SKMD.L Regulatory News (SKMD)

28 Feb 2006 07:23

General meeting of shareholders Report on the Resolution of the General Meeting of Shareholders 1. Date/Time Date March 10, 2006 Time 09:00 AM (Local time) 2. Location Grand Auditorium, 4/F, SK Telecom Boramae Building Bongch'on 1-dong 729-1, Gwanak-gu, Seoul, Korea 3. Agenda No. 1 : Approval of the Financial Statement for the 22nd Fiscal Year No. 2 : Approval of the Amendment to the Articles of Incorporation No. 3 : Approval of the Ceiling Amount of the Remuneration of Directors No. 4 : Approval of the Appointment of Independent Non-Executive Directors (Election of Independent Non-Executive Director as Member of the Audit Committee) 4. Date of Resolution February 14, 2006 -- Attendance Attendee 6 of Independent Non-Executive Absentee 1 Directors -- Attendance - of Auditors (Audit Committee members who are not Independent Non-Executive Directors) 5. Others All members of the Audit Committee are Independent Non-Executive Directors and all three of the members attended the board meeting. Related Publication - Agenda for Shareholders' Meeting I. Approval of the Financial Statement1. Summary of Business¢â‚¬¢ In 2005, we grew by 4.7% compared to 2004 in terms of the total sales (Won10,160 billion). Wireless internet sector recorded a 35% growth compared to2004 with total sales of Won 2,460 billion, accounting for 26.6 % of mobileservice revenues (excluding interconnection revenues);¢â‚¬¢ The total number of subscribers increased by 0.75 million subscribers to19.53 million subscribers (50.9% of the aggregate number of subscribers inKorea). We were ranked first in 2005 National Customer Satisfaction Index (8thconsecutive years) and in three other major customer satisfaction surveys;¢â‚¬¢ We saw a continuous increase in the ARPU. The total number of subscribers forMelon passed 4 million subscribers to rank first out of all the internet musiccontents providers in Korea and the cumulative number of subscribers for theMobile Cyworld service exceeded 1.25 million subscribers;¢â‚¬¢ We initiated the mobile 3D game service with the launch of GXG service. Also,Moneta, which combines the smartchip technology with financial services viamobile communications technology, has further expanded its domains to creditcards, travel passes, mobile stock exchange, mobile banking and others;¢â‚¬¢ In view of future competition with other service providers, we haveintroduced HSDPA network system to the major cities. Preparation for the 2.3GHzWi-Bro business is also in progress;¢â‚¬¢ With the view of developing and fortifying our next growth engine in theentertainment convergence market, we have acquired IHQ and Seoul Records andpromoted film and music funds to further bolster profit growth of wirelessinternet services; ¢â‚¬¢ As for our global business initiatives, by combining our mobilecommunications and data services technology with EarthLink (U.S.A.)'s customerbase, marketing infrastructure and brand value, we have incorporated a companynamed HELIO through which we will be providing music, games and messagingservices targeted mainly at young customer group. Promotion for new subscriberswill begin in the first half of 2006. In Vietnam, the total number ofsubscribers for the S-Fone service soared through 0.37 million subscribers inDecember 2005. Also, we introduced Child Safety Service based on our GPStechnology to the Netherlands' GSM market.2. Balance Sheet/Income Statement/ Cash Flows of Previous Fiscal Years (1) Balance Sheet As of December 31, 2005 As of December 31, 2004 (in thousands of Won) Item 2005 2004 ¢â€¦ . Current Assets 4,172,485,403 3,854,344,504 - Quick Assets 4,166,499,725 3,843,383,854 - Inventories 5,985,678 10,960,650 ¢â€¦¡. Fixed Assets 10,349,191,056 10,166,360,150 - Investment Assets 2,366,760,393 2,112,487,713 - Tangible Assets 4,595,883,432 4,605,253,282 - Intangible Assets 3,386,547,231 3,448,619,155 Total Assets 14,521,676,459 14,020,704,654 ¢â€¦ . Current Liability 2,747,267,960 2,859,710,751¢â€¦¡. Fixed Liability 3,516,527,791 4,033,902,429 Total Liability 6,263,795,751 6,893,613,180 ¢â€¦ . Capital Stock 44,639,473 44,639,473¢â€¦¡. Capital Surplus 2,966,197,636 2,983,166,163¢â€¦¢. Retained Earnings 7,269,860,571 6,156,707,730 ¢â€¦£. Capital Adjustments (2,022,816,972) (2,057,421,892) Total Capital 8,257,880,708 7,127,091,474 Total Capital and 14,521,676,459 14,020,704,654Liabilities (2) Income Statement From January 1, 2005 to December 31, 2005 From January 1, 2004 to December 31, 2004 (in thousands of Won ) Item 2005 2004 ¢â€¦ . Operating Revenue 10,161,128,637 9,703,680,842 ¢â€¦¡. Operating Expenses 7,507,559,130 7,344,099,605 1. Wages 342,761,120 353,380,531 2. Severance 37,622,226 49,353,624Allowances 3. Employee Benefits 56,514,211 47,494,486 4. Communication 63,403,617 59,437,798Expenses 5. Utility Expenses 83,617,118 75,261,929 6. Taxes & Dues 55,687,220 62,393,573 7. Rent 179,726,259 167,671,447 8. Commissions Paid 2,895,213,849 2,827,159,345 9. Depreciation 1,512,918,958 1,577,433,613 10. Maintenance & Repairs 128,310,682 108,532,716 11. Advertising 260,699,358 328,552,088 12. Training 29,430,652 24,128,767 13. Ordinary 204,698,223 203,741,279 Development Expenses 14. Bad Debts 104,089,154 22,543,693 15. Leased Lines 392,833,602 365,443,658 16. Frequency Usage Fees 156,097,850 143,046,998 17. Network Interconnection 935,216,677 858,754,429 18. Cost of Goods Sold 12,371,704 5,915,263 19. Others 56,346,650 63,854,368 ¢â€¦¢. Operating Income 2,653,569,507 2,359,581,237 ¢â€¦£. Non-operating Income 409,793,044 237,129,199 ¢â€¦¤. Non-operating Expenses 508,749,205 480,932,308 ¢â€¦¥. Income Before Income Taxes 2,554,613,346 2,115,778,128 ¢â€¦¦. Income Taxes 683,233,256 620,926,453 ¢â€¦§. Net Income 1,871,380,090 1,494,851,675(3) Statements of Appropriations of Retained Earnings (Draft) From January 1, 2005 to December 31, 2005 From January 1, 2004 to December 31, 2004 (in thousands of Won) Item 2005 2004 ¢â€¦ . Retained Earnings Before Appropriations 1,799,159,492 1,422,771,591 1. Retained Earnings Carried Over from Previous Year 1,393,698 1,534,212 2. Profits on Disposition of Treasury Stocks 3. Changes to the Retained Earnings of the Companies Accounted in Equity Method 4. Interim Dividends (73,614,296) (73,614,296) Common Stock Dividends (ratio) Current Fiscal Year : W1,000 (200%) Previous Fiscal Year : W1,000 (200%) 5. Current Net Income 1,871,380,090 1,494,851,675 ¢â€¦¡. Transfer from Voluntary Reserves 131,466,667 84,235,060 1. Reserve for Research and Manpower Development 131,466,667 84,235,060 2. Reserve for Business Expansion ¢â€¦¢. Appropriations of Retained Earnings 1,928,914,368 1,505,612,953 1. Legal Reserves 2. Appropriated Retained Earnings for Loss on Disposition of Treasury Stock 3. Reserve for Research and Manpower Development 190,000,000 130,000,000 4. Dividend (1) Cash Dividend Common Stock Dividend (ratio) 588,914,368 684,612,953 Current Fiscal Year: 588,914,368 684,612,953 W8,000 (1,600%) Previous Fiscal Year: W9,300 (1,860%) 5. Reserve for Business Expansion 1,150,000,000 691,000,000 ¢â€¦£. Retained Earnings to be Carried Forward to Next Year 1,711,791 1,393,698 II. Amendment to the Articles of Incorporation1. Amendment Pertaining to the Exclusion of Cumulative Voting Current Amendment(Proposed) Reasons for Amendment Not Applicable 2. Other Amendments Current Amendment(Proposed) Reasons for Amendment Article 2 (Purpose) Article 2 (Purpose) Addition of a clause (1) (omitted) (1) (unchanged) on mobile tourism (2) In order to achieve the (2) In order to achieve the services. above objectives, above objectives, the Company the Company carries on carries on the following the following businesses businesses 1.~9. (omitted) 1.~9. (unchanged) 10. Any business or 10. Tourism undertaking 11. Any business or incidental or undertaking conducive to incidental or conducive to the attainmentof the the attainmentof the objects above. objects above. (3) (omitted) (3) (unchanged) Addendum(as of March 10, Newly Enacted 2006) Article 1. Date of Effectiveness These Articles of Incorporation shall take effect as of March 10, 2006. III. Approval of Salary Cap on Directors1. The Number of Directors, Total Salary and the Limits Thereon Previous Fiscal Year Current Fiscal Year Number of Directors 11 (7) 12 (8) (Independent Non-Executive Directors) Total Salary/Caps (billion Won) 12 12 IV. Election of Directors / Appointment of Audit Committee Members1. Election of Directors - None2. Appointment of Audit Committee Members (1) Candidate Information Name Date of Birth Independent Relationship with Recommended by Non-Executive the Major Director Shareholder Yong Woon Kim October 4, 1943 Yes None Board of DirectorsHyun Chin Lim April 26, 1949 Yes None Board of Directors Total of Two (2) The candidates have been recommended by the board of directors uponrecommendation from the Committee on Independent Non-Executive DirectorCandidate Recommendation.(2) Experiences Name Career Profile Business Relations with the Company within the Past 3 Years Yong Woon Business ¢â‚¬¢ POSCO -Executive Senior Vice None Kim Administrator President of Management Division (1997-2002) ¢â‚¬¢ POSCO Business Research Institution - Standing Advisor (2003-2005) ¢â‚¬¢ SK Telecom - Independent Non-Executive Director (2003-present) ¢â‚¬¢ Postech - Auditor (2005-present) Hyun Chin Professor ¢â‚¬¢ Seoul National University, College None Lim of Social Science - Professor of Sociology (1983-present) ¢â‚¬¢ Seoul National University, Faculty of Liberal Education - Dean (2004-present) ¢â‚¬¢ Central Officials Training Institute - Professor (2004-present) ¢â‚¬¢ Korea Association of Sociology - Chairman (2005-present) Announcement for Shareholders' Meeting I. Remuneration for Independent Non-Executive Directors Period Total number of Amount approved by Total amount Average amount Independent the shareholders * payable payable (per Non-Executive person) Directors 2005 7 Won 12,000 million Won 614 million Won 88 million* Includes amounts payable to inside directorsII. Transactions with Major Shareholders1. Significant Transactions with Major Shareholders - None2. Significant Transactions with Interested Party during the Current Fiscal Year (in billions of Won) Client Transaction Type Transaction Transaction Percentage (Relationship period Amount (%) with the Company) SK C&C Co. Ltd. Purchase of From January 1, 575.3 5.66 equipment and 2005 until commission December 31, 2005 III. Business References1. Summary of Business(1) Market Environment(a) Industry¢â‚¬¢ As of December 31, 2005, the number of mobile phone service subscriberstotaled to 38.34 million representing 79.4% of total Korean population.Considering the market situations in other Asian countries such as Taiwan orHong Kong where penetration rates of mobile phones are as high as 90%, webelieve that there is the possibility of further growth in the Korean mobilecommunications market.¢â‚¬¢ With the introduction of multi-functional handsets and the continuedimprovement in the network environment, convergence services providingmultimedia contents and mobile commerce service paved the way for a qualitativemarket growth, shifting the center of demand from voice communications to datacommunications.(b) Market Growth (in thousands) End of End of End of End of End of 2005 2004 2003 2002 2001 Penetration Rate(%) 79.4 75.9 70.1 67.9 60.9 No. of SK Telecom 19,530 18,783 18,313 17,220 11,867Subscribers Shinsegi Telecom - - - - 3,312 PCS 18,812 17,803 15,279 15,123 13,867 Total 38,342 36,586 33,592 32,342 29,046 (Source: Ministry of Information and Communications) (c) Competition(i) Summary of Market Dynamics¢â‚¬¢ The entry of Shinsegi Telecom and 3 PCS companies into the mobilecommunications market in 1997 signaled competition among five main serviceproviders. However, SK Telecom's acquisition of Shinsegi Telecom in December1999, followed by Korea Telecom's merger with Hansol M.com, subsequentlyrenamed as KTF in May 2001, transformed the market dynamics into a three waycompetition with SK Telecom, KTF, and LG Telecom as the main service providers;¢â‚¬¢ SK IMT and KT I-COM incorporated to provide 2GHz IMT-2000 service have beenmerged by their respective holding companies, SK Telecom and KTF, in the firsthalf of 2003, solidifying the three way market dynamics for the second andthird generation telecommunication services.(ii) Market Entry: Approval by the Minister of Information and Communicationrequired.(iii) Competition¢â‚¬¢ Brand power, product/service competitiveness, sales competitiveness are thethree major factors of competition in the market;¢â‚¬¢ Brand power can be defined as the loyalty or recognition of the services andvalues provided by the service provider to the customers;¢â‚¬¢ Our product/service competitiveness includes communication quality andservice coverage, broad range of subscription plans, broad range of wirelessinternet services and their connection quality, hand set functionality andprice and CS quality;¢â‚¬¢ Our sales competitiveness consists of the incorporation of new marketingstrategies and the level of logistic competitiveness of the branch offices andagencies.(2) Summary of Business(a) Summary and Classification of Businesses(i) Summary¢â‚¬¢ In 2005, we grew by 4.7% compared to 2004 in terms of the total sales (Won10,160 billion). Wireless internet sector recorded a 35% growth compared to2004 with total sales of Won 2,460 billion, according for 26.6 % of mobileservice revenues (excluding interconnection revenues);¢â‚¬¢ The total number of subscribers increased by 0.75 million subscribers to19.53 million subscribers (50.9% of the aggregate number of subscribers inKorea). We were ranked first in 2005 National Customer Satisfaction Index (8thconsecutive years) and in three other major customer satisfaction surveys;¢â‚¬¢ We saw a continuous increase in the ARPU. The total number of subscribers forMelon passed 4 million subscribers to rank first out of all the internet musiccontents providers in Korea and the cumulative number of subscribers for theMobile Cyworld service exceeded 1.25 million subscribers;¢â‚¬¢ We initiated the mobile 3D game service with the launch of GXG service. Also,Moneta, which combines the smartchip technology with financial services viamobile communications technology, has further expanded its domains to creditcards, travel passes, mobile stock exchange, mobile banking and others;¢â‚¬¢ In view of future competition with other service providers, we haveintroduced HSDPA network system to the major cities. Preparation for the 2.3GHzWi-Bro business is also in progress;¢â‚¬¢ With the view of developing and fortifying our next growth engine in theentertainment convergence market, we have acquired IHQ and Seoul Records andpromoted film and music funds to further bolster profit growth of wirelessinternet services; ¢â‚¬¢ As for our global business initiatives, by combining our mobilecommunications and data services technology with EarthLink (U.S.A.)'s customerbase, marketing infrastructure and brand value, we have incorporated a companynamed HELIO through which we will be providing music, games and messagingservices targeted mainly at young customer group. Promotion for new subscriberswill begin in the first half of 2006. In Vietnam, the total number ofsubscribers for the S-Fone service soared through 0.37 million subscribers inDecember 2005. Also, we introduced Child Safety Service based on our GPStechnology to the Netherlands' GSM market.(ii) Classification of Businesses Subject to Disclosure * Wireless telegraphy, telecommunication business (In accordance with the sub-categories as defined by the Korean Industrial Classification Standards) * Main products: mobile phone service (b) Market Shares[SK Telecom] (unit: %) Item 2005 2004 2003 2002 2001 Mobile phone 50.9 51.3 54.5 53.2 40.9 (Source: MIC)[Competitors]- Mobile Phone Sector (unit: %) Item SKT KTF LG Telecom Share ratio 50.9 32.1 17.0 (Source: MIC)(c) Market Characteristics¢â‚¬¢ The mobile communications market in Korea is targeted at the citizens of theRepublic of Korea. The coverage is country-wide and anyone can subscribe to theservice regardless of gender, age, and level of income;¢â‚¬¢ With the penetration rate for mobile phones reaching 79.4% (as of December31, 2005), our customer base is rapidly expanding to include students andpreschool children;¢â‚¬¢ Although the domestic consumption has provided the dominant share of ourrevenues until now, we expect to see an increase in export and overseas salesrate in the near future due to the expansion of our overseas businesses;(d) Details and Outlook for New Businesses(i) Resolution for the investment in MVNO (new business operation of wirelesscommunication in the U.S.) on January 26, 2005;¢â‚¬¢ Investment amount: US$220 million (from 2005 until 2007);¢â‚¬¢ Investment method: Establishment of a joint venture with EarthLink (U.S.A.)which is one of the three major internet service providers in the U.S.;¢â‚¬¢ Services to be Provided: Partial MVNO (Mobile Virtual Network Operator), weplan to attract subscribers and to provide services based on our additionalservices facilities and fee payment plans;¢â‚¬¢ Combination of our mobile communications and data services technology withEarthLink(U.S.A.)'s customer base, marketing infrastructure and brand value;¢â‚¬¢ Provision of music, game, and messaging services, for segmented targetcustomer group;¢â‚¬¢ Recent business events- Launch of the new HELIO brand.- Business to be initiated with full force from the first half of 2006 targeting mainly at young customer group.(ii) Introduction of HSDPA service¢â‚¬¢ With a view to develop and fortify our next growth engine, we will invest inthe development of products with visual concepts such as video phones and willexpand our global roaming services;¢â‚¬¢ We plan to focus on the early adopter customer group and heavy users tosecure market dominance and to improve our brand recognition as a premiumservice provider in order to increase customer preference toward HSDPA.Forward-Looking Statement DisclaimerThe material above contains forward-looking statements. Statements that are nothistorical facts, including statements about our beliefs and expectations, areforward-looking statements. These statements are based on current plans,estimates and projections, and therefore you should not place undue reliance onthem. Such forward-looking statements involve known and unknown risks,uncertainties and other factors which may cause the our actual results orperformance to be materially different from any future results or performanceexpressed or implied by such forward-looking statements. We do not make anyrepresentation or warranty, express or implied, as to the accuracy orcompleteness of the information contained herein, and nothing contained hereinis, or shall be relied upon as, a promise or representation, whether as to thepast or the future. Forward-looking statements speak only as of the date theyare made, and we undertake no obligation to update publicly any of them inlight of new information or future events. Additional information concerningthese and other risk factors are contained in our latest annual report on Form20-F and in our other filings with the U.S. Securities and Exchange Commission.SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, theregistrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized. SK Telecom Co., Ltd. (Registrant) By: /s/ Hyun Jong Song (Signature) Name: Hyun Jong Song Title: Vice PresidentDate: February 28, 2006ENDSK TELECOM CO LD (GDR)