##### Table of Contents

**As filed with the Securities and Exchange Commission on April 30, 2012**

 

 

 

 

**UNITED STATES SECURITIES ANDEXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**
 
**

**Form 20-F**

 

**
 
**

(Mark One) 

**OR**

 

 

**OR**

 

**OR**

 

**Date of event requiring this shell company report**

**For the transition period from             to             **

**Commission file number 1-14418**

**SK Telecom Co., Ltd.**

*(Exact name of Registrant as specified in itscharter)*

 

**
 
**

**SK Telecom Co., Ltd.**

*(Translation of Registrant’s name into English)*

**The Republic ofKorea**

*(Jurisdiction of incorporation or organization)*

**SK T-Tower**

**11, Euljiro 2-Ga, Jung-gu, Seoul, Korea**

*(Address of principal executive offices)*

**Mr. Won Tuh Chung**

**11, Euljiro 2-Ga, Jung-gu, Seoul, Korea**

**Telephone No.: 82-2-6100-2114**

**Facsimile No.: 82-2-6100-7830**

*(Name, telephone, email and/or facsimile number and address of company contact person)*

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

 

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

**Securities registered or to be registered pursuant to Section 12(g) of the Act. None**

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

**None**

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

**69,694,999 shares of common stock, par value**(Won)******500 per share (notincluding 11,050,712 shares of common stock held by the company as treasury shares)**

Indicate by check mark if theregistrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. **    Yes  **þ******    No  ** ̈********

If this report is an annual or transition report, indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.**    Yes  ** ̈******    No  **þ********

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities 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.**    Yes  **þ******    No  ** ̈********

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every InteractiveData File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).**    Yes  ** ̈******    No  ** ̈********

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. Seedefinition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one): 

**Large accelerated filer  **þ******            Accelerated filer  ** ̈******            Non-accelerated filer  ** ̈********

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: 

**U.S. GAAP  ** ̈******            IFRS  **þ******            Other  ** ̈********

Indicate by check mark which financial statement item the registranthas elected to follow. **Item 17  ** ̈******Item 18  **þ********

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). **    Yes  ** ̈******    No  **þ********

 

 

 

 

Table of Contents
**TABLE OF CONTENTS**

 
   **Page** 
CERTAIN DEFINED TERMS AND CONVENTIONS USED IN THIS REPORT
   1  
FORWARD-LOOKING STATEMENTS
   2  
PART I
   4  
Item 1.
 
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
   4  
Item 1.A.
 
Directors and Senior Management
   4  
Item 1.B.
 
Advisers
   4  
Item 1.C.
 
Auditors
   4  
Item 2.
 
OFFER STATISTICS AND EXPECTED TIMETABLE
   4  
Item 3.
 
KEY INFORMATION
   4  
Item 3.A.
 
Selected Financial Data
   4  
Item 3.B.
 
Capitalization and Indebtedness
   7  
Item 3.C.
 
Reasons for the Offer and Use of Proceeds
   7  
Item 3.D.
 
Risk Factors
   7  
Item 4.
 
INFORMATION ON THE COMPANY
   22  
Item 4.A.
 
History and Development of the Company
   22  
Item 4.B.
 
Business Overview
   25  
Item 4.C.
 
Organizational Structure
   49  
Item 4.D.
 
Property, Plants and Equipment
   50  
Item 4A.
 
UNRESOLVED STAFF COMMENTS
   50  
Item 5.
 
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
   50  
Item 5.A.
 
Operating Results
   51  
Item 5.B.
 
Liquidity and Capital Resources
   56  
Item 5.C.
 
Research and Development, Patents and Licenses, etc.
   65  
Item 5.D.
 
Trend Information
   66  
Item 5.E.
 
Off-Balance Sheet Arrangements
   66  
Item 5.F.
 
Tabular Disclosure of Contractual Obligations
   66  
Item 5.G.
 
Safe Harbor
   67  
Item 6.
 
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
   67  
Item 6.A.
 
Directors and Senior Management
   67  
Item 6.B.
 
Compensation
   68  
Item 6.C.
 
Board Practices
   69  
Item 6.D.
 
Employees
   70  
Item 6.E.
 
Share Ownership
   71  
Item 7.
 
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
   71  
Item 7.A.
 
Major Shareholders
   71  
Item 7.B.
 
Related Party Transactions
   73  
Item 7.C.
 
Interests of Experts and Counsel
   73  
Item 8.
 
FINANCIAL INFORMATION
   73  
Item 8.A.
 
Consolidated Statements and Other Financial Information
   73  
Item 8.B.
 
Significant Changes
   76  
Item 9.
 
THE OFFER AND LISTING
   76  
Item 9.A.
 
Offering and Listing Details
   76  
Item 9.B.
 
Plan of Distribution
   76  
Item 9.C.
 
Markets
   76  
Item 9.D.
 
Selling Shareholders
   83  
Item 9.E.
 
Dilution
   83  
Item 9.F.
 
Expenses of the Issue
   83  
 
(i)

Table of Contents   **Page** 
Item 10.
 
ADDITIONAL INFORMATION
   83  
Item 10.A.
 
Share Capital
   83  
Item 10.B.
 
Memorandum and Articles of Incorporation
   83  
Item 10.C.
 
Material Contracts
   96  
Item 10.D.
 
Exchange Controls
   96  
Item 10.E.
 
Taxation
   100  
Item 10.F.
 
Dividends and Paying Agents
   104  
Item 10.G.
 
Statements by Experts
   104  
Item 10.H.
 
Documents on Display
   104  
Item 10.I.
 
Subsidiary Information
   104  
Item 11.
 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   104  
Item 12.
 
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
   106  
Item 12.A.
 
Debt Securities
   106  
Item 12.B.
 
Warrants and Rights
   106  
Item 12.C.
 
Other Securities
   106  
Item 12.D.
 
American Depositary Shares
   106  
PART II
   107  
Item 13.
 
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
   107  
Item 14.
 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS   107  
Item 15.
 
CONTROLS AND PROCEDURES
   107  
Item 16.
 
[RESERVED]
   108  
Item 16A.
 
AUDIT COMMITTEE FINANCIAL EXPERT
   108  
Item 16B.
 
CODE OF ETHICS
   108  
Item 16C.
 
PRINCIPAL ACCOUNTANT FEES AND SERVICES
   108  
Item 16D.
 EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES   109  
Item 16E.
 PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS   109  
Item 16F.
 
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
   109  
Item 16G.
 
CORPORATE GOVERNANCE
   110  
Item 16H.
 
MINE SAFETY DISCLOSURE 
   110  
PART III
   111  
Item 17.
 
FINANCIAL STATEMENTS
   111  
Item 18.
 
FINANCIAL STATEMENTS
   111  
Item 19.
 
EXHIBITS
   111  
EX-1.1 
   
EX-8.1 
   
EX-12.1 
   
EX-12.2 
   
EX-13.1 
   
EX-13.2 
   
EX-15.3 
   
EX-15.4 
   
 
(ii)

Table of Contents
**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, unless the context otherwise requires, itsconsolidated 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. 

All references to “KHz” contained in this report shall mean kilohertz, a unit of frequency denoting one thousand cycles persecond, 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 onebillion 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 inany table between totals and the sums of the amounts listed are due to rounding. 

In this report, we refer to the latestgeneration technologies as “3G” technology, “3.5G” technology and “4G” technology. Second generation, or 2G, technology was designed primarily with voice communications in mind. On the other hand, 3G and 3.5Gtechnologies are designed to transfer both voice data and non-voice, or multimedia, data, generally at faster transmission speeds than was previously possible. 4G technology is designed to transfer both voice data and non-voice data at fastertransmission speeds than 3G or 3.5G technology. 

All references to “Won”, “(Won)” or “(Won)” inthis report are to the currency of Korea, all references to “Dollars”, “$” or “US$” are to the currency of the United States of America, all references to “Yen” or “¥” are to the currency ofJapan and all references to “SGD” or “SG$” are to the currency of Singapore. 

Pursuant to an amendment tothe Government Organization Act, effective as of February 29, 2008, the Ministry of Information and Communication, or “MIC”, has become the Ministry of Knowledge Economy and functions formerly performed by the MIC are now performedseparately by the Ministry of Knowledge Economy, the Ministry of Culture, Sports and Tourism, the Ministry of Public Administration and Security, and, particularly, the Korea Communications Commission, or the “KCC”. In this report, werefer to the MIC as the relevant governmental authority in connection with any approval granted or action taken by the MIC prior to such amendment to the Government Organization Act and to such other relevant governmental authority in connectionwith any approval granted or action taken by such other relevant governmental authority subsequent to such amendment. 

Thefinancial statements included in this annual report are prepared in accordance with International Financial Reporting Standards, or “IFRS”, as issued by the International Accounting Standards Board, or “IASB”. As such, we make anexplicit and unreserved statement of compliance with IFRS, as issued by the IASB, with respect to our consolidated financial statements as of and for the years ended December 31, 2010 and 2011 included in this annual report. Unless indicatedotherwise, the financial information in this annual report as of and for the years ended December 31, 2010 and 2011 has been prepared in accordance with IFRS as issued by the IASB. 

In accordance with rule amendments adopted by the U.S. Securities and Exchange Commission, or the “SEC”, which became effectiveon March 4, 2008, we are not required to provide a reconciliation to U.S. GAAP. Furthermore, pursuant to the transitional relief granted by the SEC in respect of the first-time application of IFRS, no audited financial statements and financialinformation prepared under IFRS for the year ended December 31, 2009 have been included in this annual report. 

Theconsolidated financial statements included in our annual reports on Form 20-F previously filed with the SEC in respect of the years ended December 31, 2001 to December 31, 2010 were prepared in accordance with generally accepted accountingprinciples in Korea, or “Korean GAAP”, which is not comparable to information prepared in accordance with IFRS. For additional information, please refer to our annual reports on Form 20-F previously filed with the SEC. For an explanationof how the transition to IFRS has affected our consolidated financial statements, see note 3 of the notes to our financial statements. 

Unless expressly stated otherwise, all financial data included in this annual report are presented on a consolidated basis. 

 
1 

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Unless otherwise indicated, translations of Won amounts into Dollars in this report weremade 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 (the “noon buying rate”) in effect on December 30, 2011, which wasWon 1,158.5 to US$1.00. On April 20, 2012, the noon buying rate was Won 1,138.1 to US$1.00. See “Item 3.A. Selected Financial Data — Exchange Rates”. 

**FORWARD-LOOKING STATEMENTS**

This report contains “forward-looking statements”, as defined in Section 27A of the U.S. Securities Act of 1933, as amended, or the Securities Act, and Section 21E of theU.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, that are based on our current expectations, assumptions, estimates and projections about our company and our industry. The forward-looking statements are subject to variousrisks 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 “may”, “might”, “should” or“could” occur, be taken or be achieved. 

Forward-looking statements in this annual report include, but are notlimited to, statements about the following: 

 
 • 
our ability to anticipate and respond to various competitive factors affecting the wireless telecommunications industry, including new services thatmay be introduced, changes in consumer preferences, economic conditions and discount pricing strategies by competitors; 

 
 • 
our implementation of high-speed downlink packet access, or HSDPA, technology, high-speed uplink packet access, or HSUPA, technology, evolvedhigh-speed uplink packet access, or HSPA+, technology, wireless broadband Internet, or WiBro, technology and long term evolution, or LTE, technology; 

 
 • 
our plans for capital expenditures in 2012 for a range of projects, including investments in our backbone networks, investments to improve our WCDMAnetwork-based products and services, investments to build our LTE network, investments in our wireless Internet-related and convergence businesses and funding for mid- to long-term research and development projects, as well as other initiatives,primarily related to our ongoing businesses and in the ordinary course; 

 
 • 
our efforts to make significant investments to build, develop and broaden our businesses, including developing and providing wireless data, multimedia,mobile commerce and Internet services; 

 
 • 
our ability to comply with governmental rules and regulations, including the regulations of the KCC related to telecommunications providers, rulesrelated to our status as a “market-dominating business entity” under the Korean Monopoly Regulation and Fair Trade Act, or the Fair Trade Act, and the effectiveness of steps we have taken to comply with such regulations;

 
 • 
our ability to manage effectively our bandwidth and to implement timely and efficiently new bandwidth-efficient technologies;

 
 • 
our expectations and estimates related to interconnection fees, tariffs charged by our competitors, regulatory fees, operating costs and expenditures,working capital requirements, principal repayment obligations with respect to long-term borrowings, bonds and obligations under capital leases, and research and development expenditures and other financial estimates; 

 
 • 
the success of our various joint ventures and investments in other telecommunications service providers; 

 
 • 
our ability to successfully manage our acquisition in 2008 and 2009 of a majority stake in SK Broadband Co., Ltd. (formerly, HanarotelecomIncorporated), a fixed-line telecommunications operator and broadband Internet service provider; 

 
 • 
our ability to successfully manage our acquisition in 2009 of the leased-line business of SK Networks Co., Ltd., which provides a substantial portionof the transmission lines we use; 

 
2 

Table of Contents • 
our ability to successfully manage our acquisition in 2012 of a stake in Hynix Semiconductor Inc., a memory-chip maker; 

 
 • 
our ability to successfully manage our investment in Packet One Networks (Malaysia) Sdn. Bhd., a Malaysian wireless broadband company;

 
 • 
our ability to successfully attract and retain subscribers under the KCC’s new guideline on the marketing expenses of the telecommunicationservice providers; and 

 
 • 
the growth of the telecommunications industry in Korea and other markets in which we do business and the effect that economic, political or socialconditions have on our number of subscribers, call volumes and results of operations. 

We caution you thatreliance 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, technologychanges, potential litigation and governmental actions, changes in the competitive environment, political changes, foreign exchange currency risks, foreign ownership limitations, credit risks and other risks and uncertainties that are more fullydescribed under the heading “Item 3. Key Information — Risk Factors” and elsewhere in this report. In light of these and other uncertainties, you should not conclude that we will necessarily achieve any plans and objectivesor 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. 

 
3 

Table of Contents
**PART I**

 
**Item 1.*********IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS*******
 
**Item 1.A.*********Directors and Senior Management*******
Not applicable. 

 
**Item 1.B.*********Advisers*******
Not applicable. 

 
**Item 1.C.*********Auditors*******
Not applicable. 

 
**Item 2.*********OFFER STATISTICS AND EXPECTED TIMETABLE*******
Not applicable. 

 
**Item 3.*********KEY INFORMATION*******
 
**Item 3.A.*********Selected Financial Data*******
You should read the selected consolidated financial and operating data below in conjunction with the consolidated financial statements and the related notes included elsewhere in this report. The selectedconsolidated financial data set forth below as of and for the years ended December 31, 2010 and 2011 have been derived from our audited consolidated financial statements and related notes thereto, which have been prepared in accordance withIFRS as issued by the IASB. 

Pursuant to the transitional relief granted by the U.S. Securities and Exchange Commission inrespect of the first-time application of IFRS, financial data as of and for the three years ended December 31, 2007, 2008 and 2009 derived from our consolidated financial statements prepared in accordance with Korean GAAP have not been includedbelow. 

 
   **As of or for the Year Ended December 31,**    **            2010            **   **            2011            **   **            2011*            **    **(In billions of Won and millions of dollars, except per share and percentage data)** 
**INCOME STATEMENT DATA**
      
Operating Revenue
  (Won)15,599.2    (Won)15,988.3    $13,800.8  
Operating Expenses
   13,313.3     13,856.8     11,961.0  
Operating Income
   2,285.9     2,131.5     1,839.8  
Income from Continuing Operation before Income Tax
   2,318.1     2,182.9     1,884.2  
Income from Continuing Operation
   1,773.6     1,583.8     1,367.1  
Net Income
   1,766.8     1,582.1     1,365.6  
Net Income per Share from Continuing Operation(1)
   25,653     22,864     19.74  
Net Income per Share(1)
   25,598     22,848     19.72  
Diluted Net Income per Share from Continuing Operation(2)
   24,995     22,238     19.20  
Diluted Net Income per Share(2)
   24,942     22,223     19.18  
Dividends Declared per Share
   9,400     9,400     8.11  
Weighted Average Number of Shares
   71,942,387     70,591,937     70,591,937  
 
4 

Table of Contents   **As of or for the Year Ended December 31,**    **            2010            **   **            2011            **  **            2011*            **    **(In billions of Won and millions of dollars, except per share and percentage data)** 
**BALANCE SHEET DATA**
     
Working Capital (Deficit)(3)
  (Won)451.8    (Won)(556.1)  $(480.0) 
Property and Equipment, Net
   8,153.4     9,031.0    7,795.4  
Total Assets
   23,132,4     24,366.0    21,032.4  
Non-current Liabilities(4)
   4,522.2     4,959.7    4,281.2  
Capital Stock
   44.6     44.6    38.5  
Total Shareholders’ Equity
   12,408.0     12,732.7    10,990.7  
 
   **As of or for the Year Ended December 31,**    **            2010            **  **            2011            **  **            2011*            **    **(In billions of Won and millions of dollars, except per share and percentage data)** 
**OTHER FINANCIAL DATA**
    
Capital Expenditures(5)
  (Won)2,142.3   (Won)2,960.6   $2,555.5  
R&D Expenses(6)
   352.0    291.4    251.5  
Internal R&D
   270.4    271.4    234.3  
External R&D
   81.6    20.0    17.3  
Depreciation and Amortization
   2,302.3    2,482.7    2,143.0  
Cash Flow from Operating Activities
   4,343.4    6,306.4    5,443.6  
Cash Flow from Investing Activities
   (2,339.0)   (4,239.1)   (3,659.1) 
Cash Flow from Financing Activities
   (2,246.1)   (1,079.3)   (931.6) 
Margins (% of total sales):
    
Operating Margin(7)
   14.7%   13.3%   13.3% 
Net Margin(7)
   11.3%   9.9%   9.9% 
 
  **As of or for the Year Ended December 31,**   **2007**  **2008**  **2009**  **2010**  **2011**  **2011*** 
**SELECTED OPERATING DATA**
      
Population of Korea (millions)(8)
  48.5    48.6    48.7    49.4    49.8    49.8  
Our Wireless Penetration(9)
  45.3%   47.4%   49.8%   52.0 %   53.2%   53.2% 
Number of Employees(10)
  9,485    10,626    10,714    20,143    20,955    20,955  
Wireless Subscribers(11)
  21,968,169    23,032,045    24,269,553    25,705,049    26,497,267    26,497,267  
Average Monthly Outgoing Voice Minutes per Subscriber(12)
  201    200    197    199    193    193  
Average Monthly Churn Rate(13)
  2.6%   2.7%   2.7%   2.7%   2.7%   2.7% 
Digital Cell Sites
  16,099    17,213    15,979    17,483    21,999    21,999  
 

 
*The translation into Dollars was made at the rate of Won 1,158.5 to US$1.00, the noon buying rate in effect on December 30, 2011. 
 
(1) Net income per share from continuing operation is calculated by dividing net income from continuing operation attributable to SK Telecom by the weighted average numberof common shares outstanding during the period. Net income per share is calculated by dividing net income attributable to SK Telecom by the weighted average number of common shares outstanding during the period. 
 
(2) Diluted net income per share from continuing operation is calculated by dividing net income from continuing operation attributable to SK Telecom adjusted for dilutionby the potential dilutive weighted average number of common shares outstanding during the period, taking into account the conversion of outstanding convertible bonds. Diluted net income per share is calculated by dividing net income attributable toSK Telecom adjusted for dilution by the potential dilutive weighted average number of common shares outstanding during the period, taking into account the conversion of outstanding of convertible bonds. 
 
(3) Working capital means current assets minus current liabilities. 
 
(4) Our monetary assets and liabilities denominated in foreign currencies are valued at the exchange rates prevailing at the end of each reporting period. Seenote 2.c. of the notes to our consolidated financial statements. 
 
(5) Consists of investments in property, plant and equipment. 
 
(6) Includes donations to Korean research institutes and educational organizations. See “Item 5.C. Research and Development, Patents and Licenses, etc.”.
 
5 

Table of Contents(7) Operating revenue and operating income used in the calculation of these ratios exclude the operating revenue and operating income from discontinued operations.
 
(8) Population estimates based on historical data published by the National Statistical Office of Korea. 
 
(9) Wireless penetration is determined by dividing our subscribers by total estimated population, as of the end of the period. 
 
(10) Includes regular employees and temporary employees. The number of employees as of December 31, 2010 and 2011 includes employees of Service Ace Co., Ltd., ServiceTop Co., Ltd., and Network O&S Co., Ltd., our wholly-owned subsidiaries established in 2010, who were previously employed by third-party outsourcing companies. See “Item 6.D. Employees”. 
 
(11) Wireless subscribers include those subscribers who are temporarily deactivated, including (1) subscribers who voluntarily deactivate temporarily for a period of upto 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 paymenthistory. 
 
(12) The average monthly outgoing voice minutes per subscriber is derived by dividing the total minutes of outgoing voice usage for the period by the monthly average numberof subscribers for the period, then dividing that number by the number of months in the period. The monthly average number of subscribers is derived by dividing (i) the sum of the average number of subscribers for each month in the period,calculated as the average of the number of subscribers on the first and last days of the relevant month, by (ii) the number of months in the period. 
 
(13) 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 simpleaverage of the number of subscribers at the beginning and end of the period, then dividing that number by the number of months in the period. Churn includes subscribers who upgrade to the next generation service, such as CDMA 1xEV/ DO, WCDMA or LTE,by terminating their service and opening a new subscriber account. 
**Exchange Rates**

The following table sets forth, for the periods and dates indicated, certain information concerning the noon buying rate for translationsof Won amounts into Dollars. 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. 

 

**Year Ended December 31,**
  **At End of**