1 Dr. Jongtae Ihm September 2005 SK Telecom Perspectives of DMB from Korean Cellular Industry - In the View of Convergence - - In the View of Convergence - CONFIDENTIAL

2 Contents I SKT Overview IIConverged Service Status III SKT’s Standpoint IVPerspectives V Conclusion

3 I. SKT Overview SK Telecom has always been the leader and pioneer of Korean Mobile Telecommunication market for the last twenty years, introducing numerous World’s First Services Launched WCDMA (3G) service Dec 2003 Launched CDMA 1x EV-DO (3G) service * Feb 2002 Completed acquisition of Shinsegi Telecom Inc. (STI) Jan 2002 Launched CDMA xRTT (2.5G) service* Oct 2000 Launched commercial CDMA cellular service* Jan 1996 SK Group became the major shareholder of Korea Mobile Telecom Jun 1994 Korea Mobile Telecom Service Co.,Ltd, established Mar 1984 Vision Mission Most Valuable Company with Innovation  Ubiquitous Partnership  Value-Creating Innovation  Customer Oriented Service  Global Leadership World’s First* Launched Satellite for Mobile DMB Service Jul 2004 HSDPA(1.8M/384K) Installation - 16 Cities Dec 2005 Market Status  Market Share : 51.1%  Total ARPU : USD 42.2  Data ARPU : USD 9.38 Historical Highlight, Vision and Mission 1Q2005

4 I. SKT Overview Wireless Data Business Status From “n.TOP”, SK Telecom’s first Wireless Data service launched in Oct. 1999, SK Telecom has been evolving into “NATE” and “June” to offer enhanced multi-media, multi-device services ’ Online SMS ’ Image Dl. Info. n.Top ’ Download service ’ Video Streaming ’ VoD/ AoD ’ NATE Air NATE Photo NATE PDA ’ MONETA NATE Drive ’ NATE GPS ’ EV-DO (IMT-2000) ’ MMS DAB ’ NATE AdmoA ’ NATE Code ’ Video Telephony ’ Melon: Music portal IS-95A/Bcdma2000-1x1x EV-DO VoD : Video-on-demand AoD : Audio-on-demand GPS : Global Positioning System MMS : Multimedia Messaging Service DAB : Digital Audio Broadcasting AdmoA : Mobile advertisement service Melon : Integrated Music Portal DMB : Digital Multimedia Broadcasting ’ Satellite DMB

5 I. SKT Overview Market Saturation & Solution Service Area Expansion enables operators to overcome market saturation by creating new market with converging existing service with new items from different service area. Well designed Marketing and Promotion Strategy Multi-Device Integrated Personal Platform Innovative Converged Service Suitable Terminal designed for Converged Service Telecom Broadcasting, DMB Mobile Finance Service VOD/MOD, Multimedia Service Expansion to New Converged Service Marketing Strategy Platform Strategy Service Strategy Terminal Strategy Location Based Service, Telemetics Mobile Commerce, Home Automation

6 II. Converged Service Status NATE ON NATE ON is an instant messaging service for the users to enjoy seamless instant messaging regardless of time and location NATE ON (PC)Mobile NATE ON  Client based instant messaging service  Ability to log on simultaneously with mobile NATE ON  Mobile instant messaging service with same functionalities and information of PC version; send/receive instant messages, check s, register/find buddies  Unique services leveraging features of mobile terminal such as WAP buddy, real-time SMS, audible “emoticons”, and background music

7 II. Converged Service Status Cyworld Web-based Community & personal Blog service  Personal Blog : Mini Homepage  Decoration of Mini Homepage with board, diary, avatar,  Upload of photos, music, from PC  Easy to use and navigate friend’s mini-homepage  Very successful for item business Evolution to convergence by mobile integration  Access to the same services and contents of Web environment  Ubiquitous features such as updating Mini-homepage anytime & anywhere  Real-time upload photo from camera phone, send SMS, etc. & Mini-homepage Mobile Cyworld Main page Access Mini-homepage with mobile phone “Cyworld” is a popular wired & wireless community & blog service which became the home of ubiquitous and convergence service among Korean youths 아궁 귀여워 !!!! 메뉴

8 II. Converged Service Status AMS AMS is a next generation enabling platform which provides smart card and related applications to be issued through mobile devices  Can not integrate additional application after smart card is issued  Separate smart card for each service Current Issuer-centric Service AMS-based Customer-centric Service M-Bank Chip e-bankbook Handset Traffic Credit Card Credit Card Membership Traffic Handset Card VDSC Handset Subscription & Cancellation at Bank Subscription & Cancellation at Sales Agent Subscription & Cancellation at Card Company Credit Card e-voucher m-voucher M-Bank Traffic Card Member- ship Satellite Broad- casting Subscription & Cancellation by mobile device any-time, any-where  Can add & modify service according to customer’s needs even after issue  Only one smart card chip for all services

9 II. Converged Service Status Ubiquitous Music Service – Melon MelOn goes even further than iTunes and lets subscribers to download & play unlimited number of DRM-coated music files in mobile handset, PC, and MP3 player, with monthly flat rate. MP3 PlayerMobile Phone PC Music Video, Photo Album Multimedia Music Service Monthly Flat Rate for unlimited services “Rental-based” Flat Rate 600,000 paid subscribers (Mar. 2005) Launched in Nov. 2004

10 II. Converged Service Status With the emergence of technical innovation, boundary of mobile network and broadcasting becomes more ambiguous. Satellite DMB, a convergence mobile broadcasting service from satellite is a good example of such trend. Wireless Data/S-DMB Converged Service VoD, MoD m-Commerce Ku-band (13.824~ GHz) Ku-band (12.214~ GHz) S-band (2.630~ GHz) Contents S-band Dedicated Terminal Vehicle-mounted Terminal Hybrid Terminal Combined with the existing mobile Internet Gap Filler 1x EV-DO

11 III. SKT’s Standpoint Business Model with S-DMB Win-Win business model between SK Telecom and TU Media, S-DMB Business Model with S-DMBBenefit to SK Telecom SK Telecom : Gain Additional Revenue & Value from S-DMB TU Media : Gain Marketing Power from SK Telecom SK Telecom TU Media Broadcasting Contents Sourcing & Development Network & Platform Mgt. Getting Subscribers in Mobile H/S Market Terminal Sales Distribution Channel Mgt. Broadcast Service Distribution Service 1. Revenue Increase by Consignment Contract 2. Revenue Increase by WAP Service 3. Entrance to Broadcasting/Media Industry TU Media Service Charge Service Charge Except Commission WAP Service WAP Service SK Telecom Broadcasting Service Using VOD/MOD SK Telecom i Voice + Data (M-Finance, M-Commerce) + Seeds Business for CP, PP, SO

12 III. SKT’s Standpoint ■ Revenue Impact Revenue Share 25% of TU Media’s S-DMB product sales $25 Million yearly income for the next 12 years on Satellite rental fee Distribution commission on SKT sales network (25% of Initial subscription charge & Monthly basement fee) Network management, BTS rental, and administration fee ($13M in 2005) ■ Synergy Increase customer satisfaction and royalty with hybrid handsets sales Synergy through integration with Mobile Internet and contents sharing Cost saving in Cellular Network throughput investment with new medium Diversifying contents distribution channel Revenue Impact & Synergy

13 III. SKT’s Standpoint ■ Cannibalization Exact extents of cannibalization on existing Mobile Internet is unclear due to the early stage of service. Partial cannibalization is expected to happen. Overcoming the limitation of DMB as one-way broadcasting by integrating it with Mobile Internet to achieve two-way communication, and increasing data sales. Existing VoD Service (June) will focus on the On Demand feature to position itself against DMB service. ■ Marketing Cost Promotion is only done by SKT at the moment, but the market is expected to expand when the competitors start attracting subscribers Cannibalization 최소화

14 III. SKT’s Standpoint ■ Contents With the emergence of Multimedia and Entertainment in Mobile Internet contents, importance of contents acquisition and distribution will increase. Digital Content Market is expanding and enhancing, possibility of creating New Business in C-P-N-T value chain will increase. Controlling strategic contents will enable higher usage of S-DMB, as well as next generation service such as WCDMA and Wi-Bro. Enlarging markets through diverse investment such as movie and music funds to increase contents quality and set up win-win relation with CPs. Currently searching for the next strategic contents after movie and music with various possible scenarios Contents 강화

15 IV. Perspectives Telecommunication-Broadcasting Integration  : Available Immediately  : Expected in the future  Provide information related to on-air programs through Mobile Internet.  Revenue Model : Info. Usage Fee, Traffic  Provide information and guide about programs through Mobile Internet  Revenue 모델 : Advertisement, Traffic Information EPG For successful launch of telecommunication-broadcasting integrated service, market-proven and easy-to-use data contents will converge with broadcasting mediums. Data Casting  Ad.  Education  News  Sports  Movie  Music Video  Music  CommerceInformationStreamingLBSIM/SMSTelematics Wireless Data Service Convergence Service Priorities  Sell Data Contents related to programs (Ringtone, RBT, Music Video, Shopping)  Revenue Model : Content Sales, Traffic Commerce Broadcasting Service ※ EPG: Electronic Program Guide  Replay old programs through Data Streaming on demand  Revenue Model : Info. Usage Fee, Traffic On Demand

16 IV. Perspectives Integration of Broadcasting programs and Data service (Home Shopping, Lottery Sales) Integration of On-air IM (Communication), and LBS service Integration of Audio Channel and Music Contents (Ringtone, RBT) Service switch with Hot Key Integration of Game Channel and Mobile Game Integration of Sports Channel and Information Service Convergence Broadcasting is expected to develop into a more complex and enhanced service. To support such development, SKT is working on issues such as integrated platform, data broadcasting support, and device diversification. Phase Ⅲ Phase Ⅱ Phase Ⅰ 2005 Commerce, Communication Integration Time Service Entertainment Contents Integration Communication/Broadcasting Platform Integration (Contents, Authentication, Billing,) Commercialization of Contents Object Technology Contents distribution and protection technology development Communication service technology expansion Data Broadcasting Tech’

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