SK Telecom : Announces 2016 3Q Earnings Results

• Revenue of KRW 4.244 trillion, operating income of KRW 424.3 billion and net income of KRW 322.1 billion (K-IFRS consolidated)
• The revenue edged down by 0.6% QoQ backed by decreased sales of its subsidiary PS&M
• The operating income increased by 4.2% compared to the previous quarter affected by improved performance of its subsidiaries including SK Broadband and SK Planet
• The net income grew by 10.7% QoQ due to equity-method income from SK Hynix
• Begins to generate meaningful results in its platform business by opening up major platforms namely T Map and T Phone, and is actively developing new markets to deliver uprecedent value to customers

※ All business performance figures are based on Korean International Financial Reporting Standards (K-IFRS).

SK Telecom (NYSE:SKM) today announced its earnings on a K-IFRS consolidated basis for the third quarter of 2016: revenue of KRW 4.244 trillion, operating income of KRW 424.3 billion and net income of KRW 322.1billion.

Although SK Telecom and its subsidiaries including SK Broadband and SK Planet posted increased sales, the revenue edged down by 0.6% quarter-on-quarter (QoQ) to KRW 4.244 trillion due to decreased sales of PS&M.

Compared to the previous quarter, the operating income grew by 4.2% to KRW 424.3 billion backed by improved performance of its subsidiaries including SK Broadband and SK Planet, and EBITDA increased by 2.5% QoQ to KRW 1.189 trillion.

The net income climbed by 10.7% QoQ to stand at KRW 322.1 billion affected by equity-method income from SK Hynix.

SK Telecom began providing its mobile navigation service 'T Map,' free of charge, to subscribers of other Korean mobile carriers since July 2016, and, the number of monthly T Map users grew to a record high of 9.18 million as of the end of September 2016. The company projects that T Map will play a bigger role in its intelligent transport systems as data collected via T Map can be utilized for the development of connected services and autonomous technology in vehicles.

Moreover, SK Telecom has opened 'T Phone' free of charge to non-SK Telecom customers in July 2016. The number of T Phone subscribers surpassed 10 million as of August 2016. The company is currently working on exporting the platform to overseas markets.

SK Broadband and SK Planet, SK Telecom's subsidiaries promoting business in the area of media platform and commerce platform, respectively, are sustaining robust growth. From January 1 to September 30, 2016, SK Broadband has added a total of 390,000 IPTV subscribers, which is the largest increase among all IPTV players in Korea. SK Planet's '11th Street' has further solidified its leadership in the online/mobile commerce market, boasting the largest number of unique visitors, and is witnessing a continuous increase in the total amount of transaction.

Meanwhile, SK Telecom has also focused on strengthening its core competitiveness as a mobile network operator by launching special price plans designed to meet customers' different usage patterns along with designated mobile devices. On October 12, 2016, by ranking number one in Korean Customer Satisfaction Index (KCSI) for 19 consecutive years, SK Telecom has topped all three national satisfaction surveys this year in the category of mobile telecommunications.*

*This year, SK Telecom has also ranked number one in the National Customer Satisfaction Index (NCSI) for 19 years in a row and the Korean Standard Service Quality Index (KS-SQI) for 17 consecutive years.

In September 2016, SK Telecom has launched NUGU, a voice-activated Artificial Intelligence (AI) service. The company plans to build an ecosystem by working closely with many startups, venture companies and experts, and promote the growth of the AI industry in Korea.

Furthermore, SK Telecom is making efforts to enhance customer convenience by utilizing its nationwide IoT networks - i.e. LoRa and LTE-M networks. The company has already completed the development of 24 different IoT services in areas including gas and electricity.

"We expect that our strategy to fully open up major platforms including T Map and T Phone will lead to a successful outcome in the mid-to long-term," said Hwang Keun-joo, CFO and Head of Strategy and Planning Division at SK Telecom. "SK Telecom will accelerate its transformation into a next-generation platform company and keep developing customer-oriented products and services."

Summary and Comparison of Consolidated Income Statement

Summary of ARPU

※ The conference call in regard to SK Telecom's 2016 3Q earnings results can be heard via SK Telecom's webpage on Thursday October 27, from 3:00 P.M. Seoul Time.

Link: http://cc.onoffjoin.com/webcast/skt/skt2016Q3_en.php

Summary and Comparison of Consolidated Income Statement (K-IFRS Consolidated Financial Statement, Unit: KRW 1 Billion)

Summary of ARPU (Unit: KRW)

*ARPU has been recalculated as revenues of SK Telecom's subsidiaries (e.g. buying commissions for T Store contents, etc.) that have been partly reflected in the formula for calculating SK Telecom's ARPU are no longer reflected.