ADVANC : Annual Report 1998 by ar.advanc

Annual Report 1998 Advanced Info Service Plc.

1.) GENERAL INFORMATIONS 1.1) The Company and Its Subsidiaries Company

Advanced Info Service Plc. Head Office : 414 Phaholyothin Road Samsennai Phayathai Bangkok Tel. 299-5000 Fax. 299-5719 Branch : 1291/1 Phaholyothin Road Samsennai Phayathai Bangkok Tel. 299-6000 Fax. 299-6005 Advanced Wireless Marketing Co., Ltd. 414 Phaholyothin Road Samsennai Phayathai Bangkok Tel. 299-5000 Fax. 299-5470 Advanced Paging Co., Ltd. 1291/1 Phaholyothin Road Samsennai Phayathai Bangkok Tel. 299-6000 fax. 299-6446

Shinawatra Datacom Co., Ltd. 17th Amarin Tower, 500 Ploenchit Road Pathumwan Bangkok Tel. 256-9461-80 Fax. 256-9922

Business

Service provider of cellular phone networks for NMT 900 and Digital GSM systems

Importer and distributor of cellular phone and manufacturer accessories, cellular phone rental service Service provider of the digital paging system network, trading of pagers and providing pager for rent under the name of â&#x20AC;&#x153;Phonelinkâ&#x20AC;? Service provider of voice/data communications via telephone line network (Datanet)

Registered Capital (million shares) 270

Par

% of Shares

(Baht) 10

Paid up Capital (million Baht) 2,700

240

100.00

350

100.00

45.752

457.52

27.86

As of March 31, 1999

1.2) Other Reference Persons Security Registerer

Auditor

Thailand Securities Depository Company Limited 62 Ratchadapisek Road, Klongtoey, Klongtoey, Bangkok Tel. 359-1200-01 Fax. 359-1259 Nirand Lilamethwat Certified Public Accountant Registration Number 2316 KPMG Audit (Thailand) Limited 92 Sathorn Thani Tower 2 , 9th-11st Floor, North Sathorn Road, Yannawa, Bangkok Tel. 236-6161-4 Fax. 236-6165

2.) MESSAGE FROM CHAIRMAN Dear Shareholders, Advanced Info Service Public Company Limited (AIS) is pleased to inform you the result of the company's operations in 1998, here are some important facts as follows: 1998's Operational Results Thought out year 1998, Thailand has encountered with the continuous economic downturn together with the volatile of the exchange rate. However, with serious commitment and continuous contribution from the company's management and staff, AIS

Annual Report 1998 Advanced Info Service Plc. has successfully gone through the crisis by trying to manage the business in a very efficient manner and to be very cautious on all expenses. AIS also provides and maintains the top service quality to our subscribers and has gained popularity and acceptance among our agents. All of these factors, the company can maintain operation result in the satisfaction level. In 1998, our total revenue of Baht 17,284 million were Baht 15,576 million in 1997, or increased Baht 1,708 million, a 10.97% higher than 1997. The net profit went up from Baht 2,526 million in 1997 to Baht 2,966 million in 1998, or increased Baht 440 million or a 17.42% higher than 1997. Mobile Network Development Over the year 1998, the Company has been unceasingly developing the efficiency of the Nordic Mobile Telephone 900 (NMT 900) and the digital system called the Globl System for Mobile Communications (GSM 900). In order to give maximum satisfaction to our customers, AIS also continues to expand its nationwide network coverage and improve quality of services with the advanced technologies. In year 1998, the company has set up additional 251 radio base stations for NMT900 and 321 radio base stations for GSM900. By the end of 1998, the total network was expanded to 29 Mobile Telephone Exchange (MTX) and 1,382 Radio Base Stations (RBS) for NMT900 and 13 MTX and 1,298 RBS for GSM900, enabling the company to be still the market leader in the nationwide network and service quality. Moreover, the company has re-allocated for maximizing the utilization of transmission network and ultimately reduced the cost of leasing the transmission network. Success in Marketing and Services Quality Being as the industry's leading network, the company still maintains the market share of 45% with the total subscribers of two systems at 980,000. In addition to the continuous marketing promotion program to keep up the number of subscribers, the company has realized and unceasingly emphasized on the improvement of our service quality, after sale services and the strategies to maintain the existing subscribers. In order to comply to such commitment, the company has set up a Call Center, a 24-hour customer service center. The company also expanded not only two branches in Chonburi and Nakornprathom, but also two additional Service Centers at Central Department Store, Pinklao and Udonthani branches in order to broaden our service coverage. The company has installed a new computer software, Fraud Management System, in order to detect and protect the unusual call behaviors. This will enhance the customers' satisfaction and reduce significant bad debts. The Priority Care Center is implemented to provide a new special discounted handset with the same number for whoever has lost the handset. Furthermore, the company has set up repair and maintenance agents in order to provide the repair and maintenance services and to sell the spare parts to the customers.

Besides, the company also introduced new value-added services such as direct linked from 152 to GSM and a short message information service enabling the company to have totally 16 value-added services for NMT 900 and 28 value-added services for GSM900. The Digital GSM system has also increased its automatic international roaming agreement to 52 countries.

Paiboon Limpaphayom Ph.D. Chairman of the Board

Somprasong Boonyachai Chairman of the Executive Committee

Annual Report 1998 Advanced Info Service Plc.

3.) MESSAGE FROM AUDIT COMMITTEE To the Shareholders of Advanced Info Service Public Company Limited By virtue of resolution of the Board of Directors, the Audit Committee composed of three independent directors, has been appointed to assume its responsibilities as from February 27, 1998. All members are not management, officer or employee of the Company, in compliance with regulations of the Stock Exchange of Thailand. The Audit Committee has conducted 5 meetings to review 1998 of the Companyâ&#x20AC;&#x2122;s performances in accordance with scope and objectives assigned by the Board of Directors pursuant to the requirements from the Stock Exchange of Thailand. The reviews were conducted on the matters relating to financial reports before submitting to the Board of Directors, internal controls and comprehensive plan of internal auditing. The Audit Committee also discussed with the Companyâ&#x20AC;&#x2122;s management, external auditors and internal auditors regarding the adequacy of internal controls, accounting procedure, financial statement preparation and related significant matters , and management procedures upon their fully cooperation. In our opinion, management presents a good corporate governance with sufficient internal controls including safety and legally managing program. There are no significant weaknesses found in the internal control systems. The financial statements are prepared in conformity with generally accepted accounting principles. The external auditors have audited it to provide reasonable assurance that financial records are reliable as a basis for its preparation and disclosures. The Audit Committee recommends and proposes to the Board of Directors to consider appointing KPMG (Thailand) as external auditors in 1999.

Chairman of Audit Committee,

Suphadej Poonpipat April 5, 1999

Annual Report 1998 Advanced Info Service Plc.

4.) FINANCIAL INFORMATION Performance hRevenues from Services and Equipment Rental hTotal Revenues hGross Profit hTotal Assets hTotal Liabilities hTotal Shareholder’s Equity Financial Ratios hNet Profit Margin hReturn on Equity hReturn on Total Assets hNet Profit per share (Baht) hDividend per share (Baht) hBook Value per share (Baht)

1998 14,719.42 17,283.63 6,738.83 41,526.17 26,751.02 14,376.77 1998 17.16% 22.77% 7.72% 12.67 1.10 61.44

Unit : Million Baht 1997 14,908.00 15,576.37 8,982.56 35,344.04 23,386.28 11,668.40 1997 16.22% 22.74% 8.84% 10.79 6.00 49.86

5.) CHARACTERISTICS OF BUSINESS OPERATION The Advanced Info Service Plc. conducts the business of mobile -telephone services at the frequency of 900 MHz, both in the analog system of NMT (Nordic Mobile Telephone) and in the digital system of GSM (Global System Mobile) under the concession of the Telephone Organization of Thailand (TOT), for the period of 20 years, and the concession period was extended to 25 years in September 1996. The Company conducts its main business of mobile telephone network operator in the system of Cellular 900 MHz under the concession of the Telephone Organization of Thailand (TOT), according to the Agreement dated March 27th, 1990 and the subsequent relevant agreements attached to the Agreement. Subject to the Concession Agreement, the Company shall pay the annual compensating benefits to the Telephone Organization of Thailand (TOT), according to the proportion of revenue of mobile telephone service charges, or, at least, equal to the minimum amount as specified in the Agreement. In addition, subject to the above-said Agreement, the Company agrees that all tools, equipment and other assets supplied by the Company for the operation of the Cellular 900 MHz system, shall be vested in the Telephone Organization of Thailand (TOT) after the completion of installation. The Advanced Paging Co., Ltd., a subsidiary company which the Advanced Info Service holds the shares at 100% of its paidup capital of Baht 350 million (as of March 15, 1999) conducts the business of digital display paging system under the name of “Phonelink”, which has been received the concession from the Telephone Organization of Thailand (TOT), for the period of 15 years. Both concession of the mobile telephone services and the concession of the digital display paging system are the concessions in the category of BTO (Build Transfer Operate Concession), which the Company shall be the investor and responsible for fundraising, including all expenses. This system equipment shall be vested in the Telephone Organization of Thailand (TOT) as soon as the installation of equipment is completed. Whereas, the Company shall be entitled to use the system equipment in its business operation, according to the Concession Agreement.

Annual Report 1998 Advanced Info Service Plc. As the Company is a subsidiary company of the Shin Corporations Public Company Limited., the shareholding structure of the Group Company shall be as follows;

Shin Corporations Plc.

Advance d Info Service Plc.

Shenington Investment (B.V.I.) Pte.Ltd.

Advanced Wireless Marketing Co.Ltd

Shinawatra Satellite Plc.

Shinawatra International Plc.

C.S.Communications Co.,Ltd.

Lao Telecommunications Co.,Ltd. Cambodia Shinawatra Co.,Ltd.

Advanced Paging Co.,.Ltd. Shinwatra Datacom Co.,.Ltd.

C.S.Satellite Phone Co.,Ltd. Shinawatra Information Technology Co., Ltd.

Isla Communication Pte.Ltd.

Shinawatra Directories Co.,Ltd.

Fascel Ltd.

SC Matchbox Co.,Ltd.

Microwave Communication Ltd

5.1) Groupâ&#x20AC;&#x2122;s Revenue Structure Product / Service

Operate By

% of Holding

Sales of Equipment Business

Shin Corporations Plc. Advanced Wireless Marketing Co.,Ltd. Advanced Info Service Plc. Advanced Paging Co., Ltd. Shinawatra Satellite Plc. C.S. Communications Co., Ltd. Shinawatra Directories Co., Ltd. SC Matchbox Co., Ltd. Shinawatra Information Technology Co., Ltd.

100.00

Mobile and Paging Business Satellite Business Media Business Information Technology Business Others

Unit : Million Baht 1997

1998 Revenue 5,912.41

% 24

Revenue 9,083.20

% 33

100.00 -

15,101.02

15,183.09

2,415.59

1,620.33

714.12

1,167.52

430.41

505.67

362.41

249.16

Annual Report 1998 Advanced Info Service Plc.

5.2) Changing and Development of the Company in 1998 April 1, 1998

November 1998

December 10, 1998 December 18, 1998

December 22, 1998

February 10, 1999

February 19, 1999

The Company completely operated the SIS system (Subscriber Identity Security) which is a world renown system only used by Cellular 900 that proves to be highly effective against cellular fraud. All cellular phones, which are not placed into the SIS system, will no longer work. The Company has launched the Minute Plus program, allowing customers to accumulate the points calculated on their usage to receive the discount on their future invoices. This program will grant more privileges especially for the customers who stay in the Company’s systems for many years. The Company has signed the execution of Roaming Agreement with China Telecom to provide the automatic transcontinental services through China’s provinces and districts. The Board of Directors of the Company approved the acquisition a 100% of the issued shares capital of Shinawatra Wireless Marketing Co.,Ltd. from Shinawatra Computer and Communications Plc. According to the severe competition in Thailand’s mobile phone industry was directly affected the Company’s performance, the Company had necessary to control and acquire the mobile business under the Company for beneficiary to the customers. The Company appointed Merrill Lynch Phatra Co.,Ltd. to be the advisor for giving opinion of the transaction to the Company’s independent director and shareholders The Company acquired the 23,999,994 ordinary shares of the issued shares capital of Shinawatra Wireless Marketing Co.,Ltd. (SWM) from Shinawatra Computer & Communications Plc., amounting to Baht 600 million, thus increasing the Company’s holding to 100% in SWM The Company arranged the shareholder meeting which the shareholder’s resolution consist of; 1). Approval for the increase of paid-up capital from Baht 2,340 million to Baht 2,700 million by issuing new 36 million common shares and offering to Singapore Telecom International Private Limited at the price of Baht 230 per share. 2). Approval for amendment of the Company’s Articles of Association regarding foreign shareholders limitation, allowing non-Thais to hold not more than 49.99% of total issued shares of the Company. Singapore Telecom Investment Private Ltd. acquired 18.63% of the issued shares capital of Advanced Info Service Plc. and the Company acquired 40% of the issued shares capital of Shinawatra Paging Co., Ltd. (SPG), thus increasing the Company holding to 100% in SPG

6.) CONDITION OF INDUSTRY AND COMPETITION At present, there are a lot of demands for mobile telephones in the market. Though, 6 mobile telephone systems, including NMT-450 of the Telephone Organization of Thailand (TOT), AMPS-800 of the Communications Authority of Thailand (CAT), Worldphone 800 and PCN1800 of the Total Access Communications Public Co., Ltd., as well as Cellular 900 and Digital GSM of the Advanced Info Service Public Co., Ltd., are available, they are unable to meet the demands in the market due to rapidly growing economy, insufficient infrastructure of the Government. Meanwhile, the price of mobile telephone receivers tends to be decreased, it is, thus, a good opportunity for the Company to accelerate the expansion of Cellular 900 and Digital GSM networks to be able to provide the services covering larger areas and to increase the mobile telephone numbers as many as possible and having good quality.

Annual Report 1998 Advanced Info Service Plc. Comparison Table of Mobile Telephone Systems in Thailand. System 1. System Operator.

NMT 900 Advanced Info Service, Plc.

Digital GSM Advanced Info Service, Plc.

AMP 800 1. CAT 2. Total Access Communications, Plc

2. Operational range of radio base station 3. Portability.

City 0.5-4 Km.

City 1-5 Km.

Portable

4. Quality of Voice. 5. Limitation of number of telephone numbers.

Good None

6. Service areas.

7. Network expansion 8. Internation Services 9. Prices 10. Brands of each mobile telephone system available in Thailand.

Covering all provinces, including major districts and main highways. Expanded 16,000-24,000 10 Brands.

NMT 470 TOT

City 0.5-4 Km.

PCN 1800 1. Total Access Communication s, Plc. 2. Wireless Communications Service Co., Ltd. 3. Samart Corporation, Plc City 1-5 Km.

Portable

Very good None

Good None

Very good None

Large, being a briefcase or fixed in the car. Inferior Sufficient for the provision of services. 76 Provinces nationwide

7 6 Provinces nationwide

Expanded More country 18,000-65,000 15 Brands.

List of Major Competitors 1. Telephone Organization of Thailand. 2. Communications Authority of Thailand. 3. Total Access Communications, PCL. 4. Advanced Info Service, PCL. 5. Samart Corporation, PCL. Total

76 Provinces nationwide

Expanded 11,000-32,000 30 Brands.

76 Provinces nationwide

Expanded Less Country 14,000-66,000 12 Brands.

16 Km.

No expansion. 55,000-65,000 5 Brands.

Approximate Market Share(%) 2 2 46 45 5 100 As of the end 1998

7.) SHAREHOLDERS AND MANAGEMENTS 7.1) Major Shareholders Shareholders 1. 2. 3. 4. 5.

Number of Shares (share) 109,000,000 11,688,524 9,781,605 7,900,000 7,260,000

Shin Corporations Plc. Chase Nominees Limited 1 Thailand Security Depository Shenington Investment (B.V.I.) Pte. Ltd. HSBC (Singapore) Nominees Pte. Ltd.

% of Shareholding 46.58 5.00 4.18 3.38 3.10

Annual Report 1998 Advanced Info Service Plc. Shareholders

Number of Shares (share) 6,564,631 4,400,923 3,828,673 3,759,050 2,904,850

6. State Street Bank And Trust Company Boston 7. Midland Bank Plc. 8. Bankers Trust Company 9. Litledwon Nominees Limited 10. Chase C.S.Central Nominees Limited

% of Shareholding 2.81 1.88 1.64 1.61 1.24 As of January 21, 1999

7.2) Management Team (As of February 19, 1999) Directors 1. Mr.Paiboon Limpaphayom Ph.D. 2. Mr.Boonklee Plangsiri 3. Mr.Somprasong Boonyachai 4. Mrs.Siripen Sitasuwan 5. Mr.Withu Ruksvanichpongs 6. Mr.Suphadej Poonpipat 7. Mr.Vithit Leenutapong 8. Mr.Arun Churdboonchart 9. Mr.Allen Lew Yoong Keong 10. Mr.Chow Wing Keung Lucas

Chairman of the Board and Authorized Director Authorized Director Authorized Director Authorized Directo Independent Director Independent Director Independent Director Independent Director Director Director

Executive Committee 1. Somprasong Boonyachai 2. Mr.Boonklee Plangsiri 3. Mr.Arak Chonlatanon 4. Mrs.Siripen Sitasuwan 5. Mr.Allen Lew Yoong Keong

Chairman of the Executive Committee Director Director Director Director

Management Team 1. Mr.Somprasong Boonyachai 2. Mr.Vikrom Sriprataks 3. Mr.Wichian Mektrakarn 4. Mr.Weerawat Kietipongthaworn 5. Mr.Prawat Nikanjanakool 6. Mrs.Suwimol Kaewkoon 7. Ms.Yingluck Shinawatra 8. Mrs.Arpattra Sringkarrinkul 9. Mr.Vorachat Haerabat 10. Mr.Annop Petchariya 11. Mr.Walan Norasetpakdi 12. Mr.Arkabuth Krairiksh 13. Mrs.Jiraporn Koosuwan 14. Mrs.Suvimon Kulalert

Chairman of the Executive CommitteeWireless Communications Senior Executive Vice President-Engineer Vice President-Technical Assinstant Vice President-Network Operation & Maintenance, Metro Area Assistant Vice President-Metropolitan Operation Senior Executive Vice President - Service Operation Executive Vice President - Service Operation Vice President-Information System Support Assistant Vice President-Metropolitan Operation Assiatant Vice President-Upcountry Operation Vice President-Wireless Controller Assistant Vice President-Legal Assistant Vice President-Human Resource Assistant Vice President-Internal Audit

Annual Report 1998 Advanced Info Service Plc.

7.3) Remuneration for Directors & Management Team Total Remuneration of 10 Directors in 1998 composed of ; Remuneration Total Salary Total Bonus Total Allowance Total Remuneration

1998 31,730,800 Baht 200,000 Baht 240,000 Baht 32,170,800 Baht

Total Remuneration of the 14 Executives of Management Team in 1998 composed of ; Remuneration Total Salary Total Bonus Total Allowance Total Remuneration

1998 37,308,000 Baht 3,109,000 Baht Baht 40,417,000 Baht

Total Remuneration of the top 15 Directors and the Executives in 1998 composed of ; Remuneration Total Salary Total Bonus Total Allowance Total Remuneration

1998 37,500,840 Baht 3,309,000 Baht 240,000 Baht 41,049,840 Baht

8.) RELATED PERSONS AND RELATED TRANSACTIONS 8.1) Related Persons ♦

OAI Assets Co., Ltd. Nature of Business Major Shareholder Directors Relationship with Company Size of Transaction

♦ Worth Supplies Co., Ltd. Nature of Business Major Shareholder Directors

Relationship with Company Size of Transaction

Office space rental Shinawatra’s Family 100% 1. Mrs.Potjaman Shinawatra 2. Mr.Chanon Suwasin 3. Mrs. Kanchanapa Honghern The company whose major shareholder of its parent company (SHIN) holds 100% in OAI Assets. The company has rented office space at Shinawatra Tower 2, 1291/1 Phaholyothin Rd., Samsen nai, Phayathai, Bangkok 10400 in the amount of 102.35 million Baht per year Office space rental Shinawatra’s Family 100% 1. Ms.Parnee Vejchaplukpitak 2. Mrs.Busaba Damapong 3. Mrs.Kanchanapa Honghern 4. Mr.Chanon Suwasin 5. Mr.Sitthichai Ekoramaiphol 6. Mr.Surathian Chaktharanon The company whose major shareholder of its parent company (SHIN) holds 100% in Worth Supplies The company has rented office space at 1 Soi 9, Phaholyothin Rd., Samsen nai, Phayathai Bangkok 10400 in the amount of 24.20 million Baht

per year.

Annual Report 1998 Advanced Info Service Plc. ♦ P.T. Corporations Co., Ltd. Nature of Business Major Shareholder Directors Relationship with Company Size of Transaction ♦ Up Country Land Co., Ltd. Nature of Business Major Shareholder Directors Relationship with Company Size of Transaction ♦ SC Assets Co., Ltd. Nature of Business Major Shareholder Directors

Relationship with Company Size of Transaction

Office space rental Shinawatra’s Family 100% 1. Mrs.Potjaman Shinawatra 2. Mr.Chanon Suwasin 3. Mrs.Kanchanapa Honghern The company whose major shareholder of its parent company (SHIN) holds 100% in P.T. Corporations. The company has rented office space in the amount of 11.29 million Baht per year. Office space rental Shinawatra’s Family 100% 1. Mr.Surathain Chaktharanon 2. Mr.Chanon suwasin 3. Mrs.Kanchanapa Honghern The company whose major shareholder of its parent company (SHIN) holds 100% in Up Country Land. The company has rented office space in the amount of 82.44 million Baht per year. Office space rental Shinawatra’s Family 100% 1. Mr.Bannapoj Damapong 2. Mr.Surathian Chaktharanon 3. Mrs.Busaba Damapong 4. Mrs.Dongruithai Kasisopha 5. M s.Boonchou Rianpradup The company whose major shareholder of its parent company (SHIN) holds 100% in SC Assets. The company has rented office space in the amount of 12.33 million Baht per year.

8.2) Independent Directors’ Opinion with Related Transaction We, Mr. Suphadej Poonpipat, Mr. Arun Churdboonchart and Mr. Vithit Leenutapong on behalf of independent directors and internal audit committee of Advanced Info Service Plc., would like to inform you regarding with the Company’s office space rental from related parties. We, on behalf of independent directors and internal audit committee of the company, have considered the above transaction and have stated our opinion that is in the normal course of business of the Company. The Company has continuously done the transaction at a reasonable price which did not have the significant effect on its revenue and assets.

8.3) Significant Transactions with Related Parties ♦ Shinawatra Corporations Plc. (SHIN) Nature of Business Holding Company M ajor Shareholder 1. Mrs.Potjaman Shinawatra 2. Mr.Thaksin Shinawatra Ph.D. Directors 1. Mr.Bhanapot Damapong 2. Mr.Paiboon Limpaphayom Ph.D. 3. Mr.Boonklee Plangsiri 4. Mrs.Siripen Sitasuwan 5. Mr.Thanong Bidaya Ph.D. 6. Mr.Paron Isarasena Na Ayudhaya 7. Mr.Olan Chaiprawat Ph.D. 8. Mr.Sirin Nimmanahaeminda 9. Mr.Lee Chin Koy

Annual Report 1998 Advanced Info Service Plc. Relationship with Company SHIN is the Major Shareholder Related Parties Transaction 1. Expenses for rental and other service 2. Expenses for consulting and management services 3. Purchase of computer software 4. Interest expense on bonds payable to the parent company 5. Purchase of Shinawatra Wireless Marketing’s shares

101.83 Million Baht 150.34 Million Baht 65.00 Million Baht 16.58 Million Baht 600.00 Million Baht

T h e O p i n i o n o f Finacial Advisor and Independent Directors which related to the transaction of share purchase of Shinawtra Wireless Marketing Co., Ltd. - As annex 1♦

OAI Leasing Co., Ltd. Nature of Business Major Shareholder Directors 3. Mr.Chanon Suwasin Relationship with Company

Car leasing 1. Shinawatra’s Family 45% 2. SC Asset Co.,Ltd. 55% 1. Mrs.Potjaman Shinawatra 2. Mrs.Busaba Damapong 4. Mrs. Kanchanapa Honghern The company whose major shareholder of its parent company (SHIN) holds 45% in OAI Leasing.

Related Parties Transaction 1. Purchase of cars for the Executives 1.19 Million Baht 2. Rental of cars for the Executives 29.61 Million Baht ♦ Advanced Wireless Marketing Co.,Ltd Nature of Business Importer of a 900-MHz cellular phone and retail franchiser of all Shinawatra products i,e. mobile Major Shareholder Advanced Info Service Plc. 100% Directors 1. Mr.Somprasong Boonyachai 2. Mr.Boonklee Plangsiri 3. Mr.Arak Chonlatanon 4. Mrs.Siripen Sitasuwan 5. Mr.Allen Lew Yoong Keong Relationship with Company The same Major Shareholder Related Parties Transaction 1. Marketing expenses 132.90 Million Baht 2. Bill collection service 99.79 Million Baht ♦ Shinawatra Satellite Plc. Nature of Business Leasing of Satellite transponders Major Shareholder Shin Corporations Plc. 55.71% Directors 1. Mr.Paron Isarasena Na Ayudhaya 2. Mr.Boonklee Plangsiri 3. Mr.Dumrong Kasemset Ph.D. 4. Mrs.Siripen Sitasuwan 5. Ms.Nongluck Phinainitisart Eng.D. 6. Mr.Kowit Vorapipat Ph.D. 7. Mr.Pracha Kunakasem Ph.D. 8. Mr.Rianchai Riewvilaisook 9. Mrs.Nilaya Malakul Na Ayudhaya Relationship with Company The same Major Shareholder Related Parties Transaction Transponder rental 122.44 Million Baht

Annual Report 1998 Advanced Info Service Plc. ♦ Shinawatra Information Technology Co., Ltd. Nature of Business Distributor of computer peripherals and telecom equipment Major Shareholder Shin Corporations Plc. 100% Directors

1. Mr.Somkiet Phaloprakarn 2. Mr.Somchai Tinawong 3. Mr.Arak Chonlatanon 4. Mrs.Siripen Sitasuwan The same Major Shareholder

Relationship with Company Related Parties Transaction Purchase of equipment for the operation of mobile phone and pager networks

142.37 Million Baht

The basis of transactions occurred among the company and related parties is similar to the basis of those transactions dealt with non-related parties.

9.) RISK FACTORS ♦

Termination of Concession Agreement. As the Company operates the business of mobile telephone services under the Concession Agreement between the Company and the Telephone Organization of Thailand (TOT), the Telephone Organization of Thailand (TOT) may exercise its right to terminate such Concession Agreement, if the Company fails to operate or comply with the conditions of the Agreement throughout the term of Agreement of 25 years. ♦ Renewal of the Concession Agreement. After the 25-year term of the Concession Agreement is expired, the Telephone Organization of Thailand (TOT) may renew such Agreement to the Company, or may open a new bid for the Agreement. However, if the Company had been operating the business of mobile telephone services for 25 years, the Company would have the experience in such business in all aspects, and would be able to fully provide the revenue and divide such revenue to the Telephone Organization of Thailand (TOT). Therefore, the Company would be ready whether to renew the Agreement or to participate in the following bid for the Concession Agreement. ♦ Risks of Currency Exchange Rates. After the currency exchange system was changed from the basket currency system to the floating currency system, the Company has been affected by the instability of currency exchange rates due to the Company’s importation of goods from foreign countries, whereby the Company is unable to push all burdens incurred, to the consumers. However, the Company has its policy to prevent such risks by considering the net status of all items in foreign currencies and the income structure of each company. The Company shall prevent the risks of the items in foreign currencies when the revenue is in Thai Baht. Meanwhile, the need for prevention of risks of items in foreign currencies shall be lessened, if the Company has its revenue in foreign currencies. Because such revenue shall reduce the risks of burden in foreign currencies. The top management of the Shinawatra Group shall conduct a meeting every month in order to analyze the change in currency exchange rates and to evaluate the management strategies on the items of foreign currencies according to the estimate rates being newly considered. ♦ Risk of Y2K Problem The operation of cellular phone and internal systems, such as accounting, billing and call center systems, are mainly running on computer which could be affected by Y2K problem. However, the company has taken the action to avoid or reduce the effects of failure that might occur since 1997. The Company is very confident that all core business systems are Y2K compliance and expects to finish the process by third quarter of 1999.

Annual Report 1998 Advanced Info Service Plc.

10.) OTHER FACTORS ASSECTING THE INVESTMENT 10.1) Litisation Issue -nil10.2) Dividened Policy The Company has dividend policy of at least 40% of profit after tax and the payment of dividend has no significant impact to the operations of the Company.

11.) TERMS AND CONDITIONS OF THE DEBENTURES â&#x2122;Ś Short-Term Debenture of Advanced Info Service Public Company Limited No. 1/1997 Due 1998 Type of Instruments : Unsecured, unsubordinated debentures without a trustee. Type of Debenture : Specified name of Debentureholder. Term : 268 days Principal Amount : Up to THB1,030,000,000 (One thousand and thirty million Baht). Share Amount : Up to 1,030,000 Units (One million and thirty thousand units). Face Value : THB1,000 (One thousand Baht). Issue Price : THB1,000 (One thousand Baht). Issue Date : July 2, 1997 Maturity Date : March 27, 1998 Interest : 13% p.a. Security : None Redemption Right of Issuer : None Redemption Right of Debentureholder : None Debentureholder(s) : Specified investors and/or qualified investors in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Transfer Restriction : All transfers of Debentures and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) â&#x2122;Ś Short-Term Debenture of Advanced Info Service Public Company Limited No. 3/1997 Due 1998 Type of Instruments : Unsecured, unsubordinated debentures without a trustee. Type of Debenture : Specified name of Debentureholder. Term : 178 days Principal Amount : Up to THB300,000,000 (Three hundred million Baht). Share Amount : Up to 300,000 Units (Three hundred thousand units). Face Value : THB1,000 (One thousand Baht). Issue Price : THB1,000 (One thousand Baht). Issue Date : July 15, 1997 Maturity Date : January 9, 1998 Interest : 13% p.a. Security : None Redemption Right of Issuer : None Redemption Right of Debentureholder : None Debentureholder(s) : Specified investors and/or qualified investors in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Transfer Restriction : All transfers of Debentures and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2)

Annual Report 1998 Advanced Info Service Plc. â&#x2122;Ś Short-Term Debenture of Advanced Info Service Public Company Limited No. 4/1997 Due 1998 Type of Instruments : Unsecured, unsubordinated debentures without a trustee. Type of Debenture : Specified name of Debentureholder. Term : 180 days Principal Amount : THB200,000,000 (Two hundred million Baht). Share Amount : 200,000 Units (Two hundred thousand units). Face Value / Unit : THB1,000 (One thousand Baht). Issue Price / Unit : THB1,000 (One thousand Baht). Issue Date : July 23, 1997 Maturity Date : January 19, 1998 Interest Security Redemption Right of Issuer Redemption Right of Debentureholder Debentureholder(s)

: : : : :

13% p.a. None None None Specified investors and/or qualified investors in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Transfer Restriction : All transfers of Debentures and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) â&#x2122;Ś Debenture of Advanced Info Service Public Company Limited No. 1 Due 2000 Type of Instruments : Unsecured, unsubordinated debentures without a trustee. Type of Debenture : Specified name of Debentureholder. Term : 3 years from Issue Date. Principal Amount : THB1,000,000,000 (One billion Baht). Share Amount : 1,000,000 Units (One million units). Face Value : THB1,000 (One thousand Baht). Issue Price : THB1,000 (One thousand Baht). Issue Date : December 15, 1997 Maturity Date : December 15, 2000 Interest : Average Minimum Loan Rate of Thai Farmer Bank Plc. and Bangkok Bank Plc. Interest Payment : Payable on quarter basis. Security : None Redemption Right of Issuer : None Redemption Right of Debentureholder : None Debentureholder(s) : Specified investors and/or qualified investors in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Transfer Restriction : All transfers of Debentures and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Remark : The Company had already redeemed the Debenture No.1 on August 20, 1998.

Annual Report 1998 Advanced Info Service Plc. â&#x2122;Ś Debenture of Advanced Info Service Public Company Limited No. 2 Due 2001 Type of Instruments : Unsecured, unsubordinated debentures without a trustee. Type of Debenture : Specified name of Debentureholder. Term : 3 years from Issue Date. Principal Amount : THB1,000,000,000 (One billion Baht). Share Amount : 1,000,000 Units (One million units). Face Value : THB1,000 (One thousand Baht). Issue Price : THB1,000 (One thousand Baht). Issue Date : January 26, 1998 Maturity Date : January 26, 2001 Interest : Average Minimum Loan Rate of Thai Farmer Bank Plc. and Bangkok Bank Plc. Interest Payment : Payable on quarter basis. Security : Clean Redemption Right of Issuer : None Redemption Right of Debentureholder : None Debentureholder(s) : Specified investors and/or qualified investors in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Transfer Restriction

: All transfers of Debentures and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Remark : The Company had already redeemed the Debenture No.2 on February 19, 1999. â&#x2122;Ś Debenture of Advanced Info Service Public Company Limited No. 3 Due 1999 Type of Instruments : Unsecured, unsubordinated debentures without a trustee. Type of Debenture : Specified name of Debentureholder. Term : 1 year from Issue Date. Principal Amount : THB20,000,000 (Twenty million Baht). Share Amount : 20,000 Units (Twenty thousand units). Face Value : THB1,000 (One thousand Baht). Issue Price : THB1,000 (One thousand Baht). Issue Date : January 26, 1998 Maturity Date : January 26, 1999 Interest : Average Minimum Loan Rate of Thai Farmer Bank Plc. and Bangkok Bank Plc. Interest Payment : Payable on quarter basis. Security : Clean Early Redemption Right of Issuer : None Early Redemption Right of Debentureholder : None Debentureholder(s) : Specified investors and/or qualified investors in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Transfer Restriction : All transfers of Debentures and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Remark : The Company had already redeemed the Debenture No.3 on October 12, 1998.

Annual Report 1998 Advanced Info Service Plc. â&#x2122;Ś Debenture of Advanced Info Service Public Company Limited No. 4 Due 2001 Type of Instruments : Unsecured, unsubordinated debentures without a trustee. Type of Debenture : Specified name of Debentureholder. Term : 3 years from Issue Date. Principal Amount : THB300,000,000 (Three hundred million Baht). Share Amount : 300,000 Units (Three hundred thousand units). Face Value : THB1,000 (One thousand Baht). Issue Price : THB1,000 (One thousand Baht). Issue Date : May 20, 1998 Maturity Date : May 21, 2001 Interest : Average Minimum Loan Rate of Thai Farmer Bank Plc. and Bangkok Bank Plc. Interest Payment : Payable on quarter basis. Security : None Early Redemption Right of Issuer : None Early Redemption Right of Debentureholder : None Debentureholder(s) : Specified investors and/or qualified investors in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Transfer Restriction : All transfers of Debentures and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Remark : The Company had already redeemed the Debenture No.4 on February 19, 1999. â&#x2122;Ś Debenture of Advanced Info Service Public Company Limited No. 5 Due 2001 Type of Instruments Type of Debenture Term Principal Amount Share Amount Face Value Issue Price Issue Date Maturity Date Interest

: : : : : : : : : :

Unsecured, unsubordinated debentures without a trustee. Specified name of Debentureholder. 3 years from Issue Date. THB200,000,000 (Two hundred million Baht). 200,000 Units (Two hundred thousand units). THB1,000 (One thousand Baht). THB1,000 (One thousand Baht). May 27, 1998 May 27, 2001 Average Minimum Loan Rate of Thai Farmer Bank Plc. and Bangkok Bank Plc. Interest Payment : Payable on quarter basis. Security : None Early Redemption Right of Issuer : None Early Redemption Right of Debentureholder : None Debentureholder(s) : Specified investors and/or qualified investors in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Transfer Restriction : All transfers of Debentures and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Remark : The Company had already redeemed the Debenture No.5 on February 19, 1999.

Annual Report 1998 Advanced Info Service Plc. â&#x2122;Ś Debenture of Advanced Info Service Public Company Limited No. 6 Due 2001 Type of Instruments : Unsecured, unsubordinated debentures without a trustee. Type of Debenture : Specified name of Debentureholder. Term : 3 years from Issue Date. Principal Amount : THB500,000,000 (Five hundred million Baht). Share Amount : 500,000 Units (Five hundred thousand units). Face Value : THB1,000 (One thousand Baht). Issue Price : THB1,000 (One thousand Baht). Issue Date : June 12, 1998. Maturity Date : June 12, 2001. Interest : Average Minimum Loan Rate of Thai Farmer Bank Plc. and Bangkok Bank Plc. Interest Payment : Payable on quarter basis. Security : None Early Redemption Right of Issuer : None Early Redemption Right of Debentureholder : None Debentureholder(s) : Specified investors and/or qualified investors in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Transfer Restriction : All transfers of Debentures and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) Remark : The Company had already redeemed the Debenture No.6 on February 19, 1999. â&#x2122;Ś Debenture of Advanced Info Service Public Company Limited No. 7 Due 1999 Type of Instruments : Unsecured, unsubordinated debentures without a trustee. Type of Debenture : Specified name of Debentureholder. Term : 1 year from Issue Date. Principal Amount : THB2,000,000,000 (Two billion Baht). Share Amount Face Value Issue Price Issue Date Maturity Date Interest Interest Payment Security Early Redemption Right of Issuer Early Redemption Right of Debentureholder Debentureholder(s) Transfer Restriction

: : : : : : : : : : :

2,000,000 Units (Two million units). THB1,000 (One thousand Baht). THB1,000 (One thousand Baht). October 12, 1998. October 11, 1999. 12% p.a. Payable on semi-annual basis. None None None Specified investors and/or qualified investors in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2) : All transfers of Debentures and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2)

Annual Report 1998 Advanced Info Service Plc. â&#x2122;Ś Debenture of Advanced Info Service Public Company Limited No. 8 Due 2001 Type of Instruments : Unsecured, unsubordinated debentures without a trustee. Type of Debenture : Specified name of Debentureholder. Term : 2 years from Issue Date. Principal Amount : THB500,000,000 (Five hundred million Baht). Share Amount : 500,000 Units (Five hundred thousand units). Face Value : THB1,000 (One thousand Baht). Issue Price : THB1,000 (One thousand Baht). Issue Date : February 18, 1999. Maturity Date : February 18, 2001. Interest : 8.25% p.a. Interest Payment : Payable on semi-annual basis. Security : None. Early Redemption Right of Issuer : None. Early Redemption Right of Debentureholder : None. Debentureholder(s) : Specified investors and/or qualified investors in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2). Transfer Restriction : All transfers of Debentures and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2). â&#x2122;Ś Debenture of Advanced Info Service Public Company Limited No. 9 Due 2002. Type of Instruments : Unsecured, unsubordinated debentures without a trustee. Type of Debenture : Specified name of Debentureholder. Term : 3 years from Issue Date. Principal Amount : THB1,00,000,000 (One billion Baht). Share Amount : 1,000,000 Units (One million units). Face Value : THB1,000 (One thousand Baht). Issue Price : THB1,000 (One thousand Baht). Issue Date : March 5, 1998. Maturity Date : March 5, 2001. Interest : 8.25% p.a. Interest Payment : Payable on semi-annual basis. Security : None. Early Redemption Right of Issuer : None. Early Redemption Right of Debentureholder Debentureholder(s) Transfer Restriction

: None. : Specified investors and/or qualified investors in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2). : All transfers of Debentures and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 13/2537, clause 9.(2).

12.) EXPLANATION AND ANALYSIS OF THE MANAGEMENT 12.1) Performance According to economic slowdown over the past two years, the operations of many mobile operators has been affected and may continue to be influenced for the foreseeable future although the economy in second half of the year looks better than last year. Meanwhile, the severe competition among mobile operators still increases, every mobile phone operator is

Annual Report 1998 Advanced Info Service Plc. facing with the customer’s churn-out problem via either the termination of their mobile phone usage or the payment default of their invoiced bills because of their financial difficulties. Therefore, the Company always creates new strategies to maintain the number of its existing customers as well as to acquire the number of new customers. At present, the Company, who has approximately number of one million customers in both the Cellular 900 system and the Digital GSM system, has put more focus on its marketing strategy continuously to allure and fulfill customers’ needs in order to maintain them with our system. Meanwhile, the strategy to increase the number of customers shall be based on the strong points of coverage of the network which widely covers both Cellular 900 and Digital GSM systems, by using the localized marketing strategy to create the market in the levels of provinces and districts. ♦ New Services. The Company shall still develop the provision of supplementary services to the customers continuously, including; 1. Digital GSM emphasizes supplementary services, which connect the mobile telephone network to the Internet Integration Network, including, GSM Web Messaging and other supplementary services which provide benefits to customers in a large scale, such as Voice Mail, Call Waiting, Audio Text, SMS Paging, International SMS, etc.

Cellular 900 emphasizes supplementary services to customers in a large scale especially infotainment group. ♦ Changes in Market Share. The market share of mobile telephone accumulated until the end of 1998 can be classified as follows; 1. Cellular 900 31% 2. Digital GSM 14% 3. World Phone 800 (TAC) 33% 4. World Phone 1800 18% 5. AMPS 800 (CAT) 2% 6. NMT 470 (TOT) 2% ♦ Impact of Instability of currency exchange rates on present and future operations. The Company has its policy in preventing the risks of currency exchange rates in a high percentage, i.e., at the end of 1997, there was a prevention of risks at 42% of the burden of loans in foreign currencies. In addition, the Company also provides a currency movement inspection system continuously in order that appropriate preventive measures can be selected. Meanwhile, the burden of debts in foreign currencies arisen from the investment in the network was relieved by the provision of capital sources in the same currencies as the existing burden of debts. This enables the Company to manage sufficient capital sources in the condition of unstable currency exchange rates. ♦ Readiness for Y2K Problem Protection AIS is very confident that all core business systems are Y2K compliance and all AIS’s business partners are also investigating to ensure their Y2K compliance status. Internal AIS Computer system 1. AIS core application systems have been developed since 1997 and they are Y2K compliance. CUBICS is one of these systems used for delivering services to customer such as billing, registration, collection, credit control and customer care services. 2. Workstation P.C. and P.C. application We are on the step of BIOS’s fixing for P.C. and workstations at Shinawatra towers, Maneeya, Univest Tower, Muangthongthanee, Branches, Outlets, Service centers and AIS’s dealers throughout Thailand. This correction will be completed March 1999 MTX / MSC Switching Software upgrade for MTX / MSC switching has currently been tested, implemented and the target integration test with Nokia, Ericsson will be completed in June 1999

Annual Report 1998 Advanced Info Service Plc. External System outside AIS AIS has developed Y2K’s Project incorporate with the third parties to the ensure the completeness of Y2K compliance on which external and internal data such as CDR (Call Detail Records), Bank transfer data and the transaction come from other business units. 1. Telecomz Service Provider in Thailand. 2. Banking and Financial Service 12.2) Report and Analysis of Operational Results in 1998. ♦ Revenue. In 1998, the total revenue of the Company has been increased to Baht 15,696 million from Baht 13,862 million in 1997, or increased by 13%, due to the Company’s profits gained from the currency exchange rates, totally Baht 1,753 million. However, revenue from service decreased from 1997, resulting from the economic crisis. ♦ Expenditure. In 1998, total expenditure of the Company has been increased to Baht 11,280 million, from Baht 8,444 million in 1997, or increased by 34%, because; - The costs of service has been increased to Baht 7,675 million, from Baht 5,671 million or a 35% increase from 1997. This is caused by the increasing amount of benefits paid to the Telephone Organization of Thailand (TOT), due to increasing revenue from service fees, as well as increasing rental of the transmission system, increasing rental of radio base station and increasing maintenance costs from the expansion of network. - Expenditure of sale and administration has been increased to Baht 2,435 million, from Baht 2,260 million or a 8% increase from 1997, due to increasing reserves against bad debts in terms of operational expenditure. - Interest has been increased to Baht 1,167 million, from Baht 502 million or a 133% increase from 1997, due to increasing loans. ♦ Cash Flow. In 1998, the Company has the proportion of cash flow, equal to 0.46, which has been decreased from last year, due to increasing revolving debts of the Company mainly caused by increasing short-term loan and current portion of long-term loan due in 1999. ♦ Assets. At the end of year 1998, total assets of the Company amounted to Baht 40,106 million, from the amount of Baht 33,992 million in 1997, or increased by 18%,. Cash and Bank Savings at the end of the year 1998, were totally Baht 1,691 million, increased from Baht 433 million from 1997 due to preparing cash for loan repayment in first quarter 1999. Short-term investment at the end of the year 1998, was totally Baht 2,166 million, decreased from Baht 3,873 million from 1997due to the low return on bills of exchange and preparing cash for loan repayment in first quarter 1999. Net Land, Building and Equipment at the end of the year 1998, amounted to Baht 1,750 million, increased from Baht 1,477 million, due to the Company’s increasing purchase of supplementary service development equipment amounted to Baht 607 million. Other Assets at the end of the year 1998, were totally Baht 29,477 million, increased from Baht 23,268 million, or 27%, due to the Company’s increasing mobile telephone networks under the Concession Agreement. Debts. At the end of the year 1998, total debts of the Company amounted to Baht 25,730 million, from the amount of Baht 22,323 million in 1997, or increased by 15%, due to the Company’s provision of capital sources in addition to the issuance of shortterm and long-term debentures and long-term loans from foreign banks, for the investment in customer service development and expansion of networks, whereby the proportion of debts to total assets was equal to 0.64.

Annual Report 1998 Advanced Info Service Plc. Shareholders’ Shares. At the end of the year 1998, shares of the Company’s shareholders valued at Baht 14,377 million and having the account value of Baht 61.43 per share.

13.) SHARE OWNERSHIPS OF DIRECTORS REPORT Name Mr.Paiboon Limpaphayom Ph.D. Mr.Boonklee Plangsiri Mr.Somprasong Boonyachai Mrs.Siripen Sitasuwan Mr.Withu Ruksvanichpongs Mr.Allen Lew Yoong Keong Mr.Chow Wing Keung Lucas Mr.Suphadej Poonpipat Mr.Vithit Leenutapong Mr.Arun Churdboonchart

Advanced Info Service Plc. -

Advanced Paging Co., Ltd. -

Advanced Wireless Marketing Co., Ltd. -

Shinawatra Datacom Co., Ltd. -

Annual Report 1998 Advanced Info Service Plc.

14.) FINANCIAL STATEMENTS Auditorâ&#x20AC;&#x2122;s Report To the Shareholders Advanced Info Service Public Company Limited: We have audited the consolidated balance sheet of Advanced Info Service Public Company Limited and subsidiaries as at December 31, 1998, and the related consolidated statements of income, changes in shareholders' equity, retained earnings and cash flows for the year then ended, and the separate financial statements of Advanced Info Service Public Company Limited for the year then ended. The management of Advanced Info Service Public Company Limited are responsible for the correctness and completeness of information presented in these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit. The consolidated financial statements of Advanced Info Service Public Company Limited and subsidiary and the separate financial statements of Advanced Info Service Public Company Limited for the year ended December 31, 1997 were audited by other auditors of the same office whose report dated February 13, 1998, expressed an unqualified opinion on those statements. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Advanced Info Service Public Company Limited and subsidiaries at December 31, 1998, and the consolidated results of their operations and their cash flows for the year then ended, and the separate financial position and results of operations and cash flows of Advanced info Service Public Company Limited for the year then ended, in conformity with generally accepted accounting principles.

Annual Report 1998 Advanced Info Service Plc. Without qualifying our opinion, we draw attention to Note 1 to the financial statements. The operations of Advanced Info Service Public Company Limited and subsidiaries since 1997 have been affected and may continue to be influenced for the foreseeable future by the economic conditions in Thailand and the Asia Pacific Region in general. The ultimate effect that these uncertainties will have on stated values or classifications of assets and liabilities at the balance sheet date cannot presently be determined.

Nirand Lilamethwat Certified Public Accountant Registration Number 2316

KPMG Audit (Thailand) Limited Bangkok, February 10, 1999 The accompanying financial statements are not intended to present the financial position and results of operations and cash flows in accordance with accounting principles and practices generally accepted in countries and jurisdictions other than Thailand. The standards, procedures and practices to audit these financial statements are those generally accepted and applied in Thailand.

Annual Report 1998 Advanced Info Service Plc. BALANCE SHEETS ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARIES AS AT DECEMBER 31, 1998 AND 1997 Consolidated Balance Sheets (Baht) 1998 1997

Company's Separate Balance Sheets (Baht) 1998 1997

ASSETS CURRENT ASSETS Cash in hand and at banks Short-term investments (Notes 6 & 7) Accounts and notes receivable - net (Notes 3, 4 & 8) Short-term loans and advances to related parties - net (Note 3) Inventories - net (Notes 4 & 9) Other current assets (Note 10) Total Current Assets INVESTMENTS (Notes 4 & 11) Related Parties Others Total Investments PROPERTY AND EQUIPMENT - net (Notes 4 & 12) OTHER ASSETS Costs of mobile phone and pager service networks under concession agreements - net (Notes 2, 3 & 4) Deferred charges - net (Note 4) Goodwill - net (Note 4) Others Total Other Assets Total Assets

2,062,844,745 2,456,523,707

520,092,870 4,256,940,775

1,690,915,056 2,166,007,771

432,802,197 3,872,685,575

2,625,762,255

3,152,250,693

2,328,813,573

3,011,142,393

17,648,364 256,305,080 683,426,896 66,000,485 977,470,817 920,794,082 8,823,676,784 9,172,383,985

214,277,318 867,171,771 7,267,185,489

200,844,354 900,644,203 8,418,118,722

122,115,653 64,403,797 1,612,464,928 122,115,653 64,403,797 1,612,464,928 827,825,510

827,825,510 -

1,943,724,635

1,629,929,418

1,750,073,217

1,477,475,657

29,795,812,324 414,107,877 292,790,519 133,939,997 30,636,650,717 41,526,167,789

23,796,698,977 199,068,213 329,389,334 152,162,963 24,477,319,487 35,344,036,687

29,019,632,757 354,914,302 102,177,229 29,476,724,288 40,106,447,922

22,936,853,692 198,877,995 132,511,836 23,268,243,523 33,991,663,412

See notes to financial statements

Company's Separate Balance Sheets (Baht) 1998 1997

LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Loans from banks (Notes 13 & 15) Accounts and notes payable and accrued expenses (Notes 3 & 14) Current portion of long-term liabilities (Notes 15 & 18) Advances from related parties (Note 3) Short-term bonds (Notes 3 & 16) Other current liabilities (Note 17) Total Current Liabilities

881,658,647

694,100,000

8,603,223,602

7,674,164,786

7,809,666,379

7,534,993,629

4,218,942,474 30,887,579 2,000,000,000 1,863,374,978 17,598,087,280

2,025,936,387 88,034,170 2,130,000,000 613,508,509 12,531,643,852

4,218,942,474 14,360,102 2,000,000,000 1,627,485,121 16,364,554,076

1,362,936,387 9,374,229 2,130,000,000 530,507,794 11,567,812,039

LONG-TERM BONDS (Note 3)

2,000,000,000

1,000,000,000

2,000,000,000

1,000,000,000

LONG-TERM LIABILITIES - net (Notes 15 & 18)

4,064,711,421

6,584,347,577

4,064,711,421

6,584,347,577

OTHER LIABILITIES (Note 19) Total Liabilities

3,088,222,202 26,751,020,903

3,270,288,243 23,386,279,672

3,300,408,562 25,729,674,059

3,171,102,000 22,323,261,616

398,373,023

289,355,219

5,000,000,000

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

500,000,000 9,241,773,863 14,376,773,863

500,000,000 6,533,401,796 11,668,401,796

500,000,000 9,241,773,863 14,376,773,863

500,000,000 6,533,401,796 11,668,401,796

41,526,167,789

35,344,036,687

40,106,447,922

33,991,663,412

MINORITY INTERESTS IN SUBSIDIARIES SHAREHOLDERS' EQUITY Share capital Authorized 500,000,000 common shares, Baht 10 par value Issued 234,000,000 common shares, fully paid Premium on share capital Retained earnings Appropriated to legal reserve (Note 28) Unappropriated Total Shareholders' Equity Total Liabilities and Shareholdersâ&#x20AC;&#x2122; Equity

See notes to financial statements

Annual Report 1998 Advanced Info Service Plc. STATEMENTS OF INCOME ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 Consolidated Statements of income (Baht) 1998 1997 REVENUES Revenues from services and equipment rental (Note 4) Sales (Note 4) Net result of investments in subsidiary and associated companies (Notes 4 & 11) Gain on exchange Other income (Note 20) Total Revenues EXPENSES Cost of services and equipment rental (Note 4) Cost of sales (Note 4) Selling and administrative expenses Interest expense (Note 21) Directors' remuneration (Note 22) Other expenses (Note 23) Total Expenses Net income before income tax and adjustment of net effect derived from the change in exchange rate system Income tax (Note 24) Net income before adjustment of net effect derived from the change in exchange rate system Adjustment of net effect derived from the change in exchange rate system (net of income tax effect) (Notes 24 & 26) Net income before considering minority interests in subsidiaries Less Share of net income of subsidiaries to minority interests Net income

Company's Separate Statements of income (Baht) 1998 1997

14,719,422,244 224,976,672

14,908,003,495 258,026,630

13,327,584,009 -

13,433,720,215 -

6,203,008 1,771,706,815 561,323,763 17,283,632,502

1,293,079 7,880,775 401,166,330 15,576,370,309

133,130,570 1,753,066,816 482,667,269 15,696,448,664

89,126,824 12,428,371 326,565,281 13,861,840,691

7,951,987,263 253,586,510 3,144,425,474 1,216,854,911 720,000 56,284,276 12,623,858,434

5,945,144,900 238,333,583 3,092,029,365 572,165,240 2,480,000 79,777,641 9,929,930,729

7,674,996,138 2,435,412,518 1,167,328,797 660,000 1,963,852 11,280,361,305

5,671,295,353 2,259,874,916 501,579,105 2,020,000 8,804,133 8,443,573,507

4,659,774,068 (1,584,984,352)

5,646,439,580 (1,797,825,013)

4,416,087,359 (1,450,315,292)

5,418,267,184 (1,665,875,346)

3,074,789,716

3,848,614,567

2,965,772,067

3,752,391,838

(1,239,788,131)

(1,226,520,491)

3,074,789,716

2,608,826,436

2,965,772,067

2,525,871,347

109,017,649 2,965,772,067

82,955,089 2,525,871,347

2,965,772,067

2,525,871,347

See notes to financial statements

(To be continued in page 26)

Annual Report 1998 Advanced Info Service Plc. (Continued from page 25) STATEMENTS OF INCOME ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 Consolidated Statements of income (Baht) 1998 1997 Earnings per share (Note 4) Earnings per share before adjustment of net effect derived from the change in exchange rate system Adjustment of net effect derived from the change in exchange rate system Earnings per share before considering minority interests in subsidiaries Less Share of net income of subsidiaries to minority interests Earnings per share

Company's Separate Statements of income (Baht) 1998 1997

13.14

16.44

12.67

16.03

(5.30)

(5.24)

13.14

11.14

12.67

10.79

0.47 12.67

0.35 10.79

12.67

10.79

See notes to financial statements

Annual Report 1998 Advanced Info Service Plc. STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 1998 Baht

1997 Baht

Share capital Common shares Balance at beginning of year Increase during the year Decrease during the year Balance at end of year

2,340,000,000 2,340,000,000

Premium on share capital Balance at beginning of year Increase during the year Decrease during the year Balance at end of year

2,295,000,000 2,295,000,000

Retained earnings Appropriated to legal reserve Balance at beginning of year Increase during the year Decrease during the year Balance at end of year

500,000,000 500,000,000

484,700,000 15,300,000 500,000,000

Unappropriated Balance at beginning of year Increase during the year Decrease during the year Balance at end of year

6,533,401,796 2,965,772,067 257,400,000 9,241,773,863

5,427,585,798 2,525,871,347 1,420,055,349 6,533,401,796

14,376,773,863

11,668,401,796

Total Shareholders' Equity

See notes to financial statements

Annual Report 1998 Advanced Info Service Plc. STATEMENTS OF RETAINED EARNINGS ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997

Unappropriated retained earnings Balance at beginning of year Cumulative effect of adjustment derived from the change of status of investment in other company to investment in associated company (Note 11) Appropriation of retained earnings in prior year Dividend (Note 27) Net income for the year Interim dividend payment (Note 27) Legal reserve Balance at end of year Appropriated retained earnings Legal reserve (Note 28) Total Retained Earnings

See notes to financial statements

1998 Baht

1997 Baht

6,533,401,796

5,427,585,798

(257,400,000) 2,965,772,067 9,241,773,863

(755,349) (702,000,000) 2,525,871,347 (702,000,000) (15,300,000) 6,533,401,796

500,000,000 9,741,773,863

500,000,000 7,033,401,796

Annual Report 1998 Advanced Info Service Plc. STATEMENTS OF CASH FLOWS ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 Consolidated Statements of Cash Flows (Baht) 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES Net income 2,965,772,067 Reconcile to net cash from operating activities Depreciation and amortization of property and equipment 482,271,428 Amortization of costs of mobile phone and pager service networks under concession agreements 1,615,325,210 Amortization of deferred charges 69,376,971 Amortization of goodwill 36,598,815 Addition to bad debt and allowance for doubtful accounts 766,937,219 Unrealized (gains) losses on exchange (1,631,715,303) Additions to allowance for obsolete inventories 5,034,038 Additions to allowance for obsolete equipment Net result of investment in subsidiary and associated companies (6,203,008) Net income of minority interests in the subsidiary 109,017,649 Increase in accounts and notes receivable (52,819,322) Decrease in advances to related parties 72,392,417 Decrease (increase) in inventories 15,075,298 Decrease (increase) in other current assets 28,091,781 Decrease (increase) in other assets 31,430,761 Increase in accounts and notes payable and accrued expenses 642,595,816 Increase (decrease) in advances from related parties (57,482,621) Increase (decrease) in other current liabilities 1,160,045,400 Increase in deposits from customers 94,260,319 Gain on sales of equipment (1,434,815) Net Cash Provided by Operating Activities 6,344,570,120

See notes to financial statements

Company's Separate Statements of Cash Flows (Baht) 1998 1997

2,525,871,347

2,965,772,067

2,525,871,347

279,239,394

418,729,060

236,282,966

1,020,435,413 33,401,329 36,598,814

1,497,369,171 69,328,273 -

912,581,994 33,351,646 -

341,648,612 1,321,771,670 25,800,565 7,192,000

710,946,544 (1,631,867,852) -

271,092,216 1,316,457,294 -

(1,293,079) 82,955,089 (1,294,572,996) 113,066,719 (91,801,050) (456,812,896) (83,556,002)

(133,130,570) (28,617,724) 36,567,036 25,030,934 30,334,607

(89,126,824) (1,247,929,036) 22,736,836 (506,222,153) (84,929,314)

2,496,262,015 19,277,231 (307,867,396) 430,577,604 (946,999) 6,497,247,384

580,202,260 4,985,873 1,097,701,259 129,306,562 (58,608) 5,772,598,892

2,539,863,403 7,942,237 (329,513,323) 480,147,000 (510,420) 6,088,095,869

(To be continued in page 30)

Annual Report 1998 Advanced Info Service Plc. (Continued from page 29) STATEMENTS OF CASH FLOWS ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997 Consolidated Statements of Cash Flows (Baht) 1998 1997 CASH FLOWS FROM INVESTING ACTIVITIES Net decrease (increase) in short-term investments 1,496,752,173 (2,765,040,755) Net decrease (increase) in loans to related parties (45,500,000) 121,000,000 Additions to investments in shares of subsidiary and associated companies (651,508,848) Additions to investments in property and equipment (713,258,433) (1,254,724,644) Proceeds from sales of equipment 5,871,105 4,856,463 Additions to investments in mobile phone and pager service networks under concession agreements (7,614,438,557) (9,224,723,390) Dividend received from a subsidiary Payment of dividend to minority interests in a subsidiary (70,000,000) Additions to investments in deferred charges (225,364,580) (163,459,476) Net Cash Used for Investing Activities (7,747,447,140) (13,352,091,802)

1,402,496,973

(2,696,509,565)

(50,000,000)

(651,508,848)

(693,174,020) 1,906,008

(1,148,828,857) 3,991,968

(7,580,148,236) -

(9,084,305,800) 105,000,000

(225,364,580) (7,795,792,703)

(165,271,806) (12,985,924,060)

(51,320,000) 2,130,000,000 1,000,000,000 5,181,857,748 (1,404,000,000) 6,856,537,748

691,890,300 (130,000,000) 1,000,000,000 1,976,816,370 (257,400,000) 3,281,306,670

(51,320,000) 2,130,000,000 1,000,000,000 5,183,417,747 (1,404,000,000) 6,858,097,747

1,215,429,650

1,693,330

1,258,112,859

(39,730,444)

520,092,870

518,399,540

432,802,197

472,532,641

327,322,225 2,062,844,745

520,092,870

1,690,915,056

432,802,197

CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease) in loans from banks 691,890,300 Net increase(decrease) in short-term bonds (130,000,000) Increase in long-term bonds 1,000,000,000 Net increase in long-term liabilities 1,313,816,370 Payments of dividend and interim dividend (257,400,000) Net Cash From Financing Activities 2,618,306,670 INCREASE (DECREASE) IN CASH CASH AT BEGINNING OF YEAR CASH OF SUBSIDIARY WHICH ITS RELATED SHARE CAPITAL WAS ACQUIRED ON DECEMBER 22, 1998 CASH AT END OF YEAR

Company's Separate Statements of Cash Flows (Baht) 1998 1997

See notes to financial statements (To be continued in page 31)

Annual Report 1998 Advanced Info Service Plc. (Continued from page 30) SUPPLEMENTAL DISCLOSURES 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. 7 (B.E. 2539), under the Public Company Limited Act B.E. 2535. Interest Expense and Income Tax Paid During the Years

Interest expense Income tax

Consolidated Statements of Cash Flows (Baht) 1998 1997 1,249,300,530 355,367,859 394,533,205 1,722,998,762

Company's Separate Statements of Cash Flows (Baht) 1998 1997 1,173,574,813 291,889,079 326,295,389 1,618,313,774

Non-Cash Investing Activities in 1998 and 1997 in Consolidated Statements of Cash Flows Additions to investments in property and equipment for general business operations, which are included in property and equipment, additions to investments in mobile phone and pager service networks which are included in costs of mobile phone and pager service networks under concession agreements and additions to investments in deferred charges, amounted to approximately Baht 8,553.06 million in 1998 and Baht 10,642.91 million in 1997. Outstanding debts in the balance sheets relating to the aforesaid investments, amounting to approximately Baht 6,050.28 million in 1998 and Baht 4,861.75 million in 1997 are included in accounts and notes payable, and amounting to approximately Baht 14.95 million in 1998 and Baht 68.91 million in 1997 are included in advances from related parties, and amounting to approximately Baht 18.63 million in 1998 and Baht 72.16 million in 1997 are included in other current liabilities. Non-Cash Investing Activities in 1998 and 1997 in the Company's Separate Statements of Cash Flows Additions to investments in property and equipment for general business operations, which are included in property and equipment, additions to investments in mobile phone networks which are included in costs of mobile phone networks under concession agreements, and additions to investments in deferred charges, amounted to approximately Baht 8,498.69 million in 1998 and Baht 10,398.41 million in 1997. Outstanding debts in the balance sheets relating to the aforesaid investments, amounting to approximately Baht 6,049.68 million in 1998 and Baht 4,859.12 million in 1997 are included in accounts and notes payable, and amounting to approximately Baht 14.95 million in 1998 and Baht 0.39 million in 1997 are included in advances from related parties, and amounting to approximately Baht 17.96 million in 1998 and Baht 70.73 million in 1997 are included in other current liabilities.

See notes to financial statements

(To be continued in page 32)

Annual Report 1998 Advanced Info Service Plc. (Continued from page 31) During the year ended December 31, 1998, the Company acquired certain subsidiary, 99.99% of Shinawatra Wireless Marketing Company Limited. Book values of assets acquired and liabilities assumed during the year then ended were as follows: Baht Cash in hand and at banks 327,322,225 Short-term investments 515,936 Accounts and notes receivable - net 234,392,248 Advances to related parties 1,795,927 Inventories - net 637,535,747 Other current assets 93,228,507 Equipment - net 87,244,502 Deferred charges - net 59,052,055 Other assets 311,522,034 Loans from banks (187,558,647) Accounts payable and accrued expenses (638,773,793) Short-term loan and advances from related parties (213,743,707) Other current liabilities (90,545,001) Minority interests in subsidiary (155) Excess of book value of investment in subsidiary over cost (21,987,878) Total 600,000,000

See notes to financial statements

Annual Report 1998 Advanced Info Service Plc.

NOTES TO FINANCIAL STATEMENTS ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARIES DECEMBER 31, 1998 AND 1997 NOTE 1 - ECONOMIC ENVIRONMENT AND BASIS OF PRESENTATION Since July 1997, certain Asia Pacific countries, including Thailand, have experienced economic difficulties relating to currency devaluation and slowdown in growth. Accordingly, the Thai government sought assistance from the International Monetary Fund to alleviate the economic crisis and improve the economy over time. The financial statements of Advanced Info Service Public Company Limited (" the Company ") and subsidiaries for the years ended December 31, 1998 and 1997 and the separate financial statements of the Company for the years then ended have been presented on a going concern basis and in conformity with generally accepted accounting principles practiced in Thailand applied on a consistent basis and reflect the management's current assessment of the possible impact of this economic situation on the financial position of the Company and its subsidiaries. The operations of the Company and its subsidiaries since July 1997 have been affected and may continue to be influenced for the foreseeable future by the economic conditions in Thailand and the Asia Pacific Region in general. The ultimate effect that these uncertainties will have on stated values or classifications of assets and liabilities at the balance sheet date cannot presently be determined. The consolidated financial statements of the Company and subsidiaries for the years ended December 31, 1998 and 1997 and the separate financial statements of the Company for the years then ended therefore may not necessarily include all adjustments that might ultimately result from these economic conditions due to such adjustments being both uncertain and unquantifiable. The accompanying consolidated financial statements of the Company and its subsidiaries and the separate financial statements of the Company have been prepared in conformity with generally accepted accounting principles practiced in Thailand and in accordance with the requirements of the Securities and Exchange Commission and the Stock Exchange of Thailand. The consolidated financial statements for the years ended December 31, include the financial statements of the Company and the following subsidiaries: % Holdings 1998 1997 Shinawatra Paging Company Limited Shinawatra Wireless Marketing Company Limited

59.99 99.99

59.99 -

All significant intercompany transactions between the Company and its subsidiaries have been eliminated in the preparation of these consolidated financial statements. On December 22, 1998, the Company acquired from Shinawatra Computer and Communications Public Company Limited an investment in common share capital of Shinawatra Wireless Marketing Company Limited with 99.99% shareholding in such company. The accompanying consolidated statement of income for the year ended December 31, 1998, does not include revenues and expenses of such company for the period as from December 22, 1998 through December 31, 1998 due to those relevant amounts are not significant.

NOTE 2 - GENERAL INFORMATION The Company and its subsidiaries are parts of the Shinawatra Computer and Communications Group. As at December 31, 1998, Shinawatra Computer and Communications Public Company Limited and its wholly owned subsidiary, Shenington Investment (B.V.I.) Pte. Limited, held totally 54.15% in share capital of the Company (49.81% held by Shinawatra Computer and Communications Public Company Limited, 4.34% held by Shenington Investment (B.V.I.) Pte. Limited), while as at December 31, 1997, Shinawatra Computer and Communications Public Company Limited directly held 54.34% in share capital of the Company.

Annual Report 1998 Advanced Info Service Plc. The Company and its subsidiaries are principally engaged in two major business segments comprising 1) the operations of a 900MHz CELLULAR TELEPHONE SYSTEM under a concession received from the Telephone Organization of Thailand, under an agreement dated March 27, 1990, trading mobile phones, rendering repair services for mobile phones and providing mobile phones for rent; 2) the operations of a DIGITAL DISPLAY PAGING SYSTEM under a concession received from the Telephone Organization of Thailand, under an agreement dated December 19, 1989, trading pagers and providing pagers for rent. Under the aforesaid agreements made with the Telephone Organization of Thailand, the Company and Shinawatra Paging Company Limited 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. However, under the letter dated March 4,1997 from the Telephone Organization of Thailand, no annual fee for the operations of pager service will be charged to the said subsidiary as from March 1, 1997 since the said fee has been waived by the Telephone Organization of Thailand, while the said subsidiary has to reduce fee of pager service charging to its customers. In addition, the Company and the said subsidiary, according to the aforesaid agreements, have to transfer their ownership of certain equipment and other assets procured by the Company and the said 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, book values of the aforementioned equipment and other assets, which have been transferred or have to be transferred to the Telephone Organization of Thailand, presented in the financial statements are as follows: Million Baht Concessions' Consolidated Company's Separate Expiry Date Balance Sheets Balance Sheets 1998 1997 1998 1997 Book values of equipment and other assets which have been transferred to and/or ready to be transferred to the Telephone Organization of Thailand: - Mobile phone network September 30, 2015 - Pager network June 11, 2005 Costs of equipment and other assets under construction and installation: - Mobile phone network - Pager network Total

28,828.62 775.55 29,604.17

21,948.18 859.22 22,807.40

28,828.62 28,828.62

21,948.18 21,948.18

191.01 0.63 191.64 29,795.81

988.67 0.63 989.30 23,796.70

191.01 191.01 29,019.63

988.67 988.67 22,936.85

The aforementioned equipment and other assets are presented as costs of mobile phone and pager networks under concession agreements under other assets in the balance sheets and amortized over the remaining period of each agreement commencing the dates of their completion of installation. Periods of concessions obtained from the Telephone Organization of Thailand have been granted until September 30, 2015 for the Company, and until June 11, 2005 for Shinawatra Paging Company Limited.

NOTE 3 - TRANSACTIONS WITH RELATED PARTIES The accompanying consolidated financial statements of the Company and its subsidiaries and the separate financial statements of the Company include transactions with related parties. The basis of transactions occurred among the Company and related parties is approximate of those occurred in the normal course of business.

Annual Report 1998 Advanced Info Service Plc. Outstanding balances with related parties as at December 31, are summarized as follows: Accounts and notes receivable, as referred to in Note 8 to the financial statements, include balances with related parties as follows: Million Baht Consolidated Company's Separate Balance Sheets Balance Sheets 1998 1997 1998 1997 The parent company Subsidiary companies Other related companies Total

0.42 1.33 1.75

0.16 7.69 7.85

0.01 0.38 0.35 0.74

0.08 0.03 0.54 0.65

Accounts and notes payable and accrued expenses, as referred to in Note 14 to the financial statements, include balances with related parties as follows: Million Baht Consolidated Company's Separate Balance Sheets Balance Sheets 1998 1997 1998 1997 The parent company Subsidiary companies Other related companies Accrued interest on long-term bonds payable A major shareholder of the parent company Accrued interest on short-term bonds payable (Note 16) A major shareholder of the parent company Executives of the parent company and directors of subsidiaries The parent company Total

31.46 98.82

60.13 111.82

11.95 44.24 11.37

60.13 0.20 104.85

34.24

7.10

34.24

7.10

2.74 0.53 3.27 167.79

114.67 4.11 118.78 297.83

2.74 0.53 3.27 105.07

114.67 4.11 118.78 291.06

Balances with related parties which are included in deposits received from customers, as referred to in Note 19 to the financial statements, comprise: Million Baht Consolidated Company's Separate Balance Sheets Balance Sheets 1998 1997 1998 1997 The parent company 129.27 129.27 A subsidiary company 298.31 Total 129.27 427.58 Short-term loans and advances to related parties comprise: Consolidated Balance Sheets 1998 1997 4.50

Short-term loan to a subsidiary company Short-term loan to an other related company

Million Baht Company's Separate Balance Sheets 1998 1997 50.00 -

Annual Report 1998 Advanced Info Service Plc.

Advances to the parent company Advances to a subsidiary company Advances to other related companies Amounts received from customers by a subsidiary and other related companies on behalf of the Company and another subsidiary such as deposits, registration fees, service fees and sales of pagers Less Allowance for loss on collection of advances to related parties Total

Consolidated Balance Sheets 1998 1997 5.69 9.22 11.95 24.10

0.37 18.01 0.37 17.64

218.85 256.67 0.37 256.30

Million Baht Company's Separate Balance Sheets 1998 1997 5.69 9.22 2.21 0.80 0.60

155.94 214.64 0.37 214.27

191.39 201.21 0.37 200.84

Short-term loan to a subsidiary and an other related company represent loans with interest at the approximate minimum rate of bank overdraft and loan from bank. Advances to parent and other related companies in the consolidated balance sheets mainly derived from payments made by the Company and its subsidiaries on behalf of those companies while advances to a subsidiary in the Company's separate balance sheets mainly derived from payments made by the Company on behalf of the said subsidiary. Advances from related parties comprise:

Advances from the parent company Advances from a subsidiary company Advances from other related companies Amounts received from customers on behalf of an other related company relating to sales of pagers Total

Consolidated Balance Sheets 1998 1997 12.99 8.95 4.79 71.65 13.10 30.88

7.43 88.03

Million Baht Company's Separate Balance Sheets 1998 1997 12.98 8.92 0.05 1.33 0.45 14.36

9.37

Advances from parent and other related companies mainly derived from payments made by the parent and other related companies on behalf of the Company and its subsidiaries, and purchases of fixed assets from an other related company made by a Company's subsidiary. Short-term Bonds Short-term bonds as at December 31, as referred to in Note 16 to the financial statements, include balances with related parties as follows: Million Baht Consolidated Company's Separate Balance Sheets Balance Sheets 1998 1997 1998 1997 The parent company 530.00 530.00 A major shareholder of the parent company 102.80 1,600.00 102.80 1,600.00 Executives of the parent company and directors of subsidiaries 20.10 20.10 Total 122.90 2,130.00 122.90 2,130.00

Annual Report 1998 Advanced Info Service Plc. Long-term Bonds: Long-term bonds at December 31, 1998 and 1997 represent unsecured bonds totaling 2,000,000 units and 1,000,000 units, respectively, Baht 1,000 per unit, invested by a major shareholder of the parent company. The said long-term bonds are repayable as from January 26, 2001 through June 12, 2001. Interest rate of the said bonds is at the average rate of Minimum Loan Rate of the Thai Farmers Bank Public Company Limited and the Bangkok Bank Public Company Limited. Under the agreements between the Company and the Thai Farmers Bank Public Company Limited, whereas the latter has been appointed as bonds registrar and has been authorized to offer and to sell the said long-term unsecured bonds, the Company agrees to pay fees and other expenses to the said bank as prescribed in those agreements. Significant transactions with related parties for the years ended December 31, are summarized as follows: Consolidated Financial Statements 1998 1997 The parent company Revenues - Service Income - Sales of pagers - Interest Expenses - Rental and other services - Consulting and management services - Interest on bonds payable to the parent company Investment in share capital of a subsidiary (Note 1) Purchases of equipment for general operations Purchases of equipment for the operations of mobile phone and pager service networks Purchase of computer software

Million Baht Company's Separate Financial Statements 1998 1997

3.14 0.18 6.86 101.99 150.34 16.58 600.00 -

4.11 0.05 1.89 127.03 168.00 12.43 0.56

2.31 6.86 101.82 150.34 16.58 -

2.96 1.89 127.03 168.00 12.43 0.56

65.00

226.57 -

65.00

226.57 -

Subsidiary company Revenues - Service Income Expenses - Rental and other services

0.31 2.35

0.39 2.39

Other related parties Revenues - Service Income - Sales of pagers - Interest Expenses - Rental and other services - Advertisement

12.45 14.66 1.68 681.50 21.53

10.42 13.55 8.58 480.41 312.74

10.39 1.20 624.17 7.62

8.74 423.30 304.23

Consolidated Financial Statements 1998 1997 10.00 10.00

Consulting and management services Interest on bonds payable to - A major shareholder of the parent company 387.31 Executives of parent company and directors of subsidiaries 2.72 - Other related companies Purchases of property, equipment and other assets Purchases of equipment for general operations 24.26 Purchases of equipment for the operations of mobile phone and pager service networks 142.80

Million Baht Company's Separate Financial Statements 1998 1997 -

160.96 8.54 217.15 96.51

387.31 2.72 23.06

160.96 8.54 96.51

189.67

142.37

188.26

Annual Report 1998 Advanced Info Service Plc. Transactions other than those mentioned previously are as follows: F

The Company has issued a Letter of Comfort to a bank to support credits obtained by a subsidiary in the amount of Baht 271 million.

The Company has entered into agreements with other related companies to hire them for the construction and installation of equipment for the operations of mobile phone network, and to receive satellite transponder services. The Company was committed to pay for the construction, installation and transponder services in the total amount of Baht 185.71 million.

The Company has entered into agreements with its parent company to receive consulting and management services and other central services provided by the parent company for periods ranging from 11 months to 12 months with options to renew. The Company is committed to pay for services in respect of the said agreements amounting to approximately Baht 11.16 million per month.

The Company and its subsidiaries have entered into lease and related service agreements with other related companies covering their office spaces, cars and spaces for base stations for periods ranging from 4 months to 17 years with options to renew. The Company and its subsidiaries are committed to pay for rental and related services in respect of the said agreements as follows: Million Baht Per Month Advanced Info Service Public Company Limited 17.51 Advanced Info Service Public Company Limited and subsidiaries 20.18

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Method of Revenue and Cost of Revenue 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. - Revenue from equipment rental is recognized over the period of and at the rate prescribed in each agreement. - The subsidiary recognizes sale and cost of sale when merchandise is delivered to customer. Accounts and Notes Receivable The Company and its subsidiaries provide allowance for doubtful accounts which is equivalent to the estimated collection losses. The estimated losses are based on collection experience and the management estimates. Inventories Inventories are valued at the lower of cost or net realizable value. Costs of inventories are determined by the following method: F

Cost of pager and spare parts are determined on the moving average method.

Cost of mobile phone is determined by using the first-in, first-out method while spare parts are determined on the moving average method.

In considering the realizable value, due allowance is made for all obsolete and slow-moving items.

Annual Report 1998 Advanced Info Service Plc. Investments Subsidiaries and associated companies Investments in subsidiary and associated companies in the Company's separate financial statements and investments in an associated company in the consolidated financial statements are recorded by using the equity method. Differences between costs of investments in subsidiary and associated companies and their book values at the dates near the acquisition are included in investments, and are amortized by the straight-line method over periods 5 - 15 years. The proportionate share in net income or net losses of subsidiary and associated companies for the years ended December 31, 1998 and 1997, after eliminating all significant gains or losses deriving from intercompany transactions incurred among the Company and its subsidiary and associated companies, less or add the amortization of differences between costs of investments in subsidiary and associated companies and their book values at the dates near the acquisition, are shown as net result of investments in subsidiary and associated companies in the statements of income. The recording of investments in subsidiary and associated companies by using the equity method has been made for the purpose of reflecting the status of and return on investments in those companies. Accordingly, the net result of investments in subsidiary and associated companies for the years ended December 31, 1998 and 1997 had not been considered in the income tax computation for each year. Other company Investment in share capital of a company, which is not a subsidiary or an associate and does not represent marketable securities, is recorded by using the cost method and less adjustment relating to the decline in value of investment, determined from the said company's financial status. Property and Equipment Land is stated at cost while no depreciation is considered for land. Buildings and building improvements, leasehold building improvements 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 1 - 20 years. In considering the recoverability of equipment, due allowance is made to certain equipment items. Depreciation and amortization for the years ended December 31, are summarized as follows:

Recorded in the consolidated statements of income Recorded in the Company's separate statements of income

Million Baht 1998 1997 482.27 279.24 418.73 236.28

The Company has 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 the years ended December 31, 1998 and 1997 are equally recorded by approximately Baht 0.96 million, are included in the total depreciation and amortization for the years ended December 31, 1998 and 1997 as discussed previously. Goodwill Goodwill in the consolidated financial statements represents the excess of the cost of investment in shares of a 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 the years ended December 31, 1998 and 1997 are equally recorded by approximately Baht 36.60 million.

Annual Report 1998 Advanced Info Service Plc. Excess of Book Value of Investment in Subsidiary Over Cost Excess of book value of investment in a subsidiary over cost, in the 1998 consolidated balance sheet, at the date near the acquisition (December 31, 1998) is amortized by the straight-line method over a period of 5 years commencing January 1999. Costs of Mobile Phone and Pager Networks Under Concession Agreements Costs of mobile phone and pager networks under concession agreements represent costs of certain equipment and other assets which have been transferred and/or have to be transferred to the Telephone Organization of Thailand. Costs of certain equipment and other assets which have been transferred and/or ready to be transferred to the Telephone Organization of Thailand are amortized over the remaining period of each concession agreement until September 30, 2015 for the Company, and until June 11, 2005 for Shinawatra Paging Company Limited. Amortization of costs of mobile phone and pager networks under concession agreements for the years ended December 31, are summarized as follows: Million Baht 1998 1997 Recorded in the consolidated statements of income 1,615.32 1,020.43 Recorded in the Company's separate statements of income 1,497.37 912.58 Deferred Charges Deferred charges represent expenditure relating to the increase of share capital, commitment fees of long-term loans, costs of longterm leases for spaces for base stations, expenditure relating to the increase of power of electricity at base station, cost of additional supplementary equipment for the operation of pager network other than those specified in the concession agreement and have been transferred to the Telephone Organization of Thailand, cost of computer software, and expenditure relating to the improvement project of mobile phone service network. The following amortization methods are used: F

Expenditure relating to the increase of share capital is amortized over a period of five years.

Commitment fees of long-term loans are amortized over the period of each loan agreement.

Costs of long-term leases for spaces for base stations are amortized over the period of each lease agreement.

Expenditure relating to the increase of power of electricity at base stations are amortized over the remaining period of concession agreement.

Costs of additional supplementary equipment for the pager network other than those specified in the concession agreement and have been transferred to the Telephone Organization of Thailand are amortized over periods of five years.

Cost of computer software are amortized over a period of ten years.

Expenditure relating to the improvement project of mobile phone service network is amortized over the remaining period of concession agreement.

Amortization of deferred charges for the years ended December 31, are summarized as follows: Million Baht 1998 1997 69.38 33.40 69.33 33.35

Recorded in the consolidated statements of income Recorded in the Company's separate statements of income

Annual Report 1998 Advanced Info Service Plc. 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. The Company's forward exchange contracts are intended to hedge the risks of changes in foreign currency exchange rates. Forward exchange contract receivables and payables are recorded in Baht at the spot rate on the date of contract inception, and the balances on the balance sheet date are translated into Baht at the prevailing spot rate. Premiums or discounts under forward exchange contracts for hedging losses on assets and liabilities in foreign currencies are amortized to the profit and loss accounts over the period of the forward exchange contract. Earnings Per Share Earnings per share is computed by using the following methods: F

Earnings per share in the consolidated financial statements for the years ended December 31, 1998 and 1997 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.

Earnings per share in the Company's separate financial statements for the years ended December 31, 1998 and 1997 are computed by dividing net income for each year by the number of common shares outstanding at the end of each year.

NOTE 5 - SEGMENT INFORMATION The business operations of the Company and its subsidiaries, as reflected in the consolidated financial statements, are classified into two major segments; 1) the operations of a 900-MHz CELLULAR TELEPHONE SYSTEM network, trading mobile phones, rendering repair services for mobile phones and providing mobile phones for rent; 2) the operations of a DIGITAL DISPLAY PAGING SYSTEM network, trading pagers and providing pagers for rent. As of December 31, 1998, no operating income and expenses from trading of mobile phones and rendering repair services for mobile phones and providing mobile phones for rent were reflected in the consolidated financial statements as the Company just acquired Shinawatra Wireless Marketing Company Limited, which is operating the aforesaid business activities, by the end of 1998 as discussed in Note 1 to the financial statements.

Annual Report 1998 Advanced Info Service Plc. Financial information by business segment for the years ended December 31, are shown as follows: Million Baht 1998 1997 Revenues from Services and Rental Mobile phone service Pager service and rental Adjustments of intercompany transactions Total Revenues from Sales Sales of pagers Adjustments of intercompany transactions Total Total Revenues from Services, Rental and Sales Mobile phone service Pager service, rental and sales Adjustments of intercompany transactions Total Operating Profit (Loss) Mobile phone service Pager service, rental and sales Adjustments of intercompany transactions Total Net result of investments in an associated company Gain on exchange Other income Interest expense Directors' remuneration Other expenses

Net income before income tax and adjustment of net effect derived from the change in exchange rate system Income tax Net income before adjustment of net effect derived from the change in exchange rate system Adjustment of net effect derived from the change in exchange rate system Net income before considering minority interests in subsidiaries Less Share of net income of subsidiaries to minority interests Net income

13,327.58 1,394.47 (2.63) 14,719.42

13,433.72 1,477.06 (2.78) 14,908.00

224.98 224.98

258.03 258.03

13,327.58 1,619.45 (2.63) 14,944.40

13,433.72 1,735.09 (2.78) 15,166.03

3,219.18 375.22 3,594.40 6.20 1,771.70 561.32 (1,216.85) (0.72) (56.28)

5,504.55 385.97 5,890.52 1.29 7.88 401.17 (572.17) (2.48) (79.78)

1998

Million Baht 1997

4,659.77 (1,584.98)

5,646.43 (1,797.82)

3,074.79 3,074.79 109.02 2,965.77

3,848.61 (1,239.79) 2,608.82 82.95 2,525.87

Annual Report 1998 Advanced Info Service Plc.

Classifications of assets by business segment as at December 31, Property and Equipment - net Segment-Mobile phone service, rental and sales Segment -Pager service, rental and sales Adjustments of intercompany transactions Total Other Assets Costs of mobile phone and pager networks under concession agreements - net Mobile phone service Pager service Other assets Adjustments of intercompany transactions Total Total Assets

1998

Million Baht 1997

1,837.31 106.46 (0.05) 1,943.72

1,477.48 152.50 (0.05) 1,629.93

29,019.63 776.18 29,795.81 11,408.61 (1,621.98) 39,582.44 41,526.16

22,936.85 859.85 23,796.70 10,342.01 (424.60) 33,714.11 35,344.04

Operating profit (loss) by each segment represents revenue by each segment less the related cost of revenue 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, short-term investments, accounts and notes receivable, short-term loans and advances to related parties, inventories, other current assets, investments, costs of mobile phone and pager networks, deferred charges, goodwill and others.

NOTE 6 - ASSETS PLEDGED AS COLLATERAL As at December 31, 1998, time deposit with a bank of a subsidiary, as referred to in Note 7 to the financial statements, in the amount of approximately Baht 0.51 million was pledged as collateral for credits obtained from a local bank.

NOTE 7 - SHORT-TERM INVESTMENTS Short-term investments at December 31, represent time deposits with banks and other financial institutions and investments in bills of exchange of which their withdrawal periods are within 1 year, comprise:

Consolidated Balance Sheets 1998 1997 2,176.52 2,267.00 280.00 - 1,989.94 2,456.52 4,256.94

Time deposits with local and foreign banks Time deposits with other financial institutions Investments in bills of exchange Total

Million Baht Company's Separate Balance Sheets 1998 1997 2,066.01 2,082.00 100.00 - 1,790.68 2,166.01 3,872.68

Annual Report 1998 Advanced Info Service Plc. Investments in bills of exchange as at December 31, are shown net of discount, determined from the remaining periods of those bills of exchange as follows: Discount Rates (%) Million Baht 1998 1997 1998 1997 Recorded in the consolidated financial statements 11.00-13.25 20.06 Recorded in the Company's separate financial statements 12.25-13.05 19.31

NOTE 8 - ACCOUNTS AND NOTES RECEIVABLE Accounts and notes receivable at December 31, were shown net of allowance for doubtful accounts as follows: Consolidated Balance Sheets 1998 1997 1.75 7.85 2,979.24 3,401.58 2,980.99 3,409.43 355.23 257.18 2,625.76 3,152.25

Related parties (Note 3) Other customers Less Allowance for doubtful accounts Accounts and Notes Receivable - net

Million Baht Company's Separate Balance Sheets 1998 1997 0.74 0.65 2,651.07 3,187.79 2,651.81 3,188.44 323.00 177.30 2,328.81 3,011.14

Trade notes receivable at December 31, 1998 and 1997 do not exceed 20% of total accounts and notes receivable as shown above. Accounts and notes receivable at December 31, 1998, of which are overdue more than 3 months, are summarized as follows: Million Baht Consolidated Company's Separate Financial Statements Financial Statements Balances overdue more than 3 months but not exceeding 6 months 274.42 270.26 Balances overdue more than 6 months but not exceeding 12 months 448.54 444.97 Balances overdue more than 12 months 33.19 31.90 Total Allowance for doubtful accounts for the above overdue balances

756.15

747.13

355.23

323.00

Allowance for doubtful accounts for those accounts and notes receivable at December 31, 1998 which are overdue more than 3 months were considered to cover risk from bad debts in conjunction with deposits received from those customers who associated with the above overdue balances.

NOTE 9 â&#x20AC;&#x201C; INVENTORIES Inventories at December 31, comprise:

Consolidated Balance Sheets 1998 1997 612.17 63.47 106.24 28.33 718.41 91.80 34.98 25.80 683.43 66.00

Finished goods Supplies and spare parts Less Allowance for obsolescence Inventories - net

Million Baht Company's Separate Balance Sheets 1998 1997 -

Annual Report 1998 Advanced Info Service Plc.

NOTE 10 - OTHER CURRENT ASSETS Other current assets at December 31, comprise: Million Baht Company's Separate Balance Sheets 1998 1997 643.73 321.28 125.82 136.28

Consolidated Balance Sheets 1998 1997 722.44 322.53 135.20 146.71

Other receivables Prepaid expenses Premium on purchases of foreign currencies under forward exchange contracts - net of amortization Refundable value added tax Accrued interest income Others Total

57.66 5.35 6.73 50.09 977.47

404.35 18.81 28.39 920.79

57.70 6.55 3.68 29.69 867.17

403.19 14.72 25.17 900.64

Other receivables mainly comprise service cost to be reimbursed by International network operators, value added tax to be claimed from the Telephone Organization of Thailand, and amounts receivable from franchisees.

NOTE 11 - INVESTMENTS Investments at December 31, 1998 comprise investments in share capital of the following companies

In the Company's separate financial statements Related Parties Subsidiary companies Shinawatra Paging Company Limited Shinawatra Wireless Marketing Company Limited Associated company Shinawatra Datacom Company Limited Other Company Fonepoint (Thailand) Company Limited

In the consolidated financial statements Related Parties Associated company Shinawatra Datacom Company Limited Other Company Fonepoint (Thailand) Company Limited

Values (Million Baht) Equity Recorded Dividend Method Values Income

% Holding

Paid-up Capital

Cost Method

59.99

350.00

753.76

890.35

99.99

240.00

600.00

27.86

457.52

147.37

122.11

122.11 1,612.46

17.80

15.00

Values (Million Baht) Equity Recorded Dividend Method Values Income

% Holding

Paid-up Capital

Cost Method

27.86

457.52

147.37

122.11

17.80

15.00

Annual Report 1998 Advanced Info Service Plc. Investments at December 31, 1997 comprise investments in share capital of the following companies: % Holding

Paid-up Capital

Cost Method

Values (Million Baht) Equity Recorded Dividend Method Values Income

In the Company's separate financial statements Related Parties Subsidiary company Shinawatra Paging Company Limited 59.99 350.00 753.76 763.42 Associated company Shinawatra Datacom Company Limited 18.00 695.30 95.87 64.40 64.40 827.82 Other Company Fonepoint (Thailand) Company Limited 17.80 15.00 In the consolidated financial statements Related Parties Associated company Shinawatra Datacom Company Limited 18.00 695.30 95.87 64.40 64.40 Other Company Fonepoint (Thailand) Company Limited 17.80 15.00 -

763.42

105.00

Shinawatra Paging Company Limited is principally engaged in the operations of a DIGITAL DISPLAY PAGING SYSTEM network, trading of pagers and providing pagers for rent. Shinawatra Wireless Marketing Company Limited is principally engaged in trading of mobile phone,rendering repair services for mobile phones and providing mobile phones for rent. Shinawatra Datacom Company Limited is principally engaged in the operations of simultaneous voice and data transfer system known as DataNet. In December 1998, the Company acquired additional investment in common share capital of Shinawatra Datacom Company Limited (6,449,176 shares at the value of Baht 51,508,548), and the Company's shareholding in Shinawatra Datacom Company Limited therefore increased from 13.77% to 27.86%. Accordingly, the Company is required to record such investment by using the equity method of accounting for the year ended December 31, 1998 and the financial statements for the year ended December 31, 1997 have to be adjusted retroactively from the cost method to the equity method. As a result, investments in associated company and the Company's shareholders' equity as at December 31, 1998 and 1997, the results of the Company's operations and earnings per share for the years ended December 31, 1998 and 1997 are effected as follows: F

Investments in associated company and the Company's shareholders' equity as at December 31, 1998, and net income for the year ended December 31, 1998, were equally increased by approximately Baht 6.20 million. Earnings per share for the year ended December 31, 1998 was increased by approximately Baht 0.03.

Investments in associated company and the Company's shareholders' equity as at December 31, 1997, were equally increased by approximately Baht 2.03 million. Net income for the year ended December 31, 1997 was increased by approximately Baht 2.79 million (comprising net result from investment of approximately Baht 1.29 million and a reversal of loss from decline in value of investment of approximately Baht 1.50 million), while earnings per share for the year ended December 31, 1997 was increased by approximately Baht 0.01.

Annual Report 1998 Advanced Info Service Plc. Investment in the aforesaid associated company as at December 31, 1998, at the book value of approximately Baht 122.11 million, which is equivalent to 0.29% of the total consolidated assets and 0.30% of the Company's total assets at December 31, 1998, was recorded by using the equity method of accounting based on the related financial information of the financial statements for the year ended December 31, 1998 prepared by the management of the said company and had not been audited or reviewed by the auditors. The related unaudited or unreviewed net result of investment in the said associated company for the year ended December 31, 1998 was approximately Baht 6.20 million. Investment in an other company, Fonepoint (Thailand) Company Limited, as at December 31, 1998 and 1997, which do not represent marketable securities, are shown net of adjustment relating to the decline in value of investment, determined from its financial status in the amount of approximately Baht 17.20 million. The Company and its subsidiaries do not have significant influence in the management of this company.

NOTE 12 - PROPERTY AND EQUIPMENT Property and equipment at December 31, comprise:

Estimated Useful Lives (Years) Land Buildings and improvements Leasehold buildings improvements Furniture, fixtures and office equipment Tools and equipment Pagers and mobile phone for rent Vehicles Vehicles under financial leases Assets under construction and installation

5-20 5-15 1-10 2-5 5 5

Less Accumulated depreciation and amortization Less Allowance for obsolete equipment Property and Equipment - net

Consolidated Balance Sheets 1998 1997 10.97 10.97 66.13 62.85 129.37 101.97 2,695.76 1,958.50 22.10 73.86 64.34 49.56 33.15 4.77 4.77 128.02 84.36 3,180.54 2,320.91 1,235.02 683.79 1,945.52 1,637.12 1.80 7.19 1,943.72 1,629.93

Million Baht Company's Separate Balance Sheets 1998 1997 2.52 2.52 26.06 24.10 86.65 61.10 2,364.93 1,759.80 40.87 28.39 4.77 4.77 128.02 84.36 2,653.82 1,965.04 903.75 487.57 1,750.07 1,477.47 1,750.07 1,477.47

As at December 31, 1998, land purchased by the Company's subsidiary from Pager Sales Company Limited, at the value of approximately Baht 5.05 million, was in the process of transferring the ownership to the subsidiary.

NOTE 13 - LOANS FROM BANKS At December 31, 1998, the Company had outstanding loan balance obtained from a foreign bank under a short-term loan agreement in the amount of US dollar 5 million and is repayable within December 1999. Shinawatra Computer and Communications Public Company Limited (" SC&C "), as stipulated under the said loan agreement, is required to have its shareholding in the Company for at least 51% of total issued shares of the Company. On January 6, 1999, the Board of Directors of SC&C passed a resolution to approve the sale of 14,300,000 common shares of the Company to Singapore Telecom International, and on the same day the Board of Directors of the company passed a resolution to approve the issuance of 36,000,000 common shares to sell specifically to Singapore Telecom International. SC&C's shareholding in the Company, after the completion of exercises which were approved by the Board of Directors of SC&C and the Company as discussed previously, will be lower than the levels stipulated in the aforesaid loan agreements. On January 21,1999, the aforesaid foreign bank had officially confirmed to the Company that it agreed to make an allowance in respect of the required level of holding in the Company's share capital to be maintained by SC&C.

Annual Report 1998 Advanced Info Service Plc.

NOTE 14 - ACCOUNTS AND NOTES PAYABLE AND ACCRUED EXPENSES Accounts and notes payable and accrued expenses at December 31, comprise: Consolidated Balance Sheets 1998 1997 Related parties (Note 3) Notes payable to other supplier Balances with other suppliers and accrued expenses Add (Less) Value of purchased currency under contracted exchange rates, for future payments of above liabilities, over (under) the current value of purchased currency under forward contracts Accounts and notes payable and accrued expenses - net

Million Baht Company's Separate Balance Sheets 1998 1997

167.79 1,418.23 6,805.52 8,391.54

297.83 7,379.63 7,677.46

105.07 1,418.23 6,074.97 7,598.27

291.06 7,247.25 7,538.31

211.68 8,603.22

(3.30) 7,674.16

211.39 7,809.66

(3.32) 7,534.99

NOTE 15 - UNUTILIZED LOAN FACILITIES Unutilized loan facilities of the Company and its subsidiaries as at December 31, 1998 are classified by type of currencies as follows: Million Consolidated Company's Separate Financial Statements Financial Statements Short-term Baht 220.00 US dollar 21.55 21.55 Long-term US dollar 41.69 41.69 Deutschmark 73.74 73.74 Terms and conditions of unutilized long-term facilities are similar to those long-term loans described in Note 18, while terms and conditions of unutilized short-term loans facilities are not currently specified and subject to mutual agreement between the Company, its subsidiaries and lenders if required.

NOTE 16 - SHORT-TERM BONDS ISSUED BY ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED Short-term bonds at December 31, 1998 represent unsecured bonds totaling 2,000,000 units, Baht 1,000 per unit. The said shortterm bonds are repayable on October 11, 1999 with the fixed interest rate at 12%. The Company has entered into an agreement with Bangkok First Investment and Trust Public Company Limited to appoint the said company as bonds registrar and paying agent, and the Company has also entered into an agreement with Merrill Lynch Phatra Securities Company Limited to authorize the said company to offer and sell the aforesaid unsecured bonds. The Company agrees to pay fees and other expenses to both companies in accordance with terms and conditions prescribed in both agreements.

Annual Report 1998 Advanced Info Service Plc. Short-term bonds at December 31, 1997 represent unsecured bonds totaling 2,130,000 units, Baht 1,000 per unit. The said shortterm bonds are repayable as from February 16, 1998 through March 27, 1998 with the fixed interest rate at 13% per annum. Under the agreements between the Company and the Thai Farmers Bank Public Company Limited, whereas the latter has been appointed as bonds registrar and has been authorized to offer and to sell the said short-term unsecured bonds, the Company agrees to pay fees and other expenses to the said bank as prescribed in those agreements. Bondholders as at December 31, are summarized as follow: Consolidated Balance Sheets 1998 1997 122.90 2,130.00 1,877.10 2,000.00 2,130.00

Related parties (Note 3) Other bondholders Total

Million Baht Company's Separate Balance Sheets 1998 1997 122.90 2,130.00 1,877.10 2,000.00 2,130.00

Accrued interest on short-term bonds at December 31, are summarized by type of bondholders as follow:

Related parties (Notes 3 & 14) Others bondholders Total

Consolidated Balance Sheets 1998 1997 3.27 118.78 49.99 53.26 118.78

Million Baht Company's Separate Balance Sheets 1998 1997 3.27 118.78 49.99 53.26 118.78

Consolidated Balance Sheets 1998 1997

Million Baht Company's Separate Balance Sheets 1998 1997

NOTE 17 - OTHER CURRENT LIABILITIES Other current liabilities at December 31, comprise:

Income tax payable Other payables Equipment payables Withholding income tax payable Others Total

1,637.79 171.20 14.57 22.00 17.81 1,863.37

360.80 135.88 68.59 13.13 35.11 613.51

1,421.78 169.09 13.89 18.28 4.44 1,627.48

297.76 132.25 67.15 10.90 22.44 530.50

Other payables mainly comprise service costs to be charged by the Communications Authority of Thailand, and sharing of service income to be charged by the Telephone Organization of Thailand.

NOTE 18 - LONG-TERM LIABILITIES Long-term liabilities at December 31, comprise: Consolidated Balance Sheets 1998 1997 Loans from foreign banks Syndicated loans from foreign banks Loans from foreign finance companies Loans from a foreign company Liabilities under financial leases

479.57 618.23 5,976.18 8,417.41 2,188.29 1,868.25 79.88 2.88 3.59 8,646.92 10,987.36

Less Excess of the current value of purchased currency under forward contracts, for future repayments of above loans, over the value under contracted exchange rates

363.27

2,377.07

Million Baht Company's Separate Balance Sheets 1998 1997 479.57 5,976.18 2,188.29 2.88 8,646.92

618.23 7,180.96 1,868.25 79.88 3.59 9,750.91

363.27

1,803.62

Annual Report 1998 Advanced Info Service Plc. 8,283.65 4,218.94 4,064.71

Less Current portion of long-term liabilities Long-term Liabilities - net

8,610.29 2,025.94 6,584.35

8,283.65 4,218.94 4,064.71

7,947.29 1,362.94 6,584.35

Outstanding long-term loans in foreign currencies at the end of each year are translated into Baht at the exchange rate ruling on that date and are shown net of the excess of the current value of purchased foreign currency under forward contracts, in relation to future repayments of above loans, over the value under contracted exchange rates. Loans From Foreign Banks Loans from foreign banks as at December 31, 1998 and 1997 represent loans in US dollars obtained by the Company from two foreign 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, 1998 and 1997, outstanding loan balances under the aforesaid two loan agreements amounted to approximately Baht 479.57 million and Baht 618.23 million, respectively. Syndicated Loans From Foreign Banks Syndicated loans from foreign banks as at December 31, 1997 represent loans in US dollars under four loan agreements. Loan under the first agreement represents loan obtained by the subsidiary from eight banks and are repayable in a lump sum on September 5, 1998, 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. Repayment of the first agreement was fully made by the subsidiary in the third quarter of 1998. Loan under the second agreement obtained by the Company from fourteen banks and are repayable in five equal semi-annual installments commencing April 9, 1998, while interest rate and interest payments under the said loan agreement are to be mutually agreed with the lenders at the 1 month LIBOR or 3 month LIBOR or 6 month LIBOR plus the rate as prescribed in the said agreement. Loans under the third agreement and fourth agreement are obtained by the Company from twelve banks and three banks, respectively. Both loan agreements are repayable in four equal semi-annual installments commencing March 30, 1999 and April 2, 1999, respectively. Interest rates and interest payments under both loan agreements are to be mutually agreed with the lenders at the 3 month LIBOR or 6 month LIBOR plus the rate as prescribed in both loan agreements. Syndicated loans from foreign banks as at December 31, 1998 represent loans in US dollars under three loan agreements. Loans under the first, second and third agreement obtained by the Company from the same lenders and under the same second, third and forth loan agreement as at December 31, 1997. A portion of syndicated loan under the second agreement as at December 31, 1998 in the amount of US$ 22.5 million has been reschedule to repay in a lump sum on March 30, 1999. As at December 31, 1998 and 1997 outstanding loan balances under syndicated loan agreements in the consolidated balance sheets amounted to approximately Baht 5,976.18 million and Baht 8,417.41 million, respectively. As at December 31, 1998 and 1997 outstanding loan balances under syndicated loan agreements in the Company's separate balance sheets amounted to approximately Baht 5,976.18 million and Baht 7,180.96 million.

Annual Report 1998 Advanced Info Service Plc. Loans From Foreign Finance Companies Loans from foreign finance companies as at December 31, 1997 represent loans in US dollars obtained by the Company from two finance companies under seven loan agreements. Loans obtained from the first finance company comprise six loan agreements. Loans under the first and second agreement are repayable in fifteen equal semi-annual installments commencing March 15, 1993 and June 23, 1993, respectively. Interest 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 is repayable in four equal semi-annual installments commencing January 15, 1997. Interest rate and interest payments are at the 6 month LIBOR plus the rates as prescribed in the said agreement. Repayment of the third agreement was fully made by the Company in the third quarter of 1998. Loan under the fourth agreement is repayable in ten equal semi-annual installments commencing July 15, 1996. Interest under the said loan agreement is payable semi-annually at the rate of 6.88% per annum. Loan under the fifth agreement is repayable in nine equal semi-annual installments commencing January 15, 1997. Interest under the said loan agreement is payable semi-annually at the rate of 6.10% per annum. On June 22, 1998, the Company and the said finance company mutually agreed to change the interest rate prescribed in the said loan agreement to be 6.32% per annum. Loan under the sixth agreement is repayable in six equal semiannual installments commencing September 15, 1999, while interest rate and interest payments under the said loan agreement are at the 6 month LIBOR plus the rate as prescribed in the said agreement. Loan under the seventh agreement represents loan in US dollars obtained from the second finance company and is repayable in six equal semi-annual installments commencing March 15, 2000. Interest rate and interest payments are at the 6 month LIBOR. Loans from foreign finance companies as at December 31, 1998 represent loans obtained by the Company from three finance companies under seven loan agreements. Loans in US dollars under first five loan agreements obtained from the first finance company represent the remaining loan balances under the first six loan agreements as at December 31, 1997. Loan under the sixth agreement represents additional loan in US dollars obtained from the second finance company represents the same loan under the same seventh loan agreement as at December 31, 1997. Loan under the seventh agreement represents loan in US dollars equivalent Deutschmark obtained from the third finance company and is repayable in ten equal semi-annual installments commencing March 31, 2000. Interest rate and interest payments are at the 6 month LIBOR plus the rate as prescribed in the said agreement. As at December 31, 1998 and 1997, outstanding loan balances obtained from those three finance companies amounted to approximately Baht 2,188.29 million and Baht 1,868.25 million, respectively. Loans From a Foreign Company Loans from a foreign company as at December 31, 1997 represent loans in US dollars obtained by the Company from a foreign company under two loan agreements. Both loan agreements are repayable in ten equal semi-annual installments commencing January 31, 1994 and April 29, 1994, respectively. Interest under the first loan agreement is payable semi-annually at the rate of 5.97% per annum, while interest rates and interest payments under the second loan agreement are at the 6 month LIBOR plus the rate as prescribed in the said agreements. Repayments of both loan agreements were fully made by the Company in the fourth quarter of 1998. As at December 31, 1997, outstanding balances under the aforesaid two loan agreements amounted to approximately Baht 79.88 million. Other information According to the aforesaid loan agreements made with financial institutions and foreign companies, there are certain terms and conditions for the Company and a subsidiary to comply. At December 31, 1998, certain outstanding loan balances comprising loan from a foreign bank under a long-term loan agreement (" first loan agreement "), syndicated loans obtained from foreign banks under three long-term loan agreements (" second, third and fourth loan agreement ") and loans obtained from two finance companies under four long-term loan agreements (" fifth, sixth, seventh and eighth loan agreement "), in the total amount of US dollar 203.14 million, and are repayable from December 1999 through September 2002. Shinawatra Computer and Communications Public Company Limited (" SC&C "), as stipulated under the first, fifth and sixth loan agreement, is required to have its shareholding in the

Annual Report 1998 Advanced Info Service Plc. Company for at least 50% of total issued shares of the Company, and as stipulated under the second, third, fourth, seventh and eighth loan agreement, SC&C is required to have its shareholding in the Company for at least 51% of total issued shares of the Company. Current Ratio has also been stipulated under the fifth loan agreement obtained from a finance company at 0.75:1.On January 7, 1999 the said finance company agreed to make an allowance in respect of such current ratio. On January 6,1999, the Board of Directors of SC&C passed a resolution to approve the sale of 14,300,000 common shares of the Company to Singapore Telecom International, and on the same day the Board of Directors of the Company passed a resolution to approve the issuance of 36,000,000 common shares to sell specifically to Singapore Telecom International. SC&C's shareholding in the Company, after the completion of exercises which were approved by the Board of Directors of SC&C and the Company as discussed previously, will be lower than the levels stipulated in the aforesaid loan agreements. During January 27, 1999 through February 5, 1999, all the aforesaid foreign banks and finance companies had officially confirmed to the Company of which the majority providing relevant loan balances amounting to approximately US$ 180.64 million, agreed to make allowances in respect of the above requirements, while the Company agrees to repay loans payable to the remaining parties by March 30, 1999 amounting to US$ 22.5 million. Those amounts which have been agreed to repay by March 30, 1999 are reclassified as current portion of long-term liabilities under current liabilities in the balance sheet. Liabilities Under Financial Leases The Company has entered into six financial lease agreements with a related company to obtain vehicles for its business operations. The financial leases are irrevocable and payable monthly in 60 installments 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 10% of the vehicles' costs or of the prices purchased by the lessor from car agency. At December 31, 1998, the Company was committed to future payments under financial leases shown in present value, using the discount rates ranging from 19.81 - 23.648% per annum, as follows: Year Amount (Baht) 1999 876,049.45 2000 1,082,576.51 2001 920,364.54 Total 2,878,990.50 Payment commitments as of December 31, 1999 are included in current portion of long-term liabilities as shown in the schedule of long-term liabilities.

NOTE 19 - OTHER LIABILITIES Other liabilities at December 31, comprise: Consolidated Balance Sheets 1998 1997 Deposits received from customers - Related parties (Note 3) - Other customers

129.27 2,936.96

3,270.29

Consolidated Balance Sheets 1998 1997 Excess of book value of investment in subsidiary over cost (Note 4) Total

3,066.23 21.99 3,088.22

3,270.29 3,270.29

Million Baht Company's Separate Balance Sheets 1998 1997 427.58 2,872.83

3,171.10

Million Baht Company's Separate Balance Sheets 1998 1997 3,300.41 3,300.41

3,171.10 3,171.10

Annual Report 1998 Advanced Info Service Plc.

NOTE 20 - OTHER INCOME Other income for the years ended December 31, comprise: Consolidated Statements of Income 1998 1997 Interest income Cash discount received from suppliers and service providers Others Total

440.78 58.64 61.90 561.32

340.75 29.11 31.31 401.17

M illion Baht Company's Separate Statements of Income 1998 1997 370.86 58.64 53.16 482.66

289.16 29.11 8.30 326.57

NOTE 21 - CAPITALIZATION OF THE BORROWING COSTS The Company and a 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 22 - DIRECTORS' REMUNERATION Directors' remuneration represents meeting fees and gratuities as approved by the shareholders of the Company and its subsidiary in their Annual General Meetings.

NOTE 23 - OTHER EXPENSES Other expenses for the years ended December 31, comprise: Consolidated Statements of Income 1998 1997 Amortization of goodwill (Note 4) Provision for decline in values of inventories (Notes 4 & 9) Provision for loss on obsolete equipment (Notes 4 & 12) Losses from written off current assets Others Total

36.60 5.03 13.67 0.98 56.28

36.60 25.80 7.19 10.19 79.78

Million Baht Company's Separate Statements of Income 1998 1997 1.96 1.96

8.80 8.80

Annual Report 1998 Advanced Info Service Plc.

NOTE 24 - INCOME TAX Income tax for the years ended December 31, are summarized as follows: Consolidated Statements of Income 1998 1997 Income tax before considering adjustment of net effect derived from the effect of change in exchange rate system Income tax effect on adjustment derived from the effect of change in exchange rate system Income tax for current year

Million Baht Company's Separate Statements of Income 1998 1997

1,584.98

1,797.82

1,450.31

1,665.87

1,584.98

(531.34) 1,266.48

1,450.31

(525.65) 1,140.22

NOTE 25 - FOREIGN CURRENCY RISK MANAGEMENT The Company and its subsidiaries, in terms of approved policy limit of Shinawatra Computer and Communications Group, enter into various types of foreign exchange contracts to hedge their transaction risk both in short-term and long-term foreign currency exposures. Short-term foreign currency exposures are related to trade import, short-term foreign borrowings and interest flows on long-term foreign borrowings. Long-term foreign currency exposure is related to long-term foreign borrowings. The currency risks of the Company and its subsidiaries occur in various currency combinations, but mostly in the United States dollars, due to the fact that the Company and its subsidiary involves in transactions with different countries. The Company and its subsidiaries hedging policy is to hedge currency risk mostly based on their net exposure and the structure of their revenues. The Company and its subsidiaries focus more on hedging when their revenues are on local currency base whereas it will do less when their revenues are on foreign currency base due to the natural hedge phenomenon. The senior executives in Group Finance meet on a monthly basis to analyze currency exposures and re-evaluate forex management strategies against revised currency forecasts.

NOTE 26 - CHANGE IN EXCHANGE RATE SYSTEM On July 2, 1997, the Ministry of Finance issued its notification, dated July 2, 1997, to change the exchange rate system to the managed float system. The Shinawatra Computer and Communications Group has its policy to recognize all exchange gains or losses derived from the change in exchange rate system incurred during the reporting period as income or expense in the statements of income. As at December 31, 1998, the Company and its subsidiaries have significant outstanding assets and liabilities in foreign currencies as follows: Million Consolidated Company's Separate Balance Sheets Balance Sheets Assets by type of currency US dollar 43.94 43.93 Liabilities by type of currencies US dollar 356.38 346.85 Deutschmark 15.52 15.51 Japanese yen 490.95 490.95 Norway krone 1.57 1.57

Annual Report 1998 Advanced Info Service Plc. From the foreign currency liabilities as shown above, periods of their settlement are categorised as follows:

Payment periods Within December 31, 1999 US dollar Deutschmark Japanese yen Norway krone After December 31, 1999 US dollar

Consolidated Financial Statements

Million Company's Separate Financial Statements

241.84 15.52 490.95 1.57

232.31 15.51 490.95 1.57

114.54

Foreign currency assets as shown above represent foreign currency deposits with foreign banks and receivables from network operators, while foreign currency liabilities represent short-term loans, long-term loans and related accrued interest expense, notes payable to a foreign supplier and foreign trade accounts payable. Long-term loans and related accrued interest in US dollars are repayable and payable in accordance with conditions in loan agreements as described in Note 18, while short-term loans, foreign notes payable to foreign supplier and foreign trade accounts payable are payable within December 31, 1999. From the foreign currency liabilities as shown above, a total amount of US$ 191.97 million in the book of the Company and its subsidiaries have been hedged against the risk of currency losses on future repayments and payments. Net effect derived from the change in exchange rate system as shown in the statements of income for the year ended December 31, 1997 is calculated based on the guideline of the Institute of Certified Accountants and Auditors of Thailand. Effects derived from the change in exchange rates, incurred between January 1, 1999 and February 5, 1999, to the financial position and results of operations of the Company and its subsidiaries based on their outstanding unhedged foreign currency assets and liabilities as at December 31, 1998 are not significant.

NOTE 27 - APPROPRIATION OF EARNINGS OF ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED The shareholders of the Company at the Annual General Meeting held on April 25, 1997 approved the interim dividend and legal reserve appropriated during 1996 of Baht 702 million and Baht 89.50 million, respectively. Additional dividend and legal reserve for 1996 of Baht 702 million and Baht 88.70 million, respectively, were also approved by such meeting. On August 11, 1997, the Board of Directors of the Company approved the interim dividend for 1997 in the amount of Baht 702 million. The shareholders of the Company at the Extraordinary Meeting held on October 16, 1997 approved the interim dividend for 1997 in the amount of Baht 702 million. The shareholders of the Company at the Annual General Meeting held on April 29, 1998 approved the interim dividend during 1997 of Baht 702 million. Additional dividend and legal reserve for 1997 of Baht 257.40 million and Baht 15.30 million, respectively, were also approved by such meeting.

NOTE 28 - LEGAL RESERVE Legal reserve of the Company 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 10% of the authorized share capital. This reserve is not available for dividend distribution.

Annual Report 1998 Advanced Info Service Plc.

NOTE 29 - PROVIDENT FUND The provident fund of the Company and its subsidiaries complies with the Provident Fund Act B.E. 2530. The fund is independently maintained and therefore does not appear in the balance sheets.

NOTE 30 - COMMITMENTS Lease Agreements Other than those commitments under lease agreements as described in Note 3 to the financial statements, the Company and its subsidiaries have entered into lease agreements covering spaces for branch offices, base stations, cars and others for periods ranging from 2 months to 20 years with options to renew. The Company and its subsidiaries are committed to pay for rental in respect of the said agreements as follows: Million Baht Per Month Advanced Info Service Public Company Limited 16.12 Advanced Info Service Public Company Limited and subsidiaries 20.80 Bank Guarantees At December 31, 1998, the Company and its subsidiaries had commitments with banks whereby the latter issued letters for guaranteeing the Company and its subsidiaries in respect of business contracts, electricity use, customs duties and others in the following amounts: Million Baht For Advanced Info Service Public Company Limited 3,964.82 For Advanced Info Service Public Company Limited and subsidiaries 4,136.16 Contracts for Construction and Equipment Installation of Mobile Phone Network At December 31, 1998, 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 1,431.67 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 for rental 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 Agreements In order to hedge against the risk of possible losses from future repayments of loans and the payments of related interest, deriving from exchange rates and interest rates under loans in foreign currencies, the Company has entered into six interest rate and currency exchange agreements to exchange the US dollar loan principals from US$ 76,824,731.97 to Baht 1,990,740,460.80, and to exchange the related loan interest rates on US dollar principals (comprise a fixed rate of 6.88% per annum and 6 month LIBOR plus the rate per annum as prescribed in each agreement) to the fixed rates on Baht principals ranging from 9.68 - 10.935% per annum. Value dates of those six agreements are covering from January 15, 1997 to January 15, 2001. As of December 31, 1998, outstanding loan principals under those agreements amounted to US$ 50,680,406.65, and their value dates are covering from January 15, 1999 to January 15, 2001. Forward Exchange Contracts In order to hedge against the risk of exchange losses from future repayments of foreign currency loans and the payments of related interest, notes payable to foreign supplier and foreign trade accounts payable, the Company has entered into twenty-three currency exchange agreements to exchange loans, interest, notes payable to foreign supplier and trade accounts payable from a total amount of US$ 76,788,667.54 to Baht 3,218,013,366.48. Value dates of these twenty-three agreements are covering from January 4, 1999 to December 30, 1999.

Annual Report 1998 Advanced Info Service Plc. Principal Only Swap Contracts In order to hedge against the risk of exchange losses from future repayments of foreign currency loans and the payments of related interest, the Company has entered into ten currency exchange agreements to exchange loans, and interest from a total amount of US$ 64,500,000 to Baht 2,445,650,000. Value dates of these ten agreements are covering from January 1, 1999 to March 30, 2000. Interest Rate Exchange Agreements In order to hedge against the risk of losses from interest payments, which may derive from the fluctuation of interest rates under foreign loans, the Company has entered into eleven interest rate exchange agreements, to exchange the related interest rates on US dollar loan principals of US$ 153,635,790 (comprise 6 month LIBOR plus the rate per annum as prescribed in each agreement) to the fixed rates on US dollar loan principals ranging from 5.43 - 6.34% per annum. Periods of those eleven agreements are covering from October 9, 1997 to September 15, 2002. As of December 31, 1998, outstanding loan balances relating to those interest rate agreements amounted to US$ 147,635,790, and are covering from September 15, 1998 to September 15, 2002. Letters of Credit At December 31, 1998, the Company's subsidiary had commitments under letters of credit with overseas suppliers amounting to approximately Baht 20.37 million. Purchase Orders As at December 31, 1998, the Company had purchase commitments with respect to the construction and installation of equipment for the operations of mobile phone network amounting to approximately Baht 79.03 million.

NOTE 31 - COMPUTER REMEDY PLAN FOR THE YEAR 2000 (UNAUDITED BY THE AUDITORS) The Year 2000 problem arises because many computerized systems use two digits rather than four to identify year. Datesensitive systems may recognize the year 2000 as some other dates, resulting in errors when information using year 2000 dates is processed. Entities may experience the effects of Year 2000 problem before, on, or after January 1, 2000, and that the effects on operations and financial reporting, if not addressed and repaired properly and timely, may range from minor errors to significant systems failure which could affect an entity's ability to conduct normal business operations. In addition, it is not possible to be certain that all aspects of the Year 2000 problem affecting the entity, including those related to the efforts of customers, suppliers, or other third parties, will be fully resolved. The management of the Company and subsidiaries have instructed their Management Information System Divisions to study the existing computer systems, applications and hardware to develop a computer remediation plan for the year 2000. As of December 31, 1998, the computer remedy projects of the Company and its subsidiaries had not been completed. Estimated expenditure of the computer remedy projects for the Company and its subsidiaries amount to approximately Baht 55 million. Expenses incurred in the current year relating to Year 2000 projects for the Company and its subsidiaries amounted to approximately Baht 1.68 million. Expenditure of the computer remedy projects will be recorded as assets if the replacement of computer systems, applications and hardware are made; and will be recorded as period costs when incurred if the modifications for year 2000 compliance are made. Although computer remedy projects of the Company and its subsidiaries are expected to be completed and can be implemented before the year 2000, the Company and its subsidiaries still face risks that other parties with which the Company and its subsidiaries do business may be unsuccessful in their computer remedy projects within the time limit. However, the Company and its subsidiaries expect that the impact, if any, will not be significant to the operations of the Company and its subsidiaries.

NOTE 32 - SUBSEQUENT EVENTS On January 6, 1999, the Board of Directors of Advanced Info Service Public Company Limited passed a resolution to approve the additional investment in 14,000,000 common shares of Shinawatra Paging Company Limited, Baht 67.83 per share.

Annual Report 1998 Advanced Info Service Plc. On February 10, 1999, the Extraordinary Shareholders' Meeting of Advanced Info Service Public Company Limited passed a resolution to approve the issuance of 36,000,000 common shares to sell specifically to Singapore Telecom International at Baht 230 per share.

NOTE 33 - RECLASSIFICATION OF ACCOUNTS Certain accounts in the 1997 financial statements have been reclassified to conform with the 1998 presentation.

Annual Report 1998 Advanced Info Service Plc. Annex 1 The Opinion of Finacial Advisor and Independent Directors related to the Share Purchase of Shinawatra Wireless Marketing Co., Ltd. Transaction The Opinion of Finacial Advisor We refer to the Board of Directors’ resolution of Advanced Info Service PLC (“ADVANC” or “the Company”) No. 4/1998 dated November 12, 1998, wherby the Company and Shinawatra Computer & Communication PLC (“SHIN”) propose to enter into an agreement pursuant to which the Company will acquire 99.99% of Shinawatra Wireless Marketing Co.,Ltd.’s (“SWM” or “the Acquiree”) common stock for an all cash consideration at a price of not more than Baht 700 million. Because SHIN currently holds a 54.34% stake in ADVANC and a 99.99% stake in SWM, this acquisition transaction is considered to be a connected transaction based on the Stock Exchange of Thailand’s regulations. Merrill Lynch Phatra Securities Company Limited (“MLP”) has been asked by ADVANC to render its opinion as to whether or not the proposed cash consideration to be paid by the Company in the acquisition transaction is fair and reasonable from a financial point of view. We understand ADVANC’s basic objectives in this transaction are; a) to eliminate potential conflicts of interest between its minority shareholders and SHIN, as the major shareholder of both ADVANC and SWM, b) to provide ADVANC more marketing flexibility, c) to more rapidly put into place a more comprehensive and integrated marketing strategy including well-trained sales staff and technicians, and point-of-sale and service outlets, and d) to offer ADVANC benefits from a well-established brand name, “Mobile and Accessories from Shinawatra”. In arriving at the opinion set forth below, we have, among other things: 1.) Reviewed certain publicly available business and financial information relating to the Acquiree that we deemed to be relevant; 2.) Reviewed certain information, including financial forecasts, relating to the business, earnings, cash flow, assets, liabilities and prospects of the Acquiree; 3.) Conducted discussions with member of senior management and representatives of the Acquiree concerning the matters described in clauses 1 and 2 above; 4.) Reviewed the valuation multiples for the Acquiree shares and compared them with those of certain publicly traded companies that we deemed to be relevant; 5.) Reviewed the results of operations of the Acquiree and compared them with those of certain publicly traded companies that we deemed to relevant; 6.) Conducted a discounted cash flow (DCF) analysis based on projected operating cash flows of the Acquiree; 7.) Feviewed the Acquiree’s financial statements (as of September 30, 1998) that were extracted from those of its parent company, SHIN and reviewed by the independent outside auditor for the Company, SHIN and the Acquiree; 8.) Reviewed such othe financial stufies and analyses and took into acount such other matters as we deemed necessary, including our assessment of general economic, market and monetary conditions. In preparing our opinion, we have assumed and relied on the accuracy and completeness of all information supplied or otherwise made available to us, discussed with or reviewed by or for us, or publicly available, and we have not assumed any responsibility for independently verifying such information or undertaken an independent evaluation or appraisal of any of the assets or liabilities of the Acquiree. In addition, we have not assumed any obligation to conduct any physical inspection of the properties or facilities of the Acquiree, we have assumed that they have been reasonably prepared and reflect the best currently available estimates and judgment of the Acquiree’s management as to the expected future financial performance of the Acquiree. Our opinion is necessarily based upon the market, economic and other conditions as they exist and can be evaluated on, and on the information made available to us as of, the date hereof. We have assumed that in the course of obtaining the necessary consents or approvals (contractual or otherwise) for the Transaction, no restrictions, amendments or modifications, will be imposed that will have a material adverse effect on the contemplated benefits of the Transaction. We have, in the past, provided financial advisory and financing services to the Company and may continue to do so and have received, and may receive, fees for the rendering of such services. In addition, in the ordinary course of our business subjected to regulartory requirements, we may actively trade the Company Shares for our own account and for the accounts of customers.

Annual Report 1998 Advanced Info Service Plc. This opinion is for the use and benefit o the outside directors of the Company. Our opinion does not address the merits of the underlying decision by the Company to engage in the Transaction and does not constitute a recommendation to any shareholder of the Company as to how such shareholder should vote on the proposed Transaction or any matter related thereto. We are not expressing any opinion herein as to the prices at which the Company Shares will trade following the annoucement or consummation of the Transaction. Based on the valuation methodologies described earlier, including DCF and publicly traded comparable analysis, the maximum offer value of Baht 700 million was within the derived valuation range. On the basis of and subject to the foregoing, we are of the opinion that, as of the date hereof, the Consideration to be paid by the Company pursuant to the Transaction is fair and reasonable from a financial point of view. The Opinion of Independent Directors We, Mr. Supadej Poonpipat, Mr. Vithit Leenutapong and Mr. Arun Churdboonchart as the independent directors of Advanced Info Services Plc. (“hereinafter called “the Company”) would like to inform that according to the resolutions passed by the Company’s board of directors to purchase the shares of Shinawatra Wireless Marketing Co., Ltd. (SWM) from Shinawatra Computer and Communications Plc. (SHIN) with the total purchasing amount not more than 700 Million Baht and according to the natual agreement between SHIN’s and the Company’s Management to trade SWM’s shares at the amount of 600 mllion Baht is informed by the Company’s is letter dated 20 November, 1998 to SET; We, the independent directors of the Company, have already reviewed this transaction with the opinion in the conformity with the resolution of the Company’s board of directors and the opinion from independent financial consultant to the extent that the price of SWM’s shares at 600 million Baht is fair and the transaction is justifiable.