ADVANC : Annual Report 1996 by ar.advanc

SUBSIDIARIES ASSOCIATIED COMPANY

COMPANY

NATURE OF BUSINESS

% OF INVESTMENT

SHINAWATFIA PAGING CO., LTD.

Operator of PHONELINK paging service.

60.00%

SHINAWATRA DATACOM Co., LTD.

Operator of DATANET (Data Communication Service) through ordinary telephone lines.

18.00%

FONEPOINT (THAILAND) Co., LTD.

Operator of a one-way, compact, light-weighted portable phone

17.80%

FINANCIAL HIGHLIGHTS

Baht Millions Except Per Share Data

1,996

OPERATING RESULTS • Total Revenues 11,907.80 • Net Income 3,563.30 • Total Assets 20,394.62 FINANCIAL POSITION • Share Capital Issued and Fully Paid 2,340.00 • Shareholders' Equity 10,547.30 • Earnings per Share (Baht) 15.23 • Book Value per Share (Baht) 45.07 • Dividend to Net Income Ratio 39.40% • Return on Average Shareholders' Equity 37.64% • Return on Average Assets 19.06%

See notes to financial statement

1995

1994

9,121.00 2,994.34 18,454.35

5,323.79 1,544.90 14,251.50

2,340.00 8,388.00 12.80 35.85 39.00% 41.02% 19.52%

2,340.00 6,212.66 15.82 26.55 48.00% 30.59% 15.68%

CHAIRMAN'S REPORT DEAR SHAREHOLDERS, Advanced lnfo Service Plc., is pleased to inform our shareholders of the results of the company's business in 1996. Ending on 31 December 1996, here are some significant facts that I would like to condense for you. RESULTS AND NET INCOME The company's revenue for 1996 amounted to a total of Baht 11,907.80 million. Compared with earnings of Baht 9,121 million in 1995, this represents an increase of Baht 2,786.80 million or 30.55% Net income in 1996 came to Baht 3,563.30 million, another rise above 1995 when net income was Baht 2,994.34 million. This was a considerable increase of Baht 568.96 million or 19%. THE MOBILE PHONE MARKET : QUALIFYING FACTORS IN 1996 AND THE FUTURE The general slowdown of Thailand's economy in 1996 did not have a critical effect on the mobile phone market as demand for telecommunications in business circles and among the general public remained vigorous. The result was reflected in overall telecommunications market growth of 27%. When we compare this with the number of mobile phone subscribers in 1995, we see that there are 1.64 million handsets in circulation, a penetration of 2.65% of Thailand's population. If compare the number of mobile telephone users with the figures of industrialized nations, it can be extrapolate that the market in Thailand could grow at least three times its present size, clearly showing the potential for future growth of this industry. With the rapid expansion of the market there has been a correspondingly strong increase in competition from other telecom business. This has had a nominal effect, with a drift towards lower profit expectation. Couples with a bullish market, there may well be some effect on the company's ability to preserve and increase its profit levels in the future. SIGNIFICANT MARKETING ACTIVITIES IN 1996 In 1996, Advanced lnfo Service Plc. (AIS) introduced a system to prevent the illegitimate use of Cellular 900 telephones, the first company in the Asia Pacific Region to do so. The SIS system initiated by the company prevents the returning and unauthorized use of phones completely and is quite different from other systems used to prevent the illicit use of analogue mobile telephones. Furthermore, AIS also introduced PIN codes to control the use of international calls on the Cellular 900 system. This was launched in 1996. Both introductions are an endeavour to protect the rights of our subscribers and to create a service differentiation. The Digital GSM market also received strong support form the company, stressing the quality of our service, being an important strategy. The network was expanded to cover all 76 provinces by December 1996. Additionally, AIS made it more convenient for subscribers who take their mobile Digital GSM telephone abroad by increasing the number of countries with whom we have an automatic roaming agreement from 10 in 1995 to 30 in 1996. Advanced lnfo Service Plc., has unceasingly emphasized the development of engineering, marketing and customer service, and by doing so remains extremely confident of our ability to maintain a satisfactory rate of sales and revenue growth. We would like to take this opportunity to thank all our dealers, subscribers and shareholders who have offered their support and placed their trust in the activities of our company. I would also like to thank our executives and staff, who have vigorously pursued the development of the company's business with the whole of their abilities, making 1996 another satisfactory year for the company.

ANUTHRA ASAWANONDA CHAIRMAN OF THE BOARD

BOONKLEE PLANGSIRI CHAIRMAN OF THEEXECUTIVE COMMITTEE

BUSINESS OVERVIEW Advanced lnfo Service Plc., was established 1 1 years ago to operate a mobile telephone business of the cellular 900 type, including both the NMT 900 ( Nordic Mobile Telephone 900) and the Digital GSM (Global System for Mobile Communications) systems. The company received a 25-year concession from the Telephone Organization of Thailand in order to undertake the installation and operation of a mobile telephone service using the 900 megahertz wavelength. The company has expanded its business enabling it to cover every province in Thailand with both systems, meeting the needs of consumers in every respect. The Digital GSM system has an international roaming agreement with 30 countries : Hong Kong, England, Scotland, Wales, Ireland, Greece, Switzerland, Australia, Singapore, Finland, Sweden, Denmark, South Africa, Macao, Malaysia, Indonesia, Spain, Netherlands, Austria, Belgium, France, Germany, Hungary, Italy, New Zealand, Norway, the Philippines, Taiwan and Turkey. In 1997, Advance Info Service Plc., will introduce this service for a further nine countries : Brunei, Cambodia, India, Luxembourg, Portugal, Saudi Arabia, the United Arab Emirates and the USA. The main income of the company is derived from its monthly fees and airtime usage of this revenue, the company has had to give 15% to the Telephone Organization of Thailand in the first five years of operation, increasing by 5% every five years for the whole of its concession period. At the end of 1996. The company had 820,000 subscribers. Of this total 735,000 are the Cellular 900 subscribers and 85,000 are Digital GSM subscribers. Advanced lnfo Service Plc., was listed on the Stock Exchange of Thailand (SET) on 5 May 1991 with a registered capital of Baht 500 Million. The registered capital has now increased to Baht 5,000 million. In order to increase the potential of the main business line, that is, mobile telecommunications service, Advanced lnfo Service., holds shares in the following companies : Shinawatra Paging Co., Ltd. Shinawatra Datacom Co., Ltd. Ponepoint (Thailand) Co., Ltd.

Holding : 59.99% Holding : 18.00% Holding : 17.80%

BOARD OF DIRECTORS Anuthra Asawanonda Withu Ruksvanichpongs Somprasong Boonyachai Niyom Purakum Ph.D. Vithit Leenutaphong Suphadej Poonpipat Arun Churdboonchart Boonklee Plangsiri

Chairman of the Board Vice Chairman of the Board Director Director Director Director Director Director

EXECUTIVE COMMITTEE Boonklee Plangsiri Niyom Purakum Ph.D. Somprasong Boonyachai Siripen Sitasuwan Suwimol Kaewkoon Chanon Suwasin Sarichai Thiewprasertkui

Chairman of the Executive Committee Director Director Director Director Director Director

MANAGEMENT TEAM Boonklee Plangsiri Somprasong Boonyachai

Sanchai Thiewprasertkul Sukit Tirawatanawit Vuthiporn Chaipayom Wichian Mektrakarn Arpattra Sringkarrinkui Walan Norasetpakdi Hui Weng Cheong Lee Wah Lon

Chairman of the Executive Committee - Wireless Communications Vice Chairman of the Executive Committee Wireless Communications Chairman of the Executive Committee - IT Business President - Marketing Advanced lnfo Service Public Company Limited Executive Vice President - Network Planning Vice President - Network Operation and Maintenance, Provincial Vice President - Network Operation and Maintenance, Metro Area Acting Vice President - Service Operation Assistant Vice President - Corporate Development Managing Director - Shinawatra Paging Co., Ltd. General Manager - Shinawatra Datacom Co., Ltd.

FINANCIAL ANALYSIS

ASSETS

At year end 1996, AIS's total asset was Baht 20,394.6 Million. Increased from Baht 18,454.3 Million in 1995 or a 10.5% increase. The net accounts receivable in 1995 was Baht 2,043.3 Million an increase from Baht 1,764.2 Million in 1995 or a 15.8% increase.

DEFERRED CHARGES

In 1996, the capital expenditure of the cellular network that had been transferred to TOT was a total of Baht 14,765.1 Million. An increase of 38.9% from Baht 10,632 Million in 1995.

LIABILITIES

In 1996, the total Liabilities of AIS decreased 2.2% from Baht 10,066.3 Million in 1996. The debt to total asset ratio of 1996 was 0.48.

SHAREHOLDERS' EQUITY

Shareholders' equity amounted to Baht 10,547.3 Million in 1996. Book value per share was Baht 45.07 per share.

REVENUE

Total revenue grew 30.6% from Baht 9,121 Million in 1995 to Baht 11,907.8 Million in 1996.

COST

Total expense increased 36.2% from Baht 6,126.7 Million in 1995 to Bah 8,344.5 Million in 1996.

NET INCOME

Net income increased 19% from Baht 2,994.3 Million in 1995 to Baht 3,563.3 Million in 1996. Earnings per share amounted to Baht 15.23.

AUDITOR'S REPORT

To the Shareholders Advanced lnfo Service Public Company Limited We have examined the balance sheets of Advanced lnfo Service Public Company Limited as at December 31, 1996 and 1995, and the related statements of income, retained earnings and cash flows for the years then ended. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the financial statements referred to above present fairly the financial position of Advanced lnfo Service Public Company Limited at December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

DR. PAYOM SINGHASANEH CERTIFIED PUBLIC ACCOUNTANT

PEAT MARWICK SUTHEE LIMITED BANGKOK, FEBRUARY 14, 1997

ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED BALANCE SHEETS

As at December 31, 1996 and 1995

1996

1995 Baht

ASSETS CURRENTASSETS Cash in hand and at banks(Note 5) Notes receivable from finance companies Accounts and notes receivable (net of allowance for doubtful accounts of Baht 200,600,000 in 1996 and Baht 96,000,000 in 1 995) (Notes 3 & 4) Amounts receivable from parent and other related companies - net (Note 3) Other current assets TOTAL CURRENT ASSETS

530,314,650.81 905,000,000.00

616,618,043.60 3,735,134,260.28

2,034,305,572.85

1,764,189,843.22

223,658,590.09 408,805,893.76 4,102,084,707.51

187,461,232.09 214,004,924.54 6,517,408,303.73

INVESTMENTS IN SUBSIDIARY AND OTHER COMPANIES - NET (Notes 4 & 6)

844,454,035.77

795,313,512.82

PROPERTY AND EQUIPMENT - NET (Notes 3,4 & 7)

568,411,313.83

402,251,352.36

14,832,087,720.68 47,582,522.31 14,879,670,242.99

10,709,533,659.13 29,841,311.59 10,739,374,970.72

20,394,620,300.10

18,454,348,139.63

OTHER ASSETS Deferred charges - net (Notes 2,3,4 & 8) Deposits and others TOTAL OTHER ASSETS TOTAL ASSETS

See notes to financial statements

As at December 31, 1996 and 1995

1996

1995 Baht

LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Loans from banks Accounts payable and accrued expenses (Note 3) Current portion of long-term liabilities (Notes 3, 5 & 9) Income tax payable Amounts payable to parent and other related companies (Note 3) Other current liabilities TOTAL CURRENT LIABILITIES LONG-TERM LIABILITIES - NET (Notes 3, 5 & 9) DEPOSITS RECEIVED FROM CUSTOMERS TOTAL LIABILITIES

51,320,000.00

1,130,751,750.00

4,608,675,961.72

3,747,816,934.63

465,537,047.90 775,848,047.39

1,125,429,467.30 782,304,558.91

1,431,991.85 84,173,070.09 5,986,986,118.95 1,169,393,383.32 2,690,955,000.00 9,847,334,502.27

2,619,169.11 24,208,232.30 6,813,130,112.25 1,150,936,139.32 2,102,280,000.00 10,066,346,251.57

5,000,000,000.00

SHAREHOLDERS' EQUITY Share capital Authorized 500,000,000 shares, Baht 1 0 par value Issued 234,000,000 shares, fully paid Premium on share capital Retained earnings Appropriated to legal reserve (Note 13) Unappropriated TOTAL SHAREHOLDERS' EQUITY

2,340,000,000.00 2,295,000,000.00

484,700,000.00 5,427,585,797.83 10,547,285,797.83

306,500,000.00 3,446,501,888.06 8,388,001,888.06

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

20,394,620,300.10

18,4541348,139.63

See notes to financial statements

ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED STATEMENTS OF INCOME AND RETAINED EARNINGS

For the Years Ended December 31, 1996 and 1995

1996

1995 Baht

REVENUES Service income (Note 4) Net result of investment in subsidiary (Note 4) Other income TOTAL REVENUES EXPENSES Cost of services (Note4) Selling and administrative expenses (Note 3) Other expenses (Note 11) Interest expense (Note 10) Income tax TOTAL EXPENSES NET INCOME UNAPPROPRIATED RETAINED EARNINGS AT BEGINNING OF YEAR APPROPRIATION OF EARNINGS (Note 12) Legal reserve Dividend Interim dividend UNAPPROPRIATED RETAINED EARNING AT ENO OF YEAR EARNINGS PER SHARE (Note 4)

See notes to financial statements

11,375,204,942.55

8,608,791,613.27

50,140,522.95 482,418,101.07 11,907,763,566.57

450,712.63 511,758,368.20 9,121,000,694.10

4,565,876,960.50 1,954,380,512.96 40,457,060.28 197,854,765.72 1,585,910,357.34 8,344,479,656.80 3,563,283,909.77

3,131,297,817.01 1,364,353,175.60 16,000,000.00 281,447,566.52 1,333,562,018.93 6,126,660,578.06 2,994,340,116.04

3,446,501,888.06 7,009,785,797.83

1,420,961,772.02 4,415,301,888.06

(178,200,000.00) (702,000,000.00) (702,000,000.00)

(149,800,000.00) (351,000,000.00) (468,000,000.00)

5,427,585,797.83 15.23

3,446,501,888.06 12.80

ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 1996 and 1995

1996

1995 Baht

CASH FLOWS FROM OPERATING ACTIVITIES Net income Reconcile to net cash provided by operating activities Depreciation and amortization of property and equipment Amortization of deferred charges Additions to bad debt and allowance for doubtful accounts Estimated loss on collection of amounts receivable from a related company Additions to allowance for losses on the decline in values of investments Net result of investment in subsidiary company Increase in accounts and notes receivable Decrease (increase) in amounts receivable from parent and other related companies Decrease (increase) in other current assets Increase in deposits and others Increase in accounts payable and accrued expenses Increase (decrease) in income tax payable Decrease in amounts payable to parent and other related companies Increase in other current liabilities Increase in deposits received from customers Losses on sales of equipment Other miscellaneous items

3,563,283,909.77

2,994,340,116.04

131,780,988.13 773,126,125.45

72,763,944.40 518,074,678.56

155,967,723.10

100,487,176.69

39,457,060.28

1,000,000.00

16,000,000.00

(50,140,522.95)

(450,712.63)

(426,083,452.73)

(961,655,171.82)

(75,654,418.28)

4,291,766.38

(194,800,969.22) (17,741,210.72)

40,432,536.27 (16,571,776.26)

860,859,027.09

1,799,360,727.25

(6,456,511.52)

461,780,847.02

(1,187,177.26) 59,964,837.79 588,675,000.00 894,945.49 -

(30,576,405.54) 11,603,072.41 796,446,000.00 47.05

NET CASH PROVIDED BY OPERATING ACTIVITIES 5,402,945,354.42

See notes to financial statements

5,806,326,845.82

ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 1996 and 1995

1,996

1995 Baht

CASH FLOWS FROM INVESTING ACTIVITIES Net decrease (increase) in investments in notes receivable from finance companies Additions to investments in property and equipment Proceeds from sales of equipment Additions to investments in deferred charges NET CASH USED FOR IN VESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Net decrease in loans from banks Repayments of loans from finance companies Net decrease in long-term liabilities Payments of dividend and interim dividend NET CASH FROM FINANCING ACTIVITIES NET INCREASE (DECREASE) IN CASH CASH AT BEGINNING OF YEAR CASH AT END OF YEAR

2,830,134,260.28

(224,616,126.03)

(308,151,799.63) 9,315,904.54

(171,965,183.99) 30,845.28

(4,895,680,187.00)

(3,501,790,606.45J

(2,364,381,821.81)

(3,898,341,771.19)

(1,079,431,750.00)

(60,405,273.68)

(641,435,175.40) (1,404,000,000.00) (3,124,866,925.40) (86,303,392.79) 616,618,043.60 530,314,650.81

(150,000,000.00) (800,696,154.25) (819,000,000.00) (1,830,101,427.93) 77,883,646.70 538,734,396.90 616,618,043.60

SUPPLEMENTAI DISCLOSURE OF CASH FLOW INFORMATION DEFINITION OF CASH Cash shown in the accompanying statements of cash flows represents cash in hand and at banks as defined in the Thai Accounting Standard with respect to the preparation of the statement of cash flows which is in line with the definition prescribed in the regulation relating to the financial statements issued under the Ministerial Regulation No. 2 (B.E. 2519), under the Announcement of The National Executive Council No. 285 dated 24th November, B.E. 2515 INTEREST EXPENSE AND INCOME TAX PAID DURING THE YEARS Baht Interest expense Income tax

1996 194,484,436.00 1,592,366,868.86

See notes to financial statements

1995 293,574,953.03 871,781,171.91

NON-CASH INVESTING ACTIVITIES IN 1996 AND 1995 Additions to investments in building and equipment for general business operations, which are included in property and equipment, and additions to investments in equipment for the operations of mobile phone network, which are included in deferred charges, amounted to approximately Baht 5,203.83 million in 1996 and Baht 3,673.76 million in 1995. Certain portions of debts incurred from the aforesaid investments, amounting to approximately Baht 340.17 million in 1996 and Baht 427.58 million in 1995, were converted to long-term liabilities whilst payments of the remaining balances shall be made in cash. As at December 31, 1996 and 1995, outstanding debts in the balance sheets relating to the aforesaid investments, other than those converted to long-term liabilities, amounting to approximately Baht 670.08 million in 1996 and Baht 1,329.96 million in 1995 are included in accounts payable, and amounting to approximately Baht 0.21 million in 1996 and Baht 0.26 million in 1995 are included in amounts payable to parent and other related companies, and amounting to approximately Baht 21.66 million in 1996 and Baht 10.05 million in 1995 are included in other current liabilities.

See notes to financial statements

ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED NOTE TO FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995

NOTE 1 - BASIS OF FINANCIAL STATEMENTS The accompanying financial statements have been prepared in accordance with generally accepted accounting principles and in compliance with the requirements of the Stock Exchange of Thailand. The Company does not present segment information due to the Company is principally engaged in only one business segment as described in Note 2 to the financial statements.

NOTE 2 - GENERAL INFORMATION The Company is a part of the Shinawatra Computer and Communications Group. Shinawatra Computer and Communications Public Company Limited is the Company's parent company with 57.69% shareholding as at December 31, 1996 and 1995. The Company is principally engaged in the operations of a 900-MHz CELLULAR TELEPHONE SYSTEM under a concession received from the Telephone Organization of Thailand, under an agreement dated March 27, 1990 and certain amendments made thereafter. Under the aforesaid agreement, the Company has to pay annual fee to the Telephone Organization of Thailand based on certain percentage of certain service income or at the minimum fee as specified in the agreement, whichever is higher In addition, the Company, according to the aforesaid agreement, has to transfer its ownership of certain equipment and other assets procured by the Company for the operations of a 900-MHz CELLULAR TELEPHONE SYSTEM to the Telephone Organization of Thailand on the dates of their completion of installation.

As at December 31, 1996 and 1995, the aforementioned equipment and other assets, at their book values, amounting to approximately Baht 14,765.13 million and Baht 10,631.98 million, respectively, are presented as deferred charges in the balance sheets and amortized over the remaining period of agreement until September 30, 2015.

NOTE 3 - RELATED PARTY TRANSACTIONS The accompanying financial statements include transactions with the Company's parent, subsidiary and other related companies. The effects of these transactions are reflected in the accompanying financial statements on the basis determined by the Company and companies concerned. As at December 31, outstanding balances relating to the parent, subsidiary and other related companies which are included in accounts receivable and accounts payable (including accrued expenses) in the balance sheets are summarized as follows : Million Baht

The parent company A subsidiary company Other related companies TOTAL

1996 Accounts Receivable

Accounts Payable

0.38 0.71 1.09

215.46 0.17 91.24 306.87

1995 Accounts Accounts Receivable Payable 0.17 3.50 3.752

4.72 87.21 61.93

Significant outstanding balances as at December 31, 1996 and 1995 relating to the parent and other related companies other than those balances included in accounts receivable and accounts payable (including accrued expenses) consist of Amounts receivable from parent and other related companies : Baht Amounts receivable from the parent company Amounts receivable from other related companies Less Provision for loss on collection of amounts receivable from related companies TOTAL

1,996 103,546,449.76 159,935,563.76 263,482,013.52

1995 114,778,134.70 73,049,460.54 187,827,595.24

39,823,423.43 223,658,590.09

366,363.15 187,461,232.09

Amounts receivable from the parent and other related companies mainly derived from payments made by the Company on behalf of those companies. Amounts payable to the parent and other related companies : Baht Amounts payable to the parent company Amounts payable to other related companies TOTAL

1996 353,277.76 1,078,714.09 1,431,991.85

1995 1,429,306.53 1,189,862.58 2,619,169.11

Amounts payable to the parent and other related companies mainly derived from payments made by those companies on behalf of the Company.

Significant transactions with the Company's parent and other related companies for the years ended December 31, are summarized as follows : Million Baht Costs of rental and other services Cost of advertisement Costs of consulting and management services Purchases of equipment for the operations of the mobile phone network Purchases of equipment for general business operations Service income

1996 400.63 332.84 240.00

1995 320.35 235.99 150.00

252.36

174.30

134.87 19.04

80.06 4.01

Transactions other than those mentioned previously consist of : • Loan from a foreign company as at December 31,1995 in the amount of approximately Baht 97.85 million was guaranteed by the parent company. • At December 31, 1995, the Company was contingently liable to finance companies for guaranteeing loans of a related company amounting to approximately Baht 34.20 million. • At December 31, 1996, the Company had commitments with the parent and an other related companies to purchase equipment for the operations of a 900-MHz CELLULAR TELEPHONE SYSTEM and to receive satellite transponder services amounting to approximately Baht 183.34 million, • The Company has entered into lease and related service agreements with related companies covering its office spaces, and cars for periods ranging from 10 months to 14 years with options to renew. As at December 31, 1996, the Company was committed to pay rental and service fees in respect of the said agreements amounting to approximately Baht 12.10 million per month.

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES METHOD OF REVENUE AND EXPENSE RECOGNITION The Company recognizes income from mobile phone services when said services are rendered to customers. All service costs incurred during the year are treated as period cost. ACCOUNTS AND NOTES RECEIVABLE The Company provides an allowance for doubtful accounts equivalent to the estimated collection losses. The estimated losses are based on collection experience and the management estimates. METHOD OF RECORDING OF INVESTMENTS Investment in the subsidiary company is recorded by using the equity method, while investments in other companies are recorded by using the cost method and less allowance for losses on the decline in values of investments. The excess of the cost of investment in the subsidiary company over its book value at the date near the acquisition is included in investments, and is amortized by the straight-line method over a period of 15 years.

The proportionate share in net income of the subsidiary company for the years ended December 31, 1996 and 1995, after eliminating all significant gains or losses deriving from intercompany transactions incurred by the Company and its subsidiary, and less amortization of the excess of the cost of investment in the subsidiary company over its book value at the date near the acquisition, are shown as net result of investment in the subsidiary company in the statements of income. The recording of investment in the subsidiary company by using the equity method has been made for the purpose of reflecting the status of and return on investment in the said company. The Company, therefore, does not take into consideration the net result of investment in the subsidiary company for the years ended December 31, 1996 and 1995 in the income tax computation for such years. PROPEFITY AND EQUIPMENT Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed by the straight-line method based on the estimated useful lives of assets of 5 - 20 years. Depreciation and amortization for 1996 and 1995 amount to approximately Baht 131.78 million and Baht 72.76 million, respectively. The Company, in 1996, had entered into a number of financial lease agreements to obtain vehicles for its business operations. For the financial reporting purpose, vehicle under each financial lease and its related obligation are recorded at the discounted minimum lease amount, using the discount rate as prescribed in each lease agreement, or the fair market value at the date of each agreement, whichever is lower. Depreciation of vehicles under financial leases is computed by the straight-line method based on the estimated useful lives of vehicles of 5 years. Depreciation of vehicles under financial leases for 1996, amounting to approximately Baht 0.24 million, is included in the total depreciation and amortization for 1996 as disclosed in the preceding paragraph. DEFERRED CHARGES Deferred charges represent expenditure in relation to the increase of share capital, commitment fees of longterm loans, costs of certain equipment and other assets which have been transferred to or ready to be transferred to the Telephone Organization of Thailand, and costs of long-term leases for spaces for base stations. The following amortization methods are used: • Expenditure in relation to the increase of share capital are amortized over a period of five years. • Commitment fees of long-term loans are amortized over the period of each loan agreement. • Costs of certain equipment and other assets which have been transferred to or ready to be transferred to the Telephone Organization of Thailand are amortized over the remaining period of agreement until September 30, 2015. • Costs of long-term leases for spaces for base stations are amortized over the period of each lease agreement. Amortization of deferred charges for 1996 and 1995 amount to approximately Baht 773.13 million and Baht 518.07 million, respectively. FOREIGN CURRENCY TRANSACTIONS Foreign currency transactions are recorded in baht at the rates of exchange ruling on the transaction dates. Outstanding assets and liabilities in foreign currencies at the balance sheet date are translated into baht at the exchange rates ruling on that date. Translation gain or loss is included as revenue or expense in the statements of income. Premiums or discounts under forward exchange contracts are amortized to profit and loss accounts over the period of each forward exchange contract. The Company does not present unrealized translation gain or loss from outstanding assets and liabilities in foreign currencies at the balance sheet date as part of the cash reconciliation in the statements of cash flows due to such transactions, compared to overall cash flows each year, are not significant.

EARNINGS PER SHARE Earnings per share for the year ended December 31, 1996 and 1995 are computed by dividing net income for each year by the number of common shares outstanding at the end of each year As of December 31, 1996 and 1995, the Company had authorized 500,000,000 common shares and issued 234,000,000 common shares. NOTE 5 - ASSETS PLEDGED AS COLLATERAL Bank deposits as at December 31, 1996 and 1995 amounting to approximately Baht 7.5 million and Baht 179.94 million, respectively, were pledged as collateral for credits obtained from local banks and a foreign finance company.

NOTE 6 - INVESTMENTS IN SUBSIDIARY AND OTHER COMPANIES Investments in subsidiary and other companies at December 31, comprise investments in share capital of the following companies : Million Baht

% Holdings

Values of Investments 1996 1995

SUBSIDIARY COMPANY Shinawatra Paging Company Limited

59.99

780.59

730.45

OTHER COMPANIES Shinawatra Datacom Company Limited Fonepoint (Thailand) Company Limited

18.00 17.80

95.86 17.20 893.65

95.86 17.20 843.51

49.20 844.45

48.20 795.31

Less Allowance for losses on the decline in values of investments TOTAL

The Company does not have significant influence in other companies as shown above.

NOTE 7 - PROPERTY AND EQUIPMENT Property and equipment at December 31, consist of : Baht

Estimated Useful lives (Years)

Land Buildings Leasehold building improvements Furniture, fixtures and office equipment Vehicles Vehicle under financial leases

20 10 5-10 5 5

Assets under construction and installation Less Accumulated depreciation and amortization PROPEFITY AND EQUIPMENT - NET

1995

2,525,000.00 7,575,000.00 40,411,383.65 743,276,149.59 23,467,893.31 3,426,600.00

2,525,000.00 7,575,000.00 27,173,460.25 463,014,632.39 18,044,706.31 -

11,690,872.91 832,372,899.46

28,667,979.91 547,000,778.86

263,961,585.63 568,411,313.83

144,749,426.50 402,251,352.36

NOTE 8 - DEFERRED CHARGES On September 20, 1996, the Telephone Organization of Thailand extended the concession period given to the Company for the operations of 900-MHz CELLULAR TELEPHONE SYSTEM, which formerly expires on September 30, 201 0, for another period of 5 years until September 30, 2015. Accordingly, the accounting estimates relating to amortization of those equipment and other assets, which have been transferred to or ready to be transferred to the Telephone Organization of Thailand, have therefore been revised in order to conform with the new concession period, commencing September 20, 1996. As a result, net income and earnings per share for the year ended December 31, 1996 are effected as follows â&#x20AC;˘ Net income for the year ended December 31, 1996 was increased by approximately Baht 47.70 million. â&#x20AC;˘ Earnings per share for the year ended December 31, 1996 was increased by Baht 0.20 per share.

NOTE 9 - LONG-TERM LIAB1LITIES Long-term liabilities at December 31, consist of : Baht Loans from foreign banks Syndicated loans from foreign banks Loans from foreign finance company Loans from foreign companies Liabilities under financial leases

1,996 333,580,000.00 1,189,507,990.83 108,887,535.41 2,954,904.98 1,634,930,431.22 465,537,047.90 1,169,393,383.32

Less Current portion of long-term liabilities TOTAL

1995 321,809,250.00 656,240,000.00 1,015,884,024.54 282,432,332.08 2,276,365,606.62 1,125,429,467.30 1,150,936,139.32

LOANS FROM FOREIGN FINANCE COMPANY Loans from a foreign finance company as at December 31, 1995 comprise loans under five loan agreements Loans under the first and second agreement are repayable in fifteen equal semi-annual instalments commencing March 15, 1993 and June 23, 1993, respectively. Loans under the third and fourth agreement are repayable in ten equal semi-annual instalments commencing December 30, 1993 and December 30, 1994, respectively. Loans under the fifth agreement is repayable in ten equal semi-annual instalments commencing July 15, 1996. Interest payments under the said five loan agreements are payable semi-annually at the rates ranging from 5.95% - 7.40% per annum. Loans from a foreign finance company as at December 31, 1996 comprise five loan agreements obtained from the same lender as at December 31, 1995. Loans under the first and second agreement are the same loan agreements as those loans under the first and second agreement outstanding as at December 31, 1995. Interest payments under the said two loan agreements are payable semi-annually at the rates ranging from 6.78% - 7.40% per annum. Loan under the third agreement was rearranged from the third and fourth loan agreement outstanding as at December 31, 1995, repayments of loan have been rescheduled in four equal semi-annual instalments commencing January 15, 1997. Interest rates and interest payments is at the 6 month LIBOR plus the rates as prescribed in the said agreement. Loan under the fourth agreement is the same loan under the fifth agreement outstanding as at December 31, 1995. Interest payment under the said loan agreement is payable semi-annually at the rate of 6.88% per annum. Loans under the fifth agreement is repayable in nine equal semi-annual instailments commencing January 15, 1997. Interest payment under the said loan agreement is payable semi-annually at the rate of 6.1 0% per annum. As at December 31, 1996 and 1995, outstanding balances under the aforesaid five loan agreements amount to approximately Baht 1,189.51 million and Baht 1,01 5.88 million, respectively. LOANS FROM FOREIGN COMPANIES Loans from foreign companies as at December 31, 1996 and 1995 represent loans obtained from two companies. Loan obtained from the first company is guaranteed by the parent company and is repayable in fifteen equal semi-annual instailments commencing June 16, 1992, while interest is payable semi-annually at the rate of 7.50% per annum. Repayments of the said loan were fully made in 1996. Loans obtained from the second company comprise loans under four agreements. Loans under the first, second and third agreement are repayable in ten equal semi-annual instalments commencing December 30, 1992, June 30, 1993 and January 31, 1994, respectively, while interest payments under the said three loan agreements are payable semi-annually at the rates ranging from 5.875% - 6.750% per annum. Loan under the fourth agreement is repayable in ten equal semi-annual instailments commencing April 29, 1994, while interest rate and interest payments under the said loan are at the 6 month LIBOR plus the rate as prescribed in the said agreement. As at December 31, 1996 and 1995, outstanding balances under the aforesaid four loan agreements obtained from the second company amount to approximately Baht 108.89 million and Baht 184.58 million, respectively. According to the aforesaid loan agreements made with banks, finance and foreign companies, there are certain terms and conditions for the Company to comply. LIABILITIES UNDER FINANCIAL LEASES The Company has entered into four financial lease agreements with a related company to obtain vehicles for its business operations. The financial leases are irrevocable and payable monthly in 60 instalments with interest at the rates ranging from 19.81 23.648% per annum. The said lease agreements stipulate that the Company has the right to buy those vehicles, after fully paid up those leases, at the price of10% of the vehicles' costs or of the prices purchased by the lessor from car agency.

At December 31, 1996, the Company has annual payment commitments under financial leases shown in present value, using the discount rates ranging from 19.81 23.648% per annum, as follows : Year

Amount (Baht)

1997 1998 1999 2000 2001 TOTAL

421,470.48 517,449.69 642,733.14 798,577.83 574,673.84 2,94,904.98

Payment commitments for 1997 are included in current portion of long-term liabilities as described above.

NOTE 10 - CAPITALIZATION OF THE BORROWING COSTS The Company does not capitalize interest incurred relating to the acquisition and installation of assets to costs of tools, equipment and other assets for the operations of a 900-MHz CELLULAR TELEPHONE SYSTEM due to the installation periods of most assets are short. In addition, the relevant borrowing costs which should be capitalized to costs of those tools, equipment and other assets transferred to the Telephone Organization of Thailand are not significant. No capitalization of the borrowing costs was made to costs of those assets which need not to be transferred to the Telephone Organization of Thailand as they are mostly funded by working capital derived from operations.

NOTE 11 - OTHER EXPENSES Other expenses for the years ended December 31, consist of : Baht Provision for losses on the decline in values of investments (Note 6) Estimated loss on collection of amounts receivable from a related company (Note 3) TOTAL

1996

1995

1,000,000.00

16,000,000.00

39,457,060.28 40,457,060.28

16,000,000.00

NOTE 12 - APPROPRIATION OF EARNINGS The Company's shareholders at their Annual General Meeting on April 27, 1995 approved the interim dividend and legal reserve appropriated during 1994 of Baht 390 million and Baht 39.50 million, respectively. Additional dividend and legal reserve for 1994 of Baht 351 million and Baht 37.80 million, respectively, were also approved by such meeting. On August 11, 1995, the Board of Directors of the Company approved the interim dividend and legal reserve for 1995 in the amounts of Baht 468 million and Baht 61.75 million, respectively. The Company's shareholders at the Annual General Meeting held on April 29, 1996 approved the interim dividend and legal reserve appropriated during 1995 of Baht 468 million and Baht 61.75 million, respectively. Additional dividend and legal reserve for 1995 of Baht 702 million and Baht 88.05 million, respectively, were also approved by such meeting. On August 13, 1996, the Board of Directors of the Company approved the interim dividend and legal reserve for 1996 in the amounts of Baht 702 million and Baht 89.50 million, respectively.

NOTE 13 - LEGAL RESERVE Legal reserve was established in accordance with the provision of the Public Limited Company Act B.E. 2535, which requires the appropriation as legal reserve of at least 5% of net income each year until the reserve reaches 1 0% of the authorized share capital. This reserve is not available for dividend distribution.

NOTE 14 - PROVIDENT FUND The provident fund of the Company complies with the Provident Fund Act B.E. 2530. independently maintained and therefore does not appear in the balance sheets.

The fund is

NOTE 15 - COMMITMENTS LEASE AGREEMENTS Other than those commitments under lease agreements as described in Note 3 to the financial statements, the Company has entered into lease agreements covering spaces for branch offices, base stations and others for periods ranging from 15 months to 6 years with options to renew. The Company is committed to pay rentals in respect of the said agreements amounting to approximately Baht 6.97 million per month. LETTERS OF GUARANTEE At December 31, 1996, the Company had commitments with banks whereby the latter issued letters for guaranteeing the Company in respect of business contracts, electricity use and others amounting to approximately Baht 2,780.10 million. CONTRACTS FOR CONSTRUCTION AN[) EQUIPMENT INSTALLATION OF MOBILE PHONE NETWORK At December 31, 1996, the Company had outstanding commitments under contracts relating to the construction and installation of equipment for the operations of mobile phone network amounting to approximately Baht 3,281.56 million. INTEREST RATE AND CURRENCY EXCHANGE AGREEMENTS In order to hedge against the risk of possible losses from future repayment of loans and the related interest, deriving from exchange rates and interest rates under loans in foreign currency, the Company has entered into three interest rate and currency exchange agreements to exchange the total loan principal from US$ 44,106,558.58 to Baht 1,1 17,313,049.15, and to exchange the related loan interest rates on US Dollars principals (comprise a fixed rate of 6.88% per annum and the 6 month LIBOR plus the rate per annum as prescribed in each agreement) to the fixed rates on baht principals ranging from 9.44 - 9.68% per annum. The periods of those three agreements are covering from August 26, 1996 to January 15, 2001. FORWARD EXCHANGE CONTRACTS The Company has entered into three sale forward contracts to sell US$ 50,000,000 on March 31, 1997 for the contracted amounts totalling Baht 1,287,660,000. LMER OF CREDIT At December 31, 1996, the Company had commitment under a letter of credit with an overseas supplier for an amount of approximately Baht 3.19 million.

NOTE 16 - OTHER INFORMATION The shareholders at the Extraordinary Meeting held on February 23, 1995 passed a resolution to approve the plan to issue unsecured bonds in the amount not to exceed US$ 1 00 million or approximately Baht 2,500 million with 3 years to maturity which will be totally offered to foreign investors. The shareholders at the Extraordinary Meeting held on February 13, 1997 passed a resolution to cancel the resolution on the issuance of unsecured bonds passed by the Extraordinary Meeting on February 23, 1995, and also passed a resolution to approve the plan to issue unsecured bonds in the amount not to exceed Baht 4,000 million and or in other currencies with the value comparable to such amount with 10 years to maturity, which will be offered to local investors and or foreign investors.

NOTE 17 - RECLASSIFICATION OF ACCOUNTS Certain accounts in the 1995 financial statements have been reclassified to conform with the 1996 presentation.

AUDITOR'S REPORT To the Shareholders Advanced lnfo Service Public Company Limited We have examined the consolidated balance sheets of Advanced lnfo Service Public Company Limited and subsidiary as at December 31, 1996 and 1995, and the related consolidated statements of income, retained earnings and cash flows for the years then ended. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the consolidated financial statements referred to above present fairly the consolidated financial position of Advanced lnfo Service Public Company Limited and subsidiary at December 31, 1996 and 1995, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

DR. PAYOM SINGHASANEH CERTIFIED PUBLIC ACCOUNTANT

PEAT MARWICK SUTHEE LIMITED BANGKOK, FEBRUARY 14. 1997

ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS

As at December 31, 1996 and 1995

1996

1995 Baht

ASSETS CURRENTASSETS Cash in hand and at banks(Note 6) 636,905,560.00 Notes receivable from finance companies 1,160,000,000.00 Accounts and notes receivable (net of allowance for doubtful accounts of Baht 277,213,668.99 In 1996 and Baht 179,251,609.38 In 1995) (Notes 3 & 4) 2,199,326,308.99 Amounts receivable from and loans to parent and other related companies - net (Note 3) 490,449,198.50 Other current assets 485,645,030.18 TOTAL CURRENTASSETS 4,972,326,097.67 INVESTMENTS - NET (Notes 4 & 7) 63,866,067.00 PROPERTY AND EQUIPMENT - NET (Notes 3,4 & 8) 665,545,631.97 GOODWILL - NET (Notes 4 & 12) 365,988,148.39 OTHERASSETS Deferred charges - net (Notes 2, 3, 4 & 9) 15,661,421,065.97 Deposits and others 68,606,960.99 TOTAL OTHER ASSETS 15,730,028,026.96 TOTAL ASSETS 21,797,753,971.99 See notes to consolidated financial statements

737,351,045.76 4,020,134,260.28

1,959,402,874.83

704,020,385.86 267,853,322.52 7,688,761,889.25 64,866,067.00 508,652,827.20 402,586,963.23 11,400,420,408.39 41,795,894.11 11,442,216,302.50 20,107,084,049.18

As at December 31, 1996 and 1995

1996

1995 Baht

LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Loans from banks 51,320,000.00 Accounts payable and accrued expenses (Note 3) 4,790,814,130.33 Current portion of long-term liabilities (Notes 3,6 & 10) 465,537,047.90 Income tax payable 817,311,015.81 Amounts payable to parent and other related companies (Note 3) 68,756,938.72 Other current liabilities 104,064,889.88 TOTAL CURRENT LIABILITIES 6,297,804,022.64 LONG-TERM LIABILITIES - NET (Notes 3, 6 & 1 0) 1,836,553,383.32 DEPOSITS RECEIVED FROM CUSTOMERS 2,839,710,638.60 TOTAL LIABILITIES 10,974,068,044.56 MINORITY INTERESTS IN SUBSIDIARY 276,400,129.60

1,130,751,750.00 4,074,241,610.22 1,125,429,467.30 788,572,664.76 220,043,621.15 73,467,538.38 7,412,506,651.81 1,807,176,139.32 2,280,825,500.00 11,500,508,291.13 218,573,869.99

SHAREHOLDERS' EQUITY Share capital Authorized 500,000,000 shares, Baht 10 par value Issued 234,000,000 shares, fully paid Premium on share capital Retained earnings Appropriated to legal reserve (Note 14) Unappropriated TOTAL SHAREHOLDERS' EQUITY

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

See notes to consolidated financial statements

5,000,000,000.00 2,340,000,000.00 2,295,000,000.00

484,700,000.00 5,427,585,797.83 10,547,285,797.83

306,500,000.00 3,446,501,888.06 8,388,001,888.06

21,797,753,971.99

20,107.084,049.18

ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS

For The Years Ended December 31, 19% And 1995

1,996

1995 Baht

REVENUES Service income (Note 4) Other income TOTAL REVENUES EXPENSES Cost of services (Note 4) Selling and administrative expenses (Note 3) Other expenses (Note 12) Interest expense (Note 11) Income tax TOTAL EXPENSES NET INCOME BEFORE CONSIDERING MINORITY INTERESTS IN SUBSIDIARY LESS NET INCOME OF MINORITY INTERESTS IN SUBSIDIARY NETINCOME UNAPPROPRIATED RETAINED EARNINGS AT BEGINNING OF YEAR APPROPRIATION OF EARNINGS (Note 13) Legal reserve Dividend Interim dividend UNAPPROPRIATED RETAINED EARNINGS AT END OF YEAR EARNINGS PER SHARE (Note 4)

See notes to consolidated financial statements

12,720,893,130.36 594,510,986.80 13,315,404,117.16

9,955,058,505.64 595,897,142.36 10,550,955,648.00

4,873,387,043.21 2,826,179,021.64 77,055,875.12 253,079,070.27 1,664,592,937.54 9,694,293,947.78

3,639,978,054.60 2,153,272,660.41 52,598,814.84 314,949,470.17 1,371,116,832.26 7,531,915,832.28

3,621,110,169.38

3,019,039,815.72

57,826,259.61 3,563,283,909.77

24,699,699.68 2,994,340,116.04

3,446,501,888.06 7,009,785,797.83

1,420,961,772.02 4,415,301,888.06

(178,200,000.00) (702,000,000.00) (702,000,000.00)

(149,800,000.00) (351,000,000.00) (468,000,000.00)

5,427,585,797.83 15.23

3,446,501,888.06 12.80

ADVANCED INFO SERVICE PUBLIC COMPANY LIMITEID AND SUBSIDIARY CONSOLIDATED!STATEMENTS OF CASH FLOWS For The Years Ended December 31, 1996 And 1995

1996

1995 Baht

CASH FLOWS FROM OPERATING ACTIVITIES Consolidated net income Reconcile to net cash provided by operating activities Depreciation and amortization of property and equipment Amortization of deferred charges Amortization of goodwill Additions to bad debt and allowance for doubtful accounts Estimated loss on collection of amounts receivable from a related company Additions to allowance for losses on the decline in values of investments Net income of minority interests in the subsidiary Increase in accounts and notes receivable Decrease (increase) in amounts receivable from parent and other related companies Decrease (Increase) in other current assets Increase in deposits and others Increase in accounts payable and accrued expenses Increase in income tax payable Increase (decrease) in amounts payable to parent and other related companies Increase in other current liabilities Increase in deposits received from customers Losses on sales of equipment Other miscellaneous items NET CASH PROVIDED BY OPERATING ACTIVITIES CASH FIDWS FROM INVESTING ACTIVITIES Net decrease (increase) in investments in notes receivable from finance companies Net increase in loans to other related companies Additions to investments in properly and equipment Proceeds from sales of equipment Additions to investments in deferred charges NET CASH USED FOR INVESTING ACTIVITIES See notes to consolidated financial statements

3,563,283,909.77

2,994,340,116.04

166,701,104.53 859,190,296.63 36,598,814.84

108,529,781.13 573,965,723.26 36,598,814.84

195,668,677.94

116,491,171.18

39,457,060.28

1,000,000.00

16,000,000.00

57,826,259.61

24,699,699.68

(435,592,112.10)

(1,009,239,009.28)

163,514,127.08

(13,564,143.91)

(217,791,707.66) (26,811,066.88)

14,320,782.50 (16,859,068.47)

716,572,520.11 28,738,351.05

1,794,526,232.74 450,600,889.01

(151,286,682.43) 30,597,351.50

116,786,663.66 34,250,595.80

558,885,138.60 592,973.80 -

785,749,737.01 (280,099.99)

5,587,145,016.67

6,026,917,885.20

2,860,134,260,28

(363,184,016.43)

10,600,000.00

(334,184,811.97) 9,997,928.87

(209,091,358.52) 1,014,578.19

(5,120,190,954.21)

(3,759,843,601.27)

(2,573,643,577.03)

(4,331,104,398.03)

ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS

For The Years Ended December 31, 1996 And 1995

1996

1995 Baht

CASH FLOWS FROM FINANCING ACTIVITIES Net decrease in loans from banks (1,079,431,750.00) Repayments of loans from finance companies Net decrease in long-term liabilities (630,515,175.40) Payments of dividend and interim dividend (1,404,000,000.00) NET CASH FROM FINANCING ACTIVITIES (3,113,946,925.40) NET INCREASE (DECREASE) IN CASH (100,445,485.76) CASH AT BEGINNING OF YEAR 737,351,045.76 CASH AT END OF YEAR 636,905,560.00

(180,685,273.68) (150,000,000.00) (471,276,154.25) (819,000,000.00) (1,620,961,427.93) 74,852,059.24 662,498,986.52 737,51,045.76

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION DEFINITION OF CASH Cash shown in the accompanying consolidated statements of cash flows represents cash in hand and at banks as defined in the Thai Accounting Standard with respect to the preparation of the statement of cash flows which is in line with the definition prescribed in the regulation relating to the financial statements issued underthe Ministerial Regulation No. 2 (B.E. 2519), under the Announcement of the National Executive Council No. 285 dated 24th November, B.E. 2515 INTEREST EXPENSE AND INCOME TAX PAID DURING THE YEARS Baht Interest expense Income tax

1996 243,897,990.81 1,635,854,586.49

1995 323,554,806.40 920,515,943.25

NON-CASH INVESTING ACTIVITIES IN 1996 AND 1995 Additions to investments in buildings and equipment for general business operations, which are included in property and equipment, and additions to investments in equipment for the operations of mobile phone and pager networks, which are included in deferred charges, amounted to approximately Baht 5,454.38 million in 1996 and Baht 3,968.93 million in 1995. Certain portions of debts incurred from the aforesaid investments, amounting to approximately Baht 340.17 million in 1996 and Baht 704.21 million in 1995, were converted to long-term liabilies whilst payments of the remaining balances shall be made in cash. As at December 31, 1996 and 1995, outstanding debts in the balance sheets relating to the aforesaidinvestments, other than those converted to long-term liabilities, amounting to approximately Baht 671.95 million in 1996 and Baht 1,339.50 million in 1995 are included in accounts payable, amounting to approximately Baht 0.21 million in 1996 and Baht 0.26 million in 1995 are included in amounts payable to parent and other related companies, and amounting to approximately Baht 22.96 million in 1996 and Baht 17.01 million in 1995 are included in other current liabilities. See notes to consolidated financial statements

ADVANCED INFO SERVICE PUBLIC COMPANY LIMITEID AND SUBSIDIARY NOTFS TO CONSOLIDATFD FINANCIAL STATFMENTS DECEMBER 31, 1996 AND 1995

NOTE 1 - BASIS OF CONSOLIDATION The accompanying consolidated financial statements of Advanced lnfo Service Public Company Limited and its subsidiary have been prepared in accordance with generally accepted accounting principles and in compliance with the requirements of the Stock Exchange of Thailand. The consolidated financial statements for the years ended December 31, 1996 and 1995 include the financial statements of the Company and Shinawatra Paging Company Limited with 59.99% shareholding in such company. All significant intercompany transactions between the Company and its subsidiary have been eliminated in the preparation of these consolidated financial statements.

NOTE 2 - GENERAL INFORMATION Advanced lnfo Service Public Company Limited and its subsidiary are parts of the Shinawatra Computer and Communications Group. Shinawatra Computer and Communications Public Company Limited is the parent company of Advanced lnfo Service Public Company Limited with 57.69% shareholding as at December 31, 1996 and 1995. The Company and its subsidiary are principally engaged in two main business operations, the operations of a 900-MHz CELLULAR TELEPHONE SYSTEM and a DIGITAL DISPLAY PAGING SYSTEM under concessions received from the Telephone Organization of Thailand, under agreements dated March 27, 1990 and December 19, 1989, and certain amendments made thereafter. Under the aforesaid agreements, the Company and its subsidiary have to pay annual fees to the Telephone Organization of Thailand based on certain percentage of certain service income or at the minimum fees as specified in those agreements, whichever is higher. In addition, the Company and its subsidiary, according to the aforesaid agreements, have to transfer their ownership of certain equipment and other assets procured by the Company and its subsidiary for the operations of a 900-MHz CELLULAR TELEPHONE SYSTEM and a DIGITAL DISPLAY PAGING SYSTEM to the Telephone Organization of Thailand on the dates of their completion of installation. As at December 31, 1996 and 1995, the aforementioned equipment and other assets, at their book values, amounting to approximately Baht 15,592.41 million and Baht 1 1,320.82 million, respectively, are presented as deferred charges in the consolidated balance sheets and amortized over the remaining period of each agreement. Periods of concessions obtained from the Telephone Organization of Thailand have been granted until September 30, 2015 for Advanced lnfo Service Public Company Limited, and until June 11, 2005 for Shinawatra Paging Company Limited.

NOTE 3 - RELATED PARTY TRANSACTIONS The accompanying consolidated financial statements include transactions with the Company's parent and other related companies. The effects of these transactions are reflected in the accompanying consolidated financial statements on the basis determined by the companies concerned. As at December 31, outstanding balances relating to the parent and other related companies which are included in accounts receivable and accounts payable (including accrued expenses) in the balance sheets are summarized as follows :

Million Baht

The parent company Other related companies TOTAL

1996 Accounts Receivable 0.53 0.80 1.33

1995 Accounts Payable 215.46 104.37 319.83

Accounts Receivable 0.30 3.59 3.89

Accounts Payable 175.93 117.53 293.46

Significant outstanding balances as at December 31, 1996 and 1995 relating to the parent and other related companies other than those balances included in accounts receivable and accounts payable (including accrued expenses) consist of : Amounts receivable from and loans to parent and other related companies : Baht Amounts receivable from the parent company Amounts receivable from other related companies Loans to other related companies Less Provision for loss on collection of amounts receivable from related companies TOTAL

1996 103,546,449.76 301,226,172.17 125,500,000.00 530,272,621.93

1995 114,778,134.70 474,708,614.31 114,900,000.00 704,386,749.01

39,823,423.43 490,449,198.50

366,363.15 704,020,385.86

Amounts receivable from parent and other related companies mainly derived from interest receivable from other related companies and payments made by the Company and its subsidiary on behalf of those companies. Amounts receivable from and loans to an other related company as at December 31, 1996 and 1995 amounting to approximately Baht 246.81 million and Baht 494.44 million, respectively, represent the recorded balances in the accounts of the subsidiary, and have been financially supported by the shareholders of the said related company based on their proportionate shareholdings. Loans to other related companies represent short-term loans with interest at the approximate minimum rate of bank overdraft and loan from bank. Amounts payable to parent and other related companies : Baht Amounts payable to the parent company Amounts payable to other related companies TOTAL

1996 389,196.47 68,367,742.25 68,756,938.72

1995 1,524,993.17 218,518,627.98 220,043,621.15

Amounts payable to the parent and other related companies mainly derived from payments made by those companies on behalf of the Company and its subsidiary. Significant transactions with the Company's parent and other related companies at December 31, are summarized as follows : Million Baht Costs of rental and other services Cost of advertisement Costs of consulting and management services Purchases of equipment for general business operations Purchases of equipment for the operations of mobile phone and pager networks Interest income Service Income

1996 456.28 345.05 250.00 135.05

1995 372.33 258.85 161.61 81.87

259.97 47.33 21.66

174.30 47.30 7.14

Transactions other than those mentioned previously consist of : • Loan from a foreign company as at December 31, 1995 in the amount of approximately Baht 97.85 million was guaranteed by the parent company. • At December 31, 1996 and 1995, the Company and its subsidiary were contingently liable to a bank and finance companies for guaranteeing loans of other related companies amounting to approximately Baht 30.00 million and Baht 34.20 million, respectively. • At December 31, 1996, the Company had commitments with the parent and an other related companies to purchase equipment for the operations of a 900-MHz CELLULAR TELEPHONE SYSTEM and to receive satellite transponder services for a total value of approximately Baht 183.34 million. • The Company and its subsidiary have entered into lease and related service agreements with related companies covering their office spaces and cars for periods ranging from 8 months to 14 years with options to renew. As at December 31, 1996, the Company and its subsidiary were committed to pay rental and service fees in respect of the said agreements amounting to approximately Baht 13.18 million per month.

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES METHOD OF REVENUE AND EXPENSE RECOGNITION The Company and its subsidiary recognize income from mobile phone and pager services when said services are rendered to customers. All service costs incurred during the year are treated as period cost. ACCOUNTS AND NOTES RECEIVABLE The Company and its subsidiary provide allowance for doubtful accounts equivalent to the estimated collection losses. The estimated losses are based on collection experience and the management estimates. METHOD OF RECORDING OF INVESTMENTS Investments in shares of companies, which are not subsidiary and associated companies, are recorded by using the cost method and less allowance for losses on the decline in values of investments. PROPERTY AND EQUIPMENT Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed by the straight-line method based on the estimated useful lives of assets of 5 - 20 years. Depreciation and amortization for 1996 and 1995 amount to approximately Baht 166.70 million and Baht 108.53 million, respectively. The Company, in 1996, had entered into a number of financial lease agreements to obtain vehicles for its business operations. For the financial reporting purpose, vehicle under each financial lease and its related obligation are recorded at the discounted minimum lease amount, using the discount rate as prescribed in each lease agreement, or the fair market value at the date of each agreement, whichever is lower. Depreciation of vehicles under financial leases is computed by the straight-line method based on the estimated useful lives of vehicles of 5 years. Depreciation of vehicles under financial leases for 1996, amounting to approximately Baht 0.24 million, is included in the total depreciation and amortization for 1996 as disclosed in the preceding paragraph.

GOODWILL Goodwill represents the excess of the cost of investment in shares of the subsidiary company over its book value at the date near the acquisition. Goodwill is amortized by the straight-line method over a period of 15 years. Amortization of goodwill for 1996 and 1995 amount to approximately Baht 36.60 million each year DEFERRED CHARGES Deferred charges represent expenditure in relation to the increase of share capital, commitment fees of longterm loans, costs of certain equipment and other assets which have been transferred to or ready to be transferred to the Telephone Organization of Thailand, and costs of long-term leases for spaces for base stations. The following amortization methods are used : • Expenditure relating to the increase of share capital are amortized over a period of five years. • Commitment fees of long-term loans are amortized over the period of each loan agreement. • Costs of certain equipment and other assets which have been transferred to or ready to be transferred to the Telephone Organization of Thailand are amortized over the remaining period of each agreement until September 30, 2015 for Advanced lnfo Service Public Company Limited and until June 11, 2005 for Shinawatra Paging Company Limited. • Costs of long-term leases for spaces for base stations are amortized over the period of each lease agreement. Amortization of deferred charges for 1996 and 1995 amount to approximately Baht 859.19 million and Baht 573.96 million, respectively. FOREIGN CURRENCY TRANSACTIONS Foreign currency transactions are recorded in baht at the rates of exchange ruling on the transaction dates. Outstanding assets and liabilities in foreign currencies at the balance sheet date are translated into baht at the exchange rates ruling on that date. Translation gain or loss is included as revenue or expense in the consolidated statements of income. Premiums or discounts under forward exchange contracts are amortized to profit and loss accounts over the period of each forward exchange contract. The Company and its subsidiary do not present unrealized translation gain or loss from outstanding assets and liabilities in foreign currencies at the balance sheet date as part of the cash reconciliation in the consolidated statements of cash flows due to such transactions, compared to overall cash flows each year, are not significant. EARNINGS PER SHARE Earnings per share for the year ended December 31, 1996 and 1995 are computed by dividing consolidated net income for each year, after considering minority interests in subsidiary, by the number of common shares outstanding at the end of each year. As of December 31, 1996 and 1995, the Company had authorized 500,000,000 common shares and issued 234,000,000 common shares.

NOTE 5 - SEGMENT INFORMATION The business operations of the Company and its subsidiary are classified into two major segments, the operations of a 900-MHz CELLULAR TELEPHONE SYSTEM network and the operations of a DIGITAL DISPLAY PAGING SYSTEM network. Financial information by business segment for the years ended December 31, 1996 and 1995, which are wholly operated in Thailand, are shown as follows : Million Baht Service income Mobile phone service Pager service Adjustments of intercompany transactions TOTAL SERVICE INCOME Operating profit Mobile phone service Pager service TOTAL OPERATING PROFIT Other income Other expenses Interest expense Income tax Net Income before considering minority interests in subsidiary Less Net income of minority interests in subsidiary NET INCOME Property and Equipment Mobile phone service Pager service Adjustments of intercompany transactions TOTAL PROPERTY AND EQUIPMENT Other Assets Net book value of equipment and other assets which have been or have to be transferred to the Telephone Organization of Thailand Mobile phone service Pager service Other assets TOTAL ASSETS

1,996

1995

11,375.20 1,348.00 (2.31) 12,720.89

8,608.79 1,346.27 9,955.06

4,854.95 166.38 5,021.33 594.51 (77.06) (253.08) (1,64.59)

4,113.13 48.66 4,161.79 595.89 (52.59) (314.94) (1,371.11)

3,621.11 57.83 3,563.28

3,019.04 24.70 2,994.34

568.41 97.19 (0.05) 665.55

402.25 106.45 (0.05) 508.65

14,765.13 827.28 5,539.79 21,797.75

10,631.98 688.84 8,277.61 20,107.08

Operating profit by each segment represents service income less cost of services and selling and administrative expenses. There is no intertransaction among those segments. Property and equipment by segment are those assets used in the operations of each segment. Other assets comprise: cash in hand and at banks, notes receivable from finance companies, trade accounts and notes receivable, amounts receivable from and loans to parent and other related companies, other current assets, investments in other companies, goodwill, deferred charges, deposits and others.

NOTE 6 - ASSETS PLEDGED AS COLLATERAL Bank deposits as at December 31, 1996 and 1995 amounting to approximately Baht 18.21 million and Baht 243.98 million, respectively, were pledged as collateral for credits obtained from local banks and a foreign finance company, by the Company and its subsidiary.

NOTE 7 - INVESTMENTS Investments at December 31, comprise investments in share capital of the following companies : Million Baht

% Holdings

Shinawatra Datacom Company Limited Fonepoint (Thailand) Company Limited

Values of Investments 1996 1995

18.00 17.80

95.86 17.20 113.06 49.20 63.86

Less Allowance for losses on the decline in values TOTAL INVESTMENTS - NET

95.86 17.20 113.06 48.20 64.86

The Company does not have significant influence in companies as shown above.

NOTE 8 - PROPERTY AND EQUIPMENT Property and equipment at December 31, consist of : Baht

Estimated Useful Lives (Years)

Land Buildings Leasehold buildings improvements Furniture, fixtures and office equipment Vehicles Vehicles under financial leases Assets under construction and installation

5-20 5-15 5-10 5 5

Less Accumulated depreciation and amortization PROPERTY AND EQUIPMENT - NET

1996

5,924,045.00 32,726,495.90 81,884,193.72 923,504,095.44 29,198,941.19 3,426,600.00 11,690,872.91 1,091,115,114.90 425,569,482.93 665,545,631.97

1995

5,924,045.00 32,162,884.02 61,990,034.22 624,849,857.54 25,599,318.59 31,071,810.15 781,597,949.52 272,945,122.32 508,652,827.20

NOTE 9 - DEFERRED CHARGES On September 20, 1996, the Telephone Organization of Thailand extended the concession period given to the Company for the operations of 900-MHz CELLULAR TELEPHONE SYSTEM, which formerly expires on September 30, 201 0, for another period of 5 years until September 30, 2015. Accordingly, the accounting estimates relating to amortization of those equipment and other assets, which have been transferred to or ready to be transferred to the Telephone Organization of Thailand, have therefore been revised in order to conform with the new concession period, commencing September 20, 1996. As a result, consolidated net income and earnings per share for the year ended December 31, 1996 are effected as follows: â&#x20AC;˘ Consolidated net income for the year ended December 31, 1996 was increased by approximately Baht 47.70 million. â&#x20AC;˘ Earnings per share for the year ended December 31, 1996 was increased by Baht 0.20 per share.

NOTE 10 - LONG-TERM LIABILITIES Long-term liabilities at December 31, consist of : Baht Loans from foreign banks Syndicated loans from foreign banks Loans from foreign finance company Loans from foreign companies Liabilities under financial leases Less Current portion of long-term liabilities TOTAL

1,996 333,580,000.00 667,160,000.00 1,189,507,990.83 108,887,535.41 2,954,904.98 2,302,090,431.22 465,537,047.90 1,836,553,383.32

1995 321,809,250.00 1,312,480,000.00 1,015,884,024.54 282,432,332.08 2,932,605,606.62 1,125,429,467.30 1,807,176,139.32

LOANS FROM FOREIGN BANKS Loans from foreign banks as at December 31, 1995 comprise loans obtained from three banks under three loan agreements. Loan under the first agreement is repayable in four equal semi-annual instalments commencing December 12, 1995, while interest is payable semi-annually at the 6 month LIBOR plus the rate as prescribed in the said agreement. Loan under the second agreement is repayable in five equal semi-annual instailments commencing August 10, 1995. Loan under the third agreement is repayable in a lump sum on May 16, 1998. Interest rates and interest payments under the second and third loan agreements are to be mutually agreed with the lenders at the 1 month SIBOR or 3 month SIBOR or 6 month SIBOR plus the rates as prescribed in each of the said agreements. Repayments of those three loans were fully made in 1996. Loans from foreign banks as at December 31, 1996 comprise loans obtained from two banks under two loan agreements. Both loans are repayable in lump sum on December 26, 1999. Interest rates and interest payments are to be mutually agreed with the lenders at the 1 month LIBOR or 3 month LIBOR or 6 month LIBOR plus the rates as prescribed in each of the said agreements. As at December 31, 1996, outstanding balances under the aforesaid two loan agreements amount to approximately Baht 333.58 million. SYNDICATED LOANS FROM FOREIGN BANKS Syndicated loans from foreign banks as at December 31, 1995 amounting to approximately Baht 1,312.48 million comprise loans under two loan agreements. Loans under the first agreement obtained from ten banks and are repayable in a lump sum on September 7, 1 996, while interest rate and interest payments under the said loan agreement are to be mutually agreed with the lenders at the 3 month LIBOR or 6 month LIBOR plus the rate as prescribed in the said agreement. Repayments of the first loan agreement were fully made in 1996. Loans under the second agreement obtained by a subsidiary company from eight banks and are repayable in a lump sum on September 5, 1 998, while interest rate and interest payments under the said loan agreement are to be mutually agreed with the lenders at the 1 month SIBOR or 3 month SIBOR or 6 month SIBOR plus the rate as prescribed in the said agreement. As at December 31, 1996 and 1995 outstanding balances under the said syndicated loan agreement amount to approximately Baht 667.16 million and Baht 656.24 million, respectively. LOANS FROM FOREIGN FINANCE COMPANY Loans from a foreign finance company as at December 31, 1995 comprise loans under five loan agreements Loans under the first and second agreement are repayable in fifteen equal semi-annual instalments commencing March 15, 1993 and June 23, 1993, respectively. Loans under the third and fourth agreement are repayable in ten equal semi-annual instailments commencing December 30, 1993 and December 30, 1994, respectively. Loans under the fifth agreement is repayable in ten equal semi-annual instalments commencing July 15, 1996. Interest payments under the said five loan agreements are payable semi-annually at the rates ranging from 5,95% 7.40% per annum. Loans from a foreign finance company as at December 31, 1996 comprise five loan agreements obtained from the same lender as at December 31, 1995. Loans under the first and second agreement are the same loan agreements as those loans under the first and second agreement outstanding as at December 31, 1995. Interest payments under the said two loan agreements are payable semiannually at the rates ranging from 6.78% - 7.40% per annum. Loan under the third agreement was rearranged from the third and fourth loan agreement outstanding as at December 31,

1995, repayments of loan have been rescheduled in four equal semiannual instalments commencing January 15, 1997. Interest rates and interest payments is at the 6 month LIBOR plus the rates as prescribed in the said agreement. Loan under the fourth agreement is the same loan under the fifth agreement outstanding as at December 31, 1995. Interest payment under the said loan agreement is payable semi-annually at the rate of 6.88% per annum. Loans under the fifth agreement is repayable in nine equal semi-annual instailments commencing January 15, 1997. Interest payment under the said loan agreement is payable semi-annually at the rate of6.10% per annu m. As at Decem ber31, 1996 and1995, outstanding balances under the aforesaid five loan agreements amount to approximately Baht 1,189.51 million and Baht 1,015.88 million, respectively. LOANS FROM FOREIGN COMPANIES Loans from foreign companies as at December 31, 1996 and 1995 represent loans obtained from two companies. Loan obtained from the first company is guaranteed by the parent company and is repayable in fifteen equal semi-annual instalments commencing June 16, 1992, while interest is payable semi-annually at the rate of 7.50% per annum. Repayments of the said loan were fully made in 1996. Loans obtained from the second company comprise loans under lour agreements. 'Loans under the first, second and third agreement are repayable in ten equal semi-annual instalments commencing December 30, 1992, June 30, 1993 and January 31, 1994, respectively, while interest payments under the said three loan agreements are payable semi-annually at the rates ranging from 5.875% - 6.750% per annum. Loan under the fourth agreement is repayable in ten equal semi-annual instalments commencing April 29, 1994, while interest rate and interest payments under the said loan are at the 6 month LIBOR plus the rate as prescribed in the said agreement. As at December 31, 1 996 and 1995, outstanding balances under the aforesaid four loan agreements obtained from the second company amount to approximately Baht 108.89 million and Baht 184.58 million, respectively. According to the aforesaid loan agreements made with banks, finance and foreign companies, there are certain terms and conditions for the Company to comply. LIABILITIES UNDER FINANCIAL LEASES The Company has entered into four financial lease agreements with a related company to obtain vehicles for its business operations. The financial leases are irrevocable and payable monthly in 60 instalments with interest at the rates ranging from 19.81 23.648% per annum. The said lease agreements stipulate that the Company has the right to buy those vehicles, after fully paid up those leases, at the price of 1 0% of the vehicles' costs or of the prices purchased by the lessor from car agency. At December 31, 1996, the Company has annual payment commitments under financial leases shown in present value, using the discount rates ranging from 19.81 - 23.648% per annum, as follows : Year

Amount (Baht)

1997 1998 1999 2000 2001 TOTAL

421,470.48 517,449.69 642,733.14 798,577.83 574,673.84 2,954,904.98

Payment commitments for 1997 are included in current portion of long-term liabilities as described above.

NOTE 11 - CAPITALIZATION OF THE BORROWING COSTS The Company and its subsidiary do not capitalize interest incurred relating to the acquisition and installation of assets to costs of tools, equipment and other assets for the operations of the 900-MHz CELLULAR TELEPHONE SYSTEM and the DIGITAL DISPLAY PAGING SYSTEM due to the installation periods of most assets are short. In addition, the relevant borrowing costs which should be capitalized to costs of those tools, equipment and other assets transferred to the Telephone Organization of Thailand are not significant. No capitalization of the borrowing costs was made to costs of those assets which need not to be transferred to the Telephone Organization of Thailand as they are mostly funded by working capital derived from operations.

NOTE 12 - OTHER EXPENSES Other expenses for the years ended December 31, consist of : Baht

1,996

Amortization of goodwill (Note 4) 36,598,814.84 Provision for losses on the decline in values of investments (Note 7) 1,000,000.00 Estimated loss on collection of amounts receivable from a related company (Note 3) 39,457,060.28 TOTAL 77,055,875.12

1995 36,598,814.84 16,000,000.00 52,598,814.84

NOTE 13 - APPROPRIATION OF EARNINGS OF AOVANCED INFO SERVICE PUBLIC COMPANY The Company's shareholders at their Annual General Meeting on April 27, 1995 approved the interim dividend and legal reserve appropriated during 1994 of Baht 390 million and Baht 39.50 million, respectively. Additional dividend and legal reserve for 1994 of Baht 351 million and Baht 37.80 million, respectively, were also approved by such meeting. On August 11, 1995, the Board of Directors of the Company approved the interim dividend and legal reserve for 1995 in the amounts of Baht 468 million and Baht 61.75 million, respectively. The Company's shareholders at the Annual General Meeting held on April 29, 1996 approved the interim dividend and legal reserve appropriated during 1995 of Baht 468 million and Baht 61.75 million, respectively. Additional dividend and legal reserve for 1995 of Baht 702 million and Baht 88.05 million, respectively, were also approved by such meeting. On August 13, 1996, the Board of Directors of the Company approved the interim dividend and legal reserve for 1996 in the amounts of Baht 702 million and Baht 89.50 million, respectively.

NOTE 14 - LEGAL RESERVE Legal reserve of Advanced lnfo Service Public Company Limited was established in accordance with the provision of the Public Limited Company Act B.E. 2535, which requires the appropriation as legal reserve of at least 5% of net income each year until the reserve reaches 1 0% of the authorized share capital. This reserve is not available for dividend distribution.

NOTE 15 - PROVIDENT FUND The provident fund of the Company and its subsidiary complies with the Provident Fund Act B.E. 2530. The fund is independently maintained and therefore does not appear in the consolidated balance sheets.

NOTE 16 - COMMITMENTS LEASE AGREEMENTS Other than those commitments under lease agreements as described in Note 3 to the consolidated financial statements, the Company and its subsidiary have entered into lease agreements covering spaces for branch offices, base stations and others for periods ranging from 5 months to 1 0 years with options to renew. The Company and its subsidiary are committed to pay rentals in respect of the said agreements amounting to approximately Baht 9.51 million per month. LETTERS OF GUARANTEE At December 31, 1996, the Company and its subsidiary had commitments with banks whereby the latter issued letters for guaranteeing the Company and its subsidiary in respect of business contracts, electricity use, customs duties and others amounting to approximately Baht 3,095.15 million. CONTRACTS FOR CONSTRUCTION AND EQUIPMENT INSTALLATION OF MOBILE PHONE NETWORK At December 31, 1996, the Company had outstanding commitments under contracts relating to the construction and installation of equipment for the operations of mobile phone network amounting to approximately Baht 3,281.56 million. DATA BROADCAST VIA SATELLITE AGREEMENT The Company's subsidiary has entered into a Data broadcast via satellite agreement with the Telephone Organization of Thailand for a period of 5 years with option to renew. The subsidiary is committed to pay rentals in respect of the said agreement in the amount of Baht 35,000 per site per month for master network and Baht 6,000 per site per month for remote network. INTEREST RATE AND CURRENCY EXCHANGE AGREEMENT In order to hedge against the risk of possible losses from future repayment of loans and the related interest, deriving from exchange rates and interest rates under loans in foreign currency, the Company and its subsidiary have entered into four interest rate and currency exchange agreements to exchange the total loan principal from US$ 57,106,558.58 to Baht 1,443,613,049.15, and to exchange the related loan interest rates on US Dollars principals (comprise a fixed rate of 6.88% per annum, 6 month LIBOR and 6 month SIBOR plus the rate per annum as prescribed in each agreement) to the fixed rates on baht principals ranging from 9.35 - 9.68% per annum. The periods of those four agreements are covering from March 5, 1996 to January 15, 2001. INTEREST RATE EXCHANGE AGREEMENT In order to hedge against the risk of possible losses from interest payments, deriving from interest rates under foreign loans, the Company's subsidiary has entered into an interest rate exchange agreement, to exchange the loan interest rate, under the loan balance of US$ 13,000,000, from the 6 month SIBOR to a fixed rate of 5.90% per annum. The period of the said agreement is covering from March 15, 1996 to September 8, 1998.

FORWARD EXCHANGE CONTRACTS The Company has entered into three sale forward contracts to sell US$ 50,000,000 on March 31, 1997 for the contracted amounts totalling Baht 1,287,660,000. LETTER OF CREDIT At December 31, 1996, the Company had commitment under a letter of credit with an overseas supplier for an amount of approximately Baht 3.1 9 million.

NOTE 17 - OTHER INFORMATION OF AOVANCED INFO SERVICE PUBLIC COMPANY The shareholders at the Extraordinary Meeting held on February 23, 1995 passed a resolution to approve the plan to issue unsecured bonds in the amount not to exceed US$ 1 00 million or approximately Baht 2,500 million with 3 years to maturity which will be totally offered to foreign investors. The shareholders at the Extraordinary Meeting held on February 13, 1997 passed a resolution to cancel the resolution on the issuance of unsecured bonds passed by the Extraordinary Meeting on February 23, 1995, and also passed a resolution to approve the plan to issue unsecured bonds in the amount not to exceed Baht 4,000 million and or in other currencies with the value comparable to such amount with 10 years to maturity, which will be offered to local investors and or foreign investors.

NOTE 18 - RECLASSIFICATION OF ACCOUNTS Certain accounts in the 1995 consolidated financial statements have been reclassified to conform with the 1996 presentation.