Mobile Industry Report

• 1. Korean Mobile Industry 2003

2. Domestic Market Condition (1)

• The Change ofthe Number of Korean Mobile Service Subscribers

• The Change of the Amount of Mobile Phone

Source: MIC Source:Digital Times (2002, 10,7) 3. Domestic Market Condition (2)

• Forecasted subscriber distribution by service type

Source: Gartner ,Dataquest(2000) 4. Major Players of Mobile Industry Providers Manufacturers Source by Digital Times (2002,9,30) 1,346 2,125 4,088 Number of Employees 14% 33% 53% Market Share(%) 13,921.6 33,008.2 52,236.7 Gross Profit (U$:A million) 1996,7,11 1997,1,3 1984,3,29 Foundation date LG Telecom KTF SK Telecom Name 25,435 77,467.5 23% 1958,10,01 LG Elec. 789 3,053.0 1% 1991,3,29 Pantech&Curitel 821 646 48,364 Number of Employees 1% 1% 74% Market Share(%) 1,876.7 2,974.2 248,253.7 Gross Profit (U$:A million) 1992,3,11 1992,6,1 1969,1,13 Foundation date Telson Sewon Samsung Name 5. Mobile Service Market (1)

• SK Telecom

( U$: a million )

• KTF

• LG Telecom

( U$: a million ) ( U$: a million )

• Revenue Structure of Mobile Operators

Source:Dataquest 6. Mobile Service Market (2) (U$: a million )

• Comparison of the Gross Profit

• Market Share based on Profit

7.

• Future Strategy-SK Telecom

• SKTs future growth heavily depends on wireless data service. To drive its wireless data strategy, SKT pushed aggressive 2.5G network rollout based on Qualcomm s CDMA2000 1x technology. The company already reported 15,000 subscribers with Samsung and LG s CDMA2000 1x handsets under limited coverage. At data transmission speed of 144kbps, SKT covered 79 cities with 88% population coverage by end of 2001 and improved the coverage to all major highways by end of 1H02. The company s total capacity for CDMA2000 1x reached W2.0-2.5 trillion in the same period.

• Upon full commercial rollout of 2.5G network, SKT has finalized its packet-based tariff. Based on 512 byte per packet, text-based wireless data service is charged at W6.5 per packet while multimedia based wireless data service will be charged at W2.5 per packet. Compared to NTT Docomo s packet data tariff of around W17.6, the announced tariff is 63% cheaper for text-based content and 86% cheaper for multimedia-based content. The tariff is lower even compared to initial price level of W12 per packet discussed around the industry when SKT begun negotiating with Korean government. Nevertheless, once multimedia handsets equipped with color display and stereo sound systems are available for mass market distribution, the company hopes more users to transmit multimedia contents that will likely to increase usage and revenue.

• However, with the decision to push 2.5G network rollout, SKT delayed its 3G service based on WCDMA network from previously planned launch in May 2002 to possibly 2003-2004. Given its massive rollout cost of 2.5G network, the company believes that its 3G rollout must be delayed until significant portion of 2.5G network investment in recuperated. Further, with global delays in 3G infrastructure and handset development, there is a internal concern within SKT whether there is a full commercial system ready for service in May 2002.

• Besides its core mobile business, SKT is looking to become a platform provider and financial enabler by leveraging its core cellular business. Currently, SKT is providing mobile platform for cellular handsets but will be increasing its platform service to PDA and vehicle mounted terminals and eventually expand its mobile platform to included fixed platform. The company expects mobile platform market to reach W2.83 trillion in 2003 at 3-yr CAGR (2000-2003) of 203%.

• SKT also expects strong growth as a financial enabler that will focus on providing payment infrastructure based on internally developed solutions. The company expects financial enabler market to reach W1.38 tn in 2005 at 4-yr CAGR (2001-2005) of 13.5%.

Mobile Service Market (3) 8.

• Future Strategy- KTF

• Although the company has fared well in 2000, KTF faced similar growth slowdown in 2001-2002. As such, the company focused on increasing its wireless data service that totaled W51 billion in 2000 (1.8% of total sales). At end of 2000, the 55% of all KTF subscribers owned Mobile Explorer browser enabled handsets (vs. 26% for SKT). Higher proportion of younger generation subscribers also put company in a very good position to take advantage of exploding growth in wireless data. With 83% of its wireless data subscribers fall under age of 30, 45% of KTF subscribers are currently under the 30 years old (vs 28% for SKT)

• In terms of 2.5G rollout, the company seems less aggressive than SKT. In terms of capacity, the company is only looking to invest W400-500 billion covering only 7 major metropolitan cities rather than full nation wide coverage. With launch of KT s 3G consortium - KT Icom, KT focused more than SKT to rollout 3G WCDMA network earlier. However, depending on market reception and technology development to 2.5G/3G, KTF could adjust its capacity to provide most suitable wireless data service.

• The company launched 2.5G service in 2001 with introduction of color handsets and acquired 700,000 subscribers by the end of 2001. The company also introduced packet-based tariff for 2.5G and expected 2.5G ARPU to increase roughly by 18% to W45,000.

• Besides its CDMA2000 1x network rollout, the company introduced HDR to complement 1x network in 4Q00. With HDR, KTF could increase its data transmission rate up to 3G-like 2.4 Mbps in a standard 1.25 MHz channel bandwidth. Optimized for packet data services, HDR incorporates a flexible architecture based on standard Internet Protocols (IP). HDR s IP-based architecture allows flexible implementation of the wireless system in higher performance and cost-efficiency. As a complementary solution to voice networks utilizing operator s existing cell sites, towers, antennas and network equipment, HDR technology allows KTF to leverage its current invested infrastructure.

Mobile Service Market (4) 9.

• Future Strategy-LG Telecom

• Although the recent growth rate seems to be lower than its peers, LGT has the highest percentage of wireless data subscriber base among Korean operators as well as the highest data ARPU on the back of its strong platform/contents such as JAVA (first mobile JAVA service in the world) and WAP (first wireless data service in Korea). Among 3.86 million total mobile subscribers at end of February 2001, LGT had 2.16 million deployed wireless data handsets (56.0%). The company s data ARPU of W2,251 in January 2001 was the highest among Korean mobile operators. Nevertheless, given LGT s higher wireless data subscriber portion and younger subscriber base (44% of its subscriber under age of 30), LGT is still struggling to generate strong wireless data service that will offset weaker voice ARPU, when compared to its peers.

• In terms of its 2.5G CDMA2000 1x rollout, LGT provided nationwide service in 2001. With its major shareholder LG Electronics providing software based upgrade for CDMA2000 1x upgrade, LGT s total capacity reached only W210 billion between 2000-2002 compared to W2.0-2.5 trillion for SKT and W450 billion for KTF. Although the company argued that its CDMA2000 1x network was fully capable of supporting all of LGT s 3.83 million subscribers, it is still uncertain whether or not LGT could achieve such increase in data capacity given such lower level of capacity.

• For 3G, LGT accepted Korean government s proposal to head 3G CDMA 2000 consortium that included Hanaro Telecom and POSCO. Under the situation that Korean government provides enough incentives, such as a cut in license fee, LGT obtained additional bandwidth for CDMA 2000 service.

Mobile Service Market (5) 10. Market Share of Each Manufacturer

• Sales volume and Market Share of 2001

A:presented by Samsung Elec. B:presented by LG Elec. Source: Digital Times (Unit: ten thousand)

• Sales volume and Market Share of 2002

A:presented by Samsung Elec. B:presented by LG Elec. Source: Digital Times (Unit: ten thousand) 11. Profit Structure of Each Manufacturer

• Telson Elec.

• Sewon Telecom

• Pantech

• LG Elec.

Source by Digital Times (2002,9,30) 12. Korean Major Manufacturers (1) LG Electronics

• In terms of 3G development, the company is intensifying its research for both 3G handsets and equipment development. SEC is currently considered as a world s leading CDMA 2000 vendor.

• It currently controls 100% of domestic CDMA 2000 1x infrastructure equipment order and is the first to market 1x handsets. Based on advanced CDMA 2000 technology, however, the company is ready against its global competitors in the WCDMA development.

• It supplied China Unicom with CDMA 2000-1x and sold more than 7 million GSM phones in Europe.

• It is aiming to sell GSM phones as much as 1.7 million in China and South America.

• It also plans tobuild manufacturing facilities abroad and to balance production volume between domestic and foreign areas.

Samsung Electronics Strategic Focus

• For telecom business, LGE is heavily betting on the development of 3G WCDMA technology to allow the company to have a significant competitive advantage.

• It aims to be the fifth in the world market until 2005.

• It provided more than 15 million mobile phones including domestic market and increased the amount of export in CDMA 2000-1x and GPRS color mobile phone parts in the second half of 2002.

• It provided Chinacom approximately five hundred thousand CDMA 2000-1x.

• It also just started to enter GSM market including Europe and China.

Name 13. Korean Major Manufacturers (2) Sewon Telecom

• Pantech s future strategy is to grow as an OEM/ODM handset manufacturer with volume and R&D capability. Pantech internally has increased its capacity to 10 million units in the recent years with a belief that economies of scale are the key driver under the low profit margin scheme.

• Pantechdeveloped about 20 new handset models - thus gradually moved from a largely OEM to ODM producer. In particular, the company notes that its Latin American volumes will come from models developed by Pantech. With this objective in mind, Pantech increased its R&D force from 200 to 300in 2001.

• The company also formed an alliance with Yogan Co. of Japan, which provides W-CDMA software and solutions for the NTT Docomo for development of 3G handsets.

• Pantech acquired formal Hyundai Curitel in 2001. Recently this company made contract to supply India with three hundred thousand CDMA phones.

Pantech&Curitel Strategic Focus

• Sewon s current strategy can be clearly differentiated from other second-tier handset makers with its adoption of stand- alone strategy. The management of the company believes that it cannot secure acceptable profitability by being an OEM/ODM producer. Therefore, it is seeking sales partnerships with telecom companies, especially in South America and China, for its long-term survival.

• Since OEM production generally yields low-margin output, the company s strategy makes sense for longer-term. However, given global handset market s consolidation to a group of top-tier producers, the company s strategy is aggressive but risky. In particular, with two of three Korean service providers adopting a de-factor global 3G standard - WCDMA, there will be a less room for smaller, specialized handset producers to thrive in both domestic and export market.

• In recently this company settled Export-centered business structure to China. It also made strategic alliances with Chinese companies.

Name 14. Korean Major Manufacturers (3) Strategic Focus

• While Telson was a large-scale producer for Nokia, it has retained some independence. For instance, even for Nokia handsets, Telson emphasized that the relationship was on an ODM basis - not an OEM basis. The company maintains that it will continue to be responsible for the design and production functions, while Nokia will focus on the marketing and sales end of the CDMA handsets.

• If the Nokia relationship can lead to meaningful sustainable volumes, it should have positive impact for Telson. While other global competitors are suffering from loss of market share, it is becoming increasingly clear that Nokia is becoming global brand leader in mobile handsets.

• With Nokia shipment expects to grow 250% to 1.0 billion units by 2004, Telson is aligning itself with a strong partner. Nokia s shipment target also implies a need to increase production capability.

• But this company is likely to stop relying heavily on Nokia and is trying to broaden its customer base.

Telson Electronics Name 15.

• CDMA2000-1x of each manufacturer

Sourced by KISDI

• Sales Forecast of CDMA/GSM

Sourced by Data News (except for Nokia TMC) Technical Trend (1) 65,000 color STN-LCD 3 Line LCD C-500 65,000 color STN-LCD 4 Line LCD DD-600 Pantech & Curitel IM-5100 4 Gray LCD Blue LED Back Lighting 65,000 color LCD IM-5000 SK Teletec 65,000 color TFD-LCD LG-SDI1100 LG Elec. 260,000 color TFT-LCD SCH-V310 65,000 color UFB-LCD 256 Color STN-LCD SPH-X7500 Samsung Elec. LCD formModel Manufacturer 16. Technical Trend (2)

• IMT-2000 Market Outlook in Korea

Source : Koreas Electronics and Telecommunications Research Institute(ETRI) 4,349 14,86 1,093 623 Terminal Device 4,090 735 428 244 System(US$ mil.) 3,868 1,604 729 643 No. of Subscribers(1,000) 3 rdGen.(IMT-2000) 7,119 6,190 5,382 4,601 3,866 Terminal Device 7,321 6,907 6,395 5,814 5,190 System(US$ mil.) 24,410 24,337 24,216 24,031 23,831 No. of Subscribers(1,000) 2 ndGen.(CDMA) 2005 2004 2003 2002 2001 Category 17. Service Trend: Top Contents

• Top contents per provider

• Top contents in the profit aspect

Source:Advanced Institute of Information Technology ( www.aiit.or.kr ) 2003 Chatting/Community Mail/Message Location/Traffic/Travel 5 Entertainment Chatting/Community Email/ chatting/ Meeting 4 Game Game Game/Entertainment 3 Others Picture/Sound/Dictionary Others (Event, TTL etc.) 2 Mail/Character/Melody Others (External portal etc.) Picture Friend/My bell 1 LG Telecom KTF SK Telecom Top ofthe connected number rank Game Chatting/Community Stock/Finance 5 Stock/Banking/Ticketing Mail/Message Location/Traffic/Travel 4 Entertainment Adult thing/Entertainment/Fortune-telling Game/Entertainment 3 Java station Game Picture Friend/My bell 2 Mail/Character/Melody Picture/Sound/Dictionary Others (Event, TTL etc.) 1 LG Telecom KTF SK Telecom Top ofthe Information Feerank 18. Small Technology firms (1) CASUH CarMagic Bitek Sistem Anyone Wireless Anybil Alex Technology Airl AINet Ad Telecom AdDigital Company Name Contents(car information), mCRM soultion Interface telemetry control / car condition scanning www.carmagic.co.kr 82-2-3463-5396 9 PW / CDMA www.casuh.com 82-31-713-5748 10 Mobile enterprise solution www.biek.co.kr 82-2-551-2040 8 Wireless internet protocol conversion gateway Wireless networking devices www.aow.co.kr 82-2-6440-0185 7 Mobile agency www.anybil.com 82-2-797-6491 6 Cyber stock trading center service ASP service, Financial service, PDA solutiondevelopment Internet betting solution development www.alextech.co.kr 82-2-2129-3400 5 Wired & Wireless Combination portal site Airl service Killer service contents,Mobile solution & SI service www.airl.co.kr 82-2-424-4945 4 Mobile internet service providing Mobile internet solution providing www.ainet.co.kr 82-2-560-9317 3 Ad wizard www.AdTelecom.com 82-32-860-7382 2 Mobile advertisement solution and service Digital webcasting, mobile games, on;line games www.addigital.com 82-2-3443-1533 1 Business Descriptions Contact 19. Small Technology firms (2) Billing solution, Billing ASP service Integrated support center for billing www.futec.com 82-2-400-5901 Future Tech 19 Incubation, investment, consulting www.epital.com 82-2-501-8621 Epital Holdings 17 Mobile enterprise solution Mobile agency www.feelingk.com 82-2-3443-1007 Feelink 18 www.globalweb21.com 82-2-718-0663 www.elctricisland.com 82-2-578-0337 www.ehealth24.com 82-2-780-3575 www.digitmate.com 82-2-711-1024 www.cypus.com 82-2-3442-2818 www.cesscom.com 82-2-750-8600 www.cecraft.com 82-2-548-4634 Contact Games, Entertainment contents Global Web 20 Provide Java-based games and multimedia solutions using NGF via the web and mobile phones Electric Island 16 Health information service over internet & wireless network Medical information solution with PDA eHealth Consulting 15 Information Services, Mobile business consulting Mobile agency DigitMate 14 Mobile portal Mobile agency Cypus 13 Wireless PDA, Wireless solution Semi-conductor B2B service Cesscom 12 Entertainment software for PDAs Mobile CP business, SI Business CECRAFT 11 Business Descriptions Company Name 20. Small Technology firms (3) www.ksign.com 82-2-554-2581 www.kise.co.kr 82-2-564-6985 www.isoft.co.kr 82-2-508-5678 www.IntroMobile.com 82-2-567-3434 www.insidekorea.net 82-2-516-4749 www.infohand.co.kr 82-2-3452-7251 www.infobank.net 82-2-2189-1400 www.anfoart.com 82-2-3453-3969 www.impactra.com 82-2-578-7533 www.hntek.com 82-2-2202-2147 Contact Information services Value-added solution KISE 29 Wireless PKI solution VA solution KSIGN 30 Mobile internet solutions Post PC solutions, Mobile internet entertainment ISOFT 28 Mobile integrated solution & ASP business Mobile multimedia application & service Consulting etc. IntroMobile 27 Mobile agency, Mobile enterprise solution Telemetry service Inside Korea 26 Mobile solution Digital camera Infohand 25 Mobile mail, Wireless ASP, total solution for mobile site, Mobile internet gateway system,InfoBank 24 Ticketing solutions & book / reservation business Contents business (culture & wedding) Infoart 23 Device manufacturer OS platforms Impactra 22 Device manufacturer (Handheld PCs and wireless PDAs etc.) HNT 21 Business Descriptions Company Name 21. Small Technology firms (4) www.moinvally.co.kr 82-2-582-6114 www.mocons.com 82-2-540-6276 www.mococo.com 82-2-3430-3645 www.mobilestorm.co.kr 82-2-557-5015 www.mobilecnc.co.kr 82-2-563-5625 www.mjoynet.xom 82-2-3486-3910 www.mistream.com 82-2-575-1114 www.metamedia.co.kr 82-2-571-8195 www.mcome.com 82-2-6250-1200 www.manastone.com 82-2-529-3189 Contact XML style converting gateway XML browser phone solution based on KVM Bluetooth stack & application solution Mocons 39 Mobile system for insurance management Isync Moinvalley 40 OS platforms, Web browser, WAP browser Application sets Mococo 38 XML browser, Mobile site builder, Call back url server Mobile Multi-message Service Mobilestorm 37 Mobile enterprise solution Mobile C&C 36 Games, Entertainment Mjoynet 35 Wireless streaming solutions Personal broad casting solutions Mistream 34 Entertainment, Games, Information services Metamedia 33 Mobile Enterprise solution Mobile agancy M-commerce 32 HDML, mHTML,WML based game, Mobile Java game, Mobile device imbedded game Manastone 31 Business Descriptions Company Name 22. Small Technology firms (5) www.opentown,com 82-2-3452-8020 www.ntisoft.co.kr 82-31-716-1136 82-2-419-8378 www.netz-soft.com 82-2-572-0510 www.netple.com 82-2-2189-5683 www.neosteps.com 82-31-712-5080 www.neomtel.com 82-2-528-9300 www.nazca.co.kr 82-2-3141-8302 www.musetel.com 82-2-476-6780 www.mstage.com 82-2-6363-0900 Contact Mobile internet utilizer Technical solution NTI Soft 49 Games. Mobile portal Opentown 50 Mobile enterprise solution, Mobile agency Customer management Nslash.com 48 Mobile enterprise solution Streaming solution Nets Communications 47 Wireless browser Mobile banking Netple 46 Mobile modem OS platform Neosteps 45 Simple image service Smart telemetry service NeoMTel 44 Entertainment, games Nazca 43 Bluetooth IC for wireless internet Internet audio player for mobile phone Wireless internet music distribution service Musetel 42 Commerce solution Mobile enterprise solution Mstage 41 Business Descriptions Company Name 23. Small Technology firms (6) www.uniwis.com 82-2-6001-2021 www.u2u4.com 82-2-6248-6264 www.toysoft.co.kr 82-2-517-5752 www.spreadtel.com 82-42-489-9885 www.rumex.com 82-2-518-2800 www.rchantec.com 82-2-565-3336 www.free-ism.com 82-2-539-4749 www.pointi.com 82-2-512-0232 www.palmpalm.com 82-2-6334-7700 www.ovytz.com 82-2-567-2393 Contact Wireless data service contents holding company Mobile portal, Mobile agancy U2U4 59 Mobile studio Mobile application server Uniwis 60 Game, entertainment, streaming solution Toysoft 58 2.5GMobile, IMT 2000 Handset, phone,Wireless IP phoneSpread Telecom 57 Wireless internet software solution Hardware productionRumex 56 Telemetry service, Device manufacturer, OS platforms Rchantec 55 Mobile internet system integration Mobile internet solution Prism Information System 54 Information service, Location-based service Value-added solution Pointi.com 53 Total embedded Linux solutions Software development kit Palm Palm Technology 52 Java platform Java service Ovytz 51 Business Descriptions Company Name 24. Small Technology firms (7) www.xce.co.kr 82-31-601-5821 www.wisengine.com 82-2-508-1919 www.winksoft.com 82-2-518-1987 www.widerthan,com 82-2-6240-5145 www.verytech.co.kr 82-42-934-9889 Contact OS platforms Entertainment Personal commerce XCE 65 Mobile agency WISEngine 64 Mobile enterprise solution Location-based service Mobile agency WINK 63 Application based service Contents based service Consultancy on wireless internet service WiderThan.com 62 INI(Integrated network and intelligent) SCPINI(Integrated network and intelligent) Gate INI(Integrated network and intelligent) Server Verytech 61 Business Descriptions Company Name 25. Appendix-Business areas of privately-held Korean mobile companies 26. Appendix-Business areas of privately-held Korean mobile companies 27. Appendix-Business areas of privately-held Korean mobile companies