SKM SK Telecom Co Ltd

SK Broadband : Tbroad : Tbroad Dongdaemun : KDMC

= 1 : 1.6860091 : 2.2095367 : 0.1693414

SK Broadband and the Merging Companies are all unlisted stock companies. There are no laws or regulations providing for the method of calculation of the merger ratio for a merger among unlisted stock companies, and pursuant to Article 165-4 of the Financial Investment Services and Capital Markets Act of Korea (“FSCMA”) and Article 176-5 of the Enforcement Decree of the FSCMA, no assessment of the fairness of the merger consideration by an external assessment institution is required. However, SK Broadband voluntarily received such assessment in order to determine the appropriate value of the Merging Companies.

The assessment method pursuant to the Inheritance Tax and Gift Tax Act of Korea, which is used for purposes of imposing tax or reducing tax-related disadvantages, is generally considered to be unsuitable for assessing fair value. Accordingly, SK Broadband considered the various assessment methods generally used for valuing companies based on asset value, revenue and market value, and selected the discounted cash flow (“DCF”) model, which is a method based on revenue, for calculating the merger ratio. The DCF model is the most widely used method in practice, and SK Broadband determined it to be the most suitable method for assessing a company’s corporate value in general, because it reflects the company’s future revenue stream or ability to generate cash. In particular, as the Merger combines four companies, the DCF model is the most rational method as it can take into account the expected changes to each company’s business in the medium- to long-term.

Results of Assessment

The estimated values per share of SK Broadband, Tbroad, Tbroad Dongdaemun and KDMC are Won 12,044, Won 20,306, Won 26,611 and Won 2,040, respectively, resulting in the merger ratio agreed among the merger parties of 1 : 1.6860091 : 2.2095367 : 0.1693414.

Principal Business

Fixed-line, satellite and other broadcasting

Separate Financial Information as of or for the Year Ended December 31, 2018

(in millions of Won)

Total assets

1,141,733

Share capital

74,094

Company Name

Tbroad Dongdaemun Broadcasting Co., Ltd.

Principal Business

Fixed-line, satellite and other broadcasting

Relationship to Company

—

Separate Financial Information as of or for the Year Ended December 31, 2018

(in millions of Won)

Total assets

27,754

Share capital

4,000

Total liabilities

1,731

Revenue

12,622

Total equity

26,022

Profit for the year

1,412

Company Name

Korea Digital Cable Media Center

Principal Business

Fixed-line, satellite and other broadcasting

Separate Financial Information as of or for the Year Ended December 31, 2018

(in millions of Won)

Shareholder Meeting

November 29, 2019

Submission Period of Dissent by Creditors

November 29, 2019 – December 31, 2019

Date of Merger

January 1, 2020

Registration of Merger

January 7, 2020

Issuance of New Stock

January 21, 2020

8. Appraisal Rights

9. Date of Board Resolution

April 26, 2019

•  Attendance of Outside Directors

Present

4

10. Other Important Matters Relating to Investment Decision

•  The Merger timetable above is an estimate as of the date of this filing, and it may change subject to discussions with, or approvals by, relevant authorities.

•  In connection with “8. Appraisal Rights” above, the Company, which owns all outstanding shares of SK Broadband, has consented to the Merger and delivered a letter to SK Broadband waiving its appraisal rights. Therefore, SK Broadband will not conduct appraisal procedures for the Merger.

•  Pursuant to Article 522 and Article 434 of the Korea Commercial Code, the Merger may be canceled if it fails to be approved by SK Broadband’s shareholders. The approval of the Merger agreement (the “Agreement”) requires at least two-thirds of the voting shares present at the extraordinary meeting of shareholders and one-third of all total outstanding shares.

•  The Agreement may be terminated before the date of the Merger if any of the following events occur:

1)  Any circumstance that has or would reasonably expected to have a material adverse effect on the property and business conditions of a party to the Merger is identified between the date of the Agreement and the date of the Merger;

2)  As of the end of the applicable exercise period for appraisal rights, the aggregate amount of shares of the Merging Companies for which appraisal rights have been exercised exceeds or is reasonably expected to exceed Won 20 billion;

3)  The Merger is not completed by January 31, 2020; or

4)  In connection with requisite government approvals:

i.   Government approvals that are material to the businesses of the parties to the Merger or the Merger process are conclusively denied; or

ii.  Government approvals that are obtained include conditions that are impossible to comply with or that would reasonably be expected to have a material adverse effect on the business and property of the surviving company following the Merger.

Ratio of SK Broadband’s Total Assets to the Company’s

Consolidated Total Assets (%)