Ryu Young-sang, the CEO of SK Telecom, bows and apologizes at a press conference regarding the hacking incident held at the SKT Tower in Jung-gu, Seoul, on the 4th when the final investigation results related to the government's hacking incident are announced./Courtesy of Jung Doo-yong.

The government decided to adopt the opinion of 'waiver of penalty fees' mentioned in the announcement.

Ryu Young-sang, president of SK Telecom, held a press conference regarding compensation for the hacking incident at the SKT Tower in Jung-gu, Seoul, on 4th. He noted that he had remained silent on the demands for 'waiver of penalty fees' raised by customers and the National Assembly. There was also criticism along the lines of 'if you don't have decision-making power, at least get permission from Chey Tae-won, chairman of SK Group.' Regarding the decision to waive penalty fees, Ryu said, 'SK Group aims for board-centered management. This decision was made entirely by the board and myself,' and added, 'Even if I brought Chairman Chey in, I don’t have the authority to decide.'

The Ministry of Science and ICT stated that SK Telecom, which leaked USIM (Universal Subscriber Identification Module) information due to a hacking attack, is at fault, and concluded that 'penalties should not be imposed.'

Ryu Je-myeong, the second vice minister of the Ministry of Science and ICT, announced the government's investigation results on the hacking incident, saying, 'Considering that SK Telecom’s negligence was found in this breach incident and that it failed to fulfill its primary obligation to provide a secure communication service, this breach incident falls under the company's fault according to the SK Telecom terms of service.' The government concluded that Article 43 of the SK Telecom terms of service, which states, 'The obligation to pay penalty fees shall be waived in the event of termination due to the company's fault,' should apply in this case.

Graphic=Son Min-kyun.

◇ 'Waiver of penalty fees is in line with shareholder interests in the long term.'

Accordingly, SK Telecom set April 18, prior to the hacking incident, as the reference point for the waiver of penalty fees. It will waive penalties for customers who terminated contracts due to the incident among the contracted customers who were signed up at that time. It plans to not impose penalties on customers terminating contracts by July 14.

Ryu noted, 'As this is an urgently decided matter, the refund of penalty fees will be processed in a way to allow for quick execution,' and said, 'The refund amount is planned to be paid out to the account applied within a week.'

The penalty fee refers to the amount to be returned if the contract is terminated early within the contract period, representing all or part of the discount benefits received. It pertains to terminal support refunds or optional contract discount refunds. However, the terminal installment payments are separate from the contract for communication services, therefore they are not subject to penalty fee waivers.

Ryu stated, 'Following the government announcement that day, we held an urgent board meeting and decided to accept the waiver of penalty fees after intense discussions,' he explained, 'Our position until now has been that the waiver was not possible, but after observing the government announcement and various recent situations related to customers and the market, I believe that accepting it aligns with the interests of the company and its shareholders.'

Regarding the decision to apply the penalty fee waiver only until the 14th, he said, 'I believe that extending the operation until 10 days from today will provide enough time for customers who wish to terminate their contracts.'

Ryu Young-sang, CEO of SK Telecom (center), Ryu Jung-hwan, head of the Network Infrastructure Center at SK Telecom (left), and Lim Bong-ho, head of the MNO Division at SK Telecom, are stating their positions regarding the hacking incident when the final investigation results related to the government's hacking incident are announced on the 4th at the SKT Tower in Jung-gu, Seoul./Courtesy of SK Telecom.

◇ 50% discount on communication fees in August… 50GB data provided monthly until the end of the year.

SK Telecom plans to invest 1.2 trillion won for compensation and response to the hacking incident. Of this, 500 billion won will be used for customer compensation. To strengthen information security, it plans to invest 700 billion won over the next five years.

All SK Telecom subscribers, as well as those using affordable mobile plans on the SK Telecom network, will receive ▲50% discount on communication fees in August ▲an additional 50GB of data each month until the end of the year ▲expanded membership discounts. In the T membership program, three partner companies will be selected each month to offer increased discount rates. Discounts will be available from places like Tous Les Jours (up to 50%), Domino's Pizza (up to 60%), and Paris Baguette (up to 50%).

Customers who terminate their contracts within six months after the hacking incident will have their membership years and levels restored without separate procedures. Ryu expressed gratitude towards the customers who have trusted and waited, stating, 'We have prepared this with appreciation for those who have faced difficulties in their daily lives.'

The organization related to information security will also be restructured. SK Telecom has upgraded the Chief Information Security Officer (CISO) organization to report directly to the CEO. They will bring in security experts to the board and establish a Red Team to evaluate and improve the company’s security status.

Dr. Lee Jong-hyun has been appointed as the new CISO. This CISO is a security professional who has worked in various security fields, including as Security Engineering Director at Amazon in the U.S., Security Officer at Samsung Electronics, and CISO in the Government of British Columbia in Canada. Ryu noted, 'There was an internal judgment that we need to increase our security personnel,' adding, 'We plan to expand the security staff to about 150, which is twice the current level.'

With the implementation of the penalty fee waiver, compensation plans, and increased investment in information security, a decline in SK Telecom's performance has become inevitable. There are concerns that this will disrupt the company's recently strengthened strategy of 'developing artificial intelligence (AI) capabilities.' Ryu stated, 'I anticipate that this will negatively affect the company's short-term performance,' but emphasized, 'In the long run, the board judged that this is a plan for the shareholders and the company, and it needs to be endured.' He added, 'It has become unavoidable to have some degree of selection and focus in AI investment,' and remarked, 'We will show our results as a company that excels in both telecommunications and AI through focused efforts, not just a matter of scale.'

Finally, Ryu emphasized, 'I sincerely apologize once again for this hacking incident, and I will do my best to establish a level of information security that customers can trust and depend on.'

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