SK Telecom (SKM) - 2021 Q4 - Annual Report

Market Share and Competition - As of December 31, 2021, the collective market share of KT and LG U+ amounted to approximately 55.7% in terms of the number of wireless subscribers[34] - The market share of the fixed-line telephone and VoIP service market was 15.7% as of December 31, 2021, compared to KT's 56.3% and LG U+'s 19.0%[39] - The market share of the broadband Internet market was 28.7% as of December 31, 2021, compared to KT's 41.2% and LG U+'s 20.7%[39] - The company faces significant competition from MVNOs, which generally provide cheaper rate plans, impacting its market share and profitability[35] - The monthly churn rate may increase due to intensified competition, potentially leading to higher marketing expenses as a percentage of sales[43] Subscriber Metrics - As of December 31, 2021, SK Telecom had Won 2,461.0 billion in contractual payment obligations due in 2022, primarily related to debt repayment and lease liabilities[82] - The penetration rate for wireless telecommunications in Korea was approximately 139.3% as of December 31, 2021, suggesting limited potential for subscriber growth[71] - The number of wireless subscribers in Korea reached 71.9 million as of December 31, 2021, with a penetration rate of 139.3 subscribers per 100 population[139] - The company had 31.9 million wireless subscribers as of December 31, 2021, representing a market share of 44.3% in the Korean wireless telecommunications sector[129] - The number of 5G subscribers increased to 9.9 million in 2021, up from 5.5 million in 2020, indicating a growth rate of approximately 80.5% year-over-year[151] Financial Performance and Investments - Capital expenditures for wireless network enhancements were Won 1,850.9 billion in 2021, down from Won 2,514.3 billion in 2019[48] - SK Telecom's capital expenditures for 2021 amounted to Won 2,915.9 billion, with similar spending expected in 2022 for various projects including 5G network expansion and IoT solutions development[80] - The revenue from the cellular services segment was Won 12,718.5 billion in 2021, accounting for 75.9% of the consolidated revenue from continuing operations[154] - The fixed-line telecommunications services segment generated revenue of Won 3,677.7 billion in 2021, representing 22.0% of the company's consolidated revenue from continuing operations[203] - The revenue from the other businesses segment was Won 352.4 billion in 2021, representing 2.1% of consolidated revenue from continuing operations[223] Regulatory and Legal Risks - The company is subject to additional regulations as a dominant network service provider, which may adversely affect its competitiveness and profitability[57] - The company is exposed to litigation risks due to the Securities-related Class Action Act of Korea, which allows shareholders to bring class action suits for losses related to securities transactions[111] - Any breach of financial covenants could negatively impact SK Telecom's financial condition and ability to repay debt[79] Strategic Partnerships and Business Focus - The company formed a strategic partnership with Uber, which included an investment of approximately US$50 million in T Map Mobility[66] - The company aims to leverage AI and digital infrastructure technologies to develop next-generation growth businesses and enhance customer-tailored products and services[145] - The company has redefined its business focus into five major groups under the "SKT 2.0" vision, aiming to maximize overall growth and enterprise value[68] - The company plans to actively collaborate with new ICT businesses and third parties to enhance its service offerings and market position[145] Network and Technology Development - The company plans to continue maintaining its LTE network while expanding its 5G network coverage, which is expected to be substantially completed within the next several years[46] - The company launched its 5G network in April 2019 and is continually expanding its coverage and enhancing service quality[151] - The nationwide average download speed of the company's 5G network was 930 Mbps, outperforming competitors KT and LG U+[181] - The company completed the nationwide deployment of its LoRa network in July 2016, supporting communication among IoT devices[188] Customer Experience and Service Offerings - The company has opened 790 T Premium Stores and 50 T Factory stores as of December 31, 2021, to enhance customer service and experience[197] - The T Membership program aims to improve subscriber retention by offering various benefits, leveraging the company's large subscriber base[195] - The company provides high-quality customer service through its subsidiaries, maintaining top positions in customer satisfaction indices for 24 years[201] Economic and Market Conditions - The Korean economy has shown mixed signs of growth, with adverse conditions due to the COVID-19 pandemic and geopolitical tensions, particularly from Russia's invasion of Ukraine[104] - Consumer confidence and spending have declined, influenced by the ongoing global pandemic and adverse economic conditions in key export markets such as China and the United States[106] - The Korea Composite Stock Price Index (KOSPI) has experienced significant volatility, which may adversely affect the company's ability to raise capital and the value of the Won[104]