1.	Reporting Entity

(1) General

SK Telecom Co., Ltd. (“the Parent Company”) was incorporated in March 1984 under the laws of the Republic of Korea (“Korea”) to provide cellular telephone communication services in Korea. The Parent Company mainly provides wireless telecommunications services in Korea. The head office of the Parent Company is located at65, Eulji-ro, Jung-gu, Seoul, Korea.

The Parent Company’s common shares and depositary receipts (DRs) are listed on the Stock Market of Korea Exchange, the New York Stock Exchange and the London Stock Exchange. As of December 31, 2018, the Parent Company’s total issued shares are held by the following shareholders:


	Number of shares		Percentage of total shares issued (%)
SK Holdings Co., Ltd.		21,624,120		26.78
National Pension Service		7,879,982		9.76
Institutional investors and other minority shareholders		42,365,726		52.47
Treasury shares		8,875,883		10.99

		80,745,711		100.00

These consolidated financial statements comprise the Parent Company and its subsidiaries (together referred to as the “Group” and individuals as “Group entities”). SK Holdings Co., Ltd. is the ultimate controlling entity of the Parent Company.

(2) List of subsidiaries

The list of subsidiaries as of December 31, 2018 and 2017 is as follows:

Ownership (%)(*1)

Subsidiary

Location

Primary business

Dec. 31,
2018

Dec. 31,
2017

Subsidiaries owned by the Parent Company

SK Telink Co., Ltd.

Korea

Telecommunication and Mobile Virtual Network Operator service

100.0

SK Communications Co., Ltd.

Korea

Internet website services

100.0

SK Broadband Co., Ltd.

Korea

Telecommunication services

100.0

PS&Marketing Corporation

Korea

Communications device retail business

100.0

SERVICE ACE Co., Ltd.

Korea

Call center management service

100.0

SERVICE TOP Co., Ltd.

Korea

Call center management service

100.0

Network O&S Co., Ltd.

Korea

Base station maintenance service

100.0

SK Planet Co., Ltd.(*2)

Korea

Telecommunication service

98.7

98.1

Eleven Street Co., Ltd.(*2,4)

Korea

E-commerce

81.8

—

IRIVER LIMITED (*3)

Korea

Manufacturing digital audio players and other portable media devices

52.6

45.9

SK Telecom China Holdings Co., Ltd.

China

Investment

100.0

SK Global Healthcare Business Group, Ltd.

Hong Kong

Investment

100.0

SKT Vietnam PTE. Ltd.(*4)

Singapore

Used device distribution business

—

73.3

SKT Americas, Inc.

USA

Information gathering and consulting

100.0

YTK Investment Ltd.

Cayman Islands

Investment association

100.0

Atlas Investment

Cayman Islands

Investment association

100.0

SK techx Co., Ltd.(*4)

Korea

System software development and supply

—

100.0

One Store Co., Ltd.

Korea

Telecommunication services

65.5

SK Telecom Japan Inc.(*4)

Japan

Information gathering and consulting

100.0

—

id Quantique SA(*4)

Switzerland

Quantum information and

communications service

65.6

4.6

Quantum Innovation Fund I(*4)

Korea

Investment (holdings company)

59.9

—

Life & Security Holdings Co., Ltd.(*4)

Korea

Investment(holdings company)

55.0

—

SK Infosec Co., Ltd.(*4)

Korea

Information security service

100.0

—

Subsidiaries owned by SK Planet Co., Ltd.

SK m&service Co.,Ltd.

Korea

Data base and internet website service

100.0

SK Planet Japan, K. K.

Japan

Digital contents sourcing service

79.5

SK Planet Global PTE. Ltd.(*4)

Singapore

Digital contents sourcing service

—

100.0

SKP GLOBAL HOLDINGS PTE. LTD.

Singapore

Investment

100.0

SKP America LLC.

USA

Digital contents sourcing service

100.0

shopkick Management Company, Inc.

USA

Investment

100.0

shopkick, Inc.

USA

Reward points-based in-store shopping application development

100.0

11street (Thailand) Co., Ltd.(*4)

Thailand

Electronic commerce

—

100.0

K-net Culture and Contents Venture Fund

Korea

Capital investing in startups

59.0

Hello Nature Ltd.(*4)

Korea

Retail of agro-fisheries and livestock

49.9

100.0

Subsidiaries owned by IRIVER LIMITED

iriver Enterprise Ltd.

Hong Kong

Management of Chinese subsidiaries

100.0

iriver Inc.

USA

Marketing and sales in North America

100.0

iriver China Co., Ltd.

China

Sales of and manufacturing MP3 and 4

100.0

Dongguan iriver Electronics Co., Ltd.

China

Sales of and manufacturing e-book

100.0

groovers Japan Co., Ltd.

Japan

Digital music contents sourcing and distribution service

100.0

LIFE DESIGN COMPANY Inc. (formerly, S.M. LIFE DESIGN COMPANY JAPAN INC.)

Japan

Sale of goods in Japan

100.0

S.M. Mobile Communications JAPAN Inc.(*4)

Japan

Digital contents service

—

100.0

groovers Inc.(*4)

Korea

Sale of contents and Mastering Quality Sound album

100.0

44.2

Subsidiaries owned by SK Telink Co., Ltd.

NSOK Co., Ltd.(*4)

Korea

Security and maintenance services

—

100.0

SK TELINK VIETNAM Co., Ltd.(*4)

Vietnam

Communications device retail business

100.0

—

Subsidiaries owned by Life & Security Holdings Co., Ltd.

ADT CAPS Co., Ltd.(*4)

Korea

Unmanned security

100.0

—

CAPSTEC Co., Ltd.(*4)

Korea

Manned security

100.0

—

ADT SECURITY Co., Ltd.(*4)

Korea

Sales and trade of anti-theft devices and surveillance devices

100.0

—

Subsidiary owned by id Quantique SA

Id Quantique LLC(*4)

Korea

Quantum information and

communications service

100.0

—

Subsidiaries owned by SK Broadband Co., Ltd.

Home & Service Co., Ltd.

Korea

Operation of information and communications facility

100.0

SK stoa Co., Ltd.

Korea

Other telecommunication retail business

100.0

Others(*5)

SK Telecom Innovation Fund, L.P

USA

Investment

100.0

SK Telecom China Fund I L.P.

Cayman Islands

Investment

100.0

(*1)	The ownership interest represents direct ownership interest in subsidiaries either by the Parent Company or subsidiaries of the Parent Company.

(*2)

SK Planet Co., Ltd. spun off the business unit of 11st (E-commerce and Internet-related business) and incorporated Eleven Street Co., Ltd. on August 31, 2018. 80.3% of the shares issued by Eleven Street Co., Ltd. are owned by the Parent Company and 1.5% are held by SK Planet Co., Ltd. H&Q Korea Partners, LLC acquired 1,863,093 shares of redeemable convertible preferred stocks for ￦ 500,000 million in cash and owns 18.2% of the shares issued by Eleven Street Co., Ltd. The Parent Company is obliged to guarantee at least 1% of dividend per annum of the preferred stock’s issue price to the investor by the date on which Eleven Street Co., Ltd. is publicly listed or the date the qualifying listing period is completed, whichever occurs first (see note 29). The present value of obligatory dividends amounting to ￦23,191 million are recognized as financial liabilities as of December 31, 2018.

(*3)	The Parent Company participated in a third party allotment offering to itself and to SM Entertainment Co., Ltd., and acquired 7,420,091 shares out of 7,990,867 new shares that were issued by the subsidiary. As a result, the ownership interest has changed from 45,9% to 52.6%.

(*4)	Details of changes in the consolidation scope for the year ended December 31, 2018 are presented and explained separately in Note 1-(4).

(*5)	Others are owned together by Atlas Investment and another subsidiary of the Parent Company.

(3) Condensed financial information of subsidiaries

Condensed financial information of the significant subsidiaries as of and for the year ended December 31, 2018 is as follows:


(In millions of won)	As of December 31, 2018						2018
Subsidiary	Total assets		Total liabilities		Total equity		Revenue		Profit (loss)
SK Telink Co., Ltd.(*1)	￦	493,972		107,565		386,407		373,019		39,962
Eleven Street Co., Ltd.(*2)		1,045,946		495,907		550,039		228,000		(9,507	)
SK m&service Co., Ltd.		97,924		48,182		49,742		208,936		(119	)
SK Communications Co., Ltd.		79,646		28,458		51,188		41,604		(10,323	)
SK Broadband Co., Ltd.		4,266,458		2,682,236		1,584,222		3,158,877		154,999
K-net Culture and Contents Venture Fund		147,691		20,873		126,818		—		58,584
PS&Marketing Corporation		432,699		216,624		216,075		1,587,203		76
SERVICE ACE Co., Ltd.		76,770		45,229		31,541		198,164		4,217
SERVICE TOP Co., Ltd.		74,452		49,400		25,052		205,574		5,276
Network O&S Co., Ltd.		81,773		42,257		39,516		265,183		1,089
SK Planet Co., Ltd.		753,630		436,501		317,129		672,648		(436,106	)
IRIVER LIMITED(*3)		204,479		44,620		159,859		137,849		(21,314	)
SKP America LLC.		383,697		—		383,697		—		(370	)
Life & Security Holdings Co., Ltd.(*4)		2,611,838		2,261,456		350,382		197,487		6,038
SK Infosec Co., Ltd.(*5)		183,896		54,301		129,595		—		—
One Store Co., Ltd.		116,716		65,890		50,826		110,284		(13,903	)
Home & Service Co., Ltd.		87,159		45,341		41,818		325,177		(1,264	)
SK stoa Co., Ltd.		41,305		37,560		3,745		116,459		(16,987	)

(*1)	The condensed financial information of SK Telink Co., Ltd. is consolidated financial information including SK TELINK VIETNAM Co., Ltd.

(*2)	The condensed financial information of Eleven Street Co., Ltd. includes four months of revenue and profit and loss since the spin-off on August 31, 2018.

(*3)	The condensed financial information of IRIVER LIMITED is consolidated financial information including iriver Enterprise Ltd. and six other subsidiaries of IRIVER LIMITED.

(*4)

The condensed financial information of Life & Security Holdings Co., Ltd. is consolidated financial information including ADT CAPS Co., Ltd. and two other subsidiaries, including 3 months of revenue and profit and loss since Life & Security Holdings Co., Ltd. acquired by the Parent Company on October 1, 2018.

(*5)	SK Infosec Co., Ltd. was acquired by the Parent Company and newly included in consolidation as of December 27, 2018.

Condensed financial information of the significant subsidiaries as of and for the year ended December 31, 2017 is as follows:


(In millions of won)	As of December 31, 2017						2017
Subsidiary	Total assets		Total liabilities		Total equity		Revenue		Profit (loss)
SK Telink Co., Ltd.	￦	455,685		104,727		350,958		389,944		32,728
SK m&service Co., Ltd.		113,515		62,795		50,720		193,256		1,249
SK Communications Co., Ltd.		90,923		28,410		62,513		47,546		(35,454	)
SK Broadband Co., Ltd.		3,802,349		2,616,317		1,186,032		3,050,083		32,030
K-net Culture and Contents Venture Fund		250,747		35,900		214,847		—		196,250
PS&Marketing Corporation		506,883		288,881		218,002		1,766,142		391
SERVICE ACE Co., Ltd.		77,681		45,501		32,180		197,408		2,599
SERVICE TOP Co., Ltd.		65,406		41,860		23,546		186,117		3,309
Network O&S Co., Ltd.		87,000		45,248		41,752		255,841		6,283
SK Planet Co., Ltd.		1,534,866		920,677		614,189		1,082,685		(513,667	)
IRIVER LIMITED(*)		130,878		17,204		113,674		69,452		(14,092	)
SKP America LLC.		412,251		—		412,251		—		(57	)
SK techx Co., Ltd.		237,700		41,561		196,139		195,948		26,827
One Store Co., Ltd.		104,891		39,874		65,017		115,596		(27,254	)
Home & Service Co., Ltd.		83,698		38,350		45,348		141,739		11

(*)	The condensed financial information of IRIVER LIMITED is consolidated financial information including iriver Enterprise Ltd. and six other subsidiaries of IRIVER LIMITED. Information for the other subsidiaries in the above summary is based on their separate financial statements.

Condensed financial information of the significant subsidiaries as of and for the year ended December 31, 2016 is as follows:


(In millions of won)	As of December 31, 2016						2016
Subsidiary	Total assets		Total liabilities		Total equity		Revenue		Profit (loss)
SK Telink Co., Ltd.	￦	440,956		122,741		318,215		406,930		61,585
SK m&service Co., Ltd.		107,768		56,596		51,172		173,816		4,958
SK Communications Co., Ltd.		128,233		31,592		96,641		58,154		(20,411	)
SK Broadband Co., Ltd.		3,523,494		2,376,429		1,147,065		2,942,976		21,526
PS&Marketing Corporation		546,803		328,846		217,957		1,679,735		11,908
SERVICEACE Co., Ltd.		67,735		40,014		27,721		199,828		3,605
SERVICE TOP Co., Ltd.		59,004		39,121		19,883		186,740		3,971
Network O&S Co., Ltd.		69,774		35,798		33,976		218,917		3,755
SK Planet Co., Ltd.(*1)		1,935,663		834,151		1,101,512		1,177,323		(30,959	)
IRIVER LIMITED(*2)		50,075		11,941		38,134		52,328		(9,987	)
SKP America LLC.		439,209		—		439,209		—		1,226
SK techx Co., Ltd.		212,819		52,563		160,256		193,396		28,213
One Store Co., Ltd.		134,207		41,738		92,469		106,809		(22,161	)

(*1)	The separate financial information of SK Planet Co., Ltd. includes pre-merger income and expenses of Commerce Planet Co., Ltd. prior to the merger date of February 1, 2016.

(*2)	The condensed financial information of IRIVER LIMITED is consolidated financial information including iriver Enterprise Ltd. and five other subsidiaries of IRIVER LIMITED.

(4) Changes in subsidiaries

The list of subsidiaries that were newly included in consolidation during the year ended December 31, 2018 is as follows:


Subsidiary		Reason
Eleven Street Co., Ltd.		Spun-off from SK Planet Co., Ltd.

id Quantique SA		Acquired additional ownership interests by the Parent Company

SK Telecom Japan Inc.		Established by the Parent Company

groovers Inc.		Acquired additional ownership interests by IRIVER LIMITED

SK TELINK VIETNAM Co., Ltd.		Established by SK Telink Co., Ltd.

Quantum Innovation Fund I		Acquired by the Parent Company

Life & Security Holdings Co., Ltd.		Acquired by the Parent Company

ADT CAPS Co., Ltd.		Subsidiary of Life & Security Holdings Co., Ltd.

CAPSTEC Co., Ltd.		Subsidiary of Life & Security Holdings Co., Ltd.

ADT SECURITY Co., Ltd.		Subsidiary of Life & Security Holdings Co., Ltd.

SK Infosec Co., Ltd.		Acquired by the Parent Company

Id Quantique LLC		Established by id Quantique SA

The list of subsidiaries that were excluded from consolidation during the year ended December 31, 2018 is as follows:


Subsidiary		Reason
11street (Thailand) Co., Ltd.		Disposed by SK Planet Co., Ltd.

Hello Nature Ltd.		Loss of control due to third parties’ investments

SK techx Co., Ltd.		Merged into SK Planet Co., Ltd.

S.M. Mobile Communications JAPAN Inc.		Merged into groovers Japan Co., Ltd.

SK Planet Global PTE. Ltd.		Liquidated

NSOK Co., Ltd.		Merged into ADT CAPS Co., Ltd.

SKT Vietnam PTE. Ltd.		Liquidated

(5) The information of significant non-controlling interests of the Group as of and for the years ended December 31, 2018, 2017 and 2016 are as follows. There were no dividends paid during the years ended December 31, 2017 and 2016 by subsidiaries of which non-controlling interests are significant.


(In millions of won)
	K-net Culture and Contents Venture Fund			IRIVER LIMITED			One Store Co., Ltd.			Eleven Street Co., Ltd.			Life & Security Holdings Co., Ltd. (*)
Ownership of non-controlling interests (%)		41.00			47.36			34.46			18.19			45.00

	As of December 31, 2018
Current assets	￦	118			150,199			92,844			923,153			124,091
Non-current assets		147,573			54,465			23,872			122,793			2,487,747
Current liabilities		(20,873	)		(42,142	)		(63,440	)		(486,391	)		(243,064	)
Non-current liabilities		—			(2,663	)		(2,450	)		(9,516	)		(2,018,392	)
Net assets		126,818			159,859			50,826			550,039			350,382
Fair value adjustment and others		—			—			—			(23,191	)		(1,216,347	)
Net assets on the consolidated financial statements		126,818			159,859			50,826			526,848			(865,965	)
Carrying amount of non-controlling interests		51,995			76,204			17,711			95,811			(389,684	)

	2018
Revenue	￦	—			137,849			110,284			228,000			197,487
Profit (Loss) for the year		58,584			(21,314	)		(13,903	)		(9,507	)		6,038
Depreciation of the fair value adjustment and others		—			—			—			(161	)		(2,954	)
Profit(Loss) for the year on the consolidated financial statements		58,584			(21,314	)		(13,903	)		(9,668	)		3,084
Total comprehensive income (loss)		27,773			(21,125	)		(14,386	)		(8,897	)		(991	)
Profit (Loss) attributable to non-controlling interests		24,019			(10,094	)		(4,791	)		(1,758	)		1,387

Net cash provided by (used in) operating activities	￦	115,566			13,635			7,181			(69,347	)		(23,451	)
Net cash provided by (used in) investing activities		600			(10,169	)		(11,482	)		(470,211	)		(139,430	)
Net cash provided by (used in) financing activities		(116,150	)		69,267			5			494,923			124,076
Net increase(decrease) in cash and cash equivalents		16			72,733			(4,296	)		(44,635	)		(38,805	)

Dividend paid to non-controlling interests during the year ended December 31, 2018	￦	36,178			—			—			—			—

(*)	The financial information of Life & Security Holdings Co., Ltd. is related to the period subsequent to the acquisition by the Parent Company on October 1, 2018 and includes fair value adjustments from the business combination.


(In millions of won)
	K-net Culture and Contents Venture Fund			IRIVER LIMITED			One Store Co., Ltd.
Ownership of non-controlling interests (%)		41.00			54.10			34.46

	As of December 31, 2017
Current assets	￦	625			74,873			76,810
Non-current assets		250,122			56,005			28,081
Current liabilities		(35,900	)		(9,563	)		(38,547	)
Non-current liabilities		—			(7,641	)		(1,327	)
Net assets		214,847			113,674			65,017
Carrying amount of non-controlling interests		88,087			63,382			22,405

	2017
Revenue	￦	—			69,452			115,596
Profit (loss) for the year		196,250			(14,092	)		(27,254	)
Total comprehensive profit (loss)		201,693			(14,278	)		(27,452	)
Profit (loss) attributable to non-controlling interests		80,463			(7,438	)		(9,392	)

Net cash provided by (used in) operating activities	￦	(7	)		(7,553	)		13,912
Net cash used in investing activities		(600	)		(45,002	)		(2,000	)
Net cash provided by (used in) financing activities		—			64,571			(7	)
Net increase (decrease) in cash and cash equivalents		(607	)		12,016			11,905


(In millions of won)
	SK Communications Co., Ltd.			One Store Co., Ltd.
Ownership of non-controlling interests (%)		35.46			34.46

	As of December 31, 2016
Current assets	￦	81,806			90,414
Non-current assets		46,427			43,793
Current liabilities		(30,098	)		(40,969	)
Non-current liabilities		(1,494	)		(769	)
Net assets		96,641			92,469
Carrying amount of non-controlling interests		34,265			31,863

	2016
Revenue	￦	58,154			106,809
Loss for the year		20,411			22,161
Total comprehensive loss		20,841			22,402
Loss attributable to non-controlling interests		7,240			6,772

Net cash used in operating activities	￦	(4,891	)		(4,447	)
Net cash provided by (used in) investing activities		3,625			(20,796	)
Net cash provided by financing activities		—			51,426
Net increase (decrease) in cash and cash equivalents		(1,266	)		26,183