ADVANC : Annual Report 2000 by ar.advanc

Financial

Highlights

Unit: Million Baht

2000

1999

1998

• Revenues from Services and Equipment Rentals

26,196.88

18,327.77

14,881.13

• Sales

10,761.76

6,885.88

224.98

• Total Revenue

39,729.64

25,872.69

17,449.47

• Gross Profit

14,546.11

9,119.76

5,289.26

6,598.95

2,750.06

1,446.52

• Total Assets

59,169.96

39,864.16

38,079.39

• Total Liabilities

31,045.17

18,338.78

27,000.54

• Total Shareholder’s Equity

28,124.79

21,525.38

11,078.85

• Net Profit Margin

16.61%

10.63%

8.29%

• Return on Equity

23.46%

12.78%

13.06%

• Return on Assets

11.15%

6.90%

3.80%

24.44

10.37

6.18

104.17

81.18

47.35

Operational Results

• Net Profit

Financial Ratios

• Net income for the year per share (Baht) • Dividend per share (Baht) • Book Value per share (Baht) As of December 31, 2000

Total Revenue

Net Profit

Total Assets 6,598.95

39,729.64

59,169.96

39,864.16 38,079.39

25,872.69 17,449.47 2,750.06 1,446.52

(Unit: Million Baht)

Mr. Paiboon Limpaphayom (Ph.D.) Chairman of the Board of Directors Committee Advanced Info Service Plc.

Dear Shareholders, The year 2000 welcomed back overall economic growth after recovery period from severe economic crisis having sacked Thailand since mid 1997. For Advanced Info Service Public Company Limited, the year 2000 marked the milestone of accelerating success. Combining Pre-Paid and Post-Paid subscribers has reached more than 2,000,000 since January 2001. Net subscriber increase of 747,100 turned out total subscribers to 1,977,300 at 2000 yearend. The success resulted from Company’s intelligent adjustment to enter international standard in terms of organizational administration, efficiency in service and technology, stable and strong financial status reinforced by the Strategic Alliance with solidly experienced telecommunication player named “Singapore Telecommunications Limited”. As at December 31, 2000, the operational performance for fiscal year 2000 can be summarized as follow;

Operating Per formance and Net Profit Due to efficient management, development and upgrading of administration including quality in mobile phone network and service network, product development to continually respond to customers’ need, the Company’s operating performance was significantly improved, compared to 1999. Total revenue was 39,730 Million Baht, increased from 25,873 Million Baht by 13,875 Million Baht or a 55.56% increase. Net profit after the restated amortization of mobile phone network expense was 6,599 Million Baht, increased from 2,750 Million Baht by 3,849 Million Baht, or a 139.96% increase.

Organizational Administration Development The Company has developed administrative structure to comply with international standard. Professional training programs have been created to suit manpower in every level with the same standard. Work system has been engineered to seek interrelation between each work process. In addition, the Company brings confidence to creditors and investors by focusing on transparency in performance disclosure. In returns, the Company wins trust with confidence to not only itself, but also the overall picture of nation’s telecommunication investment.

Mobile Telephone Network Development The Company masters the plan to continually expand mobile telephone network. In the past year, the Company has completed the installation of the GSM 2 Watts network to cover 795 districts throughout Thailand. For the year 2001, the Company will proceed to expand service network and sharpen application quality heading towards implementing technological convergence supporting advanced data transmission over mobile phone. The service will integrate the use of Internet network, such as, GPRS technology, Intelligent Network. The Company will also develop network operation and maintenance center to serve the needs and provide prompt solution to any usage problems. 02

Mr. Somprasong Boonyachai Chairman of the Executive Committee Advanced Info Service Plc.

Marketing Development In the past year, the Company continued successful standing in market leading position with highest market share. Introducing latest technology in data transmission under the name “mobileLIFE” using Sim Tool Kit technology and “mobileLIFE INTERNET” using WAP technology, the Company underscored its leadership by facilitating data transmission and various transaction through a GSM 2 Watts mobile phone without limitations in time and place. Moreover, a wide array of value added service (VAS) was offered. So far, the Post-Paid product has featured up to 58 types of transaction and the Pre-Paid under the name “One-2-Call” up to 18 types of transaction. International Roaming (IR) Service was expanded to cover 6 Continents worldwide, 74 Countries and 156 networks in coverage. In addition, Customer Relation Management was developed to ensure highest customers’ satisfaction.

Service Development Recognizing the importance of service, the Company managed to expand service network in terms of location coverage. More than 20 types of service available in AIS shops were rendered to more than 235 Telewiz shops throughout Thailand, coupled with well-developed curriculum “The AIS Way” to ceaselessly groom the quality of workforce. The efficiency of service were created through global technologies including Service on the Net on Internet, Intranet and Extranet network. The hotline service system was simplified with 4-digit dial number “1175.” After sales service was continually developed into a broad spectrum of activities and campaigns, such as, Minute Plus, Priority Care Center.

Readiness for Liberalization With forthcoming liberalization, market entry by foreign capitalists, capability of existing players and speedy development of Internet technology, the competition is expected to be of intense. The Company closely pursues the progress of every driving force including competition in current market, the Act of Organization for Frequency Allocation and Broadcasting Radio, Television and Communication Control, and Concession conversion under Governmental consideration.

The Company is now ready to move

towards liberalized competition in the near future. The Company would like to extend sincere thanks to shareholders, customers, every alliance and employee for the supports to generate successful performance and strongly believe that with obvious policy in operations and highly-qualified human resources, the Company will maintain leadership in telecommunication industry in the future.

>> 03

Superior Quality Network with Comprehensive Coverage and Worldwide Roaming >> Superior quality network is the Companyâ&#x20AC;&#x2122;s key factor in maintaining its leadership in wireless telecommunications business. AIS has continuously enhanced and expanded the network in order to respond to consumersâ&#x20AC;&#x2122; growing demands and needs.

By the end of 2000, AIS has expanded its GSM 2 Watts network to cover all 795 districts in Thailand. Similarly, more and more buildings has been enhanced with in-door coverage for better connections. Globally, AIS has constantly extended its International Roaming service. In 2000, GSM 2 Watts cellular phone users were able to roam in 6 continents, 74 countries, and 156 networks.

The engineering arm of AIS is continuously improving and developing new technologies to increase the network capacity and efficiency. In 2000, the AIS network has been upgraded to provide both voice and non-voice applications and was ready to move to the Third Generation Mobile Phone System in a near future.

Covering all 795 districts in Thailand with international roaming in 6 continents.

High capacity network with advanced technology ready for the third generation mobile phone system.

Market Leadership with Choices of Quality Products and Quality Voice and Non-Voice Applications >> AIS has continuously commanded a major market share through its dynamic marketing strategies that are responsive and flexible to to the changes changes andand newdevelopment developments of in mobile the mobile phonephone communications. industry, particularly a new trend of digital convergence. AIS has been able to expand its customer base by positioning our products to cover different market AIS has been segments withable services to expand and pricing its customer tailoring basetobyspecific positioning needsour andproducts demands. to cover Currently, different AISmarket offers segments 3 choices of with mobile services phone andsystems: pricing tailoring Cellular to 900, specific an analog needsNMT and system, demands. GSMCurrently, 2 Watts AIS withoffers wide 3 choicesvalue ranging of mobile added services, phone systems: and One-2-Call!, Cellular a900, pre-paid an analog mobileNMT phone system, system. GSM 2 Watt with wide ranging value added services, and One-2-Call!, a pre-paid mobile phone system. AIS has successfully retained its existing customers and penetrated wider market segments AIS has successfully existing customers penetrated wider for market segments through through developmentretained of newitsvalue added services,and particularly services non-voice applications. development new value added services, particularly services for non-voice the In 2000, the of company launched mobileLIFE service transforming a mobileapplications. phone into Ina 2000, powerful company launched communication device. mobileLIFE The latest service service transforming from AISa is mobile mobileLIFE phone INTERNET into a powerful that enables communication users to device. The latest service via from AIS is mobileLIFE INTERNETProtocol) that enables users to connect to the Internet connect to the Internet WAP (Wireless Application technology. In a near future, the via WAP (Wireless company will implement Application GPRS Protocol) (General technology. Packet Radio In a near Service) future, technology the company for awill greater implement benefit GPRS to (General our customers. Packet Radio Service) technology for a greater benefit to our customers.

Choices of quality mobile phone systems for better market penetration: Cellular 900, GSM 2 Watts, One-2-Call!

Power ful communications with leading-edge non-voice applicationsâ&#x20AC;&#x201D;mobileLIFE, mobileLIFE INTERNET.

Superior Service with High Standard Customer Service Centers and Distribution Channel >> AIS believes that the sustainable success and growth of any business is determined by maximum customer satisfaction. AIS is committed to service excellence through developing staff, technology and service network.

â&#x20AC;&#x153;The AIS Wayâ&#x20AC;? is an on-going staff training program for AIS and Telewiz shops. To ensure the same quality service of AIS high standard, the program provides in-depth knowledge of the products and services as well as promotes service mind. AIS also invests in high technology to increase service efficiency such as the on-line service and services on the net. In 2001, AIS plans to introduce AIS Call Center 1175 to handle all enquiries.

AIS has constantly expanded its service networks to cover all areas across the country. By the end of 2000, AIS offers the largest service network in Thailand, comprising 21 AIS Service Centers, 235 Telewiz shops, and 79 authorized service dealers, all of which offer the same standard with the realtime on-line network.

All-purpose Telewiz shops for better service and greater convenience throughout Thailand.

â&#x20AC;&#x153;The AIS Wayâ&#x20AC;? for excellent service with on-going service improvements and intensive staf f training.

High-Calibre Management with Strong Team Work and Excellent Credentials AIS its success and strength, to a great extent, from standard of® ∫√‘…—∑realizes œ ‡≈Áß‡ÀÁthat π∂÷ß§«“¡ ”§— ≠¢Õß√–∫∫∫√‘ À“√®—¥°“√·≈–∑√— æ¬“°√∫ÿ §§≈ comes „π∞“π–∑’ Ë‡ªìπªía®high ®—¬™’È¢“¥§«“¡ ”‡√Á professionalism important is lean and flexible organization ·≈–§«“¡·¢Áß·°√àßamong ¢ÕßÕß§å°its √ human πÕ°®“°π’resources. È∫√‘…—∑œ‰¥â„ÀâEqually §«“¡ ”§— ≠‡ªìπæ‘‡»…°— ∫√–∫∫°“√∫√‘ À“√ß“π∑’ Ë°√–∑—¥√—¥ that to effectively respond changes and new challenges. §≈àÕßµ—is «quick “¡“√∂ª√— ∫µ—«„Àâ Õ¥§≈â Õß°—∫to§«“¡‡ª≈’ ¬Ë π·ª≈ß·≈–°“√·¢à ß¢—π∑“ß∏ÿ√°‘®‰¥âÕ¬à“ß¡’ª√– ‘∑∏‘¿“æ

Recognizing as the most valuable of the∫ AIS is committed to investing in §«“¡·¢Áß·°√àßhuman ¢Õß∫√‘…capital ∑— œ‡ªìπº≈¡“®“°∑’ ¡ß“π¡◊ ÕÕ“™’æasset ¢Õß§≥–ºŸ â √‘company, À“√ ºŸ¡â ∫’ ∑∫“∑ ”§— ≠„π°“√°”Àπ¥¬ÿ ∑∏»“ µ√å human training programs at all levels. AIS‚§√ß°“√æ— owes its≤outstanding ·≈–·ª√¬ÿresources, ∑∏»“ µ√å„offering Àâ°≈“¬‡ªìvarious π§«“¡ ”‡√Á ®∑’Ë‚¥¥‡¥à π‡Àπ◊Õ§Ÿtoà·¢àstaff ß πÕ°®“°π’ È∫√‘…—∑œ¡’ π“∑√—æ¬“°√ performance toËÕits highlyπqualified team of management who∫are envision and ≠ implement ∫ÿ§§≈Õ¬à“ßµàÕ‡π◊ ß ‚¥¬‡πâ °“√‡µ√’¬¡§«“¡æ√â Õ¡¢ÕßºŸâ∫√‘À“√√–¥— °≈“ßable ´÷Ëßto ®–‡ªì π°ÿ≠·® ”§— ‰ª Ÿà°“√‡µ‘∫the ‚µ corporate strategy. ·≈–§«“¡ ”‡√Á ®¢Õß∫√‘…—∑Emphasis œ„πÕπ“§µis also given on the strengthening of middle management, whose preparedness will be the key to corporate growth and success.

Àπ÷Ëß„π∫∑æ‘ Ÿ®πå§«“¡ ”‡√Á®Õ—ππà“¿“§¿Ÿ¡‘„®¢Õß∫√‘…—∑œ§◊Õ °“√‰¥â√—∫‡≈◊Õ°‚¥¬π‘µ¬ “√ Asia Money ®“°°“√≈ß From the survey of 214 international fund πand conducted Asia Money §–·ππ¢Õß ∂“∫— π°“√‡ß‘ π™—πÈ π”¢Õß‚≈° 214 ∂“∫— „Àâ‡financial ªìπ∫√‘…∑— ∑’institutions ¡Ë °’ “√∫√‘À“√ß“π¬Õ¥‡¬’ ¬Ë ¡∑’by Ë ¥ÿ „πª√–‡∑»‰∑¬ magazine in 2000, AIS wasª√–®”ªï voted as the “Best Managed in Thailand. (Best Managed Company) 2543 πÕ°®“°π’ È ∫√‘…∑— Company” œ¬—ß‰¥â√∫— °“√ª√–°“»„Àâ ‡ªìπAIS Àπ÷ßË was „π∫√‘also …∑— ™—ranked πÈ π”„π among theµtop in Thailand by The Far Eastern Economic Review. ‡Õ‡™’¬‚¥¬π‘ ¬ “√tenFarleading Easterncompanies Economic Review

214 financial institutions worldwide voted AIS as Thailand’s Best Managed Company of the year 2000.

010

Highly motivated management with proven records of successful marketing strategy.

011

Check List 013

General Information

015

Audit Committeeâ&#x20AC;&#x2122;s Report

016

Nature of Business

024

Risk Factors

028

Shareholders and Management Structure

038

Related Transactions with Related Companies and Possible Disputes

054

The Analysis of Finance Status and Operating Performance

059

Financial Statements

012

GENERAL INFORMATION

The Company and its subsidiaries

Company

Business

Advanced Info Service Plc.

Service provider of cellular 900

Head Office : 414 Phaholyothin Road

phone networks for NMT

Samsennai, Phayathai, Bangkok

900 and Digital GSM

Registered

Par Value

Capital

(Baht per Share)

Paid-up

% of

(Million Share)

(Baht Million)

Capital

Investment

500

2,700

240

100.00

350

100.00

45.75

457.52

67.95

0.10

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 Home Page : www.ais900.com Advanced Wireless Marketing Co., Ltd.

Importer and distributor of

414 Phaholyothin Road

cellular phones and accessories,

Samsennai, Phayathai, Bangkok

and provider of NMT 900

Tel. (662) 299-5000

and Digital GSM

Fax. (662) 299-5470

phone rental service

Advanced Paging Co., Ltd.

Service provider of

408/128-135,

30th

-31st

Floor

the digital paging system

Phaholyothin Road

network, trading of pagers

Samsennai, Phayathai, Bangkok

and providing pager for

Tel. (662) 299-6000

rent under the name of

Fax. (662) 299-6446

â&#x20AC;&#x153;Phonelinkâ&#x20AC;?

Home Page : www.phonelink.net Advanced Data Network

Service provider of

Communications Co., Ltd.

voice/data communications

500

17th

Floor, Ploenchit Road

via telephone line network

Lumpini, Pathumwan, Bangkok

in Bangkok and

Tel. (662) 256-9461-80

metropolitan area

Fax. (662) 256-9922 Data Network Solutions Co., Ltd. 500

17th

Floor, Ploenchit Road

Service provider of voice/data communications

Lumpini, Pathumwan, Bangkok

via telephone line network

Tel. (662) 256-9461-80

in upcountry

Fax. (662) 256-9922 As of February 28, 2001 013

Other Reference Persons Security Registrar

Thailand Securities Depository Co.,Ltd. 62 4th-7th Floor, Ratchadapisek Road, Klongtoey, Klongtoey, Bangkok Tel. (662) 359-1200-01 Fax. (662) 359-1259

Auditor

Mr. Prasan Chuapanich CPA No. 3051 PricewaterhouseCoopers ABAS Ltd. 179/74-80, Bangkok City Tower 15th Floor, South Sathorn Road, Bangkok 10120 Tel. (662) 286-9999, (662) 344-1000 Fax. (662) 286-5050

Bond Registrar

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

014

AUDIT COMMITTEE’S REPORT

To the Shareholders of Advanced Info Service Public Company Limited The Audit Committee has worked on duty following the Charter that was approved from the Board of Directors. The Audit Committee conducted a meeting to review financial statements of the Company and its subsidiaries, including related transactions of the Company and its subsidiaries with related parties, before submitting to the Board of Directors. In addition, The Audit Committee reviewed audit reports and an annual audit plan of the Internal Audit Office that concentrated on risk management, controls, good governance and Internal Auditing standards. The Audit Committee also commented on a data security system and a disclosure of significant information of the Company, including provided a recommendation about the Company’s management which received a fully cooperation from the managements, external auditors and internal auditors.

In our opinion, the Company’s management presents a good corporate governance, transparency, and good ethics. The management has performed its duties in compliance with related laws and regulations with honesty and taking good care of company’s benefits. The company has an effective and the adequacy of the system of internal controls. The financial statements are disclosed correctly and appropriately. There are no significant weaknesses found in the internal control systems.

The Audit Committee recommends and proposes to the Board of Directors to consider appointing PricewaterhouseCoopers ABAS Limited as external auditors in 2001.

Suphadej Poonpipat Chairman of the Audit Committee, April 2001

015

NATURE OF BUSINESS

The Company is one of the companies held by Shin Corporations Plc. (“SHIN”), a holding company of the Group. As at December 31, 2000, SHIN’s business is categorized into 4 major business units as following;

Business Unit

Company

Wireless Communications

Advanced Info Service Plc. (“The Company” or “ADVANC”) Digital Phone Co., Ltd. (“DPC”) Advanced Wireless Marketing Co., Ltd. (“AWM”) Advanced Paging Co., Ltd. (“APG”) Advanced Data Network Communications (“ADC”) Data Network Solutions Co., Ltd. (”DNS”)

Satellite and International Business

Shin Satellite Plc. (“SATTEL”) C.S. Communications Co., Ltd. (“CSC”) Cambodia Shinawatra Co., Ltd. (“CAM”) Lao Telecommunications Co., Ltd. (“LAO”)

Media and Advertising

SC Matchbox Co., Ltd. (“SMB”) ITV Plc. (“ITV”)

E-Business

Teleinfo Media Co., Ltd. (“TMC”) AD Venture Co., Ltd. (“ADV”)

The Company operates mobile phone network service in the frequency of 900 MHz both Analog NMT and Digital GSM under the Concession awarded by Telephone Organization of Thailand (TOT). The concession was dated March 27, 1990 with applicable Supplementary Agreements subsequently established. (Please find detail on Concession in Section 5.) The Company is obliged to paying annual Concession fee to TOT in percentage of gross service revenue or minimum guaranteed amount clearly indicated in the Concession. Regarded as BTO (Build-Transfer-Operate) concession, the Company is responsible for acquiring funds, paying all-in cost and investing in equipment and network with ownership transferred to TOT upon the completion of installation. The Company has right to utilize the transferred equipment and network for operation under the Concession.

016

At present, the Company invests in the following Subsidiaries and Joint Ventures.

Advanced Wireless Marketing Co., Ltd. (AWM) As at December 31, 2000, the Company held 99.99% of AWM initially named “Shinawatra Telewiz Co., Ltd.,” renamed as “Shinawatra Wireless Marketing Co., Ltd.” on December 25, 1997 and recently renamed as “Advanced Wireless Marketing Co., Ltd. on March 2, 1999.

AWM serves as importer and dealer for handsets of analog NMT 900, Digital GSM 900 and GSM 1800 as well as other telecommunication equipment. The distribution runs on Franchise system under the trade name “Telewiz.”

In addition, AWM operates mobile phone rental service (Phone Rent), repair & after sales services, distribution of refillable card for prepaid One-2-Call.

Advanced Paging Co., Ltd. (APG) As at December 31, 2000, the Company held 99.99% of APG formerly known as Shinawatra Paging Co., Ltd. APG was granted a 15 year BTO concession by TOT on December 19, 1989 to operate paging service in Digital Display Paging system for the service period from June 12, 1990 to June 11, 2005. APG frequency transmits in the range of 170.025-280.425 MHz with the capacity to serve 360,000 customers.

APG reached about 263,000 customers on

September 30, 2000. The paging service of APG (under the name “Phonelink”) is the first system to send and receive alphabetic message with nationwide coverage of service area and value added service, such as, Internet via Link To Phonelink, Short Message to Phonelink, Voice Mail Plus, Voice & Fax Mail Plus, Stock Broadcast, Stock Package, Stock Tracking and Moneylink.

Advanced Data Network Communications Co., Ltd. (ADC) As at December 31, 2000, the Company held 67.95% of ADC. Other major shareholders are TOT holding 23.50%. On September 19, 1989, ADC, formerly known as Shinawatra Datacom Co., Ltd., was granted a 25 year concession to operate On-line Data Communication including linking data between computer at different locations, linking data between ATM (Automatic Teller Machine) and online banking service under the name “DataNet.” In 1990, ADC began its service with Point-to-Point and Point-to-Multipoint linking in the forms of X.25, Frame Relay and ATM (Asynchronous Transfer Mode). Main customers range from banks, gas repositories, airlines to trading and transportation businesses. At present, ADC service area and network covers throughout country.

Data Network Solutions Co., Ltd. (DNS) As at December 31, 2000, the Company held 49.00% of DNS. The remaining 51.00% of shares are held by Bangkok Telecom Engineering Co., Ltd. In accordance with original concession, DNS was entitled to provide On-line data communication service in metropolitan area. After September 1997, DNS reached the Agreement with TOT to expand service area to cover nationwide. DNS now is servicing only existing customers and selling additional equipment.

017

The Shareholding Structure of the Group Company

Shin Corporations Plc.

40.51% Advanced Info Service Plc.

100% Advanced Wireless Marketing Co.,Ltd.

100% Advanced Paging Co.,Ltd.

51.53% Shin Satellite Plc.

99% C.S. Communications Co.,Ltd.

80% C.S.Satellite Phone Co.,Ltd.

67.95% Advanced Data Network Communications Co.,Ltd.

100% Shin Broadband Internet (Thailand) Co.,Ltd.

49% Data Network Solutions Co.,Ltd.

100% Shenington Investments Pte Ltd.

100% Cambodia Shinawatra Co.,Ltd.

49% Lao Telecommunications Co.,Ltd.

As of Feburary 28, 2001

018

38.25% Teleinfo Media Co.,Ltd.

100% Shinawatra Information Technology Co.,Ltd.

74.97% SC Matchbox Co.,Ltd.

100% IT Application Service Co.,Ltd.

100% AD Venture Co.,Ltd.

47.55% Digital Phone Co.,Ltd.

39% ITV. Plc.

100% Shin digital Co.,Ltd.

100% Merry International Investment Corp.

Revenue Structure Revenue Structure from products and services of Company and its Subsidiaries to others for the past 3 years Unit: Million Baht Product/Service

Operated by

Percent of Companyâ&#x20AC;&#x2122;s shares

1998

1999

2000

Revenue

13,327.58

85.02

16,687.92

64.50

24,622.03

64.90

99.99

6,747.89

26.08

10,718.97

28.25

13,327.58

85.02

23,435.81

90.58

35,341.00

93.16

Mobile Phone Business Mobile Phone Service

Advanced Info Service Plc.

Handset Distribution

Advanced Wireless

and Rental

Marketing Co., Ltd.

Total Paging Business Paging Service

Advanced Paging Co., Ltd.

99.99

1,382.39

8.82

1,350.12

5.22

1,144.32

3.02

Paging Rental

Advanced Paging Co., Ltd.

99.99

9.45

0.06

6.67

0.03

3.59

0.01

Pager Distribution

Advanced Paging Co., Ltd.

99.99

224.98

1.44

250.32

0.97

193.92

0.51

1,616.82

10.32

1,607.11

6.22

1,341.83

3.54

67.95

161.70

1.03

157.46

0.61

209.06

0.55

49.00

13.29

0.05

66.75

0.18

Total

161.70

1.03

170.75

0.66

275.81

0.73

Others

569.44

3.63

659.03

2.55

978.78

2.58

TOTAL

15,675.54

100.00

25,872.70

100.00

37,937.42

100.00

Total On-line Data Communication Business

Advanced Data Network Communication Co., Ltd. Data Network Solutions Co., Ltd.

Remarks: 1) The Company held 100% of Advanced Wireless Marketing Co., Ltd. in December 1998. 2) The Company held 67.95% of Advanced Data Network Communication Co., Ltd. and 49.00% of Data Network Solutions Co., Ltd. in October 1999. 3) Other revenues are interest, and other revenues excluding gain from foreign exchange.

MILESTONE - March 2000 The Company issued the 8000 Million Baht Debenture offered to institutional and individual investors. - August 2000 The Company entered the age of Non Voice Application by launching mobileLIFE service transmitting data through handset with Sim Tool Kit technology facilitating a broad array of transactions over handset. - December 2000 The Company took further step in mobileLIFE service. With Wireless Application Protocol (WAP) technology, users could connect their mobile phones to Internet network. - December 2000 The Company developed its network to reach 795 Amphur (district) service coverage nationwide.

019

Marketing 1

Marketing Strategy and Target Group The Company operates mobile phone network service and generates revenue by charging customers using service on Company’s network on the basis of time and frequency of uses. Therefore, the strategy to increase revenue is to increase subscription, attract customers to increase time and frequency of uses on Company’s network. Marketing strategy implemented by the Company to achieve such goal is as follows:

(a) Conserve existing customer base As at December 31, 2000, the Company possessed customer base of more than 1.98 million for combining Analog NMT and Digital GSM system as follow: Number Of Customers

Post paid collection - NMT 900 - Digital GSM Pre paid collection

465,000 1,157,200 354,500

To conserve existing customer base, the Company focuses on creating highest customer satisfaction with efficient service, and ongoing marketing activities. The Company has exercised the following action: - Indicate various marketing activities for each period of time in response to the needs of each group of customers. Customer Segmentation can be divided into 4 groups based upon monthly payment due to the bill as hereunder: 1) Customer paying highest bill (Very high value customer) is customer paying monthly bill to the Company for 1,750 Baht and more. 2) Customer paying high bill (High value customer) is customer paying monthly bill to the Company for 1,000-1,749 Baht 3) Customer paying medium bill (Medium value customer) is customer paying monthly bill to the Company for 750-999 Baht. 4) Customer paying low bill (Low value customer) is customer paying monthly bill to the Company for less than 749 Baht. - The Company established the project “AIS Call Center 1175” serving as center of information beneficial to customers. Customers can call for inquiries or instruction on usage 24 hour a day. - The project “Priority Care Center” is established to offer customers various specific services including handset replacement for the lost handset, special price for replacing handset cheaper than new handset new number, and etc. In addition, the Migration project aims at attracting customers to replace existing handset carrying basic functions with a new handset on Digital GSM system at special price. - The system has been developed to boost customer satisfaction including SIS (Subscriber Identification Security) protecting unauthorized use at 100% guaranteed efficiency for Analog NMT system, CLI (Calling Line Identification) displaying incoming call, the service mobileLIFE by GSM 2 Watts and WAP (Wireless Application Protocol) for customers throughout the country. - Various special activities to pay back to customers, such as the project “Minute Plus” giving discount and gifts to customers earning points from monthly bill payment, other special projects in conjunction with many leading companies to extend rewards and privileges to customers, such as discount on hotel services, restaurants and hospitals.

(b) New Customers Besides conserving existing customer base, the Company attempts to acquire new customers to expand Company’s customer base. The Company specifies the following principles for each system

- Analog NMT Targeted customers for Analog NMT are those who use mobile phone for basic Voice Communication and do not require value added services. Customers of this group need wide service coverage area for efficient communication. The Company has completed network installation for Analog NMT to cover nationwide service area since 1992 in line with expanding customer base to upcountry. Customers residing in upcountry require their mobile

020

phones to be capable of communicating only basic voice. To date, Analog NMT network has enough capacity to serve more customers without having to expand more investment in network installation. The Company plans to acquire more customers for Analog NMT by targeting new customers with lower income than current customers. The plan will be supported by the refurbishment of the traded Analog NMT handsets offered to the target at special price. Thus, the Company can expand customer base to the customers with low purchasing power.

- Digital GSM Digital GSM features higher technology enabling more advanced service than basic voice communication. The targeted group is customers throughout country who require higher quality of service with more varieties. The Company focuses on expanding customer base for Digital GSM by offering a wide array of value added services. In August 2000, the Company launched mobileLIFE service on Non-voice Applications. Initially, the service consists of the following: 1) mBanking Mobile phone interfacing with banking system turns a mobile phone to mobile banking. 2) mInfo Mobile phone functions as a gateway to access needed information including finance, local and global news, stock update, traffic report, refreshment search, and etc. 3) mShopping Mobile phone facilitates transactions, such as ticket booking, flower delivery and invoice payment. 4) mMessaging Mobile phone, without subscription to any Internet network, receives and sends E-Mail from and to the members of worldwide Internet network.

In December 2000, the Company officially launched WAP (Wireless Application Protocol) call mobileLIFE INTERNET service by connecting a handset to the Internet on WAP platform. In addition to the above value added services, the Company continually establishes sales promotion campaign to stimulate the purchase and registration from customers.

- One-2-Call! The selling point of One-2-Call is cheap price, no monthly and number registration fee. The Company excludes One-2-Call targeted customers from Postpaid. The target of One-2-Call is: - Teenagers firstly use mobile phone. - Greenhorns who just earn income. - Customers with low airtime and undesirability to pay monthly fee. - Customers with the need to control phone bill. - Customers who do not need to disclose name in registration.

The Company plans to expand customer base by appointing dealers throughout country to allow customers to easily buy handset and refillable card and seeking other distribution channels than only mobile phone shops and training dealersâ&#x20AC;&#x2122; salespeople to gain understanding and knowledge about system and products for prospective customersâ&#x20AC;&#x2122; confidence.

(c) Value Added Service Development The Company also emphasizes on acknowledging customers in both systems about new value added services generating another source of revenue. Regarding GSM customers, the Company offers a variety of service groups responding to various groups of customers. The GSM Internet Integration group allows users to communicate with Internet users, send and leave message and access call waiting service for those who do not want to miss any communication. Infotainment group, inquiry on phone bill, fortune teller service, entertainment update and etc are available. The Company also develops value added services for Analog NMT system, such as incoming call number show up, Infotainment and messaging.

021

(d) Network Expansion and Development Because quality and service area coverage of network are key factors of success in mobile phone business, the Company aims at expanding and developing network to differentiate itself from competitors. The Company speeds up GSM network expansion to reach wider service area coverage. At the end of 2000, GSM network covered service area of 795 districts (Amphur) nationwide with the capacity to serve increasing customers. For network quality enhancement, the service area coverage now penetrates some towers (In-door Coverage)

(e) After Sales Service The Company has established many projects to improve efficiency in after sales service, such as : - Service Dealer Training service dealers in every province to be able to troubleshoot and fix customers’ handsets and developing potential service dealers to provide full-fledged service of fixing and maintenance. - Temp-O-Phone In case of check up and fixing finished in more than 24 hours, service offices will provide temporary handset for customers. - Service Caravan Mobile service will travel to main provinces to provide maintenance and check up service. - Registration System Development The Company has developed the registration system for customers’ convenience. The system enables handsets to enter network after registered for 3 hours. The Company can reconnect within 1 hour after service barring has been engaged. Moreover, change in registration is available by mail, if customers do not wish to go to Company’s office. Besides fast service, the Company has expanded registration channel to Telewiz and potential shops in addition to AIS’ branches. - Bill Payment The Company has increased pay point and mode of payment for customers to conveniently pay their bills.

Industry Situation and Competition

(a) Structure of Mobile Phone Industry Mobile phone industry in Thailand is under control of 2 major Government Agencies including TOT and CAT. Both Agencies report to Ministry of Transportation and Communication. While frequency allocation is managed and controlled by Post & Telegraph Department.

Besides supervising and controlling the industry, TOT provides fundamental fixed line and communication service within country and reaching neighboring countries whose boundaries situate next to Thailand. CAT provides international call service. Both TOT and CAT also operate mobile phone service but on limited network.

Tariff, deposit and other fees that the Operators charge on opening account is under the control of TOT and CAT. (Concession Owner of each Concessionaire) Major revenue of Operators consists of Registration fee, Monthly fee, and Airtime charged on only outgoing call. There is no incoming call charge for local, adjacent, remote, boundary and international call except for International Roaming in which Operators can charge on both outgoing and incoming calls. The Concessions granted by TOT and CAT to the Companies operating mobile phone service can be clarified as follow: Concession Grantor

Concessionaire

1. TOT

Advanced Info Service Plc.

2. CAT

Total Access Communications Plc. Digital Phone Co., Ltd. Wireless Communication Service Co., Ltd. Tawan Mobile Telecom Co., Ltd.

Besides TOT and CAT Concessionaires, TOT, CAT themselves and ACT Mobile Co., Ltd. (a Joint-venture between TOT, CAT and Radio Aviation of Thailand Co., Ltd.) also operate mobile phone service.

022

(b) Market and Competition Due to 1997’s economic crisis, growth rate of mobile phone users decreased from 19% in 1997 to 11% in 1998. However, growth rate returned to increase by 22% in 1999 making the ratio of number of mobile phone users to 100 population (Penetration Rate) increase from 3.6 in 1998 to 4.3* in 1999. However the rate, considered very low compared with other countries with similar economic development obviously, indicates that mobile phone industry in Thailand has substantial opportunity to grow in the future.

Due to intensive competition in 2000 as a result of Operators’ stronger financial status, the market growth reached 49% while penetration rate was 6% (Estimated by the Company)

* Average Penetration Rate obtained from Lehman Brothers’ research on June 26, 2000, Socgen-Crosby on July 2000, Merrill Lynch Phatra Securities Co., Ltd. on September 21, 2000, Jardine Fleming Thanakom Securities Limited on October 20, 2000, Credit Suisse First Boston on October 30, 2000, Solomon Smith Barney on November 7, 2000 and Morgan Stanley Dean Witter on November 17, 2000

Detail on Mobile Phone Service in Thailand (Source: Company’s Information) System

NMT 900

GSM 900

AMPS 800

PCN 1800

GSM 1800

NMT 470

CDMA

1. Operator

ADVANC

1. CAT Band A

TAC

DPC

TOT

Tawan

2. TAC Band B

2. System on Service

Analog

3. Base Station Coverage Radius

Digital

Mobile

Analog

Digital

Analog

16 Km.

City 0.5-4 Km.

City 0.8-5 Km

City 0.5-4 Km.

City 1.0-1.5 Km.

City less Than

Rural/Highway

2.0 Km. Rural

20-35 Km.

10 Km.

Less than 6 Km.

Portable

4. Portability

Handbag or

Digital

Portable

Car attached 5. Quality of Voice

Clear

6. Service Coverage Area

Very Clear

Clear

Very Clear

Nationwide

76 Provinces

only city area in

Roaming on

main district

all district

main highway

upcountry

Poor

clear

76 Provinces

andCentral

Bangkok

other Operators’ network for DPC non coverage

7. Network Expansion

Sufficient Capacity

Sufficient capacity

(as of December 31, 2000)

8. International Roaming

Continually

expanded

71 countries

5 Countries

74 Countries

Negotiating

3,900-13,500

6,500-42,900

7,900-19,900

5,900-39,900

3,900-31,900

N/A

8,400

10 Brands

3 Brands

7 Brands

9 Brands

1 Brand

(As of December 31, 2000)

9. Handset Price (Excluded Registration and Deposit)

10. Brands of handsets Available in Thailand

2 Brands

(as of December 31,2000)

023

RISK FACTORS

The risk factor to which the Company is exposed can be classified into 5 categories as follows :

Risk associated with amendment in laws, regulations and government’s policies Operating business under the Concession granted by TOT, the Company abides by Government’s policy towards Telecommunication Liberalization as a commitment to the World Trade Organization. (WTO) Thailand is committed to liberalizing telecommunication up to infrastructure layer by the year 2006. In compliance with current Constitution, an independent Regulatory Body has been established to allocate frequency of broadcasting radio, television radio, and telecommunication. The Regulatory Body is also responsible for overseeing, controlling the industry and making rules of competition. The Government needs to accomplish the enactment of Telecommunication Act before the expiration of the Act of Governmental Agencies, Telegraph and Telephone B.E. 2477, the Act of Telephone Organization of Thailand B.E. 2498, the Act of Communication Authority of Thailand B.E. 2519 and other laws concerning telecommunication, broadcasting radio, television radio and other telecommunication issues.

The effect on the Company and other players under the Concessions granted by Telephone Organization of Thailand (TOT), Communication Authority of Thailand (CAT) and Post & Telegraph Department is the conversion of existing Concessions to comply with upcoming liberalization. The bottom line of Concession conversion is to explore a fair compensation to abort existing Concession equivalent to present value of stipulated benefits. The calculation relies on the principle of Net Present Value (NPV), by using the discount rate standardized for every Concession. Related Governmental Agencies, however, have expressed disconcerted opinion in appropriate conceptual framework of Concession conversion. The Ministry of Transportation and Communications suggested that time frame for the calculation of compensation be limited to the year 2006 on the ground that when the liberalization is in effect, no further Concession fee should be debited. Continuing Concession fee payment after liberalization resulted in unfair competition. While the Ministry of Finance employed Thailand Development and Research Institute (TDRI) to study the Concession conversion. TDRI suggested that, despite the liberalization, the Concessionaires still be liable for paying full amount of Concession fee as stipulated in the Concession. Because the Concession is not çmonopolized to the State,é and the original Contracts have been amended to cancel out all protection, discontinuing Concession fee payment is, therefore, irrelevant.

The discrepancy between the Ministry of Transportation and Communications and the Ministry of Finance causes delay in process of Concession conversion. The State Enterprise Policy Commission (SEPC) proposed the resolution in favor of the Ministry of Finance according to TDRI’s study result in which the Concessionaires are obliged to pay concession fee throughout concession period along with a leeway. The SEPC proposed that term of payment be extended up to 10-15 years after liberalization is effective rather than before the liberalization and service fee discount given to customers write off compensations. The negotiation is, however, far from progress, while the sub-committee set up by the SEPC to monitor and supervise the Concession conversion will be expired in March 2001. The conclusion of Concession conversion is, therefore, uncertain. Every Concessionaire agrees with the conversion principal based on promoting fair competition among new and existing Operators in the future. According to such principal, the Company believes that the concession conversion will not significantly affect Company’s operation.

024

The analysis of risk associated with the policy towards Concession conversion under the framework proposed by the SEPC suggests that the extended terms of payment of 10-15 years does not substantially affect the Company, given the remaining 15 years of Concession period. The service fee discount written off concession fee payment fortifies the Company in price competition with the new entries after liberalization. The principal of liberalization is also rooted in fair competition. And although the Contract between TOT and the Company has been amended, in 1996, to protect Company’s interest from new entries, the rule makers cannot make any terms and conditions different from existing Concession. If the Company spots more adverse effects from the new Contract than existing Contract, the Company can reserve its right to object the implementation of new Contract.

In addition to Concession conversion, the liberalization relates to other factors including policy on the allocation of frequency as scarce resource, policy on the utilization of infrastructure to wire cable and install network on public premises, and etc. Policy on revised airtime charge pertaining to actual production cost is also important. The possibility is that Operators may be legible to charge incoming calls in addition to outgoing calls currently being implemented. The conditions and principals of the factors mentioned above must be obvious before the telecommunication liberalization is in effect. In conclusion, the liberalization should not yield negative effects to the Company’s business in the near future. Although the liberalization attracts additional players, they will be confront with Barrier to Entry, such as, the construction of customer base, time span in network development, distribution channel, and importantly uncertainty in rules, regulations and Government’s policy.

Risk associated with market and competition At present, two mobile phone Operators, the Company and TAC, dominates market with combining 92% of market share in Thailand as of December 31, 2000. The Company and TAC have expanded network in terms of service coverage area and capacity. Service areas cover wide areas in Bangkok and densely populated areas throughout Thailand. Although the Company is exposed to risk associated with new entry, the new players will encounter difficulties as follows; - Investment fund to expand network as prudent as the Company and TAC. - Time needed to expand network as complete as the Company and TAC. - Limitation in frequency. - Economy of scale from existing customers base possessed by the Company and TAC. - Customer base takeover is not easy to do, because there is cost associated with system transfer, such as, replaced handset and new number and registration fee. Moreover, the Company as a long time early entry has created Brand Loyalty among customers.

The Company expects that in 2001 onwards more Operators will enter market with the lineup led by Digital Phone Co., Ltd., Wireless Communication Service Co., Ltd. (WCS), Tawan Mobile Telecom Co., Ltd. and ATC Mobile Co., Ltd. Telecom Asia’s PCT, however, is not considered a perfect substitution because; - Huge investment is needed to expand base station to cover wide area. Currently, PCT signal transmission reaches within only Bangkok area. - Technological difficulty called “Slow hand-off speed” cripples the communication while travelling in a vehicle running with high speed.

Therefore, the competition from new players may not significantly affect the Company in the next few years. The new comers most likely emphasize on service in Bangkok area. In addition, the installation of base station encounters limitations in available fund and time. Meanwhile, the Company plans to develop its network to reach even remoter areas.

025

Risk associated with technology and operation 1 Risk from technological change In long run, the mobile phone in Analog NMT system will be totally replaced with Digital GSM, because the handset suppliers in world market have halted the production of NMT and gear towards GSM development with more power and compatibility with Third Generation development. However, change in technological trend may not adversely affect the Company shortly, because a number of customers, especially in upcountry, still heavily use their mobile phones in Analog NMT system to fulfill basic requirement. In terms of network system, the Company has reached the Agreements with foreign manufacturers to supply parts used in NMT handset for 10 years after network installation to prevent deficiency in parts supply.

Radical change in technology with the advent of GSM will not erupt in the near future. Leading global suppliers are researching and developing Digital GSM on technology 2.5 as the fundamental of 3rd Gen. The Company is on the right track by developing Digital GSM to serve as solid base for future technology.

The 3rd Gen-oriented development needs substantial amount of investment. But the infrastructure utilized in Thailand does not completely suite system design and technology engineered by foreign manufacturers. Technology adoption for practical and efficient use, therefore, needs to concern about technological and financial feasibility.

2 Risk from bill collection At present, the Company hands invoices to customers to pay their phone bills on monthly post-paid basis. Hence, the Company is subject to default in bill collection. However, the Company manages the risk by computerizing billing system to monitor the bill payment. The Company will disconnect network registration for customers with a specified overdue. The Company also temporarily bar the account with unusually substantial usage. The computer is equipped with Fraud Management system to handle risk associated with collection default.

The prepaid under the name “One-2-Call” emerged as a solution to curb bad debt from bill collection.

Risk associated with financial and economic situation 1 Risk from foreign exchange fluctuation The Company’s business directly relies on foreign technologies, investment denominated in foreign currency is, therefore, inevitable. In case of Baht depreciation, the Company cumulates higher financial burden for investment. However, the Company has protected against such risk exposure by employing Hedging Instrument. Foreign exchange fluctuation essentially attributable to country’s macro economic affects not only the Company, but also every Operator. Another policy to which the Company adheres to secure its interest to some extent is domestic funding instead of international loans.

2 Risk from economic situation Mobile phone is considered consumer goods. Therefore, Thailand’s economic situation directly impacts demand in customers’ use. In response to economic downturn situation, the Company launched the product under the name “One-2-Call!” to offer an economical choice to customers. With no monthly and registration fee, the prepaid product targets at low income customers and those who want to control phone bill. In addition, the Company comes up with more value added services to seek supplementary income.

026

Risk from parent, holding mother companies running the same business Shin Corporations Plc. (SHIN), holds the shares of Digital Phone Co., Ltd. (DPC), another mobile phone player operating in different frequency. The share holding in DPC by SHIN affects the Company’s operation, because the Company and DPC run business in the same arena. However, both have obviously different target group. DPC targets at customers using mobile phone in Bangkok and peripherals. DPC launched a new campaign under the name “City Phone for City Life” in July 2000 offering monthly fee as low as 300 Baht for Bangkok and peripherals coverage area. On the other hand, the Company operates on network with nationwide coverage area. Therefore, the target group of the Company is those who use their mobile phone to reach throughout country and/or those who enjoy new advanced technology.

Having the same major shareholder, the Company benefits from marketing reinforcement and increasing efficiency in customer service. Both Operators share each other’s distribution channel while rendering alternatives to customers. In the future, both expect to reach an Agreement to share network (Network Roaming). Allowing DPC to rent Company’s network creates mutual benefits for both in that DPC can decrease huge investment with long-term payback period, while the Company earns higher service revenues. Thus, network utilization is more productive. If a customer own a dual band handset, he can communicate in wider area on both frequencies.

027

SHAREHOLDER AND MANAGEMENT STRUCTURE

Major shareholders Shareholders

Number of Shares

1. Shin Corporations Plc.

109,371,200

40.51

2. Singtel Strategic Investments Pte Ltd.

50,3000,000

18.63

3. HSBC (Singapore) Nominees Pte Ltd.

10,177,167

3.77

4. State Street Bank and Trust Company

8,065,362

2.99

5. Chase Nominees Limited 1

6,949,175

2.57

6. Thai Trust Fund Management Company Limited

6,403,900

2.37

7. HSBC Bank Plc.

4,183,168

1.55

8. Littledown Nominees Limited

3,420,236

1.27

9. Nortrust Nominees Limited

3,182,470

1.18

3,103,754

1.15

10. Thailand Securities Depository Company Limited for Depositors

1. As of the latest closing date of register book dated January 8, 2001 2. As of January 8, 2001, Thailand Securities Depository Co., Ltd. for Depositors (Foreign) and Thailand Securities Depository Co.,Ltd. for Depositors (Local) appeared on the share registration book. This was due to the fact that there were Non-Thai shareholders and Non-Foreign shareholders having shares which did not comply to the rules and regulations of the Thailand Securities Depository Co.,Ltd.

028

Management Management Structure The Company’s management structures comprises of three groups : Board of Directors, Executive Committee and Audit Committee; Board of Directors

1. Mr. Paiboon Limpaphayom, (Ph..D.)

Chairman of the Board of Directors

2. Mrs. Tasanee Manorot

Director

3. Mr. Boonklee Plangsiri

Director

4. Mr. Somprasong Boonyachai

Director

5. Mrs. Siripen Sitasuwan

Director

6. Mr. Allen Lew Yoong Keong

Director

7. Mr. Chow Wing Keung Lucas

Director

8. Mr. Suphadej Poonpipat

Chairman of the Audit Committee

9. Mr. Arun Churdboonchart

Member of the Audit Committee

10. Mrs. Charintorn Vongspootorn

Member of the Audit Committee

Authorized signatories Any two of four directors including Mr. Paiboon Limpaphayom (Ph.D.), Mr. Somprasong Boonyachai, Mr. Boonklee Plangsiri, Mrs. Siripen Sitasuwan, may act on behalf of the Company by jointly signing and affixing the Company’s seal.

Jurisdictions of the Board of Directors 1. The Board has jurisdiction to appoint and amend the Authorized Signatory . 2. The Board must abide by Laws, Objectives and Regulations of Company as well as the Resolution of Board Meeting, except for the issue with Board’s approval before action, such as the issue in which the Law requires the Resolution of Board of Committee, the related transactions and the selling or buying of important assets in compliance with the rules of Stock Exchange of Thailand (SET) or indicated by other Government Agencies. 3. The Board may appoint other(s) to manage Company’s business under the control of Board of Directors or give the Power of Attorney to such Appointee(s) to assume power within a specified period as the Board’s consent, by which the Board reserves its right to withdraw or alter the Power of Attorney.

Executive Committee

1. Mr. Somprasong Boonyachai

Chairman of the Executive Committee

2. Mr. Dumrong Kasemset (Ph.D.)

Member of the Executive Committee

3. Mr. Arak Chonlatanon

Member of the Executive Committee

4. Mrs. Siripen Sitasuwan

Member of the Executive Committee

5. Mr. Chow, Wing Keung Lucas

Member of the Executive Committee

Jurisdictions of the Executive Committee 1. Control the administration of the Company to comply with the policy set forth by the Board of Directors and as the declaration of operation in front of the Shareholders’ Meeting. 2. Take action and consider the Company’s performance to meet Business Plan established by the Board of Directors. 3. Assume power to approve and revise business plan pertinent to business situation for the interest of Company’s administration. 4. Assume power to approve budget for investment and operation within the line of 800 Million Baht. 5. Chairman of the Executive Committee is responsible for reporting the performance to Chairman of the Board of Directors.

029

Audit Committee

1. Mr. Suphadej Poonpipat

Chairman of the Audit Committee

2. Mr. Arun Churdboonchart

Member of the Audit Committee

3. Mrs. Charintorn Vongspootorn

Member of the Audit Committee

Jurisdictions of the Audit Committee 1. Supervise and audit the Company’s operation to promote transparency in fairness and faithfulness and the responsibility of the Executive Committees and the Management to the Company’s shareholders. Also ensure that the Executive Committee and the Management manage the business to completely and accurately comply with policy of the Board of Directors. 2. Responsible for the following missions; 2.1 Supervising the process of making and disclosure of Company’s financial report and its subsidiaries’ with accuracy and reliability by coordinating with Certified Audit and the Management in charge of making the Quarter and Annual Reports. 2.2 Supervising to ensure that internal audit system is appropriate and efficient. Double auditing with Independent External Audit and Internal Audit to find out the relevancy of Company’s internal audit system. 2.3 Supervising to avoid conflict of interests among the Company and related Companies. 2.4 Supervising the Company to comply with Rules and Regulations imposed by the Stock Exchange of Thailand (SET) and other Applicable Laws. 2.5 Revising evidence for internal investigation when suspect of corruption erupts or unusual circumstance occurs to Internal Audit System and reporting to the Board of Directors for further consideration. 2.6 Commanding and revising the evidence to skeptical violation of Law or SEC’s Rule with the possibility to significantly affecting Company’s financial status and performance. 2.7 Considering and revising Annual Auditing Plan proposed by Internal Audit Office. 2.8 Considering the result of audit, the proposal of Certified Audit and Internal Audit as well as following up the progress of actions to such proposal. 2.9 Suggesting the Certified Audit to revise the transactions necessary to the process of Company’s and subsidiaries’ auditing. 2.10 Indicate the criteria to appoint Certified Audit, annual auditing fee and reporting to the Board of Directors in supportive of comment in Shareholders’ Meeting. 1.11 When the fiscal year is ended, the Audit Committee makes the Report of Audit Committee disclosed in Company’s Annual Report and signed by Chairman of the Audit Committee. 1.12 The Audit Committee has the right to request valuable information from the Executive Committee, Management, to attend the Meeting and to invite Lawyers, Auditors and Internal Auditors to attend the Audit Committee Meeting. 1.13 Other missions indicated or assigned by the Board of Directors.

Management Team

1. Mr. Somprasong Boonyachai

Chairman of the Executive Committee - Wireless Communications

2. Mr. Allen Lew Yoong Keong

Chief Operating Officer

3. Ms. Yingluck Shinawatra

Executive Vice President - Service Operation

4. Mr. Wichian Mektrakarn

Vice President - Engineering

5. Mrs. Arpattra Sringkarrinkul

Vice President - Information System Support

6. Mr. Walan Norasetpakdi

Vice President - Wireless Controller

7. Mr. Yanyong Akrajindanon

Vice President - Marketing

8. Ms. Sansanee Gumpalanuwat

Assistant Vice President - Accounting

9. Ms. Sunitaya Shinawatra

Finance Manager

As of December 31, 2000, the Company’s Secretary was Mr. Vivat Songsasen.

030

The Search for Committees The Company constructs the method to search and appoint the Committees as follows : (1) In every Annual General Meeting, one-third of the Committees must leave the post. If the number of Committees is not divisible by 3, the number of Committee leaving the post is as closest as one-third. The Committees leaving the post in the first and second year after Company Registration shall be selected by random drawing. After that, the Committees resuming the post for longest period shall leave. The Committees leaving as usual may return to the post. (2) In case of vacancy due to any reasons other than usual, the Committees shall select the person whose qualifications are not against Section 68 of Public Company Act B.E. 2535 to take over the vacant post in the next Board Meeting. If remaining terms of the Board is less than 2 months, the replacement shall resume the post as long as the remaining period of the Committee leaving the post.

The Companyâ&#x20AC;&#x2122;s Regulations enforcing the Committee Election in Shareholdersâ&#x20AC;&#x2122; Meeting are as follows: (1) A shareholder has the votes as much as the held shares. (2) Each shareholder exercises the vote as specified in (1) to elect one or many persons to be the Committee. In case of election for many persons to be the Committee, the votes cannot be divided for any candidates. (3) The person wining most votes and so on shall take the seats as much as available in each term or election. In case of equal votes of more than one candidates and exceeding the available posts, the Chairman shall make ultimate decision.

According to the Contract permitting the operation of mobile phone business between the Company and TOT, a representative from TOT shall take one Committee post and according to the conditions in the Agreement between major shareholders including Shin Corporations Plc. (SHIN) and Singapore Telecom International Private Limited (STI), SHIN shall appoint 4 Comittees and STI shall appoint 2 Committees, the Board of Directors as of September 30, 2000 is as follow;

Board of Directors

1. Mr. Paiboon Limpaphayom (Ph.D)

representing SHIN

2. Mr. Boonklee Plangsiri

representing SHIN

3. Mr. Somprasong Boonyachai

representing SHIN

4. Mrs. Siripen Sritasuwan

representing SHIN

5. Mrs. Tasanee Manorot

representing TOT

6. Mr. Allen Lew Yoong Keong

representing STI

7. Mr. Chow Wing Keung Lucas

representing STI

8. Mr. Suphadej Poonpipat

Chairman of the Audit Committee

9. Mr. Arun Churdboonchart

Member of the Audit Committee

10. Mrs. Charintorn Vongspoothorn

Member of the Audit Committee

031

Directors and Management Team

Name - Surname

Mr. Paiboon Limpaphayom (Ph.D.)

Age

Position

Chairman of the Board of Directors

Shareholding (%)

None

Relationship with Management

None

Education

Ph.D. (Electrical Engineering), Iowa State University Diploma (Private Sector) - Thailand National Defense College

Experience

1988 - 1992

Managing Director - Telephone Organization of Thailand

1992 - 1993

Advisor - Telephone Organization of Thailand

1993 - 1998

Director and Member of the Executive Committee - Shin Corps. Group

1999 - Present Chairman of the Board of Directors - Advanced Info Service Plc. Director - Shin Corporations Plc. 2000 - Present Director - Thai Military Bank Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Somprasong Boonyachai

Age

Position

Director and Chairman of the Executive Committee - Wireless Communications

Shareholding (%)

None

Relationship with Management

None

Education

Master of Engineering, Asian Institute of Technology (AIT)

Experience

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 Communications

1999 - Present Chairman of the Executive Committee - Wireless Communications 2000 - Present Group Vice Chairman of the Group Executive Committee Member of the Executive Committee - Shin Satellite Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Boonklee Plangsiri

Age

Position

Director

Shareholding (%)

None

Relationship with Management

None

Education

M.A. in Computer Engineering, University of Illinois (Urbana Champaign), USA.

Experience

1993 - 1994

President of Shinawatra Group

1995 - 1996

Vice Chairman (Operation) - Shinawatra Group

1997 - 2000

Director, Member of the Executive Committee - Shin Corporations Plc., Advanced Info Service Plc., Shin Satellite Plc.

1999 - Present Chairman of the Group Executive Committee - Shin Corporations Plc. 2000 - Present Director - Advanced Info Service Plc., Shin Satellite Plc. Illegal Record during past 10 years

032

None

Name - Surname

Mrs. Siripen Sitasuwan

Age

Position

Director and Member of the Executive Committee

Shareholding (%)

None

Relationship with Management

None

Education

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

Experience

1991 - 1993

Executive Vice President - Shinawatra Group

1994 - 1998

Executive Committee - Chief Finance Officer of the Group

1998 - 2000

Chief Finance Officer of the Group

1998 - Present Director and Member of the Executive Committee - Shin Corporations Plc., Advanced Info Service Plc., Shin Satellite Plc. 2000 - Present President - Shin Corporations Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Allen Lew Yoong Keong

Age

Position

Director

Shareholding (%)

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 - Advanced Info Service Plc., Chief Operating Officer - Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Chow, Wing Keung Lucas

Age

Position

Director and Member of the Executive Committee

Shareholding (%)

None

Relationship with Management

None

Education

Bachelor of Science (Honours),University of Aston, Brimingham, UK.

Experience

1998

Operation Manager of Hewlette

1998 - 1999

Group Director of Total Quality

1999 - present Vice President (Consumer Marketing) CEO (SingTel Mobile) Present

Executive Vice President (Consumer Business Group), Director and Member of the Executive Committee - Advanced Info Service Plc.

Illegal Record during past 10 years

None

Name - Surname

Mrs. Tasanee Manorot

Age

Position

Director

Shareholding (%)

None

Relationship with Management

None

Education

Bachelor Degree in Commerce and Accountancy, Chulalongkorn University

Experience

1996 - 1999

Vice President of Finance Department - Telephone Organization of Thailand

1999 - 2000

Executive Vice President - Telephone Organization of Thailand

2000 - present Senior Executive Vice President - Telephone Organization of Thailand Illegal Record during past 10 years

None

033

Name - Surname

Mr. Suphadej Poonpipat

Age

Position

Chairman of the Audit Committee

Shareholding (%)

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. Arun Churdboonchart

Age

Position

Member of the Audit Committee

Shareholding (%)

None

Relationship with Management

None

Education

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

Experience

Executive Director - Trinity Group 1998 - present Member of the Audit Committee - Advanced Info Service Plc.

Illegal Record during past 10 years

None

Name - Surname

Mrs. Charintorn Vongspootorn

Age

Position

Member of the Audit Committee

Shareholding (%)

None

Relationship with Management

None

Education

MBA, Creghton University, USA.

Experience

Senior Executive Vice President MFC Director of Thai Equity Fund 1999 - Present Member of the Audit Committee - Shin Satellite Plc. 2001 - Present Member of the Audit Committee - Advanced Info Service Plc.

Illegal Record during past 10 years

None

Name - Surname

Mr. Dumrong Kasemset (Ph.D.)

Age

Position

Member of the Executive Committee

Shareholding (%)

None

Relationship with Management

None

Education

Ph.D. in Electrical Engineering, Massachusetts Institute of Technology, USA.

Experience

1994 - 1997

President - Shinawatra Satellite Plc.

1995 - 1997

Vice Chairman of the Executive Committee - Shinawatra Group

1997 - present Chairman of the Executive Committee - Satellite and International Business, Shin Corporations Plc. 2000 - present Group Vice Chairman of the Group Executive Committee - Shin Corporations Plc. Member of the Executive Committee - Advanced Info Service Plc. Illegal Record during past 10 years

034

None

Name - Surname

Mr. Arak Chonlatanon

Age

Position

Member of the Executive Committee

Shareholding (%)

None

Relationship with Management

None

Education

Electrical Engineering, Chulalongkorn University

Experience

1991 - 1992

President - Advanced Info Service Plc.

1993 - 1998

President - Shinawatra International Plc.

1998 - 2000

Member of the Executive Committee - Shin Corporations Plc.

2000 - present Chairman of the Group Executive Committee - E Business Illegal Record during past 10 years

None

Name - Surname

Ms. Yingluck Shinawatra

Age

Position

Executive Vice President - Service Operation

Shareholding (%)

None

Relationship with Management

None

Education

Master Degree, Kentucky State University, USA.

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. Wichian Mektrakarn

Age

Position

Vice President - Engineering

Shareholding (%)

0.0004

Relationship with Management

None

Education

Bachelor Degree in Electrical and Electronics Engineering, California Polytechnic State University, Pomona, USA.

Experience

1992 - 1994

Engineering Manager - Shinawatra Satellite Plc.

1995 - 1996

Assistant Vice President (Network Development) - Advanced Info Serive Plc.

1997 - 1998

Vice President (Network Operations and Maintenance, Metropolitan Area) Advanced Info Service Plc.

1999 - 2000

Vice President (Technical) - Advanced Info Service Plc.

2001 - present Vice President (Engineering) - Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Mr. Yanyong Akrajindanon

Age

Position

Vice President - Marketing

Shareholding (%)

0.0007

Relationship with Management

None

Education

MBA, Thammasat University

Experience

Policy and Planning Manager - Shinawatra Computer and Communications Plc. Advertising and Promotion Manager - Advanced Info Service Plc. Marketing Manager - Advanced Info Service Plc. Vice President (Marketing) - Advanced Info Service Plc.

Illegal Record during past 10 years

None

035

Name - Surname

Mrs. Arpattra Sringkarrinkul

Age

Position

Vice President - Information System Support

Shareholding (%)

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

Executive Education Manager - IBM (Thailand)

1994 - 1996

General Manager (Computer Service) - Shinawatra Computer and Communications 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

Position

Vice President - Wireless Controller

Shareholding (%)

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.

1998 - Present Vice President (Wireless Controller) - Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Ms. Sansanee Gumpalanuwat

Age

Position

Assistant Vice President - Accounting

Shareholding (%)

None

Relationship with Management

None

Education

MS (Accounting) - Thammasat University

Experience

1995

Senior Finance Specialist - Shin Corporations Plc.

1996 - 1997

Senior Finance and Accounting Manager - Advanced Wireless Marketing Co., Ltd

1997 - 1999

Accounting Manager - Advanced Info Service Plc.

2000 - present Assistant Vice President (Accounting) - Advanced Info Service Plc. Illegal Record during past 10 years

None

Name - Surname

Ms. Sunitaya Shinawatra

Age

Position

None

Relationship with Management

None

Education

Master of Business Administration, 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

036

None

Directors and Management’s Remuneration Total Directors’ Remuneration (4 persons) Salary

Baht

Bonus

1,800,000

Baht

560,000

Baht

2,360,000

Baht

Allowance Provident Fund Total

Remark: Allowance and Bonus were paid to outside directors only.

Total Management’s Remuneration* (7 persons) Salary

23,226,903

Baht

Bonus

3,037,000

Baht

914,400

Baht

27,178,303

Baht

Allowance Provident Fund Total

* This remuneration excludes the remuneration of the Chairman of the Executive Committee who has been compensated from Shin Corporations Plc. (The Company’s parent) and also excludes Finance and Accounting Managers.

A Corporate Governance The Company has defined that the Board of Directors have to perform their responsibilities in accordance with the Code of Best Practices of the Stock Exchange of Thailand.

A Protection of Using an Internal Information The Company has concerned about a using of internal information of the Management for their personal benefits. The Company has informed the Management that they have had to make and submit a report of securities occupying and a report of any changes in securities occupying of their company, spouses and immaturity children within a period of time scheduled in the regulation of securities occupying. And the Management have had to submit a copy of those mentioned reports within the same day that is presented to the Securities and Exchange Commission and the Stock Exchange of Thailand.

An Internal Controls Independence directors and the Audit Committee who attended the Audit Committee’s meeting no. 5/2000 dated 22 December, 2000 assessed an effectiveness of an internal control system by inquiring some information from the Management and concluded that the Company has had an adequate and appropriate internal control system . The assessment method has been performed by evaluating 5 factors which are Control Environment, Risk Assessment, Control Activities, Information and Communication , and Monitoring system.

The Company has formed the safeguarding of assets system to prevent a lost or an improper usage of assets. There is a clear segregation of duty in approval, accounting record and information technology, and asset protecting.

The Company has established an Internal Auditing Department which will perform an audit field work in conformity with an international standard and have independence and objectivity in presenting audit reports. From previous audit reports, there were no significant weaknesses found in the internal control systems.

In addition, an external auditor, PricewaterhouseCoopers ABAS Limited, who audited 2000 financial statements, assessed an effectiveness of an internal control system and commented that there were no significant weaknesses found in the internal control system. 037

RELATED TRANSACTIONS WITH RELATED COMPANIES AND POSSIBLE DISPUTES

The Company and its associated companies have related transactions with arising from the business operation as usual by the Company, its associated companies and other parties and possibly cause disputes. With regard to the approval process of related transactions, the Company conforms to Codes of Conduct applicable to other general transactions. The approval of a related transaction requires Authorized Signatory with specified amount of transaction scrutinized by the Audit Committee to prevent conflict of interests. Because related transactions occur as business as usual, the related transactions with related companies and possible disputes may continue in the future. The Company principally recognizes appropriate transaction with reasonable price.

In 2000, the Company and its associated companies had related transactions with possible disputes as commented by the Certified Audit and appeared in the Note number 38 of Financial Statement for the fiscal year ended on December 31, 2000. Such transactions were regular, and by which the Company sold to and bought from related Companies with possible disputes the products and services at the price applicable to other parties under various business conditions.

The Companyâ&#x20AC;&#x2122;s Policy towards Related Transaction If the Company engages in buying and/or selling products and services, the prices shall be those applicable to other parties. If no price is ever quoted, a professionally independent appraiser accredited by SEC will be employed to appraise significant related transactions on annual basis to serve as the principle in considering reasonable price.

Related transactions with related companies and possible disputes over such period of time are as follow:

Shin Corporations Plc. Type of Business:

A Holding company investing in telecommunication business, information technology, multimedia and advertising media.

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. Mr. Panthongtae Shinawatra

24.99%

2. Mr. Bhanapot Damapong

13.77%

3. Ample Rich Investment

7.80%

As at December 31, 2000 1. Mr. Bhanapot Damapong 2. Mr. Boonklee Plangsiri * 3. Mr. Paron Isarasena Na Ayudhaya 4. Mr. Paiboon Limpaphayom (Ph. D.)* 5. Mrs. Siripen Sitasuwan * 6. Mr. Sirin Nimmanheminda 7. Mr. Olarn Chaiprawat (Ph. D.) 8. Mr. Thanong Bidaya (Ph. D.) 9. Mr. Lee Chin Koi 10. Mr. Thavatchai Vilailuck 11. Mr. Vithit Leenutaphong * Joint-Director

038

Relationship:

SHIN is the Major Shareholder with joint-Directors

Major Related Transactions: The Company employs SHIN to provide consultant and management. The Company pays consulting fee at 3,456,000 Baht a month and the amount as actual transaction for management fee. Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

82.80

2. Interest for Debentures

0.55

3. Rental and Others

1.80

2.77

4. Service Revenue

0.91

1.92

5. Cost of Office Automation & Computer

0.55

1.11

4.66

4.72

87.80

Size of Transaction 1. Consulting and Management Fee

Outstanding 1. Loans from Associated 2. Deposit

Shin Satellite Plc. Type of Business:

Providing Satellite Transponders

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. SHIN

37.09%

2. Merry International Investment Corp.

11.75%

As at October 26, 2000 1. Mr. Paron Isarasena Na Ayudhaya 2. Mrs. Nilaya Malakul Na Ayudhaya 3. Miss Nongluck Phinainitisart 4. Mr. Dumrong Kasemset (Ph. D.) 5. Mr. Rianchai Reowilaisuk 6. Mr. Boonklee Plangsiri 7. Mrs. Siripen Sitasuwan * 8. Mrs. Charintorn Vongspootorn * Joint-Director

Relationship:

SHIN is the Major Shareholder with joint-Director.

Major Related Transactions: The Company leases Satellite transponder on the Thaicom 1A from Shin Satellite Plc. for the lease rental of 1,700,000 US$ per year. Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

78.93

2. Service Revenue

1.36

1.94

3. Transponder Equipment

0.50

1. Trade Creditors

0.49

2. Loans from Associated

6.20

Size of Transaction 1. Rental and other Services

Outstanding :

039

Shinawatra Information Technology Co., Ltd. Type of Business:

Distributing, leasing and installing computer and peripherals.

Major Shareholders:

As at December 31, 2000 SHIN

Board of Directors:

100.00%

As at December 31, 2000 1. Mr. Boonklee Plangsiri 2. Mr. Somkiet Phaloprakarn 3. Mrs. Busaba Damapong 4. Mrs. Siripen Sitasuwan* *Joint-Director

Relationship:

SHIN is the Major Shareholder with joint-Director.

Major Related Transactions: The Company, AWM and APG utilize computer service provided by Shinawatra Information Technology Co., Ltd. and pay the following amount 1. The Company

600,500 Baht per Month

2. AWM

1,157,200 Baht per Month

3. APG

412,600 Baht per Month

Size of Related Transaction Unit: Million Baht 2000 Transaction

Company

Consolidated

1. Consulting & Management fee for Computer System

7.97

2. Service Revenues

0.08

0.15

3. Rentals and other Services

1.42

6.40

4. Cost of Office Equipment and Computer

0.09

Size of Transaction

SC Matchbox Co., Ltd. Type of Business:

Advertising and full-fledged advertising media production

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. SHIN

74.97%

2. Mr. Chatchai Sanoerkam

12.50%

3. Mr. Songsak Premsuk

12.50%

As at December 31, 2000 1. Mr. Bhanapot Damapong 2. Mr. Boonklee Plangsiri* 3. Mr. Niwat Boonsong 4. Mr. Songsak Premsuk 5. Mr. Chatchai Sanoerkam 6. Mr. Banpot Boonyanit *Joint-Director

Relationship:

SHIN is the Major Shareholder with joint-Director.

Major Related Transactions: The Company and AWM employ SC Matchbox Co., Ltd. as the Agency to produce advertising campaigns through various media on freelance basis

040

Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

66.89

801.65

0.00

1.37

13.26

240.83

Size of Transaction 1. Advertising fee 2. Cost of Office Equipment Outstanding 1. Advertising Payables 2. Payables to Associated Companies

Teleinfo Media Co., Ltd. Type of Business:

Publishing and distributing white and yellow pages, directories nationwide and information service for mobile phoneâ&#x20AC;&#x2122;s value added service (Audiotext)

Major Shareholders:

Board of Directors:

As at December 31, 2000 1. SHIN

51.00%

2. Telephone Organization of Thailand

49.00%

As at December 31, 2000 1. Mr. Niwat Boonsong 2. Mr. Somchai Sinjananura 3. Mr. Surachart Kugasemrat 4. Mr. Arak Chonlatanon 5. Miss Yingluck Shinawatra 6. Mr. Somboon Kuptimanus 7. Mr. Pongpan Manorot 8. Mr. Wichien Naksrinual 9. Mr. Pasit Dhamrongsiriwadh 10. Mrs. Tipawan Wuttisarn 11. Mrs. Naengnoi Vananuvetchapong

Relationship:

SHIN is the Major Shareholder.

Major Related Transactions: The Company employs Teleinfo Media Co., Ltd. to furnish the information for mobile phoneâ&#x20AC;&#x2122;s value added service, such as astrology, lotto, comic story. The Company pays for actual services on monthly basis. Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

30.89

2. Advertising fee

0.80

4.80

3. Cost of Office Equipment and Computer

0.00

1. Trade Account Payables

2.43

2. Payables to associated companies

2.50

2.58

Size of Transaction 1. Service fee

Outstanding

041

OAI Asset Co., Ltd. Type of Business:

Office Space Lease

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. Miss Pintongta Shinawatra

50.00%

2. Miss Paetongtarn Shinawatra

50.00%

As at December 31, 2000 1. Khunying Potjaman Shinawatra 2. Mr. Chanon Suwasin 3. Mrs. Kanchanapa Honghern

Relationship:

The Shinawatra family, the Major Shareholder of SHIN, holds 100% of OAI Asset Co., Ltd.

Major Related Transactions: 1. Office space leasing at Shinawatra Tower 2 The Company, AWM and APG lease office space in Shinawatra Tower 2 located at 1291/1 Phaholyothin Road, Samsennai, Payathai, Bangkok with total area of 14,719.32 square meters from OAI Asset Co., Ltd. Lease rental and service fees are 450-800 Baht per square meter per month. 2. Office space leasing at White House The Company leases office space in White House located at 21 Phaholyothin Road, Samsennai, Phayathai, Bangkok with total area of 1,009 square meters from OAI Asset Co., Ltd. Total lease rental and service fees are 550,000 baht per month. 3. Office space leasing at Metropolitan Water Supply Building The Company leases office space in Metropolitan Water Supply Building located at 1285, Phaholyothin Road, Samsennai, Phayathai, Bangkok with total area of 1,405 square meters from OAI Asset Co., Ltd. Total lease rental and service fees are 150,000 baht per month. 4. Office space leasing at Phaholyothin Soi 13 Building and parking area renting The Company leases office space in Phaholyothin Soi 13 located at 10 Phaholyothin Road, Samsennai, Phayathai, Bangkok with total area of 238 square meters from OAI Asset Co., Ltd. Lease rental is 175 Baht per square meter per month. The Company rents parking area in 5 land title deeds to park 157 cars from OAI Asset Co., Ltd. The rental is 1,200 Baht per car per month. Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

124.73

142.92

0.00

1. Trade account payables

0.00

0.12

2. Payables to associated companies

2.18

2.37

Size of Transaction 1. Leased rental and other service fees 2. Office decoration Outstanding

042

SC Of fice Park Co., Ltd. Type of Business:

Office space Lease

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. Win Mark Limited

40.00%

2. Miss Pintongta Shinawatra

30.00%

3. Miss Paetongtarn Shinawatra

30.00%

As at December 31, 2000 1. Khunying Potjaman Shinawatra 2. Mr. Chanon Suwasin 3. Mrs. Kanchanapa Honghern

Relationship:

The Shinawatra family, the major shareholder of SHIN, holds 60% of SC Office Park Co., Ltd.

Major Related Transactions: The Company and AWM lease office space in Shinawatra Tower 1 located at 414 Phaholyothin Road, Samsennai, Phayathai, Bangkok with total area of 10,430 square meters from SC Office Park Co., Ltd. The lease rental is 250-495 Baht per square meter per month. In addition, the Company rents 1,392 square meters of Shinawatra Tower 1 to operating Mobile Telephone Exchange Station with the rental of 330 Baht per square meter per month. Related transaction size between the Company and SC Office Park Co., Ltd. is as follow: Unit: Million Baht 2000 Transaction

Rental and other service fees

Company

Conslidated

30.54

43.28

SC Asset Co., Ltd. Type of Business:

Providing infrastructure facilities for central area of Tower

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. Mr. Bhanapot Damapong

70.00%

2. Mrs. Busaba Damapong

29.75%

As at December 31, 2000 1. Mr. Bhanapot Damapong 2. Mr. Surathian Chaktharanon 3. Mrs. Busaba Damapong 4. Mrs. Laltharima Hasdin Na Ayudhaya

Relationship:

The Damapong family, a Major Shareholder of SHIN, holds 99.75% of SC Asset Co., Ltd.

Major Related Transactions: The Company and AWM utilize infrastructure system in central area of Shinawatra Tower 1, such as, electricity and light system, water supply, air-conditioning system, elevator, security, internal circuited monitor and janitor provided by SC Asset Co., Ltd. Service fee is 170 Baht per square meter per month. The Company and AWM lease the area of 10,430 square meters in the Tower.

043

Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

32.72

54.17

2. Revenues from service

1.27

2.04

3. Cost of office equipment

0.00

1. Trade account payables

0.65

2. Payables to associated companies

0.81

2.06

Size of Transaction 1. Rental and other service fees

Outstanding

Worth Supplies Co., Ltd. Type of Business:

Office Space Lease

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. Miss Pintongta Shinawatra

32.05%

2. Miss Paetongtarn Shinawatra

32.05%

3. Win Mark Limited

27.82%

4. Khunying Potjaman Shinawatra

8.09%

As of December 31, 2000 1. Miss Pranee Vejchaplukpitak 2. Mrs. Busaba Damapong 3. Mr. Chanon Suwasin 4. Mrs. Kanchanapa Honghern 5. Mr. Surathian Chaktharanon

Relationship:

The Shinawatra family, the Major Shareholder of SHIN, holds 72.19% of Worth Supplies Co., Ltd.

Major Related Transactions: The Company, AWM and APG lease office space in Shinawatra Group Tower (Chiangmai) located at 115-116 Thapae Road, Chiangmai with total area of 2,447.4 square meter from Worth Supplies Co., Ltd. Lease rental and space service fee is 100-360 Baht per square meter per month. Size of Related Transaction: Unit: Million Baht 2000 Transaction

1. Lease rental and other service fees 2. Cost of vehicle and office equipment

044

Company

Consolidated

12.67

15.85

0.00

P.T. Corporation Co., Ltd. Type of Business:

Office space and warehouse lease

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. Miss Pintongta Shinawatra

30.00%

2. Miss Paetongtarn Shinawatra

30.00%

3. Win Mark Limited

30.00%

4. Khunying Potjaman Shinawatra

10.00%

As at December 31, 2000 1. Khunying Potjaman Shinawatra 2. Mr. Chanon Suwasin 3. Mrs. Kanchanapa Honghern

Relationship:

The Shinawatra family, the Major Shareholder of SHIN, holds 70.00% of P.T. Corporation Co., Ltd.

Major Related Transactions: 1. Warehouse lease The Company leases the warehouse located at 60/1 Moo 10, Soi Samnaksong, Nawamindha Road, Kannayao, Bangkok from P.T. Corporation Co., Ltd. at total rental of 193,000 Baht per month. 2. Office building and top deck lease The Company leases area in the building located at 526 and top deck at 1376/1 RamaV Road, Nakornchaisri Road, Dusit, Bangkok with total area of 183.20 square meter to operate Mobile Telephone Exchange from P.T. Corporation Co., Ltd. The rental is 100 Baht per square meter per month and total 20,000 Baht per month for the area in building and top deck respectively. The Company also leases the building located at 99/388 Janwattana Road, Tungsonghong, Bangkhen, Bangkok with total area of 1,099.01 square meter and top deck to operate Mobile Telephone Exchange from P.T. Corporation Co., Ltd. The rental is 100 Baht per square meter per month and total 15,000 Baht per month for the lease of area in building and top deck respectively. 3. Office space lease APG leases Mini-office (D Tower) located at 99/387 Moo 2, Jangwattana Road, Tungsonghong, Laksi, Bangkok from P.T. Corporation Co., Ltd. with total area of 1,077.96 square meters. The rental and area service fee is 275 Baht per square meter per month. Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

9.28

21.08

0.11

Size of Transaction 1. Rental and other service fees Outstanding 1. Payables to associated companies

045

UpcountryLand Co., Ltd. Type of Business:

Building and land lease

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. Miss Pintongta Shinawatra

49.99%

2. Miss Paetongtarn Shinawatra

49.99%

As at December 31, 2000 1. Mr. Surathian Chaktharanon 2. Mr. Chanon Suwasin 3. Mrs. Kanchanapa Honghern

Relationship:

The Shinawatra family, the Major Shareholder of SHIN, holds 10.00% of UpcountryLand Co., Ltd.

Major Related Transactions: The Company leases office building and the place to provide signal switching service of mobile phone in Cellular 900 and GSM and to install equipment and mobile phone base station from UpcountryLand Co., Ltd. in Bangkok and regional areas totaling 92 places. The rental ranges from 13,000-240,000 Baht per month. Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

93.26

0.00

Size of Transaction 1. Rental and other service fees 2. Base station construction support

OAI Leasing Co., Ltd Type of Business:

Car lease

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. Miss Pintongta Shinawatra

22.50%

2. Miss Paetongtarn Shinawatra

22.50%

3. SC Asset Co., Ltd.

55.00%

As at December 31, 2000 1. Khunying Potjaman Shinawatra 2. Mrs. Busaba Damapong 3. Mr. Chanon Suwasin 4. Mrs. Kanchanapa Honghern

Relationship:

The Shinawatra family, the Major Shareholder of SHIN, holds 45.00% of OAI Leasing Co., Ltd.

Major Related Transactions: The Company, AWM and APG lease 83 cars for the use of various branches from OAI Leasing Co., Ltd. The rental ranges from 20,000-30,000 Baht per unit per month. Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

33.41

35.92

1.97

0.02

Size of Transaction 1. Rental and other service fees 2. Car acquisition Outstanding 1. Payables to associated companies

046

I.T. Applications and Service Co., Ltd. Type of Business:

Providing SAP (System Application and Products Data Processing) and developing multimedia and Internet management

Major Shareholders:

As at December 31, 2000 SHIN

Board of Directors:

100.00%

As at December 31, 2000 1. Mr. Boonklee Plangsiri* 2. Mr. Somkiet Phaloprakarn 3. Mrs. Busaba Damapong 4. Mrs. Siripen Sitasuwan* *Joint-Director

Relationship:

SHIN is the Major Shareholder with Joint-Directors

Major Related Transactions: The Company, AWM and APG employ I.T. Application and Service Co., Ltd. to improve and develop computer program on freelance basis. Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

1. Consulting and management fee

6.27

2. Rental and other service fees

0.00

13.96

1.2

6.74

1.82

Size of Transaction:

3. Cost of office equipment and computer Outstanding 1. Payables to associated companies

OAI Property Co., Ltd. Type of Business:

Office space lease

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. Win Mark Limited

25.04%

2. SC Office Park Co., Ltd.

25.00%

3. Miss Pintongta Shinawatra

22.49%

4. Miss Paetongtarn Shinawatra

22.49%

5. Khunying Potjaman Shinawatra

4.99%

As at December 31, 2000 1. Khunying Potjaman Shinawatra 2. Mr. Chanon Suwasin 3. Mrs. Kanchanapa Honghern

Relationship:

The Shinawatra family, the Major Shareholder of SHIN, holds 49.97% of OAI Property Co,. Ltd.

Major Related Transactions: The Company and AWM lease office space in Shinawatra Tower 3 located at 1010, Vibhavadee Rangsit Road, Ladyao, Chatuchak, Bangkok with total area of 2,792 square meters from OAI Property Co., Ltd. The rental ranges from 330-770 Baht per square meter per month. The Company exclusively leases the area of 689.90 square meter to operate Mobile Telephone Exchange for the rental of 50 Baht per square meter per month.

047

Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

1. Rental and other service fees

5.53

16.27

2. Office decoration

1.93

1. Trade account payables

0.13

2. Payables to associated companies

0.39

0.87

Outstanding

Singapore Telecom Mobile Pte. Ltd. Type of Business:

Providing mobile phone network in GSM 900 and GSM 1800 in Singapore

Major Shareholders:

As at December 31, 2000 Singapore Telecommunications Ltd.

Board of Directors:

100.00%

As at December 31, 2000 1. Lee Hsien Yang 2. Chua Sock Koong 3. Lucas Chow Wing Keung

Relationship:

An associated company in the Group of SingTel Strategic Investments Pte. Ltd., the Company’s Major Shareholder.

Major Related Transactions: The Company signed the Service Contract with Singapore Telecom Mobile Pte. Ltd. for International Roaming service. The Company calculates the balance of service fee due from the Singapore Telecom Mobile Pte. Ltd.’s customers roaming to Thailand. On the other hand, Singapore Telecom Mobile Pte. Ltd. calculates the balance of service fee due from Company’ s customers roaming to Singapore. The Company and Singapore Telecom Mobile Pte. Ltd. settle the transaction by netting out each other’s balance due. The party with higher balance of service fee is Creditor and the party with lower balance of service is Debtor. The Debtor is liable for paying the net balance denominated in Creditor’s currency using the exchange rate specified in the invoice as conversion rate. Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

157.23

30.62

49.34

86.00

7.32

Size of Transaction 1. Revenue from service 2. Rental and other service fees Outstanding 1. Trade account receivables 2. Trade account payables

048

Singapore Telecom International Pte. Ltd. Type of Business:

A Holding Company providing technical consultant and telecommunication management

Major Shareholders:

As at December 31, 2000 Singapore Telecommunications Ltd.

Board of Directors:

100.00%

As at December 31, 2000 1. Lee Hsien Yang 2. Chua Sock Koong

Relationship:

An associated company in SingTel Strategic Investments Pte. Ltd., the Company’s Major Shareholder

Major Related Transactions: 1. Buying common shares of ADC and DNS The Company bought common shares of ADC and DNS from Singapore Telecom International Pte. Ltd. on October 29, 1999. The buying is rooted in the fact that Thai telecommunication business in Thailand entered the Age of Information in which consumers tend to increasingly communicate data in more sophisticated means than simple voice. The Company recognized the prospect of data transmission on fixed line (Data Net) initially provided by ADC and DNS with the potential to create value added and create the versatility in response to Strategic Move of both ADC and DNS.

The Company acquired total share worth 281,067,807.54 Million Baht consisting of 18,339,386 common shares of ADC at 14.89 Baht per share and 49,000 common shares of DNS at 163.15 Baht per share. After share acquisition, the Company held 67.95% and 49.00% of ADC and DNS’ paid-up capital respectively.

The transaction contributing to 1.22% of Company’s book value of tangible assets as at November 30, 1999 was considered related transactions in compliance with SEC’s rules and regulations requiring the Company to disclose the related transactions of registered Company (Section 9). The Company, therefore, acknowledged the involvement of such transactions to SEC on October 20, 1999.

In the valuation of ADC and DNS, the Company applied Discounted Cash Flow (DFC) method where buyer and seller had common accord. Due to various hypotheses in valuation, the value of common share differed from Book Value. The valuation based on Book Value of the acquired shares of ADC and DNS, if applied, would be 191 Million Baht and 6 Million Baht respectively. As a result, the Company paid for goodwill of ADC and DNS at 82 Million Baht and 2 Million Baht respectively.

Siam Commercial Business Co., Ltd., the Company’s Financial Advisor, put that data transmission on fixed line was Company’s related business and the dealing price was the agreed upon price for both parties.

049

2. Technical Service Agreement APG signed Technical Service Agreement to hire Singapore Telecom International Pte. Ltd. as a technical consultant in Digital Display Paging for the annual fee as follows:

1990

Free of charge

1991-1992

5 Million Baht per year

1993-2005

10 Million Baht per year combining 50% of APGâ&#x20AC;&#x2122;s annual net profit

Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

0.00

13.13

30.13

Size of Transaction 1. Consulting and Management fee Outstanding 1. Payables to associated companies

Digital Phone Co., Ltd. Type of Business:

Providing mobile phone network in GSM 1800 system

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. Telekom Malaysia International Sdn. Bhd.

49.99%

2. SHIN

47.55%

3. Total Access Communication Plc.

2.29%

As at December 31, 2000 1. Mr. Boonklee Plangsiri* 2. Mr. Vikrom Sriprataks 3. Mrs. Siripen Sitasuwan 4. Mr. Kowit Surapan 5. Dato, Ir Muhammad Radzi Haji Mansor 6. Mr. Lim Kheng Guan 7. Mr. Rosli Bin Man *Joint-Director

Relationship:

SHIN is the Major Shareholder with Joint-Director

Major Related Transactions: AWM distributes handsets in GSM 1800 to Digital Phone Co., Ltd. Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

0.00

112.07

Size of Transaction 1. Selling Revenues

050

C.S. Communications Co., Ltd. Type of Business:

Ground station service for the transmission of television signal through satellite, live broadcast service through satellite

Major Shareholders:

As at December 31, 2000 Shin Satellite Plc.

Board of Directors:

99.02%

1. Mr. Kittin Udomkiat 2. Mr. Ormsin Cheevapurk 3. Mr. Boonklee Plangsiri* 4. Mr. Wattana Eiambamrung 5. Mr. Dumrong Kasemset (Ph. D.) 6. Mr. Arvudh Ploysongsang (Ph. D.) 7. Mr. Prommin Lertsuridej *Joint-Director

Relationship:

SHIN is indirect Major Shareholder with Joint-Director

Major Related Transactions: The Company, AWM and APG employ C.S. Communication Co., Ltd. to provide Internet service and pay monthly service fee. Size of Related Transaction: Unit: Million Baht 2000 Transaction

Company

Consolidated

1. revenues from service

0.16

23.97

2. Rental and other service fees

2.97

5.07

1. Trade account payables

0.02

11.22

2. Payables and loans to associated companies

0.00

4.18

Size of Transaction

Outstanding

OAI Consultant and Management Co., Ltd. Type of Business:

Hotel

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. Khunying Potjaman Shinawatra

84.21%

2. SC Office Park Co., Ltd.

15.79%

As at December 31, 2000 1. Mr. Bhanapot Damapong 2. Mrs. Busaba Damapong 3. Mr. Somkiet Phaloprakarn 4. Mr. Chanon Suwasin 5. Mr. Surathian Chaktharanon 6. Mrs. Kanchanapa Honghern

Relationship:

The Shinawatra family, the Major Shareholder of SHIN holds 84.21% OAI Consultant and Management Co., Ltd.

Major Related Transactions: The Company uses banquet ballroom managed by OAI Consulting and Management Co., Ltd. for seminar, employee training on usage basis. Size of Related Transaction: Unit: Million Baht 2000 Transaction

Rental and other service fees

Company

Consolidated

4.52

4.53 051

B.P. Property Co., Ltd. Type of Business:

Building area lease

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. Khunying Potjaman Shinawatra

49.46%

2. Miss Pintongta Shinawatra

14.34%

3. Miss Paetongtarn Shinawatra

14.34%

4. SC Office Park Co., Ltd.

11.76%

5. Win Mark Limited

10.00%

As at December 31, 2000 1. Miss Pranee Vetchpukpitak 2. Mrs. Busaba Damapong 3. Mr. Surathian Chaktharanon 4. Mrs. Kanchanapa Honghern

Relationship:

The Shinawatra family, the Major Shareholder of SHIN holds 78.14% of B.P. Property Co., Ltd.

Major Related Transactions: The Company leases top deck and partial area of SC Sathorn Mansion Tower located at 141/9 South Sathorn Road, Tungmahamek, Sathorn, Bangkok to install base station from B.P. Property Co., Ltd. The rental is 32,000 Baht per month. Size of Related Transaction: Unti: Million Baht 2000 Transaction

Rental and other service fees

Company

Consolidated

0.60

Shineedotcom Co., Ltd. Type of Business:

Internet service provider

Major Shareholders:

As at December 31, 2000 AD Venture Co., Ltd.

Board of Directors:

99.17%

As at December 31, 2000 1. Mr. Boonklee Plangsiri* 2. Mr. Dumrong Kasemset (Ph. D.) 3. Mrs. Siripen Sitasuwan* 4. Mr. Sanchai Tiewprasertkul 5. Miss Jurairat Romlumdoun *Joint-Director

Relationship:

SHIN is indirect Major Shareholder with Joint-Directors.

Major Related Transactions: The Company hires Shineedotcom Co., Ltd. to provide Internet service. Service fee is paid montly. Size of Related Transaction: Unit: Million Baht 2000 Transaction

Trade account payables

052

Company

Consolidated

13.50

Infolink Co., Ltd. Type of Business:

Providing value added service on page phone, such as, stock report, exchange rate update

Major Shareholders:

As at December 31, 2000

Board of Directors:

1. Miss Boonchu Rienpradub

50.30%

2. Singapore Telecom International Pte. Ltd.

49.00%

As at December 31, 2000 1. Mr. Somprasong Boonyachai* 2. Mr. Hui Weng Cheong 3. Mr. Mark Chong Chin Kok *Joint-Director

Relationship:

Singapore Telecom International Pte. Ltd., an Associated Company in the Group of SingTel Strategic Investments Pte., Ltd., the Company’s Major Shareholder. The Company and Infolink Co., Ltd. has Joint-Director.

Major Related Transactions: Infolink Co., Ltd. deals with customers using services on page phones. Service fee is charged to customers of Infolink Co., Ltd. but waived for APG’s customers. Therefore, Infolink Co., Ltd. has reimbursed service fees for APG’s customers. The waived service fees have been accrued as account receivables from APG since 1992. The accrued service fees were discounted by 50% to compensate the canceled Service Promotion Contract with APG in 1999. The balance of accrued service fees were paid afterwards. Size of Related Transaction: Unit: Million Baht 2000 Transaction

Trade account receivables

Company

Consolidated

0.00

4.96

053

THE ANALYSIS OF FINANCE STATUS AND OPERATING PERFORMANCE

The Analysis of Operating Per formance Since 1999, the Company has continually generated increasing profits. The Company’s net profit increased from 10.63% in 1999 to 16.61% in 2000. Earning per share increased from 16.87% in 1999 to 26.58% in 2000. The increasing capability in generating profit is attributable to continual increase of Selling and Service Revenue (increased by 46.58% in 2000 compared with 1999). While operating cost increased by 36.3% in 2000 compared with 1999.

The Analysis of Revenue The Company’s and its Subsidiaries’ major revenue can be itemized into 2 categories including 1) Revenue from Service and Equipment Rental 2) Revenue from Selling 1999

2000

Million Baht

16,800

66.6

24,792

67.1

1,357

5.4

118

3.1

171

0.7

257

0.7

18,328

72.2

26,197

70.9

6,636

26.3

10,549

28.5

250

1.0

194

0.5

0.0

0.1

6,886

27.3

10,762

29.1

25,214

100.0

26,959

100.0

Revenue from Service & Equipment Rental Mobile Phone Pager Data on Phone Line Subtotal Revenue from Selling Handset Pager Data on Phone Line Subtotal Gross Total

Revenue from Service and Equipment Rental Revenue from Service and Equipment Rental continually increased from 16,800 Million Baht in 1999 to 24,792 Million Baht in 2000 or a 42.93% increase.

Table of Mobile Phone Subscribers and Average Revenue per User Net Use Increase Year

Accounting Users

ARPU (Baht/Month)

NMT-900

GSM-900

One-2-Call!

NMT-900

GSM-900

One-2-Call!

NMT-900

GSM-900

1999

(65,700.0)

293,000

23,700

610,500

596,000

23,700

1,075

1,229

2000

(144,900)

56,120

330,800

485,800

1,157,200

354,500

1,106

1,312

The expansion of Revenue from Service and Equipment Rental principally resulted from substantial increase in users. The number of users increased from 1,230,000 subscribers at the end of 1999 to 1,977,300 subscribers at the end of 2000 as a consequence of deteriorating handset price, ongoing implementation of marketing plan and country’s recovering economy. In addition, the prepaid service under the name “One-2-Call!” launched in July 1999 gained quick and high popularity. The Net Increase in number of prepaid users in 2000 was 330,800 over the existing users of only 23,700 in 1999.

054

In terms of Analog NMT and Digital GSM users, the number of Analog NMT users has continually decreased since 1998. Total decrease of users was 144,900 at the end of 2000 as a result of Company’s policy to migrate Analog NMT users in Bangkok and Peripherals to Digital GSM. The Manufacturers will totally cease the production of Analog NMT handsets and parts used for network maintenance in the future. On the other hand, the number of Digital GSM users has continually increased with the net increase of 561,200 in 2000. Therefore, combining net increase of users for both systems was 416,300 in 2000.

Concerning Average Revenue per User (ARPU), ARPU for Digital GSM, the system with majority of users, has increased since 1999. ARPU for 2000 stood at 1,312 Baht compared with 1,229 Baht in 1999. However, ARPU tends to decrease due to customer base expansion to cover the users with low monthly usage

Revenue from Selling The acquisition of AWM’s shares on December 21, 1998 allows the Company to earn higher revenue from the selling of handsets besides pagers. Revenue from selling dramatically increased from 6,886 Million Baht in 1999 to 10,762 Million Baht in 2000.

Revenue from Compensation TOT acknowledged the Company to absorb VAT burden as a result of the declaration of VAT imposition in 1992. However, an Operator under the Concession granted by TOT managed to request TOT to compensate the VAT absorption by the Operators. In 1998, the ultimate judgement by the Arbitrator commanded that TOT pay VAT for the Operators. Therefore the Company requested TOT to compensate the Company for the missing revenue from VAT payment during 1992-1997. TOT paid the compensation to the Company for 1,032 Million Baht in 2000 as stated in the 2000’s Income Statement.

Other Revenues With regard to other revenues appeared in Company’s and its Subsidiaries’ Income Statement, the main item included international call discount collected from CAT. According to historical performance, the Company’s other revenues have continually increased since 1999 due to the increase of international call service on Company’s network. Because more foreigners coming to Thailand on business and travelling purpose heavily used Company’s International Roaming service, the balance of international call service due to CAT therefore increased. Therefore, international call discount entitled to the Company and collected from CAT has increased. The Company showed other revenues in Income Statement of 428 Million Baht and 598 Million Baht in 1999 and 2000 respectively.

The Analysis of Costs Cost of Service and Equipment Rental Cost of service and equipment rental consists of 2 major components including 1) Annual Revenue Sharing paid to TOT in percentage of revenue from mobile phone service and 2) the Amortization of mobile phone and pager networks under the Concession Agreements.

Because the amortization of mobile phone and pager network under the Concession Agreements is considered fixed cost, the continual increase of revenue from service and equipment rental contributed to lower proportion of amortization cost of network to revenues from service and equipment rental decreased in 1999 and 2000. The deteriorating proportion obviously indicated the efficient administration of mobile phone and pager network. Moreover, the Company could decrease cost of transponder, which is a cost of service and equipment rental, by using more Company’s owned transponder than previously rented from TOT. The Company realized cost of service and equipment rental of 11,385 Million Baht and 14,941 Million Baht in 1999 and 2000 respectively or a ratio of cost to revenue from service and equipment rental of 62.12% and 57.03% in 1999 and 2000 respectively.

055

Selling Cost Declining price of handsets by the distributors, increasing selling revenues and discount given to customers migrating their Analog NMT handsets to Digital GSM principally contributed to Company’s increasing selling cost. Considering consolidated selling cost of Company and AWM, total selling cost increased from 4,709 Million Baht in 1999 to 7,472 Million Baht in 2000 with growth rate of operating profit of 31.62% and 30.57% in 1999 and 2000 respectively.

Gain (Loss) on Exchange The Company has continually placed policy towards risk exposure associated with foreign exchange. Gain from exchange of 761 Million Baht in 2000 was attributable to deposit in foreign currency written off Baht appreciation.

The Analysis of Financial Status The Analysis of Assets Cash in Hand and at Banks and Shor t term Investment At the end of 1999, the Company had cash in hand and at banks of 840 Million Baht with short term investment of 2,851 Million Baht. Cash in hand and at banks increased to 1,497 Million Baht, while short term investment increased to 10,869 Million Baht in 2000. The increase of cash in hand and at banks and short term investment resulted from higher operating performance. Substantial accrued Revenue Sharing payable to TOT and more efficient debt collection ended up cash flow from operation of 13,950 Million Baht. The issuance of 10,000 Million Baht Debentures in March 2000 resulted in net cash flow from financing activities of 6,484 Million Baht with total investment of 11,731 Million Baht.

Net Trade Receivables Net trade receivables increased from 3,848 Million Baht in 1999 to 5,445 Million Baht at the end of 2000 as a result of increasing revenues from service, equipment rental and selling. Considering the 2000ûs ratio of net trade receivables to revenue from service, equipment rental and selling, net trade receivables contributed to only 14.73% with average collection period of 45 days. In practice, the Company handed invoice once a month. Actual collection period was lower than estimated. In 1999, trade receivables contributed to 15.26% with average collection period of 49 days. The improvement was mainly due to increasing number of Pre-paid users. Bad debt at 3% for the past 3 years was decreased to 1.6% of revenues from service and equipment rental at the end of 2000 due to the adjustment of conditions to put temporary barring in responding to target groups and more strict fraud investigation. The adoption of Intelligent Database System assisted the Company in more superbly conducting customer segmentation and managing asset quality. For example, the officers file notice to the customers with specified overdue to immediately pay their bills before disconnecting services.

The Company considers the setting up of parameter applying to bad debt accounts with more than 3 months of non-payment in conjunction with deposit collected from customers for registration. The Company demands Bank Guarantee issued by leading banks to back the selling of goods to dealers. The Company convinces that the allowance for bad debt of 238 Million Baht at the end of 2000 is sufficient to cover risk associated with doubtful accounts.

Net Inventories After consolidating AWM, the distributor of handsets, to be Company’s Subsidiary, net inventories increased from 939 Million Baht at the end of 1999 to 1,970 Million Baht at the end of 2000. Net inventories increased in line with continual increase in handsets sold.

Forward and Swap Contract Receivables or Payables Entering forward Contracts to hedge against foreign exchange risk exposure, the Company realized discrepancy in actual rate and forward rate as forward receivables or payables in accordance with Forward or Swap Contracts. At the end of 1999, the exchange rate at ending accounting period was 37.71 Baht per US Dollar. The Company had net Forward Payables and Payables pursuant to long-term Forward Contracts of 57 Million Baht and 25 Million Baht respectively at the end of 2000 where the exchange rate was 43.44 Baht per US Dollar. The Company had net Forward Receivables of 221 Million Baht.

056

Advance Payment to Suppliers Advance payment to Suppliers were transaction recognized at the end of 2000. The Company made advance payment of 989 Million Baht to the Suppliers of mobile phone network to seek trade discount and hedge against foreign exchange risk. The Suppliers receiving advance payment from the Company are reputable mobile phone network distributors with strong financial status, therefore, the Company is confident that the Suppliers shall completely comply with the conditions set forth in the agreed upon quotation.

Other Current Assets Other current assets totaling 1,091 Million Baht at the end of 1999 was due to increasing advanced payment and VAT from asset transfer to TOT not refunded yet. At the end of 2000, other current assets decreased to 992 Million Baht.

Cost of Mobile Phone and Page Phone Network and Cost of DATANET Tool and Equipment under Net Concession Agreements Cost of mobile phone and page phone network and cost of DATANET tool and equipment under net Concession Agreements increased from 26,812 Million Baht at the end of 1999 to 33,947 Million Baht at the end of 2000. The increase is mainly due to Companyâ&#x20AC;&#x2122;s investment expansion in mobile phone network with the focus on Digital GSM system in upcountry. In evaluating asset quality based on ability of assets to generate revenue, returns on asset was 7.06% in 1999. For 2000, returns on asset increased to 13.33% principally due to increasing sales and net profit.

The Analysis of Liabilities Trade Accounts Payable Trade accounts payable at the end of 1999 decreased to 2,324 Million Baht with average repay period of 128 days. Trade accounts payable increased to 4,602 Million Baht with average repay period of 73 days, despite the repayment in 2000, was because the Company increased investment in mobile phone network.

Long-term Debentures and Long-term Loans At the end of 1999, outstanding long-term debentures and long-term loans decreased to 3,892 Million Baht, because the Company serviced the liabilities of 8,280 Million Baht with the funds acquired by the increase of paid-up capital of 36 Million shares subscription. In March 2000, the Company issued the 10,000 Million Baht Debentures and serviced long-term debentures and long-term loans of 3,792 Million Baht. Outstanding long-term debentures and longterm loans, therefore, increased to 9,085 Million Baht at the end of 2000. Current portion of long-term debentures matured within 1 year was recognized at 2,301 Million Baht.

Accrued Annual Revenue Sharing Accrued annual revenue sharing at the end of 2000 was 1,814 Million Baht compared with 953 Million Baht in 1999. The increase of appropriated revenue sharing was in line with increasing sales. Regularly, the Company pays minimum revenue sharing specified by TOT. The payment is made in 4 equal installments due in every January, April, July and October. Incremental revenue sharing is determined and paid in every November. In October 2000, the applicable rate of annual revenue sharing increased in compliance with the Concession Agreement with TOT. Accrued Annual Revenue Sharing was, therefore, more than appeared in the Financial Statement at the end of 1999.

Other Current Liabilities Other current liabilities were 4,519 Million Baht at the end of 2000 and increased to 6,983 Million Baht at the end of 2000. Transmission System due from TOT mostly contributed to other current liabilities.

057

The Analysis of Capital Structure The Company abides by the policy towards maintaining Debt to Equity of less than 2:1. The Company’s Debt to Equity Ratio increased from 0.85 at the end of 1999 to 1.10 at the end of 2000 as a result of the issuance of 10,000 Million Baht Debentures in March 2000.

The Analysis of Liquidity The Company engaged in huge investment in mobile phone network to expand service coverage area and increase service efficiency. Net cash flow from operation of 6,742 Million Baht was insufficient to fund investing activities costing 9,216 Million Baht in 1999. The Company, therefore, raised Common Shares to cash in 8,280 Million Baht. Generating increasing revenues from service, equipment rental and handset selling in 2000, the Company had cash from operation of 13,950 Million Baht along with cash of 9,956 Million Baht from the issuance of long-term Debentures. Meanwhile, the Company repaid long-term Debentures and long-term Loans for 3,792 Million Baht. The Company, therefore, left net cash from financing activities of 6,484 Million Baht. The Company involved in investment of 11,731 Million Baht. At the end of 2000, the Company’s cash and cash equivalents increased by 8,703 Million Baht.

Liquidity ratio increased from 0.87 at the end of 1999 to 1.22 at the end of 2000 mainly due to substantial increase of short-term investment from 2,854 Million Baht at the end of 1999 to 10,869 Million Baht at the end of 2000.

Interest coverage ratio at the end of 1999 and 2000 was 7.61 times and 15.92 times respectively due to net operating profit increased from 5,573 Million Baht in 1999 to 10,851 Million Baht in 2000, while interest paid increased from 718 Million Baht in 1999 to 729 Million Baht in 2000. At the end of 1999, the Company had Cash Basis ratio of 0.62 times due to the repayment of short-term Debentures, long-term Debentures and long-term loans totaling 11,379 Million Baht. Thanks to better operating performance in 2000, the Company had net cash from operation of 13,950 Million Baht and Cash Basis ratio increased to 3.25 times.

At the end of 2000, outstanding short-term loan of 6,166 Million Baht affecting Company’s liquidity included loan from banks, current portion of long-term Debentures due within 1 year, current portion of long-term loans due within 1 year and accrued revenue sharing with exclusive amount of 1,814 Million Baht. Concerning the ability to service short-term liabilities, cash and cash equivalents of 12,366 Million Baht consisting of cash in hand and at banks and short-term investment is prudent for the Company to repay loan from banks, current portion of long-term Debentures due within 1 year, current portion of long-term loans due within 1 year and accrued revenue sharing without significant impact on Company’s liquidity and operation.

058

FINANCIAL STATEMENTS

Auditorâ&#x20AC;&#x2DC;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 2000 and 1999, and the related consolidated and company statements of income, changes in shareholdersâ&#x20AC;&#x2122; equity, retained earnings, and cash flows for the years then ended. These financial statements are the responsibility of the Companyâ&#x20AC;&#x2122;s management. My responsibility is to express an opinion on these financial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing standards. 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 audits provide 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 2000 and 1999 and the consolidated and company results of operations, and cash flows for the years then ended in accordance with generally accepted accounting principles.

PRASAN CHUAPHANICH Certified Public Accountant (Thailand) No. 3051 PricewaterhouseCoopers ABAS Limited

Bangkok 9 February 2001

059

BALANCE SHEETS Advanced Info Service Public Company Limited As at 31 December 2000 and 1999

Consolidated Notes

Company

2000

1999

2000

1999

Baht

ASSETS Current Assets Cash on hand and at banks

1,497,298,297

839,647,271

816,501,508

525,850,888

Short-term investments

10,869,043,966

2,851,465,387

9,190,105,826

2,352,919,560

Trade accounts receivable, net

5,445,307,017

3,848,345,836

4,935,723,154

3,430,142,410

4,196,342

548,159

74,147

2,093,329

Inventories, net

1,970,365,783

939,472,853

Forward and swap contracts receivable, net

220,712,133

205,435,829

988,651,337

991,855,529

1,090,625,816

838,669,235

1,028,222,526

21,987,430,404

9,570,105,322

16,975,161,036

7,339,228,713

Amounts due from and loans to related companies, net

Advances to suppliers Other current assets

Total Current Assets

Non-Current Assets Long-term investments, net

4,453,254,896

3,825,617,841

Property and equipment, net

2,340,188,930

1,974,811,317

2,096,873,341

1,778,747,098

33,947,149,419

26,812,222,245

32,800,912,318

25,720,430,223

895,194,438

1,507,022,850

365,034,898

475,145,345

37,182,532,787

30,294,056,412

39,716,075,453

31,799,940,507

59,169,963,191

39,864,161,734

56,691,236,489

39,139,169,220

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

The notes to the consolidated and company financial statements on pages 69 to 107 are an integral part of these financial statements.

060

Consolidated Notes

Company

2000

1999

2000

1999

Baht

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

2,049,960,000

1,950,000,000

2,029,960,000

1,950,000,000

Trade accounts payable

4,602,483,754

2,324,113,183

3,102,258,023

1,683,336,062

Current portion of long-term debenture

2,301,266,964

Current portion of long-term liabilities

782,784

1,033,126,793

782,784

1,033,126,793

294,207,094

135,046,813

64,774,782

693,480,365

57,450,350

57,227,095

1,813,905,026

953,231,105

1,813,905,026

953,231,105

6,983,269,838

4,518,768,739

6,039,398,991

3,614,101,988

18,045,875,460

10,971,736,983

15,352,346,570

9,984,503,408

Amounts due to and loans from related companies Forward and swap contracts payable, Net Accrued concession fee Other current liabilities

Total Current Liabilities

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

24,564,860

Long-term debentures

8,834,718,720

1,500,000,000

8,834,718,720

1,500,000,000

Long-term liabilities

250,000,000

2,391,868,726

Deposits from customers

3,914,581,087

3,450,606,377

4,538,801,435

3,871,811,093

Total Non-Current Liabilities

12,999,299,807

7,367,039,963

13,373,520,155

7,788,244,679

Total Liabilities

31,045,175,267

18,338,776,946

28,725,866,725

17,772,748,087

5,000,000,000

Shareholders’ Equity Share capital Authorised share capital Issued and fully paid-up share capital

2,700,000,000

Premium on share capital

10,215,000,000

500,000,000

14,550,369,764

7,951,421,133

14,550,369,764

7,951,421,133

159,418,160

158,963,655

28,124,787,924

21,525,384,788

27,965,369,764

21,366,421,133

59,169,963,191

39,864,161,734

56,691,236,489

39,139,169,220

Retained earnings Appropriated - Legal reserve Unappropriated Minority interests Total Shareholders’ Equity

Total Liabilities and Shareholders’ Equity

061

STATEMENTS OF INCOME Advanced Info Service Public Company Limited For the years ended 31 December 2000 and 1999

Consolidated

Company

2000

1999

2000

1999

Baht

Revenues from services and equipment rentals

26,196,886,675

18,327,768,540

24,637,870,884

16,701,245,081

Sales

10,761,757,882

6,885,884,121

760,640,485

699,581,159

Notes

Revenues

Net gain on exchange Compensation income

1,031,569,923

Other operating income

978,788,559

659,034,636

726,860,682

506,666,477

39,729,643,524

25,872,687,297

27,095,882,648

17,207,911,558

14,940,630,368

11,385,272,325

14,184,320,193

10,750,141,776

Cost of sales

7,471,907,851

4,708,594,735

Selling and administrative expenses

5,703,519,403

4,181,786,277

2,986,592,550

2,396,658,719

108,653,881

118,993,916

Total Revenues

Expenses Cost of services and equipment Rentals

Net loss on exchange Interest expenses

729,440,455

718,286,932

733,037,369

717,647,239

Directorsâ&#x20AC;&#x2122; remuneration

1,658,629

5,060,000

1,590,791

5,000,000

28,847,156,706

21,107,654,150

17,905,540,903

13,988,441,650

10,882,486,818

4,765,033,147

9,190,341,745

3,219,469,908

977,636,995

987,568,785

10,882,486,818

4,765,033,147

10,167,978,740

4,207,038,693

4,283,083,622

1,995,711,939

3,569,030,109

1,456,977,126

6,599,403,196

2,769,321,208

6,598,948,631

2,750,061,567

454,565

19,259,641

6,598,948,631

2,750,061,567

6,598,948,631

2,750,061,567

24.44

10.44

24.44

10.37

(0.07)

24.44

10.37

24.44

10.37

Total Expenses

Operating income

Share of net profit in subsidiaries, net of Baht 300 million loss on impairment for investment in subsidiary (Note 10) Income before tax Income tax

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

Net income for the year

Basic earnings per share Income before minority interests Share of net profit in subsidiaries to minority interests Net income for the year

The notes to the consolidated and company financial statements on pages 69 to 107 are an integral part of these financial statements.

062

STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY Advanced Info Service Public Company Limited For the years ended 31 December 2000 and 1999

Consolidated

Company

2000

1999

2000

1999

Baht

2,700,000,000

2,340,000,000

2,700,000,000

2,340,000,000

360,000,000

2,700,000,000

10,215,000,000

2,295,000,000

10,215,000,000

2,295,000,000

7,920,000,000

10,215,000,000

500,000,000

Increase during the year

Decrease during the year

500,000,000

5,201,359,566

Beginning balance

7,951,421,133

Net income for the year

6,598,948,631

2,750,061,567

6,598,948,631

2,750,061,567

14,550,369,764

7,951,421,133

14,550,369,764

7,951,421,133

159,418,160

158,963,655

28,124,787,924

21,525,384,788

27,965,369,764

21,366,421,133

Notes

Share Capital Beginning balance Increase during the year

Decrease during the year Ending balance

Premium on Share Capital Beginning balance Increase during the year

Decrease during the year Ending balance

Retained Earnings Appropriated retained earnings Legal reserve

Beginning balance

Ending balance Unappropriated retained earnings Beginning balance-as restated

Ending balance Minority interests

Total Shareholdersâ&#x20AC;&#x2122; Equity

The notes to the consolidated and company financial statements on pages 69 to 107 are an integral part of these financial statements.

063

STATEMENTS OF RETAINED EARNINGS Advanced Info Service Public Company Limited For the years ended 31 December 2000 and 1999

Consolidated Notes

Company

2000

1999

2000

1999

Baht

5,201,359,566

7,951,421,133

6,598,948,631

2,750,061,567

6,598,948,631

2,750,061,567

14,550,369,764

7,951,421,133

14,550,369,764

7,951,421,133

500,000,000

15,050,369,764

8,451,421,133

15,050,369,764

8,451,421,133

Unappropriated retained earnings: Beginning balance-as restated Beginning balance Net income for the year Unappropriated retained earnings at end of the year

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

The notes to the consolidated and company financial statements on pages 69 to 107 are an integral part of these financial statements.

064

STATEMENTS OF CASH FLOWS Advanced Info Service Public Company Limited For the years ended 31 December 2000 and 1999

Consolidated Notes

Company

2000

1999

2000

1999

Baht

6,598,948,631

2,750,061,567

6,598,948,631

2,750,061,567

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

676,206,227

599,236,020

596,301,341

515,801,518

Provision for obsolete fixed assets

10,446,194

4,386,992,002

3,716,634,027

4,183,248,178

3,537,661,087

90,342,076

103,337,347

48,444,545

90,534,804

553,117,078

611,086,487

420,646,985

485,160,365

diminution in value of finished goods

119,215,638

89,758,720

Amortisation forward and swap premiums

15,261,428

86,523,094

63,871,320

87,460,396

9,563,700

2,909,857

7,350,818

5,662,358

(18,680,335)

(18,650,659)

125,539,692

158,944,953

168,762,728

71,399,189

170,000,000

20,556,388

170,000,000

Unrealised loss (gain) on foreign exchange rate

15,448,958

38,670,393

2,674,501

45,549,824

Realised loss (gain) on foreign exchange for loans

33,679,281

119,471,369

33,679,281

119,471,369

113,362,720

95,371,246

300,000,000

(37,110,360)

(977,636,995)

(987,568,785)

14,236,947

454,505

19,259,641

13,264,032,690

8,375,655,602

11,287,973,701

6,819,794,503

Amortisation of costs of mobile phone and pager service networks and Datanet tools and equipment under concession agreements Amortisation of deferred charges Doubtful accounts and bad debts Loss on write-off inventories and provisions for obsolete inventories and

Loss (gain) on disposals of fixed assets Loss (gain) on disposals of cost of mobile phone service networks and Datanet tools and equipment Loss (gain) on write-off deferred charges

Loss (gain) on write-off fixed assets Loss (gain) on write-off cost of mobile phone and pager service networks

Amortisation of goodwill Provision for impairment of goodwill

Write-down of negative goodwill to be other operating income Share of net profit in subsidiaries Amortisation of bond issuing cost Share of net profit in subsidiaries to minority interests Net income before changes in operating assets and liabilities

The notes to the consolidated and company financial statements on pages 69 to 107 are an integral part of these financial statements.

065

STATEMENTS OF CASH FLOWS (CONTINUED) Advanced Info Service Public Company Limited For the years ended 31 December 2000 and 1999

Consolidated

Company

2000

1999

2000

1999

Baht

13,264,032,690

8,375,655,602

11,287,973,701

6,819,794,503

27,605,322

(23,769,046)

(2,150,831,405)

(1,397,702,852)

(1,926,980,875)

(1,181,183,550)

(3,648,183)

17,100,205

2,019,182

212,183,989

(220,712,133)

145,460,396

(205,435,829)

146,287,928

(1,148,449,375)

(345,324,549)

(988,651,337)

(70,043,871)

(698,075,011)

30,992,675

(745,212,756)

1,193,478,632

(1,630,262,838)

334,950,103

(1,468,799,524)

Increase in amounts due to related companies

159,160,280

104,159,234

21,294,417

29,120,263

Increase (decrease) in forward and swap contracts payable

(68,255,319)

5,309,096

(56,177,689)

5,085,840

Increase in accrued concession fee

860,673,921

298,118,906

860,673,921

298,118,906

2,648,013,830

1,661,334,480

2,549,946,297

1,034,927,302

(Increase) in other assets

(16,246,565)

(133,241,285)

(62,704,277)

(108,588,618)

Increase in deposits from customers

463,974,711

362,752,809

666,990,343

571,402,530

13,950,101,198

6,741,515,147

12,514,890,632

5,613,136,813

Notes

Net income before changes in operating assets and liabilities Changes in operating assets and liabilities (excluding the effects of acquisition and disposal) Decrease (increase) in short-term investments have been pledged with bank (Increase) in trade accounts receivable Decrease (increase) in amounts due from related companies Decrease (increase) in forward and swap contracts receivable (Increase) in inventories (Increase) in advances to suppliers Decrease (increase) in other current assets Increase (decrease) in trade accounts payable

Increase in other current liabilities

Cash flows from operating activities

The notes to the consolidated and company financial statements on pages 69 to 107 are an integral part of these financial statements.

066

STATEMENTS OF CASH FLOWS (CONTINUED) Advanced Info Service Public Company Limited For the years ended 31 December 2000 and 1999

Consolidated

Company

2000

1999

2000

1999

Baht

13,950,101,198

6,741,515,147

12,514,890,632

5,613,136,813

Increase in loans from related companies

650,000,000

Dividend received from a subsidiary

349,999,940

(1,228,037,858)

(1,230,600,000)

7,071,940

27,214,866

2,137,870

18,023,766

(1,675,142,418)

(957,260,994)

(1,548,789,127)

(871,299,855)

(10,063,052,515)

(7,057,909,344)

(9,754,259,151)

(6,899,046,147)

(11,731,122,993)

(9,215,993,330)

(10,950,910,468)

(8,332,922,236)

Receipts from short-term loans from banks

2,020,000,000

1,950,000,000

2,000,000,000

1,950,000,000

Repayment in short-term loans from banks

(1,950,000,000)

(881,658,647)

(1,950,000,000)

(694,100,000)

(650,000,000)

9,956,298,737

1,500,000,000

9,956,298,737

1,500,000,000

250,000,000

2,084,293,871

8,280,000,000

(2,000,000,000)

(334,550,000)

(2,000,000,000)

(334,550,000)

(2,000,000,000)

(3,457,892,015)

(7,378,560,827)

(3,457,892,015)

(7,378,560,827)

Net cash receipts from financing activities

6,483,856,722

1,554,074,397

5,563,856,722

1,741,633,044

Net increase (decrease) in cash and cash equivalents

8,702,834,927

(920,403,786)

7,127,836,886

(978,152,379)

Cash and cash equivalents - beginning balance

3,649,188,465

4,569,592,251

2,878,770,448

3,856,922,827

12,352,023,392

3,649,188,465

10,006,607,334

2,878,770,448

Notes

Cash flows from operating activities

Cash flows from investing activities

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

Proceeds from disposals of fixed assets Purchases of property and equipment 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

Repayments of loans from related companies Receipts from long-term debentures Receipts from long-term liabilities Proceeds from capital increase Repayments of short-term debentures Repayments of long-term debentures Repayments of long-term liabilities

Cash and cash equivalents - ending balance

The notes to the consolidated and company financial statements on pages 69 to 107 are an integral part of these financial statements.

067

STATEMENTS OF CASH FLOWS (CONTINUED) Advanced Info Service Public Company Limited For the years ended 31 December 2000 and 1999

Supplemental disclosures of cash flow information

Cash and cash equivalents Cash and cash equivalents included in statements of cash flows for the years ended 31 December 2000 and 1999 comprise: Consolidated

Company

2000

1999

2000

1999

Baht

1,497.30

839.65

816.50

525.85

Short-term investments

10,869.04

2,851.46

9,190.11

2,352.92

Total

12,366.34

3,691.11

10,006.61

2,878.77

(14.32)

(41.92)

12,352.02

3,649.19

10,006.61

2,878.77

Cash on hand and at banks

Less Short-term investments have been pledged with banks (Note 5) Total cash and cash equivalents

Interest expenses and income tax Interest expenses and income tax paid during the years ended 31 December 2000 and 1999 comprise: Consolidated

Interest expenses Income tax

Company

2000

1999

2000

1999

Baht

570.05

870.91

569.70

864.65

3,987.36

1,676.28

3,204.03

1,451.60

Non-cash investing activities in 2000 and 1999 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 12,846.82 million in 2000 and Baht 5,235.12 million in 1999.

Outstanding debts in the balance sheets relating to the aforesaid investments, were approximately Baht 2,248.31 million in 2000 and Baht 1,140.49 million in 1999.

Non-cash investing activities in 2000 and 1999 in the companyâ&#x20AC;&#x2122;s separate 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 networks, which are included in costs of mobile phone networks under concession agreements, were approximately Baht 12,411.68 million in 2000 and Baht 4,989.52 million in 1999.

Outstanding debts in the balance sheets relating to the aforesaid investments, amounting to approximately Baht 2,248.31 million in 2000 and Baht 1,139.67 million in 1999. The notes to the consolidated and company financial statements on pages 69 to 107 are an integral part of these financial statements.

068

NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS Advanced Info Service Public Company Limited For the years ended 31 December 2000 and 1999

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 thean 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 thean 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 thean agreement dated 19 September 1989, rendering services for data network communications.

Under the above agreements made with TOT, the Company, Advanced Paging Co., Ltd. and Advanced Datanetwork Communications Co., Ltd., formerly “Shinawatra Datacom Co., Ltd.” have to pay annual fees to TOT based on certain percentages of certain service income or at minimum fees as specified in those agreements, whichever is higher.

Under a letter dated 4 March 1997 from TOT no annual fee for the operations of pager services will be charged to Advanced Paging Co., Ltd. as from 1 March 1997 as the fee has been waived by TOT as the subsidiary reduced fees for pager service charged to its customers.

Under a joint venture agreement between Advanced Datanetwork Communications Co., Ltd., and TOT dated 25 September 1997, TOT has extended the period of the service agreement to 25 years and waived the annual fee under the agreements effective from 25 September 1997. In exchange for the waiver of the annual fee, the subsidiary has issued thean additional 10.75 million ordinary shares at the a par value of Bhat 10 each to TOT on 17 March 1998.

In addition, the Company and theits 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.

069

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.

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 37.

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.

070

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 issued 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.

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 Groupâ&#x20AC;&#x2122;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 Groupâ&#x20AC;&#x2122;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: Pagers

- 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

071

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, 10 5

Pagers and mobile phones for rent

2-5

Vehicles (including vehicles under finance leases)

The Groupâ&#x20AC;&#x2122;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.

072

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 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.

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 space 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:

073

- 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 five 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.

2.16 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 and the unrealised gains and losses resulting from the translation are recognised in the statement of income.

2.17 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.

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 33.

2.18 Segment reporting The segmental reporting has been prepared based on the Groupâ&#x20AC;&#x2122;s method of internal reporting, which desegregates business by service or product.

074

2.19 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.

2.20 Comparatives The company and its subsidiaries “the Group” have implemented the following new Thai Accounting Standards, effective 1 January 2000, in these financial statements:

TAS 44 - Consolidated Financial Statements and Accounting for Investment in Subsidiaries TAS 45 - Accounting for Investments in Associates TAS 47 - Related Party Disclosures TAS 48 - Financial Instruments : Disclosure and Presentation

There are no changes in accounting policy 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 in year 1999.

During 2000 the Group has adopted a new accounting policy relating to long-term investments in marketable debt securities as follows:

Investment in marketable debt securities - for sale Investments in marketable debt securities, which are classified as available-for-sale securities, are carried at fair value. Fair value of marketable debt securities is calculated by reference to Stock Exchange quoted bid prices at the close of business on the balance sheet date. Increases/decreases in the carrying amount are credited/charged against the revaluation reserve on investments in available-for-sale securities in shareholders’ equity.

A review for impairment is carried out when there is a factor indicating that such investment might be impaired. If the recoverable amount of the investment is less than its carrying value, impairment loss is charged to the statement of income.

On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the statement of income. On disposal of a revalued investment, amounts in revaluation reserve relating to that investment are reversed to the statement of income.

When disposing of part of the Group’s holding of a particular investment in marketable debt securities the carrying amount of the disposed part is determined from the weighted average carrying amount of the total holding of the investment.

075

3 CONCESSION CONVERSION Following the agreement of the Thai Cabinet on 25 January 2000 to encourage concessionaires to participate in the concession conversion process to undertake telecom liberalisation, the State Enterprise Policy Committee (SEPC) established the Concession Conversion Subcommittee (CCSC) to undertake the concession conversion process. Following a CCSC meeting on 19 April 2000 the CCSC informed concessionaires to give formal notice of their intention of participating in the concession conversion process. The Company gave formal notice to the CCSC on 30 June 2000 of its intention to participate in the concession conversion process. The concession conversion process is ongoing and no determination can be made at the date of these financial statements of the likely outcome and the impact of conversion on the Companyâ&#x20AC;&#x2122;s financial and operating position.

4 CASH ON HAND AND AT BANKS Consolidated

Company

2000

1999

2000

1999

Million Baht

61.27

13.39

46.64

2.97

Deposits held at call with banks

1,436.03

826.26

769.86

522.88

Total cash on hand and at banks

1,497.30

839.65

816.50

525.85

Cash on hand

The weighted average effective interest rates of deposits held at call with banks were between 0.33% and 1.13% (1999: 2.57% - 2.66%).

5 SHORT-TERM INVESTMENTS Short-term investments represent fixed deposits, promissory notes, and investments in bills of exchange, with maturity of less than 1 year. Promissory notes and bills of exchange are classified as held-to-maturity debt securities. The investments bear interest at rates ranging from 2.30% - 3.5% per annum. Consolidated

Company

2000

1999

2000

1999

Million Baht

Fixed deposits with local banks

2,664.02

353.54

1,970.00

Fixed deposits with foreign banks

3,928.84

2,352.92

3,928.84

2,352.92

Promissory notes from financial institutions

2,630.00

2,040.00

Investments in bills of exchange

1,626.14

145.00

1,231.23

20.04

10,869.04

2,851.46

9,190.11

2,352.92

Other Total short-term investments

The Groupâ&#x20AC;&#x2122;s fixed deposits with local banks amounting to Baht 14.32 million (1999: Baht 41.92 million) have been pledged with a bank in respect of bank guarantees.

Fixed deposits with foreign banks are denominated in US Dollars. The Company holds foreign currency deposits to reduce currency exchange exposure arising on expected future payments denominated in US Dollars.

076

6 TRADE ACCOUNTS RECEIVABLE, NET Consolidated

Company

2000

1999

2000

1999

Million Baht

5,580.99

4,085.82

4,891.92

3,578.49

102.39

42.34

239.50

84.35

Total trade accounts receivable

5,683.38

4,128.16

5.131.42

3,662.84

Less Allowance for doubtful Accounts

(238.07)

(279.81)

(195.70)

(232.70)

Total trade accounts receivable, net

5,445.31

3,848.35

4,935.72

3,430.14

Trade accounts receivable: Third parties Related companies

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

Company

2000

1999

2000

1999

Million Baht

151.65

46.72

Other related companies

102.39

42.34

87.85

37.63

Total trade accounts receivable - related companies

102.39

42.34

239.50

84.35

Subsidiaries

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

Company

2000

1999

2000

1999

Million Baht

Overdue 3 - 6 months

316.31

239.42

282.97

218.42

Overdue 6 - 12 months

61.98

190.91

61.91

189.69

Over 12 months

54.19

36.31

44.16

24.51

432.48

466.64

389.04

432.62

(238.07)

(279.81)

(195.70)

(232.70)

Allowance for doubtful accounts

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 exposure to the bad debt risk.

7 AMOUNTS DUE FROM AND LOANS TO RELATED COMPANIES, NET Consolidated

Company

2000

1999

2000

1999

Million Baht

0.23

1.98

Other related companies

4.57

0.92

0.21

0.48

Total amounts due from and loans to related companies

4.57

0.92

0.44

2.46

(0.37)

4.20

0.55

0.07

2.09

Subsidiaries

Less Allowance for doubtful Accounts Total amounts due from and loans to related companies, net

077

8 INVENTORIES, NET Consolidated

Company

2000

1999

2000

1999

Million Baht

1,982.55

873.54

168.85

134.07

Total inventories

2,151.40

1,007.61

Less Allowance for obsolete inventories and diminution in value of finished goods

(181.03)

(68.14)

Total inventories, net

1,970.37

939.47

Finished goods Supplies and spare parts

9 OTHER CURRENT ASSETS Consolidated

Company

2000

1999

2000

1999

Million Baht

Other receivables

337.29

661.78

335.77

660.40

Prepaid expenses

317.12

173.23

303.68

168.90

Others

337.45

255.62

199.22

198.92

Total other current assets

991.86

1,090.63

838.67

1,028.22

10 LONG-TERM INVESTMENTS, NET Consolidated

Company

2000

1999

2000

1999

Million Baht

Subsidiaries

4,453.25

3,825.62

Other company, net

Total long-term investments, net

4,453.25

3,825.62

Company 2000

1999

Million Baht

Opening net book amount - as restated

3,825.62

1,607.45

Share of net profit in subsidiaries, gross

1,277.63

987.57

1,230.60

Dividend income

(350.00)

Provision for impairment of investment in subsidiary

(300.00)

Closing net book amount

4,453.25

3,825.62

Acquisitions (Note 37)

As at 31 December 2000, the Company has provided Baht 300 million in respect of impairment in the carrying value of its investment in its subsidiary, Advanced Paging Company Limited. The Company has provided for impairment against the carrying value of its investment of Baht 1,607.26 million, before impairment, as management consider that paging services will become increasingly less attractive to subscribers and potential subscribers due to technological developments and price competition from mobile telecommunication services. Provision for impairment has been made by comparing the carrying value of the investment, on the equity method, with the recoverable value determined from value in use, and providing for the excess of the carrying value over the value in use. Management has estimated value in use by discounting the net operating cash flows from the paging business until the end of concession period, June 2005, using a discount rate of 4%. Management consider that Baht 300 million provision for impairment on the investment is sufficient, as the subsidiary is in the process of starting a call center business, which is expected to become profitable in the future. The Company has charged the impairment loss as an expense in the income statement.

078

Company - 31 December 2000 Accumulated share of profit/ Paid-up

(loss) in

capital Investment Nature ofbusiness

Cost

subsidiaries

Equity

Dividend

Country of

Nature of

(Million

portion

(Million

incorporation

relationship

Baht)

(%)

Baht)

Thailand Shareholder

350.00

99.99

1,703.36

253.90

Thailand Shareholder

240.00

99.99

600.00

2,152.29

2,752.29

Thailand Shareholder

457.52

67.95

420.37

(40.38)

379.99

Thailand Shareholder

1.00

49.00

8.00

5.71

13.71

2,731.73

2,371.52

2,731.73

2,371.52J

Subsidiaries Advanced Paging Co., Ltd.

Service provider of digital paging

1,607.26 (350.00)

system network, trading of pagers and providing pagers for rent

Advanced Wireless Marketing

Importer and distributor of cellular

Co., Ltd.

phones, related accessories and cellular phone rental service provider

Advanced Datanetwork

Service provider of voice/data

Communications Co., Ltd.

communications via telephone line

(formerly “Shinawatra Datacom Co., Ltd.”)

Data Network Solution Co., Ltd. Service provider of voice/data communications via telephone line

Less Provision for impairment of investment in subsidiary

4,753.25 (350.00) (300.00)

4,453.25 (350.00)

Company - 31 December 1999 Accumulated share of profit/ Paid-up

(loss) in

capital Investment Nature ofbusiness

Cost

subsidiaries

Equity

Dividend

Country of

Nature of

(Million

portion

(Million

incorporation

relationship

Baht)

(%)

Baht)

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

Subsidiaries Advanced Paging Co., Ltd.

Service provider of digital 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

Advanced Datanetwork

Service provider of voice/data

Communications Co., Ltd.

communications via telephone line

(formerly “Shinawatra Datacom Co., Ltd.”)

Data Network Solution

Service provider of voice/data

Co., Ltd.

communications via telephone line

079

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

2000

1999

Percent

17.80

Unlisted company Fonepoint (Thailand) Co., Ltd.

Service provider of cellular phones

Consolidated

Company

2000

1999

2000

1999

Million Baht

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 2000 Million Baht Furniture, Buildings

Leasehold

Assets

Pagers and

under

purchased

fixtures

mobile

construction

under

and

Leasehold

building

Tools and

and office

phones

and

finance

Land improvements

rights

improvements

equipment

for rent

Vehicles

installation

leases

120.87

2,612.35

780.80

87.95

63.36

29.87

4.24

3,808.94

(42.11) (1,141.91)

(491.17)

(56.81)

(27.27)

(2.79)

(1,822.04)

Total

At 31 December 1999 Cost Less Accumulated depreciation

8.45

56.74

44.31

(24.68)

(35.30)

Provision for obsolete fixed assets Net book amount

(9.96)

(2.13)

(12.09)

8.45

32.06

9.01

78.76

1,470.44

279.67

29.01

36.09

29.87

1.45

1,974.81

Year ended 31 December 2000 Opening net book amount

8.45

32.06

9.01

78.76

1,470.44

279.67

29.01

36.09

29.87

1.45

1,974.81

Additions

5.58

7.17

52.78

939.39

140.30

19.25

13.06

510.82

1,688.35

Transfers

4.14

9.60

24.39

(3.38)

(0.67)

(505.27)

(471.19)

Disposals, net

(0.27)

(4.42)

(171.20)

(6.71)

(2.69)

(2.35)

(187.64)

Depreciation charge

(3.52)

(4.63)

(20.63)

(513.58)

(104.60)

(16.39)

(12.00)

(0.85)

(676.20)

Provision for obsolete fixed assets Closing net book amount

9.92

2.13

12.05

8.45

37.99

11.55

116.09

1,749.44

315.20

30.64

34.80

35.42

0.60

2,340.18

167.79

3,329.98

883.09

83.75

70.44

35.42

4.24

4,699.25

(51.70) (1,580.54)

(567.85)

(53.11)

(35.64)

(3.64)

(2,359.03)

At 31 December 2000 Cost Less Accumulated depreciation

8.45

64.75

51.34

(26.76)

(39.79)

Provision for obsolete fixed Assets Net book amount

080

(0.04)

8.45

37.99

11.55

116.09

1,749.44

315.20

30.64

34.80

35.42

0.60

2,340.18

Company 2000 Million Baht Leasehold

Furniture,

Assets under

Assets

fixtures

construction

purchased

Buildings and

building

Tools and

and office

and

under

Land

improvements

equipment

Vehicles

installation

finance leases

Total

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)

Net book amount

12.05

76.11

1,430.70

205.07

28.06

25.31

1.45

1,778.75

Opening net book amount

12.05

76.11

1,430.70

205.07

28.06

25.31

1.45

1,778.75

Additions

4.85

46.75

917.90

70.81

10.86

510.82

1,561.99

Transfers

4.14

9.60

21.39

0.73

(505.18)

(469.32)

Disposals, net

(0.12)

(2.54)

(170.15)

(4.39)

(1.05)

(178.25)

Depreciation charge

(1.47)

(18.98)

(495.77)

(69.70)

(9.53)

(0.85)

(596.30)

Closing net book amount

19.45

110.94

1,704.07

202.52

28.34

30.95

0.60

2,096.87

Cost

24.94

161.65

3,223.64

511.54

58.07

30.95

4.24

4,015.03

Less Accumulated depreciation

(5.49)

(50.71)

(1,519.57)

(309.02)

(29.73)

Net book amount

19.45

110.94

1,704.07

202.52

28.34

30.95

At 31 December 1999

(2.79) (1,409.76)

Year ended 31 December 2000

At 31 December 2000

(3.64) (1,918.16) 0.60

2,096.87

081

12 COST OF MOBILE PHONE AND PAGER SERVICE NETWORKS AND DATANET TOOLS AND EQUIPMENT UNDER CONCESSION AGREEMENTS, NET Consolidated Million Baht Cost of Cost of

Cost of

Datanet

mobile phone

pager service

tools and

networks

equipment

Total

37,596.75

1,275.00

787.09

39.658.84

(11,876.32)

(547.15)

25,720.43

727.85

363.94

26,812.22

Opening net book amount

25,720.43

727.85

363.94

26,812.22

Additions

10,849.68

52.27

256.58

11,158.53

Transfers

468.15

(0.97)

1.18

468.36

Write-offs

(54.10)

(0.03)

(54.13)

(4,183.25)

(139.02)

(50.84)

32,800.91

589.29

556.95

33,947.15

48,840.58

1,326.25

1,044.82

51,211.65

(16,039.67)

(686.12)

(487.87) (17,213.66)

(50.84)

32,800.91

589.29

556.95

33,947.15

At 31 December 1999 Cost Less Accumulated amortisation Net book amount

(423.15) (12,846.62)

Year ended 31 December 2000

Amortisation charge Provision for assets impairment Closing net book amount

(64.72) (4,386.99)

At 31 December 2000 Cost Less Accumulated amortisation Provision for asset impairment Net book amount

082

As at 31 December 2000, the subsidiary, Advanced Paging Company Limited, has provided Baht 39.23 million(included in the impairment provision of Baht 50.84 million) in respect of impairment in the carrying value of cost of pager networks under concession, as management consider that paging services will become increasingly less attractive to subscribers and potential subscribers due to technological developments and price competition from mobile telecommunication services. Provision for impairment has been made by comparing the carrying value of the pager network concession assets with the recoverable value determined from value in use, and providing for the excess of the carrying value over the value in use. Management have estimated value in use by discounting net operating cash flows from the paging business until the end of concession period, June 2005, using a discount rate of 4%. Company Million Baht Cost of mobile phone networks

At 31 December 1999 Cost Less Accumulated amortisation Net book amount

37,596.75 (11,876.32) 25,720.43

Year ended 31 December 2000 Opening net book amount

25,720.43

Additions

10,849.68

Transfers

468.15

Write-offs

(54.10)

Amortisation charge

(4,183.25)

Closing net book amount

32,800.91

At 31 December 2000 Cost Less Accumulated amortisation Net book amount

48,840.58 (16,039.67) 32,800.91

083

13 OTHER ASSETS, NET Consolidated Million Baht Deferred Goodwill

charges

Others

Total

Cost

1,162.17

633.13

159.59

1,954.89

Less Accumulated amortisation

(349.92)

(97.95)

(447.87)

812.25

535.18

159.59

1,507.02

812.25

535.18

159.59

1,507.02

Additions

45.65

(28.24)

17.41

Write-offs

(125.54)

Amortisation charge

(113.36)

(90.34)

(203.70)

Provision for impairment of investment in subsidiary (Note 10)

(300.00)

398.89

364.95

131.35

895.19

Cost

1,162.17

516.16

131.35

1,809.68

Less Accumulated amortisation

(463.28)

(151.21)

(614.49)

(300.00)

398.89

364.95

131.35

895.19

At 31 December 1999

Net book amount

Year ended 31 December 2000 Opening net book amount

Closing net book amount

At 31 December 2000

Provision for impairment of investment in subsidiary (Note 10) Net book amount

Company Million Baht Deferred Charges

Others

Total

Cost

443.66

106.33

549.99

Less Accumulated amortisation

(74.84)

Net book amount

368.82

106.33

475.15

368.82

106.33

475.15

Additions

45.65

18.21

63.86

Write-offs

(125.54)

Amortisation charge

(48.44)

Closing net book amount

240.49

124.54

365.03

Cost

326.69

124.54

451.23

Less Accumulated amortisation

(86.20)

Net book amount

240.49

124.54

365.03

At 31 December 1999

Year ended 31 December 2000 Opening net book amount

At 31 December 2000

084

14 SHORT-TERM LOANS FROM BANKS Short-term loans from banks represent promissory notes and bill of exchange. The loans bear interest at rates ranging from 4.220% 4.625% per annum and are unsecured.

15 TRADE ACCOUNTS PAYABLE Consolidated

Company

2000

1999

2000

1999

Million Baht

4,573.86

2,311.17

3,076.77

1,673.20

Related companies (Note 38)

28.62

12.94

25.49

10.14

Total trade accounts payable

4,602.48

2,324.11

3,102.26

1,683.34

Trade accounts payable Third parties

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

Company

2000

1999

2000

1999

Million Baht

0.84

2.39

Other related companies (Note 38)

28.62

12.94

24.65

7.75

Total trade accounts payable - related Companies

28.62

12.94

25.49

10.14

Subsidiaries

16 AMOUNTS DUE TO AND LOANS FROM RELATED COMPANIES Consolidated

Company

2000

1999

2000

1999

Million Baht

17.74

669.81

Other related companies (Note 38)

294.21

135.05

47.03

23.67

Total amounts due to and loans from related companies

294.21

135.05

64.77

693.48

Subsidiaries

17 FORWARD AND SWAP CONTRACTS RECEIVABLE/(PAYABLE), NET Consolidated

Contracts receivable Contracts payable

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

Company

2000

1999

2000

1999

Million Baht

4,466.78

3,759.23

3,398.16

3,755.98

(4,246.07) (3,841.24)

(3,192.72) (3,837.77)

220.71

(82.01)

205.44

(81.79)

(220.71)

57.45

(205.44)

57.23

(24.56)

085

18 OTHER CURRENT LIABILITIES Consolidated

Company

2000

1999

2000

1999

Million Baht

Income tax payable

2,244.27

1,952.81

1,792.16

1,427.16

Accrued transmission fee

1,613.05

799.26

1,613.05

799.26

Accrued expenses

2,474.35

1,520.11

2,024.37

1,142.81

651.60

246.59

609.82

244.87

6,983.27

4,518.77

6,039.40

3,614.10

Others Total other current liabilities

19 LONG-TERM DEBENTURES Consolidated

Company

2000

1999

2000

1999

Million Baht

2,293.55

7.72

2,301.27

8,541.55

1,230.00

8,541.55

1,230.00

293.17

270.00

293.17

270.00

8,834.72

1,500.00

8,834.72

1,500.00

11,135.99

1,500.00

11,135.99

1,500.00

Current portion of long-term debentures - Third parties - Related companies (Note 38)

Long-term debentures - Third parties - Related companies (Note 38)

Total long-term debentures

As at 31 December 1999 long-term debentures represent 1.5 million units of Baht 1,000 each of unsubordinated and unsecured debentures amounting to Baht 1,500 million. Long-term debentures bear interest at a fixed rate of 8.25% per annum throughout the term of the debentures, payable on a semi-annual basis commencing from the issuing dates

On 20 March 2000 the Company issued additional 8 million units of Baht 1,000 each of unsubordinated, unsecured and amortised debentures, amounting to Baht 8,000 million. Such debentures bear interest at a fixed rate of 6.50% per annum throughout the terms of debentures, payable on a semi-annual basis commencing from the issuing date. The debentures will be redeemed by 4 equal installments, commencing the eighteenth month after the issuing date until 20 March 2003.

086

On 31 March 2000 the Company issued additional 2 million units of Baht 1,000 each of unsubordinated and unsecured debentures, amounting to Baht 2,000 million. Such debentures bear interest at a fixed rate of 6.25% per annum throughout the terms of debentures, payable on a quarterly basis commencing from the issuing date. These debentures will be entirely redeemed on 31 March 2003.

During the second quarter of year 2000 the Company early redeemed 0.3 million units of the long-term debentures amounting to Baht 335 million incurring a penalty of Baht 12 million. The remaining 0.3 million units and 0.9 million units of debentures will be redeemed on 18 February 2001 and 5 March 2002 respectively.

The maturity of long-term debentures are as follows: Consolidated

Company

2000

1999

2000

1999

Million Baht

Later than 1 year and not later than 2 years

4,843.98

1,500.00

4,843.98

1,500.00

Later than 2 years and not later than 5 years

3,990.74

8,834.72

1,500.00

8,834.72

1,500.00

The carrying amounts and fair values of long term debentures are as follows: Consolidated

Long-term debentures

Company

Carrying amounts

Fair values

Carrying amounts

Fair values

Million Baht

11,135.99

11,558.08

11,135.99

11,558.08

Fair values for traded debentures have been determined based on quoted selling prices from The Thai Bond Dealing Center at the close of the business on the balance sheet date. Fair values for non-traded debentures are based on discounted cash flows using a discounted rate based upon the borrowing rate which the directors expect would be available to the Group and the Company at the balance sheet date.

087

20 LONG-TERM LIABILITIES Consolidated

Company

2000

1999

2000

1999

Million Baht

Loans from finance companies

1,032.16

Loans from banks

0.78

0.97

0.78

0.97

0.78

1,033.13

0.78

1,033.13

2,391.09

250.00

0.78

250.00

2,391.87

250.78

3,425.00

0.78

3,425.00

6.67%

5.03%

2000

1999

2000

1999

Million Baht

250.00

3,423.25

Current portion of long-term liabilities

Obligations under finance leases

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

Total long-term liabilities

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

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

Total long-term loans (floating interest rate)

Company

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

Company

2000

1999

2000

1999

Million Baht

Later than 1 year and not later than 2 years

100.00

1,032.16

Later than 2 years and not later than 5 years

150.00

1,314.94

43.99

250.00

2,391.09

Later than 5 years

As at 31 December 1999, long-term loans represent unsecured loans from foreign finance companies and foreign banks equivalent to USD 90.78 million, carrying interest at rates between LIBOR (London Inter Bank Offer Rate) and LIBOR plus 1.25% per annum.

On 7 April 2000, the Company settled all foreign long-term loans and incurred a penalty of Baht 1 million.

088

As at 31 December 2000, the Companyâ&#x20AC;&#x2122;s subsidiary utilised Baht 250 million of their unsecured credit faciliities totalling Baht 250 million from a bank. This loan is denominated in Thai Baht. This loan bears interest at BIBOR plus 2.35% per annum. The term of repayment is five equal semi-annual installments in the years 2002 to 2004.

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

Company

2000

1999

2000

1999

Million Baht

Expiring within one year

5,884.40

3,842.13

5,884.40

3,842.13

Expiring beyond one year

3,203.87

840.00

1,372.97

485.00

9,088.27

4,682.13

7,257.37

4,327.13

Floating interest rate

The undrawn borrowing facilities have been arranged to support financing of the Group and Companyâ&#x20AC;&#x2122;s activities. Facilities expiring beyond one year are facilities subject to review at various dates.

The carrying amounts and fair values of long term liabilities (excluding obligations under finance leases) are as follows: Consolidated

Long-term liabilities

Company

Carrying amounts

Fair values

Carrying amounts

Fair values

Million Baht

250.00

The fair values of long-term liabilities (excluding obligations under finance leases) approximate their carrying amounts as at 31 December 2000.

21 DEPOSITS FROM CUSTOMERS Consolidated

Company

2000

1999

2000

1999

Million Baht

87.80

105.13

761.90

588.23

3,826.78

3,345.48

3,776.90

3,283.58

3,914.58

3,450.61

4,538.80

3,871.81

Deposits from customers Related companies (Note 38) Third parties Total deposits from customers

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

Company

2000

1999

2000

1999

Million Baht

674.10

483.10

Other related company (Note 38)

87.80

105.13

87.80

105.13

Total deposits from customers - related companies

87.80

105.13

761.90

588.23

Subsidiary

089

22 SHARE CAPITAL AND PREMIUM Number of

capital

premium

Total

Million

Million Baht

234

2,340.00

2,295.00

4,635.00

360.00

7,920.00

8,280.00

31 December 1999

270

2,700.00

10,215.00

12,915.00

1 January 2000

270

2,700.00

10,215.00

12,915.00

31 December 2000

270

2,700.00

10,215.00

12,915.00

1 January 1999 Issue of shares, registered on 19 February 1999

At the extraordinary meeting of the Companyâ&#x20AC;&#x2122;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.

23 LEGAL RESERVE Consolidated

Beginning balance Appropriation during the year Ending balance

Company

2000

1999

2000

1999

Million Baht

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 nondistributable.

24 MINORITY INTERESTS Consolidated

Beginning balance - as restated

2000

1999

Million Baht

158.96

742.49

6.61

0.45

19.26

(609.40)

159.41

158.96

Additions: Acquisition of investment in subsidiary (Note 37) Share of net profit in subsidiaries to minority interest Share of net profit in subsidiaries (before change in amortisation period for cost of Datanet tools and equipment under concession agreement) Disposals of interests to the Company Ending balance

090

25 COMPENSATION INCOME Following the introduction of Value Added Tax “VAT” in 1992, the Thai cabinet of ministers required on 7 January 1992 all state enterprises including the telecommunication operators to absorb Value Added Tax on service charges to their customers. Accordingly the Telephone Organization of Thailand (the ”TOT”) requested the Company on 16 January 1992 to absorb such VAT during the years 1992 to 1997. However, certain operators, operating under concession agreements from the TOT, made legal claims requesting the TOT to compensate those operators for the VAT absorbed.

In 1998 the TOT was ordered, in arbitration, to compensate an operator for the VAT on service charges absorbed by that operator and such compensation was realized as part of the Company’s revenue which was subject to the revenue sharing fees paid to TOT. Following this award at arbitration, in 1999 the Company requested the TOT to compensate the Company on a similar basis for VAT absorbed by the Company for the period 1992 to 1997. On 4 May 2000, the Company received a notification of compensation of VAT from the TOT of Baht 953 million and related interest income of Baht 79 million. The Company received full cash settlement of Baht 1,032 million, net of revenue sharing fees, from the TOT on 8 May 2000. The Company had not recorded a receivable or recognized any revenues in respect of this compensation in the periods ending on or before 31 March 2000 as collection was considered to be remote.

26 OTHER OPERATING INCOME Consolidated

Company

2000

1999

2000

1999

Million Baht

380.86

231.36

334.47

200.38

9.12

3.95

11.30

Others

588.81

423.72

381.09

306.29

Total other operating income

978.79

659.03

726.86

506.67

Interest income Gains on disposals of property and Equipment

27 INTEREST EXPENSES Consolidated

Company

2000

1999

2000

1999

Million Baht

104.94

392.75

108.50

392.11

0.28

0.46

0.28

0.46

165.91

624.15

137.02

624.22

137.02

0.07

22.15

0.04

22.15

729.44

718.29

733.04

717.65

Interest expenses - short-term and long-term loans - finance leases - short-term debentures - long-term debentures - others Total interest expenses

091

28 DIRECTORS’ REMUNERATION During the year ended 31 December 2000 the remuneration of the directors amounted to Baht 1.66 million (1999 : Baht 5.06 million), which did not exceed amounts which had been approved by the annual general meetings of the shareholders of the Company and its subsidiaries. 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

Depreciation on property and equipment (Note 11)

Company

2000

1999

2000

1999

Million Baht

676.20

599.23

596.30

515.80

4,386.99

3,716.63

4,183.25

3,537.66

113.36

95.37

(37.11)

90.34

103.33

48.44

90.53

1,313.72

1,110.59

897.90

633.30

4,393

4,478

2,039

1,742

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 Number of staffs

30 INCOME TAX Consolidated

Company

2000

1999

2000

1999

Million Baht

10,882.49

4,765.03

10,167.98

4,207.04

(1,277.63)

(987.57)

10,882.49

4,765.03

8,890.35

3,219.47

Tax calculated at a tax rate of 30%

3,264.75

1,429.51

2,667.10

965.84

Expenses not deductible for tax purposes

1,018.33

566.20

901.93

491.14

Income tax

4,283.08

1,995.71

3,569.03

1,456.98

Income before tax Less Share of net profit in subsidiaries Operating income

31 BASIC 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

Net income attributable to shareholders Weighted average number of ordinary shares in issue (Million shares) Basic earnings per share (Baht)

092

Company

2000

1999

2000

1999

Million Baht

6,598.95

2,750.06

6,598.95

2,750.06

270.00

265.17

270.00

265.17

24.44

10.37

24.44

10.37

32 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 fundâ&#x20AC;&#x2122;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.

33 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% and the floating rates are linked to LIBOR.

093

The remaining terms and notional principal amounts of the outstanding interest rate swap contracts at 31 December were: Consolidated

Company

2000

1999

2000

1999

Million Baht

Not later than 1 year

649.06

Later than 1 year and not later than 5 years

1,407.21

2,056.27

In May 2000, the company settled all interest rate swap contracts due to early termination of the foreign loans and gained Baht 11 million.

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 2000 the settlement dates on open forward contracts ranged between 3 days and 12 months (1999 : 3 months and 9 months). The amounts to be paid and received and contractual exchange rates of the outstanding contracts were: Consolidated

Company

2000

1999

2000

1999

Million Baht

217.70

2,718.20

3,685.93

245.77

77.55

8.06

USD 47.49 million (Baht 37.21 - Baht 39.35/USD)

1,788.03

DEM 6.36 million (Baht 20.44 - Baht 21.40/DEM)

135.85

DEM 6.19 million (Baht 21.40/DEM)

132.38

4,017.31

1,923.88

2,963.97

1,920.41

The amounts to be paid USD 5.26 million (Yen 105.90 - Yen 106.52/USD)

The amounts to be received USD 68.27 million (Baht 35.57 - Baht 43.05/USD) USD 90.87 million (Baht 35.57 - Baht 43.595/USD) JPY 640.88 million (Bath 0.3779 - Baht 0.3866/JPY) EUR 2.09 million (Baht 37.01 - Baht 37.35/EUR) FRF 1.45 million (Baht 5.54/FRF)

094

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. The amounts to be received and contractual exchange rates of the outstanding contracts were: Consolidated

Company

2000

1999

2000

1999

Million Baht

1,917.36

USD 49.96 million (Baht 38.28 - Baht 38.42/USD)

On 7 April 2000, the Company has shortened all of outstanding principal only swaps amounting to USD 39 million due to early repayments of foreign loans and incurring a penalty of Baht 43 million.

Net fair values The net fair values of the derivative financial instruments at 31 December 2000 are:

Favourable forward foreign exchange contracts Unfavourable forward foreign exchange contracts Net

Consolidated

Company

Million Baht

253.45

235.23

(1.11)

(0.20)

252.34

235.03

The fair values of forward foreign exchange contracts have been calculated using a quoted market price rate to terminate the contracts at the balance sheet date.

Credit risk The management are of the opinion that the Company and the Group have no significant concentration of credit risk. Cash and short-term investments are placed with substantial financial institutions.

Fair values The carrying amounts of the following financial assets and financial liabilities approximate to their fair values: cash, investments, trade receivables and payables, other receivables and payables, and short term borrowings.

095

34 COMMITMENTS As at 31 December 2000 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 Baht

1,939.13

1,885.83

17.60

1,690.69

Deutsche Marks

1.12

Singapore Dollars

0.08

14.99

Pound Sterling

0.44

Krone Norway

0.13

9.29

7.29

Construction and installation of mobile phone networks Thai Baht US Dollars Japanese Yen

Euro

Property and equipment Thai Baht

- The Group has commitments under letters of credit with overseas suppliers amounting to approximately Baht 38.61 million (1999: Baht 59.45 million) on a consolidated basis and Baht 38.61 million (1999: Baht 20.36 million) on a company basis.

- The Company has entered into service agreements for maintenance hardware and software mobile phone networks in the amount of Euro 1.41 million

- 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 2000 the Group is committed to pay for rental and related services in respect of the agreements as follows: Consolidated

Company

Million Baht

282.30

256.26

86.75

85.26

- Third parties

324.91

302.40

- Related companies

293.83

290.22

3.66

3.64

456.80

Payment due - within 1 year - Third parties - Related companies - within 2 to 5 years

- over 5 years - Third parties - Related companies

096

- The Company has entered into agreements with a related company under which the related company provides satellite transponder services. The Company is committed to pay for the transponder services amounting to approximately Baht 73.85 million within 1 year. - The Companyâ&#x20AC;&#x2122;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 4,000 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 4 million per month and plus the rate per events as prescribed in the agreements. (1999 : Baht 6.25 million per month). - The Company has entered into agreements with a related company under which the related company provides computer system services and repair and maintenance services for software and hardware for a twelve-month period. The Company is committed to pay for such services under these agreements amounting to approximately Baht 1 million per month.

35 BANK GUARANTEES As at 31 December 2000, 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 5,507.03 million (1999 : Baht 4,448.93 million) on a consolidated basis and Baht 5,399.35 million (1999 : Baht 4,338.04 million) on a company basis.

36 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

097

Financial information by business segment for the years ended 31 December are shown as follows: Consolidated 2000

Revenue from services and equipment rentals Sales Compensation income Other operating income Total revenues

Mobile phone

Pager sales &

Mobile phone

Services

services

sales

Datanet service

Group

Million Baht

24,622.03

1,147.91

169.94

257.01

26,196.89

193.92

10,549.03

18.80

10,761.75

1,031.57

391.00

121.27

85.90

(0.25)

597.92

26,044.60

1,463.10

10,804.87

275.56

38,588.13

(14,184.32)

(685.11)

(7,319.99)

(223.12)

(22,412.54)

(3,339.26)

(583.31)

(1,739.32)

(43.28)

(5,705.17)

8,521.02

194.68

1,745.56

9.16

10,470.42

Operating expenses Cost of sales and services and equipment rentals Selling and administrative expenses Operating income

Finance cost Net gain on exchange

760.64

Interest income

380.86

Interest expenses

(729.44)

Income before tax

10,882.48

Income tax

(4,283.08)

Income before minority interests

6,599.40

Share of net profit in subsidiaries to minority interests

(0.45)

Net income

098

6,598.95

Consolidated total assets

52,488.91

1,249.32

4,551.99

879.75

59,169.97

Consolidated total liabilities

27,994.99

278.50

2,371.69

400.00

31,045.18

Depreciation charge

596.30

35.38

37.88

6.65

676.21

Amortisation charge

4,408.93

143.07

(24.61)

64.72

4,592.11

Consolidated 1999

Revenue from services and equipment rentals Sales Other operating income Total revenues

Mobile phone

Pager sales &

Mobile phone

Services

services

sales

Datanet service

Group

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

343.40

23.93

58.70

1.64

427.67

17,031.32

1,631.02

6,806.58

172.40

25,641.32

(10,750.14)

(754.50)

(4,473.59)

(115.64)

(16,093.87)

(2,452.76)

(601.02)

(1,081.12)

(51.94)

(4,186.84)

3,828.42

275.50

1,251.87

4.82

5,360.61

Operating expenses Cost of sales and services and equipment rentals Selling and administrative expenses Operating income

Finance cost Net loss on exchange

(108.65)

Interest income

231.36

Interest expenses

(718.29)

Income before tax

4,765.03

Income tax

(1,995.71)

Income before minority interests

2,769.32

Share of net profit in subsidiaries to minority interests

(19.26)

Net income

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

37 ACQUISITIONS 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 Groupâ&#x20AC;&#x2122;s management is of the opinion that the book value approximated fair value at the date of acquisition.

099

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

(4.68) (56.07)

Accrued expenses

(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

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

Purchase consideration Fair value of net assets acquired Positive goodwill

273.00 (191.34) 81.66

100

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

Cash on hand and at banks

64.18

Trade accounts receivable, net

8.88

Other current assets

6.25

Equipment, net

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

477.40

Interest acquired

40.08%

Fair value of net assets acquired

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

8.00 (6.35)

Positive goodwill

1.65

Purchase consideration

8.00

Less Cash on hand and at banks of subsidiary Cash flow on acquisition, net of cash on hand and at banks acquired

(2.56) 5.44

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 Trade accounts receivable, net

2.56 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

101

38 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 arm lengths market value basis in the ordinary course of business and according to normal trade conditions.

On 19 February 1999 Shin Corporations Public Company Limited ceased to hold in excess of 50% of the share capital of the Company. Therefore, Shin Corporations 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

Company

2000

1999

2000

1999

Million Baht

Advanced Wireless Marketing Co., Ltd.

14.92

12.50

Others

0.92

0.83

15.84

13.33

157.23

153.94

157.23

153.94

31.27

7.42

4.49

6.06

188.50

161.36

161.72

160.00

188.50

161.36

177.56

173.33

112.07

1,112.86

86.57

Service income Subsidiaries

Related companies Singapore Telecom Mobile Pte Ltd. Others

Total service income

Sales of goods Related companies Digital Phone Co., Ltd.

Sales of prepaid cards Subsidiary Advanced Wireless Marketing Co., Ltd.

102

b) Purchases of services Consolidated

Company

2000

1999

2000

1999

Million Baht

Advanced Wireless Marketing Co., Ltd.

46.61

43.96

Others

16.91

4.76

63.52

48.72

78.93

114.63

78.93

114.63

2.77

5.73

1.80

1.53

Singapore Telecom International Pte Ltd.

49.34

30.62

SC Asset Co., Ltd.

54.17

35.86

32.72

27.27

Tele Info Media Co., Ltd.

30.89

17.83

30.89

17.83

Upcountry Land Co., Ltd.

93.26

83.65

93.26

83.65

OAI Leasing Co., Ltd.

35.92

34.73

33.41

28.13

142.92

134.68

124.73

108.37

OAI Property Co., Ltd.

16.27

5.53

SC Office Park Co., Ltd.

43.28

17.64

30.54

17.64

PT Corporation Co., Ltd.

21.08

21.31

9.28

9.22

Worth Supplies Co., Ltd.

15.85

18.10

12.67

15.24

Others

33.05

24.44

12.00

5.93

617.73

508.60

496.38

429.44

617.73

508.60

559.90

478.16

801.65

446.72

66.89

47.75

5.79

13.23

0.80

807.44

459.95

67.69

47.75

Rental and other service expenses Subsidiaries

Related companies Shin Satellite Public Co., Ltd. Shin Corporations Public Co., Ltd.

OAI Asset Co., Ltd.

Total rental and other service expenses

Advertising expenses Related companies SC Matchbox Co., Ltd. Others Total advertising expenses

103

Consolidated

Company

2000

1999

2000

1999

Million Baht

82.80

75.00

82.80

75.00

15.30

Shinawatra Information Technology Co., Ltd.

7.97

17.64

7.97

8.90

I.T. Applications and Services Co., Ltd.

6.27

97.04

107.94

97.04

83.90

8.25

3.66

0.55

41.59

0.55

41.59

22.28

79.09

22.28

79.09

1.58

4.61

1.58

4.61

24.41

125.29

24.41

125.29

24.41

125.29

32.66

128.95

Consulting and management fees Related companies Shin Corporations Public Co., Ltd. Singapore Telecom International Pte Ltd.

Total consulting and management fees

Interest expenses Subsidiaries Related companies Shin Corporations Public Co., Ltd. A major shareholder of related companies Directors of related companies

Total interest expenses

c) Purchases of property, equipment and computer software Consolidated

Subsidiaries Related companies

Company

2000

1999

2000

1999

Million Baht

5.51

4.76

12.42

25.22

6.32

24.31

12.42

25.22

11.83

29.07

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

Company

2000

1999

2000

1999

Million Baht

151.65

46.72

Singapore Telecom Mobile Pte Ltd.

86.00

37.50

86.00

37.50

Others

16.39

4.84

1.85

0.13

102.39

42.34

87.85

37.63

102.39

42.34

239.50

84.35

Trade accounts receivable Subsidiaries Related companies

Total trade accounts receivable

104

Consolidated

Company

2000

1999

2000

1999

Million Baht

0.23

1.98

Related companies

4.20

0.55

(0.15)

0.11

Total amounts due from related Companies

4.20

0.55

0.08

2.09

Amounts due from related companies Subsidiaries

Consolidated

Company

2000

1999

2000

1999

Million Baht

0.84

2.39

SC Matchbox Co., Ltd.

1.37

3.10

Shin Satellite Public Co., Ltd.

0.49

1.31

0.49

1.31

Tele Info Media Co., Ltd.

2.43

4.10

2.43

4.10

Singapore Telecom Mobile Pte Ltd.

7.32

2.10

7.32

2.10

13.50

3.51

2.33

0.91

0.24

28.62

12.94

24.65

7.75

28.62

12.94

25.49

10.14

Advanced Paging Co., Ltd.

10.65

11.12

Others

7.09

8.69

17.74

19.81

30.31

20.29

13.13

6.20

240.83

106.67

13.26

10.58

Shin Corporations Public Co., Ltd.

4.72

1.34

4.66

1.34

OAI Asset Co., Ltd.

2.37

1.50

2.18

1.48

Tele Info Media Co., Ltd.

2.58

2.32

2.50

2.32

Shin Satellite Public Co., Ltd.

6.20

Others

7.20

2.93

5.11

1.75

294.21

135.05

47.04

23.67

294.21

135.05

64.78

43.48

Trade accounts payable Subsidiaries Related companies

Shineedotcom Co., Ltd. Others

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.

Total amounts due to related companies

105

Consolidated

Company

2000

1999

2000

1999

Million Baht

Advanced Paging Co., Ltd.

250.00

Advanced Wireless Marketing Co., Ltd.

400.00

650.00

294.21

135.05

64.78

693.48

Loans from related companies Subsidiaries

Total loans from related companies Total amounts due to and loans from related companies

Loans from Advanced Paging Co., Ltd. and Advanced Wireless Marketing Co., Ltd. are provided at interest rates equivalent tothe short-term market rates quoted by banks that have provided short-term credit lines for the Company. These applied borrowing rates would be the rates that the Company would get if the Company borrowed from the commercial banks for that specific period. Consolidated

Company

2000

1999

2000

1999

Million Baht

674.10

483.10

87.80

105.13

87.80

105.13

87.80

105.13

761.90

588.23

270.00

31.00

301.00

270.00

301.00

270.00

Deposits from customers, net Subsidiary Advanced Wireless Marketing Co., Ltd. Related company Shin Corporations Public Co., Ltd. Total deposits from customers, net

Long-term debentures A major shareholder of related companies Directors of a related company and the Company Total long-term debentures

106

e) Financial support for construction of main route stations Consolidated

Company

2000

1999

2000

1999

Million Baht

1.80

Contributions to construction of main route stations Related company Upcountry Land Co., Ltd.

Singapore Telecom International Pte Ltd. and Singapore Telecom Mobile Pte Ltd. are subsidiaries of Singapore Telecommunications Ltd., a shareholder holding in excess of 20% of the share capital of the Company.

Shin Corporations Public Co., Ltd. ceased to be the parent of the Company, but continues to hold in excess of 20% of the share capital of the Company. Shin Satellite Public Co., Ltd., Tele Info Media Co., Ltd., SC Matchbox Co., Ltd., Shinawatra Information Technology Co., Ltd., Digital Phone Co., Ltd. and I.T. Applications and Services Co., Ltd. are subsidiaries of Shin Corporations Public Co., Ltd.

Upcountry Land Co., Ltd., SC Asset Co., Ltd., OAI Leasing Co., Ltd., OAI Asset Co., Ltd., OAI Property Co., Ltd., SC Office Park Co., Ltd., PT Corporation Co., Ltd., Worth Supplies Co., Ltd. and Shineedotcom Co., Ltd. are related through their principal shareholder being a major shareholder of Shin Corporations Public Co., Ltd.

39 POST BALANCE SHEET EVENT At an extraordinary meeting of the Companyâ&#x20AC;&#x2122;s shareholders held on 22 January 2001, the shareholders approved a resolution to issue unsubordinated and unsecured debentures for an amount not exceeding Baht 15,000 million (15 million units of Baht 1,000 each). The debentures are to be redeemable within a period of 10 years from the issuance dates. The issue of debentures is to fund the expansion of mobile phone networks in the year 2001. The Companyâ&#x20AC;&#x2122;s Board of Directors is in the process of determining the details and conditions of this debenture issue. The issue is expected to be completed within March 2001.

107