TABLE OF CONTENTS
CERTAIN DEFINED TERMS AND CONVENTIONS USED IN THIS ANNUAL REPORT
FORWARD-LOOKING STATEMENTS
Part I
Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Item 1.A. Directors and Senior Management
Item 1.B. Advisers
Item 1.C. Auditors
Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Item 3. KEY INFORMATION
Item 3.A. [Reserved]
Item 3.B. Capitalization and Indebtedness
Item 3.C. Reasons for the Offer and Use of Proceeds
Item 3.D. Risk Factors
Item 4. INFORMATION ON THE COMPANY
Item 4.A. History and Development of the Company
Item 4.B. Business Overview
Item 4.C. Organizational Structure
Item 4.D. Property, Plants and Equipment
Item 4A. UNRESOLVED STAFF COMMENTS
Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
Item 5.A. Operating Results
Item 5.B. Liquidity and Capital Resources
Item 5.C. Research and Development, Patents and Licenses, etc.
Item 5.D. Trend Information
Item 5.E. Critical Accounting Estimates
Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Item 6.A. Directors and Senior Management
Item 6.B. Compensation
Item 6.C. Board Practices
Item 6.D. Employees
Item 6.E. Share Ownership
Item 6.F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Item 7.A. Major Shareholders
Item 7.B. Related Party Transactions
Item 7.C. Interests of Experts and Counsel
Item 8. FINANCIAL INFORMATION
Item 8.A. Consolidated Statements and Other Financial Information
Item 8.B. Significant Changes
Item 9. THE OFFER AND LISTING
Item 9.A. Offering and Listing Details
Item 9.B. Plan of Distribution
Item 9.C. Markets
Item 9.D. Selling Shareholders
Item 9.E. Dilution
Item 9.F. Expenses of the Issue
Item 10. ADDITIONAL INFORMATION
Item 10.A. Share Capital
Item 10.B. Memorandum and Articles of Association
(i)
Item 10.C. Material Contracts
Item 10.D. Exchange Controls
Item 10.E. Taxation
Item 10.F. Dividends and Paying Agents
Item 10.G. Statements by Experts
Item 10.H. Documents on Display
Item 10.I. Subsidiary Information
Item 10.J. Annual Report to Security Holders
Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Item 12.A. Debt Securities
Item 12.B. Warrants and Rights
Item 12.C. Other Securities
Item 12.D. American Depositary Shares
Part II
Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Item 15. CONTROLS AND PROCEDURES
Item 16. RESERVED
Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Item 16B. CODE OF ETHICS
Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Item 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Item 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Item 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Item 16G. CORPORATE GOVERNANCE
Item 16H. MINE SAFETY DISCLOSURE
Item 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Item 16J. INSIDER TRADING POLICIES
Item 16K. CYBERSECURITY
Part III
Item 17. FINANCIAL STATEMENTS
Item 18. FINANCIAL STATEMENTS
Item 19. EXHIBITS
(ii)
All references to “Korea” contained in this annual 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,” or “our” shall mean SK Telecom Co., Ltd. and, unless the context otherwise requires, 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.
All references to “MHz” contained in this annual report 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 bits per second, all references to “Mbps” shall mean one million bits per second and all references to “Gbps” shall mean one billion bits per second. All references to “GB” shall mean gigabytes, which is one billion bytes. 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 annual report are to the currency of Korea and all references to “Dollars,” “U.S. dollar” or “US$” are to the currency of the United States of America.
The Ministry of Science and ICT (the “MSIT”) is charged with regulating information and telecommunications, and the Korea Media and Communications Commission (the “KMCC”) is charged with regulating the public interest aspects of and fairness in broadcasting and telecommunications. Subscriber information for the wireless and fixed-line telecommunications industry set forth in this annual report is derived from information published by the MSIT unless expressly stated otherwise.
In the past, the MSIT published subscriber data for the Korean wireless telecommunications industry only in terms of wireless subscribers as a whole – which include subscribers to mobile phone services as well as non-mobile phone wireless services, such as for Internet-of-Things (“IoT”) devices, tablet computers, wearable devices and others – rather than for mobile phone service subscribers only. However, beginning as of December 31, 2023, the MSIT began to publish subscriber data also for mobile phone services only, which we believe is more meaningful for understanding our business. Accordingly, we have included in this annual report subscriber information for mobile phone service subscribers only from December 31, 2023, which is not comparable to corresponding information set forth in our annual reports for prior years, as the latter information related to wireless service subscribers as a whole.
The consolidated financial statements included in this annual report are prepared in accordance with International Financial Reporting Standards (“IFRS”) Accounting Standards, as issued by the International Accounting Standards Board (the “IASB”). As such, we make an explicit and unreserved statement of compliance with IFRS Accounting Standards, as issued by the IASB, with respect to our consolidated financial statements as of December 31, 2025 and 2024, and for the years ended December 31, 2025, 2024 and 2023, included in this annual report.
Unless expressly stated otherwise, all financial data included in this annual report are presented on a consolidated basis.
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This report contains “forward-looking statements,” as defined in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the U.S. Securities Exchange Act of 1934, as amended (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 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 “may,” “might,” “should” or “could” occur, be taken or be achieved.
Forward-looking statements in this annual report include, but are not limited to, statements about the following:
our ability to anticipate and respond to various competitive factors affecting the telecommunications industry, including new services that may be introduced, changes in consumer preferences, economic conditions and discount pricing strategies by competitors;
our continued implementation of fifth generation wireless technology, which we refer to as “5G” technology, including through the development and implementation of an advanced version of 5G technology with higher data transmission speed and efficiency, which we refer to as “5G-Advanced” technology;
our plans for capital expenditures in 2026, including investments to maintain and enhance our telecommunications networks (including our 5G and fourth generation long-term evolution (“LTE”) networks), investments to improve and maintain our Wi-Fi network, investments in data infrastructure and computing capabilities, and investments in the development of artificial intelligence (“AI”), IoT and other digital solutions and services;
our efforts to expand and develop new growth businesses, including cloud computing, data center operations, AI-driven services, subscription-based services and other innovative services, as well as our efforts to integrate AI technologies into our existing telecommunications and digital service offerings and to create synergies across our business portfolio;
our ability to comply with governmental rules and regulations, including the regulations of the Government related to telecommunications providers, rules related to designation as a “market-dominating business entity” by the relevant authorities under the Korean Monopoly Regulation and Fair Trade Act (the “Fair Trade Act”) and the effectiveness of steps we have taken to comply with such regulations;
our ability to effectively manage our bandwidth and to timely and efficiently implement new bandwidth-efficient technologies and our intention to participate in, and acquire additional bandwidth pursuant to, frequency bandwidth auctions held, or other allocations of bandwidth, by the MSIT;
our expectations and estimates related to interconnection fees, rates charged by our competitors, regulatory fees, operating costs and expenditures, working capital requirements, principal repayment obligations with respect to long-term borrowings, bonds and short-term borrowings, and research and development expenditures and other financial estimates;
the success of our various joint ventures, investments, strategic alliances and cooperation efforts as well as other corporate restructuring activities, including the Spin-off (as defined below);
our ability to successfully attract and retain subscribers of our telecommunications-related businesses and customers of our other businesses; and
the growth of the telecommunications and other industries in which we operate in Korea and other markets and the effect that economic, political or social conditions have on our number of subscribers and customers and results of operations.
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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, cybersecurity and data protection risks, political changes, foreign exchange currency risks, foreign ownership limitations, credit risks and other risks and uncertainties that are more fully described under the heading “Item 3.D. Risk Factors” and elsewhere in this annual 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.
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PART I
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Directors and Senior Management
Not applicable.
Advisers
Auditors
OFFER STATISTICS AND EXPECTED TIMETABLE
KEY INFORMATION
[Reserved]
Capitalization and Indebtedness
Reasons for the Offer and Use of Proceeds
Risk Factors
Risks Relating to Our Business
Competition may reduce our market share and harm our business, financial condition and results of operations.
We face substantial competition across all of our businesses, including our wireless telecommunications business. We expect competition to remain intense as new technologies, products and services are developed and introduced by us and our competitors. We expect that such trends will continue to put downward pressure on the rates we can charge our subscribers.
Historically, there has been considerable consolidation in the telecommunications industry, resulting in the current competitive landscape comprising three mobile and fixed network operators in the Korean market, us, KT Corporation (“KT”) and LG Uplus Corp. (“LG U+”). Each of our competitors has substantial financial, technical, marketing and other resources to respond to our business offerings. As of December 31, 2025, the collective market share of KT and LG U+ amounted to approximately 58.4% in terms of number of mobile phone subscribers (including an aggregate of 15.1% attributable to mobile virtual network operators (“MVNOs”) that lease KT’s and LG U+’s respective networks). Our market share in 2025 was negatively affected by the impact of a cybersecurity incident, of which we became aware in April 2025, involving the leakage of certain universal subscriber identity module (“USIM”) information of our 5G and LTE network subscribers. See “—Malicious and abusive Internet practices could impair our services and we may be subject to significant legal and financial exposure, damage to our reputation and a loss of confidence of our customers.”
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Our competitors for subscriber activations include MVNOs, including MVNOs that lease our networks. MVNOs generally provide rate plans that are relatively cheaper than similar rate plans of the wireless network providers from which they lease their networks, including us. In recent years, a number of new entrants have entered the MVNO business, including affiliates of leading financial institutions in Korea. Some of these new entrants have engaged in aggressive marketing campaigns and promotional discounts while leveraging the brand power of their affiliates as part of their efforts to gain subscribers. Partly as a result of such efforts, the combined market share of MVNOs has generally increased in recent years, including from 15.5% as of December 31, 2023 to 16.9% as of December 31, 2024 and 18.3% as of December 31, 2025, in terms of number of mobile phone subscribers. In January 2025, the Government announced a number of new policy measures to strengthen the competitiveness of MVNOs, including lowering the cost of leasing networks from wireless network providers (including us) and providing support for the emergence of “full MVNOs” possessing their own core network infrastructures and telephone platform operations. We cannot assure you that such policy measures will not lead to further increases in the combined market share of MVNOs or encourage new MVNOs to enter the market.
In addition, other companies may enter the wireless network services market. For example, in January 2024, the Government allocated 800 MHz of bandwidth in the 28 GHz spectrum to Stage X, a consortium led by Stage Five, an MVNO, to provide nationwide wireless network services. However, in July 2024, the Government revoked such allocation citing Stage X’s failure to meet the paid-in capital requirement and discrepancies in the actual ownership ratios of major shareholders and ownership structure compared to the information included in its frequency allocation application.
We believe that a continued increase in the market share of MVNOs (including through the entrance of new MVNOs, if any) and the entrance of new mobile network operators, if any, in the wireless telecommunications market may further increase competition in the telecommunications sector, as well as cause downward price pressure on the fees we charge for our services, which, in turn, may have a material adverse effect on our business, financial position and results of operations. See “— Our business, financial condition and results of operations may be adversely affected if we fail to acquire adequate additional frequency usage rights, renew existing frequency usage rights, or use our bandwidth efficiently to accommodate subscriber growth and subscriber usage” and “— Our businesses are subject to various types of Government regulation, and any change in Government policy relating to the telecommunications industry could have an adverse effect on our business, financial condition and results of operations.”
Our fixed-line telephone service competes with KT and LG U+, as well as other providers of voice over Internet protocol (“VoIP”) services. As of December 31, 2025, our market share of the fixed-line telephone and VoIP service market was 15.6% (including the services provided by SK Broadband Co., Ltd. (“SK Broadband”)) in terms of number of subscribers compared to KT with 51.6% and LG U+ with 18.1%. In addition, our broadband Internet access, Internet protocol TV (“IPTV”) and cable TV services provided through SK Broadband compete with other providers of such services, including KT, LG U+ and cable companies. Furthermore, our IPTV and cable TV services are facing an increasing level of competition from global operators of online video streaming platforms, such as YouTube, Netflix, Disney Plus and Apple TV, leading domestic video streaming platforms such as TVING, Coupang Play, Wavve (which is seeking to merge with TVING pursuant to a memorandum of understanding entered into in December 2023) and Watcha, and the video contents offered by leading domestic and global internet search, communications and social media platforms including NAVER, Kakao and Instagram, as such services continue to become increasingly popular to serve as a substitute to traditional television programming. As of December 31, 2025, our market share of the broadband Internet market was 28.7% in terms of number of subscribers compared to KT with 40.3% and LG U+ with 22.1%. As of December 31, 2025, our market share of the pay TV market (which includes IPTV, cable TV and satellite TV) was 25.9% compared to KT with 36.7% (including its IPTV, cable TV and satellite TV services) and LG U+ with 25.1% (including its IPTV and cable TV services), and the collective market share of other pay TV providers was 12.2%. Our market shares in the broadband Internet and pay TV markets in 2025 were also marginally and negatively affected by the impact of the above-mentioned cybersecurity incident, as a significant portion of our customers of these services subscribe to packages that combine our mobile phone services with one or both of these services.
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Over the past decade, the Korean fixed-line telecommunications industry has gone through significant consolidation involving major pay television service providers. In April 2020, we completed the merger of Tbroad Co., Ltd., a former leading cable television and other fixed-line telecommunications services provider in Korea, and two of its subsidiaries, Tbroad Dongdaemun Broadcasting Co., Ltd. and Korea Digital Cable Media Center Co. Ltd. (collectively, “Tbroad”), with and into SK Broadband. In the same month, SK Telecom acquired a 55.0% equity interest in Broadband Nowon Co., Ltd. (formerly known as Tbroad Nowon Broadcasting Co., Ltd.), another subsidiary of Tbroad Co., Ltd., which was subsequently merged with and into SK Broadband in October 2022. Following such transactions (the “Tbroad Merger”), we have become the second-largest pay TV provider in Korea in terms of number of subscribers as of December 31, 2025. In November 2024, in order to enhance management efficiency and strengthen our control over SK Broadband, we entered into an agreement to acquire an additional 24.8% equity interest in SK Broadband from minority shareholders. Such transaction was completed in May 2025. We owned approximately 99.1% of SK Broadband’s total outstanding shares as of December 31, 2025. Furthermore, in March 2026, in order to enhance management efficiency and strengthen enterprise value through greater strategic flexibility, we entered into an agreement to acquire the remaining 0.9% equity interest in SK Broadband from minority shareholders. Such transaction is currently pending subject to regulatory approval and other customary closing conditions. In December 2019, LG U+ acquired a majority equity stake in CJ Hello Co., Ltd. and changed the acquired company’s name to LG HelloVision Co., Ltd. (“LG HelloVision”). In August 2021, KT acquired HCN Co., Ltd. (“HCN”), a major Korean cable TV service provider, through its subsidiary KT Skylife Co., Ltd. (“KT Skylife”). Such transactions, as well as further consolidation in the fixed-line telecommunications industry, may result in increased competition, as the entities emerging from such consolidation and other remaining players in the industry may actively pursue expanding or protecting their respective market shares.
Continued competition from other wireless and fixed-line telecommunications service providers has also resulted in, and may continue to result in, deactivations among our subscribers. A substantial level of subscriber deactivations, or churn, may significantly harm our business, financial condition and results of operations. In 2025, the monthly churn rate in our wireless telecommunications business ranged from 0.7% to 2.3%, with an average monthly churn rate of 1.1%, which increased from 0.8% in 2024, mainly due to the cybersecurity incident of which we became aware in April 2025 as described above. Intensification of competition in the future may cause our churn rates to increase, which in turn may cause us to increase our marketing expenses as a percentage of sales to attract and retain subscribers. In December 2024, the National Assembly passed a bill to abolish the Mobile Device Distribution Improvement Act (the “MDDIA”), which limits the amount of handset subsidies a wireless telecommunications service provider can provide to subscribers in order to prevent excessive competition in the market, and the MDDIA was repealed in July 2025. While we will continue to strive to cautiously balance our market share and profitability margins, we cannot assure you that the abolishment of the MDDIA, which has allowed wireless telecommunications service providers to provide handset subsidies without limitation, will not intensify market competition or increase our marketing expenses. See “Item 4.B. Business Overview — Law and Regulation — Rate Regulation” below.
As we continue to expand our business into areas beyond the traditional wireless and fixed-line telecommunications businesses, we also face competition from major players in the relevant sectors, such as cloud services, data center services, online commerce and television shopping (“T-commerce”). Some of our competitors may have stronger brand recognition, more robust technological capabilities and/or more significant financial resources than us in their respective areas of business.
Our ability to compete successfully in all of the businesses in which we operate will depend on our ability to anticipate and respond to various competitive factors affecting the respective industries, including new services that may be introduced, changes in consumer preferences, economic conditions and discount pricing strategies by competitors.
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Inability to successfully implement or adapt our network and technology to meet the continuing technological advancements affecting the wireless telecommunications industry will likely have a material adverse effect on our business, financial condition and results of operations.
The telecommunications industry has been characterized by continued improvements and advances in technology, and this trend is expected to continue. We and our competitors have continually implemented technology upgrades from previous generations of prevailing network technology, including the basic code division multiple access (“CDMA”) and wideband code division multiple access (“WCDMA”) networks, to the currently dominant LTE and 5G networks. Our business could be harmed if we fail to implement, or adapt to, future technological advancements in the telecommunications sector in a timely manner, such as the further enhancement of 5G technology (including through the development and implementation of 5G-Advanced technology) and the development and implementation of an eventual successor technology to 5G technology. We launched wireless service plans using the 5G network in April 2019 following the commencement of sales of the first 5G-compatible smartphones, and we continue to maintain and enhance our 5G network coverage. We currently provide full nationwide 5G network coverage across outdoor terrestrial areas and subway lines, and substantially full nationwide 5G network coverage in large buildings. KT and LG U+ also rolled out their respective 5G wireless service plans in April 2019. The more successful operation of a 5G network or development of improved 5G technology by a competitor, including better market acceptance or network quality of a competitor’s 5G services, could materially and adversely affect our existing wireless telecommunications businesses as well as the returns on future investments we may make in our 5G network or our other businesses.
In addition to introducing new technologies and offerings, we must phase out outdated and unprofitable technologies and services. For example, we discontinued our wireless broadband Internet access (“WiBro”) services in January 2019 and our second generation CDMA wireless services in July 2020. If we are unable to introduce new technologies and offerings on a cost-effective and timely basis, our business, financial condition and results of operations could be adversely affected.
Implementation of new wireless technology and enhancement of existing wireless technology have required, and may continue to require, significant capital and other expenditures, which we may not recoup.
We have made, and intend to continue to make, capital investments to develop, launch and enhance our wireless service. In 2025, 2024 and 2023, we spent Won 733.9 billion, Won 1,259.0 billion and Won 1,380.6 billion, respectively, in capital expenditures to build and enhance our wireless networks. We plan to make further capital investments related to our wireless services in the future, including services that can potentially leverage our 5G network and enhance the service quality of our 5G network, including through the development and application of AI technology. In addition, we plan to continue maintaining and enhancing our 5G network (including through the development and implementation of 5G-Advanced technology) as described above, while also maintaining our LTE network, which we expect will continue to be used by a material portion of our subscriber base in the near future, despite the ongoing migration of wireless service users to our 5G network. Our wireless technology-related investment plans are subject to change, and will depend, in part, on market demand for 5G and LTE services, the competitive landscape for provision of such services and the development of competing technologies. There may not be sufficient demand for services based on our latest wireless technologies, as a result of competition or otherwise, to permit us to recoup or profit from our wireless technology-related capital investments.
Our businesses are subject to various types of Government regulation, and any change in Government policy relating to the telecommunications industry could have an adverse effect on our business, financial condition and results of operations.
Our businesses are generally subject to governmental supervision and various types of regulation.
Rate Regulation. The Government has periodically reviewed the rates charged by wireless telecommunications service providers and has, from time to time, released public policy guidelines or suggested
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rate reductions. Although these guidelines or suggestions were not binding, we have implemented some rate reductions in response to them. For example, under the MDDIA, wireless telecommunications service providers were obliged to provide certain benefits, such as discounted rates, to subscribers who subscribe to their service without receiving subsidies. In June 2017, the State Affairs Planning Advisory Committee of Korea announced that it would encourage wireless telecommunications service providers, including us, to increase the applicable discount rate offered to subscribers from 20% to 25%, which we adopted in September 2017, and to offer additional discounts to low income customers, including those on government welfare programs and senior citizen recipients of the basic pension, which we implemented in December 2017 and July 2018, respectively. Although the MDDIA was repealed in July 2025, discounted rates offered under the MDDIA have been retained through a related amendment to the Telecommunications Business Act. See “Item 4.B. Business Overview — Law and Regulation — Rate Regulation” and “Item 5.A. Operating Results — Overview — Rate Regulations.” Such discounts have contributed to a general decrease in the monthly revenue per subscriber of our wireless telecommunications services. See “Item 5.A. Operating Results — Overview — Decrease in Monthly Revenue per Subscriber.” In July 2022, the MSIT requested wireless telecommunications service providers, including us, to introduce additional mid-tier 5G rate plans to provide 5G subscribers with more diverse and affordable rate plans that better meet their data usage patterns. We have since introduced several types of such new plans in 2022 and 2023. In November 2023, the MSIT requested wireless telecommunications service providers, including us, to provide 5G smartphone users with the option to subscribe to LTE rate plans, which we implemented in the same month. In addition, in January 2024, the MSIT requested wireless telecommunications service providers, including us, to introduce low-tier 5G rate plans priced under Won 40,000 per month, which we implemented in March 2024. In October 2024, during the National Assembly’s audit of the MSIT, concerns were raised about LTE rate plans that are more expensive or offer fewer benefits compared to 5G rate plans. We have since reviewed this concern and suspended new subscriptions for some of our LTE rate plans starting in February 2025. The Government may suggest other policy initiatives relating to rate plans of wireless telecommunications service providers in the future, and any further changes to our rate plans we make in response to such suggestion may adversely affect our profitability and results of operations.
Technology Standards. The Government also plays an active role in setting the timetable and quality standards for the adoption and implementation of new technologies to be used by telecommunications operators in Korea. For example, the Government provided such guidance in connection with the introduction of LTE and 5G technologies in the past. The Government may provide similar guidance or recommendations in connection with the adoption and implementation of technologies to be used in future telecommunications services, and it is possible that adherence to such guidance or recommendations promoted by the Government in the future may not provide us with the best commercial returns.
Frequency Allocation. The Government sets the policies regarding the use of frequencies and allocates the spectrum of frequencies used for wireless telecommunications. See “Item 4.B. Business Overview — Law and Regulation — Frequency Allocation.” The reallocation of the spectrum to our existing competitors or a new entrant to the wireless telecommunications business could increase competition among wireless telecommunications service providers, which may have an adverse effect on our business, financial condition and results of operations. See “— Our business, financial condition and results of operations may be adversely affected if we fail to acquire adequate additional frequency usage rights, renew existing frequency usage rights, or use our bandwidth efficiently to accommodate subscriber growth and subscriber usage.”
MVNOs. Pursuant to the Telecommunications Business Act, certain wireless telecommunications service providers designated by the MSIT, which currently includes only us, are required to lease their networks or allow use of their networks (collectively, a “wholesale lease”) by other network service providers, such as an MVNO, that have requested such a wholesale lease in order to provide their own services using the leased networks. Currently, 15 MVNOs provide wireless telecommunications services using the networks leased from us. We believe that leasing a portion of our bandwidth capacity to an MVNO impairs our ability to use our bandwidth in ways that would generate maximum revenues and strengthens our MVNO competitors by granting them access
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and lowering their costs to enter into and operate in our markets. Accordingly, our profitability has been, and may continue to be, adversely affected.
Interconnection. Our wireless telecommunications services depend, in part, on our interconnection arrangements with domestic and international fixed-line and other wireless networks. Our interconnection arrangements, including the interconnection rates we pay and interconnection rates we charge, affect our revenues and operating results. The MSIT determines the basic framework for interconnection arrangements, including policies relating to interconnection rates in Korea. Such basic framework for interconnection arrangements has been changed several times in the past, and we cannot assure you that we will not be adversely affected by the MSIT’s interconnection policies and future changes to such policies. See “Item 4.B. Business Overview — Interconnection — Domestic Calls.”
Regulatory Action. The MSIT 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 or any violation of the conditions of our licenses. Alternatively, in lieu of suspension of our business, the MSIT may levy a penalty surcharge of up to 3.0% of the average of our annual revenue for the preceding three fiscal years. Such penalties, which may include the revocation of cellular licenses, suspension of business or imposition of penalty surcharges by the MSIT, could have a material adverse effect on our business. We believe that we are currently in compliance with the material terms of all of our cellular licenses.
AI Technology. In January 2025, in light of the increasing proliferation of AI technology in both the private and public sectors, the National Assembly enacted the Framework Act on the Development of Artificial Intelligence and the Creation of a Foundation for Trust, which seeks to regulate the risks of the use of AI technology while also promoting the growth of AI-related industries in Korea. Such new law became effective on January 22, 2026, and the Government promulgated more detailed regulations relating to the safety and reliability of AI-generated information and the handling of user data, among other things, on the same day.
In addition, the Fair Trade Act provides for various regulations and restrictions enforced by the Korea Fair Trade Commission (the “KFTC”) to prohibit or restrict actions that impede competition and fair trade. From time to time, we have been, and may in the future be, subject to investigations by the KFTC relating to potential violations of such laws and regulations. See “Item 8.A. — Consolidated Statements and Other Financial Information — Legal Proceedings — KFTC Proceedings.” Any future determination by the KFTC that we have engaged in transactions that violate the fair trade laws and regulations may result in fines or other punitive measures and may have a material adverse effect on our business.
On March 12, 2026, the National Assembly passed a resolution to amend the Act on Promotion of Information and Communications Network Utilization and Information Protection. The amendments were promulgated on March 31, 2026, and will take effect beginning on October 1, 2026, except as otherwise provided for certain provisions. The amendments will require certain information and communications service providers to secure adequate personnel and budget for information security, establish an information security committee and strengthen the role and responsibilities of the chief information security officer. The amendments will also authorize the MSIT to periodically assess the stability and reliability of information and communications networks, impose notification obligations on service providers in the event of certain cybersecurity incidents and expand the scope of incident investigations and analyses. In addition, the amendments will require the establishment of a cybersecurity incident review committee under the MSIT and introduce administrative surcharges for repeated cybersecurity incidents.
On February 12, 2026, the plenary session of the National Assembly passed amendments to the Personal Information Protection Act to strengthen regulations relating to personal data protection. The amendments clarified that business operators and their chief executives bear ultimate responsibility for the processing and protection of personal information and strengthened the role and responsibilities of the chief privacy officer. The amendments also expand notification obligations to data subjects to include not only the loss, theft or leakage of
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personal information but also its falsification, alteration or damage, and impose notification requirements in certain cases where there is a risk of personal data leakage. The amendments also require personal information controllers of companies that meet certain criteria to be set out in the Presidential Decree based on factors, such as revenue and the scale of personal data processing, to obtain Personal Information & Information Security Management System (“ISMS-P”) certification. In addition, the amendments strengthen enforcement measures by allowing administrative surcharges of up to 10% of total revenue to be imposed in cases involving repeated or large-scale personal data breaches caused by willful misconduct or gross negligence. These amendments were promulgated on March 10, 2026, and will take effect on September 11, 2026. The requirement to obtain ISMS-P certification is scheduled to take effect on July 1, 2027.
Our cost of compliance with, and any determination by the Government that we are in violation of, these or any other new laws and regulations that relate to our business and operations may have an adverse effect on our business, financial condition and results of operations.
We are subject to additional regulations as a result of our dominant market position in the wireless telecommunications sector, which could harm our ability to compete effectively.
The Government endeavors to promote competition in the Korean telecommunications markets through measures designed to prevent a dominant service provider from exercising its market power and deterring the emergence and development of viable competitors. We have been designated by the MSIT as the “dominant network service provider” in respect of our wireless telecommunications business. As such, we are subject to additional regulations to which certain of our competitors are not subject. For example, the MSIT has fifteen days to object to any new rates and terms of service reported by us. See “Item 4.B. Business Overview — Law and Regulation — Rate Regulation.”
We may also be designated as a “market-dominating business entity” by the relevant authorities under the Fair Trade Act, based on a case-by-case assessment of factors such as our market share, barriers to entry and the relative scale of competitors. If so designated, we would be subject to additional regulations, including restrictions on engaging in conduct that could be deemed an abuse of such position. See “Item 4.B. Business Overview — Law and Regulation — Competition Regulation.” The additional regulations to which we are subject have affected our competitiveness in the past and may materially hurt our profitability and impede our ability to compete effectively against our competitors in the future.
We may fail to successfully complete, integrate or realize the anticipated benefits of our new businesses, joint ventures or other strategic alternatives or corporate reorganizations, and such transactions may negatively impact our business.
We continue to seek opportunities to develop new businesses that we believe are complementary to our existing product and service portfolio and expand our global business through selective acquisitions. We also continue to seek ways to optimize our corporate structure to maximize the value of our traditional businesses on the one hand and newly developed businesses on the other hand. Accordingly, we are often engaged in evaluating potential transactions and other strategic alternatives as well as corporate reorganizations, some of which may be significant in size.
For example, we completed the Tbroad Merger in April 2020, following which we became the second-largest pay TV provider in Korea in terms of number of subscribers as of December 31, 2025. Moreover, in February 2022, in order to strengthen our online distribution capabilities and explore synergies with our other businesses in the information and communications technologies (“ICT”) sector, we indirectly re-acquired a 100.0% equity interest in SK m&service Co., Ltd. (“SK M&Service”), which provides online corporate employee benefits management and training services for Korean businesses and public institutions, through our wholly-owned subsidiary PS&Marketing Corporation (“PS&Marketing”), from SK Planet. However, as part of our efforts to increase our operational efficiency and re-balance our business areas, we entered into agreements
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with Samgu Inc. and its affiliates in December 2024 to dispose of a 70% equity interest in SK M&Service, as well as our 100% equity interest in our former wholly-owned subsidiary NATE Communications Corporation (formerly known as SK Communications Co., Ltd.), which operates the “Nate” internet portal, and the entirety of our 50% equity interest in our former associate F&U Credit Information Co., Ltd. (“F&U Credit Information”), which provides credit information services. The disposals of NATE Communications Corporation, SK M&Service and F&U Credit Information were completed in January 2025, February 2025 and April 2025, respectively.
In December 2025, we entered into an agreement to sell our entire equity stake in SK stoa Co., Ltd. (“SK Stoa”), which operates our T-commerce business, and Media S Co., Ltd. (“Media S”), which operates two TV channels and co-produces original television entertainment contents, to Rapport Labs Inc., a Korea-based e-commerce company, as part of our ongoing strategy to streamline and optimize our overall business portfolio. Such transaction is currently pending subject to regulatory approval and other customary closing conditions.
We have also pursued other strategic alternatives, such as entering into a strategic alliance in July 2022 with Hana Financial Group Inc. (“Hana Financial Group”), a leading financial holding company in Korea with subsidiaries having significant presences in commercial banking, credit card business, securities brokerage and insurance, among others, to seek synergies through convergence between finance and ICT technology. As part of such strategic alliance, we transferred the entirety of our 15.0% interest in HanaCard Co., Ltd. (“HanaCard”), a leading credit card company in Korea and a subsidiary of Hana Financial Group, for Won 330.0 billion in July 2022 and acquired 8,630,949 shares of Hana Financial Group (representing a 2.9% interest) for Won 330.0 billion between July and November 2022, and HanaCard acquired 1,307,471 common shares of us (representing a 0.6% interest) for Won 68.4 billion between July and September 2022.
Effective as of November 1, 2021, we conducted a horizontal spin-off (the “Spin-off”) of our businesses related to the management of our equity interests in certain subsidiaries and investees (the “Spin-off Portfolio Companies”) engaged in the semiconductor and certain other non-telecommunications businesses, including security, e-commerce and other new ICT businesses (the “Spin-off Businesses”). The Spin-off was accomplished through the establishment of a new company named SK square Co., Ltd. (“SK Square”), to which our equity interests in the Spin-off Portfolio Companies were transferred, and we distributed SK Square’s shares of common stock on a pro rata basis to the holders of our common stock.
We have been actively emphasizing the development and utilization of AI technologies across our businesses and operations to enhance competitiveness, drive innovation and improve operational efficiency. In September 2025, we consolidated our AI-related business units into a centralized internal organization, which we refer to as the “AI Company-in-Company (“CIC”),” to drive more efficient and focused growth of our AI-related businesses. See “Item 5.A. Operating Results — Overview — Operational Efficiency.” We have also been collaborating with leading Korean AI technology companies as well as other global telecommunications companies, including by making various strategic investments in leading AI technology companies in recent years to facilitate mutual collaboration. For a detailed description of our recent investments in new businesses, including those relating to the field of AI technology, see “Item 4.B. Business Overview — Cellular Services — Other Solutions and Services — Other New Businesses” and “Item 5.B. Liquidity and Capital Resources — Capital Requirements — Investments in New Growth Businesses.”
While we are hoping to benefit from a range of synergies and efficiencies from our recent or future acquisitions, strategic investments and corporate reorganizations as well as our development and integration of new businesses and technologies, we may not be able to successfully complete or integrate such acquisitions, strategic investments, new businesses or technologies, or reorganized entities and may fail to realize their expected benefits in the near term, or at all. In addition, when we enter into new businesses with partners through joint ventures or other strategic alliances, we and those partners may have disagreements with respect to strategic directions or other aspects of business, or may otherwise be unable to coordinate or cooperate with each other, any of which could materially and adversely affect our operations in such businesses. Our business may be negatively impacted if we fail to successfully integrate or realize the anticipated benefits of such transactions.
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Due to the existing high penetration rate of mobile phones in Korea, we are unlikely to maintain our subscriber growth rate, which could adversely affect our business, financial condition and results of operations.
According to data published by the MSIT and the historical population data published by the Ministry of the Interior and Safety, the penetration rate of mobile phones in Korea as of December 31, 2025 was approximately 110.6%, which was relatively high compared to many industrialized countries. Therefore, we expect that the penetration rate of mobile phones in Korea will remain relatively stable. As a result of the already high penetration rate of mobile phones in Korea coupled with our leading market share and a declining trend in the population size of Korea, we expect our subscriber growth rate to decrease. Slowed growth or any future decrease in the number of subscribers without a commensurate increase in revenues through the introduction of new services and increased use of our services by existing subscribers would likely have a material adverse effect on our business, financial condition and results of operations.
Our business, financial condition and results of operations may be adversely affected if we fail to acquire adequate additional frequency usage rights, renew existing frequency usage rights, or use our bandwidth efficiently to accommodate subscriber growth and subscriber usage.
One of the principal limitations on a wireless network’s subscriber capacity is the amount of frequency spectrum available for use by the network. We have acquired a number of frequency usage rights to secure bandwidth capacity to provide our broad range of services, for which we typically make an initial payment as well as pay usage fees during the license period. We made frequency usage right fee payments of Won 99.8 billion in 2025, Won 103.0 billion in 2024 and Won 102.5 billion in 2023. For more information regarding the various bandwidths that we use and the usage right fees for such bandwidths, see “Item 4.B. Business Overview — Law and Regulation — Frequency Allocation,” “Item 5.B. Liquidity and Capital Resources — Capital Requirements — Capital Expenditures” and note 16 of the notes to our consolidated financial statements.
The growth of our wireless data businesses has been a significant factor in the increased utilization of our bandwidth, since wireless data applications are generally more bandwidth-intensive than voice services. In
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particular, the continued increase in popularity of smartphones and data intensive applications among smartphone users has been a major factor for the high utilization of our bandwidth in recent years. Although such trend has been offset in part by the implementation of new technologies that enable more efficient usage of our bandwidth, we expect that the current trend of increased data transmission use by our subscribers will continue to accelerate in the near future as more subscribers migrate to our 5G network and the volume and sophistication of the multimedia content we offer through our wireless data services continue to grow in the 5G environment. While we believe that we can address the capacity constraint issue through system upgrades and efficient allocation of bandwidth, inability to address such capacity constraints in a timely manner may adversely affect our business, financial condition and results of operations. In the event we are unable to maintain sufficient bandwidth capacity, our subscribers may perceive a general slowdown of wireless telecommunications services. Growth of our wireless telecommunications business will depend in part upon our ability to effectively manage our bandwidth capacity and to implement efficiently and in a timely manner new bandwidth-efficient technologies if they become available. We cannot assure you that bandwidth constraints will not adversely affect the growth of our wireless telecommunications business.
In 2021, the MSIT reallocated a total of 310 MHz of frequency bandwidths to KT, LG U+ and us, 95 MHz (in the 800 MHz, 2.1 GHz and 2.6 GHz spectrums) of which was allocated to us. See “Item 5.B. Liquidity and Capital Resources — Capital Requirements.” In December 2022, citing the lack of progress made to date with respect to the implementation of 5G infrastructure for our use of the 28 GHz spectrum (800 MHz of bandwidth which was allocated to us in December 2018 for a period of five years until November 2023), the MSIT reduced the duration of our license for the use of such bandwidth by six months and asked us to install 15,000 base stations that use the 28 GHz spectrum by the end of May 2023, which we were not able to do within the Government’s requested timetable. While we do not believe that the loss of such allocated bandwidth have had or will have a material adverse effect on our business, we cannot assure you that we will be able to reacquire such bandwidth in the future or that the failure to reacquire such bandwidth will not adversely affect our future prospects. Furthermore, in December 2022, the Government cancelled the allocations of bandwidth in the 28 GHz spectrum that had been provided to KT and LG U+, also citing the lack of progress made by these companies. In January 2024, the Government allocated 800 MHz of bandwidth in the 28 GHz spectrum to Stage X to provide nationwide wireless network services. However, in July 2024, the Government revoked such allocation citing Stage X’s failure to meet the paid-in capital requirement and discrepancies in the actual ownership ratios of major shareholders and ownership structure compared to the information included in its frequency allocation application.
We may be required to pay a substantial amount to acquire additional bandwidth capacity in the future in order to meet increasing bandwidth demand or renew the rights to use our existing bandwidth, and we may not be successful in acquiring the necessary bandwidth to meet such demand at commercially attractive terms or at all, which may adversely affect our business, financial condition and results of operations. In particular, the rights to use certain of our existing frequency bandwidths are due to expire within 2026, including 20 MHz in the 800 MHz spectrum in June 2026 and an aggregate of 135 MHz in the 1.8 GHz, 2.1 GHz and 2.6 GHz spectrums in December 2026. We have applied for the renewal of the 20 MHz frequency bandwidth in the 800 MHz spectrum in December 2025, and we plan to apply for the renewal of the remaining 135 MHz of frequency bandwidths in June 2026. The final consideration to be paid by us for such reallocated bandwidths is expected to be conditional on the number of indoor 5G cell sites to be constructed by us by 2031. While we do not have any material reasons to believe that our renewal efforts will not be successful, any failure or delay in obtaining such renewal on economically viable terms or at all for any reason may have an adverse impact on our business, financial condition and results of operations.
We rely on key technology professionals and senior management, and the loss of the services of any such personnel or the inability to attract and retain them may negatively affect our business.
Our success depends to a significant extent on the continued service of our research and development and engineering personnel, and our ability to continue to attract, retain and motivate qualified technology professionals including researchers and engineers. In particular, our focus on leading the market in introducing
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new services has meant that we must aggressively recruit technology professionals with expertise in cutting-edge technologies. Such employees are in high demand, and we devote significant resources to identifying, hiring, training, successfully integrating and retaining these employees. Competition for these individuals could cause us to offer higher compensation and other benefits to attract and retain them. We also depend on the services of experienced key senior management, and if we lose their services, it would be difficult to find and integrate replacement personnel in a timely manner, or at all.
The loss of the services of any of our key technology professionals or senior management without adequate replacement, or the inability to attract new qualified personnel, would have a material adverse effect on our results of operations.
We need to observe certain financial and other covenants under the terms of our debt instruments, the failure to comply with which would put us in default under those instruments.
Certain of our debt instruments contain financial and other covenants with which we are required to comply on an annual and semi-annual basis. The financial covenants with respect to SK Telecom’s debt instruments include, but are not limited to, a maximum net debt-to-EBITDA ratio of 3.50 and a minimum EBITDA-to-total interest expense ratio of 4.00, each as determined on a separate financial statement basis. The debt arrangements also contain negative pledge provisions limiting our ability to provide liens on our assets as well as cross-default and cross-acceleration clauses, which give related creditors the right to accelerate the amounts due under such debt if an event of default or acceleration has occurred with respect to our existing or future indebtedness, or if any material part of our indebtedness or indebtedness of our subsidiaries is capable of being declared payable before the stated maturity date. In addition, such covenants restrict our ability to raise future debt financing.
If we breach our financial or other covenants, our financial condition will be adversely affected to the extent we are not able to cure such breaches or repay the relevant debt.
We may have to make further financing arrangements to meet our capital expenditure requirements and debt payment obligations.
We have had, and expect to continue to have, significant capital expenditure requirements as we continue to build out, maintain and upgrade our networks and invest in businesses that complement our wireless and fixed-line telecommunications businesses. We spent Won 2,206.6 billion for capital expenditures in 2025. We currently expect to spend a slightly higher amount for capital expenditures in 2026 compared to 2025 for a range of projects, including investments to maintain and enhance our telecommunications networks (including our 5G and LTE networks), investments to improve and maintain our Wi-Fi network, investments in data infrastructure and computing capabilities, and investments in the development of AI, IoT and other digital solutions and services. Such projects also include other initiatives related to the development of new growth businesses and our ongoing businesses in the ordinary course, in each case with an emphasis on incorporating AI technology into our various existing and new business areas. However, our overall capital expenditure levels and the allocation of such expenditures remain subject to many uncertainties. We may increase, reduce or suspend our planned capital expenditures for 2026 or change the timing and area of our capital expenditure spending from the estimates described above in response to market conditions or for other reasons. We may also make additional capital expenditures and other investments beyond our currently anticipated level as opportunities arise, including in relation to any acquisitions of additional frequency usage rights or execution of additional AI-related investments.
In particular, we continue to make significant capital investments to maintain and upgrade our wireless networks in response to growing bandwidth demand by our subscribers. Bandwidth usage by our subscribers has rapidly increased in recent years primarily due to the increasing number of data intensive mobile applications and use of such applications by smartphone users. If heavy usage of bandwidth-intensive services grows beyond our current expectations, we may need to invest more capital than is currently anticipated to expand the bandwidth
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capacity of our networks or our customers may experience suboptimal performance when using our services. Any of these events could adversely affect our competitive position and have a material adverse effect on our business, financial condition and results of operations. For a more detailed discussion of our capital expenditure plans and a discussion of other factors that may affect our future capital expenditures, see “Item 5.B. Liquidity and Capital Resources — Capital Requirements — Capital Expenditures.”
As of December 31, 2025, we had Won 2,350.2 billion in contractual payment obligations (excluding short-term leases and leases of low-value assets) due in 2026, which mostly involved repayment of debt obligations and payments related to lease liabilities and frequency licenses. See “Item 5.B. Liquidity and Capital Resources — Contractual Obligations and Commitments.”
We have not arranged firm financing for all of our current or future capital expenditure plans and contractual payment obligations. We have, in the past, obtained funds for our proposed capital expenditure and payment obligations from various sources, including our cash flow from operations as well as from financings, primarily debt and equity financings. Any material adverse change in our operational or financial condition could impact our ability to fund our capital expenditure plans and contractual payment obligations. Volatile financial market conditions and an increasing interest rate environment may also curtail our ability to obtain adequate funding and/or increase our cost of borrowings, which would have an adverse effect on our liquidity and financial position. Inability to fund such capital expenditure requirements may have a material adverse effect on our business, financial condition and results of operations. In addition, although we currently anticipate that the capital expenditure levels estimated by us will be adequate to meet our business needs, such estimates may need to be adjusted based on developments in technology and markets. Failure to meet any such increased expenditure requirements or to obtain adequate financing for such requirements on terms acceptable to us, or at all, may have a material adverse effect on our business, financial condition and results of operations.
Termination or impairment of our relationship with a small number of key suppliers for network equipment and for leased lines could adversely affect our business, financial condition and results of operations.
We purchase wireless network equipment from a small number of suppliers. To date, we have purchased substantially all of the equipment for our networks from Samsung Electronics Co., Ltd. (“Samsung Electronics”), Ericsson-LG Co., Ltd. (“Ericsson-LG”) and Nokia Corporation (“Nokia”). In addition, we purchase a substantial majority of our wireless devices from Samsung Electronics and Apple. Although other manufacturers sell the equipment we require, sourcing such equipment from other manufacturers could result in unanticipated costs in the maintenance and enhancement of our wireless networks. Inability to obtain the equipment needed for our networks in a timely manner may have an adverse effect on our business, financial condition and results of operations.
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 interruption in the availability of equipment from our suppliers for any reason could have an adverse effect on our business, financial condition and results of operations. In addition, inability to lease adequate lines at commercially reasonable rates may impact the quality of the services we offer and may also damage our reputation and our business.
Our business relies on technology developed by us, and our business will suffer if we are unable to protect our proprietary rights.
We own numerous patents and trademarks worldwide, and have applications for patents pending in many countries. In addition to active research and development efforts, our success depends in part on our ability to obtain patents and other intellectual property rights covering our services.
We may be required to defend against charges of infringement of patent or other proprietary rights of third parties. Although we have not experienced any significant patent or other intellectual property disputes, we
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cannot be certain that any significant patent or other intellectual property disputes will not occur in the future. Defending our patent and other proprietary rights could require us to incur substantial expense and to divert significant resources of our technical and management personnel, and could result in our loss of rights to employ certain technologies to provide services.
Malicious and abusive Internet practices could impair our services and we may be subject to significant legal and financial exposure, damage to our reputation and a loss of confidence of our customers.
Our business involves the storage and transmission of large amounts of personal information, and cybersecurity breaches expose us to a risk of loss of this information, which may lead to improper use or disclosure of such information, ensuing potential liability and litigation, and loss of customers, any of which could harm our reputation and adversely affect our business.
We maintain a comprehensive process for assessing, identifying and managing material risks from cybersecurity threats as part of our overall risk management system and processes. See “Item 16K. Cybersecurity.” Instituting appropriate access controls and safeguards across all of our information technology infrastructure is challenging. Furthermore, outside parties may attempt to fraudulently induce employees to disclose personal or confidential information in order to gain access to our data or our customers’ data or accounts, or may otherwise obtain access to such data or accounts. Because the techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently and often are not recognized until attacks are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.
On April 18, 2025, we became aware of a malware attack against our information technology infrastructure, which resulted in the leakage of certain USIM information of our 5G and LTE network subscribers. Upon becoming aware of such incident, we promptly deleted the malware and segregated the targeted equipment, and we have yet to find any instance of actual or attempted misuse of such information. We also alerted the Government authorities and our customers of such attack, and promptly took further measures to mitigate the potential impact of such attack, including by engaging in a comprehensive audit of our entire network system, strengthening our monitoring efforts against USIM swap frauds and unauthorized authentication attempts, and offering free USIM protection services and free replacement of USIM cards to our subscribers to block any unauthorized misuse of their USIM information, while also cooperating with Government authorities in their investigations of this incident. From May 5, 2025 to June 23, 2025, we temporarily suspended new subscriptions of mobile phone services to alleviate the shortage of USIM card replacement inventory in accordance with administrative guidance from the MSIT. Furthermore, on July 4, 2025, in order to reaffirm our commitment and restore customer trust, we announced the “Accountability and Commitment Program” consisting of the “Customer Assurance Package,” “Information Protection Innovation Plan,” “Customer Appreciation Package” and “Subscription Cancellation Fee Waiver.” Under the Customer Assurance Package, we have been providing free subscriptions to a leading third-party mobile device security solution for all customers for one year beginning in November 2025, among other things. Under the Information Protection Innovation Plan, we announced our intent to invest approximately Won 700 billion over the course of the next five years to strengthen our cybersecurity technology, infrastructure and personnel. Under the Customer Appreciation Package, we provided a range of economic benefits to our customers totaling approximately Won 500 billion in value during the second half of 2025. Such benefits included discounts on monthly subscription fees for the month of August 2025 and free additional mobile data until the end of 2025, as well as significant membership discounts redeemable at our various partnering merchants and special benefits for returning customers, in each case subject to applicable terms and conditions. Under the Subscription Cancellation Fee Waiver, we waived the subscription cancellation fees for customers who canceled their subscriptions between April 19, 2025 (which was the date of the public announcement of the cybersecurity incident) and July 14, 2025. The number of our mobile phone subscribers decreased by approximately 0.73 million over such period. In August 2025, the Telecommunications Dispute Resolution Committee under the KMCC recommended that we waive cancellation fees through year-end and reduce bundled wireless and fixed-line telecommunications service cancellation fees by 50%. We declined this recommendation in September 2025.
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On August 27, 2025, the Personal Information Protection Commission of Korea (the “PIPC”) imposed a fine of Won 134.8 billion and an administrative penalty of Won 9.6 million and issued a correctional order on us in connection with this incident. While we have provisionally paid the fine and the administrative penalty in full, we filed an administrative lawsuit challenging such decision in January 2026, which case is currently pending before the Seoul Administrative Court. In addition, certain of our mobile phone service subscribers have sought dispute mediation with relevant authorities to make damage claims in connection with their alleged losses relating to the incident. To date, we have declined to accept the authorities’ proposed settlements. See “Item 8.A. Consolidated Statements and Other Financial Statements — Legal Proceedings — Other Proceedings.” Certain of our mobile phone service subscribers have also filed a number of civil lawsuits seeking alleged damages in connection with this incident, all of which are currently pending before trial courts. While we are vigorously defending ourselves in each of these cases, we are unable to predict their outcomes, and no assurance can be made that additional customers will not pursue additional legal actions to seek alleged damages against us in connection with this incident.
Actual or perceived breaches of our cybersecurity of a material nature, or material harm to the market perception of the effectiveness of our cybersecurity measures may require us to incur significant legal and financial exposure, including legal claims and regulatory fines and penalties, monetary compensation to our customers, damage to our reputation and a loss of confidence of our customers, which could have a material adverse effect on our business, financial condition and results of operations.
In addition, in the event of common malicious and abusive Internet activities, such as unsolicited mass advertising (i.e., “spam”), hacking of personal information, distributed denial-of-service attacks and dissemination of viruses, worms and other destructive or disruptive software, our wireless and fixed-line subscribers, in accessing the Internet through our network, may be exposed to such activities. These activities could have adverse consequences on our network and our customers, including degradation of service, excessive call volume to call centers and damage to our or our customers’ equipment and data. Significant incidents could lead to customer dissatisfaction and, ultimately, loss of customers or revenue, in addition to increased costs to us to service our customers and protect our network. Any significant loss of our subscribers or revenue due to incidents of malicious and abusive Internet practices or significant increase in costs of serving those subscribers, including in connection with the above-described cybersecurity incident, could materially and adversely affect our business, financial condition and results of operations.
Labor disputes may disrupt our operations.
Although we have never experienced any significant labor disputes, there can be no assurance that we will not experience labor disputes in the future, including protests and strikes, which could have an adverse effect on our business, financial condition and results of operations.
Every two years, the union and management negotiate and enter into a new collective bargaining agreement that has a two-year duration, which is focused on employee benefits and welfare. Employee wages are separately negotiated on an annual basis. Although we consider our relationship with our employees to be good, there can be no assurance that we will be able to maintain such a working relationship with our employees and will not experience labor disputes resulting from disagreements with the labor union in the future.
Our ability to deliver services may be disrupted due to a systems failure, shutdown in our networks or natural disaster.
Our services are currently carried through our wireless and fixed-line networks, which could be vulnerable to damage or interruptions in operations due to fires, floods, earthquakes, power losses, telecommunication failures, network software flaws, unauthorized access, computer viruses and similar events, which may occur from time to time. The occurrence of any of these events could impact our ability to deliver services, we may be liable for damages to our customers caused by such interruptions, our reputation may be damaged and our
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customers may lose confidence in us, which could have a negative effect on our business, financial condition and 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 the market value of our common shares and 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; 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 our common shares on the KRX KOSPI Market. These fluctuations will also affect:
the amounts a registered holder or beneficial owner of ADSs will receive from the American Depositary Receipt (“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 our common shares; and
the secondary market price of our ADSs.
If SK Inc. causes us to breach the foreign ownership limitations on our common shares by being deemed to be a foreign entity, we may experience a change of control.
The Telecommunications Business Act currently sets a 49.0% limit on the aggregate foreign ownership of our issued shares. Under the Telecommunications Business Act, as amended, a Korean entity, such as SK Inc., 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 15.0% or more of the issued voting stock of the Korean entity.
Notwithstanding the above, pursuant to an amendment to the Telecommunications Business Act which became effective in April 2022, a Korean entity, so long as (i) such entity’s largest shareholder (determined by aggregating the shareholdings of such shareholder and its related parties) is a foreign entity specifically designated by the MSIT incorporated in a country that has entered into a bilateral or multilateral free trade agreement with Korea, and (ii) such shareholder (together with the shareholdings of its related parties) owns 15.0% or more of the issued voting stock of such entity, may own more than 49.0% of our issued shares but may not exercise its voting rights with respect to the shares held in excess of the 49.0% ceiling until the end of the MSIT’s Public Interest Review (see “Item 4.B. Business Overview — Foreign Ownership and Investment Restrictions and Requirements”).
As of December 31, 2025, SK Inc. owned 65,668,397 shares of our common stock, or 30.6%, of our issued shares. SK Inc. is currently not deemed to be a foreign entity. However, should SK Inc. be considered to be a foreign shareholder in the future, then its shareholding in us would be included in the calculation of our aggregate foreign shareholding and our aggregate foreign shareholding (based on our foreign ownership level as of December 31, 2025, which we believe was 36.2%) would exceed the 49.0% ceiling on foreign shareholding. As of December 31, 2025, the two largest foreign shareholders of SK Inc. each held a 3.4% stake therein.
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If our aggregate foreign shareholding limit is exceeded, the MSIT may issue a corrective order to us, the breaching shareholder (including SK Inc. if the breach is caused by an increase in foreign ownership of SK Inc.) and the foreign shareholder which owns in the aggregate 15.0% or more of SK Inc. Furthermore, if SK Inc. is considered a foreign shareholder, it will be prohibited from exercising its voting rights with respect to the shares held in excess of the 49.0% ceiling, which may result in a change in control of us. In addition, the MSIT will be prohibited from granting us licenses or permits necessary for entering into new telecommunications businesses until our aggregate foreign shareholding is reduced to below 49.0%. For a description of further actions that the MSIT could take, see “Item 4.B. Business Overview — Law and Regulation — Foreign Ownership and Investment Restrictions and Requirements.”
Risks Relating to Korea
Unfavorable financial and economic developments in Korea may have an adverse effect on us.
We are incorporated in Korea, and a substantial portion of our operations and assets are located in Korea. As a result, we are subject to political, economic, legal and regulatory risks specific to Korea, and our performance and successful fulfillment of our operational strategies are dependent in large part on the overall Korean economy. In addition, the future growth of the Korean economy is subject to many factors beyond our control, including developments in the global economy. In recent years, adverse conditions and volatility in the worldwide financial markets, fluctuations in oil and commodity prices, supply chain disruptions and the increasing weakness of the global economy, which have been affected by, among others, the COVID-19 pandemic, the Russia-Ukraine war and ensuing sanctions against Russia, difficulties faced by several banks in the United States and Europe, fluctuations in policy interest rates globally (including Korea), and more recently, the military conflicts between Iran and other countries, including the United States and Israel, have contributed to the uncertainty of global economic prospects in general and have adversely affected, and may continue to adversely affect, the Korean economy.
The value of the Won relative to major foreign currencies, in particular, the U.S. dollar, has fluctuated significantly and, as a result of uncertain global and Korean economic, social and political conditions, there has been significant volatility in the stock prices of Korean companies recently. Future declines in the Korea Composite Stock Price Index (the “KOSPI”), and large amounts of sales of Korean securities by foreign investors and subsequent repatriation of the proceeds of such sales may adversely affect the value of the Won, the foreign currency reserves held by financial institutions in Korea, and the ability of Korean companies to raise capital. Any future deterioration of the Korean or global economy could adversely affect our business, financial condition and results of operations.
Developments that could have an adverse impact on Korea’s economy include:
declines in consumer confidence and a slowdown in consumer spending, including as a result of higher levels of market interest rates;
the imposition of significant tariffs on Korea’s exports by any of its major export markets, including the United States, as well as any countermeasures or policy responses adopted by the Government that may entail significant costs;
shortages of imported raw materials, natural resources, rare earth minerals or component parts, including semiconductors, due to disruptions to the global supply chain;
rising inflationary pressures leading to increases in costs of goods and services and a decrease in purchasing power;
adverse changes or volatility in foreign currency reserve levels, interest rates, inflation rates, commodity prices (including oil prices), exchange rates (including fluctuations of the U.S. dollar, the Euro or Japanese Yen exchange rates or revaluation of the Chinese Yuan) or stock markets;
adverse conditions or developments in the economies of countries and regions that are important export markets for Korea, such as China, the United States, Europe and Japan, or in emerging market
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economies in Asia or elsewhere, including as a result of deterioration of economic and trade relations among such countries or impositions of significant tariffs by any such country and increased uncertainties in the global financial markets and industry;
hostilities or political or social tensions involving countries in the Middle East (such as those resulting from the military conflicts between Iran and other countries, including the United States and Israel, and internal political or social unrest within countries in the region) and Northern Africa and any material disruption in the global supply of oil or sudden increase in the price of oil;
the occurrence of severe health epidemics in Korea or other parts of the world;
interest rate fluctuations as well as perceived or actual changes in policy rates, or other monetary and fiscal policies set forth, by the U.S. Federal Reserve, Korea and other central banks;
a continuing rise in the level of household debt and increasing delinquencies and credit defaults by retail and small— and medium—sized enterprise borrowers in Korea;
the economic impact of any pending or future free trade agreements or of any changes to existing free trade agreements;
political uncertainty or increasing strife among or within political parties in Korea following the declaration of martial law by former President Yoon Suk-yeol in December 2024 that led to his impeachment and subsequent removal in April 2025 and the election of Mr. Lee Jae-myung as President in June 2025;
a deterioration in economic or diplomatic relations between Korea and its trading partners or allies, including deterioration resulting from territorial disputes or disagreements in foreign policy;
increased sovereign default risks in select countries and the resulting adverse effects on the global financial markets;
a deterioration in the financial condition or performance of small- and medium-sized enterprises and other companies in Korea;
investigations of large Korean business groups and their senior management for possible misconduct;
social and labor unrest;
substantial changes in the market prices of Korean real estate;
a substantial decrease in tax revenues and a substantial increase in the Government’s expenditures for fiscal stimulus measures, unemployment compensation and other economic and social programs, which, together, would likely lead to a national budget deficit as well as an increase in the Government’s debt;
financial problems or lack of progress in the restructuring of Korean business groups, other large troubled companies, their suppliers or the financial sector;
loss of investor confidence arising from corporate accounting irregularities or corporate governance issues concerning certain Korean companies;
increases in social expenditures to support an aging population in Korea or decreases in economic productivity due to the declining population size in Korea;
a continued decrease in the population and birthrates in Korea;
geopolitical uncertainty and the risk of further attacks by terrorist groups around the world;
hostilities or political or social tensions involving Russia (including the Russia-Ukraine war and the ensuing sanctions against Russia) and any resulting adverse effects on the global supply of oil and other natural resources or the global financial markets;
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natural or man-made disasters that have a significant adverse economic or other impact on Korea or its major trading partners; and
an increase in the level of tensions or an outbreak of hostilities between North Korea and Korea or the United States.
Escalations in tensions with North Korea could have an adverse effect on us and the market value of our common shares and ADSs.
Relations between Korea and North Korea have been tense throughout Korea’s modern history. The level of tension between Korea and North Korea has fluctuated and may increase abruptly as a result of future events. In particular, there have been heightened security concerns in recent years stemming from North Korea’s nuclear weapon, ballistic missile and satellite programs as well as its hostile military actions against Korea.
North Korea renounced its obligations under the Nuclear Non-Proliferation Treaty in January 2003 and has conducted six rounds of nuclear tests since October 2006, including claimed detonations of hydrogen bombs and warheads that can be mounted on ballistic missiles. Over the years, North Korea has continued to conduct a series of missile tests, including ballistic missiles launched from submarines and intercontinental ballistic missiles that it claims can reach the United States mainland. North Korea has increased the frequency of such activities since the beginning of 2022, firing numerous ballistic missiles, including intercontinental ballistic missiles, and in November 2023, successfully launched its first spy satellite. In response, the Government has repeatedly condemned North Korea’s provocations and flagrant violations of relevant United Nations Security Council resolutions. Over the years, the United Nations Security Council has passed a series of resolutions condemning North Korea’s actions and significantly expanding the scope of sanctions applicable to North Korea as did the United States and the European Union.
North Korea’s economy also faces severe challenges, which may further aggravate social and political pressures within North Korea. Although bilateral summit meetings between Korea and North Korea were held in April, May and September 2018 and between the United States and North Korea in June 2018, February 2019 and June 2019, there can be no assurance that the level of tensions affecting the Korean peninsula will not escalate in the future. Any increase in tensions, which may occur, for example, if North Korea experiences a leadership crisis, high-level contacts between Korea and North Korea or between the United States and North Korea break down or military hostilities occur, could have a material adverse effect on our business, financial condition and results of operations and the market value of our common shares and ADSs.
Korea’s legislation allowing class action suits related to securities transactions may expose us to additional litigation risk.
The Securities-related Class Action Act of Korea (the “Securities-related Class Action Act”), enacted in January 2004, allows class action suits to be brought by shareholders of companies (including us) listed on the KRX KOSPI Market for losses incurred in connection with purchases and sales of securities and other securities transactions arising from (1) false or inaccurate statements provided in the registration statements, prospectuses, annual reports, audit reports, and semi-annual or quarterly reports or omissions of material information in such documents, (2) insider trading, (3) market manipulation and (4) unfair trading. The Securities-related Class Action Act 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. Because of the relatively recent enactment of the Securities-related Class Action Act, there is not enough judicial precedent to predict how the courts will apply the 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 upon 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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There are special risks involved with investing in securities of Korean companies, including the possibility of restrictions being imposed by the Government in emergency circumstances.
As we are a Korean company and operate in a business and cultural environment that is different from that of other countries, there are risks associated with investing in our securities that are not typical for investments in securities of companies in other jurisdictions.
Under the Foreign Exchange Transactions Act of Korea, if the Government deems that certain emergency circumstances, including a significant disruption in the international balance of payments and international financial markets or extreme difficulty in carrying out currency, exchange rate or other macroeconomic policies due to the movement of capital between Korea and other countries, are likely to occur, it may impose any necessary restriction such as requiring Korean or foreign investors to obtain prior approval from the Ministry of Finance and Economy (the “MOFE”) for the acquisition of Korean securities or for the repatriation of interest, dividends or sales proceeds arising from Korean securities or from disposition of such securities or other transactions involving foreign exchange. See “Item 10.D. Exchange Controls — Korean Foreign Exchange Controls and Securities Regulations.”
Risks Relating to Securities
Sales of our shares by SK Inc. and/or other large shareholders may adversely affect the market value of our common shares and ADSs.
Sales of substantial amounts of our common shares, or the perception that such sales may occur, could adversely affect the prevailing market value of our common shares or ADSs or our ability to raise capital through an offering of our common shares.
As of December 31, 2025, SK Inc. owned 30.6% of our total issued common shares and has not agreed to any restrictions on its ability to dispose of our shares. See “Item 7.A. Major Shareholders.” We can make no prediction as to the timing or amount of any sales of our common shares. We cannot assure you that future sales of our common shares, or the availability of our common shares for future sale, will not adversely affect the prevailing market value of our common shares or ADSs from time to time.
If an investor surrenders his or her ADSs to withdraw the underlying shares, he or she may not be allowed to deposit the shares again to obtain ADSs.
Under the deposit agreement, holders of our common shares 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 our common shares. 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 our common shares represented by ADSs exceeds a specified maximum, 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 4.0% of our common shares. It is possible that we may not give the consent. Consequently, an investor who has surrendered his or her 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 new shares and may suffer dilution of his or her 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 a right to subscribe for additional new common shares or any other rights of
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similar 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 Securities Act 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 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 or her 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 Inc., 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 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.
A holder of our ADSs may not be able to enforce a judgment of a foreign court against us.
We are a corporation with limited liability organized under the laws of Korea. Substantially all of our directors and officers and other persons named in this annual report reside in Korea, and all or a significant portion of the assets of our directors and officers and 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 holders of our ADSs to effect service of process within the United States, or to enforce against us any judgments obtained from the United States courts based on 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 United States courts, of civil liabilities predicated on the United States federal securities laws.
We are generally subject to Korean corporate governance and disclosure standards, which may differ from those in other countries.
Companies in Korea, including us, are subject to corporate governance standards applicable to Korean public companies, which may differ in some respects from standards applicable in other countries, including the United States. As a reporting company registered with the SEC and listed on the New York Stock Exchange (“NYSE”), we are subject to certain corporate governance standards as mandated by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). However, foreign private issuers, including us, are exempt from certain corporate governance requirements under the Sarbanes-Oxley Act or under the rules of the NYSE. There may also be less publicly available information about Korean companies, such as us, than is regularly made available by public or non-public companies in other countries. Such differences in corporate governance standards and less public information available could result in corporate governance practices or disclosures that are perceived as less than satisfactory by investors in certain countries.
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INFORMATION ON THE COMPANY
History and Development of the Company
As Korea’s first wireless telecommunications service provider, we have a recognized history of leadership and innovation in the domestic telecommunications sector. Today, we remain Korea’s leading wireless telecommunications services provider and have continued to pioneer the commercial development and implementation of state-of-the-art wireless technologies. We had 23.5 million mobile phone subscribers, including MVNO subscribers leasing our networks, as of December 31, 2025, representing a market share of 41.6%, the largest market share among Korean wireless telecommunications service providers. We believe that we are also a leader in developing new products and services that reflect the increasing convergence of telecommunications technologies, as well as the growing synergies between the telecommunications sector and other industries.
In February 2012, we acquired an equity stake in SK Hynix, one of the world’s largest memory-chip makers by revenue, for an aggregate purchase price of Won 3.4 trillion, and became its largest shareholder. In November 2021, we transferred all of our 20.1% equity interest in SK Hynix to SK Square pursuant to the Spin-off, as further described below.
Effective as of November 1, 2021, we conducted the Spin-off, pursuant to which we spun off our equity interests in certain subsidiaries and investees (collectively comprising the Spin-off Portfolio Companies) engaged in the semiconductor and certain other non-telecommunications businesses, including our security, e-commerce and other new ICT businesses (collectively comprising the Spin-off Businesses) to SK Square, a newly established holding company, and we distributed SK Square’s shares of common stock on a pro rata basis to the holders of our common stock.
In connection with the Spin-off, we also engaged in a 5-to-1 stock split of our common stock (the “Stock Split”), pursuant to which the par value of our common stock changed from Won 500 per share to Won 100 per share and the number of issued shares of our common stock increased from 72,060,143 shares to 360,300,715 shares, in each case effective as of October 28, 2021. Immediately following, and as a result of, the Stock Split, each ADS outstanding as of October 28, 2021 represented five-ninths of one share of our common stock. On March 31, 2026, we had a market capitalization of approximately Won 16.4 trillion (US$10.7 billion) or approximately 0.4% of the total market capitalization on the KRX KOSPI Market, making us the 48th largest company listed on the KRX KOSPI Market based on market capitalization on that date. Our ADSs, each representing five-ninths of one share of our common stock, have traded on the NYSE since June 27, 1996.
We are a corporation with limited liability organized under the laws of Korea. We established our telecommunications business in March 1984 under the name Korea Mobile Telecommunications Co., Ltd. We changed our name to SK Telecom Co., Ltd., effective March 21, 1997. In January 2002, we merged with Shinsegi Telecom Co., Ltd. (“Shinsegi”), which was then the third-largest wireless telecommunications service provider in Korea. Our registered office is at SK T-Tower, 65, Eulji-ro, Jung-gu, Seoul 04539, Korea and our telephone number is +82-2-6100-1532. Our website address is www.sktelecom.com.
The SEC maintains a website (www.sec.gov), which contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
Korean Telecommunications Industry
Established in March 1984, we became the first wireless telecommunications service provider in Korea. We remained the sole provider of wireless telecommunications services until April 1996, when Shinsegi commenced cellular service. The Government began to introduce competition into the fixed-line and wireless telecommunications services markets in the early 1990’s. During this period, the Government allowed new competitors to enter the fixed-line sector, sold a controlling stake in us to the SK Group, and granted a cellular
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license to our first competitor, Shinsegi. In October 1997, three additional companies began providing wireless telecommunications services under Government licenses to provide wireless telecommunications services. In 2000 and 2001, the Korean wireless telecommunications market experienced significant consolidation. In January 2002, Shinsegi was merged into us. Additionally, two of the other wireless telecommunications services providers merged.
There are currently three mobile network operators in Korea: us, KT and LG U+. As of December 31, 2025, the market share of the Korean wireless telecommunications market, in terms of number of mobile phone subscribers, of KT and LG U+ was approximately 30.8% and 27.6%, respectively (compared to our market share of 41.6%), each including MVNO subscribers leasing the respective networks. As of December 31, 2025, MVNOs had a combined market share of 18.3%, of which MVNOs leasing our networks represented 3.1%, MVNOs leasing KT’s networks represented 7.0% and MVNOs leasing LG U+’s networks represented 8.1%. In January 2024, the Government allocated 800 MHz of bandwidth in the 28 GHz spectrum to Stage X to provide nationwide wireless network services. However, in July 2024, the Government revoked such allocation citing Stage X’s failure to meet the paid-in capital requirement and discrepancies in the actual ownership ratios of major shareholders and ownership structure compared to the information included in its frequency allocation application.
Telecommunications industry growth in Korea has been among the most rapid in the world, with fixed-line penetration being under five lines per 100 population in 1978 and increasing to 47.9 lines per 100 population as of December 31, 2006 before decreasing to 19.0 lines per 100 population as of December 31, 2025, and mobile phone penetration reaching 110.6 subscribers per 100 population as of December 31, 2025. The table below sets forth certain subscription and penetration information regarding the Korean telecommunications industry as of the dates indicated:
Population of Korea(1)
Mobile Phone Subscribers
Mobile Phone Subscribers per 100 Population
Telephone Lines in Service
Telephone Lines per 100 Population
Source: The Ministry of the Interior and Safety.
Excludes internal carrier lines and inbound roaming lines pursuant to a change in the presentation of the MSIT’s published data in 2024. As of December 31, 2024 and December 31, 2025, an aggregate of 693 thousand and 927 thousand internal carrier lines and inbound roaming lines, respectively, were in existence.
Since the introduction of short text messaging in 1998, Korea’s wireless data market has grown rapidly. This growth has been driven, in part, by the rapid development of wireless Internet service since its introduction in 1999 and the implementation of LTE and 5G technologies providing for fast data transmission speeds and large data transmission capacity. The table below sets forth certain penetration information regarding the number of smartphones that have direct access to the Internet using mobile Internet technology and mobile phone subscribers in Korea as of the dates indicated:
Number of Smartphones
Total Number of Mobile Phone Subscribers
Penetration of Smartphones
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In addition to its well-developed wireless telecommunications sector, Korea has one of the largest Internet markets in the Asia Pacific region. From the end of 2010 to the end of 2025, the number of broadband Internet access subscribers increased from approximately 17.2 million to approximately 25.2 million. In connection with such growth in broadband Internet usage, the number of IPTV subscribers has also increased rapidly. The table below sets forth certain information regarding broadband Internet access subscribers and IPTV subscribers as of the dates indicated:
Number of Broadband Internet Access Subscribers(1)
Number of IPTV Subscribers
Includes subscribers accessing Internet service using digital subscriber line, or xDSL, connections; cable modem connections; local area network, or LAN, connections; fiber-to-the-home, or FTTH, connections and satellite connections.
Business Overview
Overview
We are Korea’s leading wireless telecommunications services provider, and our core business is centered on providing wireless and fixed-line telecommunications services. We maintain the largest market share in the Korean market for wireless telecommunications services. Our revenue is primarily generated from our cellular services segment, which accounts for a substantial portion of our consolidated revenue, with additional contributions from our fixed-line telecommunications services and other business segments. We continue to develop, enhance and operate our telecommunications services through ongoing investments in network infrastructure and the adoption of advanced technologies, with a focus on improving service quality, reliability and operational efficiency. In addition to our core telecommunications services, we offer a broad range of complementary services and solutions that leverage our telecommunications platforms and digital infrastructure capabilities. These include IoT solutions and enterprise communications services, cloud services, subscription services, advertising and curated shopping services, AI business-to-consumer (“B2C”) services and AI business-to-business (“B2B”) services. We seek to drive growth by enhancing our core telecommunications services while selectively expanding complementary services that leverage our network infrastructure and customer base. These services are designed to enhance customer engagement, expand our service offerings and support the overall competitiveness of our core telecommunications business. Our operations are reported in three segments:
cellular services, which include wireless voice and data transmission services, sales of wireless devices, cellular interconnection services, as well as IoT solutions and enterprise communications services, cloud services, subscription services, advertising and curated shopping services, AI B2C services and AI B2B services;
fixed-line telecommunications services, which include fixed-line telephone services, broadband Internet services, advanced media platform services (including IPTV and cable TV services), and business communications and related infrastructure services; and
other businesses, which include our T-commerce business and certain other miscellaneous businesses.
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Our Business Strategy
We operate in an environment characterized by rapid technological advancements, evolving customer needs and increasing convergence across industries. In response to these trends, we focus on strengthening our core telecommunications business and enhancing customer trust and value, while selectively expanding our AI-related capabilities to support our long-term growth. Our strategy is centered on maintaining our leadership in the Korean market for wireless telecommunications services, improving service quality and operational efficiency, and pursuing disciplined growth opportunities in selected areas, including AI-related initiatives that complement our existing business. In doing so, we seek to leverage our core telecommunications infrastructure and subscriber base to support the expansion of complementary services and improve operational efficiency. Our principal business strategies are as follows:
Strengthening our core telecommunications business. We seek to maintain our leadership in the Korean market for wireless telecommunications services by enhancing network quality, expanding service offerings and improving customer experience. We are focused on optimizing our network operations and improving service reliability, including through the adoption of advanced technologies such as AI-based network management and automation. We also continue to leverage data analytics to better understand customer needs and to provide more relevant and personalized products and services.
Enhancing customer trust and service stability. We place significant emphasis on strengthening customer trust and delivering stable and reliable services. Following recent cybersecurity incidents that have affected the telecommunications industry, we have taken steps to enhance our security systems and internal control processes, including upgrades to our security infrastructure and improvements in asset management and monitoring capabilities. We plan to continue to invest in technologies and processes designed to enhance the security, reliability and resilience of our services, and to reinforce our ability to respond to evolving risks, with the aim of maintaining and improving customer trust.
Selectively expanding AI-related capabilities. We are pursuing a disciplined and selective approach to the development of our AI-related capabilities by focusing on areas where we can enhance our existing services, improve operational efficiency or develop solutions with clear commercial applications. We are investing in selected AI infrastructure and computing capabilities, as well as AI-based solutions that can be integrated into our telecommunications services or offered to enterprise customers. We aim to leverage our existing assets, including our network infrastructure and customer base, to support the development of these capabilities.
Improving operational efficiency and pursuing sustainable growth. We are focused on improving operational efficiency across our business and optimizing our cost structure, including through automation and data-driven decision-making. In addition, we continue to pursue long-term sustainable growth by enhancing the efficiency of our operations, including our network infrastructure, and by supporting the responsible use of technology. Through these efforts, we aim to create long-term value for our shareholders and other stakeholders.
In line with our business strategies as discussed above, we are striving to enhance our operational efficiency through our efforts to reduce operating expenses, optimize capital expenditures and reorganize non-essential business lines and investments. For example, in order to streamline our operating expenses, we have been actively utilizing AI technology in various operational processes, including our marketing activities and customer services. Furthermore, we have shifted the focus of our 5G network-related capital expenditure from expanding network coverage and increasing maximum data transmission speed to enhancing network quality. Moreover, in December 2024, we entered into agreements with Samgu Inc. and its affiliates to dispose of a 70% equity interest in SK M&Service, as well as our 100% equity interest in our former wholly-owned subsidiary NATE Communications Corporation, which operates the “Nate” internet portal, and the entirety of our 50% equity interest in our former associate F&U Credit Information, which provides credit information services. The disposals of NATE Communications Corporation, SK M&Service and F&U Credit Information were completed in January 2025, February 2025 and April 2025, respectively. In April 2025, we disposed of 10,818,510 shares of
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Kakao Corp. (representing a 2.4% interest), which we had previously acquired in 2019 as part of a strategic partnership between the two companies, for Won 413.3 billion. More recently, in December 2025, we entered into an agreement to sell our entire equity stake in SK Stoa, which operates our T-commerce business, and Media S, which operates two TV channels and co-produces original television entertainment contents, to Rapport Labs Inc., a Korea-based e-commerce company, as part of our ongoing strategy to streamline and optimize our overall business portfolio. Such transaction is currently pending subject to regulatory approval and other customary closing conditions.
Cellular Services
We offer wireless voice and data transmission services, sell wireless devices and provide various other technological solutions and services through our cellular services segment. Our wireless voice and data transmission services are offered through our backbone networks that collectively can be accessed by substantially all of the Korean population. We had 23.5 million mobile phone subscribers, including MVNO subscribers leasing our networks, as of December 31, 2025, representing a market share of 41.6%, the largest market share among Korean wireless telecommunications service providers. We launched our wireless services using our 5G network in April 2019, and we are continually maintaining and enhancing our 5G network coverage and service quality. The table below sets forth the number of mobile phone subscribers, including subscribers of MVNOs that lease our wireless networks, using our various digital wireless networks as of the dates indicated:
Network
5G
LTE
WCDMA
Total
Includes internal carrier lines and inbound roaming lines.
In 2025, 2024 and 2023, our cellular services segment revenue was Won 12,552.5 billion, Won 13,318.2 billion and Won 13,123.2 billion, respectively, representing 73.4%, 74.2% and 74.5%, respectively, of our consolidated revenue.
Wireless Services
We offer wireless voice transmission and data transmission services to our subscribers through our backbone networks. Our wireless telecommunications services are available to our subscribers receiving service under the SK Telecom brand. In addition, customers can obtain wireless telecommunications services that operate on our network from MVNOs that lease our wireless networks. We derive revenues from our wireless telecommunications service principally through monthly plan-based fees as described in “— Rate Plans” below.
We provide a voice-over-LTE service, known as our “HD Voice” service, to all of our LTE and 5G subscribers featuring high-quality voice transmission, fast call connection, voice-to-video call switching and digital content sharing during calls. We also offer our subscribers a wide range of wireless data transmissions services. Our messaging service allows our subscribers to send and receive text, graphic, audio and video messages. In addition, our subscribers can access a wide variety of digital content and services through mobile applications providing music, video, gaming, news, commerce and financial services as well as solutions that enable subscribers to access the Internet and e-mail. We intend to continue to build our wireless data services as a platform for growth, extending our portfolio of wireless data services and developing new content for our subscribers.
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Through service agreements with various foreign wireless telecommunications service providers, we offer cellular global roaming services, branded as our “T-Roaming” service. Global roaming services allow subscribers traveling abroad to make and receive calls using their regular mobile phone numbers. In addition, we provide global roaming service to foreigners traveling to Korea. In such cases, we generally receive a fee from the traveler’s local wireless telecommunications service provider.
Through our subsidiary SK Telink Co., Ltd. (“SK Telink”), we also operate our MVNO business under the brand “SK 7Mobile,” which we believe offers excellent quality at reasonable rates utilizing SK Telecom’s wireless networks. SK Telink is focused on developing low-cost distribution channels and targeting niche customer segments that have a lower average revenue per user than that of SK Telecom’s subscriber base.
In addition, we provide interconnection service to connect our networks to domestic and international fixed-line and other wireless networks. See “— Interconnection” below.
Wireless Device Sales
We offer several categories of wireless devices, including smartphones and basic phones, tablets and other Internet access devices and wearable devices that are sold through an extensive distribution network, which consists of authorized exclusive dealers and independent retailers, as well as branch offices and stores directly operated by us through our wholly-owned subsidiary, PS&Marketing. As of December 31, 2025, substantially all of our mobile phone subscribers (including MVNO subscribers leasing our networks) owned smartphones that have direct access to the Internet. We purchase a substantial majority of our wireless devices from Samsung Electronics and Apple.
Smartphones and Basic Phones. We offer smartphones that are enabled to utilize our digital wireless networks and run on various operating systems, such as Apple iOS and Google Android. We also offer basic phones that have the ability to access wireless Internet services.
Tablets and Wearable Devices. We offer tablets and wearable devices, primarily comprising smart watches, which can access the Internet via our digital wireless networks and a Wi-Fi connection. The tablets and wearable devices run primarily on the Apple iOS and Google Android operating systems, and we provide targeted rate plans that are specific to such devices. See “— Rate Plans” below.
Other Solutions and Services
In addition to our cellular services and wireless device sales businesses, we provide a variety of other innovative technological solutions and services by leveraging our capabilities in telecommunications, AI and ICT technologies, and we are continuing to invest in these and other emerging new business areas, including the following:
IoT Solutions and Enterprise Communication Services
Through our IoT solutions business, we provide network access and enhanced services to support telemetry-type applications, which are characterized by massive machine-type communication (“mMTC”) wireless connections, to our enterprise customers. In order to promote the growth of our IoT solutions business, we deployed networks nationwide that are designed to support IoT devices, namely our high-speed LTE-M network in March 2016 and our low-cost Low-Power Wide-Area network based on LoRa technology (our “LoRa network”) in July 2016. In April 2018, we increased the battery efficiency of our IoT devices by launching our LTE Cat.M1 technology, and we have further enhanced our competitiveness in this business with our 5G network.
We provide network access and customized IoT solutions to our enterprise customers. Our IoT services support devices that are used in a variety of market segments, including manufacturing, logistics, public
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infrastructure, security, automotive, agriculture and data analytics as well as public institutions. For example, we provide services to transmit and store extensive data accumulated in manufacturing processes of our customers through our ultra-high speed and ultra-low latency connectivity solutions. We also offer private wireless and fixed-line networks for businesses as well as digital transformation infrastructure leveraging our 5G and edge cloud technologies.
We also provide a variety of other communication solutions and services to our enterprise customers. Our key offerings in this area include IoT, security, advertising and monitoring solutions, business messaging and call services, and platforms for mobile payment, authentication and ancillary value-added services.
Cloud Services
We provide a comprehensive range of managed cloud services that focus on supporting cloud-based AI services in Korea. Our managed cloud services are provided in collaboration with our SK Group affiliate SK AX, which engages in B2B sales and the establishment and operation of the services, while we provide the necessary AI infrastructure and solutions. Our managed cloud services benefit from our leadership in network infrastructure in Korea and our competitive capabilities in AI, big data, data centers and information security. We plan to further strengthen our market position by developing and providing tailored AI cloud services that meet the needs of our enterprise customers.
Subscription Service
In August 2021, we launched a subscription-based membership service under our “T Universe” brand name. T Universe offers a wide range of lifestyle services through subscription packages. From streaming services such as YouTube Premium, Netflix and Wavve to shopping, cloud storage services such as Google One, and various partner restaurants and delivery services, customers can subscribe to a broad selection of services either as bundled packages or as standalone offerings. To enhance its service offerings, T Universe continues to pursue business partnerships with popular consumer brands and service providers, expanding the scope of its partnerships. We also plan to grow and further develop T Universe by identifying and marketing new products and services that align with customer preferences.
Advertising and Curated Shopping Services
We offer advertising services to businesses by leveraging our wireless and fixed-line telecommunications services platforms. Our advertising services primarily consist of display advertising on our proprietary mobile applications for smartphones, including “A. (or “A dot”) Phone” and “T Membership” (which manages our customer loyalty program under the same name). In addition, we offer a text message-based curated shopping service under our “T Deal” brand. Our customers who have consented to the T Deal service receive a daily text message on their smartphones with a link to a broad range of merchandise with significant discounts that are specially curated to maximize customer interest by utilizing AI technology and big data.
AI B2C Services
Through our AI B2C services business, we seek to provide innovative AI-based mobile agent services that meet our customers’ evolving needs in an increasingly connected world. In September 2023, we officially launched A., which offers the ability to verbally communicate with the user and handle a variety of tasks on the user’s smartphone, including recording and summarizing calls, managing the user’s schedules, providing real-time interpretation service during calls and recommending and playing personalized music and video contents. In August 2024, A. underwent a major update, allowing it to deliver a natural conversational experience and specialized services through various agents with enhanced search and everyday convenience features. In October 2024, we rebranded our proprietary voice call application, “T Phone,” as “A. Phone,” embedded certain of A.’s AI-enhanced service features, including the ability to record, summarize and translate calls, into the A. Phone
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application. In June 2025, we introduced two additional features to A., including “A. Note,” which offers real time voice transcription and summarization services, and “A. Briefing,” which utilizes users’ personalized data to proactively provide personalized suggestions and helpful information for the users’ daily routines and tasks. We plan to continually strengthen the levels of personalization and information security, and expand the portfolio of services handled, by A., including through combination with our other service offerings as well as collaboration with our SK Group affiliates and third parties.
AI B2B Services
Our business customers have been increasingly seeking digital transformation by implementing AI technology, including generative AI, into their operations and business cycle. In order to meet such needs of our business customers, we have introduced various AI technology services, which we have been developing in order to improve our and our affiliated companies’ competitiveness, which are collectively referred to as “AI B2B” services (formerly referred to as “enterprise AI” services). Our AI B2B services combine AI technology with connectivity and infrastructure technologies of our core telecommunications business as well as the underlying technologies of our other new growth businesses, and principally include generative AI, AI vision, AI contact center, AI marketing, AI data and physical AI. In 2025, we also preliminarily launched “A. Biz,” a B2B version of our “A.”, an AI agent service featuring general administrative functions as well as the ability to provide assistance in a number of areas requiring professional expertise, including legal, tax, public relations, purchasing and personnel management, to business organizations. Following a period of beta tests, A. Biz is currently utilized internally as well as by a number of our SK Group affiliates.
Other New Business Services
We are also investing in and developing new business areas that actively integrate AI technology, including through strategic investments in, and collaboration with, leading domestic and overseas technology companies. We have also been makings investments to develop and launch GPU-as-a-service (“GPUaaS”), which would enable our enterprise customers to access GPU cloud services on an as-needed basis to develop or utilize AI services. As part of such initiative, in February 2024, we made an equity investment of US$20 million in Lambda, Inc., a GPU cloud service provider based in San Francisco, to cooperate on the development and launch of GPUaaS and AI data center solutions and services. In August 2024, we entered into a strategic partnership with Lambda, Inc. to deploy its AI cloud platform in SK Broadband’s Gasan data center, and launched our GPUaaS in January 2025. In August 2025, we launched the “Haein cluster,” comprised of more than 1,000 NVIDIA Corporation’s B200 GPUs, in SK Broadband’s Gasan data center. The Haein cluster has been selected by the MSIT for the Government’s “Sovereign AI Foundation Model Project,” which is aimed at building domestic AI foundation models with globally competitive performance, thereby reducing Korea’s reliance on foreign AI technologies. A consortium led by us has advanced to the second stage of the Sovereign AI Foundation Model Project. In June 2025, we announced the partnership with Amazon Web Services, Inc. to build an AI data center in Ulsan, Korea, with operations expected to begin in 2027. We commenced construction of such data center in September 2025. In October 2025, we signed a letter of intent and a memorandum of understanding with OpenAI, an AI research organization based in San Francisco, California, to collaborate on the construction of an AI data center in the southwest region of Korea as part of OpenAI’s Stargate project, which aims to establish a global AI infrastructure. Furthermore, we have been engaged in the research, development and promotion of AI data center solutions. As part of such initiative, in December 2024, we made an equity investment of US$200 million in Penguin Solutions Inc. (formerly known as Smart Global Holdings, Inc.), a leading designer and developer of enterprise solutions based in Milpitas, California, in order to cooperate on the development of differentiated global end-to-end AI factory and data center solutions and services.
Rate Plans
We offer our wireless telecommunications services on both a postpaid and prepaid basis. Substantially all of our subscribers received our wireless telecommunications services on a postpaid basis as of December 31, 2025.
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Postpaid accounts primarily represent retail subscribers under contract with SK Telecom pursuant to which a subscriber is billed in advance a monthly fixed service fee in return for a monthly network service allowance and usage for outgoing voice calls and wireless data services beyond the allowance is billed in arrears, where payment of the total amount of the bill is due at the end of the month. The standard contract period for our rate plans is 24 months, although our subscribers have the option to enter into shorter term contracts or no fixed-term contract at all. We provide various subsidies and discounts, including handset subsidies, depending on the length of the contract and the subscriber’s chosen rate plan. Our prepaid service enables individuals to obtain wireless telecommunications services without a fixed-term contract by paying for all services in advance according to expected usage. We do not charge our customers for incoming calls, although we do receive interconnection charges from KT and other companies for calls from the fixed-line network terminating on our networks and interconnection revenues from other wireless network operators. See “— Interconnection” below.
We also charge our customers a 10.0% value-added tax, which is included in the price of all of our rate plans. 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.
Basic Rate Plans. We offer various postpaid account plans for mobile devices, tablets and smart watches that are designed to meet a wide range of subscriber needs and interests. Our 5G services are primarily provided through the “5GX” plans, which offer unlimited domestic voice minutes and text messaging and unlimited data transmission allowance per month and range from Won 69,000 to Won 125,000 per month. We also offer several types of lower-priced 5G rate plans, ranging from Won 39,000 to Won 59,000 per month, with smaller data transmission allowances per month compared to our 5GX plans that target subscribers who seek more affordable rate plans. Our representative smartphone rate plans for our LTE services are the “T” plans, which feature unlimited domestic voice minutes and text messaging and a fixed or unlimited data transmission allowance per month and range from Won 33,000 to Won 100,000 per month. We also offer “Direct” plans that are exclusively available through our online distribution channel, ranging from Won 27,000 to Won 76,000 per month for 5G services and at Won 22,000 per month for LTE services. Our “Voice Free” plans are available for our basic phones and feature a fixed allowance of voice minutes and 50 text messages per month with rates that range from Won 20,900 to Won 103,400 per month. We also offer a standard rate plan for Won 12,100 per month, through which the subscriber is charged per usage amount, other than on text message usage up to 50 messages per month. In October 2025, we launched six types of “air” subscription plans, a separate line of mobile subscription services offered exclusively for unlocked mobile devices through a dedicated online channel.
In addition, we provide a variety of differentiated rate plans for our customer segments such as our “0 Youth” plans for smartphone users who are 34 years old or younger tailored for younger demographics, our “0 Teen” plans for teenagers who are 18 years old or younger, our “ZEM” plans for children who are 12 years old or younger, our “T Senior” LTE and 5G subscription plans for users who are 65 years or older, our “5G Happiness (Haengbok-nuri)” plans for customers with visual impairment or hearing loss and our “0 Hero” LTE plans for users who are performing mandatory military service.
We also offer bundled rate discount plans combining multiple wireless devices as well as those combining our wireless services with our fixed-line telecommunications services. In addition, we offer bundled rate plans that provide discounts for family members or co-inhabitants of the same household.
Data Add-on Rate Plans. We offer a variety of optional “add-on” rate plans and data coupons that are designed to meet a wide range of subscriber needs with respect to increased data usage that followed the widespread use of smartphones and faster transmission speeds. For example, for certain rate plan subscribers, we offer unlimited access to the wavve video streaming service and the Flo music streaming service through our “wavve and Data Plus” plan and “Flo and Data Plus” plan, respectively, at no additional cost, at a discounted rate or at the standard rate, depending on the subscribers’ basic rate plan.
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Roaming Plans. Our representative international roaming plan for longer term travelers and provides fixed data transmission, named “baro Plan,” offers allowances of 3GB for Won 29,000, 6GB for Won 39,000, 12GB for Won 59,000 or 24GB for Won 79,000 that can be used in 195 countries. We also offer data sharing options to families travelling together and special discounts to subscribers of our “0 Youth” plans. In addition, all of our roaming plans include free high-quality data voice calls and text messages to Korea through our A. Phone application.
Digital Wireless Network
We offer wireless voice and data transmission services throughout Korea using digital wireless networks, primarily consisting of our 5G network, LTE network, WCDMA network, Wi-Fi network and LoRa network. We continually upgrade and increase the capacity of our wireless networks to keep pace with advancements in technology, the growth of our subscriber base and the increased usage of voice and wireless data services by our subscribers. For more information about our capital expenditures relating to our wireless networks, see “Item 5.B. Liquidity and Capital Resources — Capital Requirements — Capital Expenditures.”
5G Network. 5G is the currently dominant wireless network that enables data to be transmitted at speeds faster than our LTE network with lower latency. We began the operation of our 5G network in December 2018 on a limited basis for business customers, beginning with a few major commercial districts in Seoul and other metropolitan areas. We launched wireless service plans using the 5G network in April 2019 following the commencement of sales of the first 5G-compatible smartphones, and we continue to maintain and enhance our 5G network coverage. We currently provide full nationwide 5G network coverage across outdoor terrestrial areas and subway lines, and substantially full nationwide 5G network coverage in large buildings. Our 5G services provided a maximum data transmission speed of 2.75 Gbps. We have also deployed our 5G network for mMTC connections relating to our IoT solutions.
We believe that our 5G technology and network infrastructure enable us to provide the fastest 5G data transmission network nationwide. In December 2025, the MSIT announced that our 5G network provided the fastest upload and download speeds among the three mobile network operators, KT, LG U+ and us. The nationwide average download speed of our 5G network was 1,214 Mbps compared to 1,147 Mbps for KT’s 5G network and 1,051 Mbps for LG U+’s 5G network.
LTE Network. LTE technology has become widely accepted globally as the standard fourth generation technology and enables data to be transmitted at speeds faster than our WCDMA network. Since first commencing our LTE services in July 2011, we have developed and launched various upgraded LTE networks and related services providing faster network speeds, enhanced connectivity and broader coverage areas.
We believe that our advanced LTE technology and dense network infrastructure enable us to provide the fastest LTE data transmission network nationwide. In December 2025, the MSIT announced that our LTE network provided the fastest upload and download speeds among the three mobile network operators, KT, LG U+ and us. The nationwide average download speed of our LTE network was 216 Mbps compared to 161 Mbps for KT’s LTE network and 141 Mbps for LG U+’s LTE network.
Wi-Fi Network. Wi-Fi technology enables our subscribers with Wi-Fi-capable devices such as smartphones, laptops and tablet computers to access mobile Internet. We started to build Wi-Fi access points in 2010 and, as of December 31, 2025, we had more than 60,000 Wi-Fi access points in public areas such as shopping malls, restaurants, coffee shops, subways and airports where, generally, the demand for high-speed wireless Internet service is high. While each Wi-Fi access point typically has a radius of approximately 20-30 meters, some of our Wi-Fi hot zones, which have multiple Wi-Fi access points, including those installed at public transportation facilities and amusement parks, have much wider service areas.
LoRa Networks. A Low-Power Wide-Area network based on LoRa technology is a type of telecommunications network designed to support communication among IoT devices. It can transmit data over
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tens of kilometers while consuming much less power than LTE networks, lowering costs for connectivity as well as lowering battery power usage. We completed the nationwide deployment of our LoRa network in July 2016. We expect that our LoRa network will provide the infrastructure necessary for the growth of not only our own IoT solutions business but also the IoT industry as a whole.
Network Infrastructure
The principal components of our wireless networks are:
base stations, which are physical locations equipped with transmitters, receivers and other equipment that communicate by radio signals with wireless handsets within range of the cell (typically a 3 to 40 kilometer radius);
switching stations, which switch voice and data transmissions to their proper destinations, which may be, for instance, a mobile phone of one of our subscribers (for which transmissions would originate and terminate on our wireless networks), a mobile phone of a KT or LG U+ subscriber (for which transmissions would be routed to KT’s or LG U+’s wireless networks, as applicable), a fixed-line telephone number (for which calls would be routed to the public switched telephone network of a fixed-line network operator), an international number (for which calls would be routed to the network of a long distance service provider) or an Internet site; and
transmission lines, which link base stations to switching stations and switching stations with other switching stations.
As of December 31, 2025, our 5G, LTE and WCDMA networks had an aggregate of 58,567 base stations.
To date, we have purchased substantially all of the equipment for our networks from Samsung Electronics, Ericsson-LG and Nokia. Most of the transmission lines we use, including virtually all of the lines linking switching stations, as well as a portion of the lines linking base stations to switching stations, comprise optical fiber lines that we own and operate directly. However, we have not undertaken to install optical fiber lines to link every base station and switching station. In places where we have not installed our own transmission lines, we have leased lines from KT and LG U+. We intend to increase the efficiency of our network utilization and provide optimal services by internalizing transmission lines.
We use a wireless network surveillance system. This system oversees the operation of base stations and allows us to monitor our main equipment located throughout the country from one monitoring station. The automatic inspection and testing provided to the base stations lets the system immediately rebalance to the most suitable setting, and the surveillance system provides for automatic dispatch of repair teams and quick recovery in emergency situations.
Marketing, Distribution and Customer Service
Marketing. Our marketing strategy is focused on offering solutions tailored to the needs of our various customer segments, promoting our brand and leveraging our extensive distribution network. Our marketing plan includes a coordinated program of television, print, radio, outdoor signage, Internet and point-of-sale media promotions designed to relay a consistent message across all of our markets. We market our wireless products and services under the “T” brand, which signifies the centrality of “Telecommunications” and “Technology” to our business and also seeks to emphasize our commitment to providing “Top” quality, “Trustworthy” products and services to our customers.
We have implemented certain information technology improvements in connection with our marketing strategy, including customer management systems, as well as more effective information security controls. We believe these upgrades have enhanced our ability to process and utilize marketing- and subscriber-related data,
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which, in turn, has helped us to develop more effective and targeted marketing strategies. We currently operate a customer information system designed to provide us with an extensive customer database. Our customer information system includes a billing system that provides us with comprehensive account information for internal purposes and enables us to efficiently respond to customer requests. Our customers can also change their rate plans, verify the charges accrued on their accounts, receive their bills online and send text messages to our other subscribers through our website at www.tworld.co.kr and through our “T world” mobile application.
We strive to improve subscriber retention through our T Membership program, which is a membership service available to our wireless subscribers. Our T Membership program provides various membership benefits to its members such as discounts with our membership partners for dining, shopping, entertainment and travel, membership points accumulation, access to our online membership shopping mall and invitations to various promotional events. Although our competitors also have similar membership programs, we believe that our T Membership program has a competitive advantage over our competitors’ membership programs due to our large subscriber base and breadth of membership benefits.
Distribution. We use a combination of an extensive network, including branch offices and stores, directly operated by us through our subsidiary, PS&Marketing, more than 2,500 authorized exclusive dealers and an extensive network of independent retailers in order to increase subscriber growth while reducing subscriber acquisition costs.
In addition, we operate an online distribution channel, “T Direct Shop,” through which subscribers can conveniently purchase wireless devices and subscribe to our services online. We also operate a dedicated online shop on 11st, our former subsidiary Eleven Street’s e-commerce marketplace. In light of increasing customer preference for online service, the level of distribution of our wireless devices and our services through online channels has significantly increased in recent years. We intend to continue to develop our online distribution channel to leverage our offline distribution capabilities to provide convenience and additional value to our subscribers. For example, subscribers purchasing wireless devices through T Direct Shop can opt to pick up their devices at one of our offline stores.
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 plan-based rate for the first five years. In order to strengthen our relationships with our exclusive dealers, we offer a dealer financing plan, pursuant to which we provide to each authorized dealer a loan of up to Won 4.0 billion (Won 5.0 billion if collateral is pledged) which can be used for operating expenditures with a repayment period of up to 11 months. We also provide loans to our authorized dealers for financing deposits and key money in connection with securing retail space with a repayment period of up to 30 months. As of December 31, 2025, we had an aggregate of Won 61.1 billion outstanding in loans to authorized dealers.
Customer Service. We provide high-quality customer service directly through our two subsidiaries, Service Ace Co., Ltd. and Service Top Co., Ltd., rather than rely on outsourcing. SK O&S Co., Ltd. operates our switching stations and related transmission and power facilities and offers quality customer service primarily to our business customers. We have held the top position with respect to our telecommunications service in Korea’s leading three customer satisfaction indices, the National Customer Satisfaction Index, the Korean Customer Satisfaction Index and the Korean Standard-Service Quality Index, for 28 years, 27 years and 26 years, respectively.
Fixed-line Telecommunications Services
We offer fixed-line telephone, broadband Internet and advanced media platform services (including IPTV and cable TV services), and business communications and related infrastructure services, through our fixed-line telecommunications services segment. Our fixed-line telecommunications services are provided by our
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subsidiary, SK Broadband. The following table sets forth historical information about our subscriber base for our fixed-line telecommunications services for the periods indicated:
Fixed-Line Telephone (including VoIP)(1)
Broadband Internet(2)
IPTV(3)
Cable TV
Includes subscribers to VoIP services of SK Broadband.
Excludes dedicated broadband Internet lines for Internet cafes.
Includes subscribers to SK Broadband’s B tv service and video-on-demand only service subscribers.
In 2025, 2024 and 2023, our fixed-line telecommunications services segment revenue was Won 4,191.1 billion, Won 4,075.4 billion and Won 3,928.0 billion, respectively, representing 24.5%, 22.7% and 22.3%, respectively, of our consolidated revenue.
As part of our efforts to enhance our capabilities and increase our market share in the fixed-line business, we completed the Tbroad Merger in April 2020. In November 2024, in order to enhance management efficiency and strengthen our control over SK Broadband, we entered into an agreement to acquire an additional 24.8% equity interest in SK Broadband from minority shareholders. Such transaction was completed in May 2025. We owned approximately 99.1% of SK Broadband’s total outstanding shares as of December 31, 2025. Furthermore, in March 2026, in order to enhance management efficiency and strengthen enterprise value through greater strategic flexibility, we entered into an agreement to acquire the remaining 0.9% equity interest in SK Broadband from minority shareholders. Such transaction is currently pending subject to regulatory approval and other customary closing conditions. See “Item 3.D. Risk Factors — Risks Relating to Our Business — Competition may reduce our market share and harm our business, financial condition and results of operations.”
Fixed-line Telephone Services
Our fixed-line telephone services comprise local, domestic long distance, international long distance and VoIP services. VoIP is a technology that transmits voice data through an Internet Protocol network. As of December 31, 2025, we had approximately 3.3 million fixed-line telephone subscribers (including subscribers to VoIP services of SK Broadband). Our fixed-line telephone services are primarily offered under the “B phone” brand name. A portion of our fixed-line telephone services were previously provided through the VoIP services of our subsidiary SK Telink that targeted corporate customers, which business was acquired by SK Broadband in April 2021.
Broadband Internet Access Services
Our broadband Internet access network covered a substantial majority of households in Korea as of December 31, 2025. As of December 31, 2025, we had approximately 7.2 million broadband Internet access subscribers. We offer broadband Internet access products with various throughput speeds, ranging from optical LAN service, which provides maximum data transmission speeds of up to 100 Mbps, to “Giga Premium” and “Giga Premium×10,” which provide maximum data transmission speeds of up to 1 Gbps and 10 Gbps, respectively.
Advanced Media Platform (including IPTV and Cable TV Services)
As part of our initiative to be the leading next-generation platform provider, we provide an advanced media platform with various media content and service offerings.
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We have offered video-on-demand services since 2006 and launched real-time IPTV services in 2009. We currently offer IPTV services under the brand name “B tv” with access to as many as 272 high definition channels depending on the subscription service as of December 31, 2025, as well as pay-per-view and subscription-based video-on-demand services providing a wide range of media content, including recent box office movie releases, popular U.S. and other foreign TV shows and various children’s TV programs. We also offer “B tv UHD,” which is an ultra-high definition IPTV service and has a resolution that is four times as high as the standard high definition broadcasting service in the IPTV industry. As of December 31, 2025, we had approximately 6.7 million IPTV subscribers. Since 2018, we have unveiled a number of smart set-up boxes that incorporate voice recognition and command capabilities as well as AI-based services.
In December 2023, we introduced “AI B tv,” Korea’s first AI-powered personalized IPTV service. Once a set top box is turned on, AI B tv automatically recognizes the user and provides hyper-personalized content experience including recommending video-on-demand and other content based on the user’s viewing history analyzed through AI technology. We plan to integrate T-commerce capabilities into AI B tv and allow users to concurrently search for and purchase the apparel and accessories that appear in the video-on-demand content, which are recognized through AI technology. We also plan to further develop and improve our AI B tv service by integrating A. and generative AI technology. In September 2024, we introduced “B tv A. Service,” a new AI voice command service which utilizes A.’s large-language model and allows customers to explore content and receive recommendations.
Following the Tbroad Merger, we have been offering cable TV services under the “B tv Cable” brand with access to as many as 226 channels. As of December 31, 2025, we had approximately 2.7 million cable TV subscribers.
We also offer advertising services on our advanced media platform, primarily consisting of advertisements on video-on-demand and streaming contents and our TV channels. In addition, in May 2024, we began to offer access to the over-the-top content offerings of Netflix through our IPTV set-top boxes at a bundled discount with our IPTV subscriptions.
SK Broadband also operates two TV channels and co-produces original television entertainment contents through our indirect subsidiary Media S. In December 2025, we entered into an agreement to sell our entire equity stake in SK Stoa, which operates our T-commerce business, and Media S to Rapport Labs Inc., a Korea-based e-commerce company, as part of our ongoing strategy to streamline and optimize our overall business portfolio. Such transaction is currently pending subject to regulatory approval and other customary closing conditions.
We continue to expand the scope of our media services and content offerings to provide our subscribers with a vast library of high-quality content that can be accessed through our wireless networks and our fixed-line network, which we believe will also increase the appeal of our advanced media platform to businesses as an advertising platform.
Business Communications and Related Infrastructure Services
Through SK Broadband, we offer business communications and related infrastructure services to our business customers, including corporations and government entities. Our business communications and related infrastructure services offered by SK Broadband include leased line solutions, Internet data center solutions and network solution services.
Our leased line solutions are exclusive lines that allow point-to-point connection for voice and data traffic between two or more geographically separate points. We hold a license to operate leased line services on a nationwide basis in Korea and also use international transmission lines to provide leased line services to other countries. Our leased line services enable high volumes of data to be transmitted swiftly and reliably. We also
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provide back-up storage for transmitted data. Through our Internet data centers, we provide our business subscribers with server-based support including co-location, dedicated server hosting and cloud computing services. In June 2025, SK Broadband acquired the business operations of the Pangyo Data Center from SK Inc. for Won 506.8 billion as part of its initiative to expand its data center operations and generate synergy. Our network solution service utilizes our network infrastructure and voice platform to provide 24-hour monitoring and control of our customers’ networks. Through this service, we conduct remote monitoring of our customers’ data and voice communications infrastructure and network and traffic conditions, and carry out preventive examinations and on-site visits.
For our residential customers, we offer both bundled rate plans for a combination of our fixed-line service offerings as well as individual rate plans for each separate service offering. Bundled rate plans are offered at a discount compared to subscribing to the same services through individual rate plans. Approximately 87% of subscribers to our broadband Internet services subscribe to two or more of our services through our bundled rate plans. Bundled rate plans for a combination of fixed-line telephone, broadband Internet access and IPTV or cable TV services, which are subject to a contract of one to three years, range from Won 33,000 to Won 111,100 per month, depending on the services included and the length of the contract. We also offer bundled rate plans combining our fixed-line telecommunications services with our wireless services, the physical security services of SK Shieldus Co., Ltd., and subscriptions to Netflix, as well as bundled rate plans that provide discounts for family members or co-inhabitants of the same household.
Our “5,000 minute” plan for subscribers to our fixed-line telephone service features 5,000 voice minutes for domestic land-to-land calls for a fixed rate and range from Won 7,700 to Won 11,550 per month depending on whether or not the subscriber opts for a long-term contract and if so, the length of the contract period. We offer individual fixed-rate plans for our broadband Internet access service that range from Won 30,800 to Won 104,500 per month depending on the data throughput speed and existence and length of a contract. We offer individual fixed-rate plans for our IPTV and cable TV services that range from Won 4,400 to Won 50,600 per month depending on the number of channels provided and existence and length of a contract. In addition, subscribers can purchase individual videos on demand or subscribe to certain paid content on a periodic basis.
With respect to our business communications and related infrastructure services, we offer rates that are tailored to the specific needs of our business customers. We also charge certain installation fees and equipment rental fees as well as other ancillary fees with respect to certain of our fixed-line telecommunications services.
We focus on bringing our fixed-line telephone, broadband Internet and advanced media platform services (including IPTV and cable TV services) to residential users, and various business communications and related infrastructure services to corporate users. We market our fixed-line telecommunications products and services under the “B” brand. Our “B” brand signifies our pursuit of creating a “Borderless” media ecosystem with “Beloved” content offerings to transform our business to go “Beyond” simply offering connectivity to customers. It also seeks to emphasize our commitment to stand “Beside” our customers to “Bridge” their worlds, leading to “Bravo” and “Blissful” customer experience. Our “B” brand also strengthens our shared identity with our wireless service’s “T” brand.
We operate an extensive distribution network, including regional marketing branch offices and numerous customer centers, large retail stores and authorized dealers across Korea, in order to increase subscriber growth while reducing subscriber acquisition costs. In addition, SK Telecom’s direct retail stores and authorized dealers for wireless telecommunications services also market our fixed-line telephone, broadband Internet and advanced media platform services (including IPTV and cable TV services), which we believe has contributed to the increase in the number of subscribers to such services. We have contracts with our customer centers to sell our services exclusively. These centers receive a commission for each service contract and installation contract
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secured. Customer centers often enter into sub-contracts with smaller distribution outlets within their area to increase their sales coverage and engage in telemarketing efforts. Authorized dealers are entitled to an initial commission for each new subscriber registered by the dealer.
In addition, we operate an online distribution channel, “B Direct Shop,” through which subscribers can conveniently subscribe online to our pay TV, broadband Internet and residential fixed-line telephone services. In light of increasing customer preference for online service, the level of distribution of our services through the B Direct Shop has consistently increased in recent years. We intend to continue to develop our online distribution channel to leverage our offline distribution capabilities to provide convenience and additional value to our subscribers.
Sales to business subscribers are handled through our in-house sales group as well as a small-scale distribution network. Our in-house sales group focuses on large business clients such as major corporations, public institutions and governmental agencies. Our small-scale distribution network, on the other hand, targets smaller business clients such as small businesses and sole proprietorship businesses.
Other Businesses
We strive to continually diversify our products and services and develop new businesses that we believe are complementary to our existing products and services, which we include in our other businesses segment. In 2025, 2024 and 2023, the revenue of our other businesses segment, which primarily consisted of our T-commerce and former portal service businesses, was Won 355.6 billion, Won 547.0 billion and Won 557.3 billion, respectively, representing 2.1%, 3.0% and 3.2%, respectively, of our consolidated revenue. See “Item 5.A. Operating Results — Overview — Operational Efficiency.”
We operate a T-commerce network, “SK stoa,” through our consolidated subsidiary SK Stoa, which offers a broad assortment of goods and services through pre-recorded television programming. The goods and services promoted on SK stoa’s T-commerce programming can be purchased through telephone orders, SK stoa’s mobile application or online open marketplace, or a virtual application appearing on the television screen using the viewer’s remote controller. Since 2019, SK Stoa has offered searchable shopping programming that is available to viewers at their convenience by utilizing video-on-demand capabilities. SK Stoa also operates several private fashion and health supplement brands. SK stoa also acts as the exclusive T-commerce distributor for certain products and services of SK Group companies, such as food, electronics, home appliances and car rentals.
In December 2025, we entered into an agreement to sell our entire equity stake in SK Stoa and Media S, which operates two TV channels and co-produces original television entertainment contents as described above, to Rapport Labs Inc. as part of our ongoing strategy to streamline and optimize our overall business portfolio. Such transaction is currently pending subject to regulatory approval and other customary closing conditions.
Prior to the completion of the disposal transactions described below, we also offered online portal services under our “Nate” brand name through our former subsidiary NATE Communications Corporation, and online corporate employment benefits management and training services for Korean businesses and public institutions through our former indirect subsidiary SK M&Service. In December 2024, as part of our efforts to increase our operational efficiency and re-balance our business areas, we entered into agreements with Samgu Inc. and its affiliates to dispose of our 100% equity interest in NATE Communications Corporation and a 70% equity interest in SK M&Service, as well as our interest in a former non-consolidated associate. The disposals of NATE Communications Corporation, SK M&Service and F&U Credit Information were completed in January 2025, February 2025 and April 2025, respectively. See “Item 5.A. Operating Results — Overview — Operational Efficiency.”
Interconnection
Our wireless and fixed-line networks interconnect with the public switched telephone networks operated by KT and SK Broadband and, through their networks, with the international gateways of KT and LG U+, as well as
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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, certain service providers, including us, are required to permit other service providers to interconnect to their networks. If a new service provider desires interconnection with the networks of an existing service provider but the parties are unable to reach an agreement within 90 days, the new service provider can appeal to the KMCC.
Domestic Calls
Guidelines issued by the MSIT 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 MSIT determines interconnection rates applicable to each carrier based on changes in traffic volume, taking into account other factors such as research results, competition and trends in technology development.
Wireless-to-Fixed-line. According to our interconnection arrangement with KT, for a call from our wireless network to KT’s fixed-line network, we collect the usage rate from our wireless subscriber and in turn pay KT the interconnection charges. Similarly, KT pays interconnection charges to SK Broadband for a call from KT’s wireless network to SK Broadband’s fixed-line network. The interconnection rate applicable to both KT and SK Broadband was Won 6.73 per minute, Won 6.89 per minute and Won 7.22 per minute for 2025, 2024 and 2023, respectively.
Fixed-line-to-Wireless. The MSIT determines interconnection arrangements for calls from a fixed-line network to a wireless network. For a call initiated by a fixed-line user to one of our wireless subscribers, the fixed-line network operator collects our usage fee from the fixed-line user and remits to us an interconnection charge. Interconnection with KT accounts for substantially all of our fixed-line-to-wireless interconnection revenue and expenses. The interconnection rate paid by fixed-line network service providers to each wireless network service provider was Won 8.15 per minute, Won 8.55 per minute and Won 9.17 per minute for 2025, 2024 and 2023, respectively.
Wireless-to-Wireless. Interconnection charges also apply to calls between wireless telephone networks in Korea. Under these arrangements, the operator originating the call pays an interconnection charge to the operator terminating the call. The applicable interconnection rate is the same as the fixed-line-to-wireless interconnection rate set out in the paragraph above.
Our revenues from the wireless-to-wireless interconnection charges were Won 341.5 billion in 2025, Won 370.1 billion in 2024 and Won 401.3 billion in 2023. Our expenses from these charges were Won 335.4 billion in 2025, Won 364.9 billion in 2024 and Won 392.4 billion in 2023.
International Calls and International Roaming Arrangements
With respect to international calls, if a call is initiated by our wireless subscribers, we bill the wireless subscriber for the international charges of KT, LG U+ or SK Broadband, and we receive interconnection charges from such operators. If an international call is received by our subscriber, KT, LG U+ or SK Broadband pays interconnection charges to us based on our imputed costs.
To complement the services we provide to our subscribers in Korea, we offer international voice and data roaming services. We charge our subscribers usage fees for global roaming service and, in turn, pay foreign wireless network operators fees for the corresponding usage of their network. For a more detailed discussion of our global roaming services, see “— Wireless Services” above.
Competition
We operate in highly saturated and competitive markets, and we believe that our subscriber growth is affected by many factors, including the expansion and technical enhancement of our networks, the development
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and deployment of new technologies, the effectiveness of our marketing and distribution strategy, the quality of our customer service, the introduction of new products and services, competitive pricing of our rate plans, new market entrants and regulatory changes.
Historically, there has been considerable consolidation in the telecommunications industry, resulting in the current competitive landscape comprising three mobile and fixed network operators in the Korean market, KT, LG U+ and us. Each of our competitors has substantial financial, technical, marketing and other resources to respond to our business offerings.
The following table shows the market share information, based on number of subscribers, as of December 31, 2025, for the following markets.
Mobile phone(1)
Fixed-Line Telephone (including VoIP)
Broadband Internet
Pay TV (2)
Includes MVNO subscribers that lease the wireless networks of the respective mobile network operator.
Includes video-on-demand only service subscribers. Market share is expressed as a percentage of the pay TV market (which includes IPTV, cable TV and satellite TV).
Consists of 18.4% from our IPTV service and 7.5% from our cable TV service.
Consists of 26.2% from KT’s IPTV service, 7.1% from its satellite TV service provided through KT Skylife and 3.4% from KT’s cable TV service provided through HCN, which was acquired by KT in August 2021.
Consists of 15.7% from LG U+’s IPTV service and 9.4% from its cable TV service provided through LG HelloVision, a subsidiary of LG U+.
As of December 31, 2025, we had 23.5 million mobile phone subscribers, representing a market share of approximately 41.6%, including MVNO subscribers leasing our networks. As of December 31, 2025, KT and LG U+ had 17.4 million and 15.6 million mobile phone subscribers, respectively, representing approximately 30.8% and 27.6%, respectively, of the total number of mobile phone subscribers in Korea on such date, each including MVNO subscribers leasing its networks.
In 2025, we had 1.9 million activations and 2.9 million deactivations. In 2025, the monthly churn rate in our wireless telecommunications business ranged from 0.7% to 2.3%, with an average monthly churn rate of 1.1%, which increased from 0.8% in 2024. The increases in deactivations and average monthly churn rate in 2025 compared to 2024 were mainly due to the cybersecurity incident of which we became aware in April 2025 as described above. See “— Malicious and abusive Internet practices could impair our services and we may be subject to significant legal and financial exposure, damage to our reputation and a loss of confidence of our customers.”
Our competitors for subscriber activations include MVNOs, including MVNOs that lease our networks. MVNOs generally provide rate plans that are relatively cheaper than similar rate plans of the wireless network providers from which they lease their networks, including us. Currently, 15 MVNOs provide wireless telecommunications services using the networks leased from us. As of December 31, 2025, MVNOs had a combined market share of 18.3%, of which MVNOs leasing our networks represented 3.1%, MVNOs leasing KT’s networks represented 7.0% and MVNOs leasing LG U+’s networks represented 8.1%.
In recent years, a number of new entrants have entered the MVNO business, including affiliates of leading financial institutions in Korea. Some of these new entrants have engaged in aggressive marketing campaigns and
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promotional discounts while leveraging the brand power of their affiliates as part of their efforts to gain subscribers. Partly as a result of such efforts, the combined market share of MVNOs has generally increased in recent years, including from 16.9% as of December 31, 2024 to 18.3% as of December 31, 2025, in terms of number of mobile phone subscribers. In January 2025, the Government announced a number of new policy measures to strengthen the competitiveness of MVNOs, including lowering the cost of leasing networks from wireless network providers (including us) and providing support for the emergence of “full MVNOs” possessing their own core network infrastructures and telephone platform operations. We cannot assure you that such policy measures will not lead to further increases in the combined market share of MVNOs or encourage new MVNOs to enter the market.In addition, other companies may enter the wireless network services market. See “— Law and Regulation — Frequency Allocation” and “Item 3.D. Risk Factors — Risks Relating to Our Business — Our businesses are subject to various types of Government regulation, and any change in Government policy relating to the telecommunications industry could have an adverse effect on our business, financial condition and results of operations.” For a description of the risks associated with the competitive environment in which we operate, see “Item 3.D. Risk Factors — Risks Relating to Our Business — Competition may reduce our market share and harm our business, financial condition and results of operations.”
Historically, competition in the wireless telecommunications business had caused us to significantly increase our marketing and advertising expenses from time to time depending on the prevailing competitive landscape, with marketing expenses as a percentage of SK Telecom’s revenue, on a separate basis, reaching a peak of 28.2% in 2012. Such percentage was 24.2% in 2023, 22.8% in 2024 and 24.1% in 2025. We believe that the maturity of the overall wireless telecommunication market has contributed to the general stabilization of our marketing expenses in recent years.
We face competition from KT and LG U+ as well as other platform service providers in our other cellular service businesses. For example, our Smart Home service competes with KT’s Giga IoT Home service and LG U+’s IoT@Home service.
Fixed-Line Telecommunications Services
Our fixed-line telephone service competes with KT and LG U+, as well as other providers of VoIP services. As of December 31, 2025, our market share of the fixed-line telephone and VoIP service market was 15.6% (including the services provided by SK Broadband) in terms of number of subscribers compared to KT with 51.6% and LG U+ with 18.1%.
We are the second-largest provider of broadband Internet access services in Korea in terms of both revenue and subscribers, and our network covered a substantial majority of households in Korea as of December 31, 2025. As of December 31, 2025, our market share of the broadband Internet market was 28.7% in terms of number of subscribers compared to KT with 40.3% and LG U+ with 22.1%.
Our IPTV and cable TV services compete with other providers of pay TV services, including KT, LG U+ and cable companies. As of December 31, 2025, our market share of the pay TV market (which includes IPTV, cable TV and satellite TV) was 25.9% compared to KT with 36.7% (including its IPTV, cable TV and satellite TV services) and LG U+ with 25.1% (including its IPTV and cable TV services), and the collective market share of other pay TV providers was 12.2%. Our market shares in the broadband Internet and pay TV markets in 2025 were marginally and negatively affected by the impact of the above-mentioned cybersecurity incident, as a significant portion of our customers of these services subscribe to packages that combine our mobile phone services with one or both of these services. Furthermore, our IPTV and cable TV services are facing an increasing level of competition from global operators of online video streaming platforms, such as YouTube, Netflix, Disney Plus and Apple TV, leading domestic video streaming platforms such as TVING, Coupang Play, Wavve (which is seeking to merge with TVING pursuant to a memorandum of understanding entered into in December 2023) and Watcha, and the video contents offered by leading domestic and global internet search, communications and social media platforms including NAVER, Kakao and Instagram, as such services continue to become increasingly popular to serve as a substitute to traditional television programming.
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Over the past decade, the Korean fixed-line telecommunications industry has gone through significant consolidation involving major pay television service providers. We completed the Tbroad Merger in April 2020, following which we became the second-largest pay TV provider in Korea in terms of number of subscribers as of December 31, 2025. In December 2019, LG U+ acquired a majority equity stake in LG HelloVision. In August 2021, KT acquired HCN, a major Korean cable TV service provider, through its subsidiary KT Skylife. Such transactions, as well as further consolidation in the fixed-line telecommunications industry, may result in increased competition, as the entities emerging from such consolidation and other remaining players in the industry may actively pursue expanding or protecting their respective market shares.
Other Investments and Relationships
We have investments in a number of other businesses and companies and have entered into various business arrangements with other companies. For example, in July 2022, we entered into a strategic alliance with Hana Financial Group, a leading financial holding company in Korea with subsidiaries having significant presences in commercial banking, credit card business, securities brokerage and insurance, among others, to seek synergies through convergence between finance and ICT technology. As part of such strategic alliance, we transferred the entirety of our 15.0% interest in HanaCard for Won 330.0 billion in July 2022 and acquired 8,630,949 shares of Hana Financial Group (representing a 2.9% interest) for Won 330.0 billion between July and November 2022, and HanaCard acquired 1,307,471 common shares of us (representing a 0.6% interest) for Won 68.4 billion between July and September 2022. See also “— Cellular Services — Other Solutions and Services — Other New Businesses.”
Law and Regulation
Korea’s telecommunications industry is subject to comprehensive regulation by the MSIT, which is responsible for information and telecommunications policies. The MSIT 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;
interconnection and revenue-sharing between telecommunications service providers;
research and development of policy formulation for information and telecommunications; and
competition among telecommunications service providers.
The MSIT is charged with regulating information and telecommunications, and the KMCC is charged with regulating the public interest aspects of and fairness in broadcasting and telecommunications.
Telecommunications service providers are currently classified into two categories: network service providers and value-added 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 were previously required to obtain a license from the MSIT for the services we provide. However, an amendment to the Telecommunications Business Act, pursuant to which companies meeting certain regulatory criteria may become a network service provider without a separate license requirement, went into effect in June 2019. Our licenses permit us to provide cellular services, third generation wireless telecommunications services using WCDMA technology, fourth generation wireless telecommunications services using LTE technology and fifth generation wireless telecommunications services using 5G technology.
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The MSIT 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 any violation of the conditions of our licenses. Alternatively, in lieu of suspension of our business, the MSIT may levy a penalty surcharge of up to 3.0% of the average of our annual revenue for the preceding three fiscal years. A network service provider that wants to cease its business or dissolve must notify its users 60 days prior to the scheduled date of cessation or dissolution and obtain MSIT approval.
In the past, the Government has stated that its policy was 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 MSIT regulation, we are subject to increased regulation because of our position as the dominant wireless telecommunications services provider in Korea.
Competition Regulation
The KMCC 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 KMCC may take corrective measures it deems necessary, including, but not limited to, prohibiting further violations, requiring amendments to the articles of incorporation or to service contracts with customers, requiring the execution or performance of, or amendments to, interconnection agreements with other network service providers and prohibiting advertisements to solicit new subscribers. The KMCC is required to notify the Minister of the MSIT upon ordering certain corrective measures.
In addition, we may also be designated as a “market-dominating business entity” by the relevant authorities under the Fair Trade Act, based on a case-by-case assessment of factors such as our market share, barriers to entry and the relative scale of competitors. If so designated, we would be prohibited from engaging in conduct that could be deemed an abuse of such position, including unreasonably determining, 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.
Because we are a member company of the SK Group, which is a large business group as designated by the KFTC, we are subject to the following restrictions under the Fair Trade Act:
Restriction on debt guarantee among affiliates. Any affiliate within the SK Group may not guarantee the debts of another domestic affiliate, except for certain guarantees prescribed in the Fair Trade Act, such as those relating to the debts of a company acquired for purposes of industrial rationalization, bid deposits for overseas construction work or technology development funds.
Restriction on cross-investment. A member company of the SK Group may not acquire or hold shares in an affiliate belonging to the SK Group that owns shares in the member company.
Restrictions on circular investments. A member company of the SK Group may not acquire or hold shares which would constitute “circular investments” in an affiliate company which also forms part of the SK Group where “circular investments” refer to a cross-affiliate shareholding relationship under which three or more affiliate companies become connected through cross affiliate shareholdings by owning shares in other affiliates or by becoming an entity whose shares are owned by other affiliates.
Public notice of board resolution on large-scale transactions with specially related persons. If a member company of the SK Group engages in a transaction with a specially related person in an amount exceeding the lesser of (1) Won 10 billion and (2) 5.0% of the larger of the total capital or capital stock of the member company (provided, however, in cases where 5.0% of the total capital or
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capital stock of the member company is less than Won 500 million, the threshold set forth in (2) above is set at Won 500 million), the transaction must be approved by a resolution of the member company’s board of directors and the member company must publicly disclose the transaction.
Restrictions on investments by subsidiaries and sub-subsidiaries of holding companies. The Fair Trade Act prohibits subsidiaries of holding companies from investing in, or holding shares of common stock of, domestic affiliates that belong to the same large business group, unless such domestic affiliates are their own subsidiaries. Furthermore, any subsidiaries of a holding company’s subsidiaries (“sub-subsidiaries”) are prohibited from investing in, or holding shares of common stock of, domestic affiliates that belong to the same large business group, unless all shares issued by the affiliates are held by the sub-subsidiary. Therefore, we and other subsidiaries of SK Inc. may not invest in any domestic affiliate that is also a member company of the SK Group, except in the case where we invest in our own subsidiary or where another subsidiary of SK Inc. invests in its own subsidiary.
Public notice of the current status of a business group. Under the Fair Trade Act and the Enforcement Decree thereof, a member company of the SK Group must publicly disclose the general status of the SK Group, including the name, business scope and financial status of affiliates, information on the officers of affiliates, information on shareholding and cross-investments between member companies of the SK Group, information on transactions with certain related persons and, if a member company engages in a transaction with an affiliated company in the amount of 5.0% or more of the member company’s quarterly sales or Won 5.0 billion or more, information on transactions with such affiliated company on a quarterly basis.
Rate Regulation
Network service providers whose sales proceeds exceed the amount prescribed by law must report to the MSIT the rates and contractual terms for each type of service they provide. Under the current reporting requirement, which does not apply to other network service providers with respect to the rates they provide, the MSIT has fifteen days to object to any new rates and terms of service reported by us, and we may implement such new rates and terms of service after the fifteen-day period expires in the absence of the MSIT’s objection.
Furthermore, in 2007, the Government announced a “road map” highlighting revisions in regulations to promote deregulation of the telecommunications industry. In accordance with the road map and pursuant to the Combined Sales Regulation, promulgated in May 2007, telecommunications service providers in Korea are permitted to bundle their services, such as wireless data transmission service, wireless voice transmission service, broadband Internet access service, fixed-line telephone service and IPTV service, at a discounted rate; provided, however, that we and KT, each of which holds a significant market share in the telecommunications industry, allow other competitors to employ the services provided by us and KT, respectively, so that such competitors can provide similar discounted package services. In September 2007, the regulations and provisions under the Telecommunications Business Act were amended to permit licensed transmission service providers to offer local, domestic long-distance and international telephone services, as well as broadband Internet access and Internet phone services, without additional business licenses.
Moreover, an MVNO system under which the MSIT may designate and obligate certain wireless telecommunications services providers to allow an MVNO, at such MVNO’s request, to use their telecommunications network facilities at a rate mutually agreed upon that complies with the standards set by the MSIT became effective on March 14, 2017 under the amended Telecommunications Business Act. We are currently the only wireless telecommunications services provider obligated to allow other wireless telecommunications services providers to use our telecommunications network facilities. Currently, 15 MVNOs provide wireless telecommunications services using the networks leased from us.
On October 1, 2014, the MDDIA, enacted for the purpose of establishing a transparent and fair mobile distribution practice, became effective. The MDDIA limited the amount of subsidies a wireless
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telecommunications service provider can provide to subscribers in order to prevent excessive competition among wireless telecommunications service providers. Pursuant to the MDDIA, wireless telecommunications service providers are prohibited from (i) unfairly providing discriminatory subsidies based on criteria such as type of subscription, subscription plan and characteristics of the subscriber and (ii) entering into a separate agreement with subscribers imposing obligations to use a specific subscription plan as a condition for providing subsidies. See “Item 5.A. Operating Results — Overview — Rate Regulations.”
In addition, under the MDDIA, wireless telecommunications service providers were obliged to provide certain benefits, such as discounted rates, to subscribers who subscribe to their service without receiving subsidies. In June 2017, the State Affairs Planning Advisory Committee of Korea announced that it would encourage wireless telecommunications service providers, including us, to increase the applicable discount rate offered to subscribers from 20% to 25%, which we adopted in September 2017, and to offer additional discounts to low income customers, including those on government welfare programs and senior citizen recipients of the basic pension, which we implemented in December 2017 and July 2018, respectively. Although the MDDIA was repealed in July 2025, discounted rates offered under the MDDIA have been retained through a related amendment to the Telecommunications Business Act. We cannot provide assurance that we will not provide other rate discounts or lower-priced subscription plans in the future to comply with the Government’s public policy guidelines or suggestions.
Dominant network service providers such as ourselves that own essential infrastructure facilities or possess a certain market share are required to provide interconnection of their telecommunications network facilities to other service providers upon request. The MSIT 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, LG U+ 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 MSIT grants permits to additional telecommunications service providers.
Frequency Allocation
The MSIT has the discretion to allocate and adjust the frequency bandwidths for each type of service and may auction off the rights to certain frequency bandwidths. Upon allocation of new frequency bandwidths or adjustment of frequency bandwidths, the MSIT is required to give a public notice. The MSIT also regulates the frequency to be used by each radio station, including the transmission frequency used by equipment in our base stations. All of our frequency allocations are for a definite term. We pay fees to the MSIT for our frequency usage that are determined based upon our number of subscribers, frequency usage by our networks and other factors. For 2025, 2024 and 2023, the fee amounted to Won 99.8 billion, Won 103.0 billion and Won 102.5 billion, respectively.
We currently use 10 MHz of bandwidth in the 2.1 GHz spectrum for our WCDMA services, 30 MHz of bandwidth in the 2.1 GHz spectrum, 20 MHz of bandwidth in the 800 MHz spectrum, 35 MHz of bandwidth in the 1.8 GHz spectrum and 60 MHz of bandwidth in the 2.6 GHz spectrum for our LTE services, as well as 100 MHz of bandwidth in the 3.5 GHz spectrum for our 5G services. In December 2022, citing the lack of progress made to date with respect to the implementation of 5G infrastructure for our use of the 28 GHz spectrum (800 MHz of bandwidth which was allocated to us in December 2018 for a period of five years until November 2023), the MSIT reduced the duration of our license for the use of such bandwidth by six months and asked us to install 15,000 base stations that use the 28 GHz spectrum by the end of May 2023, which we were not able to do within the Government’s requested timetable. Furthermore, in December 2022, the Government cancelled the allocations of bandwidth in the 28 GHz spectrum that had been provided to KT and LG U+, also citing the lack of progress made by these companies. In January 2024, the Government allocated 800 MHz of bandwidth in the 28 GHz spectrum to Stage X to provide nationwide wireless network services. However, in July 2024, the
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Government revoked such allocation citing Stage X’s failure to meet the paid-in capital requirement and discrepancies in the actual ownership ratios of major shareholders and ownership structure compared to the information included in its frequency allocation application. For more information regarding the license fees for the various bandwidths that we use, see “Item 5.B. Liquidity and Capital Resources — Capital Requirements — Capital Expenditures” and note 16 of the notes to our consolidated financial statements.
In December 2025, the MSIT announced plans to reallocate a total of 370 MHz of frequency bandwidths whose usage terms are due to expire in 2026 to KT, LG U+ and us, 155 MHz (in the 800 MHz, 1.8 GHz, 2.1 GHz and 2.6 GHz spectrums) of which will be allocated to us. We have applied for the renewal of the 20 MHz frequency bandwidth in the 800 MHz spectrum in December 2025, and we plan to apply for the renewal of the remaining 135 MHz of frequency bandwidths in June 2026. The final consideration to be paid by us for such reallocated bandwidths is expected to be conditional on the number of indoor 5G cell sites to be constructed by us by 2031. For risks relating to the maintenance of adequate bandwidth capacity, see “Item 3.D. Risk Factors — Risks Relating to Our Business — Our business, financial condition and results of operations may be adversely affected if we fail to acquire adequate additional frequency usage rights, renew existing frequency usage rights, or use our bandwidth efficiently to accommodate subscriber growth and subscriber usage.”
Mandatory Contributions and Obligations
All telecommunications service providers other than (i) value-added service providers and regional paging service providers or (ii) any telecommunications service providers whose net annual revenue is less than an amount determined by the MSIT (currently set at Won 30.0 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 discounted telephone services for handicapped and low-income citizens, or contribute toward the supply of such universal services. The MSIT designates universal services and the service provider who is required to provide each service. Currently, under the MSIT guidelines, we are required to offer a discount of between 35.0% to 50.0% of our monthly fee for wireless telecommunications services to handicapped and low-income citizens.
In addition to such universal services for handicapped and low-income citizens, we are also required to make certain annual monetary contributions to compensate for other service providers’ costs for the universal services. The size of a service provider’s contribution is based on its net annual revenue for the previous year (calculated pursuant to the MSIT guidelines, which differ from our accounting practices). We recognized expenses relating to such contributions of Won 9.7 billion, Won 35.2 billion and Won 31.1 billion in 2025, 2024 and 2023, respectively. 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.
Foreign Ownership and Investment Restrictions and Requirements
Because we are a network service provider, and the exception for the foreign shareholding limit under the Telecommunications Business Act does not apply to us, foreign governments, individuals, and entities (including Korean entities that are deemed foreigners, as discussed below) are prohibited from owning more than 49.0% of our voting stock. Korean entities whose largest shareholder is a foreign government or a foreigner (together with any of its related parties) that owns 15.0% or more of the outstanding voting stock of such Korean entities are also deemed foreigners. If this 49.0% ownership limitation is violated, certain of our foreign shareholders will not be permitted to exercise voting rights in excess of the limitation, and the MSIT may require other corrective action.
Notwithstanding the above, pursuant to an amendment to the Telecommunications Business Act which became effective in April 2022, a Korean entity, so long as (i) such entity’s largest shareholder (determined by
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aggregating the shareholdings of such shareholder and its related parties) is a foreign entity specifically designated by the MSIT incorporated in a country that has entered into a bilateral or multilateral free trade agreement with Korea, and (ii) such shareholder (together with the shareholdings of its related parties) owns 15.0% or more of the issued voting stock of such entity, may own more than 49.0% of our issued shares but may not exercise its voting rights with respect to the shares held in excess of the 49.0% ceiling until the end of the MSIT’s Public Interest Review.
As of December 31, 2025, SK Inc. owned 65,668,397 shares of our common stock, or 30.6%, of our issued shares. As of December 31, 2025, the two largest foreign shareholders of SK Inc. each held a 3.4% stake therein. If such foreign shareholders increase their shareholdings in SK Inc. to 15% or more and any such foreign shareholder constitutes the largest shareholder of SK Inc., SK Inc. will be considered a foreign shareholder, and its shareholding in us would be included in the calculation of our aggregate foreign shareholding. If SK Inc.’s shareholding in us is included in the calculation of our aggregate foreign shareholding, then our aggregate foreign shareholding, assuming the foreign ownership level as of December 31, 2025 (which we believe was 36.2%), would exceed the 49.0% ceiling on foreign shareholding.
If our aggregate foreign shareholding limit is exceeded, the MSIT may issue a corrective order to us, the breaching shareholder (including SK Inc. if the breach is caused by an increase in foreign ownership of SK Inc.) and the foreign shareholder which owns in the aggregate 15.0% or more of SK Inc. Furthermore, SK Inc. will be prohibited from exercising its voting rights with respect to the shares held in excess of the 49.0% ceiling, which may result in a change in control of us. In addition, the MSIT will be prohibited from granting us licenses or permits necessary for entering into new telecommunications businesses until our aggregate foreign shareholding is reduced to below 49.0%. If a corrective order is issued to us by the MSIT arising from the violation of the foregoing foreign ownership limit, and we do not comply within the prescribed period under such corrective order, the MSIT may:
revoke our business license;
suspend all or part of our business; or
if the suspension of business is deemed to result in significant inconvenience to our customers or to be detrimental to the public interest, impose a one-time administrative penalty of up to 3.0% of the average of our annual revenue for the preceding three fiscal years.
Additionally, the Telecommunications Business Act also authorizes the MSIT to assess penalty surcharges 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 three years or a penalty of Won 150 million. See “Item 3.D. Risk Factors — Risks Relating to Our Business — If SK Inc. causes us to breach the foreign ownership limitations on our common shares, we may experience a change of control.”
We are required under the Foreign Exchange Transactions Act to file a report with a designated foreign exchange bank or with 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 in the aggregate within one year from the filing of a report with a designated foreign exchange bank require the filing of a report with the MOFE.
The Telecommunications Business Act provides for the creation of a Public Interest Review Committee under the MSIT to review investments in or changes in the control of network service providers. The following events would be subject to review by the Public Interest Review Committee:
the acquisition by an entity (and its related parties) of 15.0% or more of the equity of a network service provider;
a change in the largest shareholder of a network service provider;
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agreements by a network service provider or its shareholders with foreign governments or parties regarding important business matters of such network service provider, such as the appointment of officers and directors and transfer of businesses;
a deemed foreigner (as discussed above) from a country whose government has entered into a bilateral or multilateral free trade agreement designated by the MSIT with the Government owning in excess of 49.0% of the outstanding voting stock of a network service provider; and
a change in control over a network service provider specified in the Enforcement Decree of the Telecommunications Business Act (including, but not limited to, the change of control over the holding company of such network service 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 MSIT may issue orders to stop the transaction, amend any agreements, suspend voting rights, or divest the shares of the relevant network service provider. Additionally, if a dominant network service provider (which would currently include us and KT), together with its specially related persons (as defined under the Financial Investment Services and Capital Markets Act (the “FSCMA”)), holds more than 5.0% of the equity of another dominant network service provider, the voting rights on the shares held in excess of the 5.0% 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 telecommunications services and to design and manufacture competitive products. In addition to active internal and external research and development efforts as described in “Item 5.C. Research and Development, Patents and Licenses, etc.,” 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, and have applications for patents pending in many countries. Our patents are mainly related to wireless (LTE, 5G and Wi-Fi) technology, video codec, wireless Internet applications and AI.
We are not currently involved in any material litigation regarding patent infringement. For a description of the risks associated with our reliance on intellectual property, see “Item 3.D. Risk Factors — Risks Relating to Our Business — Our business relies on technology developed by us, and our business will suffer if we are unable to protect our proprietary rights.”
Seasonality of the Business
Our business is not affected by seasonality.
Organizational Structure
We are a member of the SK Group, based on the definition of “group” under the Fair Trade Act. As of December 31, 2025, SK Group members owned in aggregate 30.6% of the shares of our issued common stock. The SK Group is a diversified group of companies incorporated in Korea with interests in, among other things, telecommunications, trading, energy, chemicals, engineering and leisure industries.
Significant Subsidiaries
For information regarding our subsidiaries, see note 1(2) 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 December 31, 2025:
Location
Primary Use
Seoul Metropolitan Area
Gyeongsang Provinces
Jeolla and Jeju Provinces
Chungcheong Province
Represents our 93.25% ownership of SK T-Tower.
Includes base stations.
Our registered office and corporate headquarters are located at SK T-Tower, 65, Eulji-ro, Jung-gu, Seoul 04539, Korea, which occupy a total land area of approximately 64,515 square feet. We own 93.25% of SK T-Tower, while the remaining 6.75% is owned by SK Square following the transfer of such interest to it by us pursuant to the Spin-off. In addition, we own or lease various locations for base stations and switching equipment. We do not anticipate that we will encounter material difficulties in meeting our future needs for any existing or prospective leased space for our base stations. See “Item 4.B. Business Overview — Cellular Services — Network Infrastructure.”
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, lightning, 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 coverage are in accordance with general business practices in Korea.
UNRESOLVED STAFF COMMENTS
We do not have any unresolved comments from the SEC staff regarding our periodic reports under the Exchange Act.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion together with our consolidated financial statements and the related notes thereto which appear elsewhere in this annual report. We prepare our consolidated financial statements in accordance with IFRS Accounting Standards as issued by the IASB. In addition, you should read carefully notes 2(4) and 3 of the notes to our consolidated financial statements which provide summaries of certain critical accounting estimates 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.
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Operating Results
Our operations are reported in three segments: (1) cellular services, which include wireless voice and data transmission services, sales of wireless devices, cellular interconnection services, and various other solutions and services including certain new growth businesses and other miscellaneous cellular services, (2) fixed-line telecommunication services, which include fixed-line telephone services, broadband Internet services, advanced media platform services (including IPTV and cable TV services), and business communications and related infrastructure services, and (3) other businesses, which include our T-commerce business and certain other miscellaneous businesses that do not meet the quantitative thresholds to be separately considered reportable segments.
In our cellular services segment, we earn revenue principally from our wireless voice and data transmission services through monthly plan-based fees, usage charges for outgoing voice calls, usage charges for wireless data services and value-added service fees paid by our wireless subscribers as well as interconnection fees paid to us by other telecommunications operators for use of our wireless network by their customers and subscribers. We also derive revenue from sales of wireless devices by PS&Marketing. Other sources of revenue include revenue from our other miscellaneous cellular services and our new services and products utilizing our AI and digital infrastructure capabilities and our telecommunications platforms, including a broad range of IoT solutions and enterprise communications services, cloud services, subscription services, advertising and curated shopping services, AI B2C services and AI B2B services.
In our fixed-line telecommunication services segment, we earn revenue principally from our fixed-line telephone services and broadband Internet services and advanced media platform services (including IPTV and cable TV services) through monthly plan-based fees and usage charges as well as interconnection fees paid to us by other telecommunications operators for use of our fixed-line network by their customers and subscribers, and advertising fees paid to us by businesses that advertise their products and services on our advanced media platforms. In addition, we derive revenue from international calling services and our business communications and related infrastructure services through customized fee arrangements with our business customers.
In our others segment, we have principally earned revenue from the T-commerce business of SK Stoa, which derives revenue through third-party seller fees earned (including commissions) for transactions in which it acts as a selling agent on SK stoa, its T-commerce network. In December 2025, we entered into an agreement to sell our entire equity stake in SK Stoa and Media S, which operates two TV channels and co-produces original television entertainment contents, to Rapport Labs Inc., a Korea-based e-commerce company, as part of our ongoing strategy to streamline and optimize our overall business portfolio. Such transaction is currently pending subject to regulatory approval and other customary closing conditions, and the assets and liabilities of SK Stoa and Media S are classified as assets and liabilities held for sale in our consolidated financial statements included in this annual report. Prior to the completion of the disposal transactions described below, we also derived revenue from online portal services under our “Nate” brand name through our former subsidiary NATE Communications Corporation, and online corporate employment benefits management and training services for Korean businesses and public institutions through our former indirect subsidiary SK M&Service. See “— Operational Efficiency.”
Our cellular service revenue and fixed-line telecommunications service revenue depend principally upon the number of our subscribers and service users, the rates we charge for our services, the frequency and volume of subscriber usage of our services and the terms of our interconnection with other telecommunications operators. Our others revenue depends principally upon the gross merchandise volume, which is the total monetary value of customer purchases of goods and services, net of estimated refunds, of SK stoa and the number of merchants that utilize SK stoa to advertise and promote their products and services and the extent of such advertisement and promotion.
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Among other factors, management uses operating profit of each reportable segment presented in accordance with K-IFRS (“segment operating profit”) in its assessment of the profitability of each reportable segment. The sum of segment operating profit for all three reportable segments differs from our operating profit presented in accordance with IFRS Accounting Standards as issued by the IASB as segment operating profit does not include certain items such as donations, gain and loss from disposal of property and equipment and intangible assets and impairment loss on property and equipment and intangible assets. For a reconciliation of operating profit presented in accordance with IFRS Accounting Standards as issued by the IASB and operating profit presented in accordance with K-IFRS, see “— Explanatory Note Regarding Presentation of Certain Financial Information under K-IFRS.” In addition to the information set forth below, see note 4 of the notes to our consolidated financial statements for more detailed information regarding each of our reportable segments.
A number of recent developments have had or are expected to have a material impact on our results of operations, financial condition and capital expenditures. These developments include:
Rate Regulations. Under the MDDIA, wireless telecommunications service providers were obliged to provide certain benefits, such as discounted rates, to subscribers who subscribe to their service without receiving handset subsidies. Handset subsidies are provided to subscribers who agree to use our service for a predetermined service period and purchase handsets on an installment basis. In June 2017, the State Affairs Planning Advisory Committee of Korea announced that it would encourage wireless telecommunications service providers, including us, to increase the applicable discount rate offered to subscribers from 20% to 25%, which we adopted in September 2017, and to offer additional discounts to low income customers, including those on government welfare programs and senior citizen recipients of the basic pension, which we implemented in December 2017 and July 2018, respectively. Although the MDDIA was repealed in July 2025, discounted rates offered under the MDDIA have been retained through a related amendment to the Telecommunications Business Act. See “Item 4.B. Business Overview — Law and Regulation — Rate Regulation.”
These Government measures have adversely affected our revenues and results of operations as more subscribers elected to receive the 25% rate discount in recent years. On the other hand, this has also led to a reduction of, or partially offset increases in, our marketing expenses as the number of subscribers who have elected to receive handset subsidies has generally declined in recent years, and has contributed to maintaining a stable churn rate. Moreover, following the abolishment of the MDDIA as discussed above, we have increased our marketing expenses relating to handset subsidies in part depending on the prevailing competitive landscape, which may have an adverse effect on our operating expenses and results of operations.
Decrease in Interconnection Fees. 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 MSIT determines the basic framework for interconnection arrangements, including policies relating to interconnection rates in Korea. 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. The MSIT has continued to gradually decrease the interconnection rates in Korea, which has led to an overall decrease in our interconnection revenue as well as interconnection expenses from 2012 to 2025 and any further reduction in interconnection rates by the MSIT may continue to impact our results of operations. Beginning in 2017, a single interconnection rate paid by fixed-line network service providers for fixed-line to wireless calls applies to all wireless telecommunications service providers. For more information about our interconnection revenue and expenses, see “Item 4.B. Business Overview — Interconnection.”
Changes in Monthly Revenue per Subscriber. We measure monthly average revenue per subscriber using two metrics: average monthly revenue per subscriber excluding MVNO subscribers leasing our networks (“ARPU”) and average monthly revenue per subscriber including such MVNO subscribers (“ARPU including MVNO”). ARPU is derived by dividing the sum of total SK Telecom revenues on a separate basis from voice
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service and data service for the period (excluding revenue derived from MVNO subscribers leasing our networks) by the monthly average number of subscribers (excluding the number of MVNO subscribers) for the period, then dividing that number by the number of months in the period. ARPU including MVNO is derived by dividing the sum of total SK Telecom revenues on a separate basis from voice service and data service for the period (including revenue derived from MVNO subscribers) by the monthly average number of subscribers (including the number of MVNO subscribers) for the period, then dividing that number by the number of months in the period.
Our ARPU decreased by 5.1% to Won 27,845 in 2025 from Won 29,355 in 2024, which represented a decrease of 1.7% from Won 29,874 in 2023. Our ARPU including MVNO decreased by 5.5% to Won 26,146 in 2025 from Won 27,658 in 2024, which represented a decrease of 0.8% from Won 27,887 in 2023. The decreases in ARPU and ARPU including MVNO in 2025 were both primarily due to discounts on monthly subscription fees we offered for the month of August 2025 as part of the Customer Appreciation Package following the cybersecurity incident of which we became aware in April 2025 as described above. See “— Overview — Cybersecurity.” The decrease in ARPU in 2024 was primarily due to an increase in subscriptions for secondary mobile phones and non-mobile phone devices, from which we generally derive lower revenue per subscriber, which effect was offset in part by an increase in the number of subscribers that subscribe to our 5G subscription plans. The decrease in ARPU including MVNO in 2024 was primarily due to an increase in the number of MVNO subscribers from whom we derive lower ARPU.
Economic Conditions in Korea. Demand for our products and services may fluctuate in light of the overall economic conditions in Korea. The overall prospects for the Korean economy and, in turn, the market conditions for the industries in which we operate, remain uncertain, and have been affected by, among others, the COVID-19 pandemic, the Russia-Ukraine war and ensuing sanctions against Russia, difficulties faced by several banks in the United States and Europe, fluctuations in policy interest rates globally (including Korea), and more recently, the military conflicts between Iran and other countries, including the United States and Israel, have adversely affected, and may continue to adversely affect, the Korean economy. In addition, an increase in unemployment among, and/or a decrease in disposable income of, our customers resulting from mixed signs of deterioration and uncertain recovery displayed by the Korean economy as described above, may decrease demand for some of our products and services or cause an increase in delinquent subscriber accounts. See “Item 3.D. Risk Factors — Risks Relating to Korea — Unfavorable financial and economic developments in Korea may have an adverse effect on us.”
Operational Efficiency. We are striving to enhance our operational efficiency through our efforts to reduce operating expenses, optimize capital expenditures and reorganize non-essential business lines and investments. For example, in order to streamline our operating expenses, we have been actively utilizing AI technology in various operational processes, including our marketing activities and customer services. Furthermore, we have shifted the focus of our 5G network-related capital expenditure from expanding network coverage and increasing maximum data transmission speed to enhancing network quality. Moreover, in December 2024, we entered into agreements with Samgu Inc. and its affiliates to dispose of a 70% equity interest in SK M&Service, as well as our 100% equity interest in our former wholly-owned subsidiary NATE Communications Corporation, which operates the “Nate” internet portal, and the entirety of our 50% equity interest in our former associate F&U Credit Information, which provides credit information services. The disposals of NATE Communications Corporation, SK M&Service and F&U Credit Information were completed in January 2025, February 2025 and April 2025, respectively. More recently, in December 2025, we entered into an agreement to sell our entire equity stake in SK Stoa, which operates our T-commerce business, and Media S, which operates two TV channels and co-produces original television entertainment contents, to Rapport Labs Inc., a Korea-based e-commerce company, as part of our ongoing strategy to streamline and optimize our overall business portfolio. Such transaction is currently pending subject to regulatory approval and other customary closing conditions, and the assets and liabilities of SK Stoa and Media S are classified as assets and liabilities held for sale in our consolidated financial statements included in this annual report.
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Cybersecurity. Our business involves the storage and transmission of large amounts of personal information, and cybersecurity breaches expose us to a risk of loss of this information, which may lead to improper use or disclosure of such information, ensuing potential liability and litigation, and loss of customers, any of which could harm our reputation and adversely affect our business. We maintain a comprehensive process for assessing, identifying and managing material risks from cybersecurity threats as part of our overall risk management system and processes. On April 18, 2025, we became aware of a malware attack against our information technology infrastructure, which resulted in the leakage of certain USIM information of our 5G and LTE network subscribers. While we have addressed such incident with various remedial measures, including ongoing and planned investments in strengthening our cybersecurity and customer compensation packages, such incident resulted in a decrease in the number of our mobile phone subscribers and has had a negative impact on the average monthly churn rate of our wireless telecommunications business. In addition, on August 27, 2025, the PIPC imposed a fine of Won 134.8 billion and an administrative penalty of Won 9.6 million and issued a correctional order on us in connection with this incident. While we have provisionally paid the fine and the administrative penalty in full, we filed an administrative lawsuit challenging such decision in January 2026, which case is currently pending before the Seoul Administrative Court. See “Item 3.D. Risk Factors — Risks Relating to Our Business — Malicious and abusive Internet practices could impair our services and we may be subject to significant legal and financial exposure, damage to our reputation and a loss of confidence of our customers” and “Item 16K. Cybersecurity.”
Explanatory Note Regarding Presentation of Certain Financial Information under K-IFRS
In addition to preparing consolidated financial statements in accordance with IFRS Accounting Standards as issued by the IASB included in this annual report, we also prepare financial statements in accordance with Korean International Financial Reporting Standards (“K-IFRS”) as adopted by the Korean Accounting Standards Board (“KASB”), which we are required to file with the FSC and the Korea Exchange under the FSCMA.
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K-IFRS requires operating profit, which is calculated as operating revenue less operating expenses, to be separately presented on the consolidated statement of income. The presentation of operating profit in our consolidated statements of income prepared in accordance with IFRS Accounting Standards as issued by the IASB included in this annual report differs from the presentation of operating profit in the consolidated statements of income prepared in accordance with K-IFRS for the corresponding periods in certain respects. The table below sets forth a reconciliation of our operating profit as presented in our consolidated statements of income prepared in accordance with IFRS Accounting Standards as issued by the IASB for each of the three years ended December 31, 2025 to the operating profit as presented in the consolidated statements of income prepared in accordance with K-IFRS.
Operating profit pursuant to IFRS Accounting Standards as issued by the IASB
Differences:
Other income pursuant to IFRS Accounting Standards as issued by the IASB that are classified as other non-operating income pursuant to K-IFRS:
Gain on disposal of property and equipment and intangible assets
Others
Other operating expenses pursuant to IFRS Accounting Standards as issued by the IASB that are classified as other non-operating expenses pursuant to K-IFRS:
Impairment loss on property and equipment and intangible assets
Impairment loss on assets held for sale
Loss on disposal of property and equipment and intangible assets
Donations
Bad debt for accounts receivable – other
Operating profit pursuant to K-IFRS
See note 4(2) of the notes to our consolidated financial statements. However, there is no impact on profit for the year or earnings per share for each of the three years ended December 31, 2025, 2024 and 2023.
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The following table sets forth summary consolidated statement of income information, including that expressed as a percentage of operating revenue and other income, for the periods indicated:
Operating revenue and other income
Revenue
Other income
Operating expenses
Operating profit
Profit before income tax
Income tax expense
Profit for the year
Attributable to:
Owners of the Parent Company
Non-controlling interests
The following table sets forth additional information about our operations with respect to our reportable segments during the periods indicated:
Cellular Services Revenue
Wireless Service(1)
Cellular Interconnection
Miscellaneous(2)
Total Cellular Services Revenue
Fixed-line Telecommunication Services Revenue
Fixed-line Telephone Service
Fixed-line Interconnection
Broadband Internet Service and Advanced Media Platform Service(3)
International Calling Service
Miscellaneous(4)
Total Fixed-line Telecommunication Services Revenue
Others Revenue
T-commerce(5)
Portal Service(6)
Miscellaneous(7)
Total Others Revenue
Total Revenue
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Segment Operating Expenses(8)
Fixed-line Telecommunication Services
Total Segment Operating Expenses
Segment Operating Profit (Loss) (9)
Total Segment Operating Profit
Wireless service revenue includes revenue from wireless voice and data transmission services principally derived through monthly plan-based fees, usage charges for outgoing voice calls, usage charges for wireless data services and value-added service fees such as fees for T Universe subscription program paid by wireless subscribers.
Miscellaneous cellular services revenue includes revenue from our IoT and other solutions as well as other miscellaneous cellular services.
Broadband internet service and advanced media platform service revenue includes revenues from our broadband Internet services as well as IPTV and cable TV services.
Miscellaneous fixed-line telecommunication services revenue includes revenues from business communications and related infrastructure services (other than fixed-line telephone service) provided by SK Broadband.
T-commerce services revenue includes revenues from SK Stoa. In December 2025, we entered into an agreement to sell our entire equity stake in SK Stoa and Media S to Rapport Labs Inc., a Korea-based e-commerce company. Such transaction is currently pending subject to regulatory approval and other customary closing conditions, and the assets and liabilities of SK Stoa and Media S are classified as assets and liabilities held for sale in our consolidated financial statements included in this annual report. See “— Overview — Operational Efficiency.”
Portal service revenue includes revenues from our former subsidiary NATE Communications Corporation. See “— Overview — Operational Efficiency.”
Miscellaneous revenue includes revenues from our former indirect subsidiary SK M&Service and other minor miscellaneous revenue items. See “— Overview — Operational Efficiency.”
“Segment operating expenses” mean operating expenses for each reportable segment presented in accordance with K-IFRS and therefore does not include certain expenses that are classified as other non-operating expenses under K-IFRS. For more information on the differences between our consolidated operating expenses pursuant to K-IFRS and pursuant to IFRS Accounting Standards as issued by the IASB, see “— Explanatory Note Regarding Presentation of Certain Financial Information under K-IFRS.” Segment operating expenses presented above, which represent the difference between segment revenue and segment operating profit (loss), are not separately reviewed by or reported to our chief operating decision maker.
Segment operating profit (loss) for each of the segments above is presented net of consolidation adjustments. Accordingly, they do not reconcile with the segment operating profit (loss) for each of such segments set forth in note 4(1) of the notes to our consolidated financial statements, which is expressed prior to making such consolidation adjustments.
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2025 Compared to 2024
Operating Revenue and Other Income. Our consolidated operating revenue and other income decreased by 4.1% to Won 17,269.6 billion in 2025 from Won 18,012.9 billion, due to a decrease in operating revenue, offset in small part by an increase in other income, as discussed below.
Our consolidated operating revenue decreased by 4.7% to Won 17,099.2 billion in 2025 from Won 17,940.6 billion in 2024, due to decreases in cellular services revenue and others revenue, which were partially offset by an increase in fixed-line telecommunications services revenue.
Our consolidated other income increased by 135.7% to Won 170.4 billion in 2025 from Won 72.3 billion in 2024, primarily due to the gain on disposal of property and equipment and intangible assets we recognized in 2025 relating to the disposal of our Pangyo office building.
The following sets forth additional information about our operating revenues with respect to each of our reportable segments.
Cellular services: The revenue of our cellular services segment, which is composed of revenues from wireless service, cellular interconnection, wireless device sales and miscellaneous cellular services, decreased by 5.7% to Won 12,552.5 billion in 2025 from Won 13,318.2 billion in 2024. The decrease in our cellular services revenue was mainly due to a decrease in wireless service revenue, which was enhanced by decreases in wireless device sales revenue and cellular interconnection revenue.
Wireless service revenue decreased by 6.6% to Won 9,715.6 billion in 2025 from Won 10,401.6 billion in 2024, primarily attributable to discounts on monthly subscription fees we offered for the month of August 2025 as part of the Customer Appreciation Package following the cybersecurity incident of which we became aware in April 2025 as described above. See “— Overview — Cybersecurity.”
Wireless device sales revenue decreased by 4.1% to Won 1,034.7 billion in 2025 from Won 1,078.7 billion in 2024, primarily due to the decrease in the sales volume of the handsets we sold during the year, which was also mainly attributable to the cybersecurity incident described above. See “— Overview — Cybersecurity.”
Cellular interconnection revenue decreased by 7.6% to Won 369.9 billion in 2025 from Won 400.5 billion in 2024, primarily attributable to a decrease in interconnection rates.
Fixed-line telecommunications services: The revenue of our fixed-line telecommunication services segment, which is composed of revenues from broadband Internet service and advanced media platform service (including IPTV and cable TV services), fixed-line telephone service, international calling service, fixed-line interconnection and miscellaneous fixed-line telecommunication services, increased by 2.8% to Won 4,191.1 billion in 2025 from Won 4,075.4 billion in 2024, due to an increase in miscellaneous fixed-line telecommunication services revenue, offset in part by decreases in fixed-line telephone service revenue and international calling service revenue.
Miscellaneous fixed-line telecommunication services revenue increased by 12.4% to Won 1,327.2 billion in 2025 from Won 1,180.9 billion in 2024, primarily due to an increase in revenue from our business communications and related infrastructure services, including our data center services.
Fixed-line telephone service revenue decreased by 8.9% to Won 142.5 billion in 2025 from Won 156.5 billion in 2024, primarily due to a decrease in the number of fixed-line telephone subscribers to 3.3 million as of December 31, 2025 from 3.4 million as of December 31, 2024.
International calling service revenue decreased by 6.0% to Won 200.9 billion in 2025 from Won 213.7 billion in 2024, primarily due to a decrease in international calling volume.
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Others: The revenue of our others segment decreased by 35.0% to Won 355.6 billion in 2025 from Won 547.0 billion in 2024, primarily due to an 80.9% decrease in our miscellaneous others revenue to Won 42.7 billion in 2025 from Won 223.4 billion in 2024, which mainly reflected the disposal of our former subsidiary SK M&Service in February 2025, and no recognized revenue from our portal service business in 2025 compared to Won 21.3 billion in 2024, which reflected the disposal of our former subsidiary NATE Communications Corporation in January 2025. See “— Overview — Operational Efficiency.” Such decreases were slightly offset by a 3.5% increase in the revenue of SK Stoa’s T-commerce business to Won 312.9 billion in 2025 from Won 302.3 billion in 2024, which mainly reflected an increase in the gross value of merchandise sold.
Operating Expenses. Our consolidated operating expenses decreased by 0.6% to Won 16,221.1 billion in 2025 from Won 16,322.0 billion in 2024, primarily due to a 2.6% decrease in depreciation and amortization expenses to Won 3,467.1 billion in 2025 from Won 3,560.4 billion in 2024, a 1.3% decrease in commission expenses to Won 5,494.7 billion in 2025 from Won 5,564.3 billion in 2024, an 8.3% decrease in network interconnection expenses to Won 635.1 billion in 2025 from Won 692.9 billion in 2024 and a 4.3% decrease in cost of goods sold to Won 1,269.5 billion in 2025 from Won 1,326.2 billion in 2024, partially offset by a 10.5% increase in other operating expenses to Won 2,059.3 billion in 2025 from Won 1,864.0 billion in 2024.
The decrease in depreciation and amortization expenses was primarily related to a decrease in acquisitions of property and equipment, a decrease in the amortization expenses for our frequency usage rights, as well as the expiration of the applicable amortization period for certain of our software assets.
The decrease in commission expenses was primarily due to the expiration of the amortization period for capitalized commissions from prior years.
The decrease in network interconnection expenses was primarily due to decreases in wireless-to-fixed-line and fixed-line-to-wireless interconnection rates.
The decrease in cost of goods sold was primarily due to a decrease in the number of wireless devices sold in 2025.
The increase in other operating expenses was primarily due to the USIM replacement fees incurred in connection with the cybersecurity incident described above. See “— Overview — Cybersecurity.”
The following sets forth additional information about our segment operating expenses with respect to each of our reportable segments, which do not include certain expenses that are classified as other non-operating expenses under K-IFRS. For more information on the difference between our consolidated operating expenses pursuant to K-IFRS and pursuant to IFRS Accounting Standards as issued by the IASB, see “— Explanatory Note Regarding Presentation of Certain Financial Information under K-IFRS” and note 4(2) of the notes to our consolidated financial statements.
Cellular services: The segment operating expenses for our cellular services segment increased by 0.5% to Won 11,808.3 billion in 2025 from Won 11,746.3 billion in 2024, primarily due to the USIM replacement fees incurred in connection with the cybersecurity incident described above. See “— Overview — Cybersecurity.”
Fixed-line telecommunication services: The segment operating expenses for our fixed-line telecommunication services segment increased by 2.1% to Won 3,834.8 billion in 2025 from Won 3,754.7 billion in 2024, primarily due to an increase in SK Broadband’s labor costs, which in turn primarily reflected the one-time costs of engaging in a voluntary retirement program and higher wage levels, as well as an increase in depreciation expense in connection with its acquisition of the business operations of the Pangyo Data Center from SK Inc.
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Others: The segment operating expenses for our others segment decreased by 37.9% to Won 382.9 billion in 2025 from Won 616.2 billion in 2024, primarily reflecting the disposals of our former subsidiaries NATE Communications Corporation and SK M&Service in January 2025 and February 2025, respectively.
Operating Profit. Our consolidated operating profit significantly decreased by 38.0% to Won 1,048.5 billion in 2025 from Won 1,690.9 billion in 2024, as the decrease in operating revenue and other income outpaced the decrease in operating expenses in 2025.
The following sets forth additional information about our segment operating profit (loss) with respect to each of our reportable segments. Our segment operating profit (loss) with respect to each of our reportable segments is based on K-IFRS and the sum of segment operating profit for all three reportable segments differs from our consolidated operating profit presented in accordance with IFRS Accounting Standards as issued by the IASB. For a reconciliation of operating profit presented in accordance with IFRS Accounting Standards as issued by the IASB and operating profit presented in accordance with K-IFRS, see “— Explanatory Note Regarding Presentation of Certain Financial Information under K-IFRS” and note 4(2) of the notes to our consolidated financial statements.
Cellular services: The segment operating profit of our cellular services segment decreased by 52.7% to Won 744.2 billion in 2025 from Won 1,571.9 billion in 2024, due to the greater decrease in segment operating revenue as compared to the decrease in segment operating expenses, for the various reasons described above. The segment operating margin (which, with respect to each reportable segment, is segment operating profit (loss) divided by revenue from such segment, expressed as a percentage) of our cellular services segment decreased to 5.9% in 2025 from 11.8% in 2024.
Fixed-line telecommunication services: The segment operating profit of our fixed-line telecommunication services segment increased by 11.1% to Won 356.3 billion in 2025 from Won 320.7 billion in 2024, due to the greater increase in segment operating revenue as compared to the increase in segment operating expenses, for the reasons described above. The segment operating margin of our fixed-line telecommunication services segment increased to 8.5% in 2025 from 7.9% in 2024.
Others: The segment operating loss of our others segment decreased by 60.5% to Won 27.3 billion in 2025 from Won 69.2 billion in 2024, due to the greater decrease in segment operating expenses as compared to the decrease in segment operating revenue as described above. The segment operating margin of our others segment improved to (7.7)% in 2025 from (12.7)% in 2024.
Finance Income and Finance Costs. Our finance income decreased by 38.2% to Won 219.4 billion in 2025 from Won 355.0 billion in 2024, primarily due to a 69.4% decrease in gain relating to financial instruments at fair value through profit or loss to Won 58.3 billion in 2025 from Won 190.4 billion in 2024, primarily reflecting the base effect of gain on derivatives recognized in 2024 in connection with our acquisition of additional equity interest in SK Broadband.
Our finance costs decreased by 20.4% to Won 482.0 billion in 2025 from Won 605.9 billion in 2024, primarily due to a significant decrease in loss relating to financial instruments at fair value through profit or loss to Won 16.4 billion in 2025 from Won 133.0 billion in 2024, primarily reflecting the significantly higher loss recognized in 2024 in connection with a forward transaction related to our investment in Penguin Solutions Inc.
Gains (Losses) Related to Investments in Subsidiaries, Associates and Joint Ventures. We recorded losses related to investments in subsidiaries, associates and joint ventures of Won 63.6 billion in 2025, primarily due to our share of loss from Rebellions, Inc. (formerly known as SAPEON Korea Inc.) of Won 77.6 billion, compared to gains related to investments in subsidiaries, associates and joint ventures of Won 321.8 billion in 2024, primarily in connection with the one-time effect of reclassification of our equity interest in SAPEON Korea Inc. from a consolidated subsidiary to an associate, following its merger with and into Rebellions, Inc. in 2024.
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Income Tax. Income tax expense decreased by 7.3% to Won 347.2 billion in 2025 from Won 374.7 billion in 2024 primarily due to a 59.0% decrease in profit before income tax to Won 722.3 billion in 2025 from Won 1,761.8 billion in 2024. Such decrease was partially offset by income tax paid and other of Won 111.8 billion in 2025 compared to income tax refund and other of Won 18.3 billion in 2024. Our effective tax rate in 2025 increased to 48.1% from 21.3% in 2024. Our effective tax rate in 2025 was greater than the maximum statutory tax rate of 26.4%, primarily due to additional income tax resulting from a change in the tax authority’s interpretation. Our effective tax rate in 2024 was lower than the maximum statutory tax rate of 26.4%, primarily due to changes in unrecognized deferred taxes as well as tax credits and tax reductions.
Profit for the Year. Principally as a result of the factors discussed above, our profit for the year decreased by 73.0% to Won 375.1 billion in 2025 from Won 1,387.1 billion in 2024. Profit for the year as a percentage of operating revenue and other income was 2.2% in 2025 compared to 7.7% in 2024.
2024 Compared to 2023
Operating Revenue and Other Income. Our consolidated operating revenue and other income increased by 2.0% to Won 18,012.9 billion in 2024 from Won 17,658.9 billion in 2023 due to increases in operating revenue and, to a much lesser extent, other income, as discussed below.
Our consolidated operating revenue increased by 1.9% to Won 17,940.6 billion in 2024 from Won 17,608.5 billion in 2023, due to increases in cellular services revenue and fixed-line telecommunications services revenue, which were slightly offset by a decrease in others revenue.
Our consolidated other income increased by 43.5% to Won 72.3 billion in 2024 from Won 50.4 billion in 2023, primarily due to the gain on disposal of property and equipment and intangible assets we recognized in 2024 relating to certain ancillary properties.
Cellular services: The revenue of our cellular services segment, which is composed of revenues from wireless service, cellular interconnection, wireless device sales and miscellaneous cellular services, increased by 1.5% to Won 13,318.2 billion in 2024 from Won 13,123.2 billion in 2023. The increase in our cellular services revenue was due to increases in wireless device sales revenue, wireless service revenue and miscellaneous cellular services revenue, partially offset by a decrease in cellular interconnection revenue.
Wireless device sales revenue increased by 8.5% to Won 1,078.7 billion in 2024 from Won 993.9 billion in 2023, primarily due to increases in the sales volume and average prices of the handsets we sold during the year, which primarily reflected the launch of new high-end flagship devices by leading manufacturers and higher prices charged by such manufacturers.
Wireless service revenue increased by 0.7% to Won 10,401.6 billion in 2024 from Won 10,329.0 billion in 2023, primarily attributable to the continued increase in the number of subscribers who subscribe to our 5G subscription plans and an increase in the usage of our roaming services in light of a further increase in international travel by our subscribers.
Miscellaneous cellular services revenue increased by 5.1% to Won 1,437.4 billion in 2024 from Won 1,367.6 billion in 2023, primarily due to increases in revenue from our cloud services, IoT solutions and other new businesses, as we continued to build up the scale of such businesses to complement our core wireless service business.
Cellular interconnection revenue decreased by 7.4% to Won 400.5 billion in 2024 from Won 432.7 billion in 2023, primarily attributable to a decrease in interconnection rates.
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Fixed-line telecommunications services: The revenue of our fixed-line telecommunication services segment, which is composed of revenues from broadband Internet service and advanced media platform service (including IPTV and cable TV services), fixed-line telephone service, international calling service, fixed-line interconnection and miscellaneous fixed-line telecommunication services, increased by 3.8% to Won 4,075.4 billion in 2024 from Won 3,928.0 billion in 2023, primarily due to increases in miscellaneous fixed-line telecommunication services revenue, and to a lesser extent, international calling service revenue, broadband Internet service and advanced media platform service revenue, and fixed-line telephone service revenue, slightly offset by a decrease in fixed-line interconnection revenue.
Miscellaneous fixed-line telecommunication services revenue increased by 9.4% to Won 1,180.9 billion in 2024 from Won 1,079.6 billion in 2023, primarily due to an increase in revenue from our business communications and related infrastructure services, including our data center services.
International calling service revenue increased by 11.9% to Won 213.7 billion in 2024 from Won 190.9 billion in 2023, primarily due to an increase in international calling volume.
Revenue from our broadband Internet service and advanced media platform service (including our IPTV and cable TV services) slightly increased by 0.7% to Won 2,510.3 billion in 2024 from Won 2,494.0 billion in 2023, primarily due to an increase in the number of IPTV subscribers to 6.8 million subscribers as of December 31, 2024 from 6.7 million subscribers as of December 31, 2023.
Fixed-line telephone service revenue increased by 6.0% to Won 156.5 billion in 2024 from Won 147.7 billion in 2023, primarily due to an increase in calling volume, including those relating to the National Assembly election campaigns in 2024.
Fixed-line interconnection revenue decreased by 11.4% to Won 14.0 billion in 2024 from Won 15.8 billion in 2023, primarily due to a continued decrease in interconnection rates, as well as decreases in residential calling volume and the number of fixed-line telephone subscribers to 3.4 million as of December 31, 2024 from 3.5 million as of December 31, 2023.
Others: The revenue of our others segment slightly decreased by 1.8% to Won 547.0 billion in 2024 from Won 557.3 billion in 2023, primarily due to a 4.1% decrease in our miscellaneous others revenue, which mainly reflected a decrease in revenue we derived from our former subsidiary SK M&Service, and an 8.2% decrease in our portal service revenue derived from our former subsidiary NATE Communications Corporation. Such decreases were partially offset by a 0.3% increase in the revenue of SK Stoa’s T-commerce business to Won 302.3 billion in 2024 from Won 301.3 billion in 2023, which mainly reflected an increase in the gross value of merchandise sold.
Operating Expenses. Our consolidated operating expenses increased by 2.6% to Won 16,322.0 billion in 2024 from Won 15,902.6 billion in 2023, primarily due to a 9.5% increase in labor costs to Won 2,725.8 billion in 2024 from Won 2,488.2 billion in 2023, a 12.9% increase in other operating expenses to Won 1,864.0 billion in 2024 from Won 1,651.3 billion in 2023 and a 4.7% increase in cost of goods sold to Won 1,326.2 billion in 2024 from Won 1,266.4 billion in 2023, partially offset by a 1.5% decrease in depreciation and amortization expenses to Won 3,560.4 billion in 2024 from Won 3,614.8 billion in 2023 and a 21.0% decrease in advertising expenses to Won 186.3 billion in 2024 from Won 235.8 billion in 2023.
The increase in labor costs was primarily due to our one-time implementation of a voluntary retirement program and a general increase in the base salary of our employees.
The increase in other operating expenses was primarily due to an increase in impairment loss on property and equipment and intangible assets related to the replacement of outdated equipment and our recognition of the expected amount of certain administrative fine of Won 42.6 billion, which was provisionally announced by the
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KFTC in March 2025 (see “Item 8.A. — Consolidated Statements and Other Financial Information — Legal Proceedings — KFTC Proceedings”), as well as an increase in utilities, mainly reflecting an increase in electricity prices.
The increase in cost of goods sold was primarily due to increases in sales of merchandise under our T Universe subscription program and solutions businesses to our enterprise customers.
The decrease in depreciation and amortization expenses was primarily related to the expiration of the applicable amortization period for certain of our software assets and a decrease in the amortization expenses for our frequency usage rights, as well as a decrease in acquisitions of property and equipment.
The decrease in advertising expenses was primarily due to continued stabilization of the market for wireless service subscribers and our efficient management of marketing fees as part of our ongoing organizational efforts to enhance operational efficiency, as well as the base effect of our extensive advertising campaigns in 2023 as part of our efforts to promote the City of Busan’s bid to host the World Expo 2030.
Cellular services: The segment operating expenses for our cellular services segment slightly increased by 0.6% to Won 11,746.3 billion in 2024 from Won 11,673.1 billion in 2023, due to the increase in SK Telecom’s labor costs as described above, which was substantially offset by a decrease in commissions paid to SK Telecom’s authorized dealers and independent retailers, as the market for new 5G subscribers continued to stabilize, and a decrease in depreciation and amortization expenses, primarily reflecting the expiration of the applicable amortization period for certain of our software assets and a decrease in the amortization expenses for our frequency usage rights, as well as a decrease in acquisitions of property and equipment.
Fixed-line telecommunication services: The segment operating expenses for our fixed-line telecommunication services segment increased by 4.8% to Won 3,754.7 billion in 2024 from Won 3,582.1 billion in 2023, primarily due to increases in SK Broadband’s labor costs, primarily reflecting higher wage levels and associated retirement benefits, as well as in marketing expenses and commissions, primarily reflecting increases in the sale of broadband Internet and IPTV service subscriptions.
Others: The segment operating expenses for our others segment increased by 2.7% to Won 616.2 billion in 2024 from Won 600.1 billion in 2023, primarily due to increases in utilities and costs of goods sold as well as labor costs.
Operating Profit. Our consolidated operating profit decreased by 3.7% to Won 1,690.9 billion in 2024 from Won 1,756.3 billion in 2023, as the increase in operating expenses outpaced the increase in operating revenue and other income in 2024.
The following sets forth additional information about our segment operating profit (loss) with respect to each of our reportable segments. Our segment operating profit (loss) with respect to each of our reportable segments is based on K-IFRS and the sum of segment operating profit for all three reportable segments differs from our consolidated operating profit presented in accordance with IFRS Accounting Standards as issued by the IASB. For a reconciliation of operating profit presented in accordance with IFRS Accounting Standards as issued by the IASB and operating profit presented in accordance with K-IFRS, see “— Explanatory Note Regarding
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Presentation of Certain Financial Information under K-IFRS” and note 4(2) of the notes to our consolidated financial statements.
Cellular services: The segment operating profit of our cellular services segment increased by 8.4% to Won 1,571.9 billion in 2024 from Won 1,450.1 billion in 2023, due to the greater increase in segment operating revenue as compared to the increase in segment operating expenses, for the various reasons described above. The segment operating margin (which, with respect to each reportable segment, is segment operating profit (loss) divided by revenue from such segment, expressed as a percentage) of our cellular services segment increased to 11.8% in 2024 from 11.0% in 2023.
Fixed-line telecommunication services: The segment operating profit of our fixed-line telecommunication services segment decreased by 7.3% to Won 320.7 billion in 2024 from Won 345.9 billion in 2023, due to the greater increase in segment operating expenses as compared to the increase in segment operating revenue, for the reasons described above. The segment operating margin of our fixed-line telecommunication services segment decreased to 7.9% in 2024 from 8.8% in 2023.
Others: The segment operating loss of our others segment increased by 61.7% to Won 69.2 billion in 2024 from Won 42.8 billion in 2023, due to the increase in segment operating expenses as compared to the decrease in segment operating revenue as described above. As a result, the segment operating margin of our others segment worsened to (12.7)% in 2024 from (7.7)% in 2023.
Finance Income and Finance Costs. Our finance income increased by 42.9% to Won 355.0 billion in 2024 from Won 248.4 billion in 2023, primarily due to a 65.6% increase in gain relating to financial instruments at fair value through profit or loss to Won 190.4 billion in 2024 from Won 115.0 billion in 2023, primarily relating to gain on derivatives recognized in connection with our acquisition of additional equity interest in SK Broadband. The effect of such increase was enhanced by a 24.4% increase in interest income to Won 87.2 billion in 2024 from 70.1 billion in 2023, which mainly reflected an increase in the average volume of our interest-earning financial assets.
Our finance costs increased by 14.9% to Won 605.9 billion in 2024 from Won 527.4 billion in 2023, primarily due to a significant increase in loss relating to financial instruments at fair value through profit or loss to Won 133.0 billion in 2024 from Won 49.6 billion in 2023, primarily relating to forward transaction loss from our investment in Penguin Solutions Inc. The effect of such increase was enhanced by a 3.4% increase in interest expense to Won 403.1 billion in 2024 from Won 389.8 billion in 2023, which mainly reflected our refinancing of maturing debt at higher interest rates in recent years, as the market interest rates were generally higher in more recent periods compared to earlier periods over the past few years. The impact of such increases was partially offset by a decrease in loss on sale of accounts receivable – other related to our sale of accounts receivable for handset installment payments to Won 35.3 billion in 2024 from Won 65.0 billion in 2023.
Gains Related to Investments in Subsidiaries, Associates and Joint Ventures. Gains related to investments in subsidiaries, associates and joint ventures significantly increased to Won 321.8 billion in 2024 from Won 10.9 billion in 2023, primarily due to the reclassification of our equity interest in SAPEON Korea Inc. from a consolidated subsidiary to an associate, following its merger with and into Rebellions, Inc. during 2024.
Income Tax. Income tax expense increased by 9.5% to Won 374.7 billion in 2024 from Won 342.2 billion in 2023 primarily due to an 18.4% increase in profit before income tax to Won 1,761.8 billion in 2024 from Won 1,488.2 billion in 2023. Our effective tax rate in 2024 decreased to 21.3% from 23.0% in 2023. Our effective tax rates in 2024 and 2023 were lower than the maximum statutory tax rate of 26.4% for both years, primarily due to, in the case of 2024, changes in unrecognized deferred taxes as well as tax credits and tax reductions, and in the case of 2023, tax credits and tax reductions.
Profit for the Year. Principally as a result of the factors discussed above, our profit for the year increased by 21.0% to Won 1,387.1 billion in 2024 from Won 1,145.9 billion in 2023. Profit for the year as a percentage of operating revenue and other income was 7.7% in 2024 compared to 6.5% in 2023.
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Liquidity and Capital Resources
Liquidity
We had a working capital surplus (current assets in excess of current liabilities) of Won 197.4 billion as of December 31, 2025, a working capital deficit (current liabilities in excess of current assets) of Won 1,747.6 billion as of December 31, 2024 and a working capital deficit of Won 408.4 billion as of December 31, 2023. The increase in our working capital as of December 31, 2025 compared to December 31, 2024 was mainly due to a decrease in our current liabilities, primarily in relation to current portion of long-term debt, net and accounts payable – other, which outpaced the decrease in our current assets, primarily in relation to cash and cash equivalents. We plan to fund our current liabilities with the cash flow generated by our operations, proceeds from the disposal of investment securities or property and equipment that are no longer deemed profitable and proceeds from additional borrowings, as necessary.
We had cash and cash equivalents, short-term financial instruments and short-term investment securities of Won 1,676.7 billion as of December 31, 2025, Won 2,347.6 billion as of December 31, 2024 and Won 1,749.9 billion as of December 31, 2023. We had outstanding short term borrowings and current portion of long-term debt of Won 1,252.6 billion as of December 31, 2025, Won 2,560.1 billion as of December 31, 2024 and Won 1,621.8 billion as of December 31, 2023. As of December 31, 2025, SK Telecom had credit lines with several local banks that provided for borrowing of up to Won 1,050 billion, all of which was available for borrowing.
Cash flows from operating activities and debt financing have been our principal sources of liquidity. We had cash and cash equivalents of Won 1,490.0 billion as of December 31, 2025, Won 2,023.7 billion as of December 31, 2024 and Won 1,455.0 billion as of December 31, 2023. We believe that we have a variety of alternatives available to us to satisfy our financial requirements to the extent that they are not met by funds generated by operations, including the issuance of debt securities and bank borrowings.
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Net increase (decrease) in cash and cash equivalents
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents included in assets held for sale
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
N.A. = Not available
Cash Flows from Operating Activities. Net cash provided by operating activities was Won 3,923.8 billion in 2025, Won 5,087.3 billion in 2024 and Won 4,947.2 billion in 2023. Profit for the year was Won 375.1 billion in
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2025, Won 1,387.1 billion in 2024 and Won 1,145.9 billion in 2023. Net cash provided by operating activities in 2025 decreased by 22.9% from 2024, primarily due to the decrease in profit for the year as well as an increase in prepaid expenses (mainly reflecting an increase in contract acquisition costs capitalized as prepaid expenses) and a decrease in accrued expenses (mainly reflecting a decrease in employee incentives). Net cash provided by operating activities in 2024 increased by 2.8% from 2023, primarily due to the increase in profit for the year as well as increases in accrued expenses (mainly reflecting an increase in the outstanding year-end payables relating to our operating expenditures and our recognition of the expected amount of certain administrative fine announced by the KFTC in March 2025 as described above) and in withholdings (mainly reflecting an increase in our salary expenses) compared to decreases of such line items in 2023.
Cash Flows from Investing Activities. Net cash used in investing activities was Won 1,737.1 billion in 2025, Won 2,711.8 billion in 2024 and Won 3,352.9 billion in 2023. Cash inflows from investing activities were Won 1,384.3 billion in 2025, Won 362.3 billion in 2024 and Won 272.6 billion in 2023. Cash inflows in 2025 mainly reflected proceeds from disposals of long-term investment securities, primarily related to our disposals of shares of Kakao Corp. and Joby Aviation Inc., and proceeds from disposals of property and equipment, mainly related to the sale of an office building in Pangyo. Cash inflows in 2024 mainly reflected collection of short-term loans, primarily related to SK Telecom’s collection of short-term loans that were made to authorized dealers, and proceeds from disposals of investments in associates and joint ventures, mainly related to the reductions of paid-in capital by SK Technology Innovation Company and SK Latin America Investment S.A.
Cash outflows for investing activities were Won 3,121.4 billion in 2025, Won 3,074.1 billion in 2024 and Won 3,625.5 billion in 2023. Cash outflows in 2025, 2024 and 2023 were primarily attributable to expenditures related to the acquisition of property and equipment of Won 2,206.6 billion, Won 2,487.4 billion and Won 2,973.9 billion, respectively, primarily in connection with the acquisition of 5G and LTE equipment, the maintenance and enhancement of our 5G network and the maintenance of our LTE network.
Cash Flows from Financing Activities. Net cash used in financing activities was Won 2,711.8 billion in 2025, Won 1,809.9 billion in 2024 and Won 2,021.0 billion in 2023. Cash inflows from financing activities were Won 2,258.3 billion in 2025, Won 1,552.2 billion in 2024 and Won 2,416.8 billion in 2023. Such inflows were primarily driven by the issuance of debentures, which provided cash of Won 1,875.3 billion in 2025, Won 1,236.5 billion in 2024 and Won 1,785.1 billion in 2023, as well as proceeds from long-term borrowings, which provided cash of Won 300.0 billion in 2025, Won 200.0 billion in 2024 and Won 50.0 billion in 2023, and proceeds from issuance of hybrid bonds in the case of 2023, which provided cash of Won 398.5 billion.
Cash outflows for financing activities were Won 4,970.0 billion in 2025, Won 3,362.0 billion in 2024 and Won 4,437.8 billion in 2023. Cash outflows for financing activities included repayments of debentures, repayments of long-term borrowings, payments of dividends, repayments of long-term payables – other, repayments of lease liabilities and transactions with non-controlling shareholders, among other items. Repayments of debentures were Won 2,121.5 billion in 2025, Won 1,235.8 billion in 2024 and Won 1,869.2 billion in 2023. Repayments of long-term borrowings were Won 312.5 billion in 2025, Won 402.5 billion in 2024 and Won 125.0 billion in 2023. Payments of dividends were Won 628.4 billion in 2025, Won 804.3 billion in 2024 and Won 773.8 billion in 2023. Repayments of long-term payables – other were Won 369.2 billion in 2025, Won 369.2 billion in 2024 and Won 400.2 billion in 2023. Repayments of lease liabilities were Won 372.8 billion in 2025, Won 381.3 billion in 2024 and Won 402.5 billion in 2023. In addition, cash outflow from transactions with non-controlling shareholders was Won 1,145.9 billion in 2025, which mainly related to our acquisition of additional equity interest in SK Broadband from minority shareholders in May 2025.
As of December 31, 2025, we had total long-term debt (excluding current portion) outstanding of Won 7,594.4 billion, which included debentures in the amount of Won 7,294.4 billion and bank and institutional borrowings in the amount of Won 300.0 billion. As of December 31, 2024, we had total long-term debt (excluding current portion) outstanding of Won 6,566.7 billion, which included debentures in the amount of Won 6,363.6 billion and bank and institutional borrowings in the amount of Won 203.1 billion. For a description of our long-term debt, see note 17 of the notes to our consolidated financial statements.
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As of December 31, 2025, we had (i) Won 6,802.0 billion aggregate principal amount of Korean Won-denominated debentures outstanding and (ii) Won 1,434.9 billion aggregate principal amount of debentures outstanding denominated in Dollars. The fixed interest rates of our debentures range from 1.39% to 6.63% depending on the offering size, maturity, interest rate environment at the time of the offering and currency, among other factors. We have a diversified maturity profile with respect to our debentures. See “— Contractual Obligations and Commitments” for more details.
As of December 31, 2025, substantially all of our foreign currency-denominated short term and long-term borrowings and debentures, which in the aggregate amounted to 16.2% of our total outstanding short-term and long-term debt, including the current portion and net of present value discount and discounts on bonds as of such date, was denominated in Dollars. However, substantially all of our revenue and operating expenses are denominated in Won. We generally pay for imported capital equipment in Dollars. Appreciation of the Won against the Dollar will result in net foreign currency transaction and translation gains, while depreciation of the Won against the Dollar will result in net foreign currency transaction 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. For a description of swap or derivative transactions we have entered into, among other transactions, to mitigate the effects of such losses, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk.”
Capital Requirements
Historically, capital expenditures, repayment of outstanding debt, frequency usage payments and lease payments have represented our most significant use of funds. In recent years, we have also increasingly dedicated capital resources to develop and invest in innovative new solutions and services, including those utilizing our AI and digital infrastructure capabilities and our telecommunications platforms, as well as to make strategic investments in companies with innovative technology or other complementary offerings of solutions and services.
To fund our scheduled debt repayment and planned capital expenditures over the next several years, we intend to rely primarily on cash flows from operating activities, as well as bank and institutional borrowings, and offerings of debt or equity in the domestic or international markets. We believe that these sources will be sufficient to fund our planned capital expenditures for 2026. 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.
Capital Expenditures. The following table sets forth our actual capital expenditures for 2025, 2024 and 2023:
Wireless Networks(1)
Fixed-line Network(2)
Others(3)
Includes investments in wireless networks, primarily our 5G, LTE and Wi-Fi networks, as well as other capital expenditures related to our networks.
Includes all capital expenditures made by SK Broadband.
Includes non-network related investments such as capital expenditures for product development, upgrades of our information technology systems and equipment and investments in data infrastructure.
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We set our capital expenditure budget for each upcoming year on an annual basis. Our actual capital expenditures in 2025, 2024 and 2023 were Won 2,206.6 billion, Won 2,487.4 billion and Won 2,973.9 billion, respectively. Of such amounts, we spent approximately 33.3%, 50.6% and 46.4%, respectively, on capital expenditures related to building and enhancing our wireless networks. Our capital expenditures related to building and enhancing our wireless networks, including in connection with our 5G network which we launched in 2019, have generally decreased in recent years. See “Item 4.B. Business Overview — Cellular Services — Digital Wireless Network — 5G Network.” Our other non-network related capital expenditures in 2025, 2024 and 2023 primarily related to developing new products, services and technology, upgrades to our information technology systems and equipment and investments in data infrastructure.
In particular, we have been making capital expenditures to expand, and subsequently maintain and enhance, our 5G network. We commenced commercial 5G services in April 2019. We have also been making capital expenditures to enhance and maintain our LTE network. For a more detailed description of our 5G and LTE networks, see “Item 4.B. Business Overview — Cellular Services — Digital Wireless Network.” In addition, we have been making capital expenditures to maintain and enhance our fixed-line (including broadband Internet) networks. We plan to continue to make capital investments in 2026 to maintain and enhance our 5G, LTE and fixed-line networks and develop related technologies, as well as to maintain our LTE network.
The following table sets forth our payment obligations relating to our acquisitions of frequency usage rights.
Spectrum
Technology (width)
800 MHz
1.8 GHz
2.1 GHz
2.6 GHz
3.5 GHz
We currently expect to spend a slightly higher amount for capital expenditures in 2026 compared to 2025 for a range of projects, including investments to maintain and enhance our telecommunications networks (including our 5G and LTE networks), investments to improve and maintain our Wi-Fi network, investments in data infrastructure and computing capabilities, and investments in the development of AI, IoT and other digital solutions and services. In December 2025, the MSIT announced plans to reallocate a total of 370 MHz of frequency bandwidths whose usage terms are due to expire in 2026 to KT, LG U+ and us, 155 MHz (in the 800 MHz, 1.8 GHz, 2.1 GHz and 2.6 GHz spectrums) of which will be allocated to us. We have applied for the renewal of the 20 MHz frequency bandwidth in the 800 MHz spectrum in December 2025, and we plan to apply for the renewal of the remaining 135 MHz of frequency bandwidths in June 2026. The final consideration to be paid by us for such reallocated bandwidths is expected to be conditional on the number of indoor 5G cell sites to be constructed by us by 2031. However, our overall capital expenditure levels and the allocation of such expenditures remain subject to many uncertainties. We may increase, reduce or suspend our planned capital expenditures for 2026 or change the timing and area of our capital expenditure spending from the estimates described above in response to market conditions or for other reasons. We may also make additional capital expenditures and other investments beyond our currently anticipated level as opportunities arise, including in relation to any acquisitions of additional frequency usage rights or execution of additional AI-related investments. Accordingly, we periodically review the amount of our capital expenditures and other investments and may make adjustments based on the current progress of capital expenditure projects and market conditions. No assurance can be given that we will be able to meet any such increased expenditure requirements or obtain adequate financing for such requirements, on terms acceptable to us, or at all.
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Repayment of Outstanding Debt. As of December 31, 2025, our principal repayment obligations with respect to long-term borrowings, bonds and short-term borrowings outstanding were as follows for the periods indicated:
Year Ending December 31,
2026
2027
2028
2029 and thereafter
Lease Payments. Pursuant to IFRS 16, Leases, we recognize right-of-use assets representing our rights to use the underlying assets and lease liabilities representing our obligation to make lease payments in relation to substantially all of our lease arrangements, except for certain short-term leases and leases of low-value assets. As of December 31, 2025, our aggregate current and long-term lease liabilities amounted to Won 1,525.8 billion, which primarily related to land, buildings and structures we leased from third parties in the ordinary course of our business. As of December 31, 2025, our payment obligations with respect to our lease liabilities were as follows for the periods indicated:
Investments in New Growth Businesses. We may also require capital for investments to support our development of new growth businesses, including, for example, investments in leading AI technology companies to facilitate mutual collaboration. Our notable strategic investments in other companies for such purpose in recent years include the following:
In June 2023, we made an equity investment of US$100 million in Joby Aviation Inc., a transportation company based in Santa Cruz, California, which is developing electric vertical take-off and landing aircrafts, as part of our ongoing efforts to develop emissions-free aerial ridesharing services to cities and communities across Korea.
In August 2023, we made an equity investment of US$100 million in Anthropic PBC, a generative AI technology company based in San Francisco, California, in order to jointly develop a multilanguage large-language model customized for telecommunications companies.
In February 2024, we made an equity investment of US$20 million in Lambda, Inc., a GPU cloud service provider based in San Francisco, California, in order to cooperate on the development and launch of GPUaaS and AI data center solutions and services.
In June 2024, we made an equity investment of US$10 million in Perplexity AI, Inc., an AI technology company based in San Francisco, California, in order to cooperate on the development of generative AI search engine services.
In December 2024, we made an equity investment of US$200 million in Penguin Solutions Inc., a leading designer and developer of enterprise solutions based in Milpitas, California, in order to cooperate on the development of differentiated global end-to-end AI factory and data center solutions and services.
To date, we have made more than US$300 million on a cumulative basis in AI-related investments, and we seek to continue making such and other investments in furtherance of our growth strategy. See “Item 4.B. Business Overview — Our Business Strategy.”
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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. See “— Overview — Operational Efficiency.”
Severance Payments. The present value of our defined benefit obligations, which is the present value of total accrued and unpaid retirement and severance benefits for our employees, as of December 31, 2025, was Won 1,051.5 billion, which was more than offset by the fair value of our defined benefit plan assets of Won 1,257.0 billion as of such date. Accordingly, we recognized defined benefit assets of Won 205.5 billion as of December 31, 2025. Also see “Item 6.D. Employees — Employee Benefits” and note 20 of the notes to our consolidated financial statements.
Dividends. Total cash outflows for payments of dividends amounted to Won 628.4 billion in 2025, Won 804.3 billion in 2024 and Won 773.8 billion in 2023.
Contractual Obligations and Commitments
The following summarizes our contractual cash obligations (excluding short-term leases and leases of low-value assets) at December 31, 2025, and the effect such obligations are expected to have on liquidity and cash flow in future periods:
Bonds
Principal
Interest
Long-term borrowings
Lease liabilities
Facility deposits
Other long-term payables(2)
Short-term borrowings
Total contractual cash obligations
We are contractually obligated to make severance payments to eligible employees we have employed for more than one year, upon termination of their employment, regardless of whether such termination is voluntary or involuntary. Accruals for severance indemnities are recorded based on the amount we would be required to pay in the event the employment of all our employees were to terminate at the balance date. However, we have not yet estimated cash flows for future periods. Accordingly, payments due in connection with severance indemnities have been excluded from this table.
Related to acquisition of frequency licenses. See note 18 of the notes to our consolidated financial statements.
See note 36 of the notes to our consolidated financial statements for details related to our other commitments and contingencies.
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Research and Development, Patents and Licenses, etc.
We maintain a high level of spending on our research and development activity. We also donate funds to several Korean research institutes and educational organizations that focus on research and development activity. We believe that we must maintain a substantial in-house technology capability to achieve our strategic goals.
The main focus of our research and development activity is the development of new wireless technologies and services and value-added technologies and services for our 5G network and LTE network, such as wireless data communications, as well as the development of new technologies that reflect the growing convergence between telecommunications and other industries, such as AI, big data analytics and media. SK Telecom’s research and development activity is primarily conducted through our SK AI Research and Development Center, which is subdivided into the Future Research and Development Laboratory, AI DC Laboratory, Open AIX Laboratory, Vision Laboratory, Media Laboratory, Digital Twin Laboratory and the AI Model Laboratory. The Infrastructure Technology Division of the Network Infrastructure Center also conducts related research and development activities.
Each business unit also has its own research team that can concentrate on specific short-term research needs, and some of our consolidated subsidiaries also have their own research and development organizations to focus on activities related to their respective business areas. 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. See “Item 5.A. Operating Results — Overview — Operational Efficiency.”
Trend Information
These matters are discussed under “Item 5.A. Operating Results” and “Item 5.B. Liquidity and Capital Resources” above where relevant.
Critical Accounting Estimates
Our financial statements are prepared in accordance with IFRS Accounting Standards as issued by the IASB. See notes 2(4) and 3 of the notes to our consolidated financial statements which provide summaries of certain critical accounting estimates 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.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
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, more than half of whom must be independent non-executive directors. We currently have a total of eight directors, five of whom are independent non-executive 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 independent non-executive directors within the board of directors, the Independent Director Nomination Committee. Independent non-executive directors are appointed from among those candidates recommended by the Independent Director Nomination Committee.
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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. The total term of office of independent directors may not exceed six years, and when combined with the term of office at our affiliates, may not exceed nine years. 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 executive and non-executive directors. The business address of all of our directors is the address of our registered office at SK T-Tower, 65, Eulji-ro, Jung-gu, Seoul 04539, Korea.
Executive directors are our directors who also serve as our executive officers, and they also comprise the senior management, or the key personnel who manage us. Their names, dates of birth and positions at our company, other positions and business experience are set forth below:
Name
Position
Business Experience
Jaihun Jung
Myung Jin Han
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Our current non-executive directors are as set forth below:
Poong Young Yoon
Nov. 1974
2029
Non-executiveDirector
President inCharge, SUPEXCouncil
President, SK AX; Chief Investment Officer, SK Square; Head of Corporate Center, SK Telecom
Chang Bo Kim
Mi Kyung Noh
Alice Hae Yun Oh
Seong Yeob Lee
Tay Seop Lim
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Other Executive Officers
In addition to our executive directors, we currently have the following executive officers:
Month andYear of
Birth
Business
Experience
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Young Sang Ryu
Head of Communications Center
On Dispatch to SUPEX Council Project
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Dec. 1966
Head of Security Center
Director Security Engineering, Amazon
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Compensation
The aggregate of the remuneration paid and in-kind benefits granted to our directors (all executive directors, who also serve as our executive officers, and non-executive directors) during the year ended December 31, 2025 totaled approximately Won 5.3 billion.
The compensation of our directors who received total annual compensation exceeding Won 500 million in 2025 was as follows:
Yang Seob Kim
The maximum amount of the aggregate remuneration for our directors is determined by shareholder resolution. Severance allowances for our directors are determined by the board of directors in accordance with our regulation on severance allowances for officers, which was adopted by shareholder resolution. 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.
The aggregate of the remuneration paid and in-kind benefits granted to our executive officers (excluding all executive directors, who also serve as our executive officers) during the year ended December 31, 2025 totaled approximately Won 60.4 billion.
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The compensation of the five individuals who received the highest compensation among those who received total annual compensation exceeding Won 500 million in 2025 was as follows:
Bong Ho Lim
Ki Yoon Lee
Stock Options
On February 23, 2023, our board of directors resolved to grant options to purchase shares of our common stock to certain directors and executive officers, which was approved by shareholder resolution on March 28, 2023. The following table summarizes the exercisable stock options granted to our current and former directors and executive officers as of March 31, 2026:
Recipient
Seong Ho Ha
Dong Hwan Cho
HyunA Lee
Jin Won Kim
Yong Joo Park
Hee Sup Kim
Jung Whan Ahn
The stock options granted on March 28, 2023 were cancelled and replaced with PSUs.
Two-thirds of the stock options granted to Young Sang Ryu on March 25, 2022 were cancelled and replaced with PSUs.
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Other Equity-based Compensation
PSU Program
Since 2023, we have been granting PSUs to certain of our and our subsidiaries’ directors (including the representative director) and executive officers in order to align management and shareholder interests and further align growth in our enterprise value with management compensation. Future performance targets are set when entering into the relevant stock compensation agreement, and the final number of shares to be received by each grantee, which will be settled out of our treasury shares, will be determined based on the achievement levels of such targets subject to approval by the board of directors. In consideration of the representative director’s role and importance, additional shares of up to 100% of the representative director’s annual salary at the time of the PSU grant may be granted in recognition of his or her outstanding achievements upon satisfaction of certain conditions. The validity of the PSUs, which is subject to a three-year vesting period, is dependent on the grantee meeting a minimum term of incumbency under his or her title until the end of the year in which the PSUs were issued. In 2023, we granted a total of 228,708 PSUs to 194 directors and executive officers. In 2024, we granted a total of 243,451 PSUs to 213 directors and executive officers. In 2025, we did not grant any PSUs.
Shareholder Participation Program
Since 2021, pursuant to the Korean Commercial Code, we have been operating the “Shareholder Participation Program” as equity compensation in order to align management and shareholder interests and strengthen commitment to enhance our enterprise value. All of our employees, including the representative director, are eligible to participate in the Shareholder Participation Program, under which we grant treasury shares equal to a portion of a participating employee’s bonus. The participating employee must be employed with us at the time of actual grant and there is no transfer restriction period. In 2023, we granted a total of 434,088 treasury shares to 1,863 employees. In 2024, we granted a total of 498,135 treasury shares to 1,743 employees. In 2025, we did not grant any treasury shares to employees as part of the Shareholder Participation Program.
Stock Grant Program
Since 2021, we have been granting portions of our independent non-executive directors’ remuneration in the form of shares in order to align the interests of our board of directors and shareholders. The number of shares granted, which is in the form of treasury shares, is based on the independent non-executive director’s role and responsibility and our director compensation payment criteria. Transfer of such shares is restricted for three years following initial receipt. In 2023, we granted a total of 6,999 treasury shares to five independent non-executive directors. In 2024, we granted a total of 5,477 treasury shares to five independent non-executive directors. In 2025, we granted a total of 4,860 treasury shares to five independent non-executive directors.
Board Practices
For information regarding the expiration of each director’s term of appointment, as well as the period from which each director has served in such capacity, see the table set out under “Item 6.A. Directors and Senior Management” above.
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-thirds of whom must be
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independent non-executive directors in accordance with applicable rules. The members of the audit committee are appointed annually by a resolution of the general meeting of shareholders. 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 auditors to examine our financial statements. An audit and review of our financial statements by independent auditors 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 Services Commission (the “FSC”) and the KRX KOSPI Market.
Our audit committee is composed of four independent non-executive directors: Tay Seop Lim, Chang Bo Kim, Mi Kyung Noh and Seong Yeob Lee, each of whom is financially literate and independent under the rules of the NYSE as applicable. Tay Seop Lim is the chairperson of the committee. The board of directors has determined that Tay Seop Lim is an “audit committee financial expert” as defined under the applicable rules of the SEC. See “Item 16A. Audit Committee Financial Expert.”
Independent Director Nomination Committee
This committee is devoted to recommending independent non-executive 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 decides from time to time who will comprise the members of this committee. The committee is comprised of one non-independent director, Poong Young Yoon, and two independent directors, Alice Haeyun Oh and Seong Yeob Lee. Alice Haeyun Oh is the chairperson of the committee.
Future Strategy Committee
This committee is responsible for reviewing our annual business plan as well as establishing our key performance indicators (“KPIs”) and measuring our performance against such KPIs. The committee is comprised of two executive directors, Jaihun Jung and Myung Jin Han, one non-independent director, Poong Young Yoon, and five independent directors, Chang Bo Kim, Alice Haeyun Oh, Mi Kyung Noh, Seong Yeob Lee and Tay Seop Lim. Chang Bo Kim is the chairperson of the committee.
Compensation Committee
This committee oversees our overall compensation scheme for the representative director and the non-independent directors. The committee is responsible for reviewing both the criteria for and level of compensation. It is comprised of one non-independent director, Poong Young Yoon, and three independent directors, Mi Kyung Noh, Alice Haeyun Oh and Chang Bo Kim. Mi Kyung Noh is the chairperson of the committee.
ESG Committee
This committee is responsible for establishing and reviewing the direction of our environmental, social and governance policy as well as public filings and communications with related parties. This committee was established to help us achieve world-class sustainable growth and to help us fulfill our corporate social responsibilities. It is comprised of three independent directors, Seong Yeob Lee, Chang Bo Kim and Tay Seop Lim. Seong Yeob Lee is the chairperson of the committee.
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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:
December 31, 2023
December 31, 2024
December 31, 2025
Labor Relations
As of December 31, 2025, SK Telecom had a company union consisting of 2,270 regular employees out of 4,735 total 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, which is focused on employee benefits and welfare. Employee wages are separately negotiated on an annual basis. Our wage negotiations for 2023 were completed in September 2023 and resulted in an average monthly wage increase of 3.0% for SK Telecom employees. Our wage negotiations for 2024 were completed in September 2024 and resulted in an average monthly wage increase of 2.9% for SK Telecom employees. Our wage negotiations for 2025 were completed in September 2025 and resulted in an average monthly wage increase of 3.0% for SK Telecom employees. We consider our relations with our employees to be good.
Employee Benefits
In accordance with the National Pension Act of Korea, we contribute an amount equal to 4.5% of an employee’s standard monthly wages, and each employee contributes 4.5% of his or her standard monthly wages, into his or her personal pension account, as of the date of this annual report. Such rates, however, are scheduled to gradually increase to 6.5% by 2033. 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 we subsidize the employee stock ownership association through the Employee Welfare Fund by providing low interest rate loans to employees who desire to purchase our stock through the plan in the event of a capitalization by the association.
We are required to pay a severance amount to eligible employees who voluntarily or involuntarily cease employment with 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. The present value of our defined benefit obligations, which is the present value of total accrued and unpaid retirement and severance benefits for our employees, as of December 31, 2025, was Won 1,051.5 billion, which was more than offset by the fair value of our defined benefit plan assets of Won 1,257.0 billion as of such date. Accordingly, we recognized defined benefit assets of Won 205.5 billion as of December 31, 2025. Under Korean laws and regulations, we are prevented from involuntarily terminating a full-time employee except under certain limited circumstances. In September 2000, we entered into an employment stabilization agreement with the union. Among other things, 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, this agreement provides for a guarantee of the same wage level for the year that such an event occurs.
Under the Basic Labor Welfare Act, we may also contribute a certain percentage of our annual profit before income tax for employee welfare. Contribution amounts are determined annually following negotiation with the union. The contribution amount for 2023 was set at 4.58% of SK Telecom’s profit before income tax on a separate basis, or Won 62.0 billion. The contribution amount for 2024 was set at 4.06% of SK Telecom’s profit before income tax on a separate basis, or Won 59.9 billion. The contribution amount for 2025 was set at 8.13% of SK Telecom’s profit before income tax on a separate basis, or Won 59.9 billion.
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In addition, we provide our employees with miscellaneous other fringe benefits including medical cost subsidies, family camp programs and sabbatical programs for long-term employees.
Share Ownership
The following table sets forth the share ownership by our directors and executive officers as of March 31, 2026:
Percentage ofTotal SharesOutstanding
Directors:
Executive Officers:
Kyoung Pyo Kang
Young Sun Go
Hyun Cheol Ku
Young Sang Kwon
Hai Sung Kwon
Dae Sung Kim
Do Yeop Kim
Myoung Gook Kim
Min Ho Kim
Sang Bum Kim
Seok Won Kim
Youn Jong Kim
Woo Ram Kim
Eun Jung Kim
Il Young Kim
Jae Hyung Kim
Jee Hyun Kim
Ji Hyung Kim
Ji Hoon Kim
Jin Taek Kim
Tae Seuk Kim
Tae Yoon Kim
Tae Hwan Kim
Tae Hee Kim
Ho Geun Kim
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Kyong Hwan Ra
Seo Young Na
Suk Kwon Na
Jae Sang Noh
Hoon Do
Man Kang Ra
Jung Hwan Ryu
Tak Ki Yu
Byung Kwan Park
Sung Joon Park
Eun Jin Park
Jong Suk Park
Byeong Chan Bai
Jae Won Bok
Ji Hwan Seok
Suk Ham Sung
Young Kyu Son
In Hyuk Son
Sang Min Shin
Hong Beom Ahn
Seung Ji Yang
Jong Hwan Um
Kyung Sang Yu
Doo Hee Yun
Myong Won Yoon
Sung Eun Yoon
Jae Woong Yoon
Hyun Sang Yoon
Gahp Jae Lee
Sang Yun Lee
Seung Yeoll Lee
Seung Ha Lee
Won Hee Lee
Jae Shin Lee
Jae Joon Lee
Jung Ryong Lee
Henry Jong Hyeon Lee
Jong Hun Lee
Ji Seon Lee
Hyun Jun Lee
Hye Yeon Lee
Kyoo Nam Im
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Sung Gook Jang
Jung Hwan Jang
Gye Bum Jun
Dae Dug Jeong
Min Young Jeong
Suk Geun Chung
Hyung Chul Jung
Dong Yeon Cho
Young Log Cho
Yong Chul Cho
Wook Cho
Ik Hwan Cho
Hyun Deuk Cho
Seong Su Cha
Ho Beom Cha
Young Hun Chae
Dong Hee Choi
Yong Jin Choi
Jai Won Choi
Jong Bok Choi
Hoon Won Choi
Myung Bok Ha
Min Yong Ha
Jae Hoon Hur
Sun Kee Hong
Jae Man Hwang
Less than 1%.
See “Item 6.B. Compensation” for information regarding the exercisable stock options granted to our directors and executive officers.
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Major Shareholders
As of the close of our shareholders’ registry on March 31, 2026, approximately 62.3% of our issued shares were held in Korea by approximately 275,606 shareholders.
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The following table sets forth certain information as of December 31, 2025 with respect to any person known to us to be the beneficial owner of more than 5.0% of our common shares:
Shareholder
SK Inc.
National Pension Service
Calculated based on 214,790,053 total issued shares, which include 1,807,778 treasury shares, as of December 31, 2025.
Calculated based on 212,982,275 total outstanding shares as of December 31, 2025.
The following table sets forth significant changes in the percentage ownership held by our major shareholders during the past three years:
SK Group(2)
Includes 1,807,778 shares, 1,903,711 shares and 6,133,414 shares held in treasury as of December 31, 2025, 2024 and 2023, respectively. In 2025, we transferred 95,933 treasury shares as bonus payments to certain of our officers and employees. In 2024, we repurchased 317,000 common shares under a share repurchase agreement with SK Securities Co., Ltd., a securities brokerage firm (“SK Securities”), dated July 27, 2023 (the “2023 Share Repurchase Agreement”), and transferred 503,612 treasury shares as bonus payments to certain of our officers and employees. In addition, we cancelled 4,043,091 treasury shares in 2024. In 2023, we repurchased 5,773,410 common shares under the 2023 Share Repurchase Agreement and transferred 441,087 treasury shares as bonus payments to certain of our officers and employees.
SK Group’s ownership interest as of December 31, 2025, 2024 and 2023 consisted of the ownership interest of SK Inc. only.
Except as described above, other than companies in the SK Group, no other persons or entities known by us to be acting in concert, directly or indirectly, jointly or severally, own in excess of 5.0% of our total shares outstanding or exercise control or could exercise control over our business.
As of March 31, 2026, SK Inc. held 30.6% of our total issued shares of common stock. For a description of our foreign ownership limitation, see “Item 3.D. Risk Factors — Risks Relating to Our Business — If SK Inc. causes us to breach the foreign ownership limitations on our common shares, we may experience a change of control.” and “Item 4.B. Business Overview — Law and Regulation — Foreign Ownership and Investment Restrictions and Requirements.” In the event that SK Inc. 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.
As of March 31, 2026, the total number of our common shares outstanding was 213,000,896.
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.
Related Party Transactions
We are part of the SK Group of affiliated companies. See “Item 7.A. Major Shareholders.” As disclosed in note 35 of the notes to 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, 2025.
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SK Networks
As of December 31, 2025, we had Won 0.3 billion of accounts receivable from SK Networks. As of the same date, we had Won 123.9 billion of accounts payable to SK Networks, mainly relating to payments for wireless devices provided by PS&Marketing. The operating expenses we incurred with respect to SK Networks, including aggregate fees we paid to SK Networks for dealer commissions, amounted to Won 977.9 billion in 2025, Won 1,011.2 billion in 2024 and Won 970.7 billion in 2023.
We enter into agreements with SK Inc. from time to time for specific information technology-related projects, and we also pay SK Inc. for use of the SK brand. The operating expenses we incurred with respect to SK Inc., including aggregate fees we paid to SK Inc. for such information technology services and the use of the SK brand, amounted to Won 440.2 billion in 2025, Won 428.1 billion in 2024 and Won 415.2 billion in 2023. We also purchase various information technology-related equipment from SK Inc. from time to time. The total amount of such purchases was Won 256.3 billion in 2025, Won 125.7 billion in 2024 and Won 120.9 billion in 2023. We are a party to several service agreements with SK Inc. relating to the development and maintenance of our information technologies systems.
In addition, in June 2025, SK Broadband acquired the business operations of the Pangyo Data Center from SK Inc. for Won 506.8 billion as part of its initiative to expand its data center operations and generate synergy.
Interests of Experts and Counsel
FINANCIAL INFORMATION
Consolidated Statements and Other Financial Information
See “Item 18. Financial Statements” and pages F-1 through F-122.
Legal Proceedings
KFTC Proceedings
In August 2023, the KFTC imposed a fine of Won 16.8 billion, Won 13.9 billion and Won 2.8 billion on SK Telecom (which SK Telecom has paid in full), KT and LG U+, respectively, and issued a correctional order for violating the Act on Fair Labeling and Advertising by engaging in inappropriate and potentially misleading advertising regarding the transmission speeds of their respective 5G wireless services. In August 2023, we initiated an administrative proceeding with the Seoul High Court to request the revocation of the fine and the correctional order, which proceeding currently remains pending.
In January 2024, the KFTC imposed a fine of Won 8.6 billion, Won 5.8 billion, Won 1.4 billion and Won 4.1 billion on KT, LG U+, SK Telecom (which SK Telecom has paid in full) and SK O&S Co., Ltd., a wholly-owned subsidiary of SK Telecom which engages in the base station maintenance service business, respectively, and issued a correctional order for violating the Fair Trade Act by colluding from 2013 to 2019 to reduce costs for renting locations that house their base stations.
In June 2025, the KFTC imposed a fine of Won 38.8 billion, Won 27.7 billion and Won 29.9 billion on SK Telecom (which SK Telecom has paid in full), LG U+ and KT, respectively, and issued a correctional order for violating the Fair Trade Act, including in connection with the sharing of certain customer activation data among
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these companies in order to align the sales incentives paid to their mobile phone retailers. In September 2025, we initiated an administrative proceeding with the Seoul High Court to request the revocation of the fine and the correctional order, which proceeding currently remains pending.
PIPC Proceeding
In August 2025, the PIPC imposed a fine of Won 134.8 billion and an administrative penalty of Won 9.6 million on us (which we have paid in full) and issued a correctional order in connection with the cybersecurity incident of which we became aware in April 2025. See “Item 3.D. Risk Factors — Risks Relating to Our Business — Malicious and abusive Internet practices could impair our services and we may be subject to significant legal and financial exposure, damage to our reputation and a loss of confidence of our customers.” In January 2026, we filed an administrative lawsuit with the Seoul Administrative Court challenging such decision and requesting the revocation of the fine, the administrative penalty and the correctional order, which proceeding currently remains pending.
Other Proceedings
In November 2025, the Dispute Mediation Committee of the PIPC proposed that we pay Won 300,000 in compensation to each of the 3,998 mobile phone service subscribers who sought dispute mediation in connection with the cybersecurity incident of which we became aware in April 2025. See “Item 3.D. Risk Factors — Risks Relating to Our Business — Malicious and abusive Internet practices could impair our services and we may be subject to significant legal and financial exposure, damage to our reputation and a loss of confidence of our customers.” In the same month, we submitted our rejection to accept such settlement proposal to the PIPC. The mediation process was terminated following our rejection of the proposal.
In December 2025, the Consumer Dispute Settlement Commission of the Korea Consumer Agency proposed that we pay Won 100,000 in compensation to each of the 58 mobile phone service subscribers who sought dispute mediation in connection with the above-described cybersecurity incident. See “Item 3.D. Risk Factors — Risks Relating to Our Business — Malicious and abusive Internet practices could impair our services and we may be subject to significant legal and financial exposure, damage to our reputation and a loss of confidence of our customers.” In January 2026, we submitted our rejection to accept such settlement proposal to the Korea Consumer Agency. The mediation process was terminated following our rejection of the proposal.
Certain of our mobile phone service subscribers have also filed a number of civil lawsuits seeking alleged damages in connection with this incident, all of which are currently pending before trial courts. While we are vigorously defending ourselves in each of these cases, we are unable to predict their outcomes, and no assurance can be made that additional customers will not pursue additional legal actions to seek alleged damages against us in connection with this incident.
See “Item 3.D. Risk Factors — Risks Relating to Our Business — Malicious and abusive Internet practices could impair our services and we may be subject to significant legal and financial exposure, damage to our reputation and a loss of confidence of our customers.”
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, could be approved by a resolution of our board of directors. We replaced the interim dividend system with a quarterly dividend system pursuant to an amendment to our articles of incorporation at our annual general meeting of shareholders held on March 25, 2021. Once declared, dividends must be claimed within five years, after which the right to receive the dividends is extinguished and reverted to us.
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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 “Item 10.D. Exchange Controls — Korean Foreign Exchange Controls and Securities Regulations.”
The following table sets forth the interim and annual dividend per share and the aggregate total amount of dividends declared, as well as the number of outstanding shares entitled to dividends, with respect to the years ended December 31, 2023, 2024 and 2025. The annual dividend was paid in the immediately following year, and the interim dividends were paid in the same year.
Dividend Type
Interim dividend (for the period ended March 31, 2023)
Interim dividend (for the period ended June 30, 2023)
Interim dividend (for the period ended September 30, 2023)
Annual dividend (for the year ended December 31, 2023)
Interim dividend (for the period ended March 31, 2024)
Interim dividend (for the period ended June 30, 2024)
Interim dividend (for the period ended September 30, 2024)
Annual dividend (for the year ended December 31, 2024)
Interim dividend (for the period ended March 31, 2025)
Interim dividend (for the period ended June 30, 2025)
We did not pay any interim dividend for the period ended September 30, 2025 or annual dividend for the period ended December 31, 2025.
We distribute dividends to our shareholders in proportion to the number of shares owned by each shareholder. Our 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.
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. For the purpose of determining the shareholders who are entitled to annual dividends, we may set a record date with at least two weeks’ prior public notice by a resolution of our board of directors. We may distribute the annual dividend in cash or in shares. However, a dividend of shares must be distributed at 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, (2) the total amount of our capital
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surplus reserve, (3) legal reserve accumulated up to the end of the relevant dividend period and (4) the increase in our net asset value resulting from the evaluation of our assets and liabilities that has not been offset against unrealized losses. In addition, we may not pay an annual dividend unless we have set aside as a 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. We may not use our legal reserve to pay cash dividends but may transfer amounts from our legal reserve to capital stock or use our legal reserve to reduce an accumulated deficit.
In addition, the FSCMA and our articles of incorporation provide that, in addition to annual dividends, we may pay quarterly dividends. Unlike annual dividends, the decision to pay quarterly dividends can be made by a resolution of the board of directors and is not subject to shareholder approval. For the purpose of determining the shareholders who are entitled to quarterly dividends, we may set a record date with at least two weeks’ prior public notice by a resolution of our board of directors, which needs to take place within 45 days of March 31, June 30 or September 30 of the relevant fiscal year. Any quarterly dividends must be paid in cash.
Under the FSCMA, the total amount of quarterly 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 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 quarterly dividend payment. In addition, no quarterly dividends can be paid if there is a concern over the net assets of the current fiscal year falling short of the aggregate sum of (1) our stated capital, (2) the total amount of our capital surplus reserve, (3) legal reserve accumulated up to the end of the current fiscal year and (4) the increase in our net asset value resulting from the evaluation of our assets and liabilities that has not been offset against unrealized losses.
Our obligation to pay quarterly dividends expires if no claims to such dividends are made for a period of five years from the payment date.
Significant Changes
None.
THE OFFER AND LISTING
Offering and Listing Details
These matters are described under “Item 9.C. Markets” below where relevant.
Plan of Distribution
Markets
The principal trading market for our common shares is the KRX KOSPI Market. Our common shares are traded on the KRX KOSPI Market under the identification code 017670. As of March 31, 2026, 213,000,896 shares of our common stock were outstanding.
The ADSs are traded on the NYSE. The ADSs have been issued by the ADR depositary and are traded on the NYSE under the ticker symbol “SKM.” Each ADS represents five-ninths of one share of our common stock.
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Selling Shareholders
Dilution
Expenses of the Issue
ADDITIONAL INFORMATION
Share Capital
Memorandum and Articles of Association
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 FSCMA, the Korean Commercial Code, the Telecommunications Business Act 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 FSCMA, the Korean Commercial Code and the Telecommunications Business Act. We have filed a copy of our articles of incorporation as an exhibit to our annual reports on Form 20-F.
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, as amended, our 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 sales business;
real estate business (development, management and leasing, etc.) and chattel leasing business;
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;
travel business;
electronic financial services business;
film business (production, import, distribution and screening);
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lifetime education and management of lifetime educational facilities;
electric engineering business;
information- and communication-related engineering business;
ubiquitous city construction and related service business;
any related business through investment, management and operation of our Korean or offshore subsidiaries and investment companies;
construction business, including the machine and equipment business;
export/import business and export/import intermediation/agency business;
electrical business such as intelligent electrical grid business;
data production, trading and utilization business, including MyData business;
manufacture, import, maintenance, sale and lease of medical equipment and veterinary medical equipment business; and
any business or undertaking incidental or conducive to the attainment of the objectives stated above.
Currently, our authorized share capital is 670,000,000 shares, which consists of shares of common stock, par value Won 100 per share, and shares of non-voting stock, par value Won 100 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 preferred shares. As of March 31, 2026, 214,790,053 common shares were issued, of which 1,789,157 shares were held by us in treasury. In connection with the Spin-off, we also engaged in the Stock Split, pursuant to which the par value of our common stock changed from Won 500 per share to Won 100 per share and the number of issued shares of our common stock increased from 72,060,143 shares to 360,300,715 shares, in each case effective as of October 28, 2021. In 2023, we repurchased 5,773,410 common shares under the 2023 Share Repurchase Agreement and transferred 441,087 treasury shares as bonus payments to certain of our officers and employees. In 2024, we repurchased 317,000 common shares under the 2023 Share Repurchase Agreement and transferred 503,612 treasury shares as bonus payments to certain of our officers and employees. In addition, we cancelled 4,043,091 treasury shares in 2024. In 2025, we transferred 95,933 treasury shares as bonus payments to certain of our officers and employees. We have never issued any non-voting preferred shares. All of the issued and outstanding common shares are fully-paid and non-assessable and are in registered form.
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 of 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 independent non-executive directors is required for certain matters, which include:
investment by us or any of our subsidiaries in a foreign company in equity or acquisition of such foreign company’s other overseas assets in an amount equal to 5.0% or more of our 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 10.0 billion through one or a series of transactions.
Resolutions of the board must be adopted in the presence of a majority of the directors then 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.
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There are no specific shareholding requirements for director’s qualification. Directors are elected at a general meeting of shareholders if the approval of the holders of the majority of the voting shares present at such meeting is obtained and if such majority also represents at least one-fourth of the total number of shares outstanding. Under the Korean Commercial Code, unless otherwise stated in the articles of incorporation, holders of an aggregate of 1.0% 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 do not permit cumulative voting for the election of directors.
The term of office 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 and our shareholders may remove them from office at any time by a special resolution adopted at a general meeting of shareholders. The total term of office of independent directors may not exceed six years, and when combined with the term of office at our affiliates, may not exceed nine years.
We distribute dividends to our shareholders in proportion to the number of shares owned by each shareholder. Our common shares represented by the ADSs have the same dividend rights as other outstanding common shares. For a detailed discussion of our dividend policy, see “Item 8.A. Consolidated Statements and Other Financial Information — Dividends.”
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 of 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 of 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. 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) the purpose of 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. If we make an allotment of new shares to persons other than our existing shareholders, we are required by the Korean Commercial Code to notify our existing shareholders of (a) the class and number of new shares, (b) the issuance price of new shares and the date set for the payment thereof, (c) in cases of no par value shares, the amount to be included in the paid-up capital out of the issuance price of new shares and (d) the method of subscription to new shares by no later than two weeks before the date of payment of the subscription price, or publicly announce such information. 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, under our articles of incorporation, we may issue convertible bonds or bonds with warrants, each up to an aggregate principal amount of Won 400.0 billion, to persons other than existing shareholders,
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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 FSCMA. 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% of the sum of the number of shares then outstanding and the number of newly-issued shares.
General Meeting of Shareholders
We generally hold the annual general meetings 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 1.5% or more of our outstanding shares and preferred shares for at least six months; or
at the request of our audit committee.
Holders of non-voting preferred 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 Maeil Business Newspaper, both published in Seoul, for this purpose, but we may give notice in the future through electronic means. 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 preferred 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 in which we own more than 10.0% equity interest, either directly or indirectly, may not be exercised. The Korean Commercial Code, unless otherwise stated in the articles of incorporation, permits cumulative voting, which would allow each shareholder to have multiple voting rights corresponding to the number of directors to be appointed in the voting and to exercise all voting rights cumulatively to elect one director. Our articles of incorporation do not permit cumulative voting for the election of directors.
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 such 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
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voting shares present or represented at a meeting, and such affirmative votes must 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;
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 preferred shares are not entitled to vote on any resolution or receive notice of any general meeting of shareholders.
However, in 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 preferred shares, approval of the holders of non-voting preferred shares is required. We may obtain the approval by a resolution of holders of at least two-thirds of the non-voting preferred shares present or represented at a class meeting of the holders of non-voting preferred 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 preferred 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 beginning at the next general meeting of shareholders to be held after the declaration of non-payment of dividends is made until such dividends are paid. The holders of enfranchised non-voting preferred shares will 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 may 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 our common shares underlying their ADSs.
Limitation on Shareholdings
The Telecommunications Business Act prohibits foreign governments, individuals, and entities (including Korean entities that are deemed foreigners, as discussed below) from owning more than 49.0% of our voting stock, subject to certain exceptions. See “Item 4.B. Business Overview — Foreign Ownership and Investment Restrictions and Requirements.” Korean entities whose largest shareholder is a foreign government or a foreigner (together with any of its related parties) that owns 15.0% or more of such Korean entities’ outstanding voting stock are deemed foreigners. A foreigner who has acquired shares of our voting stock in excess of such limitation may not exercise the voting rights with respect to the shares exceeding such limitation and may be subject to the MSIT’s corrective orders.
Rights of Dissenting Shareholders
Under Financial Investment Services and Capital Market Act, 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
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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 KRX KOSPI Market 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 KRX KOSPI Market 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 KRX KOSPI Market for the one week period before the date of the adoption of the relevant resolution. However, a court may determine the purchase price if we or dissenting shareholders do not accept the purchase price.
Registry of Shareholders and Record Dates
Our transfer agent, Kookmin Bank, maintains the register of our shareholders at its office in Seoul, Korea. The transfer agent records and registers transfers of shares onto the register of shareholders.
For the purpose of determining the shareholders who are entitled to stock dividends, we may set a record date with at least two weeks’ prior public notice by a resolution of our board of directors.
Annual Report
When sending a written notice for the general meeting of shareholders, we must attach our annual report prepared under the FSCMA and audit report prepared under the Act on External Audit of Stock Companies. Alternatively, we may inform the shareholders of the annual report and audit report by email or uploading them to our website one week before the general meeting of shareholders. Furthermore, at least one week before the annual general meeting of shareholders, we must make our business reports and audited non-consolidated financial statements available for inspection at our principal office and at all of our branch offices. In addition, copies of business 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 FSCMA, we must file with the FSC and the Korea Exchange (1) an annual report within 90 days after the end of our fiscal year, (2) a mid-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 FSC and the Korea Exchange.
Transfer of Shares
Under the Korean Commercial Code and the Act on Electronic Registration of Stocks, Bonds, etc., the transfer of shares is effected by registration on the electronic registration ledger. 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.
Under current Korean regulations, the Korea Securities Depository, foreign exchange banks (including domestic branches of foreign banks), financial investment companies with a dealing, brokerage or collective
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investment license and internationally recognized custodians 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-Korean citizens. See “Item 10.D. Exchange Controls — Korean Foreign Exchange Controls and Securities Regulations.”
Our transfer agent is Kookmin Bank, located at 24, Gukjegeumyung-ro, Yeongdeungpo-gu, Seoul, Korea.
Restrictions Applicable to Shares
Pursuant to the Telecommunications Business Act, the maximum aggregate foreign shareholding in us is limited to 49.0%. See “Item 4.B. 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-Korean citizens. See “Item 10.D. Exchange Controls — Korean Foreign Exchange Controls and Securities Regulations.”
Acquisition of Shares by Us
We may acquire our own shares pursuant to an approval at the general meeting of shareholders, through purchases on the Korea Exchange or a tender offer, or by acquiring the interests in a trust account holding our own shares through agreements with trust companies and asset management companies. The aggregate purchase price for the shares may not exceed the total amount available for distribution as dividends as of the end of the preceding fiscal year less the amount of dividends and mandatory reserves required to be set aside for that fiscal year, subject to certain procedural requirements.
Under the Korean Commercial Code, we may resell or transfer any shares acquired by us to a third party pursuant to an approval by the Board of Directors. In general, corporate entities in which we own a 50.0% or more equity interest may not acquire our common stock. Under the FSCMA, we are subject to certain selling restrictions with respect to the shares acquired by us.
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 preferred shares have no preference in liquidation. Holders of debt securities have no preference over other creditors in the event of liquidation.
Material Contracts
We have not entered into any material contracts during the two years immediately preceding the date of this annual report, other than in the ordinary course of our business. For information regarding our agreements and transactions with entities affiliated with the SK Group, see “Item 7.B. Related Party Transactions” and note 35 of the notes to our consolidated financial statements. For a description of certain agreements entered into during the past three years related to our capital commitments and obligations, see “Item 5.B. Liquidity and Capital Resources.”
Exchange Controls
Korean Foreign Exchange Controls and Securities Regulations
The Foreign Exchange Transactions Act and the Presidential Decree and regulations under that Act and Decree, collectively referred to as the “Foreign Exchange Transaction Laws,” regulate investments in Korean
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securities by non-residents and issuances of securities outside Korea by Korean companies. Non-residents may invest in Korean securities pursuant to the Foreign Exchange Transaction Laws. The FSC has also adopted, pursuant to its authority under the FSCMA, regulations that restrict investments by foreigners in Korean securities and regulate issuances of securities outside Korea by Korean companies.
Subject to certain limitations, the MOFE has the 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), impose an obligation to deposit, safe-keep or sell any means of payment to The Bank of Korea, a foreign exchange stabilization fund, certain other governmental agencies or financial companies or impose an obligation on a resident that holds a claim against a non-resident to collect such claim to enable the recovery of the relevant debt back to Korea; 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, a foreign exchange stabilization fund, certain other governmental agencies or financial companies.
Under the regulations of the FSC amended on February 4, 2009, (1) if a company listed on the KRX KOSPI Market or a company listed on the KRX KOSDAQ Market has submitted a public disclosure of material matters to a foreign financial investment supervisory authority pursuant to the laws of the foreign jurisdiction, then it must submit a copy of the public disclosure and a Korean translation thereof to the FSC and the Korea Exchange, and (2) if a KRX KOSPI Market-listed company or KRX KOSDAQ Market-listed company is approved for listing on a foreign stock market or determined to be de-listed from the foreign stock market or actually listed on, or de-listed from a foreign stock market, then it must submit a copy of any document, which it submitted to or received from the relevant foreign government, foreign financial investment supervisory authority or the foreign stock market, and a Korean translation thereof to the FSC and the Korea Exchange.
Government Review of Issuances of ADSs
In order for us to issue ADSs in excess of US$50 million, we are required to submit a report to the MOFE with respect to the issuance of the ADSs prior to and after such issuance; provided that such US$50 million threshold amount would be reduced by the aggregate principal amount of any foreign currency loans borrowed, and any securities offered and issued, outside Korea during the one-year period immediately preceding the report’s submission date; provided further that when calculating this principal amount, any borrowing of funds or issuance of securities for the purpose of overseas usage shall be excluded. The MOFE may at its discretion direct us to take necessary measures to avoid exchange rate fluctuation in connection with its acceptance of report of the issuance of the ADSs.
Under current Korean laws and regulations, the depositary is required to obtain our prior consent for any proposed deposit of common shares if the number of shares to be deposited in such proposed deposit exceeds the number of common shares initially deposited by us for the issuance of ADSs (including deposits in connection with the initial and all subsequent issuances of ADSs by us or with our consent and stock dividends or other distributions related to the ADSs).
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In addition to such restrictions under Korean laws and regulations, there are also restrictions on the deposits of our common shares for issuance of ADSs. Therefore, a holder of ADRs who surrenders ADRs and withdraws shares may not be permitted subsequently to deposit those shares and obtain ADRs.
We submitted a report to and obtained acceptance thereof by the MOFE for the issuance of ADSs up to an amount corresponding to 24,321,893 common shares. No additional Korean governmental approval is necessary for the issuance of ADSs except that if the total number of our common shares on deposit for conversion into ADSs exceeds 24,321,893 common shares, we may be required to file a report to and obtain acceptance thereof by the MOFE with respect to the increase of such limit and the issuance of additional ADSs.
Reporting Requirements for Holders of Substantial Interests
Under the FSCMA, any person whose direct or beneficial ownership of shares with voting rights, 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 and purpose (in terms of whether the purpose of shareholding is to affect control over management of the issuer) of the holdings to the FSC and the Korea Exchange within five business days after reaching the 5.0% ownership interest threshold and promptly deliver a copy of such report to the issuer. In addition, any change (1) in the ownership interest subsequent to the report which equals or exceeds 1.0% of the total outstanding equity securities, or (2) in the shareholding purpose is required to be reported to the FSC and the Korea Exchange within five business days from the date of the change. However, the reporting deadline of such reporting requirement is extended for (1) certain professional investors, as specified under the FSCMA, or (2) persons who hold shares for purposes other than management control by up to the tenth day of the month immediately following the last month of the quarter in which the share acquisition or change in their shareholding occurred. Those who reported the purpose of shareholding is to affect control over management of the issuer are prohibited from exercising their voting rights and acquiring additional shares for five days subsequent to the report under the FSCMA.
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 FSC 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 10.0% or more of the total issued and outstanding shares with voting rights (a “major shareholder”) must report the status of his or her shareholding to the Securities and Futures Commission and the Korea Exchange within five business days after he or she becomes a major shareholder. In addition, any change in the ownership interest subsequent to the report must be reported to the Securities and Futures Commission and the Korea Exchange by the fifth business day of any changes in his or her shareholding. Violations of these reporting requirements may subject a person to criminal sanctions, such as fines or imprisonment.
Furthermore, pursuant to the Enforcement Decree of the FSCMA, a major shareholder must report his or her trading plan to the Securities and Futures Commission and the Korea Exchange at least 30 days prior to the trading The enforcement of such reporting obligations became effective on July 24, 2024.
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
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with the withdrawal. The acquisition of the shares by a foreigner must be reported by the foreigner or his or her standing proxy in Korea immediately to the Governor (the “Governor”) of the Financial Supervisory Service of Korea (the “FSS”).
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.
In addition, we are required to file a securities registration statement with the FSC and such securities registration statement has to become effective pursuant to the FSCMA in order for us to issue shares represented by ADSs, except in certain limited circumstances.
As a result of amendments to the Foreign Exchange Transaction Laws and the regulations of the FSC, 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 KRX KOSPI Market or the KRX KOSDAQ Market, unless prohibited by specific laws. Foreign investors may trade shares listed on the KRX KOSPI Market or the KRX KOSDAQ Market only through the KRX KOSPI Market or the KRX KOSDAQ Market, 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;
acquisition of shares by direct investment (including de facto direct investment) under the Foreign Investment Promotion Law;
acquisition and disposal of shares on an overseas stock exchange market, if such shares are simultaneously listed on the KRX KOSPI Market or KRX KOSDAQ Market and such overseas stock exchange;
arm’s length transactions between foreigners in the event all such foreigners belong to an investment group managed by the same person; and
transactions between foreigners outside the securities market and alternative trading systems which do not result in a change in the substantive ownership of the securities.
For over-the-counter transactions of shares between foreigners outside the KRX KOSPI Market or the KRX KOSDAQ Market for shares with respect to which the limit on aggregate foreign ownership has been reached or exceeded, a financial investment company with a brokerage license in Korea must act as an intermediary. Odd-lot trading of shares outside the KRX KOSPI Market or the KRX KOSDAQ Market must involve a
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financial investment company with a dealing license in Korea as the other party. Foreign investors are prohibited from engaging in margin transactions through borrowing shares from financial investment companies with respect to shares which are subject to a foreign ownership limit.
The Investment Rules previously required a foreign investor who wished to invest in shares for the first time on the KRX KOSPI Market or the KRX KOSDAQ Market (including converted shares) and shares being publicly offered for initial listing on the KRX KOSPI Market or the KRX KOSDAQ Market to register its identity with the FSS prior to making any such investment. Upon registration, the FSS issued an investment registration certificate (the “IRC”), also referred to as a “foreign investment ID,” to the foreign investor, and the foreign investor was required to present the IRC each time he or she opened a brokerage account with a financial investment company or financial institution in Korea. Foreigners eligible to obtain IRCs included foreign nationals who had not been residing in Korea for a consecutive period of 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 promulgated under the FSCMA. All Korean offices of a foreign corporation as a group were treated as a separate foreigner from the offices of the corporation outside Korea for the purpose of investment registration.
However, the IRC requirement was abolished on June 13, 2023. Recent amendments to the Investment Rules now permit a foreign investor to trade shares listed on the KRX KOSPI Market or the KRX KOSDAQ Market by providing its Legal Entity Identifier (“LEI”) (in case of corporate entities) or his or her passport number (in case of individuals) to a local securities broker and open a securities account. Foreign investors who have already obtained IRCs can continue to use them for purposes of trading shares listed on the KRX KOSPI Market or the KRX KOSDAQ Market.
If a foreign investor acquires or sells shares outside the KRX KOSPI Market and the KRX KOSDAQ Market, such acquisition or sale of shares must be reported by the foreign investor or such foreign investor’s 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 of shares outside the KRX KOSPI Market or the KRX KOSDAQ Market in the case of trades in connection with a tender offer, odd-lot trading of shares or trades of a class of shares for which the aggregate foreign ownership limit has been reached or exceeded, is reported to the Governor by the Korea Securities Depository, financial investment companies with a dealing or brokerage license or securities finance companies engaged to facilitate such transaction. In the event a foreign investor desires to acquire or sell shares outside the KRX KOSPI Market or the KRX KOSDAQ Market 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 KRX KOSPI Market or the KRX KOSDAQ Market, 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 among the Korea Securities Depository, foreign exchange banks (including domestic branches of foreign banks), financial investment companies with a dealing, brokerage or collective investment license and certain eligible foreign 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. Generally, a foreign investor may not permit any person, other than his, her or its standing proxy, to exercise rights relating to its shares or perform any tasks related thereto on his, her or its behalf. 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.
Shares of Korean companies must be electronically registered with an eligible custodian in Korea, except in cases where physical security is necessary for the exercise of securities rights or for physical inspections. The Korea Securities Depository, foreign exchange banks (including domestic branches of foreign banks), financial investment companies with a dealing, brokerage or collective investment license and certain eligible foreign custodians are eligible to act as a custodian of shares for a non-resident or foreign investor.
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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 two such exceptions, designated public corporations are subject to (i) a 40.0% ceiling on the acquisition of shares by foreigners in the aggregate and (ii) unless the corporations’ articles of incorporation set a lower threshold, a 3.0% ceiling on the acquisition of shares by a single foreign individual or entity. Currently, Korea Electric Power Corporation is the only designated public corporation, but it has not set a lower threshold for ownership by a single foreign individual or entity. 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 Trade, 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 Act. The Telecommunications Business Act generally limits the maximum aggregate foreign shareholdings in us to 49.0% of the outstanding shares. A foreigner who has acquired shares in excess of such restriction described above may not exercise the 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 KRX KOSPI Market or the KRX KOSDAQ Market must designate a foreign exchange bank at which he, she or it 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.
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 financial investment companies with a securities dealing, brokerage or collective investment license or the investor’s Won account. Funds in the investor’s Won account may be transferred to such investor’s 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.
Financial investment companies with a securities dealing, brokerage or collective investment license are allowed to open foreign currency accounts with foreign exchange banks exclusively for accommodating foreign investors’ stock investments in Korea. Through these accounts, these financial investment 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.
Taxation
United States Taxation
This summary describes certain U.S. federal income tax consequences for a U.S. holder (as defined below) of acquiring, owning, and disposing of common shares or ADSs. This summary applies to you only if you hold our common shares or ADSs as capital assets for tax purposes. This summary does not apply to you if you are a member of a class of holders subject to special rules, such as:
a dealer in securities or currencies;
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a trader in securities that elects to use a mark-to-market method of accounting for securities holdings;
a bank or other financial institution;
a life insurance company;
a tax-exempt organization;
a person that holds common shares or ADSs that are a hedge or that are hedged against interest rate or currency risks;
a person that holds common shares or ADSs as part of a straddle or conversion transaction for tax purposes;
a person whose functional currency for tax purposes is not the U.S. dollar;
a person that owns or is deemed to own 10.0% or more of any class of our stock (by vote or value); or
an entity or arrangement that is treated as a partnership for U.S. federal income tax purposes (or partners therein).
This summary is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations promulgated thereunder, and published rulings and court decisions, all as currently in effect. These laws are subject to change, possibly on a retroactive basis.
Please consult your own tax advisers concerning the U.S. federal, state, local, and other tax consequences of purchasing, owning, and disposing of common shares or ADSs in your particular circumstances.
For purposes of this summary, you are a “U.S. holder” if you are the beneficial owner of a common share or an ADS and are:
a citizen or resident of the United States;
a U.S. domestic corporation; or
otherwise subject to U.S. federal income tax on a net income basis with respect to income from the common share or ADS.
In general, if you are the beneficial owner of ADSs, you will be treated as the beneficial owner of the common shares represented by those ADSs for U.S. federal income tax purposes, and no gain or loss will be recognized if you exchange an ADS for the common share represented by that ADS.
The gross amount of cash dividends that you receive (prior to deduction of Korean taxes) generally will be subject to U.S. federal income taxation as foreign source “passive income” dividend income and will not be eligible for the dividends received deduction. Dividends paid in Won will be included in your income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the date of your receipt of the dividend, in the case of common shares, or the depositary’s receipt, in the case of ADSs, regardless of whether the payment is in fact converted into U.S. dollars. If such a dividend is converted into U.S. dollars on the date of receipt, you generally should not be required to recognize foreign currency gain or loss in respect of the dividend income.
The U.S. dollar amount of dividends received by an individual with respect to the ADSs will be subject to taxation at a preferential rate if the dividends are “qualified dividends.” Subject to certain exceptions for short-term and hedged positions, dividends paid on the ADSs will be treated as qualified dividends if (1) the ADSs are readily tradable on an established securities market in the United States and (2) we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a passive foreign
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investment company (“PFIC”), as discussed below under “ —Passive Foreign Investment Company Rules.” The ADSs are listed on the NYSE and will qualify as readily tradable on an established securities market in the United States so long as they are so listed. As described below under “ —Passive Foreign Investment Company Rules,” we do not believe that we were classified as a PFIC with respect to our taxable years ending December 31, 2024 and 2025. We do not expect to be classified as a PFIC for the current taxable year or in the reasonably foreseeable future based on the present composition of our income and assets and our expectations regarding our income and assets in the future. Accordingly, U.S. holders of commons shares or ADSs should consult their own tax advisors regarding the availability of the reduced dividend tax rate for dividends with respect to our common shares or ADSs.
Distributions of additional shares in respect of common shares or ADSs that are made as part of a pro-rata distribution to all of our stockholders generally will not be subject to U.S. federal income tax.
Sale or Other Disposition
Subject to the discussion below under “ —Passive Foreign Investment Company Rules,” for U.S. federal income tax purposes, gain or loss you realize on a sale or other disposition of common shares or ADSs generally will be treated as U.S. source capital gain or loss, and will be long-term capital gain or loss if the common shares or ADSs were held for more than one year. Your ability to offset capital losses against ordinary income is limited. Long-term capital gain recognized by an individual U.S. holder generally is subject to taxation at reduced rates.
Passive Foreign Investment Company Rules
Special U.S. tax rules apply to investors in companies that are considered to be PFICs. We will be classified as a PFIC in a particular taxable year if either (i) 75 percent or more of our gross income for the taxable year is passive income; or (ii) 50 percent or more of the value of our assets (generally determined on the basis of a quarterly average) is attributable to assets that produce or are held for the production of passive income. Investments in companies in which we own less than 25 percent of the stock (by value) are considered to be assets that produce passive income.
The determination whether we are a PFIC is made annually based on the particular facts and circumstances, such as the composition of our income and the valuation of our assets. We do not believe that we were classified as a PFIC with respect to our taxable years ending December 31, 2024 and 2025. We do not expect to be classified as a PFIC for the current taxable year or in the reasonably foreseeable future, based on the present composition of our income and assets and our expectations regarding our income and assets in the future. Stock market volatility could exacerbate these considerations. See “Item 3.D. Risk Factors — Risks Relating to Korea — Unfavorable financial and economic developments in Korea may have an adverse effect on us.”
You should consult your own tax advisors regarding our classification as a PFIC for 2024, 2025 or in the current or future years.
If we are classified as a PFIC, and you do not make a mark-to-market election, as described in the following paragraph, you will be subject to a special tax at ordinary income tax rates on “excess distributions” (generally, any distributions that you receive in a taxable year that are greater than 125 percent of the average annual distributions that you have received in the preceding three taxable years, or your holding period, if shorter), including gain that you recognize on the sale of your common shares or ADSs. The amount of income tax on any excess distributions will be increased by an interest charge to compensate for tax deferral, calculated as if the excess distributions were earned ratably over the period you hold your common shares or ADSs. Classification as a PFIC may also have other adverse tax consequences, including, in the case of individuals, the denial of a step-up in the basis of your common shares or ADSs at death.
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Although the determination of whether we are a PFIC is made annually, if we are a PFIC for any taxable year during which a U.S. holder holds our common shares or ADSs, such U.S. holder will generally be subject to the unfavorable rules described above for that year and for each subsequent year in which such U.S. holder holds the common shares or ADSs (even if we do not qualify as a PFIC in such subsequent years). However, if we cease to be a PFIC, a U.S. holder can avoid the continuing impact of the PFIC rules by making a special election to recognize gain as if such U.S. holder’s common shares or ADSs had been sold on the last day of the last taxable year during which we were a PFIC.
A U.S. holder may be able to avoid the unfavorable rules described above by electing to mark its ADSs to market, provided the ADSs are treated as “marketable stock.” The ADSs generally will be treated as marketable stock if the ADSs are “regularly traded” on a “qualified exchange or other market” (which includes the NYSE). Further, it should also be noted that only the ADSs and not the common shares are listed on the NYSE. Consequently, a U.S. holder that holds common shares that are not represented by ADSs may not be eligible to make a mark-to-market election in respect of those common shares. If the U.S. holder makes a mark-to-market election, the U.S. holder will be required in any year in which we are a PFIC to include as ordinary income the excess of the fair market value of its ADSs at year-end over the U.S. holder’s basis in those ADSs. If at the end of the U.S. holder’s taxable year, the U.S. holder’s basis in the common shares or ADSs exceeds their fair market value, the U.S. holder will be entitled to deduct the excess as an ordinary loss, but only to the extent of the U.S. holder’s net mark-to-market gains from previous years. A U.S. holder’s adjusted tax basis in the ADSs will be increased by the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules. In addition, any gain the U.S. holder recognizes upon the sale of the U.S. holder’s ADSs in a year in which we are a PFIC will be taxed as ordinary income in the year of sale, and any loss will be treated as an ordinary loss to the extent of the U.S. holder’s net mark-to-market gains from previous years. If a U.S. holder makes a mark-to-market election, it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the ADSs are no longer regularly traded on a “qualified exchange or other market” or the Internal Revenue Service (“IRS”) consents to the revocation of the election. If a U.S. holder makes a mark-to-market election in respect of a corporation classified as a PFIC and such corporation ceases to be classified as a PFIC, the U.S. holder will not be required to take into account the mark-to-market gain or loss described above during any period that such corporation is not classified as a PFIC. Because a mark-to-market election generally cannot be made for any lower-tier PFICs that we may own (unless shares of such lower-tier PFIC are themselves “marketable”), a U.S. holder who makes a mark-to-market election with respect to our common shares may continue to be subject to the general PFIC rules with respect to such U.S. holder’s indirect interest in any of our non-United States subsidiaries that is classified as a PFIC. U.S. holders are urged to consult their own tax advisors about the availability of the mark-to-market election, the consequences of not making a mark-to-market election for the first year during which a U.S. holder holds interests in our common shares or ADSs and we are a PFIC, and whether making the election would be advisable in their particular circumstances.
Although a U.S. holder can also avoid the unfavorable PFIC rules described above by electing to treat its common shares or ADSs as interests in a qualified electing fund (“QEF”), we do not intend to provide the information that would allow a U.S. holder to make such an election. Accordingly, in the event that we are treated as a PFIC, a U.S. holder will not be able to make a “QEF election.”
A U.S. holder that owns an equity interest in a PFIC must annually file IRS Form 8621 and may be required to file other IRS forms. A failure to file one or more of these forms as required may toll the running of the statute of limitations in respect of each of the U.S. holder’s taxable years for which such form is required to be filed. As a result, the taxable years with respect to which the U.S. holder fails to file the form may remain open to assessment by the IRS indefinitely, until the form is filed.
The U.S. federal income tax rules relating to PFICs are complex. U.S. holders are strongly urged to consult their own tax advisors regarding our potential classification as a PFIC and regarding the U.S. federal income tax consequences of acquiring, holding and disposing of our common shares or ADSs if we are so classified, including the advisability of making a mark-to-market election, if available.
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Foreign Tax Credit Considerations
You should consult your own tax advisers to determine whether you are subject to any special rules that limit your ability to make effective use of foreign tax credits, including the possible adverse impact of failing to take advantage of benefits under the income tax treaty between the United States and Korea (the “Treaty”).
Subject to generally applicable limitations and conditions, Korean withholding tax imposed on dividends paid at the appropriate rate applicable to a U.S. holder may be eligible for a credit against such U.S. holder’s U.S. federal income tax liability. These generally applicable limitations and conditions include requirements adopted by the IRS in regulations promulgated in December 2021 and any Korean tax will need to satisfy these requirements in order to be eligible to be a creditable tax for a U.S. holder. In the case of a U.S. holder that consistently elects to apply a modified version of these rules under temporary guidance and complies with specific requirements set forth in such guidance, the Korean tax on dividends will be treated as meeting the requirements and therefore as a creditable tax. In the case of all other U.S. holders, the application of these requirements to the Korean tax on dividends is uncertain and we have not determined whether these requirements are met. If the Korean tax is not a creditable tax for a U.S. holder or the U.S. holder does not elect to claim a foreign tax credit for any foreign income taxes paid or accrued in the same taxable year, the U.S. holder may be able to deduct the Korean tax in computing such U.S. holder’s taxable income for U.S. federal income tax purposes. Dividends will constitute income from sources without the United States and, if such withholding tax is a creditable tax for a U.S. holder that elects to claim foreign tax credits, generally will constitute “passive category income” for foreign tax credit purposes.
Gain, if any, realized by a U.S. holder on the sale or other disposition of the common shares or ADSs generally will be treated as U.S. source income for U.S. foreign tax credit purposes. A U.S. holder that is eligible for, and properly elects, the benefits of the Treaty, will generally not be subject to Korean withholding tax on capital gains. If a U.S. holder is not eligible for benefits under the Treaty and is therefore subject to Korean withholding tax on capital gains, the U.S. holder generally will not be entitled to credit any Korean tax imposed on the sale or other disposition of the shares against such U.S. holder’s U.S. federal income tax liability, except in the case of a U.S. holder that consistently elects to apply a modified version of the U.S. foreign tax credit rules that is permitted under temporary guidance and complies with the specific requirements set forth in such guidance. Consequently, even if the withholding tax qualifies as a creditable tax, a U.S. holder may not be able to credit the tax against its U.S. federal income tax liability unless such credit can be applied (subject to generally applicable conditions and limitations) against tax due on other income treated as derived from foreign sources. If the Korean tax is not a creditable tax, the tax would reduce the amount realized on the sale or other disposition of the shares even if the U.S. holder has elected to claim a foreign tax credit for other taxes in the same year.
The temporary guidance discussed above also indicates that the U.S. Department of the Treasury and the IRS are considering proposing amendments to the December 2021 regulations and that the temporary guidance can be relied upon until additional guidance is issued that withdraws or modifies the temporary guidance.
Any Korean securities transaction tax or agricultural and fishery special surtax that you pay will not be creditable for foreign tax credit purposes.
The rules with respect to foreign tax credits are complex and U.S. holders should consult their own tax advisors regarding the application of the foreign tax credit rules to their investment in, and disposition of, the common shares or ADSs.
Specified Foreign Financial Assets
Certain U.S. holders that own “specified foreign financial assets” with an aggregate value in excess of US$50,000 on the last day of the taxable year or US$75,000 at any time during the taxable year are generally required to file an information statement along with their tax returns, currently on IRS Form 8938, with respect to
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such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer (which would include the common shares or ADSs) that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on certain objective criteria. U.S. holders who fail to report the required information could be subject to substantial penalties. Prospective investors should consult their own tax advisers concerning the application of these rules to their investment in the common shares or ADSs, including the application of the rules to their particular circumstances.
U.S. Information Reporting and Backup Withholding Rules
Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries are subject to information reporting and may be subject to backup withholding unless the holder (1) is a corporation or other exempt recipient and demonstrates this when required or (2) provides a taxpayer identification number and certifies that no loss of exemption from backup withholding has occurred. Holders that are not a “United States Person” (as defined in the Code) generally are not subject to information reporting or backup withholding. However, such a holder may be required to provide a certification of its non-U.S. status in connection with payments received within the United States or through a U.S.-related financial intermediary.
Korean Taxation
The following is a summary of the principal Korean tax consequences to owners of the common shares or ADSs, as the case may be, who are non-resident individuals or non-Korean corporations without a permanent establishment in Korea to which the relevant income is attributable or with which the relevant income is effectively connected (“Non-resident Holders”). The statements regarding Korean tax laws set forth below are based on the laws in force and as interpreted by the Korean taxation authorities as of the date hereof. This summary is not exhaustive of all possible tax considerations which may apply to a particular investor and potential investors are advised to satisfy themselves as to the overall tax consequences of the acquisition, ownership and disposition of the common shares or ADSs, including specifically the tax consequences under Korean law, the laws of the jurisdiction of which they are resident, and any tax treaty between Korea and their country of residence, by consulting their own tax advisors.
Tax on Dividends
Dividends on the common shares or ADSs paid (whether in cash or in shares) to a Non-resident Holder will be subject to Korean withholding taxes at the rate of 22.0% (including local income tax) or such lower rate as is applicable under a treaty between Korea and such Non-resident Holder’s country of tax residence. Free distributions of shares representing a capitalization of certain capital surplus reserves may be subject to Korean withholding taxes.
The tax is withheld by the payer of the dividend. While it is the payer that is required to withhold the tax, Korean law generally entitles the person who was subject to the withholding of Korean tax to recover from the Government any part of the Korean tax withheld upon providing evidence that it was entitled to have tax withheld at a lower rate if certain conditions are met.
Tax on Capital Gains
As a general rule, capital gains earned by Non-resident Holders upon transfer of the common shares or ADSs are subject to Korean withholding tax at the lower of (1) 11.0% (including local income tax) of the gross proceeds realized or (2) 22.0% (including local income tax) of the net realized gains (subject to the production of satisfactory evidence of the acquisition costs and certain direct transaction costs), unless exempt from Korean income taxation under the effective Korean tax treaty with the Non-resident Holder’s country of tax residence.
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However, a Non-resident Holder will not be subject to Korean income taxation on capital gains realized upon the sale of the common shares through the KRX KOSPI Market if the Non-resident Holder (1) has no permanent establishment in Korea and (2) did not or has not owned (together with any shares owned by any entity with certain special relationship with such Non-resident Holder) 25.0% or more of the total issued and outstanding shares of us at any time during the calendar year in which the sale occurs and during the five calendar years prior to the calendar year in which the sale occurs.
It should be noted that capital gains earned by you (regardless of whether you have a permanent establishment in Korea) from a transfer of ADSs outside Korea will generally be exempt from Korean income taxation, provided that the ADSs are deemed to have been issued overseas. If and when an owner of the underlying common shares transfers the ADSs following the conversion of the underlying shares for ADSs, such person will not be exempt from Korean income taxation.
Inheritance Tax and Gift Tax
Korean inheritance tax is imposed upon (1) all assets (wherever located) of the deceased if at the time of his death he was a tax resident of Korea and (2) all property located in Korea which passes on death (irrespective of the domicile of the deceased). Gift tax is imposed in similar circumstances to the above. The taxes are imposed if the value of the relevant property is above a certain limit and vary depending on the value of the property and the identity of the parties involved.
Under Korean inheritance and gift tax laws, securities issued by a Korean corporation are deemed to be located in Korea irrespective of where they are physically located or by whom they are owned.
Securities Transaction Tax
Securities transaction tax is imposed on the transfer of shares issued by a Korean corporation or the right to subscribe for such shares generally at the rate of 0.35% of the sales price. In the case of the transfer of shares listed on the KRX KOSPI Market (such as our common shares), the securities transaction tax is imposed generally at the rate of (1) 0.20% of the sales price of such shares (including agricultural and fishery special surtax thereon) for transfers made on or after January 1, 2026 if traded on the KRX KOSPI Market or (2) subject to certain exceptions, 0.35% of the sales price of such shares if traded outside the KRX KOSPI Market.
Securities transaction tax or the agricultural and fishery special surtax is not applicable if (1) the shares or rights to subscribe for shares are listed on a designated foreign stock exchange and (2) the sale of the shares takes place on such exchange.
Securities transaction tax, if applicable, must be paid by the transferor of the shares or rights, in principle. When the transfer is effected through a securities settlement company, such settlement company is generally required to withhold and pay (to the tax authority) the tax, and when such transfer is made through a financial investment company with a brokerage license only, such company is required to withhold and pay the tax. Where the transfer is effected by a Non-resident Holder without a permanent establishment in Korea, other than through a securities settlement company or a financial investment company with a brokerage license, the transferee is required to withhold the securities transaction tax. Failure to do so will result in the imposition of penalties equal to the sum of (1) between 10.0% to 40.0% of the tax amount due, depending on the nature of the improper reporting, and (2) 8.03% per annum on the tax amount due for the default period.
Tax Treaties
Currently, Korea has income tax treaties with a number of countries, inter alia, Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Italy, Japan, Luxembourg, Ireland, the Netherlands, New Zealand,
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Norway, Singapore, Sweden, Switzerland, the United Kingdom and the United States under which the rate of withholding tax on dividend and interest is reduced, generally to between 5.0% and 16.5% (including local income tax), and the tax on capital gains derived by a non-resident from the transfer of securities issued by a Korean company is often eliminated.
Each Non-resident Holder of common shares should inquire for itself whether it is entitled to the benefits of a tax treaty with Korea. It is the responsibility of the party claiming the benefits of a tax treaty in respect of interest, dividend, capital gains or “other income” to submit to us (or our agent), the purchaser or the financial investment company with a brokerage license, as the case may be, prior to or at the time of payment, such evidence of tax residence of the party claiming the treaty benefit as the Korean tax authorities may require in support of its claim for treaty protection. In the absence of sufficient proof, we (or our agent), the purchaser or the financial investment company with a brokerage license, as the case may be, must withhold tax at the normal rates.
Furthermore, in order for a non-resident of Korea to obtain the benefits of tax exemption on certain Korean source income (e.g., capital gains and interest) under an applicable tax treaty, Korean tax law requires such non-resident (or its agent) to submit to the payer of such Korean source income an application for a tax exemption along with a certificate of tax residency of such non-resident issued by a competent authority of the non-resident’s country of tax residence, subject to certain exceptions. The payer of such Korean source income, in turn, is required to submit such application to the relevant district tax office by the ninth day of the month following the date of the first payment of such income.
For a non-resident of Korea to obtain the benefits of treaty-reduced tax rates on certain Korean source income (e.g., capital gains and interest) under an applicable tax treaty, Korean tax law requires such non-resident (or its agents) to submit to the payer of such Korean source income an application for treaty-reduced tax rates prior to receipt of such Korean source income; provided, however, that an owner of ADSs who is a non-resident of Korea is not required to submit such application, if the Korean source income on the ADSs is paid through an account opened at the Korea Securities Depository by a foreign depository. The payer of such Korean source income, in turn, is required to submit such application to the relevant district tax office by the end of February of the year following the date of payment of such income (or, in the case of a temporary suspension or permanent closure of business, by the end of the month following the second month after the month in which such suspension or closure occurs).
At present, Korea has not entered into any tax treaty relating to inheritance or gift tax.
Dividends and Paying Agents
Statements by Experts
Documents on Display
We file reports, including annual reports on Form 20-F, and other information with the SEC pursuant to the rules and regulations of the SEC that apply to foreign private issuers. You may read and copy any materials filed with the SEC at the Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Any filings we make electronically will be available to the public over the Internet at the SEC’s Website at www.sec.gov.
Documents filed with annual reports 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 SK T-Tower, 65, Eulji-ro, Jung-gu, Seoul 04539, Korea.
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Subsidiary Information
Annual Report to Security Holders
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to foreign exchange rate and interest rate risk primarily associated with underlying liabilities and to equity price risk as a result of our investment in equity instruments.
We have entered into a floating-to-fixed cross currency interest rate swap contract to hedge foreign currency and interest rate risks with respect to US$300 million of bonds issued in May 2025. In addition, we have entered into fixed-to-fixed cross currency swap contracts to hedge the foreign currency risks of US$400 million of bonds issued in July 2007 and US$300 million of bonds issued in June 2023. Furthermore, we have entered into a floating-to-fixed interest rate swap contract to hedge interest rate risks with respect to Won 200 billion of bonds issued in October 2024. See note 21 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, primarily in Dollars. A 10.0% increase in the exchange rate between the Won and all foreign currencies would result in an increase in profit before income tax of Won 11.3 billion, with a decrease of 10.0% in the exchange rate having the opposite effect, as of December 31, 2025. For a further discussion of our exchange rate risk exposures, see note 34(1) of the notes to our consolidated financial statements.
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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 as of December 31, 2025:
Local currency:
Fixed-rate
Average weighted rate(1)
Variable rate
Sub-total
Foreign currency:
Weighted average rates of the portfolio at the period end.
A 1.0% point increase in interest rates would result in a decrease in profit before income tax of Won 5.5 billion with a 1.0% point decrease in interest rates having the opposite effect, as of December 31, 2025. For a further discussion of our interest rate risk exposures, see note 34(1) of the notes to our consolidated financial statements.
Equity Price Risk
We are also subject to market risk exposure arising from changes in the equity securities market, which affect the fair value of our equity portfolio. As of December 31, 2025, 2024 and 2023, a 10.0% increase in the equity indices where our equity investments at fair value are listed, with all other variables held constant, would have increased our total equity by Won 71.1 billion, Won 81.4 billion and Won 85.0 billion, respectively, with a 10.0% decrease in the equity index having the opposite effect. The foregoing sensitivity analysis assumes that all variables other than changes in the equity index are held constant, and that our equity investments at fair value through other comprehensive income had moved according to the historical correlation to the index, and as such, does not reflect any correlation between the equity index and other variables. For a further discussion of our equity price risk exposures, see note 34(1) of the notes to our consolidated financial statements.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Debt Securities
Warrants and Rights
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Other Securities
American Depositary Shares
Fees and Charges under Deposit Agreement
The ADR depositary will charge the party receiving ADSs up to US$5.00 per 100 ADSs (or fraction thereof), provided that the ADR depositary has agreed to waive such fee as would have been payable by us in the case of (1) an offering of ADSs by us or (2) any distribution of shares of common stock or any rights to subscribe for additional shares of common stock. The ADR depositary will not charge the party to whom ADSs are delivered against deposits. The ADR depositary will charge the party surrendering ADSs for delivery of deposited securities up to US$5.00 per 100 ADSs (or fraction thereof) surrendered. The ADR depositary will also charge the party to whom any cash distribution, or for whom the sale or exercise of rights or other corporate action involving distributions to shareholders, is made with respect to ADSs up to US$0.02 per ADS held plus the expenses of the ADR depositary on a per-ADS basis. We will pay the expenses of the ADR depositary and any entity acting as registrar for the shares only as specified in the deposit agreement. The ADR depositary will pay any other charges and expenses of the ADR depositary and the entity acting as registrar for the shares.
Holders of ADRs must pay (1) taxes and other governmental charges, (2) share transfer registration fees on deposits of shares of common stock, (3) such cable, telex, facsimile transmission and delivery expenses as are expressly provided in the deposit agreement to be at the expense of persons depositing shares of common stock or holders of ADRs and (4) such reasonable expenses as are incurred by the ADR depositary in the conversion of foreign currency into Dollars.
Notwithstanding any other provision of the deposit agreement, in the event that the ADR depositary determines that any distribution in property (including shares or rights to subscribe therefor or other securities) is subject to any tax or governmental charges which the ADR depositary is obligated to withhold, the ADR depositary may dispose of all or a portion of such property (including shares and rights to subscribe therefor) in such amounts and in such manner as the ADR depositary deems necessary and practicable to pay such taxes or governmental charges, including by public or private sale, and the ADR depositary will distribute the net proceeds of any such sale or the balance of any such property after deduction of such taxes or governmental charges to the holders of ADSs entitled thereto in proportion to the number of ADSs held by them respectively.
All such charges may be changed by agreement between the ADR depositary and us at any time and from time to time, subject to the deposit agreement. The right of the ADR depositary to receive payment of fees, charges and expenses shall survive the termination of this deposit agreement and, as to any depositary, the resignation or removal of such depositary pursuant to the deposit agreement.
Payments made by ADR Depositary
The ADR depositary reimburses us for certain expenses we incur in connection with our ADR program, subject to certain ceilings. These reimbursable expenses currently include expenses relating to the preparation of SEC filings and submissions, listing fees, education and training fees, corporate action expenses and other miscellaneous fees. In the fiscal year 2025, we received US$106,670.29, net of taxes, from the ADR depositary in connection with such reimbursements.
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PART II
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
CONTROLS AND PROCEDURES
Our management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of December 31, 2025. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that it is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as of December 31, 2025. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our consolidated financial statements would be prevented or detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with IFRS Accounting Standards, as issued by the IASB. Based on our evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2025.
Report of the Independent Registered Public Accounting Firm on the Effectiveness of Our Internal Control Over Financial Reporting
The report of our independent registered public accounting firm, KPMG Samjong Accounting Corp., or KPMG Samjong, on the effectiveness of our internal control over financial reporting as of December 31, 2025 is included in Item 18 of this annual report.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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RESERVED
AUDIT COMMITTEE FINANCIAL EXPERT
Tay Seop Lim is the chairperson of our audit committee and determined to be an “audit committee financial expert” within the meaning of this Item 16A by the board of directors. The board of directors have further determined that Tay Seop Lim is independent within the meaning of applicable SEC rules and the listing standards of the NYSE. See “Item 6.C. Board Practices — Audit Committee” for additional information regarding our audit committee.
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, Chief Financial Officer, senior accounting officers and employees. We also have an internal control and disclosure policy designed to promote full, fair, accurate, timely and understandable disclosure in all of our reports and publicly filed documents. A copy of our code of ethics is available on our website at www.sktelecom.com. If we amend the provisions of our code of ethics that apply to our Chief Executive Officer, Chief Financial Officer and persons performing similar functions, or if we grant any waiver of such provisions, we will disclose such amendment or waiver on our website.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the fees we paid to our current independent registered public accounting firm KPMG Samjong and its affiliates for the year ended December 31, 2025 and our former independent registered public accounting firm EY Han Young (formerly, Ernst & Young Han Young) and its affiliates for the year ended December 31, 2024:
Audit Fees
Audit-Related Fees
Tax Fees
All Other Fees
“Audit Fees” are the aggregate fees billed by our independent registered public accounting firm 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 our independent registered public accounting firm 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 in 2025 for the verification of the consistency of financial information submitted to the MSIT with our historical financial statements in connection with the reallocation of certain of our frequency usage rights.
“Tax Fees” are fees for professional services rendered by our independent registered public accounting firm for tax compliance, tax advice on actual or contemplated transactions and tax planning services.
“All Other Fees” are fees billed by our independent registered public accounting firm for benchmarking analysis relating to net zero initiatives for the purpose of providing background market information.
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Pre-Approval of Audit and Non-Audit Services Provided by Independent Registered Public Accounting Firm
Our audit committee pre-approves all audit services to be provided by our independent registered public accounting firm. 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 our audit committee. Non-audit services that are prohibited to be provided to us by our independent auditors under the rules of the SEC 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 registered public accounting firm.
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 SEC.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
During the fiscal year ended December 31, 2025, we did not make any purchase of our common shares.
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
The disclosure called for by paragraph (a) of this Item 16F was previously reported, as that term is defined in Rule 12b-2 under the Exchange Act, in our Annual Report on Form 20-F for the year ended December 31, 2024 (File No. 333-04906), filed on April 29, 2025.
CORPORATE GOVERNANCE
The following is a summary of the significant differences between the NYSE’s corporate governance standards and those that we follow under Korean law.
NYSE Corporate Governance Standards
Our Corporate Governance Practice
Director Independence
Executive Session
Nomination/Corporate Governance Committee
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Audit Committee Additional Requirements
Shareholder Approval of Equity Compensation Plan
Shareholder Approval of Equity Offerings
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Corporate Governance Guidelines
Code of Business Conduct and Ethics
MINE SAFETY DISCLOSURE
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
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PART III
FINANCIAL STATEMENTS
Index to Financial Statements
Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements (as of December 31, 2025 and for the year then ended)
Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements (as of December 31, 2024, and for each of the two years in the period then ended)
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
Consolidated Statements of Financial Position as of December 31, 2025 and 2024
Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023
Consolidated Statements of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023
Consolidated Statements of Changes in Equity for the years ended December 31, 2025, 2024 and 2023
Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023
Notes to the Consolidated Financial Statements
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EXHIBITS
Number
Description
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SIGNATURE
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.
(Registrant)
/s/ Taehee Kim
Name:
Taehee Kim
Title:
Vice President, Head of IR
Date: April 29, 2026
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