ADVANC : Annual Report 1999

Page 1

financial highlights

Unit: Million Baht 1999

1998

18,327.77

14,881.13

6,885.88

224.98

25,872.69

17,449.47

Gross Profit

9,282.82

5,289.26

Net Profit

2,750.06

1,446.52

Total Assets

39,864.16

38,079.39

Total Liabilities

18,338.78

27,000.54

Total Shareholder’s Equity

21,525.38

11,078.85

1999

1998

Net Profit Margin

10.63%

8.29%

Return on Equity

12.78%

13.06%

Return on Assets

6.90%

3.80%

10.37

6.18

-

-

81.18

47.35

Operational Results Revenues from Services and Equipment Rentals Sales Total Revenue

Financial Ratios

Net income for the year per share (Baht) Dividend per share (Baht) Book Value per share (Baht) As of December 31, 1999

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message from the chairmen

Dear Shareholders: Year of 1999 marked an early phase of economic recovery for Thailand after being hit with severe crisis, which had crippled businesses since 1997. It was also a remarkable year for Advanced Info Service Public Company Limited (AIS) for that it had achieved its target of 1,000,000 mobile subscribers base. The number of subscribers had continuously increased since March 1999. Total new subscriber addition for the year was 250,900, bringing the balance of accumulated subscribers to 1,230,200 as at the end of the year. In addition, 1999 was also the year when significant adjustment had taken place to further strengthen the Company’s financial position and to lift the Company’s standard to the international level—a strong telecommunication player from Singapore became our strategic partner. The operational performance for the period ending on 31 December 1999 can be summarized as follows : Operating Results and Net Profit Effective management, expense control, preservation of premium network and service quality, customer satisfaction, and continuous innovation of new products—all of which had significantly contributed to a remarkable improvement in 1999 performance compared to 1998. Total revenue was Baht 25.873 billion, increased from Baht 17.449 billion in 1998—Baht 8.424 billion—or 48.28% growth year-on-year. Net profit of Baht 2.750 billion, after an adjustment of change in amortization cost of mobile phone network under concession agreements, increased from Baht 1.446 billion in 1998—Baht 1.304 billion—or 90.18% growth. Mobile Phone Network Development The Cellular 900 and Digital GSM network superiority has widely been regarded, not only as the broadest geographical coverage in Thailand, but also as the most effective round-the-clock service. Throughout 1999, AIS has continuously invested in network development, both in coverage area expansion and in service quality enhancement using new technology. Ninety-three base stations have been added to the Cellular 900 network, while two hundred seventy-four base stations have

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been added to the Digital GSM network. The balances as at the end of 1999 were 29 telephone exchanges and 1,475 base stations for Cellular 900 network and 17 telephone exchanges and 1,573 base stations for Digital GSM network. We have also inspected and prepared our mobile network and computer systems in compliance with the requirement for the year 2000. Market Development As the leader in the network service provider market, AIS commands a market share of 48% and has a total of 1,230,200 subscribers in Cellular 900 and Digital GSM. AIS has also introduced prepaid mobile phone service in Digital GSM system under the commercial name of “One-2-Call!” The new service is to target new customers who have a need to limit usage. Furthermore, AIS has extended international roaming agreements to cover 60 countries on 117 networks, compared to 47 countries on 81 networks originally in 1998. GSM subscribers can now automatically use mobile phones across USA. New value-added services have also been added for Cellular 900 increasing from 16 services in 1998 to 24 services in 1999. And for Digital GSM, there are a total of 41 value-added services in 1999, up from 28 services in 1998. Service Quality Development AIS is fully aware of the importance of service quality and after-sale service. The new service under the name of “Services on the Net” has been implemented where customer can check service fees and outstanding balance and make payments via internet. Beginning in 1998, AIS has also established “Priority Care Center” and “Minute Plus” project to ensure the best care of the existing subscribers. Customer service branches have been revamped with modern facilities to provide convenience to customers, while customer service personnel has undergone “The AIS Way” training program in order to provide the highest standard of service quality. In addition, AIS has appointed countrywide service representatives extending services throughout the country to provide convenience and reach out to the customers even in remote areas. Liberalizati on AIS is closely monitoring every step of the telecommunication liberalization process—frequency allocation act, radio and television broadcasting act, telecommunication act, and revenue conversion currently under the Government’s consideration. We are confident to inform that AIS is ready for the telecommunication liberalization, which is expected to materialize in the near future. We would like to thank all of you—shareholders, customers, business partners, and staffs—for continuing support and taking part in our outstanding performance achievement. With our clear business policy together with our high-capacity personnel, AIS should be able to maintain the leading position in telecommunication sector.

Mr. Paiboon Limpahayom (Ph.D.)

Mr. Somprasong Boonyachai

Chairman of the Board of Director

Chairman of the Executive Committee Wireless Communication

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leadership by capitalizing on new opportunities The dynamic marketing strategies of AIS have successfully broadened

The key factor ensuring Advance Info Service Plc. (AIS) to maintain its leadership in Thailand’s mobile phone business is the Company’s dynamic marketing strategy to capitalize on new opportunities. To create as well as respond to consumers’ fast-changing needs and demands, AIS continuously expands its mobile phone networks, constantly improves its service and cutting edge technology.

its market base through product and network development and by creating an appeal to specific segments of target consumers, from businessmen and small business owners to the young generation and teenagers. AIS network coverage is extensive and efficient, while various services in addition to receiving and making calls are conveniently in place. Currently, AIS offers Cellular 900, Digital GSM, and prepaid One-2-Call! systems. It is our mission to expand our services to the full range of wireless communications. Mobile telephones no longer communicate solely with sound but are equipped to send and receive the latest news and information vital to businesses and everyday life in this information age. The next step in product development at AIS is characterized by variety and personalized services. Infrastructural installations are well on their way to accommodate internet connections and complete non-voice applications. These new developments will ensure state-of-the-art services and the greatest benefits for subscribers. With the management team of highly-qualified professionals in various fields, AIS has attained remarkable achievements in all aspects. Despite the economic crisis and intense competition, AIS has gained wider market expansion, stronger financial status. To guarantee the

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5


leadership by capitalizing on new opportunities

Company the edge in business operations, AIS has successfully undertaken organization restructuring. The Company is confident that it will continue to lead the way in Thailand’s wireless communications business.

L e a d i n g E d g e N e t w o r k Two of the most important aspects of wireless communications business are highly-efficient equipment and extensive AIS has continued to develop comprehensive networks nationwide. By the end of 1999, the Company has expanded its Cellular 900 network by setting up 29 mobile telephone exchanges and 1,475 base stations. The Digital GSM system is supported by 17 exchanges and 1,543 base stations. Additionally, AIS mobile telephone services will soon be connected to the internet.

network. The engineering arm of AIS is therefore constantly improving and developing new technologies, especially in basic network expansion, to enhance maximum sound quality and coverage. Subscribers can enjoy greater convenience, i.e. better connections and sound quality while communicating in areas with transmission deficiency. More and more buildings have been equipped with GSM signal enhancement for better connections. By the end of 1999, AIS has expanded its Cellular 900 network to 29 mobile telephone exchanges and 1,475 base stations. The Digital GSM system

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is supported by 17 telephone exchanges and 1,543 base stations. With 200 million US dollars set aside, the Company is also planning to develop and expand the network to accommodate new subscribers and new technologies. AIS mobile telephone services will soon be connected to the internet.

Q u a l i t y P r o d u c t AIS’s market share of 48% is its testimony of on-going development in all aspects. New services are frequently introduced

The AIS international roaming feature is well-received by subscribers who use the mobile telephone during their foreign travel. As of 1999, this feature covers 60 countries and 117 networks worldwide. In the US, for instance, international roaming is available to AIS subscribers in almost all states.

such as the prepaid “One-2-Call!� service, which has proved to be very popular among target consumers, and the international roaming feature which caters to subscribers involved in international business. As of 1999, this feature covers 60 countries and 117 networks worldwide. In the US, for instance, international roaming is available to AIS subscribers in virtually all states. 7


Other brand new services are also in the making. AIS is gearing up for non-voice applications to meet demands in information transfer via the internet including Mobile Commerce. In response to the rapidly increasing needs of the information age, new technologies will soon be available such as SIM ToolKits, Mobile Banking, and WAP, allowing subscribers to surf the internet via the mobile phone no matter where or when. “One-2-Call!”, the prepaid service, was introduced in 1999 to expand AIS customer base. The service has proved to be very popular among target consumers— teenagers, the young generation, and other subscribers who use their mobile telephones minimally.

B e t t e r S e r v i c e Recognizing the importance of both product quality and subscriber support in mobile telephone business, AIS has established the AIS Priority Call Center and AIS Priority Care Center nationwide to

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leadership by capitalizing on new opportunities

Recognizing the importance of after-sale services in mobile telephone business, AIS has established the AIS Priority Call Center and AIS Priority Care Center to provide comprehensive assistance to subscribers in Bangkok and other provinces nationwide.

provide comprehensive assistance to subscribers in Bangkok and in other provinces throughout the country. Furthermore, AIS has developed internet services known as “Service on the Net” via www.ais900.com to provide convenient communication access between the Company and dealers as well as between subscribers and AIS. “Service on the Net” offers a variety of services such as mobile telephone registration, telephone charge record, payment via the net, outstanding payment check, etc. 9


leadership by capitalizing on new opportunities

R e a d y f o r L i b e r a l i z a t i o n AIS is confident in its strengths in all aspects—a well-qualified team of management and operations experts, extensive network coverage nationwide, constantly-updated products and services of international standards, and strong strategic partner such as Singapore Telecom International Pte Ltd. When concession amendment and the master plan in telecommunications development take effect to make way for market liberalization, the Company is ready to compete with new operators in the business. In 1999, AIS formed strategic partnership with Singapore Telecom International Pte Ltd. (STI) in order to develop and consolidate its cellular telephone business, increasing its competitive edge for the coming market liberalization. STI now holds 20% of AIS.

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With years of experience and superb expertise, AIS knows inside out the Thai market—the culture and behavior of the Thai consumers. At the same time, we are always on top of the latest telecommunications technologies. Backed by more than one million subscribers, AIS has every reason to believe that, after market liberalization, the Company will emerge, as always, the ultimate leader in telecommunications business in Thailand.


time chart

Advanced Info Service Plc.

April 24, 1986

Advanced Info Service Plc. (AIS) was established with registered

capital of Baht 5 million to run a computer rental business. March 27, 1990 AIS was granted an exclusive 20-year concession by the Telephone Organization of Thailand (TOT) to operate a mobile telephone services using 900 MHz. October 1, 1990 AIS launched its first services of cellular 900 MHz with analogue system. November 5, 1991 AIS was registered a public company and listed on the Stock Exchange of Thailand. June 1992 The Company acquired Shinawatra DataCom Co., Ltd. (SDC) who was granted by TOT a 10-year concession to operate a data communication network from its parent company, SHIN. In September 1997, the concession agreement was changed to join venture agreement, resulting TOT owns 23.5% stake of SDC. The Company acquired Shinawatra Paging Co., Ltd. (SPG) who was granted by TOT a 15-year concession to operate the nationwide paging service “Phonelink” from SHIN. April 29, 1993 The Company increased its paid-up capital from Baht 750 million to Baht 780 million. October 1994 The Company launched new service of cellular 900 MHz called “Digital GSM” (Global System Mobile Communications) November 16, 1994 The Company increased its registered capital from Baht 1,000 million to Baht 5,000 million and paid-up capital from Baht 780 million to Baht 2,340 million September 20, 1996 AIS was granted by TOT to extend its concession periods from 20 years to 25 years. However, TOT could grant license to new operators as well. December 20, 1998 The Company acquired investment in Shinawatra Wireless Marketing Co., Ltd. (SWM), importer and distributor of cellular 900 mobile phone, from its parent company in order to reorganize business structure of the Group. In March 2, 1999 SWM has changed its name to Advanced Wireless Marketing Co., Ltd. (AWM). 11


time chart

Advanced Info Service Plc.

February 19, 1999 The Company increased its paid-up capital from Baht 2,340 million to Baht 2,700 million by issuing 36 million new shares for Private Placement to Singapore Telecom International Pte Ltd. (STI). This was to strengthen financial status of the Company as well as enhance the competitive capability after liberalization of the telecommunication industry in the near future. The Company acquired additional 40% stake of Shinawatra Paging Co., Ltd. from Thai Page Pte Ltd., the affiliate of STI Group, resulting the Company’s shareholding in SPG up to 100% . March 2, 1999 Shinawatra Paging Co., Ltd. and Shinawatra Wireless Marketing Co., Ltd. has changed its name to Advanced Paging Co., Ltd. (APG) and Advanced Wireless Marketing Co., Ltd. (AWM) respectively. June 1999 The Company launched a new service “One-2-Call!” which is prepaid Digital GSM mobile phone service. September 1999 The Company has changed the Company’s auditor from KPMG Audit (Thailand) Co., Ltd. to PricewaterhouseCoopers ABAS Ltd. effective as of the third quarter of 1999. October 1999 The Company acquired additional 40% stake of Shinawatra DataCom Co., Ltd. (SDC) from STI, resulting the Company’s shareholding in SDC up to 68%. Recently, SDC has changed its name to Advanced Datanetwork Communications Co., Ltd. since February 23, 2000.

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Subsidiary and Associated Companies

The Company and its subsidiaries, in which it holds more than 10% stake Company

Business

Registered

Par Value

Paid-Up

% of

Capital

(Baht per

Capital

Investment

(Million

Share)

(Million

Share)

Advanced Info Service Plc.

Service provider of

Head Office : 414 Phaholyothin Road

cellular phone networks for

Samsennai, Phayathai, Bangkok

NMT 900 and Digital GSM

Baht)

270

10

2,700

-

24

10

240

99.99

35

10

350

99.99

45.752

10

457.52

67.95

0.10

10

1

49.00

Tel. (662) 299-5000 Fax. (662) 299-5719 Branch: 1291/1 Phaholyothin Road Samsennai, Phayathai, Bangkok Tel. (662) 299-6000 Fax. (662) 299-6005 Advanced Wireless Marketing Co., Ltd.

Importer and distributor of

414 Phaholyothin Road

cellular phones and

Samsennai, Phayathai, Bangkok

accessories, and provider

Tel. (662) 299-5000

of NMT 900 and Digital

Fax. (662) 299-5470

GSM phone rental service

Advanced Paging Co., Ltd.

Service provider of the

1291/1 Phaholyothin 9

digital paging system

Samsennai, Phayathai, Bangkok

network, trading of pagers

Tel. (662) 299-6000

and providing pager for

Fax. (662) 299-6446

rent under the name of “Phonelink�

Advanced Data Network

Service provider of

Communications Co., Ltd.

nationwide voice/data

500 Amarin Tower, 17/F, Ploenchit Road

communications via

Lumpini, Pathumwan, Bangkok

telephone line network

Tel. (662) 256-9461 to 80 Fax. (662) 256-9922 Data Network Solutions Co., Ltd.

Service provider of high-

500 Amarin Tower, 17/F, Ploenchit Road

speed data

Lumpini, Pathumwan, Bangkok

communications network

Tel. (662) 256-9461 to 80 Fax (662) 256-9922

As of February 29, 2000

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Other Reference Persons Security Registrar

Thailand Securities Depository Co., Ltd. 62 Ratchadapisek Road, Kwaeng Klongtoey, Khet Klongtoey, Bangkok Tel. (662) 359-1200 to 01 Fax. (662) 359-1259

Auditor

Mr. Prasan Chuapanich

CPA. No. 3051

Mr. Suchart Luengsurasawat

CPA. No. 2807

Miss Nangnoi Charoenthaveesub CPA. No. 3044 PricewaterhouseCoopers ABAS Ltd. 179/74-80 Bangkok City Tower, 15/F South Sathorn Road, Bangkok 10120 Tel. (662) 286-9999, 344-1000 Fax. (662) 286-5050 Financial Advisor for Bond Offering

SCB Advisory Co., Ltd. 111-B SCB Park Plaza, West Tower I, 11/F 18 Ratchadapisek Road, Lardyao, Chatuchak Bangkok 10900 Tel. (662) 937-5059

Bond Registrar

Siam Commercial Bank Public Company Limited 9 Ratchadapisek Road, Lardyao, Chatuchak Bangkok 10900 Tel. (662) 544-3866 - 76

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Report of the Audit Committee

To the Shareholders of Advanced Info Service Public Company Limited The Audit Committee has conducted its responsibilities in compliance with Charter of the Audit Committee approved by the Board of Directors. Meeting of the Audit Committee has been held quarterly through the preceding year to review financial statements of the Company and its subsidiaries before submitting to the Board of Directors. The recommendations were conducted on subject matters related to audit results of the internal auditing control systems and comprehensive plans of Internal Audit Office by using a mean of business risk assessments. The Audit Committee has also discussed regarding the disclosure of significant information technologies of the Company and also given particular advise with respect to management procedures where upon a kind cooperation of the Company’s Management, external auditors and internal auditors has fully met. In our opinion, the Company’s operation performance presents good corporate governance with transparency, integrity and ethics, including sufficient internal controls measurement. The financial statements are prepared in conformity with appertaining laws and regulations to disclose an appropriate and adequate information. There are no significant weaknesses found in the internal control systems. The Audit Committee proposed the Board of Directors to consider approval for the appointment of PricewaterhouseCoopers ABAS Ltd. as the Company’s Auditors for the accounting year of 2000.

Suphadej Poonpipat Chairman of Audit Committee, April 3, 2000

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Nature of business

Advanced Info Service Plc., “the Company,” operates Nordic Mobile Telephone (NMT) and Digital Global System Mobile (GSM) telephone services through 900 MHz frequency under concession agreements with the Telephone Organization of Thailand (TOT) dated March 27, 1990 and Memorandum of Agreements attached thereto. The Company has to pay a revenue sharing of 15% of its gross service revenue to TOT in the first 5 years. The rate shall be increased by 5% every subsequent 5-year throughout the 25-year concession period, with a cap of 30% or the minimum amount as stipulated in the agreement for year 16-25. Such concession is a “build-transfer-operate” (BTO) type under which the Company shall make investment and assume responsibilities for fund raising and the costs in connection therewith. After installation, the entire system shall fall into the ownership of TOT, and the Company shall be entitled to use the system for the operation of NMT and Digital GSM mobile phone services under the concession agreements. Mobile phone services can be divided into 2 systems as followed: ●

The NMT system transmits radio signals through ultra high frequency (UHF). This means in any period of time, it can provide service to only one pair of speakers within one channel 905-915 MHz for reception and 950-960 MHz for transmission. The Company has opted for this system during the initial stage of mobile phone service and has installed mobile switching centers and base stations extensively throughout the country. Later, when the Digital GSM with higher efficiency and more advanced features has been introduced, the Company has segmented subscriber base and marketed the products according to their requirements. That is, the NMT is positioned to serve subscribers with basic service needs who live outside Metropolitan areas and require nationwide coverage.

The Digital GSM transmits signals through Time Division Multiple Access (TDMA). This special technique enables one pair of frequencies (reception/transmission) to accommodate conversation of subscribers up to 8 access lines at the same time or 8 times more than the NMT. The digital GSM is a well-recognized system with services provided in over 60 countries around the world. The frequencies between 897.5 - 905 MHz are used for reception while the frequencies between 942.5950 MHz are used for transmission. In the future, mobile phone will advance to the third generation, to which Digital GSM system can easily be enhanced. The advancement will bring change to the services. There will not be only voice transmission, but also data transmission, which transmits in high quantity at high-speed. The new services will include of data transmission in the forms of multimedia and Internet/Intranet applications. In addition, the new mobile phones will be of the same standard throughout the world, and they will be light and small. Digital GSM subscribers will be those who live in Bangkok and other Metropolitan areas who require advanced telecommunication technology.

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Investment in other firms: Advanced Wireless Marketing Co., Ltd. (AWM) AWM has a registered capital of Baht 240 million, all of which is fully paid. Advanced Info Service Plc. holds 100% stake. AWM, formerly known as Shinawatra Telewiz Co., Ltd., distributes NMT and Digital GSM mobile phones under a franchise system. The Company’s name has been changed to Shinawatra Wireless Marketing Co., Ltd. on December 25, 1997, and subsequently to Advanced Wireless Marketing Co., Ltd. on March 2, 1999. AWM is now an importer and distributor of NMT, Digital GSM mobile phones, and other telecommunication equipment. AWM also operates phone rental service, after-sale service and repair center, sale of refill cards for “One-2-Call!” mobile phones and I-Station (Internet Counter) at Bangkok (Don Muang) International Airport. Advanced Paging Co., Ltd. (APG) APG has a registered capital of Baht 350 million, all of which is fully paid. Advanced Info Service Plc. holds 100% stake. APG, formerly known as Shinawatra Paging Co., Ltd., operates “Digital Display Paging” service under the name of “Phonelink” under a BTO concession from TOT. The concession period is 15 years from June 12, 1990 to June 11, 2005. “Phonelink” is the first nationwide paging service that sends messages in texts. There are additional value-added services, such as “Express Link to Phonelink” “Short Message to Phonelink” “Voice Mail Plus” “Voice & Fax Mail Plus” “Stock Broadcast” “Stock Package” “Stock Tracking” and “Moneylink”. Advanced DataNetwork Communication Co., Ltd. (ADC) ADC has a registered capital of Baht 457.52 million, all of which is fully paid. Advanced Info Service Plc. holds 67.95%, while TOT and others hold 23.50% and 8.55% of its outstanding shares respectively. ADC is formerly known as Shinawatra Datacom Co., Ltd. The name has been changed to ADC on February 23, 2000. ADC has been granted a concession by TOT to operate On-line Data Communication service via telephone lines under the name of “Datanet.” The services include linking computers at different premises, linking ATMs, and linking banks’ online computer system. The services have commenced in 1990. ADC provides links in forms of Point-to-Point, Point-to-Multipoint, X.25, Frame Relay and ATM. Major customers include banks, oil tanks, airlines, transportation and trading businesses. Currently ADC commands 11% market share; while the TOT, the market leader, has 60% market share. So far, ADC has a backbone network capable of providing services nationwide. Data Network Solutions Co., Ltd. (DNS) DNS has a registered capital of Baht 1 million, all of which is fully paid. Advanced Info Service Plc. holds 49%, while Bangkok Telecom Engineering Co., Ltd. holds the other 51% stake. Originally DNS was established to provide On-line Data Communication in the provincial areas, as ADC was restricted by the concession agreement to provide service only in Bangkok. However in September 1997, TOT granted ADC a permission to operate nationwide. As such, DNS is currently providing service only to existing subscribers and selling equipment not related to the service.

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Shareholding Structure of the Group Company

Shin Corporations Plc.

Advanced Info Service Plc.

Advanced Wireless Marketing Co., Ltd.

Advanced Paging Co., Ltd.

Advanced Data Network Communications Co., Ltd.

Data Network Solutions Co., Ltd.

Shin Satellite Plc.

C.S. Communications Co., Ltd.

C.S. Satellite Phone Co., Ltd.

Shenington Investments Pte Ltd.

Cambodia Shinawatra Ltd.

Lao Telecommunications Co., Ltd.

As of February 29, 2000

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Teleinfo Media Co., Ltd.

SC Matchbox Co., Ltd.

IT Applications Service Co., Ltd.

Shinawatra Information Technology Co., Ltd.

AD Venture Co., Ltd.

Merry International Investment Corp.


Structure of income of the group of Companies (Unit: Million Baht) Product/Service

Operator

% of

1999

1998

Holding

Mobile Telephone Service Advanced Info Service Plc.

(Restated) Revenue

%

Revenue

%

-

16,687.92

66.19

13,323.79

88.20

99.99

6,747.88

26.76

Distributor of Mobile

Advanced Wireless Marketing

Phones

Co., Ltd. (AWM)

-

-

Paging Service and

Advanced Paging Co., Ltd. (APG)

99.99

1,607.09

6.37

1,619.45

10.72

On-line Data

Advanced Data Network

67.95

170.76

0.68

162.86

1.08

communications Service

Communications Co., Ltd. (ADC)

25,213.65

100.00

Distributor of Pagers

via Telephone Line

Data Network Solutions Co., Ltd. (DNS)

49.00

Total

15,106.10 100.00

As of December 31, 1999

Note

1. The Company holds 99.99% of AWM shares since December 20, 1998 and consolidates into the Company’s financial statement in 1999. 2. The Company holds 99.99% of APG shares since February 19, 1999 3. The Company holds 67.95 of ADC and 49.00% of DNS since October 20, 1999 respectively.

Major Events of the Company in 1999 January 1999: *

Standard & Poor’s changed the Company’s credit rating from BBB to BBB-, in line with the country’s credit rating.

February 1999: *

The Company’s shareholders meeting passed the following resolutions: 1. Approval of increase in paid-up capital from Baht 2,340 million to Baht 2,700 million by issuing 36 million new shares for private placement to Singapore Telecom International Pte Ltd. (STI) at a price of Baht 230 per share. Proceeds are for expansion of mobile phone network. 2. Approval of amendment to the Company’s Articles of Association to allow foreigners to hold shares of the Company up to 49.99%. 3. Approval of purchase of 40% of ordinary shares of Advanced Paging Co., Ltd. (formerly known as Shinawatra Paging Co., Ltd.) at Baht 67.83 per share, total equivalent to Baht 949.60 million, from Thai Page Pte Ltd., which is an affiliated company of STI.

*

STI acquired 18.63% stake of the Company and the Company acquired additional 40% stake in APG, bringing the Company’s shareholding in APG up to 100%.

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July 1999: *

The Company launched a new service “One-2-Call!” which is prepaid Digital GSM mobile phone. The service can be activated instantly with neither registration nor monthly fee, and refill cards can conveniently be purchased at various outlets. “One-2-Call!” is position to target young customers.

September 1999: *

The Extraordinary General Meeting of Shareholders passed a resolution to change the Company’s auditor from KPMG Audit (Thailand) Co., Ltd. to PricewaterhouseCoopers ABAS Ltd. effective as of the third quarter of 1999.

*

Change in accounting policy. Previously the Company has previously amortized the cost of NMT and GSM mobile telephone network equipment over the remaining period of the concession agreement, commencing from the date of equipment installation to September 2015. Under the new accounting policy, such cost is amortized over the period the underlying systems equipment assets are expected to contribute revenue and cash to the business. The cost of mobile telephone network equipment for the NMT system is amortized on a straight-line basis over a period of 10 years, not exceeding year 2005. Digital GSM system is amortized on a straight line basis over a period of 10 years, not exceeding the concession period. The Company’s management considers that this presents more fairly the economic substance and benefits expected to flow from use of these assets under the terms of the concession agreement.

October 1999: *

The Board of Directors Meeting passed a resolution for the Company to purchase 18,339,386 ordinary shares of Advanced DataNetwork Communications Co., Ltd. (ADC), formerly known as Shinawatra Datacom Co., Ltd.; and 49,000 ordinary shares of Data Network Solutions Co., Ltd. (DNS) for the total price of Baht 281 million from Singapore Telecom International Pte Ltd., one of the Company’s major shareholders. The Company foresees that Thailand’s telecommunication is moving into information technology phase, whereby data communications show an increasing trend in addition to the current, pure voice communications. Moreover the “Datanet” business (the online data communications service via telephone line of ADC and DNS) has a great potential to grow and to add value to the Company. Besides, the purchase also enhances synergy behind strategic moves of ADC and DNS. The transaction accounts for 1.22 percent of the existing assets of the Company. It is regarded as relevant transaction according to Cl. 9 of SET’s Announcement on the Disclosure of Relevant Transactions of Listed Companies under which the Company has to report to SET on the transactions without seeking shareholders meeting’s approval.

December 1999: *

The Company’s shareholders meeting passed the following resolutions: 1. To cancel the remaining portion of the approved, but not issued, unsecured bonds in the amount of Baht 3.5 billion. Previously upon the resolution of Extraordinary General Meeting of Shareholders No. 2/1997 on October 16, 1997, the issuance of up to Baht 5.0 billion of unsecured bonds was approved. The rationale for the cancellation was that details and conditions of approved, but not issued, bonds were not in line with the current bond market. 2. To approve the issuance and offer for sale of unsecured bond to investors in an amount not exceeding Baht 10.0 billion and/or equivalent in other currencies, with maturity not exceeding 10 years from the date of issue. The bonds were to be offered domestically and/or internationally to the public and/or institutional investors in whole or in part which could be single or multiple offerings. In case that there was redemption, within the amount approved the Company can replace it with an additional bond of the same nature and under the conditions and amount as stipulated. Additional restrictions and conditions of the bond (such as face value, per-unit offered price, interest rate, appointment of bondholders’ representatives, allocation method, offering details, early redemption, an account to be established to receive the proceeds from the sale of the bond, and listing in one or more of the securities exchange markets) shall be considered and decided by the Executive Committee and/or person assigned by the Board of Directors.

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*

The shareholders meeting approved establishment of fund for foreign investors (Thai Trust Fund) and granted the Fund to invest or possess the shares of the Company at the ratio not exceeding 2.5% of the total issued shares (around 6.75 million of the 270 million paid-up shares). The purpose is to support foreign investment in the Stock Exchange of Thailand. The foreign investors shall be entitled to all monetary benefits, while the management control still remains with the Thai management.

January 2000: *

The Company was ranked by “Asia Money” an Asian well-renowned financial magazine, as Thailand’s No.2 “Overall Best Managed Company” for 1999, second only to its parent company, Shin Corporations Plc. which was ranked the first. The methodology was that the 176 fund management community was asked to rate which companies in Thailand perform best in a series of criteria: corporate strategy, management of financial accounts, reliable forecasting, treatment of minorities, access to senior management, and investor relations.

February 2000: *

The Securities Exchange Commission and Stock Exchange of Thailand approved the Company’s Thai Trust Fund, and trading of the units commenced.

March 2000: *

The Company offered for sale of Baht 8.0 billion, 3-year, unsecured, un-subordinated debentures to institutional and retail investors. Interest rate is 6.5% p.a. payable semi-annually on September 20 and March 20 of every year and calculated based on outstanding balance of principal. The principal is to be repaid in 4 equal installments (25% of the face value) commencing on September 20, 2001.

21


Industry Situation & Competition

Industry Situation and Competition Telecommunication Industry Structure Telecommunication industry in Thailand is under controlled by two main organizations, the Communications Authority of Thailand (CAT) and the Telephone Organization of Thailand (TOT) which are responsible by the Ministry of Transportation and Communication. Nevertheless, frequency control and management are under the Post and Telegraph department’s responsibility. Not only taking care and control telecommunication industry, but TOT also provides fixed line telephone service for domestic as well as frontier countries surrounding Thailand while CAT provides international telephone service. Moreover, both TOT and CAT also provide mobile phone service but network coverage is limited. Being realized that telecommunication is one of the most important factors for Thai economy development, Thai government offered the opportunities to the private sector by providing concession to the high potential organizations. The objectives are to encourage advancement of basic telecommunication service and reduce investment burden of the government. Under concession agreement, a concessionaire has to provide of build the infrastructure and transfer these properties to the originate state owned enterprise after concession expiry. Furthermore, a concessionaire has to pay the installment of revenue sharing on percentage basis during concession period. However, the payment must excess the guarantee minimal payment stated in the agreement otherwise the concessionaire need to pay at the minimal charge. To ensure the fair rate for mobile user, the CAT and TOT under control the tariff rate, deposit fee and other fees charged to a mobile subscriber. During the concession period, a network operator will gain its revenue from registration fee, monthly fee and airtime charge. Currently, there is no charge for mobile phone incoming call except for the international roaming usage. Presently, the concession, issued by TOT, CAT and the Post and Telegraph department for telecommunication services including fixed line telephone, mobile phone, and pager, are concluded as following

Type of Service

Concession Originator

Fixed Line TA

TOT

TT&T

TOT

Mobile Phone

22

TAC

CAT

ADVANC (The Company)

TOT


Type of Service

Concession Originator

Pager Worldpage

TOT

Phonelink

TOT

Hutchison Pagephone

TOT

Paclink

CAT

Easycall

CAT

Post Tel

The post and Telegraph Dept.

Mobile phone industry Prior to the outbreak of economic crisis in Asia, Thailand was experiencing a remarkable economic growth enabling broad expansion in the mobile phone industry. During the economic crisis from 1997 to 1998, the growth of mobile phone users declined from 19% in 1997 to 11% in 1998. However, the number of users per 100 people (penetration rate) increased from 3.2 % in 1997 to 3.6 % in 1998.

Mobile Phone Penetration Rate in 1998

Country

Mobile Phone’s Penetration Rate (%)

Hong Kong

44.0

Japan

30.9

Korea

30.3

Singapore

29.8

Taiwan

21.0

Malaysia

10.6

Thailand

3.6

Philippine

2.4

China

2.0

Indonesia

0.5

India

0.1

Source : Taiwan Cellular Sector, July 9, 1999 by Credit Suisse First Boston

23


In 1999, the mobile phone industry growth rate was at its peak of 22%. The penetration rate was at 4.4 access line per 100 people, which was still low compared to other countries of comparable economic development. The low penetration implies high growth potential for mobile phone usage, especially when fueled by the following factors. *

Bangkok’s traffic congestion made mobile phone a necessity for everyday life.

*

Provincial and national economic recovery enhanced purchasing power and increased market demand.

*

Insufficiency of fixed line telephones, especially in the provincial areas.

*

The launch of prepaid mobile phone service allowed penetration to cost-conscious, limited-budget, or low-usage customers. Market growths of prepaid mobile phone in Asia and Europe had been 700% and 170% respectively. (Source : Thai Cellular by Lehman Brothers, November 19, 1999)

*

Market segmentation and effective distribution channels improved services and reach to target groups - sale of prepaid mobile phones and refill cards in convenience stores and gas stations.

*

Increase in functionality and value-added services helped improve sale of mobile phones.

*

Continuous decline in handset price: 20-25% in 1999 and likely to continue in 2000

Although near-term demand for mobile phones may have been affected by the economic downturn, the Company expects the above factors to bring about a satisfactory demand growth in the long run. The penetration rate is expected to reach 8% by 2004-2005.

Market & Competitive Environment Currently there are five mobile phone operators providing services on seven systems: 1. TOT : NMT-470 (analog) 2. CAT : AMPS-800 (analog) and CDMA-800 (digital) 3. Total Access Communications Plc. (TAC) : WorldPhone 800 (Analog) and PCN-1800 (Digital) 4. Advanced Info Service Plc. (the Company) : NMT-900 and Digital GSM 5. Digital Phone Co., Ltd. (DPC) : PCN-1800 via network of TAC

24


Comparison of Mobile Telephone Service in Thailand

System

1. System Operator

NMT 900

Advanced Info

Digital GSM

Advanced Info

AMPS 800

1. Communication

PCN 1800

NMT 470

1.Total Access

Telephone

Service Plc.

Service Plc.

Authority of

Communications

Organization of

(The Company)

(The Company)

Thailand (CAT)

Plc.

Thailand (TOT)

2. Total Access

2. SAMART

Communications

Corporation Plc.

Plc. 2. Radio base station coverage radius

3. Portability

City: 0.5-4.0 km.

City: 0.8-5.0 km.

City: 0.5-4.0 km.

City: 10-1.5 km.

Province/Highway:

Province/Highway:

Province/Highway:

Province/Highway:

20-35 km.

20-35 km.

20-35 km.

10 km.

Portable

Portable

Portable

Portable

16 km.

Large, briefcaselike or car mount

4. Quality of Voice

Good

Very Good

Good

Very Good

Inferior

5. Phone Number

None

None

None

None

Sufficient

Service/Coverage

Nationwide:

Nationwide:

Nationwide:

Nationwide:

Nationwide:

Areas

76 provinces and

76 provinces and

76 provinces

76 provinces with

76 provinces

main highways

main highways

limitations 6.

emphasis in major districts

7. Network Expansion

Sufficient to

Continuous

Expansion limited

coverage 8. International

-

Roaming 9. Handset Price

Expansion limited

No expansion

maintain call quality expansion for wider by budget constraint by budget

More than

constraint -

Less than GSM

-

PCN1800 Bt. 8,900-15,500

Bt. 11,900-59,000

Bt. 6,900-25,900

Bt. 9,600-39,900

Bt. 55,000-65,000

12 brands

15 brands

10 brands

7 brands

9 brands

(excluding registration fee and deposit) 10. Brands of Handsets available in Thailand Source : Company’s Information

25


Market research has suggested that in 1999 demand for analog NMT system mobile phone was declining, while the demand for Digital GSM was moving upward. In term of market share, The Company and TAC, the two market leaders, command 48% and 43% market shares respectively. This is attributed to extensive network coverage and effective distribution channels, which could accommodate such rapid growth in market demand. The other operators have relatively small subscriber bases and, even worse, are financially limited in terms of investment. Their competitiveness is thus limited. Among these small operators, Digital Phone Company Limited (DPC) is the most prominent player controlling around 145,000 subscribers as at December 1999. However, DPC is still facing limitation in network expansion in Bangkok and, thus, needs to depend on TAC’s network. Market Share at end of 1999 (excluding PCT)

Operators

Approximate Market Share (%)

ADVANC

48

TAC

43

DPC

6

Others

3

Total

100

Source : Company’s information

Competition from related industry Even after the 4.1-million fixed line telephone project completed, mobile phone industry is still on the go. Unlike a mobile phone, a fixed line has several limitations, for instances, *

Accessibility Despite the 4.1-million fixed line telephone project, the service still does not cover every area due to the geographical inaccessibility. Mobile phone, on the other hand, has many media, for instance, microwave, fiber optics, and satellite, to deploy in different landscape or environment. These technical alternatives give a mobile phone superior accessibility all over the region.

*

Response time Fixed line installation normally proceeds with a very slow speed. Thus, it is difficult to promptly reponse to users’ need.

*

Portability & Convenience Subscribers can bring a mobile phone anywhere, use it whenever they need to, making it convenient to use.

*

Coverage area In spite of the coming of PCT by Telecom Asia, the situation is unpredictable. Taking an example from PCT in Japan where subscribers were decreasing from 7.1 million to 5.6 million. Even though PCT has a price advantage, its network quality, and coverage area (restricted only in metropolis and vicinities) render PCT competitive only in a small arena.

26


Key success factor for service operators *

Coverage area is one of the most important factors. The fact that the rate of a mobile phone/user in upcountry is as low as 1.8% (vs. 16.6% in BKK, as of 1999) implies the promising, expandable target in the future.

*

Network quality is the necessity to efficiently respond to customer based expansion. It affects, as a result, the quality of usage i.e. amount of dropped calls, ease of incoming/ outgoing calls.

*

Financial stability is a resource to facilitate a service operator to continuously expand its network.

*

Marketing strategies that serve customer’s need, for instance, variety of services / product, after sales services and price, must answer to users’ requirements.

*

Overall service standard, for example, responsiveness, accessibility, prompt response to problem solving and services quality. With an equal amount of investment, The Company has larger coverage area than its competitors, thanks to the qualification of Frequency 900. Its solid financial status, in addition, enhances further network expansion to increase customer satisfaction as well as prepare for multiplying customer base. Customer care programs, i.e. Priority Call Center, Priority Care Center, Minute Plus, as well as any newly developed value added services, are arranged to continuously serve its subscribers.

Opportunities and threats Opportunities 1. When compared with other countries, both of the fixed line and mobile phone penetration rates in Thailand are very low, especially in upcountry. Moreover, fixed line service is deficient, yielding room for growth for mobile phone industry. 2. In the past, a mobile phone was a product primarily for high to upper-medium income group. Nowadays, however, the lower price of handset and new product, Prepaid, expand the industry’s customer base. 3. The increasing demand of International Roaming accounts for the increase in revenue. 4. From technology development, a mobile phone is not limited to only voice communication. In the near future, a mobile phone will become a medium to data communication, as well as Internet integration. Threats According to the 8th National Economic and Social Development Plan, telecommunications liberalization will render the market more competitive. However, the plan is proceeding with a slow pace. Newcomers, moreover, will face several obstacles (high investment, market knowledge, lead-time for network installment) Therefore, any impacts from newcomers should not affect in a near future.

27


Shareholders and Management3

Shareholders

Shareholders’ Name

1. Shin Corporations Plc.

Number of shares

% of Shareholding

109,300,000

40.48

2. Singtel Strategic Investments Pte Ltd.

50,300,000

18.63

3. Chase Nominees Limited 1

10,853,374

4.02

4. HSBC (Singapore) Nominees Pte Ltd.

9,279,810

3.44

5. State Street Bank and Trust Company, Boston

8,393,444

3.11

6. Thailand Securities Depository Company Limited for Depositors

6,175,233

2.29

7. HSBC Bank Plc.

4,419,846

1.64

8. The Bank of New York (Europe) Ltd.

4,215,822

1.52

9. Bankers Trust Company

3,475,273

1.29

10. The Bank of New York Nominee Ltd.

2,886,513

1.07

As of December 8, 1999

Note: 1. Shin Corporations Plc. is a holding company, which have the major shareholders as follows: 1.1

Shinawatra family 36.88%,

1.2

Ample Rich Investment Ltd. which is a holding company, 100% owned by Shinawatra family,

1.3

Singapore Telecom International Pte Ltd. which is a holding company and a consulting firm in technical and management or telecommunications business. This company is 100% owned by Singapore Telecom Mobile Pte Ltd.

2. As of December 8, 1999, Thailand Securities Depository Company Limited - for Depositor appeared on the share registration book. This was due to the fact that non-Thai shareholders exceeded the Company’s restriction which stated that aggregate amount of shares held by non-Thais shareholders must not exceed one half of the total issued shares of the Company. Thus, Share Registrar has registered such share under Thailand Securities Depository Company Limited for Depositors in order to avoid infringement of law and the Company’s restriction.

28


Management Team Board of Directors

Executive Committee

Audit Committee

Management

Mr. Paiboon Limpaphayom, (Ph.D.)Chairman of the Board of Directors Mr. Withu Ruksvanichpongs

Vice Chairman of the Board of Directors

Mr. Boonklee Plangsiri

Director

Mr. Somprasong Boonyachai

Director

Mrs. Siripen Sitasuwan

Director

Mr. Allen Lew Yoong Keong

Director

Mr. Chow Wing Keung Lucas

Director

Mr. Suphadej Poonpipat

Independent Director

Mr. Vithit Leenutaphong

Independent Director

Mr. Arun Churdboonchart

Independent Director

Mr. Somprasong Boonyachai

Chairman of the Executive Committee

Mr. Boonklee Plangsiri

Executive Committee

Mr. Arak Chonlatanon

Executive Committee

Mrs. Siripen Sitasuwan

Executive Committee

Mr. Allen Lew Yoong Keong

Executive Committee

Mr. Suphadej Poonpipat

Chairman of the Audit Committee

Mr. Vithit Leenutaphong

Audit Committee

Mr. Arun Churdboonchart

Audit Committee

Mr. Somprasong Boonyachai

Chairman of the Executive CommitteeWireless Communications

Mr. Allen Lew Yoong Keong

Chief Operating Officer

Mr. Vikrom Sriprataks

Senior Executive Vice President - Engineering

Mrs. Suwimol Kaewkoon

Senior Executive Vice President - Service Operation

Miss Yingluck Shinawatra

Executive Vice President - Service Operation

Mr. Sukit Teerawatanawit

Vice President - Asset and Data Network

Mr. Wichian Mektrakarn

Vice President - Technical

Mr. Wutiporn Chaipayorm

Vice President - Transmission Project Manager

Mr. Weerawat Kiattipongthaworn

Vice President - Metropolitan Operation and Maintenance

Mrs. Arpattra Sringkarrinkul

Vice President - Information System Support

Mr. Walan Norasetpakdi

Vice President - Wireless Controller

Col. Prawat Nigarnkul

Assistant Vice President - Site Acquisition and Maintenance

Mr. Vorachat Herabat

Assistant Vice President - Metropolitan Operation

Mr. Annop Petchariya

Assistant Vice President - Upcountry Operation

Mr. Pattarasak Uttamayodhin

Assistant Vice President - Human Resource

Mrs. Suvimon Kulalert

Assistant Vice President - Internal Audit

Mr. Somchai Lertsuthiwong

Assistant Vice President - Business Relation

Mr. Supoch Vathitphund

Acting Assistant Vice President - Legal

Mrs. Wilai Keangpradoo

Public Relation Manager

Mr. Attapol Sariddipantawat

System Support Manager

Mrs. Walaiporn Khajeenikorn

Administration and Purchasing Manager

Miss Sansanee Gumpalanuwat

Accounting Manager

Miss Sunitaya Shinawatra

Finance Manager

29


Remuneration for Directors and Management Team

Total Director’s Remuneration in 1999 composed of: Total salary

27,480,000

Total bonus

4,675,800

Baht

900,000

Baht

33,055,800

Baht

Total Salary

40,747,200

Baht

Total bonus

6,469,900

Baht

-

Baht

47,217,100

Baht

Total Salary

36,126,000

Baht

Total Bonus

6,298,500

Baht

900,000

Baht

43,324,500

Baht

Total Allowance Total Remuneration

Baht

Total Executive Committees’ Remuneration in 1999 composed of:

Total Allowance Total Remuneration Total Top 15 Management’s Remuneration in 1999 composed of:

Total Allowance Total Remuneration

30


Related Companies and Related Transactions

Related Companies 1. OAI Assets Co., Ltd. Company’s Profile Nature of Business

Rental of office space in Shinawatra Tower 2

Major Shareholders

Shinawatra family: 100%

Directors

1. Mrs. Potjaman Shinawatra 2. Mr. Chanon Suwasin 3. Mrs. Kanchanapa Honghern

Relationship with ADVANC

Major shareholder of ADVANC’s parent company holds 100% in OAI Assets Co., Ltd.

Size of Transaction

The Company and its subsidiaries pay rental and service fee for office space at the rate of Baht 450-800 per square meter. Total rented space is 14,686.32 square meter and total rental fee amounting to Baht 134.68 million.

2. Worth Supplies Co., Ltd. Company’s Information Nature of Business

Office space rental

Major Sharehlders

Shinawatra family: 100%

Directors

1. Miss Pranee Vejchaplukpitak 2. Mrs. Busaba Damapong 3. Mrs. Kanchanapa Honghern 4. Mr. Chanon Suwasin 5. Mr. Surathian Chaktharanon

Relationship with ADVANC

The major shareholder of ADVANC’s parent company holds 100% in Worth Supplies Co., Ltd.

Size of Transaction

The Company and its subsidiaries pay for rental and service fee for office space as the following: 1. Maisson Maneeya Tower: 1 Phaholyothin Soi 9, Samsennai, Payathai, Bangkok, at the rate of Baht 200-360 per square meter. Total rented space was 1,634 square meters, of which the agreement has been cancelled since June 1999. 2. Chiang Mai Branch: 115-116 Tah-Pae Road, Chiang-Mai, at the rate of Baht 100-360 per square meters. Total rented space is 1,954.4 square meters, and total rental fee was Baht 18.10 million.

31


3. P.T. Corporations Co., Ltd. Company’s Information Nature of Business

Office space and warehouse rental

Major Shareholders

Shinawatra family: 100%

Directors

1. Mrs. Potjaman Shinawatra 2. Mr. Chanon Suwasin 3. Mrs. Kanchanapa Honghern

Relationship with ADVANC

The major shareholder of ADVANC’s parent company holds 100% in P.T. Corporations Co., Ltd.

Size of Transaction

The Company and its subsidiaries pay rental fee at the rate of Baht 147-420 per square meter. Total warehouse space rented is 3,797.58 square meters, and the total rental fee is Baht 21.32 million.

4. UpCountry Land Co., Ltd. Company’s Information Nature of Business

Land rental for ADVANC’s switching centers and base stations in upcountry.

Major Shareholders

Shinawatra family: 100%

Directors

1. Mr. Surathian Chaktharanon 2. Mr. Chanon Suwasin 3. Mrs. Kanchanapa Honghern

Relationship with ADVANC

The major shareholder of ADVANC’s parent company holds 100% in UpCountry Land Co., Ltd.

Size of Transaction

The Company pays monthly fixed rental and service fees for 88 locations, totaling Baht 83.65 million.

5. SC Asset Co., Ltd. Company’s Information Nature of Business

Rental of office space in Shinawatra Tower 1

Major Shareholders

Mr. Bhanapot Damapong: 66.67%

Directors

1. Mr. Bhanapot Damapong 2. Mr. Surathian Chaktharanon 3. Mrs. Busaba Damapong 4. Mrs. Duangruetai Kasisopa 5. Miss Boonchou Rianpradub

Relationship with ADVANC

Chairman of the Board of ADVANC’s parent company holds 66.67% in SC Asset Co., Ltd.

Size of Transaction

The Company pays rental fee at the rate of Baht 170 per square meter, totaling Baht 35.86 million.

6. SC Office Park Co., Ltd. Company’s Information Nature of Business

Rental of office space in Shinawatra Tower 1

Major Shareholders

Shinawatra family: 100%

Directors

1. Mrs. Potjaman Shinawatra 2. Mr. Chanon Suwasin 3. Mrs. Kanchanapa Honghern

Relationship with ADVANC

The major shareholder of ADVANC’s parent company holds 100% in SC Office Park Co., Ltd.

Size of Transaction

The Company and subsidiaries pays rental fee at the rate of Baht 250-460 per square meter. The total rental space is 8,831.5 square meters, totaling Baht 17.64 million.

32


7. OAI Leasing Co., Ltd. Company’s Information Nature of Business Major Shareholders

Automobile Rental 1. Shinawatra family: 45% 2. SC Asset Co., Ltd.: 55%

Directors

1. Mrs. Potjaman Shinawatra 2. Mrs. Busaba Damapong 3. Mr. Chanon Suwasin 4. Mrs. Kanchanapa Honghern

Relationship with ADVANC

The major shareholder of ADVANC’s parent company holds 45% in OAI Leasing Co., Ltd.

Size of Transaction

The Company pays for automobile purchase and rentals, totaling of Baht 34.73 million.

8. Singapore Telecommunication Pte Ltd. Company’s Information Nature of Business

Telecommunication service provider and Investment Holding

Major Shareholders

Temasek Holdings (Private) Ltd.: 79.38%

Directors

1. Koh Boon Kwee 2. Wong Hung Khim 3. BG Lee Hsien Yang 4. Paul Chan Kwai Wah 5. Lim Ho Kee 6. MG Lim Chuan Poh 7. Quek Poh Hual 8. Seah Kian Peng 9. Jaspal Singh 10. Keith Tay Ah Kee

Relationship with ADVANC

Parent company of ADVANC’s major shareholder

Size of Transaction

1. The Company pays for International Roaming fee, amounting to Baht 334.84 million. 2. Accounts receivable, amounting to Baht 37.50 million.

9. Singapore Telecom International Pte Ltd. Company’s Information Nature of Business

Holding company and providing technical and management consultant for telecommunication businesses

Major Shareholders

Singapore Telecom Mobile Pte Ltd.: 100%

Directors

1. BG Lee Hsien Yang 2. Chua Sock Koong

Relationship with ADVANC

Singapore Telecom International Pte Ltd. is in the same group company as a major shareholder of the ADVANC.

Size of Transaction

The Company bought 18,339,386 ordinary shares of ADC (formerly know as Shinawatra Datacom Co., Ltd.) and 49,000 ordinary shares of DNS from Singapore Telecom International Pte Ltd. at a total price of Baht 281 million. Such transactions are accounted for 1.22% of the accounting value of tangible assets of the Company - regarded as related transactions according to SET’s Announcement on the Principle and Method of Revealing Related Transactions of Listed Companies (Cl. 9). The Company is required only to report to SET

33


the agreements on the transactions without having to seek approval of the shareholders meeting. As financial consultant, SCB Advisory Service Co., Ltd. is of the opinion that the Thai telecommunication business is entering the information era. The “Datanet” has a great potential to grow and to add value to the Company. Using discounted cash flow method, the Company assessed the value of the shares with various assumptions agreed upon by the sellers and the buyers. The share value results obtained from such method are different from those obtained by calculation of book value of each company. Using the book value according to the purchase portion, ADC is worth Baht 191 million, and DNS is Baht 6 million, resulting in goodwill of Baht 82 million and Baht 2 million. The consultant is of the opinion that “Datanet” business is related to the Company’s business, the selling price is agreed upon by both parties, and such transactions do not require any resolution from the shareholders meeting. Size of Transaction

The Company pays for technical consulting and management fee, totaling Baht 14.09 million.

10. Shin Corporations Public Company Limited (SHIN) Company’s Information Nature of Business Major Shareholders

Holding company Mrs. Potjaman Shinawatra: 25.00% Pol. Col Thaksin Shinawatra (Ph.D.): 11.875% Ample Rich Investment Pte Ltd.: 11.875%

Directors

1. Mr. Bhanapot Damapong 2. Mr. Paiboon Limpaphayom (Ph.D.) 3. Mr. Boonklee Plangsiri 4. Mrs. Siripen Sitasuwan 5. Mr. Paron Isarasena Na Ayudhaya 6. Mr. Lee Shin Koi 7. Mr. Olarn Chaiprawat, (Ph.D.) 8. Mr. Thanong Bidaya, (Ph.D.) 9. Mr. Sirin Nimmanheminda

Relationship with ADVANC

Shin Corporations Plc. is the ADVANC’s major shareholder

Size of Transaction

SHIN sold its shares in Advanced Wireless Marketing Co., Ltd. (AWM) (formerly known as Shinawatra Wireless Marketing) to the Company totaling of 23,999,997 shares or 99.99% amounting to Baht 600 million on a condition that three fourth of the non-related party in the shareholders’ meeting vote approving the transaction as the transaction was a related transaction pertaining to Rules and Regulations of the SET.

Comments of Independent Directors

The independent directors agreed with resolution of the Board of Directors of the Company and Merill Lynch Phatra Securities Co., Ltd, the independent financial advisor that the selling price of Baht 600 million was a fair price and reasonable on financial aspect considered from Discounted Cashflow Analysis Method and Market Comparison Method.

Size of Transaction

1. The Company and its subsidiaries paid for management and consulting fee of Baht 75 million. 2. The Company paid interest on bond amount to its parent company of Baht 41.59 million.

34


Transactions between The Company, its subsidiaries and its associated companies 1. Advanced Wireless Marketing Co., Ltd. Company’s Information Nature of Business

Distributor of 900-MHz and GSM mobile phones and “Telewiz” franchise operator

Major Shareholders

Advanced Info Service Plc.: 99.99%

Directors

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

Relationship with ADVANC Size of Transaction

ADVANC’s subsidiary The Company pays Baht 41.14 million for Bill Collection Service. Creditor - marketing, commission fee and others amount to Baht 11.64 million.

2. Shin Satellite Plc. Company’s Information Nature of Business

Leasing of Satellite transponders

Major Shareholders

Shin Corporations Plc.: 51.53% (As of February 29, 2000)

Directors

1. Mr. Paron Isarasena na Ayudhaya (Ph.D.) 2. Mr. Rianchai Reuwilaisook 3. Mr. Dumrong Kasemset (Ph.D.) 4. Mr. Boonklee Plangsiri 5. Mr. Arak Chonlatanon 6. Mrs. Siripen Sitasuwan 7. Miss Nongluck Pianainitisart (Eng.D.) 8. Mr. Kowit Vorapipatana (Ph.D.) 9. Mrs. Nilaya Malakul Na Ayudhaya 10. Mrs. Charintorn Vongspootorn

Relationship with ADVANC

Major stake held by the same parent company

Size of Transaction

The Company paid for satellite transponders lease of Baht 114.63 million.

3. Shinawatra Information Technology Co., Ltd. Company’s Information Nature of Business

Distributor of computer peripherals and telecom equipment

Major Shareholders

Shin Corporations Plc.: 99.99%

Directors

1. Mr. Boonklee Plangsiri 2. Mr. Somkiat Paloprakarn 3. Mrs. Busaba Damapong 4. Mr. Arak Chonlatanon 5. Mrs. Siripen Sitasuwan 6. Miss Jurairat Romlumdoun

Relationship with ADVANC

Major stake held by the same parent company

Size of Transaction

1. The Company paid for consulting and management fee (Computer System), amounting to Baht 17.64 million. 2. The Company purchased the Computer Software amounting to Baht 15 million.

35


4. SC Matchbox Co., Ltd. Company’s Information Nature of Business

Designing, Advertising and Publishing Services

Major Shareholders

Shin Corporations Plc.: 74.96%

Directors

1. Mr. Bhanapot Damapong 2. Mr. Arak Chonlatanon 3. Mr. Sanchai Tuewprasertkul 4. Mr. Songsak Pramesuk 5. Mr. Chatchai Sanoerkam 6. Mr. Niwat Boonsong 7. Mr. Banpot Boonyanit

Relationship with ADVANC

Major stake held by the same parent company

Size of Transaction

1. The Company paid for advertisement amounting to Baht 459.95 million. 2. Accounts payable of the Company amounting to Baht 109.81 million.

5. Teleinfo Media Co., Ltd. (formerly known as Shinawatra Directories Co., Ltd.) Company’s Information Nature of Business

Publisher and nationwide distributor of White and Yellow Pages directories.

Major Shareholders

1. Shin Corporations Plc.: 50.99% 2. Telephone Organization of Thailand: 49%

Directors

1. Mr. Niwat Boonsong 2. Mr. Somchai Sinjananurak 3. Mr. Surachart Kukasemrat 4. Miss Jurairat Romlumdoun 5. Miss Yingluck Shinawatra 6. Mr. Somboon Kuptimanus 7. Mr. Pongpan Manoros 8. Mr. Wichian Naksrinuan 9. Mr. Pisit Tumrongsiriwat 10. Mrs. Tipawan Wuitsan 11. Mr. Sayan Tinsumran

Relationship with Company

Major stake held by the same parent company

Size of Transaction

The Company paid for marketing service amounting to Baht 17.83 million.

The Opinion of Independent Director and Audit Committee on Related Company Transactions Independent Director and Audit Committee have considered the related companies and related company transactions in the part of expenses and have stated that the above transactions are in the normal course of business of the Company. The Company has continuously performed an appropriate price in conformity with the market situation and did not have the significant effect on its revenue and assets. As per other related company transactions shown in the Company’s financial statement as in the Note 39 - Related companies transactions the Audit Committee has stated that during the year the Company has performed the normal course of business with related companies. All prices for products and services agreed by all parties are in line with prices charged to or paid by other unrelated companies and under normal business terms and conditions.

36


Risk Factors

Risk Factors can be classified into 4 categories as follows: Risks involving Technology and Operation Risk from loss of management Success in business operation can be attributed to dedication and managerial skills of the Company’s management. Thus, loss of management team can adversely affect the business operation. However, the Company will continue to train and develop new management team to mitigate such risk. Risk from change in technology In the long run the analog NMT system will be replaced by the digital GSM system. Many manufactures has already ceased production of the analog NMT mobile phones and begun concentrating on the production of digital GSM which is more sophisticated and can easily evolve to the Third Generation. In the near term, however, such technological change shall not affect the Company because many subscribers, mostly in provincial areas, still only require mobile phones with basic functions, and analog NMT can still satisfy their requirements. Moreover, the Company has already signed contracts with overseas manufacturers for supply of parts and equipment to ensure that the service on this system can continue for another 10 years without shortage of equipment. Substitute product to digital GSM is not likely to emerge because most of major manufacturers around the world are developing the Third Generation mobile phone based on digital GSM platform. Therefore, the Company’s development-to-date of digital GSM system will be a good stepping-stone into new technologies in the future. Development of the Third Generation mobile phones requires significant investments, and the new technology is developed by overseas market leaders/manufacturers. Thus, such new technology may not immediately suit the Thai market because there may be only limited group of customers who require such high technology. Therefore, market readiness and financial feasibility should be closely considered before the introduction of new, leading-edge technology to the Thai market.

37


Risk from unsuccessful bill collections Currently the Company bills customers in the Post-paid Program on monthly basis. As such, the Company is subject to risk of incurring bad debts due unsuccessful bill collections. However, the Company has implemented a number of measures to mitigate such risk. For instance, all customer accounts are closely monitored by a computer system; any account with excessive overdue payments will be suspended. Moreover, the “Fraud Management” system has been implemented to detect unusual usage and take action before hand to avoid bad debts. The Company’s new product “One-2-Call!” is a prepaid program, which airtime and service fees are paid in advance through refill card. Therefore, it’s automatically free of bad debt problem. Risks from competition Competition with new operators & alternative services At present, there are 5 mobile phone service operators, but the Company and Total Access Communications Plc. (TAC) have a combined market share of 91% of the total mobile phone service market in Thailand. This is because both the Company and TAC have wide network coverage and high capacity covering the entire area of Bangkok and other densely populated areas countrywide. Despite the risk of competition coming from new operators, the barriers to entry can be summarized as follow. *

Investment in network layout and expansion to the size comparable to the Company’s and TAC’s

*

Time required for network development to achieve the standard set by the Company’s

*

Large subscriber base provide the Company with competitive edge with respect to economies of scale

*

Radio frequency limitation is still an obstacle for newcomers

*

Persuading subscribers to switch from one system to another is quite a difficult task due to expenses incurred (i.e. new handset, registration fee, etc.) In addition, brand loyalty has already been built since the Company has provided quality service for a many years.

Apart from the 5 existing service providers, the 2 other alternative services worth considering are PCT of Telecom Asia Plc. (TA), officially launched toward the end of 1999, and the 1900 MHz frequency digital phone service jointly developed by TOT and CAT. PCT is not likely to be a substitute of mobile phones due to the following reasons. *

Limitation on reception/transmission base stations. Much higher investment is required to extend coverage, PCT currently only covers Bangkok.

*

Technical limitation on “slow hand-off speed” limits PCT from being in a vehicle traveling at a high speed.

*

Sharing of the same number with fixed-line telephone at home disables concurrent use of PCT and fixed-line.

The development of the digital 1900 MHz system has not been significantly carried out. A great amount of time and capital expenditure are required to build a network, comparable to digital GSM of the Company in terms of coverage and capacity. Financial and Economic Risk Interest Rate Risk On December 31, 1999, the Company’s long-term liabilities can be divided into two parts: Baht 1,500 billion long-term debentures and USD 90.77 million long-term loans. The Company’s Thai Baht debentures having fixed interest rate implies no exposure to interest rate fluctuation. As of December 31, 1999, 61.29% of the outstanding balance of long-term loans denominated in foreign currencies have been swapped from floating interest rate (referenced to LIBOR) to a fixed rate. As such, the Company has satisfactorily reduced the risk from interest rate fluctuation.

38


Foreign Exchange Rate Risk *

Risks associated with repayment of foreign currency-denominated loans As of December 31, 1999, USD 62.45 million or approximately 68.8% of USD 90.77 million long-term loans has been hedged at an average rate of Baht 38.15 per US dollar. Although currently there is not much fluctuation in the foreign exchange rate, the Company still closely monitors it to limit foreign exchange risk exposure.

*

Risks associated with investment Due to rapid change in technology, the Company must constantly invest in new technology which is denominated in foreign currencies; hence being exposed to fluctuation in the foreign exchange rate. Any depreciation of Thai Baht against foreign currencies implies automatic increase in investments. To avoid such risk, agreements with suppliers are made in such way that payments shall be made at an exchange rate, agreed upon in advance. Alternatively, hedging instruments are also used. In addition, the fluctuation in the foreign exchange rates reflects stability of macroeconomics, which affects all operators, not only the Company. The fact that the Company has a policy to raise funds locally, in stead of borrowing foreign loans, can also to some extent alleviate risk from foreign exchange fluctuation.

Economic Risk Mobile phones can be considered as consumer products. Hence the country’s economic condition directly impacts the demand of mobile phones. For instance, during economic contraction, consumer’s purchasing power declines. To counter this, the Company introduced a new product “One-2-Call!,” a prepaid mobile phone service which handsets and service fee are less expensive, so that consumers with lower incomes can afford the service. Moreover, introduction of new value-added services should also increase the Company’s service revenue. Risk associated to amendment of laws, regulations, and government’s policies The Government has a commitment to the World Trade Organization (WTO) to liberalize telecommunications industry by the year 2006. The fact that the Company operates under a concession granted by the Telephone Organization of Thailand (TOT) forces the Company to review its position for the new competitive environment. Under the new telecommunications Master Plan, an independent regulatory body has to be established in order to manage the allocation of the radio, television, and telecommunications frequencies. The body must also act as the monitor, rule maker and amend relevant laws relating to all telecommunications landscape. Such tasks must be accomplished by October 10, 2000 before the Government Organization Act; Telegraph & Telephone Act of 1934; Telephone Organization of Thailand Act of 1955; Communications Authority of Thailand Act of 1976; and other telecommunication, radio, television and communication radios acts are repealed under the new constitutions.

39


As a result, the Company and other service operators under the concessions granted by TOT, CAT and Post & Telegraph Department must convert revenue sharing agreements in order to comply with telecommunications liberalization. Methodology for the revenue conversion to arrive at the Government compensations is to discount future revenue sharing, as stipulated in the concession agreements, back to present using Net Present Value (NPV) calculation for the period of the remaining concession lives and the same discount rate for all operators. This is to eliminate the concession fees and create plain-level field for free competitions. However, such compensation calculation is still a subject of dispute among the Government agencies. The Ministry of Transport & Communications is of the opinion that the concessionaires should only have to include in the calculation the concession fees for up to 2006 because after liberalization there should not be any such fee involved. The concept that the existing concessionaires having to pay concession fees after the liberalization implies unfair competitions. On the other hand, the Ministry of Finance has employed Thailand Development and Research Institute (TDRI) to conduct research. TDRI suggests that the concessionaires are still obliged to compensate for all concession fees, as stipulated in the agreements, even after liberalization because their concession agreements are not appertaining to “monopolized with the state” and that all of those existing agreements have already been amended and no longer engaged with any protection. Thus, they cannot be attributable to use as a basis for refusal to pay concession fees after liberalization. The differences between the two ministries have caused a delay in revenue conversion process. However, the State Enterprise Policy Commission (SEPC) is in favor of the Finance Ministry to use TDRI’s proposal, and the concessionaires must calculate the compensations based on the assumption that payment of concession fees carries on until the end of the concession lives. However, the payments of the compensations can be extended to 10-15 years after the liberalization instead of before, and discounts in service fees given to the consumers can be deducted from the compensations. After the SEPC has agreed on such conditions, the methodology still needs approval from the Cabinet. Subsequently revenue conversion committee shall be established to map out detail frameworks and act as the arbitration between the state enterprises and the concessionaires. To date, it is still unclear as to how such task will be accomplished. Analysis of risk associated with revenue conversion under the framework of SEPC indicates that the Company should not be greatly affected even if it decides to proceeds with the revenue concession process. The ability to postpone the compensation payment to 10-15 years matches the remaining life of the Company’s concession, which is 15 years. Also the service-fee-discount deduction from the compensation gives the Company a competitive advantage because it enables the Company to compete with new operators in terms of pricing during the time of liberalization. Given the principle of liberalization, all policies should be within the framework to promote fair competition. Although the concession agreement between TOT and the Company has been amended in 1996 to lift market protection and allow new operators to enter the market, but it does not mean that the state can set forth new terms and conditions differing from those stipulated in the original concession agreement. In case that the Company is of the opinion that the revenue conversion will have more adverse effects than the original one, it may refuse to proceed with the conversion process. The fact that the revenue conversion procedures are still unclear, the impact to the Company should not be felt in the next 3 years.

40


Apart from the revenue conversion issue, the industry liberalization still has many implications. Policy on allocation of frequency, which is a scarce resource, and policy on granting permission to the operators to use public utilities for business operation in case that they must set up system or network or install cables through public places are still to be carefully considered. Another important issue is the tariff structure, which should be revised to be more in line with operation costs. The revised tariff structure may introduce an entire new airtime-charging scheme, differing from the present one where the operators can charge airtime for outgoing calls only. The new scheme may allow the operators to charge for both in and outgoing calls. All of these issues must be resolved with clearly defined terms and conditions prior to the liberalization of the telecommunications industry. In summary, the liberalization should not have a significant impact on the Company’s business operation. Although the liberalization may attract new entrants, there are a number of barriers to entry - building up customer base and investments, time for network development, market distribution channels, and most importantly law, rules, regulations and the Government’s policies that are currently still unclear. Risks of the parent company holding shares in other company operating same business Shin Corporations Plc. (SHIN), the Company’s parent company, is likely to hold shares in Digital Phone Co., Ltd. (DPC) which is another mobile phone service operator, similar to the Company but using different frequency. It is possible that SHIN may change some of its policies to support DPC’s business, which may affect the Company in terms of personnel and market competition. However, the Company has taken action to mitigate such risks. In terms of personnel, the Company constantly provides training to employees to be able to work in substitution of one another in a “process-oriented” work environment. In terms of marketing, the Company does not expect adverse effects, but in stead, increase in distribution channels and more efficient customer services. That is because it is likely that both the Company’s and DPC’s dealers will jointly sell the products of both companies giving customers more choices. Also the Company’s customers who use dual-band handsets will be able to roam on both systems, thus further enhancing the communications. Moreover, the Company also is confident about its product image and its quality service that will bring about customer satisfaction.

41


Other Factors Affecting Investment

Litigation As of December 31, 1999, The Company and its subsidiaries have a total of 11 pending court cases which composes of 7 cases that the Company and/or its subsidiaries are the plaintiff such that the claim amount being Baht 2,390,005.38 and 4 cases that the Company and/or its subsidiaries are the defendant such that the claim amount being Baht 771,238.75. All 11 cases took place in the normal course of business, the claim amount involved is not significant to have and impact on the Company and/or its subsidiaries’ daily normal business operation. Obligation to issue share in the future -None-

42


Terms and Conditions of the Debentures

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

THB 500,000,000 (Five hundred million Baht).

Share Amount

500,000 Units (Five hundred thousand units).

Face Value

THB 1,000 (One thousand Baht).

Issue Price

THB 1,000 (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 Debenture holders

None.

Debentureholder (s)

Private placement to specific investors and/or qualified investors in accordance with the Notification No. Gor Jor. 32/2540, clause 9.(2)

Transfer Restriction

All transfers of Debenture and entries on the register of Debentureholders will be only made in accordance with the Notification No. Gor Jor. 32/ 2537, clause 9.(2).

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

THB 1,000,000,000 (One billion Baht).

Share Amount

1,000,000 Units (One million units).

Face Value

THB 1,000 (One thousand Baht).

Issue Price

THB 1,000 (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 Debenture holders

None.

43


Debentureholder (s)

Private placement to specific investors and/or qualified investors in accodance with the Notification No. Gor Jor. 32/2540, 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. 32/ 2537, clause 9.(2).

Debenture of Advanced Info Service Public Company Limited No. 1/2543 Due 2003 Type of Instruments

Unsecured, unsubordinated, amortizing debentures with a trustee.

Type of Debenture

Specified name of Debentureholder.

Term

3 years from Issue Date.

Principal Amount

THB 8,000,000,000 (Eight billion Baht).

Share Amount

8,000,000 Units (Eight million units).

Face Value

THB 1,000 (One thousand Baht).

Issue Price

THB 1,000 (One thousand Baht).

Issue Date

March 20, 2000.

Maturity Date

March 20, 2003.

Interest

6.50% p.a.

Interest Payment

Payable on semi-annual basis on September 20 and March 20 of every year

Principal Repayment

Repayment begins on 18th month in 4 equal installments (25% of the face value) scheduled as followed: * September 20, 2001 * March 20, 2002 * September 20, 2002 * March 20, 2003

Procedures for interest payment and principal repayment

* The registrar will close the debentureholder registration book to halt ownership transfers 14 days prior to the sched uled dates for interest payments, principal repayments, and debenture redemption, whichever applicable. * Interest payments and principal repayments will be done via checks payable to the names of the debentureholders as of the date that the registrar closes the registration book or via money transfers to the accounts specified by the debentureholders on the date that the registrar closes the registration book.

Procedures for debenture redemption

Debentureholders have to return the debentures to the registrar on the redemption date. The Company will pay the outstanding principals and last interest payments via checks or via money transfers to the debentureholders as of that date.

Security

None.

The Registrar and the Trustee

Siam Commercial Bank Plc.

Debenture’s secondary market

The Company intends to register the debentures in the Thai Bond Dealing Center. In case that intention does not materialize, Citicorp Finance and Securities (Thailand) Ltd. and Siam Commercial Bank Plc. will act as the middle person between the debentureholders who want to sell and the interested parties who want to buy and settle a price that are agreed upon by both parties.

44


Management Discussion and Analysis

Operation & financial status in the past Capital, liquidity, assets, profit and operation of the three main business: 1. Operation of 900 MHz Cellular NMT and Digital GSM mobile phone services; sale, rental and repair of mobile phones 2. Operation of Digital Display Paging service; sale and rental of page phones 3. Operation of data communication through Datakit Virtual Circuit Switch Group 1: sale, rental and repair of mobile phones; Group 2 and Group 3 are the services operated through affiliated companies AWM and APG ADC and DNS respectively. Mobile phone

Mobile phone

Page phone sale

Data

Service

sale & rental

& service

communication through leased line

1998

Incomes from service & rental Incomes from sales Total incomes Note:

1999

1998

13,327.58 16,701.25

1999

1998

1,360.55

1998

1999

-

112.50

-

-

6,690.07

215.24

276.17

-

0.17

13,327.58 16,701.25

-

6,802.57

1,619.45

1,636.72

162.86

183.88

-

1,404.21

1999

162.86

183.71

1. On October 29, 1999, the Company increased its investment in ADC in order to hold more than 50%. Therefore, ADC has become a subsidiary company. For the purpose of financial statements comparison, the items are rearranged. 2. On October 29, 1999, the Company invested in 49% of ordinary shares of DNS. Therefore, DNS’s incomes in November and December were included in the consolidated financial statement 1999.

From the above structure, the incomes from NMT and Digital GSM mobile phone affect the capacity for income generation and cash flow of the Company, accounted for 66% of the total revenue in 1999. The Company intends to maintain the debt to equity ratio at lower than 2 to 1. However, the new method of appropriation of the costs of mobile phone network resulted in the profit from 1998 and 1999 in the balance sheet, after adjustment for comparison, being reduced to Baht 1,515.50 million and Baht 1,757.05 million respectively. The accumulated profit at the beginning of the financial period reduced to Baht 2,519.90 million and Baht 4,035.40 million respectively. As a result, the debt to equity ratio, based on the consolidated financial statement, after adjustment for comparison, was at 0.85 and 2.44 at the end of 1999 and 1998 respectively.

45


If such debt to equity ratio is based on the financial statement before adjustment of changing method of amortization period, it will be at 0.72 and 1.99 at end of year 1999 and 1998 respectively. Such ratio is regarded as low, taking into account the impact produced by the change in exchange rate in 1997. It is low because the Company hedged the risks by buying foreign currencies with the forwards and swap at the rate of 83 % of total loans in foreign currencies. In 1997, the Company entered the impact produced by the change in exchange rate (net from income tax) as cost at Baht 1,239.79 million. Such entry was made according to accounting standard set by the Association of Certified Accountants and Auditors of Thailand even if the amount was not in cash. The Company still avoids the risks of exchange rate. At the end of 1999, the Company hedged 69% of its foreign loans. At the end of 1999, the debt to ratio went down to 0.85, because the Company issued 36 million ordinary shares to increase its capital. Such shares was sold to Singapore Telecom International Pte Ltd. at Baht 230 per share in the first quarter of the year. Therefore, the shareholder’s equity in the balance sheet increased by Baht 8,280 million. The proceeds from the sale of such shares were mostly used in the repayment of loan. As a result, the loans in consolidated financial statement reduced from Baht 12,646.9 million at the end of 1998 to Baht 4,925 million at the end of 1999. From the time of establishment, the Company has been recognized as leading private firm by financial institutions. This is because the Company has never defaulted on payment of principal or interest. The Company has earned trust from foreign governments and foreign financial institutions. For example, the Bank for Export of Finland and the Bank for Export of Australia offered long-term loans of USD 47.71 million and USD 12.99 million respectively. In 1997, it was the fist time that any private firm in Thailand was offered clean loan. The liquidity, current ratio increased from 0.50 time in 1998 to 0.87 time in 1999, because the Company repaid loan and paid for the equipment in 1999. As the Company has to make large invest in mobile phone network. Therefore, assessment of assets based on income generation will show that the rating is not too high. The ratio of returns on asset was at 3.80 in 1998 and it increased to 6.90 in 1999. However, the assessment of assets based on account receivable will show that the rating is quite high. Based on the past 3 years’ records, the Company’s bad debts were only 1% to 3%, except in 1998 the bad debts were 5% due to the economic crisis. In 1999, the average collection period was 50 days, which was in accord with the standard set by the Company. However, it was reduced from 79 days in 1998. The extended period was due to severe economic impact from 1997 to 1999. To reduce such impact, the Company adopted strict measures for dealing with subscribers who were in arrears with payments, such as suspension of service. So far, the Company has divided customers into different categories and segments, and changed the conditions of service suspension accordingly. Moreover, the Company invested in intelligent database for better categorization and segmentation of customers and management of asset quality. For example, subscribers who do not pay the bills on time will get reminders.

46


Major cost of the Company are variable costs which mainly is the concession fee to TOT at the rate of 20% of revenue before expenses and tax for 1998 and such sum must not be less than minimum payment. From 1996 to 1999, the Company paid TOT the concession fee at the rate higher than the minimum payment. The Company’s fixed costs are costs of sale of mobile phones and page phones, plant & equipment for operation of datanet under concession agreement, rental of signal communication link with TOT, station rental, maintenance of mobile phone and page phone networks, mobile phones and page phones. The Companies group’s gross profit margin increased from 35.01% in 1998 to 36.82% in 1999. This is because the group reduced the rental of signal communication link with TOT and used its own link more. Therefore, the fixed costs had reduced. The net profit has changed according to the gross profit.

Significant change Assets The value of inventories was Baht 683.60 million and Baht 939.47 million at the end of 1998 and 1999 respectively, compared with Baht 66.1 million at the end of 1997. This is because the inventories of AWM, which is importer and distributor of mobile phones, were included in the consolidated financial statement, commencing at the end of 1998. Therefore, from 1998 the inventories include AWM’s mobile phones and equipments and APG’s page phones which were included in the consolidated financial statement prepared earlier. In 1998 and 1999, the Company increased the investments in subsidiary and associated companies as follows: *

Advanced Wireless Marketing Co., Ltd. (AWM) On December 22, 1998, the Company has acquired an AWM’s ordinary shares from SHIN in the amount of Baht 600 million. As a result, the Company holds 99.99% of shares in AWM. AWM is an importer and distributor of NMT and Digital GSM mobile phones and also operate phone rental service after-sale service and repair center. Now, it has a fully paid-up capital of Baht 240 million.

*

Advanced Paging Co., Ltd. (APG) On February 1999, the Company bought Baht 949.6 million of APG’s ordinary shares from Thai Page Private Ltd., which is an affiliated company of STI. As a result, the Company holds 99.99% of shares in APG instead of 60%. APG’s main activities are Digital Display Paging service, sale, and rental of page phones. Now, its has a fully paid-up capital Baht 350 million.

*

Advanced Datanetwork Communications Co., Ltd. (ADC) On October 20, 1999, the Company board of directors approved the purchase of 18,339,386 ordinary shares of ADC at the price of Baht 14.89 per share, totaling Baht 273.1 million. As a result, the Company’s shareholding in ADC increased from 27.86 % to 67.95%. ADC’s main business is DATANET which is data communication through leased line. At present, it has a fully paid-up capital of Baht 457.52 million.

*

Data Network Solution Co., Ltd. (DNS) On October 20, 1999, the Company board of directors approved the purchase of 49,000 ordinary shares of DNS at the price of Baht 163.15 per share, totaling Baht 8 million. As a result, the Company’s shareholding in DNS is 49%. DNS’s main business is DATANET which is data communication through leased line. It is in joint operation with ADC. At present, DNS has a fully paid-up capital of Baht 1 million.

47


The Company has invested in Baht 1,501.13 million and Baht 2,731.73 million in affiliated and subsidiary companies by the end of 1998 and 1999 respectively. *

From the third quarter of 1999, the Company changed the amortization period for cost of mobile phone network. Previously, the cost of mobile phone networks are amortized as expense on the straight-line method on remaining concession period - from the day of equipment installation until September 2015. With the new method, the cost of mobile phone networks are amortized on the straight-line method over a period of 10 years not exceeding year 2005 for the analogue system and the straight-line method over a period of 10 years not exceeding the remaining concession period for the digital GSM system. Such new method of amortization affected the consolidated balance sheets for 1998 and 1999, that is, the assets decrease by Baht 2,519 million and Baht 4,035 million respectively. The net profit and accumulated profit brought forward also decrease. It affected the overall performance in 1999, that is, the amortization increased by Baht 1,757.05 million. Such changes are non-cash items.

*

Other information: *

Cash and bank deposit decrease from Baht 2,099.22 million at the end of 1998 to Baht 880.98 million at the end of 1999. It was due to repayment of loan in the first quarter of 1999.

*

Net account receivable and notes receivable increased from Baht 3,064.39 million at the end of 1998 to Baht 3,848.35 million at the end of 1999. It was due to higher revenue from service charge and success in reduction of average collection period from 79 days in 1998 to 50 days in 1999.

*

The costs of mobile phone and page phone network, plant and equipment for Datanet operation under concession agreement increased from Baht 26,096.20 million at the end of 1998 to Baht 26,812.20 million at the end of 1999. It was due to additional investment in construction of networks in the provincial areas.

*

Net value of goodwill increased from Baht 292.8 million at the end of 1998 to Baht 812.25 million at the end of 1999. It was due to inclusion of the values of goodwill of APG and ADC, in which the Company made additional investments in the first and fourth quarter of 1999.

Liabilities & shareholder’s equity *

Account payable and notes payable decreased from Baht 6,745.85 million in 1998 to Baht 2,324.11 million in 1999. It was due to large amounts of loan repayments in 1999.

*

Debentures, long and short-term loans decreased from Baht 12,646.9 million at the end of 1998 to Baht 4,925.00 million at the end of 1999. It was due to repayment of loans by the proceeds from increasing capital of 36 million shares.

*

Accrued Concession fee increased from Baht 655.11 million at the end of 1998 to Baht 953.23 million at the end of 1999. It was due to higher revenue. Normally, the Company shall first pay the minimum amount to TOT as set forth under the concession agreement. Payments shall be made in 4 equal installments in January, April, July and October of every year. Then, the difference shall be paid to TOT in November of every year.

*

Other current liabilities increased from Baht 2,947.13 million at the end of 1998 to Baht 4,518.77 million in 1999. They included main items such as accrued income taxes, circuit rental expenses and other expenses. The increase was due to higher accrued circuit rental and other expenses.

*

In January 1999, STI and SHIN signed an agreement to jointly hold shares in the Company. As a result, SHIN’s shareholding in the Company reduced from 54.57% to 41.87%. STI’s shareholding in the Company is done through purchase from SHIN 14.3 million ordinary shares of the Company at the price of Baht 230 per share and purchase of 36 million capital raising ordinary shares of the Company at the same price of Baht 230 each, totaling Baht 11,569 million as approved by the shareholders extraordinary meeting. After purchase of shares, STI hold 18.63% stake in the Company’s registered capital. The effects on the balance sheets are as follows:

*

The paid-up capital increased by Baht 360 million, from Baht 2,340 million at the end of 1998 to Baht 2,700 million at the end of 1999. It was due to issuance of 36 million capital raising ordinary shares (par value of Baht 10 per share) in the first quarter of 1999.

*

The premium on share capital increased by Baht 7,920 million from Baht 2,295 million at the end of 1998 to Baht 10,215 million at the end of 1999. It was due to issuance of capital raising ordinary shares at the par value of Baht 10 per share for sale at Baht 230 each.

48


Incomes & expenditures *

Incomes from mobile phones and page phone services increased by 23%, to Baht 18,327.77 million in 1999. It was due to improved economy after the crisis in 1997. The subscribers of mobile phone increased to 611,000 for NMT, 596,000 for Digital GSM, and 23,200 for prepaid phones. The number of all subscribers was 1,230,200 at the end of 1999.

*

Incomes from sale and costs of sale increased from Baht 224.98 million and Baht 253.59 million in 1998 to Baht 6,885.88 million and Baht 4,708.60 million in 1999. This was because the Company consolidated income statement of AWM, which is importer and distributor of mobile phones for Shinawatra Group, in which the Company holds 100% of equity stake, commencing form the first quarter of 1999 despite purchase of AWM’s ordinary shares at the end of December 1988. Before 1999, incomes from sale and costs of sale in the income statement meant the incomes from sale and costs of sale of Phonelink page phones of APG which is the affiliated company.

*

Under the concession agreement dated March 27, 1990 between the Company and TOT; and the concession agreement dated December 19, 1989 between APG and TOT, the Company and APG must pay annual concession fee to TOT based on the revenue from mobile phone and page phone services or the minimum amount fixed under the agreements. Since March 1, 1997, the fee has been waived by TOT for APG, provided that APG gave discount rates of pager service charging to its customers. Therefore, the effects on APG’s financial statement are not too significant, because the fee and discount rates tend to compensate for each other.

*

The costs of service and equipment rental increased in 1998 because of the higher cost of mobile phone network and the amortization of costs due to the change in foreign currency exchange system in 1997.

Cash flow statement *

Normally, the nature of business of the Company need to use large investment. In 1998 and 1999, The Company had made additional investment in mobile network to increase the capacity for mobile phone service. The net cash earned from activities to the value of Baht 6,654.66 million in 1998 and Baht 6,765.28 million in 1999 was insufficient. Therefore, the Company sought cash funding Baht 2,572.70 million and Baht 1,554.07 million from financial institution in 1998 and 1999 respectively.

*

The interest coverage ratio was at 5.63 times in 1998 and increased to 13.01 times in 1999. It was due to loan repayments before maturity date in 1999.

*

Ability to make repayment on cash basis = cash flow from operation + interest payment/ (interest payment + principal + dividend) = 0.62 times in 1999, a decrease from 1.19 times in 1998. It was due to loan repayments of Baht 11,379* million in 1999 and Baht 5,132 million in 1998. Such sums belong to cash flow from financing activities.

* Baht 3,600 million of loan repayments in such period was made voluntarily before maturity.

49


Non-Recurring Transaction *

In January 1999, the Company issued 36 million capital raising ordinary shares by private placement to STI at Baht 230 per share

*

The Company operates mobile phone service under concession granted by TOT. The concession term of 20 years was extended to 25 years, effective from 1990. In the balance sheet, the costs of mobile phone network are shown as “the costs of mobile phone network under concession agreement” under assets, but in the past, the Company was to amortize such costs throughout the remaining term of the concession - from the date of installation of equipment until September 2015. The management examined the entries of the costs of mobile phone network and decided that from September 1999, the financial statement shall show such sums as the costs of system’s life service - the assets expected to generate incomes and cash flow for the Company. The new method of amortization reflects such returns on such assets under the terms and conditions of the concessions far better than the previous method. Therefore, the costs of mobile phone network will be amortized on the straight-line method over the period of 10 years not exceeding year 2005 for the analogue system and on the straight-line method over a period of 10 years not exceeding the remaining concession period for the digital system.

Restructuring of company’s shareholding with the group SHIN reduced the shareholding in the Company to less than 50%. Therefore, the Company is not SHIN’s subsidiary company since March 31, 1999. Affiliated company’s effects on financial status and performance The performance of the Company and affiliated companies will be in the same line. For the past 3 years, the revenue of subsidiary companies (after inter-company transactions elimination) came to 15% of the consolidated revenue of the

Com-

pany and its subsidiary companies. The subsidiary companies which generate most of the income are AWM and APG. The operation of ADC and DNS affects the Company’s operation by less than 1% of the consolidated revenue.

50


Directors Report 1999

Name

Position

Advanced Info

Advanced

Advanced

Advanced

Data Network

Service Plc.

Paging

Wireless

Datanetwork

Solutions

Co., Ltd.

Marketing

Communications

Co., Ltd.

Co., Ltd.

Co., Ltd.

Mr. Paiboon Limpaphayom (Ph.D.)

Chairman of The Board

-

-

-

-

-

Mr. Vithu Rakvanichapongs

Vice Chairman of the Board

-

-

-

-

-

Director and Executive

-

-

1

-

1

Communication

-

-

-

-

1

Director and Executive

-

-

-

-

1

-

-

-

-

-

Mr. Chow Wing Keung Lucas Director

-

-

-

-

-

Mr. Suphadej Poonpipat

-

-

-

-

-

Audit Committee

-

-

-

-

-

Mr. Arun Churdboonchart

Audit Committee

-

-

-

-

-

Mr. Arak Chonlatanon

Executive Committee

-

-

-

-

-

Mr. Boonklee Plangsiri

Committee Mr. Somprasong Boonyachai

Director and Chairman of the Executive Committee - Wireless

Mrs. Siripen Sitasuwan

Committee Mr. Allen Lew Yoong Keong

Director and Executive Committee Chairman of the Audit Committee

Mr. Vithit Leenutaphong

As of December 31, 1999

51


Directors and Management Team

Name - Surname

Mr. Paiboon Limpaphayorm (Ph.D.)

Age

58

Position

Chairman of the Board of Director

Shareholding Status (%)

None

Relationship with Management

None

Education

Ph.D. (Electrical Engineering) Iowa State University

Experience

1988 - 1992

Managing Director - Telephone Organization of Thailand

1992 - 1993 1993 - 1998

Advisor - Telephone Organization of Thailand Director and Executive Committee Shin Corps. Group

1999 - Present Chairman of the Board - Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Withu Rukvanichapongs

Age

60

Position

Vice Chairman of the Board of Director

Shareholding Status (%)

None

Relationship with Management

None

Education

M.A. of Engineering, USA

Experience

1992 - Present Senior Executive Vice President of Telephone Organization of Thailand

Illegal Record during past 10 years

None

Name - Surname

Mr. Boonklee Plangsiri

Age

48

Position

Director and Executive Committee

Shareholding Status (%)

None

Relationship with Management

None

Education

M.A. of Computer Engineering, University of Illinois, USA, Oregon State University, USA

Experience

1993 - 1994

President of Shinawatra Group

1995 - 1996

Vice Chairman (Operation) - Shinawatra Group

1997 - Present Director, Executive Committee - Shin Corporations Plc., Advanced Info Service Plc., Shin Satellite Plc. 1999 - Present Chairman of the Executive Committee Shin Corporations Plc. Illegal Record during past 10 years

52

None


Name - Surname

Mr. Somprasong Boonyachai

Age

45

Position

Director, Chairman of the Executive Committee Wireless Communication

Shareholding Status (%)

None

Relationship with Management

None

Education

Master of Engineering, Asian Institute of Technology (AIT)

Experience

1991 - 1992

IMA Manager, Report to General Manager, IBM Thailand

1992 - 1993

Executive Vice President (Operation 4) Shinawatra Group

1993

President - Advanced Info Service Plc.

1993 - 1994

President - Shinawatra Satellite Plc.

1994 - 1995

President - Advanced Info Service Plc.

1995 - 1996

Senior President - Advanced Info Service Plc.

1997 - 1998

Vice Chairman of the Executive Committee Wireless Communication

1999 - Present Chairman of the Executive Committee - Wireless Communication, President - Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mrs. Siripen Sitasuwan

Age

51

Position

Director and Executive Committee

Shareholding Status (%)

None

Relationship with Management

None

Education

M.B.A. Wichita State University, Wichita Kansas, USA

Experience

1991 - 1993 1994 - 1998

Executive Vice President - Finance Shinawatra Group Executive Committee - Chief Finance Officer of the Shinawatra Group

1999 - Present Chief Finance Officer of Shin Corporations Plc., Director and Executive Committee Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Allen Lew Yoong Koeng

Age

44

Position

Director and Executive Committee

Shareholding Status (%)

None

Relationship with Management

None

Education

Master Degree, Massachusettes Institute of Technology, USA

Experience

1980 - 1993

Singapore Telecom

1994 - 1995

General Manager - Singapore Telecom

1996 - 1999

COO - Singapore Telecom International Pte Ltd.

1999 - Present Director, Executive Committee Advanced Info Service Plc., Chief Operating Officer - Advanced Info Service Plc. Illegal Record during past 10 years

None

53


Name - Surname

Mr. Chow, Wing Keung Lucas

Age

46

Position

Director

Shareholding Status (%)

None

Relationship with Management

None

Education

University of Aston Packard

Experience

1998

Operation Manager of Hewlette

1998 - 1999

Group Director of Total Quality

Present

Director - Advanced Info Service Plc.

Illegal Record during past 10 years

None

Name - Surname

Mr. Suphadej Poonpipat

Age

49

Position

Independent Director and Chairman of the Audit Committee

Shareholding Status (%)

None

Relationship with Management

None

Education

Master Degree, University of Wisconsin, USA

Experience

1990 - Present President and Chief Executive Officer National Securities Plc. 1998 - Present Chairman of the Audit Committee Advanced Info Service Plc.

Illegal Record during past 10 years

None

Name - Surname

Mr. Vithit Leenutaphong

Age

44

Position

Independent Director and Audit Committee

Shareholding Status (%)

None

Relationship with Management

None

Education

MBA, University of Southern California, USA

Experience

Executive Director - Yontrakit Group Executive Director - Thai Yarnyon Co., Ltd. Executive Director (Sale and Marketing) - Yontrakit Group

Illegal Record during past 10 years

None

Name - Surname

Mr. Arun Churdboonchart

Age

58

Position

Independent Director and Audit Committee

Shareholding Status (%)

None

Relationship with Management

None

Education

BBA, California State University, Long Beach, California, USA Diploma (Private Sector) - Thailand National Defense College

54

Experience

Executive Director - Tritip Complex Group

Illegal Record during past 10 years

None


Name - Surname

Mr. Vikrom Sriprataks

Age

46

Position

Senior Executive Vice President - Engineering

Shareholding Status (%)

None

Relationship with Management

None

Education

Engineering, Chulalongkorn University

Experience

1981 - 1990

Ericsson Telephone Corp. Far East AB.

1992 - 1994

General Manager - Advanced Info Service Plc.

1998 - Present Senior Executive Vice President (Engineering) Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mrs. Suvimol Kaewkoon

Age

44

Position

Senior Executive Vice President (Service Operation) - Advanced Info Service Plc.

Shareholding Status (%)

None

Relationship with Management

None

Education

Master Degree, Asian Institute of Management, Manila Phillipines

Experience

1988

Management Trainee / PSA. Group

1993 - 1994

President - Shinawatra Telewiz

1995 - Present Senior Executive Vice President (Service Operation) Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Miss Yingluck Shinawatra

Age

32

Position

Executive Vice President - Service Operation

Shareholding Status (%)

None

Relationship with Management

None

Education

Master Degree, Kentucky State University

Experience

1991 - 1994

Manager - Shinawatra Directories Co., Ltd.

1995 - 1996

General Manager - Shinawatra Directories Co., Ltd.

1997 - 1998

Vice President - Shinawatra Directories Co., Ltd.

1999 - Present Executive Vice President (Service Operation) Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Sukit Tirawatanawit

Age

55

Position

Vice President - Asset and Data Network

Shareholding Status (%)

None

Relationship with Management

None

Education

Engineering, Chulalongkorn University

Experience

1992 - 1994

Telephone Organization of Thailand

1994 - 1996

Vice President - Shinawatra International Co., Ltd.

1996 - 1997

Vice President (Engineering Network) Advanced Info Service Plc.

1997 - Present Vice President (Asset and Data Network) Advanced Info Service Plc. Illegal Record during past 10 years

None

55


Name - Surname

Mr. Wichian Mektrakarn

Age

46

Position

Vice President - Technical

Shareholding Status (%)

None

Relationship with Management

None

Education

Master Degree in Electrical Engineering, California Polytechnic State University Pomona, USA

Experience

1992 - 1994

Engineering Manager - Shinawatra Satellite Plc.

1995 - 1996

Manager of Mobile Phone Office Advanced Info Service Plc.

1997 - 1998

Vice President - Network Operation and Maintenance, Metropolitan Area

1999 - Present Vice President (Technical) - Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Vuthiporn Chaipayom

Age

52

Position

Vice President - Transmission Management Project

Shareholding Status (%)

None

Relationship with Management

None

Education

MINI MBA, Thammasat University MINI MBA, Chulalongkorn University

Experience

1991 - 1993

Chief Electronics Repair Center Telephone Organization of Thailand

1993 - 1994

Chief of Office of Telecommunications Department Telephone Organization of Thailand

1995 - 1997

Vice President (Network Operation and Maintenance, Metro Area) - Advanced Info Service Plc.

1997 - Present Vice President (Transmission Management Project) Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Weerawat Kiattipongthaworn

Age

39

Position

Vice President - Metropolitan Operation and Maintenance

Shareholding Status (%)

None

Relationship with Management

None

Education

Master Degree, University of Michigan

Experience

1983

Engineer - Communications Authority of Thailand

1990 - 1999

Shinawatra Group

Present

Vice President (Metropolitan Operation and Maintenance) - Advanced Info Service Plc.

Illegal Record during past 10 years

56

None


Name - Surname

Mrs. Arpattra Sringkarrinkul

Age

44

Position

Vice President - Information System Support

Shareholding Status (%)

None

Relationship with Management

None

Education

Master Degree in Computer, Rochastor Institute of Technology, New York, USA

Experience

1990 - 1991

Engineering Manager (Industrial Production) IBM (Thailand) Co., Ltd.

1992 - 1993

Industrial Education Manager - IBM (Thailand)

1994 - 1996

General Manager (Computer Service) Shinawatra Computer and Communication Plc.

1998 - 1999

Vice President (Operation) - Advanced Info Service Plc.

1999 - Present Vice President (Information System Support) Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Walan Norasetpakdi

Age

38

Position

Vice President - Wireless Controller

Shareholding Status (%)

None

Relationship with Management

None

Education

Master Degree, Commerce and Accountancy, Thammasat University

Experience

1991 - 1993

Finance and Accounting Manager Advanced Info Service Plc.

1993 - 1994

Finance and Accounting Senior Manager Advanced Info Service Plc.

1994 - 1996

Assistant Vice President (Finance and Administration) Advanced Info Service Plc.

1997 - 1998

Assistant Vice President (Wireless Controller) Advanced Info Service Plc.

1999 - Present Vice President (Wireless Controller) Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Col. Prawat Nigarnkul

Age

49

Position

Assistant Vice President - Site Acquisition and Maintenance

Shareholding Status (%)

None

Relationship with Management

None

Education

Master Degree, Georgia Institute of Techonology

Experience

1995 - 1997

Senior Manager Special Project Shinawatra Computer and Communication Plc.

1997 - Present Assistant Vice President (Site Acquisition and Maintenance) - Advanced Info Service Plc. Illegal Record during past 10 years

None

57


Name - Surname

Mr. Warachat Herabat

Age

48

Position

Assistant Vice President - Metropolitan Operation

Shareholding Status (%)

None

Relationship with Management

None

Education

MBA, Marketing Tulane University, USA

Experience

1992 - 1994 1994 - 1995

Administration Manager - Advanced Info Service Plc. Assistant Vice President (Administration) Advanced Info Service Plc.

1996 - Present Assistant Vice President (Metropolitan Operation) Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Annop Petchariya

Age

44

Position

Assistant Vice President - Upcountry Operation

Shareholding Status (%)

None

Relationship with Management

None

Education

Bachelor of Electrical Engineering

Experience

1978 - 1994

IBM (Thailand) Co., Ltd.

1994 - 1996

Upcountry Manager - Advanced Info Service Plc.

1996 - Present Assistant Vice President (Upcountry Operation) Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Pattarasak Uttamayodhin

Age

40

Position

Assistant Vice President - Human Resource

Shareholding Status (%)

None

Relationship with Management

None

Education

Master Degree, University of Southern of California, USA

Experience

1993 - 1997

First Assistant Vice President (Administration) Multi - Credit Corporation of Thailand Plc.

1997 - 1998

Human Resource Manager Wireless Communications Service Co., Ltd.

1998 - 1999

Head of Human Resouces Consultant Thailand Productivity Institute

1999 - Present Assistant Vice President (Human Resource) Advanced Info Service Plc. Illegal Record during past 10 years

58

None


Name - Surname

Mrs. Suvimon Kulalert

Age

39

Position

Assistant Vice President - Internal Audit

Shareholding Status (%)

None

Relationship with Management

None

Education

Master Degree, Oklahoma City University, USA

Experience

1981 - 1985

Certified Public Accountant

1987 - 1991

Assistant Accounting Manager - TCC Group

1991 - 1994

Corporate Accounting Manager - Shinawatra Group

1995 - Present Assitant Vice President (Internal Audit) Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Somchai Lertsuthiwong

Age

38

Position

Assistant Vice President - Business Relation

Shareholding Status (%)

None

Relationship with Management

None

Education

MBA, Chulalongkorn University

Experience

1996 - 1997

Automatic Post Office Project Manager Shinawatra Information Technology Co., Ltd.

1998 - Present Assistant Vice President (Business Relation) Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Supoch Vathitphund

Age

49

Position

Acting Assistant Vice President - Legal

Shareholding Status (%)

None

Relationship with Management

None

Education

Bachelor of Law - Thammasat University

Experience

1975

Bank of Ayudhaya Plc.

1981

Lawyer - Thammasan Legal Office

Present

Acting Assistant Vice President (Legal) Advanced Info Service Plc.

Illegal Record during past 10 years

None

Name - Surname

Mrs. Wilai Keangpradoo

Age

40

Position

Public Relation Manager

Shareholding Status (%)

None

Relationship with Management

None

Education

Master of Arts Mass Communication, Chulalongkorn University

Experience

1983 - 1988

Public Relation - Thai Airways Domestic Airline

1988 - 1993

Media Relation Section Manager Thai Airways International Co., Ltd.

1996 - 1998

Public Relations Manager - Shin Corporations Plc.

1999 - Present Public Relations Manager Advanced Info Service Plc. Illegal Record during past 10 years

None

59


Name - Surname

Mr. Attapol Sariddipantawat

Age

35

Position

System Support Manager

Shareholding Status (%)

None

Relationship with Management

None

Education

MBA, Kasetsart University

Experience

1995 - 1997

Finance and Administration Manager Shin Corporations Plc.

1998 - Present System Support Manager Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mrs. Walaiporn Khajeenikorn

Age

40

Position

Administration and Purchasing Manager

Shareholding Status (%)

None

Relationship with Management

None

Education

MBA, Dhurakij Bandit University

Experience

1996 - 1997

Purchasing and Inventory Control Manager Advanced Info Service Plc.

1997

Purchasing Manager - Advanced Info Service Plc.

1998 - Present Administration and Purchasing Manager Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Miss Sansanee Gumpalanuwat

Age

43

Position

Accounting Manager

Shareholding Status (%)

None

Relationship with Management

None

Education

MS (Accounting) - Thammasat University

Experience

1995 1996 - 1997

Senior Finance Specialist - Shin Corporations Plc. Senior Finance and Accounting Manager Advanced Wireless Marketing Co., Ltd

1997 - Present Accounting Manager - Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Miss Sunitaya Shinawatra

Age

39

Position

Finance Manager

Shareholding Status (%)

None

Relationship with Management

None

Education

MBA, North Texas State University, USA

Experience

1994

Finance and Accounting Manager Advanced Info Service Plc.

1995 - Present Finance Manager - Advanced Info Service Plc. Illegal Record during past 10 years

60

None


Financial Statements

61


Auditor’s Report

TO THE SHAREHOLDERS OF ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED I have audited the accompanying consolidated and company balance sheets of Advanced Info Service Public Company Limited as at 31 December 1999, and the related consolidated and company statements of income, changes in shareholders’ equity, retained earnings, and cash flows for the year then ended. These financial statements are the responsibility of the Companys’ management. My responsibility is to express an opinion on these financial statements based on my audit. The consolidated and company financial statements (before restatement) of Advanced Info Service Public Company Limited for the year ended 31 December 1998 presented herewith for comparative purposes, were audited by another auditor whose report dated 10 February 1999, expressed an unqualified opinion on those statements. I conducted my audit in accordance with generally accepted auditing standards in Thailand. Those standards require that I 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. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the consolidated and company financial statements referred to above present fairly, in all material respects, the consolidated and company financial position of Advanced Info Service Public Company Limited as at 31 December 1999 and the consolidated and company results of operations and cash flows for the year then ended in accordance with generally accepted accounting principles in Thailand.

62


As explained in Note 3 to the consolidated and company financial statements, during the year 1999, the Company and a subsidiary have changed their accounting policies in respect of: (a) accounting for the cost of mobile phone networks under concession agreements; (b) accounting for the cost of Datanet tools and equipment under concession agreement and (c) accounting for the change in status of investment in associate to be investment in subsidiary, to reflect a change in the reporting unit. The Company and the Group have accounted for these changes retrospectively. Accordingly the consolidated and company financial statements for the year ended 31 December 1998 have been restated. I have audited the adjustments, detailed in Note 3, relating to the restatement of the consolidated and company financial statements for the year ended 31 December 1998, and found that the adjustments have been appropriately made. I draw attention to Note 40 to the consolidated and company financial statements which is marked “unaudited�. Information regarding the Year 2000 issue as presented in this note has not been subjected to auditing procedures, and, accordingly, I express no opinion on it.

PRASAN CHUAPHANICH Certified Public Accountant (Thailand) No. 3051 PricewaterhouseCoopers ABAS Limited Bangkok 4 February 2000

63


Balance Sheets Advanced Info Service Public Company Limited As at 31 December 1999 and 1998

Consolidated Notes

Company

1999

1998

1999

Restated Baht

Baht

1998 Restated

Baht

Baht

ASSETS Current Assets Cash on hand and at banks

4

880,981,901

2,099,223,691

525,850,888

1,690,915,056

Short-term investments

5

2,810,130,757

2,488,523,707

2,352,919,560

2,166,007,771

Trade accounts receivable, net

6

3,848,345,836

3,064,391,826

3,430,142,410

2,749,419,588

Amounts due from and loans to 7

548,159

17,648,364

2,093,329

214,277,318

Inventories, net

related companies, net

8

939,472,853

683,559,225

-

-

Other current asset

9

1,090,625,816

558,395,217

1,028,222,526

446,565,756

9,570,105,322

8,911,742,030

7,339,228,713

7,267,185,489

-

160,544,852

-

160,544,852

Total Current Assets Non-Current Assets Long-term forward and swap contracts receivable, net

17

Long-term investments, net

10

-

-

3,825,617,841

1,607,449,056

Property and equipment, net

11

1,974,811,317

1,954,142,351

1,778,747,098

1,750,073,217

12

26,812,222,245

26,096,159,306

25,720,430,223

24,984,234,332

Cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements, net Other assets, net Total Non-Current Assets Total Assets

64

13

1,507,022,850

956,801,422

475,145,345

457,091,531

30,294,056,412

29,167,647,931

31,799,940,507

28,959,392,988

39,864,161,734

38,079,389,961

39,139,169,220

36,226,578,477

The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.


Consolidated Notes

Company

1999

1998

1999

Restated

1998 Restated

Baht

Baht

Baht

Baht

1,950,000,000

814,688,647

1,950,000,000

627,130,000

LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Short-term loans from banks Trade accounts payable

14

2,324,113,183

6,745,856,643

1,683,336,062

5,936,803,452

Current portion of long-term liabilitie

20

1,033,126,793

4,419,468,419

1,033,126,793

4,419,468,419

related companies

15

135,046,813

30,887,579

693,480,365

14,360,102

Short-term debentures

16

-

2,000,000,000

-

2,000,000,000

Amounts due to and loans from

Forward and swap contracts payable, net

17

Accrued concession fee Other current liabilities

18

57,450,350

76,706,115

57,227,095

76,706,115

953,231,105

655,112,199

953,231,105

655,112,199

4,518,768,739

2,947,128,934

3,614,101,988

2,632,774,949

10,971,736,983

17,689,848,536

9,984,503,408

16,362,355,236

17

24,564,860

-

24,564,860

-

Long-term debentures

19

1,500,000,000

2,000,000,000

1,500,000,000

2,000,000,000

Long-term liabilities

20

2,391,868,726

4,227,455,113

2,391,868,726

4,227,455,113

Deposits from customers

21

Total Current Liabilities Non-Current Liabilities Long-term forward and swap contracts payable, net

Total Non-Current Liabilities Total Liabilities

3,450,606,377

3,083,240,092

3,871,811,093

3,300,408,562

7,367,039,963

9,310,695,205

7,788,244,679

9,527,863,675

18,338,776,946

27,000,543,741

17,772,748,087

25,890,218,911

Shareholders’ Equity Share capital 5,000,000,000

5,000,000,000

5,000,000,000

5,000,000,000

Issued and paid-up share capital

Authorised share capital 22

2,700,000,000

2,340,000,000

2,700,000,000

2,340,000,000

Premium on share capital

22

10,215,000,000

2,295,000,000

10,215,000,000

2,295,000,000

Retained earnings Appropriated - Legal reserve

23

Unappropriated Minority interests Total Shareholders’ Equity

24

500,000,000

500,000,000

500,000,000

500,000,000

7,951,421,133

5,201,359,566

7,951,421,133

5,201,359,566

158,963,655

742,486,654

-

-

21,525,384,788

11,078,846,220

21,366,421,133

10,336,359,566

39,864,161,734

38,079,389,961

39,139,169,220

36,226,578,477

Total Liabilities and Shareholders’ Equity

The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.

65


Statements of Income Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998

Consolidated Notes

Company

1999

1998

1999

Restated

1998 Restated

Baht

Baht

Baht

Baht

18,327,768,540

14,881,128,031

16,701,245,081

13,327,584,009

6,885,884,121

224,976,672

-

-

Revenues Revenues from services and equipment rentals Sales Net gain on exchange Other operating income

25

Total Revenues

-

1,773,932,350

-

1,753,066,816

659,034,636

569,436,685

506,666,477

482,667,269

25,872,687,297

17,449,473,738

17,207,911,558

15,563,318,094

Expenses Cost of services and equipment 11,222,235,367

9,563,260,582

10,750,141,776

9,190,498,846

Cost of sales

rentals

26

4,708,594,735

253,586,510

-

-

Selling and administrative expenses

4,344,823,235

3,252,628,351

2,396,658,719

2,437,376,371

108,653,881

-

118,993,916

-

Net loss on exchange Interest expenses

27

718,286,932

1,216,858,571

717,647,239

1,167,328,796

Directors’ remuneration

28

5,060,000

720,000

5,000,000

660,000

21,107,654,150

14,287,054,014

13,988,441,650

12,795,864,013

4,765,033,147

3,162,419,724

3,219,469,908

2,767,454,081

Total Expenses Operating income

29

Share of net profit in subsidiaries Income before tax Income tax

30

-

-

987,568,785

129,379,554

4,765,033,147

3,162,419,724

4,207,038,693

2,896,833,635

1,995,711,939

1,591,291,692

1,456,977,126

1,450,315,292

2,769,321,208

1,571,128,032

2,750,061,567

1,446,518,343

19,259,641

124,609,689

-

-

2,750,061,567

1,446,518,343

2,750,061,567

1,446,518,343

10.44

6.71

10.37

6.18

to minority interests

(0.07)

(0.53)

-

-

Net income for the year

10.37

6.18

10.37

6.18

Income before minority interests Share of net profit in subsidiaries to minority interests

24

Net income for the year Basic earnings per share Income before minority interests

31

Share of net profit in subsidiaries

66

The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.


Statements of Changes in Shareholders’ Equity Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998

Consolidated Notes

Company

1999

1998

1999

Restated

1998 Restated

Baht

Baht

Baht

Baht

2,340,000,000

2,340,000,000

2,340,000,000

2,340,000,000

360,000,000

-

360,000,000

-

-

-

-

-

2,700,000,000

2,340,000,000

2,700,000,000

2,340,000,000

2,295,000,000

2,295,000,000

2,295,000,000

2,295,000,000

7,920,000,000

-

7,920,000,000

-

Share Capital Beginning balance Increase during the year

22

Decrease during the year Ending balance Premium on Share Capital Beginning balance Increase during the year

22

Decrease during the year

-

-

-

-

10,215,000,000

2,295,000,000

10,215,000,000

2,295,000,000

500,000,000

500,000,000

500,000,000

500,000,000

Increase during the year

-

-

-

-

Decrease during the year

-

-

-

-

500,000,000

500,000,000

500,000,000

500,000,000

Ending balance Retained Earnings Appropriated retained earnings Legal reserve Beginning balance

Ending balance

23

The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.

67


Statements of Changes in Shareholders’ Equity (Continued) Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998

Consolidated Notes

Company

1999

1998

1999

Restated

1998 Restated

Baht

Baht

Baht

Baht

9,241,773,863

6,533,401,796

9,241,773,863

6,533,401,796

(4,035,398,425)

(2,519,895,717)

(4,035,398,425)

(2,519,895,717)

(5,015,872)

(1,264,856)

(5,015,872)

(1,264,856)

5,201,359,566

4,012,241,223

5,201,359,566

4,012,241,223

Unappropriated. retained earnings Beginning balance-as previously reported Adjustments

3

Change in amortisation period for cost of mobile phone networks under concession agreements Change in status of investment in associate to be investment in subsidary, net of change in amortisation period for cost of Datanet tools and equipment of the subsidiary under concession agreement Beginning balance-as restated Net income for the year As previously reported Net income for the year Adjustments

-

2,965,772,067

-

2,965,772,067

2,750,061,567

-

2,750,061,567

-

-

(1,515,502,708)

-

(1,515,502,708)

3

Change in amortisation period for cost of mobile phone networks under concession agreements Change in status of investment in associate to be investment in subsidiary, net of change in amortisation period for cost of Datanet tools and equipment of the subsidiary under concession agreement Less: Dividends

32

Ending balance Minority interests Total

68

24

-

(3,751,016)

-

(3,751,016)

7,951,421,133

5,458,759,566

7,951,421,133

5,458,759,566

-

(257,400,000)

-

(257,400,000)

7,951,421,133

5,201,359,566

7,951,421,133

5,201,359,566

158,963,655

742,486,654

-

-

21,525,384,788

11,078,846,220

21,366,421,133

10,336,359,566

The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.


Statements of Retained Earnings Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998

Consolidated Notes

Company

1999

1998

1999

Restated

1998 Restated

Baht

Baht

Baht

Baht

9,241,773,863

6,533,401,796

9,241,773,863

6,533,401,796

(4,035,398,425)

(2,519,895,717)

(4,035,398,425)

(2,519,895,717)

(5,015,872)

(1,264,856)

(5,015,872)

(1,264,856)

5,201,359,566

4,012,241,223

5,201,359,566

4,012,241,223

Unappropriated retained earnings: Beginning balance-as previously reported Adjustments

3

Change in amortisation period for cost of mobile phone networks under concession agreements Change in status of investment in associate to be investment in subsidiary, net of change in amortisation period for cost of Datanet tools and equipment of the subsidiary under concession agreement Beginning balance-as restated Net income for the year As previously reported Net income for the year Adjustments

-

2,965,772,067

-

2,965,772,067

2,750,061,567

-

2,750,061,567

-

-

(1,515,502,708)

-

(1,515,502,708)

3

Change in amortisation period for cost of mobile phone networks under concession agreements Change in status of investment in associate to be investment in subsidiary, net of change in amortisation period for cost of Datanet tools and equipment of the subsidiary under concession agreement Less: Dividends

32

-

(3,751,016)

-

(3,751,016)

7,951,421,133

5,458,759,566

7,951,421,133

5,458,759,566

-

(257,400,000)

-

(257,400,000)

7,951,421,133

5,201,359,566

7,951,421,133

5,201,359,566

Unappropriated retained earnings at end of the year Appropriated retained earnings: Legal reserve Retained earnings at end of the year

23

500,000,000

500,000,000

500,000,000

500,000,000

8,451,421,133

5,701,359,566

8,451,421,133

5,701,359,566

The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.

69


Statements of Cash Flows Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998

Consolidated Notes

Company

1999

1998

1999

Restated

1998 Restated

Baht

Baht

Baht

Baht

2,750,061,567

1,446,518,343

2,750,061,567

1,446,518,343

Cash flows from operating activities : Net income for the year Adjusted by : Depreciation charge

11

599,236,020

484,985,439

515,801,518

418,729,060

Provision for obsolete fixed assets

11

10,446,194

-

-

-

12

3,716,634,027

3,170,262,530

3,537,661,087

3,012,871,880

Amortisation of costs of mobile phone and pager service networks and Datanet tools and equipment under concession agreements Amortisation of deferred charges

13

Doubtful accounts and bad debt

103,337,347

76,392,042

90,534,804

76,343,343

611,086,487

766,995,153

485,160,365

710,946,544

Loss on write-off inventories and provisions for obsolete inventories and diminution in value of finished goods Amortisation forward and swap premiums Loss (gain) on disposals of fixed assets

89,758,720

7,642,038

-

-

86,523,094

46,290,723

87,460,396

44,731,624

2,909,857

(1,601,843)

5,662,358

(58,608)

170,000,000

-

170,000,000

-

38,670,393

(1,937,113,058)

45,549,824

(1,936,048,683)

119,471,369

(718,374,141)

119,471,369

(718,374,141)

95,371,246

36,598,815

-

-

(37,110,360)

-

-

-

-

-

(987,568,785)

(129,379,554)

19,259,641

124,609,689

-

-

8,375,655,602

3,503,205,730

6,819,794,503

2,926,279,808

(1,397,702,852)

(221,336,927)

(1,181,183,550)

(206,055,717)

17,100,205

72,544,966

212,183,989

36,567,036

145,460,396

1,482,403,309

146,287,928

1,482,403,309

(345,324,549)

12,467,298

-

-

Loss from write-off cost of mobile phone service networks Unrealised loss (gain) on foreign exchange rate Realised loss (gain) on foreign exchange for loans Amortisation of goodwill

13

Write-down of negative goodwill to be other operating income Share of net profit in subsidiaries Share of net profit in subsidiaries to minority interests Net income before changes in operating assets and liabilities Changes in operating assets and liabilities (Excluding the effects of acquisition and disposal) (Increase) in trade accounts receivable Decrease in amounts due from related companies Decrease in forward and swap contracts receivable Decrease (increase) in inventories Decrease (increase) in other current assets Increase (decrease) in trade accounts payable

70

(698,075,011)

155,021,733

(745,212,756)

146,599,799

(1,630,262,838)

1,680,435,861

(1,468,799,524)

1,614,614,413

The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.


Statements of Cash Flows (Continued) Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998

Consolidated Notes

Company

1999

1998

1999

Restated

1998 Restated

Baht

Baht

Baht

Baht

104,159,234

(57,482,621)

29,120,263

4,985,872

5,309,096

(692,913,068)

5,085,840

(692,913,068)

Increase (decrease) in amounts due to related companies Increase (decrease) in forward and swap contracts payable Increase (decrease) in accrued concession fee

298,118,906

(213,484,830)

298,118,906

(213,484,830)

Increase in other current liabilities

1,661,334,480

1,041,269,814

1,034,927,302

964,129,008

(Increase) in other assets

(133,241,285)

(199,679,021)

(108,588,618)

(202,045,043)

362,752,809

92,204,092

571,402,530

129,306,562

6,765,284,193

6,654,656,336

5,613,136,813

5,990,387,149

(Increase) in loans to related companies

-

(45,500,000)

-

(50,000,000)

Increase in loans from related companies

-

-

650,000,000

-

(1,228,037,858)

(323,670,687)

(1,230,600,000)

(651,508,848)

Increase in deposits from customers Cash flows from operating activities Cash flows from investing activities

Cash invested in long-term investments in subsidiaries, net of cash acquired

38

Proceeds from disposals of fixed assets Purchases of property and equipment

27,214,866

6,091,382

18,023,766

1,906,008

(957,260,994)

(588,831,453)

(871,299,855)

(562,130,007)

(7,057,909,344)

(8,510,570,220)

(6,899,046,147)

(8,412,923,309)

(9,215,993,330)

(9,462,480,978)

(8,332,922,236)

(9,674,656,156)

Cash invested in cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements Net cash (payments) to investing activities Cash flows from financing activities Increase in short-term loans from banks

1,068,341,353

678,450,000

1,255,900,000

678,450,000

Receipts from short-term debentures

-

2,000,000,000

-

2,000,000,000

Receipts from long-term debentures

1,500,000,000

2,000,000,000

1,500,000,000

2,000,000,000

Receipts from long-term liabilities

2,084,293,871

3,283,401,578

2,084,293,871

3,283,401,578

Proceeds from capital increase

8,280,000,000

-

8,280,000,000

-

Repayments of short-term debentures

(2,000,000,000)

(2,130,000,000)

(2,000,000,000)

(2,130,000,000)

Repayments of long-term debentures

(2,000,000,000)

(1,000,000,000)

(2,000,000,000)

(1,000,000,000)

Repayments of long-term liabilities

(7,378,560,827)

(2,001,747,516)

(7,378,560,827)

(1,338,747,516)

Dividends paid

22

-

(257,400,000)

-

(257,400,000)

Net cash receipts from financing activities

32

1,554,074,397

2,572,704,062

1,741,633,044

3,235,704,062

Net (decrease) in cash and cash equivalents

(896,634,740)

(235,120,580)

(978,152,379)

(448,564,945)

4,587,747,398

4,822,867,978

3,856,922,827

4,305,487,772

3,691,112,658

4,587,747,398

2,878,770,448

3,856,922,827

Cash and cash equivalents - beginning balance Cash and cash equivalents - ending balance

The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.

71


Statements of Cash Flows (Continued) Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998

Supplemental disclosures of cash flow information Cash and cash equivalents Cash and cash equivalents included in cash flow statements for the years ended 31 December 1999 and 1998 comprise: Consolidated

Company

1999

1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

880.98

2,099.22

525.85

1,690.92

Short-term investments

2,810.13

2,488.53

2,352.92

2,166.00

Total cash and cash equivalents

3,691.11

4,587.75

2,878.77

3,856.92

Cash on hand and at banks

Interest expenses and income tax Interest expenses and income tax paid during the years ended 31 December 1999 and 1998 comprise:

Consolidated

Company

1999

1998

1999

Restated

Interest expenses Income tax

Million Baht

Million Baht

870.91 1,676.28

1998 Restated

Million Baht

Million Baht

1,299.32

864.65

1,173.57

390.00

1,451.60

326.30

Non-cash investing activities in 1999 and 1998 in consolidated statements of cash flows Additions to investments in property and equipment for general business operation, which are included in property and equipment, and additions to investments in mobile phone and pager service networks and Datanet tools and equipment, which are included in costs of mobile phone and pager service networks and Datanet tools and equipment under concession agreements, were approximately Baht 5,235.12 million in 1999 and Baht 8,397.67 million in 1998. Outstanding debts in the balance sheets relating to the aforesaid investments, were approximately Baht 1,140.49 million in 1999 and Baht 3,920.49 million in 1998. Non-cash investing activities in 1999 and 1998 in the company’s separate statements of cash flows Additions to investments in property, plant and equipment for general business operation, which are included in property, and equipment, and additions to investments in mobile phone networks, which are included in costs of mobile phone networks under concession agreements, were approximately Baht 4,989.52 million in 1999 and Baht 8,273.32 million in 1998. Outstanding debts in the balance sheets relating to the aforesaid investments, amounting to approximately Baht 1,139.67 million in 1999 and Baht 3,920.49 million in 1998.

72

The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.


Notes to the Consolidated and Company Financial Statements Advanced Info Service Public Company Limited For the years ended 31 December 1999 and 1998

1 GENERAL INFORMATION Advanced Info Service Public Co., Ltd. (“the Company”) is a public company limited and is incorporated and domiciled in Thailand. The address of its registered office is as follows: 414 Shinawatra Tower 1, Phaholyothin Road, Phayathai, Bangkok 10400 The Company is listed on the Stock Exchange of Thailand. The principal business operations of the Company and its subsidiaries (“the Group”) are summarised as follows: 1) The operation of a 900-MHz CELLULAR TELEPHONE SYSTEM under a concession granted from the Telephone Organization of Thailand (“TOT”), under the agreement dated 27 March 1990, trading mobile phones, rendering repair services for mobile phones and providing mobile phones for rent. 2) The operation of a DIGITAL DISPLAY PAGING SYSTEM under a concession granted from TOT, under the agreement dated 19 December 1989, trading pagers and providing pagers for rent. 3) The operation of a DATAKIT VIRTUAL CIRCUIT SWITCH under a concession granted from TOT, under the agreement dated 19 September 1989, rendering services for data network. Under the above agreements made with TOT, the Company, Advanced Paging Co., Ltd. and Shinawatra Datacom Co., Ltd. have to pay annual fees to TOT 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 4 March 1997 from TOT, no annual fee for the operations of pager service will be charged to Advanced Paging Co., Ltd. as from 1 March 1997 since the fee has been waived by TOT, while the said subsidiary has to reduce fee of pager service charging to its customers. Under the joint venture agreement between Shinawatra Datacom Co., Ltd. and TOT dated 25 September 1997, TOT has extended the period of the service agreement to 25 years and waived annual fee under the agreements effective from 25 September 1997, in exchange for annual fee, the subsidiary has issued the additional 10.75 million ordinary shares at the par value of Bht 10 each to TOT on 17 March 1998. In addition, the Company and the subsidiaries, according to the concessions, have to transfer their ownership of certain equipment and other assets procured by the Company and the subsidiaries for the operations of a 900 MHz CELLULAR TELEPHONE SYSTEM, DIGITAL DISPLAY PAGING SYSTEM and DATAKIT VIRTUAL CIRCUIT SWITCH to TOT upon completion of equipment installation. 2 SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of these consolidated and company financial statements are set out below: 2.1 Basis of preparation The consolidated and company financial statements are prepared in accordance with and comply with generally accepted accounting principles in Thailand. The consolidated and company financial statements are prepared under the historical cost convention.

The notes to the consolidated and company financial statements on pages 73 to 107 form an integral part of these financial statement. Auditor’s report pages 62 and 63.

73


2.2 Consolidation Subsidiary undertakings, which are those companies in which the Group, directly or indirectly, has an interest of more than one half of the voting rights or otherwise has power to exercise control over the financial and operating policies, have been consolidated. Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are no longer consolidated from the date of disposal. All intercompany transactions, balances and unrealised surpluses and deficits on transactions between group companies have been eliminated. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Group. Separate disclosure is made for minority interests. A list of the Group’s principal subsidiaries is set out in Note 10. The financial effect of the acquisition of subsidiaries is shown in Note 38. 2.3 Investments in subsidiaries Investments in subsidiary undertakings are accounted for in the non-consolidated financial statements by the equity method of accounting. These are undertakings over which the Company has over 50% of the voting rights, and over which the Company exercises control. Provisions are recorded for impairment in value (if any). Equity accounting involves recognising in the income statement the Company’s share of the subsidiaries’ profit or loss for the year. The Company’s interest in the subsidiary is carried in the balance sheet an amount that reflects its share of the net assets of the subsidiary and includes goodwill on the acquisition. Where a subsidiary undertaking is acquired and held exclusively with a view to be subsequently disposed in the near future; or a subsidiary undertaking operates under severe long-term restrictions that significantly impair its ability to transfer funds to the Group, the interest in the subsidiary undertaking is accounted for in the consolidated and company financial statements by using the cost method of accounting. 2.4 Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of net assets of the acquired subsidiary undertaking at the date of acquisition. Goodwill on acquisitions is reported in the consolidated balance sheet as an intangible asset and is amortised using the straight-line method over its estimated useful life. Goodwill arising on acquisitions of the Group is amortised over a maximum period of 15 years. The carrying amount of goodwill is reviewed annually and written down for impairment where it is considered necessary. 2.5 Revenue recognition Revenue from equipment sales is recognised when goods are delivered to customers. Revenue from equipment rentals is recognised over the period and at the rate prescribed by each agreement. Revenues from the provision of mobile phone and pager services are recognised when services are rendered to customers. Revenue from rendering voice/data communications via telephone line network services is recognised when service is rendered and billed. Interest income is recognised on an accrual basis unless collectibility is in doubt. 2.6 Cash and cash equivalents For the purpose of the statement of cash flows, cash and cash equivalents comprise cash on hand and deposits held 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 issue under the Ministerial Regulation No. 7 (B.E. 2539) under the Public Company Limited Act B.E. 2535. Cash and cash equivalents, therefore, represents cash at banks and short-term investments with original maturities of three months or less.

74


2.7 Trade accounts receivable Trade accounts receivable are carried at anticipated realisable value. An estimate is made for doubtful accounts receivable based on a review of all outstanding amounts at every month end. Bad debts are written off during the year in which they are identified. 2.8 Allowance for doubtful accounts The Group’s management estimates the allowance for doubtful accounts based on the ending balance of accounts receivable. The estimate encompasses the consideration of past collection experience and other factors, such as changes in the composition and volume of the receivable, the relationship of the allowance to the accounts receivable, and the local economic conditions. 2.9 Pension obligations and employee benefits The Group operates a provident fund under a defined contribution plan, which the assets are held in a separate trustee-administered fund. The provident fund is funded by payments from employees and the relevant group companies. The Group’s contributions to the provident fund are charged to the statement of income in the related period. 2.10 Inventories Inventories comprise pager and mobile phone stocks and spare parts used for repairs and services. Inventories are stated at the lower of cost or net realisable value. Cost is determined as follows: Pager

- Moving weighted average method

Mobile phones

- First-in, first-out (FIFO) method

Spare parts (pagers, phones)

- Moving weighted average method

Datanet equipment

- First-in, first-out (FIFO) method

Net realisable value is the estimated selling price in the ordinary course of business less costs of completion and selling expenses. A provision is made for obsolete, slow-moving or defective inventories when necessary. 2.11 Related companies Companies are considered to be related if one company has the ability to control or exercise significant influence over the other company in making financial and operating decisions, or most of the shareholders or executive management of both companies are the same people or relatives. 2.12 Property and equipment Property and equipment are recorded at cost. The property and equipment, except land, are stated in the balance sheet at historical cost less accumulated depreciation. Depreciation is calculated on the straight-line method to write off the cost of each asset to its residual value over its estimated useful life as follows: Acquisition date

Years

Buildings and improvements

-

5, 20

Leasehold rights

-

lease period

Leasehold building improvements

-

5, 10

Tools and equipment Furniture, fixtures and office equipment

before 1 January 1999 1 January 1999 onward

5 5, 10 5

Pagers and mobile phones for rent

-

2-5

Vehicles (including vehicles under finance leases)

-

5

75


2.12 Property and equipment (continued) The Group’s policy is to review asset values annually and to adjust depreciation schedules to match estimated useful lives. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Estimated recoverable amount is the higher of the anticipated discounted cash flows from the continuing use of the asset and the amount obtainable from the sale of the asset less any costs of disposal. Gains and losses on disposal of property and equipment are determined by reference to their carrying amount and are taken into account in determining operating income. 2.13 Accounting for leases - where the Group is the lessee Leases of property and equipment, where the Group assumes substantially all the benefits and risks of ownership, are classified as finance leases. Finance leases are capitalised at the estimated present value of the underlying lease payments. Each lease payment is allocated between the liability and finance charges in order to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in other long-term payable. The interest element of the finance charge is charged to the income statement over the lease period. The property and equipment acquired under finance leasing contracts are depreciated over the useful life of the asset. Leases of assets, under which all the risks and benefits of ownership are effectively retained by the lessor, are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any penalty payment required of the lessor is recognised as an expense in the period in which the termination takes place. 2.14 Long-lived assets The Group annually evaluates the carrying value of long-lived assets to be held and used, including goodwill and other intangible assets, when events and circumstances warrant such a review. The carrying value of long-lived assets is considered impaired when the anticipated recoverable value of such assets is separately identifiable and is less than its carrying value. In that event, a loss is recognised based on the amount by which the carrying value exceeds the higher of the net selling price of the long-lived assets or the recoverable value derived from the value of the asset in use. Value in use is determined primarily using anticipated cash flows discounted at a rate commensurate with the risk involved. Long-lived assets to be disposed of are recorded at net selling price, which is reduced by the estimated costs of disposal. 2.15 Computer software development costs Generally, costs associated with developing computer software programmes are recognised as an expense as incurred. However, costs that are clearly associated with an identifiable and unique product which will be controlled by the Group and has a probable benefit exceeding the costs beyond one year, are recognised as an intangible asset. Expenditure which enhances and extends the benefits of computer software programmes beyond their original specifications and lives is recognised as a capital improvement and added to the original cost of the software. Computer software development costs recognised as assets are amortised using the straight-line method over their estimated useful lives, not exceeding 10 years. Costs associated with the maintenance of existing computer software programmes and for modifications for the Year 2000 are expensed as incurred.

76


2.16 Intangible assets Cost of mobile phone and pager networks and Datanet tools and equipment under concession agreements The costs of mobile phone and pager networks and Datanet tools network and equipment under concession agreements represent costs of certain equipment and other assets which have been or have to be transferred to TOT. The costs of mobile phone networks under concession agreements are amortised as expense on the straight-line method over a period of 10 years not exceeding the remaining concession period for the digital system and the straight-line method over a period 10 years not exceeding year 2005 for the analogue system. The cost of Datanet tools and equipment under concession agreement is amortised as expense on the straight-line method over the period of 10 years not exceeding the remaining concession period. This accounting policy was adopted in 1999 (refer to Note 3). Previously, the costs of mobile phone networks and Datanet tools and equipment under concession agreements were amortised over the remaining concession period. Cost of pager network under concession agreement are amortised on the straight-line method over the remaining concession period until year 2005. Deferred charges Deferred charges represent commitment fees of long-term loans, costs of long-term leases of spaces for base stations, expenditures relating to the increase of power of electricity at base stations, costs of additional supplementary equipment for the operation of pager networks other than those specified in the concession agreement and which have been transferred to TOT, cost of computer software, expenditures relating to the improvement project of mobile phone service network and license fees from the joint venture agreement between the subsidiary and TOT. The following amortisation methods are used: -

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

-

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

-

Expenditures relating to the increase of power of electricity at base stations are amortised over the remaining period of the concession agreements.

-

Costs of additional supplementary equipment for the pager network, other than those specified in the concession agreement and that have not been transferred to TOT, are amortised over a period of five years.

-

Cost of computer software is amortised over a period of ten years.

-

Expenditures relating to the improvement project of mobile phone service network are amortised over a period of five years.

-

License fees are amortised over the period of concession agreement.

2.17 Foreign currencies Transactions denominated in foreign currencies are translated into Baht at the rates of exchange ruling on the transaction dates. Realised gains and losses on exchange are recognised as income or expense as incurred. Monetary assets and liabilities at the balance sheet date denominated in foreign currencies are translated into Baht at the rates of exchange ruling at that date. Unrealised gains and losses on exchange are recognised in the income statement as incurred. 2.18 Financial instruments Financial instruments carried on the balance sheet include cash and bank balances, investments, trade receivables, trade creditors, leases and borrowings. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item. The Group uses financial instruments that reduce exposure to fluctuations in foreign currency exchange and interest rates. These instruments, which mainly comprise forward foreign currency contracts and interest rate swap agreements, are recorded in the financial statements on the contract date. The purpose of these instruments is to reduce risk.

77


Forward foreign exchange contracts protect the Group from fluctuations in exchange rates by establishing the rate at which a foreign currency asset or liability will be settled. Forward contract transactions are recorded as forward contracts receivable and forward contracts payable. Premiums or discounts are amortised in the statement of income on a straight-line basis over the contract period. Interest rate swap agreements protect the Group from fluctuations in floating interest rates. Any differential to be paid or received on an interest rate swap agreement is recognised as a component of interest revenue or expense over the period of the agreement. Gains and losses on early termination of interest rate swaps or on repayment of the borrowing are charged to the income statement. Disclosures about financial instruments to which the Group is a party are provided in Note 34. 2.19 Segment reporting The segmental reporting has been prepared based on the Group’s method of internal reporting, which desegregates business by service or product. 2.20 Earnings per share Basic consolidated earnings per share is calculated by dividing the consolidated net earnings after considering minority interests in subsidiaries, attributable to shareholders by the weighted average number of ordinary shares in issue during the year. Basic company earnings per share is calculated by dividing the Company’s net earnings by the weighted average number of ordinary shares in issue during the year. 2.21 Comparatives Where necessary, comparative figures have been adjusted or reclassified to conform with changes in presentation in the current year. In particular, the comparatives have been adjusted or extended to take into account the requirements of the following revised or new accounting standards which the Group implemented in 1999, in advance of their effective dates: TAS 44 - Consolidated Financial Statements and Accounting for Investment in Subsidiaries TAS 47 - Related Party Disclosures TAS 48 - Financial Instruments: Presentation and Disclosure In 1999, the Group implemented the new Thai Accounting Standards, namely: TAS 32 - Property, Plant and Equipment TAS 33 - Borrowing Costs TAS 35 - Presentation of Financial Statements TAS 36 - Impairment of Assets TAS 37 - Revenue Recognition TAS 38 - Earnings Per Share TAS 39 - Net Profit or Loss for the Period, Fundamental Errors and Accounting Changes There are no changes in accounting policy that affect operating income resulting from the adoption of the above standards in these financial statements, as the Group was already following the recognition and measurement principles in those standards. 3 ADJUSTMENTS Accounting for cost of mobile phone networks under concession agreements The Company uses 2 systems to provide mobile phone services: a Nordic Mobile Telephone (“NMT”) analogue system and a Global System for Mobile (“GSM”) digital system. The cost of this system equipment is presented as cost of mobile phone networks under concession agreements under other assets in the balance sheet.

78


Previously the Company amortised the cost of such equipment over the remaining period of the concession agreement, commencing from the date of equipment installation, to September 2015. On 1 July 1999, the Company’s management reviewed its accounting for the cost of such mobile phone networks and now amortises such cost over the period the underlying systems equipment assets are expected to contribute revenue and cash to the business. The Company’s management considers that this presents more fairly the economic substance and benefits expected to flow from use of these assets under the terms of the concession agreement. Therefore, the cost of mobile phone network equipment for the NMT analogue system is amortised on a straight-line basis over a period of 10 years not exceeding year 2005, and for the GSM digital system is amortised on a straight-line basis over a period of 10 years not exceeding the concession period. Regular reviews are conducted on network carrying values in consideration of global developments in the wireless telecommunications industry. This basis of amortisation has been applied with effect from the commencement of use of the NMT analogue and GSM digital networks. The effects on the consolidated and company balance sheets as at 31 December 1999 and 1998 and consolidated and company statements of income for the years then ended are as follows: Consolidated

Company

1999

1998

1999

1998

Restated

Restated

Million Baht

Million Baht

Million Baht

Million Baht

5,792.45

4,035.40

5,792.45

4,035.40

4,035.40

2,519.90

4,035.40

2,519.90

1,757.05

1,515.50

1,757.05

1,515.50

Balance sheets Decrease in net book value of mobile phone networks Decrease in retained earnings brought forward at 1 January Statements of income Increase in amortisation expense

Accounting for cost of Datanet tools and equipment under concession agreement and accounting for the change in status of investment in associate to be investment in subsidiary Datanet operating right, which is owned by Shinawatra Datacom Co., Ltd. (“the subsidiary”) represents project tools and equipment acquired for the contract with TOT, dated 19 September 1989. Under the terms of the concession agreement the ownership of the system equipment, including tools, vests with TOT on completion of equipment installation. The subsidiary is entitled to operate the DATAKIT VIRTUAL CIRCUIT SWITCH system over the concession period. Previously the subsidiary amortised the cost of such tools and equipment over the remaining period of the concession agreement, commencing from the date of equipment installation, to September 2022. During the year, the subsidiary’s management has reviewed its accounting for the cost of such system equipment and now amortises such cost over the period the underlying system equipment assets are expected to contribute revenue and cash to the business. The subsidiary’s management considers that this presents more fairly the economic substance and benefits expected to flow from use of these assets under the terms of the concession agreement. Therefore, the cost of the system equipment, including tools, is amortised on a straight-line basis over a period of 10 years not exceeding the remaining period of concession agreement. This basis of amortisation has been applied with effect from the commencement of use of Datanet equipment.

79


On 29 October 1999, the Company increased its interest in the subsidiary, which formerly was an associate, by 40.08% of the total share capital. As a result, the Company has 67.95% interest, causing a change in status to be a subsidiary. Therefore, the financial statements of the subsidiary are consolidated with the Company’s from 29 October 1999 onward. The net effect resulting from the above changes on the consolidated and company balance sheets as at 31 December 1999 and 1998 and consolidated and company statements of income for the years then ended are as follows: Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

(70.95)

(37.67)

-

-

Balance sheets Decrease in net book value of Datanet tools and equipment Decrease in investments in subsidiaries Decrease in minority interests’

-

-

(11.50)

(5.02)

(53.93)

(32.15)

-

-

(5.02)

(1.26)

(5.02)

(1.26)

Decrease in retained earnings as at 1 January Statements of income Increase in amortisation expense Decrease in net income

33.28

30.64

-

-

(11.50)

(3.76)

(11.50)

(3.76)

(21.78)

(15.59)

-

-

1998

1999

Decrease in net profit in subsidiaries to minority interests 4 CASH ON HAND AND AT BANKS Consolidated 1999

Company Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

54.72

68.10

2.97

2.96

Deposits held at call with banks

826.26

2,031.12

522.88

1,687.96

Total cash on hand and at banks

880.98

2,099.22

525.85

1,690.92

Cash on hand

The weighted average effective interest rates of deposits held at call with banks were between 2.57% and 2.66% (1998: 3.88% - 5.55%). The Group’s fixed deposits amounting to Baht 41.33 million (1998: Baht 17.80 million) have been pledged with a bank in respect of bank guarantees.

80


5 SHORT-TERM INVESTMENTS Short-term investments represent fixed deposits with banks and other financial institutions and investments in bills of exchange with duration within 1 year. Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

2,665.13

2,208.52

2,352.92

2,066.01

Fixed deposits with local and foreign banks Fixed deposits with other finance companies Investments in bills of exchange Total short-term investment

-

280.00

-

100.00

145.00

-

-

-

2,810.13

2,488.52

2,352.92

2,166.01

1998

1999

6 TRADE ACCOUNTS RECEIVABLE, NET Consolidated 1999

Company Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

4,085.82

3,401.78

3,578.49

3,059.43

42.34

30.06

84.35

23.87

4,128.16

3,431.84

3,662.84

3,083.30

Trade accounts receivable: Third parties Related companies Total trade accounts receivable Less: Allowance for doubtful accounts Total trade accounts receivable, net

(279.81)

(367.45)

(232.70)

(333.88)

3,848.35

3,064.39

3,430.14

2,749.42

Trade accounts receivable - related companies as at 31 December comprise: Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Parent company

-

0.42

-

-

Subsidiaries

-

-

46.72

0.38

42.34

29.64

37.63

23.49

42.34

30.06

84.35

23.87

Other related companies

Million Baht

Million Baht

Total trade accounts receivablerelated companies

Certain debtors with settlement problems are included in the above trade accounts receivable. The Group has set up provisions to account for these debtors. The outstanding balances can be aged as follows: Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

Overdue 3 - 6 months

239.42

303.69

218.42

275.16

Overdue 6 - 12 months

190.91

453.16

189.69

444.88

36.31

34.96

24.51

31.88

Over 12 months Allowance for doubtful accounts

466.64

791.81

432.62

751.92

(279.81)

(367.45)

(232.70)

(333.88)

81


The directors are of the opinion that allowance for doubtful debts overdue more than 3 months of the Group in conjunction with deposits received from these customers (presented in balance sheet as deposits from customers) and bank guarantees received from dealers are sufficient to cover the bad debt risk. 7 AMOUNTS DUE FROM AND LOANS TO RELATED COMPANIES, NET Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Parent company

-

5.69

-

5.69

Subsidiaries

-

-

1.98

208.15

0.92

12.33

0.48

0.81

Other related companies

Million Baht

Million Baht

Total amounts due from and loans to related companies Less: Allowance for doubtful accounts

0.92

18.02

2.46

214.65

(0.37)

(0.37)

(0.37)

(0.37)

0.55

17.65

2.09

214.28

1998

1999

Total amounts due from and loans to related companies, net 8 INVENTORIES, NET Consolidated 1999

Company Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

Finished goods

873.54

626.65

-

-

Supplies and spare parts

134.07

107.27

-

-

1,007.61

733.92

-

-

(68.14)

(50.36)

-

-

939.47

683.56

-

-

1998

1999

Total inventories Less: Provisions for obsolete inventories and diminution in value of finished goods Total inventories, net 9 OTHER CURRENT ASSETS

Consolidated 1999

Company Restated

Million Baht

Million Baht

Million Baht

Million Baht

Other receivables

661.78

301.98

660.40

256.34

Prepaid expenses

173.23

135.96

168.90

125.82

Others

255.62

120.46

198.92

64.41

1,090.63

558.40

1,028.22

446.57

Total other current assets

82

1998 Restated


10 LONG-TERM INVESTMENTS, NET Consolidated

Company

1999

1998

1999

1998

Restated

Restated

Million Baht

Million Baht

Million Baht

Million Baht

Subsidiaries

-

-

3,825.62

1,607.45

Other company, net

-

-

-

-

Total long-term investments, net

-

-

3,825.62

1,607.45

Investments in subsidiaries Company 1999

1998 Restated

Million Baht

Million Baht

1,501.13

849.62

111.34

(21.80)

1,612.47

827.82

Opening balance Cost Accumulated share of net profit/(loss) in subsidiaries Opening net book amount - as previously reported Adjustment (Note 3) Change in amortisation period for cost of Datanet tools and equipment under concession agreement Opening net book amount - as restated

(5.02)

(1.26)

1,607.45

826.56

987.57

129.38

Share of net profit in subsidiaries Acquisitions (Note 38)

1,230.60

651.51

Closing net book amount

3,825.62

1,607.45

Company - 31 December 1999 Accumulated share of profit/ (loss) in Country of Nature of business

Nature of

Paid-up capital

incorporation relationship (Million Baht)

Investment

Cost

subsidiaries

Equity

Dividend

portion (%)

(Million Baht)

(Million Baht)

(Million Baht)

(Million Baht)

Subsidiaries Advanced Paging Co., Ltd.

Service provider of digital

(formerly “Shinawatra

paging system network,

Paging Co., Ltd.”)

trading of pagers and providing

Thailand

Shareholder

350.00

99.99

1,703.36

227.70

1,931.06

-

Thailand

Shareholder

240.00

99.99

600.00

885.37

1,485.37

-

Thailand

Shareholder

457.52

67.95

420.37

(18.66)

401.71

-

Thailand

Shareholder

1.00

49.00

8.00

(0.52)

7.48

-

2,731.73

1,093.89

3,825.62

-

pagers for rent Advanced Wireless Marketing Co., Ltd. Importer and distributor (formerly “Shinawatra Wireless Marketing Co., Ltd.”)

of cellular phones, related accessories and cellular phone rental service provider

Shinawatra Datacom Co., Ltd.

Service provider of voice/data communications via telephone line

Data Network Solution Co., Ltd.

Service provider of voice/data communications via telephone line

Company - 31 December 1998 (Restated)

Subsidiaries Advanced Paging Co., Ltd.

Service provider of digital

Thailand

Shareholder

350.00

59.99

753.76

136.59

890.35

-

Thailand

Shareholder

240.00

99.99

600.00

-

600.00

-

Thailand

Shareholder

457.52

27.87

147.37

(30.27)

117.10

-

1,501.13

106.32

1,607.45

-

paging system network, trading of pagers and providing pagers for rent Advanced Wireless Marketing Co., Ltd. Importer and distributor of cellular phones, related accessories and cellular phone rental service provider Shinawatra Datacom Co., Ltd.

Service provider of voice/data communications via telephone line

83


Investment in other company Percentage of holding by the Group and the Company 1999

1998 Restated

Unlisted company Fonepoint (Thailand) Co., Ltd.

Nature of business

Percent

Percent

Service provider of cellular phones

17.80

17.80

Consolidated

Company

1999

1998

1999

1998

Restated

Restated

Million Baht

Million Baht

Million Baht

Million Baht

17.20

17.20

17.20

17.20

(17.20)

(17.20)

(17.20)

(17.20)

-

-

-

-

Other company: Unlisted company Investment, at cost Less: Provision for change in fair value of investment Total investment in other company, net

11 PROPERTY AND EQUIPMENT, NET Consolidated 1999 Million Baht Leasehold

Land

Furniture,

Pagers and

Assets under

Assets

fixtures

mobile

construction

purchased

and

Buildings and

Leasehold

building

Tools and

and office

phones for

improvements

rights

improvements

equipment

equipment

rent

Vehicles

installation

Total

under finance property and leases

equipment

At 31 December 1998 Cost Less: Accumulated depreciation

10.97

52.34

42.72

112.51

2,040.62

682.04

73.81

55.26

133.37

4.77

3,208.41

-

(11.98)

(30.41)

(42.15)

(741.64)

(363.48)

(39.09)

(21.57)

-

(2.15)

(1,252.47)

Provision for obsolete fixed assets Net book amount

-

-

-

-

-

-

(1.80)

-

-

-

(1.80)

10.97

40.36

12.31

70.36

1,298.98

318.56

32.92

33.69

133.37

2.62

1,954.14

1,954.14

Year ended 31 December 1999 Opening net book amount

10.97

40.36

12.31

70.36

1,298.98

318.56

32.92

33.69

133.37

2.62

Acquisition of subsidiary (Note 38)

-

-

-

-

-

5.56

-

-

-

-

5.56

Additions

-

0.25

1.73

35.22

581.52

88.28

29.87

21.54

83.55

-

841.96 (187.05)

Transfers Disposals, net Depreciation charge

-

(2.61)

-

-

2.61

-

-

-

(187.05)

-

(2.52)

(4.72)

-

(3.73)

(5.98)

(2.08)

(1.84)

(8.96)

-

(0.29)

(30.12)

-

(3.06)

(5.03)

(16.75)

(411.33)

(125.12)

(27.23)

(9.83)

-

(0.88)

(599.23)

-

(2.60)

-

-

-

(7.52)

(0.33)

-

-

-

(10.45)

8.45

27.62

9.01

85.10

1,465.80

277.68

33.39

36.44

29.87

1.45

1,974.81

Additional provision for obsolete fixed assets Closing net book amount

At 31 December 1999 Cost Less: Accumulated depreciation

8.45

42.41

44.31

141.72

2,607.80

771.24

92.65

65.73

29.87

4.24

3,808.42

-

(12.19)

(35.30)

(56.62)

(1,142.00)

(486.04)

(57.13)

(29.29)

-

(2.79)

(1,821.36)

-

(2.60)

-

-

-

(7.52)

(2.13)

-

-

-

(12.25)

8.45

27.62

9.01

85.10

1,465.80

277.68

33.39

36.44

29.87

1.45

1,974.81

Provision for obsolete fixed assets Net book amount

84


Company 1999 Million Baht Furniture, and

Assets under

Assets

fixtures

construction

purchased

Total

and

under finance

property and

Vehicles

installation

leases

equipment

2,653.82

Leasehold Land

Buildings and

building

Tools and

and office

improvements

improvements

equipment

equipment

At 31 December 1998 Cost Less: Accumulated depreciation Net book amount

2.52

26.06

86.65

1,930.68

434.25

40.87

128.02

4.77

-

(5.19)

(24.49)

(675.15)

(182.64)

(14.13)

-

(2.15)

(903.75)

2.52

20.87

62.16

1,255.53

251.61

26.74

128.02

2.62

1,750.07

1,750.07

Year ended 31 December 1999 Opening net book amount

2.52

20.87

62.16

1,255.53

251.61

26.74

128.02

2.62

Additions

-

0.26

31.02

596.26

25.85

17.48

84.34

-

755.21

Transfers

-

(2.61)

-

2.61

-

-

(187.05)

-

(187.05)

Disposals, net

(2.52)

(4.72)

(3.69)

(2.71)

(1.13)

(8.62)

-

(0.29)

(23.68)

Depreciation charge

-

(1.75)

(13.38)

(420.99)

(71.26)

(7.54)

-

(0.88)

(515.80)

Closing net book amount

-

12.05

76.11

1,430.70

205.07

28.06

25.31

1.45

1,778.75

At 31 December 1999 Cost

-

16.12

111.76

2,525.63

457.16

48.29

25.31

4.24

3,188.51

Less: Accumulated depreciation

-

(4.07)

(35.65)

(1,094.93)

(252.09)

(20.23)

-

(2.79)

(1,409.76)

Net book amount

-

12.05

76.11

1,430.70

205.07

28.06

25.31

1.45

1,778.75

12 COST OF MOBILE PHONE AND PAGER SERVICE NETWORKS AND DATANET TOOLS AND EQUIPMENT UNDER CONCESSION AGREEMENTS Consolidated Million Baht Total cost of mobile phone and pager service networks and

At 31 December 1998 Cost Less: Accumulated amortisation Previously reported Adjustments (Note 3) Accumulated amortisation - as restated Net book amount Year ended 31 December 1999 Opening net book amount - as restated Additions Transfers Write-offs Amortisation charge Closing net book amount At 31 December 1999 Cost Less: Accumulated amortisation Net book amount

Cost of mobile

Cost of pager

Cost of Datanet

Datanet tools and

phone networks

service networks

tools and equipment

equipment

33,401.97

1,194.23

709.02

35,305.22

(4,382.34) (4,035.40)

(418.05) -

(335.60) (37.67)

(5,135.99) (4,073.07)

(8,417.74) 24,984.23

(418.05) 776.18

(373.27) 335.75

(9,209.06) 26,096.16

24,984.23 4,234.31 187.06 (147.50) (3,537.67) 25,720.43

776.18 80.77 (129.10) 727.85

335.75 78.08 (0.02) (49.87) 363.94

26,096.16 4,393.16 187.06 (147.52) (3,716.64) 26,812.22

37,596.75 (11,876.32) 25,720.43

1,275.00 (547.15) 727.85

787.09 (423.15) 363.94

39,658.84 (12,846.62) 26,812.22

85


Company Million Baht Cost of mobile phone networks

At 31 December 1998 Cost

33,401.97

Less: Accumulated amortisation Previously reported

(4,382.34)

Adjustments (Note 3)

(4,035.40)

Accumulated amortisation - as restated

(8,417.74)

Net book amount

24,984.23

Year ended 31 December 1999 Opening net book amount - as restated

24,984.23

Additions

4,234.31

Transfers

187.06

Write-offs

(147.50)

Amortisation charge

(3,537.67)

Closing net book amount

25,720.43

At 31 December 1999 Cost

37,596.75

Less: Accumulated amortisation

(11,876.32)

Net book amount

25,720.43

13 OTHER ASSETS Consolidated Million Baht Goodwill

Deferred charges

Others

Total

At 31 December 1998 Cost Less: Accumulated amortisation Net book amount

548.98

637.10

146.03

1,332.11

(256.19)

(119.12)

-

(375.31)

292.79

517.98

146.03

956.80

292.79

517.98

146.03

956.80

Year ended 31 December 1999 Opening net book amount Additions

614.83

120.54

13.56

748.93

Amortisation charge

(95.37)

(103.34)

-

(198.71)

Closing net book amount

812.25

535.18

159.59

1,507.02

Cost

1,163.81

757.64

159.59

2,081.04

Less: Accumulated amortisation

(351.56)

(222.46)

-

(574.02)

812.25

535.18

159.59

1,507.02

At 31 December 1999

Net book amount

86


Company Million Baht Deferred charges

Others

Total

463.73

102.18

565.91

(108.82)

-

(108.82)

354.91

102.18

457.09

Opening net book amount

354.91

102.18

457.09

Additions

104.44

4.15

108.59

Amortisation charge

(90.53)

-

(90.53)

Closing net book amount

368.82

106.33

475.15

At 31 December 1998 Cost Less: Accumulated amortisation Net book amount Year ended 31 December 1999

At 31 December 1999 Cost Less: Accumulated amortisation Net book amount

568.17

106.33

674.50

(199.35)

-

(199.35)

368.82

106.33

475.15

1998

1999

14 TRADE ACCOUNTS AND NOTES PAYABLE Consolidated 1999

Company Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

2,311.17

5,197.12

1,673.20

4,451.01

12.94

130.51

10.14

67.56

2,324.11

5,327.63

1,683.34

4,518.57

-

1,418.23

-

1,418.23

2,324.11

6,745.86

1,683.34

5,936.80

1998

1999

Trade accounts payable Third parties Related companies Notes payable - third parties Total trade accounts and notes payable

Trade accounts payable - related companies as at 31 December comprise: Consolidated 1999

Company

Restated Million Baht

Million Baht

Parent company

-

Subsidiaries

-

Other related companies

1998 Restated

Million Baht

Million Baht

31.46

-

11.95

-

2.39

44.24

12.94

99.05

7.75

11.37

12.94

130.51

10.14

67.56

Total trade accounts payable - related companies

87


15 AMOUNTS DUE TO AND LOANS FROM RELATED COMPANIES Consolidated

Company

1999

1998

1999

Restated Million Baht

Million Baht

Parent company

-

Subsidiaries

-

Other related companies

1998 Restated

Million Baht

Million Baht

13.00

-

12.98

-

669.81

0.05

135.05

17.89

23.67

1.33

135.05

30.89

693.48

14.36

Total amounts due to and loans from related companies 16 SHORT-TERM DEBENTURES As at 31 December 1998, short-term debentures represented 2 million units of Baht 1,000 each of unsecured debentures amounting to Baht 2,000 million. The short-term debentures carried interest at the fixed rate of 12% per annum throughout the term of the debentures and were redeemed on 11 October 1999. The interest on the debentures was payable on a semi-annual basis commencing from the issuing date on 12 October 1998. During the second and the third quarters of year 1999, the Company early redeemed partial of such debentures amounting to Baht 744.30 million, incurring a penalty of Baht 13.65 million. Debenture holders as at 31 December comprise: Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

-

102.80

-

102.80

-

20.10

-

20.10

-

1,877.10

-

1,877.10

-

2,000.00

-

2,000.00

1998

1999

A major shareholder of a parent company Directors of a related company and the Company Other Total

17 FORWARD AND SWAP CONTRACTS RECEIVABLE/ (PAYABLE) Consolidated 1999

Company Restated

Million Baht

Contracts receivable Contracts payable Less: Current portion

Million Baht

1998 Restated

Million Baht

Million Baht

3,759.23

7,008.04

3,755.98

7,008.04

(3,841.24)

(6,924.21)

(3,837.77)

(6,924.21)

(82.01)

83.83

(81.79)

83.83

57.45

76.71

57.23

76.71

(24.56)

160.54

(24.56)

160.54

Total forward and swap contracts receivable/(payable), net

88


18 OTHER CURRENT LIABILITIES Consolidated 1999

Company 1998

1999

Restated

Income tax payable Accrued transmission fee Accrued expenses Others Total other current liabilities

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

1,952.81

1,637.80

1,427.16

1,421.78

799.26

456.72

799.26

456.72

1,520.11

644.84

1,142.81

549.64

246.59

207.77

244.87

204.63

4,518.77

2,947.13

3,614.10

2,632.77

19 LONG-TERM DEBENTURES As at 31 December 1999, long-term debentures represent 1.5 million units of Baht 1,000 each of unsecured debentures amounting to Baht 1,500 million. The long-term debentures bear interest at the fixed rate of 8.25% per annum throughout the term of the debentures, payable on a semi-annual basis commencing from the issuing dates. The 0.5 million units and 1 million units of debentures will be redeemed on 18 February 2001 and 5 March 2002 respectively. As at 31 December 1998, long-term debentures represented 2 million units of Baht 1,000 each of unsecure debentures, totalling Baht 2,000 million. The debentures carried interest at the average MLR (Minimum Loan Rate) of two commercial banks, payable on a semi-annual basis commencing from the issuing date. The debentures were repayable during 26 January 2001 through 12 June 2001. On 19 February 1999, the Company early redeemed such debentures before their due date without incurring any penalty. Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

-

2,000.00

-

2,000.00

A major shareholder of a parent company A major shareholder of a related 270.00

-

270.00

-

Others

company

1,230.00

-

1,230.00

-

Total

1,500.00

2,000.00

1,500.00

2,000.00

89


20 LONG-TERM LIABILITIES Consolidated

Company

1999

1998

1999

Restated Million Baht

1998 Restated

Million Baht

Million Baht

Million Baht

1,032.16

296.17

1,032.16

296.17

-

4,122.46

-

4,122.46

Current portion of long-term liabilities Loans from finance companies Loans from banks Obligations under finance leases

0.97

0.84

0.97

0.84

1,033.13

4,419.47

1,033.13

4,419.47

2,391.09

1,892.13

2,391.09

1,892.13

Long-term liabilities Loans from finance companies Loans from banks Obligations under finance leases Total long-term liabilities

-

2,333.29

-

2,333.29

0.78

2.04

0.78

2.04

2,391.87

4,227.46

2,391.87

4,227.46

3,425.00

8,646.93

3,425.00

8,646.93

6.67%

6.88%

6.67%

6.88%

Weighted average effective interest rates: - Long-term loans from finance companies and banks

Long-term loans of the Group and the Company, which carry floating interest rate, were as follows: Consolidated

Company

1999

1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

3,423.25

8,644.05

3,423.25

8,644.05

Total long-term loans (floating interest rate)

The maturity of long-term liabilities (excluding obligations under finance leases) are as follows: Consolidated

Company

1999

1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

Later than 1 year and not later than 2 years

1,032.16

2,969.21

1,032.16

2,969.21

Later than 2 years and not later than 5 years

1,314.94

1,071.21

1,314.94

1,071.21

Later than 5 years

43.99

185.00

43.99

185.00

2,391.09

4,225.42

2,391.09

4,225.42

Long-term loans represent unsecured loans from foreign finance companies and foreign banks equivalent to US$ 90.78 million (1998: US$ 234.32 million), carrying interest at rates between LIBOR (London Inter Bank Offer Rate) and LIBOR plus 1.25% per annum (1998: LIBOR - LIBOR plus 1.25% per annum). The Company is required to comply with certain terms and conditions as specified in the loan agreements. The Group has in place certain forward exchange contracts, principal only swaps and interest rate swaps to cover these loans.

90


Borrowing facilities The Group and the Company have the following undrawn committed borrowing facilities: Consolidated 1999

Company 1998

1999

1998

Restated

Restated

Million Baht

Million Baht

Million Baht

Million Baht

3,842.13

2,636.76

3,842.13

2,636.76

Floating interest rate Expiring within one year Expiring beyond one year

840.00

2,112.80

485.00

1,842.80

4,682.13

4,749.56

4,327.13

4,479.56

The undrawn committed borrowing facilities have been arranged to support financing of the Group’s and the Company’s activities. The facilities expiring beyond one year are facilities subject to review at various dates. 21 DEPOSITS FROM CUSTOMERS Consolidated 1999

Company 1998

1999

1998

Restated

Restated

Million Baht

Million Baht

Million Baht

Million Baht

105.13

129.27

588.23

427.58

3,345.48

2,953.97

3,283.58

2,872.83

3,450.61

3,083.24

3,871.81

3,300.41

Deposits from customers Related companies Third parties Total deposits from customers

Deposits from customers - related companies as at 31 December comprise: Consolidated 1999

Company 1998

1999

1998

Restated

Restated

Million Baht

Million Baht

Million Baht

Million Baht

Parent company

-

129.27

-

129.27

Subsidiary

-

-

483.10

-

105.13

-

105.13

298.31

105.13

129.27

588.23

427.58

Total

Other related company Total deposits from customers -related companies 22 SHARE CAPITAL AND PREMIUM

Number of

Share

Share

Shares

capital

premium

Million

Million Baht

Million Baht

Million Baht

1 January 1998

234

2,340.00

2,295.00

4,635.00

31 December 1998

234

2,340.00

2,295.00

4,635.00

1 January 1999

234

2,340.00

2,295.00

4,635.00

Issue of shares, registered on 19 February 1999 31 December 1999

36

360.00

7,920.00

8,280.00

270

2,700.00

10,215.00

12,915.00

At the extraordinary meeting of the Company’s shareholders held on 10 February 1999, the shareholders passed a resolution to approve the issuance of 36,000,000 ordinary shares to sell specifically to Singapore Telecom International at Baht 230 per share. The issuance of the new shares was registered with the Ministry of Commerce on 19 February 1999.

91


23 LEGAL RESERVE Consolidated

Company

1999

1998

1999

Restated

Beginning balance Appropriation during the year Ending balance

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

500.00

500.00

500.00

500.00

-

-

-

-

500.00

500.00

500.00

500.00

Under the Public Companies Act, the Company is required to set aside as a statutory reserve at least 5 percent of its net income after accumulated deficit brought forward (if any) until the reserve is not less than 10 percent of the registered capital. The reserve is non-distributable. 24 MINORITY INTERESTS Consolidated 1999

1998 Restated

Beginning balance before adjustments

Million Baht

Million Baht

774.64

289.36

-

293.39

Adjustments (Note 3) Change in status of investment in associate to be investment in subsidiary before change in amortisation period for cost of Datanet tools and equipment under concession agreement Change in amortisation period for cost of Datanet tools and equipment under concession agreement

(32.15)

(5.76)

Beginning balance - as restated

742.49

576.99

-

107.52

6.61

-

19.26

109.02

-

41.98

-

(26.39)

(609.40)

(66.63)

158.96

742.49

Additions: The subsidiary has issued the additional ordinary shares to TOT (Note 1) Acquisition of investment in subsidiary (Note 38) Share of net profit in subsidiaries (before change in amortisation period for cost of Datanet tools and equipment under concession agreement) Change in status of investment in associate to be investment in subsidiary Change in amortisation period for cost of Datanet tools and equipment under concession agreement Disposals of interests to the Compan Ending balance 25 OTHER OPERATING INCOME Consolidated 1999

Company 1998

1999

Restated

Interest income

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

231.36

446.48

200.38

370.86

Gains on disposals of property and equipment

92

3.95

1.67

-

0.29

Others

423.72

121.29

306.29

111.52

Total other operating income

659.03

569.44

506.67

482.67


26 COST OF SERVICES AND EQUIPMENT RENTALS Included in cost of services and equipment rentals for the year ended 31 December 1998 was transmission expense for the prior years to 31 December 1997 charged from TOT in the amount of Baht 492.5 million. 27 INTEREST EXPENSES Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

392.75

741.62

392.11

692.09

0.46

0.69

0.46

0.69

- short-term debentures

165.91

100.84

165.91

100.84

- long-term debentures

137.02

321.51

137.02

321.51

Interest expenses - short-term and long-term loans - finance leases

- others Total interest expenses

22.15

52.20

22.15

52.20

718.29

1,216.86

717.65

1,167.33

28 DIRECTORS' REMUNERATION During the year ended 31 December 1999 the remuneration of the directors amounted to Baht 5.06 million (1998 : Baht 0.72 million), which did not exceed amounts which had been approved by the annual general meetings of the shareholders of the Company and the subsidiaries. The directors’ remuneration represents meeting fees and gratuities. 29 OPERATING INCOME The following expenditures, classified by nature, have been charged in arriving at operating income: Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

599.23

484.99

515.80

418.73

3,716.63

3,170.26

3,537.66

3,012.87

95.37

36.60

-

-

(37.11)

-

-

-

Depreciation on property and equipment (Note 11) Amortisation of intangible assets - Cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements (Note 12) - Positive goodwill (included in “Selling and administrative expenses”) - Write-down of negative goodwill (included in “Other operating income”) - Deferred charges (included in “Selling and administrative expenses”) Staff costs

103.33

76.39

90.53

76.34

1,110.59

909.58

633.30

454.45

93


30 INCOME TAX Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

4,765.03

3,162.42

4,207.04

2,896.83

-

-

(987.57)

(129.38)

Operating income

4,765.03

3,162.42

3,219.47

2,767.45

Tax calculated at a tax rate of 30%

1,429.51

948.73

965.84

830.24

566.20

658.47

491.14

620.08

Income before tax Less: Share of net profit in subsidiaries

Expenses not deductible for tax purposes Utilisation of previously unrecognised tax losses

-

(15.91)

-

-

Income tax

1,995.71

1,591.29

1,456.98

1,450.32

31 EARNINGS PER SHARE Basic earnings per share is calculated by dividing the net income attributable to shareholders by the weighted average number of ordinary shares in issue during the year Consolidated 1999

Company 1998

1999

Restated

Net income attributable to shareholders

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

2,750.06

1,446.52

2,750.06

1,446.52

265.17

234.00

265.17

234.00

Weighted average number of ordinary shares in issue Basic earnings per share

Baht

Baht

Baht

Baht

10.37

6.18

10.37

6.18

32 DIVIDEND PER SHARE Dividends payable are not accounted for until they have been ratified at the annual general meeting. At the annual general meeting of the Company’s shareholders held on 29 April 1998, the shareholders resolved to declare a dividend for the year ended 31 December 1997 of Baht 1.10 per share, totalling Baht 257.4 million. The dividend was distributed to the shareholders on 25 May 1998. 33 PROVIDENT FUND The Company has established a contributory registered provident fund, in accordance with the Provident Fund Act B.E. 2530. The registered provident fund plan was approved by the Ministry of Finance on 23 July 1990 and subsequently amended the provident fund’s name on 21 January 1993. Under the plan, the employees must contribute 3% - 7% of their basic salaries, to be matched by the Company. The Company appointed a fund manager to manage the fund in accordance with the terms and conditions prescribed in the Ministerial Regulation No. 2 (B.E. 2532) issued under the Provident Fund Act B.E. 2530.

94


34 FINANCIAL INSTRUMENTS The principal financial risks faced by the Group are interest rate risk and currency exchange risk. The Group borrows at both fixed and floating rates of interest to finance its operations. Purchases are mainly made in foreign currencies. The Group, in terms of approved policy limit of Shin Corporation Public Company Limited, enters into various types of foreign exchange contracts to hedge transaction risk both for short-term and long-term currency exposures. Short-term foreign currency exposures relate to trade imports, short-term foreign borrowings and interest flows on long-term borrowings. Long-term foreign currency exposure relates to long-term foreign borrowings. The currency exchange risks of the Group occurs in various currency combinations, but mostly in United States dollars because the Group involves in transactions in different countries. The Group hedging policy is to hedge currency risk, mostly based on the net exposure and the structure of the revenues. The Group focuses more on hedging when the revenues are received in local currency whereas it will do less when the revenues are received in foreign currency as such income can reduce risks from the foreign currency obligations. The management regularly analyses interest rate and currency exposures and re-evaluates forex management strategies. Trading for speculative purposes is prohibited. Objectives and significant terms and conditions To manage the risks arising from fluctuations in currency exchange and interest rates, the Group makes use of the following derivative financial instruments: Interest rate swaps The Group has entered into interest rate swap contracts that entitle it to obtain interest at floating rates on notional principal amounts and is obliged to pay interest at fixed rates on the same amounts. The interest rate swaps allow the Group to protect fluctuations of floating interest rates in the future. Under interest rate swaps, the Group agrees with other parties to exchange, at specified intervals, the difference between fixed rates and floating rates calculated by reference to the agreed notional principal amounts. At 31 December 1999 the fixed interest rates vary from 5.43% to 5.94% (1998: 5.43% to 6.34%) and the floating rates are linked to LIBOR. The remaining terms and notional principal amounts of the outstanding interest rate swap contracts at 31 December were: Consolidated 1999

Company 1998

1999

Restated

Not later than 1 year

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

649.06

2,530.91

649.06

2,530.91

1,407.21

2,915.37

1,407.21

2,915.37

2,056.27

5,446.28

2,056.27

5,446.28

Later than 1 year and not later than 5 years

95


Forward foreign exchange contracts Forward foreign exchange contracts are entered into to manage exposure of fluctuations in foreign currency exchange rates on specific transactions. At 31 December 1999 the settlement dates on open forward contracts ranged between 3 months and 9 months (1998 : 1 month to 1 year). The amounts to be received and contractual exchange rates of the outstanding contracts were: Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

1,788.03

-

1,788.03

-

-

3,144.23

-

3,144.23

135.85

-

-

-

-

-

132.38

-

1,923.88

3,144.23

1,920.41

3,144.23

USD 47.49 million (Baht 37.21 - Baht 39.35/USD) USD 74.79 million (Baht 37.35 - Baht 43.15/USD) DEM 6.36 million (Baht 20.44 - Baht 21.40/DEM) DEM 6.19 million (Baht 21.40/DEM) Principal only swaps Principal only swap contracts are entered into to manage exposure of fluctuations in foreign currency exchange rates on specific transactions. At 31 December 1999 the settlement dates on open principal only swap contracts ranged between 9 months and 2 years and 3 months (1998 : 3 months to 1 year and 3 months). The amounts to be received and contractual exchange rates of the outstanding contracts were: Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

1,917.36

-

1,917.36

-

-

2,479.25

-

2,479.25

1,917.36

2,479.25

1,917.36

2,479.25

USD 49.96 million (Baht 38.28 - Baht 38.42/USD) USD 64.50 million (Baht 36.88 - Baht 39.59/USD)

Cross currency swaps Cross currency swap contracts are entered into to manage exposure to fluctuations in foreign currency exchange rates and interest rates on specific transactions. At 31 December 1998 the settlement dates on open cross currency swap contracts ranged between 1 month and 2 years. The amounts to be received and contractual exchange rates and interest rates of the outstanding contracts were: Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

-

1,300.73

-

1,300.73

-

1,300.73

-

1,300.73

USD 50.68 million (Baht 25.30 - Baht 25.93/USD and interest rates between 9.68% and 10.935%)

During the first quarter of 1999 the Company had shortened some cross currency swaps due to foreign loan prepayment.

96


35 COMMITMENTS - As at 31 December 1999 the Group and the Company have commitments in respect of the construction and installation of mobile phone networks, which have not been completed, and purchases of property and equipment as follows: Consolidated

Company

Million

Million

1,064.03

1,064.03

15.27

15.27

698.78

698.78

17.06

17.06

0.56

-

38.11

38.11

Construction and installation of mobile phone networks Thai Baht US Dollars Japanese Yen Deutsche Mark Singapore Dollars Property and equipment Thai Baht

- The Group has commitments under letters of credit with overseas suppliers amounting to approximately Baht 59.45 million (1998: Baht 20.37 million) on a consolidated basis and Baht 20.36 million (1998: Nil) on a company basis. - The Group has entered into lease and related service agreements for office spaces, cars, and base stations for periods ranging from 4 months to 17 years with options to renew. As at 31 December 1999 the Group is committed to pay for rental and related services in respect of the agreements as follows: Consolidated

Company

Million

Million

- Third parties

171.86

154.36

- Related companies

100.56

143.24

- Third parties

148.09

137.10

- Related companies

257.56

257.37

Payment due - within 1 year

- within 2 to 5 years

- over 5 years - Third parties - Related companies

0.01

0.07

470.06

470.10

- The Company’s subsidiary has entered into a Data Broadcast via satellite agreement with TOT for a period of 5 years with option to renew. The subsidiary is committed to pay rental cost at Baht 35,000 per site per month for the master network and Baht 6,000 per site per month for the remote network as set out in the agreement. - The Company has entered into agreements with a related company under which the related company provides consulting and management services and other central services for a twelve-month period. The company is committed to pay for such services under these agreements amounting to approximately Baht 6.25 million per month (1998 : Baht 10.32 million per month).

97


36 BANK GUARANTEES As at 31 December 1999, the Group has commitments with local banks relating to letters of guarantee issued by the banks in respect of custom duties, electricity use and other transactions in the ordinary course of business amounting to approximately Baht 4,448.93 million (1998 : Baht 4,136.16 million) on a consolidated basis and Baht 4,338.04 million (1998 : Baht 3,964.82 million) on a company basis. 37 FINANCIAL INFORMATION BY SEGMENT The business operations of the Group, as reflected in the consolidated financial statements, are classified into four major segments as follows: 1) the operations of a 900-MHz CELLULAR TELEPHONE SYSTEM network 2) the operations of a DIGITAL DISPLAY PAGING SYSTEM network, trading pagers, and providing pagers for rent 3) trading of mobile phones, rendering repair services for mobile phones and providing mobile phones for rent 4) the operations of data network Financial information by business segment for the years ended 31 December are shown as follows: Consolidated 1999

Revenue - services Revenue - sales

Mobile phone

Pager sales &

Mobile phone

services

services

sales

Datanet service

Group

Million Baht

Million Baht

Million Baht

Million Baht

Million Baht

16,687.92

1,356.78

112.48

170.59

18,327.77

-

250.31

6,635.40

0.17

6,885.88

Total revenues

16,687.92

1,607.09

6,747.88

170.76

25,213.65

Segment result

5,937.78

1,015.63

2,274.30

55.11

Selling and administrative expenses

9,282.82 (4,458.54)

Operating income

4,824.28

Other income

427.67

Finance cost Interest income

231.36

Interest expenses

(718.28)

Income before tax

4,765.03

Income tax

(1,995.71)

Group income

2,769.32

Minority interests

(19.26)

Net income

98

2,750.06

Consolidated total assets

36,071.18

1,309.43

1,896.55

587.00

39,864.16

Consolidated total liabilities

16,617.45

371.16

1,250.14

100.03

18,338.78

Depreciation charge

515.80

46.87

32.57

4.00

599.24

Amortisation charge

3,715.66

130.15

6.44

54.25

3,906.50


Consolidated 1998

Revenue - services Revenue - sales

Mobile phone

Pager sales &

Mobile phone

services

services

sales

Datanet service

Group

Million Baht

Million Baht

Million Baht

Million Baht

Million Baht

13,323.79

1,394.47

-

162.86

14,881.12

-

224.98

-

-

224.98

Total revenues

13,323.79

1,619.45

-

162.86

15,106.10

Segment result

4,133.30

1,088.87

-

67.09

Selling and administrative expenses

5,289.26 (3,253.35)

Operating income

2,035.91

Other income

1,896.89

Finance cost Interest income

446.48

Interest expenses

(1,216.86)

Income before tax

3,162.42

Income tax

(1,591.29)

Group income

1,571.13

Minority interests

(124.61)

Net income

1,446.52

Consolidated total assets

34,703.64

1,425.35

1,400.10

550.30

38,079.39

Consolidated total liabilities

25,882.50

417.27

626.26

74.51

27,000.54

Depreciation charge

418.73

63.54

-

2.71

484.98

Amortisation charge

3,133.95

119.56

-

39.43

3,292.94

38 ACQUISITIONS In December 1998, the Group acquired an additional 14.10% of share capital of Shinawatra Datacom Co., Ltd. Consolidated 1998 Million Baht

Purchase consideration

51.51

Fair value of net assets acquired

(66.63)

Negative goodwill

(15.12)

99


No fair value adjustments were made to the book value of net assets acquired. The Group’s management is of the opinion that the book value approximated fair value at the date of acquisition. The book value of assets and liabilities acquired on the additional acquisition of Shinawatra Datacom Co., Ltd. were as follows: Restated Million Baht

Cash on hand and at banks

36.38

Short-term investments

32.00

Trade accounts receivable, net

9.06

Amounts due from related companies

5.29

Inventories, net

0.13

Other current assets

1.53

Equipment, net

10.42

Other assets

452.36

Trade accounts payable

(15.27)

Amounts due to related companies

(0.34)

Accrued expenses

(41.35)

Deposits from customers

(17.66)

Fair value of net assets

472.55

Interest acquired

14.10%

Fair value of net assets acquired

66.63

In December 1998, the Group acquired 99.99% of the share capital of Advanced Wireless Marketing Co., Ltd. Consolidated 1998 Million Baht

Purchase consideration Fair value of net assets acquired

600.00 (621.99)

Negative goodwill

(21.99)

Purchase consideration

600.00

Less: Cash and cash equivalents of subsidiary Cash flow on acquisition, net of cash and cash equivalents acquired

(327.84) 272.16

No fair value adjustments were made to the book value of net assets acquired. The Group’s management is of the opinion that the book value approximated fair value at the date of acquisition.

100


The book value of assets and liabilities acquired on the acquisition of Advanced Wireless Marketing Co., Ltd. were as follows: Million Baht

Cash on hand and at banks Short-term investments Trade accounts receivable, net Amounts due from related companies Inventories, net

327.32 0.52 234.39 1.80 637.54

Other current assets

93.23

Equipment, net

87.24

Deferred charges, net

59.05

Other assets

311.52

Loans from banks

(187.56)

Trade accounts payable and accrued expenses

(638.77)

Short-term loans and advances from related companies

(213.74)

Other current liabilities

(90.55)

Fair value of net assets acquired

621.99

In February 1999 the Group acquired an additional 40% of share capital of Advanced Paging Co., Ltd. Consolidated 1999 Million Baht

Purchase consideration Fair value of net assets acquired Positive goodwill

949.60 (418.20) 531.40

No fair value adjustments were made to the book value of net assets acquired. The Group’s management is of the opinion that the book value approximated fair value at the date of acquisition. The book value of assets and liabilities acquired on the additional acquisition of Advanced Paging Co., Ltd. were as follows: Million Baht

Cash on hand and at banks

42.83

Short-term investments

220.00

Trade accounts receivable, net

130.47

Amounts due from related companies

11.97

Inventories, net

43.28

Other current assets

54.14

Equipment, net

514.58

Other assets

360.17

Trade accounts payable

(25.39)

Amounts due to related companies Deposits from customers Accrued expenses

(4.68) (56.07) (117.12)

Other current liabilities

(128.69)

Fair value of net assets

1,045.49

Interest acquired Fair value of net assets acquired

40% 418.20

101


In October 1999, the Group acquired an additional 40.08 % of share capital of Shinawatra Datacom Co., Ltd. Consolidated 1999 Million Baht

Purchase consideration Fair value of net assets acquired Positive goodwill

273.00 (191.34) 81.66

No fair value adjustments were made to the book value of net assets acquired. The Group’s management is of the opinion that the book value approximated fair value at the date of acquisition. The book value of assets and liabilities acquired on the acquisition of Shinawatra Datacom Co., Ltd. were as follows: Million Baht

Cash on hand and at banks Trade accounts receivable, net Other current assets Equipment, net

64.18 8.88 6.25 13.31

Other assets

479.45

Trade accounts payable

(17.10)

Deposits from customers

(14.96)

Accrued expenses

(62.61)

Fair value of net assets Interest acquired Fair value of net assets acquired

477.40 40.08% 191.34

In October 1999, the Group acquired 49% of share capital of Data Network Solutions Co., Ltd. Consolidated 1999 Million Baht

Purchase consideration Fair value of net assets acquired Positive goodwill Purchase consideration Less: Cash on hand and at banks of subsidiary Cash flow on acquisition, net of cash on hand and at banks acquired

8.00 (6.35) 1.65 8.00 (2.56) 5.44

No fair value adjustments were made to the book value of net assets acquired. The Group’s management is of the opinion that the book value approximated fair value at the date of acquisition.

102


The book value of assets and liabilities acquired on the acquisition of Data Network Solutions Co., Ltd. were as follows: Million Baht

Cash on hand and at banks

2.56

Trade accounts receivable, net

12.64

Other current assets

1.48

Equipment, net

5.56

Other assets

0.84

Other current liabilities

(5.51)

Other liabilities

(4.61)

Fair value of net assets

12.96

Interest acquired

49%

Fair value of net assets acquired

6.35

39 RELATED COMPANY TRANSACTIONS During the year, the Group has entered into a number of transactions with related companies. The terms of such transactions are negotiated on an arms length market value basis in the ordinary course of business and according to normal trade conditions. On 19 February 1999 Shin Corporation Public Company Limited ceased to hold in excess of 50% of the share capital of the Company. Therefore, Shin Corporation Public Company Limited ceased to be treated as the parent company in the first quarter ended 31 March 1999. Significant related company transactions are summarised as follows: a) Sales of goods and services Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

Advanced Wireless Marketing Co., Ltd.

-

-

12.50

-

Others

-

-

0.83

0.31

-

-

13.33

0.31

153.94

-

153.94

-

7.42

12.45

6.06

10.39

161.36

12.45

160.00

10.39

161.36

12.45

173.33

10.70

-

-

86.57

-

Service income Subsidiaries

Related companies Singapore Telecom Mobile Pte Ltd. Others Total service income Sales of prepaid cards Subsidiary Advanced Wireless Marketing Co., Ltd.

103


b) Purchases of services Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

-

101.99

-

101.82

Advanced Wireless Marketing Co., Ltd.

-

-

43.96

-

Others

-

-

4.76

2.35

-

-

48.72

2.35

Rental and other service expenses Parent company Subsidiaries

Related companies Shin Satellite Public Co., Ltd.

114.63

127.08

114.63

127.08

SC Asset Co., Ltd

35.86

12.33

27.27

12.33

Tele Info Media Co., Ltd

17.83

-

17.83

-

Upcountry Land Co., Ltd.

83.65

82.44

83.65

82.44

OAI Leasing Co., Ltd. OAI Asset Co., Ltd. Others Total rental and other service expenses

34.73

29.53

28.13

29.53

134.68

102.35

108.37

102.35

87.22

332.83

49.56

270.44

508.60

686.56

429.44

624.17

508.60

788.55

478.16

728.34

446.72

21.53

47.75

7.62

Advertising expenses Related companies SC Matchbox Co., Ltd. Other

13.23

-

-

-

459.95

21.53

47.75

7.62

-

150.34

-

150.34

Shin Corporation Public Co., Ltd.

75.00

-

75.00

-

Singapore Telecom International Pte Ltd.

15.30

10.00

-

-

Shinawatra Information Technology Co., Ltd.

17.64

-

8.90

-

107.94

10.00

83.90

-

107.94

160.34

83.90

150.34

Parent company

-

16.58

-

16.58

Subsidiaries

-

-

3.66

-

Shin Corporation Public Co., Ltd.

41.59

-

41.59

-

A major shareholder of related companies

79.09

387.31

79.09

387.31

4.61

2.72

4.61

2.72

125.29

390.03

125.29

390.03

125.29

406.61

128.95

406.61

Total advertising expenses Consulting and management fees Parent company Related companies

Total consulting and management fees Interest expenses

Related companies

Directors of related companies Total interest expenses

104


c) Purchases of property, equipment and computer software Consolidated 1999

Company 1998

1999

Restated Million Baht

Million Baht

Parent company

-

Subsidiaries

-

Related companies

1998 Restated

Million Baht

Million Baht

65.00

-

65.00

-

4.76

19.07

25.22

5.19

24.31

3.99

25.22

70.19

29.07

88.06

d) Purchases of cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements Consolidated 1999

Company 1998

1999

Restated Million Baht

Million Baht

1998 Restated

Million Baht

Million Baht

Related companies Shinawatra Information Technology Co., Ltd. Others

-

138.17

-

137.74

-

4.63

-

4.63

-

142.80

-

142.37

e) Outstanding balance arising from sales/purchases of goods/services and loan to/from related companies Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

Parent company

-

0.42

-

-

Subsidiaries

-

-

46.72

0.38

37.50

23.13

37.50

23.13

Trade accounts receivable

Related companies Singapore Telecom Mobile Pte Ltd. Others

4.84

6.51

0.13

0.36

42.34

29.64

37.63

23.49

42.34

30.06

84.35

23.87

Parent company

-

5.69

-

5.69

Subsidiaries

-

-

1.98

158.16

0.55

11.96

0.11

0.43

0.55

17.65

2.09

164.28

-

-

-

50.00

0.55

17.65

2.09

214.28

Total trade accounts receivable Amounts due from and loan to related companies Amounts due from related companies

Related companies Loan to related company Subsidiary Advanced Wireless Marketing Co., Ltd. Total amounts due from and loan to related companies

105


Loan to a subsidiary represented loan with interest at the approximate minimum rate of bank overdraft and minimum rate of bank lending of 5 major commercial banks in Thailand. The rates were determined by Group Finance and were applied to the Group. The intercompany borrowing rate would be vary by adding margin which would be different according to the tenor of each borrowing. Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

Parent company

-

Subsidiaries

-

31.46

-

11.95

-

2.39

44.24

SC Matchbox Co., Ltd.

3.10

74.80

-

-

Shin Satellite Public Co., Ltd.

1.31

11.14

1.31

11.14

Others

8.53

13.11

6.44

0.23

Trade accounts payable

Related companies

12.94

99.05

7.75

11.37

12.94

130.51

10.14

67.56

-

13.00

-

12.98

Advanced Paging Co., Ltd.

-

-

11.12

-

Others

-

-

8.69

-

-

-

19.81

-

Total trade accounts payable Amounts due to and loans from related companies Amounts due to related companies Subsidiaries

Related companies Singapore Telecom International Pte Ltd. SC Matchbox Co., Ltd. Pager Sales Co., Ltd.

20.29

-

6.20

-

106.67

1.92

10.58

-

-

13.14

-

-

8.09

2.83

6.89

1.38

135.05

17.89

23.67

1.38

135.05

30.89

43.48

14.36

Advanced Paging Co., Ltd.

-

-

250.00

-

Advanced Wireless Marketing Co., Ltd.

-

-

400.00

-

-

-

650.00

-

135.05

30.89

693.48

14.36

Others

Loans from related companies Subsidiaries

Total amounts due to and loans from related companies

106


The loans from Advanced Paging Co., Ltd. and Advanced Wireless Marketing Co., Ltd. were provided interest rate at the short-term market rate quoted by the Banks that approved short-term credit line for the Company. The applied borrowing rate would be the rate that the Company would get if the Company borrowed from the commercial banks at that specific period. Consolidated 1999

Company 1998

1999

Restated

1998 Restated

Million Baht

Million Baht

Million Baht

Million Baht

-

-

483.10

298.31

105.13

129.27

105.13

129.27

105.13

129.27

588.23

427.58

Deposits from customers, net Subsidiary Advanced Wireless Marketing Co., Ltd. Related company Shin Corporation Public Co., Ltd. Total deposits from customers, net 40 YEAR 2000 ISSUE (This note is unaudited) The Group completed modifications of the computer systems to deal with the Year 2000 issue in 1999. Although the Group fully completed the modifications on its computer systems, the Group remains exposed to the risk that other companies with which the Group transacts with might not be the Year 2000 compliant. This might have an effect on the Group’s operations. To date the Group has not experienced any Year 2000 problems relating to the Group’s own systems or third parties’ systems. Total expenses of modifications incurred by the Group in 1999 for the Year 2000 project was Baht 30.46 million (1998: Nil).

107


Check List

Page Message from the Chairman Subsidiary and Associated Companies The Company and its Subsidiary Other Reference Persons Message from the Chairman

13 13 14 2-3

Report of the Audit Committee

15

Nature of Business

16

The Shareholdering structure of the Group Company

18

Major Event of the Company in 1999

19

Industry Situation and Competition

22

Shareholders and Management

28

Shareholders

28

Management Team

29

Remuneration for Director and Management Team

30

Related Companies and Related Transaction

108

2

31

Related Companies

31

Transaction between the Company, its subsidiaries and its associated Companies

35

The Opinion of Independent Director and Audit Committee on Related Company Transactions

36

Risk Factors

37

Other Factor Affecting Investment

42

Litigation

42

Obligations to issue share in the future

42

Terms and Conditions of Debentures

43

The Management Discussion and Analysis

45

Directors Report 1999

51

Financial Statements

61


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