Form 6-K

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF MARCH 2026

Commission File Number: 333-04906

SK Telecom Co., Ltd.

(Translation of registrant’s name into English)

65, Euljiro, Jung-gu

Seoul 04539, Korea

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


SK TELECOM CO., LTD.
(Registrant)

By:		/s/ Taehee Kim
(Signature)
Name:		Taehee Kim
Title:		Vice President

Date: March 11, 2026

SK TELECOM CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

For the year ended December 31, 2025

(With independent Auditors’ Report Thereon)

Contents


	Page
Independent Auditors’ Report		1

Consolidated Financial Statements		5

Consolidated Statements of Financial Position		6

Consolidated Statements of Income		8

Consolidated Statements of Comprehensive Income		9

Consolidated Statements of Changes in Equity		10

Consolidated Statements of Cash Flows		11

Notes to the Consolidated Financial Statements		13

Independent Auditors’ Report on Internal Control over Financial Reporting for Consolidation Purposes		130

Management’s Annual Report on Internal Control over Financial Reporting for Consolidation Purposes		132

Independent Auditors’ Report

Based on a report originally issued in Korean

The Shareholders and Board of Directors

SK Telecom Co., Ltd.

Opinion

We have audited the accompanying consolidated financial statements of SK Telecom Co., Ltd. and its subsidiaries (the “Group”) which comprise the consolidated statement of financial position as of December 31, 2025, and the consolidated statements of income, comprehensive income, changes in equity and cash flow for the year then ended, and notes, including material accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2025, and its consolidated financial performance and its consolidated cash flow for the year then ended in accordance with Korean International Financial Reporting Standards (“K-IFRS”).

We also have audited, in accordance with Korean Standards on Auditing (“KSAs”), the Group’s Internal Control over Financial Reporting (“ICFR”) for consolidation purposes as of December 31, 2025 based on the criteria established in Conceptual Framework for Designing and Operating Internal Control over Financial Reporting issued by the Operating Committee of Internal Control over Financial Reporting in the Republic of Korea, and our report dated March 10, 2026 expressed an unmodified opinion on the effectiveness of the Group’s ICFR for consolidation purposes.

Basis for Opinion

We conducted our audit in accordance with KSAs. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements as of and for the year ended December 31, 2025. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Existence and Accuracy of Wireless Service Revenue

As described in Notes 3 (21) and 4 to the consolidated financial statements, the Group provides a wide range of telecommunications services with a broad and complex set of rate plans and frequent subscriber activities, such as activations, cancellations and plan changes. Revenue is initiated, processed, measured and recognized through multiple complex information technology (IT) systems involving subscriber activation and cancellation, rate plan changes, usage rating, billing and related interfaces. Because of the significant reliance on complex, interdependent IT systems and the high transaction volume, errors arising from system changes or system operation could have a significant impact on the consolidated financial statements. Accordingly, we identified the existence and accuracy of wireless service revenue as a key audit matter. The related revenue recognized for 2025 amounted to W9,715,601 million.

The primary procedures we performed to address this key audit matter included:

•

Inspecting key terms of subscriber contracts to assess whether the Group’s revenue recognition policies comply with the requirements of K-IFRS No. 1115 Revenue from Contracts with Customers.

•

Assessing the IT environment, systems and related processes supporting revenue recognition, including usage aggregation; rating; and billing, and testing the designs and operating effectiveness of relevant internal controls associated with the Group’s revenue recognition.

•

Selecting samples of customer billing data for customers with cancellation activity during 2025, and comparing billed amounts to contract terms, rating data, and cash collections.

Impairment Assessment of Goodwill Allocated to the Fixed-Line Telecommunication Services Cash Generating Unit (“CGU”)

As described in Notes 3(10) and 15 to the consolidated financial statements, the Group performs an annual impairment assessment of goodwill regardless of whether indicators of impairment exist. As of December 31, 2025, goodwill allocated to the fixed-line telecommunication services CGU amounted to W764,082 million.

Management estimated the recoverable amount of the CGU using a value-in-use (“VIU”) model based on discounted future cash flows. This assessment involves significant management judgment regarding projected operating revenue and perpetual growth rate in estimating future cash flows, and in selecting discount rate. These key assumptions involve uncertainty and could significantly affect the outcome of the impairment assessment. Accordingly, we identified this impairment assessment as a key audit matter.

The primary procedures we performed to address this key audit matter included:

•

Evaluating the design and testing the operating effectiveness of internal controls related to impairment analysis. This includes controls related to the development of projected operating revenue, perpetual growth rate, and discount rate assumption.

•

Performing sensitivity analysis on discount rate and perpetual growth rate to assess the impact of changes in these assumptions on the Group’s determination of the VIU of the fixed-line telecommunication services CGU.

•

Assessing projected operating revenue by comparing with the financial budget approved by the Group. We also compared the forecasted operating revenue in prior years with the actual results to assess the Group’s ability to accurately forecast.

•

Involving our valuation professionals with specialized skills and knowledge, who assisted in evaluating projected operating revenue and perpetual growth rate by comparing them with telecommunication industry reports as well as the Group’s historical performance and evaluating the discount rate by comparing it with a discount rate that was independently developed using publicly available market data for comparable entities.

Other Matters

The consolidated financial statements of the Group as of and for the year ended December 31, 2024 were audited by another auditor who expressed an unmodified opinion on those statements on March 10, 2025.

The procedures and practices utilized in the Republic of Korea to audit and such consolidated financial statements may differ from those generally accepted and applied in other countries.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with K-IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with KSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with KSAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

•

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.

•

Evaluate the appropriateness of accounting policies used in the preparation of the consolidated financial statements and the reasonableness of accounting estimates and related disclosures made by management.

•

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.

•

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partner on the audit resulting in this independent auditors’ report is In Hye Kang.

LOGO

KPMG Samjong Accounting Corp.

Seoul, Korea

March 10, 2026

This report is effective as of March 10, 2026, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the accompanying consolidated financial statements and notes thereto. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

SK TELECOM CO., LTD. AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

The accompanying consolidated financial statements, including all footnote disclosures, have been prepared by, and are the responsibility of, the Group.

Ryu, Young-Sang

Chief Executive Officer

SK TELECOM CO., LTD.

SK TELECOM CO., LTD. and its Subsidiaries

Consolidated Statements of Financial Position

As of December 31, 2025 and 2024


(In millions of won)	*Note*	December 31, 2025		December 31, 2024
Assets
Current Assets:
Cash and cash equivalents	34,35	W	1,490,024		2,023,721
Short-term financial instruments	5,34,35		151,426		323,890
Short-term investment securities	10,34,35		35,217		—
Accounts receivable – trade, net	6,34,35,36		1,918,502		1,989,306
Short-term loans, net	6,34,35,36		69,664		65,205
Accounts receivable – other, net	6,34,35,36,37		346,326		369,192
Contract assets	8,35		124,831		90,385
Prepaid expenses	7		2,135,763		1,945,610
Prepaid income taxes	31		6,217		21
Derivative financial assets	21,34,35,38		6,945		119,500
Inventories, net	9		167,640		209,783
Assets held for sale	40		143,489		174,839
Advanced payments and others	6,34,35		131,086		165,230

			6,727,130		7,476,682

Non-Current Assets:
Long-term financial instruments	5,34,35		370		373
Long-term investment securities	10,34,35		3,188,572		1,877,922
Investments in associates and joint ventures	11		2,238,470		2,341,827
Investment property, net	13		39,841		26,611
Property and equipment, net	12,14,36,37		11,902,173		12,617,394
Goodwill	15		2,072,493		2,072,493
Intangible assets, net	16		1,710,620		2,194,871
Long-term contract assets	8,35		63,778		46,352
Long-term loans, net	6,34,35,36		32,184		34,446
Long-term accounts receivable – other, net	6,34,35,36,37		164,762		173,252
Long-term prepaid expenses	7		1,280,751		1,108,406
Guarantee deposits, net	6,34,35,36		167,823		155,875
Long-term derivative financial assets	21,34,35,38		303,201		221,608
Defined benefit assets	20		205,477		154,329
Other non-current assets	6,34,35		10,138		12,814

			23,380,653		23,038,573

Total Assets		W	30,107,783		30,515,255

(Continued)

SK TELECOM CO., LTD. and its Subsidiaries

Consolidated Statements of Financial Position, Continued

As of December 31, 2025 and 2024


(In millions of won)	*Note*	December 31, 2025			December 31, 2024
Liabilities and Shareholders’ Equity
Current Liabilities:
Accounts payable – trade	34,35,36	W	110,867			126,508
Accounts payable – other	34,35,36		1,576,870			2,798,978
Withholdings	34,35,36		1,011,918			928,679
Contract liabilities	8		207,682			168,194
Accrued expenses	25,34,35		1,345,998			1,522,750
Income tax payable	31		28,482			243,564
Derivative financial liabilities	21,34,35,38		5,782			—
Provisions	19,39		145,953			50,016
Short-term borrowings	17,34,35,38		130,000			100,000
Current portion of long-term debt, net	17,34,35,38		1,122,584			2,460,109
Current portion of long-term payables – other	18,34,35,38		368,572			367,765
Lease liabilities	34,35,36,38		407,959			351,363
Liabilities held for sale	40		67,108			106,352

			6,529,775			9,224,278

Non-Current Liabilities:
Debentures, excluding current portion, net	17,34,35,38		7,294,445			6,363,646
Long-term borrowings, excluding current portion, net	17,34,35,38		300,000			203,125
Long-term payables – other	18,34,35,38		179,389			539,955
Long-term lease liabilities	34,35,36,38		1,117,839			1,286,588
Long-term contract liabilities	8		194,261			61,512
Defined benefit liabilities	20		—			2,086
Long-term derivative financial liabilities	21,34,35,38		621			3,437
Long-term provisions	19		80,094			70,044
Deferred tax liabilities	31		1,363,191			851,200
Other non-current liabilities	34,35,36		92,876			81,750

			10,622,716			9,463,343

Total Liabilities			17,152,491			18,687,621

Shareholders’ Equity:
Share capital	1,22		30,493			30,493
Capital surplus and others	22,23,24,25		(12,131,340	)		(11,954,936	)
Retained earnings	26		22,938,268			22,976,127
Reserves	27		2,025,682			646,943
Equity attributable to owners of the Parent Company			12,863,103			11,698,627
Non-controlling interests			92,189			129,007

Total Shareholders’ Equity			12,955,292			11,827,634

Total Liabilities and Shareholders’ Equity		W	30,107,783			30,515,255

The accompanying notes are an integral part of the consolidated financial statements.

SK TELECOM CO., LTD. and its Subsidiaries

Consolidated Statements of Income

For the years ended December 31, 2025 and 2024


(In millions of won, except for earnings per share)	*Note*		2025			2024
Operating revenue:		4,36
Revenue			W	17,099,213			17,940,609
Operating expenses:		36
Labor				2,711,262			2,725,765
Commission		7		5,494,689			5,564,289
Depreciation and amortization		4		3,467,134			3,560,374
Network interconnection				635,085			692,881
Leased lines				267,348			265,518
Advertising				182,669			186,340
Rent				134,075			136,753
Cost of goods sold		9		1,269,541			1,326,159
Others		28		1,864,195			1,659,121

				16,025,998			16,117,200

Operating profit:		4		1,073,215			1,823,409
Finance income		4,30		219,358			355,035
Finance costs		4,30		(481,996	)		(605,919	)
Gain (loss) relating to investments in subsidiaries, associates and joint ventures, net		4,11		(63,602	)		321,787
Other non-operating income		4,29		170,434			72,288
Other non-operating expenses		4,29		(195,148	)		(204,835	)

Profit before income tax		4		722,261			1,761,765
Income tax expense		31		347,177			374,670

Profit for the year			W	375,084			1,387,095

Attributable to:
Owners of the Parent Company			W	408,410			1,250,155
Non-controlling interests				(33,326	)		136,940

Earnings per share		32
Basic earnings per share (in won)			W	1,825			5,780
Diluted earnings per share (in won)				1,825			5,765

The accompanying notes are an integral part of the consolidated financial statements.

SK TELECOM CO., LTD. and its Subsidiaries

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2025 and 2024


(In millions of won)	*Note*		2025			2024
Profit for the year			W	375,084			1,387,095
Other comprehensive income (loss):
Items that will not be reclassified subsequently to profit or loss, net of taxes:
Net change in accumulated other comprehensive income of investments in associates and joint ventures		11,27		56,652			—
Remeasurement of defined benefit plans		20		(6,432	)		(25,905	)
Valuation gain on financial assets at fair value through other comprehensive income		27,30		1,465,513			11,253
Items that are or may be reclassified subsequently to profit or loss, net of taxes:
Net change in accumulated other comprehensive Income (loss) of investments in associates and joint ventures		11,27		(6,416	)		132,581
Net change in unrealized fair value of derivatives		21,27,30		22,623			(6,573	)
Foreign currency translation differences for foreign operations		27		(2,106	)		49,420

Other comprehensive income for the year, net of taxes				1,529,834			160,776

Total comprehensive income			W	1,904,918			1,547,871

Total comprehensive income (loss) attributable to:
Owners of the Parent Company			W	1,937,762			1,409,090
Non-controlling interests				(32,844	)		138,781

The accompanying notes are an integral part of the consolidated financial statements.

SK TELECOM CO., LTD. and its Subsidiaries

Consolidated Statements of Changes in Equity

For the years ended December 31, 2025 and 2024


(In millions of won)
			Attributable to owners of the Parent Company													Non- controlling interests			Total equity
	*Note*		Share capital		Capital surplus (deficit) and others			Retained earnings			Reserves		Sub-total			Non- controlling interests			Total equity
Balance as of January 1, 2024			W	30,493		(11,828,644	)		22,799,981			387,216		11,389,046			839,353			12,228,399
Total comprehensive income (loss):
Profit for the year				—		—			1,250,155			—		1,250,155			136,940			1,387,095
Other comprehensive income (loss):		11,20,21,27,30		—		—			(100,792	)		259,727		158,935			1,841			160,776

				—		—			1,149,363			259,727		1,409,090			138,781			1,547,871

Transactions with owners:
Annual dividends		33		—		—			(223,335	)		—		(223,335	)		(50,927	)		(274,262	)
Interim dividends		33		—		—			(530,082	)		—		(530,082	)		—			(530,082	)
Share option		25		—		5,173			—			—		5,173			402			5,575
Interest on hybrid bonds		24		—		—			(19,800	)		—		(19,800	)		—			(19,800	)
Acquisition and disposal of treasury shares		23		—		9,154			—			—		9,154			—			9,154
Retirement of treasury shares		23		—		200,000			(200,000	)		—		—			—			—
Changes in consolidation scope				—		—			—			—		—			(902	)		(902	)
Changes in ownership in subsidiaries, etc.				—		(340,619	)		—			—		(340,619	)		(797,700	)		(1,138,319	)

				—		(126,292	)		(973,217	)		—		(1,099,509	)		(849,127	)		(1,948,636	)

Balance as of December 31, 2024			W	30,493		(11,954,936	)		22,976,127			646,943		11,698,627			129,007			11,827,634

Balance as of January 1, 2025			W	30,493		(11,954,936	)		22,976,127			646,943		11,698,627			129,007			11,827,634
Total comprehensive income (loss):
Profit (loss) for the year				—		—			408,410			—		408,410			(33,326	)		375,084
Other comprehensive income:		11,20,21,27,30		—		—			150,613			1,378,739		1,529,352			482			1,529,834

				—		—			559,023			1,378,739		1,937,762			(32,844	)		1,904,918

Transactions with owners:
Annual dividends		33		—		—			(223,531	)		—		(223,531	)		(1,533	)		(225,064	)
Interim dividends		33		—		—			(353,551	)		—		(353,551	)		—			(353,551	)
Share option		25		—		(1,156	)		—			—		(1,156	)		—			(1,156	)
Interest on hybrid bonds		24		—		—			(19,800	)		—		(19,800	)		—			(19,800	)
Disposal of treasury shares		23		—		5,303			—			—		5,303			—			5,303
Changes in ownership in subsidiaries, etc.				—		(180,551	)		—			—		(180,551	)		(2,441	)		(182,992	)

				—		(176,404	)		(596,882	)		—		(773,286	)		(3,974	)		(777,260	)

Balance as of December 31, 2025			W	30,493		(12,131,340	)		22,938,268			2,025,682		12,863,103			92,189			12,955,292

The accompanying notes are an integral part of the consolidated financial statements.

SK TELECOM CO., LTD. and its Subsidiaries

Consolidated Statements of Cash Flows

For the years ended December 31, 2025 and 2024


(In millions of won)	*Note*		2025			2024
Cash flows from operating activities:
Cash generated from operating activities:
Profit for the year			W	375,084			1,387,095
Adjustments for income and expenses		38		4,436,619			4,313,213
Changes in assets and liabilities related to operating activities		38		(144,208	)		(108,813	)

				4,667,495			5,591,495
Interest received				52,646			74,787
Dividends received				75,537			43,536
Interest paid				(371,502	)		(356,081	)
Income tax paid				(500,329	)		(266,452	)

Net cash provided by operating activities				3,923,847			5,087,285

Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term financial instruments, net				127,141			—
Collection of short-term loans				100,801			131,823
Proceeds from disposals of short-term investment securities				75,664			—
Proceeds from disposals of long-term investment securities				702,184			51,741
Proceeds from disposals of investments in associates and joint ventures				31,540			77,974
Proceeds from disposals of assets held for sale				25,944			13,031
Proceeds from disposals of property and equipment				240,487			47,078
Proceeds from disposals of intangible assets				10,137			32,685
Collection of long-term loans				2,915			1,680
Decrease in deposits				11,317			5,758
Proceeds from settlement of derivatives				5,047			492
Proceeds from disposals of subsidiaries, net of cash transferred				51,086			—

				1,384,263			362,262
Cash outflows for investing activities:
Increase in short-term financial instruments, net				—			(26,581	)
Increase in short-term loans				(98,284	)		(110,810	)
Increase in long-term loans				(13,264	)		(14,118	)
Acquisitions of short-term investment securities				(110,000	)		—
Acquisitions of long-term investment securities				(39,538	)		(222,568	)
Cash outflows from settlement of derivatives				—			(112,903	)
Acquisitions of investments in associates and joint ventures				(11,672	)		(8,014	)
Acquisitions of property and equipment				(2,206,567	)		(2,487,360	)
Acquisitions of intangible assets				(116,685	)		(71,856	)
Increase in deposits				(18,518	)		(15,525	)
Cash decrease due to changes in consolidation scope				—			(4,354	)
Cash outflow from acquisitions of business				(506,844	)		—

				(3,121,372	)		(3,074,089	)

Net cash used in investing activities			W	(1,737,109	)		(2,711,827	)

(Continued)

SK TELECOM CO., LTD. and its Subsidiaries

Consolidated Statements of Cash Flows, Continued

For the years ended December 31, 2025 and 2024


(In millions of won)	*Note*		2025			2024
Cash flows from financing activities:
Cash inflows from financing activities:
Proceeds from issuance of debentures			W	1,875,300			1,236,475
Proceeds from long-term borrowings				300,000			200,000
Proceeds from short-term borrowings, net				30,000			100,000
Cash inflows from settlement of derivatives				52,859			—
Transactions with non-controlling shareholders				92			15,717

				2,258,251			1,552,192
Cash outflows for financing activities:
Repayments of long-term payables – other				(369,150	)		(369,150	)
Repayments of debentures				(2,121,501	)		(1,235,750	)
Repayments of long-term borrowings				(312,500	)		(402,500	)
Payments of dividends				(628,359	)		(804,317	)
Payments of interest on hybrid bonds				(19,800	)		(19,800	)
Repayments of lease liabilities				(372,834	)		(381,347	)
Acquisition of treasury shares				—			(15,788	)
Transactions with non-controlling shareholders				—			(133,393	)
Cash outflow from transactions with non-controlling shareholders				(1,145,870	)		—

				(4,970,014	)		(3,362,045	)

Net cash used in financing activities		38		(2,711,763	)		(1,809,853	)

Net increase (decrease) in cash and cash equivalents				(525,025	)		565,605
Cash and cash equivalents at beginning of the year				2,023,721			1,454,978
Effects of exchange rate changes on cash and cash equivalents				(4,088	)		26,124
Cash and cash equivalents included in assets held for sale				(4,584	)		(22,986	)

Cash and cash equivalents at end of the year			W	1,490,024			2,023,721

The accompanying notes are an integral part of the consolidated financial statements.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

1.	Reporting Entity

(1)

General

SK Telecom Co., Ltd. (the “Parent Company”) was incorporated on March 29, 1984, under the laws of the Republic of Korea (“Korea”) to provide cellular telephone communication services in Korea. The head office of the Parent Company is located at 65, Eulji-ro, Jung-gu, Seoul, Korea.

The Parent Company’s common shares are listed on the Stock Market of Korea Exchange, and its depositary receipts (DRs) are listed on the New York Stock Exchange. As of December 31, 2025, the Parent Company’s total issued shares are held by the following shareholders:


	Number of shares		Percentage of total shares issued (%)
SK Inc.		65,668,397		30.57
National Pension Service		14,332,207		6.67
Institutional investors and other shareholders		129,135,184		60.13
Kakao Investment Co., Ltd.		3,846,487		1.79
Treasury shares		1,807,778		0.84

		214,790,053		100.00

These consolidated financial statements comprise the Parent Company and its subsidiaries (collectively referred to as the “Group”). SK Inc. is the ultimate controlling entity of the Parent Company.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

1.	Reporting Entity, Continued

(2)

List of consolidated subsidiaries

The list of consolidated subsidiaries as of December 31, 2025 and 2024 is as follows:

Ownership (%)(*1)

Subsidiary

Location

Primary business

Dec. 31,
2025

Dec. 31,
2024

Subsidiaries

owned by the

Parent Company

SK Telink Co., Ltd.

Korea

International telecommunication and

Mobile Virtual Network Operator

Service

100.0

NATE Communications Corporation

(Formerly, SK Communications Co., Ltd.)(*2)

Korea

Internet website services

—

100.0

SK Broadband Co., Ltd.(*3)

Korea

Fixed-line telecommunication services

99.1

PS&Marketing Corporation

Korea

Communications device retail business

100.0

SERVICE ACE Co., Ltd.

Korea

Call center management service

100.0

SERVICE TOP Co., Ltd.

Korea

Call center management service

100.0

SK O&S Co., Ltd.

Korea

Base station maintenance service

100.0

SK Telecom China Holdings Co., Ltd.

China

Investment (Holdings company)

100.0

YTK Investment Ltd.(*2)

Cayman Islands

Investment

—

100.0

Atlas Investment

Cayman Islands

Investment

100.0

SK Telecom Americas, Inc.

USA

Information gathering and consulting

100.0

Happy Hanool Co., Ltd.

Korea

Service

100.0

SK stoa Co., Ltd.

Korea

Other telecommunication retail business

100.0

SAPEON Inc.

USA

Investment (Holdings company)

62.5

Astra AI Infra LLC

USA

Investment

100.0

Subsidiaries owned by

SK Broadband Co.,

Ltd.

Home & Service Co., Ltd.

Korea

Operation of information and

communication facility

100.0

Media S Co., Ltd.

Korea

Production and supply services of

broadcasting programs

100.0

Subsidiary owned by

PS&Marketing Corporation

SK m&service Co., Ltd.(*2)

Korea

Database and internet website service

—

100.0

Subsidiary owned by

SK Telecom Americas, Inc.

Global AI Platform Corporation

USA

Software development and supply business

100.0

Subsidiary owned by

Global AI Platform

Corporation

Global AI Platform Corporation

Korea

Software development and supply business

100.0

Subsidiary owned by

Atlas Investment

Forest AI Investment(*2)

Cayman Islands

Investment

100.0

—

Others(*4)

SK Telecom Innovation Fund,

L.P.

USA

Investment

100.0

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

1.	Reporting Entity, Continued

(2)

List of consolidated subsidiaries, Continued

The list of consolidated subsidiaries as of December 31, 2025 and 2024 is as follows, Continued:

(*1)	The ownership interest represents direct ownership interest in subsidiaries either by the Parent Company or subsidiaries of the Parent Company.

(*2)	Details of changes in the consolidation scope for the year ended December 31, 2025 are presented in note 1-(4).

(*3)

In connection with the merger involving SK Broadband Co., Ltd that occurred prior to the periods presented herein, the Parent Company entered into a shareholders’ agreement with the existing shareholders of the merged entities. Pursuant to the shareholders’ agreement, the Parent Company entered into a share purchase agreement to acquire an additional 24.76% of the shares of SK Broadband Co., Ltd. for W1,145,870 million as of November 13, 2024. Based on the terms and conditions of the agreement, the Parent Company concluded that it obtained the 24.76% ownership interest in SK Broadband Co., Ltd as of the agreement date, and has accounted for the shares as an ownership interest in a subsidiary accordingly.

(*4)	Other is owned by Atlas Investment and another subsidiary of the Parent Company.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

1.	Reporting Entity, Continued

(3)

Condensed financial information of subsidiaries

1) Condensed financial information of significant consolidated subsidiaries as of and for the year ended December 31, 2025 is as follows:


(In millions of won)
	As of December 31, 2025						2025
Subsidiary	Total assets		Total liabilities		Total equity		Revenue		Profit (loss)
SK Telink Co., Ltd.	W	205,972		62,038		143,934		345,910		8,946
SK Broadband Co., Ltd.		6,824,041		4,011,668		2,812,373		4,540,603		141,489
PS&Marketing Corporation		454,512		210,013		244,499		1,383,335		13,748
SERVICE ACE Co., Ltd.		97,050		68,222		28,828		184,525		2,356
SERVICE TOP Co., Ltd.		69,385		46,453		22,932		154,764		1,103
SK O&S Co., Ltd.		124,327		87,023		37,304		381,574		630
Home & Service Co., Ltd.		148,382		110,021		38,361		516,346		1,557
SK stoa Co., Ltd.		134,596		67,405		67,191		313,050		6,518
SK m&service Co., Ltd.(*)		—		—		—		46,240		(4,407	)

(*)

The condensed financial information of SK m&service Co., Ltd. represents the financial information up to the date of disposal.

2) Condensed financial information of significant consolidated subsidiaries as of and for the year ended December 31, 2024 is as follows:


(In millions of won)
	As of December 31, 2024						2024
Subsidiary	Total assets		Total liabilities		Total equity		Revenue		Profit
SK Telink Co., Ltd.	W	210,962		63,558		147,404		341,838		14,323
SK Broadband Co., Ltd.		6,806,280		3,760,426		3,045,854		4,415,270		263,967
PS&Marketing Corporation		448,887		218,885		230,002		1,382,361		63
SERVICE ACE Co., Ltd.		74,676		49,818		24,858		191,376		2,585
SERVICE TOP Co., Ltd.		60,073		42,479		17,594		166,699		969
SK O&S Co., Ltd.		130,618		94,807		35,811		351,721		689
Home & Service Co., Ltd.		139,664		107,379		32,285		495,546		3,947
SK stoa Co., Ltd.		116,785		56,192		60,593		302,332		4,354
SK m&service Co., Ltd.		164,772		100,230		64,542		246,999		220

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

1.	Reporting Entity, Continued

(4)

Changes in subsidiaries

1) Details of subsidiary that was newly included in consolidation scope for the year ended December 31, 2025 are as follows:


Subsidiary		Reason
Forest AI Investment		Established by Atlas Investment

2) Details of subsidiaries that were excluded from consolidation scope for the year ended December 31, 2025 are as follows:


Subsidiary		Reason
NATE Communications Corporation (Formerly, SK Communications Co., Ltd.)		Loss of control

SK m&service Co., Ltd.		Loss of control

YTK Investment Ltd.		Liquidation

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

1.	Reporting Entity, Continued

(5)

The financial information of material non-controlling interests of the Group as of and for the years ended December 31, 2025 are as follows:


(In millions of won)
	SAPEON Inc.
Ownership of non-controlling interests (%)		37.5

	As of December 31, 2025
Current assets	W	10,393
Non-current assets		187,491
Current liabilities		(16,454	)
Non-current liabilities		—
Net assets		181,430
Carrying amount of non-controlling interests		68,133

	2025
Revenue	W	—
Loss for the year		(91,558	)
Total comprehensive loss		(98,732	)
Loss attributable to non-controlling interests		(34,384	)

Net cash used in operating activities	W	(4,082	)
Net cash provided by investing activities		9,738
Net cash used in financing activities		(25,310	)
Effects of exchange rate changes on cash and cash equivalents		(890	)
Net decrease in cash and cash equivalents		(20,544	)

Dividends paid to non-controlling interests for the year ended December 31, 2025	W	—

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

2.	Basis of Preparation

These consolidated financial statements were prepared in accordance with International Financial Reporting Standards as adopted by the Republic of Korea (“KIFRS”), as prescribed in the Act on External Audits of Stock Companies of Korea. The accompanying consolidated financial statements have been translated into English from Korean financial statements. In the event of any differences in interpreting the financial statements or the independent auditors’ report thereon, Korean version, which is used for regulatory reporting purposes, shall prevail.

The accompanying consolidated financial statements comprise the Group and the Group’s investments in associates and joint ventures.

The consolidated financial statements were authorized for issuance by the Board of Directors on February 5, 2026, which will be submitted for approval at the shareholders’ meeting to be held on March 26, 2026.

(1)

Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis, except for the following material items in the consolidated statement of financial position:

•

derivative financial instruments measured at fair value;

•

financial instruments measured at fair value through profit or loss (“FVTPL”);

•

financial instruments measured at fair value through other comprehensive income (“FVOCI”);

•

liabilities measured at fair value for cash-settled share-based payment arrangement; and

•

liabilities (assets) for defined benefit plans recognized at the total present value of defined benefit obligations less the fair value of plan assets.

(2)

Functional and presentation currency

Financial statements of Group entities within the Group are prepared in functional currency of each group entity, which is the currency of the primary economic environment in which each entity operates. Consolidated financial statements of the Group are presented in Korean won, which is the Parent Company’s functional and presentation currency.

(3)

Use of estimates and judgments

The preparation of the consolidated financial statements in conformity with KIFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period prospectively.

1) Critical judgments

Information about critical judgments in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements is included in notes for the following areas: consolidation (whether the Group has de facto control over an investee), and determination of stand-alone selling prices.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

2.	Basis of Preparation, Continued

(3)

Use of estimates and judgments, Continued

2) Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the following notes: loss allowance (notes 6 and 35), estimated useful lives of costs to obtain a contract (notes 8), property and equipment and intangible assets (notes 3 (7), (8), 12 and 16), impairment of non-financial assets including goodwill and other non-financial assets (notes 3 (10) and 15), recognition of provision (notes 3 (15) and 19), measurement of defined benefit liabilities (assets) (notes 3 (14) and 20), transaction of derivative instruments (notes 3 (6) and 21) and recognition of deferred tax assets (liabilities) (notes 3 (23) and 31).

3) Fair value measurement

The Group’s accounting policies and disclosures require the measurement of fair values, for both a number of financial and non-financial assets and liabilities. The Group has an established policies and processes with respect to the measurement of fair values including Level 3 fair values, and the measurement of fair values is reviewed and is directly reported to the finance executives.

The Group regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the Group assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of KIFRS, including the level in the fair value hierarchy in which such valuations should be classified.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

•

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

•

Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

•

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Information about assumptions used for fair value measurements are included in note 21 and note 35.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies

The material accounting policies applied by the Group in the preparation of its consolidated financial statements in accordance with KIFRS are included below. Except for certain standards and amendments which are effective for annual periods beginning on or after January 1, 2025, the material accounting policies have been consistently applied by the Group for all periods presented. The Group has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective.

The new and amended standards and interpretations that are effective for annual periods beginning on or after January 1, 2025 are as follows. These amended standards had no material impact on the Group’s consolidated financial statements.

•

Lack of Exchangeability (Amendments to KIFRS 1021 The Effect of Changes in Foreign Exchange Rates and KIFRS 1101 First-time Adoption of International Financial Reporting Standards)

•

Disclosure of differences in estimation techniques (Amendments to KIFRS 1117 Insurance Contracts)

(1)

Operating segments

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. The Group’s operating segments have been determined to be each business unit, for which the Group generates separately identifiable financial information that is regularly reported to the chief operating decision maker for the purpose of resource allocation and assessment of segment performance. The Group has three reportable segments as described in note 4. Segment results that are reported to the chief operating decision maker include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(2)

Basis of consolidation

1) Business combination

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control.

In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.

The Group has an option to apply a ‘concentration test’ that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

Consideration transferred is generally measured at fair value, identical to the measurement of identifiable net assets acquired at fair value. The difference between the acquired company’s fair value and the consideration transferred is accounted for goodwill. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately. Acquisition-related costs are expensed in the periods in which the costs are incurred and the services are received, except if related to the costs to issue debt or equity securities recognized based on KIFRS 1032 and KIFRS 1109.

Consideration transferred does not include the amount settled in relation to the pre-existing relationship. Such amounts are generally recognized through profit or loss.

Contingent consideration is measured at fair value at the acquisition date. Contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. If contingent consideration is not classified as equity, the Group subsequently recognizes changes in fair value of contingent consideration through profit or loss.

2) Non-controlling interests

Non-controlling interests are measured at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition.

Changes in a Controlling Company’s ownership interest in a subsidiary that do not result in the Controlling Company losing control of the subsidiary are accounted for as equity transactions.

3) Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Consolidation of an investee begins from the date the Group obtains control of the investee and cease when the Group loses control of the investee.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(2)

Basis of consolidation, Continued

4) Loss of control

If the Group loses control of a subsidiary, the Group derecognizes the assets and liabilities of the former subsidiary from the consolidated statement of financial position and recognizes gain or loss associated with the loss of control attributable to the former controlling interest. Any investment retained in the former subsidiary is recognized at its fair value when control is lost.

5) Interest in investees accounted for using the equity method

Interest in investees accounted for using the equity method composed of interest in associates and joint ventures.

An associate is an entity in which the Group has significant influence, but not control, over the entity’s financial and operating policies. A joint venture is a joint arrangement whereby the Group that has joint control of the arrangement has rights to the net assets of the arrangement.

The investment in an associate and a joint venture is initially recognized at cost including transaction costs and subsequently accounted for using the equity method. The carrying amount of the investment is adjusted to reflect the Group’s share of the investee’s profit or loss and other comprehensive income arising after the date of acquisition. Distributions received from the investee are deducted from the carrying amount of the investment.

However, when significant influence exists but there is no substantive access to the returns associated with ownership interests in an associate or joint venture, the related financial instruments are accounted for in accordance with KIFRS 1109, Financial Instruments.

6) Intra-group transactions

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. The Group’s share of unrealized gain incurred from transactions with investees accounted for using the equity method are eliminated and unrealized loss are eliminated using the same basis if there are no evidence of asset impairments.

7) Business combinations under common control

SK Inc. is the ultimate controlling entity of the Group. The assets and liabilities acquired under business combination under common control are recognized at the carrying amounts in the ultimate controlling shareholder’s consolidated financial statements. The difference between consideration and carrying amount of net assets acquired is added to or subtracted from capital surplus and others.

(3)

Cash and cash equivalents

Cash and cash equivalents comprise cash balances, call deposits and investment securities with maturities of three months or less from the acquisition date that are easily convertible to cash and subject to an insignificant risk of changes in their fair value.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(4)

Inventories

Handsets are measured at acquisition cost using the specific identification method, after deducting purchase discounts, rebates and other similar items. Other inventories are measured using the weighted average method. Also, during the reporting period, a perpetual inventory system is used to track inventory quantities, which is adjusted based on the physical inventory counts performed at the period end. When the net realizable value of inventories is less than cost, the carrying amount is reduced to the net realizable value, and any difference is charged to current period as operating expenses.

(5)

Non-derivative financial assets

1) Recognition and initial measurement

Accounts receivable – trade and debt investments issued are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Group becomes a party to the contractual provisions of the instrument.

A financial asset (unless an accounts receivable – trade without a significant financing component) or financial liability is initially measured at fair value. For an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue added to or deducted from fair value. An accounts receivable – trade without a significant financing component is initially measured at the transaction price.

2) Classification and subsequent measurement

On initial recognition, a financial asset is classified as measured at:

•

FVTPL

•

FVOCI – equity investment

•

FVOCI – debt investment

•

Financial assets at amortized cost

A financial asset is classified based on the business model in which a financial asset is managed and its contractual cash flow characteristics.

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

•

it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

•

its contractual terms give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(5)

Non-derivative financial assets, Continued

2) Classification and subsequent measurement, Continued

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

•

it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

•

its contractual terms give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding on specified dates.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income (“OCI”). This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

The following accounting policies are applied to the subsequent measurement of financial assets.


		Financial assets at FVTPL		These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

		Financial assets at amortized cost		These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

		Debt investments at FVOCI		These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

		Equity investments at FVOCI		These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to profit or loss.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(5)

Non-derivative financial assets, Continued

3) Impairment

The Group estimates the expected credit losses (“ECL”) for the debt instruments measured at amortized cost and FVOCI based on the Group’s historical experience and informed credit assessment that includes forward-looking information. The impairment approach is decided based on the assessment of whether the credit risk of a financial asset has increased significantly since initial recognition. However, the Group applies a practical expedient and recognizes impairment losses equal to lifetime ECLs for accounts receivable – trade and lease receivables from the initial recognition.

ECL is a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e., the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive).

At each reporting date, the Group assesses whether financial assets measured at amortized cost and debt investments at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

Loss allowance on financial assets measured at amortized cost is deducted from the carrying amount of the respective assets, while loss allowance on debt instruments at FVOCI is recognized in OCI, instead of reducing the carrying amount of the transferred assets.

4) Derecognition

Financial assets

The Group derecognizes a financial asset when:

•

the contractual rights to the cash flows from the financial asset expire; or

•

it transfers the rights to receive the contractual cash flows in a transaction in which either: substantially all of the risks and rewards of ownership of the financial asset are transferred; or

•

the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group enters into transactions whereby it transfers assets recognized in its consolidated statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(5)

Non-derivative financial assets, Continued

4) Derecognition, Continued

Interest rate benchmark reform

When the basis for determining the contractual cash flows of a financial asset or financial liability measured at amortized cost changed as a result of interest rate benchmark reform, the Group updated the effective interest rate of the financial asset or financial liability to reflect the change that is required by the reform. A change in the basis for determining the contractual cash flows is required by interest rate benchmark reform if the following conditions are met:

•

the change is necessary as a direct consequence of the reform; and

•

the new basis for determining the contractual cash flows is economically equivalent to the previous basis – i.e., the basis immediately before the change.

When changes were made to a financial asset or financial liability in addition to changes to the basis for determining the contractual cash flows required by interest rate benchmark reform, the Group first updated the effective rate of the financial asset or financial liability to reflect the change that is required by interest rate benchmark reform. After that, the Group applied the policies on accounting for modifications to the additional changes.

5) Offsetting

Financial assets and financial liabilities are offset, and the net amount is presented in the statement of financial position when the Group currently has a legally enforceable right to offset the recognized amounts and intends either to settle on a net basis or to settle the liability and realize the asset simultaneously.

A financial asset and a financial liability are offset only when the right to set off the amount is not contingent on future event and legally enforceable even on the event of default, insolvency or bankruptcy.

(6)

Derivative financial instruments, including hedge accounting

Derivatives are initially recognized at fair value. Subsequent to initial recognition, derivatives are measured at fair value at the end of each reporting period, and changes therein are accounted for as described below.

1) Hedge accounting

The Group holds forward exchange contracts, interest rate swaps, currency swaps and other derivative contracts to manage interest rate risk and foreign exchange risk. The Group designates derivatives as hedging instruments to hedge the variability in cash flow associated with highly probable forecasted transactions or firm commitments (a cash flow hedge).

On initial designation of the hedge, the Group formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(6)

Derivative financial instruments, including hedge accounting, Continued

1) Hedge accounting, Continued

Hedges directly affected by interest rate benchmark reform

When uncertainty arises about the interest rate benchmark designated as a hedged risk and the timing or the amount of the interest rate benchmark-based cash flows of the hedged item or of the hedging instrument as a result of IBOR reform, for the purpose of evaluating whether there is an economic relationship between the hedged items and the hedging instruments, the Group assumes that the interest rate benchmark on which the hedged items and the hedging instruments are based is not altered as a result of interest rate benchmark reform.

For a cash flow hedge of a forecast transaction, the Group assumes that the benchmark interest rate will not be altered as a result of interest rate benchmark reform for the purpose of assessing whether the forecast transaction is highly probable and determining whether a previously designated forecast transaction in a discontinued cash flow hedge is still expected to occur.

The Group will cease applying the specific policy for assessing the economic relationship between the hedged item and the hedging instrument.

•

to a hedged item or hedging instrument when the uncertainty arising from interest rate benchmark reform is no longer present with respect to the timing and the amount of the interest rate benchmark-based cash flows of the respective item or instrument; or

•

when the hedging relationship is discontinued.

When the basis for determining the contractual cash flows of the hedged item or hedging instrument changes as a result of IBOR reform and therefore there is no longer uncertainty arising about the cash flows of the hedged item or the hedging instrument, the Group amends the hedge documentation of that hedging relationship to reflect the change(s) required by IBOR reform.

The Group amends the formal hedge documentation by the end of the reporting period during which a change required by IBOR reform is made to the hedged risk, hedged item or hedging instrument. These amendments in the formal hedge documentation do not constitute the discontinuation of the hedging relationship or the designation of a new hedging relationship.

If changes are made in addition to those changes required by interest rate benchmark reform to the financial asset or financial liability designated in a hedging relationship or to the designation of the hedging relationship, the Group determines whether those additional changes result in the discontinuation of hedging accounting. If the additional changes do not result in the discontinuation of hedging accounting, the Group amend the formal designation of the hedging relationship.

When the interest rate benchmark on which the hedged future cash flows had been based is changed as required by IBOR reform, for the purpose of determining whether the hedged future cash flows are expected to occur, the Group deems that the hedging reserve recognized in OCI for that hedging relationship is based on the alternative benchmark rate on which the hedged future cash flows will be based.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(6)

Derivative financial instruments, including hedge accounting, Continued

1) Hedge accounting, Continued

Cash flow hedge

When a derivative is designated to hedge the variability in cash flows attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income, net of tax, and presented in the hedging reserve in equity. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued prospectively. The cumulative gain or loss on the hedging instrument that has been recognized in other comprehensive income is reclassified to profit or loss in the periods during which the forecasted transaction occurs. If the forecasted transaction is no longer expected to occur, then the balance in other comprehensive income is recognized immediately in profit or loss.

2) Other derivative financial instruments

Other derivative financial instrument not designated as a hedging instrument are measured at fair value, and the changes in fair value of the derivative financial instrument is recognized immediately in profit or loss.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(7)

Property and equipment

Property and equipment are initially measured at cost. The cost of property and equipment includes expenditures arising directly from the construction or acquisition of the asset, any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management and the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located.

Property and equipment, subsequently, are carried at cost less accumulated depreciation and accumulated impairment losses.

Subsequent costs are recognized in the carrying amount of property and equipment at cost or, if appropriate, as a separate item if it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be reliably measured. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing are recognized in profit or loss as incurred.

Property and equipment, except for land, are depreciated on a straight-line basis over estimated useful lives that appropriately reflect the pattern in which the asset’s future economic benefits are expected to be consumed. A component that is significant compared to the total cost of property and equipment is depreciated over its separate useful life.

Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment and are recognized as other non-operating income or expenses.

The estimated useful lives of the Group’s property and equipment are as follows:


		Useful lives (years)
Buildings and structures		15 ~ 40
Machinery		3 ~ 15, 30
Other property and equipment		3 ~ 10

The Group reviews estimated residual values, expected useful lives, and depreciation methods annually at the end of each reporting date and adjusts, if appropriate. The change is accounted for as a change in an accounting estimate.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(8)

Intangible assets

Intangible assets are measured initially at cost and, subsequently, are carried at cost less accumulated amortization and accumulated impairment losses.

Intangible assets, except for goodwill, are amortized on a straight-line basis over the estimated useful lives of intangible assets from the date that they are available for use. The residual value of intangible assets is zero. However, club memberships and brand are expected to be available for use as there are no foreseeable limits to the periods. These intangible assets are determined as having indefinite useful lives and, therefore, not amortized.

The estimated useful lives of the Group’s intangible assets are as follows:


	Useful lives (years)
Frequency usage rights		5 ~ 10
Land usage rights		5
Industrial rights		5, 10
Development costs		5
Facility usage rights		10, 20
Customer relations		3 ~ 15
Other		3 ~ 20

Amortization periods and the amortization methods for intangible assets with finite useful lives are reviewed at the end of each reporting period. The useful lives of intangible assets that are not being amortized are reviewed at the end of each reporting period to determine whether events and circumstances continue to support indefinite useful life assessments for those assets. Changes, if appropriate, are accounted for as changes in accounting estimates.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(8)

Intangible assets, Continued

Expenditures on research activities are recognized in profit or loss as incurred. Development expenditures are capitalized only if development costs can be reliably measured, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Other development expenditures are recognized in profit or loss as incurred.

Subsequent expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which it relates. All other expenditures, including expenditures on internally generated goodwill and brands, are recognized in profit or loss as incurred.

(9)

Investment properties

Investment properties are properties held to earn rent income and/or for capital appreciation. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are reported at cost less accumulated depreciation and accumulated impairment losses.

Subsequent expenditures are recognized in carrying amount of an asset or as a separate asset if it is probable that future economic benefits associated with the assets will flow into the Group and the cost of an asset can be measured reliably. The carrying amount of those parts that are replaced is derecognized. The costs associated with routine maintenance and repairs are recognized in profit or loss as incurred.

Investment property, except for land, is depreciated on a straight-line basis over estimated useful lives of 30 ~ 40 years. In addition, right-of-use asset classified as investment property is depreciated using the straight-line basis from the commencement date to the end of the lease term.

The depreciation method, estimated useful lives and residual values are reviewed at the end of each reporting date and adjusted, if appropriate. The change is accounted for as a change in an accounting estimate.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(10)

Impairment of non-financial assets

The carrying amounts of the Group’s non-financial assets other than contract assets recognized for revenue arising from contracts with a customer, assets recognized for the costs to obtain or fulfill a contract with a customer, employee benefits, inventories, deferred tax assets, and non-current assets held for sale are reviewed at the end of the reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, irrespective of whether there is any indication of impairment, are tested for impairment annually by comparing their recoverable amounts to their carrying amounts.

The Group estimates the recoverable amount of an individual asset, and if it is impossible to measure the individual recoverable amount of an asset, the Group estimates the recoverable amount of cash-generating unit (“CGU”). A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is determined by estimating the future cash flows expected to be generated by the asset or CGU and discounting those cash flows using an appropriate discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU, to the extent those risks have not been incorporated into the cash flow estimates.

An impairment loss is recognized in profit or loss to the extent the carrying amount of the asset exceeds its recoverable amount.

Goodwill acquired in a business combination is allocated to each CGU that is expected to benefit from the synergy arising from the business acquired. Any impairment identified at the CGU level will first reduce the carrying amount of goodwill and then be used to reduce the carrying amount of the other assets in the CGU on a pro rata basis. Except for impairment losses recognized on goodwill, which are never reversed, the Group assesses at each reporting date whether there is any indication that a previously recognized impairment loss may no longer exist or may have decreased. A reversal of an impairment loss is recognized only when there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, had no impairment loss been recognized.

(11)

Leases

A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

1) The Group as a lessee

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(11)

Leases, Continued

1) The Group as a lessee, Continued

The Group recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line basis from the commencement date to the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The Group determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.

Lease payments included in the measurement of the lease liability comprise the following:

•

fixed payments, including in-substance fixed payments;

•

variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

•

amounts expected to be payable under a residual value guarantee; and

•

the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortized cost using the effective interest method. The Group remeasures the lease liability when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(11)

Leases, Continued

1) The Group as a lessee, Continued

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group presents right-of-use assets that do not meet the definition of investment property in ‘property and equipment’ in the statement of financial position.

The Group has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Group recognizes the lease payments on short-term leases and leases of low value assets as an expense on a straight-line basis over the lease term.

2) Group as a lessor

At inception or on modification of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease.

To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Group is an intermediate lessor, is accounts for its interests in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

If an arrangement contains lease and non-lease components, then the Group applies KIFRS 1115 to allocate the consideration in the contract.

The Group applies derecognition and impairment requirements in KIFRS 1109 to the net investment in the lease. The Group further regularly reviews estimated unguaranteed residual values used in calculating the gross investment in the lease.

The Group recognizes lease payments received under operating leases as income on a straight-line basis over the lease term as part of ‘other revenue’.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(12)

Assets held for sale

Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered primarily through sales rather than through continuing use, are classified as held for sale. In order to be classified as held for sale, the assets (or disposal groups) must be available for immediate sale in their present condition and their sale must be highly probable. The assets or disposal groups that are classified as assets held for sale are measured at the lower of their carrying amounts and fair value less cost to sell. The Group recognizes an impairment loss for any initial or subsequent write-down of assets (or disposal groups) to fair value less costs to sell and a gain for any subsequent increase in fair value less costs to sell up to the cumulative impairment loss previously recognized.

An asset that is classified as held for sale or part of a disposal group classified as held for sale is not depreciated (or amortized).

(13)

Non-derivative financial liabilities

The Group classifies non-derivative financial liabilities into financial liabilities at fair value through profit or loss or other financial liabilities in accordance with the substance of the contractual arrangement. The Group recognizes financial liabilities in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the financial liabilities.

1) Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading or designated as such upon initial recognition.

Financial liabilities designated at fair value through profit or loss are measured at fair value subsequent to initial recognition. The amount of change in fair value of financial liability that is attributable to changes in the credit risk of that liability shall be presented in other comprehensive income, and the remaining amount of change in the fair value of the liability shall be presented in profit or loss. Upon initial recognition, transaction costs that are directly attributable to the issue of the financial liability are recognized in profit or loss as incurred.

2) Other financial liabilities

Non-derivative financial liabilities other than financial liabilities at fair value through profit or loss are classified as other financial liabilities. At the date of initial recognition, other financial liabilities are measured at fair value minus transaction costs that are directly attributable to the issue of the financial liabilities. Subsequent to initial recognition, other financial liabilities are measured at amortized cost and the interest expenses are recognized using the effective interest method.

3) Derecognition of financial liability

The Group extinguishes a financial liability only when the contractual obligation is fulfilled, canceled or expires. The Group recognizes new financial liabilities at fair value based on new contracts and eliminates existing liabilities when the contractual terms of the financial liabilities change and the cash flows change substantially.

When a financial liability is derecognized, the difference between the carrying amount and the consideration paid (including any transferred non-cash assets or liabilities assumed) is recognized in profit or loss.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(14)

Employee benefits

1) Short-term employee benefits

Short-term employee benefits are employee benefits that are due to be settled within 12 months after the end of the period in which the employees render related services. When an employee has rendered a service to the Group during an accounting period, the Group recognizes the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service.

2) Other long-term employee benefits

Other long-term employee benefits include employee benefits that are settled beyond 12 months after the end of the period in which the employees render related services. The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Remeasurements are recognized in profit or loss in the period in which they arise.

3) Retirement benefits: defined contribution plans

When an employee has rendered a service to the Group during a period, the contribution payable to a defined contribution plan in exchange for that service is recognized through profit or loss except when the contribution is included in the cost of an asset. The Group recognizes the contribution payable as a liability (accrued expense), after deducting any contribution already paid. If the contribution already paid exceeds the contribution due for service before the end of the reporting period, the Group recognizes that excess as an asset (prepaid expense) to the extent that the prepayment will lead to a reduction in future payments or a cash refund.

4) Retirement benefits: defined benefit plans

At the end of reporting period, defined benefit liabilities (assets) relating to defined benefit plans are recognized at present value of defined benefit obligations net of fair value of plan assets.

The calculation is performed annually by an independent actuary using the projected unit credit method. When the fair value of plan assets exceeds the present value of the defined benefit obligation, the Group recognizes an asset, to the extent of the present value of any economic benefits available in the form of refunds from the plan or reduction in the future contributions to the plan.

Remeasurements of the net defined benefit liability (asset), which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in other comprehensive income. The Group determines net interests on net defined benefit liability (asset) by multiplying discount rate determined at the beginning of the annual reporting period and considers changes in net defined benefit liability (asset) from contributions and benefit payments. Net interest costs and other costs relating to the defined benefit plan are recognized through profit or loss.

When the plan amendment or curtailment occurs, gains or losses on amendment or curtailment in benefits for the past service provided are recognized through profit or loss. The Group recognizes a gain or loss on a settlement when the settlement of defined benefit plan occurs.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(15)

Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of a provision. If the effect of the time value of money is material, provisions are determined at the present value of the expected future cash flows.

If some or all of the expenditures required to settle a provision are expected to be reimbursed by another party, the reimbursement is recognized when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement is treated as a separate asset.

Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimates. If it is no longer probable that an outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.

A provision is used only for expenditures for which the provision was originally recognized.

(16)

Emissions Rights

The Group accounts for greenhouse gases emission right and the relevant liability as below pursuant to the Act on Allocation and Trading of Greenhouse Gas Emission in Korea.

1) Greenhouse Gases Emission Right

Greenhouse Gases Emission Right consists of emission allowances, which are allocated from the government free of charge or purchased from the market. The cost includes any directly attributable costs incurred during the normal course of business.

The Group derecognizes an emission right asset when the emission allowance is unusable, disposed or submitted to government in which the future economic benefits are no longer expected to be probable.

2) Emissions liability

Emission liability is a present obligation of submitting emission rights to the government with regard to emission of greenhouse gas. The emission liability is measured based on the expected quantity of emission for the performing period in excess of emission allowance in possession and the unit price for such emission rights in the market at the end of the reporting period. The emissions liabilities are derecognized when they are surrendered to the government.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(17)

Transactions in foreign currencies

1) Foreign currency transactions

Transactions in foreign currencies are translated to the functional currency of the Group at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency using the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined.

Exchange differences arising from the translation of monetary items are recognized in profit or loss, except for those relating to investments in equity instruments designated at fair value through other comprehensive income, those arising from the translation of net investments in foreign operations, and those arising from financial liabilities designated as cash flow hedging item. If a gain or loss on a non-monetary item is recognized in other comprehensive income, any foreign exchange differences are also recognized in other comprehensive income. When a gain or loss on a non-monetary item is recognized in profit or loss, any foreign exchange differences are also recognized in profit or loss.

2) Foreign operations

If the presentation currency of the Group is different from a foreign operation’s functional currency, the financial statements of the foreign operation are translated into the presentation currency using the following methods:

The assets and liabilities of foreign operations, whose functional currency is not the currency of a hyperinflationary economy, are translated to presentation currency at exchange rates at the reporting date. The income and expenses of foreign operations are translated to functional currency at exchange rates at the dates of the transactions. Foreign currency differences are recognized in other comprehensive income.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition of that foreign operation is treated as assets and liabilities of the foreign operation. Thus, they are expressed in the functional currency of the foreign operation and translated at the closing rate at the reporting date.

When a foreign operation is disposed, the relevant amount in the translation is transferred to profit or loss as part of the profit or loss on disposal. On the partial disposal of a subsidiary that includes a foreign operation, the relevant proportion of such cumulative amount is reattributed to non-controlling interest. In any other partial disposal of a foreign operation, the relevant proportion is reclassified to profit or loss.

(18)

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.

When the Parent Company repurchases its own shares, the amount of the consideration paid is recognized as a deduction from equity and classified as treasury shares. The gains or losses from the purchase, disposal, reissue, or retirement of treasury shares are directly recognized in equity being as transaction with owners.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(19)

Hybrid bond

The Group recognizes a financial instrument issued by the Group as an equity instrument if it does not include contractual obligation to deliver financial assets including cash to the counter party.

(20)

Share-based payment

For equity-settled share-based payment transaction, if the fair value of the goods or services received cannot be reliably estimated, the Group measures the value indirectly by reference to the fair value of the equity instruments granted. The related expense with a corresponding increase in capital surplus and others is recognized over the vesting period of the awards.

The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in cash, is recognized as an expense with a corresponding increase in liabilities, over the period in which the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date based on the fair value of the share appreciation rights. Any changes in the fair value of the liability are recognized in profit or loss.

(21)

Revenue

1) Identification of performance obligations in contracts with customers

The Group identifies the distinct services or goods as performance obligations in contracts with customers such as (1) providing wireless and fixed-line telecommunications services, (2) sale of handsets and (3) providing other goods and services. In the case of providing both wireless telecommunications service and selling a handset together to one customer, the Group allocates considerations from the customer between the separate performance obligations for handset sale and wireless telecommunications service. The handset sale revenue is recognized when handset is delivered, and the wireless telecommunications service revenue is recognized over the period of the contract term as stated in the subscription contract.

2) Allocation of the transaction price to each performance obligation

The Group allocates the transaction price to each performance obligation based on the relative stand-alone selling prices. Stand-alone selling prices are estimated using the “adjusted market assessment approach”, which considers market conditions and prices for similar goods or services.

3) Incremental costs of obtaining a contract

The Group pays commissions to its retail stores and authorized dealers in connection with acquiring service contracts. The commissions paid to these parties constituted a significant portion of the Group’s operating expenses. As these commissions would not have been incurred if the related contracts had not been obtained, the Group capitalizes the incremental costs of obtaining customer contracts and amortizes them over the expected contract periods.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(21)

Revenue, Continued

4) Customer loyalty programs

The Group grants customer loyalty points to customers based on their service usage. The loyalty points provide customers with a material right and are therefore treated as a separate performance obligation. The amount of the transaction price allocated to the loyalty program is measured based on the relative stand-alone selling price of the customer loyalty points. The allocated amount is recognized as a contract liability and is subsequently recognized as revenue when loyalty points are redeemed or when the likelihood of redemption becomes remote.

5) Consideration payable to a customer

Based on the subscription contract, a customer who uses the Group’s wireless telecommunications services may receive a discount for purchasing goods or services from a designated third party. The Group pays a portion of the price discounts that the customer receives to the third party which is viewed as consideration payable to a customer. The Group accounts for the amounts payable to the third party as a reduction of the wireless telecommunications service revenue.

(22)

Finance income and finance costs

Finance income comprises interest income on funds invested (including financial assets measured at fair value), dividend income, gains on disposal of financial assets at FVTPL, changes in fair value of financial instruments at FVTPL, and gains on hedging instruments that are recognized in profit or loss. Interest income is recognized as it accrues in profit or loss, using the effective interest rate method. Dividend income is recognized in profit or loss when the right to receive the dividend is established.

Finance costs comprise interest expense on borrowings and debentures, changes in fair value of financial instruments at FVTPL, and losses on hedging instruments that are recognized in profit or loss. Interest expense on borrowings and debentures is recognized as it accrues in profit or loss using the effective interest rate method.

(23)

Income taxes

Income tax expense comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCI.

The Group pays income tax in accordance with the tax-consolidation system when the Parent Company and its subsidiaries are economically unified.

1) Current tax

Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively enacted at the end of the reporting period, and includes interests and fines related to income taxes paid or payable. The taxable profit is different from the accounting profit for the period since the taxable profit is calculated excluding the temporary differences, which will be taxable or deductible in determining taxable profit (tax loss) of future periods, and non-taxable or non-deductible items from the accounting profit.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(23)

Income taxes, Continued

2) Deferred tax

Deferred tax is recognized by using the asset-liability method in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The Group recognizes a deferred tax liability for all taxable temporary differences, except for the difference associated with investments in subsidiaries and associates that the Group is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The Group recognizes a deferred tax asset for all deductible temporary differences to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilized.

A deferred tax asset is recognized for the carryforward of unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilized. Future taxable profit is dependent on the reversal of taxable temporary differences. If there are insufficient taxable temporary differences to recognize the deferred tax asset, the business plan of the Group and the reversal of existing temporary differences are considered in determining the future taxable profit.

The Group reviews the carrying amount of a deferred tax asset at the end of each reporting period and reduces the carrying amount to the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all of that deferred tax asset to be utilized.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized, or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset only if the Group has a legally enforceable right to offset the amount recognized and intends to settle the current tax liabilities and assets on a net basis. Income tax expense in relation to dividend payments is recognized when liabilities relating to the dividend payments are recognized.

3) Uncertainty over income tax treatments

The Group assesses the uncertainty over income tax treatments pursuant to KIFRS 1012. If the Group concludes it is not probable that the taxation authority will accept an uncertain tax treatment, the Group reflects the effect of uncertainty for each uncertain tax treatment by using either of the following methods, depending on which method the entity expects to better predict the resolution of the uncertainty:

•

The most likely amount: the single most likely amount in a range of possible outcomes.

•

The expected value: the sum of the probability-weighted amounts in a range of possible outcomes.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

3.	Material Accounting Policies, Continued

(24)

Earnings per share

The Group calculates basic and diluted earnings per share with respect to profit or loss from continuing operations and of the year, and presents them in the consolidated statement of income. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Parent Company by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise share options granted to employees, if any.

(25)

Discontinued operation

A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:

•

represents a separate major line of business or geographic area of operations;

•

is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or

•

is a subsidiary acquired only for a purpose of resale.

When an operation is classified as a discontinued operation, the comparative statements of income and comprehensive income are re-presented as if the operation had been discontinued from the start of the comparative year.

(26)

Standards issued but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective for annual period beginning after January 1, 2025 are disclosed below. The Group is currently assessing the impact of these issuances and amendments on its consolidated financial statements.

•

Classification and measurement of financial instruments (Amendments to KIFRS 1109 ‘Financial Instruments’ and KIFRS 1107 ‘Financial Instruments: Disclosures’)

•

Contracts referencing nature-dependent electricity (Amendments to KIFRS 1109 ‘Financial Instruments’ and KIFRS 1107 ‘Financial Instruments: Disclosures’)

•

KIFRS 1118 ‘Presentation and Disclosures in Financial Statements’ and amendments to KIFRS 1118

•

Annual Improvements to KIFRS - Volume 11

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

4.	Operating Segments

The Group’s operating segments have been identified to be each business unit, by which the Group provides different services and sells merchandise. The Group’s reportable segments include: cellular services, which mainly include cellular voice service, wireless data service and wireless internet services; fixed-line telecommunication services, which mainly include telephone services, internet services, and leased line services; and all other businesses, which include providing shopping channel and digital platform for selling products and other immaterial operations, each of which does not meet the quantitative threshold to be considered as a reportable segment and are presented collectively as others.

(1)

Segment information for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025
	Cellular services		Fixed-line telecommunication services		Others			Sub-total		Elimination			Total
Total revenue	W	14,155,266		5,421,288		390,147			19,966,701		(2,867,488	)		17,099,213
Inter-segment revenue		1,602,723		1,230,175		34,590			2,867,488		(2,867,488	)		—
External revenue		12,552,543		4,191,113		355,557			17,099,213		—			17,099,213
Depreciation and amortization		2,551,737		993,930		18,979			3,564,646		(97,512	)		3,467,134
Operating profit (loss)		817,941		308,372		(30,551	)		1,095,762		(22,547	)		1,073,215
Finance income (costs), net														(262,638	)
Loss relating to investments in subsidiaries, associates and joint ventures, net														(63,602	)
Other non-operating income (expense), net														(24,714	)
Profit before income tax														722,261


(In millions of won)
	2024
	Cellular services		Fixed-line telecommunication services		Others			Sub-total		Elimination			Total
Total revenue	W	14,866,217		5,271,705		614,036			20,751,958		(2,811,349	)		17,940,609
Inter-segment revenue		1,548,004		1,196,293		67,052			2,811,349		(2,811,349	)		—
External revenue		13,318,213		4,075,412		546,984			17,940,609		—			17,940,609
Depreciation and amortization		2,688,764		966,904		25,824			3,681,492		(121,118	)		3,560,374
Operating profit (loss)		1,529,971		366,517		(64,929	)		1,831,559		(8,150	)		1,823,409
Finance income (cost), net														(250,884	)
Gain relating to investments in subsidiaries, associates and joint ventures, net														321,787
Other non-operating income (expense), net														(132,547	)
Profit before income tax														1,761,765

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

4.	Operating Segments, Continued

(1)

Segment information for the years ended December 31, 2025 and 2024 are as follows, Continued:

The Group principally operates its businesses in Korea, and substantially all of its operations are conducted in Korea, with activities outside Korea being immaterial. Therefore, no entity-wide geographical information is presented.

No single customer contributed 10% or more to the Group’s total revenue for the years ended December 31, 2025 and 2024.

(2)

Disaggregation of operating revenues considering the economic factors that affect the nature, amounts, timing and uncertainty of the Group’s revenue and future cash flows is as follows:


(In millions of won)
		2025		2024
Goods and Services transferred at a point in time:
Cellular revenue	Goods and others(*1)	W	1,034,695		1,078,673
Fixed-line telecommunication revenue	Goods and others		86,249		68,836
Other revenue	Other(*2)		325,417		468,518

			1,446,361		1,616,027

Goods and Services transferred over time:
Cellular revenue	Wireless service(*3)		9,715,601		10,401,565
	Cellular interconnection		369,870		400,516
	Other(*4)		1,432,377		1,437,459
Fixed-line telecommunication revenue	Fixed-line service		142,500		156,453
	Cellular interconnection		12,384		14,014
	Internet Protocol Television(*5)		1,806,840		1,837,199
	International calls		200,860		213,745
	Internet service and miscellaneous(*6)		1,942,280		1,785,165
Other revenue	Miscellaneous		30,140		78,466

			15,652,852		16,324,582

		W	17,099,213		17,940,609

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

4.	Operating Segments, Continued

(2)

Disaggregation of operating revenues considering the economic factors that affect the nature, amounts, timing and uncertainty of the Group’s revenue and future cash flows is as follows, Continued:

(*1)

Cellular revenue includes revenue from sales of handsets and other electronic accessories.

(*2)

Other revenue includes revenue from considerations received for providing data-broadcasting channel and broadcasting services for product sale programs, as well as revenue from the sale of goods through data-broadcasting channel.

(*3)

Wireless service revenue includes revenue from wireless voice and data transmission services, which is collected from the wireless subscribers. During the year ended December 31, 2025, the wireless service revenue was reduced by W454,143 million reflecting the impact of Customer Appreciation Package and early cancellation fee waivers provided to customers as part of the measures taken in response to a cybersecurity incident.

(*4)

Other revenue includes revenue from billing and collection services, solution services, and other miscellaneous services.

(*5)

Internet Protocol Television (“IPTV”) service revenue includes revenue from IPTV services principally derived from usage charges to IPTV subscribers.

(*6)

Internet service and miscellaneous revenue includes revenue from high speed broadband internet service principally derived from usage charges to subscribers as well as other miscellaneous services.

5.	Deposits with Restrictions on Use

Deposits which are restricted in use as of December 31, 2025 and 2024 are summarized as follows:


(In millions of won)
	December 31, 2025		December 31, 2024
Short-term financial instruments(*)	W	90,163		79,500
Long-term financial instruments(*)		370		372

	W	90,533		79,872

(*)

Financial instruments includes the charitable trust fund established by the Group, which cannot be withdrawn before maturity, and the deposits received under the share purchase agreements for the sale of shares in SK stoa Co., Ltd. and Media S Co., Ltd.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

6.	Trade and Other Receivables

(1)

Details of trade and other receivables as of December 31, 2025 and 2024 are as follows:


(In millions of won)	December 31, 2025
	Gross amount		Loss allowance			Carrying amount
Current assets:
Accounts receivable – trade	W	2,185,983		(267,481	)		1,918,502
Short-term loans		70,271		(607	)		69,664
Accounts receivable – other(*)		366,785		(20,459	)		346,326
Accrued income		1,998		—			1,998
Guarantee deposits (Other current assets)		102,396		—			102,396

		2,727,433		(288,547	)		2,438,886
Non-current assets:
Long-term loans		51,431		(19,247	)		32,184
Long-term accounts receivable – other		164,762		—			164,762
Guarantee deposits		167,823		—			167,823
Long-term accounts receivable – trade (Other non-current assets)		8,402		(1	)		8,401

		392,418		(19,248	)		373,170

	W	3,119,851		(307,795	)		2,812,056

(*)

Gross and carrying amounts of accounts receivable – other as of December 31, 2025 include W189,963 million of financial instruments classified as fair value through profit or loss (“FVTPL”).


(In millions of won)	December 31, 2024
	Gross amount		Loss allowance			Carrying amount
Current assets:
Accounts receivable – trade	W	2,247,334		(258,028	)		1,989,306
Short-term loans		65,767		(562	)		65,205
Accounts receivable – other(*)		394,820		(25,628	)		369,192
Accrued income		4,242		—			4,242
Guarantee deposits (Other current assets)		119,575		—			119,575

		2,831,738		(284,218	)		2,547,520
Non-current assets:
Long-term loans		75,842		(41,396	)		34,446
Long-term accounts receivable – other		173,252		—			173,252
Guarantee deposits		155,875		—			155,875
Long-term accounts receivable – trade (Other non-current assets)		11,078		(2	)		11,076

		416,047		(41,398	)		374,649

	W	3,247,785		(325,616	)		2,922,169

(*)

Gross and carrying amounts of accounts receivable – other as of December 31, 2024 include W223,761 million of financial instruments classified as fair value through profit or loss (“FVTPL”).

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

6.	Trade and Other Receivables, Continued

(2)

Changes in the loss allowance on accounts receivable – trade measured at amortized costs for the years ended December 31, 2025 and 2024 are as follows:


	Beginning balance		Impairment		*Write-offs()**			Collection of receivables previously written-off		Ending balance
2025	W	258,030		44,183		(42,484	)		7,753		267,482
2024	W	242,737		49,865		(42,662	)		8,090		258,030

(*)

The Group writes off the trade and other receivables that are determined to be uncollectable due to reasons such as termination of operations or bankruptcy.

(3)

The Group applies the practical expedient that allows the Group to estimate the loss allowance for accounts receivable – trade at an amount equal to the lifetime expected credit losses. The expected credit losses include the forward-looking information. To make the assessment, the Group uses its historical credit loss experience over the past three years and classifies the accounts receivable – trade by their credit risk characteristics and days overdue. Details of loss allowance on accounts receivable – trade and information on days overdue as of December 31, 2025 are as follows:


(In millions of won)
		Less than 6 months			6 months ~ 1 year			1 ~ 3 Years			More than 3 years
Telecommunications service revenue	Expected credit loss rate		1.58	%		73.47	%		90.76	%		99.99	%
	Gross amount	W	1,413,007			56,639			150,448			25,965
	Loss allowance		22,393			41,615			136,546			25,964

Other revenue	Expected credit loss rate		2.78	%		53.91	%		62.41	%		93.48	%
	Gross amount	W	514,691			5,170			8,827			19,638
	Loss allowance		14,310			2,787			5,509			18,358

Due to the nature of its business, which involves both fixed-line and wireless telecommunications, the Group’s accounts receivables from telecommunications revenue primarily consist of receivables from individual customers. As there are no significant differences in credit terms among customers, there is no material concentration of credit risk.

Receivables related to other revenue mainly consist of receivables from corporate customers. The Group transacts only with corporate customers whose credit risk is assessed as low. In addition, the Group is not exposed to significant credit concentration risk as the Group monitors the credit ratings of these customers on a regular basis and evaluates their creditworthiness accordingly. Although contract assets are subject to the expected credit loss assessment, no significant credit risk has been identified.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

7.	Prepaid expenses

The Group pays commissions to its retail stores and authorized dealers, primarily for wireless and fixed-line telecommunication services based on their performance of attracting new customers and renewing contracts with existing customers. The Group recognizes costs among the commissions that would not have incurred if a contract had not been entered into with a customer as prepaid expenses. These prepaid expenses are amortized on a straight-line basis over the expected customer retention periods.

(1)

Details of prepaid expenses as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025		December 31, 2024
Current assets:
Incremental costs of obtaining contracts	W	2,061,667		1,881,608
Others		74,096		64,002

	W	2,135,763		1,945,610

Non-current assets:
Incremental costs of obtaining contracts	W	1,208,600		1,038,170
Others		72,151		70,236

	W	1,280,751		1,108,406

(2)

Incremental costs of obtaining contracts

Amortization in connection with incremental costs of obtaining contracts recognized as an asset for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025		2024
Amortization recognized	W	2,596,632		2,493,346

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

8.	Contract Assets and Liabilities

In case of providing both wireless telecommunication services and sales of handsets, the Group allocated the consideration based on relative stand-alone selling prices and recognized unbilled receivables from handset sales as contract assets. The Group recognized receipts in advance for prepaid telecommunications services and solution services, and unearned revenue for customer loyalty programs as contract liabilities.

(1)

Details of contract assets and liabilities as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025		December 31, 2024
Contract assets	W	188,609		136,737
Contract liabilities:
Wireless service contracts		21,807		20,275
Customer loyalty programs		5,920		5,694
Fixed-line service contracts		288,421		151,427
Others		85,795		52,310

	W	401,943		229,706

(2)

Amounts of revenue recognized for the years ended December 31, 2025 and 2024 related to the contract liabilities carried forward from the prior periods are W145,572 million and W113,792 million, respectively. Details of revenue expected to be recognized from contract liabilities as of December 31, 2025 are as follows:


(In millions of won)
	Less than 1 year		1 ~ 2 years		More than 2 years		Total
Wireless service contracts	W	21,807		—		—		21,807
Customer loyalty programs		4,221		1,138		561		5,920
Fixed-line service contracts		95,859		22,489		170,073		288,421
Others		85,795		—		—		85,795

	W	207,682		23,627		170,634		401,943

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

9.	Inventories

(1)

Details of inventories as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025							December 31, 2024
	Acquisition cost		Valuation allowance			Carrying amount		Acquisition cost		Valuation allowance			Carrying amount
Merchandise	W	160,996		(6,942	)		154,054		191,323		(8,121	)		183,202
Supplies		13,586		—			13,586		26,581		—			26,581

	W	174,582		(6,942	)		167,640		217,904		(8,121	)		209,783

(2)

Inventories recognized as operating expenses for the years ended December 31, 2025 and 2024 are W1,267,120 million and W1,323,907 million, respectively, which are included in the cost of goods sold. In addition, valuation losses on inventories which are included in the cost of goods sold and other operating expenses amount to W66 million and W486 million for the years ended December 31, 2025 and 2024, respectively. Loss from write-offs included in other operating expenses for the years ended December 31, 2025 and 2024 are W51 million and W36 million, respectively.

10.

Investment Securities

(1)

Details of short-term investment securities as of December 31, 2025 are as follows:


(In millions of won)
	Category		December 31, 2025
Beneficiary certificates		FVTPL	W	35,217

(2)

Details of long-term investment securities as of December 31, 2025 and 2024 are as follows:

(In millions of won)

Category

December 31, 2025

December 31, 2024

Equity instruments

FVOCI

(*)

3,025,988

1,739,133

Debt instruments

FVTPL

162,584

138,789

3,188,572

1,877,922

(*)

The Group designated investments in equity instruments that are not held for trading as financial assets at FVOCI.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

11.

Investments in Associates and Joint Ventures

(1)

Investments in associates and joint ventures accounted for using the equity method as of December 31, 2025 and 2024 are as follows:


(In millions of won)			December 31, 2025				December 31, 2024
	Country		Ownership (%)		Carrying amount		Ownership (%)		Carrying amount
	Country		Ownership (%)		Carrying amount		Ownership (%)		Carrying amount
Investments in associates:
SK China Company Ltd.		China		27.3	W	1,045,903		27.3	W	975,443
Korea IT Fund(*1)		Korea		63.3		370,482		63.3		363,138
UniSK		China		49.0		26,442		49.0		26,031
SK Technology Innovation Company		Cayman Islands		49.0		33,523		49.0		34,516
SK MENA Investment B.V.(*2)		Netherlands		32.1		6,612		32.1		17,273
SK Latin America Investment S.A.(*3)		Spain		—		—		32.1		1,357
SK South East Asia Investment Pte. Ltd.		Singapore		20.0		368,776		20.0		391,572
Citadel Pacific Telecom Holdings, LLC(*4)		USA		15.0		55,167		15.0		51,780
SM Culture & Contents Co., Ltd.		Korea		22.8		29,305		22.8		39,567
Nam Incheon Broadcasting Co., Ltd.(*5)		Korea		—		—		27.3		15,635
Home Choice Corp.(*4)		Korea		17.8		2,773		17.8		3,238
Konan Technology Inc.(*4)		Korea		18.9		5,070		20.6		3,575
CMES Inc.(*4)		Korea		6.5		6,999		6.6		4,772
SK telecom Japan Inc.		Japan		24.9		3,629		24.9		3,703
Rebellions Inc. (Formerly, SAPEON Korea Inc.)(*4)		Korea		18.2		187,466		26.1		298,327
SK m&service Co., Ltd.(*6)		Korea		30.0		24,551		—		—
Start-up Win-Win Fund and others(*4,7,8)		—		—		65,661		—		102,702

					W	2,232,359			W	2,332,629

Investments in joint ventures:
UTC Kakao-SK Telecom ESG Fund(*9)		Korea		48.2		6,111		48.2		9,198

					W	2,238,470			W	2,341,827

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

11.

Investments in Associates and Joint Ventures, Continued

(1)

Investments in associates and joint ventures accounted for using the equity method as of December 31, 2025 and 2024 are as follows, Continued:

(*1)	Investment in Korea IT Fund was classified as investment in associates as the Group does not have control over the investee under the contractual agreement with other shareholders.

(*2)	The Group received W10,955 million from the paid-in capital reduction of SK MENA Investment B.V. for the year ended December 31, 2025, with no change in ownership interest.

(*3)	The Group is expected to receive W1,394 million from the liquidation of SK Latin America Investment S.A. and recognized a W282 million loss relating to investments in associates for the year ended December 31, 2025.

(*4)	These investments were classified as investments in associates as the Group can exercise significant influence through its right to appoint the members of the board of directors even though the Group has less than 20% of equity interests.

(*5)	The Group received W4,000 million from the paid-in capital reduction of Nam Incheon Broadcasting Co., Ltd. and recognized a W11,791 million loss relating to investments in associates for the year ended December 31, 2025.

(*6)

The Group disposed of a portion of shares in SK m&service Co., Ltd., which was an indirect subsidiary of the Parent Company, to SAMKOO Inc. and received W54,987 million for the year ended December 31, 2025. As a result, the remaining shares have been reclassified as an investment in associate as of December 31, 2025.

(*7)	The Group exchanged its entire shares in id Quantique SA for shares in IonQ, Inc., and recognized a W1,189 million loss relating to investments in associates for the year ended December 31, 2025.

(*8)	The Group newly contributed W10,596 million in cash to Syntelligence AI Ltd. for the year ended December 31, 2025.

(*9)	This investment was classified as investment in joint ventures as the Group has joint control pursuant to the agreement with the other shareholders.

(2)

Market value of investments in listed associates as of December 31, 2025 and 2024 are as follows:


(In millions of won, except for share data)
	December 31, 2025						December 31, 2024
	Market price per share (in won)		Number of shares		Market value		Market price per share (in won)		Number of shares		Market value
SM Culture & Contents Co., Ltd.	W	1,330		22,033,898		29,305		1,400		22,033,898		30,847
Konan Technology Inc.		19,710		2,359,160		46,499		19,470		2,359,160		45,933
CMES Inc.		33,100		763,968		25,287		24,000		763,968		18,335

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

11.

Investments in Associates and Joint Ventures, Continued

(3)

The condensed financial information of material associates as of and for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	As of December 31, 2025
	Korea IT Fund		SK China Company Ltd.		SK South East Asia Investment Pte. Ltd.		Rebellions Inc. (Formerly, SAPEON Korea Inc.)(*)
Current assets	W	183,750		1,787,188		1,012,134		399,796
Non-current assets		401,222		2,120,977		965,785		296,759
Current liabilities		—		39,402		42,226		919,604
Non-current liabilities		—		407,230		31,791		9,777

	For the year ended December 31, 2025
Revenue	W	40,134		68,245		132,567		32,022
Profit (loss) for the year		21,343		42,909		1,806		(203,010	)
Other comprehensive income		4,232		239,747		12,323		219
Total comprehensive income (loss)		25,575		282,656		14,129		(202,791	)

(*)

The financial information includes the goodwill held by Rebellions Inc. (formerly, SAPEON Korea Inc.), which was recognized as part of the identifiable net assets of the associate at the time the investment in the associate was made.


(In millions of won)
	As of December 31, 2024
	Korea IT Fund		SK China Company Ltd.			SK South East Asia Investment Pte. Ltd.
Current assets	W	164,128		1,755,237			1,724,220
Non-current assets		409,248		1,898,657			1,328,952
Current liabilities		—		48,662			342,671
Non-current liabilities		—		328,485			18,430

	For the year ended December 31, 2024
Revenue	W	57,110		71,870			119,019
Profit (loss) for the year		37,187		55,448			(54,649	)
Other comprehensive income (loss)		13,006		(156,828	)		(3,972	)
Total comprehensive income (loss)		50,193		(101,380	)		(58,621	)

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

11.

Investments in Associates and Joint Ventures, Continued

(4)

Reconciliations of financial information of material associates to carrying amounts of investments in associates in the consolidated financial statements as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025
	Net assets			Ownership interests (%)		Net assets attributable to the ownership interests			Cost-book value differentials		Carrying amount
Korea IT Fund	W	584,972			63.3		370,482			—		370,482
SK China Company Ltd.		3,461,533			27.3		944,111			101,792		1,045,903
SK South East Asia Investment Pte. Ltd.(*1)		1,843,880			20.0		368,776			—		368,776
Rebellions Inc. (Formerly, SAPEON Korea Inc.)(*2,3)		(462,479	)		18.2		(163,255	)		350,721		187,466

(*1)

Net assets of the entity represent net assets excluding those attributable to the non-controlling interests.

(*2)

Net assets of the entity exclude the goodwill held by Rebellions Inc. (formerly, SAPEON Korea Inc.) at the time the investment in the associate was recognized.

(*3)

The ownership interest is based on the number of shares owned by the Parent Company divided by the total shares issued by the investee, and the effective ownership interest applied for the equity method is 35.3% as of December 31, 2025.


(In millions of won)
	December 31, 2024
	Net assets		Ownership interests (%)		Net assets attributable to the ownership interests		Cost-book value differentials		Carrying amount
Korea IT Fund	W	573,376		63.3		363,138		—		363,138
SK China Company Ltd.		3,276,747		27.3		893,609		81,834		975,443
SK South East Asia Investment Pte. Ltd.(*)		1,957,860		20.0		391,572		—		391,572

(*)

Net assets of these entities represent net assets excluding those attributable to their non-controlling interest.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

11.

Investments in Associates and Joint Ventures, Continued

(5)

Changes in investments in associates and joint ventures accounted for using the equity method for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)	2025
	Beginning balance		Acquisition and disposal			Share of profit (loss)			Other comprehensive income (loss)			Other changes			Ending balance


Investments in associates:
SK China Company Ltd.	W	975,443		—			9,707			60,753			—			1,045,903
Korea IT Fund(*1)		363,138		—			13,519			2,681			(8,856	)		370,482
UniSK(*1)		26,031		—			215			450			(254	)		26,442
SK Technology Innovation Company		34,516		(1,363	)		1,242			(872	)		—			33,523
SK MENA Investment B.V.		17,273		(11,041	)		401			(21	)		—			6,612
SK Latin America Investment S.A.		1,357		(1,676	)		191			128			—			—
SK South East Asia Investment Pte. Ltd.		391,572		—			(1,710	)		(21,086	)		—			368,776
Citadel Pacific Telecom Holdings, LLC(*1)		51,780		—			185			4,640			(1,438	)		55,167
SM Culture & Contents Co., Ltd.		39,567		—			(4,220	)		(153	)		(5,889	)		29,305
Nam Incheon Broadcasting Co., Ltd.(*1)		15,635		(15,791	)		293			—			(137	)		—
Home Choice Corp.		3,238		—			(465	)		—			—			2,773
Konan Technology Inc.		3,575		3,535			(2,040	)		—			—			5,070
CMES Inc.		4,772		3,374			(1,216	)		69			—			6,999
SK telecom Japan Inc.		3,703		—			247			(321	)		—			3,629
Rebellions Inc. (Formerly, SAPEON Korea Inc.)		298,327		(33,620	)		(77,610	)		369			—			187,466
SK m&service Co., Ltd(*2)		—		—			1,037			(52	)		23,566			24,551
Start-up Win-Win Fund and others (*1,3,4)		102,702		10,253			3,458			(622	)		(50,130	)		65,661

		2,332,629		(46,329	)		(56,766	)		45,963			(43,138	)		2,232,359
Investments in joint ventures:
UTC Kakao-SK Telecom ESG Fund		9,198		(2,000	)		(1,087	)		—			—			6,111

	W	2,341,827		(48,329	)		(57,853	)		45,963			(43,138	)		2,238,470

(*1)

Dividends received from the associates are deducted from the carrying amount for the year ended December 31, 2025.

(*2)

The Group disposed of a portion of shares in SK m&service Co., Ltd., which was an indirect subsidiary of the Parent Company, for the year ended December 31, 2025, resulting in the reclassification of the remaining shares as an investment in associate as of December 31, 2025.

(*3)

The Group exchanged its entire shares in id Quantique SA for shares in IonQ, Inc. and classified the investment in IonQ, Inc. as a financial asset at FVOCI for the year ended December 31, 2025.

(*4)

The acquisition for the year ended December 31, 2025 includes W10,596 million of investments in Syntelligence AI Ltd.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

11.

Investments in Associates and Joint Ventures, Continued

(5)

Changes in investments in associates and joint ventures accounted for using the equity method for the years ended December 31, 2025 and 2024 are as follows, Continued:


(In millions of won)	2024
	Beginning balance		Acquisition and disposal			Share of profit (loss)			Other comprehensive income (loss)			Other changes			Ending balance


Investments in associates:
SK China Company Ltd.	W	896,990		—			8,913			69,540			—			975,443
Korea IT Fund(*1)		336,404		—			23,552			8,237			(5,055	)		363,138
UniSK		22,285		—			1,430			2,815			(499	)		26,031
SK Technology Innovation Company		70,409		—			4,269			8,078			(48,240	)		34,516
SK MENA Investment B.V.		14,872		—			329			2,072			—			17,273
SK Latin America Investment S.A.		14,607		—			(65	)		1,268			(14,453	)		1,357
SK South East Asia Investment Pte. Ltd.		355,282		—			(9,403	)		45,693			—			391,572
Citadel Pacific Telecom Holdings, LLC(*1)		45,901		—			619			6,699			(1,439	)		51,780
SM Culture & Contents Co., Ltd.		41,578		(3	)		(1,880	)		(128	)		—			39,567
Nam Incheon Broadcasting Co., Ltd.(*1)		14,344		—			1,427			—			(136	)		15,635
Home Choice Corp.		3,215		—			23			—			—			3,238
Konan Technology Inc.		6,349		(16	)		(2,861	)		103			—			3,575
CMES Inc.		900		(4,396	)		(767	)		51			8,984			4,772
SK telecom Japan Inc.		1,239		1,560			(983	)		1,887			—			3,703
Rebellions Inc. (Formerly, SAPEON Korea Inc.)(*2)		—		—			—			—			298,327			298,327
Start-up Win-Win Fund and others (*1,3,4)		81,142		(2,953	)		(1,686	)		2,793			23,406			102,702

		1,905,517		(5,808	)		22,917			149,108			260,895			2,332,629
Investments in joint ventures:
UTC Kakao-SK Telecom ESG Fund		9,495		—			(297	)		—			—			9,198

	W	1,915,012		(5,808	)		22,620			149,108			260,895			2,341,827

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

11.

Investments in Associates and Joint Ventures, Continued

(5)

Changes in investments in associates and joint ventures accounted for using the equity method for the years ended December 31, 2025 and 2024 are as follows, Continued:

(*1)

Dividends received from the associates are deducted from the carrying amount for the year ended December 31, 2024.

(*2)

The Group lost control of SAPEON Korea Inc., which was a subsidiary of the Parent Company, for the year ended December 31, 2024, due to a decreased ownership resulting from the merger between SAPEON Korea Inc. and Rebellions Inc. As a result, the entity was reclassified as an investment in associate for the year ended December 31, 2024.

(*3)

The acquisition for the year ended December 31, 2024 includes W5,878 million of investment in SK AMERICAS Inc. (formerly, SK USA Inc.), W180 million of investment in SK VENTURE CAPITAL, LLC., W273 million of investment in WALDEN SKT VENTURE FUND, W24 million of investment in F&U Credit information Co., Ltd. and W1,294 million of investment in AhnLab Blockchain Company. The disposal for the year ended December 31, 2024 includes a portion of shares of SK AMERICAS Inc. (formerly, SK USA Inc.) for W167 million, a portion of Start-up Win-Win Fund for W200 million, and the entire shares of 12CM JAPAN and Daliworks Inc. for W7,296 million and W2,013 million, respectively.

(*4)

The Group reclassified the entire shares of F&U Credit information Co., Ltd. as assets held for sale. (See note 40).

(6)

The Group discontinued the application of equity method to the following investees due to their carrying amounts being reduced to zero. The details of cumulative unrecognized equity method losses as of December 31, 2025 are as follows:


(In millions of won)	Unrecognizedloss				Unrecognized change in equity
	2025		Cumulative loss		2025			Cumulative loss
Invites Genomics Co., Ltd.	W	7,662		29,840		(726	)		560
U-land Co., Ltd.		—		1,011		—			—

	W	7,662		30,851		(726	)		560

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

12.

Property and Equipment

(1)

Property and equipment as of December 31, 2025 and 2024 are as follows:


(In millions of won)	December 31, 2025
	Acquisition cost		Accumulated depreciation			Accumulated impairment loss			Carrying amount
Land	W	1,319,260		—			—			1,319,260
Buildings		2,041,946		(1,148,764	)		(450	)		892,732
Structures		965,034		(777,607	)		(1,601	)		185,826
Machinery		38,731,865		(31,385,515	)		(11,807	)		7,334,543
Other		1,466,321		(1,181,476	)		(561	)		284,284
Right-of-use assets		2,559,944		(1,187,419	)		—			1,372,525
Construction in progress		513,267		—			(264	)		513,003

	W	47,597,637		(35,680,781	)		(14,683	)		11,902,173


(In millions of won)	December 31, 2024
	Acquisition cost		Accumulated depreciation			Accumulated impairment loss			Carrying amount
Land	W	1,260,712		—			—			1,260,712
Buildings		1,822,695		(1,056,427	)		(450	)		765,818
Structures		955,360		(742,772	)		(1,601	)		210,987
Machinery		38,191,687		(30,457,696	)		(11,425	)		7,722,566
Other		1,631,503		(1,262,496	)		—			369,007
Right-of-use assets		2,645,207		(1,036,988	)		—			1,608,219
Construction in progress		681,010		—			(925	)		680,085

	W	47,188,174		(34,556,379	)		(14,401	)		12,617,394

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

12.

Property and Equipment, Continued

(2)

Changes in property and equipment for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025
	Beginning balance		Acquisition		Disposal			*Transfer(1)**			Deprecia- tion			Impairment			Other Changes(*2)		Ending balance
Land	W	1,260,712		149		(32,812	)		49,637			—			—			41,574		1,319,260
Buildings		765,818		1,953		(45,157	)		79,349			(59,453	)		—			150,222		892,732
Structures		210,987		1,350		(5	)		8,387			(34,893	)		—			—		185,826
Machinery		7,722,566		530,431		(9,753	)		1,241,385			(2,198,208	)		(381	)		48,503		7,334,543
Other		369,007		180,380		(5,379	)		(189,482	)		(69,685	)		(561	)		4		284,284
Right-of-use assets		1,608,219		278,554		(90,198	)		(3,000	)		(421,050	)		—			—		1,372,525
Construction in progress		680,085		1,298,248		(4,308	)		(1,460,758	)		—			(264	)		—		513,003

	W	12,617,394		2,291,065		(187,612	)		(274,482	)		(2,783,289	)		(1,206	)		240,303		11,902,173

(*1)

The Group decided to dispose of its shareholdings in SK stoa Co., Ltd. and Media S Co., Ltd., both consolidated subsidiaries. Accordingly, property and equipment of these entities amounting to W13,512 million were reclassified as assets held for sale. (See note 40)

(*2)

Other changes consist of increases in assets arising from business combinations under common control. (See note 41)


(In millions of won)
	2024
	Beginning balance		Acquisition		Disposal			*Transfer()**			Deprecia- tion			Impairment			Changes in consolidation scope			Ending balance
Land	W	1,248,200		101		(2,213	)		14,624			—			—			—			1,260,712
Buildings		773,392		3,785		(1,279	)		46,479			(56,559	)		—			—			765,818
Structures		234,879		1,574		(78	)		13,408			(37,997	)		—			(799	)		210,987
Machinery		7,890,654		517,884		(23,253	)		1,616,265			(2,267,720	)		(11,025	)		(239	)		7,722,566
Other		485,157		390,130		(12,131	)		(408,675	)		(84,179	)		(10	)		(1,285	)		369,007
Right-of-use assets		1,611,951		523,494		(90,734	)		(26,271	)		(407,338	)		(33	)		(2,850	)		1,608,219
Construction in progress		761,963		1,441,907		(5,030	)		(1,517,830	)		—			(925	)		—			680,085

	W	13,006,196		2,878,875		(134,718	)		(262,000	)		(2,853,793	)		(11,993	)		(5,173	)		12,617,394

(*)

The Group decided to dispose of the shares of NATE Communications Corporation (formerly, SK Communications Co., Ltd.) and SK m&service Co., Ltd., the consolidated subsidiaries, and reclassified the property and equipment amounting to W17,412 million of NATE Communications Corporation (formerly, SK Communications Co., Ltd.) and SK m&service Co., Ltd. as assets held for sale. (See note 40)

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

13.

Investment Property

(1)

Investment property as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025							December 31, 2024
	Acquisition cost		Accumulated depreciation			Carrying amount		Acquisition cost		Accumulated depreciation			Carrying amount
	Acquisition cost		Accumulated depreciation			Carrying amount		Acquisition cost		Accumulated depreciation			Carrying amount
Land	W	18,743		—			18,743		9,787		—			9,787
Buildings		36,741		(21,276	)		15,465		23,010		(14,981	)		8,029
Right-of-use assets		13,808		(8,175	)		5,633		16,518		(7,723	)		8,795

	W	69,292		(29,451	)		39,841		49,315		(22,704	)		26,611

(2)

Changes in investment property for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025
	Beginning balance		Transfer			Depreciation			Ending balance
Land	W	9,787		8,956			—			18,743
Buildings		8,029		8,708			(1,272	)		15,465
Right-of-use assets		8,795		(735	)		(2,427	)		5,633

	W	26,611		16,929			(3,699	)		39,841


(In millions of won)
	2024
	Beginning balance		*Transfer()**			Depreciation			Ending balance
Land	W	14,199		(4,412	)		—			9,787
Buildings		10,242		(1,143	)		(1,070	)		8,029
Right-of-use assets		10,371		73			(1,649	)		8,795

	W	34,812		(5,482	)		(2,719	)		26,611

(*)

The Group decided to dispose of the shares of NATE Communications Corporation (formerly, SK Communications Co., Ltd.) and SK m&service Co., Ltd., the consolidated subsidiaries, and reclassified the investment property amounting to W1,719 million of SK m&service Co., Ltd. as assets held for sale.

(3)

The Group recognized lease income of W7,411 million and W5,526 million from investment property for the years ended December 31, 2025 and 2024, respectively.

(4)

The fair value of investment property is W86,702 million and W58,552 million as of December 31, 2025 and 2024, respectively.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

14.

Leases

(1)

Group as a lessee

Details of the right-of-use assets as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025		December 31, 2024
Right-of-use assets:
Land, buildings and structures	W	1,157,029		1,379,422
Others		215,496		228,797

	W	1,372,525		1,608,219

Details of amounts recognized in the consolidated statements of income for the years ended December 31, 2025 and 2024 as a lessee are as follows:


(In millions of won)
	2025		2024
Depreciation of right-of-use assets:
Land, buildings and structures	W	356,889		343,161
Others(*)		64,161		64,177

	W	421,050		407,338

Interest expense on lease liabilities	W	47,596		50,631

(*)

Others include the amount reclassified as research and development expenses related to the lease contract for research and development facilities.

Expenses related to short-term leases and leases of low-value assets that the Group recognized are immaterial.

The total cash outflows for lease payments for the years ended December 31, 2025 and 2024 amounted to W457,331 million and W465,119 million, respectively.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

14.

Leases, Continued

(2)

Group as a lessor

1) Finance lease

The Group recognized interest income of W2,408 million and W2,566 million on lease receivables for the years ended December 31, 2025 and 2024, respectively.

The following table sets out a maturity analysis for lease receivables, presenting the undiscounted lease payments to be received subsequent to December 31, 2025.


(In millions of won)
	Amount
Less than 1 year	W	15,345
1 ~ 2 years		4,592
2 ~ 3 years		2,765
3 ~ 4 years		1,632
4 ~ 5 years		591

Undiscounted lease payments	W	24,925

Unrealized finance income	W	930
Net investment in the lease		23,995

2) Operating lease

The Group recognized lease income of W235,261 million and W235,519 million for the years ended December 31, 2025 and 2024, respectively, of which variable lease payments received are W1,588 million and W2,309 million, respectively.

The following table sets out a maturity analysis of lease payments, presenting the undiscounted fixed payments to be received subsequent to December 31, 2025.


(In millions of won)
	Amount
Less than 1 year	W	136,517
1 ~ 2 years		79,931
2 ~ 3 years		39,731
3 ~ 4 years		109
4 ~ 5 years		109
More than 5 years		255

	W	256,652

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

15.

Goodwill

(1)

Goodwill as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025		December 31, 2024
Goodwill related to merger of Shinsegi Telecom, Inc.	W	1,306,236		1,306,236
Goodwill related to acquisition of SK Broadband Co., Ltd.		764,082		764,082
Other goodwill		2,175		2,175

	W	2,072,493		2,072,493

(2)

Details of the impairment testing of Goodwill as of December 31, 2025 is as follows:

Goodwill is allocated to the following CGUs for the purpose of impairment testing.

•

goodwill related to Shinsegi Telecom, Inc.: Cellular services;

•

goodwill related to SK Broadband Co., Ltd.: Fixed-line telecommunication services; and

•

other goodwill: Others.

The recoverable amount of CGU is determined based on its value in use. Value in use is calculated using the estimated cash flows based on financial forecasts for the next five years and growth rate for subsequent years (“perpetual growth rate”). The key assumptions used in the estimation of value in use include operating revenue, perpetual growth rate and discount rate. Certain assumptions related to Fixed-line telecommunication services involve management’s most subjective and complex judgments and are subject to significant estimation uncertainty.

Management estimated the operating revenue using external sources and the Group’s historical experience, and determined the estimated cash flows considering market growth forecasts.

A perpetual growth rate was applied for the cash flows expected to be incurred after five years and is not expected to exceed the long-term industry growth rate relevant to each CGU.

The discount rate was calculated using the weighted average cost of equity capital and debt and the beta of equity capital was calculated as the average of industry comparables. Cost of debt was calculated using the yield rate of non-guaranteed corporate bonds considering the CGU’s credit rating and debt ratio was determined using the average of the debt ratios of industry comparables. The recoverable amount of the CGU was calculated by applying a post-tax discount rate to the estimated future post-tax cash flows, and the resulting value in use is not significantly different from the value in use calculated using pre-tax cash flows and a pre-tax discount rate.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

15.

Goodwill, Continued

(2)

Details of the impairment testing of Goodwill as of December 31, 2025 is as follows, Continued:

The discount rates and perpetual growth rates applied in the value in use calculations for the years ended December 31, 2025 and 2024 are as follows:


	2025
	Discount rate (Pre-tax)			Discount rate (Post-tax)			Perpetual Growth Rate
Goodwill related to merger of Shinsegi Telecom, Inc.		6.5	%		4.8	%		0.0	%
Goodwill related to acquisition of SK Broadband Co., Ltd.		6.3	%		5.0	%		1.0	%


	2024
	Discount rate (Pre-tax)			Discount rate (Post-tax)			Perpetual Growth Rate
Goodwill related to merger of Shinsegi Telecom, Inc.		7.0	%		5.2	%		0.0	%
Goodwill related to acquisition of SK Broadband Co., Ltd.		7.6	%		6.0	%		1.0	%

(3)

Details of the changes in goodwill for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025		2024
Beginning balance	W	2,072,493		2,075,009
Reclassified as assets held for sale(*)		—		(2,516	)

Ending balance	W	2,072,493		2,072,493

(*)

The Group decided to dispose of the shares of NATE Communications Corporation (formerly, SK Communications Co., Ltd.) and SK m&service Co., Ltd., the consolidated subsidiaries, and reclassified the goodwill amounting to W2,516 million of SK m&service Co., Ltd. as assets held for sale.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

16.

Intangible Assets

(1)

Intangible assets as of December 31, 2025 and 2024 are as follows:


(In millions of won)	December 31, 2025
	Acquisition cost		Accumulated amortization			Accumulated impairment loss			Carrying amount
Frequency usage rights(*1)	W	3,564,907		(2,900,421	)		—			664,486
Land usage rights		41,193		(40,944	)		—			249
Industrial rights		57,239		(37,669	)		—			19,570
Development costs		1,914		(1,906	)		—			8
Facility usage rights		162,391		(150,671	)		—			11,720
Customer relations		501,103		(282,009	)		—			219,094
Club memberships(*2)		91,787		—			(14,326	)		77,461
Other(*3)		4,520,167		(3,795,530	)		(6,605	)		718,032

	W	8,940,701		(7,209,150	)		(20,931	)		1,710,620


(In millions of won)	December 31, 2024
	Acquisition cost		Accumulated amortization			Accumulated impairment loss			Carrying amount
Frequency usage rights(*1)	W	3,564,907		(2,429,361	)		—			1,135,546
Land usage rights		54,341		(54,032	)		—			309
Industrial rights		98,265		(33,092	)		(45,000	)		20,173
Development costs		2,960		(2,933	)		—			27
Facility usage rights		161,561		(148,247	)		—			13,314
Customer relations		505,062		(258,943	)		—			246,119
Club memberships(*2)		93,266		—			(14,648	)		78,618
Other(*3)		5,029,153		(4,284,644	)		(43,744	)		700,765

	W	9,509,515		(7,211,252	)		(103,392	)		2,194,871

(*1)

The Parent Company was reassigned 800 MHz, 1.8 GHz and 2.1 GHz band of frequency licenses from the Ministry of Science and Information and Communication Technology (“ICT”) in exchange for W227,200 million, W547,800 million and W411,700 million, respectively, for the year ended December 31, 2021. The band of frequency was assigned to the Parent Company at the date of initial lump sum payment for the year ended December 31, 2021 and the annual payments in installment for the remaining balances are made in the next five years starting from the date of initial lump sum payment.

(*2)

Club memberships are classified as intangible assets with indefinite useful lives and are not amortized.

(*3)

Other intangible assets primarily consist of computer software and others.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

16.

Intangible Assets, Continued

(2)

Changes in intangible assets for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025
	Beginning balance		Acquisition		Disposal			Transfer *(2)**			Amortization			*Impairment(1)**			Other Changes(*3)		Ending balance
Frequency usage rights	W	1,135,546		—		—			—			(471,060	)		—			—		664,486
Land usage rights		309		96		—			—			(156	)		—			—		249
Industrial rights		20,173		3,976		—			—			(4,579	)		—			—		19,570
Development costs		27		—		—			—			(19	)		—			—		8
Facility usage rights		13,314		848		(2	)		381			(2,821	)		—			—		11,720
Customer relations		246,119		—		—			—			(27,025	)		—			—		219,094
Club memberships		78,618		6,580		(3,900	)		(2,542	)		—			(1,295	)		—		77,461
Other		700,765		105,212		(1,861	)		212,122			(297,569	)		(639	)		2		718,032

	W	2,194,871		116,712		(5,763	)		209,961			(803,229	)		(1,934	)		2		1,710,620

(*1)

The Group recognized the difference between recoverable amount and the carrying amount of intangible assets amounting to W1,934 million as impairment loss for the year ended December 31, 2025.

(*2)

The Group decided to dispose of the shares of SK stoa Co., Ltd. and Media S Co., Ltd., the consolidated subsidiaries, and reclassified the intangible assets amounting to W17,795 million of SK stoa Co., Ltd. and Media S Co., Ltd., as assets held for sale. (See note 40)

(*3)

Other changes consist of increases in assets arising from business combinations under common control. (See note 41)


(In millions of won)
	2024
	Beginning balance		Acquisition		Disposal			Transfer *(2)**			Amortization			*Impairment(1)**			Changes in consolidation scope			Ending balance
Frequency usage rights	W	1,606,606		—		—			—			(471,060	)		—			—			1,135,546
Land usage rights		587		69		(5	)		—			(342	)		—			—			309
Industrial rights		46,154		6,578		(241	)		(1	)		(4,962	)		(27,340	)		(15	)		20,173
Development costs		49		—		—			—			(22	)		—			—			27
Facility usage rights		14,313		1,477		(3	)		618			(3,091	)		—			—			13,314
Customer relations		273,150		—		—			—			(27,031	)		—			—			246,119
Club memberships		97,186		3,700		(20,065	)		(1,727	)		—			(476	)		—			78,618
Other		823,092		61,598		(1,596	)		209,702			(336,870	)		(54,927	)		(234	)		700,765

	W	2,861,137		73,422		(21,910	)		208,592			(843,378	)		(82,743	)		(249	)		2,194,871

(*1)

The Group recognized the difference between recoverable amount and the carrying amount of intangible assets amounting to W82,743 million as impairment loss for the year ended December 31, 2024.

(*2)

The Group decided to dispose of the shares of NATE Communications Corporation (formerly, SK Communications Co., Ltd.) and SK m&service Co., Ltd., the consolidated subsidiaries, and reclassified the intangible assets amounting to W5,655 million of NATE Communications Corporation (formerly, SK Communications Co., Ltd.) and SK m&service Co., Ltd. as assets held for sale. (See note 40)

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

16.

Intangible Assets, Continued

(3)

Research and development expenditures recognized as expense for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025		2024
Research and development costs expensed as incurred	W	339,507		378,079

(4)

Details of frequency usage rights as of December 31, 2025 are as follows:


(In millions of won)
	Amount		Amortization methods	Commencement of amortization	Completion of amortization
800MHz license	W	21,958		Jul. 2021	Jun. 2026
1.8GHz license		96,968		Dec. 2021	Dec. 2026
2.6GHz license		121,410	Straight-line basis	Sep. 2016	Dec. 2026
2.1GHz license		72,876		Dec. 2021	Dec. 2026
3.5GHz license		351,274		Apr. 2019	Nov. 2028

	W664,486

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

17.

Borrowings and Debentures

(1)

Short-term borrowings as of December 31, 2025 and 2024 are as follows:


(In millions of won)
Lender	Annual interest rate (%)	Maturity	December 31, 2025		December 31, 2024
SK Securities Co., Ltd.	3.62	Oct. 2, 2025	W	—		50,000
Shinhan Securities Co., Ltd.	3.62	Oct. 2, 2025		—		50,000
Bank of China Ltd.	2.83	Oct. 29, 2026		130,000		—

			W	130,000		100,000

(2)

Long-term borrowings as of December 31, 2025 and 2024 are as follows:


(In millions of won)
Lender	Annual interest rate (%)	Maturity	December 31, 2025			December 31, 2024
Korea Development Bank(*1)	1.87	Feb. 10, 2026	W	3,125			15,625
DBS Bank Ltd.	2.63	Mar. 10, 2025		—			200,000
Credit Agricole CIB	4.89	Nov. 28, 2025		—			50,000
Mizuho Bank, Ltd.(*2)	3M CD + 1.05	Jul. 25, 2025		—			50,000
DBS bank Ltd.(*2)	3M CD + 0.075	Oct. 8, 2026		200,000			200,000
Industrial and Commercial Bank of China Ltd.	2.70	Sep. 13, 2027		100,000			—
Mizuho Bank, Ltd.	2.75	Sep. 22, 2027		200,000			—

				503,125			515,625
Less: present value discount				—			(25	)

				503,125			515,600
Less: current portions				(203,125	)		(312,475	)

			W	300,000			203,125

(*1)

The long-term borrowings are to be repaid by installments on an annual basis from 2022 to 2026.

(*2)

Applied interest rate is the 3M CD rate of 2.85% and 3.41% as of December 31, 2025 and 2024, respectively.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

17.

Borrowings and Debentures, Continued

(3)

Debentures as of December 31, 2025 and 2024 are as follows:


(In millions of won and thousands of U.S. dollars)
	Purpose	Maturity	Annual interest rate (%)	December 31, 2025		December 31, 2024
Unsecured corporate bonds	Operating fund	2032	3.45	W	90,000		90,000
Unsecured corporate bonds		2033	3.22		130,000		130,000
Unsecured corporate bonds	Operating and refinancing fund	2025	2.49		—		150,000
Unsecured corporate bonds	Operating fund	2030	2.61		50,000		50,000
Unsecured corporate bonds		2025	2.66		—		70,000
Unsecured corporate bonds		2030	2.82		90,000		90,000
Unsecured corporate bonds	Refinancing fund	2025	2.55		—		100,000
Unsecured corporate bonds		2035	2.75		70,000		70,000
Unsecured corporate bonds	Operating fund	2026	2.08		90,000		90,000
Unsecured corporate bonds		2036	2.24		80,000		80,000
Unsecured corporate bonds		2026	1.97		120,000		120,000
Unsecured corporate bonds		2031	2.17		50,000		50,000
Unsecured corporate bonds	Refinancing fund	2027	2.55		100,000		100,000
Unsecured corporate bonds	Operating and refinancing fund	2032	2.65		90,000		90,000
Unsecured corporate bonds	Refinancing fund	2027	2.84		100,000		100,000
Unsecured corporate bonds	Operating fund	2028	3.00		200,000		200,000
Unsecured corporate bonds		2038	3.02		90,000		90,000
Unsecured corporate bonds		2038	2.44		50,000		50,000
Unsecured corporate bonds		2029	2.19		50,000		50,000
Unsecured corporate bonds		2039	2.23		50,000		50,000
Unsecured corporate bonds	Operating and refinancing fund	2029	1.50		120,000		120,000
Unsecured corporate bonds	Refinancing fund	2039	1.52		50,000		50,000
Unsecured corporate bonds		2049	1.56		50,000		50,000
Unsecured corporate bonds	Operating fund	2029	1.79		40,000		40,000
Unsecured corporate bonds		2039	1.81		60,000		60,000
Unsecured corporate bonds		2025	1.75		—		130,000
Unsecured corporate bonds		2030	1.83		50,000		50,000
Unsecured corporate bonds		2040	1.87		70,000		70,000

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

17.

Borrowings and Debentures, Continued

(3)

Debentures as of December 31, 2025 and 2024 are as follows, Continued:


(In millions of won and thousands of U.S. dollars)
	Purpose	Maturity	Annual interest rate (%)	December 31, 2025		December 31, 2024
Unsecured corporate bonds	Refinancing fund	2025	1.40		—		140,000
Unsecured corporate bonds		2030	1.59		40,000		40,000
Unsecured corporate bonds		2040	1.76		110,000		110,000
Unsecured corporate bonds		2026	1.39		80,000		80,000
Unsecured corporate bonds		2031	1.80		50,000		50,000
Unsecured corporate bonds		2041	1.89		100,000		100,000
Unsecured corporate bonds		2026	2.69		70,000		70,000
Unsecured corporate bonds		2041	2.68		40,000		40,000
Unsecured corporate bonds		2025	3.80		—		240,000
Unsecured corporate bonds		2027	3.84		70,000		70,000
Unsecured corporate bonds		2042	3.78		40,000		40,000
Unsecured corporate bonds		2025	4.00		—		300,000
Unsecured corporate bonds		2027	4.00		95,000		95,000
Unsecured corporate bonds		2025	4.73		—		110,000
Unsecured corporate bonds		2027	4.74		60,000		60,000
Unsecured corporate bonds		2032	4.69		40,000		40,000
Unsecured corporate bonds		2026	3.65		110,000		110,000
Unsecured corporate bonds		2028	3.83		190,000		190,000
Unsecured corporate bonds		2026	3.72		80,000		80,000
Unsecured corporate bonds		2028	3.80		200,000		200,000
Unsecured corporate bonds		2030	3.96		70,000		70,000
Unsecured corporate bonds		2026	4.54		115,000		115,000
Unsecured corporate bonds		2028	4.68		100,000		100,000
Unsecured corporate bonds		2030	4.72		50,000		50,000
Unsecured corporate bonds		2033	4.72		30,000		30,000
Unsecured corporate bonds		2027	3.72		180,000		180,000
Unsecured corporate bonds		2029	3.73		110,000		110,000
Unsecured corporate bonds		2034	3.92		110,000		110,000
Unsecured corporate bonds		2027	2.91		170,000		170,000
Unsecured corporate bonds		2029	2.92		90,000		90,000
Unsecured corporate bonds		2034	2.96		40,000		40,000
Unsecured corporate bonds		2028	2.98		190,000		—
Unsecured corporate bonds		2030	3.05		70,000		—
Unsecured corporate bonds		2035	3.17		140,000		—
Unsecured corporate bonds		2028	2.67		80,000		—
Unsecured corporate bonds		2030	2.82		190,000		—
Unsecured corporate bonds		2035	3.06		40,000		—
Unsecured corporate bonds(*1)	Operating and refinancing fund	2026	1.86		50,000		50,000
Unsecured corporate bonds(*1)		2025	1.64		—		100,000
Unsecured corporate bonds(*1)	Refinancing fund	2025	1.41		—		160,000
Unsecured corporate bonds(*1)		2025	2.58		—		100,000
Unsecured corporate bonds(*1)		2032	2.92		50,000		50,000

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

17.

Borrowings and Debentures, Continued

(3)

Debentures as of December 31, 2025 and 2024 are as follows, Continued:


(In millions of won and thousands of U.S. dollars)
	Purpose	Maturity	Annual interest rate (%)	December 31, 2025			December 31, 2024
Unsecured corporate bonds(*1)	Operating and refinancing fund	2025	4.21		—			50,000
Unsecured corporate bonds(*1)		2026	4.28		100,000			100,000
Unsecured corporate bonds(*1)		2028	4.37		90,000			90,000
Unsecured corporate bonds(*1)	Facility fund	2026	4.87		100,000			100,000
Unsecured corporate bonds(*1)		2028	5.00		60,000			60,000
Unsecured corporate bonds(*1)	Refinancing fund	2027	3.89		170,000			170,000
Unsecured corporate bonds(*1)		2029	3.93		60,000			60,000
Unsecured corporate bonds(*1)	Facility and Refinancing fund	2027	3.06		130,000			130,000
Unsecured corporate bonds(*1)		2029	3.06		115,000			115,000
Unsecured corporate bonds(*1)		2031	3.11		50,000			50,000
Unsecured corporate bonds(*1)	Refinancing fund	2028	2.76		50,000			—
Unsecured corporate bonds(*1)		2030	2.87		120,000			—
Unsecured corporate bonds(*1)		2035	2.97		30,000			—
Unsecured corporate bonds(*1)	Business acquisition fund	2030	3.09		480,000			—
Unsecured corporate bonds(*1)		2035	3.38		50,000			—
Registered unsecured private exchangeable bond(*2)	Refinancing fund	2027	—		7,008			—
Unsecured global bonds	Operating fund	2027	6.63		573,960 (USD 400,000	)		588,000 (USD 400,000	)
Unsecured global bonds(*1)	Refinancing fund	2028	4.88		430,470 (USD 300,000	)		441,000 (USD 300,000	)
Floating rate notes(*3)	Operating fund	2025	SOFR rate + 1.17		—			441,000 (USD 300,000	)
		2028	SOFR rate + 0.59		430,470 (USD 300,000	)		—
Convertible bonds(*4)		2028	—		—			4,410 (USD 3,000	)
Convertible bonds(*4)		2028	—		—			23,741 (USD 16,150	)
Convertible bonds(*4)		2028	—		—			11,392 (USD 7,750	)
Convertible bonds(*4)		2028	—		—			11,760 (USD 8,000	)

					8,236,908			8,526,303
Less: discounts on bond					(23,004	)		(15,023	)

					8,213,904			8,511,280
Less: current portions of bonds					(919,459	)		(2,147,634	)

				W	7,294,445			6,363,646

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

17.

Borrowings and Debentures, Continued

(3)

Debentures as of December 31, 2025 and 2024 are as follows, Continued:

(*1)

Unsecured corporate bonds were issued by SK Broadband Co., Ltd., a subsidiary of the Parent Company.

(*2)

Exchangeable bonds were issued by SAPEON Inc., a subsidiary of the Parent Company.

(*3)

Applied interest rates are SOFR rate of 4.20% and 4.49% as of December 31, 2025 and 2024, respectively.

(*4)

Convertible bonds were issued by SAPEON Inc., a subsidiary of the Parent Company, and redeemed on February 7, 2025, pursuant to an early redemption request.

18.

Long-term Payables – other

(1)

As of December 31, 2025 and 2024, details of long-term payables – other which consist of payables related to the acquisition of frequency usage rights are as follows (See note 16):


(In millions of won)
	December 31, 2025			December 31, 2024
Long-term payables – other	W	551,925			921,075
Present value discount on long-term payables – other		(3,964	)		(13,355	)
Current portion of long-term payables – other		(368,572	)		(367,765	)

Carrying amount as of December 31	W	179,389			539,955

(2)

Repayments of the principal portion of long-term payables – other amounted to W369,150 million for each of the years ended December 31, 2025 and 2024, respectively. The repayment schedule for the principal amount of long-term payables – other as of December 31, 2025 is as follows:


(In millions of won)
	Amount
Less than 1 year	W	369,150
1 ~ 3 years		182,775

	W551,925

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

19.

Provisions

Changes in provisions for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025															As of December 31, 2025
	Beginning balance		Increase		Utilization			Reversal			*Other()**			Ending balance		Current		Non-current
Provision for restoration	W	119,623		5,837		(6,330	)		(1,272	)		(275	)		117,583		37,502		80,081
Emission allowance		437		1,641		(266	)		(1,282	)		—			530		530		—
Other Provisions (note 28)		—		108,039		(105	)		—			—			107,934		107,921		13

	W	120,060		115,517		(6,701	)		(2,554	)		(275	)		226,047		145,953		80,094

(*)

Other includes amounts reclassified as liabilities held for sale for the year ended December 31, 2025.


(In millions of won)
	2024																		As of December 31, 2024
	Beginning balance		Increase		Utilization			Reversal			Changes in consolidation scope			*Other()**			Ending balance		Current		Non-current
Provision for restoration	W	120,024		6,475		(3,555	)		(1,053	)		(351	)		(1,917	)		119,623		49,579		70,044
Emission allowance		1,182		1,410		(130	)		(2,025	)		—			—			437		437		—
Other provisions		218		—		—			(218	)		—			—			—		—		—

	W	121,424		7,885		(3,685	)		(3,296	)		(351	)		(1,917	)		120,060		50,016		70,044

(*)

Other includes amounts reclassified as liabilities held for sale for the year ended December 31, 2024.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

20.

Defined Benefit Liabilities (Assets)

(1)

Details of defined benefit liabilities (assets) as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025			December 31, 2024
Present value of defined benefit obligations	W	1,051,508			1,142,324
Fair value of plan assets		(1,256,985	)		(1,294,567	)

Defined benefit assets(*)		(205,477	)		(154,329	)

Defined benefit liabilities		—			2,086

(*)

Since the Group entities neither have legally enforceable right nor intention to settle the defined benefit obligations of Group entities with defined benefit assets of other Group entities, defined benefit assets of Group entities have been separately presented from defined benefit liabilities.

(2)

Principal actuarial assumptions as of December 31, 2025 and 2024 are as follows:


	December 31, 2025	December 31, 2024
Discount rate for defined benefit obligations	3.51% ~ 4.57%	3.35% ~ 4.24%
Expected rate of salary increase	2.00% ~ 6.22%	2.00% ~ 5.42%

Discount rate for defined benefit obligation is determined based on market yields of high-quality corporate bonds with similar maturities for estimated payment term of defined benefit obligation. Expected rate of salary increase is determined based on the Group’s historical promotion index, inflation rate and salary increase ratio.

(3)

Changes in present value of defined benefit obligations for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025			2024
Beginning balance	W	1,142,324			1,121,679
Current service cost		123,241			130,538
Interest cost		42,399			47,463
Remeasurement
- Demographic assumption		264			(761	)
- Financial assumption		(14,087	)		49,788
- Adjustment based on experience		26,041			(15,085	)
Benefit paid(*1)		(270,415	)		(157,801	)
Past service cost		1,693			6,795
Changes in consolidation scope		—			(2,458	)
Others(*2)		48			(37,834	)

Ending balance	W	1,051,508			1,142,324

(*1)

Benefit paid includes payments arising from changes to the retirement benefit plan for the years ended December 31, 2025 and 2024.

(*2)

Others include changes in liabilities due to employees’ transfers among affiliates and reclassification as liabilities held for sale for the years ended December 31, 2025 and 2024.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

20.

Defined Benefit Liabilities (Assets), Continued

(4)

Changes in fair value of plan assets for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025			2024
Beginning balance	W	1,294,567			1,292,416
Interest income		46,765			54,215
Remeasurement		1,406			729
Contributions		182,076			124,921
Benefit paid(*1)		(264,521	)		(131,031	)
Changes in consolidation scope		—			(2,151	)
Others(*2)		(3,308	)		(44,532	)

Ending balance	W	1,256,985			1,294,567

(*1)

Benefit paid includes payments arising from changes to the retirement benefit plan for the years ended December 31, 2025 and 2024.

(*2)

Others include changes in assets due to employees’ transfers among affiliates and reclassification as assets held for sale for the years ended December 31, 2025 and 2024.

The Group’s expected contributions to the defined benefit plan for the year ended December 31, 2026, amounts to W167,383 million.

(5)

Total cost of defined benefit plan, which is recognized in profit or loss for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025			2024
Current service cost	W	123,241			130,538
Net interest income		(4,366	)		(6,752	)
Past service cost		1,693			6,795

	W120,568			130,581

Costs related to the defined benefit plan except for the amounts transferred to construction in progress are included in labor expenses and research and development expenses.

(6)

Details of plan assets as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025		December 31, 2024
Equity instruments	W	102,046		67,184
Debt instruments		238,979		394,138
Short-term financial instruments, etc.		915,960		833,245

	W	1,256,985		1,294,567

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

20.

Defined Benefit Liabilities (Assets), Continued

(7)

Sensitivity analysis

As of December 31, 2025, reasonably possible changes to each of the significant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below:


(In millions of won)
	0.5%p Increase			0.5%p Decrease
Discount rate	W	(37,121	)		39,709
Expected salary increase rate		39,780			(37,537	)

A sensitivity analysis does not consider dispersion of all cash flows that are expected from the plan but provides approximate values of sensitivity for the assumptions used.

The weighted average duration of defined benefit obligations as of December 31, 2025 and 2024 is 7.33 years and 7.46 years, respectively.

(8)

Defined contribution plan

The amount recognized as an expense for defined contribution plans are W35,454 million and W29,784 million for the years ended December 31, 2025 and 2024, respectively.

21.

Derivative Instruments

(1)

Currency and interest rate swap contracts under cash flow hedge accounting as of December 31, 2025 are as follows:


(In millions of won, thousands of U.S. dollars)
Borrowing date	Hedging Instrument (Hedged item)	Hedged risk	Financial institution	Duration of contract
Jul. 20, 2007	Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 400,000)	Foreign currency risk	Morgan Stanley and four other banks	Jul. 20, 2007 ~ Jul. 20, 2027
Jun. 28, 2023	Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 300,000)	Foreign currency risk	Citi bank, Shinhan Bank, Korea Development Bank and J.P. Morgan	Jun. 28, 2023 ~ Jun. 28, 2028
Oct. 7, 2024	Floating-to-fixed interest rate swap (Korean won borrowing amounting to KRW 200,000)	Interest rate risk	DBS Bank Ltd.	Oct. 10, 2024 ~ Oct. 8, 2026
May. 28, 2025	Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 300,000)	Foreign currency risk and interest rate risk	DBS Bank Ltd.	May. 28, 2025 ~ May. 26, 2028

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

21.

Derivative Instruments, Continued

(2)

SK Broadband Co., Ltd., a subsidiary of the Parent Company, entered into Total Return Swap (“TRS”) contracts with IGIS Professional Investment Type Private Real Estate Investment Trust No. 156 and Hana Professional Alternative Investment Type Private Real Estate Investment Trust No. 62, with underlying beneficiary certificates of W270,000 million and W80,000 million, respectively. Under the terms of the contracts, the parties settle the difference arising from changes in the value of the real estate at maturity, as well as the difference between the actual dividends received and the contractual base dividend during the contract period. SK Broadband Co., Ltd. is obligated to guarantee a fixed rate of return to the counterparties to each contract. As of December 31, 2025 and 2024, SK Broadband Co., Ltd. recognized derivative financial assets of W91,824 million and W64,926 million, respectively, in relation to the TRS contracts. The derivative financial assets were measured using a discounted cash flow method based on estimated future cash flows.

(3)

SAPEON Inc., a subsidiary of the Parent Company, disposed of a portion of its shares in Rebellions Inc. (formerly, SAPEON Korea Inc.) during the year ended December 31, 2024, and, concurrently, the Parent Company entered into a Price Return Swap (“PRS”) under which the buyer is entitled to receive the difference between the sale proceeds and the settlement amount upon the subsequent sale of the shares. The Parent Company recognized a derivative financial liability of W555 million in relation to the PRS as of December 31, 2025.

(4)

PS&Marketing Corporation, a subsidiary of the Parent Company, entered into a Total Return Swap (“TRS”) contract with Kukje Lucestar Investment Private Equity Real Estate Investment Trust No.2 with underlying beneficiary certificates amounting to W50,000 million. Under the terms of the contract, the parties settle the difference arising from changes in the value of the underlying real estate at maturity, as well as the difference between actual dividends and the contractual base dividend during the contract period. PS&Marketing Corporation is obligated to guarantee a fixed rate of return to the counter party. As of December 31, 2025 and 2024, PS&Marketing Corporation recognized derivative financial assets of W5,830 million and W5,385 million, respectively, in relation to the TRS. The derivative financial assets were measured using a discounted cashflow approach based on estimated future cash flows.

(5)

PS&Marketing Corporation, a subsidiary of the Parent Company, disposed of 2,169,379 common shares (ownership interest: 70%) of SK m&service Co., Ltd. to SAMKOO Inc. during the year ended December 31, 2025, and entered into a shareholders’ agreement in connection with the transaction. Pursuant to the shareholders’ agreement, PS&Marketing Corporation holds a put option that entitles it to sell all or part of its remaining shares to the counterparty in accordance with the specified procedures and conditions for a period of eight years beginning three years after the closing date of the transaction. PS&Marketing Corporation recognized a derivative financial asset of W11,230 million as of December 31, 2025 in relation to the put option.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

21.

Derivative Instruments, Continued

(6)

The derivative financial instruments to which the Group applies cash flow hedging is recorded in the consolidated financial statements as derivative financial assets and derivative financial liabilities. As of December 31, 2025, details of fair values of the derivative assets and liabilities are as follows:


(In millions of won, thousands of U.S. dollars)
Hedging instrument (Hedged item)	Cash flow hedge			Fair value
Assets:
Fixed-to-fixed cross currency (U.S. dollar denominated bonds face value of USD 400,000)	W	137,222			137,222
Fixed-to-fixed cross currency swap (U.S. dollar denominated bonds face value of USD 300,000)		45,006			45,006
Floating-to-fixed cross currency interest rate swap (U.S. dollar denominated bonds face value of USD 300,000)		19,034			19,034

	W	201,262			201,262

Liabilities:
Floating-to-fixed interest rate swap (Korean won borrowing amounting to KRW 200,000)	W	(621	)		(621	)

	W	(621	)		(621	)

As of December 31, 2025, changes in fair value of derivatives designated as hedging instruments, all of which were assessed as effective hedges, were recognized in full in other comprehensive income.

(7)

The derivatives held for trading is recorded in the consolidated financial statements as derivative financial assets and derivative financial liabilities. As of December 31, 2025, details of fair values of the derivative assets and liabilities are as follows:


(In millions of won)
	Held for trading			Fair value
Assets:
Total Return Swap (“TRS”)	W	97,654			97,654
Share option		11,230			11,230

	W	108,884			108,884

Liabilities:
Foreign exchange forward contract	W	(26	)		(26	)
Price Return Swap (“PRS”)		(555	)		(555	)
Share option		(1,769	)		(1,769	)
Exchange option		(3,432	)		(3,432	)

	W	(5,782	)		(5,782	)

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

22.

Share Capital and Capital Surplus and Others

(1)

Details of share capital as of December 31, 2025 and 2024 are as follows:


(In millions of won, except for share data)
	December 31, 2025		December 31, 2024
Number of authorized shares		670,000,000		670,000,000
Par value (in won)	W	100		100
Number of issued shares		214,790,053		214,790,053
Share capital:
Common shares(*)	W	30,493		30,493

(*)

In 2002, 2003 and 2024, the Parent Company retired treasury shares with reduction of its retained earnings before appropriation. As a result, the Group’s issued shares have decreased without change in share capital.

(2)

Changes in issued shares for the years ended December 31, 2025 and 2024 are as follows:


(In shares)
	2025		2024
Issued shares as of January 1		214,790,053		218,833,144
Retirement of treasury shares(*)		—		(4,043,091	)

Issued shares as of December 31		214,790,053		214,790,053

(*)

The Parent Company retired 4,043,091 treasury shares with reduction of its retained earnings before appropriation for the year ended December 31, 2024.

(3)

Details of shares outstanding as of December 31, 2025 and 2024 are as follows:

(In shares)

December 31, 2025

December 31, 2024

Issued
shares

Treasury
shares

Outstanding
shares

Issued
shares

Treasury
shares

Outstanding
shares

Shares outstanding

214,790,053

1,807,778

212,982,275

214,790,053

1,903,711

212,886,342

(4)

Details of capital surplus and others as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025			December 31, 2024
Paid-in surplus	W	1,771,000			1,771,000
Treasury shares (Note 23)		(88,533	)		(92,962	)
Hybrid bonds (Note 24)		398,509			398,509
Share option (Note 25)		14,511			14,498
Others(*)		(14,226,827	)		(14,045,981	)

	W	(12,131,340	)		(11,954,936	)

(*)

The amount includes a change in equity amounting to W13,340,037 million due to the spin-off that was accounted for as a transaction under common control.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

23.

Treasury Shares

(1)

Treasury shares as of December 31, 2025 and 2024 are as follows:


(In millions of won, except for the number of shares)
	December 31, 2025		December 31, 2024
Number of shares		1,807,778		1,903,711
Acquisition cost	W	88,533		92,962

(2)

Changes in treasury shares for the years ended December 31, 2025 and 2024 are as follows:


(In shares)
	2025			2024
Treasury shares as of January 1		1,903,711			6,133,414
Acquisition(*1)		—			317,000
Disposal(*2)		(95,933	)		(503,612	)
Retirement of treasury shares(*3)		—			(4,043,091	)

Treasury shares as of December 31		1,807,778			1,903,711

(*1)

The Parent Company acquired 317,000 treasury shares for W15,788 million in an effort to increase shareholder value by stabilizing its stock price for the year ended December 31, 2024.

(*2)

The Parent Company granted 91,073 treasury shares (acquisition cost: W4,191 million) upon exercise of stock options for the year ended December 31, 2025, resulting in a gain on disposal of treasury shares of W1,164 million, and the Parent Company distributed 4,860 treasury shares (acquisition cost: W238 million) as bonus payment to the employees, resulting in gain on disposal of treasury shares of W24 million for the year ended December 31, 2025. Also, the Parent Company distributed 503,612 treasury shares (acquisition cost: W24,807 million) as bonus payment to the employees, resulting in gain on disposal of treasury shares of W181 million for the year ended December 31, 2024.

(*3)

The Parent Company retired 4,043,091 treasury shares with reduction of its retained earnings before appropriation, as a result, the Parent Company’s issued shares have decreased without change in share capital for the year ended December 31, 2024.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

24.

Hybrid Bonds

Hybrid bonds classified as equity as of December 31, 2025 and 2024 are as follows:

(In millions of won)

Type

Issuance date

Maturity(*1)

Annual
interest
rate(%)(*2)

December 31,
2025

December 31,
2024

Series 3 hybrid bonds

Unsecured subordinated

bearer bond

June 5, 2023

June 5, 2083

4.95

400,000

Issuance costs

(1,491

)

(1,491

)

398,509

As the Parent Company has no contractual obligation to deliver cash or other financial assets to the holders of its hybrid bonds, the instruments are classified as equity. In the event of liquidation or bankruptcy, the hybrid bonds rank senior only to common shares.

(*1)

The Parent Company has the right to extend the maturity at its discretion without providing any prior notice or announcement.

(*2)

The annual interest rate is determined as yield rate of a 5-year national bond plus a premium. According to the step-up clause, an additional premium of 0.25% and 0.75% is applied after 10 years and 25 years, respectively, from the issuance date.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

25.

Share based payment Arrangement

25.1

Share-based payment arrangement of the Parent Company

(1)

Terms and conditions related to the grants of the share-based payment arrangement are as follows:

Share-based payment arrangement with cash alternatives

Series

5(*)

7-1

7-2

Grant date

March 26, 2020

March 25,

2021

March 25,

2022

Types of shares to be issued

Registered common shares of the Parent Company

Grant method

Reissue of treasury shares, Cash settlement

Number of shares (in share)

32,947

71,726

98,425

96,820

Exercise price (in won)

38,452

50,276

56,860

Exercise period

Mar. 27, 2023

~ Mar. 26,

2027

Mar. 26, 2023
~ Mar. 25,
2026

Mar. 26, 2025
~ Mar. 25,
2029

Mar. 26, 2024
~ Mar. 25,
2027

Vesting conditions

3 years’ service from the grant date

2 years’ service
from the grant
date

(*)

For the year ended December 31, 2025, some portions of stock options granted in the 5^th series were exercised.

Cash-settled share-based payment arrangement

The entire amount of remaining share appreciation rights for shares of SK Telecom Co., Ltd. granted in 2022 was not exercised and was fully forfeited during the year ended December 31, 2025.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

25.

Share based payment Arrangement, Continued

25.1

Share-based payment arrangement of the Parent Company, Continued:

(1)

Terms and conditions related to the grants of the share-based payment arrangement are as follows, Continued:

Equity-settled share-based payment arrangement

The Parent Company established Performance Share Units (”PSU”) for executives of the Parent Company and major subsidiaries as part of the compensation based on the growth of corporate value during the year ended December 31, 2023, and the details are as follows:


	PSU of SK Telecom Co., Ltd.
Grant date	March 28, 2023	March 26, 2024
Types of shares to be issued	Registered common shares of the Parent Company
Grant method	Reissue of treasury shares
Number of shares(*)	Fluctuates according to the share price on the expiration date and the cumulative increase rate of KOSPI200
Reference share price (in won)	47,280	52,720
Reference index (KOSPI200)	315	362
Maturity (exercise date)	The day in which the annual general meeting of shareholders is held after 3 years from the grant date
Vesting conditions	Full service in the year in which the grant date is included

(*)

The initial grant amounted to W10,813 million in 2023 and W12,835 million in 2024. The number of shares to be delivered is determined based on the adjustment rate calculated using the share price on the expiration date and the cumulative increase rate of KOSPI200.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

25.

Share based payment Arrangement, Continued

25.1

Share-based payment arrangement of the Parent Company, Continued:

(2)

Share compensation expense for share-based payment arrangements with cash alternatives recognized for the year ended December 31, 2025 is as follows, and there is no remaining share compensation expense to be recognized in subsequent periods.


(In millions of won)
	Share compensation expense
Cumulative amount through December 31, 2024	W	158,596
For the year ended December 31, 2025		(439	)

	W	158,157

The liabilities recognized by the Parent Company in relation to the share-based payment arrangement with cash alternatives are W1,134 million and W7,283 million, respectively, which are included in accrued expenses as of December 31, 2025 and 2024.

As of December 31, 2024, the carrying amount of liabilities recognized by the Parent Company in relation to the cash-settled share-based payment arrangement are W305 million and no liability was recognized as of December 31, 2025.

Share compensation expenses recognized for the Parent Company’s equity-settled share-based payment arrangement was W6,286 million for the year ended December 31, 2024, and no expense was recognized for the year ended December 31, 2025.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

25.

Share based payment Arrangement, Continued

25.1

Share-based payment arrangement of the Parent Company, Continued:

(3)

The Parent Company used option-pricing models, including the binomial model, on the measurement of the fair value of the share options and the inputs used in the model are as follows:

Share-based payment arrangement with cash alternatives

(i) SK Telecom Co., Ltd.


(In won)	Series
	5			6			7-1			7-2
Risk-free interest rate		2.65	%		2.43	%		3.02	%		2.64	%
Estimated option’s life		7 years			5 years			7 years			5 years
Share price on the remeasurement date		53,500			53,500			53,500			53,500
Expected volatility		15.30	%		15.30	%		15.30	%		15.30	%
Expected dividends yield		6.62	%		6.62	%		6.62	%		6.62	%
Exercise price		38,452			50,276			56,860			56,860
Per-share fair value of the option		15,048			3,394			2,520			1,518

(ii) SK Square Co., Ltd.


(In won)	Series
	5			6
Risk-free interest rate		1.52	%		1.55	%
Estimated option’s life		7 years			5 years
Share price (Closing price on the preceding day)		34,900			49,800
Expected volatility		8.10	%		25.70	%
Expected dividends yield		5.70	%		4.00	%
Exercise price		38,452			50,276
Per-share fair value of the option		192			8,142

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

25.

Share based payment Arrangement, Continued

25.1

Share-based payment arrangement of the Parent Company, Continued:

(3)

The Parent Company used option-pricing models, including the binomial model, on the measurement of the fair value of the share options and the inputs used in the model are as follows, Continued:

Equity-settled share-based payment arrangement


(In won)	Granted in 2023 PSU of SK Telecom Co., Ltd.			Granted in 2024 PSU of SK Telecom Co., Ltd.
Risk-free interest rate		3.26	%		3.30	%
Estimated option’s life		3 years			3 years
Share price on the grant date		48,500			54,100
Expected volatility		18.67	%		15.90	%
Expected dividends yield		4.90	%		5.40	%
Per-share fair value of the option		27,525			25,920

25.2

Share-based payment arrangement by SAPEON Inc., a subsidiary of the Parent Company

The entire amount of remaining share-based payment arrangement granted by SAPEON Inc. to its employees was not exercised and was fully forfeited during the year ended December 31, 2025.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

26.

Retained Earnings

(1)

Retained earnings as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025		December 31, 2024
Appropriated:
Legal reserve	W	22,320		22,320
Reserve for business expansion		10,131,138		9,981,138
Reserve for technology development		4,865,300		4,715,300

		14,996,438		14,696,438
Unappropriated		7,919,510		8,257,369

	W	22,938,268		22,976,127

(2)

Legal reserve

The Korean Commercial Act requires the Parent Company to appropriate as a legal reserve at least 10% of cash dividends paid for each accounting period until the reserve equals 50% of outstanding share capital. The legal reserve may not be utilized for cash dividends, but may only be used to offset a future deficit, if any, or may be transferred to share capital.

27.

Reserves

(1)

Details of reserves, net of taxes, as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025		December 31, 2024
Valuation gain on FVOCI	W	1,570,314		262,657
Other comprehensive income of investments in associates and joint ventures		368,213		315,283
Valuation gain (loss) on derivatives		14,503		(8,044	)
Foreign currency translation differences for foreign operations		72,652		77,047

	W	2,025,682		646,943

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

27.

Reserves, Continued

(2)

Changes in reserves for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	Valuation gain on financial assets at FVOCI		Other comprehensive income of investments in associates and joint ventures		Valuation gain (loss) on derivatives			Foreign currency translation differences for foreign operations			Total
	Valuation gain on financial assets at FVOCI				Valuation gain (loss) on derivatives						Total
Balance as of January 1, 2024	W	176,208		182,702		(1,488	)		29,794			387,216
Changes, net of taxes		86,449		132,581		(6,556	)		47,253			259,727
Balance as of December 31, 2024	W	262,657		315,283		(8,044	)		77,047			646,943
Balance as of January 1, 2025	W	262,657		315,283		(8,044	)		77,047			646,943
Changes, net of taxes		1,307,657		52,930		22,547			(4,395	)		1,378,739

Balance as of December 31, 2025	W	1,570,314		368,213		14,503			72,652			2,025,682

(3)

Changes in valuation gain (loss) on financial assets at FVOCI for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025			2024
Balance as of January 1	W	262,657			176,208
Amount recognized as other comprehensive income for the year, net of taxes		1,464,741			11,262
Amount reclassified to retained earnings, net of taxes		(157,084	)		75,187

Balance as of December 31	W	1,570,314			262,657

(4)

Changes in valuation gain (loss) on derivatives for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025			2024
Balance as of January 1	W	(8,044	)		(1,488	)
Amount recognized as other comprehensive income (loss) for the year, net of taxes		16,408			(12,636	)
Amount reclassified to profit or loss, net of taxes		6,139			6,080

Balance as of December 31	W	14,503			(8,044	)

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

28.

Other Operating Expenses

Details of other operating expenses for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025		2024
Communication	W	32,294		34,037
Utilities		591,507		547,204
Taxes and dues		68,852		44,888
Repair		425,698		438,089
Research and development		339,507		378,079
Training		29,804		30,949
Bad debt for accounts receivable – trade		44,183		49,865
Travel		14,936		19,090
Supplies and others(*)		317,414		116,920

	W	1,864,195		1,659,121

(*)

Supplies and others operating expenses include W211,998 million of costs incurred in response to the cybersecurity incident during the year ended December 31, 2025. The portion of these estimated costs that remained unpaid as of December 31, 2025 are recognized as a provision. (See note 19)

29.

Other Non-Operating Income and Expenses

Details of other non-operating income and expenses for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025		2024
Other non-operating income:
Gain on disposal of property and equipment and intangible assets	W	127,058		37,316
Others		43,376		34,972

	W	170,434		72,288

Other non-operating expenses:
Loss on impairment of property and equipment and intangible assets	W	3,140		94,736
Loss on impairment of assets held for sale		12,320		—
Loss on disposal of property and equipment and intangible assets		15,296		17,427
Donations		15,339		15,712
Bad debt for accounts receivable – other		3,282		4,838
Others(*)		145,771		72,122

	W	195,148		204,835

(*)

Others include penalties of W134,799 million imposed by the Personal Information Protection Commission in connection with the cybersecurity incident during the year ended December 31, 2025.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

30.

Finance Income and Costs

(1)

Details of finance income and costs for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025		2024
Finance income:
Interest income	W	73,064		87,245
Dividends		57,060		35,818
Gain on foreign currency transactions		27,307		32,260
Gain on foreign currency translations		3,671		9,344
Gain relating to financial instruments at FVTPL		58,256		190,368

	W	219,358		355,035


(In millions of won)
	2025		2024
Finance costs:
Interest expense	W	383,205		403,129
Loss on sale of accounts receivable – other		17,513		35,317
Loss on foreign currency transactions		30,777		30,892
Loss on foreign currency translations		3,029		3,575
Loss relating to financial instruments at FVTPL		16,350		133,006
Loss on settlement of derivatives		7,298		—
Loss on repayment of debentures		468		—
Other finance costs		23,356		—

	W	481,996		605,919

(2)

Details of interest income included in finance income for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025		2024
Interest income on cash equivalents and financial instruments	W	47,851		57,731
Interest income on loans and others		25,213		29,514

	W	73,064		87,245

(3)

Details of interest expenses included in finance costs for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025		2024
Interest expense on borrowings	W	26,300		31,718
Interest expense on debentures		277,937		272,846
Others		78,968		98,565

	W	383,205		403,129

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

30.

Finance Income and Costs, Continued

(4)

Finance income and costs by category of financial instruments for the years ended December 31, 2025 and 2024 are as follows. Bad debt expense (reversal of loss allowance) for accounts receivable – trade, loans and receivables are presented and explained separately in notes 6 and 35.

Finance income and costs


(In millions of won)
	2025
	Finance income		Finance costs
Financial assets:
Financial assets at FVTPL	W	84,582		38,798
Financial assets at FVOCI		56,199		23,356
Financial assets at amortized cost		72,894		33,259

		213,675		95,413

Financial liabilities:
Financial liabilities at FVTPL		2,153		2,364
Financial liabilities at amortized cost		3,530		384,219

		5,683		386,583

	W	219,358		481,996


(In millions of won)
	2024
	Finance income		Finance costs
Financial assets:
Financial assets at FVTPL	W	95,708		52,731
Financial assets at FVOCI		30,993		—
Financial assets at amortized cost		106,514		13,281

		233,215		66,012

Financial liabilities:
Financial liabilities at FVTPL		121,061		115,592
Financial liabilities at amortized cost		759		424,315

		121,820		539,907

	W	355,035		605,919

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

30.

Finance Income and Costs, Continued

(4)

Other comprehensive income (loss), net of tax


(In millions of won)
	2025		2024
Financial assets:
Financial assets at FVOCI	W	1,465,513		11,253
Derivatives designated as hedging instrument		12,445		(12,398	)

		1,477,958		(1,145	)

Financial liabilities:
Derivatives designated as hedging instrument		10,178		5,825

	W	1,488,136		4,680

(5)

Details of impairment losses for financial assets for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025		2024
Accounts receivable – trade	W	44,183		49,865
Other receivables		3,282		4,838

	W	47,465		54,703

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

31.

Income Tax Expense

(1)

Income tax expenses for the years ended December 31, 2025 and 2024 consist of the following:


(In millions of won)
	2025		2024
Current tax expense:
Current year	W	181,348		392,192
Changes in estimates related to prior years		102,033		(22,271	)

		283,381		369,921

Deferred tax expense:
Changes in net deferred tax liabilities		63,796		4,749

Income tax expense:	W	347,177		374,670

(2)

The difference between income taxes computed using the statutory corporate income tax rates and the recorded income taxes for the years ended December 31, 2025 and 2024 is attributable to the following:


(In millions of won)
	2025			2024
Profit before income tax	W	722,261			1,761,765
Income taxes at statutory income tax rate		172,771			450,819
Non-taxable income		(10,095	)		(9,843	)
Non-deductible expenses		64,361			15,216
Tax credit and tax reduction		(26,708	)		(26,204	)
Changes in unrecognized deferred taxes		(12,997	)		(37,958	)
Changes in estimates related to prior years and others		111,781			(18,340	)
Changes in tax rate		48,064			980

Income tax expense	W	347,177			374,670

(3)

Deferred taxes directly charged to (credited from) equity for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025			2024
Valuation gain on financial assets measured at fair value	W	(502,149	)		(4,499	)
Share of other comprehensive gain of investment in associates		(3,813	)		(15,628	)
Valuation loss (gain) on derivatives		(7,614	)		1,902
Remeasurement of defined benefit plans		4,301			7,266
Capital surplus and others		65,996			(46	)

	W	(443,279	)		(11,005	)

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

31.

Income Tax Expense, Continued

(4)

Details of the changes in deferred tax assets (liabilities) for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025
	Beginning			Deferred tax income (expense)			Directly charged to (credited from) equity			Reclassified as assets held for sale			Ending
Deferred tax assets (liabilities) related to temporary differences:
Loss allowance	W	76,590			(3,648	)		—			(11	)		72,931
Accrued interest income		(968	)		479			—			—			(489	)
Financial assets measured at fair value		(39,533	)		60,448			(502,149	)		—			(481,234	)
Investments in subsidiaries and associates		69,749			(42,234	)		(3,813	)		—			23,702
Property and equipment and intangible assets		(423,592	)		43,417			66,310			(6	)		(313,871	)
Provisions		1,331			(190	)		—			(57	)		1,084
Retirement benefit obligation		38,034			(30,206	)		4,301			(53	)		12,076
Valuation gain (loss) on derivatives		14,478			(5,439	)		(7,614	)		—			1,425
Loss on foreign currency translation		20,370			1,206			—			—			21,576
Incremental costs to acquire a contract		(722,952	)		(125,979	)		—			—			(848,931	)
Contract assets and liabilities		19,959			29,481			—			—			49,440
Right-of-use assets		(370,771	)		49,035			—			—			(321,736	)
Lease liabilities		394,206			(8,912	)		—			—			385,294
Others		(50,634	)		(22,647	)		(314	)		(4,789	)		(78,384	)

		(973,733	)		(55,189	)		(443,279	)		(4,916	)		(1,477,117	)

Deferred tax assets related to unused tax credit carryforwards:		122,533			(8,607	)		—			—			113,926

	W	(851,200	)		(63,796	)		(443,279	)		(4,916	)		(1,363,191	)

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

31.

Income Tax Expense, Continued

(4)

Details of the changes in deferred tax assets (liabilities) for the years ended December 31, 2025 and 2024 are as follows, Continued:


(In millions of won)
	2024
	Beginning			Deferred tax income (expense)			Directly charged to (credited from) equity			Reclassified as liabilities held for sale			Changes in consolidation scope			Ending
Deferred tax assets (liabilities) related to temporary differences:
Loss allowance	W	75,115			1,475			—			—			—			76,590
Accrued interest income		(6,839	)		(1,395	)		—			7,266			—			(968	)
Financial assets measured at fair value		(2,526	)		(32,508	)		(4,499	)		—			—			(39,533	)
Investments in subsidiaries and associates		22,930			62,447			(15,628	)		—			—			69,749
Property and equipment and intangible assets		(419,413	)		(3,861	)		—			(318	)		—			(423,592	)
Provisions		1,319			12			—			—			—			1,331
Retirement benefit obligation		12,430			18,338			7,266			—			—			38,034
Valuation gain (loss) on derivatives		19,670			(7,094	)		1,902			—			—			14,478
Gain (loss) on foreign currency translation		20,667			(297	)		—			—			—			20,370
Incremental costs to acquire a contract		(718,211	)		(4,741	)		—			—			—			(722,952	)
Contract assets and liabilities		17,565			2,394			—			—			—			19,959
Right-of-use assets		(389,863	)		19,092			—			—			—			(370,771	)
Lease liabilities		388,091			6,115			—			—			—			394,206
Others		4,266			(47,646	)		(46	)		(7,486	)		278			(50,634	)

		(974,799	)		12,331			(11,005	)		(538	)		278			(973,733	)

Deferred tax assets related to unused tax loss carryforwards and tax credit carryforwards:
Tax loss carryforwards		7,150			2,812			—			689			(10,651	)		—
Tax credit		147,022			(19,892	)		—			—			(4,597	)		122,533

		154,172			(17,080	)		—			689			(15,248	)		122,533

	W	(820,627	)		(4,749	)		(11,005	)		151			(14,970	)		(851,200	)

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

31.

Income Tax Expense, Continued

(5)

Details of temporary differences and unused tax loss carryforwards for which no deferred tax assets were recognized in the consolidated statements of financial position as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025		December 31, 2024
Loss allowance		W79,201		77,433
Investments in subsidiaries, associates and joint ventures		713,493		481,135
Other temporary differences		51,394		103,405
Unused tax loss carryforwards		99,525		126,553

The amount of unused tax loss carryforwards for which no deferred tax assets were recognized as of December 31, 2025 are expiring within the following periods:


(In millions of won)
	Unused tax loss carryforwards
Less than 1 year	W	—
1 ~ 2 years		—
2 ~ 3 years		—
More than 3 years		99,525

	W	99,525

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

31.

Income Tax Expense, Continued

(6)

Details of the aggregate temporary differences related to investments in subsidiaries and associates, for which no deferred tax liabilities were recognized in the consolidated statements of financial position as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025		December 31, 2024
Investments in subsidiaries and associates		W428,665		1,474,534

(7)

In accordance with the Pillar Two rules, the Group is required to pay top-up taxes when the GloBE effective tax rate of any Group entity in its jurisdictions is below the minimum tax rate of 15%. For the year ended December 31, 2025, the Group recognized W472 million of income tax expense related to Pillar Two (2024: nil). The Group has applied the temporary exception from recognizing and disclosing deferred tax assets and liabilities arising from the application of the Pillar Two rules.

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

32.

Earnings per Share

Earnings per share is calculated for profit attributable to owners of the Parent Company per common share and dilutive potential common share, and details are as follows:

(1)

Basic earnings per share

Basic earnings per share for the years ended December 31, 2025 and 2024 are calculated as follows:


(In millions of won, except for share data and basic earnings per share)
	2025			2024
Basic earnings per share attributable to owners of the Parent Company:
Profit attributable to owners of the Parent Company	W	408,410			1,250,155
Interest on hybrid bonds		(19,800	)		(19,800	)

Profit attributable to owners of the Parent Company on common shares		388,610			1,230,355
Weighted average number of common shares outstanding (in shares)		212,953,061			212,848,138

Basic earnings per share (in won)	W	1,825			5,780

Weighted average number of common shares outstanding for the years ended December 31, 2025 and 2024 are calculated as follows:


(In shares)	2025
	Number of common shares			Weighted average number of common shares
Issued shares as of January 1, 2025		214,790,053			214,790,053
Treasury shares as of January 1, 2025		(1,903,711	)		(1,903,711	)
Disposal of treasury shares		95,933			66,719

		212,982,275			212,953,061


(In shares)	2024
	Number of common shares			Weighted average number of common shares
Issued shares as of January 1, 2024		218,833,144			218,833,144
Treasury shares as of January 1, 2024		(6,133,414	)		(6,133,414	)
Acquisition of treasury shares		(317,000	)		(315,314	)
Disposal of treasury shares		503,612			463,722

		212,886,342			212,848,138

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

32.

Earnings per Share, Continued

(2)

Diluted earnings per share

Diluted earnings per share for the years ended December 31, 2025 and 2024 are calculated as follows:


(In millions of won, except for share data and diluted earnings per share)	2025		2024
Profit attributable to owners of the Parent Company on common shares	W	388,610		1,230,355
Adjusted weighted average number of common shares outstanding (in shares)		212,975,220		213,428,916

Diluted earnings per share (in won)	W	1,825		5,765

Adjusted weighted average number of common shares outstanding for the years ended December 31, 2025 and 2024 are calculated as follows:


(In shares)	2025		2024
Outstanding shares as of January 1		212,886,342		212,699,730
Effect of treasury shares		66,719		148,408
Effect of share option		22,159		580,778

Adjusted weighted average number of common shares outstanding (in shares)		212,975,220		213,428,916

100

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

33.

Dividends

(1)

Details of dividends declared

Details of dividends declared in Parent Company for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won, except for face value and share data)
Year	Dividend type	Number of shares outstanding (in shares)		Face value (in won)		Dividend ratio			Dividends
2025	Cash dividends (Interim)		212,982,275		100		830	%	W	176,776
	Cash dividends (Interim)		212,982,275		100		830	%		176,775

									W	353,551

2024	Cash dividends (Interim)		212,880,865		100		830	%	W	176,690
	Cash dividends (Interim)		212,886,342		100		830	%		176,696
	Cash dividends (Interim)		212,886,342		100		830	%		176,696
	Cash dividends (Year-end)		212,886,342		100		1,050	%		223,531

									W	753,613

(2)

Dividends yield ratio

Dividends yield ratios for the years ended December 31, 2025 and 2024 are as follows:

(In won)


Year	Dividend type	Dividend per share		Closing price at year-end		Dividend yield ratio
2025	Cash dividends		1,660		53,500		3.10	%
2024	Cash dividends		3,540		55,200		6.41	%

101

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

34.

Categories of Financial Instruments

(1)

Financial assets by category as of December 31, 2025 and 2024 are as follows:


(In millions of won)	December 31, 2025
	Financial assets at FVTPL		Equity instruments at FVOCI		Financial assets at amortized cost		Derivatives hedging instrument		Total
Cash and cash equivalents(*1)	W	657,905		—		832,119		—		1,490,024
Long-term investment securities		35,217		—		—		—		35,217
Financial instruments(*1)		13,000		—		138,796		—		151,796
Long-term investment securities(*2)		162,584		3,025,988		—		—		3,188,572
Accounts receivable – trade(*1)		—		—		1,926,903		—		1,926,903
Loans and other receivables(*1)		189,963		—		682,449		—		872,412
Derivative financial assets		108,884		—		—		201,262		310,146

	W	1,167,553		3,025,988		3,580,267		201,262		7,975,070

(*1)

Financial assets reclassified as assets held for sale as of December 31, 2025 are not included.

(*2)

The Group designated W3,025,988 million of equity instruments that are not held for trading as financial assets at FVOCI.


(In millions of won)	December 31, 2024
	Financial assets at FVTPL		Equity instruments at FVOCI		Financial assets at amortized cost		Derivatives hedging instrument		Total
Cash and cash equivalents(*1)	W	310,721		—		1,713,000		—		2,023,721
Financial instruments(*1)		5,000		—		319,263		—		324,263
Long-term investment securities(*2)		138,789		1,739,133		—		—		1,877,922
Accounts receivable – trade(*1)		—		—		2,000,382		—		2,000,382
Loans and other receivables(*1)		223,761		—		697,216		—		920,977
Derivative financial assets		70,311		—		—		270,797		341,108

	W	748,582		1,739,133		4,729,861		270,797		7,488,373

(*1)

Financial assets reclassified as assets held for sale as of December 31, 2024 are not included.

(*2)

The Group designated W1,739,133 million of equity instruments that are not held for trading as financial assets at FVOCI.

102

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

34.

Categories of Financial Instruments, Continued

(2)

Financial liabilities by category as of December 31, 2025 and 2024 are as follows:


(In millions of won)	December 31, 2025
	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivatives hedging instrument		Total
Accounts payable – trade	W	—		110,867		—		110,867
Derivative financial liabilities		5,782		—		621		6,403
Borrowings		—		633,125		—		633,125
Debentures		—		8,213,904		—		8,213,904
Lease liabilities(*1,2)		—		1,525,798		—		1,525,798
Accounts payable - other and others(*2)		—		3,506,048		—		3,506,048

	W	5,782		13,989,742		621		13,996,145

(*1)

The categorization of financial liabilities is not applicable to lease liabilities, but they are classified as financial liabilities measured at amortized cost, considering the nature of measuring liabilities.

(*2)

Financial liabilities reclassified as liabilities held for sale as of December 31, 2025 are not included.


(In millions of won)	December 31, 2024
	Financial liabilities at FVTPL		Financial liabilities at amortized cost		Derivatives hedging instrument		Total
Accounts payable – trade	W	—		126,508		—		126,508
Derivative financial liabilities		2,689		—		748		3,437
Borrowings		—		615,600		—		615,600
Debentures		—		8,511,280		—		8,511,280
Lease liabilities(*1,2)		—		1,637,951		—		1,637,951
Accounts payable - other and others(*2)		—		5,018,850		—		5,018,850

	W	2,689		15,910,189		748		15,913,626

(*1)

(*2)

Financial liabilities reclassified as liabilities held for sale as of December 31, 2024 are not included.

103

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

35.

Financial Risk Management

(1)

Financial risk management

The Group is exposed to market risk, credit risk and liquidity risk. Market risk refers to the risk of fluctuations in market variables such as foreign exchange rates, interest rates and the prices of financial instrumentss. The Group has established a risk management framework to monitor and manage these risks on an ongoing basis.

The Group’s financial assets consist of cash and cash equivalents, financial instruments, long-term investment securities, accounts receivable – trade and other, etc. Financial liabilities consist of accounts payable – other and others, borrowings, debentures, lease liabilities and others.

1) Market risk

(i) Currency risk

The Group is exposed to foreign currency risk arising from revenues and expenses denominated in foreign currencies in the course of its global operations. The primary foreign currencies in which such risk arises are the USD, EUR and others. The Group establishes its currency risk management policy by considering the nature of each business and the availability of hedging or risk-mitigating strategies for each Group entity. The Group regularly monitors, evaluates, and manages its foreign currency exposures through established risk management processes for receivables and payables denominated in foreign currencies. Currency risk arises from both forecasted transactions and recognized assets and liabilities which are denominated in a currency other than the functional currency of each Group entity.

Monetary assets and liabilities denominated in foreign currencies as of December 31, 2025 are as follows:


(In millions of won, thousands of foreign currencies)
	Assets				Liabilities
	Foreign currencies		Won equivalent		Foreign currencies		Won equivalent
USD		106,150	W	152,314		1,021,242	W	1,465,380
EUR		6,031		10,168		1		1
Others		—		1,071		—		14,504

			W	163,553			W	1,479,885

In addition, the Group has entered into cross currency swaps to hedge against currency risk related to foreign currency debentures. (See note 21)

As of December 31, 2025, a hypothetical change in exchange rates by 10% would have increased (decreased) the Group’s profit before income tax and equity as follows:


(In millions of won)
	Profit before income tax						Equity
	If increased by 10%			If decreased by 10%			If increased by 10%			If decreased by 10%
USD	W	11,616			(11,616	)		8,541			(8,541	)
EUR		1,017			(1,017	)		748			(748	)
Others		(1,343	)		1,343			(987	)		987

	W	11,290			(11,290	)		8,302			(8,302	)

104

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

35.

Financial Risk Management, Continued

(1)

Financial risk management, Continued

Market risk, Continued

(ii) Interest rate risk

The Group is exposed to interest rate risk arising from its borrowings, debentures and long-term payables – other. As the Group’s interest-bearing assets are predominantly fixed-rate instruments, changes in market interest rates do not have a significant impact on the Group’s revenue or operating cash flows.

The Group conducts various analyses to manage interest rate risk and optimize its financing structure. To nitigate the impact of interest rate fluctutations, the Group employs a range of strategies, including refinancing, renewing existing borrowings, alternative financing arrangements and hedging.

As of December 31, 2025, the par values of floating-rate borrowings and debentures amount to W200,000 million and W430,470 million, respectively. The Group has entered into interest rate swaps to hedge interest rate risk related to the floating-rate borrowings and debentures. Therefore, changes in interest rates on the underlying floating-rate borrowings and debentures would not have affected profit before income tax for the year ended December 31, 2025. (See note 21)

As of December 31, 2025, the per values of floating-rate long-term payables – other amount to W551,925 million. Assuming all other variables remain constant, the impact of changes in the interest rate of long-term payables – other by 1%p on profit before income tax and equity for the year ended December 31, 2025 is as follows.


(In millions of won)
Profit before income tax					Equity
If increased by 1%p			If decreased by 1%p		If increased by 1%p			If decreased by 1%p
W	(5,519	)		5,519	W	(4,058	)		4,058

(iii) Price fluctuation risk

As of December 31, 2025, the Group holds equity instruments that are traded in an active market and is therefore exposed to the risk of fluctuations in market prices. Assuming all other variables remain constant, the impact of changes in per-share stock price of the equity securities on profit before income tax and equity for the year ended December 31, 2025 is as follows.

(In millions of won)

Profit before income tax

Equity

If increased by 10%

If decreased by 10%

If increased by 10%

If decreased by 10%

—

71,077

(71,077

)

105

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

35.

Financial Risk Management, Continued

(1)

Financial risk management, Continued

Credit risk

Maximum credit exposure as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025		December 31, 2024
Cash and cash equivalents(*)	W	1,489,850		2,023,543
Financial instruments(*)		151,796		324,263
Accounts receivable – trade(*)		1,926,903		2,000,382
Long-term investment securities		2,651		2,205
Contract assets		188,609		136,737
Loans and other receivables(*)		872,412		920,977
Derivative financial assets		310,146		341,108

	W	4,942,367		5,749,215

(*)

Amounts reclassified as assets held for sale as of December 31, 2025 and 2024 are not included.

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. To manage credit risk, the Group evaluates the credit worthiness of each customer or counterparty by considering the party’s financial information, its own trading records and other factors. Based on such information, the Group establishes credit limits for each customer or counterparty.

(i)

Accounts receivable – trade and contract assets

The Group recognizes a loss allowance for accounts receivable – trade and contract assets. The allowance consists of a specific component for individually significant exposures and a collective component for groups of similar assets where credit losses are expected to occur. The collective loss allowance is determined based on historical data of collection statistics for similar financial assets. Details of changes in loss allowance for the year ended December 31, 2025 are included in note 6.

106

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

35.

Financial Risk Management, Continued

(1)

Financial risk management, Continued

Credit risk, Continued

(ii)

Debt investments

Credit risk arises from debt investments included in financial instruments of W151,796 million, loans and other receviables of W872,412 million, and long-term investment securities of W2,651 million. To limit the exposure to this risk, the Group transacts only with financial institutions whose credit ratings are assessed as low credit risk.

Most of the Group’s debt investments are assessed to have a low risk of default and the counterparties are considered to have a strong capacity to meet their contractual cash flow obligations in the near term. Accordingly, the Group measures the loss allowance for these debt investments at an amount equal to 12-month expected credit losses.

Meanwhile, the Group monitors changes in credit risk at each reporting date. The Group measures the loss allowance at an amount equal to lifetime expected credit losses when the credit risk of a debt investments is assessed to have increased significantly since initial recognition (presumed when it is more than 30 days past due).

The Group’s maximum exposure to credit risk is equal to each financial asset’s carrying amount. The gross carrying amounts of each financial asset except for the accounts receivable – trade and derivative financial assets as of December 31, 2025 are as follows.


(In millions of won)
	Financial assets at FVTPL		Financial assets at amortized cost
			12-month ECL			Lifetime ECL – not credit impaired			Lifetime ECL – credit impaired
Gross amount	W	205,614		812,203			10,342			39,013
Loss allowance		—		(2,262	)		(3,330	)		(34,721	)

Carrying amount	W	205,614		809,941			7,012			4,292

107

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

35.

Financial Risk Management, Continued

(1)

Financial risk management, Continued

2) Credit risk, Continued

(ii) Debt investments, Continued

Changes in loss allowance for debt investments for the year ended December 31, 2025 are as follows:


(In millions of won)
	12-month ECL			Lifetime ECL – not credit impaired			Lifetime ECL – credit impaired			Total
December 31, 2024	W	3,343			4,004			60,238			67,585
Remeasurement of loss allowance, net		2,249			227			806			3,282
Transfer to lifetime ECL – not credit impaired		(3,330	)		3,330			—			—
Transfer to lifetime ECL – credit impaired		—			(4,231	)		4,231			—
Amounts written off		—			—			(30,685	)		(30,685	)
Recovery of amounts written off		—			—			633			633
Reclassified as assets held for sale		—			—			(502	)		(502	)

December 31, 2025	W	2,262			3,330			34,721			40,313

(iii) Cash and cash equivalents

As of December 31, 2025, the Group deposited W1,489,850 million of cash and cash equivalents (W2,023,543 million as of December 31, 2024) with banks and financial institutions that maintain credit ratings above a specified threshold. The impairment on cash and cash equivalents was measured using a 12-month expected credit loss model, taking into account the short-term nature of the exposure. Based on an assessment of the counterparties’ external credit ratings, the credit risk associated with these balances is considered to be low.

108

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

35.

Financial Risk Management, Continued

(1)

Financial risk management, Continued

3) Liquidity risk

The Group’s approach to managing liquidity is to ensure that it maintains sufficient cash and cash equivalents and secures adequate liquidity through various committed credit lines at all times. The Group maintains sufficient liquidity based on its cash-generating capacity from operating activities and available credit facilities.

Contractual maturities of financial liabilities as of December 31, 2025 are as follows:


(In millions of won)
	Carrying amount		Contractual cash flows		Less than 1 year		1 - 5 years		More than 5 years
Accounts payable – trade	W	110,867		110,867		110,867		—		—
Borrowings(*1)		633,125		653,644		347,513		306,131		—
Debentures(*1)		8,213,904		9,326,506		1,199,268		6,022,173		2,105,065
Lease liabilities		1,525,798		1,776,311		420,054		1,037,114		319,143
Accounts payable – other and others(*1,2)		3,506,048		3,524,280		3,323,502		200,778		—

	W	13,989,742		15,391,608		5,401,204		7,566,196		2,424,208

(*1)

The contractual cash flow includes interest payables.

(*2)

The Group’s accounts payable – other and others includes amounts settled through supplier finance arrangements. The Group pays the amounts within the normal operating cycle, and no collateral is provided in connection with the agreements. As the payment terms have not been substantially modified, the related balances are classified as accounts payable – other and presented as operating cash flows in the statements of cash flows. Accounts payable – other and others relating to the supplier finance arrangements amount to W240,565 million as of December 31, 2025, which equals the amounts already received by the suppliesr from the finance provider.

The Group does not expect that the cash flows included in the maturity analysis could occur significantly earlier or in significantly different amounts.

As of December 31, 2025, periods in which cash flows from cash flow hedge derivatives are expected to occur are as follows:


(In millions of won)
	Carrying amount			Contractual cash flows			Less than 1 year			1 - 5 years
Assets	W	201,262			207,405			22,033			185,372
Liabilities		(621	)		(627	)		(627	)		—

109

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

35.

Financial Risk Management, Continued

(2)

Capital management

The Group manages its capital to ensure its ability to continue as a going concern while seeking to maximize shareholder returns through the optimization of its debt and equity structure. The overall capital management strategy of the Group is the same as that of the Group as of and for the year ended December 31, 2024.

The Group monitors its debt-to-equity ratio as a key indicator of capital management. This ratio is calculated as total liabilities divided by total equity, based on the amounts presented in the consolidated financial statements.

Debt-to-equity ratio as of December 31, 2025 and 2024 are as follows:


(In millions of won)
	December 31, 2025			December 31, 2024
Total liabilities	W	17,152,491			18,687,621
Total equity		12,955,292			11,827,634

Debt-to-equity ratios		132.40	%		158.00	%

(3)

Fair value

Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of December 31, 2025 are as follows:


(In millions of won)	December 31, 2025
	Carrying amount		Level 1		Level 2		Level 3		Total
Financial assets that are measured at fair value:
FVTPL	W	1,167,553		—		896,085		271,468		1,167,553
Derivative hedging instruments		201,262		—		201,262		—		201,262
FVOCI		3,025,988		966,666		—		2,059,322		3,025,988

	W	4,394,803		966,666		1,097,347		2,330,790		4,394,803

Financial liabilities that are measured at fair value:
FVTPL		5,782		—		26		5,756		5,782
Derivative hedging instruments		621		—		621		—		621

	W	6,403		—		647		5,756		6,403

Financial liabilities that are not measured at fair value:
Borrowings	W	633,125		—		634,241		—		634,241
Debentures		8,213,904		—		8,183,670		—		8,183,670
Long-term payables – other		547,961		—		553,807		—		553,807

	W	9,394,990		—		9,371,718		—		9,371,718

110

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

35.

Financial Risk Management, Continued

(3)

Fair value, Continued

Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of December 31, 2024 are as follows:


(In millions of won)
	December 31, 2024
	Carrying amount		Level 1		Level 2		Level 3		Total
Financial assets that are measured at fair value:
FVTPL	W	748,582		—		539,481		209,101		748,582
Derivative hedging instruments		270,797		—		270,797		—		270,797
FVOCI		1,739,133		1,088,578		171,967		478,588		1,739,133

	W	2,758,512		1,088,578		982,245		687,689		2,758,512

Financial liabilities that are measured at fair value:
FVTPL		2,689		—		—		2,689		2,689
Derivative hedging instruments		748		—		748		—		748

	W	3,437		—		748		2,689		3,437

Financial liabilities that are not measured at fair value:
Borrowings	W	615,600		—		619,325		—		619,325
Debentures		8,511,280		—		8,582,255		—		8,582,255
Long-term payables – other		907,720		—		930,604		—		930,604

	W	10,034,600		—		10,132,184		—		10,132,184

Interest rates used by the Group for the fair value measurement as of December 31, 2025 are as follows:


	Interest rate
Derivative instruments		1.52% ~ 17.92%
Borrowings and debentures		3.06% ~ 3.45%
Long-term payables – other		2.95% ~ 3.16%

The above information does not include fair values of financial assets and liabilities of which fair values have not been measured as carrying amounts are reasonable approximation of fair values.

Fair value of the financial instruments that are traded in an active market (financial assets at FVOCI) is measured based on the bid price at the end of the reporting date.

111

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

35.

Financial Risk Management, Continued

(3)

Fair value, Continued

Fair value and carrying amount of financial assets and liabilities including fair value hierarchy as of December 31, 2024 are as follows, Continued:

The Group uses various valuation methods and inputs for determination of fair value of financial instruments that are not traded in an active market. The valuation techniques and inputs used for recurring and non-recurring fair value measurements classified within Level 2 and Level 3 of the fair value hierarchy by the Group are as follows:


	Level	Valuation methods	Inputs
Financial assets at FVPL	2	Market approach, Discounted cash flow model	Discount rate
	3	Binominal option pricing model	Discount rate, Underlying asset price, Volatility
Financial assets at FVOCI	3	Market approach, Monte Caro simulation model	Comparable transaction price, Expected maturity, Volatility, Discount rate
Derivative hedging instruments	2	Discounted cash flow model	Discount rate
Financial liabilities at FVPL	2	Discounted cash flow model	Discount rate
	3	Binominal option pricing model	Discount rate, Underlying asset price, Volatility

There have been no transfers between Level 1 and Level 2 for the year ended December 31, 2025. The changes of financial assets and liabilities classified as Level 3 for the year ended December 31, 2025 are as follows:


(In millions of won)
	Balance as of January 1, 2025			Gain (loss) For the year			OCI			Acquisition			Disposal			*Transfer()**		Balance as of December 31, 2025
Financial assets
FVTPL	W	209,101			44,599			(1,271	)		27,312			(20,591	)		12,319		271,469
FVOCI		478,588			—			1,348,399			1,424			(49,468	)		280,379		2,059,322

	W	687,689			44,599			1,347,128			28,736			(70,059	)		292,698		2,330,791

Financial liabilities
FVTPL	W	(2,689	)		(204	)		—			(13,279	)		10,416			—		(5,756	)

(*)

Transfer includes amounts transferred between levels in the fair value hierarchy due to changes in the availability of observable market inputs for the financial instruments.

112

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

35.

Financial Risk Management, Continued

(4)

Enforceable master netting agreement or similar agreement

Carrying amounts of financial instruments recognized to which offset agreements are applicable as of December 31, 2025 and 2024 are as follows:


(In millions of won)	December 31, 2025
	Gross financial instruments recognized		Amount offset			Net financial instruments presented on the consolidated statements of financial position
Financial assets:
Accounts receivable – trade and others	W	222,477		(209,487	)		12,990
Financial liabilities:
Accounts payable – other and others	W	213,881		(209,487	)		4,394

(In millions of won)	December 31, 2024
	Gross financial instruments recognized		Amount offset			Net financial instruments presented on the consolidated statements of financial position
Financial assets:
Accounts receivable – trade and others	W	186,284		(174,372	)		11,912
Financial liabilities:
Accounts payable – other and others	W	180,323		(174,372	)		5,951

113

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

36.

Transactions with Related Parties

(1)

List of related parties


Relationship		Company
Ultimate controlling entity		SK Inc.
Joint venture		UTC Kakao-SK Telecom ESG Fund
Associates(*)		SK China Company Ltd. and 40 others
Others		The ultimate controlling entity’s subsidiaries, associates and others

(*)

Associates include investments that are measured in accordance with KIFRS 1109 in which the Group has significant influence but is determined to have no substantive access to returns associated with its ownership interest.

As of December 31, 2025, the Group is part of SK Group, a conglomerate as defined in the Monopoly Regulation and Fair Trade Act of the Republic of Korea. All other entities within SK Group are therefore considered related parties of the Group.

(2)

Compensation for the key management

The Parent Company considers registered directors who have substantial roles and responsibilities in the planning, operations, and oversight of relevant controls of the business to be key management personnel. The compensation given to such key management for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025			2024
Salaries	W	6,727			5,673
Defined benefits plan expenses		1,038			1,362
Share option		(181	)		977

	W	7,584			8,012

Compensation for the key management includes salaries, non-monetary benefits, defined benefit relating to the pension plan, and share-based compensation expenses.

114

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

36.

Transactions with Related Parties, Continued

(3)

Transactions with related parties for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)		2025
Scope	Company	Operating revenue and others		Operating expenses and others(*1)		Acquisition of property and equipment and others
Ultimate controlling entity	SK Inc.(*2)	W	34,002		618,183		256,314

Associates	SK m&service Co., Ltd.		4,584		34,214		1,211
	Penguin Solutions, Inc.(*3)		15,191		—		99,822

	Others(*4,5)		22,144		25,439		129

			41,919		59,653		101,162

Others	SK Innovation Co., Ltd.		8,566		18,819		2,050
	SK Energy Co., Ltd.		1,793		74		—
	SK Geo Centric Co., Ltd.		810		320		—
	SK Networks Co., Ltd.(*6)		9,786		977,911		—
	SK Networks Service Co., Ltd.		4,964		60,740		3,928
	SK Ecoplant Co., Ltd.		2,959		286		34,765
	SK hynix Inc.		64,330		792		—
	SK Shieldus Co., Ltd.		54,407		178,304		29,009
	Content Wavve Corp.		8,422		59,667		—
	Eleven Street Co., Ltd.		72,221		29,817		—
	SK Planet Co., Ltd.		7,990		74,562		1,670
	SK intellix Co.,Ltd. (Formerly, SK Magic Co., Ltd.)		1,391		1,165		—
	Tmap Mobility Co., Ltd.		12,221		5,503		—
	Onestore Co., Ltd.		12,365		37		—
	Dreamus Company		3,915		50,339		—
	UNA Engineering Inc.		92		57,350		47,061
	Happy Narae Co., Ltd.		709		32,268		42,137
	SK REIT Co., Ltd.(*7)		215,701		1,174		—
	Others		39,459		50,603		20,130

			522,101		1,599,731		180,750

		W	598,022		2,277,567		538,226

115

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

36.

Transactions with Related Parties, Continued

(3)

Transactions with related parties for the years ended December 31, 2025 and 2024 are as follows, Continued:

(*1)

Operating expenses and others include lease payments by the Group.

(*2)

Operating expenses and others include W177,961 million of dividends paid by the Parent Company.

(*3)

Operating revenue and others include W15,191 million of dividends received.

(*4)

The disposal of the shares in F&U Credit Information Co., Ltd. held by the Group was completed on April 4, 2025, and the transactions subsequent to the disposal have not been included.

(*5)

Operating revenue and others include W18,339 million of dividends received which was deducted from the investment in associates.

(*6)

Operating expenses and others include costs for handset purchases amounting to W914,042 million.

(*7)

Operating revenue and others include W215,699 million arising from the disposal of the office building located in Seongnam-si, Gyeonggi-do.

116

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

36.

Transactions with Related Parties, Continued

(3)

Transactions with related parties for the years ended December 31, 2025 and 2024 are as follows, Continued:


(In millions of won)		2024
Scope	Company	Operating revenue and others		Operating expenses and others(*1)		Acquisition of property and equipment and others
Ultimate controlling entity	SK Inc.(*2)	W	19,501		660,578		125,691

Associates	F&U Credit information Co., Ltd.		3,227		48,035		266
	SK AMERICAS Inc. (Formerly, SK USA Inc.)		649		5,462		—
	Daehan Kanggun BcN Co., Ltd.		9,551		—		—
	Others(*3)		10,154		13,051		296

			23,581		66,548		562

Others	SK Innovation Co., Ltd.		14,630		16,757		—
	SK Energy Co., Ltd.		3,822		264		—
	SK Geo Centric Co., Ltd.		847		187		—
	SK Networks Co., Ltd.(*4)		5,096		1,011,217		—
	SK Networks Service Co., Ltd.		5,300		67,713		4,352
	SK Ecoplant Co., Ltd.		2,993		—		—
	SK hynix Inc.		50,127		256		—
	SK Shieldus Co., Ltd.		61,040		147,587		18,863
	Content Wavve Corp.		13,432		83,164		—
	Eleven Street Co., Ltd.		69,448		31,277		—
	SK Planet Co., Ltd.		15,580		84,536		14,656
	SK RENT A CAR Co., Ltd.(*5)		8,336		14,462		169
	SK intellix Co.,Ltd. (Formerly, SK Magic Co., Ltd.)		1,522		796		—
	Tmap Mobility Co., Ltd.		24,291		6,452		—
	Onestore Co., Ltd.		14,588		1,604		—
	Dreamus Company		5,526		66,242		265
	UNA Engineering Inc.		88		55,902		50,497
	Happy Narae Co., Ltd.		1,317		15,760		108,074
	Others		47,355		75,040		25,236

			345,338		1,679,216		222,112

		W	388,420		2,406,342		348,365

(*1)

Operating expenses and others include lease payments by the Group.

(*2)

Operating expenses and others include W232,466 million of dividends paid by the Parent Company.

(*3)

Operating revenue and others include W7,718 million of dividends received which was deducted from the investment in associates.

(*4)

Operating expenses and others include costs for handset purchases amounting to W964,692 million.

(*5)

SK RENT A CAR Co., Ltd. was excluded from the related parties for the year ended December 31, 2024, and the transactions above occurred before the related party relationship terminated.

117

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

36.

Transactions with Related Parties, Continued

(4)

Account balances with related parties as of December 31, 2025 and 2024 are as follows:


(In millions of won)		December 31, 2025
		Receivables		Payables
Scope	Company	Accounts receivable – trade, etc.		Accounts payable – other, etc.
Ultimate controlling entity	SK Inc.	W	9,193		170,652
Associates	SK m&service Co., Ltd.		700		32,081
	Others		1,009		1,790

			1,709		33,871

Others	SK Innovation Co., Ltd.		4,996		21,976
	SK Networks Co., Ltd.		258		123,865
	Mintit Co., Ltd.		2,553		2
	SK hynix Inc.		13,232		291
	Happy Narae Co., Ltd.		37		2,851
	SK Shieldus Co., Ltd.		15,393		18,754
	Content Wavve Corp.		—		6
	Incross Co., Ltd.		1,820		25,570
	Eleven Street Co., Ltd.		17,455		2,189
	SK Planet Co., Ltd.		259		5,933
	UNA Engineering Inc.		—		9,271
	SK REIT Co., Ltd.		7,890		61,835
	Others		11,895		24,816

			75,788		297,359

		W	86,690		501,882

118

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

36.

Transactions with Related Parties, Continued

(4)

Account balances with related parties as of December 31, 2025 and 2024 are as follows, Continued:


(In millions of won)		December 31, 2024
		Receivables				Payables
Scope	Company	Loans		Accounts receivable – trade, etc.		Accounts payable – other, etc.
Ultimate controlling entity	SK Inc.	W	—		1,668		76,471
Associates	F&U Credit information Co., Ltd.		—		54		4,610
	Daehan Kanggun BcN Co., Ltd.(*)		22,147		—		—
	Others		—		5,158		7,001

			22,147		5,212		11,611

Others	SK Innovation Co., Ltd.		—		6,531		28,326
	SK Networks Co., Ltd.		—		372		140,120
	Mintit Co., Ltd.		—		4		—
	SK hynix Inc.		—		12,680		206
	Happy Narae Co., Ltd.		—		52		17,833
	SK Shieldus Co., Ltd.		—		12,582		20,515
	Content Wavve Corp.		—		1,564		7
	Incross Co., Ltd.		—		1,946		20,353
	Eleven Street Co., Ltd.		—		16,637		4,750
	SK Planet Co., Ltd.		—		980		15,491
	UNA Engineering Inc.		—		—		25,498
	Others		—		12,703		27,981

			—		66,051		301,080

		W	22,147		72,931		389,162

(*)

As of December 31, 2024, the Parent Company recognized loss allowance for the entire balance of loans to Daehan Kanggun BcN Co., Ltd.

(5)

The Group has granted SK REIT Co., Ltd. the right of first offer regarding the disposal of specified real estates owned by the Group, and the negotiation period is three years from June 30, 2024, the date of agreement. In addition, the Group has been granted the right by SK REIT Co., Ltd. to lease the real estate in preference to a third party if SK REIT Co., Ltd. purchases the real estate from the Group.

(6)

The details of additional investments and disposal of associates for the year ended December 31, 2025 are presented in note 11.

119

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

37.

Commitments and Contingencies

(1) Collateral assets and commitments

SK Broadband Co., Ltd., a subsidiary of the Parent Company, has pledged its properties as collateral for leases on buildings in the amount of W1,198 million as of December 31, 2025.

(2) Legal claims and litigations

As of December 31, 2025, the Group is involved in various legal claims and litigations. The provision recognized in relation to these claims and litigations is immaterial. For legal claims and litigations for which no provision has been recognized, management does not believe the Group has a present obligation, nor is any such matter expected to have a material effect on the Group’s financial position or operating results in the event an outflow of resources becomes necessary.

(3) Accounts receivable from sale of handsets

Retail stores and authorized dealers of the Parent Company sell handsets to the Parent Company’s subscribers on an installment basis. The Parent Company has entered into comprehensive agreements with these retail stores and authorized dealers to purchase the related accounts receivable from handset sales and to transfer the accounts receivable from handset sales to special purpose companies which were established with the purpose of liquidating receivables, respectively.

The accounts receivable from sale of handsets amounting to W205,160 million and W241,962 million as of December 31, 2025 and 2024, respectively, which the Parent Company purchased according to the relevant comprehensive agreements, are recognized as accounts receivable – other and long-term accounts receivable – other.

(4) Obligation relating to spin-off

The Parent Company completed the spin-off of its business of managing investments in semiconductor, New Information and Communication Technologies(“ICT”) and other businesses and making new investments on November 1, 2021. In accordance with Article 530-9 (1) of the Korean Commercial Act, the Parent Company and SK Square Co., Ltd., the spin-off company, are jointly and severally liable for liabilities incurred by the Parent Company prior to the spin-off.

120

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

37.

Commitments and Contingencies, Continued

(5) As of December 31, 2025, the Group has committed to incur W24,008 million of acquisition costs for property and equipment and intangible assets in future periods under existing arrangements.

(6) According to the covenants associated with the Group’s bond issuances and borrowings, the Group is required to maintain certain financial ratios, including the debt ratio, within speficified thresholds. The funds obtained must be used for specified purposes, and regular reporting to lenders is required. Additionally, the contracts include clauses that restrict the provision of additional collateral over the Group’s assets and limite the disposal of certain assets.

(7) The Parent Company entered into a contract with SK Inc. for the use of Amazon Web Services (“AWS”). In accordance with the contract, the Parent Company is entitled to receive AWS services for a ten-year period beginning in July 2025, with a total contract value of USD 800,000,000.

121

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

38.

Statements of Cash Flows

(1)

Adjustments for income and expenses from operating activities for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025			2024
Interest income	W	(73,064	)		(87,245	)
Dividends		(57,060	)		(35,818	)
Gain on foreign currency translations		(3,671	)		(9,344	)
Gain (loss) relating to investments in subsidiaries, associates and joint ventures, net		63,602			(321,787	)
Gain on disposal of property and equipment and intangible assets		(127,058	)		(37,316	)
Gain relating to financial instruments at FVTPL		(58,256	)		(190,368	)
Other finance costs		23,367			—
Interest expense		383,194			403,129
Loss on foreign currency translations		3,029			3,575
Loss on repayment of debentures		468			—
Loss on sale of accounts receivable – other		17,513			35,317
Income tax expense		347,177			374,670
Expense related to defined benefit plan		120,568			130,581
Share option expenses (reversal)		(744	)		6,696
Bonus paid by treasury shares		262			24,988
Depreciation and amortization		3,590,217			3,699,890
Bad debt for accounts receivables – trade		44,183			49,865
Impairment loss on property and equipment and intangible assets		3,140			94,736
Loss on disposal of property and equipment and intangible assets		15,296			17,427
Impairment loss on assets held for sale		12,320			—
Bad debt for accounts receivable – other		3,282			4,838
Loss relating to financial instruments at FVTPL		16,350			133,006
Loss on settlement of derivatives		7,298			—
Increase in other provisions		107,924			—
Other income (expenses)		(2,718	)		16,373

	W	4,436,619			4,313,213

122

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

38.

Statements of Cash Flows, Continued

(2)

Changes in assets and liabilities from operating activities for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025			2024
Accounts receivable – trade	W	47,995			(69,043	)
Accounts receivable – other		(44,132	)		(51,028	)
Advanced payments		15,478			4,503
Prepaid expenses		(361,744	)		(11,233	)
Inventories		33,402			(35,661	)
Long-term accounts receivable – other		34,179			135,823
Contract assets		(52,820	)		(6,966	)
Guarantee deposits		2,013			15,552
Accounts payable – trade		(20,297	)		(10,039	)
Accounts payable – other		233,283			(161,778	)
Withholdings		94,239			138,672
Contract liabilities		185,984			17,213
Deposits received		9,737			(1,835	)
Accrued expenses		(135,674	)		81,025
Provisions		(5,555	)		(160	)
Long-term provisions		(754	)		(357	)
Plan assets		82,445			6,110
Retirement benefits payment		(270,415	)		(157,801	)
Others		8,428			(1,810	)

	W	(144,208	)		(108,813	)

(3)

Material non-cash transactions for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025			2024
Decrease in accounts payable – other relating to the acquisition of property and equipment and intangible assets	W	(194,029	)		(130,413	)
Increase of right-of-use assets		278,554			523,494
Transfer from property and equipment to investment property		16,929			(5,482	)
Increase in accounts payable – other relating to the acquisition of shares		—			1,195,642

123

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

38.

Statements of Cash Flows, Continued

(4)

Reconciliation of liabilities arising from financing activities for the years ended December 31, 2025 and 2024 are as follows:


(In millions of won)
	2025
	January 1, 2025			Cash flows			Non-cash transactions
	January 1, 2025			Cash flows			Exchange rate changes(*1)			Fair value changes			Other changes			December 31, 2025
Total liabilities from financing activities:
Short-term borrowings	W	100,000			30,000			—			—			—			130,000
Long-term borrowings		515,600			(12,500	)		—			—			25			503,125
Debentures		8,511,280			(246,201	)		(31,078	)		—			(20,097	)		8,213,904
Lease liabilities		1,637,951			(372,834	)		—			—			260,681			1,525,798
Long-term payables – other		907,720			(369,150	)		—			—			9,391			547,961
Derivative financial liabilities		748			—			—			(127	)		—			621
Derivative financial assets		(270,797	)		52,859			—			16,676			—			(201,262	)

	W	11,402,502			(917,826	)		(31,078	)		16,549			250,000			10,720,147
Other cash flows from financing activities:
Payments of cash dividends				W	(628,359	)
Payments of interest on hybrid bonds					(19,800	)
Cash outflow from transactions with the non-controlling shareholders(*2)					(1,145,870	)
Cash inflow from transactions with the non-controlling shareholders					92

					(1,793,937	)

				W	(2,711,763	)

(*1)	The effect of changes in foreign exchange rates for financial liabilities at amortized cost.

(*2)	Includes W1,145,870 million of consideration paid to non-controlling shareholders for the acquisition of additional shares in SK Broadband Co., Ltd., a subsidiary of the Parent Company, for the year ended December 31, 2025.

124

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

38.

Statements of Cash Flows, Continued

(4)

Reconciliation of liabilities arising from financing activities for the years ended December 31, 2025 and 2024 are as follows, Continued:


(In millions of won)
	2024
	January 1, 2024			Cash flows			Non-cash transactions
	January 1, 2024			Cash flows			Exchange rate changes(*)		Fair value changes			Other changes		December 31, 2024
Total liabilities from financing activities:
Short-term borrowings	W	—			100,000			—		—			—		100,000
Long-term borrowings		718,078			(202,500	)		—		—			22		515,600
Debentures		8,325,643			725			179,773		—			5,139		8,511,280
Lease liabilities		1,611,433			(381,347	)		—		—			407,865		1,637,951
Long-term payables – other		1,260,453			(369,150	)		—		—			16,417		907,720
Derivative financial liabilities		9,212			—			—		(8,464	)		—		748
Derivative financial assets		(116,210	)		—			—		(154,587	)		—		(270,797	)

	W	11,808,609			(852,272	)		179,773		(163,051	)		429,443		11,402,502
Other cash flows from financing activities:
Payments of cash dividends				W	(804,317)
Payments of interest on hybrid bonds					(19,800)
Acquisition of treasury shares					(15,788)
Cash outflow from transactions with the non-controlling shareholders					(133,393)
Cash inflow from transactions with the non-controlling shareholders					15,717

					(957,581	)

				W	(1,809,853	)

(*)	The effect of changes in foreign exchange rates for financial liabilities at amortized cost.

125

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

39.

Emissions Liabilities

(1)

The quantities of emissions rights allocated free of charge for each implementation year as of December 31, 2025 are as follows:


(In tCO2-eQ)
	Quantities allocated in 2021		Quantities allocated in 2022		Quantities allocated in 2023		Quantities allocated in 2024		Quantities allocated in 2025		Total
Emissions rights allocated free of charge(*)		1,385,433		1,602,751		1,736,918		1,766,850		1,597,964		8,089,916

(*)

Finalized changes in allocated quantities, including additional allocations, cancellations and other adjustments, have been reflected.

(2)

Changes in the quantities of emissions rights held by the Group are as follows:


(In tCO2-eQ)
	Quantities allocated in 2023			Quantities allocated in 2024			Quantities allocated in 2025			Total
Beginning		306,575			414,356			517,280			1,238,211
Allocation at no cost		1,736,918			1,766,850			1,597,964			5,101,732
Sale		(56,266	)		(41,446	)		(250,738	)		(348,450	)
Surrender or shall be surrendered		(1,572,871	)		(1,622,480	)		(1,864,506	)		(5,059,857	)

Ending		414,356			517,280			—			931,636

(3)

As of December 31, 2025, the estimated annual greenhouse gas emissions quantities of the Group are 1,864,506 tCO2-eQ.

126

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

40.

Assets and Liabilities Held for Sale

Assets and liabilities held for sale as of December 31, 2025 and 2024 are as follows:


(In millions of won)
		December 31, 2025		December 31, 2024
Assets:
Disposal Groups(*1)	Cash and cash equivalents	W	27,569		22,986
	Accounts receivable – trade and other, net		23,591		71,401
	Prepaid expenses		1,877		1,127
	Inventories, net		6,278		3,740
	Property and equipment, net		10,866		17,412
	Investment property, net		—		1,719
	Intangible assets, net		17,795		5,655
	Right of use, net		2,646		—
	Goodwill		—		2,516
	Financial instrument		45,003		10
	Deferred tax assets		4,916		—
	Defined benefit assets		1,981		7,601
	Advanced payments and others		80		17,559
Investments in associates	F&U Credit information Co., Ltd.(*2)		—		11,138
Investments in associates	Daekyo Wipoongdangdang Contents Korea Fund		746		746
Long-term investment securities	Digital Content Korea Fund		—		3,395
	Central Fusion Content Fund		—		883
	P&I Cultural Innovation Fund		—		818
Property and equipment	—		141		6,133

		W	143,489		174,839
Liabilities:
Disposal Groups(*1)	Accounts payable – other	W	38,637		82,206
	Withholdings		16,863		16,161
	Lease liabilities		2,910		2,745
	Contract liabilities		43		1,261
	Provisions		275		1,924
	Other current liabilities		3,885		1,904
	Current tax liabilities		4,495		—
	Deferred tax liabilities		—		151

		W	67,108		106,352

(*1)	For the year ended December 31, 2025, the Group decided to dispose of the shares of SK stoa Co., Ltd. and Media S Co., Ltd., the consolidated subsidiaries. Accordingly, the assets and liabilities of SK stoa Co., Ltd. And Media S Co., Ltd. were reclassified as assets and liabilities held for sale.

(*2)	The Group disposed of its shares in F&U Credit information Co., Ltd., resulting in a gain of W7,367 million relating to investments in associates for the year ended December 31, 2025.

127

SK TELECOM CO., LTD. and its Subsidiaries

Notes to the Consolidated Financial Statements

For the years ended December 31, 2025 and 2024

41.

Business Combinations Under Common Control

(1)

General Information

On July 1, 2025, SK Broadband Co., Ltd., a subsidiary of the Parent Company, acquired the Pangyo Data Center business from SK Inc., a related party.

As this transaction is a business combination under common control, the assets acquired and liabilities assumed were recognized at the carrying amounts in SK Inc.’s (the ultimate controlling entity) consolidated financial statements, and the difference between the consideration transferred and the carrying amounts of net assets acquired was recognized as capital surplus and others for the year ended December 31, 2025.

(2)

Considerations transferred and identifiable assets acquired and liabilities assumed are as follows:


(In millions of won)
	Amounts
I. Consideration transferred:
Cash and cash equivalents	W	506,844
II. Identifiable assets acquired and liabilities assumed:
Accounts receivable – trade and other, net		19,085
Property and equipment, net		240,303
Intangible assets, net		2
Accounts payable – trade and other		(3,992	)

		255,398

III. Capital surplus and others(I - II)	W	251,446

128

Audit opinion on internal control over financial reporting for consolidation purposes

The accompanying independent auditors’ report on internal control over financial reporting for consolidation purposes is attached as a result of the audits of the internal control over financial reporting for consolidation purposes of SK Telecom Co., Ltd. and its subsidiaries (the “Group”) and the consolidated financial statements of the Group as of and for the year ended December 31, 2025 in accordance with the Paragraph 7 of Article 8 of the Act on External Audit of Stock Companies.

Attachments:

Independent Auditor’s Report on Internal Control over Financial Reporting for Consolidation Purposes

Management’s Annual Report on Internal Control over Financial Reporting for Consolidation Purposes

129

Independent Auditors’ Report on Internal Control over Financial Reporting for Consolidation Purposes

(Based on a report originally issued in Korean)

The Shareholders and Board of Directors

SK Telecom Co., Ltd.

Opinion on Internal Control over Financial Reporting for Consolidation Purposes

We have audited SK Telecom Co., Ltd. and its subsidiaries(the “Group”) Internal Control over Financial Reporting (“ICFR”) for consolidation purposes as of December 31, 2025, based on the criteria established in the Conceptual Framework for Designing and Operating ICFR issued by the Operating Committee of Internal Control over Financial Reporting in the Republic of Korea (“ICFR Design and Operation Framework”).

In our opinion, the Group maintained, in all material respects, effective ICFR for consolidation purposes as of December 31, 2025, based on ICFR Design and Operation Framework.

We also have audited, in accordance with Korean Standards on Auditing (“KSAs”), the consolidated financial statements of the Group, which comprise the consolidated statement of financial position as of December 31, 2025, the consolidated statements of income, comprehensive income, changes in equity, and cash flow for the year then ended, and notes, including material accounting policies, and our report dated March 10, 2026 expressed an unmodified opinion on those consolidated financial statements.

Basis for Opinion on Internal Control over Financial Reporting for Consolidation Purposes

We conducted our audit in accordance with KSAs. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of Internal Control over Financial Reporting for Consolidation Purposes section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of ICFR for consolidation purposes in the Republic of Korea, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management and Those Charged with Governance for the Internal Control over Financial Reporting for Consolidation Purposes

The Group’s management is responsible for designing, operating, and maintaining effective ICFR for consolidation purposes and for its assessment of the effectiveness of ICFR for consolidation purposes, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting for Consolidation Purposes.

Those charged with governance are responsible for overseeing the Group’s ICFR for consolidation purposes.

Auditors’ Responsibilities for the Audit of the Internal Control over Financial Reporting for Consolidation Purposes

Our responsibility is to express an opinion on the Group’s ICFR for consolidation purposes based on our audit. We conducted our audit in accordance with KSAs. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective ICFR for consolidation purposes was maintained in all material respects.

An audit of ICFR for consolidation purposes includes performing procedures to obtain audit evidence about whether a material weakness exists. The procedures selected depend on the auditor’s judgment, including the assessment the risk that a material weakness exists. The audit involves obtaining an understanding of ICFR for consolidation purposes, and testing and evaluating the design and operating effectiveness of internal controls based on the assessed risks.

130

Definition and Inherent Limitations of Internal Control over Financial Reporting for Consolidation Purposes

The Group’s ICFR for consolidation purposes is implemented by those charged with governance, management, and other employees, and is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with Korean International Financial Reporting Standards (“K-IFRS”). The Group’s ICFR for consolidation purposes includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Group; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with K-IFRS, and that receipts and expenditures of the Group are being made only in accordance with authorizations of management and directors of the Group; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Group’s assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, ICFR for consolidation purposes may not prevent, or detect misstatements in the consolidated financial statements. 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

The engagement partner on the audit resulting in this independent auditor’s report is In Hye Kang.

LOGO

KPMG Samjong Accounting Corp.

Seoul, Korea

March 10, 2026

This report is effective as of March 10, 2026, the audit report date. Certain subsequent events or circumstances, which may occur between the audit report date and the time of reading this report, could have a material impact on the internal control over financial reporting for consolidation purposes. Accordingly, the readers of the audit report should understand that the above audit report has not been updated to reflect the impact of such subsequent events or circumstances, if any.

131

Management’s Annual Report on Internal Control over Financial Reporting for Consolidation Purposes

English translation of a Report Originally Issued in Korean

To Shareholders, the Board of Directors and Audit Committee of

SK Telecom Co., Ltd.

We, as the Chief Executive Officer (“CEO”) and Internal Control over Financial Reporting (“ICFR”) Officer of SK Telecom Co., Ltd. and its subsidiaries (the “Group”), assessed the status of the design and operation of the Group’s ICFR for consolidation purposes for the year ending December 31, 2025.

The Group’s management including the CEO and ICFR Officer is responsible for designing and operating ICFR for consolidation purposes. We, as the CEO and ICFR Officer (collectively, “We”, “Our” or “Us”), evaluated whether the ICFR for consolidation purposes has been appropriately designed and is effectively operating to prevent and detect error or fraud which may cause material misstatement of the financial statements to ensure preparation and disclosure of reliable financial information.

We used the ‘Conceptual Framework for Designing and Operating Internal Control over Financial Reporting’ established by the Operating Committee of Internal Control over Financial Reporting in Korea (the “ICFR Committee”)’ as the criteria for design and operation of the Group’s ICFR for consolidation purposes. We also conducted an evaluation of ICFR for consolidation purposes based on the ‘Evaluation and Reporting Standard for Internal Control over Financial Reporting’ set forth in Appendix 6 of the Detailed Enforcement Rule of the Regulation on External Audit and Accounting.

Based on our assessment of ICFR for consolidation purposes operation, we concluded that the Group’s ICFR for consolidation purposes has been appropriately designed and is operating effectively in all material respects as of December 31, 2025, in accordance with the ‘Conceptual Framework for Designing and Operating Internal Control over Financial Reporting’.

We certify that this report does not contain any untrue statement of a fact, or omit to state a fact necessary to be presented herein. We also certify that this report does not contain or present any statements which might cause material misunderstandings of the readers, and we have reviewed and verified this report with sufficient care.

(Appendix)

- Internal control activities performed by the Group to address fraud risks related to misappropriation of assets and other treasury-related fraud

February 24, 2026

/s/ Park, Jong Seok

Internal Control over Financial Reporting Officer

/s/ Ryu, Young Sang

Chief Executive Officer

132

(Appendix) Internal control activities performed by the company to address fraud risks related to misappropriation of assets and other treasury-related fraud


	Control activities	Entity subject to control activities	Results of the design and operating effectiveness assessment (performing department, timing, etc)
Entity level control	<Operation of the whistleblowing system and appropriate actions> The company independently operates both internal and external reporting channels for ethical violations. Upon receipt of a report, immediate actions are taken, and the matter is analyzed to identify measures to prevent recurrence. The results are reported to management and the Audit Committee of the Board of Directors and are also incorporated into the company’s ethics program.	The Parent Company and 8 subsidiaries	No material weaknesses were identified. (The Parent Company and 8 subsidiaries’ ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)
	<Assessment of fraud risks related to ICFR> The company considers fraud risk when determining the annual scope of internal control over financial reporting and prepares fraud risk assessments that take into account risk factors related to fraudulent financial reporting and the misappropriation of assets. The company reports the ICFR annual operational review plan, including procedures and results reflecting fraud risk considerations in determining the scope of ICFR, to the Internal Control over Financial Reporting Officer and the Audit Committee, among others.	The Parent Company and 8 subsidiaries	No material weaknesses were identified. (The Parent Company and 8 subsidiaries’ ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)
	<Monitoring of compliance with segregation of duties and access control policies> The company has established and operates segregation of duties policies, and the person responsible for authority management performs semiannual reviews to identify any violations of these policies and assesses the results.	The Parent Company and 8 subsidiaries	No material weaknesses were identified. (The Parent Company and 8 subsidiaries’ ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)
	<Classification of ICFR deficiencies and establishment of remediation plans> The company consults with relevant departments regarding any deficiencies identified following the annual evaluation of ICFR to classify control deficiencies and develop remediation plans. The company also prepares documentation of identified internal control deficiencies and the corresponding remediation measures.	The Parent Company and 8 subsidiaries	No material weaknesses were identified. (The Parent Company and 8 subsidiaries’ ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)

133

(Appendix) Internal control activities performed by the company to address fraud risks related to misappropriation of assets and other treasury-related fraud, Continued:


	Control activities	Entity subject to control activities	Results of the design and operating effectiveness assessment (performing department, timing, etc)
Treasury control	<Segregation of duties in the treasury process> The responsibilities for initiating or modifying fund transfers are segregated from those for approving fund transfers.	The Parent Company and 8 subsidiaries	No material weaknesses were identified. (The Parent Company and 8 subsidiaries’ ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)
	<Reconciliation of cash and cash equivalents balances> The head of the treasury department periodically reviews reconciliations between the subsidiary ledger for cash and cash equivalents and bank transaction reports, and where differences are identified, reviews and approves the appropriateness of the supporting evidence for such differences.	The Parent Company and 8 subsidiaries	No material weaknesses were identified. (The Parent Company and 8 subsidiaries’ ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)
	<Restriction of treasury disbursement authority> Authority to create or modify bank account information and to create, modify and execute fund transfers is restricted to qualified personnel within the treasury department.	The Parent Company and 8 subsidiaries	No material weaknesses were identified. (The Parent Company and 8 subsidiaries’ ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)
	<Identification of dormant bank accounts and closure of unused accounts> The treasury department periodically reviews all bank accounts held in the company’s name to identify dormant or omitted accounts and closes unused accounts where necessary.	The Parent Company and 8 subsidiaries	No material weaknesses were identified. (The Parent Company and 8 subsidiaries’ ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)
	<Review of treasury disbursement> The treasury department reviews and approves fund transfer transactions recorded in the corporate banking and/or internet banking systems by verifying their consistency with key details in the supporting documents.	The Parent Company and 8 subsidiaries	No material weaknesses were identified. (The Parent Company and 8 subsidiaries’ ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)
	<Reconciliation between authorization records of corporate cards issued in the company’s name and billing statements> The person responsible for corporate cards issued in the company’s name compares the card issuer’s authorization records with billing statements on a monthly basis to identify any differences and adjusts such differences where necessary.	The Parent Company and 8 subsidiaries	No material weaknesses were identified. (The Parent Company and 8 subsidiaries’ ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)

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(Appendix) Internal control activities performed by the company to address fraud risks related to misappropriation of assets and other treasury-related fraud, Continued:


	Control activities	Entity subject to control activities	Results of the design and operating effectiveness assessment (performing department, timing, etc)
Treasury control	<Approval of bank account opening and closure> The head of the treasury department reviews and approves the justification for requests to open or close bank accounts.	The Parent Company and 8 subsidiaries	No material weaknesses were identified. (The Parent Company and 8 subsidiaries’ ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)
	<Review and approval of reconciliations relating to the list of bank accounts> The head of the treasury department periodically reviews and approves the reconciliation between bank balance confirmations and the related list of bank accounts recorded in the books.	The Parent Company and 8 subsidiaries	No material weaknesses were identified. (The Parent Company and 8 subsidiaries’ ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)
	<Controls over access to and use of treasury-related physical assets> Access to treasury-related physical assets is restricted, and where the company’s seals are used, a seal usage request form is prepared and approved by an authorized approver within the department responsible for seal management.	The Parent Company and 8 subsidiaries	No material weaknesses were identified. (The Parent Company and 8 subsidiaries’ ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)
	<Review of treasury financing activities> The treasury department reviews and approves the appropriateness of key terms and conditions set forth in borrowing and bond issuance approval documents and submits such matters to the Board of Directors where board approval is required.	The Parent Company and 1 subsidiary	No material weaknesses were identified. (The Parent Company and 1 subsidiary’s ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)
Other transac-tion level control	<Approval of the creation and modification of key vendor master information> Authorized approvers within the vendor master management function, including the head of the treasury department, review and approve the creation or modification of key vendor master information (such as business registration numbers and vendor’s bank account) after confirming its consistency with supporting documents.	The Parent Company and 4 subsidiaries	No material weaknesses were identified. (The Parent Company and 4 subsidiaries’ ICFR department, Jul. 2025, Sep. 2025, Dec. 2025, Feb. 2026)

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