SK Telecom (SKM) - 2023 Q1 - Quarterly Report

Form 6-K Filing Information Form 6-K Details This section provides regulatory filing details for the Form 6-K, identifying the registrant and report type - SK Telecom Co, Ltd is filing a Form 6-K report as a foreign private issuer[1] Form 6-K Details | Detail | Value | | :--- | :--- | | Commission File Number | 333-04906 | | Registrant Name | SK Telecom Co, Ltd | | Address | 65, Euljiro, Jung-gu, Seoul 04539, Korea | | Annual Report Type | Form 20-F | | Filing Month | February 2023 | Resolution to Call the Annual General Meeting of Shareholders AGM Details and Agenda Overview The Board of Directors resolved to call the Annual General Meeting of Shareholders for March 28, 2023 AGM Details | Detail | Value | | :--- | :--- | | Date of Board Resolution | February 23, 2023 | | AGM Date / Time | March 28, 2023 (Tuesday), 10:00 am (Seoul time) | | AGM Place | SUPEX Hall, 4th Floor, SK T-Tower, 65, Eulji-ro, Jung-gu, Seoul, Korea | - The AGM agenda includes approval of financial statements, grant of stock options, appointment of directors and audit committee members, and approval of director remuneration[7] - The place and time of the AGM may change due to emergencies, such as COVID-19[6] Approval of Financial Statements for the 39th Fiscal Year (2022) Shareholders are requested to approve the 2022 financial statements prepared under Korean IFRS - The financial statements for the 39th fiscal year (2022) were prepared in accordance with Korean International Financial Reporting Standards[9] - The audit report from independent auditors will be uploaded to SK Telecom's website and the U.S. SEC website in early- to mid-March 2023[9] - Consolidated Financial Statements are in Appendix 1 and Separate Financial Statements are in Appendix 2[9] Grant of Stock Options The Company proposes granting 190,000 stock options to align management and shareholder interests - The purpose of the stock option grant is to maximize company value by aligning management and shareholder interests and encouraging long-term value enhancement[10] Stock Option Grant Details | Detail | Value | | :--- | :--- | | Type and Number of Shares Issuable | 190,000 registered common shares | | Grant Date | March 28, 2023 | | Exercise Period | March 29, 2025 – March 28, 2028 | | Exercise Price | Arithmetic mean of volume weighted average closing prices of two-month, one-month and one-week periods prior to grant date | | Employment Condition | Stock options cancelled if recipient not employed for at least two years from grant date | Previously Granted Stock Options (as of December 31, 2022) | Year | Grant date | Number of recipients | Type of shares | Number of shares issuable | Number of shares issued upon exercise | expired stock options | Remaining number of shares issuable | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | 2020 | March 26 | 10 | Common shares | 387,624 | — | 11,314 | 376,310 | | 2021 | March 25 | 13 | Common shares | 101,060 | — | 13,270 | 87,790 | | 2022 | March 25 | 12 | Common shares | 415,716 | — | 10,737 | 404,979 | | Total | | 35 | Common shares | 904,400 | — | 35,321 | 869,079 | Appointment of Independent Non-executive Directors The Board recommends three candidates for appointment as independent non-executive directors Director Candidate Details | Name of Candidate | Date of Birth | Candidate for independent non-executive director | Relationship with largest shareholder | Recommended by | | :--- | :--- | :--- | :--- | :--- | | Kim, Yong-Hak | January 17, 1953 | Yes | Independent non-executive director of affiliate (SK Telecom) | Independent Director Nomination Committee | | Kim, Junmo | September 7, 1976 | Yes | Independent non-executive director of affiliate (SK Telecom) | Independent Director Nomination Committee | | Oh, Haeyun | November 13, 1974 | Yes | None | Independent Director Nomination Committee | - Kim, Yong-Hak is expected to contribute expertise in sociology, leadership, and social values, enhancing corporate governance[17][18] - Kim, Junmo, an AI expert, is expected to provide professional advice on AI and digital transformation businesses and strategies[17][18] - Oh, Haeyun, an AI-based natural language processing expert, will offer insights on AI vision, directions, and ethics issues[18] Appointment of Members of the Audit Committee The Board recommends two candidates for appointment to the Audit Committee to enhance its independence Audit Committee Candidate Details | Name of Candidate | Date of Birth | Candidate for independent non-executive director | Relationship with largest shareholder | Recommended by | | :--- | :--- | :--- | :--- | :--- | | Kim, Yong-Hak | January 17, 1953 | Yes | Independent non-executive director of affiliate (SK Telecom) | Independent Director Nomination Committee | | Oh, Haeyun | November 13, 1974 | Yes | None | Independent Director Nomination Committee | - Kim, Yong-Hak is recommended for his experience in institution management and deep understanding of management issues, contributing to audit committee independence and management transparency[21] - Oh, Haeyun is recommended for her AI expertise and background in overseeing AI ethics guidelines, enhancing the Board's independence and professionalism through technology diagnosis[20][21] Approval of the Ceiling Amount of Remuneration for Directors Shareholders are asked to approve the maximum authorized remuneration for directors for fiscal year 2023 Director Remuneration Details | Detail | Fiscal year 2023 | Fiscal year 2022 | | :--- | :--- | :--- | | Number of directors | 8 | 8 | | Number of independent non-executive directors | 5 | 5 | | Total amount of remuneration paid to directors | — | Won 3,486,749,320 | | Total amount or maximum authorized amount of remuneration for directors | Won 12,000,000,000 | Won 12,000,000,000 | Consolidated Financial Statements (Appendix 1) Consolidated Statements of Financial Position The Group's financial position shows slightly increased assets and liabilities but decreased shareholder's equity in 2022 Consolidated Financial Position | Metric | December 31, 2022 (Millions of Won) | December 31, 2021 (Millions of Won) | | :--- | :--- | :--- | | Total Assets | W 31,308,262 | W 30,911,277 | | Total Liabilities | W 19,153,066 | W 18,576,139 | | Total Shareholder's Equity | W 12,155,196 | W 12,335,138 | Consolidated Statements of Income The Group reported increased revenue and operating profit, but a significant decrease in net profit for 2022 Consolidated Income Statement | Metric | 2022 (Millions of Won) | 2021 (Millions of Won) | | :--- | :--- | :--- | | Revenue | W 17,304,973 | W 16,748,585 | | Operating Profit | W 1,612,070 | W 1,387,162 | | Profit from continuing operations | W 947,831 | W 1,271,395 | | Profit from discontinued operations, net of taxes | — | W 1,147,594 | | Profit for the year | W 947,831 | W 2,418,989 | | Basic earnings per share (in won) | W 4,118 | W 7,191 | Consolidated Statements of Comprehensive Income The Group's total comprehensive income for 2022 decreased significantly due to valuation losses on financial assets Consolidated Comprehensive Income | Metric | 2022 (Millions of Won) | 2021 (Millions of Won) | | :--- | :--- | :--- | | Profit for the year | W 947,831 | W 2,418,989 | | Other comprehensive income (loss), net of taxes | W (306,226) | W 1,362,192 | | Total comprehensive income | W 641,605 | W 3,781,181 | - A significant valuation loss on financial assets at fair value through other comprehensive income (W 491,853 million) contributed to the decrease in total comprehensive income in 2022[28] Consolidated Statements of Changes in Equity The equity statements reflect impacts from profit, dividends, and a significant spin-off transaction in 2021 Consolidated Changes in Equity | Equity Component | Balance, January 1, 2021 (Millions of Won) | Balance, December 31, 2021 (Millions of Won) | Balance, December 31, 2022 (Millions of Won) | | :--- | :--- | :--- | :--- | | Share capital | W 44,639 | W 30,493 | W 30,493 | | Capital surplus and others | W 677,203 | W (11,623,726) | W (11,567,117) | | Retained earnings | W 22,981,913 | W 22,437,341 | W 22,463,711 | | Reserves | W 40,139 | W 735,238 | W 391,233 | | Equity attributable to owners of the Parent Company | W 23,743,894 | W 11,579,346 | W 11,318,320 | | Non-controlling interests | W 652,349 | W 755,792 | W 836,876 | | Total Shareholder's Equity | W 24,396,243 | W 12,335,138 | W 12,155,196 | - The spin-off in 2021 significantly impacted equity, reducing total shareholder's equity by W 15,005,397 million[30] - Annual dividends paid were W 361,186 million in 2022 and W 641,944 million in 2021[30] Consolidated Statements of Cash Flows The Group's cash and cash equivalents increased in 2022, driven by strong operating cash flow Consolidated Cash Flows | Cash Flow Activity | 2022 (Millions of Won) | 2021 (Millions of Won) | | :--- | :--- | :--- | | Net cash provided by operating activities | W 5,159,317 | W 5,031,279 | | Net cash used in investing activities | W (2,807,795) | W (3,486,189) | | Net cash used in financing activities | W (1,349,882) | W (2,053,611) | | Net increase (decrease) in cash and cash equivalents | W 1,001,640 | W (508,521) | | Cash and cash equivalents at end of the year | W 1,882,291 | W 872,731 | - Cash generated from operating activities increased to W 5,785,375 million in 2022 from W 5,324,073 million in 2021[32] - Proceeds from issuance of debentures were W 1,200,122 million in 2022, up from W 873,245 million in 2021[33] Notes to the Consolidated Financial Statements This section details the reporting entity, basis of preparation, and significant accounting policies Reporting Entity and Subsidiaries The company provides wireless telecommunications services in Korea and underwent a spin-off in 2021 - SK Telecom Co, Ltd is a Korean wireless telecommunications service provider, with SK Inc as its ultimate controlling entity[35][36] Shareholder Structure | Shareholder | Number of shares | Percentage of total shares issued (%) | | :--- | :--- | :--- | | SK Inc | 65,668,397 | 30.01 | | National Pension Service | 16,846,066 | 7.69 | | Institutional investors and other shareholders | 131,671,103 | 60.17 | | Kakao Investment Co, Ltd | 3,846,487 | 1.76 | | Treasury shares | 801,091 | 0.37 | | Total | 218,833,144 | 100.00 | - In 2022, SAPEON Inc and SK m&service Co, Ltd were newly included in consolidation, while Broadband Nowon Co, Ltd was excluded due to merger[38][39][44] Basis of Preparation The financial statements are prepared under Korean IFRS on a historical cost basis with some exceptions - Consolidated financial statements are prepared in accordance with Korean International Financial Reporting Standards (KIFRS)[48] - Statements are prepared on a historical cost basis, with exceptions for fair value measurements of certain financial instruments and liabilities[50][52] - The preparation requires management to make judgments, estimates, and assumptions, which are reviewed on an ongoing basis[50][51] Significant Accounting Policies This section details the significant accounting policies applied by the Group for financial reporting - The Group applies the acquisition method for business combinations, testing goodwill annually for impairment[66][69] - Financial assets are classified and measured at FVTPL, FVOCI, or amortized cost based on business model and contractual cash flow characteristics[82][84] - Property and equipment are depreciated on a straight-line basis over estimated useful lives (e.g, 15-40 years for buildings, 3-15 years for machinery)[114][115] - Intangible assets are amortized on a straight-line basis over estimated useful lives (e.g, 2.4-10 years for frequency usage rights)[120][121] - The Group recognizes right-of-use assets and lease liabilities for leases, depreciating assets over the lease term[137][139][140] - Revenue from wireless telecommunications services is recognized over the contract term, while handset sale revenue is recognized upon delivery[184] Separate Financial Statements (Appendix 2) Separate Statements of Financial Position The Company's separate financial position shows slightly increased assets and liabilities but decreased total equity in 2022 Separate Financial Position | Metric | December 31, 2022 (Millions of Won) | December 31, 2021 (Millions of Won) | | :--- | :--- | :--- | | Total Assets | W 26,432,121 | W 26,389,065 | | Total Liabilities | W 16,048,739 | W 15,526,209 | | Total Shareholder's Equity | W 10,383,382 | W 10,862,856 | Separate Statements of Income The Company reported increased revenue and operating profit, but a decrease in net profit for 2022 Separate Income Statement | Metric | 2022 (Millions of Won) | 2021 (Millions of Won) | | :--- | :--- | :--- | | Revenue | W 12,414,588 | W 12,102,830 | | Operating Profit | W 1,321,131 | W 1,114,323 | | Profit for the year | W 869,490 | W 1,073,823 | | Basic earnings per share (in won) | W 3,921 | W 3,183 | Separate Statements of Comprehensive Income The Company's total comprehensive income for 2022 decreased significantly due to valuation losses on financial assets Separate Comprehensive Income | Metric | 2022 (Millions of Won) | 2021 (Millions of Won) | | :--- | :--- | :--- | | Profit for the year | W 869,490 | W 1,073,823 | | Other comprehensive income (loss), net of taxes | W (499,714) | W 297,192 | | Total comprehensive income | W 369,776 | W 1,371,015 | - A significant valuation loss on financial assets at fair value through other comprehensive income (W 481,023 million) contributed to the decrease in total comprehensive income in 2022[211] Separate Statements of Changes in Equity The equity statements reflect impacts from profit, dividends, and a significant spin-off transaction in 2021 Separate Changes in Equity | Equity Component | Balance, January 1, 2021 (Millions of Won) | Balance, December 31, 2021 (Millions of Won) | Balance, December 31, 2022 (Millions of Won) | | :--- | :--- | :--- | :--- | | Share capital | W 44,639 | W 30,493 | W 30,493 | | Capital surplus and others | W 289,134 | W (4,576,271) | W (4,506,693) | | Retained earnings | W 16,684,640 | W 14,770,618 | W 14,691,461 | | Reserves | W 331,445 | W 638,016 | W 168,121 | | Total Shareholder's Equity | W 17,349,858 | W 10,862,856 | W 10,383,382 | - The spin-off in 2021 significantly impacted equity, reducing total shareholder's equity by W 6,901,907 million[212] - Annual dividends paid were W 361,186 million in 2022 and W 641,944 million in 2021[212] Separate Statements of Cash Flows The Company's cash and cash equivalents increased in 2022, driven by strong operating cash flow Separate Cash Flows | Cash Flow Activity | 2022 (Millions of Won) | 2021 (Millions of Won) | | :--- | :--- | :--- | | Net cash provided by operating activities | W 4,072,281 | W 3,919,829 | | Net cash used in investing activities | W (1,964,831) | W (2,251,647) | | Net cash used in financing activities | W (1,048,738) | W (1,838,576) | | Net increase (decrease) in cash and cash equivalents | W 1,058,712 | W (170,394) | | Cash and cash equivalents at end of the year | W 1,217,504 | W 158,823 | - Cash generated from operating activities increased to W 4,554,517 million in 2022 from W 4,021,672 million in 2021[213] - Proceeds from issuance of debentures were W 1,050,820 million in 2022, up from W 507,876 million in 2021[214] Notes to the Separate Financial Statements This section details the reporting entity, basis of preparation, and significant accounting policies Reporting Entity The company provides wireless telecommunications services in Korea and completed a spin-off in 2021 - SK Telecom Co, Ltd is a Korean wireless telecommunications service provider, incorporated in March 1984[215] Shareholder Structure | Shareholder | Number of shares | Percentage of total shares issued (%) | | :--- | :--- | :--- | | SK Inc | 65,668,397 | 30.01 | | National Pension Service | 16,846,066 | 7.69 | | Institutional investors and other shareholders | 131,671,103 | 60.17 | | Kakao Investment Co, Ltd | 3,846,487 | 1.76 | | Treasury shares | 801,091 | 0.37 | | Total | 218,833,144 | 100.00 | - The company completed the spin-off of its investment businesses in semiconductor, New ICT, and other areas on November 1, 2021[216] Basis of Preparation The separate financial statements are prepared under KIFRS 1027 using the cost method for investments - Separate financial statements are prepared in accordance with KIFRS 1027, Separate Financial Statements[218] - Investments in subsidiaries, associates, and joint ventures are accounted for at cost less impairment[218] - Statements are prepared on a historical cost basis, with exceptions for fair value measurements of certain financial instruments and liabilities[219] Significant Accounting Policies This section details the significant accounting policies applied for the separate financial statements - The Company applies the cost method to investments in subsidiaries, associates, and joint ventures[231] - Financial assets are classified and measured at FVTPL, FVOCI, or amortized cost based on business model and contractual cash flow characteristics[238][241] - Property and equipment are depreciated on a straight-line basis over estimated useful lives (e.g, 15-30 years for buildings, 3-8 years for machinery)[268][270] - Intangible assets are amortized on a straight-line basis over estimated useful lives (e.g, 2.4-10 years for frequency usage rights)[274][275] - The Company recognizes right-of-use assets and lease liabilities for leases, depreciating assets over the lease term[289][290][291] - Revenue from wireless telecommunications services is recognized over the contract term, while handset sale revenue is recognized upon delivery[330] Disclaimers and Signatures Financial Statement Disclaimer The included financial statements are unaudited and subject to the independent audit process - The consolidated and separate financial statements are unaudited and subject to the audit process[348] - Audited financial statements will be available in future filings with the U.S. Securities and Exchange Commission[348] Forward-Looking Statement Disclaimer The report contains forward-looking statements that involve risks and uncertainties - The material contains forward-looking statements based on current plans, estimates, and projections[349] - These statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[349] - The Company undertakes no obligation to update publicly any forward-looking statements in light of new information or future events[349] Signatures This section confirms the official signing and submission of the Form 6-K report - The report was duly signed on behalf of SK Telecom Co, Ltd by Hee Jun Chung, Vice President[350] - The signing date for the Form 6-K report was February 24, 2023[350]