Sk Telecom Co., Ltd. · KRX:017670
Sk Telecom — Morgan Stanley TMT Conference 2003
27 slides from Sk Telecom's conference presentation, November 2003
Slide 1: Morgan Stanley TMT Conference Investor Presentation
Morgan Stanley TMT Conference Investor Presentation November 2003 This material has been prepared by SK Telecom for the information of investors of the company. This is not intended as an offer or solicitation for the purchase or sale of any financial instrument or securities. While reasonable care
Slide 2: Discussion Topics
Discussion Topics I. Industry Leadership II. Growth Potential III. Current Issues in SK Telecom IV. Conclusion 1
Slide 3: Industry Leadership
SECTION 1 Industry Leadership 2
Slide 4: CDMA Pioneer & Leader
CDMA Pioneer & Leader Jan 1996 Launched world’s first commercial CDMA service Oct 2000 Launched world’s first commercial CDMA 1x service Dec 2000 3G (W-CDMA) license awarded Oct 2001 Launched integrated multi-access Internet portal (NATE) Feb 2002 Launched world’s first CDMA 1x EV-DO servi
Slide 5: Achieving Our 2003 Operation Targets
Achieving Our 2003 Operation Targets 2003 3Q 2003 Target YTD 3Q ‘03 On Target (Unit : KRW Bn unless noted) Revenue 2,410 9,500 7,040 9 EBITDA Margin * 50.5% 48.0% 49.8% 9 ARPU (Won) 44,804 44,000 44,193 9 Wireless internet revenue % out of total revenue 15.7% 15.0% 14.5% 9 Marketing expense % out of
Slide 6: Dominant Position in Korea
Dominant Position in Korea Market Share ARPU MOU1 EBITDA Margin (%) (Won) (Minutes) (%) 54.3 44,486 51 38,880 198 32,719 39 154 33 31.4 132 14.3 SKT KTF LGT SKT KTF LGT SKT KTF LGT SKT KTF LGT 1Includes only outgoing, non- non-IDD minutes Market share (Oct ’03), APRU (Sep ’03), MOU (Aug ’03), and EB
Slide 7: Mobile Penetration Rate: Significant Potential
Mobile Penetration Rate : Significant Potential Korea’s mobile penetration rate is still low 120% 112% 110% 100% 100% 95% 88% 90% 86% 80% 75% 69% 70% 65% 60% 50% 40% Japan Korea Germany UK Spain Italy Israel Taiwan Source: Merrill Lynch Data as of Jun 2003 6
Slide 8: Growth potential
SECTION 2 Growth potential June Satellite DMB Financial Enabler 7
Slide 9: Preparing For Ubiquitous Environment
Preparing For Ubiquitous Environment Maximize Value Creation and Profitability Improve Profitability New Growth Momentum Value creation in network business Enter new convergence market Value added service Capitalize Voice on core offerings Broadcasting competency Telecom Wireless Internet Strengthen
Slide 10: Our Wireless Internet Service Status
Our Wireless Internet Service Status Wireless Internet Service Comparison Wireless Internet Service Evolution TV Multimedia Live High Volume Display Streaming Multimedia Phone Service VOD MOD Multimedia Photo Streaming Java Mail Game Poly LBS Bell TEXT Based SMS Low Volume TEXT Based Data Service In
Slide 11: June: World's First Successful 3G Service
June : World’s First Successful 3G Service The premium wireless internet brand of SK Telecom that provides VOD, MOD, real- time news, TV broadcasting, and internet access through 1x EV-DO network Music Game Video Live Traffic Broadcasting Information 10
Slide 12: Contents Usage Pattern
Contents Usage Pattern Packet Occupation and Hit Rate (For the month of October 2003) Monthly Packet Occupation Rate Monthly Hit Rate 51% 33.7% 30% 22.6% 22.5% 8% 5% 12.9% 2.2% 1.3% 1.0% 1.2% 0.3% 3.0% 2.3% 1.3% 1.5% 0.2% n n ic n nt l s e ia io io TV io us er am te ec at at at th M on rm m G Sp or
Slide 13: Change in Consumer Perception and Behavior
Change in Consumer Perception and Behavior Change in Consumer Perception Change in Consumer Behavior Adoption of June enabled handset Visual + Non- Non-users Audio DVD 44.2% VTR Movies 47.2% 46.3% Fixed Line Internet Games Wireless Internet 28.2% Entertainment Portable music 7.9% 7.2% 7.1% Informati
Slide 14: Concrete Results of Growth in Wireless Internet
Concrete Results of Growth in Wireless Internet ARPU by Handset Type (Won) 34.1% 67,845 JUNE 23,102 28.4% 58,031 1x EV- EV-DO 16,483 12.6% 39,322 1x RTT 4,936 5.1% 25,838 95A/B 1,306 Total ARPU Data ARPU Source: Company data As of September 2003 *Total ARPU is net of interconnection fees and signup
Slide 15: Subscriber Base Continues to Move Up-Market
Subscriber Base Continues to Move Up-Market Subscriber Composition by Handset Type * (%) 60.6 62.0 61.5 58.9 60% 50% 48% 39.8 35.9 30.0 24.5 14.0 20% 8.0 1.3 3.5 4.6 6.9 0.1 2.2 Jan-03 Mar-03 Jun-03 Sep-03 June 1x EV-DO 1x RTT 95AB % of EV-DO handsets purchased by total number of new and renewing su
Slide 16: Further Growth Expected
Further Growth Expected WI Revenue as % of Total Revenue SMS as % of Data Revenue 20% 100% 93.7% 80% 15% 16% 14% 60% 10% 13% 12% 43.0% 42.9% 10% 35.9% 40% 31.1% 5% 20% 3.6% 4.0% 4.5% 4.4% 3.5% 0% 3Q02 4Q02 1Q03 2Q03 3Q03 0% SKT Japan Asia Europe US Portion of SMS % of Total Revenue Pacific Note: % o
Slide 17: Satellite Digital Multimedia Broadcasting
Satellite Digital Multimedia Broadcasting New satellite broadcast service on mobile devices Gap Filler Mobile terminal Program Satellite DMB Provider broadcast Mobile handsets center Automobile PDA No space limitations Mobility Mobility Vehicles or outdoors Easy connection Digital Digi
Slide 18: Financial Enabler
Financial Enabler Improving the profitability of the MONETA business, and making the lives of our customers richer and more convenient. Convergence of telecommunications and finance Transportation Electronic Direct payment Other card passbook E-money payment methods MONETA : Enhanced competitiveness
Slide 19: Current Issues in SK Telecom
SECTION 3 Current Issues in SK Telecom Recent Regulatory Environment WCDMA Investment Strengthening Role of BOD Return to Shareholders 18
Slide 20: Recent Regulatory Environment
Recent Regulatory Environment Regulatory Details / Impact Issue Price Lower prices have greater impact on smaller competitors Reductions Due to CID rate reductions in October, reductions will be limited Handset Officially banned by law Subsidies No final word on differentiated subsidies, but
Slide 21: SKT's response to MNP
SKT’s response to MNP Pre-introductory y Speed 011 Rainbow Measures y strong brand reputation Product y High quality service & Full EV-DO coverage differentiation y Accumulated benefits and mileage High handset y $350 or more for new handset switching cost Minimal difference y Actual difference is l
Slide 22: WCDMA Investment
WCDMA Investment A focus on the availability of handsets and systems that are both marketable and provide a high quality of service to our customers System / Handset Development Competitive Marketability Environment Commercial Launch in Seoul, Dec.2003 Roll-out plan based on handset development, sys
Slide 23: Strengthening Role of BOD
Strengthening Role of BOD Enhanced independence and expertise of the Board of Directors will lead to increased corporate transparency and maximization of shareholder value Capex Review Majority outside directors Committee Regular review Compensation 100% outside directors Board of Directors Co
Slide 24: Return to Shareholders
Return to Shareholders 2003 Estimates Going Forward 3% buyback & cancellation KRW 524bn Return to y Treasury stocks (10.53%) ($444 mil*) Shareholder - Execution plan is to be Expected 42% of FCF announced early next year Dividend FCF KRW 152bn KRW 1.6tn ($129mil) ($ 1.36 bn *) New Business Others y
Slide 25: Conclusion
SECTION 4 Conclusion 24 SK Telecom
Slide 26: Bright Future of Wireless in Korea
Bright Future of Wireless in Korea Dominant Position Sustaining Growth y Dominant Market Share y Capitalize on Wireless Internet y Strong & Consistent Performance y Convergence of Wireless & y Strong Brand Recognition Internet Shareholder Value Strong Corporate Maximization Governance y Distribution
Slide 27: THANK YOU
SK Telecom THANK YOU