New 3G Services New 3G Services Strategy Toward Growth Strategy - - PowerPoint PPT Presentation

New 3G Services

Strategy Toward Growth

New 3G Services

Strategy Toward Growth

May 24, 2006 May 24, 2006

3G CDMA Latin America Regional Conference 3G CDMA Latin America Regional Conference

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Table of Contents Table 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 Market Korean Wireless Market

B Co 17.0% SKT 50.9% A Co 32.1% 19,530 12,302 6,510 SKT A Co B Co 17.2% 19.1% 21.8% 2,675 5,008 10,161 SKT A Co B Co % of Revenue SKT A Co B Co 4,288 1,945 719

Market Share Market Share by Subscribers by Subscribers Revenue Revenue Marketing Expense Marketing Expense to Sales to Sales EBITDA (Margin) EBITDA (Margin)

As of 2005 End Source: MIC, Earnings release

(US$mn) (‘000s, %) (US$mn) (%)

SK Telecom Remains the Undisputed Leader

(42.2%) (38.8%) (26.9%)

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A Co 34%

Wireless Data Service Wireless Data Service

74% 85% 92% 26% 15% 8% SKT A Co B Co Voice 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

SKT SKT

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 Services Global Leadership in Data Services Comparison to Domestic Peers Comparison to Domestic Peers EVDO Subscribers EVDO 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 Market Maturing Korean Wireless Market

29,047 32,342 33,592 36,586 38,342 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 Wireless Korean Wireless Market Trend Market Trend SK Telecom SK Telecom’ ’s Revenue Growth s Revenue Growth

6,227 8,634 9,520 9,704 10,161 10,500 38.7% 10.3% 1.9% 4.7% 3.3% 2001 2002 2003 2005 2006E 2004

Revenue Annual Growth

SK Telecom SK Telecom’ ’s ARPU Trend s ARPU Trend

43.9 44.5 43.5 44.2 2002 2003 2004 2005 (US$)

Strategy toward Growth Strategy toward Growth

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SK Telecom’s Growth Strategy SK Telecom’s Growth Strategy

Reinforce Domestic MNO Business through Introduction of New Serv Reinforce 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 Opportunities Business Opportunities

Domestic Business Complemented by New Business to Enhance Growth

US & Vietnam Satellite DMB Telematics

Domestic MNO Business Domestic MNO Business New Business New Business

Digital Home

Convergence Data Business Global Business

GXG Cyworld Melon

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Strengthening Data Business Strengthening Data Business

Data Business to Fuel Top-line Growth

Financial Services Smart UI Music Portal Game Portal Cinema Portal 3G Multimedia Service Telematics Service

Online & Mobile Integrated Services

Security Service Messaging Service

Color Mail

Mobile Blogging Service SK Telecom’s Terminal Platform

SK Telecom SK Telecom’ ’s Major Brands for Its Wireless Data Services s Major Brands for Its Wireless Data Services

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Leading Data Services Leading Data Services

MelOn is Korea’s Number One Paid Music Site in Terms of Revenue and Subscriber Base

MP3 Player MP3 Player Mobile Phone Mobile Phone PC PC

Monthly flat rate for unlimited service Partnership with Intel to integrate with Intel’s Digital Home Platform “Vive,” enabling access from TV Over-the-air music download Real-time music listening Music playable on mobile handset, PC and MP3 player

World 1 World 1st

st Convergent Music Portal

Convergent Music Portal Innovative Business Model Innovative Business Model Performance Update ( Performance Update (’ ’05) 05)

4.2M members with 600K paying subscribers Revenue of US$45 million 2006 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 page Access Mini Homepage with mobile phone

“Cyworld” is a popular wired & wireless community & blog service which became the trademark of ubiquitous and convergence service among Korean youths

메뉴

Leading Data Services Leading Data Services

Access to the same online service thru mobile phones Ubiquitous features such as updating Mini Homepage anytime anywhere Decoration of Mini Homepage with photos, music and avatar Successful item sales model Easy to navigate friends’ Mini Homepages

Web Web-

• based Community &

based Community & Personal Personal Blog Blog Service Service Evolution to Convergence by Evolution to Convergence by Mobile Integration Mobile Integration Performance Update ( Performance Update (’ ’05) 05)

1.2M cumulative mobile Cyworld users Revenue of US$50 million 2006 Target: 1.9mn cumulative mobile Cyworld users and revenue of US$55 million

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Leading Data Services Leading 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 Businesses Convergence/Ubiquitous Businesses

Satellite 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 Service Mobile Convergence Service

Satellite DMB to Provide Platform for Growth

Service Feature Overview Service Feature Overview Satellite DMB 2005 Performance Satellite 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 Plan

Subscription Fee Monthly Fee

US$20 US$13

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“Multi-purpose Card”

• LG
• Samsung
• Korea

Exchange Bank

• Koram Bank
• Hana Bank
• Visa Cash

In partnership with In partnership with Credit Cards E-cash

Mileage Point

• 0.9% of every credit card transaction

amount is put into mileage

• Off-line, online, mobile payment

All-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 card credit card Insert the chip into the back of Insert the chip into the back of handset handset It is ready to use now It is ready to use now

Mobile Convergence Service Mobile Convergence Service

Financial Services

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• Finds shortest route

based on real time traffic information

Personalized Navigation Service

• Launched telematics service

in Jeju island (Dec 2004)

• Launched in Mar 2002
• traffic jam, emergency
• 300,000 subscribers (June 2005)
• Voice-activated navigation

Telematics - NATE Drive

Mobile Convergence Service Mobile Convergence Service

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Data Business Performance Data Business Performance

Revenue from Wireless Data Services Showing Robust Growth

* Excluding revenues from connection fees

23.9% 25.0% 26.0% 27.6% 27.7% 661.5 544.2 547.7 597.0 653.0 '04 4Q '05 1Q '05 2Q '05 3Q '05 4Q

Wireless Data Revenue as % of Cellular Revenue Wireless Data Revenue*

(US$mn)

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Data Business Performance Data Business Performance

SKT’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 LGT

Voice Revenue Data Revenue

(4Q 05)

EV-DO 50 36% of Total ARPU 1X 35 22.3% of Total ARPU

Total ARPU Data ARPU (US$) (Million Subs)

IS-95A 1X 1xEV-DO / June

18.8 18.3 59.3% 19.5% 34.5% 19.5 53.4% 41.6%

Data ARPU by Handset Type Data ARPU by Handset Type

21.2% 56.2% 9.3% 5.0% 2003 2004 2005 18 8 31% 9% 5% 10% 8% 3% 8% 4% 8% M u s i c G a m e V i d e

• M

e s s a g i n g L B S A d u l t Picture C

• m

m u n i t y 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

USA Israel Mongolia China Japan Australia Taiwan Philippines Indonesia Singapore Thailand 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 o Nationwide services leveraging the nationwide network coverage of f host wireless carriers host wireless carriers Entertainment data services ( Entertainment data services (VoD VoD, M0D, Game, Etc.) leveraging its , M0D, Game, Etc.) leveraging its proximity to Hollywood and Silicon Valley proximity to Hollywood and Silicon Valley Building sales channel strategy aligned with new brand Building sales channel strategy aligned with new brand Partnering with leading youth portals to maximize online sales Partnering with leading youth portals to maximize online sales Tech Tech-

• Savvy Youth & Young Adults

Savvy Youth & Young Adults ( (Fun& Entertainment Seekers/ Fun& Entertainment Seekers/Prosumer Prosumer /Affluent) /Affluent) Korean American Community Korean American Community Building the company Building the company’ ’s own wireless Internet platform, billing & s own wireless Internet platform, billing & customer care system, etc. led by SK Telecom customer care system, etc. led by SK Telecom Target Customer Target Customer Target Coverage Target Coverage Killer Contents Killer Contents Distribution Distribution Channel Channel Infrastructure Infrastructure

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What’s Next ? What’s Next ?

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Network Network Service Service

Broadband Network

• optimal portfolio of broadband

networks suitable for each service characteristics

Convergent Terminal

• Hybrid functionalities
• Highly flexible to new services
• convergence services

driven from customer’s needs

Integrated Service

Terminal Terminal

Success Factors Success 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

Mobile Internet Mobile Internet

Telematics Telematics Wireline Internet Wireline Internet Satellite DMB Satellite DMB Wireline Internet Wireline Internet Community Content

Interactivity

NATE Drive

• Cizle(movie)
• Melon(music)
• ddangkong(game)
• Cyworld(homepage)
• Nate on(messaging)

Integrated Service Integrated Service

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Network Portfolio Network Portfolio

Growth from Technology Leadership

Combination of networks Service Convergence Seamless handover

2G/1X/DO WCDMA WiBro WLAN

Cities Nationwide Coverage Hot Zone Hot Spot

High-speed Data Demand

Improve Data Rate & Mobility

Mobility

EV-DO rA HSDPA EV-DO WCDMA 95A/B 1X

WiBro WLAN

Optimal Network Portfolio

Multi Multi-

• access Technologies

access Technologies Optimal Network Portfolio Optimal Network Portfolio

Coverage

Data Rate

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• WiBro
• RFID
• ZigBee

Perceptual Interface

• Healthcare

(Sensor)

Integrated Function

• Mini-HDD
• 7 mega pixel
• VGA
• Smart chip

Ubiquitous Interface

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

MONETA M-Bank Multimedia Camera Game MMMB

’05 1Q ’05 1Q ’04 4Q ’04 4Q ’05 2Q ’05 2Q

Convergent Terminal - Evolution Convergent Terminal - Evolution

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Strengthening global partnership to identify new business opportunity together High quality 3G networks and capable terminals enabled value added services with increased ARPU Convergence is the key word for the future

Summary Summary