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New 3G ServicesStrategy Toward Growth
New 3G ServicesStrategy Toward Growth
May 24, 2006May 24, 2006
3G CDMA Latin America Regional Conference3G CDMA Latin America Regional Conference
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Table of ContentsTable of Contents
Wireless Industry in Korea
Strategy toward Growth
What’s Next?
Wireless Industry in Korea
Strategy toward Growth
What’s Next?
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Korean Wireless MarketKorean Wireless Market
B Co17.0%
SKT50.9%
A Co32.1%
19,530
12,302
6,510
SKT A Co B Co
17.2% 19.1% 21.8%
2,6755,008
10,161
SKT A Co B Co
% ofRevenue
SKT A Co B Co
4,288
1,945719
Market Share Market Share by Subscribersby Subscribers RevenueRevenue
Marketing ExpenseMarketing Expense to Salesto Sales EBITDA (Margin)EBITDA (Margin)
As of 2005 EndSource: MIC, Earnings release
(US$mn)(‘000s, %)
(US$mn)(%)
SK Telecom Remains the Undisputed Leader
(42.2%)
(38.8%)(26.9%)
3
A Co34%
Wireless Data Service Wireless Data Service
74% 85% 92%
26%15% 8%
SKT A Co B CoVoice Revenue Data Revenue
66%66%
SKT has higher data revenue portion than most global peers. It also leads data service in Korean market including EV-DO service
SKTSKT
Source: 2Q ’05 earnings release for the companies, respectively
Source: 2Q ’05 earnings release for the companies, respectively
Source: Global Mobile, As of 3Q ’05
Global Leadership in Data ServicesGlobal Leadership in Data Services Comparison to Domestic PeersComparison to Domestic Peers
EVDO SubscribersEVDO Subscribers
Peer Avg.: 16.1%
25.1%
8.4% 8.3%
12.2%
26.7%24.8%
SKT Verizon Sprint Telefonica Vodafone Docomo
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Maturing Korean Wireless MarketMaturing Korean Wireless Market
29,04732,342 33,592
36,58638,342
61.2%67.9% 70.1%
75.9%79.1%
2001 2002 2003 2004 2005
Subscribers Penetration
(‘000s, %) (US$mn)
Source: MIC, NSO
Limited Potential for Growth in the Conventional Voice Market
Korean WirelessKorean Wireless Market TrendMarket Trend SK TelecomSK Telecom’’s Revenue Growths Revenue Growth
6,227
8,6349,520 9,704 10,161 10,500
38.7%
10.3%
1.9% 4.7% 3.3%
2001 2002 2003 2005 2006E2004Revenue Annual Growth
SK TelecomSK Telecom’’s ARPU Trends ARPU Trend
43.944.5
43.544.2
2002 2003 2004 2005
(US$)
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SK Telecom’s Growth StrategySK Telecom’s Growth Strategy
Reinforce Domestic MNO Business through Introduction of New ServReinforce Domestic MNO Business through Introduction of New Services under a ices under a Convergence Environment and Enhance Global Business Initiatives Convergence Environment and Enhance Global Business Initiatives to Create New to Create New Business OpportunitiesBusiness Opportunities
Domestic Business Complemented by New Business to Enhance Growth
US & Vietnam
Satellite DMB
Telematics
Domestic MNO
Business
Domestic MNO
Business
New BusinessNew Business
Digital Home
ConvergenceData Business
Global Business
GXG
Cyworld Melon
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Strengthening Data BusinessStrengthening Data BusinessData Business to Fuel Top-line Growth
Financial Services
Smart UI
Music Portal Game PortalCinema Portal
3G Multimedia Service
Telematics Service
Online & Mobile Integrated Services
Security Service Messaging Service
Color Mail
Mobile BloggingService
SK Telecom’s Terminal Platform
SK TelecomSK Telecom’’s Major Brands for Its Wireless Data Servicess Major Brands for Its Wireless Data Services
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Leading Data ServicesLeading Data ServicesMelOn is Korea’s Number One Paid Music Site in Terms of Revenue and Subscriber Base
MP3 PlayerMP3 PlayerMobile PhoneMobile Phone
PCPC
Monthly flat rate for unlimited servicePartnership with Intel to integrate with Intel’s Digital Home Platform “Vive,”enabling access from TV
Over-the-air music downloadReal-time music listeningMusic playable on mobile handset, PC and MP3 player
World 1World 1stst Convergent Music PortalConvergent Music Portal Innovative Business ModelInnovative Business Model Performance Update (Performance Update (’’05)05)
4.2M members with 600K paying subscribersRevenue of US$45 million2006 Target: 8 mn members, 900K paying subscribers and revenue of ~US$70 million
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http://www.cyworld.com & Mini Homepage Mobile Cyworld
Main pageAccess Mini Homepage
with mobile phone
“Cyworld” is a popular wired & wireless community & blog service which became the trademark of ubiquitous and convergence serviceamong Korean youths
메뉴
Leading Data ServicesLeading Data Services
Access to the same online service thru mobile phonesUbiquitous features such as updating Mini Homepage anytime anywhere
Decoration of Mini Homepage with photos, music and avatarSuccessful item sales modelEasy to navigate friends’ Mini Homepages
WebWeb--based Community & based Community & Personal Personal BlogBlog ServiceService
Evolution to Convergence by Evolution to Convergence by Mobile IntegrationMobile Integration Performance Update (Performance Update (’’05)05)
1.2M cumulative mobile Cyworld usersRevenue of US$50 million2006 Target: 1.9mn cumulative mobile Cyworld users and revenue of US$55 million
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Leading Data ServicesLeading Data Services
Popular PC, arcade & console games enjoyed any time, any where via mobile phone!
3D game portal site launched in April 2005
Expect increased use in line with aggressive expansion of HSDPA in 2006
SKT’s premium game service portal, GXG, allows game manias to experience the extreme in mobile 3D games through various GXG-enabled mobile handsets
GXG Game Phone Models
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Convergence/Ubiquitous BusinessesConvergence/Ubiquitous BusinessesSatellite DMB & Other New Businesses to Provide Platform for Growth
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Commercialized in May 2005 to strengthen top line growth via rental, monthly and activation fees
2005 Operating Performance
► Subscriber: 400,000 Subscribers
► Revenue: US$21.5 million
2006 Subscriber Target: 1.2 million Subscribers
Satellite DMB has many advantages as;
► It provides more extensive contents
► Numerous handsets facilitate Satellite DMB
► Provides a wider geographical coverage
Mobile Convergence ServiceMobile Convergence ServiceSatellite DMB to Provide Platform for Growth
Service Feature OverviewService Feature OverviewSatellite DMB 2005 PerformanceSatellite DMB 2005 Performance
11ch
26ch
Movie, Music, Drama, Sports, Game, News, Education, Business, Etc.
Music, News, Education(Non-stop Music, DJ Music, Variety, Etc.)
Video
Audio
Channel Lineup
25 Terminal Line-up by the End of 2005
Price PlanSubscription
FeeMonthly
FeeUS$20 US$13
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“Multi-purpose Card”
- LG - Samsung- Korea
Exchange Bank- Koram Bank- Hana Bank
- Visa Cash
In partnership withIn partnership withCredit Cards E-cash
MileagePoint
• 0.9% of every credit card transaction amount is put into mileage
• Off-line, online, mobile paymentAll-channel
Payment
• Credit card, e-cash, bus & subway card• Membership: TTL, OK Cashbag™, etc.• Future: ID, medical insurance card,banking, etc.
Multi-feature
Take out the chip from the Take out the chip from the credit cardcredit card
Insert the chip into the back of Insert the chip into the back of handsethandset
It is ready to use nowIt is ready to use now
Mobile Convergence ServiceMobile Convergence ServiceFinancial Services
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• Finds shortest routebased on real time traffic information
Personalized Navigation Service
• Launched telematics servicein Jeju island (Dec 2004)
• Launched in Mar 2002
- traffic jam, emergency
- 300,000 subscribers (June 2005)
• Voice-activated navigation
Telematics - NATE Drive
Mobile Convergence ServiceMobile Convergence Service
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Data Business PerformanceData Business PerformanceRevenue from Wireless Data Services Showing Robust Growth
* Excluding revenues from connection fees
23.9%25.0%
26.0%27.6%
27.7%
661.5
544.2547.7
597.0
653.0
'04 4Q '05 1Q '05 2Q '05 3Q '05 4Q
Wireless Data Revenue as % of Cellular RevenueWireless Data Revenue*
(US$mn)
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Data Business PerformanceData Business PerformanceSKT’s Data Service Revenue Comes Mostly from Rich Contents
* As of 2005 4Q
Data ARPU Portion*Data ARPU Portion*
72% 82% 90%
28% 18%10%
SKT KTF LGTVoice Revenue Data Revenue
(4Q 05)
EV-DO 5036% of Total ARPU
1X 3522.3% of Total ARPU
Total ARPU Data ARPU
(US$)
(Million Subs)
IS-95A1X1xEV-DO / June
18.818.3
59.3%
19.5% 34.5%
19.5
53.4%
41.6%
Data ARPU by Handset TypeData ARPU by Handset Type
21.2%
56.2%
9.3% 5.0%2003 2004 2005
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8
31%9%
5%
10%8%
3%8% 4%
8%
MusicGam
eVideo
Messa
gingLBS
Adult
Picture
Community
Others SMS
Sub-total: 86%
100%
14%
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Global Business Global Business Building Global Value Network for Economies of Scale and Cross Benchmarking
USAIsrael
Mongolia
China Japan
Australia
TaiwanPhilippines
Indonesia
SingaporeThailand
Vietnam
Platform Licensing► Israel (Pelephone)► Taiwan (APBW)► Thailand (TA Orange)► Singapore (SingTel, M1)► Indonesia (TelkomSel)► Philippine (SMART)
Network Consulting► Telstra in Australia► China Unicom► KDDI and NEC’s Operation
Partner
MVNO► HELIO in US
MNO► S Telecom in Vietnam
- Committed to build nation-wide coverage
► SkyTel in Mongolia
Portal
► UNISK and Viatech in China- UNISK: JV with China Unicom- Viatech: Community Portal
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Global Business Global Business Closer Look at Helio JV in the US
Nationwide services leveraging the nationwide network coverage oNationwide services leveraging the nationwide network coverage of f host wireless carriershost wireless carriers
Entertainment data services (Entertainment data services (VoDVoD, M0D, Game, Etc.) leveraging its , M0D, Game, Etc.) leveraging its proximity to Hollywood and Silicon Valleyproximity to Hollywood and Silicon Valley
Building sales channel strategy aligned with new brandBuilding sales channel strategy aligned with new brandPartnering with leading youth portals to maximize online salesPartnering with leading youth portals to maximize online sales
TechTech--Savvy Youth & Young Adults Savvy Youth & Young Adults ((Fun& Entertainment Seekers/Fun& Entertainment Seekers/ProsumerProsumer /Affluent)/Affluent)
Korean American CommunityKorean American Community
Building the companyBuilding the company’’s own wireless Internet platform, billing & s own wireless Internet platform, billing & customer care system, etc. led by SK Telecomcustomer care system, etc. led by SK Telecom
Target CustomerTarget Customer
Target CoverageTarget Coverage
Killer ContentsKiller Contents
Distribution Distribution ChannelChannel
InfrastructureInfrastructure
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NetworkNetwork
ServiceService
Broadband Network• optimal portfolio of broadband
networks suitable for each service characteristics
Convergent Terminal• Hybrid functionalities • Highly flexible to new services
• convergence servicesdriven from customer’sneeds
Integrated Service
TerminalTerminal
Success FactorsSuccess Factors
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Each industry’s characteristics, such as communication’s interactivity, internet’s content and community, are integrated to create new services
MobileInternetMobileInternet
TelematicsTelematics
WirelineInternetWirelineInternet
SatelliteDMB
SatelliteDMB
WirelineInternetWirelineInternetCommunityContent
InteractivityNATE Drive
• Cizle(movie)• Melon(music) • ddangkong(game) • Cyworld(homepage) • Nate on(messaging)
Integrated ServiceIntegrated Service
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Network PortfolioNetwork PortfolioGrowth from Technology Leadership
Combination of networksService Convergence Seamless handover
2G/1X/DO
WCDMA
WiBro
WLAN
Cities
Nationwide Coverage
Hot Zone
Hot Spot
High-speed Data Demand
Improve Data Rate & Mobility
Mob
ility
EV-DO rAHSDPA
EV-DOWCDMA
95A/B1X
WiBro
WLAN
Optimal Network Portfolio
MultiMulti--access Technologiesaccess Technologies Optimal Network PortfolioOptimal Network Portfolio
CoverageData Rate
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• WiBro• RFID• ZigBee
PerceptualInterface
• Healthcare(Sensor)
IntegratedFunction
• Mini-HDD• 7 mega pixel• VGA• Smart chip
UbiquitousInterface
PH-S4• MONETA• 2 mega pixel• QVGA
SV-520• JUNE,MP3• 1.3 mega pixel• Mini SDm
SCH S-250• 5 mega pixel• Intenna• QVGA
PH-S3500• GIGA• 86M memory• WIPI1.2
SCH V-600• JUNE,MP3• MONETA• 1.3 mega pixel
SCH W-120• WCDMA• 1X/DO• JUNE
SCH B-100• S-DMB• JUNE• QVGA
SCH V-650• JUNE,MP3• WIPI2.0• QVGA• MONETA
IM-8200• S-DMB• JUNE• QVGA
PH-S6000• Bluetooth• GIGA
GIGA• 2 mega pixel
• 5 mega pixel• 3X Zoom
A-GPS• JUNE• QVGA
MONETAM-Bank
Multimedia
Camera
Game
MMMB
’05 1Q’05 1Q’04 4Q’04 4Q ’05 2Q’05 2Q
Convergent Terminal - EvolutionConvergent Terminal - Evolution