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.

 

Date: March 11, 2026

SK TELECOM CO., LTD.

Separate Financial Statements

For the year ended December 31, 2025

(With Independent Auditors’ Report Thereon)

Contents

 

		Page
Independent Auditors’ Report			1
Separate Financial Statements			4
Separate Statements of Financial Position			5
Separate Statements of Income			7
Separate Statements of Comprehensive Income			8
Separate Statements of Changes in Equity			9
Separate Statements of Cash Flows			10
Notes to the Separate Financial Statements			12
Independent Auditors’ Report on Internal Control over Financial Reporting			113
Management’s Annual Report on Internal Control over Financial Reporting			115

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 separate financial statements of SK Telecom Co., Ltd. (the “Company”) which comprise the separate statement of financial position as of December 31, 2025, and the separate 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 separate financial statements present fairly, in all material respects, the separate financial position of the Company as of December 31, 2025, and its separate financial performance and 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 Company’s Internal Control over Financial Reporting (“ICFR”) 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 Company’s ICFR.

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 Separate Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the separate 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 Matter

Key audit matter is a matter that, in our professional judgment, was of most significance in our audit of the separate financial statements as of and for the year ended December 31, 2025. This matter was addressed in the context of our audit of the separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.

Existence and Accuracy of Wireless Service Revenue

As described in Notes 3 (21) and 27 to the separate financial statements, the Company 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 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 separate 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 W9,946,153 million.

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

 

•

Inspecting key terms of subscriber contracts to assess whether the Company’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 Company’s revenue recognition.

 

1

•

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.

Other Matters

The separate financial statements of the Company 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 separate financial statements may differ from those generally accepted and applied in other countries.

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

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

In preparing the separate financial statements, management is responsible for assessing the Company’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 Company or to cease operations, or has no realistic alternative but to do so.

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

Auditors’ Responsibilities for the Audit of the Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the separate 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 separate 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 separate 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 separate 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 Company’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 separate 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 Company to cease to continue as a going concern.

 

2

•

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

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 separate 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.

 

KPMG Samjong Accounting Corp.

Seoul, Korea

March 10, 2026

 

 

3

SK TELECOM CO., LTD.

SEPARATE FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024

 

 

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

Ryu, Young-Sang

Chief Executive Officer

SK TELECOM CO., LTD.

 

4

SK TELECOM CO., LTD.

Separate 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	771,861				1,165,158
Short-term financial instruments			4,34,35				89,155				79,000
Accounts receivable – trade, net			5,34,35,36				1,469,426				1,508,893
Short-term loans, net			5,34,35,36				60,122				55,577
Accounts receivable – other, net			5,34,35,36,37				393,136				390,243
Contract assets			7,35				5,958				5,275
Prepaid expenses			6				1,997,049				1,802,742
Guarantee deposits			5,34,35,36				58,513				67,521
Prepaid income taxes			31				8,827				—
Derivative financial assets			19,34,35,38				—				80,650
Inventories, net							16,940				38,982
Non-current assets held for sale			40				40,081				11,568
Advanced payments and others			5,34,35				21,489				36,796
							4,932,557				5,242,405
Non-Current Assets:
Long-term financial instruments			4,34,35				354				354
Long-term investment securities			8,34,35				2,396,996				1,418,465
Investments in subsidiaries, associates and joint ventures			9				5,892,726				4,899,558
Property and equipment, net			10,12,36				7,680,504				8,515,225
Investment property, net			11				47,287				35,462
Goodwill			13				1,306,236				1,306,236
Intangible assets, net			14				1,230,202				1,683,018
Long-term loans, net			5,34,35,36				363				490
Long-term accounts receivable – other, net			5,34,35,37				235,980				239,008
Long-term contract assets			7,35				11,363				13,301
Long-term prepaid expenses			6				1,065,238				894,226
Guarantee deposits, net			5,34,35,36				92,213				85,939
Long-term derivative financial assets			19,34,35,38				156,256				148,172
Defined benefit assets			18				100,212				103,518
Other non-current assets							249				249
							20,216,179				19,343,221
Total Assets						W	25,148,736				24,585,626

 

(Continued)

 

5

SK TELECOM CO., LTD.

Separate 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:
Short-term borrowings			15,34,35,38			W	130,000				—
Accounts payable – other			34,35,36				1,527,175				1,543,989
Contract liabilities			7				108,613				76,682
Withholdings			34,35				773,970				717,547
Accrued expenses			34,35				792,458				996,204
Income tax payable			31				—				172,008
Provisions			17,39				137,750				40,710
Current portion of long-term debt, net			15,34,35,38				864,696				1,930,070
Lease liabilities			34,35,36,38				354,906				308,141
Current portion of long-term payables – other			16,34,35,38				368,572				367,765
Derivative financial liabilities			19,34,35,38				581				78,467
Other current liabilities			34,35				11,521				9,303
							5,070,242				6,240,886
Non-Current Liabilities:
Debentures, excluding current portion, net			15,34,35,38				5,416,644				4,955,124
Long-term borrowings, excluding current portion, net			15,34,35,38				300,000				200,000
Long-term payables – other			16,34,35,38				179,389				539,955
Long-term contract liabilities			7				1,699				1,528
Long-term derivative financial liabilities			19,34,35,38				621				3,437
Long-term lease liabilities			34,35,36,38				782,702				850,311
Long-term provisions			17				69,517				60,395
Deferred tax liabilities			31				1,277,326				717,278
Other non-current liabilities			34,35				59,546				55,858
							8,087,444				7,383,886
Total Liabilities							13,157,686				13,624,772
Shareholders’ Equity:
Share capital			1,20				30,493				30,493
Capital surplus and others			20,21,22,23				(4,547,673	)			(4,551,820	)
Retained earnings			24,25				15,199,915				15,273,451
Reserves			26				1,308,315				208,730
Total Shareholders’ Equity							11,991,050				10,960,854
Total Liabilities and Shareholders’ Equity						W	25,148,736				24,585,626

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

 

6

SK TELECOM CO., LTD.

Separate 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:			27,36
Revenue						W	12,051,068				12,774,060
Operating expenses:			36
Labor							1,102,748				1,139,968
Commission			6				4,807,803				4,773,925
Depreciation and amortization							2,510,464				2,645,850
Network interconnection							405,834				463,783
Leased lines							193,454				193,896
Advertising							124,709				136,723
Rent							127,268				122,499
Cost of goods sold							607,219				600,190
Others			28				1,359,727				1,174,051
							11,239,226				11,250,885
Operating profit							811,842				1,523,175
Finance income			30				307,372				513,884
Finance costs			30				(372,807	)			(485,535	)
Other non-operating income			29				152,505				51,855
Other non-operating expenses			29				(170,266	)			(141,478	)
Gain relating to investments in subsidiaries, associates and joint ventures, net			9				7,852				15,183
Profit before income tax							736,498				1,477,084
Income tax expense			31				325,703				196,600
Profit for the year						W	410,795				1,280,484
Earnings per share:			32
Basic earnings per share (in won)						W	1,836				5,923
Diluted earnings per share (in won)							1,836				5,907

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

 

7

SK TELECOM CO., LTD.

Separate 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	410,795				1,280,484
Other comprehensive income (loss):
Items that will not be reclassified subsequently to profit or loss, net of taxes:
Remeasurement of defined benefit plans			18				(22,748	)			(5,771	)
Valuation gain on financial assets at fair value through other comprehensive income			26,30				1,222,439				13,659
Items that are or may be reclassified subsequently to profit or loss, net of taxes:
Net change in unrealized fair value of derivatives			19,26,30				12,445				(4,721	)
Other comprehensive income for the year, net of taxes							1,212,136				3,167
Total comprehensive income						W	1,622,931				1,283,651

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

 

8

SK TELECOM CO., LTD.

Separate Statements of Changes in Equity

For the years ended December 31, 2025 and 2024

 

(In millions of won)
										Capital surplus and others
		Note				Share capital				Paid-in surplus				Treasury shares				Hybrid bonds				Share option				Other				Sub-total				Retained earnings				Reserves				Total equity
Balance as of January 1, 2024						W	30,493				1,771,000				(301,981	)			398,509				9,818				(6,643,493	)			(4,766,147	)			15,032,473				139,274				10,436,093
Total comprehensive income:
Profit for the year							—				—				—				—				—				—				—				1,280,484				—				1,280,484
Other comprehensive income (loss)			18,19,26,30				—				—				—				—				—				—				—				(66,289	)			69,456				3,167
							—				—				—				—				—				—				—				1,214,195				69,456				1,283,651
Transactions with owners:
Annual dividends			33				—				—				—				—				—				—				—				(223,335	)			—				(223,335	)
Interim dividends			33				—				—				—				—				—				—				—				(530,082	)			—				(530,082	)
Share option			23				—				—				—				—				4,680				493				5,173				—				—				5,173
Interest on hybrid bonds			22				—				—				—				—				—				—				—				(19,800	)			—				(19,800	)
Acquisition and disposal of treasury shares			21				—				—				9,019				—				—				135				9,154				—				—				9,154
Retirement of treasury shares			21				—				—				200,000				—				—				—				200,000				(200,000	)			—				—
							—				—				209,019				—				4,680				628				214,327				(973,217	)			—				(758,890	)
Balance as of December 31, 2024						W	30,493				1,771,000				(92,962	)			398,509				14,498				(6,642,865	)			(4,551,820	)			15,273,451				208,730				10,960,854
Balance as of January 1, 2025						W	30,493				1,771,000				(92,962	)			398,509				14,498				(6,642,865	)			(4,551,820	)			15,273,451				208,730				10,960,854
Total comprehensive income:
Profit for the year							—				—				—				—				—				—				—				410,795				—				410,795
Other comprehensive income			18,19,26,30				—				—				—				—				—				—				—				112,551				1,099,585				1,212,136
							—				—				—				—				—				—				—				523,346				1,099,585				1,622,931
Transactions with owners:
Annual dividends			33				—				—				—				—				—				—				—				(223,531	)			—				(223,531	)
Interim dividends			33				—				—				—				—				—				—				—				(353,551	)			—				(353,551	)
Share option			23				—				—				—				—				13				(1,169	)			(1,156	)			—				—				(1,156	)
Interest on hybrid bonds			22				—				—				—				—				—				—				—				(19,800	)			—				(19,800	)
Disposal of treasury shares			21				—				—				4,429				—				—				874				5,303				—				—				5,303
							—				—				4,429				—				13				(295	)			4,147				(596,882	)			—				(592,735	)
Balance as of December 31, 2025						W	30,493				1,771,000				(88,533	)			398,509				14,511				(6,643,160	)			(4,547,673	)			15,199,915				1,308,315				11,991,050

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

 

9

SK TELECOM CO., LTD.

Separate 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	410,795				1,280,484
Adjustments for income and expenses			38				3,107,322				3,093,252
Changes in assets and liabilities related to operating activities			38				(368,497	)			99,735
							3,149,620				4,473,471
Interest received							27,661				36,833
Dividends received							240,015				216,886
Interest paid							(281,519	)			(293,944	)
Income tax paid							(382,769	)			(244,313	)
Net cash provided by operating activities							2,753,008				4,188,933
Cash flows from investing activities:
Cash inflows from investing activities:
Decrease in short-term financial instruments, net							—				109,738
Collection of short-term loans							90,387				121,314
Proceeds from disposals of long-term investment securities							650,145				36,171
Proceeds from disposals of investments in subsidiaries, associates and joint ventures							37,268				80,691
Proceeds from disposals of non-current assets held for sale							34,389				—
Proceeds from disposals of property and equipment							236,842				43,052
Proceeds from disposals of intangible assets							7,242				24,793
							1,056,273				415,759
Cash outflows for investing activities:
Increase in short-term financial instruments, net							(10,155	)			—
Increase in short-term loans							(94,850	)			(108,326	)
Acquisitions of long-term investment securities							(500	)			(1,145	)
Cash outflows from settlement of derivatives							(78,467	)			(112,903	)
Acquisitions of investments in subsidiaries, associates and joint ventures							(1,081,986	)			(285,604	)
Acquisitions of property and equipment							(1,260,722	)			(1,676,884	)
Acquisitions of intangible assets							(83,176	)			(32,925	)
							(2,609,856	)			(2,217,787	)
Net cash used in investing activities						W	(1,553,583	)			(1,802,028	)

 

(Continued)

 

10

SK TELECOM CO., LTD.

Separate 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 short-term borrowings, net						W	130,000				—
Proceeds from long-term borrowings							300,000				200,000
Proceeds from issuance of debentures							1,116,267				697,143
Cash inflows from settlement of derivatives							52,859				—
							1,599,126				897,143
Cash outflows for financing activities:
Repayments of long-term borrowings							(250,000	)			(390,000	)
Repayments of long-term payables – other							(369,150	)			(369,150	)
Repayments of debentures							(1,654,420	)			(860,000	)
Payments of dividends							(577,054	)			(753,390	)
Payments of interest on hybrid bonds							(19,800	)			(19,800	)
Repayments of lease liabilities							(321,515	)			(341,989	)
Acquisition of treasury shares							—				(15,788	)
							(3,191,939	)			(2,750,117	)
Net cash used in financing activities							(1,592,813	)			(1,852,974	)
Net increase (decrease) in cash and cash equivalents							(393,388	)			533,931
Cash and cash equivalents at beginning of the year							1,165,158				631,066
Effects of exchange rate changes on cash and cash equivalents							91				161
Cash and cash equivalents at end of the year						W	771,861				1,165,158

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

 

11

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

1.	Reporting Entity

SK Telecom Co., Ltd. (“the 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 Company is located at 65, Eulji-ro, Jung-gu, Seoul, Korea.

The 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 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

 

2.	Basis of Preparation

These separate 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 separate 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.

These financial statements are separate financial statements prepared in accordance with KIFRS 1027, Separate Financial Statements, presented by a parent and an investor with joint control of or significant influence over an investee, in which the investments are accounted for at cost less impairment, if any.

The separate 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 separate financial statements have been prepared on the historical cost basis, except for the following material items in the separate 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.

 

12

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

2.	Basis of Preparation, Continued

 

(2)

Functional and presentation currency

These separate financial statements are presented in Korean won, which is the currency of the primary economic environment in which the Company operates.

 

(3)

Use of estimates and judgments

The preparation of the separate 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 separate financial statements is included in notes for the following areas: financial risk management.

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 is included in the following notes: loss allowance (notes 5 and 35), estimated useful lives of costs to obtain a contract (notes 3 (21), and 6), property and equipment and intangible assets (notes 3 (7), (8), 10 and 14), impairment of goodwill and other non-financial assets (notes 3 (10) and 13), recognition of provision (notes 3 (15) and 17), measurement of defined benefit liabilities (notes 3 (14) and 18), transaction of derivative instruments (notes 3 (6) and 19) and recognition of deferred tax assets (liabilities) (notes 3 (23) and 31).

3) Fair value measurement

The Company’s accounting policies and disclosures require the measurement of fair values, for both a number of financial and non-financial assets and liabilities. The Company has 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 Company 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 Company 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.

 

13

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

2.	Basis of Preparation, Continued

 

(3)

Use of estimates and judgments, Continued

3) Fair value measurement, Continued

When measuring the fair value of an asset or a liability, the Company 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 Company 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 is included in note 19 and note 35.

 

14

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies

The material accounting policies applied by the Company in the preparation of its separate 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 Company for all periods presented. The Company has not early adopted any standards, and interpretations or amendments that have been issued but are not yet effective.

The following amended KIFRS is effective from January 1, 2025 and it did not have a material impact on the Company’s separate 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

The Company presents disclosures relating to operating segments on its consolidated financial statements in accordance with KIFRS 1108, Operating Segments, and such disclosures are not separately disclosed on these separate financial statements.

 

(2)

Investments in subsidiaries, associates, and joint ventures

These separate financial statements are prepared and presented in accordance with KIFRS 1027, Separate Financial Statements. The Company applies the cost method to investments in subsidiaries, associates and joint ventures in accordance with KIFRS 1027. Dividends from subsidiaries, associates, and joint ventures are recognized in profit or loss when the right to receive the dividends is established.

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.

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.

 

15

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(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.

 

(4)

Inventories

Inventories are initially recognized at the acquisition cost and subsequently measured using the 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 Company 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.

 

16

SK TELECOM CO., LTD.

Notes to the Separate 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

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 Company 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.

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 Company 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 Company 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.

 

17

SK TELECOM CO., LTD.

Notes to the Separate 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

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.

 

3)

Impairment

The Company estimates the expected credit losses (“ECL”) for the debt instruments measured at amortized cost and FVOCI based on the Company’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 Company 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 Company expects to receive).

At each reporting date, the Company 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 assets.

 

18

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(5)

Non-derivative financial assets, Continued

 

4)

Derecognition

Financial assets

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

The Company enters into transactions whereby it transfers assets recognized in its 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.

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 Company 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 Company first updated the effective interest rate of the financial asset or financial liability to reflect the change that is required by interest rate benchmark reform. After that, the Company 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 Company 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.

 

19

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(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 Company holds forward exchange contracts, interest rate swaps, currency swaps and other derivative contracts to manage interest rate risk and foreign exchange risk. The Company 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 Company 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.

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 Company 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 Company 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 Company 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 Company amends the hedge documentation of that hedging relationship to reflect the change(s) required by IBOR reform.

The Company 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.

 

20

SK TELECOM CO., LTD.

Notes to the Separate 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, Continued

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 Company 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 Company 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 Company 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.

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.

 

21

SK TELECOM CO., LTD.

Notes to the Separate 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 Company 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 (loss).

 

22

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(7)

Property and equipment, Continued

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

 

		Useful lives (years)
Buildings and structures		15, 30
Machinery		3 ~ 8, 10, 30
Other property and equipment		4 ~10

The Company 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.

 

(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 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 Company’s intangible assets are as follows:

 

		Useful lives (years)
Frequency usage rights		5 ~ 10
Land usage rights		5
Industrial rights		5, 10
Facility usage rights		10, 20
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.

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 Company 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.

 

23

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(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 Company 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 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.

 

24

SK TELECOM CO., LTD.

Notes to the Separate 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 Company’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 Company estimates the recoverable amount of an individual asset, and if it is impossible to measure the individual recoverable amount of an asset, the Company estimates the recoverable amount of cash-generating unit (“CGU”). 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 Company 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.

 

25

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(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 Company as a lessee

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

The Company 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 Company by the end of the lease term or the cost of the right-of-use asset reflects that the Company 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 Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate.

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

 

26

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(11)

Leases, Continued

1) The Company as a lessee, Continued

The lease liability is measured at amortized cost using the effective interest method. The Company 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 Company’s estimate of the amount expected to be payable under a residual value guarantee, if the Company 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.

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 Company 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 Company has elected not to recognize right-of-use assets and lease liabilities for leases of low-value assets and short-term leases. The Company 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)

Company as a lessor

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

When the Company 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 Company 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 Company considers certain indicators such as whether the lease is for the major part of the economic life of the asset.

When the Company is an intermediate lessor, it 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 Company 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 Company applies KIFRS 1115 to allocate the consideration in the contract.

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

 

27

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(11)

Leases, Continued

2) Company as a lessor, Continued

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

 

(12)

Non-current 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 non-current assets held for sale are measured at the lower of their carrying amounts and fair value less cost to sell. The Company 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.

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

 

28

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(13)

Non-derivative financial liabilities

The Company 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 Company recognizes financial liabilities in the separate statement of financial position when the Company 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 Company extinguishes a financial liability only when the contractual obligation is fulfilled, canceled or expires. The Company 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.

 

29

SK TELECOM CO., LTD.

Notes to the Separate 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 Company during an accounting period, the Company 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 Company’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 Company 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 Company 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 Company 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 Company 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 Company 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 Company recognizes a gain or loss on a settlement when the settlement of defined benefit plan occurs.

 

30

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(15)

Provisions

Provisions are recognized when the Company 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.

 

31

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(16)

Emissions Rights

The Company 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 Company 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.

 

32

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(17)

Transactions in foreign currencies

Transactions in foreign currencies are translated to the functional currency of the Company 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, 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.

 

(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 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.

 

(19)

Hybrid bond

The Company recognizes a financial instrument issued by the Company 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 Company 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.

 

33

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(21)

Revenue

 

1)

Identification of performance obligations in contracts with customers

The Company identifies the distinct services or goods as performance obligations in contracts with customers such as (1) providing wireless telecommunications services and (2) sale other goods and services. In the case of providing both wireless telecommunications service and selling a handset together to one customer, the Company 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 Company 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 Company 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 Company’s operating expenses. As these commissions would not have been incurred if the related contracts had not been obtained, the Company capitalizes the incremental costs of obtaining customer contracts and amortizes them over the expected contract periods.

 

4)

Customer loyalty programs

The Company 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 Company’s wireless telecommunications services may receive a discount for purchasing goods or services from a designated third party. The Company 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 Company accounts for the amounts payable to the third party as a reduction of the wireless telecommunications service revenue.

 

34

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(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.

 

35

SK TELECOM CO., LTD.

Notes to the Separate Financial Statements

For the years ended December 31, 2025 and 2024

 

3.	Material Accounting Policies, Continued

 

(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 items recognized directly in equity or in OCI.

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

 

1)

Current tax

In accordance with the tax-consolidation system, the Company calculates current taxes on the consolidated taxable income for the Company and its subsidiaries that meet the criteria for the consolidated income tax returns and recognizes the income tax payable as current tax liabilities of the Company.

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.

 

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 Company recognizes a deferred tax liability for all taxable temporary differences, except for the difference associated with investments in subsidiaries and associates that the Company 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 Company 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 Company and the reversal of existing temporary differences are considered in determining the future taxable profit.

The Company 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.

 

36