which were offset in part by difference in treatment of
non-refundable acquisition fees, deferred income taxes and
intangible assets.

Our shareholders equity at
December 31, 2001 under U.S. GAAP is lower than under
Korean GAAP by Won 329.2 billion primarily due to the
differing treatment of minority interest in equity of
consolidated affiliates and non-refundable activation fees,
which were partially off-set by differences in intangible
assets. Our shareholders equity at December 31, 2002
under U.S. GAAP is higher than under Korean GAAP by Won
124.3 billion primarily due to the differing treatment of
loss on impairment of investment securities, minority interest
in equity of consolidated affiliates and cancellation of
amortization of goodwill. Our

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shareholders equity at December 31,
2003 under U.S. GAAP is higher than under Korean GAAP by
Won 920.8 billion primarily due to increases from
differing treatment of loss on impairment of investment
securities and cancellation of amortization of goodwill, which
were partially offset by decreases from differing treatment of
non-refundable acquisition fees and minority interest of equity
in consolidated affiliates.


On January 1, 2002, we adopted
SFAS No. 142, Goodwill and Other Intangible
Assets. Under SFAS No. 142, goodwill and
intangible assets with indefinite lives are no longer amortized.
However, they will be subject to annual impairment tests as
prescribed by the Statement. The following table presents the
impact of SFAS No. 142 on reported net income and
earnings per share had the standard been in effect for the year
ended December 31, 2001:

|                                           |                       |                      |         |       | 
|------------------------------------------ | --------------------- | -------------------- | ------- | ----- | 
|                                           |                       | Year Ended          
|                                           |                       | December 31, 2001   
|                                           |                       |                     
|                                           |                       | (In billions of Won)
|Reported net income                        |                       | W                    | 1,111.6 |      
|                                           | Goodwill amortization |                      |         | 151.9 | 
|                                           |                       |                      |         |      
|Adjusted net income                        |                       |                      | 1,263.5 |      
|                                           |                       |                      |         |      
|Basic earnings per common share            |                       |                      | 12,844  |      
|                                           | Goodwill amortization |                      |         | 1,755 | 
|                                           |                       |                      |         |      
|Adjusted earnings per common share-basic   |                       |                      | 14,599  |      
|                                           |                       |                      |         |      
|Diluted earnings per common share          |                       |                      | 12,844  |      
|                                           | Goodwill amortization |                      |         | 1,755 | 
|                                           |                       |                      |         |      
|Adjusted earnings per common share-diluted |                       |                      | 14,599  |      
|                                           |                       |                      |         |      

In November 2002, the FASB issued Interpretation
No. 45 (FIN 45), Guarantors
Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others. FIN 45
elaborates on the disclosures to be made by a guarantor about
its obligations under certain guarantees issued. It also
clarifies that a guarantor is required to recognize, at the
inception of certain guarantees, a liability for the fair value
of the obligation undertaken in issuing the guarantee. The
initial recognition and measurement provisions of FIN 45
apply on a prospective basis to guarantees issued or modified
after December 31, 2002. The disclosures were effective for
our annual financial statements for the year ended
December 31, 2002. The adoption of FIN 45 did not have
a significant impact on our consolidated financial position or
results of operations.

On January 1, 2003, we adopted
SFAS No. 143, Accounting for Asset Retirement
Obligations. This statement addresses accounting for the
cost of legal obligations associated with the retirement of
long-lived assets. SFAS No. 143 requires that
companies recognize the fair value of a liability for asset
retirement obligations in the period in which the obligations
are incurred and that such amount be capitalized as part of the
book value of the long-lived asset. We have determined that we
do not have a material legal obligation to remove long-lived
assets as described by this statement. Thus, the adoption of
SFAS No. 143 did not have a significant impact on our
future consolidated financial position or results of operations.

On January 1, 2003, we adopted
SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. This statement nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3,
Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). This statement
requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred
rather than the date of an entitys commitment to an exit
plan. The adoption of SFAS No. 146 did not have a
significant impact on our consolidated financial position or
results of operations.

In April 30, 2003, the FASB issued
SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. The
statement amends and clarifies accounting for derivative
instruments, including certain derivative instruments embedded
in other contracts, and for hedging activities under

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Statement 133. The new guidance amends
Statement 133 regarding implementation issues raised in
relation to the application of the definition of a derivative,
particularly regarding the meaning of an underlying and the
characteristics of a derivative that contains financing
components. The amendments set forth in SFAS No. 149
improve financial reporting by requiring that contracts with
comparable characteristics be accounted for in a similar manner.
In particular, this statement clarifies under what circumstances
a contract with an initial net investment meets the
characteristic of a derivative as discussed in
Statement 133. In addition, it clarifies when a derivative
contains a financing component that warrants special reporting
in the statement of cash flows. The adoption of
SFAS No. 149 did not have a significant impact on our
consolidated financial position or results of operations.


In May 15, 2003, the FASB has issued
SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and
Equity. The statement changes the accounting for certain
financial instruments that, under previous guidance, issuers
could account for as equity. The new statement requires that
certain instruments be classified as liabilities in statements
of financial position. One type of such instrument is a
mandatory redeemable stock, which the issuing company is
obligated to buy back in exchange for cash or other assets. A
second type of instrument, which includes put options and
forward purchase contracts, involves instruments that do or may
require the issuer to buy back some of its shares in exchange
for cash or other assets. The third type of instruments that are
considered liabilities under this statement are obligations that
can be settled with variable number of its equity shares, the
monetary value of which is (1) fixed, or (2) tied
solely or predominantly to a variable such as a market index, or
(3) varies inversely with the value of the issuers
shares. SFAS No. 150 does not apply to features
embedded in a financial instrument that is not a derivative in
its entirety. In addition to its requirements for the
classification and measurement of financial instruments in its
scope, SFAS No. 150 also requires disclosures about
alternative ways of settling the instruments and the capital
structure of entities, all of whose shares are mandatory
redeemable. Most of the guidance in this statement is effective
for all financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning
of the first interim period beginning after June 15, 2003.
The adoption of SFAS No. 150 had no significant impact
on our consolidated financial position or results of operations.

On January 17, 2003, the FASB issued
Interpretation No. 46 (FIN 46) 
Consolidation of Variable Interest Entities, which
addresses consolidation by business enterprises where equity
investors do not bear the residual economic risks and rewards.
These entities have been commonly referred to as special
purpose entities (SPEs). The underlying
principle behind the new Interpretation is that if a business
enterprise has a majority financial interest in an entity, which
is defined in the guidance as a variable interest entity, the
assets, liabilities and results of the activities of the
variable interest entity should be included in the consolidated
financial statements with those of the business enterprise. The
Interpretation also explains how to identify variable interest
entities and how an enterprise should assess its interest in an
entity when deciding whether or not it will consolidate that
entity. In December 2003, the FASB released a revision of FIN
No. 46 (FIN No. 46R) in which the
calculation of expected losses and expected residual returns
have been altered to reduce the impact of decision maker and
guarantor fees. In addition, FIN No. 46R changes the
definition of a variable interest. We as a foreign private
issuer are required to apply either FIN 46 or FIN 46R
to variable interest entities (VIEs) created after
January 31, 2003. We are also required to apply
FIN 46R to the VIEs which existed prior to February 1,
2003 in 2004. For the purpose of U.S. GAAP, certain special
purpose companies (SPCs) established by us, have been
consolidated from the date of their establishment (see
note 32(q) of our notes to consolidated financial
statements). There is an entity created before February 1,
2003, other than the aforementioned consolidated SPCs, for which
it is reasonably possible that we will be deemed a primary
beneficiary and therefore will be required to consolidate it
upon the application of FIN 46R to the entity in 2004. Such
entity is a joint venture established to operate wireless
telecommunications services in a country outside of Korea. With
respect to our involvement in the entity, our maximum exposure
to loss was approximately Won 26.6 billion as of
December 31, 2003. We have not completed the evaluation of
the effect of the application of FIN No. 46R in 2004.

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Significant Changes in Korean GAAP

On January 1, 2002, the Company and its
subsidiaries adopted Statement of Korea Accounting Standards
(SKAS) No. 6 Events Occurring after
Balance Sheet Date. This statement requires that proposed
appropriations of retained earnings, including proposed cash
dividends, be reflected on the balance sheet when the
appropriations are approved by shareholders. Through 2001, such
proposed appropriation of retained earnings, including proposed
cash dividends, were recorded in the year they were proposed in
accordance with Korean GAAP. In order to reflect this accounting
change, the financial statements for the year ended
December 31, 2001 have been restated. This accounting
change resulted in an increase in stockholders equity as
of December 31, 2001 and 2002 of Won 57.3 billion and
Won 151.7 billion, respectively, and a decreases in total
liabilities as December 31, 2001 and 2002 of the same
amounts. Operating income and net income for the years ended
December 31, 2001 and 2002 were not affected by this change.

On January 1, 2003, the Company adopted SKAS
No. 2 through No. 9, except for SKAS No. 6, which
was adopted in 2002. As a result, the Company reclassified the
accounts relating to securities in the consolidated financial
statements for the years ended December 31, 2001, 2002 and
2003 as explained in note 2(f) of our consolidated
financial statements for the years ended 2001, 2002 and 2003 and
changed the accounting policy for capitalization of interest and
other financing costs to charge such interest expense and other
financing cost to current operations as incurred as explained in
notes 2(h) and 2(i) to our consolidated financial
statements for the years ended December 31, 2001, 2002 and
2003. If financing costs had been capitalized, the consolidated
net income of the Company for the year ended December 31,
2003 would have increased by Won 32.3 billion (net of
income tax effect of Won 13.6 billion). In addition, in
accordance with the application of SKAS No. 3,
Intangible Assets, effective from January 1,
2003 organization costs which were recorded in intangible assets
through 2002, are charged to expenses as incurred and the
cumulative effect of this accounting change was charged to
beginning retained earnings as of January 1, 2003.

Critical Accounting Policies, Estimates And
Judgments

Our consolidated financial statements are
prepared in accordance with Korean GAAP. The preparation of
these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets,
liabilities, revenue and expenses as well as the disclosure of
contingent assets and liabilities. We continually evaluate our
estimates and judgments including those related to revenue
recognition, allowances for doubtful accounts, inventories,
useful lives of property and equipment, investments, employee
stock option compensation plans and income taxes. We base our
estimates and judgments on historical experience and other
factors that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates
under different assumptions or conditions. We also provide a
summary of significant differences between accounting principles
followed by us and our subsidiaries and U.S. GAAP. We
believe that of our significant accounting policies, the
following may involve a higher degree of judgment or complexity:



| |                    
| | -------------------
| | Revenue Recognition

Our revenues are principally derived from
telecommunications service revenue and wireless handset sales.
Telecommunications service consists of fixed monthly charges,
usage-related charges and non-refundable activation fees. Fixed
monthly charges are recognized in the period earned.
Usage-related charges and non-refundable activation fees are
recognized at the time services are rendered.

Our subsidiaries also sell wireless handsets to
customers and such sales are recognized at the time products are
delivered.



| |                                     
| | ------------------------------------
| | Allowances for Doubtful
    Accounts

An allowance for doubtful accounts is provided
based on a review of the status of individual receivable
accounts at end of the year. We maintain allowances for doubtful
accounts for estimated losses that result from the inability of
our customers to make required payments. We base our allowances
on the likelihood of recoverability of accounts receivable based
on past experience and taking into account current collection

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trends that are expected to continue. If economic
or specific industry trends worsen beyond our estimates, we
increase our allowances for doubtful accounts by recording
additional expenses.




| |            
| | -----------
| | Inventories

Inventories are stated at the lower of cost,
determined using the moving average method, or net realizable
value. Inventories consist of supplies for wireless
telecommunications facilities, handsets and raw materials for
handsets.



| |                                                               
| | --------------------------------------------------------------
| | Estimated Useful Lives and Impairment of
    Long-lived Assets

We estimate the useful lives of long-lived assets
in order to determine the amount of depreciation and
amortization expense to be recorded during any reporting period.
The useful lives are estimated at the time the asset is acquired
and are based on historical experience with similar assets as
well as taking into account anticipated technological or other
changes. If technological changes were to occur more rapidly
than anticipated or in a different form than anticipated, the
useful lives assigned to these assets may need to be shortened,
resulting in the recognition of increased depreciation and
amortization expense in future periods.

Alternatively, these technological changes could
result in the recognition of an impairment charge to reflect the
write-down in value of the asset. We review these types of
assets for impairment annually, or when events or circumstances
indicate that the carrying amount may not be recoverable over
the remaining lives of the assets. In assessing impairments, we
use cash flows that take into account managements
estimates of future operations.



| |                                        
| | ---------------------------------------
| | Impairment of Investment
    Securities

When the declines in fair value of individual
available-for-sale and held-to-maturity securities below their
acquisition cost are other than temporary and there is objective
evidence of impairment, the carrying value of the securities is
adjusted to their fair value with the resulting valuation loss
charged to current operations.

As part of this review, the investees
operating results, net asset value and future performance
forecasts as well as general market conditions are taken into
consideration. If we believe, based on this review, that the
market value of an equity security or a debt security may
realistically be expected to recover, the loss will continue to
be classified as temporary. If economies or specific industry
trends worsen beyond our estimates, valuation losses previously
determined to be recoverable may need to be charged as an
impairment loss in current operations.

Significant management judgment is involved in
the evaluation of declines in value of individual investments.
The estimates and assumptions used by management to evaluate
declines in value can be impacted by many factors, such as the
financial condition, earnings capacity and near-term prospects
of the company in which we have invested and, for
publicly-traded securities, the length of time and the extent to
which fair value has been less than cost. The evaluation of
these investments is also subject to the overall condition of
the economy and its impact on the capital markets.



| |                                            
| | -------------------------------------------
| | Employee Stock Option Compensation
    Plan

We adopted the fair value based method of
accounting for the employee stock option compensation plan. The
plan was established, effective as of March 17, 2000, to
reward the performance of management who have contributed, or
have the ability to contribute, significantly to our company.
Under the fair value based method, compensation cost is measured
at the grant date based on the value of the award and is
recognized over the service period. For stock options, fair
value is determined using an option-pricing model that takes
into account the stock price at the grant date, the exercise
price, the expected life of the option, the volatility of the
underlying stock, expected dividends and the current risk-free
interest rate for the expected life of the option. However, as
permitted under Korean GAAP, we exclude the volatility factor in
estimating the value of our stock options, which results in
measurement at minimum value. The total compensation cost of an
option

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estimated at the grant date is not subsequently
adjusted for changes in the price of the underlying stock or its
volatility, the life of the option, dividends on the stock, or
the risk-free interest rate.




| |             
| | ------------
| | Income Taxes

Current tax expense is determined based on
taxable income for the year computed using prevailing tax rates.

Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax liabilities are recognized for all taxable
temporary differences and deferred tax assets are recognized for
deductible temporary differences to the extent that it is
expected that taxable income will be available in future periods
against which the deductible temporary differences can be
utilized.

Deferred tax is calculated at the tax rates that
have been enacted or substantively enacted at the balance sheet
date. Deferred tax is charged or credited in the statement of
income, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also
charged or credited directly to equity.

Deferred tax assets and liabilities are presented
on the balance sheet as a non-current number.

Research and development



| |         
| | --------
| | Overview

In conformity with the MICs guidance, we
have maintained a high level of spending on research and
development activity. Prior to 1996, the majority of our
research and development expense consisted of the MIC-directed
donations to several Korean research institutes and educational
organizations. More recently, we have sharply increased our
spending for our internal research activity resulting in such
amounts exceeding our spending on external research. We believe
that we must maintain a substantial in-house technology
capability to achieve our strategic goals.

The following table sets forth our annual
research and development expenses:

|                         |  |                              |       |      |  |      |       |  |  |   |       | 
|------------------------ |  | ---------------------------- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                         |  |                             
|                         |  | As of and for the Year Ended
|                         |  | December 31,                
|                         |  |                             
|                         |  | 2001                         |       | 2002 |  | 2003
|                         |  |                              |       |      |  |     
|                         |  |                             
|                         |  | (in billions of Won)        
|Internal R&D Expenses(1) |  | W                            | 130.7 |      |  | W    | 194.3 |  |  | W | 235.8 | 
|External R&D Expenses(2) |  |                              | 23.0  |      |  |      | 59.0  |  |  |   | 64.4  | 
|                         |  |                              |       |      |  |      |       |  |  |   |       | 
|Total R&D Expenses(3)    |  | W                            | 153.7 |      |  | W    | 253.3 |  |  | W | 300.2 | 
|                         |  |                              |       |      |  |      |       |  |  |   |       | 



---



|    |                                                                                  
|--- | ---------------------------------------------------------------------------------
|(1) | Includes Won 4.8 billion for Shinsegi for
    the year ended December 31, 2001.  
|   
|(2) | Shinsegi did not incur any R&D expenses for
    the year ended December 31, 2001.
|   
|(3) | Includes Won 4.8 billion for Shinsegi for
    the year ended December 31, 2001.  

The MIC has the statutory power to recommend
levels of spending by telecommunications service providers on
research and development activity and the allocation of
expenditures between internal and external research. In
practice, the MIC has issued guidelines regarding the amount and
allocation of research spending. In its May 1995 guidelines, the
MIC recommended that our minimum level of total research and
development spending (set as a percentage of budgeted revenue
and calculated according to MIC guidelines which differ from our
accounting treatment of such expenses) be: 9.0% from 1995
through 1997; 9.5% for 1998; and 10.0% for 1999 through 2001.
With respect to the level of contribution specifically for
external research and development, in July 1998, the MIC reduced
the recommended minimum level of contribution to the MIC-run
Fund for Development of Information and Telecommunications to
1.5% from 2.0%. In 2001, the recommended minimum level of
contribution was further reduced to 1.0%. In 2002, the
contribution

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became mandatory, and the required minimum level
of contribution was further reduced to 0.75%. In 2003 and 2004,
the required minimum level of contribution is 0.75%, the same as
2002. We are not obligated to make donations to any other
external research institutes.




| |                                      
| | -------------------------------------
| | Internal Research and
    Development

The main focus of our internal research and
development activity is the development of 3G technologies
and services and value-added technologies and services for our
CDMA network, such as wireless data communications. We spent
approximately Won 235.8 billion on internal research and
development in 2003.

Our internal research and development activity is
centered at a research center with state-of-the-art facilities
and equipment established in January 1999 in Bundang-gu,
Sungnam-si, Kyunggi-do, Korea. As of December 31, 2003 our
research center housed 561 research engineers (including both
full time and temporary research engineers). Their work focuses
on cell planning, network management, digital wireless
technologies, multimedia, information processing and other
wireless telecommunications areas. Our research center includes
a team that is helping to develop a fourth generation wireless
technology, which is expected to enable wireless data
transmissions at speeds of up to 155 Mbps, 70 times faster
than W-CDMA technology.

Each business unit has its own research team that
can concentrate on specific short-term research needs. Such
research teams permit our research center to concentrate on
long-term, technology-intensive research projects. We aim to
establish strategic alliances with selected domestic and foreign
companies with a view to exchanging or jointly developing
technologies, products and services.



| |                                      
| | -------------------------------------
| | External Research and
    Development

In addition to conducting research in our own
facilities, we have been a major financial supporter of other
Korean research institutes, and we have helped coordinate the
Governments effort to commercialize the CDMA digital
technology. We do not have any independently-owned intellectual
property rights in the technologies or products developed by any
external research institute.

OFF BALANCE SHEET ARRANGEMENTS

We have sold certain receivables in 2002 and 2003
in five separate transactions described under  
Liquidity and Capital Resources  Liquidity to
Nate First Special Purpose Company, Nate Second Special Purpose
Company, Nate Third Special Purpose Company, Nate Fourth Special
Purpose Company and Nate Fifth Special Purpose Company in
asset-backed securitization transactions. In connection with
these transactions, we have obligations to repurchase up to
13.2%, 13.3% and 13.2% of the receivables for Nate Third Special
Purpose Company, Nate Fourth Special Purpose Company and Nate
Fifth Special Purpose Company, respectively, if receivables
become past due for three months or debtors become insolvent. At
December 31, 2003, the uncollected balances of accounts
receivable sold to Nate Third Special Purpose Company, Nate
Fourth Special Purpose Company and Nate Fifth Special Purpose
Company were Won 32.9 billion, Won 215.6 billion and
Won 402.3 billion, respectively. See notes 3 and 21 of
the notes to our consolidated financial statements. Under Korean
GAAP, we accounted for these transactions as sales of the
receivables to the special purpose companies. See note 21(e) of
the notes to our consolidated financial statements. Under
U.S. GAAP, we are required to consolidate these entities as
these entities do not meet the qualifications for a qualifying
special purpose entity. See  U.S. GAAP
Reconciliation and note 32(q) of our notes to
consolidated financial statements.

PaxNet Co. Ltd., our subsidiary, has
guaranteed the repayment of the borrowings of
Fimger Co., Ltd., a former affiliated company of ours.
The outstanding balance of such guarantee as of
December 31, 2003 was approximately
Won 332 million.

SLD Telecom, the Companys overseas
subsidiary, entered into a business cooperation contract with
Saigon Post & Telecommunication Services Corporation to
establish cellular mobile communication services and provide
CDMA service throughout Vietnam. In accordance with this
contract, in the event that the cash inflow for the Business is
insufficient to cover the cash outflow necessary to cover the
joint expenditure of the

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Business (cash shortfall), SLD
Telecom and Saigon Post & Telecommunication Services
Corporation will contribute the necessary funds to Business and
bear additional cash shortfalls according to their gross profit
sharing ratios at that time. With respect to the Companys
involvement in the Business, the Companys maximum exposure
to loss was approximately Won 26.6 billion as of
December 31, 2003.







|        |                                               
|------- | ----------------------------------------------
|Item. 6 | Directors, Senior Management and
    Employees

DIRECTORS AND SENIOR MANAGEMENT

Our board of directors has ultimate
responsibility for the management of our affairs. Under our
articles of incorporation, our board is to consist of at least
three but no more than twelve directors. We currently have a
total of eight directors, four of whom are outside directors. We
elect our directors at a general meeting of shareholders with
the approval of at least a majority of those shares present or
represented at such meeting. Such majority must represent at
least one-fourth of our total issued and outstanding shares with
voting rights.

As required under relevant Korean laws and our
articles of incorporation, we have a committee for
recommendation of outside directors within the board of
directors or Recommendation Committee. Outside directors are
appointed from among those candidates recommended by the
Recommendation Committee.

The term of offices for directors is until the
close of the third annual general shareholders meeting convened
after he or she commences his or her term. Our directors may
serve consecutive terms. Our shareholders may remove them from
office by a resolution at a general meeting of shareholders
adopted by the holders of at least two-thirds of the voting
shares present or represented at the meeting, and such
affirmative votes also represent at least one-third of our total
voting shares then issued and outstanding.

Representative directors are directors elected by
the board of directors with the statutory power to represent our
company.

The following are the names and positions of our
standing and non-standing directors. The business address of all
of our directors is the address of our registered office at 99
Seorin-dong, Jongro-gu, Seoul, Korea.

Standing directors are our full-time employees
and executive officers, and they also comprise the senior
management, or the key personnel who manage us. Their names,
date of birth and positions at our company and other positions
are set forth below:

|              |  |                |  |          |      |            |  |          |      |                   |  |                                           |  |                                                                                                               |  |                                                                                                                                                         
|------------- |  | -------------- |  | -------- | ---- | ---------- |  | -------- | ---- | ----------------- |  | ----------------------------------------- |  | ------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------
|              |  |                |  |          |      |            |  |          |      | Other Principal   |  |                                          
|              |  |                |  | Director |      | Expiration |  |          |      | Directorships and |  |                                          
|Name          |  | Date of Birth  |  | Since    |      | of Term    |  | Position |      | Positions         |  | Business Experience                      
|              |  |                |  |          |      |            |  |          |      |                   |  |                                          
|Jung Nam Cho  |  | Nov. 20, 1941  |  |          | 1995 |            |  |          | 2007 |                   |  | Vice-Chairman and Representative Director |  |                                                                                                               |  | President & COO, SK Telecom                                                                                                                             
|Shin Bae Kim  |  | Oct. 15, 1954  |  |          | 2002 |            |  |          | 2005 |                   |  | CEO and Representative Director           |  | Director, Hanaro Telecom; Director, SK Telink;
    Director, SK Teletech; Representative Director, SK Capital |  | Head of Strategic Planning Group, Shinsegi
    Telecomm; Director, SK Telecom; Senior Vice President,
    SK Telecom; Director, KORMS                   
|Young Jin Kim |  | Sept. 19, 1946 |  |          | 2002 |            |  |          | 2005 |                   |  | Executive Vice- President                 |  |                                                                                                               |  | Head of SK America, Inc.; Head of President
    Office, SK Networks; Head of Human Resource Development Office
    And Europe Branch Office, SK Networks

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|                                        |  |               |  |          |      |            |  |          |      |                   |  |                                                                             |  |                                                                      |  |                                                                                                                                                                                                                         
|--------------------------------------- |  | ------------- |  | -------- | ---- | ---------- |  | -------- | ---- | ----------------- |  | --------------------------------------------------------------------------- |  | -------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                        |  |               |  |          |      |            |  |          |      | Other Principal   |  |                                                                            
|                                        |  |               |  | Director |      | Expiration |  |          |      | Directorships and |  |                                                                            
|Name                                    |  | Date of Birth |  | Since    |      | of Term    |  | Position |      | Positions         |  | Business Experience                                                        
|                                        |  |               |  |          |      |            |  |          |      |                   |  |                                                                            
|Sung Min Ha                             |  | Mar. 24, 1957 |  |          | 2004 |            |  |          | 2007 |                   |  | Chief Financial Officer and Head of Strategic
    Planning Divisional Group |  |                                                                      |  | Head of Finance Management, Shinsegi Telecomm,
    Inc.; Director of Strategic Planning Officer, SK Telecomm                                                                                                            
|Our current non-standing directors are:
|Sang Koo Nam                            |  | Aug. 20, 1946 |  |          | 1998 |            |  |          | 2007 |                   |  | Outside Director                                                            |  | Professor, Korea University                                          |  | University of Pennsylvania, MBA
    (1975), Ph.D. (1981); President, Korean Financial
    Association                                                                                                                   
|Sang C. Lee                             |  | Jan. 24, 1941 |  |          | 1999 |            |  |          | 2005 |                   |  | Outside Director                                                            |  | Consultant                                                           |  | Chairman, Communication Network Interface, Inc.;
    Chairman and CEO, Spectron Corp.; President, Scovill Fasteners,
    Inc.; Director of Organization, ITT Worldwide Corp.; Vice
    President, ITT Asia Pacific Corp.
|Jae Seung Yoon                          |  | Nov. 9, 1962  |  |          | 2002 |            |  |          | 2005 |                   |  | Outside Director                                                            |  | CEO & Representative Director, Daewoong
    Pharmaceutical Co., Ltd. |  | Public Prosecutor, The Seoul/Busan District
    Public Prosecutors Office; Auditor and Vice President,
    Daewoong Pharmaceutical Co., Ltd.                                                                           
|Yong Woon Kim                           |  | Oct. 4, 1943  |  |          | 2003 |            |  |          | 2006 |                   |  | Outside Director                                                            |  | Standing Advisor, POSCO Research Institute                           |  | Senior Executive Vice President (Legal
    Department, Seoul Office, Investment and Finance) and Director,
    POSCO                                                                                                    

INVOLVEMENT IN CERTAIN LEGAL
PROCEEDINGS

In February 2004, certain members of our board of
directors and executive officers resigned following a finding of
accounting misconduct at SK Networks and the resulting movement
to improve corporate governance in companies in the
SK Group. The resignations were tendered by Mr. Tae
Won Chey, former non-standing director of SK Telecom and
chairman and CEO of SK Corporation, Mr. Kil Seung Son,
former Chairman, Chief Executive Officer and Representative
Director of SK Telecom and representative director of SK
Networks and non-standing director of SK Corporation,
Mr. Jae Won Chey, former executive vice president of
SK Telecom and Mr. Moon Soo Pyo, former president of
SK Telecom. None of these resignations were related to any
allegations of wrongdoing in connection with their role in our
business, and SK Telecom was not implicated in any of the
charges against SK Networks management. For details of the
charges against Mr. Tae Won Chey and Mr. Kil Seung
Son, see Key Information  Risk
Factors  Financial difficulties and charges of
financial irregularities at our affiliate, SK Networks (formerly
SK Global), may cause disruptions in our business.

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COMPENSATION OF DIRECTORS AND
OFFICERS

The aggregate of the remuneration paid and
in-kind benefits granted to the directors (both standing
directors, who also serve as our executive officers, and
non-standing directors) during the year ended December 31,
2003 totaled approximately Won 3.4 billion.

Remuneration for the directors is determined by
shareholder resolutions. Severance allowances for directors are
determined by the board of directors in accordance with our
regulation on severance allowances for officers, which was
adopted by shareholder resolutions. The regulation provides for
monthly salary, performance bonus, severance payment and fringe
benefits. The amount of performance bonuses is independently
decided by a resolution of the board of directors.

In March 2001 and 2002, pursuant to the
resolutions of the shareholders, and in accordance with our
articles of incorporation, certain of our directors and officers
were granted options to purchase our common shares. 42 and 70
officers, respectively, in 2001 and 2002, were granted options
to purchase 43,820 and 65,730 common shares. The exercise
price for the shares are Won 211,000 and Won 267,000,
respectively, for 2001 and 2002. Each stock option agreement
also provides for adjustments to the amount and exercise price
of the shares in cases where the share price may become diluted
as a result of issuance of new shares, stock dividends or
mergers. The officers may exercise their options during a
two-year period starting from March 2004 (for shares granted in
2001) or from March 2005 (for shares granted in 2002). The board
of directors may, by resolution, cancel any directors or
officers stock options under certain circumstances. In
2003, none of our directors and officers were granted options to
purchase our common shares.

The following table shows the share allotment for
the directors under our 2001, 2002 and 2003 stock option
programs.

|               |       |          |                  |                           |  |           |        |        |  |           |        |        |  |  |   |   |  |  |   |   | 
|-------------- | ----- | -------- | ---------------- | ------------------------- |  | --------- | ------ | ------ |  | --------- | ------ | ------ |  |  | - | - |  |  | - | - | 
|               |       |          |                  |                           |  |          
|               |       |          |                  | Number of Shares Allotted |  | Number of
|               |       |          |                  |                           |  | Options  
|Name           |       | Position |                  | 2001                      |  | 2002      |        | 2003   |  | Exercised
|               |       |          |                  |                           |  |           |        |        |  |          
|Jung Nam Cho   |       |          | Director         |                           |  |           | 7,750  |        |  |           | 6,150  |        |  |  | 0 |   |  |  | 0 |  
|Shin Bae Kim   |       |          | Director         |                           |  |           | 0      |        |  |           | 1,650  |        |  |  | 0 |   |  |  | 0 |  
|Young Jin Kim  |       |          | Director         |                           |  |           | 0      |        |  |           | 790    |        |  |  | 0 |   |  |  | 0 |  
|Sung Min Ha    |       |          | Director         |                           |  |           | 0      |        |  |           | 690    |        |  |  | 0 |   |  |  | 0 |  
|Sang Koo Nam   |       |          | Outside Director |                           |  |           | 1,000  |        |  |           | 1,000  |        |  |  | 0 |   |  |  | 0 |  
|Sang C. Lee    |       |          | Outside Director |                           |  |           | 1,000  |        |  |           | 1,000  |        |  |  | 0 |   |  |  | 0 |  
|Jae Seung Yoon |       |          | Outside Director |                           |  |           | 0      |        |  |           | 1,000  |        |  |  | 0 |   |  |  | 0 |  
|Yong Woon Kim  |       |          | Outside Director |                           |  |           | 0      |        |  |           | 0      |        |  |  | 0 |   |  |  | 0 |  
|Other Officers |       |          |                  |                           |  |           | 34,070 |        |  |           | 53,450 |        |  |  | 0 |   |  |  | 0 |  
|               |       |          |                  |                           |  |           |        |        |  |           |        |        |  |  |   |   |  |  |   |  
|               | Total |          |                  |                           |  |           |        | 43,820 |  |           |        | 65,730 |  |  |   | 0 |  |  |   | 0 | 
|               |       |          |                  |                           |  |           |        |        |  |           |        |        |  |  |   |   |  |  |   |  

BOARD PRACTICES

Termination of Directors, Services

Directors are given a retirement and severance
payment upon termination of employment in accordance with our
internal regulations on severance payments. Upon retirement,
directors who have made significant contributions to our company
during their term may be appointed to serve either as an advisor
to us or as an officer of an affiliate company.

Audit Committee

Under relevant Korean laws and our articles of
incorporation, we are required to have an audit committee under
the board of directors. The committee is composed of at least
three members, two-third of whom must

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be outside directors. They are appointed annually
by a resolution of the board of directors. They are required to:




| |   |                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------
| |  | examine the agenda for the general meeting of
    shareholders;                                                                         
|
| |  | 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.                                                                 

In addition, the audit committee must appoint
independent certified public accountants to examine our
financial statements. An audit and review by certified public
accountants of our financial statements is required for the
purposes of a securities report. Listed companies must provide
such report on an annual, semi-annual and quarterly basis to the
Financial Supervisory Commission of Korea and the Korea Stock
Exchange.

Our audit committee is composed of four outside
directors: Sang Koo Nam, Sang C. Lee, Jae Seung Yoon and Yong
Woon Kim. Although we believe that one or more of the members of
our audit committee satisfy the criteria for audit
committee financial expert prescribed by the Securities
and Exchange Commission, our board of directors has not yet
formally determined that any members of the audit committee
satisfy the SEC criteria for audit committee financial expert.
See Audit Committee Financial Expert.

Outside Director Nomination
Committee

This committee is devoted to recommending outside
directors for the board of directors. The objective of the
committee is to help promote fairness and transparency in the
nomination of candidates for these positions. The board of
directors decide from time to time who will comprise the members
of this committee.

In addition, we have the following committees
that make recommendations to our board of directors.

Capex review committee

This committee is responsible for reviewing our
business plan (including the budget). It also examines major
capital expenditure revisions, and routinely monitors capital
expenditure decisions that have already been executed. The board
of directors decide from time to time who will comprise the
members of this committee.

Compensation review committee

This committee oversees our overall compensation
scheme for the Chief Executive Officer and directors. The
committee consists of three outside directors and is in charge
of reviewing the criteria for and levels of directors
compensation packages and benefits. The board of directors
decide from time to time who will comprise the members of this
committee.

Remuneration

We do not have an independent internal
remuneration committee. Remuneration for the directors and
officers are determined by shareholder resolutions. Severance
allowances for directors are determined by the board of
directors in accordance with our internal regulation on
remuneration of officers, which was also adopted by shareholder
resolutions and provides for monthly salary, performance bonus,
severance payment and fringe benefits. The amount of performance
bonuses is independently decided by a resolution of the board of
directors. The regulation on payment of remuneration to company
officers also provides for a special contribution bonus upon
retirement, which provide for additional compensation in
addition to the basic severance package to any officer or
director who during his term of service makes special
contributions to the company. We may also reimburse our outside
directors for expenses they incurred in performance of their
services. See  Compensation of Directors and
Officers. We are currently receiving consulting services
on creating a remuneration committee under the Board of
Directors.

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EMPLOYEES

The following table sets forth the numbers of our
regular employees, temporary employees and total employees as of
the dates indicated:

|                     |  |           |       |           |  |       |       |     |  |  |       | 
|-------------------- |  | --------- | ----- | --------- |  | ----- | ----- | --- |  |  | ----- | 
|                     |  | Regular   |       | Temporary |  |      
|                     |  | Employees |       | Employees |  | Total
|                     |  |           |       |           |  |      
|December 31, 2001    |  |           | 4,587 | (1)       |  |       | 1,106 | (2) |  |  | 5,693 | 
|December 31, 2002    |  |           | 4,641 |           |  |       | 1,600 |     |  |  | 6,241 | 
|December 31, 2003    |  |           | 5,447 |           |  |       | 1,474 |     |  |  | 6,921 | 
|As of April 30, 2004 |  |           | 5,450 |           |  |       | 836   |     |  |  | 6,286 | 



---



|    |                                                                       
|--- | ----------------------------------------------------------------------
|(1) | Includes 1,002 regular Shinsegi employees as of
    December 31, 2001.
|   
|(2) | Includes 330 temporary Shinsegi employees as of
    December 31, 2001.

Throughout 2000, we experienced voluntary and
involuntary termination of a large number of temporary employees
in non-core business departments such as the customer hotline
center. The number of our regular employees increased in 2001
and 2002 due to periodic hiring of new employees.

The following table sets forth numbers of our
regular employees and temporary employees by categories of
activity as of April 30, 2004:

|                    |  |           |       |            |  |          |       |         |  |              |     |       |  |  |       |  |  |  |     |  |  |  |       | 
|------------------- |  | --------- | ----- | ---------- |  | -------- | ----- | ------- |  | ------------ | --- | ----- |  |  | ----- |  |  |  | --- |  |  |  | ----- | 
|                    |  | Marketing |       | Production |  | Research |       | Support |  | New Business |     | Total
|                    |  |           |       |            |  |          |       |         |  |              |     |      
|Regular Employees   |  |           | 1,758 |            |  |          | 1,713 |         |  |              | 906 |       |  |  | 824   |  |  |  | 249 |  |  |  | 5,450 | 
|Temporary Employees |  |           | 292   |            |  |          | 271   |         |  |              | 62  |       |  |  | 195   |  |  |  | 16  |  |  |  | 836   | 
|                    |  |           |       |            |  |          |       |         |  |              |     |       |  |  |       |  |  |  |     |  |  |  |       | 
|Total               |  |           | 2,050 |            |  |          | 1,984 |         |  |              | 968 |       |  |  | 1,019 |  |  |  | 265 |  |  |  | 6,286 | 
|                    |  |           |       |            |  |          |       |         |  |              |     |       |  |  |       |  |  |  |     |  |  |  |       | 

As of December 31, 2003, we had a company
union comprised of 2,900 regular employees. We have never
experienced a work stoppage of a serious nature. Every two
years, the union and management negotiate and enter into a new
collective bargaining agreement that has a two-year duration.
Our wage negotiations completed in November 2003 resulted in an
average wage rate increase of 7.0% for 2003 from 2002. Our wage
negotiations completed in May 2004 resulted in no increase in
wage rates for 2004.

Since April 1999, we have been required to
contribute an amount equal to 4.5% of employee wages toward a
national pension plan. Employees are eligible to participate in
an employee stock ownership association. We are not required to,
and we do not, make any contributions to the employee stock
ownership association, although through the Employee Welfare
Fund we subsidize the employee stock ownership association by
providing low interest rate loans to employees desiring to
purchase stock through the plan in the case of a capitalization
by the association. As of December 31, 2003, the employee
stock ownership association owned approximately 0.6% of our
issued common stock.

We are required to pay a severance amount to
eligible employees who voluntarily or involuntarily cease
working for us, including through retirement. This severance
amount is based upon the employees length of service with
us and the employees salary level at the time of
severance. As of December 31, 2003, the accrued and unpaid
retired and severance benefits of Won 208.6 billion for all
of our employees are reflected in our non-consolidated financial
statements as a liability, and a portion of our retirement and
severance liabilities, totaling Won 138.8 billion was
funded. Under Korean laws and regulations, we are prevented from
involuntarily terminating a full-time employee except under
certain limited circumstances. In September 2002, we entered
into am employment stabilization agreement with the union. Among
other things, this agreement provides for a one-year guarantee
of the same wage level in the event that we reorganize a
department into a separate entity or we outsource an employee to
a separate entity where the wage is lower. If the new entity is
our subsidiary, of which we own at least a 50% stake, employment
is guaranteed for three years.

We are also required by law to contribute up to
5.0% of our annual earnings before tax for employee welfare. We
contributed 3% of our revenues annually for years prior to 2002.
Beginning in 2002, we have

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negotiated an exact amount each year. In 2002, we
contributed Won 37.4 billion. We have not yet made any
contributions in 2003, as the contribution amount has not been
negotiated yet.


We consider our relations with our employees to
be good.

SHARE OWNERSHIP

The following table sets forth the share
ownership by our standing and non-standing directors as of
April 30, 2004:

|                       |  |                                                                             |  |           |       |               |  |         |   |         |  |  |      |  |  |  |        | 
|---------------------- |  | --------------------------------------------------------------------------- |  | --------- | ----- | ------------- |  | ------- | - | ------- |  |  | ---- |  |  |  | ------ | 
|                       |  |                                                                             |  | Number of |       | Percentage of |  | Special |   |        
|                       |  |                                                                             |  | Shares    |       | Total Shares  |  | Voting  |   |        
|Name                   |  | Position                                                                    |  | Owned     |       | Outstanding   |  | Rights  |   | Options
|                       |  |                                                                             |  |           |       |               |  |         |   |        
|Standing Directors     |  |                                                                             |  |           |       |               |  |         |   |         |  |  |      |  |  |  |        | 
|Jung Nam Cho           |  | Vice-Chairman and Representative Director                                   |  |           |      |               |  |         |  |         |  |  | None |  |  |  | 16,500 | 
|Shin Bae Kim           |  | CEO and Representative Director                                             |  |           | 1,270 |               |  |         |  |         |  |  | None |  |  |  | 1,650  | 
|Young Jin Kim          |  | Executive Vice-President                                                    |  |           |      |               |  |         |  |         |  |  | None |  |  |  | 790    | 
|Sung Min Ha            |  | Chief Financial Officer and Head of Strategic
    Planning Divisional Group |  |           | 738   |               |  |         |  |         |  |  | None |  |  |  | 690    | 
|Non-Standing Directors |  |                                                                             |  |           |       |               |  |         |   |         |  |  |      |  |  |  |        | 
|Sang Koo Nam           |  | Outside Director                                                            |  |           |      |               |  |         |  |         |  |  | None |  |  |  | 2,500  | 
|Sang C. Lee            |  | Outside Director                                                            |  |           |      |               |  |         |  |         |  |  | None |  |  |  | 2,500  | 
|Jae Seung Yoon         |  | Outside Director                                                            |  |           | 200   |               |  |         | 0 | *       |  |  | None |  |  |  | 1,000  | 
|Yong Woon Kim          |  | Outside Director                                                            |  |           |      |               |  |         |  |         |  |  | None |  |  |  | 0      | 



---



|  |               
|- | --------------
|* | Less than 1.0%






|        |                                                      
|------- | -----------------------------------------------------
|Item. 7 | Major Shareholders and Related Party
    Transactions

MAJOR SHAREHOLDERS

As of December 31, 2003, approximately 53%
of our issued shares were held in Korea by approximately
20,000 shareholders. The following table sets forth certain
information as of the close of our shareholders registry
on December 31, 2003 with respect to any person known to us
to be the beneficial owner of more than 5.0% of the shares of
our common stock and with respect to the total amount of such
shares owned by our employees and our officers and directors, as
a group:

|                        |                             |               |            |            |  |              |       |        |   |  |       |        |  
|----------------------- | --------------------------- | ------------- | ---------- | ---------- |  | ------------ | ----- | ------ | - |  | ----- | ------ | -
|                        |                             |               |            | Percentage |  |             
|                        |                             |               |            | Total      |  | Percentage  
|                        |                             |               |            | Shares     |  | Total Shares
|Shareholder/Category    |                             | Number Shares |            | Issued     |  | Outstanding 
|                        |                             |               |            |            |  |             
|Domestic Shareholders   |                             |               |            |            |  |              |       |        |   |  |       |       
|                        | SK Group(1)                 |               |            | 20,239,225 |  |              |       | 24.60  | % |  |       | 27.49  | %
|                        | POSCO                       |               |            | 4,098,496  |  |              |       | 4.98   |   |  |       | 5.57   |  
|                        | Employees(2)                |               |            | 478,657    |  |              |       | 0.58   |   |  |       | 0.65   |  
|                        | Treasury shares(3)          |               |            | 8,662,403  |  |              |       | 10.53  |   |  |       | N/A    |  
|                        | Officers and Directors(4)   |               |            | 2,180      |  |              |       |       |   |  |       |       |  
|                        | Other Domestic Shareholders |               |            | 10,129,367 |  |              |       | 12.31  |   |  |       | 13.76  |  
|Foreign Shareholders(5) |                             |               | 38,666,383 |            |  |              | 47.00 | %      |   |  | 52.53 | %     
|                        |                             |               |            |            |  |              |       |        |   |  |       |       
|                        | Total Issued Shares         |               |            | 82,276,711 |  |              |       | 100.00 | % |  |       | 100.00 | %
|                        |                             |               |            |            |  |              |       |        |   |  |       |       

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---



|    |                                                                                         
|--- | ----------------------------------------------------------------------------------------
|(1) | The SK Groups ownership interest consists
    of the following as of December 31, 2003:

|                                        |  |           |            |               |  |               |       |   |  |  |       |  
|--------------------------------------- |  | --------- | ---------- | ------------- |  | ------------- | ----- | - |  |  | ----- | -
|                                        |  |           |            | Percentage of |  | Percentage of
|                                        |  | Number of |            | Total Shares  |  | Total Shares 
|SK Group Member                         |  | Shares    |            | Issued        |  | Outstanding  
|                                        |  |           |            |               |  |              
|SK Corporation                          |  |           | 17,663,127 |               |  |               | 21.47 | % |  |  | 23.99 | %
|SK Securities Co., Ltd.                 |  |           | 4,178      |               |  |               | 0.01  |   |  |  | 0.01  |  
|SK Networks*                            |  |           | 2,515,943  |               |  |               | 3.06  |   |  |  | 3.42  |  
|SK Life Insurance Co., Ltd.             |  |           | 9,700      |               |  |               | 0.01  |   |  |  | 0.01  |  
|SK Investment Trust Management Co. Ltd. |  |           | 46,277     |               |  |               | 0.06  |   |  |  | 0.06  |  
|                                        |  |           |            |               |  |               |       |   |  |  |       |  
|Total                                   |  |           | 20,239,225 |               |  |               | 24.60 | % |  |  | 27.49 | %
|                                        |  |           |            |               |  |               |       |   |  |  |       |  





| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| | * | SK Networks sold 418,000 shares of January
    2004 and currently owns 2,097,942 shares.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The SK Group is a group of affiliated entities.
    As of December 31, 2003, the ownership interest among the
    SK Group were, among others: SK Corporation owned 21.47% of SK
    Telecom Co., Ltd., 50.36% of SK Networks, 47.66% of SKC and
    72.13% of SK Shipping Co., Ltd. SK Networks owned 2.55% of
    SK Telecom Co., Ltd., 17.71% of SK Shipping, 10.5% of SK
    Computer & Communications Co., Ltd., and 14.47% of SK
    Securities Co., Ltd. SK Chemicals owned 3.28% of SK Corporation,
    40.67% of SK Engineering and Construction. SKC owns 6.2% of
    SK Chemicals and 10.16% of SK Shipping Co., Ltd. SK Engineering
    and Construction owns 3.28% of SK Corporation and 14.49% of SK
    Securities Co., Ltd. SK Shipping Co., Ltd. owns 30.99% of SK
    Engineering and Construction. SK Computer &
    Communications Co., Ltd. owns 8.63% of SK Corporation and 12.41%
    of SK Securities Co., Ltd. We own 30.0% of SK
    Computer & Communications Co., Ltd.



|    |                                                                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Represents shares owned by our employee stock
    ownership association. See Information on the
    Company  Employees.                                                                                                                               
|   
|(3) | Treasury shares do not have any voting rights.                                                                                                                                                                                                           
|   
|(4) | Less than 0.01%.                                                                                                                                                                                                                                         
|   
|(5) | Includes 5,244,450 shares of our common
    stock or approximately 6.26% of our issued common stock,
    represented by American Depositary Shares (ADSs) held by Momenta
    (Cayman), a special purpose vehicle incorporated in the Cayman
    Islands.

After giving effect to the 10-for-1 stock split
of our common shares which became effective on April 21,
2000, the following table sets forth significant changes in the
percentage ownership held by our major shareholders during the
past three years:

|                  |                                |                           |       |       |  |      |       |       |  |  |       |       | 
|----------------- | ------------------------------ | ------------------------- | ----- | ----- |  | ---- | ----- | ----- |  |  | ----- | ----- | 
|                  |                                |                          
|                  |                                | As of December 31,       
|                  |                                |                          
|Shareholder       |                                | 2001                      |       | 2002  |  | 2003
|                  |                                |                           |       |       |  |     
|                  |                                |                          
|                  |                                | (As a percentage of total
|                  |                                | issued shares)(1)        
|SK Group          |                                |                           | 34.16 | %     |  |      | 24.43 | %     |  |  | 24.60 | %    
|                  | SK Corporation(2)              |                           |       | 26.81 |  |      |       | 19.81 |  |  |       | 21.47 | 
|                  | SK Life Insurance              |                           |       | 0.01  |  |      |       | 0.00  |  |  |       | 0.01  | 
|                  | SK Investment Trust Management |                           |       | 0.04  |  |      |       | 0.07  |  |  |       | 0.06  | 
|                  | SK Networks(3)                 |                           |       | 7.29  |  |      |       | 4.53  |  |  |       | 3.06  | 
|KT Corporation(4) |                                |                           | 10.39 |       |  |      | 9.27  |       |  |  | 0.00  |      
|POSCO(5)          |                                |                           | 6.50  |       |  |      | 6.50  |       |  |  | 4.98  |      



---



|    |                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes shares held in treasury of 6,159,266,
    4,852,972 and 8,662,403 as of December 31, 2001, 2002 and
    2003, respectively. The treasury share amount as of
    December 31, 2002 excludes 4,465,635 shares of the
    Companys common stock acquired from KT Corporation
    pursuant to a stock swap on December 30, 2002.

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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | On July 25, 2002, SK Corporation sold our
    ADSs representing 5,117,500 shares of our common stock to
    Momenta (Cayman), which in turn sold bonds exchangeable
    initially into such ADSs. On the same day, SK Corporation sold
    1,122,223 shares of our common stock represented by ADRs to
    foreign investors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   
|(3) | On January 4, 2002, SK Networks issued bonds
    exchangeable into an aggregate of 1,730,104 shares of our
    common stock. On January 31, 2002, bank trust funds
    controlled by us purchased from SK Networks an aggregate of
    1,367,180 shares of our common stock, or approximately 1.5%
    of our outstanding common stock. On July 25, 2002, SK
    Networks sold 1,100,000 shares of our common stock
    represented by ADRs to foreign investors. SK Networks sold
    418,000 shares in January 2004 and currently owns
    2,097,943 shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(4) | On April 15, 2002, KT Corporation sold an
    aggregate of 1,000,000 shares, or approximately 1.1%, of
    our outstanding common stock to investors. On December 30,
    2002, KT Corporation sold an aggregate of 4,457,635 shares,
    on approximately 5.0%, of our outstanding common stock to us. On
    January 10, 2003, KT Corporation sold its remaining stake
    in us, an aggregate of 3,809,288 shares, or approximately
    4.3%, of our outstanding common stock to us. On May 23,
    2002, we acquired a 9.6% equity interest (29,808,333 shares
    of common stock) in KT Corporation for Won 1,609 billion.
    Pursuant to the terms of an agreement between us and KT
    Corporation dated November 14, 2002, we sold all of our
    shares of KT Corporation. Under the terms of the agreement,
    we exchanged 29,808,333 shares of KT Corporations
    common stock for 8,266,923 shares of our common stock and
    settled the difference in the price in cash on December 30,
    2002 and January 10, 2003. The exchange was made at Won
    50,900 per share of KT Corporations common stock
    and Won 224,000 per share of our common stock.
|   
|(5) | POSCO acquired these shares in connection with
    our acquisition of a 27.7% equity interest in Shinsegi.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

Other than companies in the SK Group and POSCO,
no other persons or entities known by us to be acting in
concert, directly or indirectly, jointly or severally, own in
excess of 3.0% of our total shares outstanding or exercise
control or could exercise control over our business.

On January 4, 2002, in transactions exempt
from registration under the U.S. Securities Act,
SK Networks issued bonds exchangeable into an aggregate of
1,730,104 shares of our common stock, subject to
anti-dilution adjustments. These bonds may be exchanged at the
option of the bondholders at any time from April 4, 2002
through December 4, 2004. In connection with the issuance
of these bonds, SK Networks has deposited 1,730,104 shares
of our common stock with the Korea Securities Depository. The
title to these shares belongs to SK Networks but, under
applicable Korean laws and the deposit agreement between
SK Networks and Korea Securities Depository dated
December 21, 2001, these shares are subject to restrictions
on transfer except upon exercise or repayment of the bonds. As
of December 31, 2003, 1,519,997 shares have been
exchanged.

On January 31, 2002, bank trust funds
controlled by us purchased from SK Networks an aggregate of
1,367,180 shares of our common stock, or approximately 1.5%
of our outstanding common stock.

On July 25, 2002, in transactions exempt
from registration under the U.S. Securities Act,
SK Corporation sold our ADSs representing
5,117,500 shares of our common stock to Momenta (Cayman), a
special purpose vehicle incorporated in the Cayman Islands,
which in turn sold bonds exchangeable initially into such ADSs.
The 5,244,450 shares of our common stock, or approximately
6.26% of our issued common stock, held by Momenta (Cayman) are
reflected on the foreign shareholders line in the first table
under this Major Shareholders section. Pursuant to
the terms and conditions of such bonds, if investors do not
otherwise exchange the bonds for our ADSs, all or a portion of
such ADSs may ultimately be returned to SK Corporation. On
the same day, SK Corporation and SK Networks each sold 1,122,223
and 1,100,000 shares, respectively, of our common stock
represented by ADRs to foreign investors.

Although no announcements have been made, SK
Corporation and SK Networks may dispose of additional shares of
our common stock in one or more transactions. As of
December 31, 2003, SK Corporation held 21.5% of our shares
of common stock. For a description of our foreign ownership
limitation, see Key Information  Risk
Factors  If SK Corporation breaches the foreign
ownership limitations on SK Telecom, it may result in a change
of control of us. and Information on the
Company  Law and Regulation 

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Foreign Ownership and Investment Restrictions and
Requirements. As a result of significant financial
difficulties and prosecutors discovery of alleged
fraudulent accounting practices at SK Networks, SK Networks
sold 418,000 of the shares it owns in SK Telecom in January
2004. As a result of such sale, SK Networks currently owns
2.6% of our shares. In the event that either SK Corporation or
SK Networks announces plans of a sale of our shares, we expect
to be able to discuss the details of such sale with them in
advance, and will endeavor to minimize any adverse effects on
our share prices as a result of such sale.


There is currently a 49% limit on the aggregate
foreign ownership of our issued shares. As of December 31,
2003, SK Corporation owns 17,663,127 shares of our common
stock, or approximately 21.5%, of our issued shares. As of
December 31, 2003, a foreign investment fund and its
related parties collectively held a 14.99% stake in SK
Corporation. Under a newly adopted amendment to the
Telecommunications Business Law, which became effective on
May 9, 2004, a Korean entity, such as SK Corporation, is
deemed to be a foreign entity if its largest shareholder
(determined by aggregating the shareholdings of such shareholder
and its related parties) is a foreigner and such shareholder
(together with the shareholdings of its related parties) holds
15% or more of the outstanding voting stock of the Korean
entity. Thus, effective from May 9, 2004, if the foreign
investment fund and its related parties increase their
shareholdings in SK Corporation to 15% or more and such foreign
investment fund and its related parties collectively constitute
the largest shareholder of SK Corporation, SK Corporation will
be considered a foreign shareholder of SK Telecom, and its
shareholding in SK Telecom would be included in the calculation
of the aggregate foreign shareholding of SK Telecom.

If SK Corporations shareholding in SK
Telecom is included in the calculation of the aggregate foreign
shareholding of SK Telecom, then the aggregate foreign
shareholding in SK Telecom assuming foreign ownership level as
of December 31, 2003 (which we believe was 47.0%), would
reach 68.5%, exceeding the 49% ceiling on foreign shareholding.
If the aggregate foreign shareholding limit in SK Telecom is
exceeded, the MIC may issue a corrective order to SK Telecom,
the breaching shareholder (including SK Corporation if the
breach is caused by an increase in foreign ownership of SK
Corporation) and the foreign investment fund and its related
parties who own in the aggregate 15% or more of SK Corporation.
Furthermore, SK Corporation may not exercise its voting
rights with respect to the shares held in excess of the 49%
ceiling, which may result in a change in control of us. In
addition, the MIC may refuse to grant us licenses or permits
necessary for entering into new telecommunications businesses
until the aggregate foreign shareholding of SK Telecom is
reduced to below 49%.

If a corrective order is issued to us by the MIC
arising from the violation of the foregoing foreign ownership
limit, and we do not comply within the prescribed period under
such corrective order, the MIC may (1) suspend all or part
of our business, or (2) if the suspension of business is
deemed to result in significant inconvenience to our customers
or be detrimental to the public interest, impose a one-time
administrative penalty of up to 3% of our sales revenues. The
amendment to the Telecommunications Business Law in May 2004
also authorizes the MIC to assess monetary penalties of up to
0.3% of the purchase price of the shares for each day the
corrective order is not complied with, as well as a prison term
of up to one year and a penalty of Won 50 million. See
Key Information  Risk Factors  If SK
Corporation breaches the foreign ownership limitations on SK
Telecom, it may result in a change of control of us. and
Information on the Company  Law and
Regulation  Foreign Ownership and Investment
Restrictions and Requirements.

On August 11, 2003 we concluded a stock
buyback program which we commenced on June 30, 2003. We
acquired a total of 2,544,600 shares of our outstanding
common stock, all of which were cancelled on August 20,
2003. The total purchase price for the stock buyback was Won
524.4 billion (or an average of approximately Won
206,078.6 per share), with the price per share ranging from
Won 192,000 (on July 24, 2003) to Won 216,000 (on
July 15-16, 2003). As a result of the stock buyback and
subsequent cancellation of shares, the total number of our
outstanding common stock declined from 84,821,311 to 82,276,711
as of December 31, 2003.

Other than as disclosed herein, there are no
other arrangements, to the best of our knowledge, which would
result in a material change in the control of us. Our major
shareholders do not have different voting rights.

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##### Table of Contents



CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS

SK Networks

We are a party to several contracts with SK
Networks, including:



| |   |                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A series of real property sale and purchase
    contracts in November 2000 pursuant to which we purchased from
    SK Networks the building and land where our new corporate
    headquarters will be located. The aggregate purchase price was
    Won 114.4 billion; and                          
|
| |  | A series of sale and purchase agreements pursuant
    to which we and our subsidiary, SK Teletech, sell handsets to SK
    Networks. The aggregate sales to SK Networks pursuant to these
    contracts were Won 272.5 billion in 2001, Won
    381.9 billion in 2002 and Won 481.2 billion in 2003.

On August 30, 2002, SK Networks acquired
from Korea Thrunet Co., Ltd. certain fiber-optic cable assets.
These assets constitute approximately 39% of our current leased
line needs in 2003 and we currently lease all of such assets
from SK Networks. If SK Networks is required to sell off its
leased line business, this may result in a disruption of the
service provided to us. However, we currently believe that it is
not likely that the creditors will require SK Networks to sell
this business unit. In 2003, KT and SK Networks provided
approximately 33% and 39%, respectively, of our leased lines. In
order to reduce our dependence on the fixed network lines of our
competitor, KT, we are considering leasing a majority of our
fixed lines from SK Networks in the future.

SK Networks also serves as our distributor of
handsets to network of dealers. Samsung Electronics Co. Ltd., LG
Electronics Inc, Motorola Korea, Inc. and Pantech &
Curitel suspended their supply of handsets to SK Networks on
April 7, 2003. In May 2003, all suppliers resumed their
supply of handsets on the condition that payment on their mobile
phones be made in cash within one week of delivery. Previously,
SK Networks issued three-month promissory notes for payment to
handset suppliers.

As of December 31, 2003, we had Won
107.8 billion of accounts receivables from SK Networks
primarily in connection with handset sales of our subsidiary, SK
Teletech. As of the same date, we had Won 63.6 billion of
accounts payable to SK Networks, mainly consisting of leased
line charges and commissions to dealers owned by SK Networks.
For more information on SK Networks, see Key
Information  Risk Factors  Financial
difficulties and charges of financial statement irregularities
at our affiliate, SK Networks (formerly SK Global), may have a
material adverse impact on our business and financial
condition.

Other Related Parties

In December 2000, we entered into an agreement
with SK Corporation for the sale and leaseback of our head
office, located at 99 Seorin-dong, Chongro-gu, Seoul, with a
lease period from December 19, 2000 through March 31,
2004. Rent expense for the period from December 19, 2000 to
December 31, 2000 was approximately Won 417 million.
Under the lease agreement, in January 2001, we deposited Won
80.1 billion in refundable leasehold key money with SK
Corporation. In 2003, we extended our contract through
February 28, 2005 by depositing an additional Won
23.6 billion in refundable leasehold key money. Although
there are no monthly rent payments, we pay a monthly management
fee of Won 366.8 million. SK Corporation is obligated
to refund the deposit, without interest, upon the expiration of
the lease. As a result of these transactions, land and buildings
with a net book value of Won 170.5 billion were removed
from our balance sheet in 2000 and we recognized a loss of Won
5.9 billion on the disposal.

On July 22, 2003, we acquired
2,481,310 shares of POSCO common stock held by SK
Corporation at a price of Won 134,000 per share in
accordance with a resolution of our board of directors dated
July 22, 2003. We decided to purchase the shares for
strategic reasons in order to address overhang concerns arising
from POSCOs ownership of our shares. As of
December 31, 2003, POSCO owned 5.0% of our shares.

We are party to several contracts with SK
Engineering and Construction related to the construction of our
new corporate headquarters in Seoul. We expect that construction
of our new headquarters will be

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completed by the end of 2004. The total contract
price for the demolition of existing buildings on the site and
construction of the new building is estimated to be Won
161 billion.


We are party to an agreement with SKC&C
pursuant to which SKC&C provides us with information
technology services. This agreement will expire on
December 31, 2009 but may be terminated by us at any time
without cause on six months prior notice. The agreement
provides that the parties will agree annually on the specific
services to be provided and the monthly fees to be paid by us.
We also enter into agreements with SKC&C from time to time
for specific information technology-related projects. The
aggregate fees we paid to SKC&C for information technology
services amounted to Won 221.1 billion for 2001, Won
231.5 billion for 2002 and Won 284.2 billion for 2003.
We also purchase various information technology-related
equipment from SKC&C from time to time. The total amount of
such purchases was Won 108.4 billion for 2001,
Won 197.3 billion for 2002 and Won 182.8 billion
for 2003.

We are part of the SK Group of affiliated
companies. See Major Shareholders and Related Party
Transactions  Major Shareholders. As disclosed
in note 23 of our consolidated financial statements, we had
related party transactions with a number of affiliated companies
of the SK Group during the year ended December 31, 2003. In
October 2003, the FTC ordered us to pay a fine of Won
4.1 billion in connection with our payment of
advertisements on behalf of certain companies in the SK Group.
We paid the fine in December 2003.

The following table summarizes the amount of
outstanding loans, including guarantees of any kind, made by us
or our subsidiaries to or for the benefit of related parties
from January 1, 2001 through December 31, 2003:

|                                                            |  |          |               |                   |  |                                     |  |                                     |  |                             |  |  |  |                                                                                                     |  |  |  |                                                                                                                                                                                                         
|----------------------------------------------------------- |  | -------- | ------------- | ----------------- |  | ----------------------------------- |  | ----------------------------------- |  | --------------------------- |  |  |  | --------------------------------------------------------------------------------------------------- |  |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                            |  |          |               | Total Outstanding |  | Largest Amount                      |  |                                     |  | Nature of the Loan and the 
|                                                            |  | Date of  |               | Amount as of      |  | Outstanding During                  |  | Interest                            |  | Transaction in Which it was
|Parties/Relationship                                        |  | Contract |               | December 31, 2003 |  | the Period                          |  | Rate                                |  | Incurred                   
|                                                            |  |          |               |                   |  |                                     |  |                                     |  |                            
|DSS Mobile Communications, Ltd. (Joint Venture
    Company) |  |          | Sept. 2, 1994 |                   |  | US$15,733,922(Won 18.9  billion)(1) |  | US$15,733,922(Won 18.9  billion)(1) |  |                             |  |  |  | Guarantee of loan from Sumitomo Bank in our
    capacity as shareholder and promoter of DSS Mobile.
|                                                            |  |          |               |                   |  |                                     |  |                                     |  |                             |  |  |  |                                                                                                     |  |  |  | SK Telecom paid DSS Mobile Communications
    obligation to Sumitomo Bank in 2001. SK Telecom has
    provided 100% allowance for the entire corresponding amount owed
    by DSS Mobile to SK Telecom.



---



|    |                                                                                 
|--- | --------------------------------------------------------------------------------
|(1) | Based on an exchange rate of US$1.00 to Won
    1,192.0 as of December 31, 2003.

All other loans were made in the ordinary course
of business, on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for
comparable transactions with unrelated persons and did not
involve more than the normal risks of non-collection or present
other unfavorable features.






|        |                      
|------- | ---------------------
|Item. 8 | Financial Information

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL
INFORMATION

See Financial Statements and
pages F-1 through F-68.

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LEGAL PROCEEDINGS

FTC Proceedings

On September 10, 2001, the FTC ordered us to
pay a fine of Won 476 million in connection with certain
alliance agreements we entered into with several restaurants and
other service-related companies. Under these agreements,
restaurants operated by these companies provided certain
discounts and other benefits to subscribers under some of our
service plans. The agreements contained provisions which in
effect prohibited these companies from entering into similar
arrangements with other companies without obtaining our prior
consent. The FTC took the position that such provisions violated
the Fair Trade Act and ordered us to pay the fine. We paid the
fine in full on November 15, 2001 and revised our
agreements to comply with the Fair Trade Act.

In addition, also on September 10, 2001, the
FTC ordered us to pay a fine of Won 100 million in
connection with the sale arrangements for certain wireless
handsets. SK Networks does not charge interest to our authorized
dealers who sell handsets acquired from SK Networks to our
subscribers under the no-interest installment plans, while
charging interest under installment plans on handsets supplied
by unaffiliated suppliers. The FTC views such practices as an
unfair trade practice. We disagree with the FTCs position
and filed a lawsuit for an invalidation of the order on
October 16, 2001. The Won 100 million fine was paid in
full on November 15, 2001. On October 10, 2002, the
Seoul High Court ruled in our favor. The FTC appealed the
decision on November 20, 2002 and the appeal is currently
pending before the Supreme Court.

On July 22, 2002, members of the SK Group
(including SK Telecom, SK Corporation and SK Networks)
concurrently with several other large Korean conglomerates,
received a notice from the FTC requesting that these companies
submit certain information, including financial statements and
information about related party transactions, to the FTC by
August 3, 2002. This deadline was extended to
August 9, 2002, and we provided the requested information
to the FTC on that date. After concluding its investigation, on
October 29, 2002, the FTC ordered us to pay a fine of Won
175 million for violating the disclosure rules concerning
related party transactions, which we paid in full.

On November 7, 2002, the FTC ordered us to
pay a fine of Won 1.04 billion in connection with certain
misleading advertisements relating to Moneta, our mobile credit
card. We, along with LG Telecom and KT Freetel, advertised
that there would be a Won 100,000 to Won 300,000 discount on the
purchase of wireless handsets when paid with a mobile credit
card, such as Moneta. The advertisements were found to be
misleading by the FTC because the FTC concluded that we did not
duly inform the subscribers of an annual interest rate up to 9%
to be accrued on the credit amount. KT Freetel and LG Telecom
were also fined Won 672 million and Won 384 million,
respectively, for similar violations. The FTC also ordered us to
make a public announcement of such violation.

In October 2003, the FTC ordered us, SK
Corporation and SKC&C to pay fines of Won 1.0. billion,
Won 0.9 billion, Won 0.9 billion, respectively,
in connection with loans extended to SK Life. FTC charged that
the interest on the loans was below market-price. We paid the
fine in December 2003. However, we have filed an appeal, as we
believe that the interest on the loans was not below the
interest rates customarily charged in the market. The appeal is
currently pending.

In October 2003, the FTC ordered us to pay a fine
of Won 4.1 billion in connection with our payment of
advertisements on behalf of certain companies in the SK Group.
We paid the fine in December 2003.

In March 2004, the FTC ordered us to pay a fine
of Won 228 million for certain allegedly misleading
advertisements made by us with respect to our competition and
the nature of our services. LG Telecom and KT Freetel were also
fined in connection with related offenses.

MIC Proceedings

In March 2002, the MIC indicated its belief that
certain incentive payments made to wireless handset dealers by
us and other wireless network service providers were being
passed on to purchasers of wireless handsets and therefore
constituted improper handset subsidies. Consequently, beginning
in April 2002, we

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eliminated such incentives, and believe that
other wireless network service providers eliminated such
incentives. In May 2002, we, KT Freetel, LG Telecom and KT
Corporation were fined an aggregate of
Won 20.0 billion by the MIC in respect of these
incentive payments. We paid in full a fine of
Won 10.0 billion. See Operating and Financial
Review and Prospects  Overview 
Revenue.


In July 2002 the MIC imposed on us (i) a
total fine of Won 30 million for our and two of our
branches refusal (a fine of Won 10 million for each)
to comply with the MICs request for documents during the
MICs spot investigations of possible handset subsidies,
and (ii) a fine of Won 1 billion for a temporary
stoppage of KT Corporations short messaging service on our
networks for 17 hours without prior notice. We paid the
fine in full in September 2002.

On November 15, 2002, we received an order
from the MIC prohibiting us from signing on new subscribers for
30 days (from November 21, 2002 through
December 20, 2002) for violating MICs handset subsidy
regulation. KT Freetel and LG Telecom were also prohibited from
signing on new subscribers for 20 days.

On March 26, 2003, we were ordered by the
MIC to pay a fine of Won 300 million and to make public
announcements in four major newspapers for violating certain
provisions of the Telecommunications Business Act by not
entering into written contracts with and checking personal
identification of such subscribers for subscription of pre-paid
wireless handsets, which is required to prevent handsets from
being used for criminal purposes. KT Freetel and LG Telecom were
also fined Won 200 million and Won 120 million,
respectively, for the same violations.

In February 2004, the MIC imposed a total fine of
Won 2.0 billion on us in connection with our marketing
efforts related to the number portability system that was
adopted by us in January 2004. The fine was imposed in response
to (i) the adoption of a voice recording identifying our
network upon connection of each outgoing call made on our
network without the consent of our subscribers and
(ii) reverse-marketing calls made between
January 1, 2004 and January 9, 2004 informing our
subscribers of benefits that they would lose by switching to
another operator. We were ordered to make public announcements
of these violations in major newspapers in Korea. In February
2004, the MIC also imposed fines of Won 250 million and
Won 150 million on KT Freetel and LG Telecom,
respectively, for their failure to accept cancellations of
service by certain of their subscribers.

In February 2004, the MIC imposed upon us a fine
of Won 21.7 billion with respect to certain incentive
payments that were deemed by the MIC to constitute improper
handset subsidies. We paid the fine in March 2004. In February
2004, KT Freetel and KT Corporation were also fined Won
7.5 billion and Won 4.1 billion, respectively, in
respect of such incentive payments. We Filed an appeal, but MIC
upheld the fine in April 2004.

In April 2004, the MIC ordered us, KT Freetel, KT
Corp. and LG Telecom, to pay fines of Won 650 million,
Won 170 million, Won 20 million and Won 100
million, respectively, for failing to establish sufficient
safeguards against the execution of telecommunications service
contracts by users using false names. We were found to have
conveyed payment delinquency information to credit rating
companies without confirming that the names on the service
contracts belonged to the actual users of our services. We,
along, with KT Freetel, KT Corp. and LG Telecom,
were ordered to publish the violations in newspapers.

In addition, when the MIC approved the merger of
Shinsegi into SK Telecom in January 2002, the MIC imposed
certain conditions on SK Telecom. The MIC periodically reviews
our compliance with the conditions to our merger with Shinsegi.
On May 25, 2004, a policy advisory committee to the MIC
announced the results of its review and stated that the
committee believed that our market dominance may significantly
restrict competition in the telecommunications market and that
we have violated a merger condition related to our acquisition
of Shinsegi by providing subsidies to handset buyers. The
committee stated that it will recommend that the MIC extend the
post-merger monitoring period by two years until January 2007
and take appropriate corrective measures against us for
providing subsidies to handset buyers. Although the MIC has not
yet made a formal determination, on May 31, 2004, the
Minister of the MIC has stated that MIC intends to impose a
Won 11.9 billion fine on us and extend the post-merger
monitoring period until January 2007. When the MIC

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makes its formal determinations, the MIC, at its
discretion, may take additional actions against us pursuant to
telecommunications related laws and regulations in order to
facilitate fair competition in the telecommunications industry.
The MICs formal decision is expected in early June 2004.
On May 25, 2004, we voluntarily undertook to limit our
market share to 52.3% of the wireless telecommunications market
through the end of 2005, the level of our market share at the
time of the approval of our merger with Shinsegi in January
2002. We can give no assurance that the MIC will not take action
that may have a material adverse effect on our business,
operations and financial condition. See Key
Information  Risk Factors  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.


Former Shinsegi Shareholders
Litigation

Former shareholders of Shinsegi approved the
merger of Shinsegi into SK Telecom on November 16, 2001 at
an extraordinary shareholders meeting. However, 28 former
minority shareholders of Shinsegi, including Jin Kap Park, filed
a lawsuit against Shinsegi with the Seoul District Court in
December 2001 to void the shareholders resolution
approving the merger. In the lawsuit, the plaintiffs argued that
the merger did not meet certain requirements of a small
scale merger under the Korean Commercial Code and that the
merger ratio was unfair and illegal. The Seoul District Court
dismissed the lawsuit on April 25, 2002 on the grounds that
the requirements of a small scale merger as claimed
by the plaintiffs are not required under the correct
interpretation of the Korean Commercial Code and that there is
no evidence supporting the plaintiffs, claim as to the
unfairness of the merger ratio. The plaintiffs appealed the
decision on May 8, 2002, but the High Court denied the
appeal. The case is currently pending in the Supreme Court.

Iridium Litigation

On June 9, 2000, The Chase Manhattan Bank
filed a lawsuit against SK Telecom and certain other defendants
in the U.S. District Court in Delaware. In the lawsuit,
Chase alleged that we and other members of Iridium LLC are
severally obligated to pay Chase certain amounts allegedly due
as a reserve capital call under the limited liability company
agreement of Iridium LLC. The claim arose out of a
US$800 million syndicated loan previously extended to a
subsidiary of Iridium by Chase and other banks and financial
institutions. In the lawsuit, our obligation under the reserve
capital call was alleged to be approximately US$10 million.
On September 5, 2002, we paid US$8.15 million to Chase
to settle the case.

GNI Enterprise Litigation

On October 18, 2002, GNI Enterprise Inc.
filed lawsuits against SK Communications Co. Ltd., our
subsidiary, asserting that the contract for usage of Lycos brand
between GNI Enterprise and SK Communications was effective. SK
Communications believes that any liability that it may be
subject to thereunder will be immaterial. The ultimate outcome
of this lawsuit cannot be determined. In addition, in the
lawsuit filed on November 15, 2002, GNI Enterprise Inc.
asserted that the merger of Netsgo Co., Ltd. into SK
Communications Co., Ltd. was not legitimate. On January 11,
2004, this lawsuit was terminated as GNI Enterprise Inc.
withdrew its claims.

Multinet Litigation

In October 2002, Multinet filed a lawsuit against
the MIC in the Seoul Administrative Court in connection with
MICs allocation to us of the frequency necessary in
connection with our DMB business. Multinet had been previously
granted the right to use this frequency by the MIC, but their
right had been granted on the condition that Multinet would
renounce its right to use the frequency upon implementation of a
DMB business (the extent necessary for the operation of our DMB
business) and that Multinet would comply with any directive of
the MIC to reallocate the frequency. The Seoul Administrative
Court ruled in favor of the MIC in December 2002. Multinet has
filed an appeal with the High Court, and the appeal is currently
pending.

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Except as described above, neither we nor any of
our subsidiaries are involved in any litigation, arbitration or
administrative proceedings relating to claims which may have, or
have had during the twelve months preceding the date hereof, a
significant effect on our financial position or the financial
position of our subsidiaries taken as a whole, and, so far as we
are aware, no such litigation, arbitration or administrative
proceedings are pending or threatened.

DIVIDENDS

Annual dividends, if any, on our outstanding
shares must be approved at the annual general meeting of
shareholders. This meeting is generally held in March of the
following year, and the annual dividend is generally paid
shortly after the meeting. Since our shareholders have
discretion to declare annual dividends, we cannot give any
assurance as to the amount of dividends per share or that any
dividends will be declared at all. Interim dividends, if any,
can be approved by a resolution of our board of directors. Once
declared, dividends must be claimed within five years, after
which the right to receive the dividends is extinguished and
reverted to us.

We pay cash dividends to the ADR depositary in
Won. Under the terms of the deposit agreement, cash dividends
received by the ADR depositary generally are to be converted by
the ADR depositary into Dollars and distributed to the holders
of the ADSs, less withholding tax, other governmental charges
and the ADR depositarys fees and expenses. The ADR
depositarys designated bank in Korea must approve this
conversion and remittance of cash dividends. See
Additional Information  Korean Foreign Exchange
Controls and Securities Regulations and Additional
Information  Taxation  Korean
Taxation.

The following table sets forth the dividend per
share, the aggregate total amount of dividends, as well as the
number of outstanding shares entitled to dividends to the
shareholders of record on December 31 of the years
indicated. The dividends set out for each of the years below
were paid in the immediately following year.

|                        |  |           |       |                      |  |                  |       |  |  |  |            | 
|----------------------- |  | --------- | ----- | -------------------- |  | ---------------- | ----- |  |  |  | ---------- | 
|                        |  |           |       |                      |  | Number of Shares
|                        |  | Dividend  |       | Total Amount of      |  | Entitled to     
|Year Ended December 31, |  | per Share |       | Dividends            |  | Dividend        
|                        |  |           |       |                      |  |                 
|                        |  | (In Won)  |       | (In billions of Won) |  |                 
|1997                    |  | W         | 90    |                      |  | W                | 5.6   |  |  |  | 62,169,720 | 
|1998                    |  |           | 118   |                      |  |                  | 7.6   |  |  |  | 64,258,670 | 
|1999                    |  |           | 185   |                      |  |                  | 15.4  |  |  |  | 83,284,110 | 
|2000                    |  |           | 540   |                      |  |                  | 48.1  |  |  |  | 89,079,034 | 
|2001                    |  |           | 690   |                      |  |                  | 57.3  |  |  |  | 82,993,404 | 
|2002                    |  |           | 1,800 |                      |  |                  | 151.7 |  |  |  | 84,299,698 | 
|2003                    |  |           | 5,500 |                      |  |                  | 404.9 |  |  |  | 73,614,308 | 



---



|    |                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.

We distribute dividends to our shareholders in
proportion to the number of shares owned by each shareholder.
The common shares represented by the ADSs have the same dividend
rights as other outstanding common shares.

Holders of non-voting shares are entitled to
receive dividends in priority to the holders of common shares.
The dividend on the non-voting shares is between 9.0% and 25.0%
of the par value as determined by the board of directors at the
time of their issuance. If the dividends for common shares
exceed the dividends for non-voting shares, the holders of
non-voting shares will be entitled to participate in the
distribution of such excess amount with the holders of common
shares. If the amount available for dividends is less than the
aggregate amount of the minimum required dividend, holders of
non-voting shares will be entitled to receive such accumulated
unpaid dividend from dividends payable in the next fiscal year
before holders of common shares. There are no non-voting shares
issued or outstanding.

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We declare dividends annually at the annual
general meeting of shareholders which is generally held within
three months after the end of the fiscal year. We pay the annual
dividend shortly after the annual general meeting to the
shareholders of record or registered pledgees as of the end of
the preceding fiscal year. We may distribute the annual dividend
in cash or in shares. However, a dividend of shares must be
distributed at par value. If the market price of the shares is
less than their par value, dividends in shares may not exceed
one-half of the annual dividend. Our obligation to pay dividend
expires if no claim to dividend is made for five years from the
payment date.

Under the Korean Commercial Code, we may pay an
annual dividend only out of the excess of our net assets, on a
non-consolidated basis, over the sum of (1) our stated
capital and (2) the total amount of our capital surplus
reserve and legal reserve accumulated up to the end of the
relevant dividend period. In addition, we may not pay an annual
dividend unless we have set aside as legal reserve an amount
equal to at least 10.0% of the cash portion of the annual
dividend or until we have accumulated a legal reserve of not
less than one-half of our stated capital. As a Korea Stock
Exchange-listed company, we are also required under the relevant
laws and regulations to set aside in reserve a certain amount
each fiscal year until our own capital ratio is at least 30%. We
may not use legal reserve to pay cash dividends but may transfer
amounts from legal reserve to capital stock or use legal reserve
to reduce an accumulated deficit.

In addition, the Korean Securities and Exchange
Act and our articles of incorporation provide that, in addition
to annual dividends, we may pay interim dividends once during
each fiscal year. Unlike annual dividends, the decision to pay
interim dividends can be made by a resolution of the board of
directors and is not subject to shareholder approval. Any
interim dividends must be paid in cash to the shareholders of
record as of June 30 of the relevant fiscal year.

Under the Korean Securities and Exchange Act, the
total amount of interim dividends payable in a fiscal year shall
not be more than the net assets on the balance sheet of the
immediately preceding fiscal year, after deducting (1) a
companys capital in the immediately preceding fiscal year,
(2) the aggregate amount of its capital reserves and legal
reserves accumulated up to the immediately preceding fiscal
year, (3) the amount of earnings for dividend payments
confirmed at the annual shareholders meeting with respect
to the immediately preceding fiscal year and (4) the amount
of legal reserve that should be set aside for the current fiscal
year following the interim dividend payment. Furthermore, the
rate of interim dividends for non-voting shares must be the same
as that for our common shares.

Our obligation to pay interim dividends expires
if no claims to such dividends are made for a period of five
years from the payment date.






|        |                      
|------- | ---------------------
|Item. 9 | The Offer and Listing

MARKET PRICE INFORMATION

The principal trading market for our common stock
is the Korea Stock Exchange. As of May 24, 2004, 82,276,711
shares of our common stock were outstanding.

The ADSs are traded on the New York Stock
Exchange and the London Stock Exchange. The ADSs have been
issued by the ADR depositary and are traded on the New York
Stock Exchange under the symbol SKM. Each ADS
represents one-ninth of one share of common stock. As of
May 30, 2003, 98,870,022 ADSs representing 10,985,558
shares of our common stock were outstanding.

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Shares of Common Stock

The following table sets forth the high, low and
closing prices and the average daily trading volume of the
shares of common stock on the Korea Stock Exchange since
January 1, 1999:

|                      |                                 |                      |         |                    |         |       |         |                |         |   |         |         |         |  |         |         |         | 
|--------------------- | ------------------------------- | -------------------- | ------- | ------------------ | ------- | ----- | ------- | -------------- | ------- | - | ------- | ------- | ------- |  | ------- | ------- | ------- | 
|                      |                                 |                      |         |                   
|                      |                                 | Prices(1)            |         |                   
|                      |                                 |                      |         | Average Daily     
|Calendar Year         |                                 | High(2)              |         | Low(2)             |         | Close |         | Trading Volume
|                      |                                 |                      |         |                    |         |       |         |               
|                      |                                 |                      |         |                   
|                      |                                 | (Won per share)      |         | (Number of shares)
|1999                  |                                 | W                    | 407,000 |                    |         | W     | 52,419  |                |         | W | 407,000 |         |         |  | 280,326 |        
|2000                  |                                 |                      | 481,000 |                    |         |       | 216,000 |                |         |   | 253,000 |         |         |  | 262,660 |        
|                      | First Quarter                   |                      |         | 481,000            |         |       |         | 323,000        |         |   |         | 360,000 |         |  |         | 238,762 |        
|                      | Second Quarter                  |                      |         | 406,000            |         |       |         | 263,500        |         |   |         | 365,000 |         |  |         | 311,828 |        
|                      | Third Quarter                   |                      |         | 379,000            |         |       |         | 216,000        |         |   |         | 272,000 |         |  |         | 239,913 |        
|                      | Fourth Quarter                  |                      |         | 288,000            |         |       |         | 230,000        |         |   |         | 253,000 |         |  |         | 261,753 |        
|2001                  |                                 |                      | 295,000 |                    |         |       | 165,000 |                |         |   | 268,000 |         |         |  | 242,254 |        
|                      | First Quarter                   |                      |         | 293,500            |         |       |         | 182,000        |         |   |         | 183,000 |         |  |         | 253,393 |        
|                      | Second Quarter                  |                      |         | 235,500            |         |       |         | 165,000        |         |   |         | 191,500 |         |  |         | 312,070 |        
|                      | Third Quarter                   |                      |         | 233,000            |         |       |         | 184,500        |         |   |         | 208,000 |         |  |         | 154,785 |        
|                      | Fourth Quarter                  |                      |         | 295,000            |         |       |         | 220,000        |         |   |         | 268,000 |         |  |         | 250,676 |        
|2002                  |                                 |                      | 299,000 |                    |         |       | 209,500 |                |         |   | 229,000 |         |         |  | 261,482 |        
|                      | First Quarter                   |                      |         | 299,000            |         |       |         | 242,000        |         |   |         | 290,000 |         |  |         | 263,168 |        
|                      | Second Quarter                  |                      |         | 292,000            |         |       |         | 239,000        |         |   |         | 269,500 |         |  |         | 227,115 |        
|                      | Third Quarter                   |                      |         | 279,500            |         |       |         | 209,500        |         |   |         | 237,000 |         |  |         | 241,154 |        
|                      | Fourth Quarter                  |                      |         | 252,500            |         |       |         | 220,000        |         |   |         | 229,000 |         |  |         | 314,019 |        
|2003                  |                                 |                      | 235,000 |                    |         |       | 142,000 |                |         |   | 199,000 |         |         |  | 327,689 |        
|                      | First Quarter                   |                      |         | 235,000            |         |       |         | 142,000        |         |   |         | 153,000 |         |  |         | 497,115 |        
|                      | Second Quarter                  |                      |         | 210,000            |         |       |         | 157,500        |         |   |         | 204,000 |         |  |         | 298,346 |        
|                      | Third Quarter                   |                      |         | 216,000            |         |       |         | 183,000        |         |   |         | 184,000 |         |  |         | 267,821 |        
|                      | Fourth Quarter                  |                      |         | 212,500            |         |       |         | 185,000        |         |   |         | 199,000 |         |  |         | 247,332 |        
|2004 (through May 24) |                                 |                      | 238,500 |                    |         |       | 179,000 |                |         |   | 193,500 |         |         |  | 232,222 |        
|                      | First Quarter                   |                      |         | 238,500            |         |       |         | 207,500        |         |   |         | 214,500 |         |  |         | 243,681 |        
|                      |                                 | January              |         |                    | 227,000 |       |         |                | 207,500 |   |         |         | 217,500 |  |         |         | 377,784 | 
|                      |                                 | February             |         |                    | 238,000 |       |         |                | 212,000 |   |         |         | 238,000 |  |         |         | 172,131 | 
|                      |                                 | March                |         |                    | 238,500 |       |         |                | 210,500 |   |         |         | 214,500 |  |         |         | 199,007 | 
|                      | Second Quarter (through May 24) |                      |         | 213,000            |         |       |         | 179,000        |         |   |         | 193,500 |         |  |         | 212,848 |        
|                      |                                 | April                |         |                    | 213,000 |       |         |                | 195,500 |   |         |         | 200,000 |  |         |         | 203,779 | 
|                      |                                 | May (through May 24) |         |                    | 206,500 |       |         |                | 179,000 |   |         |         | 193,500 |  |         |         | 224,939 | 



---

Source: Korea Stock Exchange



|    |                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The price give effect to the 10-for-1 stock split
    of our common shares which became effective on April 21,
    2000 and resulted in the par value of each share being reduced
    from Won 5,000 to Won 500.
|   
|(2) | Both high and low prices are based on the daily
    closing prices for the period.                                                                                                                              

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American Depositary Shares

The following table sets forth the high, low and
closing prices and the average daily trading volume of the ADSs
on the New York Stock Exchange since January 1, 1999:

|                      |                                 |                      |       |                  |       |       |       |                |       |     |       |       |       |  |           |           |           | 
|--------------------- | ------------------------------- | -------------------- | ----- | ---------------- | ----- | ----- | ----- | -------------- | ----- | --- | ----- | ----- | ----- |  | --------- | --------- | --------- | 
|                      |                                 |                      |       |                 
|                      |                                 | Prices(1)            |       |                 
|                      |                                 |                      |       | Average Daily   
|Calendar Year         |                                 | High(2)              |       | Low(2)           |       | Close |       | Trading Volume
|                      |                                 |                      |       |                  |       |       |       |               
|                      |                                 |                      |       |                 
|                      |                                 | (US$ per ADS         |       | (Number of ADSs)
|1999                  |                                 | US$                  | 39.94 |                  |       | US$   | 8.76  |                |       | US$ | 38.38 |       |       |  | 744,266   |          
|2000                  |                                 |                      | 50.69 |                  |       |       | 20.56 |                |       |     | 23.56 |       |       |  | 832,301   |          
|                      | First Quarter                   |                      |       | 50.69            |       |       |       | 33.50          |       |     |       | 39.00 |       |  |           | 964,229   |          
|                      | Second Quarter                  |                      |       | 43.31            |       |       |       | 28.25          |       |     |       | 36.31 |       |  |           | 781,578   |          
|                      | Third Quarter                   |                      |       | 43.44            |       |       |       | 20.56          |       |     |       | 25.63 |       |  |           | 810,021   |          
|                      | Fourth Quarter                  |                      |       | 28.19            |       |       |       | 21.31          |       |     |       | 23.56 |       |  |           | 773,376   |          
|2001                  |                                 |                      | 28.94 |                  |       |       | 13.50 |                |       |     | 21.62 |       |       |  | 710,410   |          
|                      | First Quarter                   |                      |       | 28.94            |       |       |       | 15.18          |       |     |       | 15.18 |       |  |           | 743,602   |          
|                      | Second Quarter                  |                      |       | 21.05            |       |       |       | 13.50          |       |     |       | 16.90 |       |  |           | 817,532   |          
|                      | Third Quarter                   |                      |       | 20.21            |       |       |       | 16.15          |       |     |       | 18.44 |       |  |           | 655,302   |          
|                      | Fourth Quarter                  |                      |       | 25.29            |       |       |       | 18.26          |       |     |       | 21.62 |       |  |           | 623,611   |          
|2002                  |                                 |                      | 26.75 |                  |       |       | 19.25 |                |       |     | 21.35 |       |       |  | 684,421   |          
|                      | First Quarter                   |                      |       | 24.70            |       |       |       | 20.30          |       |     |       | 24.60 |       |  |           | 488,958   |          
|                      | Second Quarter                  |                      |       | 26.75            |       |       |       | 20.20          |       |     |       | 24.40 |       |  |           | 555,865   |          
|                      | Third Quarter                   |                      |       | 26.36            |       |       |       | 19.25          |       |     |       | 21.23 |       |  |           | 963,578   |          
|                      | Fourth Quarter                  |                      |       | 22.81            |       |       |       | 19.30          |       |     |       | 21.35 |       |  |           | 717,859   |          
|2003                  |                                 |                      | 21.85 |                  |       |       | 12.83 |                |       |     | 18.65 |       |       |  | 743,316   |          
|                      | First Quarter                   |                      |       | 21.85            |       |       |       | 12.83          |       |     |       | 13.62 |       |  |           | 971,259   |          
|                      | Second Quarter                  |                      |       | 19.40            |       |       |       | 14.07          |       |     |       | 18.86 |       |  |           | 723,959   |          
|                      | Third Quarter                   |                      |       | 20.83            |       |       |       | 17.71          |       |     |       | 17.84 |       |  |           | 724,406   |          
|                      | Fourth Quarter                  |                      |       | 19.90            |       |       |       | 17.46          |       |     |       | 18.65 |       |  |           | 564,023   |          
|2004 (through May 24) |                                 |                      | 25.01 |                  |       |       | 19.15 |                |       |     | 20.30 |       |       |  | 1,181,672 |          
|                      | First Quarter                   |                      |       | 25.01            |       |       |       | 19.43          |       |     |       | 21.30 |       |  |           | 1,330,742 |          
|                      |                                 | January              |       |                  | 22.33 |       |       |                | 19.43 |     |       |       | 22.18 |  |           |           | 1,774,400 | 
|                      |                                 | February             |       |                  | 25.01 |       |       |                | 22.03 |     |       |       | 25.01 |  |           |           | 1,191,863 | 
|                      |                                 | March                |       |                  | 24.98 |       |       |                | 21.15 |     |       |       | 21.30 |  |           |           | 1,059,678 | 
|                      | Second Quarter (through May 24) |                      |       | 21.83            |       |       |       | 19.15          |       |     |       | 20.30 |       |  |           | 931,878   |          
|                      |                                 | April                |       |                  | 21.83 |       |       |                | 20.20 |     |       |       | 20.20 |  |           |           | 786,157   | 
|                      |                                 | May (through May 24) |       |                  | 20.70 |       |       |                | 19.15 |     |       |       | 20.30 |  |           |           | 1,123,138 | 



---

Source: New York Stock Exchange



|    |                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The price give effect to the 10-for-1 stock split
    of our common shares which became effective on April 21,
    2000 and resulted in the par value of each share being reduced
    from Won 5,000 to Won 500.
|   
|(2) | Both high and low prices are based on the daily
    closing prices for the period.                                                                                                                              

96



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THE KOREAN SECURITIES MARKET

The Korea Stock Exchange

The Korea Stock Exchange began its operations in
1956. Currently it is the only stock exchange in Korea. It has a
single trading floor located in Seoul. The Korea Stock Exchange
is a membership organization, consisting of most of Korean
securities companies and some Korean branches of foreign
securities companies.

As of May 20, 2004, the aggregate market
value of equity securities listed on the Korea Stock Exchange
was approximately Won 341.2 trillion. The average daily
trading volume of equity securities for 2003 was approximately
542.0 million shares with an average transaction value of
Won 2,216.6 billion and for the period from January 1,
2004 through May 20, 2004 was approximately
436.3 million shares with an average transaction value of
Won 2,714.0 billion.

The Korea Stock Exchange has the power in some
circumstances to suspend trading in the shares of a given
company or to de-list a security. The Korea Stock Exchange also
restricts share price movements. All listed companies are
required to file accounting reports annually, semi-annually and
quarterly and to release immediately all information that may
affect trading in a security.

The Government has in the past exerted, and
continues to exert, substantial influence over many aspects of
the private sector business community which can have the
intention or effect of depressing or boosting the market. In the
past, the Government has informally both encouraged and
restricted the declaration and payment of dividends, induced
mergers to reduce what it considers excess capacity in a
particular industry and induced private companies to offer
publicly their securities.

The Korea Stock Exchange publishes the Korea
Composite Stock Price Index, or KOSPI, every ten seconds, which
is an index of all equity securities listed on the Korea Stock
Exchange. On January 1, 1983, the method of computing KOSPI
was changed from the Dow Jones method to the aggregate value
method. In the new method, the market capitalizations of all
listed companies are aggregated, subject to certain adjustments,
and this aggregate is expressed as a percentage of the aggregate
market capitalization of all listed companies as of the base
date, January 4, 1980.

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Movements in KOSPI are set out in the following
table together with the associated dividend yields and price to
earnings ratios:

|                      |  |         |          |      |  |     |          |         |  |                |        |          |  |  |          |  |  |  |      |     |  |  |      |    
|--------------------- |  | ------- | -------- | ---- |  | --- | -------- | ------- |  | -------------- | ------ | -------- |  |  | -------- |  |  |  | ---- | --- |  |  | ---- | ---
|                      |  |         |          |      |  |     |          |         |  |               
|                      |  |         |          |      |  |     |          |         |  | Period Average
|                      |  |         |          |      |  |     |          |         |  |               
|                      |  |         |          |      |  |     |          |         |  |                |        | Price   
|                      |  |         |          |      |  |     |          |         |  | Dividend       |        | Earnings
|Year                  |  | Opening |          | High |  | Low |          | Closing |  | Yield(1)(%)    |        | Ratio(2)
|                      |  |         |          |      |  |     |          |         |  |                |        |         
|1980                  |  |         | 100.00   |      |  |     | 119.36   |         |  |                | 100.00 |          |  |  | 106.87   |  |  |  | 20.9 |     |  |  | 2.6  |    
|1981                  |  |         | 97.95    |      |  |     | 165.95   |         |  |                | 93.14  |          |  |  | 131.37   |  |  |  | 13.2 |     |  |  | 3.1  |    
|1982                  |  |         | 123.60   |      |  |     | 134.49   |         |  |                | 106.00 |          |  |  | 127.31   |  |  |  | 10.5 |     |  |  | 3.4  |    
|1983                  |  |         | 122.52   |      |  |     | 134.46   |         |  |                | 115.59 |          |  |  | 121.21   |  |  |  | 6.9  |     |  |  | 3.8  |    
|1984                  |  |         | 116.73   |      |  |     | 142.46   |         |  |                | 114.37 |          |  |  | 142.46   |  |  |  | 5.1  |     |  |  | 4.5  |    
|1985                  |  |         | 139.53   |      |  |     | 163.37   |         |  |                | 131.40 |          |  |  | 163.37   |  |  |  | 5.3  |     |  |  | 5.2  |    
|1986                  |  |         | 161.40   |      |  |     | 279.67   |         |  |                | 153.85 |          |  |  | 272.61   |  |  |  | 4.3  |     |  |  | 7.6  |    
|1987                  |  |         | 264.82   |      |  |     | 525.11   |         |  |                | 264.82 |          |  |  | 525.11   |  |  |  | 2.6  |     |  |  | 10.9 |    
|1988                  |  |         | 532.04   |      |  |     | 922.56   |         |  |                | 527.89 |          |  |  | 907.20   |  |  |  | 2.4  |     |  |  | 11.2 |    
|1989                  |  |         | 919.61   |      |  |     | 1,007.77 |         |  |                | 844.75 |          |  |  | 909.72   |  |  |  | 2.0  |     |  |  | 13.9 |    
|1990                  |  |         | 908.59   |      |  |     | 928.77   |         |  |                | 566.27 |          |  |  | 696.11   |  |  |  | 2.2  |     |  |  | 12.8 |    
|1991                  |  |         | 679.75   |      |  |     | 763.10   |         |  |                | 586.51 |          |  |  | 610.92   |  |  |  | 2.6  |     |  |  | 11.2 |    
|1992                  |  |         | 624.23   |      |  |     | 691.48   |         |  |                | 459.07 |          |  |  | 678.44   |  |  |  | 2.2  |     |  |  | 10.9 |    
|1993                  |  |         | 697.41   |      |  |     | 874.10   |         |  |                | 605.93 |          |  |  | 866.18   |  |  |  | 1.6  |     |  |  | 12.7 |    
|1994                  |  |         | 879.32   |      |  |     | 1,138.75 |         |  |                | 860.47 |          |  |  | 1,027.37 |  |  |  | 1.2  |     |  |  | 16.2 |    
|1995                  |  |         | 1,013.57 |      |  |     | 1,016.77 |         |  |                | 847.09 |          |  |  | 882.94   |  |  |  | 1.2  |     |  |  | 16.4 |    
|1996                  |  |         | 888.85   |      |  |     | 986.84   |         |  |                | 651.22 |          |  |  | 651.22   |  |  |  | 1.3  |     |  |  | 17.8 |    
|1997                  |  |         | 653.79   |      |  |     | 792.29   |         |  |                | 350.68 |          |  |  | 376.31   |  |  |  | 1.5  |     |  |  | 17.0 |    
|1998                  |  |         | 385.49   |      |  |     | 579.86   |         |  |                | 280.00 |          |  |  | 562.46   |  |  |  | 1.9  |     |  |  | 10.8 |    
|1999                  |  |         | 587.57   |      |  |     | 1,028.07 |         |  |                | 498.42 |          |  |  | 1,028.07 |  |  |  | 1.1  |     |  |  | 13.5 |    
|2000                  |  |         | 1,059.04 |      |  |     | 1,059.04 |         |  |                | 500.60 |          |  |  | 504.62   |  |  |  | 1.6  | (3) |  |  | 18.6 | (3)
|2001                  |  |         | 520.95   |      |  |     | 704.50   |         |  |                | 468.76 |          |  |  | 693.70   |  |  |  | 2.0  | (3) |  |  | 14.2 | (3)
|2002                  |  |         | 724.95   |      |  |     | 937.61   |         |  |                | 584.04 |          |  |  | 829.44   |  |  |  | 1.4  | (3) |  |  | 17.9 | (3)
|2003                  |  |         | 653.17   |      |  |     | 822.16   |         |  |                | 515.24 |          |  |  | 810.71   |  |  |  | 2.1  | (3) |  |  | 11.7 | (3)
|2004 (through May 20) |  |         | 821.26   |      |  |     | 936.06   |         |  |                | 728.98 |          |  |  | 767.79   |  |  |  | 1.9  | (3) |  |  | 12.7 | (3)



---

Source: Korea Stock Exchange



|    |                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 Korea Stock Exchange. Starting in April 2000,
    excludes classified companies, companies which did not submit
    annual reports to the Korea Stock Exchange, and companies which
    received disqualified opinion from external auditors.

Shares are quoted ex-dividend on the
first trading day of the relevant companys accounting
period. Since the calendar year is the accounting period for the
majority of listed companies, this may account for the drop in
KOSPI between its closing level at the end of one calendar year
and its opening level at the beginning of the following calendar
year.

With certain exceptions, principally to take
account of a share being quoted ex-dividend and
ex-rights, permitted upward and downward movements
in share prices of any category of shares on any day are

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limited under the rules of the Korea Stock
Exchange to 15.0% of the previous days closing price of
the shares, rounded down as set out below:


|                                   |  |              |       | 
|---------------------------------- |  | ------------ | ----- | 
|                                   |  | Rounded Down
|Previous Days Closing Price (Won) |  | to (Won)    
|                                   |  |             
|Less than 5,000                    |  | W            | 5     | 
|5,000 to less than 10,000          |  |              | 10    | 
|10,000 to less than 50,000         |  |              | 50    | 
|50,000 to less than 100,000        |  |              | 100   | 
|100,000 to less than 500,000       |  |              | 500   | 
|500,000 or more                    |  |              | 1,000 | 

As a consequence, if a particular closing price
is the same as the price set by the fluctuation limit, the
closing price may not reflect the price at which persons would
have been prepared, or would be prepared to continue, if so
permitted, to buy and sell shares. Orders are executed on an
auction system with priority rules to deal with competing bids
and offers.

Due to a recent deregulation of restrictions on
brokerage commission rates, the brokerage commission rate on
equity securities transactions may be determined by the parties,
subject to commission schedules being filed with the Korea Stock
Exchange by the securities companies. In addition, a securities
transaction tax will generally be imposed on the transfer of
shares or certain securities representing rights to subscribe
for shares. A special agricultural and fishery tax of 0.15% of
the sales prices will also be imposed on transfer of these
shares and securities on the Korea Stock Exchange. See
Additional Information Taxation  Korean
Taxation.

99



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The following table sets forth the number of
companies listed on the Korea Stock Exchange, the corresponding
total market capitalization and the average daily trading volume
at the end of the periods indicated:

|                      |  |                                |     |                                      |  |               |             |           |  |              |             |               |  |  |         |  |  |   |           |  |  |     |           | 
|--------------------- |  | ------------------------------ | --- | ------------------------------------ |  | ------------- | ----------- | --------- |  | ------------ | ----------- | ------------- |  |  | ------- |  |  | - | --------- |  |  | --- | --------- | 
|                      |  |                                |     |                                      |  |               |             |          
|                      |  | Market Capitalization          |     |                                     
|                      |  | on the Last Day of Each Period |     | Average Daily Trading Volume & Value
|                      |  |                                |     |                                     
|                      |  | Number of                      |     |                                      |  |              
|                      |  | Listed                         |     | (Millions of                         |  | (Thousands of |             | Thousands |  | (Millions of |             | (Thousands of
|Year                  |  | Companies                      |     | Won)                                 |  | Dollars)(1)   |             | of Shares |  | Won)         |             | Dollars)(1)  
|                      |  |                                |     |                                      |  |               |             |           |  |              |             |              
|1980                  |  |                                | 352 |                                      |  | W             | 2,526,553   |           |  | US$          | 3,828,691   |               |  |  | 5,654   |  |  | W | 3,897     |  |  | US$ | 5,905     | 
|1981                  |  |                                | 343 |                                      |  |               | 2,959,057   |           |  |              | 4,224,207   |               |  |  | 10,565  |  |  |   | 8,708     |  |  |     | 12,433    | 
|1982                  |  |                                | 334 |                                      |  |               | 3,000,494   |           |  |              | 4,407,711   |               |  |  | 9,704   |  |  |   | 6,667     |  |  |     | 8,904     | 
|1983                  |  |                                | 328 |                                      |  |               | 3,489,654   |           |  |              | 4,386,743   |               |  |  | 9,325   |  |  |   | 5,941     |  |  |     | 7,468     | 
|1984                  |  |                                | 336 |                                      |  |               | 5,148,460   |           |  |              | 6,222,456   |               |  |  | 14,847  |  |  |   | 10,642    |  |  |     | 12,862    | 
|1985                  |  |                                | 342 |                                      |  |               | 6,570,404   |           |  |              | 7,380,818   |               |  |  | 18,925  |  |  |   | 12,315    |  |  |     | 13,834    | 
|1986                  |  |                                | 355 |                                      |  |               | 11,994,233  |           |  |              | 13,924,115  |               |  |  | 31,755  |  |  |   | 32,870    |  |  |     | 38,159    | 
|1987                  |  |                                | 389 |                                      |  |               | 26,172,174  |           |  |              | 33,033,162  |               |  |  | 20,353  |  |  |   | 70,185    |  |  |     | 88,584    | 
|1988                  |  |                                | 502 |                                      |  |               | 64,543,685  |           |  |              | 94,348,318  |               |  |  | 10,367  |  |  |   | 198,364   |  |  |     | 289,963   | 
|1989                  |  |                                | 626 |                                      |  |               | 95,476,774  |           |  |              | 140,489,660 |               |  |  | 11,757  |  |  |   | 280,967   |  |  |     | 414,431   | 
|1990                  |  |                                | 669 |                                      |  |               | 79,019,676  |           |  |              | 110,301,055 |               |  |  | 10,866  |  |  |   | 183,692   |  |  |     | 256,500   | 
|1991                  |  |                                | 686 |                                      |  |               | 73,117,833  |           |  |              | 96,182,364  |               |  |  | 14,022  |  |  |   | 214,263   |  |  |     | 281,850   | 
|1992                  |  |                                | 688 |                                      |  |               | 84,711,982  |           |  |              | 107,502,515 |               |  |  | 24,028  |  |  |   | 308,246   |  |  |     | 391,175   | 
|1993                  |  |                                | 693 |                                      |  |               | 112,665,260 |           |  |              | 139,419,948 |               |  |  | 35,130  |  |  |   | 574,048   |  |  |     | 676,954   | 
|1994                  |  |                                | 699 |                                      |  |               | 151,217,231 |           |  |              | 191,729,721 |               |  |  | 36,862  |  |  |   | 776,257   |  |  |     | 984,223   | 
|1995                  |  |                                | 721 |                                      |  |               | 141,151,399 |           |  |              | 182,201,367 |               |  |  | 26,130  |  |  |   | 487,762   |  |  |     | 629,614   | 
|1996                  |  |                                | 760 |                                      |  |               | 117,369,988 |           |  |              | 139,031,021 |               |  |  | 26,571  |  |  |   | 486,834   |  |  |     | 575,733   | 
|1997                  |  |                                | 776 |                                      |  |               | 70,988,897  |           |  |              | 50,161,742  |               |  |  | 41,525  |  |  |   | 555,759   |  |  |     | 392,707   | 
|1998                  |  |                                | 748 |                                      |  |               | 137,798,451 |           |  |              | 114,090,455 |               |  |  | 97,716  |  |  |   | 660,429   |  |  |     | 471,432   | 
|1999                  |  |                                | 725 |                                      |  |               | 349,503,966 |           |  |              | 305,137,040 |               |  |  | 278,551 |  |  |   | 3,481,620 |  |  |     | 3,039,654 | 
|2000                  |  |                                | 704 |                                      |  |               | 188,041,490 |           |  |              | 150,162,898 |               |  |  | 306,163 |  |  |   | 2,602,211 |  |  |     | 2,078,028 | 
|2001                  |  |                                | 689 |                                      |  |               | 225,850,076 |           |  |              | 194,784,979 |               |  |  | 473,241 |  |  |   | 1,997,420 |  |  |     | 1,520,685 | 
|2002                  |  |                                | 683 |                                      |  |               | 258,680,756 |           |  |              | 218,167,122 |               |  |  | 851,242 |  |  |   | 3,041,592 |  |  |     | 2,414,362 | 
|2003                  |  |                                | 684 |                                      |  |               | 355,362,626 |           |  |              | 297,960,530 |               |  |  | 542,010 |  |  |   | 2,216,636 |  |  |     | 1,858,580 | 
|2004 (through May 24) |  |                                | 678 |                                      |  |               | 355,106,659 |           |  |              | 297,908,300 |               |  |  | 302,774 |  |  |   | 2,015,461 |  |  |     | 1,690,823 | 



---

Source: Korea Stock Exchange



|    |                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Converted at the concentration base rate of The
    Bank of Korea or the market average exchange rate as announced
    by the Seoul Money Brokerage Services Limited, as the case may
    be, at the end of periods indicated.

The Korean securities markets are principally
regulated by the Financial Supervisory Commission of Korea and
the Korean Securities and Exchange Act. The Korean Securities
and Exchange Act was amended fundamentally numerous times in
recent years to broaden the scope and improve the effectiveness
of official supervision of the securities markets. As amended,
the law imposes restrictions on insider trading and price
manipulation, requires specified information to be made
available by listed companies to investors and establishes rules
regarding margin trading, proxy solicitation, takeover bids,
acquisition of treasury shares and reporting requirements for
shareholders holding substantial interests.

100



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Further Opening of the Korean Securities
Market

A stock index futures market was opened on
May 3, 1996 and a stock index option market was opened on
July 7, 1997, in each case at the Korea Stock Exchange.
Remittance and repatriation of funds in connection with
investment in stock index futures and options are subject to
regulations similar to those that govern remittance and
repatriation in the context of foreign investment in Korean
stocks.

In addition, the Korea Stock Exchange opened new
option markets for stocks of seven companies including our
shares of common stock and common stock of six other companies
on January 28, 2002. Foreigners will be permitted to invest
in such options for individual stocks subject to certain
procedural requirements.

Starting from May 1, 1996, foreign investors
were permitted to invest in warrants representing the right to
subscribe for shares of a company listed on the Korea Stock
Exchange or registered on the KOSDAQ, subject to certain
investment limitations. A foreign investor may not acquire such
warrants with respect to shares of a class of a company for
which the ceiling on aggregate investment by foreigners has been
reached or exceeded.

As of December 30, 1997, foreign investors
were permitted to invest in all types of corporate bonds, bonds
issued by national or local governments and bonds issued in
accordance with certain special laws without being subject to
any aggregate or individual investment ceiling. The Financial
Supervisory Commission of Korea sets forth procedural
requirements for such investments. The Government announced on
February 8, 1998 its plans for the liberalization of the
money market with respect to investment in money market
instruments by foreigners in 1998. According to the plan,
foreigners have been permitted to invest in money market
instruments issued by corporations, including commercial paper,
starting February 16, 1998 with no restrictions as to the
amount. Starting May 25, 1998, foreigners have been
permitted to invest in certificates of deposit and repurchase
agreements.

Currently, foreigners are permitted to invest in
securities including shares of all Korean companies which are
not listed on the Korea Stock Exchange nor registered on the
KOSDAQ and in bonds which are not listed.

Protection of Customers Interest in Case
of Insolvency of Securities Companies

Under Korean law, the relationship between a
customer and a securities company in connection with a
securities sell or buy order is deemed to be consignment and the
securities acquired by a consignment agent (i.e., the securities
company) through such sell or buy order are regarded as
belonging to the customer in so far as the customer and the
consignment agents creditors are concerned. Therefore, in
the event of a bankruptcy or reorganization procedure involving
a securities company, the customer of the securities company is
entitled to the proceeds of the securities sold by the
securities company.

When a customer places a sell order with a
securities company which is not a member of the Korea Stock
Exchange and this securities company places a sell order with
another securities company which is a member of the Korea Stock
Exchange, the customer is still entitled to the proceeds of the
securities sold received by the non-member company from the
member company regardless of the bankruptcy or reorganization of
the non-member company.

Under the Korean Securities and Exchange Act, the
Korea Stock Exchange is obliged to indemnify any loss or damage
incurred by a counterparty as a result of a breach by its
members. If a securities company which is a member of the Korea
Stock Exchange breaches its obligation in connection with a buy
order, the Korea Stock Exchange is obliged to pay the purchase
price on behalf of the breaching member.

When a customer places a buy order with a
non-member company and the non-member company places a buy order
with a member company, the customer has the legal right to the
securities received by the non-member company from the member
company because the purchased securities are regarded as
belonging to the customer in so far as the customer and the
non-member companys creditors are concerned.

As the cash deposited with a securities company
is regarded as belonging to the securities company, which is
liable to return the same at the request of its customer, the
customer cannot take back deposited cash from the securities
company if a bankruptcy or reorganization procedure is
instituted against the securities

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company and, therefore, can suffer from loss or
damage as a result. However, the Depositor Protection Act
provides that Korea Deposit Insurance Corporation will, upon the
request of the investors, pay investors up to Won 50
million per investor in case of the securities companys
bankruptcy, liquidation, cancellation of securities business
license or other insolvency events. Pursuant to the Securities
and Exchange Act, as amended, subject to certain exceptions,
securities companies are required to deposit the cash received
from its customers with the Korea Securities Finance
Corporation, a special entity established pursuant to the
Securities and Exchange Act. Set-off or attachment of cash
deposits by securities companies is prohibited. The premiums
related to this insurance under the Depositor Protection Act are
paid by securities companies.







|         |                       
|-------- | ----------------------
|Item. 10 | Additional Information

DESCRIPTION OF CAPITAL STOCK

This section provides information relating to our
capital stock, including brief summaries of material provisions
of our articles of incorporation, the Korean Securities and
Exchange Act of 1962 (the Korean Securities and Exchange
Act), the Korean Commercial Code and related laws of
Korea, all as currently in effect. The following summaries are
subject to, and are qualified in their entirety by reference to,
our articles of incorporation and the applicable provisions of
the Korean Securities and Exchange Act and the Korean Commercial
Code. We have filed or incorporated by reference copies of our
articles of incorporation and these laws as exhibits to our most
recently filed annual report.

General

The name of our company is SK Telecom Co., Ltd.
We are registered under the laws of Korea under the commercial
registry number of 110111-0371346. As specified in
Article 2 (Objectives) of our articles of incorporation,
the companys objectives are the rational management of the
telecommunications business, development of telecommunications
technology, and contribution to public welfare and convenience.
In order to achieve these objectives, we are engaged in the
following:



| |   |                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------
| |  | 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; and                    
|
| |  | any business or undertaking incidental or
    conducive to the attainment of the objectives stated above.

Currently, our authorized share capital is
220,000,000 shares, which consists of shares of common stock,
par value Won 500 per share and shares of non-voting stock,
par value Won 500 per share (common shares and non-voting
shares together are referred to as shares). Under
our articles of incorporation, we are authorized to issue up to
5,500,000 non-voting shares. As of May 20, 2004, 82,276,711
common shares were issued, of which 8,662,415 shares were held
by us in treasury. We have never issued any non-voting shares.
All of the issued and outstanding common shares are fully-paid
and non-assessable and are in registered form. We issue share
certificates in denominations of 1, 5, 10, 50, 100, 500, 1,000
and 10,000 shares.

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Board of Directors

Meetings of the board of directors are convened
by the representative director as he or she deems necessary or
upon the request three or more directors. The board of directors
determines all important matters relating to our business. In
addition, the prior approval of the majority of the outside
directors is required for certain matters, which includes:



| |   |                                                                                                                                                                                                                             
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.

Resolutions of the board are adopted in the
presence of a majority of the directors in office and by the
affirmative vote of a majority of the directors present. No
director who has an interest in a matter for resolution may
exercise his or her vote upon such matter.

There are no specific shareholding requirements
for directors qualification. Directors are elected at a
general meeting of shareholders if the approval of a majority
vote of the shareholders present at such meeting is obtained,
and such majority also represents at least one-fourth of the
total number of shares outstanding. Under the Korean Securities
and Exchange Act, unless stated otherwise in the articles of
incorporation, holders of an aggregate of 1% or more of the
outstanding shares with voting rights may request cumulative
voting in any election for two or more directors. Our articles
of incorporation permit cumulative voting starting from the
ordinary general meeting of shareholders in 2003.

The term of office for directors shall be until
the close of the third annual general shareholders meeting
convened after he or she commences his or her term. Our
directors may serve consecutive terms and our shareholders may
remove them from office at any time by a special resolution
adopted at a general meeting of shareholders.

Dividends

We distribute dividends to our shareholders in
proportion to the number of shares owned by each shareholder.
The common shares represented by the ADSs have the same dividend
rights as other outstanding common shares.

Holders of non-voting shares are entitled to
receive dividends in priority to the holders of common shares.
The dividend on the non-voting shares is between 9.0% and 25.0%
of the par value as determined by the board of directors at the
time of their issuance. If the dividends for common shares
exceed the dividends for non-voting shares, the holders of
non-voting shares will be entitled to participate in the
distribution of such excess amount with the holders of common
shares. If the amount available for dividends is less than the
aggregate amount of the minimum required dividend, holders of
non-voting shares will be entitled to receive such accumulated
unpaid dividend from dividends payable in the next fiscal year
before holders of common shares.

We declare dividends annually at the annual
general meeting of shareholders which is generally held within
three months after the end of the fiscal year. We pay the annual
dividend shortly after the annual general meeting to the
shareholders of record or registered pledges as of the end of
the preceding fiscal year. We may distribute the annual dividend
in cash or in shares. However, a dividend of shares must be
distributed at par value. If the market price of the shares is
less than their par value, dividends in shares may not exceed
one-half of the annual dividend. Our obligation to pay dividend
expires if no claim to dividend is made for five years from the
payment date.

Under the Korean Commercial Code, we may pay an
annual dividend only out of the excess of our net assets, on a
non-consolidated basis, over the sum of (1) our stated
capital and (2) the total amount of our capital surplus
reserve and legal reserve accumulated up to the end of the
relevant dividend period. In addition, we may not pay an annual
dividend unless we have set aside as legal reserve an amount
equal to at least 10.0% of the cash portion of the annual
dividend or unless we have accumulated a legal reserve of not
less than one-half of our stated capital. As a Korea Stock
Exchange-listed company, we are also required under the

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relevant laws and regulations to set aside in
reserve a certain amount each fiscal year until our own capital
ratio is at least 30%. We may not use legal reserve to pay cash
dividends but may transfer amounts from legal reserve to capital
stock or use legal reserve to reduce an accumulated deficit.


In addition, the Korean Securities and Exchange
Act and our articles of incorporation provide that, in addition
to annual dividends, we may pay interim dividends once during
each fiscal year. Unlike annual dividends, the decision to pay
interim dividends can be made by a resolution of the board of
directors and is not subject to shareholder approval. Any
interim dividends must be paid in cash to the shareholders of
record as of June 30 of the relevant fiscal year.

Under the Korean Securities and Exchange Act, the
total amount of interim dividends payable in a fiscal year shall
not be more than the net assets on the balance sheet of the
immediately preceding fiscal year, after deducting (1) a
companys capital in the immediately preceding fiscal year,
(2) the aggregate amount of its capital reserves and legal
reserves accumulated up to the immediately preceding fiscal
year, (3) the amount of earnings for dividend payments
confirmed at the general shareholders meeting of the
immediately preceding fiscal year and (4) the amount of
legal reserve that should be set aside for the current fiscal
year following the interim dividend payment.

Our obligation to pay interim dividends expires
if no claims to such dividends are made for a period of five
years from the payment date.

Distribution of Free Shares

In addition to paying dividends in shares out of
our retained or current earnings, we may also distribute to our
shareholders an amount transferred from our capital surplus or
legal reserve to our stated capital in the form of free shares.
We must distribute such free shares to all our shareholders in
proportion to their existing shareholdings.

Preemptive Rights and Issuance of Additional
Shares

We may at times issue authorized but unissued
shares, unless otherwise provided in the Korean Commercial Code,
on terms determined by our board of directors. All our
shareholders are generally entitled to subscribe to any
newly-issued shares in proportion to their existing
shareholdings. We must offer new shares on uniform terms to all
shareholders who have preemptive rights and are listed on our
shareholders registry as of the relevant record date.
Under the Korean Commercial Code, we may amend, without
shareholders approval, the terms of these preemptive
rights for different classes of shares. We must give public
notice of the preemptive rights regarding new shares and their
transferability at least two weeks before the relevant record
date. Our board of directors may determine how to distribute
shares for which preemptive rights have not been exercised or
where fractions of shares occur.

Under the Korean Commercial Code and our articles
of incorporation, we may issue new shares pursuant to a board
resolution to persons other than existing shareholders only if
(1) the new shares are issued for the purpose of issuing
depositary receipts in accordance with the relevant regulations
or through an offering to public investors and (2) such
issuance is deemed necessary by us to achieve a business
purpose, including, but not limited to, the introduction of new
technology for the improvement of our financial condition. Under
our articles of incorporation, only our board of directors is
authorized to set the terms and conditions with respect to such
issuance of new shares.

In addition, we may issue convertible bonds or
bonds with warrants, each up to an aggregate principal amount of
Won 400 billion, to persons other than existing
shareholders, where such issuance is deemed necessary by us to
achieve a business purpose, including, but not limited to, the
introduction of new technology or the improvement of our
financial condition.

Members of our employee stock ownership
association, whether or not they are our shareholders, generally
have a preemptive right to subscribe for up to 20.0% of the
shares publicly offered pursuant to the Korean Securities and
Exchange Act. This right is exercisable only to the extent that
the total number of shares so acquired and held by members of
our employee stock ownership association does not exceed 20.0%

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of the sum of the number of shares then
outstanding and the number of newly-issued shares. As of
December 31, 2003, approximately 0.6% of the issued shares
were held by members of our employee stock ownership association.


General Meeting of Shareholders

We generally hold the annual general meeting of
shareholders within three months after the end of each fiscal
year. Subject to a board resolution or court approval, we may
hold an extraordinary 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.                                                                                           

Holders of non-voting shares may request a
general meeting of shareholders only after the non-voting shares
become entitled to vote or enfranchised, as
described under  Voting Rights below.

We must give shareholders written notice setting
out the date, place and agenda of the meeting at least two weeks
before the date of the general meeting of shareholders. However,
for holders of less than 1.0% of the total number of issued and
outstanding voting shares, we may give notice by placing at
least two public notices in at least two daily newspapers at
least two weeks in advance of the meeting. Currently, we use The
Korea Economic Daily News and Mail Business Newspaper, both
published in Seoul, for this purpose. Shareholders who are not
on the shareholders registry as of the record date are not
entitled to receive notice of the general meeting of
shareholders or attend or vote at the meeting. Holders of
non-voting shares, unless enfranchised, are not entitled to
receive notice of or vote at general meetings of shareholders.

Our general meetings of shareholders have
historically been held in or near Seoul.

Voting Rights

Holders of our common shares are entitled to one
vote for each common share, except that voting rights of common
shares held by us (including treasury shares and shares held by
bank trust funds controlled by us), or by a corporate
shareholder that is more than 10.0% owned by us either directly
or indirectly, may not be exercised. Under the Korean Securities
and Exchange Act, unless stated otherwise in the articles of
incorporation, holders of an aggregate of 1% or more of the
outstanding shares with voting rights may request cumulative
voting in any election for two or more directors. Our articles
of incorporation permit cumulative voting starting from the
ordinary general meeting of shareholders in 2003. Under this
voting method, each shareholder would have multiple voting
rights corresponding to the number of directors to be appointed
in a particular election and may exercise all voting rights
cumulatively to elect one director.

Our shareholders may adopt resolutions at a
general meeting by an affirmative majority vote of the voting
shares present or represented at the meeting if the proportion
of affirmative votes also represent at least one-fourth of our
total voting shares then issued and outstanding. However, under
the Korean Commercial Code and our articles of incorporation,
the following matters, among others, require approval by the
holders of at least two-thirds of the voting shares present or
represented at a meeting, and such affirmative votes also
represent at least one-third of our total voting shares then
issued and outstanding:



| |   |                                                                    
| | - | -------------------------------------------------------------------
| |  | amending our articles of incorporation;                            
|
| |  | removing a director;                                               
|
| |  | effecting any dissolution, merger or
    consolidation of us;      
|
| |  | transferring the whole or any significant part of
    our business;

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| |   |                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                                                                     

In general, holders of non-voting shares are not
entitled to vote on any resolution or receive notice of any
general meeting of shareholders. However, in the case of
amendments to our articles of incorporation, or any merger or
consolidation of us, or in some other cases which affect the
rights or interests of the non-voting shares, approval of the
holders of non-voting shares is required. We may obtain the
approval by a resolution of holders of at least two-thirds of
the non-voting shares present or represented at a class meeting
of the holders of non-voting shares, where the affirmative votes
also represent at least one-third of our total issued and
outstanding non-voting shares. In addition, if we are unable to
pay dividends on non-voting shares as provided in our articles
of incorporation, the holders of non-voting shares will become
enfranchised and will be entitled to exercise voting rights
until the dividends are paid. The holders of enfranchised
non-voting shares have the same rights as holders of common
shares to request, receive notice of, attend and vote at a
general meeting of shareholders.

Shareholders may exercise their voting rights by
proxy. A shareholder may give proxies only to another
shareholder, except that a corporate shareholder may give
proxies to its officers or employees.

Holders of ADRs exercise their voting rights
through the ADR depositary, an agent of which is the record
holder of the underlying common shares. Subject to the
provisions of the deposit agreement, ADR holders are entitled to
instruct the ADR depositary how to vote the common shares
underlying their ADSs.

Rights of Dissenting Shareholders

In some limited circumstances, including the
transfer of all or a significant part of our business or our
merger or consolidation with another company (with certain
exceptions), dissenting shareholders have the right to require
us to purchase their shares. To exercise this right,
shareholders, including holders of non-voting shares, must
submit to us a written notice of their intention to dissent
before the general meeting of shareholders. Then, within
20 days after the relevant resolution is passed at a
meeting, the dissenting shareholders must request us in writing
to purchase their shares. We are obligated to purchase the
shares of such dissenting shareholders within one month after
the expiration of the 20-day period. The purchase price for the
shares is required to be determined through negotiation between
the dissenting shareholders and us. If we cannot agree on a
price through negotiation, the purchase price will be the
average of (1) the weighted average of the daily share
prices on the Korea Stock Exchange for the two-month period
before the date of the adoption of the relevant board
resolution, (2) the weighted average of the daily share
price on the Korea Stock Exchange for the one month period
before the date of the adoption of the relevant resolution and
(3) the weighted average of the daily share price on the
Korea Stock Exchange for the one week period before such date of
the adoption of the relevant resolution. However, the Financial
Supervisory Commission of Korea may adjust this price if we or
30.0% or more of dissenting shareholders do not accept the
purchase price. Holders of ADSs will not be able to exercise
dissenters rights unless they have withdrawn the
underlying common stock and become our direct shareholders.

Registry of Shareholders and Record
Dates

Our transfer agent, Kookmin Bank, maintains the
registry of our shareholders at its office in Seoul, Korea. It
records and registers transfers of shares on the registry of
shareholders upon presentation of the share certificates.

The record date for annual dividends is
December 31. For the purpose of determining the
shareholders entitled to annual dividends, the registry of
shareholders is closed for the period from January 1 to
January 31 of the following year. Further, for the purpose
of determining the shareholders entitled to some other rights
pertaining to the shares, we may, on at least two weeks
public notice, set a record date and/or close the

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register of shareholders for not more than three
months. The trading of shares and the delivery of share
certificates may continue while the register of shareholders is
closed.


Annual Report

At least one week before the annual general
meeting of shareholders, we must make our annual report and
audited non-consolidated financial statements available for
inspection at our principal office and at all of our branch
offices. In addition, copies of annual reports, the audited
non-consolidated financial statements and any resolutions
adopted at the general meeting of shareholders will be available
to our shareholders.

Under the Korean Securities and Exchange Act, we
must file with the Financial Supervisory Commission of Korea and
the Korea Stock Exchange (1) an annual securities report
within 90 days after the end of our fiscal year, (2) a
half-year report within 45 days after the end of the first
six months of our fiscal year, and (3) quarterly reports
within 45 days after the end of the third month and the
ninth month of our fiscal year. Copies of these reports are or
will be available for public inspection at the Financial
supervisory Commission of Korea and the Korea Stock Exchange.

Transfer of Shares

Under the Korean Commercial Code, the transfer of
shares is effected by the delivery of share certificates.
However, to assert shareholders rights against us, the
transferee must have his or her name, seal and address
registered on our registry of shareholders, maintained by our
transfer agent. A non-Korean shareholder may file a sample
signature in place of a seal, unless he or she is a citizen of a
country with a sealing system similar to that of Korea. In
addition, a non-resident shareholder must appoint an agent in
Korea authorized to receive notices on his or her behalf and
file his or her mailing address in Korea. These requirements do
not apply to holders of ADSs.

Under current Korean regulations, Korean
securities companies and banks, including licensed branches of
non-Korean securities companies and banks, investment management
companies, futures trade companies, internationally recognized
foreign custodians and the Korea Securities Depository may act
as agents and provide related services for foreign shareholders.
Certain foreign exchange controls and securities regulations
apply to the transfer of shares by non-residents or non-Koreans.
See  Korean Foreign Exchange Controls and
Securities Regulations.

Our transfer agent is Kookmin Bank, located at
24-3, Yoido-dong, Yongdungpo-ku, Seoul, Korea.

Restrictions Applicable to Shares

Pursuant to the Telecommunications Business Law,
the maximum aggregate foreign shareholding in us is limited to
49.0%. See Information on the Company  Business
Overview  Law and Regulation  Foreign
Ownership and Investment Restrictions and Requirements. In
addition, certain foreign exchange controls and securities
regulations apply to the acquisition of securities by
non-residents or non-Koreans. See  Korean
Foreign Exchange Controls and Securities Regulations.

Acquisition of Shares by Us

Under the Korean Commercial Code, we may not
acquire our own shares except in limited circumstances, such as
a reduction in capital. However, we may acquire our own shares
under the relevant provisions of the Securities and Exchange
Act. In such cases, we may acquire shares through purchases on
the Korea Stock Exchange or through a tender-offer after filing
the required report with the Financial Supervisory Commission of
Korea and the Korea Stock Exchange. We may also acquire
interests in our own shares through agreements with trust
companies, securities investment companies and securities
investment trust companies after filing a report with the
Financial Supervisory Commission and the Korean Stock Exchange.
The aggregate purchase price for the shares may not exceed the
total amount available for distribution of dividends, subject to
certain procedural requirements.

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Under the Korean Commercial Code, except in the
case of a reduction in capital, we must resell or transfer any
shares we acquire to a third party within a reasonable time. In
general, corporate entities in which we own more than 50% equity
interest may not acquire our shares. Under the Korean Securities
and Exchange Act, we are subject to certain selling restrictions
for the shares we acquire. In the case of a reduction in
capital, we must immediately cancel the shares we acquire. On
October 26, 2001, in accordance with the approval of our
board of directors, we announced plans to establish trust funds
with four Korean banks with a total funding of won 1.3 trillion
for the purpose of acquiring our shares at market prices or
within a range of five percent of market prices. See
Operating and Financial Review and Prospects.

Liquidation Rights

In the event of our liquidation, assets remaining
after payment of all debts, liquidation expenses and taxes will
be distributed among shareholders in proportion to their
shareholdings. Holders of non-voting shares have no preference
in liquidation. Holders of debt securities have no preference
over other creditors in the event of liquidation.

DESCRIPTION OF AMERICAN DEPOSITARY
SHARES

The following is a summary of the 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, among us, Citibank, N.A., as ADR depositary,
and all holders and beneficial owners of ADSs, as supplemented
by the side letter dated as of August 1, 2002 by and
between us and Citibank, N.A., as ADR depositary, and as
supplemented by the side letter dated as of October 1, 2002
by and between us and Citibank, N.A., as ADR depositary. The
deposit agreement is governed by the laws of the State of New
York. Because it is a summary, this description does not contain
all the information that may be important to you. For more
complete information, you should read the entire deposit
agreement and the ADR. The deposit agreement has been filed as
an exhibit to our registration statement on Form F-3 (File
No. 333-91304) filed with the United States Securities and
Exchange Commission. Copies of the deposit agreement are
available for inspection at the principal New York office of the
ADR depositary, currently located at 111 Wall Street, 20th
Floor, New York, New York 10043, and at the principal London
office of the ADR depositary currently located at Cottons
Centre, Hays Lane, London SE1 2QT, England.

American Depositary Receipts

The ADR depositary will execute and deliver the
ADRs evidencing the ADSs. Each ADR evidences a specified number
of ADSs, each ADS representing one-ninth of one share of our
common stock to be deposited with the ADR depositarys
custodian in Seoul, or the Custodian. The Custodian is Korea
Securities Depository, located at 36-5 Yoido-dong,
Yongdungpo-ku, Seoul, Korea. Korea Securities Depository is also
the institution authorized under applicable law to effect
book-entry transfers of our common shares, known as the
Custodian. An ADR may represent any number of ADSs.
We and the ADR depositary will treat only persons in whose names
ADRs are registered on the books of the registrar as holders of
ADRs.

Deposit and Withdrawal of Shares of Common
Stock

Notwithstanding the provisions described below,
under the terms of the deposit agreement, as amended by the side
letter dated as of October 1, 2002, the deposit of shares
and issuance of ADSs may only be made if the total number of
shares represented by ADRs after such deposit does not exceed a
specified maximum, 13,598,544 shares as of October 1,
2002. This limit will be adjusted in certain circumstances,
including (1) increases upon the cancellation of existing
ADRs (up to a maximum of 5,605,839 shares), (2) increases
upon future offerings of ADSs by us or our shareholders,
(3) increases upon issuances of ADSs upon the exchange of
outstanding exchangeable bonds issued by Momenta (Cayman) (a
special purpose vehicle incorporated in the Cayman Islands,
which sold bonds exchangeable initially into such ADSs, see,
Major Shareholders and Related Party
Transactions  Related Party Transactions),
(4) increases for rights offerings and (5) adjustments
for share reclassifications. The limit also may be decreased in
certain

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circumstances, including in connection with
purchases of ADSs by Momenta (Cayman) in accordance with the
terms of its exchangeable bonds. Notwithstanding the foregoing,
the ADR depositary and the custodian may not accept deposits of
shares of common stock for issuance of ADSs (other than in the
case of an exercise of the exchange rights of the exchangeable
bonds issued by Momenta (Cayman)) (i) if it has been
notified by us in writing that we block deposits to prevent a
violation of applicable Korean laws or regulations or a
violation of our articles of incorporation or (ii) from a
person intending to make a deposit that identifies itself to the
depositary and that has been identified in writing by us as a
holder of at least 3% of our shares of common stock on
October 7, 2002.


The shares of common stock underlying the ADSs
are delivered to the ADR depositarys custodian in
book-entry form. Accordingly, no share certificates will be
issued for them, and the ADR depositary will hold the shares of
common stock through the book-entry settlement system of the
Custodian. The delivery of the shares of common stock pursuant
to the deposit agreement will take place through the facilities
of the Custodian in accordance with its applicable settlement
procedures. The ADR depositary will execute and deliver ADRs if
you or your broker deposit shares or evidence of rights to
receive shares of common stock with the Custodian. Upon payment
of its fees and expenses and of any taxes or charges, such as
stamp taxes or stock transfer taxes or fees, the ADR depositary
will register the appropriate number of ADSs in the names you
designate and will deliver an ADR or ADRs for those ADSs to the
persons you designate. The ADR depositary and the ADR
depositarys custodian will refuse to accept shares of
common stock for deposit whenever we restrict transfer of shares
of common stock to comply with ownership restrictions under
applicable law or our articles of incorporation or whenever the
deposit would cause the total number of shares of common stock
deposited to exceed a level we determine from time to time. We
may instruct the ADR depositary to take certain actions with
respect to a holder of ADSs who holds in excess of the ownership
limitation set forth in the deposit agreement, including the
mandatory sale or disposition of the shares represented by the
ADSs in excess of such ownership limitations if, and to the
extent, permitted by applicable law.

You may surrender your ADRs to the ADR depositary
to withdraw the underlying shares of our common stock. Upon
payment of the fees and any governmental charges and taxes
provided in the deposit agreement, and subject to applicable
laws and regulations of Korea and our articles of incorporation,
you will be entitled to physical delivery or electronic delivery
to an account in Korea or, if permissible under applicable
Korean law, outside Korea, of the shares of common stock
evidenced by the ADRs and any other property at the time
represented by ADRs you surrendered. If you surrender an ADR
evidencing a number of ADSs not evenly divisible by nine, the
ADR depositary will deliver the appropriate whole number of
shares of common stock represented by the surrendered ADSs, and
will execute and deliver to you a new ADR evidencing ADSs
representing any remaining fractional shares of common stock.

If you request withdrawal of shares of common
stock, you must deliver to the ADR depositary a written order
directing the ADR depositary to cause the shares of common stock
being withdrawn to be delivered outside the United States to or
upon the written order of the person designated in your order,
subject to applicable Korean laws and the provisions of the
deposit agreement.

Under the provisions of the deposit agreement,
the ADR depositary may not lend shares of common stock or ADSs.
However, subject to the provisions of the deposit agreement and
limitations established by the ADR depositary, the ADR
depositary may execute and deliver ADSs before deposit of the
underlying shares of common stock. This is called a pre-release
of the ADS. The ADR depositary may also deliver shares of common
stock upon cancellation of pre-released ADSs (even if the
cancellation occurs before the termination of the pre-release)
or upon receipt of other ADSs. The ADR depositary may
pre-release ADSs only under the following circumstances:



| |   |                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 ADRs 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                                                                                           

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| |   |                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | 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.                                                                                                              

The ADR depositary may retain for its own account
any compensation received by it in connection with the
pre-release, such as earnings on the collateral.

If you want to withdraw the shares of common
stock from the depositary facility, you must register your
identity with the Financial Supervisory Service of Korea before
you acquire the shares of common stock unless you intend to sell
the shares of common stock within three months. See Korean
Foreign Exchange Controls and Securities Regulations 
Restrictions Applicable to Shares.

Dividends, Other Distributions and
Rights

If the ADR depositary can, in its judgment and
pursuant to applicable law, convert Won (or any other foreign
currency) into Dollars on a reasonable basis and transfer the
resulting Dollars to the United States, the ADR depositary will
as promptly as practicable convert all cash dividends and other
cash distributions received by it on the deposited shares of
common stock into Dollars and to distribute the Dollars to you
in proportion to the number of ADSs representing shares of
common stock held by you, after deduction of the fees and
expenses of the ADR depositary. If the ADR depositary determines
that in its judgment any currency other than Dollars it receives
from us cannot be converted and distributed on a reasonable
basis, the ADR depositary may distribute the currency it
receives to the extent permitted under applicable law or hold
the currency for your account if you are entitled to receive the
distribution. The ADR depositary will not be liable for any
interest. Before making a distribution, the ADR depositary will
deduct any withholding taxes that must be paid.

In the event that the ADR depositary or the ADR
depositarys custodian receives any distribution upon any
deposited shares of common stock in property or securities
(other than shares of common stock, non-voting shares or rights
to receive shares of common stock or non-voting shares), the ADR
depositary will distribute the property or securities to you in
proportion to your holdings in any manner that the ADR
depositary deems, after consultation with us, equitable and
practicable. If the ADR depositary determines that any
distribution of property or securities (other than shares of
common stock, non-voting shares or rights to receive shares of
common stock or non-voting shares) cannot be made
proportionally, or if for any other reason the ADR depositary
deems the distribution not to be feasible, the ADR depositary
may, after consultation with us, dispose of all or a portion of
the property or securities in such amounts and in such manner,
including by public or private sale, as the ADR depositary deems
equitable or practicable. The ADR depositary will distribute to
you the net proceeds of any such sale, or the balance of the
property or securities, after the deduction of the fees and
expenses of the ADR depositary.

If a distribution by us consists of a dividend
in, or free distribution of, our shares of common stock, the ADR
depositary may, with our approval, and will, if we request,
deposit the shares of common stock and either (1) distribute to
you, in proportion to your holdings, additional ADSs
representing those shares of common stock, or (2) reflect
on the records of the ADR depositary the increase in the
aggregate number of ADSs representing those number of shares of
common stock, in both cases, after the deduction of the fees and
expenses of the ADR depositary. If the ADR depositary deems that
such distribution for any reason is not feasible, the ADR
depositary may adopt, after consultation with us, any method as
it may deem equitable and practicable, including by public or
private sale of all or part of the shares of common stock
received. The ADR depositary will distribute to you the net
proceeds of any such sale in the same way as it does with cash.
The

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ADR depositary will only distribute whole ADSs.
If the ADR depositary does not distribute additional ADSs, then
each outstanding ADS will also represent the new shares so
distributed.


If a distribution by us consists of a dividend
in, or free distribution of, non-voting shares, the ADR
depositary will deposit the non-voting shares under a non-voting
shares deposit agreement to be entered into among us, the ADR
depositary and all holders and beneficial owners of depositary
shares. The ADR depositary will deliver to you, in proportion to
your holdings of ADSs, depositary shares issued under the
non-voting shares deposit agreement representing the number of
non-voting shares received as such dividend or distribution. If
the ADR depositary deems such distribution for any reason is not
feasible, the ADR depositary may adopt, after consultation with
us, any method as it may deem equitable and practicable,
including by public or private sale of all or part of the
non-voting shares received. The ADR depositary will distribute
to you the net proceeds of any such sale in the same way as it
does with cash. The ADR depositary will only distribute whole
depositary shares. We are not obligated to list depositary
shares representing non-voting shares on any exchange.

If we offer holders of our securities any rights
to subscribe for additional shares of common stock or any other
rights, the ADR depositary may make these rights available to
you. The ADR depositary must first determine whether it is
lawful and feasible to do so. If the ADR depositary determines
that it is not lawful or feasible to make these rights available
to you, then upon our request, the ADR depositary will sell the
rights and distribute the proceeds in the same way as it would
do with cash. The ADR depositary may allow these rights that are
not distributed or sold to lapse. In that case, you will receive
no value for these rights.

If we issue any rights with respect to non-voting
shares, the securities issuable upon any exercise of such rights
by holders or beneficial owners will be depositary shares
representing those non-voting shares issued under the provisions
of a non-voting share deposit agreement.

If a registration statement under the
U.S. Securities Act is required with respect to the
securities to which any rights relate in order for us to offer
the rights to you and to sell the securities represented by
these rights, the ADR depositary will not offer such rights to
you until such a registration is in effect, or unless the
offering and sale of such securities and such rights to you are
exempt from the registration requirements of the
U.S. Securities Act or any required filing, report,
approval or consent has been submitted, obtained or granted. We
or the ADR depositary will not be obligated to register the
rights or securities under the U.S. Securities Act or to
submit, obtain or request any filing, report, approval or
consent.

The ADR depositary may not be able to convert any
currency or to sell or dispose of any distributed or offered
property or rights in a timely manner or at a specified price,
or at all.

Record Dates

The ADR depositary will fix a record date, after
consultation with us, in each of the following situations:



| |   |                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                   

The record date will, to the extent practicable,
be as near as the record date fixed by us for the shares of
common stock. The record date will determine (1) the ADR
holders who are entitled to receive the dividend, distribution
or rights, or the net proceeds of the sale of the rights; or
(2) the ADR holders who are entitled to receive notices or
exercise rights.

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Voting of the Underlying Shares of Common
Stock

We will give the ADR depositary a notice of any
meeting or solicitation of shareholder proxies immediately after
we finalize the form and substance of such notice but not less
than 14 days before the meeting. As soon as practicable
after it receives our notice, the ADR depositary will fix a
record date, and upon our written request, the ADR depositary
will mail to you a notice that will contain the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 incorporation, 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.                                                                                                                                                                                                                                                                                                                                                                                

Upon your written request received on or before
the date set by the ADR depositary for this purpose, the ADR
depositary will endeavor, in so far as practicable, to vote or
cause to be voted the deposited shares of common stock in
accordance with the instructions set forth in your written
requests. The ADR depositary may not itself exercise any voting
discretion over any deposited shares of common stock. You may
only exercise the voting rights in respect of 9 ADSs or
multiples of 9 ADSs. ADR holders may not be entitled to give
instruction to vote the shares represented by the ADSs if, and
to the extent, the total number of shares represented by the
ADSs of an ADR holder exceeds the limit set under applicable
law. We can give no assurance to you, however, that we will
notify the ADR depositary sufficiently in advance of the
scheduled date of a meeting or solicitation of consents or
proxies to enable the ADR depositary to make a timely mailing of
notices to you, or that you will receive the notices
sufficiently in advance of a meeting or solicitation of consents
or proxies to give instructions to the ADR depositary.

Inspection of Transfer Books

The ADR depositary will keep books at its
principal New York office which is currently located at
111 Wall Street, 20th Floor/ Zone 7, New York, New York
10043, for the registration and transfer of ADRs. You may
inspect the books of the ADR depositary as long as the
inspection is not for the purpose of communicating with holders
in the interest of a business or object other than our business
or a matter related to the deposit agreement or the ADRs.

Reports and Notices

On or before the first date on which we give
notice, by publication or otherwise, of any meeting of
shareholders, or of any adjourned meeting of shareholders, or of
the taking of any action in respect of any cash or other
distributions or the offering of any rights in respect of the
shares of common stock, we will transmit to the Custodian and
the ADR depositary sufficient copies of the notice in English in
the form given or to be given to shareholders. We will furnish
to the ADR depositary English language versions of any reports
notices and other communications that we generally transmit to
holders of our common stock, including our annual reports, with
annual audited consolidated financial statements prepared in
conformity with Korean GAAP and, if prepared pursuant to the
Securities Exchange Act of 1934, as amended, a reconciliation of
net earnings for the year and stockholders equity to
U.S. GAAP, and unaudited non-consolidated semiannual
financial statements prepared in conformity with Korean GAAP.
The ADR depositary will arrange for the prompt mailing of copies
of these documents, or, if we request, a summary of any such
notice provided by us to you or, at our request, make notices,
reports (other than the annual reports and semiannual financial
statements) and other communications available to you on a basis
similar to that for the holders of our common stock or on such
other basis as we may advise the ADR depositary according to any
applicable law, regulation or stock exchange requirement.

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Notices to you under the deposit agreement will
be deemed to have been duly given if personally delivered or
sent by mail or cable, telex or facsimile transmission,
confirmed by letter, addressed to you at your address as it
appears on the transfer books of the ADR depositary or at such
other address as you have notified the ADR depositary.

In addition, the ADR depositary will make
available for inspection by holders at its principal New York
office and its principal London office any notices, reports or
communications, including any proxy soliciting materials,
received from us that we generally transmit to the holders of
our common stock or other deposited securities, including the
ADR depositary. The ADR depositary will also send to you copies
of reports and communications we will provide as provided in the
deposit agreement.

Changes Affecting Deposited Shares of Common
Stock

In case of a change in the par value, or a
split-up, consolidation or any other reclassification of shares
of our common stock or upon any recapitalization,
reorganization, merger or consolidation or sale of assets
affecting us, any securities received by the ADR depositary or
the Custodian in exchange for, in conversion of or in respect of
deposited shares of our common stock will be treated as new
deposited shares of common stock under the deposit agreement. In
that case, ADSs will, subject to the terms of the deposit
agreement and applicable laws and regulations, including any
registration requirements under the U.S. Securities Act,
represent the right to receive the new deposited shares of
common stock, unless additional ADRs are issued, as in the case
of a stock dividend, or unless the ADR depositary calls for the
surrender of outstanding ADRs to be exchanged for new ADRs.

Amendment and Termination of the Deposit
Agreement

We may agree with the ADR depositary to amend the
deposit agreement and the ADSs without your consent for any
reason. If the amendment adds or increases fees or charges,
except for taxes and other governmental charges or certain
expenses of the ADR depositary, or prejudices any substantial
existing right of ADR holders, it will only become effective
30 days after the ADR depositary notifies you of the
amendment. If you continue to hold your ADSs at the time an
amendment becomes effective, you will be considered to have
agreed to the amendment and to be bound by the deposit agreement
as amended. Except as otherwise required by any mandatory
provisions of applicable law, no amendment may impair your right
to surrender your ADSs and to receive the underlying deposited
securities.

The ADR depositary will terminate the deposit
agreement if we ask it to do so with 90 days prior
written notice. The ADR depositary may also terminate the
deposit agreement if the ADR depositary has notified us at least
90 days in advance that it would like to resign and we have
not appointed a new depositary. In both cases, the ADR
depositary must notify you at least 30 days before the
termination date.

If any ADRs remain outstanding after the date of
termination, the ADR depositary will stop performing any further
acts under the deposit agreement, except:



| |   |                                                                                                                                                                                                                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.

At any time after the expiration of six months
from the date of termination, the ADR depositary may sell any
remaining deposited shares of common stock and hold uninvested
the net proceeds in an unsegregated account, together with any
other cash or property then held, without liability for
interest, for the pro rata benefit of the holders of ADSs that
have not been surrendered by then.

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Charges of ADR Depositary

The fees and expenses of the ADR depositary as
agreed between us and the ADR depositary include:



| |   |                                                                                                                                                                                                                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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

Neither we nor the ADR depositary will be liable
to you if prevented or delayed by law, governmental authority,
any provision of our articles of incorporation or any
circumstances beyond our or its control in performing our or its
obligations under the deposit agreement. The deposit agreement
provides that the ADR depositary will hold the shares of common
stock for your sole benefit. Our obligations and those of the
ADR depositary under the deposit agreement are expressly limited
to performing, in good faith and without negligence, our and its
respective duties specified in the deposit agreement.

The ADSs are transferable on the books of the ADR
depositary; provided, however, that the ADR depositary may,
after consultation with us, close the transfer books at any time
or from time to time, when deemed expedient by it in connection
with the performance of its duties. As a condition precedent to
the execution and delivery of any ADSs, registration of
transfer, split-up, combination of any ADR or surrender of any
ADS for the purpose of withdrawal of deposited shares of common
stock, the ADR depositary or the Custodian may require payment
from the depositor of the shares of common stock or a holder of
ADSs of a sum sufficient to reimburse the ADR depositary for any
tax or other governmental charge and any stock transfer or
registration fee and payment of any applicable fees payable by
the holders of ADSs.

Any person depositing shares of common stock, any
holder of an ADS or any beneficial owner may be required from
time to time to file with the ADR depositary or the Custodian a
proof of citizenship, residence, exchange control approval,
payment of applicable Korean or other taxes or governmental
charges, or legal or beneficial ownership and the nature of
their interest, to provide information relating to the
registration on our shareholders register (or our
appointed agent for the transfer and registration of shares of
common stock) of the shares of common stock presented for
deposit or other information, to execute certificates and to
make representations and warranties as we or the ADR depositary
may deem necessary or proper or to enable us or the ADR
depositary to perform our and its obligations under the deposit
agreement. The ADR depositary may withhold the execution or
delivery or registration of transfer of all or part of any ADR
or the distribution or sale of any dividend or other
distribution of rights or of the proceeds from their sale or the
delivery of any shares deposited under the deposit agreement and
any other securities, property and cash received by the ADR
depositary or the Custodian until the proof or other information
is filed or the certificates are executed or the representations
and warranties are made. The ADR depositary shall provide us,
unless otherwise instructed by us, in a timely manner, with
copies of any these proofs and certificates and these written
representations and warranties.

The delivery and surrender of ADSs and transfer
of ADSs generally may be suspended during any period when our or
the ADR depositarys transfer books are closed, or if that
action is deemed necessary or advisable by us or the ADR
depositary at any time or from time to time in accordance with
the deposit agreement. We

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may restrict, in a manner as we deem appropriate,
transfers of shares of common stock where the transfers may
result in ownership of shares of common stock in excess of
limits under applicable law. Except as described in
Deposit and Withdrawal of Shares of Common Stock
above, notwithstanding any other provision of the deposit
agreement, the surrender of outstanding ADRs and withdrawal of
Deposited Securities (as defined in the deposit agreement)
represented by the ADRs may be suspended, but only as required
in connection with (1) temporary delays caused by closing
the transfer books of the ADR depositary or the issuer of any
Deposited Securities (or the appointed agent or agents for such
issuer for the transfer and registration of such Deposited
Securities) in connection with voting at a shareholders
meeting or the payment of dividends, (2) payment of fees,
taxes and similar charges, or (3) compliance with any
United States or foreign laws or governmental regulations
relating to the ADRs or to the withdrawal of the Deposited
Securities.


Governing Law

The deposit agreement and the ADRs will be
interpreted under, and all rights under the deposit agreement or
the ADRs are governed by, the laws of the State of New York.

We have irrevocably submitted to the
non-exclusive jurisdiction of New York State or United States
Federal Courts located in New York City and waived any objection
to legal actions or proceedings in these courts whether on the
ground of venue or on the ground that the proceedings have been
brought in an inconvenient forum.

This submission was made for the benefit of the
ADR depositary and the holders and shall not limit the right of
any of them to take legal actions or proceedings in any other
court of competent jurisdiction nor shall the taking of legal
actions or proceedings in one or more jurisdictions preclude the
taking of legal actions or proceedings in any other jurisdiction
(whether concurrently or not), to the extent permitted under
applicable law.

Information Relating to the ADR
Depositary

Citibank, N.A. has been appointed as ADR
depositary pursuant to the deposit agreement. Citibank is a
wholly-owned subsidiary of Citicorp, a Delaware corporation
whose principal office is located in New York, New York, which
in turn is a wholly-owned subsidiary of Citigroup Inc. Citibank
is a global financial services organization serving individuals,
businesses, governments and financial institutions in
approximately 100 countries around the world.

Citibank was originally organized on
June 16, 1812, and now is a national banking association
organized under the National Bank Act of 1864 of the United
States of America. Citibank is primarily regulated by the United
States Office of the Comptroller of the Currency. Its principal
office is at 399 Park Avenue, New York, NY 10022.

The consolidated balance sheets of Citibank are
set forth in Citicorps Annual Reports on Form 10-K,
and in Citicorps quarterly financial reviews and Forms
10-Q. Citicorps Annual Reports on Form 10-K and
quarterly financial reviews and Forms 10-Q are filed
periodically with the United States Securities and Exchange
Commission, or SEC.

Citibanks Articles of Association and
By-laws, each as currently in effect, together with
Citicorps most recent annual and quarterly reports will be
available for inspection at the Depositary Receipt office of
Citibank, N.A., 111 Wall Street, 20th Floor/ Zone 7, New York,
New York 10043.

MATERIAL CONTRACTS

We did not enter into any material contracts
during the period from January 1, 2001 through May 31,
2004, other than in the ordinary course of our business. For
information regarding our agreements and transactions with
entities affiliated with the SK Group see Major
Shareholders and Related Party Transactions  Related
Party Transactions. For a description of certain
agreements entered into during the

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past three years related to our capital
commitments and obligations, see Operating and Financial
Review and Prospects  Capital Requirements and
Resources.


KOREAN FOREIGN EXCHANGE CONTROLS AND
SECURITIES REGULATIONS

General

The Foreign Exchange Transaction Act and the
Presidential Decree and regulations under that Act and Decree,
collectively referred to as the Foreign Exchange Transaction
Laws, regulate investment in Korean securities by non-residents
and issuance of securities outside Korea by Korean companies.
Under the Foreign Exchange Transaction Laws, non-residents may
invest in Korean securities only to the extent specifically
allowed by these laws. The Financial Supervisory Commission of
Korea has also adopted, pursuant to its authority under the
Securities and Exchange Act, regulations that restrict
investment by foreigners in Korean securities and regulate
issuance of securities outside Korea by Korean companies.

Subject to certain limitations, the MOFE has
authority to take the following actions under the Foreign
Exchange Transaction Laws:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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
    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

In order for us to issue ADSs outside Korea, we
are required to submit a report to the MOFE or our designated
foreign exchange bank (depending on the aggregate issuance
amount) with respect to the issuance of the ADSs. The transfer
of the shares to the ADR depositary must be reported immediately
to the Governor of the Financial Supervisory Service. The ADR
depositary must report to the Financial Supervisory Service
(1) the entry into, renewal or termination of a deposit
agreement with a Korean company immediately upon occurrence of
such event and (2) the balance of the issued depositary
receipts within 20 days from the last day of each quarter.
Furthermore, at the time of making any payment under the ADSs or
any amount as provided in the deposit agreement, relevant
documents should be submitted to a foreign exchange bank to
enable such foreign exchange bank to verify (1) that the
amount being remitted conforms to the amount required to be paid
under the relevant documents, and (2) whether or not any
necessary approval or report requirement, if any, has been met.
No further governmental approval is necessary for the offering
and issuance of the ADSs.

Under current Korean laws and regulations, the
ADR depositary is required to obtain our prior consent for the
number of shares to be deposited in any given proposed deposit
which exceeds the difference between:



| |   |                                                                                                                                                                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the aggregate number of common shares deposited
    by us or with our consent 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 these ADSs); and
|
| |  | the number of common shares on deposit with the
    ADR depositary at the time of such proposed deposit. We can give
    no assurance that we would grant our consent, if our consent is
    required. In                                                                        

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                          
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 Additional
    Information  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

Under the Korean Securities and Exchange Act, any
person whose direct or beneficial ownership of shares with
voting rights, whether in the form of shares or ADSs,
certificates representing the rights to subscribe for shares and
equity-related debt securities including convertible bonds and
bonds with warrants, collectively referred to as Equity
Securities, together with the Equity Securities beneficially
owned by certain related persons or by any person acting in
concert with the person accounts for 5.0% or more of the total
outstanding Equity Securities is required to report the status
of the holdings to the Financial Supervisory Commission of Korea
and (1) the Korea Stock Exchange if the shares are listed
on the Korean Stock Exchange or (2) the Korean Securities
Dealers Association if the shares are registered on KOSDAQ
within five business days after reaching the 5.0% ownership
interest. In addition, any change in the ownership interest
subsequent to the report which equals or exceeds 1.0% of the
total outstanding Equity Securities is required to be reported
to the Financial Supervisory Commission of Korea and
(1) the Korea Stock Exchange if the shares are listed on
the Korean Stock Exchange or (2) the Korean Securities
Dealers Association, if the shares are listed on KOSDAQ, within
five business days from the date of the change.

Violation of these reporting requirements may
subject a person to criminal sanctions such as fines or
imprisonment and may result in a loss of voting rights with
respect to the ownership of unreported Equity Securities
exceeding 5.0%. Furthermore, the Financial Supervisory
Commission of Korea may issue an order to dispose of such
non-reported Equity Securities.

In addition to the reporting requirements
described above, any person whose direct or beneficial ownership
of our common shares accounts for 10% or more of the total
issued and outstanding shares with voting rights (a major
shareholder) must report the status of his/her
shareholding to the Securities and Futures Commission and the
Korean Securities Dealers Association by the tenth day of the
calendar month immediately following the month in which any
changes in shareholding have occurred. Violations of these
reporting requirements may subject a person to criminal
sanctions, such as fines or imprisonment.

Restrictions Applicable to ADSs

No Korean governmental approval is necessary for
the sale and purchase of ADSs in the secondary market outside
Korea or for the withdrawal of shares underlying ADSs and the
delivery of shares in Korea in connection with the withdrawal,
provided that a foreigner who intends to acquire the shares must
obtain an investment registration card from the Financial
Supervisory Service, as described below. The acquisition of the
shares by a foreigner must be reported by the foreigner or his
standing proxy in Korea immediately to the Governor of the
Financial Supervisory Service.

Persons who have acquired shares as a result of
the withdrawal of shares underlying the ADSs may exercise their
preemptive rights for new shares, participate in free
distributions and receive dividends on shares without any
further governmental approval.

Restrictions Applicable to Shares

As a result of amendments to the Foreign Exchange
Transaction Laws and the regulations of Financial Supervisory
Commission of Korea, together referred to as the Investment
Rules, adopted in connection with the stock market opening from
January 1992 and after that date, foreigners may invest, with
limited exceptions and subject to procedural requirements, in
all shares of Korean companies, whether listed on the Korea
Stock Exchange or registered on the KOSDAQ, unless prohibited by
specific laws. Foreign investors

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may trade shares listed on the Korea Stock
Exchange or registered on the KOSDAQ only through the Korea
Stock Exchange or the KOSDAQ, except in limited circumstances,
including, among others:




| |   |                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.                                                                                                                                                                     

For over-the-counter transactions of shares
between foreigners outside the Korea Stock Exchange or the
KOSDAQ for shares with respect to which the limit on aggregate
foreign ownership has been reached or exceeded, a securities
company licensed in Korea must act as an intermediary. Odd-lot
trading of shares outside the Korea Stock Exchange or the KOSDAQ
must involve a licensed securities company in Korea as the other
party. Foreign investors are prohibited from engaging in margin
transactions through borrowing shares from securities companies
with respect to shares which are subject to a foreign ownership
limit.

The Investment Rules require a foreign investor
who wishes to invest in shares for the first time on the Korea
Stock Exchange or the KOSDAQ (including Converted Shares) and
shares being publicly offered for initial listing on the Korean
Stock Exchange or registration on the KOSDAQ to register its
identity with the Financial Supervisory Service prior to making
any such investment; however, the registration requirement does
not apply to foreign investors who acquire Converted Shares with
the intention of selling such Converted Shares within three
months from the date of acquisition of the Converted Shares or
who acquire the shares in an over-the-counter transaction or
dispose of shares where such acquisition or disposal is deemed
to be a foreign direct investment pursuant to the Foreign
Investment Promotion Law. Upon registration, the Financial
Supervisory Service will issue to the foreign investor an
investment registration card which must be presented each time
the foreign investor opens a brokerage account with a securities
company or financial institution in Korea. Foreigners eligible
to obtain an investment registration card include foreign
nationals who are individuals residing in Korea for six months
or longer, foreign governments, foreign municipal authorities,
foreign public institutions, international financial
institutions or similar international organizations,
corporations incorporated under foreign laws and any person in
any additional category designated by decree of the MOFE. All
Korean offices of a foreign corporation as a group are treated
as a separate foreigner from the offices of the corporation
outside Korea for the purpose of investment registration.
However, a foreign corporation or depositary issuing depositary
receipts may obtain one or more investment registration cards in
its name in certain circumstances as described in the relevant
regulations.

Upon a foreign investors purchase of shares
through the Korea Stock Exchange or the KOSDAQ, no separate
report by the investor is required because the investment
registration card system is designed to control and oversee
foreign investment through a computer system. However, where a
foreign investor acquires or sells shares outside the Korea
Stock Exchange and the KOSDAQ and the circumstances in
connection with such sale or acquisition do not fall within the
exceptions made for certain limited circumstances described
above, such acquisition or sale of shares must be reported by
the foreign investor or his standing proxy to the Governor at
the time of each such acquisition or sale; provided, however,
that a foreign investor must ensure that any acquisition or sale
by it of shares outside the Korea Stock Exchange or the KOSDAQ
in the case of trades in connection with a tender offer, odd-lot
trading of shares or trades of a

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class of shares for which the aggregate foreign
ownership limit has been reached or exceeded, is reported to the
Governor by the securities company engaged to facilitate such
transaction. In the event a foreign investor desires to acquire
or sell shares outside the Korea Stock Exchange or the KOSDAQ
and the circumstances in connection with such sale or
acquisition do not fall within the exceptions made for certain
limited circumstances described above, then the foreign investor
must obtain the prior approval of the Governor. In addition, in
the event a foreign investor acquires or sells shares outside
the Korea Stock Exchange or the KOSDAQ, a prior report to the
Bank of Korea may also be required in certain circumstances. A
foreign investor must appoint one or more standing proxies from
among the Korea Securities Depository, foreign exchange banks,
including domestic branches of foreign banks, securities
companies, including domestic branches of foreign securities
companies, investment trust companies, futures trading companies
and internationally recognized custodians which will act as a
standing proxy to exercise shareholders rights, or perform
any matters related to the foregoing activities if the foreign
investor does not perform these activities himself. However, a
foreign investor may be exempted from complying with these
standing proxy rules with the approval of the Governor in cases
deemed inevitable by reason of conflict between laws of Korea
and the home country of the foreign investor.


Certificates evidencing shares of Korean
companies must be kept in custody with an eligible custodian in
Korea. Only foreign exchange banks, including domestic branches
of foreign banks, securities companies, including domestic
branches of foreign securities companies, the Korea Securities
Depository, investment trust companies, futures trading
companies and internationally recognized custodians are eligible
to act as a custodian of shares for a non-resident or foreign
investor. A foreign investor must ensure that his custodian
deposits its shares with the Korea Securities Depository.
However, a foreign investor may be exempted from complying with
this deposit requirement with the approval of the Governor in
circumstances where compliance with that requirement is made
impracticable, including cases where compliance would contravene
the laws of the home country of such foreign investor.

Under the Investment Rules, with certain
exceptions, foreign investors may acquire shares of a Korean
company without being subject to any foreign investment ceiling.
As one such exception, designated public corporations are
subject to a 40.0% ceiling on the acquisition of shares by
foreigners in the aggregate. Designated public corporations may
set a ceiling on the acquisition of shares by a single person
within 3.0% of the total number of shares in their articles of
incorporation. Currently, Korea Electric Power Corporation is
the only designated public corporation which has set such a
ceiling. Furthermore, an investment by a foreign investor of not
less than 10.0% of the outstanding shares with voting rights of
a Korean company is defined as a direct foreign investment under
the Foreign Investment Promotion Law, which is, in general,
subject to the report to, and acceptance by, the Ministry of
Commerce, Industry and Energy of Korea, which delegates its
authority to foreign exchange banks or the Korea
Trade-Investment Promotion Agency under the relevant
regulations. The acquisition of our shares by a foreign investor
is also subject to the restrictions prescribed in the
Telecommunications Business Law. The Telecommunications Business
Law generally limits the maximum aggregate foreign shareholdings
in us to 49.0% of the outstanding shares. Foreign investors may
hold shares of our common stock in excess of the 49% limitation
acquired as a result of the exercise of certain exchange-traded
stock options for individual corporations; provided, however,
that any such foreign investor must dispose of any of shares of
our common stock in excess of the 49% limitation within one day
after settlement of the option. A foreigner who has acquired
shares in excess of such restriction described above may not
exercise its voting rights with respect to the shares exceeding
such limitations, and may be subject to corrective orders.

Under the Foreign Exchange Transaction Laws, a
foreign investor who intends to make a portfolio investment in
shares of a Korean company listed on the Korea Stock Exchange or
registered on KOSDAQ must designate a foreign exchange bank at
which he must open a foreign currency account and a Won account
exclusively for stock investments. No approval is required for
remittance into Korea and deposit of foreign currency funds in
the foreign currency account. Foreign currency funds may be
transferred from the foreign currency account at the time
required to place a deposit for, or settle the purchase price
of, a stock purchase transaction to a Won account opened at a
securities company. Funds in the foreign currency account may be
remitted abroad without any governmental approval.

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Dividends on shares are paid in Won. No
governmental approval is required for foreign investors to
receive dividends on, or the Won proceeds of the sale of, any
such shares to be paid, received and retained in Korea.
Dividends paid on, and the Won proceeds of the sale of, any such
shares held by a non-resident of Korea must be deposited either
in a Won account with the investors securities company or
the investors Won account. Funds in the investors
Won account may be transferred to his foreign currency account
or withdrawn for local living expenses, provided that any
withdrawal of local living expenses in excess of a certain
amount is reported to the tax authorities by the foreign
exchange bank at which the Won account is maintained. Funds in
the investors Won account may also be used for future
investment in shares or for payment of the subscription price of
new shares obtained through the exercise of preemptive rights.

Securities companies and investment trust
companies are allowed to open foreign currency accounts with
foreign exchange banks exclusively for accommodating foreign
investors stock investments in Korea. Through these
accounts, these securities companies and investment trust
companies may enter into foreign exchange transactions on a
limited basis, such as conversion of foreign currency funds and
Won funds, either as a counterparty to or on behalf of foreign
investors, without the investors having to open their own
accounts with foreign exchange banks.

Further Opening of the Korean Securities
Market

A stock index futures market was opened on
May 3, 1996 and a stock index option market was opened on
July 7, 1997, in each case at the Korea Stock Exchange.
Remittance and repatriation of funds in connection with
investment in stock index futures and options are subject to
regulations similar to those that govern remittance and
repatriation in the context of foreign investment in Korean
stocks.

In addition, the Korea Stock Exchange opened new
option markets for stocks of seven companies including our
shares of common stock and common stock of six other companies
on January 28, 2002.

Foreigners will be permitted to invest in such
options for individual stocks subject to certain procedural
requirements.

Starting from May 1, 1996, foreign investors
were permitted to invest in warrants representing the right to
subscribe for shares of a company listed on the Korea Stock
Exchange or registered on the KOSDAQ, subject to certain
investment limitations. A foreign investor may not acquire such
warrants with respect to shares of a class of a company for
which the ceiling on aggregate investment by foreigners has been
reached or exceeded.

As of December 30, 1997, foreign investors
were permitted to invest in all types of corporate bonds, bonds
issued by national or local governments and bonds issued in
accordance with certain special laws without being subject to
any aggregate or individual investment ceiling. The Financial
Supervisory Commission of Korea sets forth procedural
requirements for such investments. The Government announced on
February 8, 1998 its plans for the liberalization of the
money market with respect to investment in money market
instruments by foreigners in 1998. According to the plan,
foreigners have been permitted to invest in money market
instruments issued by corporations, including commercial paper,
starting February 16, 1998 with no restrictions as to the
amount. Starting May 25, 1998, foreigners have been
permitted to invest in certificates of deposit and repurchase
agreements.

Currently, foreigners are permitted to invest in
securities including shares of all Korean companies which are
not listed on the Korea Stock Exchange nor registered on the
KOSDAQ and in bonds which are not listed.

Protection of Customers Interest in case
of Insolvency of Securities Companies

Under Korean law, the relationship between a
customer and a securities company in connection with a
securities sell or buy order is deemed to be consignment and the
securities acquired by a consignment agent (i.e., the securities
company) through such sell or buy order are regarded as
belonging to the customer in so far as the customer and the
consignment agents creditors are concerned. Therefore, in
the event of a bankruptcy or reorganization procedure involving
a securities company, the customer of the securities company is
entitled to the proceeds of the securities sold by the
securities company.

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When a customer places a sell order with a
securities company which is not a member of the Korea Stock
Exchange and this securities company places a sell order with
another securities company which is a member of the Korea Stock
Exchange, the customer is still entitled to the proceeds of the
securities sold received by the non-member company from the
member company regardless of the bankruptcy or reorganization of
the non-member company.

Under the Securities and Exchange Act, the Korea
Stock Exchange is obliged to indemnify any loss or damage
incurred by a counterparty as a result of a breach by its
members. If a securities company which is a member of the Korea
Stock Exchange breaches its obligation in connection with a buy
order, the Korea Stock Exchange is obliged to pay the purchase
price on behalf of the breaching member.

When a customer places a buy order with a
non-member company and the non-member company places a buy order
with a member company, the customer has the legal right to the
securities received by the non-member company from the member
company because the purchased securities are regarded as
belonging to the customer in so far as the customer and the
non-member companys creditors are concerned.

As the cash deposited with a securities company
is regarded as belonging to the securities company, which is
liable to return the same at the request of its customer, the
customer cannot take back deposited cash from the securities
company if a bankruptcy or reorganization procedure is
instituted against the securities company and, therefore, can
suffer from loss or damage as a result.

However, the Depositor Protection Act provides
that Korea Deposit Insurance Corporation will, upon the request
of the investors, pay investors up to Won 50 million per
investor in case of the securities companys bankruptcy,
liquidation, cancellation of securities business license or
other insolvency events. Pursuant to the Securities and Exchange
Act, as amended, subject to certain exceptions, securities
companies are required to deposit the cash received from its
customers with the Korea Securities Finance Corporation, a
special entity established pursuant to the Securities and
Exchange Act. Set-off or attachment of cash deposits by
securities companies is prohibited. The premiums related to this
insurance under the Depositor Protection Act are paid by
securities companies.

TAXATION

The following summary is based on the tax laws of
the United States and Korea as in effect on the date of this
report, and is subject to any change in United States or Korean
law that may come into effect after such date. We advise
investors in ADSs or shares to consult their own tax advisors as
to the United States, Korean or other tax consequences of the
purchase, ownership and disposition of such securities,
including, in particular, the effect of any national, state or
local tax laws.

U.S. Federal Income Tax
Consequences

The following is a summary of the anticipated
material U.S. federal income tax consequences to a
U.S. Holder (as defined below) arising from and relating to
the acquisition, ownership, and disposition of ADSs or shares of
SK Telecom.

This summary is for general information purposes
only and does not purport to be a complete analysis or listing
of all potential U.S. federal income tax consequences that
may apply to a U.S. Holder as a result of the acquisition,
ownership, and disposition of ADSs or shares of SK Telecom. In
addition, this summary does not take into account the individual
facts and circumstances of any particular U.S. Holder that
may affect the U.S. federal income tax consequences of the
acquisition, ownership, and disposition of ADSs or shares of
SK Telecom. Accordingly, this summary is not intended to
be, and should not be construed as, legal or U.S. federal
income tax advice with respect to any U.S. Holder. Each
U.S. Holder should consult its own financial advisor, legal
counsel, or accountant regarding the U.S. federal,
U.S. state and local, and foreign tax consequences of the
acquisition, ownership, and disposition of ADSs or shares of SK
Telecom.

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Scope of This Disclosure



| |            
| | -----------
| | Authorities

This summary is based on the Internal Revenue
Code of 1986, as amended (the Code), Treasury
Regulations, published Internal Revenue Service
(IRS) rulings, published administrative positions of
the IRS, and U.S. court decisions that are applicable as of
the date of this Form 20-F. Any of the authorities on which
this summary is based could be changed in a material and adverse
manner at any time, and any such change could be applied on a
retroactive basis. This summary does not discuss the potential
effects, whether adverse or beneficial, of any proposed
legislation that, if enacted, could be applied on a retroactive
basis.



| |             
| | ------------
| | U.S. Holders

For purposes of this summary, a
U.S. Holder is a beneficial owner of ADSs or
shares of SK Telecom that, for U.S. federal income tax
purposes, is (a) an individual who is a citizen or resident
of the U.S., (b) a corporation, or other entity classified
as a corporation for U.S. federal income tax purposes, that
is created or organized in or under the laws of the U.S. or
any state in the U.S., including the District of Columbia,
(c) an estate if the income of such estate is subject to
U.S. federal income tax regardless of the source of such
income, or (d) a trust if (i) such trust has validly
elected to be treated as a U.S. person for
U.S. federal income tax purposes or (ii) a
U.S. court is able to exercise primary supervision over the
administration of such trust and one or more U.S. persons
have the authority to control all substantial decisions of such
trust.



| |                 
| | ----------------
| | Non-U.S. Holders

A non-U.S. Holder is a
beneficial owner of ADSs or shares of SK Telecom other than a
U.S. Holder. This summary does not address the
U.S. federal income tax consequences of the acquisition,
ownership, and disposition of ADSs or shares of SK Telecom to
non-U.S. Holders. Accordingly, a non-U.S. Holder
should consult its own financial advisor, legal counsel, or
accountant regarding the U.S. federal, U.S. state and
local, and foreign tax consequences (including the potential
application of and operation of any tax treaties) of the
acquisition, ownership, and disposition of ADSs or shares of SK
Telecom.



| |                                                                                    
| | -----------------------------------------------------------------------------------
| | U.S. Holders Subject to Special
    U.S. Federal Income Tax Rules Not
    Addressed

This summary does not address the
U.S. federal income tax consequences of the acquisition,
ownership, and disposition of ADSs or shares of SK Telecom to
U.S. Holders that are subject to special provisions under
the Code, including the following U.S. Holders:
(a) U.S. Holders that are tax-exempt organizations,
qualified retirement plans, individual retirement accounts, or
other tax-deferred accounts; (b) U.S. Holders that are
financial institutions, insurance companies, real estate
investment trusts, or regulated investment companies or that are
broker-dealers or dealers in securities;
(c) U.S. Holders that have a functional
currency other than the U.S. dollar;
(d) U.S. Holders that are subject to the alternative
minimum tax provisions of the Code; (e) U.S. Holders
that own ADSs or shares of SK Telecom as part of a straddle,
hedging transaction, conversion transaction, constructive sale,
or other arrangement involving more than one position;
(f) U.S. Holders that acquired ADSs or shares of SK
Telecom through the exercise of employee stock options or
otherwise as compensation for services; (g) partners of
partnerships that hold ADSs or shares of SK Telecom or
owners of other entities classified as partnerships or
pass-through entities for U.S. federal income
tax purposes that hold ADSs or shares of SK Telecom,
(h) U.S. Holders that hold ADSs or shares of SK
Telecom other than as a capital asset within the meaning of
Section 1221 of the Code. U.S. Holders that are
subject to special provisions under the Code, including
U.S. Holders described immediately above, should consult
their own financial advisor, legal counsel or accountant
regarding the U.S. federal, U.S. state and local, and
foreign tax consequences of the acquisition, ownership, and
disposition of ADSs or shares of SK Telecom.



| |                                                                                       
| | --------------------------------------------------------------------------------------
| | Tax Consequences Other than
    U.S. Federal Income Tax Consequences Not
    Addressed

This summary does not address the U.S. state
and local or foreign tax consequences to U.S. Holders of
the acquisition, ownership, and disposition of ADSs or shares of
SK Telecom. Each U.S. Holder should consult its own
financial advisor, legal counsel, or accountant regarding the
U.S. state and local and foreign tax

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consequences of the acquisition, ownership, and
disposition of ADSs or shares of SK Telecom. (See
Taxation  Korean Taxation below).


U.S. Federal Income Tax Consequences of
the Acquisition, Ownership, and Disposition of ADSs or Shares of
SK Telecom



| |                  
| | -----------------
| | Treatment of ADSs

A U.S. Holder of ADSs should be treated, for
U.S. federal income tax purposes, as the owner of such
U.S. Holders proportionate interest in the SK Telecom
shares held by the depositary that are represented and evidenced
by such ADSs.



| |              
| | -------------
| | Distributions



| |                                  
| | ---------------------------------
| | General Taxation of Distributions

A U.S. Holder that receives a distribution
with respect to the ADSs or shares of SK Telecom will be
required to include the amount of such distribution in gross
income as a dividend (without reduction for any Korean income
tax withheld from such distribution) to the extent of the
current or accumulated earnings and profits of SK
Telecom. To the extent that a distribution exceeds the current
and accumulated earnings and profits of SK Telecom,
such distribution will be treated (a) first, as a tax-free
return of capital to the extent of a U.S. Holders tax
basis in the ADSs or shares of SK Telecom and,
(b) thereafter, as gain from the sale or exchange of such
ADSs or shares of SK Telecom. (See more detailed discussion at
Disposition below).



| |                                            
| | -------------------------------------------
| | Reduced Tax Rates for Certain
    Dividends

For taxable years beginning after
December 31, 2002 and before January 1, 2009, a
dividend paid by SK Telecom generally will be taxed at the
preferential tax rates applicable to long-term capital gains if
(a) SK Telecom is a qualified foreign
corporation (as defined below), (b) the
U.S. Holder receiving such dividend is an individual,
estate, or trust, and (c) such dividend is paid on ADSs or
shares of SK Telecom that have been held by such
U.S. Holder for at least 61 days during the 121-day
period beginning 60 days before the ex-dividend
date.

SK Telecom generally will be a qualified
foreign corporation under Section 1(h)(11) of the
Code (a QFC) if (a) SK Telecom is incorporated
in a possession of the U.S., (b) SK Telecom is eligible for
the benefits of the Convention between the U.S. and the
Republic of Korea for the Avoidance of Double Taxation, or
(c) the ADSs or shares of SK Telecom, as the case may be,
are readily tradable on an established securities market in the
U.S. However, even if SK Telecom satisfies one or more of
such requirements, SK Telecom will not be treated as a QFC if SK
Telecom is a foreign personal holding company, a
foreign investment company, or a passive
foreign investment company for the taxable year during
which SK Telecom pays a dividend or for the preceding taxable
year.

SK Telecom believes that it is not a
foreign personal holding company, a foreign
investment company, or a passive foreign investment
company (See more detailed discussion at Additional
Rules that May Apply to U.S. Holders below).
Accordingly, SK Telecom believes that it should be a QFC. There
can be no assurance, however, that the IRS will not challenge
the determination made by SK Telecom concerning its QFC status
or that SK Telecom will be a QFC for the current or any future
taxable year. If SK Telecom is not a QFC, a dividend paid
by SK Telecom to a U.S. Holder, including a
U.S. Holder that is an individual, estate, or trust,
generally will be taxed at ordinary income tax rates (and not at
the preferential tax rates applicable to long-term capital
gains). The dividend rules are complex and each U.S. Holder
should consult its own financial advisor, legal counsel, or
accountant regarding the dividend rules.



| |                                           
| | ------------------------------------------
| | Distributions Paid in Foreign
    Currency

The amount of a distribution paid in foreign
currency generally will be equal to the U.S. dollar value,
based on the exchange rate, of such distribution on the date of
receipt. A U.S. Holder that does not convert

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foreign currency received as a distribution into
U.S. dollars on the date of receipt generally will have a
tax basis in such foreign currency equal to the U.S. dollar
value of such foreign currency on the date of receipt. Such a
U.S. Holder generally will recognize ordinary income or
loss on the subsequent sale or other taxable disposition of such
foreign currency (including an exchange for U.S. dollars).
However, an individual U.S. Holder whose realized gain does
not exceed U.S.$200 will not recognize such gain to the extent
that there are no expenses associated with the transaction that
meet the requirements for deductibility as a trade or business
expense or as an expense for the production of income.




| |                             
| | ----------------------------
| | Dividends Received Deduction

Dividends paid on the ADSs or shares of SK
Telecom generally will not be eligible for the dividends
received deduction. The availability of the dividends
received deduction is subject to complex limitations that are
beyond the scope of this discussion, and a U.S. Holder that
is a corporation should consult its own financial advisor, legal
counsel, or accountant regarding the dividends received
deduction.



| |            
| | -----------
| | Disposition

A U.S. Holder will recognize gain or loss on
the sale or other taxable disposition of ADSs or shares of
SK Telecom in an amount equal to the difference, if any,
between (a) the amount of cash plus the fair market value
of any property received and (b) such
U.S. Holders tax basis in the ADSs or shares of SK
Telecom sold or otherwise disposed of. Any such gain or loss
generally will be capital gain or loss, which will be long-term
capital gain or loss if the ADSs or shares of SK Telecom are
held for more than one year.

Preferential tax rates apply to long-term capital
gains of a U.S. Holder that is an individual, estate, or
trust. There are currently no preferential tax rates for
long-term capital gains of a U.S. Holder that is a
corporation. Deductions for capital losses and net capital
losses are subject to complex limitations. For a
U.S. Holder that is an individual, estate, or trust,
capital losses may be used to offset capital gains and up to
U.S.$3,000 of ordinary income. An unused capital loss of a
U.S. Holder that is an individual, estate, or trust
generally may be carried forward to subsequent taxable years,
until such net capital loss is exhausted. For a U.S. Holder
that is a corporation, capital losses may be used to offset
capital gains, and an unused capital loss generally may be
carried back three years and carried forward five years from the
year in which such net capital loss is recognized.

A U.S. Holder should not recognize gain or
loss on the surrender of an ADS for such U.S. Holders
proportionate interest in the SK Telecom shares held by the
depositary that are represented and evidenced by such ADS.



| |                   
| | ------------------
| | Foreign Tax Credit

A U.S. Holder who pays (whether directly or
through withholding) Korean income tax with respect to the ADSs
or shares of SK Telecom generally will be entitled, at the
election of such U.S. Holder, to receive either a deduction
or a credit for such Korean income tax paid. Generally, a credit
will reduce a U.S. Holders U.S. federal income
tax liability on a dollar-for-dollar basis, whereas a deduction
will reduce a U.S. Holders income subject to
U.S. federal income tax. This election is made on a
year-by-year basis and applies to all foreign taxes paid
(whether directly or through withholding) by a U.S. Holder
during a year.

Complex limitations apply to the foreign tax
credit, including the general limitation that the credit cannot
exceed the proportionate share of a U.S. Holders
U.S. federal income tax liability that such
U.S. Holders foreign source taxable
income bears to such U.S. Holders worldwide taxable
income. In applying this limitation, a U.S. Holders
various items of income and deduction must be classified, under
complex rules, as either foreign source or
U.S. source. In addition, this limitation is
calculated separately with respect to specific categories of
income (including passive income, high
withholding tax interest, financial services
income, shipping income, and certain other
categories of income). Dividends paid by SK Telecom generally
will constitute foreign source income and generally
will be classified as passive income or, in the case
of certain U.S. Holders, financial services
income. In addition, a U.S. Holder that is a
corporation and that owns 10% or more of the voting stock of SK
Telecom may, subject to complex limitations, be entitled to

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an indirect foreign tax credit under
Section 902 of the Code with respect to dividends paid by
SK Telecom. The foreign tax credit rules are complex, and each
U.S. Holder should consult its own financial advisor, legal
counsel, or accountant regarding the foreign tax credit rules.




| |                                                  
| | -------------------------------------------------
| | Information Reporting; Backup Withholding
    Tax

Payments made within the U.S. of dividends
on, and proceeds arising from the sale or other taxable
disposition of, ADSs or shares of SK Telecom generally will be
subject to information reporting and backup withholding tax, at
the rate of 28%, if a U.S. Holder (a) fails to furnish
such U.S. Holders correct U.S. taxpayer
identification number (generally on Form W-9),
(b) furnishes an incorrect U.S. taxpayer
identification number, (c) is notified by the IRS that such
U.S. Holder has previously failed to properly report items
subject to backup withholding tax, or (d) fails to certify,
under penalty of perjury, that such U.S. Holder has
furnished its correct U.S. taxpayer identification number
and that the IRS has not notified such U.S. Holder that it
is subject to backup withholding tax. However, U.S. Holders
that are corporations generally are excluded from these
information reporting and backup withholding tax rules. Any
amounts withheld under the U.S. backup withholding tax
rules will be allowed as a credit against a
U.S. Holders U.S. federal income tax liability,
if any, or will be refunded, if such U.S. Holder furnishes
required information to the IRS. Each U.S. Holder should
consult its own financial advisor, legal counsel, or accountant
regarding the information reporting and backup withholding tax
rules.

Additional Rules that May Apply to
U.S. Holders

If SK Telecom is a passive foreign
investment company (as defined below), the preceding
sections of this summary may not describe the U.S. federal
income tax consequences to U.S. Holders of the acquisition,
ownership, and disposition of ADSs or shares of SK Telecom.



| |                                       
| | --------------------------------------
| | Passive Foreign Investment
    Company

SK Telecom generally will be a passive
foreign investment company under Section 1297 of the
Code (a PFIC) if, for a taxable year, (a) 75%
or more of the gross income of SK Telecom for such taxable year
is passive income or (b) 50% or more of the assets held by
SK Telecom either produce passive income or are held for the
production of passive income, based on the fair market value of
such assets (or on the adjusted tax basis of such assets, if SK
Telecom is not publicly traded and either is a controlled
foreign corporation or makes an election). Passive
income includes, for example, dividends, interest, certain
rents and royalties, certain gains from the sale of stock and
securities, and certain gains from commodities transactions.

For purposes of the PFIC income test and assets
test described above, if SK Telecom owns, directly or
indirectly, 25% or more of the total value of the outstanding
shares of another foreign corporation, SK Telecom will be
treated as if it (a) held a proportionate share of the
assets of such other foreign corporation and (b) received
directly a proportionate share of the income of such other
foreign corporation. In addition, for purposes of the PFIC
income test and asset test described above, passive
income does not include any interest, dividends, rents, or
royalties that are received or accrued by SK Telecom from a
related person (as defined in Section 954(d)(3)
of the Code), to the extent such items are properly allocable to
the income of such related person that is not passive income.

If SK Telecom is a PFIC, the U.S. federal
income tax consequences to a U.S. Holder of the
acquisition, ownership, and disposition of ADSs or shares of SK
Telecom will depend on whether such U.S. Holder makes an
election to treat SK Telecom as a qualified electing
fund or QEF under Section 1295 of the
Code (a QEF Election) or a mark-to-market election
under Section 1296 of the Code (a Mark-to-Market
Election). A U.S. Holder that does not make either a
QEF Election or a Mark-to-Market Election will be referred to in
this summary as a Non-Electing U.S. Holder.

Under Section 1291 of the Code, any gain
recognized on the sale or other taxable disposition of ADSs or
shares of SK Telecom, and any excess distribution
(as defined in Section 1291(b) of the Code) paid on the
ADSs or shares of SK Telecom, must be ratably allocated to each
day in a Non-Electing U.S. Holders holding period for
the ADSs or shares of SK Telecom. The amount of any such gain or
excess distribution

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allocated to prior years of such Non-Electing
U.S. Holders holding period for the ADSs or shares of
SK Telecom generally will be subject to U.S. federal
income tax at the highest tax applicable to ordinary income in
each such prior year. A Non-Electing U.S. Holder will be
required to pay interest on the resulting tax liability for each
such prior year, calculated as if such tax liability had been
due in each such prior year.


A U.S. Holder that makes a QEF Election
generally will not be subject to the rules of Section 1291
of the Code discussed above. However, a U.S. Holder that
makes a QEF Election generally will be subject to
U.S. federal income tax on such U.S. Holders pro
rata share of (a) the net capital gain of SK
Telecom, which will be taxed as long-term capital gain to such
U.S. Holder, and (b) and the ordinary
earnings of SK Telecom, which will be taxed as
ordinary income to such U.S. Holder. A U.S. Holder
that makes a QEF Election will be subject to U.S. federal
income tax on such amounts for each taxable year in which
SK Telecom is a PFIC, regardless of whether such amounts
are actually distributed to such U.S. Holder by
SK Telecom.

A U.S. Holder that makes a Mark-to-Market
Election generally will not be subject to the rules of
Section 1291 of the Code discussed above. A
U.S. Holder may make a Mark-to-Market Election only if the
ADSs or shares of SK Telecom are marketable stock
(as defined in Section 1296(e) of the Code). A
U.S. Holder that makes a Mark-to-Market Election will
include in gross income, for each taxable year in which SK
Telecom is a PFIC, an amount equal to the excess, if any, of
(a) the fair market value of the ADSs or shares of SK
Telecom as of the close of such taxable year over (b) such
U.S. Holders tax basis in such ADSs or shares of SK
Telecom. A U.S. Holder that makes a Mark-to-Market Election
will, subject to certain limitations, be allowed a deduction in
an amount equal to the excess, if any, of (a) such
U.S. Holders adjusted tax basis in the ADSs or shares
of SK Telecom over (b) the fair market value of such ADSs
or shares of SK Telecom as of the close of such taxable year.

SK Telecom does not believe that it was a PFIC
for the taxable year ended December 31, 2003 and does not
expect that it will be a PFIC for the taxable year ending
December 31, 2004. There can be no assurance, however, that
the IRS will not challenge the determination made by SK Telecom
concerning its PFIC status or that SK Telecom will not be a PFIC
for the current or any future taxable year.

The PFIC rules are complex, and each
U.S. Holder should consult its own financial advisor, legal
counsel, or accountant regarding the PFIC rules and how the PFIC
rules may affect the U.S. federal income tax consequences
of the acquisition, ownership, and disposition of ADSs or shares
of SK Telecom.

Korean Taxation

The following summary of Korean tax
considerations applies to you so long as you are not:



| |   |                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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

We will deduct Korean withholding tax from
dividends paid to you at a rate of 27.5% (including resident
surtax). If you are a qualified resident in a country that has
entered into a tax treaty with Korea, you may qualify for a
reduced rate of Korean withholding tax. For example, if you are
a qualified resident of the United States for purposes of the
income tax treaty between the United States and Korea and you
are the beneficial owner of a dividend, generally a
reduced withholding tax at the rate of 16.5% will apply.

In order to obtain the benefits of a reduced
withholding tax rate under treaty, you must submit to us, prior
to the dividend payment date, such residence as may be required
by the Korean tax authorities. Residence may be submitted to us
through the ADR depositary. In addition, on or after
July 1, 2002, to obtain the benefit of a tax exemption
available under applicable tax treaties, you should submit an
application for exemption prior to the time of the first
dividend payment, together with a certificate of your tax
residence issued by a

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competent authority of your country of tax
residence. Excess taxes withheld are generally not recoverable
even if you subsequently produce evidence that you were entitled
to have tax withheld at a lower rate.


If we distribute to you free shares representing
a transfer of certain into paid-in capital, that subject to
Korean withholding capital reserves or asset revaluation
reserves distribution may be deemed a dividend which is tax.

Taxation Of Capital Gains

You may be exempt from Korean taxation on capital
gains from the shares if you have owned, together with certain
related parties, less than 25.0% of our total issued and
outstanding shares at any time during the year of sale and the
five calendar years before the year of sale and the sale is made
through the Korea Stock Exchange. As for the ADSs, according to
a ruling issued Korean taxation authorities, capital gains
earned by a non-resident holder, whether or not such holder has
a permanent establishment in Korea, from the transfer of ADSs
outside Korea are not subject to Korean taxation. Under the Tax
Benefit Limitation Law, capital gains earned by a non-resident
holder (whether or not such holder has a permanent establishment
in Korea) from the transfer outside Korea of securities issued
outside Korea by a Korean company which are denominated in
foreign currency or satisfy certain criteria established by the
Ministry of Finance and Economy are exempt from Korea taxation.
The Korean tax authorities have issued a tax ruling confirming
that receipts (which would include the ADSs) are deemed to be
securities issued outside Korea by the issuer of the underlying
stock. Further, capital gains earned by a non-resident from the
transfer of stocks issued by a Korean company are also exempt
from Korean taxation if listed or registered and sold through an
overseas securities exchange having functional similarity to the
Korean Stock Exchange or KOSDAQ under the Korean Securities and
Exchange Act.

If you are subject to tax on capital gains with
respect to the sale of ADSs, or of shares which you acquired as
a result of a withdrawal, your gain will be calculated based on
your cost of acquiring the ADSs representing such shares,
although there are no specific Korean tax provisions or rulings
on this issue. In the absence of the application of a tax treaty
which exempts or reduces the rate of tax on capital gains, the
amount of Korean tax imposed on your capital gains will be the
lesser of 11.0% (including resident surtax) of the gross
realization proceeds or, subject to the production of
satisfactory evidence of the acquisition cost and transfer
expenses of the ADSs, 27.5% of the net capital gains. Under the
Korea-United States Tax Treaty, a U.S. resident is
generally exempt from Korean taxation on gains from the sale,
exchange or other disposition of our Shares or ADSs, subject to
certain exceptions.

If you sell your shares or ADSs, the purchaser
or, in the case of the sale of shares on the Korea Stock
Exchange or through a licensed securities company in Korea, the
licensed securities company, is required to withhold Korean tax
from the sales price in an amount equal to 11.0% of the gross
realization proceeds and to make payment of such amounts to the
Korean tax authority, unless you establish your entitlement to
an exemption or lower rate of taxation under an applicable tax
treaty or produce satisfactory evidence of your acquisition and
transfer costs for the ADSs. To obtain the benefit of an
exemption or reduced rate of tax pursuant to a tax treaty, you
must submit to the purchaser or the securities company (or
through the ADR depositary), as the case may be, prior to or at
the time of payment, such evidence of your tax residence as the
Korean tax authorities may require in support of your claim for
treaty protection. In addition, Korean tax law requires a
non-resident seller to submit to the relevant tax office
(through the payer of the income, subject to certain exceptions)
an application for exemption by the 9th day of the month
following the month in which the first payment date falls, with
a certificate of tax residence of the seller issued by a
competent authority of the sellers residence country, to
obtain the benefit of a tax treaty exemption available under
applicable tax treaties. However, this requirement will not
apply to exemptions under Korean tax law. Excess taxes withheld
are generally not recoverable even if you subsequently produce
evidence that you were entitled to have taxes withheld at a
lower rate.

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Inheritance Tax And Gift Tax

If you die while holding an ADS or transfer an
ADS as a gift, it is unclear whether, for Korean inheritance and
gift tax purposes, you will be treated as the owner of the
shares underlying the ADSs. If you are treated as the owner of
the shares, the heir or the donee (or in certain circumstances,
you as the donor) will be subject to Korean inheritance or gift
tax presently at the rate of 10.0% to 50.0%.

If you die while holding a share or donate a
share, the heir or donee (or in certain circumstances, you as
the donor) will be subject to Korean inheritance or gift tax at
the same rate as indicated above.

Securities Transaction Tax

You will not pay a securities transaction tax on
your transfer of ADSs. If you transfer shares, you will be
subject to a securities transaction tax at the rate of 0.15% and
an agricultural and fishery special tax at the rate of 0.15% of
the sale price of the share when traded on the Korea Stock
Exchange. If your transfer is not made on the Korea Stock
Exchange, subject to certain exceptions, you will be subject to
a securities transaction tax at the rate of 0.5% and will not be
subject to an agricultural and fishery special tax.

According to a tax ruling issued by the Korean
tax authorities, foreign shareholders will not be subject to a
securities transaction tax upon the deposit of underlying shares
and receipt of depositary shares or upon the surrender of
depositary shares and withdrawal of originally deposited
underlying shares. Moreover, to date, the imposition of
securities transaction tax has not been enforced on the
transfers of ADSs, however, the Ministry of Finance and Economy
recently issued a ruling on February 25, 2004 to the Korean
National Tax Service holding that depositary shares fall under
the meaning of share certificates that are subject to the
securities transaction tax. In the ruling, the Ministry of
Finance and Economy treats the transfers of depositary shares
the same as the transfer of the underlying Korean shares.
However, under Korean tax laws, transfers of depositary shares
listed or registered on the New York Stock Exchange, Nasdaq
National Market or other foreign exchanges that may be
designated by the Ministry of Finance and Economy (the Ministry
of Finance and Economy has not yet designated any other
exchanges upon which the transfers of ADSs will be exempted from
the securities transaction tax) will be exempted from the
securities transaction tax.

Securities transaction tax, if applicable, must
be paid in principle by the transferor of the shares or the
rights to subscribe to such shares. When the transfer is
effected through a securities settlement company, such
settlement company is generally required to withhold and pay the
tax to the tax authority. When such transfer is made through a
securities company, such securities company is required to
withhold and pay the tax. Where the transfer is effected by a
non-resident without a permanent establishment in Korea, other
than through a securities settlement company or a securities
company, the transferee is required to withhold the securities
transaction tax.

The failure to pay the securities transaction tax
will result in a penalty of 10% of the tax due. The penalty is
imposed on the party responsible for paying the securities
transaction tax or, if the securities transaction tax is to be
paid via withholding, the penalty is imposed on the party that
has the withholding obligation.

Documents On Display

We file reports, including annual reports on
Form 20-F, and other information with the SEC pursuant to
apply to foreign private issuers. You the may rules and
regulations of the SEC that read and copy any materials filed
with the SEC at the Public Reference Room at 450 Fifth Street,
N.W., Washington, D.C. 20459. You may obtain information on
the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. As a foreign private issuer, we are not required
to make filings with the SEC by electronic means, although we
may do so. Any filings we make electronically will be available
to the public over the Internet at the SECs Website at
http://www.sec.gov.

Documents filed with this report and documents
filed or submitted to the SEC are also available for inspection
at our principal business office during normal business hours.
Our principal business office is located at 99, Seorin-Dong,
Jongro-Gu, Seoul, Korea.

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|         |                                                               
|-------- | --------------------------------------------------------------
|Item. 11 | Quantitative and Qualitative Disclosures
    about Market Risk

Quantitative and Qualitative Disclosures about
Market Risk



| |                                          
| | -----------------------------------------
| | Exchange Rate and Interest Rate
    Risks

We are exposed to foreign exchange rate and
interest rate risk primarily associated with underlying
liabilities. We did not have any outstanding swap or derivative
transactions as of December 31, 2003. In the first quarter
of 2004, we entered into currency swap agreements and currency
forward contracts with three banks to reduce our foreign
currency exposure with respect to our issuance of
US$300 million notes on April 1, 2004. See
note 31 of the notes to our consolidated financial
statements. We may consider in the future entering into other
such transactions solely for hedging purposes.

The following discussion and tables, which
constitute forward looking statements that involve
risks and uncertainties, summarize our market-sensitive
financial instruments including fair value, maturity and
contract terms. These tables address market risk only and do not
present other risks which we face in the normal course of
business, including country risk, credit risk and legal risk.



| |                   
| | ------------------
| | Exchange Rate Risk

Korea is our main market and, therefore,
substantially all of our cash flow is denominated in Won. We are
exposed to foreign exchange risk related to foreign currency
denominated liabilities. These liabilities relate primarily to
foreign currency denominated debt, all in Dollars and Yen. A 10%
change in the exchange rate between the Won and all foreign
currencies would result in a change in net liabilities (total
monetary liabilities minus total monetary assets) of
approximately 9.1% or Won 29 billion as of
December 31, 2003.



| |                   
| | ------------------
| | Interest Rate Risk

We are also subject to market risk exposure
arising from changing interest rates. The following table
summarizes the carrying amounts and fair values, maturity and
contract terms of our exchange rate and interest sensitive
short-term and long-term liabilities of as of December 31,
2003:

|                  |                          |                                                  |       |         |         |         |   |       |       |       |   |            |       |       |   |            |       |       |   |       |       |       |  |   |   |   |   |         |         |         |   |         |         |         | 
|----------------- | ------------------------ | ------------------------------------------------ | ----- | ------- | ------- | ------- | - | ----- | ----- | ----- | - | ---------- | ----- | ----- | - | ---------- | ----- | ----- | - | ----- | ----- | ----- |  | - | - | - | - | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                  |                          |                                                 
|                  |                          | Maturities                                      
|                  |                          |                                                 
|                  |                          | 2004                                             |       | 2005    |         | 2006    |   | 2007  |       | 2008  |   | Thereafter |       | Total |   | Fair Value
|                  |                          |                                                  |       |         |         |         |   |       |       |       |   |            |       |       |   |           
|                  |                          |                                                 
|                  |                          | (In billions of Won, except for percentage data)
|Local currency:   |                          |                                                  |       |         |         |         |   |       |       |       |   |            |       |       |   |            |       |       |   |       |       |       |  |   |   |   |   |         |         |         |   |        
|                  | Fixed rate               |                                                  | W     | 1,844.6 |         |         | W | 493.9 |       |       | W | 782.9      |       |       | W | 683.7      |       |       | W | 296.2 |       |       |  |  |   |   | W | 4,101.3 |         |         | W | 4,170.1 |        
|                  | Average weighted rate(1) |                                                  |       | 5.60    | %       |         |   | 6.00  | %     |       |   | 5.50       | %     |       |   | 5.57       | %     |       |   | 5.50  | %     |       |  |  | % |   |   |        | %       |         |   |        | %      
|                  | Variable rate            |                                                  |       |        |         |         |   |      |       |       |   |           |       |       |   |           |       |       |   |      |       |       |  |  |   |   |   |        |         |         |   |        |        
|                  | Average weighted rate(1) |                                                  |       |        |         |         |   |      |       |       |   |           |       |       |   |           |       |       |   |      |       |       |  |  |   |   |   |        |         |         |   |        |        
|                  |                          |                                                  |       |         |         |         |   |       |       |       |   |            |       |       |   |            |       |       |   |       |       |       |  |   |   |   |   |         |         |         |   |        
|                  |                          | Sub-total                                        |       | W       | 1,844.6 |         |   | W     | 493.9 |       |   | W          | 782.9 |       |   | W          | 683.7 |       |   | W     | 296.2 |       |  |   |  |   |   | W       | 4,101.3 |         |   | W       | 4,170.1 |        
|                  |                          |                                                  |       |         |         |         |   |       |       |       |   |            |       |       |   |            |       |       |   |       |       |       |  |   |   |   |   |         |         |         |   |        
|Foreign currency: |                          |                                                  |       |         |         |         |   |       |       |       |   |            |       |       |   |            |       |       |   |       |       |       |  |   |   |   |   |         |         |         |   |        
|                  | Fixed rate               |                                                  | W     | 297.1   |         |         |   |      |       |       |   |           |       |       |   |           |       |       |   |      |       |       |  |  |   |   | W | 297.1   |         |         | W | 301.9   |        
|                  | Average weighted rate(1) |                                                  |       | 6.45    | %       |         |   |      |       |       |   |           |       |       |   |           |       |       |   |      |       |       |  |  |   |   |   |        |         |         |   |        |        
|                  | Variable rate            |                                                  | W     | 8.6     |         |         | W | 1.6   |       |       | W | 5.2        |       |       |   |           |       |       |   |      |       |       |  |  |   |   | W | 15.4    |         |         | W | 15.4    |        
|                  | Average weighted rate(1) |                                                  |       | 3.91    | %       |         |   | 2.77  | %     |       |   | 5.57       | %     |       |   |           | %     |       |   |      | %     |       |  |  | % |   |   |        | %       |         |   |        | %      
|                  |                          |                                                  |       |         |         |         |   |       |       |       |   |            |       |       |   |            |       |       |   |       |       |       |  |   |   |   |   |         |         |         |   |        
|                  |                          | Sub-total                                        |       | W       | 305.7   |         |   | W     | 1.6   |       |   | W          | 5.2   |       |   |            |      |       |   |       |      |       |  |   |  |   |   | W       | 312.5   |         |   | W       | 317.3   |        
|                  |                          |                                                  |       |         |         |         |   |       |       |       |   |            |       |       |   |            |       |       |   |       |       |       |  |   |   |   |   |         |         |         |   |        
|                  |                          |                                                  | Total |         | W       | 2,150.3 |   |       | W     | 495.5 |   |            | W     | 788.1 |   |            | W     | 683.7 |   |       | W     | 296.2 |  |   |   |  |   |         | W       | 4,413.8 |   |         | W       | 4,487.4 | 
|                  |                          |                                                  |       |         |         |         |   |       |       |       |   |            |       |       |   |            |       |       |   |       |       |       |  |   |   |   |   |         |         |         |   |        



---



|    |                                                               
|--- | --------------------------------------------------------------
|(1) | Weighted average rates of the portfolio at the
    period end.

A 1.0% change in interest rates would result in a
change of approximately 1.91% in the fair value of our
liabilities resulting in a Won 70.5 billion change in their
value as of December 31, 2003 and an approximate
Won 0.1 billion annualized change in interest expenses.

129



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|         |                                                           
|-------- | ----------------------------------------------------------
|Item. 12 | Description of Securities other than Equity
    Securities

Not applicable.






|         |                                                    
|-------- | ---------------------------------------------------
|Item. 13 | Defaults, Dividend Arrearage and
    Delinquencies.

None.






|         |                                                                                 
|-------- | --------------------------------------------------------------------------------
|Item. 14 | Material Modifications to the Rights of
    Security Holders and Use of Proceeds

None.






|         |                        
|-------- | -----------------------
|Item. 15 | Controls and Procedures

Disclosure Controls And Procedures

In light of the new regulatory framework
introduced by the Sarbanes-Oxley Act of 2002, we established a
formal disclosure committee. Our disclosure committee consists
of the head of each divisional group, including (among others)
the heads of the investor relations office, legal office and
strategic planning office. The committee, together with our
Chief Executive Officer and Chief Financial Officer, has the
responsibility for the evaluation of the effectiveness of our
new disclosure and control procedures and may generally take all
actions deemed necessary or desirable to ensure compliance with
such procedures.

As of the end of the period covered by this
report, the Company carried out an evaluation, under the
supervision of the Companys Chief Executive Officer and
Chief Financial Officer, of the effectiveness of the
Companys disclosure controls and procedures pursuant to
Rule 13a-15 of the United States Securities Exchange Act of
1934 (Exchange Act). Based upon that evaluation, the
Companys Chief Executive Officer and Chief Financial
Officer have concluded that the Companys disclosure
controls and procedures are effective to ensure that information
required to be disclosed by the Company in reports that it files
or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms.

Our disclosure controls and procedures, no matter
how well designed and operated, can provide only reasonable, not
absolute, assurance of achieving the objectives of the control
system. As such, disclosure controls and procedures or internal
control systems may not prevent all error and all fraud. In
addition, the design of a control system must reflect the fact
that there are resource constraints and the benefits of controls
must be considered relative to their costs and our management
necessarily was required to apply its judgment in evaluating the
cost-benefit relationship of possible controls and procedures.
Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the
Company have been detected.

Changes In Internal Controls Over Financial
Reporting

During the period covered by this annual report
on Form 20-F, no changes occurred in the Companys
internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the
Companys internal control over financial reporting.






|          |                                     
|--------- | ------------------------------------
|Item. 16A | Audit Committee Financial
    Expert

We believe that one or more of the members of our
audit committee satisfy the criteria for audit committee
financial expert prescribed by the Securities and Exchange
Commission; however, our board of directors has not yet formally
determined that any members of the audit committee satisfy the
SEC criteria for audit committee financial expert. See
Directors, Senior Management and Employees 
Board Practices  Audit Committee for additional
information regarding our Audit Committee.

130



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|          |               
|--------- | --------------
|Item. 16B | Code of Ethics

Code of Ethics for Chief Executive Officer,
Chief Financial Officer and Controller

We have a code of ethics that applies to our
Chief Executive Officer, senior accounting officers and
employees. We also have internal control and disclosure policy
designed to promote full, fair, accurate, timely and
understandable disclosure in all of our reports and publicly
filed documents. We are in the process of revising our code of
ethics to ensure that it appropriately addresses our initiatives
to improve our corporate governance policies. A copy of the
Companys code of conduct is attached to this annual report
as Exhibit 11.1.






|          |                                           
|--------- | ------------------------------------------
|Item. 16C | Principal Accountant Fees and
    Services

The table sets forth the fees we paid to our
independent auditors, Deloitte & Touche LLC (Hana) for
the year ended December 31, 2003 and Ahn Kwon &
Co. for the year ended December 31, 2002:

|               |  |                          |                   |      |  |   |                   | 
|-------------- |  | ------------------------ | ----------------- | ---- |  | - | ----------------- | 
|               |  |                         
|               |  | Years Ended December 31,
|               |  |                         
|               |  | 2003                     |                   | 2002
|               |  |                          |                   |     
|               |  |                         
|               |  | (In millions of Won)    
|Audit:         |  | W                        | 727.7 million     |      |  | W | 913.9 million     | 
|Audit Related: |  | W                        | 13.7 million      |      |  | W | 122.0 million     | 
|Tax            |  | W                        | 143.0 million     |      |  | W | 74.7 million      | 
|All Other Fees |  | W                        | 12,006.2  million |      |  | W | 11,058.4  million | 
|               |  |                          |                   |      |  |   |                   | 
|Total          |  | W                        | 12,890.6  million |      |  | W | 12,169.0  million | 
|               |  |                          |                   |      |  |   |                   | 

Audit Fees are the aggregate fees
billed by Deloitte & Touche LLC (Hana) in 2003 and by
Ahn Kwon & Co. in 2002 for the audit of our
consolidated annual financial statements, reviews of interim
financial statements and attestation services that are provided
in connection with statutory and regulatory filings or
engagements.

Audit-Related Fees are fees charged
by Deloitte & Touche LLC (Hana) in 2003 and by Ahn
Kwon & Co. in 2002 for assurance and related services
that are reasonably related to the performance of the audit or
review of our financial statements and are not reported under
Audit Fees. This category comprises fees billed for
advisory services associated with our financial reporting.

Tax Fees are fees for professional
services rendered by Deloitte & Touche LLC (Hana) in
2003 and by Ahn Kwon & Co. in 2002 for tax compliance,
tax advice on actual or contemplated transactions.

Fees disclosed under the category All Other
Fees are fees for professional services rendered by
Deloitte & Touche LLC (Hana) in 2003 and by Ahn
Kwon & Co. in 2002 primarily for business consulting.

Pre-Approval of Audit and Non-Audit Services
Provided by Independent Auditors

Our audit committee pre-approves all audit
services to be provided by Deloitte & Touche LLC
(Hana), our independent auditors. Our audit committees
policy regarding the pre-approval of non-audit services to be
provided to us by our independent auditors is that all such
services shall be pre-approved by the Audit Committee. Non-audit
services that are prohibited to be provided to us by our
independent auditors under the rules of the Securities and
Exchange Commission and applicable law may not be pre-approved.
In addition, prior to the granting of any pre-approval, our
audit committee must be satisfied that the performance of the
services in question will not compromise the independence of our
independent auditors.

Our audit committee did not pre-approve any
non-audit services under the de minimis exception of
Rule 2-01 (c)(7)(i)(C) of Regulation S-X as
promulgated by the Securities and Exchange Commission.

131



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|          |                                                                
|--------- | ---------------------------------------------------------------
|Item. 16D | Exemptions from the Listing Standards for
    Audit Committees.

Not applicable.






|          |                                                                            
|--------- | ---------------------------------------------------------------------------
|Item. 16E | Purchases of Equity Securities by the
    Issuer and Affiliated Purchasers.

On August 11, 2003, we concluded a stock
buyback program which we commenced on June 30, 2003. We
acquired a total of 2,544,600 shares of our outstanding common
stock, all of which were cancelled on August 20, 2003. The
total purchase price for the stock buyback was Won 525.2
billion (or an average of approximately Won 206,388 per
share), with the price per share ranging from Won 192,000
(on July 24, 2003) to Won 216,000 (on July 15-16,
2003). As a result of the stock buyback and subsequent
cancellation of shares, the total number of our outstanding
common stock declined from 84,821,311 to 82,276,711 as of
December 31, 2003.

Set forth in the following table is information
with respect to purchases made by or on behalf of the issuer or
any affiliated purchaser (as defined in
Rule 10b-18(a)(3) of the Exchange Act) of our Common Shares.

|          |  |                  |           |            |  |                     |         |                    |  |  |           |  |  |  |   | 
|--------- |  | ---------------- | --------- | ---------- |  | ------------------- | ------- | ------------------ |  |  | --------- |  |  |  | - | 
|          |  |                  |           |            |  | Total Number of     |         | Maximum Number    
|          |  |                  |           |            |  | Shares Purchased as |         | of Shares that May
|          |  |                  |           | Average    |  | Part of Publicly    |         | Yet be Purchased  
|          |  | Total Number of  |           | Price Paid |  | Announces Plans or  |         | Under the Plans or
|Period    |  | Shares Purchased |           | Per Share  |  | Programs            |         | Programs          
|          |  |                  |           |            |  |                     |         |                   
|January   |  |                  |          |            |  |                     |        |                    |  |  |          |  |  |  |  | 
|February  |  |                  |          |            |  |                     |        |                    |  |  |          |  |  |  |  | 
|March     |  |                  |          |            |  |                     |        |                    |  |  |          |  |  |  |  | 
|April     |  |                  |          |            |  |                     |        |                    |  |  |          |  |  |  |  | 
|May       |  |                  |          |            |  |                     |        |                    |  |  |          |  |  |  |  | 
|June      |  |                  | 100,000   |            |  | W                   | 206,500 |                    |  |  | 100,000   |  |  |  |  | 
|July      |  |                  | 1,698,340 |            |  | W                   | 205,416 |                    |  |  | 1,698,340 |  |  |  |  | 
|August    |  |                  | 746,260   |            |  | W                   | 207,531 |                    |  |  | 746,260   |  |  |  |  | 
|September |  |                  |          |            |  |                     |        |                    |  |  |          |  |  |  |  | 
|October   |  |                  |          |            |  |                     |        |                    |  |  |          |  |  |  |  | 
|November  |  |                  |          |            |  |                     |        |                    |  |  |          |  |  |  |  | 
|December  |  |                  |          |            |  |                     |        |                    |  |  |          |  |  |  |  | 
|          |  |                  |           |            |  |                     |         |                    |  |  |           |  |  |  |   | 
|Total     |  |                  | 2,644,600 |            |  |                     |         |                    |  |  | 2,644,600 |  |  |  |  | 
|          |  |                  |           |            |  |                     |         |                    |  |  |           |  |  |  |   | 

We exchanged 29,808,333 shares of KT
Corporations common stock at Won 50,900 per share for
8,266,923 shares of our common stock at Won 224,000 per
share and settled the difference of Won 334.5 billion
between the aggregate sale and purchase prices in cash on
December 30, 2002 and January 10, 2003, under a mutual
agreement on stock exchange between us and KT Corporation dated
November 14, 2002. Of the 8,266,923 shares of our common
stock exchanged, 4,457,635 shares of our common stock were
subsequently cancelled and 3,809,288 shares were designated as
treasury stock for use in future mergers and acquisitions
transactions and strategic alliances or for other corporate
purposes to be determined by us. As a result of the share swap,
all cross-shareholdings between KT Corporation and us have been
completely eliminated.

In late May 2004, we sold US$329.5 million
in zero coupon convertible notes due 2009. These convertible
notes are convertible by the holders into shares of our common
stock at the rate of Won 235,625 per share. In connection
with the issuance of the zero coupon convertible notes, we
deposited 1,645,000 shares of our common stock with Korea
Securities Depository to be reserved and used to satisfy the
note holders conversion rights. This will be deemed as the
repurchase of treasury stock and cancellation thereof for the
purposes of Korean law.

132



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|         |                     
|-------- | --------------------
|Item. 17 | Financial Statements



|         |                     
|-------- | --------------------
|Item. 17 | Financial Statements






|         |                     
|-------- | --------------------
|Item. 18 | Financial Statements



|         |                     
|-------- | --------------------
|Item. 18 | Financial Statements

Not applicable.

133



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##### Table of Contents






INDEX TO FINANCIAL STATEMENTS

INDEX TO FINANCIAL STATEMENTS

|                                                                                                                          |  |      |          | 
|------------------------------------------------------------------------------------------------------------------------- |  | ---- | -------- | 
|                                                                                                                          |  | Page
|                                                                                                                          |  |     
|Independent Auditors Report of
    Deloitte & Touche LLC (Hana) for the years ended
    December 31, 2001, 2002 and 2003 |  |      | F-2      | 
|Independent Auditors Report of Young Wha
    Corporation for the year ended December 31, 2001                            |  |      | F-3      | 
|Consolidated Balance Sheets as of
    December 31, 2001, 2002 and 2003                                                    |  |      | F-4F-5  | 
|Consolidated Statements of Income for the Years
    Ended December 31, 2001, 2002 and 2003                                |  |      | F-6      | 
|Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2001, 2002 and 2003                            |  |      | F-7F-8  | 
|Consolidated Statements of Shareholders
    Equity for the Years Ended December 31, 2001,
    2002 and 2003              |  |      | F-9F-10 | 
|Notes to Consolidated Financial Statements                                                                                |  |      | F-11     | 

F-1



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

To the Board of Directors and Shareholders of SK
Telecom Co., Ltd.

We have audited the accompanying consolidated
balance sheets of SK Telecom Co., Ltd. (the Company)
and its subsidiaries as of December 31, 2001, 2002 and
2003, and the related consolidated statements of income,
shareholders equity, and cash flows for the years then
ended (all expressed in Korean won). These consolidated
financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits. We did not audit the financial statements of Shinsegi
Telecomm, Inc. (a consolidated subsidiary) for the year ended
December 31, 2001, which statements reflect total assets
constituting 12.83% of consolidated total assets as of
December 31, 2001 and total revenues constituting 22.61% of
consolidated total revenues for the year ended December 31,
2001. Those statements were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for Shinsegi Telecomm, Inc., is
based solely on the report of such other auditors.

We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board
(United States of America). Those standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management as
well as evaluating the overall financial statement presentation.
We believe that our audits and the report of the other auditors
provide a reasonable basis for our opinion.

In our opinion, based on our audits and the
report of other auditors, such consolidated financial statements
present fairly, in all material respects, the financial position
of SK Telecom Co., Ltd. and its subsidiaries at
December 31, 2001, 2002 and 2003, and the results of their
operations and their cash flows for the years then ended, in
conformity with accounting principles generally accepted in the
Republic of Korea.

Our audits also comprehended the translation of
the Korean won amounts into U.S. dollar amounts and, in our
opinion, such translation has been made in conformity with the
basis stated in Note 2(a) to the accompanying consolidated
financial statements. Such U.S. dollar amounts are
presented solely for the convenience of readers outside of the
Republic of Korea.

As described in Note 31 to the accompanying
consolidated financial statements, in accordance with the
approval of its board of directors dated March 12, 2004,
the Company issued unguaranteed domestic bonds with face amounts
totaling W 150,000 million and unguaranteed
U.S. dollar denominated bonds with face amounts totaling
US$300 million on March 23, 2004 and April 1,
2004, respectively. The domestic bonds were issued at an annual
rate of 5% for W 148,155 million and will be repaid in
full at its maturity on March 23, 2009. The
U.S. dollar denominated bonds were issued at an annual rate
of 4.5% for US$297.8 million and will be repaid in full at
its maturity on April 1, 2011.

Generally accepted accounting principles in the
Republic of Korea vary in certain respects from generally
accepted accounting principles in the United States. Application
of generally accepted accounting principles in the United States
would have affected results of operations for the years ended
December 31, 2001, 2002 and 2003 and shareholders
equity as of December 31, 2001, 2002 and 2003 to the extent
summarized in Note 32 to the consolidated financial
statements.

/s/ DELOITTE & TOUCHE LLC (HANA)

April 2, 2004 (May 31, 2004 with
respect to contingency discussed in Note 21 (k))

F-2



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##### Table of Contents



INDEPENDENT AUDITORS REPORT

The Stockholders and Board of Directors

Shinsegi Telecomm, Inc.


We have audited the balance sheets of Shinsegi
Telecomm, Inc. as of December 31, 2000 and 2001, and
the related statements of income, stockholders equity and
cash flows for the nine-month period ended December 31,
2000 and the year ended December 31, 2001 (not presented
separately herein). These financial statements are the
responsibility of Shinsegi Telecomm, Inc.s management. Our
responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States of
America. Those standards require that plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred
to above present fairly, in all material respects, the financial
position of Shinsegi Telecomm, Inc. as a December 31,
2000 and 2001, and the results of its operations,
stockholders equity and its cash flows for the nine-month
period ended December 31, 2000 and the year ended
December 31, 2001 in conformity with accounting principles
generally accepted in the Republic of Korea.

Accounting principles generally accepted in the
Republic of Korea vary in certain significant respects from
accounting principles generally accepted in the United States of
America. Application of generally accepted accounting principles
in the United States of America would have affected the results
of operations for the nine-month period ended December 31,
2000 and the year ended December 31, 2001 and
stockholders equity as of December 31, 2000 and 2001,
to the extent summarized in Note 19 to Shinsegi
Telecomm, Inc.s financial statements.

Young Wha Corporation

Seoul, Korea


January 25, 2002


F-3



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2001, 2002 AND
2003


|                    |                                                                                                                                                                                                                       |                             |            |                  |           |      |            |               |            |   |            |           |           |   |            |           |           | 
|------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | ---------- | ---------------- | --------- | ---- | ---------- | ------------- | ---------- | - | ---------- | --------- | --------- | - | ---------- | --------- | --------- | 
|                    |                                                                                                                                                                                                                       | 2001                        |            | 2002             |           | 2003 |            | 2003         
|                    |                                                                                                                                                                                                                       |                             |            |                  |           |      |            |              
|                    |                                                                                                                                                                                                                       |                             |            |                  |           |      |            | (In thousands
|                    |                                                                                                                                                                                                                       |                             |            | of U.S. dollars)
|                    |                                                                                                                                                                                                                       | (In millions of Korean won) |            | (Note 2)        
|ASSETS             
|CURRENT ASSETS:     |                                                                                                                                                                                                                       |                             |            |                  |           |      |            |               |            |   |            |           |           |   |            |          
|                    | Cash and cash equivalents (Note 13)                                                                                                                                                                                   |                             | W          | 867,280          |           |      | W          | 664,117       |            |   | W          | 317,488   |           |   | $          | 266,349   |          
|                    | Short-term financial instruments (Note 13)                                                                                                                                                                            |                             |            | 430,919          |           |      |            | 202,905       |            |   |            | 154,922   |           |   |            | 129,968   |          
|                    | Trading securities (Notes 2 and 3)                                                                                                                                                                                    |                             |            | 637,530          |           |      |            | 754,219       |            |   |            | 893,217   |           |   |            | 749,343   |          
|                    | Current portion of long-term investment
    securities (Notes 2 and 3)                                                                                                                                                |                             |            |                 |           |      |            | 70,267        |            |   |            | 85,861    |           |   |            | 72,031    |          
|                    | Accounts receivable  trade, net of
    allowance for doubtful accounts of W 81,681 million,
    W 60,542 million and W 65,327 million at
    December 31, 2001, 2002 and 2003, respectively
    (Notes 2, 13 and 23) |                             |            | 1,181,711        |           |      |            | 1,442,135     |            |   |            | 1,579,153 |           |   |            | 1,324,793 |          
|                    | Accounts receivable  other, net of
    allowance for doubtful accounts of W 74,065 million,
    W 23,355 million and W 16,768 million at
    December 31, 2001, 2002 and 2003, respectively
    (Notes 2, 13 and 23) |                             |            | 1,096,005        |           |      |            | 852,873       |            |   |            | 867,120   |           |   |            | 727,450   |          
|                    | Inventories (Notes 2 and 22)                                                                                                                                                                                          |                             |            | 66,559           |           |      |            | 27,460        |            |   |            | 31,516    |           |   |            | 26,440    |          
|                    | Short-term loans and other (Note 5)                                                                                                                                                                                   |                             |            | 66,742           |           |      |            | 99,748        |            |   |            | 140,248   |           |   |            | 117,658   |          
|                    |                                                                                                                                                                                                                       |                             |            |                  |           |      |            |               |            |   |            |           |           |   |            |          
|                    |                                                                                                                                                                                                                       | Total Current Assets        |            |                  | 4,346,746 |      |            |               | 4,113,724  |   |            |           | 4,069,525 |   |            |           | 3,414,032 | 
|                    |                                                                                                                                                                                                                       |                             |            |                  |           |      |            |               |            |   |            |           |           |   |            |          
|NON-CURRENT ASSETS: |                                                                                                                                                                                                                       |                             |            |                  |           |      |            |               |            |   |            |           |           |   |            |          
|                    | Property and equipment, net (Notes 2, 6, 12,
    21 and 22)                                                                                                                                                           |                             |            | 4,174,726        |           |      |            | 4,569,417     |            |   |            | 4,641,547 |           |   |            | 3,893,915 |          
|                    | Intangible assets (Notes 2 and 7)                                                                                                                                                                                     |                             |            | 3,816,373        |           |      |            | 3,721,235     |            |   |            | 3,674,944 |           |   |            | 3,083,007 |          
|                    | Long-term investment securities (Notes 2 and
    3)                                                                                                                                                                   |                             |            | 497,351          |           |      |            | 1,394,697     |            |   |            | 879,193   |           |   |            | 737,578   |          
|                    | Equity securities accounted for using the equity
    method (Notes 2 and 4)                                                                                                                                           |                             |            | 105,317          |           |      |            | 81,247        |            |   |            | 183,709   |           |   |            | 154,118   |          
|                    | Long-term bank deposits (Note 21)                                                                                                                                                                                     |                             |            | 77               |           |      |            | 177           |            |   |            | 352       |           |   |            | 295       |          
|                    | Long-term loans, net of allowance for doubtful
    accounts of W 19,699 million,
    W 19,486 million and W 19,552 million at
    December 31, 2001, 2002 and 2003, respectively
    (Notes 2 and 5)                  |                             |            | 83,520           |           |      |            | 52,688        |            |   |            | 40,819    |           |   |            | 34,244    |          
|                    | Guarantee deposits (Notes 13 and 23)                                                                                                                                                                                  |                             |            | 280,760          |           |      |            | 249,331       |            |   |            | 270,255   |           |   |            | 226,724   |          
|                    | Other                                                                                                                                                                                                                 |                             |            | 21,405           |           |      |            | 46,194        |            |   |            | 57,873    |           |   |            | 48,552    |          
|                    |                                                                                                                                                                                                                       |                             |            |                  |           |      |            |               |            |   |            |           |           |   |            |          
|                    |                                                                                                                                                                                                                       | Total Non-Current Assets    |            |                  | 8,979,529 |      |            |               | 10,114,986 |   |            |           | 9,748,692 |   |            |           | 8,178,433 | 
|                    |                                                                                                                                                                                                                       |                             |            |                  |           |      |            |               |            |   |            |           |           |   |            |          
|                   
|TOTAL ASSETS        |                                                                                                                                                                                                                       | W                           | 13,326,275 |                  |           | W    | 14,228,710 |               |            | W | 13,818,217 |           |           | $ | 11,592,465 |          
|                    |                                                                                                                                                                                                                       |                             |            |                  |           |      |            |               |            |   |            |           |           |   |            |          

F-4



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


CONSOLIDATED BALANCE
SHEETS  (Continued)

|                                           |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            |               |            |   |            |           |            |   |            |           |            |  
|------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ---------- | ---------------- | ---------- | ---- | ---------- | ------------- | ---------- | - | ---------- | --------- | ---------- | - | ---------- | --------- | ---------- | -
|                                           |                                                                                                                                                                     | 2001                                                                                |            | 2002             |            | 2003 |            | 2003         
|                                           |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            |              
|                                           |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            | (In thousands
|                                           |                                                                                                                                                                     |                                                                                     |            | of U.S. dollars)
|                                           |                                                                                                                                                                     | (In millions of Korean won)                                                         |            | (Note 2)        
|LIABILITIES AND SHAREHOLDERS
    EQUITY  
|CURRENT LIABILITIES:                       |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            |               |            |   |            |           |            |   |            |          
|                                           | Accounts payable (Notes 13 and 23)                                                                                                                                  |                                                                                     | W          | 1,035,197        |            |      | W          | 1,697,502     |            |   | W          | 1,317,162 |            |   | $          | 1,105,002 |           
|                                           | Short-term borrowings (Notes 13 and 21)                                                                                                                             |                                                                                     |            | 1,167,348        |            |      |            | 687,296       |            |   |            | 786,096   |            |   |            | 659,477   |           
|                                           | Income taxes payable                                                                                                                                                |                                                                                     |            | 371,981          |            |      |            | 383,900       |            |   |            | 402,559   |            |   |            | 337,717   |           
|                                           | Accrued expenses (Note 13)                                                                                                                                          |                                                                                     |            | 357,270          |            |      |            | 408,521       |            |   |            | 420,995   |            |   |            | 353,184   |           
|                                           | Currency forward contracts (Notes 2 and 8)                                                                                                                          |                                                                                     |            | 4,982            |            |      |            |              |            |   |            |          |            |   |            |          |           
|                                           | Current portion of long-term debt (Notes 9,
    10 and 12)                                                                                                          |                                                                                     |            | 665,472          |            |      |            | 922,209       |            |   |            | 1,364,264 |            |   |            | 1,144,517 |           
|                                           | Current portion of facility deposits                                                                                                                                |                                                                                     |            | 10,400           |            |      |            | 18,415        |            |   |            | 12,881    |            |   |            | 10,806    |           
|                                           | Other                                                                                                                                                               |                                                                                     |            | 65,931           |            |      |            | 185,543       |            |   |            | 226,953   |            |   |            | 190,397   |           
|                                           |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            |               |            |   |            |           |            |   |            |          
|                                           |                                                                                                                                                                     | Total Current Liabilities                                                           |            |                  | 3,678,581  |      |            |               | 4,303,386  |   |            |           | 4,530,910  |   |            |           | 3,801,100  |  
|                                           |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            |               |            |   |            |           |            |   |            |          
|LONG-TERM LIABILITIES:                     |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            |               |            |   |            |           |            |   |            |          
|                                           | Bonds payable, net (Notes 2 and 9)                                                                                                                                  |                                                                                     |            | 2,649,119        |            |      |            | 2,908,496     |            |   |            | 2,261,868 |            |   |            | 1,897,540 |           
|                                           | Long-term borrowings (Note 10)                                                                                                                                      |                                                                                     |            | 45,602           |            |      |            | 10,284        |            |   |            | 1,633     |            |   |            | 1,370     |           
|                                           | Facility deposits (Note 11)                                                                                                                                         |                                                                                     |            | 56,519           |            |      |            | 46,850        |            |   |            | 44,197    |            |   |            | 37,078    |           
|                                           | Long-term payables  other, net of
    present value discount of W 98,017 million and
    W 85,881 million at December 31, 2002 and 2003,
    respectively (Note 2) |                                                                                     |            | 650,000          |            |      |            | 551,983       |            |   |            | 564,119   |            |   |            | 473,254   |           
|                                           | Obligations under capital leases (Notes 2,
    12, 13 and 21)                                                                                                       |                                                                                     |            | 633              |            |      |            | 121           |            |   |            |          |            |   |            |          |           
|                                           | Accrued severance indemnities, net (Note 2)                                                                                                                         |                                                                                     |            | 61,620           |            |      |            | 48,519        |            |   |            | 67,824    |            |   |            | 56,899    |           
|                                           | Deferred income tax liabilities (Notes 2 and
    18)                                                                                                                |                                                                                     |            | 15,169           |            |      |            | 104,770       |            |   |            | 226,029   |            |   |            | 189,622   |           
|                                           | Guarantee deposits received and other
    (Note 23)                                                                                                                 |                                                                                     |            | 19,728           |            |      |            | 22,401        |            |   |            | 27,790    |            |   |            | 23,314    |           
|                                           |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            |               |            |   |            |           |            |   |            |          
|                                           |                                                                                                                                                                     | Total Long-Term Liabilities                                                         |            |                  | 3,498,390  |      |            |               | 3,693,424  |   |            |           | 3,193,460  |   |            |           | 2,679,077  |  
|                                           |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            |               |            |   |            |           |            |   |            |          
|                                           |                                                                                                                                                                     | Total Liabilities                                                                   |            |                  | 7,176,971  |      |            |               | 7,996,810  |   |            |           | 7,724,370  |   |            |           | 6,480,177  |  
|                                           |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            |               |            |   |            |           |            |   |            |          
|COMMITMENTS AND CONTINGENCIES (Note 21)    |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            |               |            |   |            |           |            |   |            |          
|SHAREHOLDERS EQUITY:                      |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            |               |            |   |            |           |            |   |            |          
|                                           | Capital stock (Notes 1 and 14)                                                                                                                                      |                                                                                     |            | 44,576           |            |      |            | 44,576        |            |   |            | 44,639    |            |   |            | 37,449    |           
|                                           | Capital surplus (Note 14)                                                                                                                                           |                                                                                     |            | 3,449,698        |            |      |            | 2,884,382     |            |   |            | 2,911,556 |            |   |            | 2,442,581 |           
|                                           | Retained earnings (Note 15)                                                                                                                                         |                                                                                     |            | 3,443,319        |            |      |            | 4,873,205     |            |   |            | 5,139,911 |            |   |            | 4,312,006 |           
|                                           | Capital adjustments:                                                                                                                                                |                                                                                     |            |                  |            |      |            |               |            |   |            |           |            |   |            |           |           
|                                           |                                                                                                                                                                     | Treasury stock (Note 16)                                                            |            |                  | (1,425,852 | )    |            |               | (2,192,449 | ) |            |           | (2,047,103 | ) |            |           | (1,717,368 | )
|                                           |                                                                                                                                                                     | Unrealized loss on valuation of long-term
    investment securities (Notes 2 and 3) |            |                  | (68,979    | )    |            |               | (104,117   | ) |            |           | (160,622   | ) |            |           | (134,750   | )
|                                           |                                                                                                                                                                     | Equity in capital adjustment of affiliates
    (Notes 2 and 4)                      |            |                  | 530        |      |            |               | (5,171     | ) |            |           | 42,581     |   |            |           | 35,722     |  
|                                           |                                                                                                                                                                     | Stock options (Notes 2 and 17)                                                      |            |                  | 960        |      |            |               | 2,452      |   |            |           | 3,741      |   |            |           | 3,138      |  
|                                           |                                                                                                                                                                     | Foreign-based operations translation credit
    (Note 2)                           |            |                  | 707        |      |            |               | 3,515      |   |            |           | 3,159      |   |            |           | 2,650      |  
|                                           | Minority interest in equity of consolidated
    subsidiaries (Note 2)                                                                                               |                                                                                     |            | 704,345          |            |      |            | 725,507       |            |   |            | 155,985   |            |   |            | 130,860   |           
|                                           |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            |               |            |   |            |           |            |   |            |          
|                                           |                                                                                                                                                                     | Total Shareholders Equity                                                          |            |                  | 6,149,304  |      |            |               | 6,231,900  |   |            |           | 6,093,847  |   |            |           | 5,112,288  |  
|                                           |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            |               |            |   |            |           |            |   |            |          
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |                                                                                                                                                                     | W                                                                                   | 13,326,275 |                  |            | W    | 14,228,710 |               |            | W | 13,818,217 |           |            | $ | 11,592,465 |          
|                                           |                                                                                                                                                                     |                                                                                     |            |                  |            |      |            |               |            |   |            |           |            |   |            |          

See accompanying Notes to Consolidated Financial
Statements.

F-5



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 2001, 2002 AND
2003


|                                                                           |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |            |  
|-------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | -------------------------------------- | --------- | --------------------- | - | ---- | --------- | ---------------- | - | - | ---------- | ---------- | - | - | --------- | ---------- | -
|                                                                           |                                                                                            | 2001                                   |           | 2002                  |   | 2003 |           | 2003            
|                                                                           |                                                                                            |                                        |           |                       |   |      |           |                 
|                                                                           |                                                                                            |                                        |           |                       |   |      |           | (In thousands of
|                                                                           |                                                                                            |                                        |           | U.S. dollars, except 
|                                                                           |                                                                                            | (In millions of Korean won, except for |           | for income per share)
|                                                                           |                                                                                            | income per share)                      |           | (Note 2)             
|OPERATING REVENUE (Notes 23 and 30)                                        |                                                                                            | W                                      | 8,371,928 |                       |   | W    | 9,323,993 |                  |   | W | 10,272,081 |            |   | $ | 8,617,518 |           
|OPERATING EXPENSES (Notes 2, 21 and 23)                                    |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           
|                                                                           | Labor cost                                                                                 |                                        |           | (270,377              | ) |      |           | (318,346         | ) |   |            | (407,243   | ) |   |           | (341,647   | )
|                                                                           | Commissions paid (Note 23)                                                                 |                                        |           | (1,404,091            | ) |      |           | (1,964,797       | ) |   |            | (2,314,558 | ) |   |           | (1,941,743 | )
|                                                                           | Depreciation and amortization                                                              |                                        |           | (1,690,728            | ) |      |           | (1,435,041       | ) |   |            | (1,510,545 | ) |   |           | (1,267,236 | )
|                                                                           | Network interconnection (Note 30)                                                          |                                        |           | (667,686              | ) |      |           | (752,144         | ) |   |            | (771,553   | ) |   |           | (647,276   | )
|                                                                           | Leased line                                                                                |                                        |           | (305,159              | ) |      |           | (280,113         | ) |   |            | (306,527   | ) |   |           | (257,154   | )
|                                                                           | Advertising                                                                                |                                        |           | (316,056              | ) |      |           | (448,784         | ) |   |            | (376,424   | ) |   |           | (315,792   | )
|                                                                           | Cost of goods sold                                                                         |                                        |           | (641,062              | ) |      |           | (509,055         | ) |   |            | (560,859   | ) |   |           | (470,519   | )
|                                                                           | Other                                                                                      |                                        |           | (752,256              | ) |      |           | (818,070         | ) |   |            | (919,265   | ) |   |           | (771,195   | )
|                                                                           |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           
|                                                                           | Sub-total                                                                                  |                                        |           | (6,047,415            | ) |      |           | (6,526,350       | ) |   |            | (7,166,974 | ) |   |           | (6,012,562 | )
|                                                                           |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           
|OPERATING INCOME                                                           |                                                                                            |                                        | 2,324,513 |                       |   |      | 2,797,643 |                  |   |   | 3,105,107  |            |   |   | 2,604,956 |           
|                                                                           |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           
|OTHER INCOME:                                                              |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           
|                                                                           | Interest                                                                                   |                                        |           | 97,422                |   |      |           | 86,013           |   |   |            | 86,485     |   |   |           | 72,555     |  
|                                                                           | Dividends                                                                                  |                                        |           |                      |   |      |           | 207              |   |   |            | 25,923     |   |   |           | 21,747     |  
|                                                                           | Commissions (Note 23)                                                                      |                                        |           | 24,076                |   |      |           | 73,515           |   |   |            | 80,180     |   |   |           | 67,265     |  
|                                                                           | Foreign exchange and translation gains
    (Note 2)                                        |                                        |           | 18,282                |   |      |           | 41,439           |   |   |            | 6,131      |   |   |           | 5,143      |  
|                                                                           | Gain on disposal of property and equipment                                                 |                                        |           | 3,467                 |   |      |           | 1,206            |   |   |            | 2,750      |   |   |           | 2,307      |  
|                                                                           | Equity in earnings of affiliates (Notes 2
    and 4)                                       |                                        |           | 4,294                 |   |      |           | 813              |   |   |            |           |   |   |           |           |  
|                                                                           | Other                                                                                      |                                        |           | 83,683                |   |      |           | 55,963           |   |   |            | 59,975     |   |   |           | 50,315     |  
|                                                                           |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           
|                                                                           |                                                                                            |                                        | 231,224   |                       |   |      | 259,156   |                  |   |   | 261,444    |            |   |   | 219,332   |           
|                                                                           |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           
|OTHER EXPENSES:                                                            |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           
|                                                                           | Interest and discounts                                                                     |                                        |           | (273,871              | ) |      |           | (311,132         | ) |   |            | (391,482   | ) |   |           | (328,424   | )
|                                                                           | Donations                                                                                  |                                        |           | (148,391              | ) |      |           | (127,517         | ) |   |            | (91,487    | ) |   |           | (76,750    | )
|                                                                           | Foreign exchange and translation losses
    (Note 2)                                       |                                        |           | (23,933               | ) |      |           | (13,547          | ) |   |            | (10,230    | ) |   |           | (8,582     | )
|                                                                           | Loss on disposal and valuation of trading
    securities (Note 2)                          |                                        |           | (1,028                | ) |      |           |                 |   |   |            | (3,974     | ) |   |           | (3,334     | )
|                                                                           | Loss on disposal and impairment of property,
    equipment and intangible assets (Note 27) |                                        |           | (41,801               | ) |      |           | (221,681         | ) |   |            | (13,784    | ) |   |           | (11,564    | )
|                                                                           | Loss on disposal of investment assets                                                      |                                        |           | (17,658               | ) |      |           | (51,618          | ) |   |            | (45,403    | ) |   |           | (38,090    | )
|                                                                           | Loss on impairment of long-term investment
    securities (Notes 2, 3 and 28)              |                                        |           | (3,326                | ) |      |           | (68,882          | ) |   |            | (5,749     | ) |   |           | (4,823     | )
|                                                                           | Equity in losses of affiliates (Notes 2 and
    4)                                         |                                        |           |                      |   |      |           |                 |   |   |            | (6,975     | ) |   |           | (5,852     | )
|                                                                           | Other                                                                                      |                                        |           | (69,046               | ) |      |           | (44,158          | ) |   |            | (43,131    | ) |   |           | (36,184    | )
|                                                                           |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           
|                                                                           |                                                                                            |                                        | (579,054  | )                     |   |      | (838,535  | )                |   |   | (612,215   | )          |   |   | (513,603  | )         
|                                                                           |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           
|ORDINARY INCOME                                                            |                                                                                            |                                        | 1,976,683 |                       |   |      | 2,218,264 |                  |   |   | 2,754,336  |            |   |   | 2,310,685 |           
|EXTRAORDINARY GAIN                                                         |                                                                                            |                                        | 25        |                       |   |      | 504       |                  |   |   |           |            |   |   |          |           
|                                                                           |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           
|INCOME BEFORE INCOME TAXES AND MINORITY INTEREST                           |                                                                                            |                                        | 1,976,708 |                       |   |      | 2,218,768 |                  |   |   | 2,754,336  |            |   |   | 2,310,685 |           
|INCOME TAXES (Notes 2 and 18)                                              |                                                                                            |                                        | (850,307  | )                     |   |      | (698,507  | )                |   |   | (789,059   | )          |   |   | (661,962  | )         
|                                                                           |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           
|INCOME BEFORE MINORITY INTEREST                                            |                                                                                            |                                        | 1,126,401 |                       |   |      | 1,520,261 |                  |   |   | 1,965,277  |            |   |   | 1,648,723 |           
|MINORITY INTEREST IN NET LOSS (GAIN) OF
    CONSOLIDATED SUBSIDIARIES      |                                                                                            |                                        | 19,648    |                       |   |      | (33,110   | )                |   |   | 823        |            |   |   | 690       |           
|                                                                           |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           
|NET INCOME                                                                 |                                                                                            | W                                      | 1,146,049 |                       |   | W    | 1,487,151 |                  |   | W | 1,966,100  |            |   | $ | 1,649,413 |           
|                                                                           |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           
|NET INCOME PER SHARE (Notes 2 and
    19) (In Korean Won and U.S. dollars) |                                                                                            | W                                      | 13,242    |                       |   | W    | 17,647    |                  |   | W | 26,187     |            |   | $ | 21.97     |           
|                                                                           |                                                                                            |                                        |           |                       |   |      |           |                  |   |   |            |            |   |   |           |           

See accompanying Notes to Consolidated Financial
Statements.

F-6



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH
FLOWS

YEARS ENDED DECEMBER 31, 2001, 2002 AND
2003


|                                      |                                                                        |                                                                                     |   |                  |           |      |   |               |           |   |   |           |           |   |   |           |           |  
|------------------------------------- | ---------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | - | ---------------- | --------- | ---- | - | ------------- | --------- | - | - | --------- | --------- | - | - | --------- | --------- | -
|                                      |                                                                        | 2001                                                                                |   | 2002             |           | 2003 |   | 2003         
|                                      |                                                                        |                                                                                     |   |                  |           |      |   |              
|                                      |                                                                        |                                                                                     |   |                  |           |      |   | (In thousands
|                                      |                                                                        |                                                                                     |   | of U.S. dollars)
|                                      |                                                                        | (In millions of Korean won)                                                         |   | (Note 2)        
|CASH FLOWS FROM OPERATING ACTIVITIES: |                                                                        |                                                                                     |   |                  |           |      |   |               |           |   |   |           |           |   |   |          
|                                      | Net income                                                             |                                                                                     | W | 1,146,049        |           |      | W | 1,487,151     |           |   | W | 1,966,100 |           |   | $ | 1,649,413 |          
|                                      |                                                                        |                                                                                     |   |                  |           |      |   |               |           |   |   |           |           |   |   |          
|                                      | Expenses not involving cash payments:                                  |                                                                                     |   |                  |           |      |   |               |           |   |   |           |           |   |   |           |          
|                                      |                                                                        | Depreciation and amortization                                                       |   |                  | 1,759,650 |      |   |               | 1,543,335 |   |   |           | 1,646,262 |   |   |           | 1,381,092 |  
|                                      |                                                                        | Provision for severance indemnities                                                 |   |                  | 56,947    |      |   |               | 45,509    |   |   |           | 65,375    |   |   |           | 54,845    |  
|                                      |                                                                        | Provision for doubtful accounts                                                     |   |                  | 56,678    |      |   |               | 20,981    |   |   |           | 23,304    |   |   |           | 19,550    |  
|                                      |                                                                        | Foreign currency translation loss                                                   |   |                  | 17,336    |      |   |               | 5,397     |   |   |           | 2,546     |   |   |           | 2,136     |  
|                                      |                                                                        | Loss on disposal and valuation of trading
    securities                            |   |                  | 1,028     |      |   |               |          |   |   |           | 3,974     |   |   |           | 3,334     |  
|                                      |                                                                        | Loss on disposal and impairment of property and
    equipment and intangible assets |   |                  | 41,801    |      |   |               | 221,681   |   |   |           | 13,784    |   |   |           | 11,564    |  
|                                      |                                                                        | Loss on impairment of long-term investment
    securities                           |   |                  | 6,372     |      |   |               | 68,882    |   |   |           | 5,749     |   |   |           | 4,823     |  
|                                      |                                                                        | Loss on disposal of investment assets                                               |   |                  | 17,658    |      |   |               | 51,618    |   |   |           | 45,403    |   |   |           | 38,090    |  
|                                      |                                                                        | Equity in losses of affiliates                                                      |   |                  |          |      |   |               |          |   |   |           | 6,975     |   |   |           | 5,852     |  
|                                      |                                                                        | Minority interest in net gain of consolidated
    subsidiaries                      |   |                  |          |      |   |               | 33,110    |   |   |           |          |   |   |           |          |  
|                                      |                                                                        | Other                                                                               |   |                  | 35,947    |      |   |               | 51,630    |   |   |           | 77,295    |   |   |           | 64,844    |  
|                                      |                                                                        |                                                                                     |   |                  |           |      |   |               |           |   |   |           |           |   |   |          
|                                      |                                                                        | Sub-total                                                                           |   |                  | 1,993,417 |      |   |               | 2,042,143 |   |   |           | 1,890,667 |   |   |           | 1,586,130 |  
|                                      |                                                                        |                                                                                     |   |                  |           |      |   |               |           |   |   |           |           |   |   |          
|                                      | Income not involving cash receipts:                                    |                                                                                     |   |                  |           |      |   |               |           |   |   |           |           |   |   |           |          
|                                      |                                                                        | Equity in earnings of affiliates                                                    |   |                  | (4,294    | )    |   |               | (813      | ) |   |           |          |   |   |           |          |  
|                                      |                                                                        | Foreign currency translation gain                                                   |   |                  | (3,354    | )    |   |               | (30,282   | ) |   |           | (668      | ) |   |           | (560      | )
|                                      |                                                                        | Gain on disposal of property and equipment                                          |   |                  | (3,467    | )    |   |               | (1,206    | ) |   |           | (2,750    | ) |   |           | (2,307    | )
|                                      |                                                                        | Reversal of allowance for doubtful accounts                                         |   |                  | (558      | )    |   |               | (6,365    | ) |   |           | (1,555    | ) |   |           | (1,305    | )
|                                      |                                                                        | Minority interest in net loss of consolidated
    subsidiaries                      |   |                  | (19,648   | )    |   |               |          |   |   |           | (823      | ) |   |           | (690      | )
|                                      |                                                                        | Other                                                                               |   |                  | (4,460    | )    |   |               | (19,705   | ) |   |           | (14,234   | ) |   |           | (11,942   | )
|                                      |                                                                        |                                                                                     |   |                  |           |      |   |               |           |   |   |           |           |   |   |          
|                                      |                                                                        | Sub-total                                                                           |   |                  | (35,781   | )    |   |               | (58,371   | ) |   |           | (20,030   | ) |   |           | (16,804   | )
|                                      |                                                                        |                                                                                     |   |                  |           |      |   |               |           |   |   |           |           |   |   |          
|                                      | Changes in assets and liabilities related to
    operating activities: |                                                                                     |   |                  |           |      |   |               |           |   |   |           |           |   |   |           |          
|                                      |                                                                        | Accounts receivable  trade                                                         |   |                  | (137,811  | )    |   |               | (277,685  | ) |   |           | (159,160  | ) |   |           | (133,523  | )
|                                      |                                                                        | Accounts receivable  other                                                         |   |                  | (859,126  | )    |   |               | 224,640   |   |   |           | (48,789   | ) |   |           | (40,930   | )
|                                      |                                                                        | Inventories                                                                         |   |                  | (33,049   | )    |   |               | 39,092    |   |   |           | (4,056    | ) |   |           | (3,403    | )
|                                      |                                                                        | Other current assets                                                                |   |                  | (20,091   | )    |   |               | (30,764   | ) |   |           | (30,417   | ) |   |           | (25,518   | )
|                                      |                                                                        | Accounts payable                                                                    |   |                  | (38,960   | )    |   |               | 614,005   |   |   |           | (396,700  | ) |   |           | (332,802  | )
|                                      |                                                                        | Income taxes payable                                                                |   |                  | 61,845    |      |   |               | 12,946    |   |   |           | (11,597   | ) |   |           | (9,729    | )
|                                      |                                                                        | Accrued expenses                                                                    |   |                  | 113,306   |      |   |               | 67,026    |   |   |           | 24,385    |   |   |           | 20,457    |  
|                                      |                                                                        | Current portion of facility deposits                                                |   |                  | 374       |      |   |               | 3,801     |   |   |           | (3,418    | ) |   |           | (2,867    | )
|                                      |                                                                        | Other current liabilities                                                           |   |                  | (51,990   | )    |   |               | 125,767   |   |   |           | 49,194    |   |   |           | 41,270    |  
|                                      |                                                                        | Deferred income taxes                                                               |   |                  | 315,755   |      |   |               | 81,963    |   |   |           | 120,879   |   |   |           | 101,409   |  
|                                      |                                                                        | Severance indemnity payments                                                        |   |                  | (14,758   | )    |   |               | (20,378   | ) |   |           | (24,516   | ) |   |           | (20,567   | )
|                                      |                                                                        | Deposits for group severance indemnities and                                        |   |                  |           |      |   |               |           |   |   |           |           |   |   |           |          |  
|                                      |                                                                        | other deposits                                                                      |   |                  | (15,332   | )    |   |               | (43,521   | ) |   |           | (24,727   | ) |   |           | (20,744   | )
|                                      |                                                                        | Transfer of accrued severance indemnities from
    affiliates and related companies |   |                  | 20        |      |   |               |          |   |   |           | 955       |   |   |           | 801       |  
|                                      |                                                                        |                                                                                     |   |                  |           |      |   |               |           |   |   |           |           |   |   |          
|                                      |                                                                        | Sub-total                                                                           |   |                  | (679,817  | )    |   |               | 796,892   |   |   |           | (507,967  | ) |   |           | (426,146  | )
|                                      |                                                                        |                                                                                     |   |                  |           |      |   |               |           |   |   |           |           |   |   |          
|                                      | Net Cash Provided by Operating Activities                              |                                                                                     | W | 2,423,868        |           |      | W | 4,267,815     |           |   | W | 3,328,770 |           |   | $ | 2,792,593 |          
|                                      |                                                                        |                                                                                     |   |                  |           |      |   |               |           |   |   |           |           |   |   |          

F-7



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH
FLOWS  (Continued)

|                                                                                                     |                                                                                   |                             |         |                  |   |      |          |               |   |   |          |            |   |   |          |            |  
|---------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | --------------------------- | ------- | ---------------- | - | ---- | -------- | ------------- | - | - | -------- | ---------- | - | - | -------- | ---------- | -
|                                                                                                     |                                                                                   | 2001                        |         | 2002             |   | 2003 |          | 2003         
|                                                                                                     |                                                                                   |                             |         |                  |   |      |          |              
|                                                                                                     |                                                                                   |                             |         |                  |   |      |          | (In thousands
|                                                                                                     |                                                                                   |                             |         | of U.S. dollars)
|                                                                                                     |                                                                                   | (In millions of Korean won) |         | (Note 2)        
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                                |                                                                                   |                             |         |                  |   |      |          |               |   |   |          |            |   |   |          |           
|                                                                                                     | Decrease in short-term financial instruments                                      |                             | W       | 215,154          |   |      | W        | 231,219       |   |   | W        | 95,123     |   |   | $        | 79,801     |  
|                                                                                                     | Decrease (increase) in trading securities                                         |                             |         | 3,845            |   |      |          | (103,256      | ) |   |          | (137,618   | ) |   |          | (115,451   | )
|                                                                                                     | Decrease (increase) in short-term loans                                           |                             |         | 541              |   |      |          | 24,474        |   |   |          | (8,533     | ) |   |          | (7,159     | )
|                                                                                                     | Decrease in long-term bank deposits                                               |                             |         | 22               |   |      |          | 21            |   |   |          |           |   |   |          |           |  
|                                                                                                     | Proceeds from sale of current portion of
    long-term investment securities      |                             |         |                 |   |      |          |              |   |   |          | 70,267     |   |   |          | 58,949     |  
|                                                                                                     | Proceeds from sale of long-term investment
    securities                         |                             |         | 24,741           |   |      |          | 1,084,945     |   |   |          | 762,896    |   |   |          | 640,013    |  
|                                                                                                     | Proceeds from sale of equity securities accounted
    for using the equity method |                             |         | 63               |   |      |          | 53,230        |   |   |          | 3,510      |   |   |          | 2,945      |  
|                                                                                                     | Decrease in long-term loans                                                       |                             |         | 32,265           |   |      |          | 19,920        |   |   |          | 9,980      |   |   |          | 8,372      |  
|                                                                                                     | Decrease in guarantee deposits                                                    |                             |         | 169,074          |   |      |          | 77,490        |   |   |          | 67,410     |   |   |          | 56,553     |  
|                                                                                                     | Proceeds from disposal of property and equipment                                  |                             |         | 91,489           |   |      |          | 23,211        |   |   |          | 12,828     |   |   |          | 10,762     |  
|                                                                                                     | Proceeds from disposal of intangible assets                                       |                             |         | 2,120            |   |      |          | 1,198         |   |   |          | 2,248      |   |   |          | 1,886      |  
|                                                                                                     | Increase in long-term bank deposits                                               |                             |         | (18              | ) |      |          |              |   |   |          | (350       | ) |   |          | (294       | )
|                                                                                                     | Acquisition of long-term investment securities                                    |                             |         | (107,852         | ) |      |          | (2,062,355    | ) |   |          | (437,076   | ) |   |          | (366,675   | )
|                                                                                                     | Acquisition of equity securities accounted for
    using the equity method        |                             |         | (1,299           | ) |      |          | (208,913      | ) |   |          | (43,600    | ) |   |          | (36,577    | )
|                                                                                                     | Increase in long-term loans                                                       |                             |         | (30,875          | ) |      |          | (24,376       | ) |   |          | (15,578    | ) |   |          | (13,069    | )
|                                                                                                     | Increase in guarantee deposits                                                    |                             |         | (252,246         | ) |      |          | (55,986       | ) |   |          | (88,223    | ) |   |          | (74,013    | )
|                                                                                                     | Increase in other assets                                                          |                             |         | (18,531          | ) |      |          | (22,022       | ) |   |          | (3,332     | ) |   |          | (2,795     | )
|                                                                                                     | Acquisition of property and equipment                                             |                             |         | (1,382,114       | ) |      |          | (2,024,655    | ) |   |          | (1,647,639 | ) |   |          | (1,382,247 | )
|                                                                                                     | Acquisition of intangible assets and deferred
    charges                         |                             |         | (719,204         | ) |      |          | (77,580       | ) |   |          | (56,745    | ) |   |          | (47,605    | )
|                                                                                                     |                                                                                   |                             |         |                  |   |      |          |               |   |   |          |            |   |   |          |           
|                                                                                                     | Net Cash Used in Investing Activities                                             |                             |         | (1,972,825       | ) |      |          | (3,063,435    | ) |   |          | (1,414,432 | ) |   |          | (1,186,604 | )
|                                                                                                     |                                                                                   |                             |         |                  |   |      |          |               |   |   |          |            |   |   |          |           
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                                |                                                                                   |                             |         |                  |   |      |          |               |   |   |          |            |   |   |          |           
|                                                                                                     | Increase in short-term borrowings                                                 |                             |         | 1,320,111        |   |      |          | 91,942        |   |   |          | 108,669    |   |   |          | 91,165     |  
|                                                                                                     | Issuance of bonds payable                                                         |                             |         | 1,716,560        |   |      |          | 1,166,451     |   |   |          | 688,737    |   |   |          | 577,799    |  
|                                                                                                     | Increase in long-term borrowings                                                  |                             |         | 72,273           |   |      |          | 24,682        |   |   |          | 13,532     |   |   |          | 11,352     |  
|                                                                                                     | Increase in minority interest in equity of
    consolidated subsidiaries          |                             |         | 643,408          |   |      |          | 17,405        |   |   |          | 22,278     |   |   |          | 18,690     |  
|                                                                                                     | Payment of short-term borrowings                                                  |                             |         | (355,232         | ) |      |          | (578,696      | ) |   |          | (12,087    | ) |   |          | (10,140    | )
|                                                                                                     | Payment of current portion of long-term debt                                      |                             |         | (1,235,163       | ) |      |          | (719,779      | ) |   |          | (939,176   | ) |   |          | (787,899   | )
|                                                                                                     | Payment of dividends                                                              |                             |         | (48,102          | ) |      |          | (58,716       | ) |   |          | (151,739   | ) |   |          | (127,298   | )
|                                                                                                     | Decrease in facility deposits                                                     |                             |         | (20,352          | ) |      |          | (25,278       | ) |   |          | (2,654     | ) |   |          | (2,227     | )
|                                                                                                     | Net increase of treasury stock                                                    |                             |         | (1,420,964       | ) |      |          | (1,351,243    | ) |   |          | (1,379,337 | ) |   |          | (1,157,161 | )
|                                                                                                     | Other                                                                             |                             |         | (341,313         | ) |      |          | 15,035        |   |   |          | (609,262   | ) |   |          | (511,126   | )
|                                                                                                     |                                                                                   |                             |         |                  |   |      |          |               |   |   |          |            |   |   |          |           
|                                                                                                     | Net Cash Provided by (Used in) Financing
    Activities                           |                             |         | 331,226          |   |      |          | (1,418,197    | ) |   |          | (2,261,039 | ) |   |          | (1,896,845 | )
|                                                                                                     |                                                                                   |                             |         |                  |   |      |          |               |   |   |          |            |   |   |          |           
|NET INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS DUE TO CHANGES IN CONSOLIDATED SUBSIDIARIES |                                                                                   |                             | (5,479  | )                |   |      | 10,654   |               |   |   | 72       |            |   |   | 60       |           
|                                                                                                     |                                                                                   |                             |         |                  |   |      |          |               |   |   |          |            |   |   |          |           
|NET INCREASE (DECREASE) IN CASH AND CASH
    EQUIVALENTS                                             |                                                                                   |                             | 776,790 |                  |   |      | (203,163 | )             |   |   | (346,629 | )          |   |   | (290,796 | )         
|CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR                                                   |                                                                                   |                             | 90,490  |                  |   |      | 867,280  |               |   |   | 664,117  |            |   |   | 557,145  |           
|                                                                                                     |                                                                                   |                             |         |                  |   |      |          |               |   |   |          |            |   |   |          |           
|CASH AND CASH EQUIVALENTS AT END OF THE YEAR                                                         |                                                                                   | W                           | 867,280 |                  |   | W    | 664,117  |               |   | W | 317,488  |            |   | $ | 266,349  |           
|                                                                                                     |                                                                                   |                             |         |                  |   |      |          |               |   |   |          |            |   |   |          |           
|Cash paid for interest (net of amounts
    capitalized)                                              |                                                                                   | W                           | 273,424 |                  |   | W    | 248,234  |               |   | W | 328,890  |            |   | $ | 275,914  |           
|                                                                                                     |                                                                                   |                             |         |                  |   |      |          |               |   |   |          |            |   |   |          |           
|Cash paid for income taxes                                                                           |                                                                                   | W                           | 476,195 |                  |   | W    | 693,999  |               |   | W | 675,122  |            |   | $ | 566,378  |           
|                                                                                                     |                                                                                   |                             |         |                  |   |      |          |               |   |   |          |            |   |   |          |           

See accompanying Notes to Consolidated Financial
Statements

F-8



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY

Years Ended December 31, 2001, 2002 AND
2003


|                           |                                                                                        |                             |        |         |  |          |           |             |   |          |           |               |   |   |            |            |   |   |         |          |   |   |           |            |  
|-------------------------- | -------------------------------------------------------------------------------------- | --------------------------- | ------ | ------- |  | -------- | --------- | ----------- | - | -------- | --------- | ------------- | - | - | ---------- | ---------- | - | - | ------- | -------- | - | - | --------- | ---------- | -
|                           |                                                                                        |                             |        |         |  |          |           |             |   |          |           | Total        
|                           |                                                                                        | Common                      |        | Capital |  | Retained |           | Capital     |   | Minority |           | Shareholders
|                           |                                                                                        | Stock                       |        | Surplus |  | Earnings |           | Adjustments |   | Interest |           | Equity       
|                           |                                                                                        |                             |        |         |  |          |           |             |   |          |           |              
|                           |                                                                                        |                            
|                           |                                                                                        | (In millions of Korean won)
|Balance, January 1, 2001   |                                                                                        | W                           | 44,576 |         |  | W        | 3,748,715 |             |   | W        | 2,345,528 |               |   | W | (128,034   | )          |   | W | 131,866 |          |   | W | 6,142,651 |           
|                           | Net income                                                                             |                             |        |        |  |          |           |            |   |          |           | 1,146,049     |   |   |            |           |   |   |         |         |   |   |           | 1,146,049  |  
|                           | Treasury stock transactions (Note 16)                                                  |                             |        |        |  |          |           |             |   |          |           | (155          | ) |   |            | (1,420,809 | ) |   |         |         |   |   |           | (1,420,964 | )
|                           | Cash dividends paid (Note 20)                                                          |                             |        |        |  |          |           |            |   |          |           | (48,103       | ) |   |            |           |   |   |         |         |   |   |           | (48,103    | )
|                           | Excess unallocated purchase price (Note 14)                                            |                             |        |        |  |          |           | (299,121    | ) |          |           |              |   |   |            |           |   |   |         |         |   |   |           | (299,121   | )
|                           | Additional issuance of common stock by
    consolidated subsidiaries to outside entity |                             |        |        |  |          |           | 1           |   |          |           |              |   |   |            |           |   |   |         |         |   |   |           | 1          |  
|                           | Gain on disposal of investments in common stock
    of subsidiary                      |                             |        |        |  |          |           | 103         |   |          |           |              |   |   |            |           |   |   |         |         |   |   |           | 103        |  
|                           | Equity in capital surplus and capital adjustment
    changes of affiliates (Note 2)    |                             |        |        |  |          |           |            |   |          |           |              |   |   |            | 8,116      |   |   |         |         |   |   |           | 8,116      |  
|                           | Unrealized gain on valuation of long-term
    investment securities (Note 3)           |                             |        |        |  |          |           |            |   |          |           |              |   |   |            | 51,355     |   |   |         |         |   |   |           | 51,355     |  
|                           | Foreign-based operations translation credit                                           |                             |        |        |  |          |           |            |   |          |           |              |   |   |            | (3,839     | ) |   |         |         |   |   |           | (3,839     | )
|                           | Stock compensation plans (Notes 2 and 17)                                              |                             |        |        |  |          |           |            |   |          |           |              |   |   |            | 577        |   |   |         |         |   |   |           | 577        |  
|                           | Increase in minority interest in equity of
    consolidated subsidiaries               |                             |        |        |  |          |           |            |   |          |           |              |   |   |            |           |   |   |         | 572,479  |   |   |           | 572,479    |  
|                           |                                                                                        |                             |        |         |  |          |           |             |   |          |           |               |   |   |            |            |   |   |         |          |   |   |           |           
|Balance, December 31, 2001 |                                                                                        |                             | 44,576 |         |  |          | 3,449,698 |             |   |          | 3,443,319 |               |   |   | (1,492,634 | )          |   |   | 704,345 |          |   |   | 6,149,304 |           
|                           | Net income                                                                             |                             |        |        |  |          |           |            |   |          |           | 1,487,151     |   |   |            |           |   |   |         |         |   |   |           | 1,487,151  |  
|                           | Treasury stock transactions (Notes 14 and 16)                                          |                             |        |        |  |          |           | 81,984      |   |          |           |              |   |   |            | (766,597   | ) |   |         |         |   |   |           | (684,613   | )
|                           | Cash dividends paid (Note 20)                                                          |                             |        |        |  |          |           |            |   |          |           | (57,265       | ) |   |            |           |   |   |         |         |   |   |           | (57,265    | )
|                           | Excess unallocated purchase price (Note 14)                                            |                             |        |        |  |          |           | (647,025    | ) |          |           |              |   |   |            |           |   |   |         |         |   |   |           | (647,025   | )
|                           | Equity in capital surplus and capital adjustment
    changes of affiliates (Note 2)    |                             |        |        |  |          |           | (275        | ) |          |           |              |   |   |            | (12,513    | ) |   |         |         |   |   |           | (12,788    | )
|                           | Unrealized gain on valuation of long-term
    investment securities (Note 3)           |                             |        |        |  |          |           |            |   |          |           |              |   |   |            | (28,327    | ) |   |         |         |   |   |           | (28,327    | )
|                           | Foreign-based operations translation credit                                           |                             |        |        |  |          |           |            |   |          |           |              |   |   |            | 2,809      |   |   |         |         |   |   |           | 2,809      |  
|                           | Stock compensation plans (Notes 2 and 17)                                              |                             |        |        |  |          |           |            |   |          |           |              |   |   |            | 1,492      |   |   |         |         |   |   |           | 1,492      |  
|                           | Increase in minority interest in equity of
    consolidated subsidiaries               |                             |        |        |  |          |           |            |   |          |           |              |   |   |            |           |   |   |         | 21,162   |   |   |           | 21,162     |  
|                           |                                                                                        |                             |        |         |  |          |           |             |   |          |           |               |   |   |            |            |   |   |         |          |   |   |           |           
|Balance, December 31, 2002 |                                                                                        |                             | 44,576 |         |  |          | 2,884,382 |             |   |          | 4,873,205 |               |   |   | (2,295,770 | )          |   |   | 725,507 |          |   |   | 6,231,900 |           
|                           |                                                                                        |                             |        |         |  |          |           |             |   |          |           |               |   |   |            |            |   |   |         |          |   |   |           |           
|Balance, January 1, 2003   |                                                                                        |                             | 44,576 |         |  |          | 2,884,382 |             |   |          | 4,873,205 |               |   |   | (2,295,770 | )          |   |   | 725,507 |          |   |   | 6,231,900 |           
|                           | Net income                                                                             |                             |        |        |  |          |           |            |   |          |           | 1,966,100     |   |   |            |           |   |   |         |         |   |   |           | 1,966,100  |  
|                           | Acquisition of treasury stock (Note 16)                                                |                             |        |        |  |          |           |            |   |          |           |              |   |   |            | (1,379,337 | ) |   |         |         |   |   |           | (1,379,337 | )
|                           | Retirement of treasury stock (Note 16)                                                 |                             |        |        |  |          |           |            |   |          |           | (1,545,281    | ) |   |            | 1,524,683  |   |   |         |         |   |   |           | (20,598    | )
|                           | Cash dividends paid (Note 20)                                                          |                             |        |        |  |          |           |            |   |          |           | (151,739      | ) |   |            |           |   |   |         |         |   |   |           | (151,739   | )
|                           | Excess unallocated purchase price (Note 14)                                            |                             |        |        |  |          |           | (230        | ) |          |           |              |   |   |            |           |   |   |         |         |   |   |           | (230       | )
|                           | Issuance of common stock for the merger with SK
    IMT Co., Ltd. (Note 14)            |                             |        | 63      |  |          |           | 31,809      |   |          |           |              |   |   |            |           |   |   |         |         |   |   |           | 31,872     |  
|                           | Gain on disposal of investments in common stock
    of subsidiary                      |                             |        |        |  |          |           | 58          |   |          |           |              |   |   |            |           |   |   |         |         |   |   |           | 58         |  
|                           | Equity in beginning retained earnings change of
    affiliates (Notes 2 and 4)         |                             |        |        |  |          |           |            |   |          |           | (33           | ) |   |            |           |   |   |         |         |   |   |           | (33        | )
|                           | Cumulative effect of an accounting change
    (Note 2)                                 |                             |        |        |  |          |           |            |   |          |           | (2,341        | ) |   |            |           |   |   |         | (515     | ) |   |           | (2,856     | )
|                           | Equity in capital surplus and capital adjustment
    changes of affiliates (Note 2)    |                             |        |        |  |          |           | (4,463      | ) |          |           |              |   |   |            | 47,752     |   |   |         |         |   |   |           | 43,289     |  
|                           | Unrealized loss on valuation of long-term
    investment securities (Note 3)           |                             |        |        |  |          |           |            |   |          |           |              |   |   |            | (56,505    | ) |   |         |         |   |   |           | (56,505    | )
|                           | Foreign-based operations translation credit                                           |                             |        |        |  |          |           |            |   |          |           |              |   |   |            | (356       | ) |   |         |         |   |   |           | (356       | )
|                           | Stock compensation plans (Notes 2 and 17)                                              |                             |        |        |  |          |           |            |   |          |           |              |   |   |            | 1,289      |   |   |         |         |   |   |           | 1,289      |  
|                           | Decrease in minority interest in equity of
    consolidated subsidiaries               |                             |        |        |  |          |           |            |   |          |           |              |   |   |            |           |   |   |         | (569,007 | ) |   |           | (569,007   | )
|                           |                                                                                        |                             |        |         |  |          |           |             |   |          |           |               |   |   |            |            |   |   |         |          |   |   |           |           
|Balance, December 31, 2003 |                                                                                        | W                           | 44,639 |         |  | W        | 2,911,556 |             |   | W        | 5,139,911 |               |   | W | (2,158,244 | )          |   | W | 155,985 |          |   | W | 6,093,847 |           
|                           |                                                                                        |                             |        |         |  |          |           |             |   |          |           |               |   |   |            |            |   |   |         |          |   |   |           |           

F-9



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


CONSOLIDATED STATEMENTS OF SHAREHOLDERS
EQUITY  (Continued)

|                           |                                                                                     |                                         |        |         |  |          |           |             |   |          |           |               |   |   |            |            |   |   |         |          |   |   |           |            |  
|-------------------------- | ----------------------------------------------------------------------------------- | --------------------------------------- | ------ | ------- |  | -------- | --------- | ----------- | - | -------- | --------- | ------------- | - | - | ---------- | ---------- | - | - | ------- | -------- | - | - | --------- | ---------- | -
|                           |                                                                                     |                                         |        |         |  |          |           |             |   |          |           | Total        
|                           |                                                                                     | Common                                  |        | Capital |  | Retained |           | Capital     |   | Minority |           | Shareholders
|                           |                                                                                     | Stock                                   |        | Surplus |  | Earnings |           | Adjustments |   | Interest |           | Equity       
|                           |                                                                                     |                                         |        |         |  |          |           |             |   |          |           |              
|                           |                                                                                     |                                        
|                           |                                                                                     | (In thousands of U.S. dollars) (Note 2)
|Balance, January 1, 2003   |                                                                                     | $                                       | 37,396 |         |  | $        | 2,419,784 |             |   | $        | 4,088,260 |               |   | $ | (1,925,983 | )          |   | $ | 608,647 |          |   | $ | 5,228,104 |           
|                           | Net income                                                                          |                                         |        |        |  |          |           |            |   |          |           | 1,649,413     |   |   |            |           |   |   |         |         |   |   |           | 1,649,413  |  
|                           | Acquisition of treasury stock (Note 16)                                             |                                         |        |        |  |          |           |            |   |          |           |              |   |   |            | (1,157,161 | ) |   |         |         |   |   |           | (1,157,161 | )
|                           | Retirement of treasury stock (Note 16)                                              |                                         |        |        |  |          |           |            |   |          |           | (1,296,377    | ) |   |            | 1,279,096  |   |   |         |         |   |   |           | (17,281    | )
|                           | Cash dividends paid (Note 20)                                                       |                                         |        |        |  |          |           |            |   |          |           | (127,298      | ) |   |            |           |   |   |         |         |   |   |           | (127,298   | )
|                           | Excess unallocated purchase price (Note 14)                                         |                                         |        |        |  |          |           | (193        | ) |          |           |              |   |   |            |           |   |   |         |         |   |   |           | (193       | )
|                           | Issuance of common stock for the merger with SK
    IMT Co., Ltd. (Note 14)         |                                         |        | 53      |  |          |           | 26,685      |   |          |           |              |   |   |            |           |   |   |         |         |   |   |           | 26,738     |  
|                           | Gain on disposal of investments in common stock
    of subsidiary                   |                                         |        |        |  |          |           | 49          |   |          |           |              |   |   |            |           |   |   |         |         |   |   |           | 49         |  
|                           | Equity in beginning retained earnings change of
    affiliates (Notes 2 and 4)      |                                         |        |        |  |          |           |            |   |          |           | (28           | ) |   |            |           |   |   |         |         |   |   |           | (28        | )
|                           | Cumulative effect of an accounting change
    (Note 2)                              |                                         |        |        |  |          |           |            |   |          |           | (1,964        | ) |   |            |           |   |   |         | (432     | ) |   |           | (2,396     | )
|                           | Equity in capital surplus and capital adjustment
    changes of affiliates (Note 2) |                                         |        |        |  |          |           | (3,744      | ) |          |           |              |   |   |            | 40,060     |   |   |         |         |   |   |           | 36,316     |  
|                           | Unrealized loss on valuation of long-term
    investment securities (Note 3)        |                                         |        |        |  |          |           |            |   |          |           |              |   |   |            | (47,403    | ) |   |         |         |   |   |           | (47,403    | )
|                           | Foreign-based operations translation credit                                        |                                         |        |        |  |          |           |            |   |          |           |              |   |   |            | (298       | ) |   |         |         |   |   |           | (298       | )
|                           | Stock compensation plans (Notes 2 and 17)                                           |                                         |        |        |  |          |           |            |   |          |           |              |   |   |            | 1,081      |   |   |         |         |   |   |           | 1,081      |  
|                           | Decrease in minority interest in equity of
    consolidated subsidiaries            |                                         |        |        |  |          |           |            |   |          |           |              |   |   |            |           |   |   |         | (477,355 | ) |   |           | (477,355   | )
|                           |                                                                                     |                                         |        |         |  |          |           |             |   |          |           |               |   |   |            |            |   |   |         |          |   |   |           |           
|Balance, December 31, 2003 |                                                                                     | $                                       | 37,449 |         |  | $        | 2,442,581 |             |   | $        | 4,312,006 |               |   | $ | (1,810,608 | )          |   | $ | 130,860 |          |   | $ | 5,112,288 |           
|                           |                                                                                     |                                         |        |         |  |          |           |             |   |          |           |               |   |   |            |            |   |   |         |          |   |   |           |           

See accompanying Notes to Consolidated Financial
Statements.

F-10



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS

Years Ended December 31, 2001, 2002 and
2003




|   |        
|-- | -------
|1. | General

SK Telecom Co., Ltd. (the Company)
was incorporated in March 1984 under the laws of Korea to engage
in providing nationwide cellular telephone communication
services in the Republic of Korea. The Companys common
shares and depositary receipts (DRs) are listed on the Korea
Stock Exchange and the New York and London Stock Exchanges,
respectively. As of December 31, 2003, the Companys
total issued shares are held by the following:

|                                                            |  |           |            |                     |  |  |        | 
|----------------------------------------------------------- |  | --------- | ---------- | ------------------- |  |  | ------ | 
|                                                            |  | Number of |            | Percentage of      
|                                                            |  | shares    |            | total shares issued
|                                                            |  |           |            |                    
|                                                            |  |           |            | (%)                
|SK Group                                                    |  |           | 20,239,225 |                     |  |  | 24.60  | 
|POSCO Corp.                                                 |  |           | 4,098,496  |                     |  |  | 4.98   | 
|Institutional investors and other minority
    shareholders |  |           | 49,276,587 |                     |  |  | 59.89  | 
|Treasury stock                                              |  |           | 8,662,403  |                     |  |  | 10.53  | 
|                                                            |  |           |            |                     |  |  |        | 
|                                                            |  |           | 82,276,711 |                     |  |  | 100.00 | 
|                                                            |  |           |            |                     |  |  |        | 



|   |                                               
|-- | ----------------------------------------------
|2. | Summary of Significant Accounting
    Policies

The accompanying consolidated financial
statements of the Company have been prepared in accordance with
Korean Financial Accounting Standards and Statements of Korea
Accounting Standards (SKAS) No. 1 through
No. 9. Significant accounting policies followed in
preparing the accompanying consolidated financial statements are
summarized as follows:



| |                         
| | ------------------------
| | a. Basis of Presentation

The official accounting records of the Company
are expressed in Korean won and are maintained in accordance
with the relevant laws and regulations of Korea. The accounting
principles and reporting practices followed by the Company and
generally accepted in Korea (Korean GAAP) may differ
in certain respects from accounting principles and reporting
practices generally accepted in other countries and
jurisdictions. To conform more closely to presentations
customary in filings with the Securities and Exchange Commission
of the United States, the accompanying consolidated financial
statements have been condensed, restructured and translated into
English. The conversion into U.S. dollars were made at the
rate of W 1,192.0 to US$1, the Noon Buying Rate in the City
of New York for cable transfers in Korean won as certified for
customs purposes by the Federal Reserve Bank of New York on the
last business day of the year ended December 31, 2003. Such
translations into U.S. dollars should not be construed as
representations that the Korean won amounts could be converted
into U.S. dollars at the above or any other rate. Certain
supplementary information included in the statutory Korean
language consolidated financial statements, not required for a
fair presentation of the Company and subsidiaries
financial position or results of operations, is not presented in
the accompanying consolidated financial statements.



| |                                   
| | ----------------------------------
| | b. Principles of
    Consolidation

The consolidated financial statements include the
accounts of the Company and all majority-owned subsidiaries.
Significant intercompany accounts and transactions have been
eliminated in consolidation. 20% to 50% owned affiliates are
accounted for using the equity method.

F-11



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

The Companys subsidiaries are as follows:

|                                      |  |               |      |                  |  |                                         |  |  |        | 
|------------------------------------- |  | ------------- | ---- | ---------------- |  | --------------------------------------- |  |  | ------ | 
|                                      |  | Year of       |      |                  |  | Ownership                              
|Subsidiary                            |  | Establishment |      | Primary business |  | Percentage                             
|                                      |  |               |      |                  |  |                                        
|                                      |  |               |      |                  |  | (%)                                    
|SK Teletech Co., Ltd.                 |  |               | 1995 |                  |  | Engineering and maintenance             |  |  | 61.66  | 
|SK Capital Co., Ltd.                  |  |               | 1995 |                  |  | Finance                                 |  |  | 100.00 | 
|SK Telink Co., Ltd.                   |  |               | 1998 |                  |  | Telecommunication services              |  |  | 90.77  | 
|SK Communications Co., Ltd.           |  |               | 1999 |                  |  | Internet website services               |  |  | 92.69  | 
|SK Wyverns Baseball Club Co., Ltd.    |  |               | 2000 |                  |  | Business related sports                 |  |  | 99.99  | 
|Centurion IT Investment Association   |  |               | 2001 |                  |  | Investment association                  |  |  | 37.50  | 
|Global Credit & information
    Corp. |  |               | 1998 |                  |  | Credit and collection services          |  |  | 50.00  | 
|PAXNet Co., Ltd.                      |  |               | 1999 |                  |  | Internet website services               |  |  | 67.10  | 
|SK Telecom International Inc.         |  |               | 1995 |                  |  | Internet website services               |  |  | 100.00 | 
|SLD Telecom PTE Ltd.                  |  |               | 2000 |                  |  | Telecommunication services              |  |  | 53.80  | 
|TU Media Corp.                        |  |               | 2003 |                  |  | Digital multimedia broadcasting service |  |  | 100.00 | 

Effective January 1, 2002, SK Telecom
International Inc., SLD Telecom PTE. Ltd. and Global
Credit & Information Corp. are included in the
consolidation of the accompanying financial statements as their
total assets at the beginning of the fiscal year were more than
W 7 billion, in accordance with Korean GAAP. As
allowed under Korean GAAP, the financial statements of prior
years have not been restated to include the financial statements
of these entities.

In August 2002, the Company purchased a 78.3%
interest in SK Communications Co., Ltd. (formerly known as Lycos
Korea) and on November 1, 2002, SK Communications Co., Ltd.
merged with Netsgo Co., Ltd., a subsidiary of the Company. In
December 2002, the Company purchased a 67.1% interest in PAXNet
Co., Ltd.

The Company incorporated TU Media Corp. with
capital stock of W 32.5 billion on December 3,
2003 in order to enter the satellite digital multimedia
broadcasting business and became the sole shareholder of
TU Media Corp., which is included in the consolidation of
the accompanying financial statements effective January 1,
2003. Effective January 1, 2004, TU Media Corp. issued new
shares amounting to W 52.1 billion. In order to
participate in such new stock issuance, the Company paid only
W 6.5 billion, and as a result, Companys equity
interest in TU Media Corp decreased from 100% to 46.1%,
effective January 1, 2004.



| |                    
| | -------------------
| | c. Use of Estimates

The preparation of financial statements in
conformity with accounting principles generally accepted in
Korea require management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of
assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the consolidated financial
statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
these estimates.



| |                                       
| | --------------------------------------
| | d. Allowance for Doubtful
    Accounts

An allowance for doubtful accounts is provided
based on the estimated collectibility of individual accounts and
historical bad debt experience.

F-12



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

Activity in the allowance for doubtful accounts
receivable  trade for 2001, 2002 and 2003 is as
follows (in millions of Korean won):

|                                                               |  |      |         |      |  |      |         |   |  |   |         |  
|-------------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                               |  | 2001 |         | 2002 |  | 2003
|                                                               |  |      |         |      |  |     
|Beginning balance                                              |  | W    | 96,532  |      |  | W    | 81,681  |   |  | W | 60,542  |  
|Increase in allowance from newly consolidated
    subsidiaries |  |      |        |      |  |      | 2,056   |   |  |   |        |  
|Additions                                                      |  |      | 7,446   |      |  |      | 22,281  |   |  |   | 22,518  |  
|Reductions                                                     |  |      | (22,297 | )    |  |      | (45,476 | ) |  |   | (17,733 | )
|                                                               |  |      |         |      |  |      |         |   |  |   |         |  
|Ending balance                                                 |  | W    | 81,681  |      |  | W    | 60,542  |   |  | W | 65,327  |  
|                                                               |  |      |         |      |  |      |         |   |  |   |         |  



| |               
| | --------------
| | e. Inventories

Inventories are stated at the lower of cost,
determined using the moving average method, or net realizable
value. Inventories consist of supplies for wireless
telecommunication facilities, handsets and raw materials for
handsets. During the year, perpetual inventory systems are used
to value inventories, which are adjusted to physical inventory
counts performed at the end of the year. When the net realizable
value of inventories is less than the acquisition cost, the
carrying amount shall be reduced to the net realizable value and
any difference is charged to current operations. The valuation
losses for the years ended December 31, 2001, 2002 and 2003
were W 958 million, W 30 million and nil,
respectively.



| |              
| | -------------
| | f. Securities

Effective January 1, 2003, the Company and
its subsidiaries adopted SKAS No. 8,
Securities, and applied it retroactively, by
reclassifying the accounts relating to securities in the
accompanying consolidated financial statements for the years
ended December 31, 2001 and 2002, which are comparatively
presented. Such reclassifications did not have an effect on the
results of their operations for the years ended
December 31, 2001 and 2002. This statement requires that
certain investment securities be classified into three separate
categories such as trading securities,
available-for-sale securities, and
held-to-maturity securities, each with different
accounting treatment as follows:

Trading securities are stated at fair value with
gains or losses on valuation reflected in current operations.

Securities classified as available-for-sale are
reported at fair value. Unrealized gains or losses on valuation
of available-for-sale securities are included in capital
adjustments and the unrealized gains or losses are reflected in
net income when the securities are sold or if an impairment is
other than temporary. Equity securities are stated at
acquisition cost if fair value cannot be reliably measured. If
the declines in the fair value of individual available-for-sale
securities below their acquisition or amortized cost are other
than temporary and there is objective evidence of impairment,
write-downs of the individual securities are recorded to reduce
the carrying value to their fair value. The related write-down
is recorded in current operations as a loss on impairment of
investment securities.

Held-to-maturity securities are presented at
acquisition cost after premiums or discounts for debt securities
are amortized or accreted, respectively. The Company recognizes
write-downs resulting from the other-than-temporary declines in
the fair value below its book value on the balance sheet date if
there is objective evidence of impairment. The related
write-down is recorded in current operations as a loss on
impairment of investment securities.

Trading securities are presented in the current
asset section of the balance sheet, and available-for-sales and
held-to-maturity securities are presented in the current and/or
non-current asset section of the balance sheet as long-term
investment securities, based on their maturities from the
balance sheet date.

F-13



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)



| |                                                                 
| | ----------------------------------------------------------------
| | g. Investment Securities with 20% or
    More Ownership Interest

Investment securities of non-consolidated
affiliated companies, in which the Company and its subsidiaries
have a 20% or more ownership interest, are carried using the
equity method of accounting, whereby the Companys initial
investment is recorded at cost and the carrying value is
subsequently increased or decreased to reflect the
Companys portion of shareholders equity of the
investee. Differences between the purchase cost and the
proportionate interest in net asset value of the investee are
amortized over 20 years using the straight-line method.
When applying the equity method of accounting, unrealized
intercompany gains and losses are eliminated and the effect of
eliminations is reflected in the investment securities account.



| |                              
| | -----------------------------
| | h. Property and
    Equipment

Property and equipment are stated at cost. Major
renewals and betterments, which prolong the useful life or
enhance the value of assets, are capitalized; expenditures for
maintenance and repairs are charged to expense as incurred.

Depreciation is computed using the declining
balance method (except for buildings and structures acquired on
or after January 1, 1995 which are depreciated using
straight-line method) over the estimated useful lives
(3 - 30 years) of the related assets.

Through 2002, interest expense and other
financing charges for borrowings related to the manufacture or
construction of property and equipment were capitalized until
such manufacture or construction activities were complete.
Effective January 1, 2003, in accordance with the
application of SKAS No. 7, Capitalization of
Financing Costs, the Company changed the accounting policy
for capitalization of interest costs to charge such interest
expense and other financial charges to current operations as
incurred. In accordance with this statement, this accounting
change has been applied prospectively. If such financing costs
had been capitalized, the total balance of property and
equipment of the Company as of December 31, 2003 and net
income for the year then ended would have increased by
W 20,345 million and W 14,303 million (net
of income tax effect of W 6,042 million),
respectively. For the years ended December 31, 2001 and
2002, the Company capitalized financing cost amounting to
W 37,326 million and W 14,830 million,
respectively, related to the manufacture or construction of
property and equipment.



| |                     
| | --------------------
| | i. Intangible Assets

Intangible assets are stated at cost , net of
accumulated amortization computed using the straight-line method
over 4 to 20 years.

With its application for a license to provide IMT
services, the Company has a commitment to pay
W 1,300,000 million to the Ministry of Information
Communication (MIC). W 650,000 million was
paid in March 2001 by SK IMT Co., Ltd. (a former subsidiary of
the Company), which was merged into the Company on May 1,
2003, and the remainder is required to be paid over
10 years with an annual interest rate equal to the
3-year-maturity government bond rate minus 0.75% (4.825% as of
December 31, 2003). The future payment obligations are
W 90,000 million in 2007, W 110,000 million
in 2008, W 130,000 million in 2009,
W 150,000 million in 2010 and
W 170,000 million in 2011. On December 4, 2001,
SK IMT Co., Ltd. received the IMT license from the MIC, and
recorded the total license cost 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 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.

Through 2002, interest expense and other
financing charges for borrowings related to the purchase of
intangible assets were capitalized until the assets were put in
use. Effective January 1, 2003, in accordance with the
application of SKAS No. 7, Capitalization of
Financing Costs, the Company changed the

F-14



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

accounting policy for capitalization of interest
to charge such interest and other financing charges to current
operations as incurred. In accordance with this statement, this
accounting change has been applied prospectively. If such
financing costs had been capitalized, the total balance of
intangible assets of the Company as of December 31, 2003
and net income for the year then ended would have increased by
W 25,594 million and W 17,993 million (net
of income tax effect of W 7,601 million),
respectively. For the years ended December 31, 2001 and
2002, the Company and its subsidiaries capitalized financing
cost amounting to nil and W 69,372 million,
respectively, related to intangible assets.

Changes in intangible assets for 2001, 2002 and
2003 are as follows (in millions of Korean won):

|                  |              |      |           |           |   |      |           |          |   |   |           |          |  
|----------------- | ------------ | ---- | --------- | --------- | - | ---- | --------- | -------- | - | - | --------- | -------- | -
|                  |              | 2001 |           | 2002      |   | 2003
|                  |              |      |           |           |   |     
|Beginning balance |              | W    | 2,565,475 |           |   | W    | 3,816,373 |          |   | W | 3,721,235 |         
|Additions:        |              |      |           |           |   |      |           |          |   |   |           |         
|                  | IMT license  |      |           | 1,300,000 |   |      |           | (40,393  | ) |   |           |         |  
|                  | Other        |      |           | 124,636   |   |      |           | 144,180  |   |   |           | 175,793  |  
|Reductions:       |              |      |           |           |   |      |           |          |   |   |           |         
|                  | Amortization |      |           | (170,358  | ) |      |           | (187,218 | ) |   |           | (214,809 | )
|                  | Write-off    |      |           |          |   |      |           | (6,669   | ) |   |           |         |  
|                  | Disposal     |      |           | (3,380    | ) |      |           | (5,038   | ) |   |           | (7,275   | )
|                  |              |      |           |           |   |      |           |          |   |   |           |         
|Ending balance    |              | W    | 3,816,373 |           |   | W    | 3,721,235 |          |   | W | 3,674,944 |         
|                  |              |      |           |           |   |      |           |          |   |   |           |         



| |                                             
| | --------------------------------------------
| | j. Discounts on Bonds Long-Term
    Payables

Discounts on bonds and long-term payables are
amortized to interest expense using the effective interest rate
method over the redemption period of the bonds and long-term
payables.



| |                                       
| | --------------------------------------
| | k. Valuation of Long-Term
    Payables

Long-term payables resulting from long-term
installment transactions are stated at the present value of the
expected future cash flows. Imputed interest amounts are
recorded in present value discount accounts which are deducted
directly from the related nominal payable balances. Such imputed
interest is included in operations using the effective interest
rate method over the redemption period.



| |                                     
| | ------------------------------------
| | l. Accrued Severance
    Indemnities

In accordance with the policies of the Company
and its subsidiaries, all employees with more than one year of
service are entitled to receive severance indemnities, based on
length of service and rate of pay, at termination. Accruals for
severance indemnities are recorded to approximate the amount
required to be paid if all employees were to terminate at the
balance sheet date.

The Company and certain subsidiaries have
deposits with insurance companies to fund the portion of the
employees severance indemnities which is in excess of the
tax deductible amount allowed under the Corporate Income Tax
Law, in order to take advantage of the additional tax
deductibility for such funding. Such funding of severance
indemnities in outside insurance companies, of which the
beneficiary is their employees, totaling
W 76,418 million, W 120,413 million and
W 144,861 million as of December 31, 2001, 2002,
and 2003, respectively, were deducted from accrued severance
indemnities in accordance with Korean GAAP.

In accordance with the Korean National Pension
Fund Law, the Company and its domestic subsidiaries transferred
a portion of its accrued severance indemnities to the National
Pension Fund through March 1999.

F-15



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

Such transfers, amounting to
W 7,522 million, W 6,860 million and
W 6,229 million as of December 31, 2001, 2002 and
2003, respectively, are deducted from accrued severance
indemnities.

Changes in accrued severance indemnities for
2001, 2002 and 2003 are as follows (in millions of Korean won):

|                                               |                                 |      |         |      |  |      |         |       |  |   |         |    | 
|---------------------------------------------- | ------------------------------- | ---- | ------- | ---- |  | ---- | ------- | ----- |  | - | ------- | -- | 
|                                               |                                 | 2001 |         | 2002 |  | 2003
|                                               |                                 |      |         |      |  |     
|Beginning balance                              |                                 | W    | 32,676  |      |  | W    | 61,620  |       |  | W | 48,519  |   
|Provision                                      |                                 |      | 59,640  |      |  |      | 49,599  |       |  |   | 67,693  |   
|Payments to employees                          |                                 |      | (14,758 | )    |  |      | (20,378 | )     |  |   | (24,516 | ) 
|Transfer from affiliated and related companies |                                 |      | 20      |      |  |      |        |       |  |   | 955     |   
|Increase in accrued severance indemnities from |                                 |      |         |      |  |      |         |       |  |   |         |   
|                                               | newly consolidated subsidiaries |      |         |     |  |      |         | 1,673 |  |   |         | 77 | 
|Deposits for severance indemnities             |                                 |      | (15,958 | )    |  |      | (43,995 | )     |  |   | (24,904 | ) 
|                                               |                                 |      |         |      |  |      |         |       |  |   |         |   
|Ending balance                                 |                                 | W    | 61,620  |      |  | W    | 48,519  |       |  | W | 67,824  |   
|                                               |                                 |      |         |      |  |      |         |       |  |   |         |   



| |                         
| | ------------------------
| | m. Accounting for Leases

Lease agreements that include a bargain purchase
option, result in the transfer of ownership at the end of the
lease term, have a lease term equal to 75% or more of the
estimated economic life of the leased property or where the
present value of minimum lease payments equals or exceeds 90% of
the fair value of the leased property, are accounted for as
capital leases. All other leases are accounted for as operating
leases.

Assets and liabilities related to capital leases
are recorded as property and equipment and obligations under
capital leases, respectively, and the related interest is
calculated using the effective interest rate method and charged
to expense. For operating leases, the future minimum lease
payments are expensed ratably over the lease term while
contingent rentals are expensed as incurred.



| |                                      
| | -------------------------------------
| | n. Research and Development
    Costs

The Company and its subsidiaries charge
substantially all research and development costs to expense as
incurred. The Company and its subsidiaries incurred internal
research and development costs of W 130,685 million,
W 194,332 million and W 235,760 million for
the years ended December 31, 2001, 2002 and 2003,
respectively, and external research and development costs of
W 23,000 million, W 58,974 million and
W 64,419 million for the years ended December 31,
2001, 2002 and 2003, respectively.



| |                              
| | -----------------------------
| | o. Derivative
    Instruments

The Company and its subsidiaries record rights
and obligations arising from derivative instruments as assets
and liabilities, which are stated at fair value. The gains and
losses that result from the change in the fair value of
derivative instruments are reported in current earnings.



| |                         
| | ------------------------
| | p. Deferred Income Taxes

Deferred tax assets and liabilities are recorded
for future tax consequences of operating loss carryforwards, tax
credits and temporary differences between the financial
statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets are
recognized to the extent that they are expected to be
realizable. Deferred tax assets and liabilities are presented on
the balance sheet as a single non-current net number.

F-16



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)



| |                        
| | -----------------------
| | q. Net Income Per Share

Net income per share is computed by dividing net
income by the weighted average number of common shares
outstanding during the period.



| |                                                    
| | ---------------------------------------------------
| | r. Foreign-Based Operations
    Translation Credit

In translating the foreign currency financial
statements of the Companys overseas subsidiaries into
Korean won, the Company presents the translation gain as a
foreign-based operations translation credit in the capital
adjustment section of the balance sheet. The translation gain
arises from the application of different exchange rates; the
year-end rate for balance sheet items except shareholders
equity, the historical rate for shareholders equity and
the daily average rate for statement of income items.



| |                                                    
| | ---------------------------------------------------
| | s. Accounting for Foreign Currency
    Transactions

The Company and its domestic subsidiaries
maintain their accounts in Korean won. Transactions in foreign
currencies are recorded in Korean won based on the prevailing
rate of exchange at the dates of transactions. As allowed under
Korean GAAP, monetary assets and liabilities denominated in
foreign currencies are translated in the accompanying
consolidated financial statements at the Base Rates announced by
Seoul Money Brokerage Services, Ltd. on the balance sheet dates,
which, for U.S. dollars, were W 1,326.10 = US$1,
W 1,200.40 = US$1 and W 1,197.80 = US$1 at
December 31, 2001, 2002 and 2003, respectively. The
resulting gains and losses arising from the translation or
settlement of such assets and liabilities are included in
current operations.



| |                                                              
| | -------------------------------------------------------------
| | t. Accounting for Employee Stock
    Option Compensation Plan

The Company adopted the fair value based method
of accounting for its employee stock option compensation plan.
Under the fair value based method, compensation cost is measured
at the grant date based on the value of the award and is
recognized over the service period. For stock options, fair
value is determined using an option-pricing model that takes
into account the stock price at the grant date, the exercise
price, the expected life of the option, the volatility of the
underlying stock, expected dividends and the current risk-free
interest rate for the expected life of the option. However, as
permitted under Korean GAAP, the Company excludes the volatility
factor in estimating the value of its stock options, which
results in measurement at minimum value. The total compensation
cost of an option estimated at the grant date is not
subsequently adjusted for changes in the price of the underlying
stock or its volatility, the life of the option, dividends on
the stock, or the risk-free interest rate.



| |                                                                            
| | ---------------------------------------------------------------------------
| | u. Accounting Change and Restatement
    of Prior Year Financial Statements

On January 1, 2002, the Company early
adopted Statement of Korea Accounting Standards
(SKAS) No. 6, Events Occurring after
Balance Sheet Date. This statement requires that proposed
appropriations of retained earnings, including proposed cash
dividends, be reflected on the balance sheet when the
appropriations are approved by shareholders. Through 2001, such
proposed appropriation of retained earnings, including proposed
cash dividends, were recorded in the year when they are proposed
under Korean GAAP. In order to reflect this accounting change,
the financial statements for the year ended December 31,
2001 have been restated. This accounting change resulted in an
increase in the stockholders equity as of
December 31, 2001 and 2002 by W 57,265 million
and W 151,739 million, respectively, and a decrease in
total liabilities as December 31, 2001 and 2002 by same
amounts. In connection with this accounting change, operating
income and net income for the years ended December 31, 2001
and 2002 were not affected.

On January 1, 2003, the Company and its
subsidiaries adopted SKAS No. 2 through No. 9, except
for SKAS No. 6, which was early adopted in 2002. As a
result, the Company and its subsidiaries reclassified the

F-17



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

accounts relating to securities as explained in
the Note 2-(f), and changed the accounting policy for
capitalization of interest and other financing costs to charge
such interest expense and other financing cost to current
operations as incurred as explained in the Note 2-(h) and
2-(i). If financing costs had been capitalized, net income of
the Company and its subsidiaries for the year ended
December 31, 2003 would have increased by
W 32,295 million (net of income tax effect of
W 13,644 million). In addition, in accordance with the
application of SKAS No. 3, Intangible Assets,
effective from January 1, 2003 organization costs which
were recorded in intangible assets through 2002, are charged to
expenses as incurred and the cumulative effect of this
accounting change was charged or credited to beginning retained
earnings as of January 1, 2003.



|   |                      
|-- | ---------------------
|3. | Investment Securities



| |                      
| | ---------------------
| | a. Trading Securities

Trading securities as of December 31, 2001,
2002 and 2003 are as follows (in millions of Korean won):

|                         |  |                     |         |               |  |                 |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|------------------------ |  | ------------------- | ------- | ------------- |  | --------------- | ------- | ---- |  | ---- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                         |  |                     |         |               |  |                
|                         |  | Acquisition cost at |         | Fair value at |  | Carrying amount
|                         |  | December 31,        |         | December 31,  |  |                
|                         |  | 2003                |         | 2003          |  | 2001            |         | 2002 |  | 2003
|                         |  |                     |         |               |  |                 |         |      |  |     
|Public bonds             |  | W                   | 18,613  |               |  | W               | 18,499  |      |  | W    |        |  |  | W | 37      |  |  | W | 18,499  | 
|Corporate bonds          |  |                     | 4,410   |               |  |                 | 4,383   |      |  |      |        |  |  |   |        |  |  |   | 4,383   | 
|Beneficiary certificates |  |                     | 872,378 |               |  |                 | 870,335 |      |  |      | 637,530 |  |  |   | 754,182 |  |  |   | 870,335 | 
|                         |  |                     |         |               |  |                 |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|Total                    |  | W                   | 895,401 |               |  | W               | 893,217 |      |  | W    | 637,530 |  |  | W | 754,219 |  |  | W | 893,217 | 
|                         |  |                     |         |               |  |                 |         |      |  |      |         |  |  |   |         |  |  |   |         | 



| |                                       
| | --------------------------------------
| | b. Long-term Investment
    Securities

Long-term investment securities at of
December 31, 2001, 2002 and 2003 are as follows (in
millions of Korean won):

|                                     |  |      |         |      |  |      |           |   |  |   |         |  
|------------------------------------ |  | ---- | ------- | ---- |  | ---- | --------- | - |  | - | ------- | -
|                                     |  | 2001 |         | 2002 |  | 2003
|                                     |  |      |         |      |  |     
|Available-for-sale equity securities |  | W    | 435,453 |      |  | W    | 1,334,197 |   |  | W | 824,392 |  
|Available-for-sale debt securities   |  |      | 11,898  |      |  |      | 12,500    |   |  |   | 14,315  |  
|Held-to-maturity securities          |  |      | 50,000  |      |  |      | 118,267   |   |  |   | 126,347 |  
|                                     |  |      |         |      |  |      |           |   |  |   |         |  
|Total                                |  |      | 497,351 |      |  |      | 1,464,964 |   |  |   | 965,054 |  
|Less current portion                 |  |      |        |      |  |      | (70,267   | ) |  |   | (85,861 | )
|                                     |  |      |         |      |  |      |           |   |  |   |         |  
|Long-term portion                    |  | W    | 497,351 |      |  | W    | 1,394,697 |   |  | W | 879,193 |  
|                                     |  |      |         |      |  |      |           |   |  |   |         |  

F-18



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)



| |                                                
| | -----------------------------------------------
| | b-(1). Available-for-sale Equity
    Securities

Available-for-sale equity securities as of
December 31, 2001, 2002 and 2003 are as follows (in
millions of Korean won, except for share data):

|                                                 |           |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  |   |         |         |  |   |           |         |  |   |         |         | 
|------------------------------------------------ | --------- | --------- | --------- | ---------- |  | ------------------- | ---- | ------------- |  | --------------- | ------- | ---- |  | ---- | -------------- | - |  | - | ------- | ------- |  | - | --------- | ------- |  | - | ------- | ------- | 
|                                                 |           |           |           |            |  |                     |      |               |  |                
|                                                 |           |           |           |            |  | Acquisition cost at |      | Fair value at |  | Carrying amount
|                                                 |           | Number    |           | Ownership  |  | December 31,        |      | December 31,  |  |                
|                                                 |           | of shares |           | percentage |  | 2003                |      | 2003          |  | 2001            |         | 2002 |  | 2003
|                                                 |           |           |           |            |  |                     |      |               |  |                 |         |      |  |     
|                                                 |           |           |           | (%)        |  |                     |      |               |  |                 |         |      |  |     
|(Investments in listed companies)                |           |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  |   |         |         |  |   |           |         |  |   |         |        
|Digital Chosunilbo Co., Ltd.                     |           |           | 2,890,630 |            |  |                     | 10.1 |               |  | W               | 5,781   |      |  |      | W2,847         |   |  | W | 5,926   |         |  | W | 2,428     |         |  | W | 2,847   |        
|Hanaro Telecom Inc.                              |           |           | 8,220,000 |            |  |                     | 1.8  |               |  |                 | 82,307  |      |  |      | 26,838         |   |  |   | 75,437  |         |  |   | 49,586    |         |  |   | 26,838  |        
|Korea Radio Wave Basestation Management (note c) |           |           | 234,150   |            |  |                     | 4.5  |               |  |                 | 1,171   |      |  |      | 2,669          |   |  |   | 616     |         |  |   | 2,693     |         |  |   | 2,669   |        
|SK Securities Co., Ltd.                          |           |           | 3,608,856 |            |  |                     | 1.1  |               |  |                 | 5,551   |      |  |      | 1,877          |   |  |   |        |         |  |   | 5,052     |         |  |   | 1,877   |        
|POSCO Corporation                                |           |           | 2,481,310 |            |  |                     | 2.7  |               |  |                 | 332,662 |      |  |      | 404,454        |   |  |   |        |         |  |   |          |         |  |   | 404,454 |        
|KT Corporation                                   |           |           |          |            |  |                     |     |               |  |                 |        |      |  |      |               |   |  |   |        |         |  |   | 730,602   |         |  |   |        |        
|                                                 |           |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  |   |         |         |  |   |           |         |  |   |         |        
|                                                 | sub-total |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  |   |         | 81,979  |  |   |           | 790,361 |  |   |         | 438,685 | 
|                                                 |           |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  |   |         |         |  |   |           |         |  |   |         |        
|(Investments in non-listed
    companies)        |           |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  |   |         |         |  |   |           |         |  |   |         |        
|SK Group Japan Co., Ltd.                         |           |           | 1,567,500 |            |  |                     | 16.5 |               |  |                 | 16,416  |      |  |      | (note b        | ) |  |   | 16,417  |         |  |   |          |         |  |   |        |        
|Powercomm Co., Ltd.                              |           |           | 7,500,000 |            |  |                     | 5.0  |               |  |                 | 240,243 |      |  |      | 68,407         |   |  |   | 240,243 |         |  |   | 240,243   |         |  |   | 68,407  |        
|Real Telecom Co., Ltd.                           |           |           | 398,722   |            |  |                     | 9.9  |               |  |                 | 5,981   |      |  |      | (note a        | ) |  |   | 5,981   |         |  |   | 5,981     |         |  |   | 5,981   |        
|Japan MBCO                                       |           |           | 84,000    |            |  |                     | 13.6 |               |  |                 | 42,517  |      |  |      | (note a        | ) |  |   | 12,288  |         |  |   | 27,209    |         |  |   | 42,517  |        
|Enterprise Networks Co., Ltd.                    |           |           | 423,244   |            |  |                     | 4.0  |               |  |                 | 14,438  |      |  |      | (note a        | ) |  |   | 14,438  |         |  |   | 14,438    |         |  |   | 14,438  |        
|SK Life Insurance Co., Ltd.                      |           |           | 4,702,000 |            |  |                     | 9.5  |               |  |                 | 14,890  |      |  |      | (note a        | ) |  |   | 14,890  |         |  |   | 14,890    |         |  |   | 14,890  |        
|Other                                            |           |           |           |            |  |                     |      |               |  |                 | 81,519  |      |  |      | (notes a and b | ) |  |   | 40,346  |         |  |   | 43,971    |         |  |   | 43,068  |        
|                                                 |           |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  |   |         |         |  |   |           |         |  |   |         |        
|                                                 | sub-total |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  |   |         | 344,603 |  |   |           | 346,732 |  |   |         | 189,301 | 
|                                                 |           |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  |   |         |         |  |   |           |         |  |   |         |        
|(Investments in funds)                           |           |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  |   |         |         |  |   |           |         |  |   |         |        
|Korea IT Fund                                    |           |           |           |            |  |                     |      |               |  |                 | 190,000 |      |  |      | (note a        | ) |  |   |        |         |  |   | 190,000   |         |  |   | 190,000 |        
|Others                                           |           |           |           |            |  |                     |      |               |  |                 | 6,917   |      |  |      | (notes a and b | ) |  |   | 8,871   |         |  |   | 7,104     |         |  |   | 6,406   |        
|                                                 |           |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  |   |         |         |  |   |           |         |  |   |         |        
|                                                 | sub-total |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  |   |         | 8,871   |  |   |           | 197,104 |  |   |         | 196,406 | 
|                                                 |           |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  |   |         |         |  |   |           |         |  |   |         |        
|Total                                            |           |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  | W | 435,453 |         |  | W | 1,334,197 |         |  | W | 824,392 |        
|                                                 |           |           |           |            |  |                     |      |               |  |                 |         |      |  |      |                |   |  |   |         |         |  |   |           |         |  |   |         |        



---



|         |                                                                                                                                      
|-------- | -------------------------------------------------------------------------------------------------------------------------------------
|(note a) | As a reasonable estimate of fair value could not
    be made without incurring excessive costs, it is stated at
    acquisition cost.



|         |                                                                                                                                                                                                                                                                                                                                                                                                                             
|-------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(note b) | Due to the impairment of the Companys
    investments in common stock of CCK Van, Biznet Tech, Hanse
    Telecom, Cybird Korea and Venture Korea, impairment losses
    totaling W 3,926 million were recorded for the year
    ended December 31, 2003. In addition, SK Communication Co.,
    Ltd., a subsidiary of the Company, recorded a loss on impairment
    of long-term investment securities of W 1,823 million.



|         |                                            
|-------- | -------------------------------------------
|(note c) | Listed on the Korea Stock Exchange in 2002.

The net unrealized loss on investments in common
stock of Digital Chosunilbo Co., Ltd., and Hanaro Telecom Inc.
as of December 31, 2001 totaling
W 75,792 million, the net unrealized loss on
investments in common stock of KT Corporation, Digital
Chosunilbo Co., Ltd., Hanaro Telecom, Inc. , Korea Radio Wave
Basestation Management and SK Securities Co., Ltd. as of
December 31, 2002 totaling W 104,117 million, and
the net unrealized gain on investments in common stock of
Digital Chosunilbo Co., Ltd., Hanaro Telecom

F-19



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

Inc., Korea Radio Wave Basestation Management, SK
Securities Co., Ltd. and POSCO Corporation as of
December 31, 2003 totaling W 11,213 million, were
recorded as a capital adjustment.

On May 23, 2002, the Company acquired a 9.6%
equity interest (29,808,333 shares of common stock) in KT
Corporation for W 1,609 billion as a result of
participation in the privatization of KT Corporation. The
Company sold all of these shares on December 30, 2002 and
January 10, 2003, under the Mutual Agreement on Stock
Exchange between the Company and KT Corporation. The investments
in 14,353,674 shares of KT Corporations common
stock as of December 31, 2002, which were not sold until
January 10, 2003, were reported at the agreed sales price
(W 50,900 per share) with unrealized losses amounting
to W 44,496 million reported as impairment losses in
the year ended December 31, 2002, as the decline in the
carrying value was not recoverable.

The Company recorded its investments in common
stock of 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
W 171,836 million as of December 31, 2003 was
recorded as a capital adjustment.



| |                                              
| | ---------------------------------------------
| | b-(2). Available-for-sale Debt
    Securities

Available-for-sale debt securities as of
December 31, 2001, 2002 and 2003 are as follows (in
millions of Korean won):

|                                                               |  |              |  |                     |       |                 |  |      |        |      |  |   |        |   |  |   |        |  
|-------------------------------------------------------------- |  | ------------ |  | ------------------- | ----- | --------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                               |  |              |  |                     |       |                
|                                                               |  |              |  | Acquisition cost at |       | Carrying amount
|                                                               |  |              |  | December 31,        |       |                
|                                                               |  | Maturity     |  | 2003                |       | 2001            |  | 2002 |        | 2003
|                                                               |  |              |  |                     |       |                 |  |      |        |     
|Public bonds                                                   |  | (note a)     |  | W                   | 971   |                 |  | W    | 2,384  |      |  | W | 586    |   |  | W | 971    |  
|Convertible bonds of Real Telecom Co.,
    Ltd.                |  | March 2004   |  |                     | 9,514 |                 |  |      | 9,514  |      |  |   | 9,514  |   |  |   | 9,514  |  
|Convertible bonds of Eonex Technologies, Inc.(1st)             |  | May 2003     |  |                     |      |                 |  |      |       |      |  |   | 2,000  |   |  |   |       |  
|Convertible bonds of Eonex Technologies, Inc.(3rd)             |  | January 2005 |  |                     | 3,600 |                 |  |      |       |      |  |   |       |   |  |   | 3,600  |  
|Others                                                         |  |              |  |                     |       |                 |  |      |       |      |  |   | 400    |   |  |   | 230    |  
|                                                               |  |              |  |                     |       |                 |  |      |        |      |  |   |        |   |  |   |        |  
|Total                                                          |  |              |  |                     |       |                 |  |      | 11,898 |      |  |   | 12,500 |   |  |   | 14,315 |  
|Less current portion of available-for-sale debt
    securities |  |              |  |                     |       |                 |  |      |       |      |  |   | (2,000 | ) |  |   | (9,514 | )
|                                                               |  |              |  |                     |       |                 |  |      |        |      |  |   |        |   |  |   |        |  
|Long-term available-for-sale debt securities                   |  |              |  |                     |       |                 |  | W    | 11,898 |      |  | W | 10,500 |   |  | W | 4,801  |  
|                                                               |  |              |  |                     |       |                 |  |      |        |      |  |   |        |   |  |   |        |  



---



|         |                                                                                                                          
|-------- | -------------------------------------------------------------------------------------------------------------------------
|(note a) | The maturities of public bonds as of
    December 31, 2001, 2002 and 2003 are as follows (in
    millions of Korean won):

|                  |  |      |       |      |  |      |     |  |  |   |     | 
|----------------- |  | ---- | ----- | ---- |  | ---- | --- |  |  | - | --- | 
|Maturity          |  | 2001 |       | 2002 |  | 2003
|                  |  |      |       |      |  |     
|Within five years |  | W    | 2,384 |      |  | W    | 583 |  |  | W | 857 | 
|Within ten years  |  |      |      |      |  |      | 3   |  |  |   | 114 | 
|                  |  |      |       |      |  |      |     |  |  |   |     | 
|                  |  | W    | 2,384 |      |  | W    | 586 |  |  | W | 971 | 
|                  |  |      |       |      |  |      |     |  |  |   |     | 

On March 30, 2001, the Company transferred
its paging business to Real Telecom Co., Ltd. (formerly, known
as Intec Telecom Co., Ltd.) in exchange for 9.9% of Real Telecom
Co., Ltd.s newly issued common

F-20



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

stock and bonds with a principal amount of
W 9.5 billion that can be converted into an additional
7.8% interest in Real Telecom.

The convertible bonds of Eonex Technologies, Inc.
(3rd) with a principal amount of W 3,600 million can
be converted into 48,000 shares of common stock of Eonex
Technologies, Inc. at W 75,000 per share over the
period from July 30, 2003 to January 29, 2005. If such
bonds are converted, the Companys equity interest in Eonex
Technologies, Inc. will increase to 20.4%.



| |                                       
| | --------------------------------------
| | b-(3). Held-to-maturity
    Securities

Held-to-maturity securities as of
December 31, 2001, 2002 and 2003 are as follows (in
millions of Korean won):

|                                                              |  |          |                |                     |  |                 |        |      |  |      |        |  |  |   |         |   |  |   |         |  
|------------------------------------------------------------- |  | -------- | -------------- | ------------------- |  | --------------- | ------ | ---- |  | ---- | ------ |  |  | - | ------- | - |  | - | ------- | -
|                                                              |  |          |                |                     |  |                
|                                                              |  |          |                | Acquisition cost at |  | Carrying amount
|                                                              |  |          |                | December 31,        |  |                
|                                                              |  | Maturity |                | 2003                |  | 2001            |        | 2002 |  | 2003
|                                                              |  |          |                |                     |  |                 |        |      |  |     
|Subordinated bonds of SK Life Insurance Co.,
    Ltd.         |  |          | April 2006     |                     |  | W               | 50,000 |      |  | W    | 50,000 |  |  | W | 50,000  |   |  | W | 50,000  |  
|Subordinated bonds of Nate First Special Purpose
    Company  |  |          | June 2003      |                     |  |                 |       |      |  |      |       |  |  |   | 40,506  |   |  |   |        |  
|Subordinated bonds of Nate Second Special Purpose
    Company |  |          | December 2003  |                     |  |                 |       |      |  |      |       |  |  |   | 27,761  |   |  |   |        |  
|Subordinated bonds of Nate Third Special Purpose
    Company  |  |          | May 2004       |                     |  |                 | 27,464 |      |  |      |       |  |  |   |        |   |  |   | 27,464  |  
|Subordinated bonds of Nate Fourth Special Purpose
    Company |  |          | September 2004 |                     |  |                 | 25,393 |      |  |      |       |  |  |   |        |   |  |   | 25,393  |  
|Subordinated bonds of Nate Fifth Special Purpose
    Company  |  |          | December 2004  |                     |  |                 | 23,490 |      |  |      |       |  |  |   |        |   |  |   | 23,490  |  
|                                                              |  |          |                |                     |  |                 |        |      |  |      |        |  |  |   |         |   |  |   |         |  
|Total                                                         |  |          |                |                     |  |                 |        |      |  |      | 50,000 |  |  |   | 118,267 |   |  |   | 126,347 |  
|Less current portion of held-to-maturity
    securities       |  |          |                |                     |  |                 |        |      |  |      |       |  |  |   | (68,267 | ) |  |   | (76,347 | )
|                                                              |  |          |                |                     |  |                 |        |      |  |      |        |  |  |   |         |   |  |   |         |  
|Long-term held-to-maturity securities                         |  |          |                |                     |  |                 |        |      |  | W    | 50,000 |  |  | W | 50,000  |   |  | W | 50,000  |  
|                                                              |  |          |                |                     |  |                 |        |      |  |      |        |  |  |   |         |   |  |   |         |  

On June 20, 2002, December 3, 2002,
May 2, 2003, September 4, 2003 and December 15,
2003, the Company sold W 631,447 million,
W 650,641 million, W 577,253 million,
W 549,256 million and W 498,426 million,
respectively, of accounts receivable resulting from its mobile
phone dealer financing plan to Nate First Special Purpose
Company, Nate Second Special Purpose Company, Nate Third Special
Purpose Company, Nate Fourth Special Purpose Company and Nate
Fifth Special Purpose Company, respectively, in asset-backed
securitization transactions. In the course of these
transactions, the Company acquired subordinate bonds issued by
such special purpose companies, in order to enhance the credit
of bonds issued by them (See Note 21-(e)).

F-21



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)



|   |                                                            
|-- | -----------------------------------------------------------
|4. | Equity Securities Accounted for Using the
    Equity Method

Equity securities accounted for using the equity
method as of December 31, 2001, 2002 and 2003 are as
follows (in millions of Korean won, except for share data):

|                                      |  |              |            |                 |  |              |      |              |  |                 |        |      |  |      |         |          |  |   |         |  |  |   |        |  |  |   |         | 
|------------------------------------- |  | ------------ | ---------- | --------------- |  | ------------ | ---- | ------------ |  | --------------- | ------ | ---- |  | ---- | ------- | -------- |  | - | ------- |  |  | - | ------ |  |  | - | ------- | 
|                                      |  | Number of    |            | Ownership       |  | Acquisition  |      | Net asset    |  |                
|                                      |  | shares at    |            | percentage (%)  |  | cost at      |      | value at     |  | Carrying amount
|                                      |  | December 31, |            | at December 31, |  | December 31, |      | December 31, |  |                
|                                      |  | 2003         |            | 2003            |  | 2003         |      | 2003         |  | 2001            |        | 2002 |  | 2003
|                                      |  |              |            |                 |  |              |      |              |  |                 |        |      |  |     
|SK C&C Co., Ltd.                      |  |              | 300,000    |                 |  |              | 30.0 |              |  |                 | 19,071 |      |  |      | 87,751  |          |  | W | 43,475  |  |  | W | 39,687 |  |  | W | 92,844  | 
|SK Telecom International Inc.         |  |              |           |                 |  |              |     |              |  |                 |       |      |  |      |        | (note 1) |  |   | 6,023   |  |  |   |       |  |  |   |        | 
|STIC Ventures Co., Ltd.               |  |              | 1,600,000  |                 |  |              | 24.1 |              |  |                 | 8,000  |      |  |      | 7,086   |          |  |   | 8,038   |  |  |   | 6,885  |  |  |   | 7,086   | 
|VCASH Co., Ltd.                       |  |              | 750,000    |                 |  |              | 23.2 |              |  |                 | 3,750  |      |  |      | 1,048   |          |  |   | 3,417   |  |  |   | 2,232  |  |  |   | 1,048   | 
|Eonex Technologies, Inc.              |  |              |           |                 |  |              |     |              |  |                 |       |      |  |      |        | (note 3) |  |   | 3,600   |  |  |   | 4,615  |  |  |   |        | 
|SLD Telecom PTE Ltd.                  |  |              |           |                 |  |              |     |              |  |                 |       |      |  |      |        | (note 1) |  |   | 5,330   |  |  |   |       |  |  |   |        | 
|WiderThan. Com Co., Ltd.              |  |              | 200,000    |                 |  |              | 20.0 |              |  |                 | 1,000  |      |  |      | 3,188   |          |  |   | 1,000   |  |  |   | 1,750  |  |  |   | 3,188   | 
|DSS Mobile Communications Ltd.        |  |              | 10,915,000 |                 |  |              | 29.5 |              |  |                 | 2,494  |      |  |      |        | (note 2) |  |   |        |  |  |   |       |  |  |   |        | 
|Global Credit & Information
    Corp. |  |              |           |                 |  |              |     |              |  |                 |       |      |  |      |        | (note 1) |  |   | 2,410   |  |  |   |       |  |  |   |        | 
|Skytel Co., Ltd.                      |  |              | 1,756,000  |                 |  |              | 28.6 |              |  |                 | 2,159  |      |  |      | 3,053   |          |  |   | 2,352   |  |  |   | 2,576  |  |  |   | 3,401   | 
|SK China Company Ltd.                 |  |              | 28,160     |                 |  |              | 20.7 |              |  |                 | 3,195  |      |  |      | 1,683   |          |  |   | 3,869   |  |  |   | 3,482  |  |  |   | 1,683   | 
|SK-QC Wireless Development Fund       |  |              |            |                 |  |              | 50.0 |              |  |                 | 6,540  |      |  |      | 5,901   |          |  |   | 6,540   |  |  |   | 5,993  |  |  |   | 5,901   | 
|SKT-HP Ventures, LLC                  |  |              |            |                 |  |              | 50.0 |              |  |                 | 6,415  |      |  |      | 5,960   |          |  |   | 6,415   |  |  |   | 5,990  |  |  |   | 5,960   | 
|CDMA Mobile Phone Center              |  |              |            |                 |  |              | 50.0 |              |  |                 | 63,354 |      |  |      | 49,444  |          |  |   |        |  |  |   |       |  |  |   | 49,444  | 
|Other investments in affiliates       |  |              |            |                 |  |              |      |              |  |                 | 13,652 |      |  |      | (note 4 | )        |  |   | 12,848  |  |  |   | 8,037  |  |  |   | 13,154  | 
|                                      |  |              |            |                 |  |              |      |              |  |                 |        |      |  |      |         |          |  |   |         |  |  |   |        |  |  |   |         | 
|Total                                 |  |              |            |                 |  |              |      |              |  |                 |        |      |  |      |         |          |  | W | 105,317 |  |  | W | 81,247 |  |  | W | 183,709 | 
|                                      |  |              |            |                 |  |              |      |              |  |                 |        |      |  |      |         |          |  |   |         |  |  |   |        |  |  |   |         | 



---



|         |                                                                                                                                                                                                                                                                                                                          
|-------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(note 1) | As their total assets at the beginning of 2002
    were over W 7 billion, effective January 1, 2002,
    SK Telecom International Inc., Global Credit &
    Information Corp. and SLD Telecom PTE Ltd. are included in the
    consolidation of the accompanying financial statements in
    accordance with Korean GAAP.
|        
|(note 2) | DSS Mobile Communication, an Indian company, has
    had a deficiency in assets since March 31, 1998.                                                                                                                                                                                                                    
|        
|(note 3) | As the Companys ownership in Eonex
    Technologies, Inc. decreased from 22.5% to 16.1%, during the
    first quarter of 2003, investments in common stock of Eonex
    Technologies, Inc. were reclassified to available-for-sale
    securities at the end of the first quarter of 2003.                              
|        
|(note 4) | As allowed under Korean financial accounting
    standards, investments in equity securities of Aircross Co.,
    Ltd. and certain others were not accounted for using the equity
    method of accounting, as their total assets at the beginning in
    2003 were less than W 7 billion.                               

F-22



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

Details of changes in investments in affiliates
accounted for using the equity method for the years ended
December 31, 2001, 2002 and 2003 are as follows (in
millions of Korean won):

|                            |  |                                      |        |             |  |           |   |                 |  |             |       |           |  |          |   |         |  |   |       |   |  |   |      |   |  |   |      |   |  |   |        | 
|--------------------------- |  | ------------------------------------ | ------ | ----------- |  | --------- | - | --------------- |  | ----------- | ----- | --------- |  | -------- | - | ------- |  | - | ----- | - |  | - | ---- | - |  | - | ---- | - |  | - | ------ | 
|                            |  |                                     
|                            |  | For the year ended December 31, 2001
|                            |  |                                     
|                            |  |                                      |        | Equity in   |  |          
|                            |  |                                      |        | Equity in   |  | Equity in |   | capital surplus |  |            
|                            |  | Beginning                            |        |             |  | earnings  |   | retained        |  | and capital |       | Dividends |  | Decrease |   | Ending 
|                            |  | balance                              |        | Acquisition |  | (losses)  |   | earnings        |  | adjustments |       | received  |  | (note 1) |   | Balance
|                            |  |                                      |        |             |  |           |   |                 |  |             |       |           |  |          |   |        
|SK C&C Co., Ltd.            |  | W                                    | 36,139 |             |  | W         |  |                 |  | W           | 4,753 |           |  | W        |  |         |  | W | 3,183 |   |  | W | (600 | ) |  | W |     |   |  | W | 43,475 | 
|STIC IT Venture Capital     |  |                                      | 8,490  |             |  |           |  |                 |  |             | (441  | )         |  |          |  |         |  |   | (11   | ) |  |   |     |   |  |   |     |   |  |   | 8,038  | 
|VCASH                       |  |                                      | 4,059  |             |  |           |  |                 |  |             | (672  | )         |  |          |  |         |  |   | 30    |   |  |   |     |   |  |   |     |   |  |   | 3,417  | 
|Skytel Co., Ltd. (note 2)   |  |                                      | 1,484  |             |  |           |  |                 |  |             | 522   |           |  |          |  |         |  |   | 346   |   |  |   |     |   |  |   |     |   |  |   | 2,352  | 
|SK China Co., Ltd. (note 2) |  |                                      | 3,195  |             |  |           |  |                 |  |             | 132   |           |  |          |  |         |  |   | 542   |   |  |   |     |   |  |   |     |   |  |   | 3,869  | 
|SK Wyverns Baseball Club    |  |                                      | 517    |             |  |           |  |                 |  |             |      |           |  |          |  |         |  |   |      |   |  |   |     |   |  |   | (517 | ) |  |   |       | 
|                            |  |                                      |        |             |  |           |   |                 |  |             |       |           |  |          |   |         |  |   |       |   |  |   |      |   |  |   |      |   |  |   |        | 
|                            |  | W                                    | 53,884 |             |  | W         |  |                 |  | W           | 4,294 |           |  | W        |  |         |  | W | 4,090 |   |  | W | (600 | ) |  | W | (517 | ) |  | W | 61,151 | 
|                            |  |                                      |        |             |  |           |   |                 |  |             |       |           |  |          |   |         |  |   |       |   |  |   |      |   |  |   |      |   |  |   |        | 

|                                      |  |                                      |        |             |  |           |     |                 |  |             |        |           |  |          |   |         |  |   |        |   |  |   |      |   |  |   |   |  |  |   |        | 
|------------------------------------- |  | ------------------------------------ | ------ | ----------- |  | --------- | --- | --------------- |  | ----------- | ------ | --------- |  | -------- | - | ------- |  | - | ------ | - |  | - | ---- | - |  | - | - |  |  | - | ------ | 
|                                      |  |                                     
|                                      |  | For the year ended December 31, 2002
|                                      |  |                                     
|                                      |  |                                      |        | Equity in   |  |          
|                                      |  |                                      |        | Equity in   |  | Equity in |     | capital surplus |  |            
|                                      |  | Beginning                            |        |             |  | earnings  |     | retained        |  | and capital |        | Dividends |  |          |   | Ending 
|                                      |  | balance                              |        | Acquisition |  | (losses)  |     | earnings        |  | adjustments |        | received  |  | Decrease |   | Balance
|                                      |  |                                      |        |             |  |           |     |                 |  |             |        |           |  |          |   |        
|SK C&C Co., Ltd.                      |  | W                                    | 43,475 |             |  | W         |    |                 |  | W           | 3,401  |           |  | W        |  |         |  | W | (6,589 | ) |  | W | (600 | ) |  | W |  |  |  | W | 39,687 | 
|STIC IT Venture Capital               |  |                                      | 8,038  |             |  |           |    |                 |  |             | (1,137 | )         |  |          |  |         |  |   | (17    | ) |  |   |     |   |  |   |  |  |  |   | 6,884  | 
|VCASH                                 |  |                                      | 3,417  |             |  |           |    |                 |  |             | (1,192 | )         |  |          |  |         |  |   | 7      |   |  |   |     |   |  |   |  |  |  |   | 2,232  | 
|Skytel Co., Ltd.                      |  |                                      | 2,352  |             |  |           | 675 |                 |  |             | 29     |           |  |          |  |         |  |   | (480   | ) |  |   |     |   |  |   |  |  |  |   | 2,576  | 
|SK China Co., Ltd.                    |  |                                      | 3,869  |             |  |           |    |                 |  |             | (21    | )         |  |          |  |         |  |   | (366   | ) |  |   |     |   |  |   |  |  |  |   | 3,482  | 
|Eonex Technologies, Inc. (note 3)     |  |                                      | 3,600  |             |  |           |    |                 |  |             | (996   | )         |  |          |  |         |  |   | 2,011  |   |  |   |     |   |  |   |  |  |  |   | 4,615  | 
|WiderThan. Com Co., Ltd. (note 3)     |  |                                      | 1,000  |             |  |           |    |                 |  |             | 750    |           |  |          |  |         |  |   |       |   |  |   |     |   |  |   |  |  |  |   | 1,750  | 
|SKT-HP Ventures, LLC                  |  |                                      | 6,415  |             |  |           |    |                 |  |             | (12    | )         |  |          |  |         |  |   | (413   | ) |  |   |     |   |  |   |  |  |  |   | 5,990  | 
|SKT QC Wireless Development Fund, LLC |  |                                      | 6,540  |             |  |           |    |                 |  |             | (9     | )         |  |          |  |         |  |   | (538   | ) |  |   |     |   |  |   |  |  |  |   | 5,993  | 
|                                      |  |                                      |        |             |  |           |     |                 |  |             |        |           |  |          |   |         |  |   |        |   |  |   |      |   |  |   |   |  |  |   |        | 
|                                      |  | W                                    | 78,706 |             |  | W         | 675 |                 |  | W           | 813    |           |  | W        |  |         |  | W | (6,385 | ) |  | W | (600 | ) |  | W |  |  |  | W | 73,209 | 
|                                      |  |                                      |        |             |  |           |     |                 |  |             |        |           |  |          |   |         |  |   |        |   |  |   |      |   |  |   |   |  |  |   |        | 

F-23



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

|                                  |  |                                      |         |             |  |           |   |                 |  |             |         |          |  |          |     |         |  |   |        |   |  |   |      |   |  |   |        |   |  |   |         | 
|--------------------------------- |  | ------------------------------------ | ------- | ----------- |  | --------- | - | --------------- |  | ----------- | ------- | -------- |  | -------- | --- | ------- |  | - | ------ | - |  | - | ---- | - |  | - | ------ | - |  | - | ------- | 
|                                  |  |                                     
|                                  |  | For the year ended December 31, 2003
|                                  |  |                                     
|                                  |  |                                      |         | Equity in   |  | Equity in |   |                
|                                  |  |                                      |         | Equity in   |  | retained  |   | capital surplus |  |             |         | Decrease |  |         
|                                  |  | Beginning                            |         |             |  | earnings  |   | earning         |  | and capital |         | Dividend |  | (notes 5 |     | Ending 
|                                  |  | balance                              |         | Acquisition |  | (losses)  |   | (note 7)        |  | adjustments |         | received |  | and 6)   |     | balance
|                                  |  |                                      |         |             |  |           |   |                 |  |             |         |          |  |          |     |        
|SK C&C Co., Ltd.                  |  | W                                    | 39,687  |             |  | W         |  |                 |  | W           | 7,962   |          |  | W        |    |         |  | W | 45,795 |   |  | W | (600 | ) |  | W |       |   |  | W | 92,844  | 
|STIC Ventures Co., Ltd.           |  |                                      | 6,884   |             |  |           |  |                 |  |             | 44      |          |  |          | (3  | )       |  |   | 161    |   |  |   |     |   |  |   |       |   |  |   | 7,086   | 
|VCASH Co., Ltd.                   |  |                                      | 2,232   |             |  |           |  |                 |  |             | (1,353  | )        |  |          | (30 | )       |  |   | 199    |   |  |   |     |   |  |   |       |   |  |   | 1,048   | 
|Eonex Technologies, Inc.          |  |                                      | 4,615   |             |  |           |  |                 |  |             | (22     | )        |  |          |    |         |  |   |       |   |  |   |     |   |  |   | (4,593 | ) |  |   |        | 
|WiderThan. Com Co., Ltd.          |  |                                      | 1,750   |             |  |           |  |                 |  |             | 1,465   |          |  |          |    |         |  |   | (27    | ) |  |   |     |   |  |   |       |   |  |   | 3,188   | 
|Skytel Co., Ltd.                  |  |                                      | 2,576   |             |  |           |  |                 |  |             | 694     |          |  |          |    |         |  |   | 152    |   |  |   | (21  | ) |  |   |       |   |  |   | 3,401   | 
|SK China Co., Ltd.                |  |                                      | 3,482   |             |  |           |  |                 |  |             | (1,864  | )        |  |          |    |         |  |   | 65     |   |  |   |     |   |  |   |       |   |  |   | 1,683   | 
|SK-QC Wireless Development Fund   |  |                                      | 5,993   |             |  |           |  |                 |  |             | (79     | )        |  |          |    |         |  |   | (13    | ) |  |   |     |   |  |   |       |   |  |   | 5,901   | 
|SKT-HP Ventures, LLC              |  |                                      | 5,990   |             |  |           |  |                 |  |             | 17      |          |  |          |    |         |  |   | (47    | ) |  |   |     |   |  |   |       |   |  |   | 5,960   | 
|CDMA Mobile Phone Center (note 4) |  |                                      | 63,354  |             |  |           |  |                 |  |             | (13,839 | )        |  |          |    |         |  |   |       |   |  |   |     |   |  |   | (71    | ) |  |   | 49,444  | 
|                                  |  |                                      |         |             |  |           |   |                 |  |             |         |          |  |          |     |         |  |   |        |   |  |   |      |   |  |   |        |   |  |   |         | 
|                                  |  | W                                    | 136,563 |             |  | W         |  |                 |  | W           | (6,975  | )        |  | W        | (33 | )       |  | W | 46,285 |   |  | W | (621 | ) |  | W | (4,664 | ) |  | W | 170,555 | 
|                                  |  |                                      |         |             |  |           |   |                 |  |             |         |          |  |          |     |         |  |   |        |   |  |   |      |   |  |   |        |   |  |   |         | 



---



|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(note 1) | As its total assets at the beginning of 2001 were
    over W 7 billion, SK Wyverns Baseball Club is included
    in the consolidation of the accompanying financial statements in
    accordance with Korean GAAP.                                                                                                                                                                                                                                                                                                                                  
|        
|(note 2) | As their total assets at the beginning of 2001
    were over W 7 billion, effective January 1, 2001,
    investments in equity securities of Skytel Co., Ltd. and SK
    China Co., Ltd. are accounted for using the equity method of
    accounting.                                                                                                                                                                                                                                                                                               
|        
|(note 3) | As their total assets at the beginning of 2002
    were over W 7 billion, effective January 1, 2002,
    investments in equity securities of Eonex Technologies, Inc. and
    WiderThan.com are accounted for using the equity method of
    accounting.                                                                                                                                                                                                                                                                                            
|        
|(note 4) | As its total assets at the beginning of 2003 were
    over W 7 billion, effective January 1, 2003,
    investment in equity securities of CDMA Mobile Phone Center held
    by SLD Telecom PTE Ltd., a overseas subsidiary of the Company,
    is accounted for using the equity method of accounting.                                                                                                                                                                                                                                              
|        
|(note 5) | Investments in common stock of Eonex
    Technologies, Inc. were reclassified to available-for-sale
    securities as the Companys ownership in Eonex
    Technologies, Inc. decreased to 16.1% from 22.5% during the
    first quarter of 2003.                                                                                                                                                                                                                                                                                                   
|        
|(note 6) | The decrease in investments in equity securities
    of CDMA Mobile Phone Center represents a translation loss
    incurred from translating the foreign currency financial
    statements of SLD Telecom PTE Ltd., a overseas subsidiary of the
    Company, which makes investments in CDMA Mobile Phone Center,
    into Korean won.                                                                                                                                                                                                             
|        
|(note 7) | Effective January 1, 2003, the
    Companys investees including STIC Ventures Co., Ltd. and
    VCASH Co., Ltd., adopted SKAS No. 3, Intangible
    Assets. This statement requires that organization cost be
    charged to expenses as incurred and the unamortized organization
    costs at January 1, 2003 be offset against the beginning
    retained earnings. To reflect the Companys portion of the
    decrease in the beginning retained earnings of the investees,
    the Company reduced its beginning retained earnings of 2003.

F-24



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)



|   |                   
|-- | ------------------
|5. | Loans to Employees

Short-term and long-term loans to employees as of
December 31, 2001, 2002 and 2003 are as follows (in
millions of Korean won):

|                                                    |  |      |        |      |  |      |        |  |  |   |        | 
|--------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|                                                    |  | 2001 |        | 2002 |  | 2003
|                                                    |  |      |        |      |  |     
|Loans to employees stock ownership
    association |  | W    | 70,939 |      |  | W    | 45,906 |  |  | W | 33,788 | 
|Loans to employees for housing and other (3 - 4%)   |  |      | 6,840  |      |  |      | 10,556 |  |  |   | 8,587  | 
|                                                    |  |      |        |      |  |      |        |  |  |   |        | 
|                                                    |  | W    | 77,779 |      |  | W    | 56,462 |  |  | W | 42,375 | 
|                                                    |  |      |        |      |  |      |        |  |  |   |        | 



|   |                       
|-- | ----------------------
|6. | Property and Equipment

Property and equipment as of December 31,
2001, 2002 and 2003 are as follows (in millions of Korean won):

|                              |  |         |       |      |  |      |            |      |  |   |            |   |  |   |            |  
|----------------------------- |  | ------- | ----- | ---- |  | ---- | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                              |  | Useful  |       |      |  |      |            |     
|                              |  | Lives   |       | 2001 |  | 2002 |            | 2003
|                              |  |         |       |      |  |      |            |     
|                              |  | (years) |       |      |  |      |            |     
|Land                          |  |         |       |      |  | W    | 441,934    |      |  | W | 439,915    |   |  | W | 449,377    |  
|Buildings and structures      |  |         | 15,30 |      |  |      | 947,949    |      |  |   | 977,045    |   |  |   | 1,081,134  |  
|Machinery                     |  |         | 3-6   |      |  |      | 6,679,089  |      |  |   | 6,998,088  |   |  |   | 8,440,624  |  
|Vehicles                      |  |         | 3-4   |      |  |      | 12,830     |      |  |   | 19,368     |   |  |   | 19,741     |  
|Construction in progress      |  |         |       |      |  |      | 184,971    |      |  |   | 352,932    |   |  |   | 323,490    |  
|Other                         |  |         | 3-4   |      |  |      | 651,871    |      |  |   | 878,006    |   |  |   | 794,495    |  
|                              |  |         |       |      |  |      |            |      |  |   |            |   |  |   |            |  
|Total                         |  |         |       |      |  |      | 8,918,644  |      |  |   | 9,665,354  |   |  |   | 11,108,861 |  
|Less accumulated depreciation |  |         |       |      |  |      | (4,743,918 | )    |  |   | (5,095,937 | ) |  |   | (6,467,314 | )
|                              |  |         |       |      |  |      |            |      |  |   |            |   |  |   |            |  
|Property and equipment, net   |  |         |       |      |  | W    | 4,174,726  |      |  | W | 4,569,417  |   |  | W | 4,641,547  |  
|                              |  |         |       |      |  |      |            |      |  |   |            |   |  |   |            |  

The governments declared standard value of
land owned as of December 31, 2001, 2002 and 2003 are
W 371,775 million, W 356,360 million and
W 396,103 million, respectively.

Details of change in property and equipment for
the year ended December 31, 2003 are as follows (in
millions of Korean won):

|                         |       |            |           |             |  |          |         |           |  |              |        |              |   |   |           |          |   |   |            |            |   |   |           |           | 
|------------------------ | ----- | ---------- | --------- | ----------- |  | -------- | ------- | --------- |  | ------------ | ------ | ------------ | - | - | --------- | -------- | - | - | ---------- | ---------- | - | - | --------- | --------- | 
|                         |       | January 1, |           |             |  |          |         |           |  |              |        | December 31,
|                         |       | 2003       |           | Acquisition |  | Disposal |         | Transfer  |  | Depreciation |        | 2003        
|                         |       |            |           |             |  |          |         |           |  |              |        |             
|Land                     |       | W          | 439,915   |             |  | W        | 6,381   |           |  | W            | (4,793 | )            |   | W | 7,874     |          |   | W |           |            |   | W | 449,377   |          
|Buildings and structures |       |            | 778,832   |             |  |          | 9,393   |           |  |              | (4,599 | )            |   |   | 100,341   |          |   |   | (40,166    | )          |   |   | 843,801   |          
|Machinery                |       |            | 2,475,663 |             |  |          | 125,332 |           |  |              | (4,996 | )            |   |   | 1,360,240 |          |   |   | (1,285,271 | )          |   |   | 2,670,968 |          
|Vehicles                 |       |            | 6,353     |             |  |          | 1,012   |           |  |              | (123   | )            |   |   | 63        |          |   |   | (3,137     | )          |   |   | 4,168     |          
|Other                    |       |            | 515,722   |             |  |          | 861,333 |           |  |              | (4,329 | )            |   |   | (916,464  | )        |   |   | (106,519   | )          |   |   | 349,743   |          
|Construction in progress |       |            | 352,932   |             |  |          | 644,188 |           |  |              |       |              |   |   | (673,630  | )        |   |   |           |            |   |   | 323,490   |          
|                         |       |            |           |             |  |          |         |           |  |              |        |              |   |   |           |          |   |   |            |            |   |   |           |          
|                         | Total |            | W         | 4,569,417   |  |          | W       | 1,647,639 |  |              | W      | (18,840      | ) |   | W         | (121,576 | ) |   | W          | (1,435,093 | ) |   | W         | 4,641,547 | 
|                         |       |            |           |             |  |          |         |           |  |              |        |              |   |   |           |          |   |   |            |            |   |   |           |          

F-25



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)



|   |                  
|-- | -----------------
|7. | Intangible Assets

Intangible assets as of December 31, 2001,
2002 and 2003 are as follows (in millions of Korean won):

|                           |  |              |           |                 |  |                  |          |      |  |      |           |  |  |   |           |  |  |   |           | 
|-------------------------- |  | ------------ | --------- | --------------- |  | ---------------- | -------- | ---- |  | ---- | --------- |  |  | - | --------- |  |  | - | --------- | 
|                           |  | Acquisition  |           | Accumulated     |  |                 
|                           |  | cost at      |           | amortization at |  | Carrying amounts
|                           |  | December 31, |           | December 31,    |  |                 
|                           |  | 2003         |           | 2003            |  | 2001             |          | 2002 |  | 2003
|                           |  |              |           |                 |  |                  |          |      |  |     
|Goodwill                   |  | W            | 2,403,097 |                 |  | W                | (273,117 | )    |  | W    | 2,367,848 |  |  | W | 2,255,868 |  |  | W | 2,129,980 | 
|Software development costs |  |              | 217,821   |                 |  |                  | (80,011  | )    |  |      | 75,334    |  |  |   | 91,337    |  |  |   | 137,810   | 
|IMT license                |  |              | 1,259,253 |                 |  |                  | (7,975   | )    |  |      | 1,300,000 |  |  |   | 1,259,253 |  |  |   | 1,251,278 | 
|Other                      |  |              | 334,930   |                 |  |                  | (179,054 | )    |  |      | 73,191    |  |  |   | 114,777   |  |  |   | 155,876   | 
|                           |  |              |           |                 |  |                  |          |      |  |      |           |  |  |   |           |  |  |   |           | 
|                           |  | W            | 4,215,101 |                 |  | W                | (540,157 | )    |  | W    | 3,816,373 |  |  | W | 3,721,235 |  |  | W | 3,674,944 | 
|                           |  |              |           |                 |  |                  |          |      |  |      |           |  |  |   |           |  |  |   |           | 

Details of changes in intangible assets for the
year ended December 31, 2003 are as follows (in millions of
Korean won):

|                           |  |            |           |          |  |          |        |          |  |              |        |              |  |   |         |   |  |   |          |   |  |   |           | 
|-------------------------- |  | ---------- | --------- | -------- |  | -------- | ------ | -------- |  | ------------ | ------ | ------------ |  | - | ------- | - |  | - | -------- | - |  | - | --------- | 
|                           |  | January 1, |           |          |  |          |        |          |  |              |        | December 31,
|                           |  | 2003       |           | Increase |  | Decrease |        | Transfer |  | Amortization |        | 2003        
|                           |  |            |           |          |  |          |        |          |  |              |        |             
|Goodwill                   |  | W          | 2,255,868 |          |  | W        | 9,374  |          |  | W            |       |              |  | W | (111    | ) |  | W | (135,151 | ) |  | W | 2,129,980 | 
|Software development costs |  |            | 91,337    |          |  |          | 26,665 |          |  |              |       |              |  |   | 56,512  |   |  |   | (36,704  | ) |  |   | 137,810   | 
|IMT license                |  |            | 1,259,253 |          |  |          |       |          |  |              |       |              |  |   |        |   |  |   | (7,975   | ) |  |   | 1,251,278 | 
|Other                      |  |            | 114,777   |          |  |          | 28,982 |          |  |              | (7,275 | )            |  |   | 54,371  |   |  |   | (34,979  | ) |  |   | 155,876   | 
|                           |  |            |           |          |  |          |        |          |  |              |        |              |  |   |         |   |  |   |          |   |  |   |           | 
|                           |  | W          | 3,721,235 |          |  | W        | 65,021 |          |  | W            | (7,275 | )            |  | W | 110,772 |   |  | W | (214,809 | ) |  | W | 3,674,944 | 
|                           |  |            |           |          |  |          |        |          |  |              |        |              |  |   |         |   |  |   |          |   |  |   |           | 

The book value as of December 31, 2003 and
residual useful lives of major intangible assets are as follows
(in millions of Korean won):

|                           |  |        |           |             |  |                                                                |  |  |             |  
|-------------------------- |  | ------ | --------- | ----------- |  | -------------------------------------------------------------- |  |  | ----------- | -
|                           |  |        |           |             |  | Residual useful                                               
|                           |  | Amount |           | Description |  | lives                                                         
|                           |  |        |           |             |  |                                                               
|Goodwill                   |  | W      | 2,078,208 |             |  | Goodwill related to acquisition of Shinsegi
    Telecomm, Inc. |  |  | 16 years    |  
|Software development costs |  |        | 137,810   |             |  | Software for business use                                      |  |  | 1 - 5 years |  
|IMT license                |  |        | 1,251,278 |             |  | IMT license received on December 4, 2001                       |  |  | (note       | )



---



|       |                                                                                                                                                                                                                                             
|------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(note) | Amortization of the IMT license commenced when
    the Company started its commercial IMT service in December 2003,
    using the straight-line method over the estimated useful life of
    the IMT license which expires in December 2016.

F-26



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)



|   |                           
|-- | --------------------------
|8. | Currency Forward Contracts

Details of the Company and its subsidiaries
foreign currency forward contracts designated as hedging the
foreign currency exposure in bank deposits denominated in
U.S. dollars as of December 31, 2001 were as of
follows (in millions of Korean won and thousands of
U.S. dollars):

|                 |  |                 |         |                  |  |               |              |  |  |   |        |  
|---------------- |  | --------------- | ------- | ---------------- |  | ------------- | ------------ |  |  | - | ------ | -
|                 |  |                 |         |                  |  | Fair value of
|                 |  | U.S. dollars to |         | Forward exchange |  | currency     
|Maturity date    |  | be sold         |         | rate             |  | forwards     
|                 |  |                 |         |                  |  |              
|January 3, 2002  |  | US$             | 7,867   |                  |  |               | W1,276.00/US |  |  | W | (394   | )
|January 7, 2002  |  |                 | 15,734  |                  |  |               | W1,276.40/US |  |  |   | (792   | )
|January 7, 2002  |  |                 | 7,867   |                  |  |               | W1,276.40/US |  |  |   | (396   | )
|January 21, 2002 |  |                 | 15,288  |                  |  |               | W1,314.60/US |  |  |   | (220   | )
|January 23, 2002 |  |                 | 15,697  |                  |  |               | W1,284.00/US |  |  |   | (714   | )
|February 4, 2002 |  |                 | 11,837  |                  |  |               | W1,277.20/US |  |  |   | (591   | )
|March 14, 2002   |  |                 | 39,348  |                  |  |               | W1,287.00/US |  |  |   | (1,875 | )
|                 |  |                 |         |                  |  |               |              |  |  |   |        |  
|                 |  | US$             | 113,638 |                  |  |               |              |  |  | W | (4,982 | )
|                 |  |                 |         |                  |  |               |              |  |  |   |        |  

There was no foreign currency forward contracts
outstanding as of December 31, 2002 and 2003.



|   |              
|-- | -------------
|9. | Bonds Payable

Bonds payable as of December 31, 2001, 2002
and 2003 are as follows (in millions of Korean won and thousands
of U.S. dollars):

|                                                   |   |          |      |                 |  |      |              |         |  |      |           |           |  |   |           |           |  |   |            |           | 
|-------------------------------------------------- | - | -------- | ---- | --------------- |  | ---- | ------------ | ------- |  | ---- | --------- | --------- |  | - | --------- | --------- |  | - | ---------- | --------- | 
|                                                   |   | Maturity |      | Annual interest |  |      |              |         |  |     
|                                                   |   | year     |      | rate            |  | 2001 |              | 2002    |  | 2003
|                                                   |   |          |      |                 |  |      |              |         |  |     
|                                                   |   |          |      | (%)             |  |      |              |         |  |     
|Domestic general bonds                             |   |          | 2002 |                 |  |      | 6.0-9.0      |         |  | W    | 475,000   |           |  | W |          |           |  | W |            |          
|                                                   |  |          |      | 2003            |  |      |              | 5.0-9.9 |  |      |           | 910,000   |  |   |           | 910,000   |  |   |            |          | 
|                                                   |  |          |      | 2004            |  |      |              | 5.0-7.0 |  |      |           | 1,120,000 |  |   |           | 1,120,000 |  |   |            | 1,120,000 | 
|                                                   |   |          |      | 2005            |  |      |              | 6.0     |  |      |           |          |  |   |           | 500,000   |  |   |            | 500,000   | 
|                                                   |  |          |      | 2006            |  |      |              | 5.0-6.0 |  |      |           | 400,000   |  |   |           | 400,000   |  |   |            | 800,000   | 
|                                                   |   |          | 2007 |                 |  |      | 5.0-6.0      |         |  |      |          |           |  |   | 700,000   |           |  |   | 700,000    |          
|                                                   |   |          | 2008 |                 |  |      | 5.0          |         |  |      |          |           |  |   |          |           |  |   | 300,000    |          
|Dollar denominated bonds (US$200,078)              |   |          | 2004 |                 |  |      | 7.75         |         |  |      | 265,323   |           |  |   | 240,173   |           |  |   | 239,653    |          
|Bonds with stock purchase warrants
    (US $4,000) |   |          | 2006 |                 |  |      | 6M Libor-0.3 |         |  |      |          |           |  |   | 4,802     |           |  |   | 4,791      |          
|                                                   |   |          |      |                 |  |      |              |         |  |      |           |           |  |   |           |           |  |   |            |          
|                                                   |   |          |      |                 |  |      |              |         |  |      | 3,170,323 |           |  |   | 3,874,975 |           |  |   | 3,664,444  |          
|Add: Long-term accrued interest                    |   |          |      |                 |  |      |              |         |  |      |          |           |  |   | 252       |           |  |   | 491        |          
|Less: Discounts on bonds                           |   |          |      |                 |  |      |              |         |  |      | (49,147   | )         |  |   | (60,467   | )         |  |   | (47,553    | )        
|                                                   |   |          |      |                 |  |      |              |         |  |      |           |           |  |   |           |           |  |   |            |          
|Net                                                |   |          |      |                 |  |      |              |         |  |      | 3,121,176 |           |  |   | 3,814,760 |           |  |   | 3,617,382  |          
|Less portion due within one year                   |   |          |      |                 |  |      |              |         |  |      | (472,057  | )         |  |   | (906,264  | )         |  |   | (1,355,514 | )        
|                                                   |   |          |      |                 |  |      |              |         |  |      |           |           |  |   |           |           |  |   |            |          
|Long-term portion                                  |   |          |      |                 |  |      |              |         |  | W    | 2,649,119 |           |  | W | 2,908,496 |           |  | W | 2,261,868  |          
|                                                   |   |          |      |                 |  |      |              |         |  |      |           |           |  |   |           |           |  |   |            |          

As of December 31, 2003, the 6M Libor is
1.22%.

All of the above bonds will be paid in full at
maturities.

F-27



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

The bonds with stock purchase warrants were
issued on December 11, 2001 by PAXNet Co., Ltd., in which
in December 2002 the Company purchased a 67.1% interest, and are
detachable and unsecured oversea public bonds. These bonds are
redeemable for cash at the option of the bondholders for
3 years after the issuance date, at 114.79% of the
principal amount. The stock purchase warrants may be exercised
at any time after 3 months from the issuance date and up to
1 month before the maturity date of the bonds. As of
December 31, 2003, the exercise price per common stock of
PAXNet Co., Ltd. is W 5,000. Unless either previously
redeemed or exercised, the bonds will be redeemed on
December 11, 2006, with the guaranteed interest rate of 6M
Libor+4.35%.



|    |                     
|--- | --------------------
|10. | Long-Term Borrowings

Long-term borrowings denominated in Korean won as
of December 31, 2001, 2002 and 2003 are as follows (in
millions of Korean won):

|                                 |  |          |      |                 |  |      |               |      |  |      |         |   |  |   |   |  |  |   |   | 
|-------------------------------- |  | -------- | ---- | --------------- |  | ---- | ------------- | ---- |  | ---- | ------- | - |  | - | - |  |  | - | - | 
|                                 |  | Final    |      |                 |  |      |               |      |  |     
|                                 |  | maturity |      | Annual interest |  |      |               |      |  |     
|Lender                           |  | year     |      | rate            |  | 2001 |               | 2002 |  | 2003
|                                 |  |          |      |                 |  |      |               |      |  |     
|                                 |  |          |      | (%)             |  |      |               |      |  |     
|Korea Development Bank           |  |          | 2002 |                 |  |      | Floating rate |      |  | W    | 31,250  |   |  | W |  |  |  | W |  | 
|Kookmin Bank                     |  |          | 2002 |                 |  |      | 9.90          |      |  |      | 44,537  |   |  |   |  |  |  |   |  | 
|Shinhan Bank                     |  |          | 2002 |                 |  |      | 6.54          |      |  |      | 24,600  |   |  |   |  |  |  |   |  | 
|                                 |  |          |      |                 |  |      |               |      |  |      |         |   |  |   |   |  |  |   |   | 
|Total                            |  |          |      |                 |  |      |               |      |  |      | 100,387 |   |  |   |  |  |  |   |  | 
|Less portion due within one year |  |          |      |                 |  |      |               |      |  |      | (81,637 | ) |  |   |  |  |  |   |  | 
|                                 |  |          |      |                 |  |      |               |      |  |      |         |   |  |   |   |  |  |   |   | 
|Long-term portion                |  |          |      |                 |  |      |               |      |  | W    | 18,750  |   |  | W |  |  |  | W |  | 
|                                 |  |          |      |                 |  |      |               |      |  |      |         |   |  |   |   |  |  |   |   | 

Long-term borrowings denominated in foreign
currency as of December 31, 2001, 2002 and 2003 are as
follows (in millions of Korean won and thousands of
U.S. dollars):

|                                           |  |               |      |                      |  |                       |  |      |          |      |  |     |         |   |  |     |         |  
|------------------------------------------ |  | ------------- | ---- | -------------------- |  | --------------------- |  | ---- | -------- | ---- |  | --- | ------- | - |  | --- | ------- | -
|                                           |  | Final         |      |                      |  |                       |  |      |          |     
|Lender                                     |  | maturity year |      | Annual interest rate |  | 2001                  |  | 2002 |          | 2003
|                                           |  |               |      |                      |  |                       |  |      |          |     
|                                           |  |               |      | (%)                  |  |                       |  |      |          |     
|Korea Development Bank                     |  |               | 2004 |                      |  | 3M Libor + 3.45       |  | US$  | 22,390   |      |  | US$ | 13,434  |   |  | US$ | 4,478   |  
|Woori Bank                                 |  |               | 2005 |                      |  | Floating rate + 0.2   |  |      | 9,541    |      |  |     | 6,815   |   |  |     | 4,089   |  
|KEB (Ireland) Investment Limited and other |  |               | 2002 |                      |  | 6M Libor +(0.5 - 0.7) |  |      | 32,000   |      |  |     |        |   |  |     |        |  
|BNP Paribas                                |  |               | 2002 |                      |  | 3M Libor + 1.1        |  |      | 40,000   |      |  |     |        |   |  |     |        |  
|                                           |  |               |      |                      |  |                       |  |      |          |      |  |     |         |   |  |     |         |  
|Total in foreign currency                  |  |               |      |                      |  |                       |  | US$  | 103,931  |      |  | US$ | 20,249  |   |  | US$ | 8,567   |  
|                                           |  |               |      |                      |  |                       |  |      |          |      |  |     |         |   |  |     |         |  
|Equivalent in Korean won                   |  |               |      |                      |  |                       |  |      | W137,823 |      |  |     | W24,307 |   |  |     | W10,262 |  
|Less portion due within one year           |  |               |      |                      |  |                       |  |      | (110,971 | )    |  |     | (14,023 | ) |  |     | (8,629  | )
|                                           |  |               |      |                      |  |                       |  |      |          |      |  |     |         |   |  |     |         |  
|Long-term portion                          |  |               |      |                      |  |                       |  |      | W26,852  |      |  |     | W10,284 |   |  |     | W1,633  |  
|                                           |  |               |      |                      |  |                       |  |      |          |      |  |     |         |   |  |     |         |  

At December 31, 2003, the 3M Libor and
floating rate of Woori Bank are 1.16%, and 2.57%, respectively.

F-28



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

The future maturities of long-term borrowings at
December 31, 2003 are as follows (in millions of Korean
won):

|                         |  |                                          |       |                       |  |   |        | 
|------------------------ |  | ---------------------------------------- | ----- | --------------------- |  | - | ------ | 
|                         |  |                                         
|                         |  | Long-term borrowings in foreign currency
|                         |  |                                         
|Year ending December 31, |  | Foreign currency                         |       | Korean won equivalent
|                         |  |                                          |       |                      
|2004                     |  | US$                                      | 7,204 |                       |  | W | 8,629  | 
|2005                     |  |                                          | 1,363 |                       |  |   | 1,633  | 
|                         |  |                                          |       |                       |  |   |        | 
|                         |  | US$                                      | 8,567 |                       |  | W | 10,262 | 
|                         |  |                                          |       |                       |  |   |        | 



|    |                  
|--- | -----------------
|11. | Facility Deposits

The Company receives facility guarantee deposits
from customers of cellular services at the subscription date.
The Company has no obligation to pay interest on these deposits
and returns all amounts to subscribers upon termination of the
subscription contract.

Long-term facility guarantee deposits by service
type held as of December 31, 2001, 2002 and 2003 are as
follows (in millions of Korean won, except deposit per
subscriber amounts):

|             |  |             |         |      |  |      |        |      |  |   |        |  |  |   |        | 
|------------ |  | ----------- | ------- | ---- |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|             |  | Deposit per |         |      |  |      |        |     
|Service type |  | subscriber  |         | 2001 |  | 2002 |        | 2003
|             |  |             |         |      |  |      |        |     
|Cellular     |  | W           | 200,000 |      |  | W    | 56,518 |      |  | W | 46,850 |  |  | W | 44,197 | 
|Local phone  |  |             | 100,000 |      |  |      | 1      |      |  |   |       |  |  |   |       | 
|             |  |             |         |      |  |      |        |      |  |   |        |  |  |   |        | 
|Total        |  |             |         |      |  | W    | 56,519 |      |  | W | 46,850 |  |  | W | 44,197 | 
|             |  |             |         |      |  |      |        |      |  |   |        |  |  |   |        | 

The Company offers existing and new cellular
subscribers the option of obtaining facility insurance from
Seoul Guarantee Insurance company (SGIC) in lieu of
the facility deposit. Existing subscribers who elect this option
are refunded their facility deposits. As a result of this
arrangement, the balance of facility guarantee deposits has been
decreasing.



|    |       
|--- | ------
|12. | Leases

The Company and its subsidiaries lease certain
machinery and equipment under capital leases. The Company and
its subsidiaries have an option to acquire the leased machinery
and equipment, free of charge, upon termination of the lease
period. The capitalized cost and accumulated depreciation
related to these leased assets as of December 31, 2003 are
W 1,043 million and W 679 million,
respectively, and depreciation expense for the years ended
December 31, 2001, 2002 and 2003 were
W 931 million, W 428 million and
W 250 million, respectively.

In 2002, certain lease contracts were terminated
and the Company acquired the related leased machinery for
US$85,956 by exercising a bargain purchase option and the
depreciation expenses of the related leased machinery for the
years ended December 31, 2001 and 2002 were
W 383 million and W 1,175 million,
respectively.

Future minimum payments under capital leases as
of December 31, 2003 are as follows (in millions of Korean
won):

|                         |  |           |     |          |  |       |   |  |  |   |     | 
|------------------------ |  | --------- | --- | -------- |  | ----- | - |  |  | - | --- | 
|Year ending December 31, |  | Principal |     | Interest |  | Total
|                         |  |           |     |          |  |      
|2004                     |  | W         | 121 |          |  | W     | 3 |  |  | W | 124 | 
|                         |  |           |     |          |  |       |   |  |  |   |     | 

F-29



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

As of December 31, 2003, the Company and its
subsidiaries leased certain machinery and equipment under
operating leases. The minimum annual lease payables under
operating leases are as follows (in millions of Korean won):

|                         |  |               |     |                  |  |       |     |  |  |   |     | 
|------------------------ |  | ------------- | --- | ---------------- |  | ----- | --- |  |  | - | --- | 
|                         |  | Lease payable |     | Lease payable in |  |      
|Year ending December 31, |  | in Korean won |     | foreign currency |  | Total
|                         |  |               |     |                  |  |      
|2004                     |  | W             | 122 |                  |  | W     | 201 |  |  | W | 323 | 
|                         |  |               |     |                  |  |       |     |  |  |   |     | 

Lease expense for the years ended
December 31, 2001, 2002 and 2003 were
W 9,389 million, W 7,649 million and
W 1,774 million, respectively.

13. Assets and Liabilities Denominated in
Foreign Currencies

The details of monetary assets and liabilities
denominated in foreign currencies (except for bonds payable and
long-term borrowings denominated in foreign currencies described
in Notes 9 and 10) as of December 31, 2001, 2002
and 2003 are as follows (in millions of Korean won, thousands of
U.S. dollars, thousands of HK dollars, thousands of
Japanese yen, thousands of Singaporean dollars, thousands of
Euros, thousands of Great Britain pounds, thousands of Swiss
francs, thousands of Chinese Yuan and thousands of Australian
dollars):

|                                 |  |                    |            |                       |  |      |            |      |  |      |            |      |  |   |         |  |  |   |         |  |  |   |        | 
|-------------------------------- |  | ------------------ | ---------- | --------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- | ---- |  | - | ------- |  |  | - | ------- |  |  | - | ------ | 
|                                 |  |                    |            |                      
|                                 |  | Foreign currencies |            | Korean won equivalent
|                                 |  |                    |            |                      
|                                 |  | 2001               |            | 2002                  |  | 2003 |            | 2001 |  | 2002 |            | 2003
|                                 |  |                    |            |                       |  |      |            |      |  |      |            |     
|Cash and cash equivalents        |  |                    | US$126,487 |                       |  |      | US$46,025  |      |  |      | US$24,407  |      |  | W | 167,683 |  |  | W | 55,247  |  |  | W | 29,234 | 
|                                 |  |                    | ¥53,059    |                       |  |      | ¥12        |      |  |      | ¥8         |      |  |   | 536     |  |  |   |        |  |  |   |       | 
|                                 |  |                    |           |                       |  |      | EUR2       |      |  |      | EUR17      |      |  |   |        |  |  |   | 3       |  |  |   | 26     | 
|                                 |  |                    |           |                       |  |      |           |      |  |      | GBP5       |      |  |   |        |  |  |   |        |  |  |   | 10     | 
|Short-term financial instruments |  |                    | US$31,086  |                       |  |      | US$35,281  |      |  |      | US$31,492  |      |  |   | 41,223  |  |  |   | 42,351  |  |  |   | 37,721 | 
|Accounts receivable  trade      |  |                    | US$3,515   |                       |  |      | US$19,477  |      |  |      | US$8,627   |      |  |   | 4,661   |  |  |   | 23,382  |  |  |   | 10,333 | 
|                                 |  |                    | ¥57        |                       |  |      | ¥240       |      |  |      | SG$743     |      |  |   | 1       |  |  |   | 2       |  |  |   | 522    | 
|Accounts receivable  other      |  |                    | US$2,073   |                       |  |      | US$9,639   |      |  |      | US$12,844  |      |  |   | 2,749   |  |  |   | 11,571  |  |  |   | 15,385 | 
|Guarantee deposits               |  |                    | US$35      |                       |  |      | US$187     |      |  |      | US$193     |      |  |   | 46      |  |  |   | 225     |  |  |   | 232    | 
|                                 |  |                    |           |                       |  |      |           |      |  |      | ¥16,337    |      |  |   |        |  |  |   |        |  |  |   | 183    | 
|                                 |  |                    |            |                       |  |      |            |      |  |      |            |      |  |   |         |  |  |   |         |  |  |   |        | 
|Total assets                     |  |                    |            |                       |  |      |            |      |  |      |            |      |  | W | 216,899 |  |  | W | 132,781 |  |  | W | 93,646 | 
|                                 |  |                    |            |                       |  |      |            |      |  |      |            |      |  |   |         |  |  |   |         |  |  |   |        | 
|Accounts payable  trade         |  |                    | US$12,179  |                       |  |      | US$23,975  |      |  |      | US$15,432  |      |  |   | 15,845  |  |  |   | 28,779  |  |  |   | 18,485 | 
|                                 |  |                    | ¥500,613   |                       |  |      | ¥1,198,724 |      |  |      | ¥555,277   |      |  |   | 5,053   |  |  |   | 12,141  |  |  |   | 6,217  | 
|                                 |  |                    |           |                       |  |      | EUR180     |      |  |      |           |      |  |   |        |  |  |   | 227     |  |  |   |       | 
|Short-term borrowings            |  |                    | US$12,903  |                       |  |      | US$32,928  |      |  |      | US$26,853  |      |  |   | 17,111  |  |  |   | 39,526  |  |  |   | 32,164 | 
|                                 |  |                    | ¥1,485,813 |                       |  |      | ¥2,603,467 |      |  |      | ¥2,255,431 |      |  |   | 14,998  |  |  |   | 26,370  |  |  |   | 25,252 | 
|                                 |  |                    | CHF302     |                       |  |      |           |      |  |      | EUR7       |      |  |   | 239     |  |  |   |        |  |  |   | 10     | 
|Accounts payable  other         |  |                    | US$9,052   |                       |  |      | US$37,228  |      |  |      | US$35,759  |      |  |   | 12,004  |  |  |   | 44,689  |  |  |   | 42,832 | 
|                                 |  |                    | ¥1,858     |                       |  |      | ¥229,641   |      |  |      | ¥20,606    |      |  |   | 19      |  |  |   | 2,326   |  |  |   | 231    | 
|                                 |  |                    | HK$218     |                       |  |      | HK$825     |      |  |      | HK$267     |      |  |   | 37      |  |  |   | 127     |  |  |   | 41     | 
|                                 |  |                    | CNY128     |                       |  |      | CNY61      |      |  |      | CNY140     |      |  |   | 21      |  |  |   | 9       |  |  |   | 20     | 
|                                 |  |                    | GBP25      |                       |  |      | GBP1       |      |  |      | GBP304     |      |  |   | 47      |  |  |   | 1       |  |  |   | 648    | 
|                                 |  |                    | SG$55      |                       |  |      | SG$24      |      |  |      | SG$5       |      |  |   | 39      |  |  |   | 17      |  |  |   | 3      | 
|                                 |  |                    | EUR1       |                       |  |      | EUR8       |      |  |      | EUR10      |      |  |   | 1       |  |  |   | 11      |  |  |   | 15     | 
|                                 |  |                    |           |                       |  |      | AU$1       |      |  |      | AU$1       |      |  |   |        |  |  |   | 1       |  |  |   | 1      | 
|                                 |  |                    |           |                       |  |      |           |      |  |      | CHF4       |      |  |   |        |  |  |   |        |  |  |   | 4      | 

F-30



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

|                                                              |  |                    |        |                       |  |      |        |      |  |      |        |      |  |   |        |  |  |   |         |  |  |   |         | 
|------------------------------------------------------------- |  | ------------------ | ------ | --------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------- |  |  | - | ------- | 
|                                                              |  |                    |        |                      
|                                                              |  | Foreign currencies |        | Korean won equivalent
|                                                              |  |                    |        |                      
|                                                              |  | 2001               |        | 2002                  |  | 2003 |        | 2001 |  | 2002 |        | 2003
|                                                              |  |                    |        |                       |  |      |        |      |  |      |        |     
|Accrued expenses                                              |  |                    |       |                       |  |      |       |      |  |      | US$71  |      |  |   |       |  |  |   |        |  |  |   | 86      | 
|                                                              |  |                    |       |                       |  |      |       |      |  |      | ¥1,300 |      |  |   |       |  |  |   |        |  |  |   | 15      | 
|                                                              |  |                    |       |                       |  |      |       |      |  |      | EUR23  |      |  |   |       |  |  |   |        |  |  |   | 1       | 
|Obligation under capital leases including current
    portion |  |                    | US$830 |                       |  |      | US$482 |      |  |      | US$101 |      |  |   | 1,101  |  |  |   | 578     |  |  |   | 120     | 
|                                                              |  |                    |        |                       |  |      |        |      |  |      |        |      |  |   |        |  |  |   |         |  |  |   |         | 
|Total liabilities                                             |  |                    |        |                       |  |      |        |      |  |      |        |      |  | W | 66,515 |  |  | W | 154,802 |  |  | W | 126,145 | 
|                                                              |  |                    |        |                       |  |      |        |      |  |      |        |      |  |   |        |  |  |   |         |  |  |   |         | 

14. Capital Stock and Capital
Surplus

The Companys outstanding capital stock
consists entirely of common stock with a par value of
W 500. The number of authorized, issued and outstanding
common shares as of December 31, 2001, 2002 and 2003 are as
follows:

|                                          |  |      |             |      |  |      |             |  |  |  |             | 
|----------------------------------------- |  | ---- | ----------- | ---- |  | ---- | ----------- |  |  |  | ----------- | 
|                                          |  | 2001 |             | 2002 |  | 2003
|                                          |  |      |             |      |  |     
|Authorized shares                         |  |      | 220,000,000 |      |  |      | 220,000,000 |  |  |  | 220,000,000 | 
|Issued shares                             |  |      | 89,152,670  |      |  |      | 89,152,670  |  |  |  | 82,276,711  | 
|Outstanding shares, net of treasury stock |  |      | 82,993,404  |      |  |      | 79,842,063  |  |  |  | 73,614,308  | 

The number of authorized shares of preferred
stock as of December 31, 2003 is 5,500,000 shares, none of
which is outstanding as of December 31, 2003.

Significant changes in common stock and capital
surplus in 2001, 2002 and 2003 are as follows (in millions of
Korean won, except for share data):

|                     |                                                                             |               |            |              |   |         |        |    |  |   |           |          |  
|-------------------- | --------------------------------------------------------------------------- | ------------- | ---------- | ------------ | - | ------- | ------ | -- |  | - | --------- | -------- | -
|                     |                                                                             | Number of     |            |              |   | Capital
|                     |                                                                             | shares issued |            | Common stock |   | surplus
|                     |                                                                             |               |            |              |   |        
|At January 1, 2001   |                                                                             |               | 89,152,670 |              |   | W       | 44,576 |    |  | W | 3,748,715 |         
|                     | Excess unallocated purchase price (note 1)                                  |               |            |             |   |         |        |   |  |   |           | (299,121 | )
|                     | Gain on disposal of investments in common stock
    of subsidiary and other |               |            |             |   |         |        |   |  |   |           | 104      |  
|                     |                                                                             |               |            |              |   |         |        |    |  |   |           |         
|At December 31, 2001 |                                                                             |               | 89,152,670 |              |   |         | 44,576 |    |  |   | 3,449,698 |         
|                     | Excess unallocated purchase price (note 1)                                  |               |            |             |   |         |        |   |  |   |           | (647,025 | )
|                     | Gain on disposal of treasury stock (note 2)                                 |               |            |             |   |         |        |   |  |   |           | 81,984   |  
|                     | Equity in capital surplus and capital adjustment
    changes of affiliates  |               |            |             |   |         |        |   |  |   |           | (275     | )
|                     |                                                                             |               |            |              |   |         |        |    |  |   |           |         
|At December 31, 2002 |                                                                             |               | 89,152,670 |              |   |         | 44,576 |    |  |   | 2,884,382 |         
|                     | Excess unallocated purchases price (note 1)                                 |               |            |             |   |         |        |   |  |   |           | (230     | )
|                     | Retirement of treasury stock (note 3)                                       |               |            | (7,002,235   | ) |         |        |   |  |   |           |         |  
|                     | Issuance of common stock for the merger with
    SK IMT Co., Ltd. (note 4)  |               |            | 126,276      |   |         |        | 63 |  |   |           | 31,809   |  
|                     | Gain on disposal of investments in common stock
    of subsidiary           |               |            |             |   |         |        |   |  |   |           | 58       |  
|                     | Equity in capital surplus and capital adjustment
    changes of affiliates  |               |            |             |   |         |        |   |  |   |           | (4,463   | )
|                     |                                                                             |               |            |              |   |         |        |    |  |   |           |         
|At December 31, 2003 |                                                                             |               | 82,276,711 |              |   | W       | 44,639 |    |  | W | 2,911,556 |         
|                     |                                                                             |               |            |              |   |         |        |    |  |   |           |         

F-31



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)



---



|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(note 1) | The excess unallocated purchase price of
    W 299,121 million for the additional 19.2% equity
    interest acquired in 2001 and W 647,025 million for
    the distribution of 2,677,653 shares of treasury stock to
    minority shareholders of Shinsegi Telecomm, Inc. upon the merger
    dated January 13, 2002, were deducted from capital surplus,
    in accordance with Korean GAAP. In addition, during the year
    ended December 31, 2003, the Company paid
    W 230 million to certain former shareholders of
    Shinsegi Telecomm, Inc. in accordance with the ruling of the
    court and deducted it from capital surplus in accordance with
    Korean GAAP.
|        
|(note 2) | The gain on disposal of treasury stock of
    W 81,984 million resulting from the distribution of
    treasury stock to minority shareholders of Shinsegi Telecomm,
    Inc. upon the merger dated January 13, 2002 was recorded as
    an increase in other capital surplus.                                                                                                                                                                                                                                                                                                                                                                                                   
|        
|(note 3) | The Company retired 4,457,635 shares and
    2,544,600 shares of treasury stock on January 6, 2003 and
    August 20, 2003, respectively, and reduced unappropriated
    retained earnings in accordance with the Korean Commercial Laws.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|        
|(note 4) | The excess of acquired net assets over the par
    value of W 63 million for the issuance of 126,276
    shares of new common stock to minority shareholders of SK IMT
    Co., Ltd. upon the merger dated May 1, 2003, was added to
    capital surplus in accordance with Korean GAAP.                                                                                                                                                                                                                                                                                                                                                                                        

15. Retained Earnings

Retained earnings as of December 31, 2001,
2002 and 2003 are as follows (in millions of Korean won):

|               |  |      |           |      |  |      |           |  |  |   |           | 
|-------------- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|               |  | 2001 |           | 2002 |  | 2003
|               |  |      |           |      |  |     
|Appropriated   |  | W    | 2,297,749 |      |  | W    | 3,379,922 |  |  | W | 4,743,822 | 
|Unappropriated |  |      | 1,145,570 |      |  |      | 1,493,283 |  |  |   | 396,089   | 
|               |  |      |           |      |  |      |           |  |  |   |           | 
|               |  | W    | 3,443,319 |      |  | W    | 4,873,205 |  |  | W | 5,139,911 | 
|               |  |      |           |      |  |      |           |  |  |   |           | 

The details of appropriated retained earnings as
of December 31, 2001, 2002 and 2003 are as follows (in
millions of Korean won):

|                                               |  |      |           |      |  |      |           |  |  |   |           | 
|---------------------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                                               |  | 2001 |           | 2002 |  | 2003
|                                               |  |      |           |      |  |     
|Legal reserve                                  |  | W    | 11,400    |      |  | W    | 17,200    |  |  | W | 22,288    | 
|Reserve for improvement of financial structure |  |      | 33,000    |      |  |      | 33,000    |  |  |   | 33,000    | 
|Reserve for business rationalization           |  |      | 126,493   |      |  |      | 169,493   |  |  |   |          | 
|Reserve for loss on foreign investment         |  |      | 48,818    |      |  |      | 29,192    |  |  |   |          | 
|Reserve for loss on disposal of treasury stock |  |      |          |      |  |      | 240,000   |  |  |   | 221,197   | 
|Reserve for research and manpower development  |  |      | 301,300   |      |  |      | 365,300   |  |  |   | 559,198   | 
|Reserve for business expansion                 |  |      | 1,776,738 |      |  |      | 2,525,737 |  |  |   | 3,908,139 | 
|                                               |  |      |           |      |  |      |           |  |  |   |           | 
|                                               |  | W    | 2,297,749 |      |  | W    | 3,379,922 |  |  | W | 4,743,822 | 
|                                               |  |      |           |      |  |      |           |  |  |   |           | 



| |                 
| | ----------------
| | a. Legal Reserve

The Korean Commercial Code requires the Company
to appropriate as a legal reserve at least 10% of cash dividends
for each accounting period until the reserve equals 50% of
outstanding capital stock. The legal reserve may not be utilized
for cash dividends, but may only be used to offset a future
deficit, if any, or may be transferred to capital stock.

F-32



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)



| |                                                      
| | -----------------------------------------------------
| | b. Reserve for Improvement of
    Financial Structure

The Financial Control Regulation for listed
companies in Korea requires that at least 10% of net income (net
of accumulated deficit), and an amount equal to net gains (net
of related income taxes, if any) on the disposal of property and
equipment be appropriated as a reserve for improvement of
financial structure until the ratio of stockholders equity
to total assets reaches 30%. The reserve for improvement of
financial structure may not be utilized for cash dividends, but
may only be used to offset a future deficit, if any, or may be
transferred to capital stock.



| |                                            
| | -------------------------------------------
| | c. Reserve for Business
    Rationalization

Through 2001, the Tax Exemption and Reduction
Control Law required that the amount of tax benefit associated
with certain tax exemptions and tax credits be appropriated as a
reserve for business rationalization. The revised Tax Exemption
and Reduction Control Law no longer requires providing the
reserve for business rationalization. Thus, since 2002, the
Company has transferred the reserve for business rationalization
to voluntary reserve that may be utilized for cash dividends.



|   |                                                                                                                          
|-- | -------------------------------------------------------------------------------------------------------------------------
|d. | Reserves for Loss on Foreign Investment,
    Loss on Disposal of Treasury Stock and Research and Manpower
    Development

Reserves for loss on foreign investment, loss on
disposal of treasury stock and research and manpower development
were appropriated in order to recognize certain tax deductible
benefits through the early recognition of future expenditures.
These reserves will be unappropriated from appropriated retained
earnings in accordance with the relevant tax laws. Such
unappropriation will be included in taxable income in the year
of unappropriation.



| |                                      
| | -------------------------------------
| | e. Reserve for Business
    Expansion

The reserve for business expansion is voluntary
and was approved by the board of directors and shareholders.

16. Treasury Stock

Upon issuance of stock dividends and new common
stock, the Company acquired fractional shares totaling 73,636
shares through 2000. In addition, the Company acquired 3,566,100
shares of treasury stock in the market for
W 789,667 million in 2001 in order to stabilize the
market price of its stock. On October 26, 2001 in
accordance with the approval of its board of directors, the
Company established trust funds with four Korean banks with a
total funding W 1.3 trillion for the purpose of
acquiring its shares at market prices. These funds purchased
2,674,580 shares of the Companys common stock, or
approximately 3.0% of its outstanding shares, from Korea Telecom
for W 669,982 million on November 6, 2001 and
1,367,180 shares of the Companys common stock from SK
Networks Co., Ltd. (formerly, SK Global Co., Ltd.) for
W 350,698 million on January 31, 2002.

A loss on disposal of treasury stock of
W 155 million resulted from the disposal of 155,050
shares of treasury stock for W 38,685 million in 2001
that had been acquired through the trust fund. The loss was
reflected as a direct adjustment to unappropriated retained
earnings.

On January 13, 2002, the Company merged with
Shinsegi Telecomm, Inc. and distributed 2,677,653 shares of
treasury stock to minority shareholders of Shinsegi Telecomm,
Inc. The cost of the treasury stock distributed was
W 584,646 million. Upon the merger with Shinsegi
Telecomm, Inc., the Company acquired fractional shares totaling
4,179 shares for W 1,036 million. On December 30,
2002, the Company acquired 4,457,635 shares of the
Companys common stock from KT Corporation for
W 999,509 million under the Mutual Agreement on Stock
Exchange between the Company and KT Corporation. The Company
retired

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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

such treasury stock on January 6, 2003 in
accordance with a resolution of the board of directors dated
December 26, 2002 and reduced unappropriated retained
earnings by W 1,008,882 million including the tax
effect of W 9,373 million, in accordance with the
Korean Commercial Laws.

On January 10, 2003, the Company acquired
3,809,288 shares of the Companys common stock from
KT Corporation for W 854,134 million under the
Mutual Agreement on Stock Exchange between the Company and KT
Corporation. On February 3, 2003, the Company acquired
fractional shares totaling 52 shares for W 13 million
which resulted from the merger with Shinsegi Telecomm, Inc., and
on May 13, 2003, the Company acquired fractional shares
totaling 91 shares for W 16 million which resulted
from the merger with SK IMT Co., Ltd.

On June 30, 2003, in accordance with a
resolution of the board of directors dated June 24, 2003,
the Company announced a stock repurchase program to acquire
2,544,600 shares of common stock in the market in order to
enhance stockholders interest and to stabilize the stock
price. Pursuant to the program, the Company acquired a total of
2,544,600 shares of Companys outstanding common stock for
a total purchase price of W 525,174 million during the
period from June 30, 2003 to August 11, 2003, retired
such treasury shares on August 20, 2003 and reduced
unappropriated retained earnings by W 537,138 million
including the tax effect of W 11,964 million, in
accordance with Korean Commercial Laws.

17. Stock Options

On March 17, 2000, March 16, 2001 and
March 8, 2002, in accordance with the approval of its
stockholders and its board of directors, the Company granted
stock options to its management, representing 17,800 shares at
an exercise price of W 424,000 per share, 43,820 shares at
an exercise price of W 211,000 per share and 65,730 shares
at an exercise price of W 267,000 per share. The stock
options will become exercisable after three years from the date
of grant and shall be exercisable within two years from the
first exercisable date. If the employees leave the Company
within three years after the grant of stock options, the Company
may cancel the stock options awarded. Upon exercise of stock
options, the Company will issue its common stock. There were no
forfeited or expired stock options during the years ended
December 31, 2001, 2002 and 2003.

The value of stock options granted is determined
using the Black-Scholes option-pricing model, without
considering a volatility factor in estimating the value of its
stock options, as permitted under Korean GAAP. The following
assumptions are used to estimate the fair value of options
granted in 2000, 2001 and 2002; risk-free interest rate of 9.1%
for 2000, 5.9% for 2001 and 6.2% for 2002; expected life of
three years for 2000, 2001 and 2002; expected dividend of
W 500 for 2000, 2001 and 2002. Under these assumptions,
total compensation cost, the recognized compensation cost for
the years ended December 31, 2001, 2002 and 2003, the
compensation cost to be recognized for the following period
after December 31, 2003 and the outstanding balance of
stock option in capital adjustment as of December 31, 2001,
2002 and 2003 are as follows (in millions of Korean won):

|               |  |              |       |                              |  |              |     |                         |  |            |       |      |  |      |       |      |  |   |       |  |  |   |     |  |  |   |       |  |  |   |       | 
|-------------- |  | ------------ | ----- | ---------------------------- |  | ------------ | --- | ----------------------- |  | ---------- | ----- | ---- |  | ---- | ----- | ---- |  | - | ----- |  |  | - | --- |  |  | - | ----- |  |  | - | ----- | 
|               |  |              |       |                              |  |              |     |                         |  |            |       |     
|               |  |              |       |                              |  |              |     | Stock option in capital
|               |  | Total        |       | Recognized compensation cost |  | Compensation |     | adjustment             
|               |  | compensation |       |                              |  | cost to be   |     |                        
|Grant date     |  | cost         |       | 2001                         |  | 2002         |     | 2003                    |  | recognized |       | 2001 |  | 2002 |       | 2003
|               |  |              |       |                              |  |              |     |                         |  |            |       |      |  |      |       |     
|March 17, 2000 |  | W            | 1,533 |                              |  | W            | 511 |                         |  | W          | 511   |      |  | W    | 128   |      |  | W |      |  |  | W | 894 |  |  | W | 1,405 |  |  | W | 1,533 | 
|March 16, 2001 |  |              | 236   |                              |  |              | 66  |                         |  |            | 79    |      |  |      | 79    |      |  |   | 12    |  |  |   | 66  |  |  |   | 145   |  |  |   | 224   | 
|March 8, 2002  |  |              | 3,247 |                              |  |              |    |                         |  |            | 902   |      |  |      | 1,082 |      |  |   | 1,263 |  |  |   |    |  |  |   | 902   |  |  |   | 1,984 | 
|               |  |              |       |                              |  |              |     |                         |  |            |       |      |  |      |       |      |  |   |       |  |  |   |     |  |  |   |       |  |  |   |       | 
|               |  | W            | 5,016 |                              |  | W            | 577 |                         |  | W          | 1,492 |      |  | W    | 1,289 |      |  | W | 1,275 |  |  | W | 960 |  |  | W | 2,452 |  |  | W | 3,741 | 
|               |  |              |       |                              |  |              |     |                         |  |            |       |      |  |      |       |      |  |   |       |  |  |   |     |  |  |   |       |  |  |   |       | 

The pro forma ordinary income, net income,
ordinary income per common share and net income per common
share, if the Company had not excluded the volatility factor
(expected volatility of 66.8% for options

F-34



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

granted in 2000, 67.5% for options granted in
2001 and 63.0% for options granted in 2002) in estimating the
value of its stock options, for the years ended
December 31, 2001, 2002 and 2003 are as follows:

|                                                          |  |      |           |      |  |      |           |  |  |   |           | 
|--------------------------------------------------------- |  | ---- | --------- | ---- |  | ---- | --------- |  |  | - | --------- | 
|                                                          |  | 2001 |           | 2002 |  | 2003
|                                                          |  |      |           |      |  |     
|Pro forma ordinary income (in millions of
    Korean won) |  | W    | 1,974,794 |      |  | W    | 2,215,401 |  |  | W | 2,751,221 | 
|Pro forma ordinary income per common shares               |  |      | 13,220    |      |  |      | 17,603    |  |  |   | 26,145    | 
|Pro forma net income (in millions of Korean won)          |  |      | 1,144,159 |      |  |      | 1,483,784 |  |  |   | 1,962,986 | 
|Pro forma net income per common shares                    |  |      | 13,220    |      |  |      | 17,607    |  |  |   | 26,145    | 

18. Income Taxes

The provision for income taxes for the years
ended December 31, 2001, 2002 and 2003 consists of the
following (in millions of Korean won):

|                      |  |      |         |      |  |      |         |  |  |   |         | 
|--------------------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|                      |  | 2001 |         | 2002 |  | 2003
|                      |  |      |         |      |  |     
|Currently payable     |  | W    | 518,474 |      |  | W    | 616,544 |  |  | W | 668,180 | 
|Deferred              |  |      | 331,833 |      |  |      | 81,963  |  |  |   | 120,879 | 
|                      |  |      |         |      |  |      |         |  |  |   |         | 
|Recorded income taxes |  | W    | 850,307 |      |  | W    | 698,507 |  |  | W | 789,059 | 
|                      |  |      |         |      |  |      |         |  |  |   |         | 

The following is a reconciliation between
financial accounting income and taxable income, together with a
computation of income taxes, for the years ended
December 31, 2001, 2002 and 2003 (in millions of Korean
won):

|                           |                                                                 |      |           |          |   |      |           |          |   |   |           |          |  
|-------------------------- | --------------------------------------------------------------- | ---- | --------- | -------- | - | ---- | --------- | -------- | - | - | --------- | -------- | -
|                           |                                                                 | 2001 |           | 2002     |   | 2003
|                           |                                                                 |      |           |          |   |     
|Income before income taxes |                                                                 | W    | 1,976,709 |          |   | W    | 2,218,768 |          |   | W | 2,754,336 |         
|Additions (deductions):    |                                                                 |      |           |          |   |      |           |          |   |   |           |         
|                           | Allowance for bad debts                                         |      |           | 47,411   |   |      |           | (66,940  | ) |   |           | 2,081    |  
|                           | Loss on impairment of investment securities                     |      |           | 6,257    |   |      |           | 68,882   |   |   |           | (53,161  | )
|                           | Accrued interest income                                         |      |           | 2,463    |   |      |           | (2,107   | ) |   |           | (3,096   | )
|                           | Foreign exchange loss                                           |      |           | (4,497   | ) |      |           | (8,211   | ) |   |           | (8,449   | )
|                           | Depreciation                                                    |      |           | 135,972  |   |      |           | (3,803   | ) |   |           | (34,070  | )
|                           | Equity in losses (earnings) of affiliates                       |      |           | (4,294   | ) |      |           | (813     | ) |   |           | 6,975    |  
|                           | Amortization of goodwill                                        |      |           | 128,662  |   |      |           | 128,662  |   |   |           | 128,662  |  
|                           | Loss on impairment of tangible assets and
    intangible assets |      |           |         |   |      |           | 8,212    |   |   |           | 22,459   |  
|                           | Tax-free reserves                                               |      |           | (291,869 | ) |      |           | (175,096 | ) |   |           | (468,775 | )
|                           | Net operating loss carryforwards                                |      |           | (306,366 | ) |      |           | (7,060   | ) |   |           |         |  
|                           | Other                                                           |      |           | 138,791  |   |      |           | 101,950  |   |   |           | 135,324  |  
|                           |                                                                 |      |           |          |   |      |           |          |   |   |           |         
|Net taxable income         |                                                                 | W    | 1,829,239 |          |   | W    | 2,262,444 |          |   | W | 2,482,286 |         
|                           |                                                                 |      |           |          |   |      |           |          |   |   |           |         

F-35



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

|                                                                                        |  |      |         |      |  |      |         |   |  |   |         |  
|--------------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                                                        |  | 2001 |         | 2002 |  | 2003
|                                                                                        |  |      |         |      |  |     
|Corporate income taxes at statutory Korean
    corporate income tax rates of 27% or 28% |  | W    | 512,129 |      |  | W    | 612,890 |   |  | W | 670,144 |  
|Tax credit for investments, technology and human
    resource development and others    |  |      | (49,959 | )    |  |      | (62,974 | ) |  |   | (75,149 | )
|                                                                                        |  |      |         |      |  |      |         |   |  |   |         |  
|Corporate income taxes payable                                                          |  |      | 462,170 |      |  |      | 549,916 |   |  |   | 594,995 |  
|Resident surtax payable                                                                 |  |      | 46,217  |      |  |      | 54,992  |   |  |   | 59,500  |  
|Special surtax for agriculture and fishery
    industries and other                     |  |      | 10,087  |      |  |      | 11,636  |   |  |   | 13,685  |  
|                                                                                        |  |      |         |      |  |      |         |   |  |   |         |  
|Total income taxes payable                                                              |  | W    | 518,474 |      |  | W    | 616,544 |   |  | W | 668,180 |  
|                                                                                        |  |      |         |      |  |      |         |   |  |   |         |  

The difference between income taxes computed
using the statutory Korean corporate income tax rates and the
recorded income taxes for the years ended December 31,
2001, 2002 and 2003 is attributable to the following (in
millions of Korean won):

|                                                                                     |  |      |          |      |  |      |          |   |  |  |          |  
|------------------------------------------------------------------------------------ |  | ---- | -------- | ---- |  | ---- | -------- | - |  |  | -------- | -
|                                                                                     |  | 2001 |          | 2002 |  | 2003
|                                                                                     |  |      |          |      |  |     
|Income taxes at statutory income tax rate of 27%
    or 28%                          |  |      | 553,478  |      |  |      | 599,067  |   |  |  | 743,671  |  
|Resident surtax payable                                                              |  |      | 55,348   |      |  |      | 59,907   |   |  |  | 74,367   |  
|Tax credit for investments, technology and human
    resource development and others |  |      | (86,917  | )    |  |      | (37,309  | ) |  |  | (83,826  | )
|Special surtax for agriculture and fishery
    industries and other                  |  |      | 10,087   |      |  |      | 11,636   |   |  |  | 13,685   |  
|Goodwill amortization not deductible for tax
    purpose                             |  |      | 39,628   |      |  |      | 38,213   |   |  |  | 38,213   |  
|Undistributed earnings (unrecognized deficit) of
    subsidiaries                    |  |      | (54,461  | )    |  |      | 12,295   |   |  |  | (5,909   | )
|Effect of the change in income tax rate (note a)                                     |  |      | 11,041   |      |  |      |         |   |  |  | (20,204  | )
|Other permanent differences                                                          |  |      | 10,467   |      |  |      | 1,520    |   |  |  | 15,327   |  
|Increase in valuation allowance                                                      |  |      | 311,636  |      |  |      | 13,178   |   |  |  | 13,735   |  
|                                                                                     |  |      |          |      |  |      |          |   |  |  |          |  
|Recorded income taxes                                                                |  |      | W850,307 |      |  |      | W698,507 |   |  |  | W789,059 |  
|                                                                                     |  |      |          |      |  |      |          |   |  |  |          |  
|Effective tax rate                                                                   |  |      | 43.02    | %    |  |      | 31.48    | % |  |  | 28.65    | %
|                                                                                     |  |      |          |      |  |      |          |   |  |  |          |  



---



|         |                                                                                                                                                                                                                                                                                                                                                                                
|-------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(note a) | Pursuant to a revision in the Korean Corporate
    Income Tax Law, statutory corporate income tax rate including
    resident surtax will be changed from current 29.7% to 27.5%,
    effective January 1, 2005. Such change in statutory
    corporate income tax rate resulted in a decrease in deferred tax
    liabilities as of December 31, 2003 by
    W 20,204 million.

In the year ended December 31, 2001, the
valuation allowance for deferred tax assets increased by
W 311,636 million. The increase was primarily due to
the need for a valuation allowance related to the Companys
investment in Shinsegi Telecomm, Inc., a subsidiary of the
Company. On January 13, 2002, the Company merged with
Shinsegi Telecomm, Inc. and retired all shares of Shinsegi
Telecomm, Inc. owned by the Company upon the merger. Pursuant to
the provisions of the current Korean Corporate Income Tax Law,
the merged company cannot transfer to the merging company
certain temporary differences, such as depreciation, and net
operating loss carryforwards. Further to the provisions of the
current Korean Corporate Income Tax Law, the merging company
cannot utilize the unrecognized deficit of a merged former
subsidiary when the merging company retires all shares of such
subsidiary owned by the merging company. Therefore,

F-36



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

the Company has provided a valuation allowance of
W 303,828 million during the year ended
December 31, 2001.

The tax effects of each type of temporary
difference that gave rise to a significant portion of the
deferred tax assets and liabilities at December 31, 2001,
2002 and 2003 are as follows (in millions of Korean won):

|                                                                  |                                      |      |         |          |   |      |          |         |   |   |          |         |  
|----------------------------------------------------------------- | ------------------------------------ | ---- | ------- | -------- | - | ---- | -------- | ------- | - | - | -------- | ------- | -
|                                                                  |                                      | 2001 |         | 2002     |   | 2003
|                                                                  |                                      |      |         |          |   |     
|Allowance for doubtful accounts                                   |                                      | W    | 50,336  |          |   | W    | 23,251   |         |   | W | 22,039   |        
|Write-off of doubtful accounts                                    |                                      |      | 5,878   |          |   |      | 9,715    |         |   |   | 9,587    |        
|Trading securities                                                |                                      |      | (635    | )        |   |      |         |         |   |   | 1        |        
|Accrued interest income                                           |                                      |      | (2,292  | )        |   |      | (2,902   | )       |   |   | (2,026   | )      
|Depreciation                                                      |                                      |      | 122,952 |          |   |      | 12,609   |         |   |   | 3,712    |        
|Loss on impairment of investment securities                       |                                      |      | 26,035  |          |   |      | 48,588   |         |   |   | 30,757   |        
|Foreign currency translation loss                                 |                                      |      | 4,701   |          |   |      | 3,345    |         |   |   | 774      |        
|Equity in losses of affiliates                                    |                                      |      | 950     |          |   |      | (5,090   | )       |   |   | (6,593   | )      
|Unrecognized deficit (undistributed earnings) of
    subsidiaries |                                      |      | 92,179  |          |   |      | (9,012   | )       |   |   | (3,364   | )      
|Tax free reserve for research and manpower
    development        |                                      |      | (75,685 | )        |   |      | (133,920 | )       |   |   | (182,518 | )      
|Tax free reserve for loss on disposal of treasury
    stock       |                                      |      | (70,359 | )        |   |      | (64,775  | )       |   |   | (130,373 | )      
|Tax credit carryforwards                                          |                                      |      | 31,963  |          |   |      |         |         |   |   | 1,162    |        
|Net operating loss carryforwards                                  |                                      |      | 95,597  |          |   |      | 17,290   |         |   |   | 29,575   |        
|Other                                                             |                                      |      | 16,490  |          |   |      | 20,851   |         |   |   | 39,693   |        
|                                                                  |                                      |      |         |          |   |      |          |         |   |   |          |        
|Total deferred tax assets (liabilities)                           |                                      |      | 298,110 |          |   |      | (80,050  | )       |   |   | (187,574 | )      
|Valuation allowance for:                                          |                                      |      |         |          |   |      |          |         |   |   |          |        
|                                                                  | Depreciation                         |      |         | (110,240 | ) |      |          | (1,081  | ) |   |          |        |  
|                                                                  | Unrecognized deficit of subsidiaries |      |         | (109,504 | ) |      |          |        |   |   |          |        |  
|                                                                  | Net operating loss carryforwards     |      |         | (92,519  | ) |      |          | (17,290 | ) |   |          | (29,575 | )
|                                                                  | Other                                |      |         | (1,016   | ) |      |          | (6,349  | ) |   |          | (8,880  | )
|                                                                  |                                      |      |         |          |   |      |          |         |   |   |          |        
|Net deferred tax assets (liabilities)                             |                                      | W    | (15,169 | )        |   | W    | (104,770 | )       |   | W | (226,029 | )      
|                                                                  |                                      |      |         |          |   |      |          |         |   |   |          |        

The net operating loss carryforwards and tax
credit carryforwards of the Companys certain subsidiaries
as of December 31, 2003 will expire as follows (in millions
of Korean won):

|                         |  |                    |         |               |  |   |       | 
|------------------------ |  | ------------------ | ------- | ------------- |  | - | ----- | 
|                         |  | Net operating loss |         | Tax credit   
|Year ending December 31, |  | carryforwards      |         | Carryforwards
|                         |  |                    |         |              
|2004                     |  | W                  | 1,320   |               |  | W |      | 
|2005                     |  |                    | 17,444  |               |  |   |      | 
|2006                     |  |                    | 19,113  |               |  |   |      | 
|2007                     |  |                    | 25,550  |               |  |   |      | 
|2008                     |  |                    | 44,118  |               |  |   | 1,162 | 
|                         |  |                    |         |               |  |   |       | 
|Total                    |  | W                  | 107,545 |               |  | W | 1,162 | 
|                         |  |                    |         |               |  |   |       | 

F-37



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

19. Income per Share

Net income and ordinary income per share for the
years ended December 31, 2001, 2002 and 2003 are computed
as follows (in millions of Korean won, except for share data):



| |                     
| | --------------------
| | Net income per share

|                                                         |  |      |            |      |  |      |            |  |  |   |            | 
|-------------------------------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- |  |  | - | ---------- | 
|                                                         |  | 2001 |            | 2002 |  | 2003
|                                                         |  |      |            |      |  |     
|Net income                                               |  | W    | 1,146,049  |      |  | W    | 1,487,151  |  |  | W | 1,966,100  | 
|Weighted average number of common shares
    outstanding |  |      | 86,545,041 |      |  |      | 84,270,450 |  |  |   | 75,078,219 | 
|                                                         |  |      |            |      |  |      |            |  |  |   |            | 
|Net income per share                                     |  | W    | 13,242     |      |  | W    | 17,647     |  |  | W | 26,187     | 
|                                                         |  |      |            |      |  |      |            |  |  |   |            | 



| |                          
| | -------------------------
| | Ordinary income per share

|                                                         |  |      |            |      |  |      |            |   |  |   |            | 
|-------------------------------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- | - |  | - | ---------- | 
|                                                         |  | 2001 |            | 2002 |  | 2003
|                                                         |  |      |            |      |  |     
|Net income                                               |  | W    | 1,146,049  |      |  | W    | 1,487,151  |   |  | W | 1,966,100  | 
|Extraordinary gain                                       |  |      | (25        | )    |  |      | (504       | ) |  |   |           | 
|Income tax effect of extraordinary gain                  |  |      | 8          |      |  |      | 149        |   |  |   |           | 
|                                                         |  |      |            |      |  |      |            |   |  |   |            | 
|Ordinary income                                          |  |      | 1,146,032  |      |  |      | 1,486,796  |   |  |   | 1,966,100  | 
|Weighted average number of common shares
    outstanding |  |      | 86,545,041 |      |  |      | 84,270,450 |   |  |   | 75,078,219 | 
|                                                         |  |      |            |      |  |      |            |   |  |   |            | 
|Ordinary income per share                                |  | W    | 13,242     |      |  | W    | 17,643     |   |  | W | 26,187     | 
|                                                         |  |      |            |      |  |      |            |   |  |   |            | 

The weighted average number of common shares
outstanding for 2001, 2002 and 2003 is calculated as follows:

|          |                                                             |      |  |           |  |          |  |            |   |  |  |         |  |  |  |            |  
|--------- | ----------------------------------------------------------- | ---- |  | --------- |  | -------- |  | ---------- | - |  |  | ------- |  |  |  | ---------- | -
|          |                                                             |      |  |           |  | Weighted |  | Weighted  
|          |                                                             |      |  | Number    |  | number   |  | number    
|          |                                                             | Date |  | of shares |  | of days  |  | of shares 
|          |                                                             |      |  |           |  |          |  |           
|For 2001: |                                                             |      |  |           |  |          |  |            |   |  |  |         |  |  |  |           
|          | At January 1, 2001                                          |      |  |          |  |          |  | 89,152,670 |   |  |  | 365/365 |  |  |  | 89,152,670 |  
|          | Treasury stock, at the beginning                            |      |  |          |  |          |  | (73,636    | ) |  |  | 365/365 |  |  |  | (73,636    | )
|          | Treasury stock                                              |      |  | (note  1) |  |          |  | (6,240,680 | ) |  |  |        |  |  |  | (2,535,267 | )
|          | Disposal of treasury stock                                  |      |  | Dec. 28   |  |          |  | 155,050    |   |  |  | 3/365   |  |  |  | 1,274      |  
|          |                                                             |      |  |           |  |          |  |            |   |  |  |         |  |  |  |           
|          | Total                                                       |      |  |           |  |          |  | 82,993,404 |   |  |  |         |  |  |  | 86,545,041 |  
|          |                                                             |      |  |           |  |          |  |            |   |  |  |         |  |  |  |           
|For 2002: |                                                             |      |  |           |  |          |  |            |   |  |  |         |  |  |  |           
|          | At January 1, 2002                                          |      |  |          |  |          |  | 89,152,670 |   |  |  | 365/365 |  |  |  | 89,152,670 |  
|          | Treasury stock, at the beginning                            |      |  |          |  |          |  | (6,159,266 | ) |  |  | 365/365 |  |  |  | (6,159,266 | )
|          | Distribution of treasury stock for merger with
    Shinsegi |      |  | Jan. 13   |  |          |  | 2,673,474  |   |  |  | 349/365 |  |  |  | 2,556,280  |  
|          | Treasury stock                                              |      |  | (note  1) |  |          |  | (5,824,815 | ) |  |  |        |  |  |  | (1,279,234 | )
|          |                                                             |      |  |           |  |          |  |            |   |  |  |         |  |  |  |           
|          | Total                                                       |      |  |           |  |          |  | 79,842,063 |   |  |  |         |  |  |  | 84,270,450 |  
|          |                                                             |      |  |           |  |          |  |            |   |  |  |         |  |  |  |           

F-38



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

|          |                                  |       |  |           |  |          |  |            |            |  |  |         |  |  |  |            |            | 
|--------- | -------------------------------- | ----- |  | --------- |  | -------- |  | ---------- | ---------- |  |  | ------- |  |  |  | ---------- | ---------- | 
|          |                                  |       |  |           |  | Weighted |  | Weighted  
|          |                                  |       |  | Number    |  | number   |  | number    
|          |                                  | Date  |  | of shares |  | of days  |  | of shares 
|          |                                  |       |  |           |  |          |  |           
|For 2003: |                                  |       |  |           |  |          |  |            |            |  |  |         |  |  |  |           
|          | At January 1, 2003               |       |  |          |  |          |  | 89,152,670 |            |  |  | 365/365 |  |  |  | 89,152,670 |           
|          | Treasury stock, at the beginning |       |  |          |  |          |  | (9,310,607 | )          |  |  | 365/365 |  |  |  | (9,310,607 | )         
|          | Treasury stock                   |       |  | Jan. 10   |  |          |  | (3,809,288 | )          |  |  | 356/365 |  |  |  | (3,715,360 | )         
|          | Purchase of fractional shares    |       |  | Feb. 3    |  |          |  | (52        | )          |  |  | 332/365 |  |  |  | (47        | )         
|          | Purchase of fractional shares    |       |  | May 1     |  |          |  | (91        | )          |  |  | 233/365 |  |  |  | (58        | )         
|          | Issuance of common stock         |       |  | May 1     |  |          |  | 126,276    |            |  |  | 233/365 |  |  |  | 80,609     |           
|          | Treasury stock                   |       |  | (note  1) |  |          |  | (2,544,600 | )          |  |  |        |  |  |  | (1,128,988 | )         
|          |                                  |       |  |           |  |          |  |            |            |  |  |         |  |  |  |           
|          |                                  | Total |  |           |  |          |  |            | 73,614,308 |  |  |         |  |  |  |            | 75,078,219 | 
|          |                                  |       |  |           |  |          |  |            |            |  |  |         |  |  |  |           



---



|         |                                                                                                                                                                                                    
|-------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(note 1) | Such treasury stock was acquired or disposed of
    on several different dates in 2001, 2002 and 2003, and the
    weighted number of shares was calculated according to each
    transaction date.

Diluted net income and ordinary income per share
amounts for the years ended December 31, 2001, 2002 and
2003 are computed as follows (in millions of Korean won except
for share data):



| |                             
| | ----------------------------
| | Diluted net income per share

|                                                                           |  |      |            |      |  |      |            |  |  |   |            | 
|-------------------------------------------------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- |  |  | - | ---------- | 
|                                                                           |  | 2001 |            | 2002 |  | 2003
|                                                                           |  |      |            |      |  |     
|Adjusted net income                                                        |  | W    | 1,146,049  |      |  | W    | 1,487,230  |  |  | W | 1,966,100  | 
|Adjusted weighted average number of common shares
    outstanding (note 2) |  |      | 86,545,041 |      |  |      | 84,277,598 |  |  |   | 75,078,219 | 
|                                                                           |  |      |            |      |  |      |            |  |  |   |            | 
|Diluted net income per share                                               |  | W    | 13,242     |      |  | W    | 17,647     |  |  | W | 26,187     | 
|                                                                           |  |      |            |      |  |      |            |  |  |   |            | 



| |                                      
| | -------------------------------------
| | Diluted ordinary income per
    share

|                                                                           |  |      |            |      |  |      |            |  |  |   |            | 
|-------------------------------------------------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- |  |  | - | ---------- | 
|                                                                           |  | 2001 |            | 2002 |  | 2003
|                                                                           |  |      |            |      |  |     
|Adjusted ordinary income                                                   |  | W    | 1,146,032  |      |  | W    | 1,486,875  |  |  | W | 1,966,100  | 
|Adjusted weighted average number of common shares
    outstanding (note 2) |  |      | 86,545,041 |      |  |      | 84,277,598 |  |  |   | 75,078,219 | 
|                                                                           |  |      |            |      |  |      |            |  |  |   |            | 
|Diluted ordinary income per share                                          |  | W    | 13,242     |      |  | W    | 17,643     |  |  | W | 26,187     | 
|                                                                           |  |      |            |      |  |      |            |  |  |   |            | 



---



|         |                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(note 2) | In the years ended December 31, 2001 and
    2003, the assumed exercise of stock options was not reflected in
    diluted earnings per share because the exercise of stock options
    would not dilute the earnings per share. In 2002, for the
    calculation of diluted income per share, the weighted average
    number of common shares outstanding is adjusted assuming the
    exercise of stock option on January 1, 2002.

F-39



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

The numerator and denominator of basic and
diluted income per share for the year ended December 31,
2002 is as follows:



| |                             
| | ----------------------------
| | Diluted net income per share

|                             |  |                 |           |                  |  |                 |            |  |  |   |        | 
|---------------------------- |  | --------------- | --------- | ---------------- |  | --------------- | ---------- |  |  | - | ------ | 
|                             |  |                 |           | Average weighted |  | Per-share      
|                             |  | Net income      |           | number of shares |  | amount         
|                             |  |                 |           |                  |  |                
|                             |  | (in millions of |           |                  |  | (in Korean won)
|                             |  | Korean won)     |           |                  |  |                
|Basic net income per share   |  | W               | 1,487,151 |                  |  |                 | 84,270,450 |  |  | W | 17,647 | 
|                             |  |                 |           |                  |  |                 |            |  |  |   |        | 
|Effect of stock option       |  |                 | 79        |                  |  |                 | 7,148      |  |  |   |        | 
|                             |  |                 |           |                  |  |                 |            |  |  |   |        | 
|Diluted net income per share |  | W               | 1,487,230 |                  |  |                 | 84,277,598 |  |  | W | 17,647 | 
|                             |  |                 |           |                  |  |                 |            |  |  |   |        | 



| |                                      
| | -------------------------------------
| | Diluted ordinary income per
    share

|                                  |  |                 |           |                  |  |                 |            |  |  |   |        | 
|--------------------------------- |  | --------------- | --------- | ---------------- |  | --------------- | ---------- |  |  | - | ------ | 
|                                  |  |                 |           | Average weighted |  | Per-share      
|                                  |  | Net income      |           | number of shares |  | amount         
|                                  |  |                 |           |                  |  |                
|                                  |  | (in millions of |           |                  |  | (in Korean won)
|                                  |  | Korean won)     |           |                  |  |                
|Basic ordinary income per share   |  | W               | 1,486,796 |                  |  |                 | 84,270,450 |  |  | W | 17,643 | 
|                                  |  |                 |           |                  |  |                 |            |  |  |   |        | 
|Effect of stock option            |  |                 | 79        |                  |  |                 | 7,148      |  |  |   |        | 
|                                  |  |                 |           |                  |  |                 |            |  |  |   |        | 
|Diluted ordinary income per share |  | W               | 1,486,875 |                  |  |                 | 84,277,598 |  |  | W | 17,643 | 
|                                  |  |                 |           |                  |  |                 |            |  |  |   |        | 

20. Dividend Disclosure

Details of dividends which were declared for
2001, 2002 and 2003 are as follows (in millions of Korean won
except for share data):

|            |  |               |                |                  |  |            |            |                |  |           |     |  |  |  |       |   |  |   |         | 
|----------- |  | ------------- | -------------- | ---------------- |  | ---------- | ---------- | -------------- |  | --------- | --- |  |  |  | ----- | - |  | - | ------- | 
|            |  |               |                | Number of shares |  |            |            |                |  |          
|Fiscal year |  | Dividend type |                | outstanding      |  | Face value |            | Dividend ratio |  | Dividends
|            |  |               |                |                  |  |            |            |                |  |          
|2001        |  |               | Cash dividends |                  |  |            | 82,993,404 |                |  | W         | 500 |  |  |  | 138.0 | % |  | W | 57,265  | 
|            |  |               |                |                  |  |            |            |                |  |           |     |  |  |  |       |   |  |   |         | 
|2002        |  |               | Cash dividends |                  |  |            | 84,299,698 | (note)         |  | W         | 500 |  |  |  | 360.0 | % |  | W | 151,739 | 
|            |  |               |                |                  |  |            |            |                |  |           |     |  |  |  |       |   |  |   |         | 
|2003        |  |               | Cash dividends |                  |  |            | 73,614,308 |                |  | W         | 500 |  |  |  | 1,100 | % |  | W | 404,879 | 
|            |  |               |                |                  |  |            |            |                |  |           |     |  |  |  |       |   |  |   |         | 



---



|       |                                                                                                                                                                                                                                                 
|------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(note) | 4,457,635 shares of the Companys common
    stock acquired through the stock exchange with
    KT Corporation on December 30, 2002 were included in
    the number of shares outstanding, as the dividend right date was
    December 27, 2002.

Dividends payout ratio for the years ended
December 31, 2001, 2002 and 2003 are as follows (in
millions of Korean won and %):

|                       |  |      |           |      |  |      |           |   |  |   |           |  
|---------------------- |  | ---- | --------- | ---- |  | ---- | --------- | - |  | - | --------- | -
|                       |  | 2001 |           | 2002 |  | 2003
|                       |  |      |           |      |  |     
|Dividends              |  | W    | 57,265    |      |  | W    | 151,739   |   |  | W | 404,879   |  
|Net income             |  |      | 1,146,049 |      |  |      | 1,487,151 |   |  |   | 1,966,100 |  
|                       |  |      |           |      |  |      |           |   |  |   |           |  
|Dividends payout ratio |  |      | 5.00      | %    |  |      | 10.20     | % |  |   | 20.59     | %
|                       |  |      |           |      |  |      |           |   |  |   |           |  

F-40



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

Dividends yield ratio for the years ended
December 31, 2001, 2002 and 2003 are as follows (in Korean
won and %):

|                            |  |      |         |      |  |      |         |   |  |   |         |  
|--------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                            |  | 2001 |         | 2002 |  | 2003
|                            |  |      |         |      |  |     
|Dividend per share          |  | W    | 690     |      |  | W    | 1,800   |   |  | W | 5,500   |  
|Stock price at the year-end |  |      | 268,000 |      |  |      | 229,000 |   |  |   | 199,000 |  
|                            |  |      |         |      |  |      |         |   |  |   |         |  
|Dividends yield ratio       |  |      | 0.26    | %    |  |      | 0.79    | % |  |   | 2.76    | %
|                            |  |      |         |      |  |      |         |   |  |   |         |  

21. Commitments and
Contingencies

a. The Company and its subsidiaries have
credit lines with several local banks that provide for
borrowings of up to W 871,283 million. At
December 31, 2003, the borrowings under these credit lines
were W 57 million at an average interest rate of
approximately 4.90% and the net availability under these credit
lines was W 871,226 million.

b. At December 31, 2003, the
Companys property and equipment (land, buildings and
machinery), amounting to W 58,299 million in carrying
value and short-term-financial instruments amounting to
W 162 million are pledged as collateral for bank
borrowings. In addition, the Company and its subsidiaries have
provided one blank check to Shinhan Capital Co., Ltd. as
collateral for guarantees of the Companys obligations
under lease agreements.

c. At December 31, 2003, the Company
and its subsidiaries have guarantee deposits restricted for
their checking accounts totaling W 52 million.

d. PAXNet Co., Ltd., a subsidiary of the
Company, has guaranteed the repayment of borrowings for Finger
Co., Ltd., which is an former affiliated company. The
outstanding balance of such guarantees as of December 31,
2003 approximated W 332 million.

e. On May 2, 2003, September 4,
2003 and December 15, 2003, the Company sold
W 577,253 million, W 549,256 million and
W 498,426 million of accounts receivable resulting
from its mobile phone dealer financing plan to Nate Third
Special Purpose Company, Nate Fourth Special Purpose Company and
Nate Fifth Special Purpose Company, respectively, in
asset-backed securitization transactions and recorded a loss on
disposal of accounts receivable-other of
W 10,789 million, W 12,863 million and
W 9,936 million, respectively. Related to these
asset-backed securitization transactions, the Company has
obligations to repurchase receivables up to 13.15%, 13.27% and
13.19% for Nate Third Special Purpose Company, Nate Fourth
Special Purpose Company and Nate Fifth Special Purpose Company,
respectively, if receivables become past due for 3 months
or the debtors become insolvent. At December 31, 2003, the
uncollected balances of accounts receivable sold to Nate Third
Special Purpose Company, Nate Fourth Special Purpose Company and
Nate Fifth Special Purpose Company were
W 32,861 million, W 215,615 million and
W 402,297 million, respectively.

f. The Companys performance under a
mobile network system development service contract with Asia
Pacific Broadband Wireless Communications Inc., a Taipei
company, and the Companys warranty obligations have been
guaranteed by Citi Corp., within the limit of US$550,000 and
US$1,490,000, respectively.

g. SK Communications Co., Ltd., which is the
Companys subsidiary, has entered into a license agreement
with Lycos Inc. to pay royalties totaling US$9,253,390 for two
years from August 14, 2002. In accordance with this
agreement, SK Communications Co., Ltd. paid US$4,626,195 and
US$2,313,098 in royalty fees for the years ended
December 31, 2002 and 2003, respectively.

h. The Company made a contract for joint
ownership of a satellite with Japan MBCO in order to enter the
satellite digital multimedia broadcasting business. In
accordance with the contract, the Company and

F-41



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

Japan MBCO decided the sharing rate of joint
ownership to be 34.66% for the Company and 65.34% for Japan MBCO
based on a number of relay stations and coverage. The details of
the contract are as follows (in millions of Japanese yen and in
millions of U.S. dollars):

|                                               |  |             |          |               |  |                 |          |                  |  |  |          |  |  |  |       | 
|---------------------------------------------- |  | ----------- | -------- | ------------- |  | --------------- | -------- | ---------------- |  |  | -------- |  |  |  | ----- | 
|                                               |  |             |          |               |  | Investment made |          | Investment to be
|                                               |  | Total       |          | The Companys |  | in 2003 by the  |          | made by the     
|                                               |  | investments |          | portion       |  | Company         |          | Company         
|                                               |  |             |          |               |  |                 |          |                 
|Purchase of satellite, launching and insurance |  |             | US$193   |               |  |                 | US$67    |                  |  |  | US$50    |  |  |  | US$17 | 
|Operation of the control center                |  |             | JP¥4,934 |               |  |                 | JP¥1,710 |                  |  |  | JP¥1,710 |  |  |  | JP¥  | 

i. On July 8, 2002, KT Freetel
Corporation filed a lawsuit against the Company. In the lawsuit,
KT Freetel Corporation claims remuneration for its loss of
W 50,000 million resulting from the Companys
alleged false advertising against KT Freetel Corporation. On
September 6, 2002, the Company brought a counterclaim
against KT Freetel Corporation, claiming remuneration for the
Companys loss of W 1,000 million. In the fourth
quarter of 2003, KT Freetel Corporation and the Company both
withdrew their lawsuits and agreed to end this legal case.

j. On October 18, 2002 and
November 15, 2002, GNI Enterprise Inc. filed lawsuits
against SK Communications Co., Ltd., which is the
Companys subsidiaries. In the lawsuit filed on
October 18, 2002, GNI Enterprise Inc. asserted that the
contract for usage of Lycos brand between GNI Enterprise Inc.
and SK Communications Co., Ltd. was effective. The ultimate
outcome of this lawsuit cannot presently be determined. SK
Communications Co., Ltd. believes that any liability that may be
subject to thereunder will not be material. In addition, in the
lawsuit filed on November 15, 2002, GNI Enterprise Inc.
asserted that the merger of Netsgo Co., Ltd. into SK
Communications Co., Ltd. was not legitimate. On January 11,
2004, this lawsuit was finished as GNI Enterprise Inc. withdrew
this lawsuit.

k. On May 25, 2004, a policy advisory
committee to the Ministry of Information and Communication
(MIC) announced the results of its review of the
Companys compliance with the merger conditions related to
the Companys acquisition of Shinsegi and stated that the
committee believes that the Companys market dominance may
significantly restrict competition in the telecommunications
market and that the Company have violated a merger condition by
providing subsidies to handset buyers. The committee stated that
it will recommend that the MIC extend the post-merger monitoring
period by two years until January 2007 and take appropriate
corrective measures against the Company for providing subsidies
to handset buyers. Although the MIC has not yet made a formal
determination, on May 31, 2004, the Minister of the MIC
stated that MIC intends to impose a Won 11.9 billion
fine on us and extend the post-merger monitoring period until
January 2007. The MIC is expected to make a formal decision as
to the advisory committees findings and recommendation in
early June 2004 and may impose additional restrictions on our
business. The Company can give no assurance that the MIC will
not take action that may have a material adverse effect on the
Companys business, operations and financial condition.

22. Insurance

At December 31, 2003, certain of the Company
and its subsidiaries assets are insured with local
insurance companies as follows (in millions of Korean won and
thousands of U.S. dollars):

|                |                        |      |  |                                  |  |          |   |           |  |  |        |            | 
|--------------- | ---------------------- | ---- |  | -------------------------------- |  | -------- | - | --------- |  |  | ------ | ---------- | 
|Asset           |                        | Risk |  | Book value                       |  | Coverage
|                |                        |      |  |                                  |  |         
|Inventories and |                        |      |  |                                  |  |          |   |           |  |  | $3,003 |           
|                | Property and equipment |      |  | Fire and comprehensive liability |  |          | W | 6,315,315 |  |  | W      | 10,399,747 | 
|                |                        |      |  |                                  |  |          |   |           |  |  |        |           

F-42



---



##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

23. Transactions with Affiliated
Companies

Significant related party transactions and
balances with affiliated companies as of and for the years ended
December 31, 2001, 2002 and 2003 were as follows (in
millions of Korean won):

|                                         |                                                               |      |  |         |  |      |  |         |  |  |  |         | 
|---------------------------------------- | ------------------------------------------------------------- | ---- |  | ------- |  | ---- |  | ------- |  |  |  | ------- | 
|Description                              |                                                               | 2001 |  | 2002    |  | 2003
|                                         |                                                               |      |  |         |  |     
|Transactions                             |                                                               |      |  |         |  |      |  |         |  |  |  |        
|SK Engineering & Construction Co., Ltd.: |                                                               |      |  |         |  |      |  |         |  |  |  |        
|                                         | Construction (note 1)                                         |      |  | 117,399 |  |      |  | 289,311 |  |  |  | 324,260 | 
|                                         | Commissions paid                                              |      |  | 2,827   |  |      |  | 23,981  |  |  |  | 7,662   | 
|                                         | Commission income and other income                            |      |  | 474     |  |      |  | 678     |  |  |  | 776     | 
|SK Networks:                             |                                                               |      |  |         |  |      |  |         |  |  |  |        
|(formerly known as SK Global)            |                                                               |      |  |         |  |      |  |         |  |  |  |        
|                                         | Purchases of property and equipment                           |      |  | 99,715  |  |      |  | 11,055  |  |  |  | 3,853   | 
|                                         | Commissions paid, leased line and other expenses              |      |  | 35,651  |  |      |  | 83,234  |  |  |  | 214,101 | 
|                                         | Sales of handsets and other income                            |      |  | 275,690 |  |      |  | 383,138 |  |  |  | 491,978 | 
|SK Corporation:                          |                                                               |      |  |         |  |      |  |         |  |  |  |        
|                                         | Purchases of property and equipment                           |      |  |        |  |      |  | 52      |  |  |  | 3,831   | 
|                                         | Commissions paid and other expenses                           |      |  | 20,643  |  |      |  | 37,249  |  |  |  | 35,612  | 
|                                         | Commission income and other income                            |      |  | 1,900   |  |      |  | 3,201   |  |  |  | 5,370   | 
|Kyocera Corp.:                           |                                                               |      |  |         |  |      |  |         |  |  |  |        
|                                         | Purchase of raw materials and other                           |      |  | 4,569   |  |      |  | 2,807   |  |  |  | 7,143   | 
|                                         | Commissions paid and other expenses                           |      |  | 4,838   |  |      |  |        |  |  |  | 59      | 
|                                         | Commission income and other income                            |      |  | 305     |  |      |  | 66,088  |  |  |  | 14,075  | 
|SK Group Japan:                          |                                                               |      |  |         |  |      |  |         |  |  |  |        
|                                         | Purchases of property and equipment                           |      |  | 64      |  |      |  |        |  |  |  |        | 
|                                         | Purchase of raw materials for handsets and other
    expenses |      |  | 55,099  |  |      |  | 9,784   |  |  |  | 5,292   | 
|SK Telesys:                              |                                                               |      |  |         |  |      |  |         |  |  |  |        
|                                         | Purchases of property and equipment                           |      |  | 69,179  |  |      |  | 187,205 |  |  |  | 188,111 | 
|                                         | Commissions paid and other expenses                           |      |  | 1,269   |  |      |  | 1,519   |  |  |  | 1,717   | 
|                                         | Commission income and other income                            |      |  | 202     |  |      |  | 290     |  |  |  | 385     | 
|SKC:                                     |                                                               |      |  |         |  |      |  |         |  |  |  |        
|                                         | Purchases of inventories                                      |      |  | 3,443   |  |      |  | 17,260  |  |  |  | 204,694 | 
|                                         | Disposal of inventories and other                             |      |  |        |  |      |  | 50,341  |  |  |  | 18      | 
|                                         | Commissions paid and other expenses                           |      |  |        |  |      |  |        |  |  |  | 3,120   | 
|                                         | Commission income and other income                            |      |  |        |  |      |  |        |  |  |  | 747     | 
|Innoace:                                 |                                                               |      |  |         |  |      |  |         |  |  |  |        
|                                         | Purchases of property and equipment                           |      |  | 8,353   |  |      |  | 40,884  |  |  |  | 35,225  | 
|                                         | Commissions paid and other expenses                           |      |  | 1,062   |  |      |  | 9,454   |  |  |  | 314     | 
|                                         | Commission income and other income                            |      |  | 111     |  |      |  | 217     |  |  |  | 8,969   | 
|SK C&C Co., Ltd.:                        |                                                               |      |  |         |  |      |  |         |  |  |  |        
|                                         | Purchases of property and equipment                           |      |  | 108,441 |  |      |  | 197,250 |  |  |  | 182,774 | 
|                                         | Commissions paid and other expenses (note 2)                  |      |  | 221,108 |  |      |  | 231,472 |  |  |  | 284,193 | 
|                                         | Commission income and other income                            |      |  | 7,198   |  |      |  | 6,691   |  |  |  | 8,200   | 

F-43



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

|                                         |                                    |      |  |        |  |      |  |         |  |  |  |         | 
|---------------------------------------- | ---------------------------------- | ---- |  | ------ |  | ---- |  | ------- |  |  |  | ------- | 
|Description                              |                                    | 2001 |  | 2002   |  | 2003
|                                         |                                    |      |  |        |  |     
|Balances                                 |                                    |      |  |        |  |      |  |         |  |  |  |        
|SK Engineering & Construction Co., Ltd.: |                                    |      |  |        |  |      |  |         |  |  |  |        
|                                         | Accounts receivable                |      |  | 57     |  |      |  | 241     |  |  |  | 92      | 
|                                         | Accounts payable                   |      |  | 17,016 |  |      |  | 65,773  |  |  |  | 63,442  | 
|                                         | Guarantee deposits received        |      |  | 90     |  |      |  | 130     |  |  |  | 90      | 
|SK Networks:                             |                                    |      |  |        |  |      |  |         |  |  |  |        
|(formerly known as SK Global)            |                                    |      |  |        |  |      |  |         |  |  |  |        
|                                         | Accounts receivable                |      |  | 63,810 |  |      |  | 84,970  |  |  |  | 107,782 | 
|                                         | Guarantee deposits                 |      |  | 113    |  |      |  | 113     |  |  |  | 113     | 
|                                         | Accounts payable                   |      |  | 16,194 |  |      |  | 14,792  |  |  |  | 63,641  | 
|                                         | Guarantee deposits received        |      |  | 513    |  |      |  | 255     |  |  |  | 719     | 
|SK Corporation:                          |                                    |      |  |        |  |      |  |         |  |  |  |        
|                                         | Accounts receivable                |      |  | 72     |  |      |  | 985     |  |  |  | 1,571   | 
|                                         | Guarantee deposits (note 3)        |      |  | 80,113 |  |      |  | 79,611  |  |  |  | 103,720 | 
|                                         | Accounts payable                   |      |  | 6,508  |  |      |  | 11,654  |  |  |  | 2,911   | 
|                                         | Guarantee deposits received        |      |  | 9,885  |  |      |  | 9,885   |  |  |  | 10,194  | 
|Kyocera Corp.:                           |                                    |      |  |        |  |      |  |         |  |  |  |        
|                                         | Accounts receivable                |      |  |       |  |      |  | 12,094  |  |  |  |        | 
|                                         | Accounts payable                   |      |  | 1,757  |  |      |  | 63      |  |  |  |        | 
|SK Group Japan:                          |                                    |      |  |        |  |      |  |         |  |  |  |        
|                                         | Accounts payable                   |      |  | 1,477  |  |      |  | 1,557   |  |  |  |        | 
|SK Telesys:                              |                                    |      |  |        |  |      |  |         |  |  |  |        
|                                         | Accounts receivable                |      |  | 3      |  |      |  | 5       |  |  |  | 50      | 
|                                         | Accounts payable                   |      |  | 18,180 |  |      |  | 60,834  |  |  |  | 33,904  | 
|SKC:                                     |                                    |      |  |        |  |      |  |         |  |  |  |        
|                                         | Accounts receivable                |      |  | 10,276 |  |      |  | 70,464  |  |  |  | 53,680  | 
|                                         | Accounts payable                   |      |  | 1,753  |  |      |  | 2,928   |  |  |  | 93,383  | 
|Innoace:                                 |                                    |      |  |        |  |      |  |         |  |  |  |        
|                                         | Accounts payable                   |      |  | 4,524  |  |      |  | 26,806  |  |  |  | 25,640  | 
|                                         | Guarantee deposits received        |      |  |       |  |      |  | 2,138   |  |  |  | 1,069   | 
|SK Life Insurance Co., Ltd.:             |                                    |      |  |        |  |      |  |         |  |  |  |        
|                                         | Deposits for severance indemnities |      |  | 36,892 |  |      |  | 58,057  |  |  |  | 63,992  | 
|                                         | Accounts receivable                |      |  | 44     |  |      |  | 117     |  |  |  | 1,119   | 
|                                         | Guarantee deposits                 |      |  | 60     |  |      |  | 60      |  |  |  | 60      | 
|                                         | Accounts payable                   |      |  | 54     |  |      |  |        |  |  |  |        | 
|                                         | Guarantee deposits received        |      |  | 786    |  |      |  | 767     |  |  |  | 338     | 
|SK C&C Co., Ltd.:                        |                                    |      |  |        |  |      |  |         |  |  |  |        
|                                         | Accounts receivable                |      |  | 34,358 |  |      |  | 287     |  |  |  | 245     | 
|                                         | Accounts payable                   |      |  | 59,065 |  |      |  | 116,235 |  |  |  | 72,715  | 
|                                         | Guarantee deposits received        |      |  | 495    |  |      |  | 284     |  |  |  | 346     | 

F-44



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)



---



|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(note 1) | The Company is a party to several contracts with
    SK Engineering and Construction related to the construction
    of its new corporate headquarters in Ulchiro 2-ga, Chongro-gu,
    Seoul. The Company expects that construction of its new
    headquarters will be completed by the end of 2004. The total
    contract price for the demolition of existing buildings on the
    site and construction of the new building is
    W 161 billion.                                                                                                                                                                                                                                                                                                                                                                                                               
|        
|(note 2) | The Company and certain subsidiaries are party to
    an agreement with SK C&C, pursuant to which
    SK C&C provides them with information technology
    services, dated as of December 28, 1998 and amended as of
    November 1, 1999. This agreement will expire on
    December 31, 2009, but may be terminated by the Company and
    certain subsidiaries without cause on a six months notice. The
    agreement provides that the parties will agree annually on the
    specific services to be provided and the monthly fees to be paid
    by the Company and certain subsidiaries. The Company and certain
    subsidiaries also enter into agreements with SK C&C
    from time to time for specific information technology-related
    projects.                                                                                                      
|        
|(note 3) | On December 19, 2000, the Company entered
    into an agreement with SK Corporation for the sale and
    leaseback of the Companys head office with the lease
    period from December 19, 2000 to March 31, 2004. Under
    the lease agreement, in January 2001 the Company deposited
    refundable leasehold key money of W 80,113 million
    and, as a result there will be no rent payment for the remaining
    lease period. On January 30, 2003, the Company prolonged
    the lease term to February 28, 2005 and deposited
    additional refundable leasehold key money of
    W 20,027 million. In addition, in December 2003, the
    Company deposited additional refundable leasehold key money of
    W 3,580 million. As a result, the refundable leasehold
    key money to SK Corporation as of December 31, 2003
    totaled W 103,720 million.

24. Merger with SK IMT Co.,
Ltd.

On May 1, 2003, the Company merged with
SK IMT Co., Ltd., in accordance with a resolution of the
Companys board of directors on December 20, 2002 and
the approval of shareholders of SK IMT Co., Ltd. on
February 21, 2003. The shareholders of SK IMT Co.,
Ltd. were entitled to exercise dissenters right under
Korean law. Shareholders holding 22,078,770 shares (or 36.8% of
SK IMT Co., Ltd.s issued and outstanding shares) exercised
such right, and SK IMT Co., Ltd. repurchased the shares of these
dissenting shareholders at a purchase price of W 27,400 per
share, totaling W 604,958 million, before the
completion of the merger with the Company. The exchange ratio of
common stock between the Company and SK IMT Co., Ltd. was
0.11276 share of the Companys common stock with a par
value of W 500 to 1 share of common stock of
SK IMT Co., Ltd. with a par value of W 5,000. Using
such exchange ratio, the Company distributed 126,276 shares of
new issued common stock to minority shareholders of SK IMT
Co., Ltd. and the Company retired all shares of SK IMT Co.,
Ltd. owned by the Company and SK IMT Co., Ltd. upon the
merger. The excess of acquired net assets over the par value of
W 63 million for the distribution of 126,276 shares of
newly issued common stock to minority shareholders of
SK IMT Co., Ltd. upon on the merger dated May 1, 2003,
was recorded as an increase in capital surplus in accordance
with Korean GAAP.

25. Merger with Cyworld Co.,
Ltd.

On August 1, 2003, SK Communications Co.,
Ltd.., the Companys subsidiary, merged with Cyworld Co.,
Ltd. in order to maximize synergy effects through enhanced
management efficiency and strengthen the competitive power in
the internet portal service market, in accordance with the
approval of stockholders of SK Communications Co., Ltd. dated on
June 16, 2003. The exchange ratio of common stock between
SK Communications Co., Ltd. (par value: W 500) and Cyworld
Co., Ltd. (par value: W 5,000) was 55.04697 to 1. Using
such exchange ratio, SK Communications Corp. issued 12,770,877
shares of new common stock.

F-45



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

The condensed balance sheets of Cyworld Co., Ltd.
as of August 1, 2003 and December 31, 2002 and
condensed statements of operations for the seven months ended
July 31, 2003 and the year ended December 31, 2002 are
as follows (in millions of Korean won):

|                           |                                            |              |   |               |   |  |   |        |  
|-------------------------- | ------------------------------------------ | ------------ | - | ------------- | - |  | - | ------ | -
|                           |                                            | Aug. 1, 2003 |   | Dec. 31, 2002
|                           |                                            |              |   |              
|(Condensed balance sheets) |                                            |              |   |               |   |  |   |       
|                           | Current assets                             |              | W | 1,200         |   |  | W | 129    |  
|                           | Non-current assets                         |              |   | 615           |   |  |   | 1,175  |  
|                           |                                            |              |   |               |   |  |   |       
|                           | Total assets                               |              | W | 1,815         |   |  | W | 1,304  |  
|                           |                                            |              |   |               |   |  |   |       
|                           | Current liabilities                        |              | W | 1,586         |   |  | W | 850    |  
|                           | Long-term liabilities                      |              |   | 77            |   |  |   | 432    |  
|                           |                                            |              |   |               |   |  |   |       
|                           | Total liabilities                          |              |   | 1,663         |   |  |   | 1,282  |  
|                           | Common stock                               |              |   | 1,160         |   |  |   | 1,160  |  
|                           | Capital surplus                            |              |   | 4,208         |   |  |   | 4,208  |  
|                           | Deficit                                    |              |   | (5,216        | ) |  |   | (5,346 | )
|                           | Total equity                               |              |   | 152           |   |  |   | 22     |  
|                           |                                            |              |   |               |   |  |   |       
|                           | Total liabilities and stockholders equity |              | W | 1,815         |   |  | W | 1,304  |  
|                           |                                            |              |   |               |   |  |   |       

|                                     |                    |                       |   |               |   |  |   |        |  
|------------------------------------ | ------------------ | --------------------- | - | ------------- | - |  | - | ------ | -
|                                     |                    | Period from Jan. 1,   |   | Year ended   
|                                     |                    | 2003 to Jul. 31, 2003 |   | Dec. 31, 2002
|                                     |                    |                       |   |              
|(Condensed statements of operations) |                    |                       |   |               |   |  |   |       
|                                     | Operating revenue  |                       | W | 1,930         |   |  | W | 1,823  |  
|                                     | Operating expenses |                       |   | (2,244        | ) |  |   | (2,694 | )
|                                     |                    |                       |   |               |   |  |   |       
|                                     | Operating loss     |                       |   | (314          | ) |  |   | (871   | )
|                                     | Other income       |                       |   | 606           |   |  |   | 37     |  
|                                     | Other expenses     |                       |   | (163          | ) |  |   | (721   | )
|                                     |                    |                       |   |               |   |  |   |       
|                                     | Net income (loss)  |                       | W | 129           |   |  | W | (1,555 | )
|                                     |                    |                       |   |               |   |  |   |       

The merger with Cyworld Co., Ltd. was accounted
for using the purchase method of accounting, and generated a
goodwill of W 9,374 million as follows (in millions of
Korean won):

|                                  |                                           |  |   |       |  |   |       |       | 
|--------------------------------- | ----------------------------------------- |  | - | ----- |  | - | ----- | ----- | 
|Fair value of net assets mergered |                                           |  |   |       |  | W | 152   |      
|Merger cost                       |                                           |  |   |       |  |   |       |      
|                                  | Fair value of common stock issued         |  | W | 8,429 |  |   |       |       | 
|                                  | Direct costs related to the merger (note) |  |   | 1,097 |  |   |       | 9,526 | 
|                                  |                                           |  |   |       |  |   |       |      
|Goodwill                          |                                           |  |   |       |  | W | 9,374 |      
|                                  |                                           |  |   |       |  |   |       |      



---



|       |                                                                                                                                                                                         
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(note) | The direct costs related to the merger are the
    liquidation income tax of W 1,067 million paid for
    Cyworld Co., Ltd., and service fees of W 30 million
    related to the merger.

In addition, SK Communications Co., Ltd.
amortizes the goodwill using the straight-line method over five
years, and goodwill amortization for the year ended
December 31, 2003 was W 781 million.

F-46



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

26. Acquisition of and Merger with
Shinsegi Telecomm, Inc.

In order to maximize shareholder value through
voluntary restructuring of the domestic wireless telecom
industry, Company management approved the acquisition of a 51.2%
equity interest in Shinsegi Telecomm Inc.s common stock on
December 20, 1999 and, on December 28, 1999, the
Company acquired a 23.5% equity interest through the purchase of
Shinsegi Telecomm, Inc.s common stock held by Kolon
International Corporation and other minority interests for
W 1,088,819 million. The Company acquired the
remaining 27.7% equity interest on April 27, 2000 from
POSCO by the issuance of 5,794,924 shares of the Companys
common stock with a market value of
W 1,657,348 million on the issuance date.

The transaction was accounted for under the
purchase method of accounting and generated
W 2,560,690 million in goodwill, which is being
amortized on a straight-line basis over a twenty year period.

The acquisition of a 51.2% equity interest in
Shinsegi Telecomm, Inc.s common stock completed on
April 27, 2000 is summarized as follows:

|                                                                     |  |                |            |  
|-------------------------------------------------------------------- |  | -------------- | ---------- | -
|                                                                     |  | In millions of
|                                                                     |  | Korean won    
|                                                                     |  |               
|Fair value of assets acquired                                        |  | W              | 1,183,633  |  
|Goodwill                                                             |  |                | 2,560,690  |  
|Elimination of investment in unconsolidated
    affiliate            |  |                | (1,067,180 | )
|Assumed liabilities                                                  |  |                | (1,018,710 | )
|                                                                     |  |                |            |  
|Acquisition cost after adding incidental costs of
    W1,085 million |  | W              | 1,658,433  |  
|                                                                     |  |                |            |  

In 2001, the Company acquired an additional 19.2%
equity interest in Shinsegi Telecomm, Inc. for
W 327,733 million. And on January 13, 2002, the
Company merged with Shinsegi Telecomm, Inc. in accordance with a
resolution of the Companys board of directors dated
September 21, 2001 and the approval of the shareholders of
Shinsegi Telecomm, Inc. dated November 16, 2001. The
exchange ratio of common stock between the Company and Shinsegi
Telecomm, Inc. was 0.05696 to 1. Using such exchange ratio, the
Company distributed 2,677,653 shares of treasury stock to
minority shareholders of Shinsegi Telecomm, Inc. and the Company
retired all shares of Shinsegi Telecomm, Inc. owned by the
Company upon the merger.

The additional acquisition of equity interests in
Shinsegi Telecomm, Inc. after its acquisition of a majority
equity interest on April 27, 2000 was also accounted for
under the purchase method of accounting whereby the purchase
price was allocated to assets acquired and liabilities assumed
based on the fair value at the date when the Company acquired a
majority equity interest in Shinsegi Telecomm, Inc. The excess
unallocated purchase prices of W 299,121 million for
the additional 19.2% equity interest acquired in 2001 and
W 647,025 million for the distribution of 2,677,653
shares of treasury stock to minority shareholders of Shinsegi
Telecomm, Inc. upon the merger dated January 13, 2002, were
recorded as decreases in capital surplus in accordance with
Korean GAAP (see Note 14).

27. Loss on Impairment of Idle Network
Equipment of Shinsegi Telecomm, Inc.

In 2002, the Company integrated Shinsegi
Telecomm, Inc.s former operations with those of the
Company and some portion of Shinsegi Telecomm, Inc.s
former network equipment was re-deployed in the Companys
network or sold for use outside Korea. The Company wrote off the
remainder of the network equipment, excluding additional network
equipment which will be re-deployed in the Companys
network, and an impairment loss of W 185,847 million
was recorded in the year ended December 31, 2002.

F-47



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

28. Stock Exchange between the Company
and KT Corporation

The Company exchanged 29,803,333 shares of KT
Corporations common stock for 8,266,923 shares of the
Companys common stock and settled the difference in the
price in cash on December 30, 2002 and January 10,
2003, under a mutual agreement on stock exchange between the
Company and KT Corporation. The exchange had been made at
W 50,900 per share of KT Corporations common stock
and W 224,000 per share of the Companys common stock.
Related to these stock exchanges, a loss on exchange of
investments in 15,454,659 shares of KT Corporation for 4,457,635
shares of the Companys common stock on December 31,
2002, amounting to W 47,909 million, was recorded as a
loss on disposal of investments during the second half of 2002,
and an impairment loss amounting to W 44,496 million,
which was related to the investments in 14,353,674 shares of KT
Corporations common stock as of December 31, 2002,
was recorded during the year ended December 31, 2002.



|    |                     
|--- | --------------------
|29. | Economic Uncertainty

The economic environment in the Republic of Korea
continues to be volatile. In addition, the Korean government and
the private sector continue to implement structural reforms to
historical business practices, including corporate governance.
The Company and its subsidiaries may be either directly or
indirectly affected by these economic conditions and the reform
program described above. The accompanying consolidated financial
statements reflect managements assessment of the impact to
date of the economic environment on the financial position and
results of operations of the Company and its subsidiaries.
Actual results may differ materially from managements
current assessment.



|    |                                
|--- | -------------------------------
|30. | Network Interconnection Charges

The Companys networks interconnect with the
public switched telephone networks operated by
KT Corporation and Hanaro and, through their networks, with
the international gateways of KT Corporation, DACOM and Onse, as
well as the networks of the other wireless telecommunications
service providers in Korea. These connections enable the
Companys subscribers to make and receive calls from
telephones outside the Companys networks. Under Korean
law, service providers are required to permit other service
providers to interconnect to their networks for purposes of
offering other services. If the new service provider desires
interconnection and the incumbent service provider is unable to
reach an agreement within 90 days, the new service provider
can appeal to the Korean Communications Commission, a government
agency under the MIC.

For the years ended December 31, 2001, 2002
and 2003, such interconnection revenues amounted to
W 1,339.9 billion, W 1,043.2 billion and
W 1,017.1 billion, respectively, while aggregate
interconnection expenses amounted to W 667.7 billion,
W 752.1 billion and W 771.5 billion,
respectively.

31. Subsequent Event

In accordance with the approval of its board of
directors dated March 12, 2004, the Company issued
unguaranteed domestic bonds with face amounts totaling
W 150,000 million and unguaranteed dollar denominated
bonds with face amounts totaling US$300 million on
March 23, 2004 and April 1, 2004, respectively. The
domestic bonds were issued at an annual rate of 5% for
W 148,155 million and will be repaid in full at its
final maturity date of March 23, 2009. The dollar
denominated bonds were issued at an annual rate of 4.5% for
US$297.8 million and will be repaid in full at its maturity
of April 1, 2011.



|    |                                                                             
|--- | ----------------------------------------------------------------------------
|32. | Reconciliation to United States Generally
    Accepted Accounting Principles

The consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted in Korea (Korean GAAP), which differ in
certain respects from accounting principles

F-48



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

generally accepted in the United States
(U.S. GAAP). The significant differences are
described below. Other differences do not have a significant
effect on either consolidated net income or shareholders
equity.



|   |                                       
|-- | --------------------------------------
|a. | Deferred Income Taxes (see
    Note 2)

Under U.S. GAAP, deferred tax assets and
liabilities are separated into their current and non-current
portions based on the classification of related assets or
liability for financial reporting purposes. Under Korean GAAP,
deferred tax assets and liabilities are presented on the balance
sheet as a single non-current net number.

In addition, U.S. GAAP does not allow
recognition of deferred tax assets on the difference between the
tax bases and financial statement bases of investments in
subsidiaries unless it is apparent that the difference will
reverse in the foreseeable future which has generally been
interpreted to be one year. Such deferred tax assets totaling
W 11,207 million, W 19,688 million and
W 27,030 million as of December 31, 2001, 2002
and 2003, respectively, have been recognized for Korean GAAP
purposes.



|   |                                  
|-- | ---------------------------------
|b. | Deferred Charges (see
    Note 2)

Korean GAAP requires that bond issuance costs be
deducted from proceeds of bonds and certain development costs be
reclassified as intangible assets. Under U.S. GAAP, bond
issuance costs are capitalized as deferred assets and amortized
over the redemption period of the related obligation and
research and development costs are charged to expense as
incurred.



|   |       
|-- | ------
|c. | Leases

Through 1998, leases whose present value of
minimum lease payments exceed 90% of the fair value of the
leased equipment were not capitalized under Korean GAAP, but are
capitalized under U.S. GAAP. Therefore, with respect to
lease contracts entered into prior to January 1, 1999,
certain adjustments for equipment, obligations under capital
leases, interest on capital leases and depreciation are required.



|   |                                                                  
|-- | -----------------------------------------------------------------
|d. | Marketable Securities and Investments
    Securities (see Note 2)

Through 2002, under Korean GAAP, debt and equity
securities were classified into marketable securities and
investment securities. Effective January 1, 2003, Korean
GAAP was revised to classify investment in securities into three
separate categories; trading securities, available-for-sales
securities and held-to-maturity securities in a similar manner
of Statement of Financial Accounting Standards No. 115
(SFAS No. 115), Accounting for Certain Investments in
Debt and Equity Securities, described below. The valuation
method for each category is similar to SFAS No. 115;
however, the accounting treatment for impairment of investment
securities and recoveries under Korean GAAP differ from those
under U.S. GAAP as described in Note 32-(e).

Under U.S. GAAP, SFAS No. 115
requires that equity securities with readily determinable fair
values and all debt securities be classified into three
categories and accounted for as follows:



| |   |                                                                                                                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Debt securities that the Company has the positive
    intent and ability to hold to maturity are classified as
    held-to-maturity securities and reported at amortized cost.                                                                                                                     
|
| |  | Debt and equity securities that are bought and
    held principally for the purpose of selling them in the near
    term are classified as trading securities and reported at fair
    value, with unrealized gains and losses included in income.                                                 
|
| |  | Debt and equity securities not classified as
    either held-to-maturity securities or trading securities are
    classified as available-for-sale securities and reported at fair
    value, with unrealized gains and losses excluded from income and
    reported in other comprehensive income.

F-49



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

Gross proceeds from the sale of such securities
were W 212,250 million, W 1,562,603 million
and W 945,854 million for the years ended
December 31, 2001, 2002 and 2003, respectively. Gross
realized gains for the years ended December 31, 2001, 2002
and 2003 were W 14 million, W 13,540 million
and W 2,122 million, respectively. Gross realized
losses for the years ended December 31, 2001, 2002 and 2003
were W 7,371 million, W 50,958 million and
W 614 million, respectively.

Information with respect to trading securities at
December 31, 2001, 2002 and 2003 is as follows (in millions
of Korean won):

|                      |                 |                  |   |            |  |            |   |            |  |  |   |       |  |  |   |         | 
|--------------------- | --------------- | ---------------- | - | ---------- |  | ---------- | - | ---------- |  |  | - | ----- |  |  | - | ------- | 
|                      |                 |                  |   | Gross      |  | Gross      |   |           
|                      |                 | Cost             |   | unrealized |  | unrealized |   |           
|                      |                 | (amortized cost) |   | gains      |  | losses     |   | Fair Value
|                      |                 |                  |   |            |  |            |   |           
|At December 31, 2001: |                 |                  |   |            |  |            |   |            |  |  |   |       |  |  |   |        
|                      | Debt securities |                  | W | 637,530    |  |            | W |           |  |  | W |      |  |  | W | 637,530 | 
|                      |                 |                  |   |            |  |            |   |            |  |  |   |       |  |  |   |        
|At December 31, 2002: |                 |                  |   |            |  |            |   |            |  |  |   |       |  |  |   |        
|                      | Debt securities |                  | W | 754,219    |  |            | W |           |  |  | W |      |  |  | W | 754,219 | 
|                      |                 |                  |   |            |  |            |   |            |  |  |   |       |  |  |   |        
|At December 31, 2003: |                 |                  |   |            |  |            |   |            |  |  |   |       |  |  |   |        
|                      | Debt securities |                  | W | 895,401    |  |            | W |           |  |  | W | 2,184 |  |  | W | 893,217 | 
|                      |                 |                  |   |            |  |            |   |            |  |  |   |       |  |  |   |        

Information with respect to long-term investment
securities including the current portion affected by
SFAS No. 115 at December 31, 2001, 2002 and 2003
is as follows (in millions of Korean won):

|                      |                   |                  |           |            |  |            |        |            |  |            |        |        |  |   |         |         |  |   |         |         | 
|--------------------- | ----------------- | ---------------- | --------- | ---------- |  | ---------- | ------ | ---------- |  | ---------- | ------ | ------ |  | - | ------- | ------- |  | - | ------- | ------- | 
|                      |                   |                  |           | Gross      |  | Gross      |        |            |  |           
|                      |                   | Cost             |           | unrealized |  | unrealized |        | Impairment |  |           
|                      |                   | (amortized cost) |           | gains      |  | losses     |        | losses     |  | Fair Value
|                      |                   |                  |           |            |  |            |        |            |  |           
|At December 31, 2001: |                   |                  |           |            |  |            |        |            |  |            |        |        |  |   |         |         |  |   |         |        
|                      | Equity securities |                  | W         | 157,155    |  |            | W      |           |  |            | W      | 75,792 |  |   | W       |        |  |   | W       | 81,363  | 
|                      | Debt securities   |                  |           | 61,898     |  |            |        |           |  |            |        |       |  |   |         |        |  |   |         | 61,898  | 
|                      |                   |                  |           |            |  |            |        |            |  |            |        |        |  |   |         |         |  |   |         |        
|                      |                   | W                | 219,053   |            |  | W          |       |            |  | W          | 75,792 |        |  | W |        |         |  | W | 143,261 |        
|                      |                   |                  |           |            |  |            |        |            |  |            |        |        |  |   |         |         |  |   |         |        
|At December 31, 2002: |                   |                  |           |            |  |            |        |            |  |            |        |        |  |   |         |         |  |   |         |        
|                      | Equity securities |                  | W         | 938,975    |  |            | W      | 1,522      |  |            | W      | 3,852  |  |   | W       | 146,284 |  |   | W       | 790,361 | 
|                      | Debt securities   |                  |           | 62,500     |  |            |        |           |  |            |        |       |  |   |         |        |  |   |         | 62,500  | 
|                      |                   |                  |           |            |  |            |        |            |  |            |        |        |  |   |         |         |  |   |         |        
|                      |                   | W                | 1,001,475 |            |  | W          | 1,522  |            |  | W          | 3,852  |        |  | W | 146,284 |         |  | W | 852,861 |        
|                      |                   |                  |           |            |  |            |        |            |  |            |        |        |  |   |         |         |  |   |         |        
|At December 31, 2003: |                   |                  |           |            |  |            |        |            |  |            |        |        |  |   |         |         |  |   |         |        
|                      | Equity securities |                  | W         | 427,472    |  |            | W      | 73,290     |  |            | W      | 6,608  |  |   | W       | 55,469  |  |   | W       | 438,685 | 
|                      | Debt securities   |                  |           | 64,315     |  |            |        |           |  |            |        |       |  |   |         |        |  |   |         | 64,315  | 
|                      |                   |                  |           |            |  |            |        |            |  |            |        |        |  |   |         |         |  |   |         |        
|                      |                   | W                | 491,787   |            |  | W          | 73,290 |            |  | W          | 6,608  |        |  | W | 55,469  |         |  | W | 503,000 |        
|                      |                   |                  |           |            |  |            |        |            |  |            |        |        |  |   |         |         |  |   |         |        

Investment equity securities are carried at fair
value for Korean GAAP purposes as all such investments are
investments in listed companies. All of gross unrealized losses
of W 6,608 million at December 31, 2003 for which
impairment has not been recognized, have been in a continuous
unrealized loss position for less than twelve months.



|   |                                                       
|-- | ------------------------------------------------------
|e. | Impairment of Investment Securities and
    Recoveries

Under U.S. GAAP, if the decline in fair
value is judged to be other than temporary, the cost basis of
the individual securities is written down to fair value as a new
cost basis and the amount of the write-down is

F-50



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

included in current operations. Under Korean
GAAP, if the collectible value from the securities is less than
acquisition costs with objective evidence of impairment such as
bankruptcy of investees, an impairment loss is recognized. Due
to such differences, for U.S. GAAP purposes, losses on
impairment of investment securities for the years ended
December 31, 2002 and 2003 increased by
W 252,031 million and W 21,716 million,
respectively, when compared to those under Korean GAAP. Such
amounts include impairment of the investments in the common
stock of Powercomm Co., Ltd. in the amount of
W 150,243 million and W 21,593 million for
the years ended December 31, 2002 and 2003, respectively.

Under Korean GAAP, the subsequent recoveries of
impaired available-for-sale securities, held-to-maturity debt
securities and equity securities without readily determinable
fair value, result in an increase of their carrying amount up to
the original acquisition cost, and the recovery gains are
reported in current operations up to the previously recognized
impairment loss as reversal of loss on impairment of investment
securities. Under U.S. GAAP, the subsequent increase in
carrying amount of the impaired and written down
held-to-maturity debt securities and equity securities without
readily determinable fair value is not allowed. The subsequent
increase in fair value of available-for-sale securities is
reported in other comprehensive income.



|   |                                                                                                
|-- | -----------------------------------------------------------------------------------------------
|f. | Impairment of Long-Lived Assets to be Held
    and Used and Long-Lived Assets to be Disposed of

U.S. GAAP (SFAS No. 144) requires
entities to perform separate calculations for long-lived assets
to be held and used in order to determine whether recognition of
an impairment loss is required and, if so, to measure the
impairment. For assets to be held and used, if the sum of
expected future cash flows (undiscounted and without interest
charges) is less than the assets carrying value, an
impairment loss is recognized, but if the sum of the expected
future cash flows is greater than an assets carrying
value, an impairment loss is not recognized. Measurement of an
impairment loss is based on the fair value of the asset. An
impairment loss creates a new book basis and subsequent
recoveries of the fair value are not recognized. U.S. GAAP
also generally requires long-lived assets to be disposed of to
be reported at the lower of the carrying value or fair value
less selling expense.

Through 1998, Korean GAAP had no specific
provisions for accounting for impairment of long-lived assets to
be held and used and long-lived assets to be disposed of.
Effective January 1, 1999, Korean GAAP was revised to
require that impairment loss should be recorded in a manner
similar to U.S. GAAP.

At December 31, 2001 and 2003, the Company
determined that there have been no significant events or changes
in circumstances indicating that the carrying amount of
long-lived assets might not be recoverable. In 2002, the Company
integrated Shinsegi Telecomm, Inc.s former operations with
those of the Company and some portion of Shinsegi Telecomm,
Inc.s former network equipment was re-deployed in the
Companys network or sold for use outside Korea. The
Company wrote off the remainder of the network equipment,
excluding the network equipment which will be re-deployed in the
Companys network, and an impairment loss of
W 185,847 million was recorded for the year ended
December 31, 2002 (see Note 27).



|   |                     
|-- | --------------------
|g. | Comprehensive Income

Under Korean GAAP, there is no requirement to
present comprehensive income. Under US GAAP, comprehensive
income and its components must be presented in the financial
statements. Comprehensive income includes all changes in
shareholders equity during a period except those resulting
from investments by, or distributions to, owners, including
certain items not included in the current results of operations.



|   |                                                
|-- | -----------------------------------------------
|h. | Business Combinations and Intangible
    Assets

Effective July 1, 2001, U.S. GAAP
requires the use of the purchase method of accounting for all
business combinations. Resulting goodwill and intangible assets
with indefinite lives are no longer amortized; however,

F-51



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

they will be subject to annual impairment tests.
The Company believes there is no impairment of such assets at
December 31, 2002 and 2003. Intangible assets with finite
lives will continue to be amortized over their estimated useful
lives.

Under Korean GAAP, business combinations
involving other than commonly controlled entities are accounted
for as either a purchase or a pooling of interests, depending on
the specific circumstances. In a purchase combination, the
difference between the purchase consideration and the fair value
of the net assets acquired is accounted for as goodwill or as
negative goodwill. Goodwill and all other intangible assets are
amortized over its estimated economic life, generally not to
exceed 20 years.



|   |                                                                       
|-- | ----------------------------------------------------------------------
|i. | Determination of Acquisition Cost of Equity
    Interest in Subsidiary

Under U.S. GAAP, when a parent company
acquires an equity interest in a subsidiary in exchange for
newly issued common stock of the parent company, the acquisition
cost of the equity interest in a subsidiary is determined at the
market price of the parent companys common stock for a
reasonable period before and after the date the terms of the
acquisition are agreed to and announced. Under Korean GAAP, the
acquisition cost is determined at the closing market price of
the parent companys common stock when the common stock is
actually issued. In addition, there are certain other
differences in the methods of allocating cost to assets acquired.



|   |                                                 
|-- | ------------------------------------------------
|j. | Additional Equity Investment in
    Subsidiaries

Under Korean GAAP, when additional interest is
acquired after acquiring a majority interest in a subsidiary,
the differences between the Companys acquisition cost of
the additional interest and the corresponding carrying amount of
the acquired additional interest in a subsidiary is presented as
an adjustment to capital surplus. Under U.S. GAAP, the cost
of an additional interest would be allocated based on the fair
value of net assets acquired, with the excess allocated to
goodwill.



|   |                                                                               
|-- | ------------------------------------------------------------------------------
|k. | Capitalization of Foreign Exchange Losses
    (or Gains) and Interest Expenses

Through 2002, under Korean GAAP, interest
expenses and foreign exchange losses (or foreign exchange gains)
incurred on debt used to finance the construction of property,
plant and equipment were capitalized (or offset against property
additions). Effective January 1, 2003, Korean GAAP was
revised to allow a company to reflect such interest expense and
foreign exchange losses (or foreign exchange gains) to current
operations. For Korean GAAP purposes, the Company adopted the
accounting policy not to capitalize such financing costs
prospectively. Under U.S. GAAP, interest expenses incurred
on debt used to finance the construction of property, plant and
equipment are capitalized, while related foreign exchange losses
(or gains) are charged to current operations as incurred.

Through 2002, under Korean GAAP, interest expense
incurred on debt used to finance the purchase of intangible
assets was capitalized until the asset was put in use. For
U.S. GAAP purposes, the Company charges such interest to
current operations as incurred. Effective January 1, 2003,
Korean GAAP was revised to allow a company to charge such
interest expense to current operations as incurred. For Korean
GAAP purposes, the Company adopted the accounting policy not to
capitalize such interest expense. This accounting change has
been applied prospectively.



|   |                              
|-- | -----------------------------
|l. | Nonrefundable Activation Fees

For U.S. GAAP purposes, effective
January 1, 2000, the Company and its subsidiaries adopted
the provisions of the Securities and Exchange Commission Staff
Accounting Bulletin (SAB) No. 101, Revenue
Recognition in Financial Statements. As a result of the
adoption of SAB No. 101, the Company and its subsidiaries
now defer nonrefundable activation revenues and costs and
amortize them over the expected term

F-52



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

of the customer relationship, which ranges from
41 months to 89 months. Previously, these revenues and
costs were recognized when the activation service was performed.

Under Korean GAAP, there is no specific provision
for the recognition of such activation fees and the Company and
its subsidiaries recognize these revenues and costs when the
activation service is performed.



|   |                                                   
|-- | --------------------------------------------------
|m. | Gain or Loss on Disposal of
    Subsidiarys Stock

Under Korean GAAP, gains or losses on disposal of
investments in common stock of subsidiaries are not recognized
in the consolidated income statement but included in capital
surplus, until such subsidiary has been excluded as a
majority-owned subsidiary. Under U.S. GAAP, such gains or losses
on disposal of the investments in common stock of subsidiary are
recognized in the income statement at the time of disposal of
such investments.



|   |                                            
|-- | -------------------------------------------
|n. | Employee Stock Option Compensation
    Plan

For Korean and U.S. GAAP purposes, the
Company charges to expense the value of stock options granted.
Korean GAAP permits all entities to exclude the volatility
factor in estimating the value of their stock options, which
results in measurement at minimum value. Under U.S. GAAP,
public entities are not permitted to exclude the volatility
factor in estimating the value of their stock options.

The weighted average fair value of options
granted in 2000, 2001 and 2002 was W 210,000 per
share, W 120,070 per share and W 48,724 per
share, respectively.



|   |                                                                         
|-- | ------------------------------------------------------------------------
|o. | Loans Receivable for Stock Issued to
    Employees Investor Association

U.S. GAAP requires that notes received for
capital stock be reported as a reduction of stockholders
equity, while Korean GAAP allows for recording such receivables
as an asset.



|   |                                   
|-- | ----------------------------------
|p. | Discount on Leasehold
    Deposits

Under U.S. GAAP, when cash and other rights
are exchanged for notes, notes (receivables or payables that
represent contractual rights to receive money or contractual
obligations to pay money on fixed or determinable dates, whether
or not there is a stated provision for interest) should be
stated at their present value and the difference between the
face amount and the present value should be deducted from or
added to the face amount of the note as a discount or premium
and amortized over the term by using effective interest method.
Thus, leasehold key money deposits are stated at their present
value. Under Korean GAAP, the leasehold key money deposits are
stated at their face amounts.



|   |                                      
|-- | -------------------------------------
|q. | Asset Securitization
    Transactions

Under U.S. GAAP, a transfer of financial
assets in an asset securitization is accounted for as a sale
only if all three of the following conditions are met;



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The transferred asset 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.

F-53



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)



| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | The transferor does not effectively maintain
    control over the transferred assets either through;



| |     |                                                                                                                                                                                         
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | an agreement that calls for the transferor to
    repurchase the transferred assets (or to buy back securities of
    a QSPE held by third-party investors) before their
    maturity or
|
| | (b) | the ability to unilaterally cause the SPE or QSPE
    to return specific assets; other than through a cleanup call.                                                                     

In addition, under U.S. GAAP, unless a
transferee is a QSPE, a transferee with nominal capital
investment and credit enhancement provided by transferor is
generally consolidated into the transferor.

However, under Korea GAAP, when a transfer of
financial assets in an asset securitization is conducted in
accordance with the Korean Asset Securitization Act, such
transfer is generally accounted for as a sale of financial
assets and the securitization vehicle is generally not
consolidated into the transferor.



|   |                                                                             
|-- | ----------------------------------------------------------------------------
|r. | Presentation of Minority Interest as a
    Component of Shareholders Equity

The Korean GAAP requires the classification of
minority interest in equity of consolidated subsidiaries as a
component of shareholders equity. Under U.S. GAAP,
minority interest in equity of consolidated subsidiaries is
presented separately from shareholders equity.

F-54



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

The following reconciles net income for the years
ended December 31, 2001, 2002 and 2003 and
shareholders equity as of December 31, 2001, 2002 and
2003 under Korean GAAP as reported in the consolidated financial
statements to the net income and shareholders equity
amounts determined under U.S. GAAP, giving effect to
adjustments for the differences listed above (in millions of
Korean won, except per share amounts):

|                                                         |                                                                                                |                            |            |         |        |      |            |          |        |   |            |         |        | 
|-------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | -------------------------- | ---------- | ------- | ------ | ---- | ---------- | -------- | ------ | - | ---------- | ------- | ------ | 
|                                                         |                                                                                                |                           
|                                                         |                                                                                                | Year ended December 31,   
|                                                         |                                                                                                |                           
|                                                         |                                                                                                | 2001                       |            | 2002    |        | 2003
|                                                         |                                                                                                |                            |            |         |        |     
|Net income based on Korean GAAP                          |                                                                                                | W                          | 1,146,049  |         |        | W    | 1,487,151  |          |        | W | 1,966,100  |        
|Adjustments:                                             |                                                                                                |                            |            |         |        |      |            |          |        |   |            |        
|                                                         | Deferred income tax adjustments due to difference
    in accounting principles                 |                            |            | 16,318  |        |      |            | (8,481   | )      |   |            | (7,342  | )     
|                                                         | Tax effect of the reconciling items                                                            |                            |            | 43,005  |        |      |            | 121,976  |        |   |            | (15,036 | )     
|                                                         | Deferred charges                                                                               |                            |            | (2,002  | )      |      |            | 1,318    |        |   |            | 2,660   |       
|                                                         | Capital leases                                                                                 |                            |            | 433     |        |      |            | 454      |        |   |            | (906    | )     
|                                                         | Intangible assets                                                                              |                            |            | (26,435 | )      |      |            | (23,507  | )      |   |            | (22,303 | )     
|                                                         | Cancellation of amortization of goodwill                                                       |                            |            |        |        |      |            | 138,041  |        |   |            | 135,557 |       
|                                                         | Capitalization of foreign exchange losses and
    interest expenses related to tangible assets |                            |            | 1,190   |        |      |            | 6,213    |        |   |            | 21,617  |       
|                                                         | Capitalization of interest expenses related to
    purchase of intangible assets               |                            |            |        |        |      |            | (69,372  | )      |   |            | 427     |       
|                                                         | Nonrefundable activation fees                                                                  |                            |            | (64,773 | )      |      |            | (104,263 | )      |   |            | (46,962 | )     
|                                                         | Loss (gain) on disposal of subsidiary shares                                                   |                            |            | 103     |        |      |            |         |        |   |            | 58      |       
|                                                         | Stock option compensation plan                                                                 |                            |            | (1,889  | )      |      |            | (3,367   | )      |   |            | (3,114  | )     
|                                                         | Loss on sale of accounts receivable and other in
    asset securitization                      |                            |            |        |        |      |            | 7,039    |        |   |            | 7,437   |       
|                                                         | Loss on impairment of investment securities                                                    |                            |            |        |        |      |            | (252,031 | )      |   |            | 24,727  |       
|                                                         | Discount on leasehold deposits                                                                 |                            |            | (322    | )      |      |            | (45      | )      |   |            | (286    | )     
|                                                         | Recovery of impaired investment securities                                                     |                            |            | (81     | )      |      |            |         |        |   |            | 115     |       
|                                                         |                                                                                                |                            |            |         |        |      |            |          |        |   |            |        
|Net income based on U.S. GAAP                            |                                                                                                | W                          | 1,111,596  |         |        | W    | 1,301,126  |          |        | W | 2,062,749  |        
|                                                         |                                                                                                |                            |            |         |        |      |            |          |        |   |            |        
|Weighted average number of common shares
    outstanding |                                                                                                |                            | 86,545,041 |         |        |      | 84,270,450 |          |        |   | 75,078,219 |        
|                                                         |                                                                                                |                            |            |         |        |      |            |          |        |   |            |        
|Earnings per share based on U.S. GAAP:                   |                                                                                                |                            |            |         |        |      |            |          |        |   |            |        
|                                                         |                                                                                                | Basic earnings per share   |            | W       | 12,844 |      |            | W        | 15,440 |   |            | W       | 27,475 | 
|                                                         |                                                                                                |                            |            |         |        |      |            |          |        |   |            |        
|                                                         |                                                                                                | Diluted earnings per share |            | W       | 12,844 |      |            | W        | 15,439 |   |            | W       | 27,475 | 
|                                                         |                                                                                                |                            |            |         |        |      |            |          |        |   |            |        

F-55



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

|                                          |              |                                                                                                |           |      |          |      |           |  |           |   |           |  |           |  
|----------------------------------------- | ------------ | ---------------------------------------------------------------------------------------------- | --------- | ---- | -------- | ---- | --------- |  | --------- | - | --------- |  | --------- | -
|                                          |              |                                                                                               
|                                          |              | December 31,                                                                                  
|                                          |              |                                                                                               
|                                          |              | 2001                                                                                           |           | 2002 |          | 2003
|                                          |              |                                                                                                |           |      |          |     
|Shareholders equity based on Korean GAAP |              | W                                                                                              | 6,149,304 |      |          | W    | 6,231,900 |  |           | W | 6,093,847 | 
|                                          | Adjustments: |                                                                                                |           |      |          |      |           |  |           |   |           |  |          
|                                          |              | Deferred income tax adjustments due to difference
    in accounting principles                 |           |      | 11,303   |      |           |  | (18,997   | ) |           |  | (45,317   | )
|                                          |              | Tax effect of the reconciling items                                                            |           |      | 29,578   |      |           |  | 151,554   |   |           |  | 136,517   |  
|                                          |              | Deferred charges                                                                               |           |      | (3,917   | )    |           |  | (2,600    | ) |           |  | 60        |  
|                                          |              | Capital leases                                                                                 |           |      | 691      |      |           |  | 1,144     |   |           |  | 239       |  
|                                          |              | Intangible assets                                                                              |           |      | 504,714  |      |           |  | 1,033,558 |   |           |  | 1,019,917 |  
|                                          |              | Cancellation of amortization of goodwill                                                       |           |      |         |      |           |  | 138,041   |   |           |  | 273,598   |  
|                                          |              | Capitalization of foreign exchange losses and
    interest expenses related to tangible assets |           |      | (7,987   | )    |           |  | (1,775    | ) |           |  | 19,842    |  
|                                          |              | Capitalization of interest expenses related to
    purchase of intangible assets               |           |      |         |      |           |  | (69,372   | ) |           |  | (68,945   | )
|                                          |              | Nonrefundable activation fees                                                                  |           |      | (87,949  | )    |           |  | (192,212  | ) |           |  | (239,174  | )
|                                          |              | Loans receivable for stock issued to
    employees investor association                       |           |      | (70,938  | )    |           |  | (45,906   | ) |           |  | (33,788   | )
|                                          |              | Minority interest in equity of consolidated
    affiliates                                     |           |      | (704,345 | )    |           |  | (725,507  | ) |           |  | (155,985  | )
|                                          |              | Loss on sale of accounts receivable and other in
    asset securitization                      |           |      |         |      |           |  | 7,039     |   |           |  | 14,476    |  
|                                          |              | Loss on impairment of investment securities                                                    |           |      |         |      |           |  | (150,243  | ) |           |  |          |  
|                                          |              | Discount on leasehold deposits                                                                 |           |      | (322     | )    |           |  | (367      | ) |           |  | (653      | )
|                                          |              | Recovery of impaired investment securities                                                     |           |      | (81      | )    |           |  | (81       | ) |           |  | 34        |  
|                                          |              |                                                                                                |           |      |          |      |           |  |           |   |           | 
|Shareholders equity based on U.S. GAAP   |              | W                                                                                              | 5,820,051 |      |          | W    | 6,356,176 |  |           | W | 7,014,668 | 
|                                          |              |                                                                                                |           |      |          |      |           |  |           |   |           | 

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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

Changes in shareholders equity based on
U.S. GAAP for the years ended December 31, 2001, 2002
and 2003 are as follows (in millions of Korean won):

|                               |                                                                                        |                         |           |            |   |      |           |           |   |   |           |            |  
|------------------------------ | -------------------------------------------------------------------------------------- | ----------------------- | --------- | ---------- | - | ---- | --------- | --------- | - | - | --------- | ---------- | -
|                               |                                                                                        |                        
|                               |                                                                                        | Year ended December 31,
|                               |                                                                                        |                        
|                               |                                                                                        | 2001                    |           | 2002       |   | 2003
|                               |                                                                                        |                         |           |            |   |     
|Balance, beginning of the year |                                                                                        | W                       | 6,117,907 |            |   | W    | 5,820,051 |           |   | W | 6,356,176 |           
|                               | Net income for the year                                                                |                         |           | 1,111,596  |   |      |           | 1,301,126 |   |   |           | 2,062,749  |  
|                               | Dividends                                                                              |                         |           | (48,103    | ) |      |           | (57,265   | ) |   |           | (151,739   | )
|                               | Issuance of common stock                                                               |                         |           |           |   |      |           |          |   |   |           | 31,053     |  
|                               | Unrealized gains on valuation of securities, net
    of tax                            |                         |           | 34,704     |   |      |           | 51,644    |   |   |           | 50,033     |  
|                               | Equity in capital surplus, retained earnings and
    capital adjustments of affiliates |                         |           | 8,116      |   |      |           | (12,789   | ) |   |           | 50,166     |  
|                               | Sales of stock by subsidiaries                                                         |                         |           | 1          |   |      |           |          |   |   |           |           |  
|                               | Retirement of treasury stock                                                           |                         |           |           |   |      |           |          |   |   |           | (20,598    | )
|                               | Treasury stock transactions                                                            |                         |           | (1,420,964 | ) |      |           | (779,290  | ) |   |           | (1,379,337 | )
|                               | Foreign-based operations translation
    adjustments                                  |                         |           | (3,839     | ) |      |           | 2,809     |   |   |           | (356       | )
|                               | Stock compensation plan                                                                |                         |           | 2,466      |   |      |           | 4,859     |   |   |           | 4,403      |  
|                               | Decrease in loans receivable for stock issued to
    employees investor association   |                         |           | 18,167     |   |      |           | 25,031    |   |   |           | 12,118     |  
|                               |                                                                                        |                         |           |            |   |      |           |           |   |   |           |           
|Balance, end of the year       |                                                                                        | W                       | 5,820,051 |            |   | W    | 6,356,176 |           |   | W | 7,014,668 |           
|                               |                                                                                        |                         |           |            |   |      |           |           |   |   |           |           

A reconciliation of the significant balance sheet
accounts except for the above listed shareholders equity
items to the amounts determined under U.S. GAAP as of
December 31, 2001, 2002 and 2003 is as follows (in millions
of Korean won):

|                |                        |                                                                           |   |           |        |      |   |           |         |   |   |           |         |  
|--------------- | ---------------------- | ------------------------------------------------------------------------- | - | --------- | ------ | ---- | - | --------- | ------- | - | - | --------- | ------- | -
|                |                        |                                                                          
|                |                        | December 31,                                                             
|                |                        |                                                                          
|                |                        | 2001                                                                      |   | 2002      |        | 2003
|                |                        |                                                                           |   |           |        |     
|Current assets: |                        |                                                                           |   |           |        |      |   |           |         |   |   |          
|                | As reported            |                                                                           | W | 4,346,746 |        |      | W | 4,113,724 |         |   | W | 4,069,525 |        
|                | U.S. GAAP adjustments: |                                                                           |   |           |        |      |   |           |         |   |   |           |        
|                |                        |  deferred tax adjustments due to
    difference in accounting principles |   |           | 72,940 |      |   |           | 60,619  |   |   |           | 73,500  |  
|                |                        |  tax effect of the reconciling items                                     |   |           | 6,221  |      |   |           | (9,927  | ) |   |           | (8,297  | )
|                |                        |  discount on leasehold deposits                                          |   |           | 4,843  |      |   |           | 4,843   |   |   |           | 5,777   |  
|                |                        |  Asset securitization transactions                                       |   |           |       |      |   |           | 582,742 |   |   |           | 478,298 |  
|                |                        |                                                                           |   |           |        |      |   |           |         |   |   |          
|                | As adjusted            |                                                                           | W | 4,430,750 |        |      | W | 4,752,001 |         |   | W | 4,618,823 |        
|                |                        |                                                                           |   |           |        |      |   |           |         |   |   |          

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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

|                                |                        |                                                                                                 |            |           |         |      |            |            |           |   |            |            |           |  
|------------------------------- | ---------------------- | ----------------------------------------------------------------------------------------------- | ---------- | --------- | ------- | ---- | ---------- | ---------- | --------- | - | ---------- | ---------- | --------- | -
|                                |                        |                                                                                                
|                                |                        | December 31,                                                                                   
|                                |                        |                                                                                                
|                                |                        | 2001                                                                                            |            | 2002      |         | 2003
|                                |                        |                                                                                                 |            |           |         |     
|Non-current assets:             |                        |                                                                                                 |            |           |         |      |            |            |           |   |            |           
|                                | As reported            |                                                                                                 | W          | 8,979,529 |         |      | W          | 10,114,986 |           |   | W          | 9,748,692  |          
|                                | U.S. GAAP adjustments: |                                                                                                 |            |           |         |      |            |            |           |   |            |            |          
|                                |                        |  loans receivable for stock issued to
    employees investor association                      |            |           | (70,938 | )    |            |            | (45,906   | ) |            |            | (33,788   | )
|                                |                        |  Intangible assets                                                                             |            |           | 507,719 |      |            |            | 1,034,972 |   |            |            | 1,015,801 |  
|                                |                        |  cancellation of amortization of
    goodwill                                                  |            |           |        |      |            |            | 138,041   |   |            |            | 273,598   |  
|                                |                        |  discount on leasehold deposits                                                                |            |           | (5,165  | )    |            |            | (5,210    | ) |            |            | (6,430    | )
|                                |                        |  loss on sale of accounts receivable
    and other in asset securitization                     |            |           |        |      |            |            | (68,267   | ) |            |            |          |  
|                                |                        |  recovery of impaired investment
    securities                                                |            |           | (115    | )    |            |            | (81       | ) |            |            | 34        |  
|                                |                        |  loss on impairment of investment
    securities                                               |            |           |        |      |            |            | (150,243  | ) |            |            |          |  
|                                |                        |  nonrefundable activation fees                                                                 |            |           |        |      |            |            | 9,129     |   |            |            | 9,129     |  
|                                |                        |  capital lease                                                                                 |            |           | 10,553  |      |            |            | 5,820     |   |            |            | 3,301     |  
|                                |                        |  capitalization of foreign exchange
    losses and interest expense related to tangible assets |            |           | (15,099 | )    |            |            | (1,775    | ) |            |            | 19,842    |  
|                                |                        |  capitalization of interest expenses
    related to purchase of intangible assets              |            |           |        |      |            |            | (69,372   | ) |            |            | (68,945   | )
|                                |                        |  deferred charges                                                                              |            |           | 3,788   |      |            |            | 6,564     |   |            |            | 6,154     |  
|                                |                        |                                                                                                 |            |           |         |      |            |            |           |   |            |           
|                                | As adjusted            |                                                                                                 |            | 9,410,272 |         |      |            | 10,968,658 |           |   |            | 10,967,388 |          
|                                |                        |                                                                                                 |            |           |         |      |            |            |           |   |            |           
|Total assets based on U.S. GAAP |                        |                                                                                                 | 13,841,022 |           |         |      | 15,720,659 |            |           |   | 15,586,211 |           
|                                |                        |                                                                                                 |            |           |         |      |            |            |           |   |            |           
|Current liabilities:            |                        |                                                                                                 |            |           |         |      |            |            |           |   |            |           
|                                | As reported            |                                                                                                 |            | 3,678,581 |         |      |            | 4,303,386  |           |   |            | 4,530,910  |          
|                                | U.S. GAAP adjustments: |                                                                                                 |            |           |         |      |            |            |           |   |            |            |          
|                                |                        |  deferred charges                                                                              |            |           | 227     |      |            |            | 222       |   |            |            | 31        |  
|                                |                        |  nonrefundable activation fees                                                                 |            |           | 20,947  |      |            |            | 46,723    |   |            |            | 68,665    |  
|                                |                        |  Asset securitization transactions                                                             |            |           |        |      |            |            | 507,436   |   |            |            | 463,822   |  
|                                |                        |  Acquisition cost of equity interest
    in subsidiary                                         |            |           | 1,360   |      |            |            | 2,449     |   |            |            | 886       |  
|                                |                        |                                                                                                 |            |           |         |      |            |            |           |   |            |           
|                                | As adjusted            |                                                                                                 | W          | 3,701,115 |         |      | W          | 4,860,216  |           |   | W          | 5,064,314  |          
|                                |                        |                                                                                                 |            |           |         |      |            |            |           |   |            |           

F-58



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

|                                            |                        |                                                                           |           |           |         |      |           |           |          |   |           |           |          |  
|------------------------------------------- | ---------------------- | ------------------------------------------------------------------------- | --------- | --------- | ------- | ---- | --------- | --------- | -------- | - | --------- | --------- | -------- | -
|                                            |                        |                                                                          
|                                            |                        | December 31,                                                             
|                                            |                        |                                                                          
|                                            |                        | 2001                                                                      |           | 2002      |         | 2003
|                                            |                        |                                                                           |           |           |         |     
|Long-term liabilities:                      |                        |                                                                           |           |           |         |      |           |           |          |   |           |          
|                                            | As reported            |                                                                           | W         | 3,498,390 |         |      | W         | 3,693,424 |          |   | W         | 3,193,460 |         
|                                            | U.S. GAAP adjustments: |                                                                           |           |           |         |      |           |           |          |   |           |           |         
|                                            |                        |  deferred charges                                                        |           |           | 7,907   |      |           |           | 8,942    |   |           |           | 5,844    |  
|                                            |                        |  Intangible assets                                                       |           |           |        |      |           |           | 3,748    |   |           |           |         |  
|                                            |                        |  nonrefundable activation fees                                           |           |           | 76,131  |      |           |           | 154,618  |   |           |           | 179,638  |  
|                                            |                        |  capital leases                                                          |           |           | 9,287   |      |           |           | 4,676    |   |           |           | 3,062    |  
|                                            |                        |  acquisition cost of equity interest
    in subsidiary                   |           |           | 1,643   |      |           |           |         |   |           |           |         |  
|                                            |                        |  deferred tax adjustments due to
    difference in accounting principles |           |           | 61,637  |      |           |           | 79,616   |   |           |           | 118,837  |  
|                                            |                        |  tax effect of the reconciling items                                     |           |           | (28,140 | )    |           |           | (166,264 | ) |           |           | (149,597 | )
|                                            |                        |                                                                           |           |           |         |      |           |           |          |   |           |          
|                                            | As adjusted            |                                                                           |           | 3,626,855 |         |      |           | 3,778,760 |          |   |           | 3,351,244 |         
|                                            |                        |                                                                           |           |           |         |      |           |           |          |   |           |          
|Total liabilities based on U.S. GAAP        |                        |                                                                           | 7,327,970 |           |         |      | 8,638,976 |           |          |   | 8,415,558 |          
|                                            |                        |                                                                           |           |           |         |      |           |           |          |   |           |          
|Minority interests:                         |                        |                                                                           |           |           |         |      |           |           |          |   |           |          
|                                            | As reported            |                                                                           |           | 704,345   |         |      |           | 725,507   |          |   |           | 155,985   |         
|                                            | U.S. GAAP adjustments: |                                                                           |           |           |         |      |           |           |          |   |           |           |         
|                                            |                        |  deferred charges                                                        |           |           | (428    | )    |           |           |         |   |           |           |         |  
|                                            |                        |  capital lease                                                           |           |           | 577     |      |           |           |         |   |           |           |         |  
|                                            |                        |  capitalization of foreign exchange
    losses                           |           |           | (7,112  | )    |           |           |         |   |           |           |         |  
|                                            |                        |  nonrefundable activation fee                                            |           |           | (9,129  | )    |           |           |         |   |           |           |         |  
|                                            |                        |  tax effect of the reconciling items                                     |           |           | 4,782   |      |           |           |         |   |           |           |         |  
|                                            |                        |  reverse of recovery of impaired
    investment securities               |           |           | (34     | )    |           |           |         |   |           |           |         |  
|                                            |                        |                                                                           |           |           |         |      |           |           |          |   |           |          
|Total minority interests based on U.S. GAAP |                        | W                                                                         | 693,001   |           |         | W    | 725,507   |           |          | W | 155,985   |          
|                                            |                        |                                                                           |           |           |         |      |           |           |          |   |           |          

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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

The following table reconciles cash flows from
operating, investing and financing activities for the years
ended December 31, 2001, 2002 and 2003 under Korean GAAP,
as reported in the consolidated financial statements to cash
flows from operating, investing and financing activities for the
years ended December 31, 2001, 2002 and 2003 under U.S.
GAAP (in millions of Korean won):

|                                                              |                                   |      |            |      |  |      |            |          |   |   |            |         |  
|------------------------------------------------------------- | --------------------------------- | ---- | ---------- | ---- |  | ---- | ---------- | -------- | - | - | ---------- | ------- | -
|                                                              |                                   | 2001 |            | 2002 |  | 2003
|                                                              |                                   |      |            |      |  |     
|Cash flows from operating activities based on
    Korean GAAP |                                   | W    | 2,423,868  |      |  | W    | 4,267,815  |          |   | W | 3,328,770  |        
|Adjustments:                                                  |                                   |      |            |      |  |      |            |          |   |   |            |        
|                                                              | Asset securitization transactions |      |            |     |  |      |            | (558,921 | ) |   |            | (47,496 | )
|                                                              |                                   |      |            |      |  |      |            |          |   |   |            |        
|Cash flows from operating activities based on US
    GAAP     |                                   | W    | 2,423,868  |      |  | W    | 3,708,894  |          |   | W | 3,281,274  |        
|                                                              |                                   |      |            |      |  |      |            |          |   |   |            |        
|Cash flows from investing activities based on
    Korean GAAP |                                   | W    | (1,972,825 | )    |  | W    | (3,063,435 | )        |   | W | (1,414,432 | )      
|Adjustments:                                                  |                                   |      |            |      |  |      |            |          |   |   |            |        
|                                                              | Asset securitization transactions |      |            |     |  |      |            | 68,267   |   |   |            | (8,080  | )
|                                                              |                                   |      |            |      |  |      |            |          |   |   |            |        
|Cash flows from investing activities based on US
    GAAP     |                                   | W    | (1,972,825 | )    |  | W    | (2,995,168 | )        |   | W | (1,422,512 | )      
|                                                              |                                   |      |            |      |  |      |            |          |   |   |            |        
|Cash flows from financing activities based on
    Korean GAAP |                                   | W    | 331,226    |      |  | W    | (1,418,197 | )        |   | W | (2,261,039 | )      
|                                                              | Adjustments:                      |      |            |      |  |      |            |          |   |   |            |         |  
|                                                              | Asset securitization transactions |      |            |     |  |      |            | 490,654  |   |   |            | 55,576  |  
|                                                              |                                   |      |            |      |  |      |            |          |   |   |            |        
|Cash flows from financing activities based on US
    GAAP     |                                   | W    | 331,226    |      |  | W    | (927,543   | )        |   | W | (2,205,463 | )      
|                                                              |                                   |      |            |      |  |      |            |          |   |   |            |        



|    |                                                 
|--- | ------------------------------------------------
|33. | Additional Disclosures Required by
    U.S. GAAP

a. Income
Taxes

Income tax expense under U.S. GAAP for the
years ended December 31, 2001, 2002 and 2003 is as follows
(in millions of Korean won):

|                  |  |                         |         |      |  |      |         |   |  |   |         | 
|----------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | 
|                  |  |                        
|                  |  | Year ended December 31,
|                  |  |                        
|                  |  | 2001                    |         | 2002 |  | 2003
|                  |  |                         |         |      |  |     
|Currently payable |  | W                       | 518,474 |      |  | W    | 616,544 |   |  | W | 668,180 | 
|Deferred          |  |                         | 272,825 |      |  |      | (31,532 | ) |  |   | 143,257 | 
|                  |  |                         |         |      |  |      |         |   |  |   |         | 
|                  |  | W                       | 791,299 |      |  | W    | 585,012 |   |  | W | 811,437 | 
|                  |  |                         |         |      |  |      |         |   |  |   |         | 

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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

The difference between the actual income tax
expense and the tax expense computed by applying the statutory
Korean corporate income tax rates to income before taxes for the
years ended December 31, 2001, 2002 and 2003 is
attributable to the following (in millions of Korean won):

|                                                                                      |  |                         |         |      |  |      |         |   |  |   |         |  
|------------------------------------------------------------------------------------- |  | ----------------------- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                                                      |  |                        
|                                                                                      |  | Year ended December 31,
|                                                                                      |  |                        
|                                                                                      |  | 2001                    |         | 2002 |  | 2003
|                                                                                      |  |                         |         |      |  |     
|Income taxes at statutory income tax rate of 28%
    in 2001 and 27% in 2002 and 2003 |  | W                       | 527,296 |      |  | W    | 518,197 |   |  | W | 776,030 |  
|Resident surtax payable                                                               |  |                         | 52,730  |      |  |      | 51,820  |   |  |   | 77,603  |  
|Tax credit for investments, technology, human
    resource development and others     |  |                         | (86,917 | )    |  |      | (37,309 | ) |  |   | (83,826 | )
|Special surtax for agriculture and fishery
    industries and other                   |  |                         | 10,763  |      |  |      | 11,636  |   |  |   | 13,685  |  
|Goodwill amortization not deductible for tax
    purpose                              |  |                         | 47,758  |      |  |      |        |   |  |   |        |  
|Undistributed earnings of subsidiaries                                                |  |                         | (54,461 | )    |  |      | 12,295  |   |  |   | (5,909  | )
|Effect of change in income tax rate                                                   |  |                         | 13,147  |      |  |      |        |   |  |   | (7,943  | )
|Other permanent differences                                                           |  |                         | 12,352  |      |  |      | 6,714   |   |  |   | 20,719  |  
|Change in valuation allowance                                                         |  |                         | 268,631 |      |  |      | 21,659  |   |  |   | 21,078  |  
|                                                                                      |  |                         |         |      |  |      |         |   |  |   |         |  
|Recorded income taxes                                                                 |  | W                       | 791,299 |      |  | W    | 585,012 |   |  | W | 808,892 |  
|                                                                                      |  |                         |         |      |  |      |         |   |  |   |         |  
|Effective tax rate                                                                    |  |                         | 42.02   | %    |  |      | 30.48   | % |  |   | 28.23   | %
|                                                                                      |  |                         |         |      |  |      |         |   |  |   |         |  

The tax effects of temporary differences that
resulted in the deferred tax assets at December 31, 2001,
2002 and 2003 computed under U.S. GAAP, and a description
of the financial statement items that created these differences
are as follows (in millions of Korean won):

|         |                                 |              |        |        |   |      |        |        |   |   |        |        |  
|-------- | ------------------------------- | ------------ | ------ | ------ | - | ---- | ------ | ------ | - | - | ------ | ------ | -
|         |                                 |             
|         |                                 | December 31,
|         |                                 |             
|         |                                 | 2001         |        | 2002   |   | 2003
|         |                                 |              |        |        |   |     
|Current: |                                 |              |        |        |   |      |        |        |   |   |        |       
|         | Allowance for doubtful accounts |              | W      | 49,967 |   |      | W      | 21,885 |   |   | W      | 22,039 |  
|         | Write-off of doubtful accounts  |              |        | 5,878  |   |      |        | 9,715  |   |   |        | 9,587  |  
|         | Trading securities              |              |        | (635   | ) |      |        |       |   |   |        | 1      |  
|         | Accrued income                  |              |        | (2,292 | ) |      |        | (2,844 | ) |   |        | (2,026 | )
|         | Accrued expenses and other      |              |        | 26,243 |   |      |        | 21,936 |   |   |        | 35,622 |  
|         |                                 |              |        |        |   |      |        |        |   |   |        |       
|         |                                 | W            | 79,161 |        |   | W    | 50,692 |        |   | W | 65,223 |       
|         |                                 |              |        |        |   |      |        |        |   |   |        |       

F-61



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

|                                        |                                                                      |              |         |         |   |      |         |          |   |   |          |          |  
|--------------------------------------- | -------------------------------------------------------------------- | ------------ | ------- | ------- | - | ---- | ------- | -------- | - | - | -------- | -------- | -
|                                        |                                                                      |             
|                                        |                                                                      | December 31,
|                                        |                                                                      |             
|                                        |                                                                      | 2001         |         | 2002    |   | 2003
|                                        |                                                                      |              |         |         |   |     
|Non-current:                            |                                                                      |              |         |         |   |      |         |          |   |   |          |         
|                                        | Depreciation                                                         |              | W       | 16,820  |   |      | W       | 11,732   |   |   | W        | 3,935    |  
|                                        | Loss on impairment and valuation of investment
    securities (note) |              |         | 48,579  |   |      |         | 119,940  |   |   |          | 74,928   |  
|                                        | Foreign exchange losses                                              |              |         | 4,701   |   |      |         | 3,345    |   |   |          | 774      |  
|                                        | Equity in losses (earnings) of affiliates                            |              |         | 950     |   |      |         | (5,090   | ) |   |          | (6,593   | )
|                                        | Undistributed earnings of subsidiaries                               |              |         | (28,532 | ) |      |         | (28,700  | ) |   |          | (3,364   | )
|                                        | Tax free reserve for technology development                          |              |         | (75,685 | ) |      |         | (133,920 | ) |   |          | (182,518 | )
|                                        | Tax free reserve for loss on disposal of treasury
    stock          |              |         | (70,359 | ) |      |         | (64,775  | ) |   |          | (130,373 | )
|                                        | Tax credit carryforwards                                             |              |         | 31,963  |   |      |         |         |   |   |          | 1,162    |  
|                                        | Net operating loss carryforwards                                     |              |         | 3,078   |   |      |         |         |   |   |          |         |  
|                                        | Deferred charges and other                                           |              |         | 19,818  |   |      |         | 79,346   |   |   |          | 46,780   |  
|                                        |                                                                      |              |         |         |   |      |         |          |   |   |          |         
|                                        |                                                                      |              | (48,667 | )       |   |      | (18,122 | )        |   |   | (195,269 | )       
|                                        |                                                                      |              |         |         |   |      |         |          |   |   |          |         
|Total deferred tax assets (liabilities) |                                                                      | W            | 30,494  |         |   | W    | 32,570  |          |   | W | (130,046 | )       
|                                        |                                                                      |              |         |         |   |      |         |          |   |   |          |         



---



|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(note) | As of December 31, 2001 and 2002, unrealized
    loss on valuation of investment securities has been recorded as
    a separate component of shareholders equity, net of tax
    effect of W 22,510 million and
    W 691 million, respectively, and unrealized gain on
    valuation of investment securities as of December 31, 2003
    was recorded as a separate component of shareholders
    equity, net of tax effect of W 18,287 million.



|   |                                        
|-- | ---------------------------------------
|b. | Fair Value of Financial
    Instruments

The following methods and assumptions were used
to estimate the fair value of each class of financial
instruments as of December 31, 2001, 2002 and 2003 for
which it is practicable to estimate that value:



| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | Cash and Cash Equivalents, Accounts Receivable
    (trade and other), Short-Term Loans, Accounts Payable and
    Short-term Borrowings

The carrying amount approximates fair value
because of the short maturity of those instruments.



| |                                                           
| | ----------------------------------------------------------
| | Trading Securities and Long-term Investment
    Securities

For investments in non-listed companies
stock, a reasonable estimate of fair value could not be made
without incurring excessive costs. Additional information
pertinent to these investments is provided in Note 3. The
fair value of investments in listed companies stock,
public bonds, and other marketable securities are estimated
based on quoted market prices for those or similar investments.



| |                        
| | -----------------------
| | Long-Term Bank Deposits

The carrying amount approximates fair value as
such long-term bank deposits bear interest rates currently
available for similar deposits.



| |                
| | ---------------
| | Long-Term Loans

The fair value of long-term loans is estimated by
discounting the future cash flows using the current interest
rate of time deposits with similar maturities.

F-62



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)



| |                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------
| | Bonds Payable, Bonds with Stock Warrant,
    Long-Term Borrowings, Long-Term Payable  Other and
    Obligation under Capital Leases

The fair value of these liabilities is estimated
based on the quoted market prices for the same or similar issues
or on the current interest rates offered for debt of the same
remaining maturities.

The following summarizes the carrying amounts and
fair values of financial instruments as of December 31,
2001, 2002 and 2003 (in millions of Korean won):

|                       |                                                                                                                                        |                         |           |            |         |          |   |            |         |          |           |            |         |  |   |           |         |   |           |           |         |  |   |           |         | 
|---------------------- | -------------------------------------------------------------------------------------------------------------------------------------- | ----------------------- | --------- | ---------- | ------- | -------- | - | ---------- | ------- | -------- | --------- | ---------- | ------- |  | - | --------- | ------- | - | --------- | --------- | ------- |  | - | --------- | ------- | 
|                       |                                                                                                                                        |                         |           |            |         |         
|                       |                                                                                                                                        | 2001                    |           | 2002       |         | 2003    
|                       |                                                                                                                                        |                         |           |            |         |         
|                       |                                                                                                                                        | Carrying                |           |            |         | Carrying |   |            |         | Carrying |           |           
|                       |                                                                                                                                        | amount                  |           |            |         | amount   |   |            |         | amount   |           |           
|                       |                                                                                                                                        | (note a)                |           | Fair value |         | (note a) |   | Fair value |         | (note a) |           | Fair Value
|                       |                                                                                                                                        |                         |           |            |         |          |   |            |         |          |           |           
|Financial assets:      |                                                                                                                                        |                         |           |            |         |          |   |            |         |          |           |            |         |  |   |           |         |   |           |           |         |  |   |          
|                       | Cash and cash equivalents and short-term
    financial instruments                                                                     |                         | W         | 1,298,199  |         |          | W | 1,298,199  |         |          | W         | 867,022    |         |  | W | 867,022   |         |   | W         | 472,410   |         |  | W | 472,410   |        
|                       | Trading securities                                                                                                                     |                         |           | 637,530    |         |          |   | 637,530    |         |          |           | 754,219    |         |  |   | 754,219   |         |   |           | 893,217   |         |  |   | 893,217   |        
|                       | Accounts receivable (trade and other)                                                                                                  |                         |           | 2,277,716  |         |          |   | 2,277,716  |         |          |           | 2,877,750  |         |  |   | 2,877,750 |         |   |           | 3,000,918 |         |  |   | 3,000,918 |        
|                       | Short-term loans                                                                                                                       |                         |           | 9,215      |         |          |   | 9,215      |         |          |           | 18,296     |         |  |   | 18,296    |         |   |           | 41,933    |         |  |   | 41,933    |        
|                       | Investment securities:                                                                                                                 |                         |           |            |         |          |   |            |         |          |           |            |         |  |   |           |         |   |           |           |         |  |   |           |        
|                       |                                                                                                                                        | Listed equity and debts |           |            | 143,261 |          |   |            | 143,261 |          |           |            | 852,861 |  |   |           | 852,861 |   |           |           | 503,000 |  |   |           | 503,000 | 
|                       |                                                                                                                                        | Non-listed equity       |           |            | 354,090 |          |   |            | N/A     |          |           |            | 543,836 |  |   |           | N/A     |   |           |           | 385,707 |  |   |           | N/A     | 
|                       | Long-term bank deposits                                                                                                                |                         |           | 77         |         |          |   | 77         |         |          |           | 177        |         |  |   | 177       |         |   |           | 352       |         |  |   | 352       |        
|                       | Long-term loans                                                                                                                        |                         |           | 25,138     |         |          |   | 18,853     |         |          |           | 12,905     |         |  |   | 9,679     |         |   |           | 13,947    |         |  |   | 10,460    |        
|                       |                                                                                                                                        |                         |           |            |         |          |   |            |         |          |           |            |         |  |   |           |         |   |           |           |         |  |   |          
|                       |                                                                                                                                        | W                       | 4,745,226 |            |         |          |   |            |         | W        | 5,927,066 |            |         |  |   |           |         | W | 5,311,484 |           |         |  |   |          
|                       |                                                                                                                                        |                         |           |            |         |          |   |            |         |          |           |            |         |  |   |           |         |   |           |           |         |  |   |          
|Financial liabilities: |                                                                                                                                        |                         |           |            |         |          |   |            |         |          |           |            |         |  |   |           |         |   |           |           |         |  |   |          
|                       | Accounts payable                                                                                                                       |                         | W         | 1,035,197  |         |          | W | 1,035,197  |         |          | W         | 1,697,502  |         |  | W | 1,697,502 |         |   | W         | 1,317,162 |         |  | W | 1,317,162 |        
|                       | Short-term borrowings                                                                                                                  |                         |           | 1,167,348  |         |          |   | 1,167,348  |         |          |           | 1,177,950  |         |  |   | 1,177,950 |         |   |           | 1,236,197 |         |  |   | 1,236,197 |        
|                       | Bonds payable, long-term borrowings, long-term
    payables  other and obligation under capital leases,
    including current portion |                         |           | 4,031,251  |         |          |   | 4,068,192  |         |          |           | 4,413,130  |         |  |   | 4,704,752 |         |   |           | 4,201,707 |         |  |   | 4,283,402 |        
|                       |                                                                                                                                        |                         |           |            |         |          |   |            |         |          |           |            |         |  |   |           |         |   |           |           |         |  |   |          
|                       |                                                                                                                                        | W                       | 6,233,796 |            |         |          |   |            |         | W        | 7,288,582 |            |         |  |   |           |         | W | 6,755,066 |           |         |  |   |          
|                       |                                                                                                                                        |                         |           |            |         |          |   |            |         |          |           |            |         |  |   |           |         |   |           |           |         |  |   |          



---



|         |                                                                             
|-------- | ----------------------------------------------------------------------------
|(note a) | These carrying amounts represent the amounts
    determined under U.S. GAAP.



|   |                           
|-- | --------------------------
|c. | Revenue Recognition Policy

The revenues of the Company and its subsidiaries
are principally derived from telecommunication service revenue
and telephone sales. Telecommunication service consists of fixed
monthly charges, usage-related charges and non-refundable
activation fees. Fixed monthly charges are recognized in the
period earned. Usage-related charges are recognized at the time
services are rendered. Non-refundable activation fees and costs
are deferred and amortized over the expected term of the
customer relationship.

The Companys subsidiaries also sell
telephones to customers and telephone sales are recognized at
the time products are delivered.

F-63



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)



|   |                     
|-- | --------------------
|d. | Comprehensive Income

Comprehensive income for the years ended
December 31, 2001, 2002 and 2003 is as follows (in millions
of Korean won):

|                                 |                                                  |      |           |        |   |      |           |        |  |   |           |        |  
|-------------------------------- | ------------------------------------------------ | ---- | --------- | ------ | - | ---- | --------- | ------ |  | - | --------- | ------ | -
|                                 |                                                  | 2001 |           | 2002   |   | 2003
|                                 |                                                  |      |           |        |   |     
|Net income                       |                                                  | W    | 1,111,596 |        |   | W    | 1,301,126 |        |  | W | 2,062,749 |       
|                                 |                                                  |      |           |        |   |      |           |        |  |   |           |       
|Other comprehensive income:      |                                                  |      |           |        |   |      |           |        |  |   |           |       
|                                 | Unrealized gain on investment securities         |      |           | 34,704 |   |      |           | 51,644 |  |   |           | 50,033 |  
|                                 | Foreign-based operations translation adjustments |      |           | (3,839 | ) |      |           | 2,809  |  |   |           | (356   | )
|                                 |                                                  |      |           |        |   |      |           |        |  |   |           |       
|Total other comprehensive income |                                                  |      | 30,865    |        |   |      | 54,453    |        |  |   | 49,677    |       
|                                 |                                                  |      |           |        |   |      |           |        |  |   |           |       
|Comprehensive income             |                                                  | W    | 1,142,461 |        |   | W    | 1,355,579 |        |  | W | 2,112,426 |       
|                                 |                                                  |      |           |        |   |      |           |        |  |   |           |       



|   |                                         
|-- | ----------------------------------------
|e. | Goodwill and Other Intangible
    Assets

On January 1, 2002, the Company adopted
SFAS No. 142, Goodwill and Other Intangible
Assets. Under SFAS No. 142, goodwill and intangible
assets with indefinite lives are no longer amortized, however,
they will be subject to periodic impairment tests as prescribed
by the Statement and intangible assets that do not have
indefinite lives are amortized over their useful lives. The
following tables present the impact of SFAS No. 142 on
reported net income and earnings per share had the standard been
in effect for the year ended December 31, 2001 (in millions
of Korean won, except per share amount):

|                                                 |                       |   |           |         | 
|------------------------------------------------ | --------------------- | - | --------- | ------- | 
|Reported net income                              |                       | W | 1,111,596 |        
|                                                 | Goodwill amortization |   |           | 151,911 | 
|                                                 |                       |   |           |        
|Adjusted net income                              |                       | W | 1,263,507 |        
|                                                 |                       |   |           |        
|Basic earnings per common share                  |                       | W | 12,844    |        
|                                                 | Goodwill amortization |   |           | 1,755   | 
|                                                 |                       |   |           |        
|Adjusted earnings per common share 
    basic   |                       | W | 14,599    |        
|                                                 |                       |   |           |        
|Diluted earnings per common share                |                       | W | 12,844    |        
|                                                 | Goodwill amortization |   |           | 1,755   | 
|                                                 |                       |   |           |        
|Adjusted earnings per common share 
    diluted |                       | W | 14,599    |        
|                                                 |                       |   |           |        



| |         
| | --------
| | Goodwill

Changes in the carrying amount of goodwill under
U.S. GAAP for the years ended December 31, 2002 and
2003 are as follows (in millions of Korean won):

|                    |                                                            |      |           |         |  |   |           |         |  
|------------------- | ---------------------------------------------------------- | ---- | --------- | ------- |  | - | --------- | ------- | -
|                    |                                                            | 2002 |           | 2003   
|                    |                                                            |      |           |        
|Beginning of period |                                                            | W    | 2,833,752 |         |  | W | 3,400,110 |        
|                    | Goodwill reclassifications to other intangibles
    assets |      |           |        |  |   |           | (16,437 | )
|                    | Goodwill acquired during the period                        |      |           | 566,358 |  |   |           | 16,482  |  
|                    | Goodwill impairment losses under
    SFAS No. 142          |      |           |        |  |   |           |        |  
|                    |                                                            |      |           |         |  |   |           |        
|Ending of period    |                                                            | W    | 3,400,110 |         |  | W | 3,400,155 |        
|                    |                                                            |      |           |         |  |   |           |        

F-64



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)



| |                        
| | -----------------------
| | Other Intangible Assets

The major components and average useful lives of
our other acquired intangible assets under U.S. GAAP are as
follows (in millions of Korean won):

|                             |                          |                   |           |                   |  |                   |          |              |   |          |           |              |  |   |          |          |   |   |           |           |  |   |          |          |  
|---------------------------- | ------------------------ | ----------------- | --------- | ----------------- |  | ----------------- | -------- | ------------ | - | -------- | --------- | ------------ |  | - | -------- | -------- | - | - | --------- | --------- |  | - | -------- | -------- | -
|                             |                          |                   |           |                   |  |                  
|                             |                          | December 31, 2001 |           | December 31, 2002 |  | December 31, 2003
|                             |                          |                   |           |                   |  |                  
|                             |                          | Gross             |           |                   |  | Gross             |          |              |   | Gross    |           |             
|                             |                          | carrying          |           | Accumulated       |  | carrying          |          | Accumulated  |   | carrying |           | Accumulated 
|                             |                          | amount            |           | Amortization      |  | amount            |          | Amortization |   | amount   |           | Amortization
|                             |                          |                   |           |                   |  |                   |          |              |   |          |           |             
|Amortized intangible assets: |                          |                   |           |                   |  |                   |          |              |   |          |           |              |  |   |          |          |   |   |           |           |  |   |          |         
|                             | IMT license (13 years)   |                   | W         | 1,300,000         |  |                   | W        |             |   |          | W         | 1,189,881    |  |   | W        |         |   |   | W         | 1,188,547 |  |   | W        | (7,548   | )
|                             | Customer lists (4 years) |                   |           | 56,013            |  |                   |          | (14,196      | ) |          |           | 99,783       |  |   |          | (39,142  | ) |   |           | 99,783    |  |   |          | (64,088  | )
|                             | Other (5 to 20 years)    |                   |           | 258,775           |  |                   |          | (114,898     | ) |          |           | 344,708      |  |   |          | (158,248 | ) |   |           | 552,279   |  |   |          | (258,802 | )
|                             |                          |                   |           |                   |  |                   |          |              |   |          |           |              |  |   |          |          |   |   |           |           |  |   |          |         
|Total                        |                          | W                 | 1,614,788 |                   |  | W                 | (129,094 | )            |   | W        | 1,634,372 |              |  | W | (197,390 | )        |   | W | 1,840,609 |           |  | W | (330,438 | )       
|                             |                          |                   |           |                   |  |                   |          |              |   |          |           |              |  |   |          |          |   |   |           |           |  |   |          |         

Intangible asset amortization expense for the
years ended December 31, 2002 and 2003 was
W 62,037 million and W 103,914 million,
respectively. It is estimated to be W 217,056 million,
W 187,534 million, W 160,460 million,
W 152,314 million and W 134,154 million for
the years ending December 31, 2004, 2005, 2006, 2007 and
2008, respectively, primarily related to the IMT license,
customer lists and other.



|   |                         
|-- | ------------------------
|f. | Other SK Group Companies

As described in Note 1, the Company is one
of the SK Group affiliated companies. In early March 2003, the
Prosecutors Office of the Republic of Korea filed charges
against several SK Group executives for alleged accounting
irregularities at SK Networks Co., Ltd. (SK
Networks, formerly SK Global Co., Ltd.), and other alleged
illegal transactions among certain SK Group affiliated
companies. As a result of these charges, there are several legal
actions against certain SK Group affiliated companies. On
March 19, 2003, SK Networks was classified as a
financially distressed company in accordance with
the Corporate Restructuring Promotion Law of the Republic of
Korea. Subsequent to this classification, there has been a
restructuring, including cash buy-out of certain debt at less
than face value and a management change, among the creditors of
SK Networks and certain of its affiliates. In addition, SK
Networks retired all common shares which SK Corporation
owned and, on October 27, 2003, SK Corporation purchased
new common shares of SK Networks in the amount of
approximately $718.5 million, which have a certain disposal
restriction. As of December 31, 2003 and for the year then
ended, the Company and its subsidiaries had certain related
party balances or transactions with SK Networks as disclosed in
Note 23. In addition, SK Shipping Co., Ltd., another SK
group affiliated company, was alleged to have been involved in
illegal transactions, which were investigated by Korean
governmental agencies, and resulted in taxes, monetary penalties
and other sanctions imposed in 2003. As of December 31,
2003 and for the year then ended, the Company and its subsidiary
had no significant related party balances or transactions with
SK Shipping Co., Ltd.. Management of the Company believes that
those legal matters will not have a material adverse effect on
the Company and its subsidiaries financial position,
operating results, or liquidity.



|   |        
|-- | -------
|g. | Segment

The Company has one reportable segment, cellular
telephone communication service and all goodwill has been
allocated to this segment.



|   |                              
|-- | -----------------------------
|h. | New Accounting Pronouncements

On January 1, 2003, the Company adopted
SFAS No. 143, Accounting for Asset Retirement
Obligations. This statement addresses accounting for the
cost of legal obligations associated with the

F-65



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

retirement of long-lived assets.
SFAS No. 143 requires that companies recognize the
fair value of a liability for asset retirement obligations in
the period in which the obligations are incurred and that such
amount be capitalized as part of the book value of the
long-lived asset. The Company has determined that it does not
have a material legal obligation to remove long-lived assets as
described by this statement. The adoption of
SFAS No. 143 did not have a significant impact on its
consolidated financial position or results of operations.

On January 1, 2003, the Company adopted
SFAS No. 146 Accounting for Costs Associated
with Exit or Disposal Activities. This statement nullifies
Emerging Issues Task Force (EITF) Issue No. 94-3,
Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring). This statement
requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred
rather than the date of an entitys commitment to an exit
plan. The adoption of SFAS No. 146 did not have a
significant impact on its consolidated financial position or
results of operations.

In November 2002, the FASB issued Interpretation
No. 45 (FIN 45) 
Guarantors Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of
Others. FIN 45 elaborates on the disclosures to be
made by a guarantor about its obligations under certain
guarantees issued. It also clarifies that a guarantor is
required to recognize, at the inception of certain guarantees, a
liability for the fair value of the obligation undertaken in
issuing the guarantee. The initial recognition and measurement
provisions of FIN 45 apply on a prospective basis to
guarantees issued or modified after December 31, 2002. The
disclosures are effective for the Companys annual
financial statements for the year ended December 31, 2002.
The adoption of this Interpretation did not have a significant
impact on the Companys consolidation financial position or
results of operations.

On January 17, 2003, the FASB issued
Interpretation No. 46 (FIN 46) 
Consolidation of Variable Interest Entities, which
addresses consolidation by business enterprises where equity
investors do not bear the residual economic risks and rewards.
These entities have been commonly referred to as Special
purpose entities (SPEs). The underlying
principle behind the new Interpretation is that if a business
enterprise has the majority financial interest in an entity,
which is defined in the guidance as a variable interest entity,
the assets, liabilities and results of the activities of the
variable interest entity should be included in the consolidated
financial statements with those of the business enterprise. The
Interpretation also explains how to identify variable interest
entities and how an enterprise should assess its interest in an
entity when deciding whether or not it will consolidate that
entity. In December 2003, the FASB released a revision of FIN
No. 46 (FIN No. 46R) in which the
calculation of expected losses and expected residual returns
have been altered to reduce the impact of decision maker and
guarantor fees. In addition, FIN No. 46R changes the
definition of a variable interest. The Company as a foreign
private issuer is required to apply either FIN 46 or
FIN 46R to variable interest entities (VIEs)
created after January 31, 2003. The Company is also
required to apply FIN 46R to the VIEs which existed prior
to February 1, 2003 in 2004. Certain special purpose
companies (SPC) established by the Company, have been
consolidated from the date of their establishment (see
Note 32-(q)). There is an entity created before
February 1, 2003, other than the aforementioned
consolidated SPCs, for which is reasonably possible that the
Company will be deemed a primary beneficiary upon the
application of FIN 46R to the entity in 2004. It is a joint
venture established to operate wireless telecommunication
services in a country outside of Korea. With respect to the
Companys involvement in the entity, the Companys
maximum exposure to loss was approximately
W 26.6 billion as of December 31, 2003. The
Company has not completed the evaluation of the effect of the
application of FIN No. 46R in 2004.

In April 30, 2003, the FASB issued Statement
No. 149  Amendment of Statement 133
on Derivative Instruments and Hedging Activities. The
statements amends and clarifies accounting for derivative
instruments, including certain derivative instruments embedded
in other contracts, and for hedging activities under
Statement 133. The new guidance amends Statement 133
regarding implementation issues raised in relation to the
application of the definition of a derivative, particularly
regarding the meaning of an underlying

F-66



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##### Table of Contents



SK TELECOM CO., LTD. AND
SUBSIDIARIES


NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS   (Continued)

and the characteristics of a derivative that
contains financing components. The amendments set forth in
SFAS No. 149 improve financial reporting by requiring
that contracts with comparable characteristics be accounted for
similarly. In particular, this statement clarifies under what
circumstances a contract with an initial net investment meets
the characteristic of a derivative as discussed in
SFAS No. 133. In addition, it clarifies when a
derivative contains a financing component that warrants special
reporting in the statement of the statement of cash flows. The
adoption of SFAS No. 149 did not have a significant
impact on its consolidated financial position or results of
operations.

On May 15, 2003, the FASB has issued
Statement No. 150  Accounting for Certain
Financial Instruments with Characteristics of both Liabilities
and Equity. The Standard improves the accounting for
certain financial instruments that, under previous guidance,
issuers could account for as equity. The new statement requires
that the following instruments be classified as liabilities in
statements of financial position. One type of instrument is
mandatory redeemable stock, which the issuing company is
obligated to buy back in exchange for cash or other assets. A
second type of instrument, which includes put options and
forward purchase contracts, involves instruments that do or may
require the issuer to buy back some of its shares in exchange
for cash or other assets. The third type of instrument that is
considered a liability under this statement is obligation that
can be settled with variable number of its equity shares, the
monetary value of which is fixed or tied solely or predominantly
to a variable such as a market index, or varies inversely with
the value of the issuers shares. The statement does not
apply to features embedded in a financial instrument that is not
a derivative in its entirety. In addition to its requirements
for the classification and measurement of financial instruments
in its scope, SFAS No. 150 also requires disclosures
about alternative ways of settling the instruments and the
capital structure of entities, all of whose shares are mandatory
redeemable. Most of the guidance in this statement is effective
for all financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning
of the first interim period beginning after June 15, 2003.
The adoption of SFAS No. 150 had no significant impact on
its consolidation financial position or results of operations.

F-67



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|         |         
|-------- | --------
|Item. 19 | Exhibits

|        |    |             |  |                                                                                                                                                                                         
|------- | -- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    | Description
|        |    |            
|        | 1  | .1          |  | Articles of Incorporation, as amended and
    restated (English translation)*                                                                                                           
|        | 4  | .1          |  | Telecommunications Basic Law of 1983, as amended
    (English translation)**                                                                                                            
|        | 4  | .2          |  | Enforcement Decree of the Telecommunications
    Basic Law, as amended (English translation)**                                                                                          
|        | 4  | .3          |  | Telecommunications Business Law of 1983, as
    amended (English translation)**                                                                                                         
|        | 4  | .4          |  | Enforcement Decree of the Telecommunications
    Business Law (together with English translation) (Incorporated
    by reference herein from our Form 20-F filed on
    July 2, 2001)   
|        | 4  | .5          |  | Amendment to Telecommunications Business Law of
    1983 dated February 9, 2004 (English translation)*                                                                                  
|        | 4  | .6          |  | Korean Commercial Code (together with English
    translation) (Incorporated by reference herein from our
    Form 20-F filed on June 30, 2000)                                         
|        | 4  | .7          |  | Amendment to Korean Commercial Code dated
    December 29, 2001 (together with English translation)
    (Incorporated by reference herein from our Form 20-F filed
    on June 28, 2002)
|        | 4  | .8          |  | Korean Securities and Exchange Act, as amended
    (together with English translation) (Incorporated by reference
    herein from our Form 20-F filed on June 28, 2002)                
|        | 11 | .1          |  | Code of Ethics of SK Telecom Co., Ltd.*                                                                                                                                                 
|        | 12 | .1          |  | Certification of Principal Executive Officer
    Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*                                                                             
|        | 12 | .2          |  | Certification of Principal Financial Officer
    Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*                                                                             
|        | 13 | .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 2002*                          
|        | 13 | .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 2002*                          
|        | 99 | .1          |  | Consent of Deloitte & Touche LLC (Hana)*                                                                                                                                                
|        | 99 | .2          |  | Consent of Young Wha Corporation*                                                                                                                                                       



---



|  |                
|- | ---------------
|* | Filed herewith.



|   |                                                                         
|-- | ------------------------------------------------------------------------
|** | Filed previously as exhibits to our
    Form 20-F filed on June 3, 2003.

E-1



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##### Table of Contents



SIGNATURES

The registrant hereby certifies that it meets all
of the requirements for filing on Form 20-F and that it has
duly caused and authorized the undersigned to sign this annual
report on its behalf.



| |                     
| | --------------------
| | SK TELECOM CO., LTD.



| |     |                 
| | --- | ----------------
| | By: | /s/ SHIN BAE KIM

| |                   
| | ------------------
| |                   
| | Name: Shin Bae Kim

| |        |                        
| | ------ | -----------------------
| | Title: | Chief Executive Officer

Date: May 31, 2004