SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

FOR THE MONTH OF JUNE 2006

SK Telecom Co., Ltd.

11, Euljiro2-ga Jung-gu
Seoul 100-999, Korea
(Address of principal executive offices)

     (Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

		Form 20-F þ		Form 40-F o

     Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):                     

     Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

     Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):                     

     Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submission to furnish a report or other document that the registration foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

     Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes o No þ

     If “Yes” is marked, indicate below the file number assigned to the Registrant in connection with Rule 12g3-2(b): 82-                     

 

 

Table of Contents

I. Company Overview

II. Business Summary

III. Financial Information

IV. Auditor’s Opinion

V. Management Structure

VI. Shares

VII. Employees

VIII. Transactions with Interested Parties

IX. Other Relevant Matters

I. Company Overview

1. Business Objectives

Business Objectives

1. Information and communication business

2. Handset sales and lease business

3. New media business

4. Advertisement business

5. Communication sales business

6. Personal property and real property lease business

7. Research and technology development related to Clause 1 through 4

8. Overseas business and trading business related to Clause 1 through 4

9. Manufacturing and distribution business related to Clause 1 through 4

10. Tourism

11. Other businesses related to the above

2. Company History

A. Company History

(1) Changes Since Incorporation

a)

Date of Incorporation

–

March 29, 1984 (date of shareholders’ meeting for the incorporation): Incorporated as Korea Mobile Communications Service Co., Ltd.

(Authorized capital: Won 500 million / Paid-in capital: Won 250 million)

b)

Location of the Headquarter

	–		22 Dohwa-dong, Mapo-gu, Seoul (July 11, 1988)
	–		16-49 Hangang-ro 3-ga, Yongsan-gu, Seoul (November 19, 1991)
	–		267 Namdaemun-ro 5-ga, Jung-gu, Seoul (June 14, 1995)
	–		99 Seorin-dong, Jongro-gu, Seoul (December 20, 1999)
	–		11 Eulji-ro 2-ga, Jung-gu, Seoul (December 13, 2004)

(2) Mergers

a)

Subject: Shinsegi Communication Co., Ltd.

	–		Date: January 13, 2002
	–		Registration: January 16, 2002

b)

Subject: SK IMT Co., Ltd.

	–		Date: May 1, 2003
	–		Registration: May 7, 2003

(3) Significant Business Events

(a)

Provision of Subsidy for Long-term Subscribers

     Pursuant to the Telecommunications Business Act, as amended, telecommunications service providers may provide a one-time subsidy to subscribers with contract terms of over 18 consecutive months within 2 years, beginning March 27, 2006. We have stated in our standard subscription contract the company’s obligation to notify the subscribers at least 30 days prior to the cancellation of the subsidy provision.

3. Total Number of Shares

A. Total number of shares

(As of March 31, 2006)														(Unit: shares)
		Share type
Classification		Common shares				—				Total				Note
I. Total number of issuable shares			220,000,000				—				220,000,000				—
II. Total number of shares issued to date			89,278,946				—				89,278,946				—
III. Total number of shares retired to date			7,002,235				—				7,002,235				—
1. Capital reduction			—				—				—				—
2. Share cancellation			7,002,235				—				7,002,235				—
3. Redeemed shares			—				—				—				—
4. Others			—				—				—				—
IV. Total number of shares (II-III)			82,276,711				—				82,276,711				—
V. Number of treasury shares			8,662,415				—				8,662,415				—
VI. Number of shares outstanding (IV-V)			73,614,296				—				73,614,296				—

B. Capital Stock and Price per Share

(As of March 31, 2006)

(Unit: Won, shares)

Capital (total face value)

Price per share

Capital amount in

Total amount of

financial

Total number of

distributed

Par value per

Capital/

Capital/

statements

issued shares

shares

share

Total number of issued shares

Number of distributed shares

Classification

Type

(A)

(IV of A.×B)

(VI of A.×B )

(B)

(A/ IV of A.)

(A/VI of A.)

Note

Registered

Common shares

44,639,473,000

41,138,355,500

36,807,148,000

500

542.6

606.4

Total

44,639,473,000

41,138,355,500

36,807,148,000

500

542.6

606.4

C. Acquisition and Disposition of Treasury Shares

(1) Status of Acquisition and Disposition of Treasury Shares

																												(Unit: shares)
				Amount at the beginning of																Amount at the
Acquisition method		Type of share		period				Acquisition (+)				Disposition (–)				Retirement (–)				end of period								Note
Direct acquisition pursuant to Article 189-2 (1) of the relevant Act		Common Share			4,697,735				—				—				—				4,697,735								—
		Preferred share			—				—				—				—				—								—
Direct acquisition based on causes other than those stipulated in Article 189-2 (1) of the relevant Act		Common Share			77,970				—				—				—				77,970								—
		Preferred share			—				—				—				—				—								—

				Amount at the beginning of																Amount at the				(Unit: shares)
Acquisition method		Type of share		period				Acquisition (+)				Disposition (–)				Retirement (–)				end of period				Note
Sub-total		Common Share			4,775,705				—				—				—				4,775,705				—
		Preferred share			—				—				—				—				—				—
Indirect acquisition through trust and other agreements		Common share			3,886,710				—				—				—				3,886,710				—
		Preferred share			—				—				—				—				—				—
Total		Common share			8,662,415				—				—				—				8,662,415				—
		Preferred share			—				—				—				—				—				—

D. Employee Stock Ownership Program

(1) Details of Transaction with the Employee Stock Ownership Program

a)

On August 23, 1999, our company lent Won 118.6 billion of purchase funds for the employee stock ownership to the Employee Stock Ownership Program, and the Employee Stock Ownership Program re-lent the amount to the employees of the company in accordance with the internal allotment standards.

	–		Terms of the loan: 10-year installment repayment plan following a three-year grace period
	–		The loan is deducted from wages for each individual to repay the Employee Stock Ownership Program, and is subsequently repaid to the company.

b)

Repayment amount during the first quarter of 2006: Won 2,611,849,150

–

Details of the loan repayment

(As of March 31, 2006)						(Unit: in thousand Won)
Classification		Amount				Note
Initial loan amount			118,577,755			Loaned on August 23, 1999 to 3,540 persons
Accumulated repayment amount			106,603,397			Including Won 2.61 billion repaid in the first quarter of 2006
Balance			11,974,358			Full repayment by June 2012

(2) Voting Rights of the Employee Stock Ownership Program

     The voting rights are exercised individually during a designated period of 7 days or longer by expressing the intention to exercise such right on the agenda at the meeting of shareholders through a proxy with a written power of attorney.

(3) Shareholdings of the Employee Stock Ownership Program

(Unit: shares)

Account classification

Types of share

Balance at the beginning of period

Balance at the end of period

E.S.O.P. account

—

—

—

Member account

Common share

297,246

259,738

     As the relevant law requires an immediate transfer of the stocks directly purchased by the employees to the account of the individual purchasers, the company transfers and holds the employees’ stocks in separate individual accounts within the program once the number of shares for each individual member is determined.

5. Status of Voting Right

(As of March 31, 2006)								(Unit: shares)
Classification				Number of shares				Note
Total outstanding shares (A)		Common share			82,276,711			—
		Preferred share			—
Number of shares without voting right (B)		Common share			8,662,415			Treasury shares
		Preferred share			—
Shares with restricted voting right under the Stock Exchange Act and other laws (C)		Common share			7			Restriction under the Antitrust and Fair Trade Act: 7 shares (7 shares in SK Securities)
Shares with reestablished voting right (D)		—			—			—
The number of shares with exercisable voting right (E = A – B – C + D)		Common share			73,614,289			—
		Preferred share			—

6. Dividends and Others

				(Unit: in million Won except per share value)
				Year ended December 31,
Classification				2005				2004				2003
Par value per share					500				500				500
Current net income					1,871,380				1,494,852				1,942,750
Net income per share					25,421				20,307				25,876
Dividendable income					1,930,626				1,377,007				406,413
Total cash dividend					662,529				758,227				404,879
Total share dividend					—				—				—

				(Unit: in million Won except per share value)
				Year ended December 31,
Classification				2005				2004				2003
Propensity to cash dividend (%)					35.4				50.7				20.8
Cash dividend yield ratio (%)		Common share			4.9				5.2				2.8
		Preferred share			—				—				—
Share dividend yield ratio (%)		Common share			—				—				—
		Preferred share			—				—				—
Cash dividend per share		Common share			9,000				10,300				5,500
		Preferred share			—				—				—
Share dividend per share		Common share			—				—				—
		Preferred share			—				—				—

II. Business Summary

1. Business Summary

A. Industry Status

(1) Characteristics of Industry

     As of the end of March 2006, the number of domestic mobile phone subscribers reached 38.92 million and with a 79.7% penetration rate, the Korean mobile communication market can be considered to have reached its maturation stage. However, considering the number of European countries with penetration rates exceeding 90%, additional future growth of the domestic market may be possible.

     The Korean mobile communications market continues to improve with the help of advances in the network-related technology evidenced by the first commercialization of CDMA2000 1x, CDMA 1x EV-DO, and the development of highly advanced handsets that enables the provision of convergence services for multimedia contents, mobile commerce, telematics, satellite DMB, digital home services and other related contents.

(2) Industry Growth

																										(Unit: 1,000 persons)
Classification						End of March 2006				End of 2005				End of 2004				End of 2003				End of 2002				End of 2001
Penetration rate (%)							79.7				79.4				75.9				70.1				67.9				60.9
		SK Telecom					19,733				19,530				18,783				18,313				17,220				11,867
Number of subscribers		Shinsegi Communication					—				—				—				—				—				3,312
		PCS					19,184				18,812				17,803				15,279				15,123				13,867
		Total					38,917				38,342				36,586				33,592				32,342				29,046

(Data: Ministry of Information and Communication website)

(3) Market Characteristics

     The Korean mobile communication market includes the entire population of Korea with the mobile communication service needs, and almost every Korean is considered a potential user. With the market penetration rate reaching as high as 79.7% (as of the end of March 2006), the customer base is continuing to expand to include elementary school and pre-school children. Although demand to date has primarily been on the domestic market, as the business territory expands to overseas market, the size of overseas sales is expected to grow in the near future. Seasonal and economic fluctuations have much less influence on the Korean mobile communication market compared to other industries.

B. Company Status

(1) Market Shares

Our Market Share

														(Unit: %)
Classification		End of March 2006				2005				2004				2003
Mobile phone			50.7				50.9				51.3				54.5

Market Share of Competitors

(As of March 31, 2006)

(Unit: %)

Classification

SK Telecom

KTF

LG Telecom

Market share as of December 31, 2005

50.7

32.2

17.1

(Data: Ministry of Information and Communication website)

(2) New Business Contents and Prospects

a)

Resolution for capital investment regarding Mobile Virtual Network Operator (MVNO) service in the U.S. (January 26, 2005)

	–		Investment amount: US$220 million (From 2005 to 2007)
	–		Investment method: Establishment of a joint venture with EarthLink which is one of the three major internet service providers in the U.S.
	–		Service provided: MVNO (Mobile Virtual Network Operator)

	•		Subscriber recruitment and service provision based on service facilities and fee plans
	•		Combination of SK Telecom’s mobile communications business capabilities and data service technology with the local customer base, marketing infrastructure and brand power of EarthLink
	•		Scheduled to provide additional services related with music, games and messaging for target customers

–

Recent business status

	•		A new brand named “HELIO” launched in October 2005
	•		Full scale business scheduled for initiation in May 2006.

b) Commercialization of the High Speed Downlink Packet Access (HSDPA) service in the first half of 2006

	–		To facilitate service vitalization as part of our future growth strategy, more visual oriented products, such as video phones, will be developed while expanding the scope of global roaming services.
	–		We plan to improve customer recognition toward HSDPA through early market dominance and upgraded market premium services focused on the early adopters and frequent users.

2. Major Products

A. Status of Major Products

(Unit: in million Won, %)

Business field

Sales type

Item

Major trademarks

Sales amount (ratio)

Information and communication

Services

Mobile phone

June, NATE and others

2,512,919 (98.92

%)

Others

Others

27,395(1.08

%)

B. Price Trend of Major Product

																		(Unit: Won)
Item						First Quarter of 2006				During 2005				During 2004				During 2003
Mobile phone (Based on standard call charge)		Basic fee (per month)					13,000				13,000				13,000				14,000
		Service fee (per 10 seconds)					20				20				20				20

3. Investment Status

A. Investment in Progress

																						(Unit: in 100 million Won)
						Investment																Amount already				Future
Business field		Classification				period				Subject of investment				Investment effect				Total investments				invested				investment				Note
Network
		Upgrade					2006			CDMA 1x, EV-DO, 95A/B				Capacity increase and quality improvement					2,600				142				2,458				—
		Upgrade					2006			WCDMA				Capacity increase and quality improvement					5,700				423				5,277				—
		Upgrade					2006			Network, and others				Network expansion					1,700				0				1,700				—
Common
		Upgrade					2006			System improvement				System Upgrade					4,550				166				4,384				—
		New installation					2006			Company building and general support				Improvement in work environment					1,450				107				1,343
		Total													—				16,000				838				15,162				—

B. Future Investment Plan

Expected investment amount

Expected investment for each year

(Unit: in 100 million Won)

Business field

Asset type

Amount

2006

2007

2008

Investment effect

Note

Mobile phone business

Machinery, equipment and others

16,000

16,000

N/A

N/A

Upgrades to the existing services and provision of new services

—

Total

16,000

16,000

N/A

N/A

—

—

4. Derivative Products and Others

A. Derivative Product Contracts Status

(1)		Purpose of Contract: Currency Exchange Risk Hedging
(2)		Contract Terms

a) Cross Currency Swap

(As of March 31, 2006)								(Unit: in million Won)
Contract amount		Contract party		Contract date		Proceeds payment method		Income/loss on valuation
US$ 125 million		Citibank		March 23, 2004		Exchange on the date immediately preceding the principal and interest payment date			(31,976	)
US$ 125 million		Credit Suisse		March 23, 2004		Same as above			(32,702	)
US$ 50 million		BNP Paribas		March 23, 2004		Same as above			(13,026	)
Total: US$300 million		—		—		—			(77,704	)

b) FX Swap

(As of March 31, 2006)								(Unit: in million Won)
Contract amount		Contract party		Contract date		Proceeds payment method		Income on valuation
US$100 million		Credit Suisse		May 27, 2004		Exchange before principal payment date			(18,542)

5. R&D Activities

A. R&D Costs

										(Unit: in thousand Won)
		Quarter ended
Category		March 31, 2006				2005				2004				Note
Raw material			15,352				234,889				255,320				—
Labor			13,027,400				35,191,759				36,026,539				—
Depreciation			32,217,737				121,335,301				122,097,858				—
Commissioned service			21,013,465				86,536,635				85,646,995				—
Others			6,370,229				41,730,732				39,951,341				—
Total R&D costs			72,644,182				285,029,316				283,978,053				—
Accounting
Sales and administrative expenses			69,871,938				273,223,885				272,290,385				—
Development expenses (Intangible assets)			2,772,244				11,805,431				11,687,668				—
R&D cost / Ratio of sales amount (Total R&D costs / Current sales amount×100)			2.86	%			2.81	%			2.93	%			—

6. Other Matters Related with Investment Decisions

A. External Fund Procurement Summary

(Domestic procurement)														(Unit: in million Won)
Source of procurement		Beginning balance				New procurement				Reduction from repayment				Ending balance				Note
Bank			—				—				—				—				—
Insurance company			—				—				—				—				—
Merchant banking			—				—				—				—				—
Loan specialty financial company			—				—				—				—				—
Mutual savings bank			—				—				—				—				—
Other financial institutions			24,543				—				4,139				20,404				—
Total procurement from financial institutions			24,543				—				4,139				20,404				—
Corporate bond (public offering)			2,500,000				—				—				2,500,000				—
Corporate bond (private offering)			—				—				—				—				—
Paid-in capital increase (public offering)			—				—				—				—				—

(Domestic procurement)														(Unit: in million Won)
Source of procurement		Beginning balance				New procurement				Reduction from repayment				Ending balance				Note
Paid-in capital increase (private offering)			—				—				—				—				—
Asset – backed securitization (public offering)			—				—				—				—				—
Asset – backed securitization (private offering)			—				—				—				—				—
Others			—				—				—				—				—
Total procurement from capital market			2,500,000				—				—				2,500,000				—
Borrowings from shareholder, officer and affiliated company			—				—				—				—				—
Others			—				—				—				—				—
Total			2,524,543				—				4,139				2,520,404				—

(Overseas procurement)										Reduction in				(Unit: in million Won)
Procurement source		Beginning balance				New procurement				repayment and others				Ending balance				Note
Financial institutions			—				—				—				—			—
Overseas securities (Corporate bond)			303,900				—				—				292,770			Exchange rate adjustment
Overseas securities (shares and others)			385,885				—				—				385,885			—
Asset – backed securitization			—				—				—				—			—
Others			—				—				—				—			—
Total			689,785				—				—				678,655			—

B. Credit Ratings

(1) Corporate Bond

		Subject of				Credit rating entity		Evaluation
Credit rating date		valuation		Credit rating		(Credit rating range)		classification
March 12, 2004		Corporate bond		AAA		Korea Ratings		Current valuation
March 15, 2004		Corporate bond		AAA		National Information on Credit Evaluation, Inc.		Current valuation
April 23, 2004		Corporate bond		AAA		Korea Investors Service, Inc.		Current valuation
April 23, 2004		Corporate bond		AAA		Korea Ratings		Current valuation
December 6, 2004		Corporate bond		AAA		Korea Investors Service, Inc.		Current valuation
December 6, 2004		Corporate bond		AAA		National Information on Credit Evaluation, Inc.		Current valuation
March 11, 2005		Corporate bond		AAA		Korea Investors Service, Inc.		Current valuation
March 11, 2005		Corporate bond		AAA		Korea Ratings		Current valuation
March 14, 2005		Corporate bond		AAA		Korea Ratings		Regular valuation
June 14, 2005		Corporate bond		AAA		National Information on Credit Evaluation, Inc.		Regular valuation

(2) CP

		Subject of				Credit rating entity		Evaluation
Credit rating date		valuation		Credit rating		(Credit rating range)		classification
January 26, 2004		CP		A1		National Information on Credit Evaluation, Inc.		Regular valuation
June 8, 2004		CP		A1		National Information on Credit Evaluation, Inc.		Current valuation
June 11, 2004		CP		A1		Korea Ratings		Current valuation

		Subject of				Credit rating entity		Evaluation
Credit rating date		valuation		Credit rating		(Credit rating range)		classification
June 11, 2004		CP		A1		Korea Investors Service, Inc.		Current valuation
June 13, 2005		CP		A1		Korea Investors Service, Inc.		Current valuation
June 14, 2005		CP		A1		National Information on Credit Evaluation, Inc.		Current valuation
June 16, 2005		CP		A1		Korea Ratings		Current valuation

(3) International Credit Ratings

				Credit rating		Credit rating company
Date of credit rating		Subject of valuation		of securities		(Credit rating range)		Evaluation type
June 14, 2005		Issuer Rating		A		Fitch (England)		Regular valuation
July 14, 2005		Global Bonds		A2		Moody’s (U.S.A.)		Regular valuation
July 14, 2005		Exchangeable Bonds		A2		Moody’s (U.S.A.)		Regular valuation
July 27, 2005		Global Bonds		A		S&P (U.S.A.)		Regular valuation
July 27, 2005		Exchangeable Bonds		A		S&P (U.S.A.)		Regular valuation

III. Financial Information

1. Summary Financial Statements

														(Unit: in million Won)
		Quarter ended				Year ended December 31,
Classification		March 31, 2006				2005				2004				2003				2002
Current assets			4,011,460				4,172,485				3,854,345				3,460,706				2,746,991
- Quick assets			4,007,002				4,166,500				3,843,384				3,452,682				2,736,273
- Inventory			4,458				5,985				10,961				8,024				10,718
Fixed assets			10,374,750				10,349,191				10,166,360				9,915,253				9,974,227

														(Unit: in million Won)
		Quarter ended				Year ended December 31,
Classification		March 31, 2006				2005				2004				2003				2002
- Investments			2,666,775				2,366,760				2,112,488				1,763,359				3,132,330
- Tangible assets			4,399,170				4,595,884				4,605,253				4,551,626				4,451,548
- Intangible assets			3,308,805				3,386,547				3,448,619				3,600,268				2,390,350
Total assets			14,386,210				14,521,676				14,020,705				13,375,959				12,721,218
Current liabilities			2,849,856				2,747,268				2,859,711				4,231,974				4,015,859
Fixed liabilities			3,416,074				3,516,528				4,033,902				3,202,147				3,168,412
Total liabilities			6,265,930				6,263,796				6,893,613				7,434,121				7,184,271
Capital			44,639				44,639				44,639				44,639				44,576
Capital surplus			2,966,198				2,966,198				2,983,166				2,915,964				2,884,385
- Surplus from share issuance			2,915,887				2,915,887				2,915,887				2,915,964				2,884,385
- Other capital surplus			50,311				50,311				67,279				—				—
Income surplus			7,018,106				7,269,861				6,156,708				5,140,349				4,897,099
Capital adjustment			(1,908,663	)			(2,022,817	)			(2,057,422	)			(2,159,114	)			(2,289,112	)
Total capital			8,120,280				8,257,881				7,127,091				5,941,838				5,536,948
Sales			2,540,314				10,161,129				9,703,681				9,520,244				8,634,049
Operation income			667,861				2,653,570				2,359,581				3,080,660				2,683,676
Ordinary income			478,318				2,554,613				2,115,778				2,714,194				2,179,993
Current net income			337,160				1,871,380				1,494,852				1,942,750				1,511,278

IV. Auditor’s Opinion

1. Auditor’s Opinion and Others

A. Auditor

Quarter ended March 31, 2006		Quarter ended March 31, 2005		2005		2004
Deloitte Anjin LLC		Deloitte Anjin LLC		Deloitte Anjin LLC		Deloitte Hana Anjin LLC

B. Audit Opinion

Term		Auditor’s opinion		Remark
Quarter ended March 31, 2006		Appropriate		—
Quarter ended March 31, 2005		Appropriate		—
Year ended December 31, 2005		Appropriate		—
Year ended December 31, 2004		Appropriate		—

2. Remuneration for Independent non-executive Auditors for the Past Three Fiscal Years

A. Audit Contracts

(Unit: in thousand Won)

Term

Auditors

Contents

Fee

Total hours

Quarter ended March 31, 2006

Deloitte Anjin LLC

Semi-annual review

Not available

Not available

Quarterly review

Non-consolidated financial statements audit

Consolidated financial statements audit

Year ended December 31, 2005

Deloitte Anjin LLC

Semi-annual review

447,000

5,177

Quarterly review

Non-consolidated financial statements audit

(Unit: in thousand Won)

Term

Auditors

Contents

Fee

Total hours

Consolidated financial statements audit

Year ended December 31, 2004

Deloitte Hana Anjin LLC

Semi-annual review

360,000

4,808

Quarterly review

Non-consolidated financial statements audit

Consolidated financial statements audit

B. Non-Audit Services Contract with External Auditors

(Unit: in thousand Won)

Term

Contract date

Service provided

Service period

Fee

Note

Quarter ended March 31, 2006

March 31, 2006

Tax adjustment for the year ended December 31, 2005

5 days

29,590

—

Year ended December 31, 2005

February 4, 2005

Advisory service regarding the set up of the internal control

9 days

46,080

March 30, 2005

- Form 20-F for the year ended December 31, 2003

- Response to the U.S. S.E.C. comments regarding the Form    6-K including the U.S. GAAP consolidated financial    statements for the six months ended June 30, 2004

10 days

20,200

March 31, 2005

Tax adjustment for the year ended December 31, 2004

7 days

24,920

April 15, 2005

Tax consulting

3 days

5,000

(Unit: in thousand Won)

Term

Contract date

Service provided

Service period

Fee

Note

April 29, 2005

Tax consulting

7 days

19,000

June 1, 2005

2004 English audit

20 days

86,000

July 18, 2005

Tax consulting

5 days

13,500

December 31, 2005

Tax consulting

All year (100 hours)

10,000

Year ended December 31, 2004

March 2, 2004

Consulting on the issuance of overseas unsecured debenture

17 days

49,500

March 30, 2004

Tax adjustment for the year ended December 31, 2003

5 days

22,650

April 1, 2004

Financial due diligence

6 days

6,100

April 10, 2004

Thailand tax consulting

4 days

12,000

April 14, 2004

Consulting on issuance of overseas exchangeable bond

15 days

48,800

May 10, 2004

Indonesia tax consulting

4 days

9,600

September 30, 2004

U.S. GAAP Consolidated Audit (yearly basis)

20 days

86,000

September 30, 2004

U.S. GAAP Consolidated Audit (Semi-annual basis)

30 days

114,000

October 15, 2004

Consulting on internal control recommendations

50 days

171,000

V. Management Structure and Status Relating to Affiliated Companies

1. Summary of Management Structure

A. Board of Directors

(1) Authorities of the Board of Directors

a)

Resolution of the board of directors regarding Article 7

	-		Convocation of shareholders’ meeting and submission of agenda
	-		Prior approval of the financial statements
	-		Decisions on the issuance of new shares

	-		Long-term borrowings, issuance of corporate bonds and redemptions
	-		Capital transfer of reserves
	-		Election of CEO and representatives
	-		Appointment of executive directors
	-		Establishment, transfer or closure of branches
	-		Enactment of and revision to rules for the Board of Directors
	-		Annual business plan and budgeting
	-		Approval of investments exceeding Won 15 billion
	-		Planned budget increases and changes for investments exceeding Won 15 billion
	-		Diversification into new businesses
	-		Investments and joint ventures exceeding Won 15 billion (excluding the matters subject to prior approval by Independent non-executive directors)
	-		Establishment of subsidiaries
	-		Guarantees exceeding Won 15 billion (excluding the matters subject to prior approval by Independent non-executive directors)
	-		Transactions exceeding the lesser of amount equivalent to 10% of capital or Won 10 billion undertaken with interested parties
	-		Material changes in accordance with the Anti-trust Law and Fair Trade Act among disclosed information
	-		Enactment of and amendment to the Internal Trading Procedure
	-		Other matters considered necessary by the Board of Directors and those requiring Board of Directors’ approval under relevant laws

b)

Reporting items: Article 7.2 of the regulations of the Board of Directors

-

The representative director must report the following within two months after the date of occurrence to the Board of Directors

	•		Results for the six months ended June 30 of each year
	•		Execution of investments between Won 5 billion and Won 15 billion
	•		New investments and joint ventures under Won 15 billion
	•		Acquisition of non-operational fixed assets

	•		Disposition of fixed assets under Won 15 billion
	•		Matters related to guarantees of over Won 15 billion
	•		Internal trading not subject to approval by the Board of Directors
	•		Matters delegated to the representative director that are requested by the Board of Directors for reporting

(2)

Publication of Candidate Information Prior to the Shareholders’ Meeting for the Election of Directors and Shareholders’ Nomination

	a)		On February 16, 2006, through the convocation of the shareholders’ meeting, information on candidates Kim Yong Woon and Lim Hyun Jin was publicized.
	b)		There was no nomination by the shareholders

(3)

Major Activities of the Board of Directors

Meeting		Date		Agenda				Approval		Note
264th (the first meeting of 2006)		January 23, 2006		-		Financial statements for the year ended December 31, 2005		Approved as proposed		—
				-		Annual business report for the year ended December 31, 2005		Approved as proposed
				-		Organization of Nomination Committee for Independent non-executive Directors		Approved as proposed
				-		Amendment of regulation for the Remuneration Review Committee		Amendment to be proposed to the Board of Directors in April, 2006
265th (the second meeting of 2006)		February 14, 2006		-		Convocation of the 22nd General Meeting of Shareholders		Approved as proposed		—
266th (the third meeting of 2006)		March 31, 2006		-		Election of committee members		Approved as proposed		—

Meeting		Date				Agenda		Approval		Note
267th (the fourth meeting of 2006)		April 26, 2006		-		Amendment of regulation for the Remuneration Review Committee		Approved after amendment		—
				-		Election of committee member for the Remuneration Review Committee		Approved as proposed
				-		Establishment of the Service & Technology Center(STC)		Approved as proposed
				-		Exercise of the iHQ call option		Approved as proposed

(4)

Committee Structure and Activities of the Board of Directors

a)

Independent non-executive Director Nomination Committee

-

Organization

(As of March 10, 2006)
		Members
Persons		Company Directors		Independent non-executive Directors
4		Jung Nam Cho, Sung Min Ha		Jae Seung Yoon and Sang Jin Lee

-

Activities

Meeting		Date		Number of Attendees		Details
7th Meeting (the first meeting of 2006)		February 14, 2006		3 persons/4 persons		- Election of the Chairman: Jung Nam Cho
						- 22nd General Meeting of Shareholders: Nomination    of Independent non-executive director candidates
						- Yong Woon Kim, Hyun Jin Lim

b)

Remuneration Review Committee

-

Organization

(As of April 26, 2006)
		Members
Number of Persons		Company Directors		Independent non-executive Directors
8 persons		—		Dae Sik Kim, Yong Woon Kim, Sang Gu Nam, Dae Kyu Byun, Seung Taik Yang, Jae Seung Yoon, Sang Jin Lee, Hyun Jin Lim

- Activities

Meeting		Date		Number of Attendees		Details
—		—		—		—

c) Investment Review Committee

		- Organization
		(As of March 31, 2006)

Persons		Members
		Company Directors		Independent non-executive Directors
5 persons		Lee Bang Hyung		Byon Dae Kyu, Yang Seung Taek, Yoon Jae Seung, Lee Sang Jin

- Activities

Meeting		Date		Number of Attendees		Details
The first meeting of 2006		February 13, 2005		4 persons/5 persons		- Additional report on the investment plan for 2006
The second meeting of 2006		April 25, 2005		4 persons/5 persons		- Establishment of the Service & Technology    Center(STC)
						- Exercise of the iHQ call option
The third meeting of 2006		April 26, 2005		4 persons/5 persons		- Election of chairman
						- Approval plans for the investment in the contents    business and the restrictions thereof

d) Global Business Committee

		- Organization
		(As of March 31, 2006)

Persons		Members
		Company Directors		Independent non-executive Directors
4 persons		Ha Sung Min		Kim Dae Sik, Byon Dae Kyu, Lee Sang Jin

- Activities

Meeting		Date		Number of Attendees		Details
—		—		—		—

     e) Audit Committee: See “B. Audit System”

      * The Audit Committee is a committee established under the provisions of the Articles of Incorporation.

B. Audit System

(1) Establishment and Organization of the Audit Committee

	a)		The Audit Committee is organized with more than three directors. However, Independent non-executive directors must account for 2/3 or more, and the members are        elected by the resolution of the Board of Directors each year.
	b)		The Audit Committee is convened when deemed necessary by the chairman or is requested by two or more of the committee members.
	c)		The quorum for resolution is majority attendance with majority consent from the attending members.

(2) Authority of the Audit Committee

     Authority to inquire on the subsidiary companies, right to investigate the business and asset conditions, and right to request for the business report from the Audit Committee pursuant to the Audit Committee Regulations

(3) Members of the Audit Committee

     Audit Committee Members are directors Kim Dae Sik, Kim Yong Woon and Im Hyun Jin.

     * Director Nam Sang Gu resigned on May 12, 2006 (relevant disclosure on May 12, 2006)

(4) Major Activities of the Audit Committee

Meeting		Date		Agenda		Approval		Note
The first meeting of 2006		January 20, 2006		- Report on operational status of the internal accounting management system		—		—
				- Audit report for the year ended December 31, 2005		Approved as proposed		—
The second meeting of 2006		February 13, 2006		- Evaluation of the internal accounting management system		Approved as proposed
The third meeting of 2006		February 27, 2006		- Auditor’s opinion on the internal audit system		Approved as proposed		—
				- Management audit schedule for 2006		—
				- Proposal for the election of outside auditor for 2006-2008 period		—
The fourth meeting of 2006		March 8, 2006		- Election of outside auditor for 2006-2008 period		Approved as proposed		—
The fifth meeting of 2006		April 25, 2006		- Election of chairman		Approved as proposed		—
				- Remuneration for outside auditor		Approved as proposed
				- Collective re-approval of outside auditor’s service schedule for 2006		Approved as proposed
				- Management report		—

C.		Exercise of Voting Right by the Shareholders
(1)		Use of the Cumulative Voting System

	a)		Pursuant to the Articles of Incorporation, the cumulative voting system was first introduced in the General Meeting of Shareholders in 2003.
	b)		Articles of Incorporation

	–		Article 32 (3) (Election of Directors): Cumulative voting under Article 382-2 of the Commercial Law will not be applied for the election of directors.
	–		Article 4 of the 12th Supplement to the Articles of Incorporation (Interim Regulation): Article 32 (3) of the Articles of Incorporation shall remain effective until the day immediately preceding the date of the general shareholders’ meeting of 2003.

D. Remuneration for Officers and Others

(1) Remuneration for Directors (including Independent non-executive Directors) and Members of the Audit Committee

Total approval by the

(Unit: in million Won)

Meeting of

Average payment per

Classification

Total payment

Shareholders

person

Note

Company directors (4 persons)

3,027

12,000

757

—

Independent non-executive directors (8 persons)

137

17

Including members of the Audit Committee (4 persons)

(2) Granting and Exercise of Stock Options

 

Granted persons		Relationship				Grant date				Grant method				Type of stocks				Fluctuation volume												Amount not								Exercise				Final
																		Granted				Exercise				Cancel				exercised				Exercise period				price				price
Cho Jung Nam		Registered officer				March 8, 2002				Distribution of treasury or new shares				Common stock					6,150				—				—				6,150			Within two years following the third year after the date of grant (March 8, 2002)					267				231.5
Kim Young Jin			—			March 8, 2002					”			Common stock					790				—				—				790				”				”				”
Kim Sin Bae		Registered officer				March 8, 2002					”			Common stock					1,650				—				—				1,650				”				”				”
Ha Sung Min		Registered officer				March 8, 2002					”			Common stock					690				—				—				690				”				”				”
Lee Sang Jin		Registered officer				March 8, 2002					”			Common stock					1,000				—				—				1,000				”				”				”
Kim Dae Sik		Registered officer				March 8, 2002					”			Common stock					1,000				—				—				1,000				”				”				”
Nam Sang Ku		Registered officer				March 8, 2002					”			Common stock					1,000				—				—				1,000				”				”				”
Sung Ki Jung			—			March 8, 2002					”			Common stock					1,000				—				—				1,000				”				”				”
Byon Dae Kyu		Registered officer				March 8, 2002					”			Common stock					1,000				—				—				1,000				”				”				”
Yoon Jae Seung		Registered officer				March 8, 2002					”			Common stock					1,000				—				—				1,000				”				”				”
Lee Bang Hyung		Registered officer				March 8, 2002					”			Common stock					1,620				—				—				1,620				”				”				”
Kim Dae Ki and 58 others			—			March 8, 2002					”			Common stock					48,830				—				—				48,830				”				”				”
Sub-total			—				—				—				—				65,730				—				—				65,730				—				—				—
Total			—				—				—				—				65,730				—				—				65,730				—				—				—