ADVANC : Annual Report 2001 by ar.advanc

FINANCIAL HIGHLIGHTS Unit : Baht Million 2001

2000

1999

* Revenue from services and equipment rentals

41,331.86

26,196.89

18,327.77

* Sales

17,925.37

10,761.76

6,885.88

* Total Revenues

60,738.02

39,729.64

25,872.69

* Gross profit

24,014.50

14,546.11

9,119.76

* Net income

3,851.32

6,598.95

2,750.06

* Total Assets

OPERATING RESULTS

113,538.39

59,134.74

39,864.16

* Total Liabilities

72,516.89

31,009.95

18,338.78

* Total Shareholdersâ&#x20AC;&#x2122; Equity

41,021.50

28,124.79

21,525.38

Financial Ratio * Net Profit Margin

6.34%

16.61%

10.63%

* Return on Equity

11.14%

26.58%

16.87%

* Return on Assets

4.46%

13.33%

7.06%

1.39

2.44

1.02

* Earning per share (Baht) * Dividend per share (Baht) * Book Value per share (Baht)

0.40

14.79

10.42

7.97

As of December 31, 2001

Note:

The Company has changed the par value from Baht 10 per share to Baht 1 per share on October 2, 2001. Therefore, the Company has adjusted the number of shares in the calculation of earning per share, dividend per share, and book value per share for those of 1999 and 2000 for comparison purposes.

Mr. Paiboon Limpaphayom (Ph.D.) Chairman of the Board of Directors Advanced Info Service Plc. DEAR SHAREHOLDERS The year 2001 has seen drastic changes in the economic situation around the world, as well as in Thailand. Despite such changes, Advanced Info Service Public Company Limited achieved very favorable growth and met our goals; that is, we obtained more than 5,000,000 pre-paid and post-paid subscribers, as of January 2002. At the end of 2001, our subscribers increased by 2,835,500 resulting in a total of 4,812,900 subscribers. This success was the result of our quality-oriented management style, which strengthens the trust our customers and shareholders place in us. We also fulfilled our role as a Thai company by making contributions to society and playing a part in the promotion of Thailandâ&#x20AC;&#x2122;s economic and social development and prosperity. REVENUE AND NET PROFIT The operating results for 2001 greatly improved over the year 2000 due to efficient management that places priority on quality in every aspect of our operations, including network growth, cutting-edge technology, quality human resources and a high standard of service. This has enabled us to fully meet the needs of our customers. Total revenue was Baht 60,738 million, compared to Baht 39,730 million in 2000, an increase of Baht 21,008 million or 52.88 percent. The net profit, was Baht 3,851 million, compared to Baht 6,599 million in 2000, a decrease of Baht 2,748 million or 41.64 percent due to a provision of Baht 4,265 million in respect to impairment in the carrying value of its cost of analog mobile phone network and pager network under concession agreement. However, excluding the above asset impairment, the 2001 net profit would have increased from the previous year. QUALITY GROWTH Quality is always our top priority. It is the foundation of the stable and sustainable expansion of our businesses. This is further enhanced by the trust our customers place in us. We are totally committed to quality in everything we do. Our networks have been expanded to cover the highest coverage and the ability to fully support any future technological advances. Information technology has been extensively implemented in order to strengthen the quality of our service. C-Care is one such example in which we are able to customize our services to best serve the individual customer. Good corporate governance allows us international-level, and transparent, management and administration, creating confidence among our investors and shareholders. Human resource development has been implemented at all levels, using the same standard, through the AIS Way program. All of these efforts reflect our commitment to enhance and sustain our quality and dynamic growth on continuous basis.

Mr. Somprasong Boonyachai Chairman of the Executive Committee Advanced Info Service Plc. OUTLOOK OF WIRELESS COMMUNICATIONS GROWTH An extensive demand for information has resulted in the increased demand for wireless communications, both in depth and breadth. The number of users is growing, while new ranges of services, non-voice applications in particular, are launched to meet those demands. Our efforts in research and development anticipate such trends; thus, mobileLIFE was fully introduced along with a range of high-tech services including SIM Tool Kits, WAP and GPRS. To further strengthen our service capability, cooperation with strategic partners and experts in key fields of technology have been formed in order to pioneer the latest and most innovative services for our customers.

FREE COMPETITION A highly competitive scenario is anticipated due to the advent of the liberalization in telecommunications industry and the introduction of foreign operators. AIS, as a corporation run by Thais, has been closely monitoring the market situation, as well as changes in legislation that will significantly affect the competition. We are studying The Act on Regulation of Radio & Television and Telecommunication 2000, the Telecom Service Act 2001, as well as the situation regarding concession conversions under the scrutiny of the Government. We firmly believe in free and fair competition and are ready to be a strong player in the upcoming liberalization of the industry. We would like to extend our gratitude to our shareholders, customers, strategic and business partners, and each and every employee who has contributed to our strong growth and success. With our quality human resources and highly focused, transparent and quality-oriented management and operations, we firmly believe that we will maintain, and further enhance, our strong leadership in the telecommunications industry.

AUDIT COMMITTEEâ&#x20AC;&#x2122;S REPORT

To the Shareholders of Advanced Info Service Public Company Limited The Audit Committee composed of 3 independent directors which are Mr. Supadej Poonpipat, as a Chairman, Mr. Arun Churdboonchart, and Mrs. Charintorn Vongspootorn as a Committee, and Mrs. Suvimon Kulalert, as a Secretary. The Audit Committee has worked on duty following the Charter that was approved from the Board of Directors. The Audit Committee conducted a meeting 6 times for the year 2001 in according to a scope of responsibility assigned. And it can be concluded in detail as follows: 1. Make a review of the financial statements of the Company and its subsidiaries before submitting to the Board of Directors for an approval. Those financial statements are presented in accordance with generally accepted accounting principles and adequately disclosed. 2. Give a comment about related party transactions and come to a conclusion that the company did operate in a normal business manner with a reasonable price. 3. Make a review of audit reports and an annual audit plan of the Internal Audit Office for the year 2001 and come to a conclusion that the company had an internal control system for an operating system and an information technology security system. Both are done in an effective manner and find no significant weaknesses in the internal control system. In addition, the company has a good risk management system and a transparency in corporate governance. 4. Conduct a meeting with the Management, a certified public accountant, and internal auditors and provide useful recommendations for managing a business operation of the Companyâ&#x20AC;&#x2122;s management. The meeting was successfully done and received a fully cooperation from all the related parties. 5. Make a review of a selection a certified public accountant and propose to the Board of Directors for an appointment of Pricewaterhouse Coopers ABAS Ltd. as a Certified Public Accountant of the company for the year 2002. In our opinion, the company has a good business operating system. The management has operated a business with an ethical mind and has an intention in performing its duties to achieve the companyâ&#x20AC;&#x2122;s goals. In addition, the company has a good and effective corporate governance.

Suphadej

Poonpipat

Chairman of Audit Committee, 28 February 2002

SHAREHOLDING STRUCTURE OF THE GROUP COMPANY

CHECK LIST

Financial Highlights

Message from the Chairmen

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

Shareholding Structure of the Group Company

Key Major Events in 2001

General Information

Nature of Business Operations

Risk Factors

Shareholding Structure

Management

Related Transactions

Management Discussion and Analysis

Directors and Management Team

Consolidated and Company Financial Statements

KEY MAJOR EVENTS IN 2001

March 2001

AIS offered 12,000 million Baht debentures to institutional and individual investors. The issued debentures were rated “AA-”

March 2001

AIS unveiled the campaign “Care for Excellence,” emphasizing excellence quality of network, service, technology and people.

September 2001

AIS underscored its leadership in mobile phone technology with GPRS (General Packet Radio Service) technology, incorporating high speed data transmission and always-on Internet connection.

November 2001

AIS issued THB 15,000 Million Baht Debentures offered to institutional and individual investors to raise fund to enhance network capacity for customers’ highest satisfaction. The AIS debentures were rated “AA-”

2001

The magazine FinanceAsia ranked AIS “Thailand Best Managed Company” along with other 6 First Class Honors in “Best Managed Company”, “Strongest Commitment to enhancing Shareholder Value”, “Best Investor Relations”, “Best Financial Management”, “Company most Committed to Corporate Governance” and “Best CFO”.

2001

Investor Relations Magazine granted ASIA2001 AWARDS to Leading Companies throughout Asia. In Thailand, AIS was honored “Best IR by Thai Company”.

2001

AsiaMoney Magazine ranked AIS “Thailand’s Best Managed Company” along with other 7 First Class Honors in Overall Best Investor Relations , Investor Relations, Corporate Governance, Corporate Strategy, Management of Financial Accounts, Treatment of Minority Shareholders, and Best Annual Report.

GENERAL INFORMATION

THE COMPANY AND ITS SUBSIDIARIES Company

Business

Advanced Info Service Plc.

Service Provider of Digital

Head Office : 414 Phaholyothin Road

GSM and NMT Cellular 900

Registered Capital (Million Shares)

Par Value (Baht per share)

Paid-up Capital (Baht Million)

5,000

2,935

240

99.99

350

99.99

45.75

457.52

67.95

0.10

49.00

% of Investment

Samsennai, Phayathai, Bangkok Tel. +66 2299-5000 Fax. +66 2615-3330 Branch : 1291/1 Phaholyothin Road Samsennai, Phayathai, Bangkok Tel. +66 2299-6000 Fax. +66 2299-6005 Home Page : www.ais900.com Advanced Wireless Marketing Co., Ltd.

Importer and distributor of

414 Phaholyothin Road Samsennai,

cellular phones and

Phayathai, Bangkok

accessories, and provider

Tel. +66 2502-5899

of NMT 900 and Digital

Fax. +66 2502-5800

GSM phone rental service

Advanced Paging Co., Ltd. 408/128-135, 30th -31st Floor

Service provider of the

Phaholyothin Place Bldg.

under the name of

Phaholyothin Road, Samsennai,

â&#x20AC;&#x153;Phonelinkâ&#x20AC;?

digital paging system

Phayathai, Bangkok Tel. +66 2619-0909 Fax. +66 2619-1433 Home Page : www.phonelink.net Advanced DataNetwork

Service provider of

Communications Co., Ltd. 500, 17th Floor, Amarin Plaza Tower

voice/data communications

Ploenchit Road, Lumpini,

in Bangkok and

Pathumwan, Bangkok

metropolitan area

via telephone line network

Tel. +66 2256-9461-80 Fax. +66 2256-9922 Home Page : www.adc.co.th DataNetwork Solutions Co., Ltd.

Service provider of

500, 9th Floor, Amarin Plaza Tower,

voice/data communications

Ploenchit Road,Lumpini,

via telephone line network

Pathumwan, Bangkok

in upcountry

Tel. +66 2256-9461-80 Fax. +66 2256-9993

Company

Business

Digital Phone Co., Ltd.

Mobile Phone network

1010 Shinawatra Tower 3, 22th-26th Floor, Vibhavadi-Rangsit Road,

operator of Digital GSM 1800

Registered Capital (Million Shares)

Par Value (Baht per share)

Paid-up Capital (Baht Million)

1,162.1

11,621

98.17

27.2

272

99.99

% of Investment

Lardyao, Chatuchak, Bangkok Tel. +66 2299-5000 Fax. +66 2299-5959 Home Page : www.dpc1800.com Shin Digital Co., Ltd.

414 Phaholyothin Road, Samsennai, Phayathai, Bangkok Tel. +66 2299-5000 Fax. +66 2299-5959 As of February 28, 2002

OTHER REFERENCES Ordinary Share Registrar

Thailand Securities Depository Company Limited 62, Ratchadapisek Road, Klongtoey, Klongtoey, Bangkok 10110 Tel. +66 2359-1200-01 Fax. +66 2359-1259

Auditor

Mr. Prasan Chuapanich Certified Public Accountant Registration Number 3051 PricewaterhouseCoopers ABAS Limited 179/74-80, Bangkok City Tower 15th Floor, South Sathorn Road, Yannawa, Bangkok 10120 Tel. +66 2286-9999, +66 2344-1000 Fax. +66 2286-5050

Debenture Registrar / Debentureholdersâ&#x20AC;&#x2122; Representative

Siam Commercial Bank Plc. 9 Rachadapisek Road, Lardyao, Chatuchak, Bangkok 10900 Tel. +66 2544-3866-76 Fax. +66 2937-7750 DBS Thai Danu Bank Plc. 393, Silom Road, Bangrak, Bangkok 10500 Tel. +66 2230-6170, +66 2230-5304 Fax. +66 2937-7750

NATURE OF BUSINESS OPERATIONS

OVERVIEW Advanced Info Service Public Company Limited (the “Company” ) was listed as a limited company on 24 April 1986 and its ordinary shares were listed on the Stock Exchange of Thailand on 5 November 1991 under the symbol “ADVANC”. The Company is a subsidiary of Shin Corporation Public Company Limited (“SHIN”) who invests and participates in the management of companies in the telecommunications and the multimedia communications industry. As of 29 November 2001, SHIN was a major shareholder of the Company, holding 43.06% of shares. On 19 February 1999, Singtel Strategic Investments Private Limited (“SingTel”), which is a subsidiary of Singapore Telecommunications Pte. Ltd., a communication technology and telecommunications company from Singapore, took up stakes in the Company and currently holds a total of 19.35% of shares in the Company. The Company operates the 900 MHz mobile telephone network in both the analog NMT and digital GSM system under a license granted by Telephone Organization of Thailand (TOT) pursuant to a joint operation agreement entered into with TOT dated 27 March 1990 and related supplementary agreements executed thereafter. The Company is required to pay 25-30% of its total annual revenue from its mobile phone operations to TOT or the minimum amount as prescribed in the agreement. Such joint operation agreement is a BTO contract (BTO: Build-Transfer-Operate). In September 2001, the Company took up 99.99% of shares in Shin Digital Co.,Ltd. (“SDT”) which held 97.54% of shares in Digital Phone Co.,Ltd. (“DPC”), the operator of GSM 1800 digital mobile phone network with registered and paid-up capital of Baht 8,556 million. In December 2001, the Company bought DPC shares from SDT and became a direct shareholder of DPC at 98.17% of total shares. Currently, DPC’s registered and paid-up capital is Baht 11,621 million. DPC operates the 1800 MHz GSM digital mobile telephone network under a joint operation agreement executed with Communications Authority of Thailand (CAT) dated 19 November 1996 and related supplementary agreements executed thereafter. Under the agreement, DPC is required to pay 20-30% of its annual revenue from mobile phone operations to CAT or the minimum amount as prescribed in the agreement. Such joint operation agreement is a BTO contract. Moreover, DPC will provide mobile phone service via joint networks with the Company under the network roaming agreement made between the Company and DPC, whereby customers of the GSM 1800 digital mobile phone can use their mobile phone anywhere in the country similar to customers of the GSM Advance, following the Company’s investment in DPC. The main features of the digital GSM and analog NMT system are: Analog NMT System Under this system, signals are transmitted using radio frequency. At present, the switching centers and base stations are installed to provide nationwide coverage. The analog NMT system is suitable for customers who need only fundamental services and nationwide coverage. Target users are customers in upcountry areas. In December 2001, the average revenue per unit (ARPU) of the system was Baht 830. Digital GSM The digital GSM is the digital mobile phone network system used in the largest number of countries. It is available in more than 85 countries around the world. The Company and its subsidiaries operate the digital GSM mobile phone network under the 900 MHz and 1800 MHz frequencies. Thanks to digital technology, GSM is capable of providing a wide range of value added services apart from voice-related services. GSM customers are those who require more than the basic services. The services offered by the Company have been customized to suit the needs of each targeted group of customers. As of December 2001, the Average Revenue Per Unit (ARPU) of GSM Advance was Baht 1,156 while the ARPU of GSM 1800 was Baht 1,067.

Apart from the analog NMT and digital GSM systems, mobile phone services can be classified by their method of service fee collection: Post-paid In post-paid, service fees are collected in the month following the use of services. The fees include a registration fee, monthly fee and the fee for airtime per minute of use. Pre-paid The digital GSM mobile phone pre-paid service was launched under the brand “1-2-Call!” in July 1999. The GSM mobile phone unit is used with a scratch card where no registration is required. There is no registration fee or monthly fee. Pre-paid phones are widely available in a variety of outlets, including bookstores, convenience stores, gas stations, etc. This pre-paid service cuts down on operating expenses, such as the cost of preparing an invoice, receipt, etc., as well as reducing the risk of unpaid bills. Apart from mobile phone investments, the Company also invests in other telecommunications-related businesses. In December 1998, the Company took up a 99.99% stake in Advanced Wireless Marketing Co., Ltd. (“AWM”) which sells mobile phone units and SIM cards, and provides related services. Then in February 1999, the Company increased its shareholding in Advanced Paging Co., Ltd. (“APG”) (formally Shinawatra Paging Co., Ltd.), which operates paging services, from 60.00% to 99.99%. And in October 1999, the Company took up 67.95% of shares in Advanced DataNetwork Communications Co., Ltd. (“ADC”) (formally Shinawatra Datacom Co., Ltd.) and 49.00% of shares in DataNetwork Solutions Co., Ltd. (“DNS”). Both companies provide data transmission via telephone lines.

Revenue Structure Revenues gained from products and services provided to third parties by the Company and its subsidiaries, during the past 2 years and the year ending 31 December 2001, are as follows:

Products/Services

Operating companies

Companyâ&#x20AC;&#x2122;s 1999 Percentage of Revenue Shares Held as of 31 Dec. 01

Unit: Million Baht 2001 Revenue %

2000 %

Revenue

Mobile phone Mobile phone services

Advanced Info Service PCL

- 16,687.92

64.50

24,622.03

64.90 39,761.05

64.34

Service and sale of mobile phones

Digital Phone Co., Ltd.

98.17

Mobile phone sales

Advanced Wireless

99.99

6,747.89

26.08

and rental

Marketing Co., Ltd. 23,435.81

Total

1,484.38

2.40

10,718.97

28.25 18,112.13

29.31

90.58

35,341.00

93.16 59,357.56

96.05

Pager Paging services

Advanced Paging Co., Ltd.

99.99

1,350.12

5.22

1,144.32

3.02

537.45

0.87

Pager rental fees

Advanced Paging Co., Ltd.

99.99

6.67

0.03

3.59

0.01

1.10

0.00

Pager sales

Advanced Paging Co., Ltd.

99.99

Total Data transmission via

Advanced Data Network

telephone lines

Communications Co., Ltd. Data Network Solutions Co., Ltd.

Total Others Grand Total

Remark:

67.95

49.00

250.32

0.97

193.92

0.51

70.05

0.11

1,607.11

6.22

1,341.83

3.54

608.60

0.98

157.46

0.61

209.06

0.55

307.28

0.50

13.29

0.05

66.75

0.18

44.59

0.07

170.75

0.66

275.81

0.73

351.87

0.57

659.03

2.55

978.78

2.58

1,480.79

2.40

25,872.70

100.00

37,937.42

100.00 61,798.82

100.0

The Company held 99.99% shares in Advanced Wireless Marketing Co., Ltd. in December 1998

In October 1999, the Company took up 67.95% shares in Advanced Data Network Communications Co ., Ltd. and 49.00% shares of Data Network Solutions Co., Ltd.

The Company held 98.17% shares in Digital Phone Co., Ltd. in December 2001

Other revenues are interest receivable and others exclude gains from exchange rates

THE MARKET AND COMPETITION (1) COMPETITIVE STRATEGY AND TARGET GROUPS The Company can increase revenues by increasing the number of customers and the length and frequency of use of the services offered. In order to achieve this, the following strategies are implemented:

(a) Building of a Brand Identity and Brand Personality The Company puts priority on communicating to consumers the strong features of each product in order to meet the various needs of each customer.

(b) Expansion of new customer base The growth of new customers is vital to the Company’s success. To achieve this, the product positioning employed is different for each product: -

GSM Advance GSM Advance is a post-paid service that offers a variety of services apart from voice-services.

1-2-Call! 1-2-Call! is a pre-paid service to suit customers who want to control their expenses. Pre-paid is free of monthly fees and registration fees.

- GSM 1800 The GSM 1800 is positioned for customers who look for basic services, be it voice communications, or basic value added services that feature simple functioning. This group of customers is large, particularly in the upcountry market where the penetration rate is still low. Apart from the strategy of individual products, the Company also aims at expanding its customer bases in regional markets where the Company has a competitive edge over other operators due to its nationwide network coverage. The Company can immediately gain market share and market leadership in the upcountry market, before any new competitor has the chance to enter the market. Other competitors stress their marketing efforts in the Greater Bangkok area, a highly competitive area with high rate of penetration rate.

(c) Maintaining existing customers In order to maintain existing customers, the Company emphasizes providing quality services and launching regular marketing campaigns to meet the needs of the customers and to create maximum satisfaction. The Company divides current customers into various groups in order to offer customized special privileges that satisfy their individual needs on a continuous basis, taking into account profitability on each privilege offered. One of the popular sales promotions offered is the swap campaign in which current customers can replace their current mobile phones with new models at special prices by maintaining their current phone numbers. A point-accumulation reward campaign, “Minute Plus,” features special prizes offered to loyal and frequent users. The Company jointly holds several privilege campaigns with leading establishments, offering discounts at leading hotels, restaurants, hospitals, etc.

(d) Development of value added services The Company is fully committed to creating new value added services for its customer in order to satisfy the needs of the customer and generate revenue. It is expected that non-voice communication services will be in high demand among users in the year 2002. Moreover, a variety of new non-voice services will be developed for the digital GSM system using high technology so as to maintain an image of leadership in advanced technology and new services. Recently, the mobileLIFE service was launched, which offers high-tech features such as a SIM tool kit, WAP and GPRS.

(e) Expansion and development of networks The quality and coverage of networks is vital to the success of the mobile phone business. Therefore, the Company is expanding and developing its networks to differentiate itself from the competition. The digital GSM network expansion has sped up to increase its coverage, which includes expansions in outdoor as well as indoor coverage, particularly in high-traffic buildings such as leading department stores and hotels.

(f ) Emphasis on after-sales services The Company emphasizes projects that enhance the quality of after-sales services. These projects include: 1) 23 AIS Service Centers nationwide, which provide a full range of services. The Centers feature auto-service kiosks where customers can search for information and make transactions on their own. 2) More than 280 Telewiz shops around the country to sufficiently serve customers everywhere. 3) AIS Call Center 1175 is a 24-hrs. service center operated by well-trained operators. 4) The Website www.ais900.com offers online web-services that provide information and services.

(2) INDUSTRY OUTLOOK AND COMPETITION (a) Mobile phone industry The mobile phone business in Thailand is under the supervision of 2 state agencies, being TOT and CAT, under the Ministry of Communications, while the Post and Telegraph Department is responsible for overseeing the use of the communications frequencies. Apart from being a supervisory agency, TOT also offers services for fixed line telephones for the domestic market and neighboring countries having borders with Thailand. CAT operates international calls. TOT and CAT also provide mobile phone services, but under limited coverage. TOT and CAT fix the rate of service fees, service deposits and other fees charged by certain mobile phone operators that enter into a joint operation agreement with TOT or CAT. A major source of revenue for mobile phone operators comes from registration fees, monthly fees and airtime, which is calculated on a per minute basis for outgoing calls only. At present no airtime is charged to those receiving calls, whether for domestic calls in same area, different areas, long distance or international calls, except for international roaming service where both incoming and outgoing calls are charged for airtime.

The joint operation agreement that TOT and CAT have made with private operators of mobile phones can be summarized as follows: Organization Granting Concession

Concessionaires

1. TOT

Advanced Info Service Public Company Limited

2. CAT

Total Access Communications Public Company Limited Digital Phone Company Limited (DPC) TA Orange Company Limited Hutchison CAT Wireless Multimedia Company Limited

Apart from the private operators of mobile phones above, there are two other state operators, being TOT and CAT. Prior to the financial crisis in 1997, the mobile phone market expanded rapidly. Following the crisis, expansion dropped from 19% in 1997 to 11% in 1998 due the consequent recession. However, the market recovered in 1999 with the dynamic expansion of 22%, and 20% and 118% in 2000 and 2001 respectively. As a result, the penetration rate per population of 100 persons jumped from 3.6 in 1998 to 4.3 in 1999, 5.9 in 2000 and 12.7 in 2001, which is still low compared with other countries with a similar rate of economic growth. This is an indication that the mobile phone industry has room for further growth in Thailand.

(b) Competition The Company and Total Access Communication PCL, or TAC, are the two major operators in the market. Both have a combined market share of 95% (Details shown in table below). Other operators include DPC, which is a subsidiary of the Company, and state operators being TOT and CAT. In the past, there was little competition, as the market enjoyed huge expansion with a limited number of competitors. However, earlier in 2001, the market became very competitive with an arrival of new operators, which include TA Orange, who operates the GSM 1800 network, and Thai Mobile, who offers GSM 1900 service. Both newcomers are expected to launch their operations in the first quarter of 2002. Apart from the newcomers, the re-launch of service by Hutchison CAT Wireless Multimedia Co., Ltd., a CDMA service provider, who is a direct competitor of TAC, adds to the competition. Hutchison has been expanding its network and improving its services to enhance its competitiveness. Therefore, 2002 should be a very competitive year. Current operators, in anticipation of such trends, need to revise their marketing strategies to remain competitive. The advent of telecom liberalization, scheduled for 2006, is expected to further stimulate the market and competition in the near future. Most competition will be among private operators rather than state operators. Private operators are expected to speed up the expansion of their network coverage and improve their after-sales services in order to increase the number of subscribers, along with increasing their market share. A major strategy employed should be the continued investment on network expansion and the improvement of service facilities, as the readiness of network coverage and sales outlets contribute to the prompt response of highly charged growth in the market. Operators with a low subscriber base and with limited financial resources will be less competitive. Aggressive and regular sales promotion campaigns are usually used by competitors in order to expand their subscriber base. The numbers of outlets and after-sales services are also a significant competitive edge for the current operators. In 2000, the number of mobile phone subscribers grew rapidly at a rate of 20%, thanks to aggressive sales promotions and the reduction in prices of mobile phone units and service fees by the two major competitors. Prices of mobile phones and service fees continued to drop in 2001, thus further stimulating growth, particularly for private operators, being the Company, TAC and DPC. This further expanded their market share, while the market share of TOT and CAT continued to drop.

Estimated number of subscribers by operator Name of Operator

December 2000

December 2001

Subscribers

Market Share

Subscribers

Market Share

ADVANC1

1,977,400

54.0 %

4,812,900

60.2 %

TAC2

1,403,300

38.0 %

2,737,598

34.3 %

DPC3

216,000

6.0 %

390,300

4.9 %

TOT.4

20,204

1.0 %

15,061

0.2 %

CAT.

36,507

1.0 %

30,000

0.4 %

Total

3,653,411

100.0 %

7,985,859

100.0 %

Total Population6 Penetration Rate per 100 persons7

62,648,000

62,914,000

5.83

12.69

The total number of subscribers at the end of 2000 was 3,653,411, equivalent to a Penetration Rate of around 5.83 per 100 persons. Price oriented campaigns on service fees and the continued slide of prices of mobile phone units contributed to drastic growth from early 2001. As of December 2001, the total number of subscribers was 7,589,859 or a Penetration Rate of 12.69 per 100 persons, representing a jump of 118% from 2000. The Company achieved the highest rate of growth in subscribers of 143%, or 136% inclusive of subsidiaryâ&#x20AC;&#x2122;s, when compared to their numbers in 2000. TAC saw its number of subscribers grow by 95%. The Companyâ&#x20AC;&#x2122;s total number of subscribers as of December 2001 was 4,812,900, and 5,203,200 inclusive of subsidiaryâ&#x20AC;&#x2122;s, while TAC figures stood at 2,737,598.

1 2 3 4 5 6 7

A number of subscribers from the Company TAC number of subscribers from its Web Site www.dtac.co.th Numbers of subscribers from the Company and DPC Number of subscribers from the Web Site of the Telephone Organization of Thailand at www.tot.or.th. TOT number of subscribers as of December 2001is estimated to remain unchanged from October 2001 by constant estimatic in December 2001. Number of CAT subscribers based on Commercial Department CAT, the number of CAT users as at October 2001 decreased to 30,000 which was assumed to remain unchanged as at December 2001 Figures and estimates of population from NESDB Penetration Rate estimated from the total population at years end.

(c) Competition in related industries Even though the 4.1 million number fixed line telephone project has been completed, the Company expects the mobile phone industry to continue its dynamic expansion due to the disadvantages of fixed line telephones when compared to mobile phones, for example: -

Accessibility of fixed line telephones is limited by geographic factors, leaving network expansion commercially unprofitable.

Therefore, fixed line telephone coverage is restricted, while mobile phones have an advantage of a variety of coverage technologies, such as microwave, fiber-optic and satellite, which is able to meet any geographical and environmental limitation. Mobile phones are able to offer greater coverage. -

The installation of fixed line telephones takes a much longer period of time compared to mobile phones, therefore their speed of

response from the market is much slower. -

Mobile phones are portable and their services are readily available. PCT is the only fixed line telephone operation that is

portable, but its coverage is limited to the Greater Bangkok area.

PROVISIONS OF PRODUCTS AND SERVICES (1) The capacity of the system to serve subscribers Subscriber capacity of the digital GSM Advance, the analog NMT and the digital GSM 1800 systems depends on the capability of the provisions and installation of facilities in order to expand the capacity of each system to serve a larger number of subscribers by the Company and its subsidiaries.

A table on service capability by system and the Companyâ&#x20AC;&#x2122;s total investment 1999

2000

NMT

GSM

NMT

Advance*

Accumulated number of base stations Accumulated number of switching centers

1,475

1,573

2001 GSM

NMT

Advance*

1,543

GSM Advance*

2,497

1,551

4,194

Number of subscribers (persons)

611,000

619,000

465,600

1,511,700

264,800

4,548,100

Network capacity (persons)**

919,000

936,000

919,000

2,152,000

558,000

6,033,000

Accumulated investment (million Baht)

37,600

48,820

75,070

Inclusive of pre-paid subscribers

** Network capacity calculated from total capacity of overall base stations

A table on service capability by system and DPCâ&#x20AC;&#x2122;s total investment

Accumulated number of base stations Accumulated number of switching centers

1999

2000

2001

GSM 1800

140

352

1,082

Number of subscribers (persons)

134,000

216,000

390,300

Network capacity (persons)*

166,000

250,000

780,000

3,290

5,743

9,903

Accumulated investment (million Baht)**

Network capacity of the system 1998-2000 calculated from total capacity of the Mobile Switching Center, for Jan.-Dec. 2001 calculated from capacity of the overall number of base stations

There is an adjustment to the accumulated investment by including software system and asset under construction.

(2) METHOD OF PROCUREMENT AND SOURCE OF PRODUCTS (a) Network Equipment of the Company and DPC Network Equipment are primarily imported. A team of experienced telecommunications and communications engineers devices of the Company and DPC will select suitable network components in order to offer quality services and create optimum benefits. At present the Company and DPC obtain network equipment directly from 7 major suppliers as follows: Suppliers

Brands

Ericsson (Thailand) Limited

Ericsson

Nokia (Thailand) Limited

Nokia

Mitsui Company Limited

NEC

Siemens Limited

Siemens

Nortel Network Singapore Pte Limited

Nortel

Digital Microwave Corporation

DMC

Huawei Technology Company Limited

Huawei

Network installation is done in a zone where network equipment from the same supplier will be installed within the same coverage area for convenience and ease in administration and maintenance. This method also creates shared responsibility between the Company and a sole supplier that directly affects the overall performance of the network in the area. The method of using several suppliers by the Company and DPC is aimed at neutralizing the bargaining power of any single supplier. Facilities from different suppliers are inter-changeable so as to increase the bargaining power of the Company and DPC on product and service prices. If any supplier fails to fulfill its obligations, another supplier within the area can fill in immediately. Therefore, there is no impact on the loss of any supplier. However, the Company and DPC have a policy of maintaining good relationships with all suppliers. The Company and DPC make separate purchase contracts for each phase of investment and a contracted supplier has to provide the following warranties: -

One year warranty on the repair and maintenance of the network system from the date the completed job is handed over. After the warranty period, the Company may enter into a maintenance contract with each supplier for repair and maintenance.

Warranty on provisions of spare parts for the improvement of the network for a period of 10 years.

Engineers and technicians from ERICSSON, NOKIA, SIEMENS, MITSUI and Huawei are stationed at the Company to give advice and technical assistance to the Companyâ&#x20AC;&#x2122;s staff in order to enhance their technical and operational skills.

(b) Mobile phone units AWM is a major provider of imported mobile phone units. List of importers and distributors of mobile phone units and accessories under the digital GSM Advance and the analog NMT system of the Company: Distributors

Brands

Advanced Wireless Marketing Co., Ltd.

Ericsson, Nokia, Philips, Siemens, Alcatel, Bosch, Panasonic, Samsung

Victory Communication Co., Ltd.

Mitsubishi

M-Link Asia Corporation Ltd.

Motorola, Alcatel, Mitsubishi

Samart E-Trading Ltd.

Siemens, Audio Vox, Sagem

List of importers and distributors of mobile phones and accessories under the digital GSM 1800 system of DPC: Distributors

Brands

Advanced Wireless Marketing Co., Ltd.

Ericsson, Nokia, Siemens, Alcatel, Panasonic

M-Link Asia Corporation Ltd.

Motorola, Alcatel

Samart E-Trading Ltd.

Siemens, Sagem

Loxley Public Company Limited

Sewon

RISK FACTORS

There are 5 possible risk factors for the Company, which are as follows:

1 RISKS INVOLVING CHANGES IN LEGISLATION, REGULATIONS AND GOVERNMENT POLICIES The telecommunication business is operated under the concession of state agencies. The Company was granted a license to operate by the Telephone Organization of Thailand and is thus affected by the obligations Thailand made with the World Trade Organization (WTO), of which the fundamental telecommunication industry has to be liberalized within the year 2006. The Government has been launching several measures to prepare for such liberalization. Thai Telecommunication Master Plan was introduced in November 1997. Section 40 of the Constitution of 1997 also provides that an independent organization must be established with the power to allocate radio frequencies, television frequencies and telecommunication frequencies. The agency shall act in place of current supervising agencies to oversee the operations and prescribe regulations for free and fair competition among new and existing operators. This shall be governed by the new Telecommunications Act, whereby the Telegraph and Telephone Act B.E. 2477 (1934) (No. 1) and the No. 2 B.E. 2517 (1974) shall be repealed. In order for telecom liberalization to create free and fair competition under the provision of the Thai Constitution, the following actions shall be enacted: 1. The setting up of the National Telecommunications Committee (NTC) under the Frequency Allocation Act; 2. The enactment of the Undertaking of Telecommunications Business Act (the Telecom Act), which is complete; 3. Conversion of Existing Joint Operation Agreements granted to original operators; 4. Privatization of the Telephone Organization of Thailand and the Communication Authority of Thailand.

The aforementioned actions significantly affect the Company and operators being in Joint Operation Agreement with relevant state agencies and it is required to convert existing Agreements. This is due to the fact that following the establishment of the NTC and the enactment of the Telecom Act, all telecom operators, old and new, as well as TOT and CAT, shall be under NTC supervision and shall be governed equally by NTC rules and regulations. The outstanding issue of Joint Operation Agreements conversion regards the principles and framework that is to be implemented, particularly with respect to the profit-sharing calculation in the period following conversion. Such conversion framework must be approved by the State Enterprise Policy Committee and the result of the conversion also depends on negotiations between counter parties. With regard to the issue of limiting foreign shareholding proportion to no more than 25% in any telecom company and the prohibition of the collection of service deposits and advance money from customers, as prescribed by the Telecom Act enacted on 16 November 2001, the Company has consulted and obtained clarification from relevant state agencies that such issues will not create any impact on its operations. This is due to the fact that the enacted law has no retroactive effect. However, in an effort to prevent any possible conflict, the government adopts a clear position for the amendment of the Telecom Act on such provisions. For example, the foreign shareholding will be amended from a 25% limit to a 49% limit. Regarding the deposit, the Company has not collected such deposit for a period of time, while the Act does not require the Company to return the deposits already collected from customers. However, the Company will implement various methods to return such deposits without material effect on its operating cash flow. The return also reduces its burden of profit-sharing on interest on the deposits to be submitted to TOT in a long-term basis. Briefly, the joint operation agreement conversion and liberalization has not yet finalized and may impact the business of the Company. Despite the increased competition anticipated as a result of the liberalization, all players are on a level playing field under the same rules. Newcomers also face tough barriers to market entry, such as the building of a customer base and the enormity of funds and time required to develop network and marketing opportunities.

2 RISK REGARDING MARKET SITUATIONS AND COMPETITION At present there are two major operators, being the Company and TAC. Both have the combined share as of 31 December 2001 of around 94.5 percent of the total mobile phone market. (Details of market shares from a table of number of subscribers by operators on page 25). Apart from these two major operators, there are 3 smaller operators, DPC, CAT and TOT. DPC shares the largest market among these smaller operators with a 5% share of overall market. With the combined market share of 65%, the Company, along with its subsidiary DPC, is a market leader, which enables us to define the direction of the market. The Company and TAC have also established comprehensive networks with nationwide coverage and service capacity. Therefore, despite the possible risk of competition from newcomers, these new operators will face several challenges, summarized as follows: -

Funds required for expanding networks on par with the Company. The Company has continually been investing in networks to obtain comprehensive nationwide coverage and attract new customers;

The period of time needed to build and develop networks in order to be on par with the Company;

Limited use of communication frequencies during the non-liberalization period is a barrier to market entry for new operators. But following the liberalization within 2006, such limitation will be lifted, as new operators will be able to obtain a license from NTC;

The large customer base of the Company gives it a competitive edge with respect to its economic scale of operations;

The Company has acquired operational experience as well as a strong relationship with distribution channels. In 2002, new operators expected to make their entry into the market include: (a) TA Orange Co., Ltd. which is expected to launch both a post-paid and a pre-paid service within the first quarter of 2002 with coverage limited to Greater Bangkok in its initial stage of operations. Further expansion to major provinces is expected in succeeding years; (b) Hutchison CAT Wireless Multimedia Co., Ltd. is expected to launch its service in the second half of 2002, using CDMA technology. The service will be aimed at a specific group of customers, as the service fee is more expensive than basic services, and its limited funds will impact network expansion to upcountry; (c) Thai Mobile Co., Ltd, the provider of GSM 1900 plans to launch in March this year, leasing a network from A.T.C. Mobile Ltd., CAT and TOT joint venture. This service only covers the Greater Bangkok area. Expansion upcountry is expected on a leased network built by other private operators, as it requires a high investment and time to build its own networks for nationwide coverage. The marketing activities are to be run by private companies hired for the purpose. Besides the new mobile phone operators , Personal Communication Telephone (PCT), operated by Telecom Asia (TA), may not

perfectly substitute mobile phones as it has certain disadvantages as follow: -

The limitation in the number of base stations, which require huge amounts of investment for installation in order to obtain

complete coverage in the Bangkok area; -

Technical disadvantages due to its slow hand-off speed, making it hard to communicate in vehicles traveling faster than the

speed limit (around 50 km. per hr.) It can be concluded that there is no material threat from new mobile phone operators, as well as from substitute products. It is apparent that the entry of new operators into the competition with substitute product causes consumers’ delay in decision making to buy a mobile phone at initial stage, because consumers want to compare price and promotion. Morever, existing customers who prefer pricing to quality may switch to other system due to low usage and opportunity to save bill payment. However, the Company expects no significant ramification. As most new operators limit their service in Bangkok due to the high cost of investment, time required and the availability of network sites. In addition, the acquisition of DPC enables the Company to co-develop mobile phone network with DPC to expand service coverage area and serve increasing number of customers. The ability to roam between Company’s and DPC’s network plays a crucial role in enhancing network quality for both.

3 RISKS ON TECHNOLOGY AND OPERATIONS (1) Risk of losing high level management The commitment, skills and quality of executives play an important part in the success of the Company. Most of these executives are specialists and their loss may affect the performance of the Company as a whole. In order to prevent such impact, executive-level training has been conducted on an on-going basis for effective replacement in the case of a loss of valuable personnel.

(2) Risks of technological changes Mobile phone operations require a huge level of technology-related investment, which may put the Company under the risk of extra investment in order to update the system to be in line with the constant changes in technology. At present, the Company has been investing in the digital GSM format, which is the system used by major operators around the world. The current digital GSM technology is in its 2.5 generation stage. This is the base for the development of third generation technology. This ensures that the Company invests in a system that will be the base for modifications of new technologies in the future. The development of various multimedia drives the Company to invest more fund in many system adjustments, especially in network system to keep up with new technologies. If such technologies gain high popularity among consumers and replace technology 2.5G, the Company’s existing network will become outmoded and not able to fully respond to consumers’ need. Although the development of third generation technology requires additional investment, it is noted that these new technologies are designed and produced by leading foreign manufacturers and Thailand may not have the infrastructure to adopt certain new technologies. Moreover, a demand for new technology is limited to specific groups of customers. Therefore, the introduction of new technology will depend on its suitability and feasibility in terms of the cost of investment. And the replacement of the GSM system with a new system is not likely to happen in the near future.

(3) Risks of unpaid mobile phone fees At present, the Company issues invoices on mobile phone fees to post-paid customers on a monthly basis; therefore, there is a risk of unpaid bills. The Company implements software called Fraud Management to handle this risk, whereby the service provided to customers who have overdue payments will be terminated. A fee limit is also used to control the amount of unpaid debts, where any customers who has an unpaid bill exceeding the fee limit will not be able to use his/her mobile phone until he/she settles the bill. The 1-2-Call! pre-paid service is an effective way to eliminate the risk of unpaid bills. 1-2-Call! is very successful and, as of 31 December 2001, pre-paid subscribers account for approximately 48% of Company’s total subscribers or 11% of total revenue. Therefore, the risk of unpaid bill has been reduced.

4 RISKS CONCERNING FINANCIAL MATTERS AND THE ECONOMIC SITUATION The operation of the Company involves transactions related to foreign technology and investments in terms of foreign currencies, therefore there is a risk on foreign currency exchange, that is, if the Baht depreciates against foreign currency, the cost of investment increases which incurs cost and results in decreasing profit. In managing such foreign currency risk, the Company uses hedging instruments to reduce the risk of currency fluctuation. A forward currency contract is made, taking into account the financial situation at the time being. The Company entered forward contracts to hedge foreign exchange risk between 6 and 278 days with the receivables of 8,000 Million Baht The currency fluctuation affects the economy as a whole and all operators in the industry, not just the Company. The Company also obtains most of its funds from domestic sources to further reduce such foreign currency exchange risk.

5 RISKS ON INVESTMENT IN DIGITAL PHONE CO., LTD. (DPC) At present, the Company holds a 98.17% stake in Digital Phone Co., Ltd. (DPC), which operates the digital GSM mobile phones under a frequency range of 1800 MHz. The investment totals Baht 20,300 million, which is a substantial investment that may affect the financial position of the Company in the case that the investment gives low or no returns. As of 31 December 2001, DPC recorded a loss of Baht 1,412 million. However, the DPC investment will enhance the operations of the Company as it becomes the first operator to provide the digital GSM mobile phone service under two frequency ranges and the network roaming agreement expands the service coverage and enables the Company to increase subscribers. Additionally, the joint network expansion means that the investment will be more cost-effective for both companies and the use of network facilities can be optimized. The DPC investment also benefits the Company in bracing for the liberalization of the telecom industry. DPC has strong business potential and is expected to have profitable returns in the near future. It is also possible to develop the valued added services that best meet the needs of customers and product positioning will be more effectively targeted to each individual group of customer. Following the investment in DPC, the Company is re-positioning DPC as GSM 1800 mobile phones, which offer nationwide coverage similar to that of GSM Advance. DPC customers include those users who need basic communication services and want a mobile phone with network coverage in the urban areas of major provinces around the country.

SHAREHOLDING STRUCTURE

SHAREHOLDERS Name

1. Shin Corporation Plc.

No. of Shares

1,263,712,000

43.06

2. Singtel Strategic Investments Pte Ltd.

568,000,000

19.35

3. State Street Bank and Trust Company

81,819,747

2.79

4. HSBC (Singapore) Nominees Pte Ltd

73,892,730

2.52

5. Thai Trust Fund Management Company Limited

64,039,000

2.18

6. Littledown Nominees Limited 9

53,706,500

1.83

7. Chase Nominees Limited 1

43,046,360

1.47

8. HSBC Bank Plc.

40,690,450

1.39

9. Government of Singapore Investment Corporation C

34,273,070

1.17

10. Boston Safe Deposit and Trust Company

31,999,050

1.09

Source : Major shareholdersâ&#x20AC;&#x2122; report as of February 18, 2002 prepared by Thailand Securities Depository Co., Ltd.

MANAGEMENT

MANAGEMENT STRUCTURE

The Company’s structure comprises of three committees : The Board of Directors, the Executive Committee and the Audit Committee.

(1) BOARD OF DIRECTORS LIST OF THE MEMBERS OF THE BOARD OF DIRECTORS As of 28 February 2002, tenre are 10 members of the Board of Directors as follow; 1. Mr. Paiboon Limpaphayom (Ph.D.)*

Chairman of the Board of Directors

2. Mr. Boonklee Plangsiri*

Director

3. Mr. Somprasong Boonyachai*

Director

4. Mrs. Siripen Sitasuwan*

Director

5. Mr. Lum Hon Fye

Director

6. Mr. Chow, Wing Keung Lucas

Director

7. Mrs. Tasanee Manorot

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 Director

The Scope of Authority and Duties of the Board of Directors

•

The Board is empowered to appoint and make amendments to the directors authorized to affix their signatures binding the Company.

•

The Board of Directors shall perform its duties in compliance with the law, the Company’s objectives, the articles of association, as well as the recommendations of the shareholders’ meetings, except with those issues that require the prior approval from a shareholders’ meeting, e.g. those issues required by law to receive a resolution from the shareholders’ meeting, before undertaking a related transaction and the sale or the purchase of material assets in accordance with the criteria prescribed by the Stock Exchange of Thailand or other public agencies, etc.

•

The Board may appoint any other person to carry out the Company’s business under the supervision of the Board, or empower such person, for such period of time that the Board views as appropriate, provided that the Board retains the right to cancel, revoke or amend such authorization. In this regard, the Board of Directors has granted the Executive Committee the authority and responsibility to perform, as per the

scope of duties and responsibilities of the Executive Committee. Such delegation of authority shall not act as authorization or partial authorization, allowing the Executive Committee, or a person authorized by the Executive Committee, to approve those transactions related to a party in conflict, a party in interest or any other party with a conflict of interest (according to the Company’s Article of Association and SEC’s notification) with the Company or subsidiary companies, except for the approval any item in accordance with the policies and criteria approved by the Board of Directors.

(2) EXECUTIVE COMMITTEE LIST OF THE MEMBERS OF THE EXECUTIVE COMMITTEE As of 28 February 2002, there are five members of the Executive Committee as follows; 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

THE SCOPE OF AUTHORITY AND DUTIES OF THE EXECUTIVE COMMITTEE

•

To set the policies, direction, strategies and the structure of administration, as well as the principles for the commencement of the Company’s business in terms of the maintenance and support of the economic conditions and competitiveness of the business, as set forth and announced to the shareholders, which shall be submitted for endorsement to the Board of Directors.

•

To map out the business plans, the budget and other administrative functions of the Company, which shall be submitted for endorsement to the Board of Director.

•

To examine and monitor that the Company’s policies and various administrative regulations are implemented effectively and support the operations of the business.

• • • •

To examine and monitor that the results of the Company’s operations are in accordance with the prior approved business plans. To consider large-scale investment projects of the Company. To occasionally conduct other activities, as requested by the Board of Directors. The Executive Committee may give partial authorization for any person to conduct any one or more issues that the Executive

Committee considers appropriate. Such authorization shall not incorporate the delegation of authority, allowing such person to approve a transaction that relates to a party in conflict or any conflict of interest. (according to the Company’s Article of Association and SEC’s notification), except the approval for the transaction in compliance with the policies and rules to the approval of the Company’s Board of Directors.

THE AUTHORITY TO APPROVE FINANCIAL OPERATIONS The Executive Committee shall have the authority to approve financial operations with a credit line not exceeding Baht 800 million. Such authorization shall include the approval of expenses related the normal operation of business, investment, capital expenditures and investment in fixed assets, borrowing, lending, acquiring credit line, and the issuance of debentures, together with provisions of collateral, loans or credit guarantees, etc. Excluded are the financial and banking operations of the Executive Committee in terms of deposits, loans, the preparation of tools for the management of foreign exchange and the risks associated with interest rates, with the credit line not exceeding Baht 2,500 million. However, Executive Committee may subrogate such authority to executive officer of the company to approve any financial matter as Executive Committee deems appropriate. By which the Board of Directors shall consider, prioritize and indicate the approval limit under the jurisdiction set forth by the Company’s Board of Directors. The approval of the above transactions shall not act as authorization or partial authorization allowing the Executive Committee or the attorney to approve such transactions that relate to a party in conflict, a party in interest or any other party with a conflict of interest (according to the Company’s Article of Association and SEC’s notification) with the Company or a subsidiary company, except for the approval of items in accordance with the policies and criteria approved by the Board of Directors.

(3) AUDIT COMMITTEE LIST OF THE MEMBERS OF THE AUDIT COMMITTEE As of 28 February 2002, there are three members of the Audit committee, as follows; 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

THE SCOPE OF AUTHORITY AND DUTIES OF THE AUDIT COMMITTEE 1. The Audit Committee shall have the responsibility to monitor that the Company’s operations are transparent and honest and that the members of the Executives Committee act in accordance with their responsibility to the Company’s shareholders. They shall ensure that the Executives Committee and the Company’s Executives have correctly managed the Company in accordance with the Company’s policies, completely and within the set standards. 2. The Audit Committee shall have the following duties and responsibilities, as determined by the Board of Directors:

•

To monitor the process of preparation, and the disclosure of, information in the financial report of the Company and subsidiary companies, making sure that such information is accurate, complete and reliable. In doing so, the Audit Committee shall coordinate with the Company’s account auditor and the executives responsible for the preparation of the quarterly and annual financial reports.

•

To monitor that the Company’s inquiry and internal control systems are appropriate and efficient by reviewing these controls with an external independent auditor and an internal auditor with regard to the efficiency of the Company’s inquiry and internal control systems.

•

To prevent any conflict of interest by reviewing the transactions between the Company and subsidiary companies with the relevant parties.

• •

To monitor that the Company comply to the regulations of the Stock Exchange of Thailand and other relevant laws. To review evidence of an internal inquiry in the case where there is suspicion, or assumption, that there is material corruption, abnormalities or faults in the internal control systems, and present such findings to the Board of Director’s for consideration.

•

To instruct and review evidence, if there is suspicion of any violation of the laws or provisions of the Stock Exchange of Thailand, which has, or may have, a significant impact upon the financial standing and the operational results of the Company.

• •

To consider and review the annual audit plan of the Internal Audit Office. To consider the results of the audit, along with the comments of the account auditor and the Internal Audit Office, as well as the monitor of operations in accordance with such comments.

•

To make suggestions to the account auditor for the review or examination of any items viewed as imperative or significant during the audit period relating to the accounts of the Company and subsidiary companies.

•

To prescribe the means for the consideration and appointment of the account auditor, and for the consideration of the annual audit report, to be submitted to the Board of Directors as additional comments to the shareholders’ meeting.

•

At the end of the fiscal year, the Audit Committee shall prepare a report of the Audit Committee and disclose such report in the Company’s annual report. Such report shall be signed by the Chairman of the Audit Committee.

•

The Audit Committee shall have the power to invite the members of the Executive Committee, the Management or any other relevant party to give testimony and any necessary information, as well as to invite a lawyer, or an account auditor or an internal auditor, to attend the meeting of the Audit Committee.

•

To conduct other tasks as prescribed or determined by the Board of Directors.

(4) MANAGEMENT TEAM LIST OF THE MANAGEMENT TEAM As of 28 February 2002, the Company’ s Management Team are as follow; 1. Mr. Somprasong Boonyachai

Chairman of the Executive Committee

2. Mr. Lum Hon Fye

Executive Vice Chairman

3. Ms. Yingluck Shinawatra

Senior Executive Vice President-Wireless Corporate Planning

4. Mr. Songsak Premsuk

Executive Vice President - Marketing

5. Mr. Walan Norasetpakdi

Acting Executive Vice President - Service Operation

6. Mr. Pong-amorn Nimpoonsawat

Chief Finance Officer - Wireless Communications

As of 28 February 2002, the Company’s Secretary is Mr. Vivat Songsasen.

SELECTION OF DIRECTORS The Company has prescribed the following guidelines for the selection and appointment of directors: At the annual general meeting, one-third of the directors shall leave office. If the number of one-third is not a round number, the number closest thereto shall be the applicable number. The directors to vacate office within the first and second year following company registration shall draw lots. In the following years, the directors serving the longest shall resign. The departing directors may be re-elected. In the case of a vacancy in the position of director, for reasons other than the completion of the term, the Committee shall appoint a director with the required qualifications, and without any characteristics that would prohibit him/her from acting as a director, as per clause 68 of the Public Company Limited Act B.E. 2535, to serve as director in the next Committee meeting, excluding such case where the remaining term is less than two months. Such appointed director shall assume the position for the remaining term of the previous director. Nevertheless, the Company shall not set up a Nominating Committee. It is provided that the shareholders’ meeting shall appoint the director, as per the criteria and procedures prescribed in the Company’s articles of association. Pursuant to the Agreement Permitting the Operation of Mobile Phone Services between the Company and the Telephone Organization of Thailand (TOT), one representative of TOT is to be a director of the Company. In accordance with the conditions set forth in the agreement with major shareholders, i.e. SHIN and STI, SHIN shall appoint four directors and two directors appointed by STI. As a result, the Company has ten directors as of 28 February 2002, as follows; 1. Mr. Paiboon Limpaphayom (Ph.D.)

representing SHIN

2. Mr. Boonklee Plangsiri

representing SHIN

3. Mr. Somprasong Boonyachai

representing SHIN

4. Mrs. Siripen Sitasuwan

representing SHIN

5. Mrs. Tasanee Manorot

representing TOT

6. Mr. Lum Hon Fye

representing SingTel

7. Mr. Chow, Wing Keung Lucas

representing SingTel

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

EXECUTIVE REMUNERATION 1. Remuneration for the Board of Directors, comprising of 5 members, for the period ended 31 December 2001, amounts to Baht 9.68 million, which includes payment to the Chairman of the Board of Directors, Audit Committee, and TOT’s representative director. * Remuneration consists of a salary, Provident Fund, bonus and an allowance for meetings (This excludes remuneration for the 3 SHIN representative directors who are paid directly by SHIN).

2. Remuneration for four management, for the period ended 31 December 2001, totals Baht 35.36 million. * Remuneration comprises of a salary, bonus, Provident Fund and other remuneration. Management include members of the Company’s Executive Committee and the Company’s Management Team. The above figure excludes the remuneration for the Chairman of the Executive Committee, who receives remuneration from SHIN and Chief Finance Officer.

DIRECTORSâ&#x20AC;&#x2122; SHAREHOLDING IN THE COMPANY AND SUBSIDIARIES * Ordinary Shares

Name

Position

Advanced Info Service Plc.

Advanced Wireless Marketing Co., Ltd.

Advanced Paging Co., Ltd.

31/12/00 31/12/01 31/12/0031/12/01 31/12/00

Mr. Paiboon Limpaphayom (Ph.D.)

Chairman of

Advanced DataNetwork Communications Co., Ltd.

31/12/01 31/12/0031/12/01

DataNetwork Solutions Co., Ltd.

Digital Phone Co., Ltd.

Shin Digital Co., Ltd.

31/12/00 31/12/01 31/12/00 31/12/01 31/12/00 31/12/01

the Board of Directors

Mr. Boonklee Plangsiri

Director

Mr. Somprasong

Director

Mrs. Siripen Sitasuwan

Director

Mr. Lum Hon Fye

Director

Mr. Chow, Wing Keung

Director

Boonyahcai

Lucas Mrs. Tasanee Manorot

Mr. Suphadej Poonpipat Chairman of the Audit Committee Mr. Arun Churdboonchart

Member of the Audit Committee

Mrs. Charintorn Vongspootorn

Member of the Audit Committee

* As of December 31, 2001

* Includes holding by spouse and minor children

A CORPORATE GOVERNANCE Independent directors and the Audit Committee, attended the Board of Directors’ meeting no. 2/2002 dated 28 February 2002 , did assessed an adequacy of a corporate governance in 7 components as followings: Board Composition, Roles and Responsibilities of Director, Appointments of the Board, Holding the Director Position, Directors’ Remuneration, Board and Shareholders Meetings, and Reporting. In conclusion, the company has an adequate and appropriate corporate governance. The Company has committed about an importance of a good corporate governance by which the Board of Directors has to perform their responsibilities in accordance with the Code of Best Practices of the Stock Exchange of Thailand. Employees also have to follow company’s regulations, code of conducts, and value. In addition, the company has had a risk management system and has adequately disclosed information in conformity with a regulation of the Stock Exchange of Thailand.

A PROTECTION OF USING AN INTERNAL INFORMATION The company has committed about a using of insider information. The company’s code of conduct defines a scope of insider information using for personal and other parties benefits of the Management and every level of employee. Code of conduct is written that the Management and every level of employee are not allowed to use the company‘s insider information that has a significant matter and is not disclosed to public. For example, a using of company‘s take over information for a benefit of purchasing or selling company‘s security. it is also specified in the code of conduct that if any violation occurs, it is said to be a serious fault and must have a disciplinary punishment. In addition, the code of conduct specifies that the Management and employees in charging in a department where insider information is available should avoid or cancle a purchasing or selling company‘s security in a period of 1 month before a disclosure of financial statment to public. The Management also has to make and submit a report of securities occupying and a report of any changes in company securities occupying of their own, spouses and immaturity children within a period of time scheduled in the regulation of securities occupying. And the Management has to submit a copy of those mentioned reports within the same day as presenting to the Securities Commission and the Stock Exchange of Thailand.

AN INTERNAL CONTROL SYSTEM Independent directors and the Audit Committee attended the Board of Directors’ meeting no. 2/2002 dated 28 February 2002 did assessed an effectiveness of an internal control system by inquiring some information from the Management. The Audit Committee has come to a conclusion that the company has an adequate and appropriate internal control system and do effectively practise according to every internal control component. The internal control system has been evaluated in 5 components which are Control Environment, Risk Assessment, Control Activities, Information and Communication , and Monitoring. The Company has a good business management and adequate internal control system. The Management has a realization in a necessity of an internal control. In addition, the Management encourage and support every department to do risk management for making an analysis and finding a method to control or reduce any damage or severity of effect that can be occurred to an appropriate level. The company also has a good corporate governance by having a clear segregation of duty, defining regulations, policies, level of managing authorities and level of transaction approval in writing and appropriately. Furthermore, the company has an information technology system and a security system of data to provide an information with accuracy, completeness and up-to-date. The Company has established an Internal Audit Office which will perform an audit field work in conformity with an international standard. In addition, the Internal Audit Office make a review of an operating system of each process in order to ensure that it can achieve its own objective and a company’s target as a whole. From previous audit reports, there were no significant weaknesses found in the internal control systems. In addition, a certified public accountant, PricewaterhouseCoopers ABAS Limited, conducted an audit of the financial statements for the year 2001, assessed an effectiveness of an internal control system and commented that there were no significant weaknesses found in the internal control system.

RELATED TRANSACTIONS

The Company and its subsidiaries have entered into inter-company transactions with persons of potential conflict. All of these transactions are entered into in the ordinary course of business of the Company, subsidiaries and persons of potential conflict. Regarding the approval of inter-company transactions, apart from the same procedures implemented on other transactions in general, where authorized persons have a limit to their approval, the Audit Committee reviews the inter-company transactions entered into by the Company or subsidiaries in order to ensure there is no conflict of interest. Since inter-company transactions are entered into under the ordinary course of business, the transactions will continue in the future, whereby the Company, in entering into such transactions, will take into account the suitability and the fair and reasonable prices for each transaction. In 2000 and 2001, the Company and its subsidiaries entered into several inter-company transactions with persons of potential conflict, whereby the Companyâ&#x20AC;&#x2122;s auditor gives his/her opinion related thereto in the notes to the audited financial statements for the accounting period of 2000 and 2001, reflecting that such transactions are entered under the ordinary course of business. The prices of transactions for goods and services entered into with the persons of potential conflict are at the market rates applied with third party transactions under normal business conditions. If the rates are not available, the Company will engage independent professional appraisers. In the case of intercompany transactions relating to the lease of immovable property, appraisers approved by the SEC Office will be engaged to provide a comparative guideline prior to the review by the Audit Committee. Details of the inter-company transactions with persons of potential conflict entered into during such period are as follows:

1 Inter-company transactions with persons of conflict of interest Related parties/ Relation to the Company

Particulars

Value of inter-company transactions as ended 31 Dec. 2000 (million Baht) Company Consolidated

Value of inter-company transactions as ended 31 Dec. 2001 (million Baht) Company Consolidated

1 Shin Corporation Public

The Company and DPC engage SHIN

It is the parent companyâ&#x20AC;&#x2122;s

Company Limited (SHIN) /

to advise and manage, with an

policy to oversee its

a major shareholder of the

advisors fee of Baht 3,795,000 per

subsidiaries through

Company and shares

month. The financial management

shareholding and

directors

fee is paid on an actual basis.

management for the

Rational and necessity of the transactions

maximum benefit to the parent company and its shareholders. 1. Advice and financial management

82.80

140.48

156.29

fees

Advising fees are charged on a monthly basis based on the cost of the advising executives. The fees for financial management are based on the market rate of the actual transaction.

2. Interest payable for debentures

0.55

0.00

437.48

3. Rental and other service expenses

1.80

2.77

4.36

5.26

4. Service income

0.91

1.92

0.90

1.17

5. Purchase of office equipment and

0.55

1.11

0.00

3. Dividends payable

computers

Related parties/ Relation to the Company

Particulars

Value of inter-company transactions as ended 31 Dec. 2000 (million Baht) Company Consolidated

Value of inter-company transactions as ended 31 Dec. 2001 (million Baht) Company Consolidated

2. Shin Satellite Public

The Company rents the transponder of

The only one satellite

Company Limited

Thai Com 1A satellite from SATTEL,

operator in Thailand.

(SATTEL) / SHIN is a major

paying the fee of USD 1,700,000

shareholder and shares

per annum.

directors

1. Rental and other service expenses

78.93

76.19

2. Service income

1.36

1.94

1.28

1.53

3. Purchase of telecommunications

0.50

2.55

7.97

9.00

Rational and necessity of the transactions

equipment 3. Shinawatra Information

The computer system of SIT is used at

Technology Company

the monthly cost of Baht 750,000

Limited(SIT) / SHIN is a

1. Computer system advice and

major shareholder, holding

management fees

99.99% shares, and shares

2. Service income

0.08

0.15

0.00

directors

3. Rental and other service expenses

1.42

6.40

0.00

18.48

4. Office equipment and the purchase

0.09

0.99

of computers 4. SC Matchbox Co., Ltd.

The Company, AWM and DPC engages

The agency is a creative

(SMB) / SHIN is a major

SMB as their advertising agency in

advertising agency with a

shareholder, holding

order to produce advertisements via a

good understanding of

74.97% of shares,

variety of media, on a job by job basis.

and shares directors

1. Advertising costs

the Companyâ&#x20AC;&#x2122;s products 66.89

801.65

564.84

1,470.91

and services, and maintains strict confidentiality.

2. Office equipment purchases 5. Teleinfo Media Co., Ltd.

0.00

5.71

5.73

The Company engages TMC in

Their specialization is in

(TMC) /SHIN is a major

preparing information related to value

providing information for

shareholder and shares

added mobile phone services, such as

the value added services

directors

information on astrology, lottery results

of mobile phones.

and fun stories. Service fees are paid on an actual basis monthly. 1. Service expenses

30.89

52.24

2. Advertising costs

0.80

4.80

1.98

6.15

Related parties/ Relation to the Company

Particulars

6. OAI Asset Co., Ltd.

The Company rents: office space in

They have been utilized

(OAIA) / The Shinawatra

Shinawatra Tower 2 /office and parking

by the Company from the

family, a major shareholder

space in the White House building /

beginning. The Company

in SHIN, holds 100% of the

office and parking space in MWA

also invested in the full

shares in OAIA

buildings /warehouse and parking space

public utilities on the

at a building on Phaholyothin Soi 13

leased premises and the

- Rental and other service expenses

Value of inter-company transactions as ended 31 Dec. 2000 (million Baht) Company Consolidated

124.73

142.92

Value of inter-company transactions as ended 31 Dec. 2001 (million Baht) Company Consolidated

150.80

166.72

Rational and necessity of the transactions

utilities are fully functioning. Any change in the leased premises will create additional costs. The leases are entered into, and renewed, based on comparative market rates, location, facilities, and the cost of moving and modifications required.

7. SC Office Park Co., Ltd.

The Company and AWM rented the

They have been utilized

(SOP) / The Shinawatra

total office space of 13,197 square

by the Company from the

family, a major shareholder

meters in Shinawatra Tower 1 for a total

beginning. The Company

in SHIN, holds 60.00% of

rental cost of Baht 6,316,575.73

also invested in the full

the shares in SOP

per month - Rental and other service expenses

public utilities on the 30.54

43.28

87.21

117.47

leased premises and the utilities are fully functioning.Any change in the leased premises will create additional costs. The leases are entered into, and renewed, based on comparative market. rates, location, facilities, and the cost of moving and modifications required.

Related parties/ Relation to the Company

Particulars

8. SC Asset Co., Ltd.

The Company and AWM rented office

(AST) / The, Dhamaphong

space in total of 13,197 square meters,

family, a major shareholder

along with the public utilities of the

in SHIN, holds 99.99%

common area in Shinawatra Tower 1,

of the shares

from AST. Late in 2000, AST transferred

Value of inter-company transactions as ended 31 Dec. 2000 (million Baht) Company Consolidated

Value of inter-company transactions as ended 31 Dec. 2001 (million Baht) Company Consolidated

Rational and necessity of the transactions

the common area public service provision to SOP 1. Rental and other service expenses

32.72

54.17

1.49

2.63

2. Service income

1.27

2.04

2.07

2.30

3. Purchase of office equipment

0.00

1.23

9. Worth Supplies Co., Ltd.

The Company rents the office space, in

They have been utilized

(WS) / The Shinawatra

total of 3,937.80 square meters, in the

by the Company from the

family, a major shareholder

Shinawatra Groupâ&#x20AC;&#x2122;s building (Chiang Mai)

beginning. The Company

in SHIN, holds 72.19% of

- Rental and other service expenses

shares in WS

12.67

15.85

17.24

19.56

also invested in the full public utilities on the leased premises and the utilities are fully functioning. Any change in the leased premises will create additional costs. The leases are entered into, and renewed, based on comparative market rates, location, facilities, and the costs of moving and modifications required.

Related parties/ Relation to the Company

Particulars

Value of inter-company transactions as ended 31 Dec. 2000 (million Baht) Company Consolidated

Value of inter-company transactions as ended 31 Dec. 2001 (million Baht) Company Consolidated

10. P.T. Corporation

The Company rents: the warehouse

They have been utilized

Co., Ltd. (PT) / The

space located in the Kanna Yao Sub-

by the Company from the

Shinawatra family, a major

district /office space and roof-top space

beginning. The Company

shareholder in SHIN,

of a building located in the Kanna Yao

also invested in the full

holds 70.00% of shares

Sub-district /building space located in

public utilities on the

in PT

the Thong Song Hong Sub-district,

leased premises and the

Bangkhen District and roof-top space

utilities are fully

/a space for base station installation at

functioning. Any change

the Wang Hin Condo Town project /APG

in the leased premises

rents the space of a mini-office

will create additional

(Tower D) located in Thong Song Hong

costs.

Rational and necessity of the transactions

Sub-district. - Rental and other service expenses

9.28

21.08

10.41

19.88

The leases are entered into, and renewed, based on comparative market rates, location, facilities, and the costs of moving and modifications required.

11. Upcountry Land

The Company rents office space and

They are specialized in

Co., Ltd. (UL) / The

spaces for base station installation in

providing rental spaces

Shinawatra family, a major

Bangkok and the provinces,

throughout the country,

shareholder in SHIN,

totaling 93 sites.

which meet the route

holds 99.98% of shares in UL

requirements in a timely - Rental and other service expenses

93.26

112.25

112.58

manner.

12. OAI Leasing Co., Ltd.

The Company, AWM and APG lease

They are specialized in

(OAIL) / The Shinawatra

a total of 83 vehicles, for use at their

the leasing of vehicles at

family, a major shareholder

branches, from OAIL

in SHIN, holds 45.00% of

1. Rental and other service expenses

reasonable prices and 33.41

35.92

22.92

23.72

1.97

0.65

0.93

shares in OAIL

quality services. 2. Vehicle purchase

13. I.T. Applications and

The Company, AWM and APG engage

Service Co., Ltd. (ITAS)

ITAS for the improvement and

/SHIN is the major

development of computer programs,

shareholder and shares

on a job by job basis

directors

1. Advising and management fees

6.27

14.93

2. Rental and other service expenses

0.00

13.96

0.00

3. Office equipment and computer

1.20

6.74

0.70

purchases

providing efficient

Related parties/ Relation to the Company

Particulars

Value of inter-company transactions as ended 31 Dec. 2000 (million Baht) Company Consolidated

Value of inter-company transactions as ended 31 Dec. 2001 (million Baht) Company Consolidated

Rational and necessity of the transactions

14. OAI Property Co., Ltd.

The Company, AWM and DPC rent the

They have been utilized

(OPP) / The Shinawatra

office space, in total of 4,912 square

by the Company from the

family, a major shareholder

meters, in Shinawatra Tower 3, and

beginning. The Company

in SHIN, holds 49.96% of

portions of Shinawatra Tower 3 at the

also invested in the full

shares in (OPP)

rate of Baht 689.90 per square meter. 1. Rental and other service expenses

public utilities on the 5.53

16.27

19.70

93.40

leased premises and the utilities are fully functioning. Any change in the leased premises will create additional costs. The leases are entered into, and renewed, based on comparative market rates, location, facilities, and the cost of moving and modifications required.

2. Office renovation costs 15. Singapore Telecom

1.93

0.00

The Company enters into an agreement

The International

Mobile Pte. Ltd. / a company with Singapore Telecom Mobile Pte. Ltd.

Roaming with Singapore

under SingTel Strategic

for the joint operation of international

Telecom Mobile Pte.Ltd.

Investments Pte. Ltd.

roaming.

(SingTel) and a major

- Service income

under the ordinary 157.23

157.23

157.84

shareholder in the Company

course of business due to the company expands into international mobile services with foreign operators.

16. Singapore Telecom

1. The Company acquired ordinary

This is part of a joint

International Pte. Ltd.

shares in ADC and DNS from STI on

venture between the

(STI) / a subsidiary

29 October 1999, for approximately

Company and Singapore

company of SingTel and

Baht 281 million. As a result, the

Telecom International

a major shareholder of

Company holds shares in ADC and

Pte. Ltd., whose staff

the Company

DNS at 67.95% and 49.00%

participates in the

respectively.

management.

2. APG entered into a Technical Service Agreement to engage STI as its technical advisor for Digital Display Paging with remuneration on a yearly basis. 3. The Company pays the salary and remuneration to STI in consideration to the STI operational staff. The expense is charged on an actual basis. - Salaries and other remuneration

30.62

49.34

39.62

43.79

Related parties/ Relation to the Company

Particulars

17. C.S. Communication

ADC provides Datanet service to the

Income from the rental

Co., Ltd. (CSC) / SHIN is

Company and CSC. AWM and APG

of transmission to cover

an indirect major

engage CSC to provide Internet

CSC service areas.

shareholder and shares

service with a monthly service fee.

directors

1. Service income

0.16

23.97

0.19

75.62

2. Rental and other service expenses

2.97

5.07

2.47

5.22

4.52

4.53

3.50

0.60

18. OAI Consultant &

The Company uses the conference

Management Co., Ltd.

room service from OCM in organizing

(OCM) / The Shinawatra

its staff seminars and training, with

family, a major shareholder

service fees paid per job.

in SHIN, holds 84.21% of

- Rental and other service expenses

Value of inter-company transactions as ended 31 Dec. 2000 (million Baht) Company Consolidated

Value of inter-company transactions as ended 31 Dec. 2001 (million Baht) Company Consolidated

Rational and necessity of the transactions

shares in OCM 19. B.P. Property Co., Ltd.

The Company rents rooftop space and

(BP) / The Shinawatra

certain spaces of the SC Sathon

family, a major shareholder

Mansion on South Sathon Road for

in SHIN, holds 78.22%

base station installation.

of shares in BP

- Rental and other service expenses

20. Shineedotcom

The Company engages Shinee for its

They are specialized in

Co., Ltd. / SHIN is an

services via the Internet, with a

Website design and

indirect major shareholder

monthly service fee.

and shares directors

- Rental and other service expenses

provide a variety of web 0.00

0.00

14.21

content that meet the needs of the Company.

21. Infolink Co., Ltd. (IFL)

IFL recruits customers wishing to use

/STI is under the same

its paging service, charging the service

group of companies of

fees for IFL, but waiving the service

SingTel, a major share

fees for customers paying to APG. IFL

holder in the Company,

therefore has to pay the customer

and shares directors

service fees waived by APG.

with IFL.

- Rental and other service expenses

22.Bangkok Telecom

The Company and DPC engage BTE

They are specialized in

Engineering Co., Ltd.

for the installation of telecommuni -

the installation of base

(BTE) / The Shinawatra

cations equipment.

family,a major shareholder

- Costs of communication equipment

in SHIN,holds 99.99% of

and their installation

share in BTE

0.00

8.38

9.02

stations. 0.00

0.00

116.91

465.50

Related parties/ Relation to the Company

Particulars

23. The Shinawatra Family

The Shinawatra family holds debentures

Value of inter-company transactions as ended 31 Dec. 2000 (million Baht) Company Consolidated

Value of inter-company transactions as ended 31 Dec. 2001 (million Baht) Company Consolidated

Rational and necessity of the transactions

of the Company. - Investment funds in the Company’s

270.00

280.00

22.28

22.40

31.00

45.08

1.58

2.05

debentures - Interest payable 24. The Company’s

The Company’s Directors hold

Directors

debentures of the Company. - Investment funds in the Company’s debentures - Interest payable

2 Procedures for the approval of inter-company transactions and the policy for future inter-company transactions The procedures for processing inter-company transactions are based on the similar procedures of processing transactions entered into with third parties. There are comparisons with market prices and limits of authorization on transaction values. The Company strictly complies with applicable rules and regulations on any other inter-company transaction falling under the notifications of the Stock Exchange of Thailand Re: Principles, Methods and Disclosure of Related Transactions of a Listed Company. The Audit Committee reviews all intercompany transactions between the Company, its subsidiaries and related parties in each quarter in order to ensure that there is no conflict of interest.

MANAGEMENT DISCUSSION AND ANALYSIS

EXPLANATION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS As of the end of the year 2001, the Company registered a total of 4.81 million mobile phone customers, comprising of 264,800 customers in the NMT system, 2,259,700 customers in the GSM Advance system, and 2,288,500 customers in the 1-2-Call! system. This represents a net increase of 2.83 million customers from 2000, or 143%. As a result, its Company increased their market share, up from 55%, as of the end of the year 2000, to 60%, as of the end of the year 2001. The effective administration led to the development of a quality mobile phone network, service network, and product lines, so as to continuously respond to the demands of the customers. The Company’s operation has continuously registered healthy growth. This is evident from a total income of Baht 60,738 million in 2001, soaring 53% from the year prior. Net profits stood at Baht 3,851 million, down 42% from the year 2000, owing largely to an allowance for losses from the depreciation of equipment for a mobile phone network in the NMT analogue system and the equipment for pager network worth Baht 4,265 million. To enhance their efficiency in the mobile phone business, the Company, in September 2001, took a 99.99% stake in SDT, which held 97.54% of shares in DPC. In December 2001, the Company bought DPC shares from SDT, resulting in the direct shareholding in DPC at 98.17%. DPC is the mobile phone operator in the Digital GSM system under the 1800 MHz frequency, registering 390,000 service customer as of the end of the year 2001. As a result, the Company and DPC captured 65% market share, followed by its major competitor, DTAC, holding 34%. DPC still operates at a loss. DPC reported a Baht 1,412 million loss as of 2001, as they are in the process of establishing and developing services and networks, which require heavy investment. Moreover, DPC’s customer base is not yet large enough to reach their break-even point. However, the Company sees potential in DPC’s business. DPC support would bring healthy returns to the Company in the long run. Various benefits from the investment in DPC include the following:

(1) Decreased in investment in mobile phone network expansion The need to invest in new sites would be reduced since mobile phones in the GSM Advance and the GSM 1800 systems can share the site within the same area. The joint planning in terms of network expansion and site positioning between the Company and DPC can substantially save on investments, particularly in terms of site preparation expenses, investments in the transmission system, and operational expense, e.g. electricity and location rental. Moreover, this move will ease the problems related to overlapping sites.

(2) Reduced for networks installation of both systems The ability to respond to network subscribers can be enhanced, simply by installing the equipment of the GSM 1800 system to the site of GSM Advance system and vice versa. This will reduce substantial amounts of time spent searching for locations and construction.

(3) Enhance the quality of network The rather limited bandwidth of the GSM Advance system has impeded frequency reuse. In the heavily populated areas, in particular, high frequency reuse causes problems with wave disturbance. The support from the GSM 1800 system can enhance the efficiency of frequency reuse.

(4) Increased in mobile phone network capacity Investment in DPC will allow the Company to have 12.5 MHz. bandwidth of the GSM 1800. That would make the Company be able to serve higher growth of demand.

(5) The network of the Digital GSM system in the 1800 MHz frequency can effectively work with the network of the Digital GSM system in the 900 MHz frequency. Since the standard of GSM Advance and the GSM 1800 systems are set by the European Telecommunication Standard Institute (ETSI), their technical qualifications are similar, only they operate in different frequencies. The Company can therefore combine the operations of both GSM frequency bands into one so as to effectively run a single network.

(6) Increase the ability to support application programs that need high speed data transmission The demand for bandwidth of the mobile phone network will soar in the future when multimedia services that transmit high volumes of information become increasingly popular. An increase by 12.5 MHz for the GSM Advance network, from investments in DPC, would raise the total bandwidth of the Companyâ&#x20AC;&#x2122;s mobile phone system to 30.0 MHz, enough to support the above demands.

(7) Lower administrative expenses The Company can save on administrative expenses, notably marketing expenses, as both companies jointly map out their marketing plans. As a result, services can be best tailored to meet the demands of each of its targeted customers. Expenses for distribution channels and after-sales service can also be slashed. Given the above benefits from the investment in DPC, the Company strongly believes in maintaining their lead in the telecommunications business and handling the increasingly competitive environment from new entrants, as well as from possible changes after the liberalization of the industry.

ANALYSIS OF OPERATIONAL RESULTS In September 2001, the Company invested in DPC via SDT and, in December 2001, bought shares of DPC from SDT. The Company now holds a direct share in DPC at 98.17%. In analyzing the operational results, figures appearing in the financial statements, as of 31 December 2001, incorporate the financial status and operational results of DPC. Since 1999, the Company profit-generating capabilities have been on the rise. The net profit ratio of the Company increased from 10.63% in 1999 to 16.61% in 2000. As a result, the rate of return to the shareholders rose from 16.87% in 1999 and up to 26.58% in 2000. An increase in profit-generating capability during 1999-2000 resulted from a continuous rise in income from sales and services. Income from sales and services was up by 66.91% in 1999 and 46.58% in 2000, while operational expenses rose at a lower rate, i.e. up by 28.57% in 1999 and by 36.39% in 2000. Nevertheless, the net profit ratio in 2001 decreased to 6.34% of the total income, while the return on equity dropped to 11.14%, despite a 60.33% increase in income from sales and services. This is due to a non-operating, i.e. impairment loss from asset in the NMT network and the equipment of a pager network of Baht 4,265 million and an accelerating in NMT network amortisation of Baht 722 million.

INCOME ANALYSIS The primary sources of income of the Company and its subsidiary companies comprise of income from services and equipment rental and income from sales. Detail as follows:

Audited 1999

2000

2001

Million Baht

16,800

66.6

24,792

67.1

40,475

68.3

1,357

5.4

1,148

3.1

539

0.90

171

0.7

257

0.7

318

0.50

18,328

72.7

26,197

70.9

41,332

69.7

6,636

26.3

10,549

28.5

17,835

30.1

250

1.0

194

0.5

0.1

0.0

6,886

27.3

10,762

29.1

17,925

30.3

25,214

100.00

36,959

100.00

59,257

100.00

Income from services and equipment rental Mobile phone Pager Data Communication Service Total

Income from sales Mobile phone Pager Data Communication Service Total Grand total

Income from Services and Equipment Rental Income from services and equipment rental rose by 42.93% in 2000 and 57.77% in 2001. Income from services and equipment rental of mobile phones has continuously grown, from Baht 16,800 million in 1999, to Baht 24,792 million in 2000, and up to Baht 40,475 million in 2001. Number of mobile phone users and average monthly income per user Net rise in users (persons) GSM

Accumulated users (persons) GSM

GSM

Average revenue per user (Baht / month) GSM GSM

NMT 900

Advance

1-2-Call!

1800

NMT 900

Advance

1-2-Call!

1800

NMT 900

Advance

1800

1999

(65,700)

293,000

23,700

N/A

610,500

596,000

23,700

133,073

1,075

1,229

1,437

2000

(144,900)

561,200

330,800

83,040

465,600

1,157,200

354,500

216,113

1,106

1,309

1,295

2001

(200,800)

1,102,500

1,934,000

174,187

264,800

2,259,700

2,288,500

390,300

984

1,295

1,035

The increase in income from services and equipment rental is largely due to the sharp increase in mobile phone customers, from 1,230,200 customers, as of the end of the year 1999, to 1,977,300 customers as of the end of the year 2000, and up to 5,203,000 customers at the end of 2001. Contributing factors include the falling prices of handsets and the continuous marketing of the Company. Moreover, the pre-paid phone service, under the “1-2-Call!” brand, has gained in acceptance. Subscribers of the prepaid service jumped from 23,700 subscribers at the end of the year 1999, to 354,500 subscribers as of the end of the year 2000 and 2,288,500 subscribers as of the end of 2001. With regard to customers of the post-paid systems, consisting of the analogue NMT and Digital GSM, the number of subscribers in the analog NMT system has been on the decline since 1998, with a total drop of 200,800 customers in 2001. This is due to the Company’s policy of encouraging customers of the NMT analog system, in Bangkok and the provinces, to shift to the Digital GSM Advance system, since producers of handsets in the NMT analogue system are likely to cease the production of handsets and spare parts for network maintenance. As a result, the Digital GSM system has seen a rise in subscribers, with a net increase of 1,102,500 subscribers in 2001. Overall, there has been a net increase of 3,010,000 customers in both pre-paid and post-paid systems in the year 2001. The average revenue per customers (ARPU) in the Digital GSM System, the main product of the Company, rose by 19.79% in 1999 and by 6.75% in 2001, but dropped 1.1% in 2001, as a result of the Company’s marketing strategy to branch out its subscriber base to the light customer segment, supported by the lower handset price introduced to the market. Despite the decrease in ARPU, since the segment is the major proportion of the country’s population, the strategy would enhance the overall revenue base for the Company.

Income from Sales The purchase of shares in AWM on 22 December 1998 has increased the Company income from the sale of mobile phones, apart from the sale of pagers. As a result, the income from sales soared from Baht 6,886 million in 1999 to Baht 10,762 million in 2000 and up to Baht 17,925 million in 2001. The share of income from sales to total income rose from 27.30% to 29.10% and 30.30%, respectively. Income from sales grew as high as 66.56% in 2001.

Other incomes Other incomes shown in the consolidated statements of income of the Company and subsidiary companies include discounts for international calls that the CAT granted international call services of the Company mobile phone customers. Other incomes of the Company have been increasing since 1998 because a large number of foreigners doing business and travelling in Thailand use the Company’s international roaming service. The high level of usage of CAT’s international call services means that the Company receives a larger discount from CAT. Therefore, other incomes in the consolidated statements of income rose from Baht 123 million in 1998 to Baht 428 million in 1999, up to Baht 598 million in 2000 and Baht 1,092 million in 2001.

ANALYSIS OF EXPENDITURES Cost of Services and Equipment Rental The cost of services and equipment rental comprise of 2 main components; (1) annual revenue sharing for TOT as a percentage of income from mobile phone services, and (2) amortization costs of mobile phone and pager networks under the joint-venture agreement. In July 2001, after the Company decreased the amortization period of the NMT analog system from the end of the year 2005 to the end of the year 2003, the amortization for the year 2001 increased by Baht 722 million. Nevertheless, the continuous growth in income from services and equipment rental and the reduction in transmission system rentals, which is part of the cost of services and equipment rental, reduced reliance on the TOT transmission system through the use of an in-house transmission system. This brought down the ratio of the cost of services and equipment rental to income from services and equipment rental during 2000-2001. This reflects greater efficiency in the management of mobile phone and pager networks. The Company recorded the cost of services and equipment rental at Baht 14,941 million and Baht 21,636 million in 2000 and 2001, respectively, or the ratio of costs to income from services and equipment rental at 57.03% and 52.35%, respectively.

Cost of Sales The sharp increase in mobile phone customers have increased the Company’s cost of sales from Baht 4,709 million in 1999 to Baht 7,472 million in 2000 and Baht 13,607 million in 2001. The ratio of gross profit from sales stood at 36.17% in 1999, 39.36% in 2000 and 40.53% in 2001, respectively.

Interest Expenses Interest expenses rose from Baht 718 million in 1999 to Baht 729 million in 2000 and up to Baht 1,573 million in 2001, as the Company issued additional debentures in order to finance its network expansion.

Gain (Loss) on Foreign Exchanges The Company adopted strict policy to manage foreign exchange risks, as it is fully aware that foreign exchange fluctuation may be caused by both internal and external factors. Overall, the Company felt only a slight impact from the depreciation of the Baht and exchange rate swings. The Company reported losses on foreign exchange at Baht 109 million in 1999 and gains on foreign exchanges at Baht 761 million in the year 2000. In 2001, the losses on foreign exchange amounted to Baht 106 million.

ANALYSIS OF FINANCIAL POSITION 1 Analysis of Assets Cash on Hand and at Banks and Short-Term Investments As of the end of the year 2000, the Company’s cash on hand and at banks totaled Baht 1,497 million and short-term investments of Baht 10,869 million. The amount of cash on hand and at banks totaled Baht 6,536 million and short-term investments fell to Baht 8,837 million at the end of the year 2001. This results from the Company’s additional investments in mobile phone networks, together with investments in DPC. In 2001, investment expenses equaled Baht 29,392 million, while net cash flow from operations otaled Baht 11,604 million and net cash flow from revenue-generating activities were at Baht 20,792 million. Activities included 2 issues of debentures, worth Baht 26,890 million; short-term and long-term loans from banks worth Baht 7,084 million; and recapitalization, in September 2001, worth Baht 10,024 million. In addition, the Company’s repayment of loans to related companies was worth Baht 12,103 million. The net repayment of short-term loans totaled Baht 7,664 million. The repayment of long-term loans was worth Baht 2,308 million. Dividend payments amounted to Baht 1,080 million.

Trade Accounts Receivable - Net Net trade accounts receivable rose from Baht 5,445 million in 2000 to Baht 7,674 million at the end of 2001, thanks to an increase in the income from services and equipment rental and income from sales. When considering the ratio of the net trade accounts receivable, to income from services and equipment rentals and income from sales, the ratio of trade accounts receivable turnover stood at 7.95 times in 2000, or an average debt collection period of 45 days, when compared with the trade accounts receivable turnover of 9.03 times and the average debt collection period of 40 days in 2001. In practice, the Company will notify service charges on a monthly basis. Moreover, the debt collection period is lower than the figures above due to a rise in pre-paid service users who have made payments in advance. The Company has adjusted the conditions for the suspension of service in accordance with the targeted groups. Inspection of fraud has become stricter. The application of an intelligent database system allows the Company to better categorize customer groups and manage quality assets. For instance, in a case that customer fails to make payment within the due date, the Company’s staff will send a warning prior to service disconnection. 49

Trade Account Receivables of the Company and Subsidiary Companies, Classified by Default Period 31 December 1999

31 December 2000

31 December 2001

(million Baht)

3,662

5,251

7,762

More than 3 months, but less than 6 months

239

316

746

More than 6 months, but less than 12 months

191

260

304

466

432

1,310

4,128

5,683

9,072

Current Trade Accounts Receivable Default Trade Accounts Receivable

More than 12 months Total default accounts receivable Total Trade Accounts Receivable Allowance for doubtful accounts

(280)

(238)

(1,398)

Total Net Trade Account Receivable

3,848

5,445

7,674

In providing the allowances for doubtful accounts, for the trade account receivable with a default period over 3 months, the Company in conjunction with deposits received from the mobile phone and pager customers. In the case of sales to dealers, the Company considers dealers’ bank guarantee. In this regard, the Company believes that the foregoing allowance is sufficient to cover exposure to the bad debt risk.

Net Inventories Net inventories increased from Baht 939 million, as of the end of the year 1999, to Baht 1,970 at the end of the year 2000, and went up to Baht 2,238 million at the end of the year 2001. This rise reflects the continued growth in the sale of mobile handsets.

Net Accounts Receivable/Accounts Payable under a Forward Contract The Company has entered into forward contracts to protect against foreign exchange fluctuations. Therefore, the Company records the difference between the actual exchange rate and the forward contract exchange rate, as net accounts receivable or payable, under a forward contract (as the case may be). Net accounts receivable under a forward contract is Baht 221 million at the end of 2000 and none at the end of the year 2001.

Advance Payment to Suppliers Advance payment to suppliers for equipment for mobile phone networks totaled Baht 989 million in 2000 and went up to Baht 3,169 million at the end of the following year. The Company has negotiated with suppliers to make advance payment so as to receive a cash discount and protect against foreign exchange risks. In so doing, the Company has entered into a contract for the sale and purchase of network equipment. As the contractual supplier has sound financial status and is well known, the Company is confident that the suppliers will follow the conditions of the contract in all respects.

Other Current Assets Other current assets totaled Baht 1,091 million, as of the end of 1999, slightly changing to Baht 957 at the end of 2000 and rose to Baht 2,255 million at the end of the year 2001. The Cost of Mobile Phone and Pager Networks and the Cost of Tools and Equipment for the Operation of Data Net Under the Joint Venture Agreement - Net. The net cost of mobile phone and pager networks and cost of tools and equipment for the operation of DataNet, under the joint venture agreement, rose from Baht 33,947 million, as of the end of 2000, to Baht 56,334 million at the end of the year 2001. This is due to the Company’s investment in a mobile phone network with the focus on the digital GSM system in Bangkok and the provinces. In the assessment of asset quality from income-generating businesses, the rate of return on assets equaled 13.33% in 2000 and 4.46% in 2001. This was the result of the incorporation of the costs of DPC’s GSM 1800 network in September 2001.

Deferred Expenses and Goodwill Deferred expenses grew from Baht 365 million, as of the end of 2000, to Baht 404 million, as of the end of 2001, while goodwill rose from Baht 399 million, as of 2000, to Baht 13,944 million, as of 2001. The main contributing factor is the investment in DPC, the Company’s subsidiary, resulting in Baht 12,499 million worth of goodwill. It is noted that DPC is the owner of concessions Baht 5,325 million. 50

2 Analysis of Liabilities Trade Accounts Payable Trade accounts payable, as of the end of 1999, stood at Baht 2,324 million, or an average debt repayment period of 128 days. As of the end of the year 2000, trade accounts payable equaled Baht 7,658 million, or an average debt repayment period of 105 days. The rise in trade accounts payable resulted from the Company’s increased investment in network expansion, while the lower debt repayment period is due to advanced payments to the distributor of the equipment of mobile phone networks, so as to receive a cash discount. As of the end of 2001, trade accounts payable rose to Baht 10,701 million, or an average debt repayment period of 117 days, again resulting from greater investment in network expansion.

Long-term Debentures and Long-term Loans The Company recorded long-term debentures and long-term loans totaling Baht 4,925 million, as of the end of 1999, then rising to Baht 11,387 million, as of the end of 2000. In 2001, the Company issued debentures two times, amounting to Baht 26,890 million. In that year, the Company repaid long-term debentures and long-term debts, worth Baht 2,308 million, resulting in net long-term debentures and long-term debts of Baht 41,184 million. The portion of long-term debentures, maturing within 1 year, amounted to Baht 6,346 million, while the portion of long-term loans, due within 1 year, amounted to Baht 920 million.

Accrued Annual Revenue Sharing Accrued annual revenue sharing, as of the end of 2001, was Baht 6,064 million, increasing from Baht 1,814 million at the end of 2000. An increase in total income in 2001 led to an increase in annual revenue sharing. Normally, the Company pays a minimal amount as prescribed by the TOT in the joint venture agreement. The payment is made in 4 installments, in equal amounts in January, April, July and October each year. The remaining payment beyond the minimum will be paid on November of that year. Moreover, the accrued annual revenue sharing, as of the end of 2001 incorporated DPC’s accrued revenue sharing to other companies, worth Baht 3,528 million.

Other Current Liabilities Other current liabilities amounted to Baht 3,893, as of the end of 2000 and rose to BAHT 6,124 million, as of the end of 2001. Most of which are debts from the rental of transmission from TOT and accrued income tax.

3 Analysis of Shareholders’ Equity In February 1999, the Company received Baht 8,280 million from the issuance of recapitalization shares. The 36 million recapitalization shares (at a par value of Baht 10) were sold to SingTel at Baht 230 per share. The Company’s issued and fully paid up share capital rose from Baht 2,340 million, as of the end of 1998, to Baht 2,700 million as of the end of 2000. The premium on shares went up from Baht 2,295 million, as of the end of the year 1998, to Baht 10,215 million at the end of 1999. In September 2001, the Company received Baht 10,024 million from the issuance of recapitalization shares. Of which, 17 million shares (at a par value of Baht 10) were sold to SHIN at Baht 413 per share and 6.5 million shares (at a par value of Baht 10) were sold to SingTel at Baht 462 per share. As of the end of 2001, the Company recorded Baht 2,935 million worth of issued and fully paid up share capital and Baht 20,004 million worth of premium on shares.

4 Analysis of Capital Structure The Company has the policy of maintaining liabilities to shareholders’ equity at the level of not less than 2 to 1. As of the end of 1999, the ratio of liabilities to shareholders’ equity to 0.85, due to the issuance of 36 million ordinary recapitalization shares for specific offerings to SingTel in February 1999. In addition, the Company’s profits increased from 1998 by 90.12 percent. As a result, shareholders’ equity, as appear in the Balance Sheets, rose by Baht 10,447 million from that in 1998. The Company used recapitalization to repay short-term debentures, long-term debentures and long-term loans, sending the total of debentures and long-term loans down from Baht 10,647 million, as of the end of 1998, to Baht 4,925 million, as of the end of 1999. In 2000, the ratio of liabilities to shareholders’ equity soared to 1.10 on the back of the issuance of long-term debentures worth Baht 10 billion in March of that year. As of the end of the year 2001, the said ratio was up to 1.77, due to 2 issues of long-term debentures in March and November 2001 respectively, totaling Baht 26,890 million, together with increasing in short-term debts and long-term debts Baht 10,892 million.

5 Analysis of Liquidity As a result of the Company’s investment in a mobile phone network, in an attempt to increase service coverage and efficiency, the net cash from operational activities of Baht 13,950 million in 2000 was not sufficient to meet demands for cash in investment activities, worth Baht 11,731 million and the repayment of long-term debts worth Baht 3,458 million. The Company reported an issue of long-term debentures, worth Baht 10 billion, in March 2000. As for the year 2001, the Company enjoyed an increase in income from services and equipment rental and income from sales of mobile phone handsets. Cash flow from operations stood at Baht 11,603 million. Moreover, the Company received Baht 26,890 net from the issuance of long-term debentures. At the same time, the Company repaid short-term and long-term loans, amounting to Baht 22,126 million, and received Baht 10,024 million from the issuance of recapitalization shares, along with Baht 7,084 from borrowing, and long-term loans. Dividend payments were at Baht 1,080 million. As a result, the Company held net cash from revenue-generating activities at Baht 20,792. As the Company’s investments in 2001 amounted to Baht 29,392 million, a net increase in cash and cash equivalents stood at Baht 3,004 million as of the end of 2001. The liquidity ratio rose from 0.87 at the end of 1999, to 1.22 at the end of 2000, due to a rise in cash flow from operations and cash received from long-term debentures. The ratio fell to 0.94 at the end of 2001, owing to a sharp increase in trade accounts payable and accrued annual revenue sharing, due within 1 year, which is due in November of each year. In terms of debt repayment, as of the end of 2000, the Company’s time-interest-earned ratio was 15.92 times, with operational profits at Baht 6,599 million and the interest expenses at Baht 729 million. As of the end of 2001, the Company’s time-interestearned ratio was down to 7.40 times, with operational profits at Baht 3,851 million, and interest expenses at Baht 1,573 million. The cash basis ratio, as of the end of 2000, was 3.25. Owing to the repayment of short-term loans, long-term debentures and long-term debts at Baht 3,792 million, the cash basis ratio fell to 0.59, as of the end of 2001. Owing to the repayment of debentures and longterm debts at Baht 19,586 million. During 2001, the Company’s short-term liabilities, which have an impact upon the Company’s liquidity, include loans from banks, portions of long-term debentures due within 1 year, portions of long-term loans due within 1 year, and accrued annual revenue sharing, amounting to Baht 15,713 million. The figure comprises of Baht 2,990 million worth of accrued annual revenue sharing due in November 2002, Baht 5,457 million worth of short-term loans from banks, and Baht 7,266 million worth of long-term debentures/ loans, due within 1 year. In terms of the capability to repay short-term debts, the Company has cash in hand and at banks and shortterm investments, totaling Baht 15,372 million. To prevent problems relating to loan repayment, the Company issued long-term debentures worth Baht 27 billion in 2001.

DIRECTORS AND MANAGEMENT TEAM

Mr. Paiboon Limpaphayom ( Ph.D.) Chairman of the Board of Directors Age

Shareholding (%)*

None

1988-1992

Highest Education

Ph.D. (Electrical Engineering),

1992-1993

Advisor, Telephone Organization of Thailand

Iowa State University, USA

1993-1998

Director and Member of the Executive Committee, Shin Corp. Group

Experience in the past 10 years

Diploma, National Defense College, Thailand Class 33

Managing Director, Telephone Organization of Thailand

Vice Chairman of the Board of Directors, Shin Corporation Plc. 1999-present Chairman of the Board of Director, Advanced Info Service Plc. 2000-present Director, Thai Military Bank Plc.

Mr. Boonklee Plangsiri

Director

Age

Experience in the past 10 years

Shareholding (%)*

None

1993-1994

President of Shinawatra Group

Highest Education

M.A. in Computer Engineering, University

1995-1996

Vice Chairman of the Executive Committee (Operation),Shinawatra Group

of Illinois (Urbana Champaign), USA

1997-2000

Director and Member of the Executive Commmittee, Shin Corporation Plc., Advanced Info Service Plc., and Shin Satellite Plc.

1999-present Director and Chairman of the Group Executive Committee, Shin Corporation Plc. 2000-present Director, Advanced Info Service Plc., Shin Satellite Plc. 2001-present Director and Chairman of the Executive Committee, ITV Plc.

Mr. Somprasong Boonyachai

Director and Chairman of the Executive Committee - Wireless Communications

Age

Shareholding (%)*

None

1992-1993

Executive Vice President (Operation 4), Shinawatra Group

Highest Education

Master of Engineering,

1993

President, Advanced Info Service Plc.

Asian Institute of Technology (AIT)

1993-1994

President, Shin Satellite Plc.

1994-1995

President, Advanced Info Service Plc.

Experience in the past 10 years

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, Shin Corporation Plc. Director and Member of the Executive Committee, Shin Satellite Plc.

* Includes holding by spouse and minor children

Mrs. Siripen Sitasuwan

Director and Member of the Executive Committee

Age

Shareholding (%)*

None

1991-1993

Vice President - Finance, Shinawatra Group

Highest Education

MBA, Wichita State University,

1994-1998

Executive Vice President - Finance, Shinawatra Group

Wichita, Kansas, USA.

1998-2000

Chief Finance Officer, Shin Corporation Plc.

Experience in the past 10 years

1998-present Director and Member of the Executive Committee, Shin Corporation Plc., Advanced Info Service Plc., Shin Satellite Plc. 2000-present President, Shin Corporation Plc. 2001-present Director and Member of the Executive Committee, ITV Plc.

Mr. Lum Hon Fye

Director and Executive Vice Chairman

Age

Shareholding (%)*

None

1998-1999

Highest Education

Master of Science in Management,

1999-2001

Experience in the past 10 years

Stanford University, USA. Engineering Science (1st Class Honours),

Chief Executive Officer, SingTel Paging Vice President/ Chief Executive Officer - Sales and Channels, Telecom Equipment

2001

University of Oxford, UK.

Vice President - Regional Mobile/Consumer Business, Singapore Telecom Ltd.

2001-present Executive Vice Chairman, Advanced Info Service Plc. 2002-present Director, Advanced Info Service Plc.

Mr. Chow, Wing Keung Lucas

Director and Member of the Executive Committee

Age

Shareholding (%)*

None

1998

Operation Manager of Hewlette

Highest Education

Bachelor of Science (Honours),

1998 - 1999

Group Director of Total Quality

University of Aston, Birmingham, UK.

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

Experience in the past 10 years

Present

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

* Includes holding by spouse and minor children

Mrs. Tasanee Manorot

Director

Age

Shareholding (%)*

None

Highest Education

Bachelor Degree in Commerce and

Experience in the past 10 years

1996-1999

Accountancy, Chulalongkorn University

Mr. Suphadej Poonpipat

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

2001-present

Director, Advanced Info Service Plc.

Director and Chairman of the Audit Committee

Age

Shareholding (%)*

None

1990 - Present President and Chief Executive Officer, National Securities Plc.

Highest Education

Master Degree, University of Wisconsin, USA.

1998 - Present Chairman of the Audit Committee, Advanced Info Service Plc.

Mr. Arun Churdboonchart

Experience in the past 10 years

Director and Member of the Audit Committee

Age

Shareholding (%)*

None

Present

Executive Director, Trinity Group

Highest Education

BBA, California State University,

1998-present

Director and Member of the Audit Committee, Advanced Info Service Plc.

Experience in the past 10 years

Long Beach, California, USA Diploma (Private Sector, Class 3), Thailand National Defense College

Mrs. Charintorn Vongspootorn Director and Member of the Audit Committee Age

Shareholding (%)*

None

Highest Education

B.A. (Accounting), Chulalongkorn University,

Experience in the past 10 years

Senior Executive Vice President, MFC Director, Thai Equity Fund

MBA, Cregton University, USA.

1999-Present Director and Member of the Audit Committee, Shin Satellite Plc.

Directors Certification Program Class 8/2001

2001-Present Director and Member of the Audit Committee, Advanced Info Service Plc.

* Includes holding by spouse and minor children

Mr. Dumrong Kasemset, (Ph.D.)

Member of the Executive Committee

Age

Shareholding (%)*

None

Highest Education

Ph.D.,Electrical Engineering

and Communications Group

Massachusetts Institute of Technology

General Manager - International Broadcasting Corporation Limited

Experience in the past 10 years

1991 - 1992

Senior Manager, Business Development, Shinawatra Computer

1993 - 1994

Executive Vice President, International Broadcasting Corporation Limited

1994 - 2000

President, Shinawatra Satellite Plc.

1995 - 1997

Vice Chairman of the Executive Committee - Policy, Shinawatra Group

1997 - present Chairman of the Executive Committee - Satellite Communications and International Business, Shin Corporation Plc. 2000 - present Group Vice Chairman of the Group Executive Committee, Shin Corporation Plc. Member of the Executive Committee, Advanced Info Service Plc.

Mr. Arak Chonlatanon

Member of the Executive Committee

Age

Shareholding (%)*

None

1991 - 1992

President, Advanced Info Service Plc.

Highest Education

Electronic Engineering,

1993 - 1998

President, Shinawatra International Plc.

Chulalongkorn University

1998 - present Member of the Executive Committee, Shin Corporation Plc.

Experience in the past 10 years

2000 - present Chairman of the Executive Committee - E-Business, Shin Corporation Plc. Member of the Executive Committee, Advanced Info Service Plc. 2001 - pesent Director, Shin Corporation Plc.

Ms. Yingluck Shinawatra

Senior Executive Vice President - Wireless Corporate Planning

Age

Sharsholding (%)*

None

1991 - 1994

Highest Education

Master Degree, Kentucky State

1995 - 1996

General Manager, Shinawatra Directories Co., Ltd.

University, USA.

1997 - 1998

Vice President - Shinawatra Directories Co., Ltd.

1999 - 2001

Executive Vice President - Service Operation, Advanced Info Service Plc.

Experience in the past 10 years

Manager, Shinawatra Directories Co., Ltd.

2001- present Senior Executive Vice President - Wireless Corporate Planning, Advanced Info Service Plc.

Mr. Songsak Premsuk

Executive Vice President - Marketing

Age

Shareholding (%)*

0.0005

1991-2001

Highest Education

Faculty of Architect, King Mongkutâ&#x20AC;&#x2122;s Institute

2001-present Executive Vice President (Marketing) - Advanced Info Service Plc.

of Techonology Ladkrabang Strategic Marketing Management Program, Harvard Business School, USA.

* Includes holding by spouse and minor children

Experience in the past 10 years

Managing Director - SC Matchbox Co., Ltd.

Mr. Walan Norasetpakdi

Acting Executive Vice President - Service Operation

Age

Shareholding(%)*

None

1991 - 1993

Highest Education

Master Degree, Commerce and

1993 - 1994

Finance and Accounting Senior Manager, Advanced Info Service Plc.

Accountancy, Thammasat University

1994-1995

General Manager - Service Provider, Advanced Info Service Plc.

1995-1997

Assistant Vice President - Finance and Administration,

1997-1998

Assistant Vice President - Corporate Development,

1998 - 2001

Vice President - Wireless Controller, Advanced Info Service Plc.

Experience in the past 10 years

Finance and Accounting Manager, Advanced Info Service Plc.

Advanced Info Service Plc.

2001 - present Acting Executive Vice President - Service Operation, Advanced Info Service Plc.

Mr. Pong-Amorn Nimpoonsawat Chief Finance Officer - Wireless Age

Shareholding(%)*

None

1997-1998

Financial Director, Shinawatra Paging Co., Ltd. , Pager Sales Co., Ltd.

Highest Education

Master of Management, SASIN

1998-2001

Financial Director, Dentsu Young & Robicam Ltd.

Experience in the past 10 years

2001-Present Chief Finance Officer - Wireless, Advanced Info Service Plc.

* Includes holding by spouse and minor children

CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

Auditorâ&#x20AC;&#x2122;s Report To the Shareholders of Advanced Info Service Public Company Limited

I have audited the accompanying consolidated and company balance sheets as at 31 December 2001 and 2000, and the related consolidated and company statements of income, changes in shareholdersâ&#x20AC;&#x2122; equity and cash flows for the years then ended of Advanced Info Service Public Company Limited and its subsidiaries, and of Advanced Info Service Public Company Limited, respectively. 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 as at 31 December 2001 and 2000, and the consolidated and company results of operations, and cash flows for the years then ended of Advanced Info Service Public Company Limited and its subsidiaries, and of Advanced Info Service Public Company Limited, respectively, in accordance with generally accepted accounting principles.

PRASAN CHUAPHANICH Certified Public Accountant (Thailand) No. 3051 PricewaterhouseCoopers ABAS Limited Bangkok 1 February 2002

BALANCE SHEETS Advanced Info Service Public Company Limited As at 31 December 2001 and 2000

Consolidated

Company

Notes

2001 Baht

2000 Baht

2001 Baht

2000 Baht

Cash on hand and at banks

6,535,537,300

1,497,298,297

4,288,608,904

Short-term investments

8,836,584,301

10,869,043,966

5,315,537,570

9,190,105,826

Trade accounts receivable, net

7,674,224,357

5,445,307,017

6,649,990,974

4,935,723,154

1,027,166

4,196,342

31,483,244

74,147

2,238,468,727

1,970,365,783

358,586,057

251,616,746

220,712,133

17,939,665

205,435,829

3,168,730,197

988,651,337

3,168,730,197

988,651,337

2,254,533,367

956,634,999

1,522,002,088

793,353,949

31,067,691,472

21,952,209,874

21,245,909,388

16,929,845,750

ASSETS Current Assets 816,501,508

Amounts due from and loans to related parties, net Inventories, net Sparepart inventories for mobile network maintenance Forward and swap contracts receivable, net Advances to suppliers Other current assets Total Current Assets Non-Current Assets Investments in subsidiaries, net

25,957,723,564

4,453,254,896

Property and equipment, net

6,233,122,217

2,340,188,930

4,369,722,477

2,096,873,341

56,334,130,518

33,947,149,419

48,710,389,413

32,800,912,318

Goodwill, net

13,943,787,826

398,885,488

Other assets, net

5,959,656,424

496,308,950

458,292,276

365,034,898

82,470,696,985

37,182,532,787

79,496,127,730

39,716,075,453

113,538,388,457

59,134,742,661

100,742,037,118

56,645,921,203

Cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements, net

Total Non-Current Assets Total Assets

The notes to the consolidated and company financial statements on pages 69 to 96 are an integral part of these financial statements.

BALANCE SHEETS Advanced Info Service Public Company Limited As at 31 December 2001 and 2000

Consolidated

Company

Notes

2001 Baht

2000 Baht

2001 Baht

2000 Baht

5,456,757,726

2,049,960,000

5,446,757,726

2,029,960,000

10,701,380,202

7,657,698,373

6,557,659,168

5,934,574,011

334,270,817

294,207,094

1,980,030,105

64,774,782

Current portion of long-term borrowings

919,763,276

782,784

1,475,092

782,784

Current portion of long-term debentures

6,346,124,222

2,301,266,964

6,346,124,222

2,301,266,964

Current portion of concession fees payable

2,990,140,404

1,813,905,026

2,535,804,009

1,813,905,026

5,166,673

6,123,684,062

3,892,834,689

4,663,600,105

3,161,767,717

32,877,287,382

18,010,654,930

27,531,450,427

15,307,031,284

LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Short-term loans from financial Institutions Trade accounts payable Amounts due to and loans from related parties

Forward and swap contracts payable, net Other current liabilities Total Current Liabilities Non-Current Liabilities Long-term borrowings

4,515,980,551

250,000,000

7,874,752

Long-term debentures

29,402,139,845

8,834,718,720

29,402,139,845

8,834,718,720

Concession fees payable

3,073,473,116

Deposits from customers

2,648,008,394

3,914,581,087

3,039,885,235

4,538,801,435

Total Non-Current Liabilities

39,639,601,906

12,999,299,807

32,449,899,832

13,373,520,155

Total Liabilities

72,516,889,288

31,009,954,737

59,981,350,259

28,680,551,439

5,000,000,000

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

2,935,000,000

2,700,000,000

2,935,000,000

2,700,000,000

Premium on share capital

20,004,000,000

10,215,000,000

20,004,000,000

10,215,000,000

500,000,000

17,321,686,859

14,550,369,764

17,321,686,859

14,550,369,764

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

260,812,310

159,418,160

41,021,499,169

28,124,787,924

40,760,686,859

27,965,369,764

113,538,388,457

59,134,742,661

100,742,037,118

56,645,921,203

The notes to the consolidated and company financial statements on pages 69 to 96 are an integral part of these financial statements.

STATEMENTS OF INCOME Advanced Info Service Public Company Limited For the years ended 31 December 2001 and 2000

Consolidated Notes

Company

2001 Baht

2000 Baht

2001 Baht

2000 Baht

41,331,862,909

26,196,886,675

39,169,603,782

24,637,870,884

17,925,373,848

10,761,757,882

760,640,485

2,799,530

699,581,159

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

1,031,569,923

Other operating income

1,480,787,989

978,788,559

1,191,726,950

726,860,682

60,738,024,746

39,729,643,524

40,364,130,262

27,095,882,648

Cost of services and equipment rentals

21,636,239,940

14,940,630,368

19,773,750,382

14,184,320,193

Cost of sales

13,606,504,094

7,471,907,851

9,588,685,932

5,364,287,403

7,111,136,469

2,986,592,550

4,264,621,047

339,232,000

3,970,000,000

1,572,896,489

729,440,455

1,329,841,956

733,037,369

Total revenues Expenses

Selling and administrative expenses Impairment loss on assets

11/13

Interest expenses Directorsâ&#x20AC;&#x2122; remuneration

Total expenses Operating income

Share of net profit in subsidiaries Impairment loss for investment in subsidiary

Income before tax Income tax

Income before minority interests

2,780,734

1,658,629

2,720,734

1,590,791

50,671,728,236

28,847,156,706

32,187,449,541

17,905,540,903

10,066,296,510

10,882,486,818

8,176,680,721

9,190,341,745

673,506,419

1,277,636,995

300,000,000

10,066,296,510

10,882,486,818

8,850,187,140

10,167,978,740

6,238,438,543

4,283,083,622

4,998,870,045

3,569,030,109

3,827,857,967

6,599,403,196

3,851,317,095

6,598,948,631

(23,459,128)

454,565

3,851,317,095

6,598,948,631

3,851,317,095

6,598,948,631

Baht

1.39

2.44

1.39

2.44

1.39

2.44

1.39

2.44

Share of net profit (loss) in subsidiaries to minority interests

Net income for the year

Basic earnings per share Income before minority interests

Share of net profit (loss) in subsidiaries to minority interests Net income for the year

The notes to the consolidated and company financial statements on pages 69 to 96 are an integral part of these financial statements.

STATEMENTS OF CHANGES IN SHAREHOLDERSâ&#x20AC;&#x2122; EQUITY Advanced Info Service Public Company Limited For the years ended 31 December 2001 and 2000

Consolidated Notes

Company

2001 Baht

2000 Baht

2001 Baht

2000 Baht

2,700,000,000

235,000,000

2,935,000,000

2,700,000,000

2,935,000,000

2,700,000,000

10,215,000,000

9,789,000,000

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

20,004,000,000

10,215,000,000

20,004,000,000

10,215,000,000

Beginning balance

500,000,000

Ending balance

500,000,000

14,550,369,764

7,951,421,133

14,550,369,764

7,951,421,133

3,851,317,095

6,598,948,631

3,851,317,095

6,598,948,631

(1,080,000,000)

17,321,686,859

14,550,369,764

17,321,686,859

14,550,369,764

Beginning balance

159,412,310

158,968,160

Increase during the year

124,859,128

450,000

Decrease during the year

(23,459,128)

Ending balance

260,812,310

159,418,160

41,021,499,169

28,124,787,924

40,760,686,859

27,965,369,764

Ending balance Retained Earnings Appropriated retained earnings Legal reserve

Unappropriated retained earnings Beginning balance Net income for the year Dividend paid

Ending balance

Minority Interests

Total Shareholdersâ&#x20AC;&#x2122; Equity

The notes to the consolidated and company financial statements on pages 69 to 96 are an integral part of these financial statements.

STATEMENTS OF RETAINED EARNINGS Advanced Info Service Public Company Limited For the years ended 31 December 2001 and 2000

Consolidated Notes

Company

2001 Baht

2000 Baht

2001 Baht

2000 Baht

14,550,369,764

7,951,421,133

14,550,369,764

7,951,421,133

3,851,317,095

6,598,948,631

3,851,317,095

6,598,948,631

(1,080,000,000)

17,321,686,859

14,550,369,764

17,321,686,859

14,550,369,764

500,000,000

17,821,686,859

15,050,369,764

17,821,686,859

15,050,369,764

Unappropriated retained earnings: Beginning balance Net income for the year Dividend paid

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 96 are an integral part of these financial statements.

STATEMENTS OF CASH FLOWS Advanced Info Service Public Company Limited For the years ended 31 December 2001 and 2000

Notes

Consolidated 2001 Baht

Company 2001 Baht

2000 Baht

Cash flows from operating activities: Net income for the year

3,851,317,095

6,598,948,631

3,851,317,095

6,598,948,631

1,028,737,629

676,206,227

922,994,940

596,301,341

tools and equipment under concession agreements 13

Adjusted by: Depreciation charge Amortisation of costs of mobile phone and pager service networks and Datanet 7,042,525,629

4,386,992,002

6,348,344,035

4,183,248,178

Amortisation of concession right and other assets

151,607,680

Impairment loss

4,264,621,047

3,970,000,000

Amortisation of deferred charges

62,943,167

90,342,076

33,515,945

48,444,545

2,236,232,198

553,117,078

1,990,928,712

420,646,985

134,638,546

119,215,638

(12,876,441)

Doubtful accounts and bad debts Allowance for inventory obsolescense and diminution in value of finished goods Provision for loss of mobile phone deposit Amortisation of forward and swap premiums (discount)

(256,006,661)

15,261,428

(256,683,959)

63,871,320

Loss (gain) on disposals of fixed assets

(934,316)

9,563,700

(1,890,143)

7,350,818

Loss from damaged of fixed assets

2,572,813

(18,680,335)

(18,650,659)

294,600

125,539,692

294,600

125,539,692

1,291,507

158,944,953

1,291,507

168,762,728

71,399,189

20,556,388

Unrealised (gain) loss on foreign exchange rate

(1,013,027)

15,448,958

48,644,376

2,674,501

Realised loss (gain) on foreign exchange rate for loans

51,818,050

33,679,281

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 property, plant, and equipment Loss (gain) on write-off cost of mobile phone and pager service networks

Amortisation of goodwill

592,948,791

113,362,720

Allowance for impairment of investment in subsidiary

300,000,000

Allowance for impairment of goodwill

300,000,000

Share of net profit in subsidiaries

(673,506,419)

(1,277,636,995)

Amortisation of bond issuing cost

29,930,845

14,236,947

29,930,843

14,236,947

9,244,716

454,505

19,189,893,868

13,264,032,690

16,265,181,532

Change in minority interests of subsidiaries

Net income before changes in operating assets and liabilities

11,287,973,701

The notes to the consolidated and company financial statements on pages 69 to 96 are an integral part of these financial statements.

STATEMENTS OF CASH FLOWS (CONTINUED) Advanced Info Service Public Company Limited For the years ended 31 December 2001 and 2000

Consolidated

Company

2001

2000

2001

2000

Baht

19,189,893,868

13,264,032,690

16,265,181,532

11,287,973,701

27,605,322

maturity of more than three months

(2,017,834)

(Increase) in trade accounts receivable

(3,986,247,631)

(2,150,831,405)

(3,711,346,714)

(1,926,980,875)

3,169,176

(3,648,183)

(31,409,097)

2,019,182

212,921,728

(220,712,133)

145,001,969

(205,435,829)

Note

Net income before changes in operating assets and liabilities Changes in operating assets and liabilities Decrease in short-term investments have been pledged with bank (Increase) in short-term investment with

(Increase) decrease in amounts due from related parties (Increase) decrease in forward and swap contracts receivable (Increase) in inventories

(726,979,676)

(1,148,449,375)

(Increase) in advances to suppliers

(2,180,078,860)

(988,651,337)

(2,180,078,860)

(988,651,337)

(Increase) decrease in other current assets

(1,289,313,741)

(34,823,341)

(1,049,070,783)

76,307,961

(1,214,215)

(16,246,565)

(127,067,924)

(62,704,277)

(264,985,824)

4,248,693,251

(612,398,994)

3,167,266,091

40,063,723

159,160,280

715,255,323

21,294,417

6,755,436

(68,255,319)

(56,177,689)

(Increase) in other assets (Decrease) increase in trade accounts payable Increase in amounts due to related parties Increase (decrease) in forward and swap contracts payable Increase in concession fee payable

871,703,573

860,673,921

721,898,983

860,673,921

1,151,205,437

(442,421,319)

1,827,322,246

(327,684,977)

(Decrease) increase in deposits from customers

(1,421,355,424)

463,974,711

(1,498,916,200)

666,990,343

Cash flows from operating activities

11,603,519,736

13,950,101,198

10,464,371,481

12,514,890,632

279,999,952

349,999,940

120,763,296

Increase (decrease) in other current liabilities

Cash flows from investing activities: Dividend received from a subsidiary Net cash and cash equivalent received from investments in subsidiaries Cash invested in investment in subsidiareis, net Proceeds from disposals of fixed assets Purchases of property and equipment

4 4

(21,110,962,200)

33,817,810

7,071,940

6,525,036

2,137,870

(4,007,424,213)

(1,675,142,418)

(3,215,249,022)

(1,548,789,127)

(25,539,039,132)

(10,063,052,515)

(24,970,291,375)

(9,754,259,151)

(29,391,882,239)

(11,731,122,993)

(49,009,977,609)

(10,950,910,468)

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

The notes to the consolidated and company financial statements on pages 69 to 96 are an integral part of these financial statements.

STATEMENTS OF CASH FLOWS (CONTINUED) Advanced Info Service Public Company Limited For the years ended 31 December 2001 and 2000

Consolidated

Note

Company

2001

2000

2001

2000

Baht

5,946,757,726

2,020,000,000

5,946,757,726

2,000,000,000

(2,539,960,000)

(1,950,000,000)

(2,529,960,000)

(1,950,000,000)

1,200,000,000

20,315,518,167

(20,315,518,167)

Cash flows from financing activities: Proceed from short-term loans from banks Repayments of short-term loans from banks Proceed from loan from subsidiary Proceed from repayment from subsidiary of loans to subsidiary Loans to subsidiary Repayments of short-term loans from third party Repayments of loans from related parties Proceeds from long-term debentures Receipt from long-term loan Proceeds from long-term liabilities Repayments of long-term debentures Repayments of long-term liabilities Proceeds from capital increase Dividend payments Net cash receipts from financing activities

(5,175,945,682)

(12,102,621,811)

(650,000,000)

26,890,347,540

9,956,298,737

26,890,347,540

9,956,298,737

1,087,179,028

50,367,206

250,000,000

(2,308,000,000)

(334,550,000)

(2,308,000,000)

(334,550,000)

(3,457,892,015)

10,024,000,000

(1,080,000,000)

20,792,124,007

6,483,856,722

38,143,145,266

5,563,856,722

3,003,761,504

8,702,834,927

(402,460,862)

7,127,836,886

12,352,023,392

3,649,188,465

10,006,607,334

2,878,770,448

15,355,784,896

12,352,023,392

9,604,146,472

10,006,607,334

Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning balance Cash and cash equivalents, ending balance

The notes to the consolidated and company financial statements on pages 69 to 96 are an integral part of these financial statements.

STATEMENTS OF CASH FLOWS (CONTINUED) Advanced Info Service Public Company Limited For the years ended 31 December 2001 and 2000

Supplemental disclosures of cash flow information Cash and cash equivalents Cash and cash equivalents included in the statements of cash flows for the years ended 31 December 2001 and 2000 comprise:

Consolidated 2001 Million Baht

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

Cash on hand and at banks (Note 5)

6,535

1,497

4,289

817

Short-term investments (Note 6)

8,837

10,869

5,315

9,190

15,372

12,366

9,604

10,007

Total Less

Short-term investment with maturity of more than three months

Total cash and cash equivalents

(16)

(14)

15,356

12,352

9,604

10,007

Interest expenses, income tax and non-cash investing activities Interest expenses, income tax and non-cash investing activities during the years ended 31 December 2001 and 2000 comprise: Consolidated

Company

2001 Million Baht

2000 Million Baht

2001 Million Baht

2000 Million Baht

Interest expenses

1,474

570

1,177

570

Income tax

5,168

3,987

4,319

3,204

2001 Million Baht

2000 Million Baht

2001 Million Baht

2000 Million Baht

4,994

2,248

3,493

2,248

Consolidated

Company

Non-cash investing activities Outstanding debts arising from the addition to investments in property and equipment and assets under concession agreements

The notes to the consolidated and company financial statements on pages 69 to 96 are an integral part of these financial statements.

NOTES TO THE CONSOLIDATED AND COMPANY FINANCIAL STATEMENTS Advanced Info Service Public Company Limited For the years ended 31 December 2001 and 2000

GENERAL INFORMATION Advanced Info Service Public Co., Ltd. (“the Company”) is a public company limited and is incorporated and domiciled in Thailand. The address of its registered office is as follows: 414 Shinawatra Tower 1, Phaholyothin Road, Phayathai, Bangkok 10400 The Company is listed on the Stock Exchange of Thailand. The principal business operations of the Company and its subsidiaries (“the Group”) are summarised as follows: 1) The operation of a 900-MHz CELLULAR TELEPHONE SYSTEM under a concession granted from the Telephone Organization of Thailand (“TOT”), under the agreement dated 27 March 1990, trading mobile phones, rendering repair services for mobile phones and providing mobile phones for rent. 2) The operation of a DIGITAL DISPLAY PAGING SYSTEM under a concession granted from TOT, under the agreement dated 19 December 1989, trading pagers and providing pagers for rent. 3) The operation of a DATAKIT VIRTUAL CIRCUIT SWITCH under a concession granted from TOT, under the agreement dated 19 September 1989, rendering services for data network communications. 4) The operation of a 1800-MHz cellular telephone system under concessions granted by The Communications Authority of Thailand (“CAT”) to Total Access Communication Public Company Limited (“TAC”) under agreements dated 14 November 1990, 23 July 1993, 20 June 1996 and 22 November 1996 (“WorldPhone Concession”). 5) The operation of providing call center service. Under the above agreements made with TOT, the Company and its subsidiaries, 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 an additional 10.75 million ordinary shares at a par value of Baht 10 each to TOT on 17 March 1998. The concessions are Build Transfer Operate concessions, under which the Company and its 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. Under the concession agreements with CAT dated 19 November 1996, which expires on 15 September 2013, the Company’s subsidiary, Digital Phone Company Limited, has to pay minimum fees to CAT based on certain percentages of service income or at the minimum fees specified in the agreements, whichever is higher. In addition, the subsidiary has to procure equipment and computer systems for its operations and has to transfer the ownership of such equipment and computer systems (being capitalized software development costs and hardware costs) to CAT within the periods specified in the concession agreements.

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 have been prepared in accordance with Thai Generally Accepted Accounting Principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued by the Institute of Certified Accountants and Auditors of Thailand and approved under law by the Board of Supervision of Auditing Practice appointed by the Minister of Commerce under the Auditor Act B.E. 2505, and the financial reporting requirements of the Securities and Exchange Commission. The consolidated and company financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below.

2.2 BASIS OF 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 Groupâ&#x20AC;&#x2122;s principal subsidiaries is set out in Note 11. The financial effect of the acquisition of subsidiaries is shown in Note 4.

2.3 GOODWILL Goodwill represents the excess of the cost of an acquisition over the fair value of the Groupâ&#x20AC;&#x2122;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, not exceeding 15 years. The carrying amount of goodwill is reviewed annually and written down for impairment where it is considered necessary.

2.4 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.

2.5 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 contracts are recorded as forward contracts receivable or forward contracts payable on inception, and are translated at the year exchange rate. Unrealised gains and losses on translation are recognised in the income statement. 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 31.

2.6 CASH AND CASH EQUIVALENTS For the purpose of the statement of cash flows, cash and cash equivalents comprise cash on hand, deposits held at banks, other short-term highly liquid investments, as defined in the Thai Accounting Standard no. 25 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 RECEIVABLES Trade receivables are carried at anticipated realizable value. An allowance is recorded for doubtful accounts receivable, which is equivalent to the estimated collection losses that may be incurred. The estimated losses are based on historical collection experience combined with a review of the current status of the existing receivables at the balance sheet date.

2.8 INVESTMENTS The Group classified its investments into the following categories : trading, held-to-maturity and available-for-sale. Investments that are acquired principally for the purpose of generating a profit from short-term fluctuations in price are classified as trading investments and included in current assets. Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held-to-maturity and are included in non-current assets. Investments intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, are classified as available-for-sale; these are included in non-current assets unless management has the express intention of holding the investment for less than 12 months from the balance sheet date or unless they will need to be sold to raise operating capital, in which case they are included in current assets. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. Investment in debt securities which are classified as held-to-maturity securities are carried at amortised cost. A test for impairment is carried out when there is a factor indicating that such investment might be impaired. If the carrying value of the investment is higher than its recoverable amount, impairment loss is charged to the income statement. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the income statement.

2.9 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 Companyâ&#x20AC;&#x2122;s share of the subsidiariesâ&#x20AC;&#x2122; profit or loss for the year. The Companyâ&#x20AC;&#x2122;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.

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, mobile phones, network)

- Moving weighted average method

Datanet equipment

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

Net realisable value is the estimated selling price in the ordinary course of business less costs of completion and selling expenses. A provision is made for obsolete, slow-moving or defective inventories when necessary.

2.11 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 and equipment under concession agreements represent the costs of certain equipment and other assets which have been or have to be transferred to concession grantor. 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 of 10 years not exceeding June 2003 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. In July 2001, the Company changed the estimated useful life of the costs of mobile phone networks under concession agreements for analogue system from a period of 10 years not exceeding year 2005 to a period of 10 years not exceeding June 2003. See note 3. Starting January 2001, the cost of pager network under concession agreement is amortised on the straight-line method over the remaining concession period until year 2002. Previously, the cost of pager network under concession agreement is amortised on the straight-line method over the remaining concession period until year 2005. See note 3.

DEFERRED CHARGES Deferred charges represent commitment fees for 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 concession agreements and which have been transferred to the concession grantor, 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 the concession grantor. The following amortisation methods are used: - Commitment fees of long-term loans are amortised over the period of each loan agreement. - Costs of long-term leases for base stations are amortised over the period of each lease agreement. - Expenditures relating to the increase of power of electricity at base stations are amortised over the remaining period of the concession agreements. - Costs of additional supplementary equipment for the pager network, other than those specified in the concession agreement and that have not been transferred to the concession grantor, 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.

CONCESSION RIGHTS The subsidiaryâ&#x20AC;&#x2122;s concession rights include the acquisition cost of certain rights and obligations to operate a PCN 1800 mobile phone system, the rights to use certain facilities and equipment, primarily the assignment of specific mobile frequency spectrums, and access to network roaming arrangements. These rights were acquired under an assignment agreement from TAC, a concessionaire operating a Cellular System Radio Telecommunication Services (mobile phone) concession from CAT. Concession rights are amortised over the concession period being the period over which the subsidiary will derive economic benefits from the rights.

2.12 PROPERTY AND EQUIPMENT Property and equipment are recorded at cost. 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. 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 REVENUE RECOGNITION Sales is recognised upon delivery of products and customer acceptance. Revenue from equipment rentals is recognised over the rental period and at the rate determined in the agreement. Revenues from mobile phone, pager and call center 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. Interest income is recognised on an accrual basis unless collectibility is in doubt.

2.16 ADVERTISING COSTS Advertising costs are expensed in the financial period during which they are incurred.

2.17 EMPLOYEE BENEFITS The Group operates a provident fund under a defined contribution plan, the assets of which are held in a separate trustee-administered fund. The provident fund is funded by payments from employees and the relevant group companies. Current contributions to the provident fund operated for employees are charged to the statement of income as incurred.

2.18 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.

2.19 DIVIDENDS Dividends proposed are payable when declared by the board of directors and approved by the shareholders.

2.20 SEGMENT REPORTING The segmental reporting has been prepared based on the Group’s method of internal reporting, which desegregates business by service or product.

2.21 RELATED PARTIES Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the company and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.

2.22 PRESENTATION OF COMPARATIVE INFORMATION The comparative figures have been amended to conform with reclassification of some certain items in the financial statements for the year ended 31 December 2001.

CHANGE IN ACCOUNTING ESTIMATE Previously, the Company amortised the cost of mobile phone networks of 900-MHz CELLULAR TELEPHONE SYSTEM under concession agreements on a straight-line basis over a period of 10 years not exceeding year 2005. During the third quarter of 2001 the Company’s management has reviewed the economic useful life of such networks and revised the remaining useful life to be the period of 10 years not exceeding June 2003. This change in useful life increased the amortisation charge for the year ended 31 December 2001 by Baht 722 million. The Company’s management considers that this presents more fairly the economic substance and benefits expected to flow from the use of these assets under the terms of the concession agreement.

Prior to year 2001, Advanced Paging Company Limited, a subsidiary, amortised the cost of pager networks under concession agreement on a straight-line basis over the period the underlying systems equipment were expected to contribute revenue and cost to the business, being until year 2005. During the first quarter of 2001 the subsidiary’s management reviewed the economic useful life of such pager networks and now amortises such cost until year 2002. This change in useful life increases the amortisation charge for the year ended 31 December 2001 by Baht 164 million.

ACQUISITIONS On 10 September 2001, the Company purchased ordinary shares in Shin Digital Company Limited (“SDT”) from Shin Corporation Public Company Limited (“Shin”) and SingTel Strategic Investments Pte Ltd. (“SingTel”) of 69,993 and 30,000 shares, respectively. The 99,993 shares purchased represent 99.99% ownership in SDT, at a price of Baht 540 million (Baht 5,400 per share). The transaction occurred after SDT acquired 431 million ordinary shares in Digital Phone Company Limited (“DPC”) for Baht 10,888 million from the Telekom Malaysia Group on 5 September 2001. SDT fully paid the purchase price in September 2001. On completion of these transactions SDT has 97.54% ownership in DPC. The purchase of SDT is under the condition that the Company gives financial support to SDT in respect of loan repayments to Shin and SingTel. DPC is mobile phone service operator of GSM 1800 MHz system. The fair value of assets and liabilities acquired on Shin Digital Company Limited were as follows: Million Baht

Cash on hand and at banks Short-term investments Trade accounts receivable, net Inventories, net Other current assets Equipment, net Assets under concession, net Intangible assets, net Other assets Trade accounts payable Amounts due to and loans from related parties Concession fee payable Short-term borrowings Long-term borrowings Deposits from customers Other liabilities Minority interests Fair value of net assets Interest acquired Fair value of net liabilities acquired

437.47 223.25 485.05 34.35 155.55 972.16 6,636.47 13.41 5,499.08 (1,804.23) (12,102.62) (3,226.40) (5,124.13) (4,047.41) (154.69) (1,503.05) (92.15) (13,597.89) 99.99% (13,597.89)

Consolidated 2001 Million Baht

Purchase consideration Fair value of net liabilities acquired Positive goodwill

539.96 13,597.89 14,137.85

On the acquisition of SDT, total goodwill amounted to Baht 14,138 million recognised in respect of SDT and its subsidiary. Goodwill is determined from the excess of cost of acquisition over the derivable fair value of the acquired assets and liabilities as at the acquisition dates. The cost of purchase of the investment was determined by Discounted Cash Flow Analysis, and the result of analysing and assessment of financial, economic, market, and other information, which was done by an external appraiser, based on its report dated 18 July 2001. The goodwill of Baht 14,138 million recognised in the financial statements has been determined on a provisional basis as the transaction was completed in September 2001. The Company is in the process of reviewing the fair value of certain acquired assets and liabilities as at the acquisition dates, to determine the appropriate amount of goodwill and expect to complete the review within September 2002. The goodwill is amortised using the straight-line method over its estimated useful life of a maximum period of 12 years, which approximates until the end of concession period of GSM 1800 MHz mobile phone networks. Included in the assets and liabilities of SDT on the date of acquisition of SDT (10 September 2001) was a 97.54% interest in DPC. On 17 December 2001, legal ownership of the interest in DPC was transferred from SDT to the Company for Baht 20,300 million. As this transaction represented a transaction between the Company and its wholly owned subsidiary, there is no impact on the consolidated financial statements. In the Company’s separate financial statements, no goodwill arose on this transaction.

On 17 December 2001, the Company purchased ordinary shares in Digital Phone Company Limited (“DPC”) from Shin Digital Company Limited (“SDT”) of 1,140,944,377 shares at a price of Baht 17.79 per share. The total shares purchased represent 98.17% ownership in DPC, at a price of Baht 20,300 million. The Company fully paid the purchase price in December 2001. On 24 December 2001, the Company purchased ordinary shares in Shin Digital Company Limited (“SDT”) of 27.1 million shares at a price of Baht 270.10 million (Baht 10 per share). On completion of the transaction, the Company has 99.99% ownership in SDT. The Company fully paid the purchase price in December 2001. The transaction occurred after SDT issued its ordinary shares of 27.1 million shares at a price of Baht 270.10 million (Baht 10 per share) in December 2001.

CASH ON HAND AND AT BANKS Consolidated 2001 Million Baht

Cash on hand Deposits held at call with banks Total cash on hand and at banks

25.29 6,510.24 6,535.53

Company 2000 Million Baht

61.27 1,436.03 1,497.30

2001 Million Baht

2000 Million Baht

7.28 4,281.33 4,288.61

46.64 769.86 816.50

The weighted average effective interest rates of deposits held at call with banks were between 0.37% and 1.4% (2000: 0.33% 1.13%).

SHORT-TERM INVESTMENTS Short-term investments mainly 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 1.25% - 2.70% per annum. Consolidated 2001 Million Baht

Fixed deposits (Baht) Fixed deposits (USD) Promissory notes from financial institutions Investments in bills of exchange Others Total short-term investments

426.43 4,305.65 1,023.44 3,003.80 77.26 8,836.58

Company 2000 Million Baht

2,664.02 3,928.84 2,630.00 1,626.14 20.04 10,869.04

2001 Million Baht

2000 Million Baht

10.10 4,305.65 999.79 5,315.54

1,970.00 3,928.84 2,040.00 1,231.23 20.04 9,190.11

Consolidated fixed deposits amounting to Baht 13.96 million (2000: Baht 14.32 million) have been pledged with a bank in respect of bank guarantees. The Company holds US Dollars deposits to reduce currency exchange exposure arising on expected future payments denominated in US Dollars.

TRADE ACCOUNTS RECEIVABLE, NET Consolidated 2001 Million Baht

Trade accounts receivable: Third parties Related parties (Note 32) Total trade accounts receivable Less Allowance for doubtful Accounts Total trade accounts receivable, net

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

9,003.42 68.39 9,071.81

5,580.99 102.39 5,683.38

6,768.85 770.84 7,539.69

4,891.92 239.50 5,131.42

(1,397.59) 7,674.22

(238.07) 5,445.31

(889.70) 6,649.99

(195.70) 4,935.72

Certain debtors with settlement problems are included in the above trade accounts receivable. The Group has set up allowance against these debtors. Outstanding balances can be aged as follows: Consolidated 2001 Million Baht

Up to 3 months 3 - 6 months 6 - 12 months Over 12 months Allowance for doubtful accounts

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

7,762.15 745.66 259.84 304.16 9,071.81

5,250.90 316.31 61.98 54.19 5,683.38

6,870.81 529.43 104.37 35.08 7,539.69

4,742.38 282.97 61.91 44.16 5,131.42

(1,397.59)

(238.07)

(889.70)

(195.70)

The directors are of the opinion that allowance for doubtful debts 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.

INVENTORIES, NET Consolidated 2001 Million Baht

Finished goods Supplies and spare parts Total inventories Less Allowance for obsolete inventories and diminution in value of Inventories Total inventories, net

2,446.71 186.96 2,633.67 (395.20) 2,238.47

2000 Million Baht

1,982.55 168.85 2,151.40 (181.03) 1,970.37

FORWARD AND SWAP CONTRACTS RECEIVABLE/(PAYABLE), NET Consolidated 2001 Million Baht

Contracts receivable Contracts payable Less Current portion of forward and swap contracts receivable/ (payable) Total long-term forward and swap contracts receivable/(payable), net

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

8,039.25 (8,044.42) (5.17)

4,466.78 (4,246.07) 220.71

5,922.09 (5,904.15) 17.94

3,398.16 (3,192.72) 205.44

5.17

(220.71)

(17.94)

(205.44)

OTHER CURRENT ASSETS Consolidated 2001 Million Baht

Other receivables Prepaid expenses Value added tax receivable Interest receivable Premium on forward contracts Others Total other current assets

388.32 476.17 1,128.90 17.10 19.18 224.86 2,254.53

Company 2000 Million Baht

337.29 281.90 159.76 21.39 7.23 149.06 956.63

2001 Million Baht

353.39 417.77 679.29 8.92 13.19 49.44 1,522.00

2000 Million Baht

335.77 258.37 142.58 16.59 7.23 32.81 793.35

INVESTMENTS IN SUBSIDIARIES, NET Company 2001 Million Baht

Opening net book amount Share of net profit in subsidiaries, gross Acquisitions (Note 4) Dividend income from a subsidiary Allowance for impairment of investment in subsidiary Closing net book amount

2000 Million Baht

4,453.25 673.51 21,110.96 (280.00) 25,957.72

3,825.62 1,277.63 (350.00) (300.00) 4,453.25

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. Allowance 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 allowance 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 year 2000 income statement. Company - 31 December 2001

Country of incorporation

Nature of relationship

Paid-up capital Investment (Million portion Baht) (%)

Nature of business

Cost (Million Baht)

Accumulated share of profit (loss) in Subsidiaries (Million Baht)

Equity (Million Baht)

Dividend (Million Baht)

Subsidiaries Advanced Paging Co., Ltd.

Service provider of digital paging system network, trading of pagers and providing pagers for rent

Thailand

Shareholder

350.00

99.99

1,703.36

(288.97)

784.39

(280.00)

Advanced Wireless Marketing Co., Ltd.

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

Thailand

Shareholder

240.00

99.99

600.00

4,777.17

5,377.17

Advanced Datanetwork Communications Co., Ltd. (formerly â&#x20AC;&#x153;Shinawatra Datacom Co., Ltd.â&#x20AC;?)

Service provider of voice/data communications via telephone line

Thailand

Shareholder

457.52

67.95

420.37

(78.90)

341.47

Data Network Solution Co., Ltd.

Service provider of voice/data communications via telephone line

Thailand

Shareholder

1.00

49.00

8.00

7.25

15.25

Shin Digital Co., Ltd.

Investment company

Thailand

Shareholder

272.00

99.99

810.96

(807.79)

3.17

Digital Phone Co., Ltd.

Service provider of digital mobile phone system in 1800 MHZ

Thailand

Shareholder 11,622.00

98.17

20,300.00

(563.73)

19,736.27

23,842.69 23,842.69

3,045.03 3,045.03

26,257.72 (300.00) 25,957.72

(280.00) (280.00)

Less Allowance for impairment of investment in subsidiary

Company - 31 December 2000

Country of incorporation

Nature of relationship

Paid-up capital Investment (Million portion Baht) (%)

Nature of business

Cost (Million Baht)

Accumulated share of profit (loss) in Subsidiaries (Million Baht)

Equity (Million Baht)

Dividend (Million Baht)

Subsidiaries Advanced Paging Co., Ltd.

Service provider of Digital paging system network, trading of pagers and providing pagers for rent

Thailand

Shareholder

350.00

99.99

1,703.36

253.90

1,607.26

(350.00)

Advanced Wireless Marketing Co., Ltd.

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

Thailand

Shareholder

240.00

99.99

600.00

2,152.29

2,752.29

Advanced Datanetwork Communications Co., Ltd. (formerly â&#x20AC;&#x153;Shinawatra Datacom Co., Ltd.â&#x20AC;?)

Service provider of voice/data communications via telephone line

Thailand

Shareholder

457.52

67.95

420.37

(40.38)

379.99

Data Network Solution Co., Ltd.

Service provider of voice/data communications via telephone line

Thailand

Shareholder

1.00

49.00

8.00

5.71

13.71

2,731.73 2,731.73

2,371.52 2,371.52

4,753.25 (300.00) 4,453.25

(350.00) (350.00)

Vehicles

Assets under construction and installation

Assets purchased under finance leases

Total

Less Allowance for impairment of investment in subsidiary

PROPERTY AND EQUIPMENT, NET Consolidated 2001 Million Baht

Land

Buildings and improvements

Leasehold rights

Leasehold building improvements

Cost 8.45 Less Accumulated depreciation Allowance for obsolete fixed assets Net book amount 8.45

Furniture, Pagers and fixtures mobile and office phones equipment for rent

Tools and equipment

64.75 (26.76) 37.99

51.34 (39.79) 11.55

167.79 (51.70) 116.09

3,329.98 (1,580.54) 1,749.44

883.09 (567.85) (0.04) 315.20

83.75 (53.11) 30.64

70.44 (35.64) 34.80

35.42 35.42

8.45 -

37.99 63.00

11.55 0.18

116.09 101.52

1,749.44 2,672.48

315.20 140.21

30.64 19.13

34.80 24.19

35.42 956.54

(5.05) 3.40

11.35 (10.81) (7.50) 94.03

(2.55) (3.19) 5.99

65.04 (0.03) (46.02) 236.60

124.55 6.51 (0.97) (809.27) 3,742.74

104.04 0.33 (9.70) (129.69) (0.02) 420.37

(4.17) (18.48) 27.12

7.28 (4.10) (13.66) 48.51

736.29 (83.23) 1,645.02

972.16 (0.01) (37.39) (0.92) (1,028.73) (0.02) 9.34 6,233.12

3.40 -

119.57 (25.54)

21.43 (15.44)

334.32 (97.72)

6,178.84 (2,436.10)

1,116.10 (695.67)

75.13 (48.01)

101.80 (53.29)

1,645.02 -

9.67 9,605.28 (0.33) (3,372.10)

3.40

94.03

5.99

236.60

3,742.74

(0.06) 420.37

27.12

48.51

1,645.02

At 31 December 2000 4.24 4,699.25 (3.64) (2,359.03) (0.04) 0.60 2,340.18

Year ended 31 December 2001 Opening net book amount Additions Additions from an acquisition of a new subsidiary (Note 4) Transfers Disposals, net Depreciation charge Allowance for obsolete fixed assets Closing net book amount

0.60 9.67

2,340.18 3,986.92

At 31 December 2001 Cost Less Accumulated depreciation Allowance for obsolete fixed Assets Net book amount

9.34

(0.06) 6,233.12

Company 2001 Million Baht

Tools and equipment

Furniture, fixtures and office equipment

161.65 (50.71) 110.94

3,223.64 (1,519.57) 1,704.07

19.45 61.20 11.35 (5.82) 86.18

110.94 98.92 65.04 (44.51) 230.39

97.49 (11.31) 86.18

325.61 (95.22) 230.39

Buildings and improvements

Leasehold building improvements

24.94 (5.49) 19.45

Vehicles

Assets under construction and installation

Assets purchased under finance leases

Total

511.54 (309.02) 202.52

58.07 (29.73) 28.34

30.95 30.95

4.24 (3.64) 0.60

4,015.03 (1,918.16) 2,096.87

1,704.07 2,659.55 6.51 (0.97) (781.48) 3,587.68

202.52 102.08 0.33 (1.10) (79.95) 223.88

28.34 22.48 (3.85) (10.31) 36.66

30.95 247.87 (83.23) 195.59

0.60 9.67 (0.01) (0.92) 9.34

2,096.87 3,201.77 (5.93) (922.99) 4,369.72

5,885.60 (2,297.92) 3,587.68

606.19 (382.31) 223.88

73.70 (37.04) 36.66

195.59 195.59

9.67 (0.33) 9.34

7,193.85 (2,824.13) 4,369.72

At 31 December 2000 Cost Less Accumulated depreciation Net book amount

Year ended 31 December 2001 Opening net book amount Additions Transfers Disposals, net Depreciation charge Closing net book amount

At 31 December 2001 Cost Less Accumulated depreciation Net book amount

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

Cost of mobile phone networks

Cost of pager service networks

48,840.58 (16,039.67) 32,800.91

1,326.25 (686.12) (50.84) 589.29

1,044.82 (487.87) 556.95

51,211.65 (17,213.66) (50.84) 33,947.15

32,800.91 26,907.43

589.29 -

556.95 158.39

33,947.15 27,065.82

6,636.47 (6,660.77) (3,970.00) 55,714.04

(294.67) (294.62) -

(8.16) (87.09) 620.09

6,636.47 (8.16) (7,042.53) (4,264.62) 56,334.13

83,587.43 (23,903.39) (3,970.00) 55,714.04

1,326.21 (980.75) (345.46) -

1,195.08 (574.99) 620.09

86,108.72 (25,459.13) (4,315.46) 56,334.13

Total

At 31 December 2000 Cost Less

Accumulated amortisation Allowance for asset impairment Net book amount

Year ended 31 December 2001 Opening net book amount Additions Additions from an acquisition of a new subsidiary (Note 4) Write-offs Amortisation charge Allowance for assets impairment Closing net book amount

At 31 December 2001 Cost Less

Accumulated amortisation Allowance for asset impairment Net book amount

As at 31 December 2001, the Company has provided Baht 3,970 million in respect of impairment in the carrying value of its cost of analogue mobile phone networks of 900-MHz CELLULAR TELEPHONE SYSTEM under concession agreement. The Company has provided for impairment against the carrying value of the cost of the analogue networks, as management consider that the analogue mobile phone service will become increasingly less attractive to subscribers and potential subscribers due to technological developments and price competition from mobile telecommunication services. Allowance for impairment has been made by comparing the carrying

value of the cost of networks, 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 mobile phone service business under 900-MHz CELLULAR TELEPHONE SYSTEM, using a discount rate of 6%. Management consider that Baht 3,970 million allowance for impairment on the cost of networks is sufficient. The impairment is based on consideration of the remaining useful life after the adjustment of change in estimated useful life of the cost of 900-MHz CELLULAR TELEPHONE SYSTEM mentioned in note 3. The Company has charged the impairment loss as an expense in the income statement. As at 31 December 2001, the subsidiary, Advanced Paging Company Limited, has provided Baht 294.62 million in respect of impairment in the carrying value of cost of pager networks under concession. This is in addition to the impairment loss of Baht 39.23 million provided as of 31 December 2000. 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. Allowance 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 2000 Cost Less Accumulated amortisation Net book amount

48,840.58 (16,039.67) 32,800.91

Year ended 31 December 2001 Opening net book amount Additions Amortisation charge Allowance for assets impairment Closing net book amount

32,800.91 26,227.82 (6,348.34) (3,970.00) 48,710.39

At 31 December 2001 Cost Less

Accumulated amortisation Allowance for assets impairment Net book amount

75,068.40 (22,388.01) (3,970.00) 48,710.39

GOODWILL, NET Consolidated Million Baht

At 31 December 2000 Cost Less

Accumulated amortisation Allowance for impairment of investment in subsidiary (Note 11) Net book amount

1,162.17 (463.28) (300.00) 398.89

Year ended 31 December 2001 Opening net book amount Additions from an acquisition of a new subsidiary (Note 4) Amortisation charge Closing net book amount

398.89 14,137.85 (592.95) 13,943.79

At 31 December 2001 Cost Less

Accumulated amortisation Allowance for impairment of investment in subsidiary (Note 11) Net book amount

15,479.29 (1,235.50) (300.00) 13,943.79

OTHER ASSETS, NET Deferred Charges

Consolidated Million Baht Concession rights and others

Total

At 31 December 2000 Cost Less Accumulated amortisation Net book amount

516.16 (151.21) 364.95

131.35 131.35

647.51 (151.21) 496.30

364.95 89.11 13.41 (0.29) (62.95) 404.23

131.35 76.59 5,499.08 (151.60) 5,555.42

496.30 165.70 5,512.49 (0.29) (214.55) 5,959.65

624.96 (220.73) 404.23

7,223.10 (1,667.68) 5,555.42

7,848.06 (1,888.41) 5,959.65

Year ended 31 December 2001 Opening net book amount Additions Additions from an acquisition of a new subsidiary (Note 4) Write-offs Amortisation charge Closing net book amount

At 31 December 2001 Cost Less Accumulated amortisation Net book amount

Deferred charges

Company Million Baht Others

Total

At 31 December 2000 Cost Less Accumulated amortisation Net book amount

326.69 (86.20) 240.49

124.54 124.54

451.23 (86.20) 365.03

240.49 89.30 (0.29) (33.52) 295.98

124.54 37.77 162.31

365.03 127.07 (0.29) (33.52) 458.29

415.70 (119.72) 295.98

162.31 162.31

578.01 (119.72) 458.29

Year ended 31 December 2001 Opening net book amount Additions Write-offs Amortisation charge Closing net book amount

At 31 December 2001 Cost Less Accumulated amortisation Net book amount

TRADE ACCOUNTS PAYABLE Consolidated 2001 Million Baht

Trade accounts payable Third parties Related parties (Note 32) Total trade accounts payable

10,640.19 61.19 10,701.38

Company 2000 Million Baht

7,629.08 28.62 7,657.70

2001 Million Baht

6,520.35 37.31 6,557.66

2000 Million Baht

5,909.08 25.49 5,934.57

BORROWINGS Consolidated 2001 Million Baht

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

Current Short-term loans from financial institutions Current portion of long-term borrowings Current portion of long-term debentures Current portion of finance lease liabilities Total short-term borrowings

5,456.76 818.68 6,346.12 101.08 12,722.64

2,049.96 2,301.27 0.78 4,352.01

5,446.76 6,346.12 1.48 11,794.36

2,029.96 2,301.27 0.78 4,332.01

4,462.11 29,402.14 53.87 33,918.12 46,640.76

250.00 8,834.72 9,084.72 13,436.73

29,402.14 7.87 29,410.01 41,204.37

8,834.72 8,834.72 13,166.73

Non-current Long-term borrowings Long-term debentures Finance lease liabilities Total long-term borrowings Total borrowings

The movements in the above borrowings can be analysed as follows: Consolidated Million Baht

Company Million Baht

For the year ended 31 December 2001 Opening net book amount Additions Acquisitions (Note 4) Repayments Loss on exchange rate Closing net book amount

13,436.73 34,041.81 9,171.54 (10,065.23) 55.91 46,640.76

13,166.73 32,876.71 (4,839.07) 41,204.37

SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS As at 31 December 2001, short-term loans from financial institutions represent promissory notes and bills of exchange. The loans are unsecured.

LONG-TERM BORROWINGS As at 31 December 2000, a subsidiary, Advanced Datanetwork Communications Company Limited, utilised Baht 250 million of its 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. The subsidiary is required to comply with certain terms and conditions as specified in the loan agreement. As at 31 December 2001, a subsidiary, Digital Phone Company Limited, has a syndicated US Dollars loan of 30 million bearing interest at LIBOR plus a margin as agreed by the subsidiary and banks and Baht loans of Baht 3,700 million bearing interest at MLR less a margin as agreed by the subsidiary and the banks. First settlement will be due in December 2002. The loans are not secured. According to the syndicated loan agreement, dividend payments cannot be made unless the ratio of the subsidiaryâ&#x20AC;&#x2122;s total debt to its annualized earnings before interest, taxes, depreciation and amortisation is less than 2.5. The subsidiaryâ&#x20AC;&#x2122;s finance lease liabilities of Baht 145.60 million are collateralized by the underlying leased assets.

LONG-TERM DEBENTURES On 20 March 2000 the Company issued 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 the 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. On 31 March 2000 the Company issued 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 the debentures, payable on a quarterly basis commencing from the issuing date. These debentures will be entirely redeemed on 31 March 2003. On 23 March 2001, the Company issued 12 million units of Bath 1,000 each of unsubordinated, unsecured and amortised debentures, amounting to Baht 12,000 million. Such debentures bear interest at a fixed rate of 5.30% per annum throughout the debenture term, payable on a semi-annual basis commencing from the issue date. The debentures will be redeemed in 8 equal installments, commencing in the eighteenth month after the issuing date until 23 March 2006.

On 28 November 2001, the Company issued 15 million additional units of Bath 1,000 each of unsubordinated, unsecured debentures, amounting to Baht 15,000 million. Baht 5,000 million debentures bear interest at a fixed rate of 4.70% per annum throughout the debenture term, payable on a semi-annual basis commencing from the issue date. The debentures will be entirely redeemed on 28 November 2004. The remaining Baht 10,000 million debentures bear interest at a fixed rate of 5.85% per annum throughout the debenture term, payable on a quarterly basis commencing from the issue date. The debentures will be entirely redeemed on 28 November 2006. Under the terms and conditions of the debentures, the Company has to comply with certain restrictions and maintain certain financial ratios. The interest rate exposure of the borrowings, before taking into account of interest rate swaps, of the Group and the Company was as follows: Consolidated 2001 Million Baht

Total borrowings: - at fixed rates - at floating rates

Weighted average interest rates: - short-term loan from financial institutions - long-term borrowings - long-term debentures - finance lease liabilities

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

41,359.97 5,280.79 46,640.76

13,166.73 270.00 13,436.73

41,204.37 41,204.37

13,166.73 13,166.73

3.31 % 5.97 % 5.69 % 11.62%

4.41 % 5.03 % 6.64 % 20.81 %

3.30 % 5.69 % 9.63 %

4.40 % 6.64 % 20.81 %

Maturity of long-term borrowings and finance lease liabilities as at 31 December 2001 is as follows: Consolidated Borrowings Million Baht

2003 2004 2005 2006

8,503.40 9,458.22 4,417.70 11,484.93 33,864.25

Company Finance lease Million Baht

45.16 4.19 1.76 2.76 53.87

Borrowings Million Baht

Finance lease Million Baht

6,966.03 7,970.84 2,980.34 11,484.93 29,402.14

1.62 1.73 1.76 2.76 7.87

OTHER CURRENT LIABILITIES Consolidated 2001 Million Baht

Income tax payable Unearned income Accrued bonus Accrued interest expense Forward/swap contracts discount Other payables Others Total other current liabilities

3,267.08 821.66 353.82 599.98 70.03 279.86 731.25 6,123.68

Company 2000 Million Baht

2,244.27 239.99 313.43 238.12 160.82 96.66 599.55 3,892.84

2001 Million Baht

2,472.37 1,045.86 269.67 389.16 68.44 96.74 321.36 4,663.60

2000 Million Baht

1,792.16 303.71 226.93 236.48 149.99 81.08 371.42 3,161.77

CONCESSION FEE PAYABLE Concession fees payable comprise revenue sharing fees and fees payable by Digital Phone Company Limited, a subsidiary, in respect of its acquisition of concession rights from the previous concession owner. As at 31 December 2001, the subsidiary has a concession fee payable to Total Access Communications Public Company Limited relating to its concession rights of Baht 2,772 million. Under the terms of the agreement, the exchange rate used for settlement is capped at Baht 38.57 per US dollar. The concession fee payable is collateralised by the concession rights, included in other assets (note 15) of Baht 5,325 million as at 31 December 2001. In the event of non-payment, Total Access Communications Public Company Limited is entitled to discontinue use of the facilities and equipment of the Total Assess Communications network and to terminate the assignment agreement. The interest rate exposure on the concession fee payable is at a fixed rate of 9.50% per annum.

DEPOSITS FROM CUSTOMERS Consolidated 2001 Million Baht

Deposits from customers Related parties (Note 32) Third parties Total deposits from customers

Company 2000 Million Baht

2001 Million Baht

612.44 2,427.44 3,039.88

2000 Million Baht

63.29 2,584.72 2,648.01

87.80 3,826.78 3,914.58

761.90 3,776.90 4,538.80

Number of shares Million

Share capital Million Baht

31 December 2000 Issue of shares on 24 September 2001

270.00 23.50 293.50

2,700.00 235.00 2,935.00

10,215.00 9,789.00 20,004.00

12,915.00 10,024.00 22,939.00

Par value alteration on 2 October 2001 31 December 2001

2,935.00 2,935.00

20,004.00 20,004.00

22,939.00 22,939.00

SHARE CAPITAL AND PREMIUM Share premium Million Baht

Total Million Baht

At the annual ordinary shareholders’ meeting on 27 April 2001, the shareholders approved to declare a dividend for 270 million shares of Baht 4 each, totaling Baht 1,080 million. The dividend was paid to the shareholders on 25 May 2001. At the extraordinary meeting of the Company’s shareholders held on 20 August 2001, the shareholders passed a resolution to approve the issuance of 23.5 million ordinary shares to sell specifically to Shin Corporation Public Company Limited and SingTel Strategic Investments Pte Ltd of 17.0 million and 6.5 million shares, at Baht 413 and Baht 462 per share, respectively, being a total amount of Baht 10,024 million. The share price was determined from the average closing price of the main board and the foreign board for 90 days retroactively. The issue of the new shares was registered with the Ministry of Commerce on 24 September 2001. The shares were fully paid-up in September 2001. At the extraordinary meeting of the Company’s shareholders held on 20 August 2001, the shareholders passed a resolution to approve the alteration of par value of the Company’s ordinary shares from Baht 10 per share to Baht 1 per share. The alteration was registered with the Ministry of Commerce on 2 October 2001. The number of authorized shares and shares in issue has, therefore, changed from 500 million to 5,000 million shares, and 293.5 million to 2,935 million shares, respectively. On 19 December 2001, the Extraordinary General Meeting of Shareholders approved the issuance and offer of warrants to directors, employees and advisors (ESOP) of the Company. Regarding to the ESOP program, the total number of warrants to be issued and offered during the 5-year period is approximately 51.4 million units, or about 51.4 million ordinary shares (at par value of Baht 1 each), or approximately 1.75% of total paid-up capital (before dilution), are to be reserved for the exercise of rights pursuant to the warrants. Each annual issuance and offer is subject to approval by the Shareholders Meeting. For the first year of the program, the Shareholders Meeting resolved to approve the issuance and offer of 14 million and also resolved to approve the allocation of 14 million ordinary shares, at par value Baht 1 each, or equivalent to 0.48% of the Company’s total paid up capital (before dilution), to be reserved for the exercise of warrants. The date of issue and offer the warrants, pursuant to this first year of ESOP program, will be determined by the Company’s executive committee. As of 31 December 2001, warrants have not been issued, therefore, no charge has been made in these financial statements for this ESOP program.

LEGAL RESERVE Consolidated 2001 Million Baht

Beginning balance Appropriation during the year Ending balance

Company 2000 Million Baht

500.00 500.00

2001 Million Baht

2000 Million Baht

500.00 500.00

The legal reserve of the Company was established in accordance with the provisions of the Public Company Limited Act B.E. 2535, which requires the appropriation as legal reserve of at least 5% of net income for the year until the reserve reached 10% of the authorised share capital. This reserve is not available for dividend distribution.

MINORITY INTERESTS Consolidated 2001 Million Baht

Beginning balance Additions: Acquisition of investment in subsidiaries Share of net profit (loss) in subsidiaries to minority interest Ending balance

2000 Million Baht

159.41

158.96

124.86 (23.46) 260.81

0.45 159.41

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 TOT to compensate those operators for the VAT absorbed. In 1998 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 has not recorded a receivable or recognised any revenues in respect of this compensation in the periods ending on or before 31 March 2000 as collections was considered to be remote.

OTHER OPERATING INCOME Consolidated 2001 Million Baht

Interest income Amortization of forward contracts Discount Bad debt recovery Marketing support Gains on disposals of property and equipment Others Total other operating income

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

389.09

380.86

567.10

334.47

392.88 198.03 317.36

133.24 131.27 142.20

325.49 138.06 -

124.65 88.14 -

183.43 1,480.79

9.12 182.10 978.79

1.89 159.19 1,191.73

11.30 168.30 726.86

DIRECTORS’ REMUNERATION During the year ended 31 December 2001 the remuneration of the directors amounted to Baht 2.78 million (2000 : Baht 1.66 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.

OPERATING INCOME The following expenditures, classified by nature, have been charged in arriving at operating income: Consolidated 2001 Million Baht

Depreciation on property and equipment (Note 12) Amortisation of intangible assets: - Cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements (Note 13) - Positive goodwill (included in “Selling and administrative expenses”) - Deferred charges (included in “Selling and administrative expenses”) Impairment loss on assets (Note 11/13) Impairment loss for investment in subsidiary (Note 11) Staff costs Number of staff

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

1,028.73

676.20

922.99

596.30

7,042.53

4,386.99

6,348.34

4,183.25

592.95

113.36

62.94 4,264.62 1,675.54 5,179

90.34 339.23 1,313.72 4,393

33.52 3,970.00 1,128.74 2,674

48.44 300.00 897.90 2,039

INCOME TAX Consolidated 2001 Million Baht

Income before tax Less Share of net profit in subsidiaries Add Impairment loss for investment in Subsidiary Operating income Tax calculated at a tax rate of 30% Expenses not deductible for tax purposes Income tax

10,066.30 10,066.30 3,019.89 3,218.55 6,238.44

Company 2000 Million Baht

10,882.49 10,882.49 3,264.75 1,018.33 4,283.08

2001 Million Baht

2000 Million Baht

8,850.19 (673.51) 8,176.68 2,453.00 2,545.87 4,998.87

10,167.98 (1,277.64) 300.00 9,190.34 2,757.10 811.93 3,569.03

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 2001

Net income attributable to shareholders (Million Baht)

Weighted average number of ordinary shares in issue (Million shares)

Basic earnings per share (Baht)

Company 2000

2001

2000

3,851.32

6,598.95

3,851.32

6,598.95

2,773

2,700

2,773

2,700

1.39

2.44

1.39

2.44

For comparison purposes, the Company has recalculated earnings per share for the year ended 31 December 2000 by considering the weighted average number of ordinary shares which had changed in par value and in the number of shares in accordance with the amendment to par values and numbers of shares as mentioned in note 21.

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.

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 the 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 fixed rates on notional principal amounts and under which it is obliged to pay interest at floating rates plus margins on the same amounts. The floating rates are calculated by reference to the average of interest rates on 6-month on the THBFIX page of Reuters. The remaining terms and notional principal amounts of the outstanding interest rate swap contracts at 31 December were: Consolidated 2001 Million Baht

Later than 1 year and not later than 5 years

3,000 3,000

Company 2000 Million Baht

2001 Million Baht

3,000 3,000

2000 Million Baht

To better manage interest rate risk, the Company terminated all interest rate swap contracts in January 2002 for the notional principal amounts of Baht 3,000 million.

FORWARD FOREIGN EXCHANGE CONTRACTS Forward foreign exchange contracts are entered into to manage exposure to fluctuations in foreign currency exchange rates on specific transactions. At 31 December 2001 the settlement dates on open forward contracts ranged between 6 days and 278 days (2000 : 3 days and 12 months). The amounts to be paid and received and contractual exchange rates of the outstanding contracts were: Consolidated 2001 Million Baht

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

The amounts to be received USD 134.05 million (Baht 35.68 - Baht 44.95/US$) USD 174.47 million (Baht 35.68 - Baht 45.45/US$) US$ 68.27 million (Baht 35.57 - Baht 43.05/US$) US$ 90.87 million (Baht 35.57 - Baht 43.595/US$) JPY 640.88 million (Baht 0.3779 - Baht 0.3866/JPY) EUR 8.02 million (Baht 38.77 - Baht 38.96/EUR) EUR 2.09 million (Baht 37.01 - Baht 37.35/EUR) FRF 1.45 million (Baht 5.54/FRF) SGD 0.84 million (Baht 23.91 - Baht 24.775/SGD)

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

217.70 217.70

7,712.97 310.99 20.46 8,044.42

3,685.93 245.77 77.55 8.06 4,017.31

5,904.15 5,904.15

2,718.20 245.77 2,963.97

CREDIT RISK The management are of the opinion that the Company and the Group have no significant concentration of credit risk. Cash and shortterm investments are placed with substantial financial institutions.

FAIR VALUES The carrying amounts of cash and cash equivalents, short-term investment, receivables, accounts payable and short-term borrowings approximate their fair value due to short maturities of these instruments. The net fair values of the derivative financial instruments at 31 December 2001 are:

Favourable forward foreign exchange contracts Unfavourable forward foreign exchange contracts Net

Consolidated

Company

Million Baht

89.95 (49.18) 40.77

80.12 (28.06) 52.06

The fair values of interest rate swap contracts, forward foreign exchange contracts have been calculated using a quoted market price rate to terminate the contracts at the balance sheet date. Fair values of 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. The carrying amounts and fair values of long term debentures are as follows: Consolidated Carrying amounts Million Baht

Long-term debentures

35,748.26

Company Fair values Million Baht

36,765.89

Carrying amounts Million Baht

35,748.26

Fair values Million Baht

36,765.89

The fair values of long-term borrowings (excluding obligations under finance leases) approximate their carrying amounts as at 31 December 2001.

RELATED PARTY TRANSACTIONS Shin Corporation Public Company Limited is a major shareholder, holding 43.06 % of the share capital of the Company. Singapore Strategic Investments Pte Ltd. is a shareholder holding 19.35 % of the share capital of the Company. The principal shareholder of the Companyâ&#x20AC;&#x2122;s major shareholder is the Shinawatra family. Transactions related to companies which Shinawatra family are the principal shareholders or directors are recognised as related party to the Company. During the year, the Group has entered into a number of transactions with related parties. 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. The Group uses external appraisers to evaluate property rental rate in the case that market rate is not available. Significant related party transactions are summarised as follows:

A) SALES OF GOODS AND SERVICES Consolidated 2001 Million Baht

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

Service income Subsidiaries Shin Corporation and its related parties Related party of Singapore Strategic Investments Pte Ltd. Total service income

512.36

31.27

455.88 421.02

15.84 4.49

157.84 670.20

157.23 188.50

157.84 1,034.74

157.23 177.56

112.07

5,053.91

1,112.86

0.14

254.74

Sales of goods Related parties of Shin Corporation

Sales of prepaid cards Subsidiary

Interest income Subsidiary

B) PURCHASES OF SERVICES Consolidated 2001 Million Baht

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

Rental and other service expenses Subsidiaries Shin Corporation and its related parties Related party of Singapore Strategic Investments Pte Ltd. Total rental and other service expenses

749.10

568.39

1,219.30 593.98

63.52 465.76

43.79 792.89

49.34 617.73

39.62 1,852.90

30.62 559.90

Advertising expenses Subsidiaries Shin Corporation and its related parties Total advertising expenses

1,477.06 1,477.06

807.44 807.44

227.76 566.82 794.58

67.69 67.69

181.72 181.72

97.04 97.04

165.91 165.91

97.04 97.04

22.40 2.05 24.45

22.28 1.58 0.55 24.41

9.25 22.40 2.05 33.70

8.25 22.28 1.58 0.55 32.66

Consulting and management fees Shin Corporation and its related parties Total consulting and management fees

Interest expenses Subsidiaries Major shareholder of Shin Corporation Directors of related parties Shin Corporation Total interest expenses

C) PURCHASES OF PROPERTY, EQUIPMENT, COMPUTER SOFTWARE, AND COST OF MOBILE PHONE NETWORK. Consolidated 2001 Million Baht

Subsidiaries Shin Corporation and its related parties

479.31 479.31

Company 2000 Million Baht

12.42 12.42

2001 Million Baht

2000 Million Baht

21.48 130.40 151.88

5.51 6.32 11.83

D) OUTSTANDING BALANCE ARISING FROM SALES/PURCHASES OF GOODS/SERVICES AND LOAN TO/FROM RELATED PARTIES Consolidated 2001 Million Baht

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

Trade accounts receivable Subsidiaries Shin Corporation and its related parties Related party of Singapore Strategic Investments Pte Ltd. Total trade accounts receivable

14.63

16.39

716.79 0.29

151.65 1.85

53.76 68.39

86.00 102.39

53.76 770.84

86.00 239.50

Consolidated 2001 Million Baht

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

Amounts due from related parties Subsidiaries Shin Corporation and its related parties Total amounts due from related Parties

1.03 1.03

Consolidated 2001 Million Baht

4.20 4.20

31.39 0.09 31.48

0.23 (0.15) 0.08

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

Trade accounts payable Subsidiaries Shin Corporation and its related parties Related party of Singapore Strategic Investments Pte Ltd. Total trade accounts payable

56.43

21.30

9.29 23.26

0.84 17.33

4.76 61.19

7.32 28.62

4.76 37.31

7.32 25.49

Consolidated 2001 Million Baht

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

Amounts due to and loans from related parties Amounts due to related parties Subsidiaries Shin Corporation and its related parties Related party of Singapore Strategic Investments Pte Ltd. Total amounts due to related parties

306.15

263.90

584.02 167.89

17.74 33.91

28.12 334.27

30.31 294.21

28.12 780.03

13.13 64.78

1,200.00 1,200.00

Loans from related parties Subsidiary Total loans from related parties

Loan from a subsidiary represents promissory notes, payable on demand. The loan is unsecured, and bears interest at the rate of 2.5% per annum. Consolidated 2001 Million Baht

Company 2000 Million Baht

2001 Million Baht

2000 Million Baht

Deposits from customers, net Subsidiary Shin Corporation Total deposits from customers, net

63.29 63.29

87.80 87.80

549.15 63.29 612.44

674.10 87.80 761.90

280.00

270.00

280.00

270.00

45.08 325.08

31.00 301.00

45.08 325.08

31.00 301.00

Long-term debentures Major shareholder of Shin Corporation Directors of the Company and its related Parties Total long-term debentures

COMMITMENTS As at 31 December 2001, 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 Million

Company Million

Construction and installation of mobile phone networks Thai Baht US Dollars Japanese Yen Deutsche Marks Australian Dollars Euro Pound Sterling Krone Norway `

5,614.68 109.86 2,024.81 0.19 0.42 55.52 0.35 15.71

5,209.45 97.29 2,024.81 0.19 0.42 39.44 0.35 15.71

14.16

12.16

Property and equipment Thai Baht

The Group has commitments under letters of credit with overseas suppliers amounting to approximately Baht 64.29 million (2000 : Baht 38.61million) on a consolidated basis and Baht 64.29 million (2000 : Baht 38.61 million) on a company basis. The Company has entered into service agreements for the maintenance hardware and software mobile phone networks as follows: Consolidated Million

Thai Baht US Dollars Euro

5.38 4.54 1.22

Company Million

5.38 4.54 1.22

The Group has entered into lease and related service agreements for office spaces, cars, and base stations for periods ranging from 0.6 month to 14 years with options to renew. As at 31 December 2001 the Group is committed to pay for rental and related services in respect of the agreements as follows: Consolidated Million Baht

Payment due - Within 1 year - Third parties - Related parties - Within 2 to 5 years - Third parties - Related parties - Over 5 years - Third parties - Related parties

Company Million Baht

642.04 282.75

477.85 270.35

621.67 239.56

430.76 235.34

5.24 278.20

0.01 278.20

The Company has entered into agreements with a subsidiary of a major shareholder under which the related company provides satellite transponder services. The Company is committed to pay for the transponder services amounting to approximately Baht 75.70 million within 1 year. A subsidiary has entered into a Data Broadcast via satellite agreement with TOT for a period of one year 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 13 million per month and plus the rate per events as prescribed in the agreements. (2000 : Baht 4 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.

BANK GUARANTEES As at 31 December 2001, 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 7,454.35 million (2000 : Baht 5,507.03 million) on a consolidated basis and Baht 7,254.13 million (2000 : Baht 5,399.35 million) on a company basis.

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 1800-MHz DIGITAL and 900-MHz CELLULAR TELEPHONE SYSTEM network 2) the operations of a DIGITAL DISPLAY PAGING SYSTEM network, trading pagers, providing pagers for rent, and call center service 3) trading of mobile phones, rendering repair services for mobile phones and providing mobile phones for rent 4) the operations of data network Financial information by business segment for the years ended 31 December are shown as follows:

Consolidated 2001

Revenue from services and equipment rentals Sales Compensation income Other operating income Total revenues Operating expenses Cost of sales and services and equipment rentals Selling and administrative expenses Impairment loss on asset Operating income

Mobile phone Services Million Baht

Pager sales and services, call center service Million Baht

Mobile phone sales Million Baht

Datanet service Million Baht

Group Million Baht

40,111.40 605.32 40,716.72

538.55 70.05 87.92 696.52

363.70 17,835.14 396.20 18,595.04

318.21 20.18 2.26 340.65

41,331.86 17,925.37 1,091.70 60,348.93

(20,697.37)

(589.56)

(13,694.49)

(261.32)

(35,242.74)

(6,921.20) (3,970.00) 9,128.15

(408.82) (294.62) (596.48)

(2,066.45) 2,834.10

(89.26) (9.93)

(9,485.73) (4,264.62) 11,355.84

Finance cost Net loss on exchange Interest income Interest expenses Income before tax Income tax Income before minority interests Share of net loss in subsidiaries to minority interests Net income

Consolidated total assets

23.46 3,851.32

105,738.30

288.69

6,649.47

861.93

113,538.39

69,705.79

149.14

2,589.62

72.34

72,516.89

Depreciation charge

945.83

35.42

39.94

7.54

1,028.73

Amortisation charge

7,211.62

297.52

15.54

99.27

7,623.95

Consolidated total liabilities

(105.73) 389.09 (1,572.90) 10,066.30 (6,238.44) 3,827.86

Consolidated 2000 Mobile phone Services Million Baht

Pager sales and services, call center service Million Baht

Mobile phone sales Million Baht

Datanet service Million Baht

Group Million Baht

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

24,622.03 1,031.57 391.00 26,044.60

1,147.91 193.92 121.27 1,463.10

169.94 10,549.03 85.90 10,804.87

257.01 18.80 (0.25) 275.56

26,196.89 10,761.75 1,031.57 597.92 38,588.13

Operating expenses Cost of sales and services and equipment rentals Selling and administrative expenses Impairment loss on assets Operating income

(14,184.32) (3,039.26) (300.00) 8,521.02

(685.11) (544.08) (39.23) 194.68

(7,319.99) (1,739.32) 1,745.56

(223.12) (43.28) 9.16

(22,412.54) (5,365.94) (339.23) 10,470.42

Finance cost Net gain on exchange Interest income Interest expenses Income before tax Income tax

760.64 380.86 (729.44) 10,882.48 (4,283.08)

Income before minority interests Share of net (profit) in subsidiaries to minority interests Net income

6,599.40 (0.45) 6,598.95

Consolidated total assets

52,453.68

1,249.32

4,551.99

879.75

59,134.74

Consolidated total liabilities

27,959.76

278.50

2,371.69

400.00

31,009.95

Depreciation charge

596.30

35.38

37.88

6.65

676.21

Amortisation charge

4,423.16

143.07

(24.60)

78.56

4,620.19

CONCESSION CONVERSION Certain of the Group companies and the Company operate concessions with the Thai Government as set out in note 1. 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. Advanced Data Network Communications Co., Ltd., Advanced Paging Co., Ltd., Digital Phone Co., Ltd. and the Company gave formal notice to the CCSC during 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 consolidated and company financial and operating position. Moreover, the term of Concession Conversion Subcommittee has now expired.

POST BALANCE SHEET EVENT At the Board of Directorsâ&#x20AC;&#x2122; meeting of the Company held on 1 February 2002, the Board approved a resolution to issue unsecured debentures for an amount not exceeding Baht 20,000 million or the equivalent amount in other currencies. The debentures are to be redeemable within a period of 10 years from the issuance dates. The Companyâ&#x20AC;&#x2122;s Board of Directors is in the process of determining the terms and conditions of the debenture issue.