On May 6th, SK Telecom announced that the company achieved a net income of 448.8 billion won and total sales of 2.243 trillion won for the first quarter of 2003. In addition, operating income came to 750.9 billion won.

SK Telecom’s total sales and net income for the first quarter of 2003 increased 16% and 1% respectively over the 1.932 trillion won in sales and 443.6 billion won in net income recorded in the first quarter of 2002. Operating income showed a 13% increase over the 663 billion won recorded last year. Compared to the fourth quarter of 2002, operating income and net income increased 27% and 176% respectively, while total sales decreased 5%.

The total number of SK Telecom cellular subscribers as of March 31st 2003 was 17.63 million, up 410 thousand subscribers from the 17.22 million subscribers as of December 31st 2002. Despite a 73% reduction in cellular service fees (the largest percentage in the mobile communication industry) and reducing interconnection fees between telecommunication operators by an average of 10.3%, the company’s total sales merely decreased 5% when compared with the fourth quarter of 2002.

In spite of the reduction in total sales, net income increased 176%. One of the main factors in producing this increase in net income is the diminishing operating expenses, which includes a lowering of marketing and depreciation costs by 16%. SK Telecom has actively taken the necessary measures for stabilizing the market, and this has been reflected in the company’s business results.

In particular, marketing costs in the first quarter of 2003 were 32% lower than marketing costs in the fourth quarter of 2002. The company’s marketing costs in the fourth quarter of 2002 saw a temporary increase due to the launch of the new brand "June" and the special circumstance of new subscription suspension mandated by the government. Marketing costs in the first quarter of 2003 decreased in accordance with a reduction in advertising expenses and marketing commissions.

Sales of wireless Internet services, that are considered a new growth engine of the company, increased more than two-fold year on year and 5% compared with the fourth quarter of 2002. This occurred in spite of an unfavorable business environment in the first quarter of 2003 due to relatively short business days, and the accounts criteria of the sales of lottery being changed from total amount to net amount.

This rapid growth of wireless Internet sales is due to both an increasing number of wireless Internet service subscribers, and the increase in monthly average revenue per user (ARPU). The number of color handset subscribers greatly increased from 1.24 million in the first quarter of 2002 to 6.21 million in the first quarter of 2003 and 1X handset subscribers reached 11.17 million, an increase of 6.06 million over the 5.11 million subscribers in the first quarter of 2002.

This further proves SK Telecom’s outstanding leadership position in the wireless Internet market. The company firmly believes the wireless Internet area will continue to be a new growth engine in the telecommunication market in the future.

In accordance with these remarkable business results, SK Telecom’s EBITDA margin in the first quarter of 2003 was 49%, up 4% from 45% in the fourth quarter of 2002. This figure exceeded the company’s goal of a 48% EBITDA margin for this year-end.