SK Telecom Co., Ltd. — FY2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022. Filed April 27, 2023. This is an annual report, not a standalone fourth-quarter filing; the filing text does not provide clear Q4-only financial results. Consolidated statements use IFRS as issued by the IASB, and amounts below are in Korean won (₩).
Business context and key financial metrics
SK Telecom is a Korean telecommunications provider, with cellular services as its largest business, alongside fixed-line and other businesses. The 2021 spin-off transferred semiconductor and other non-telecommunications businesses to SK Square; those operations are presented as discontinued operations in comparative statements.
| Metric | FY2022 | Comparison |
|---|---|---|
| Revenue | ₩17,305.0 billion | Up 3.3% from ₩16,748.6 billion in 2021 |
| Operating profit | ₩1,594.3 billion; 9.2% of operating revenue and other income | Up 11.3%; 2021 margin was 8.5% |
| Profit from continuing operations | ₩947.8 billion; 5.5% of operating revenue and other income | Down 25.5% from ₩1,271.4 billion |
| Profit attributable to parent shareholders | ₩912.4 billion | Down from ₩2,407.5 billion in 2021 |
| Net cash from operating activities | ₩5,159.3 billion | Up 2.5% from ₩5,031.3 billion |
| Net cash used in investing activities | ₩2,807.8 billion | Compared with ₩3,486.2 billion used in 2021 |
| Net cash used in financing activities | ₩1,349.9 billion | Compared with ₩2,053.6 billion used in 2021 |
| Cash and cash equivalents | ₩1,882.3 billion | Up from ₩872.7 billion at year-end 2021 |
| Working capital | Deficit of ₩827.3 billion | Deficit of ₩607.8 billion at year-end 2021 |
| Interest-bearing debt | ₩9,302.8 billion, including current and long-term borrowings and debentures | Lease liabilities were an additional ₩1,782.1 billion |
| Capital expenditures | ₩2,908.3 billion | ₩2,915.9 billion in 2021 |
Segment revenue: Cellular services contributed ₩12,942.3 billion, fixed-line telecommunications ₩3,813.0 billion, and other businesses ₩549.7 billion. Cellular segment operating profit rose 20.6% to ₩1,296.1 billion; fixed-line segment operating profit rose 7.2% to ₩318.8 billion. Other businesses recorded a ₩2.8 billion segment operating loss.
Material changes versus the prior comparable period
- Revenue growth reflected higher 5G-plan subscriptions, a recovery in roaming use as travel restrictions eased, growth in cloud and IoT services, and increased business communications revenue.
- Operating profit increased as revenue growth exceeded expense growth. Operating expenses rose 2.2%, including higher labor costs, commissions, cost of goods sold, and utilities.
- Profit from continuing operations fell despite stronger operating profit. Finance costs rose 44.6% to ₩456.3 billion, and investment-related results shifted from a ₩446.3 billion gain in 2021 to an ₩81.7 billion loss in 2022.
- Total 2021 profit included ₩1,147.6 billion from discontinued operations; 2022 had no discontinued-operation profit. This makes reported total-profit comparisons substantially affected by the spin-off.
- Cellular and fixed-line revenue increased 1.8% and 3.7%, respectively. Fixed-line telephone revenue declined 27.8%, and fixed-line interconnection revenue declined 69.6%.
Outlook, commentary, risks and unusual items
- Management expected 2023 capital expenditures to be similar to 2022, supporting 5G expansion, LTE maintenance, Wi-Fi, AI and IoT, data infrastructure, and research and development. The company cautioned that budgets and timing could change.
- Management’s strategic focus is its “AI Company” vision, spanning telecommunications, media, enterprise, subscription and metaverse services, and emerging areas such as urban air mobility. Commercial returns from newer businesses are uncertain.
- The MSIT shortened the company’s 28 GHz spectrum license by six months and requested installation of 15,000 base stations by the end of May 2023. The company said that meeting the requested timetable was not practically feasible; the license was scheduled to expire in May 2023.
- Risks include intense competition and price pressure, regulation of rates and spectrum, high market saturation, foreign-exchange and interest-rate exposure, cybersecurity and network disruption, and possible increases in funding costs. The filing identifies debt covenants, including maximum net debt-to-EBITDA and minimum EBITDA-to-interest ratios, assessed on a separate-company basis.
- The fixed-line goodwill impairment assessment was a critical audit matter because it relies on forecasts and assumptions including revenue, perpetual growth, and discount rates. The auditor issued an unqualified opinion on the financial statements and internal controls.
- The filing reports an ongoing KFTC investigation into advertised 5G transmission speeds. It also describes previously paid KCC fines, including a ₩22.3 billion fine related to 2019 handset subsidies. Management reported no other pending or threatened proceedings expected to have a significant financial effect.
- Dividend distributions for 2022 totaled ₩3,320 per share across quarterly and year-end payments; the year-end ₩830 per-share dividend was paid in April 2023. The filing also describes significant related-party transactions within the SK Group.
Important facts for investors to verify
- Review the audited statements and notes for the composition and maturity profile of debt, lease obligations, interest costs, and available liquidity; the company reported a working-capital deficit.
- Assess continuing-operations earnings separately from 2021 discontinued-operation results when comparing performance.
- Track execution and returns on planned capex and newer AI, cloud, data-center, subscription, and metaverse businesses.
- Monitor the 28 GHz spectrum outcome, any potential new mobile-network entrant, and regulatory developments affecting pricing, wholesale network access, or 5G advertising.
- Review the goodwill impairment assumptions for fixed-line services, the KFTC 5G advertising investigation, and the company’s related-party transactions and foreign-ownership constraints.