Wireless Internet Service of SK Telecom

1
Wireless Internet Serviceof SK Telecom
September 2002
2
Agenda
I. SK Telecom Overview II. Internet Service
3
Brief History
Mar 1984
Korea Mobile Telecom Service Co.,Ltd, established
Jun 1994
SK Group became the major shareholder of the
company
Jan 1996
Worlds first commercial CDMA cellular service
launched
Oct 1999
n.TOP wireless Internet service launched
Oct 2000
Worlds first commercial launch of CDMA 2000 1x
(2.5G)service
Dec 2000
Acquired 3G (W-CDMA) license
Oct 2001
Launched NATE, integrated multi-interface
Internet portal
Jan 2002
Completed merger with Shinsegi Telecom Inc. (STI)
Feb 2002
Worlds first commercial launch of CDMA 1x EV-DO
(3G) service
4
SKTs Corporate Snapshot

• SKT is the dominant market leader of the Korean
  cellular industry with growing profits

Dominant market share
SKT 16,297,000
KRW Trillion
Revenue (01) US 4.8 billion
LG Telecom 4,256,000
USKRW 1,300
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Net Income (01) US 880 million
6
5
4
3
KTF 10,012,000
2
1
0
(as of May, 2002)
1996
1997
1998
1999
2000
2001
Koreas cellular users 30,565,000
subscribers out of 47,578,000 population (64.2
penetration rate)
Revenue
Net Income
Note Pre-merger with STI
5
Mega Trend

• Telecommunications, media and IT show increasing
  scale of cross- industry business convergence
  
• Continuous radical change is expected especially
  in telecommunication

Biz Complexity
Cross-Industry
Biz Boundary Disappearing (Who takes the
Initiative first)

• ICTautofinancedistribution

Mega Convergence
Intra-ICT
TelecommediaIT
Intra-Communication
Increased Competition (Alliance becomes
important)

• FMC

Mobile

• Voice
• Data

Change in Value System (Intangible Asset becomes
important
Digital Innovation
ICT Information Communication Technology
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Wireless Data Network Evolution

• Successful 2.5G-based data service will be
  migrating its data-mature subscriber base to 3G
  service
• 1x EV-DO coverage will cover 81 major cities by
  end of 2002 (equivalent of 85 population
  coverage)
• W-CDMA will be launched based on technology
  development and competition

SKTs Current Position
2003 (TBD) W-CDMA (3G)
October 2000CDMA 2000 1x(2.5G)
February 2002 1x EV-DO (3G)
Jan 1996 IS-95AAug 1999 IS-95B CDMA
IS-95A/B(2G)
Always Worlds First Successful
Technology
W-CDMA
CDMA
Frequency
800MHz
1.9-2.1GHz
Max DataSpeed
95A14.4 Kbps95B 64 Kbps
153.6 Kbps
2.4 Mbps
R99384 KbpsR4 2 MbpsR5 10 Mbps
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Contents
I. SK Telecom Overview II. Internet Service
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Platform BusinessStrategy Services
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Platform Strategy

• NATE provides customers with seamless and
  personalized Internet service

Wireless
Wired
PC
VMT
TV
PDA
Home Appliance
Tailor services to various customer needs through
use of sophisticated customer DB
Multi-Interface Personal Platform Any Time,
Any Place, Any Device Fully Personalized
10
NATE Service Roll-Out

• Aggressive service release under prudent
  implementation

Handset/PC Launch (Oct. 2001)
PDA Service Launch (Nov.2001)
Interactive TV Launch (2002 4Q)
Vehicle Mounted Terminal Launch (2002)
NATE on Handset NATE.com
NATE PDA
NATE Drive
Interactive TV Service
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NATE on PC

• Full-feature portal (Web contents, community,
  shopping mall, etc.)
• Complimentary to handset, PDA portals (e.g
  sending picture downloads to handsets)
• The recent acquisition of Lycos Korea will shore
  up its portal business

E-Commerce (www.happy2buy.com)
NATEPhoto Portal (www.photo.nate.com)
12
NATEs 2/2.5G Handset Content

• Content usage is entertainment-driven with
  non-entertainment on the rise
• Downloads, games and chatting are the cash-cow
  segment

Downloads (e.g.Screensavers)
3
Others
Planning to concentrate on Colored bar contents
4
News/Sports
Location/ Traffic
4
5
Cartoon/ Humor
E-Lottery
5
Games(e.g.Java games)
LBS(e.g.Wheres Friend)
6
Adult
StocksBanking
6
10
Chatting
Game
11
44
Download
0
10
20
30
40
50
Download of characters ringtone. Others
include event, shopping, messaging, and etc. (As
of Mar 2002)
Chatting(e.g.AVATAR chatting)
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NATEs 2/2.5G Handset Content

• Sticky and high-ARPU generating new contents
  are being introduced to take Internet users to a
  more mature stage

• Phone-to-Phone MMS
• Phone-to-Email MMS
• PC-to-Phone MMS

• Commercially viable multimedia clips are
  gaining popularity

• Web-to-Kodak shops

• Pushing various contents to channel
  subscribers
• Value proposition to older users

• Mobile coupon read by cashiers POS scanner
• Automatic deduction of coupon discouts
• Alliance with major retailers including
  department stores

14
NATEs 3G Handset Content

• 3G MPEG-4 VOD service is being tested by
  IMT-2000 Focus Group members, service planners
  and will be commercialized in early September
• Non-MPEG-4 3G handsets have been commercially
  launched as of mid June

MPEG-4 VOD Handset
File download streaming

• MMS
• Music on Demand
• TV on NATE (Various downloadable
  clips of TV programs)
• Cinema (Preview, etc)
• News Weathers
• Traffic
• Live YTN News Streaming (CNN news equivalent)
• Adults

VOD Service Access
Downloaded Contents
Memory
Repetition
Skin for AOD
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NATEs 3G Content Strategy

• A variety of measures need to be taken to
  nurture 3G content market
• SKT needs to take a strong initiative in 3G
  content market

SpecializedContents

• Mobile drama/animation
• Music Download

Current SKTs Position
SKTs takingthe initiative
Truly Mobile Multimedia
Specialized Contents
SKT supportingCPs, Content Aggregator
Killer Contents
Killer Contents

• Multimedia screensavers, ringtones, MMS VAS,
  image-based traffic information, broadcasting,
  etc.

MobileMultimediaTrial Service
VOD
Support Content Building environment
Semi-Multimedia
Improve contentbuilding environment /User
participation
Content Building Environment

• Induce users to participate in content-building
  (proliferation of custom-made contents)

Ring-tones,Logosmessaging,games
EV-DO(3G)
1X(2.5G)
95-B/C(2G)
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NATE on PDA Contents

• Rich multimedia contents provided with streaming
  and downloading
• Wireless PDA will be even more a powerful value
  proposition with 3G

Online Game (e.g. Tetris Competition)
NATE Access
Game Category
Select Tetris
Select Level
Select Partner
Compete
Traffic Information (Updated every 5 min.)
Music Video Movie Clips
Powered byNATE Media Player(Supports H.26L
technology)
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NATE Drive

• Provide navigation and location-based
  information to car drivers
• Simple operation using hot keys on the cradle

Features
Service Package
Road direction
Navigation Box
GPS Antenna
Cradle
Handset
? Road Direc. ? Local Info. ? Traffic ? Other ?
Favorite List

• Gyro Sensor
• Acceleration Sensor
• GPS Tuner

Local Information
? ???? ? ??? ? ???? ? ?????? ? ????
Traffic Information
Road Direction
Other Information
Left-turn
?
Favorite List
?
? NATE Drive Hot Key
911 Emergency
? Voice Input Button
?
? Emergency Button
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Financial Enabler Services
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Financial Enabler Strategy

• Migrate the current cellular subscribers into
  financial service users
• Fully leverage SKTs resources

Business Customer Relationship
Benefit to SKT
SKTs Resources

• Take the initiative in finance industry
  (high-growth sector)
• Transaction fee- Infrastructure usage- Credit
  card usage
• Increase tariff reduce churn

Subscriber base(16.5 million)
IntegratedBalanceSheet(Financial portal)
PaymentBusiness(Moneta, NeMo)
FinancialInfrastructure
Brand power (Best customersatisfaction
withhighest brandawareness)
Financial ServiceClients
PaymentServiceUsers
Cellular Users
Multi-Platform Access NATE
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Financial Enabler Payment Business Moneta
Service

• MONETA Service multi-purpose card
• Launched in September 2001

Multi-feature

• Credit card, E-cash, bus-subway card
• Membership TTL, OKCashbag, etc.
• Future ID, medical insurance card, banking,
  etc.

Multi-purpose Card
Mileage Point

• 0.9 of every credit card transaction amount
  is put into mileage

In partnership with
Credit Cards
E-cash
- LG - Samsung - Korea Exchange Bank - KORAM
Bank - Hana Bank
- Visa Cash

• Off-line, online, mobile payment

All-channel Payment
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Financial Enabler Payment Business - Handset

• MONETA Phone is an interim solution to
  One-Chip handsets
• One-chip handsets will be all-in-one handsets,
  bringing both convenience and security to
  users

• Handset has Moneta Card Reader
• Support M-Commerce Payment loading of e-cash

MONETA Phone
(Commercialized Feb.02))
1-Chip

• Handset has UIM, Moneta Card UIM chip embedded
  
• Close-distance wireless communication between
  handset and readers using infra-red is being
  considered
• Support offline, online, mobile transactions

Multi-purpose IC-cardUIM Comm. Chip
(Expected November 02)
Card Authorization Terminal
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Financial Enabler Financial Infrastructure
One-Chip

• SKT has partnered with Visa International to
  promote IrFM-based mobile finance

CardAuthorizationTerminal
Off-line Marketplace

IrFM
On-line Marketplace
PC Link with IrFM Reader
IrFM(Infrared Financial Messaging) Secure
infra-red communication standard dedicated for
financial purposes
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Financial Enabler Payment Business NeMo
Service

• NeMo service is network-based Person-to-Person
  E-cash service
• Enables One-to-One, One-to-Many transfer using
  handset number only
• Launched in Sept. 2001 in alliance with a group
  of major banks

User A
User B, C, D
Affiliated Merchants (Offline, online, mobile)
P2P money transfer (Handset number only)
User B,C,D SKT Accounts
Virtual Account
User As SKT Account
Payment Gateway
Network-based E-cash
Bank Account
Bank Account
Actual Account
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Financial Enabler Integrated Balance Sheet

• Concept Financial portal business
• Cellular users ? IBS Portal members
• Provide One-Stop Shopping to fulfill all
  financial-related needs
• Launch expected in 2003

www.ibs.com
Welcome!
Mobile channel
Billing AccountManagement
Banner advertising
IBS Portal
Bill account

• Bills
• EBPP
• Integrated billing
• Credit card

• Bank account
• Securities account
• SK virtual account

My Handy Portal
PersonalizedAdvisory
Handset, Smartphone
My bill
PDA
My account
Advisory

• Financial planning
• Portfolio analysis recommendation
• Product recommendation

Member Only
My Investment
My Asset
My advisor
My community
On-line channel
Financial services
My e-mail

• Savings
• Loans
• Insurance
• Securities

Financial Services
Search, compare One-stop process
Real-time transfer!
P2P Wizard
Search
Information/community
GO

SKT Call Center
PCs,Notebooks

• News
• Research reports

• Education
• Entertainment
• Community

Information community
Family site link
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Data Performance Monthly Sales

• Data sales, which includes SMS sales, represents
  8.2 of SKTs total revenue in June 2002
• Internet sales surpassed SMS sales in July 2001

US29.4 million
Introduction of color handsets
US18 million
Wireless Internet gt SMS
December
June
March
July
March
2001
2002
Note 1. US?1,200 2. Internet sales include
NATE on Handset, PDA, VMT, Biz solution, IWF,
Financial Enablers, etc.
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Data Performance Internet Users

• Wireless Internet enabled handset holders
  account for 76 of total subscribers
• Number of WI users, who use NATE more than once
  a month, is close to 7MM as of June 2002 (56
  of total WI handsets sold)
• NATE PDA and Drive user bases show a robust
  growth

(in millions)
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Data Performance Financial Enabler Users

• An increasing number of cellular users are
  becoming M-Finance users

Number of card holders
Number of users
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Prospects for Data Revenue

• Platform and financial enabler businesses are
  expected to account for 20 of SKTs total
  revenue in 2005 given the current robust
  performance of 2.5G and far superior performance
  expected of 3G

3 bil20 of Total Revenue
()
(US millions)
CAGR 90
Integrated Finance Distribution Business
228 mil5 of Total Revenue
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Thank you