ADVANC : Annual Report 2002 by ar.advanc

Message from the Chairmen

Dear Shareholders In 2002 a number of important events helped reshape Thailand's mobile phone industry: the launch of a new service by TA Orange Co., Ltd., the declaration to unlock IMEI (International Mobile Equipment Identification) initiated by Total Access Communications Plc. and the onset of heavy competition amongst handset distributors. All of which necessitated swift responses throughout the mobile phone sector. For Advanced Info Service Public Company Limited ("the Company" or "AIS"), satisfactory growth was achieved, as was its target to expand the customer base of all its major mobile phone brands including GSM Advance, One-2-Call! and GSM 1800, both postpaid and prepaid. From January to December 2002, our subscriber base reached 10,662,500 in number, an increase from 2001 of 5,459,200 and representing an impressive growth rate of 105%. This was due primarily to AIS' commitment to providing high service quality at all levels, instilling confidence among customers and shareholders, and embracing the values of a Thai corporation. AIS recognizes the important role it has to play in strengthening Thai society and contributing to the development of the Kingdom. Operating Performance and Net Profit Thanks to efficient management and guidance, AIS staff have striven hard to achieve service quality, network efficiency and the development of technology and human resources, which are well able to respond to the individual demands of customers. The Company experienced substantial growth in its performance compared with 2001. Revenue in 2002 amounted to Baht 81,366 million, an increase of Baht 60,670 million or 34.1% from 2001. Net profit for 2002 amounted to Baht 11,430 million, an increase of Baht 7,579 million or 196.8% from Baht 3,851 million in 2001. Creation of Quality Work to Deliver Customer Satisfaction In 2002, AIS focused on creating quality services that would respond effectively to the constantly evolving demands of its customers. AIS introduced and developed a broad range of integrated services comprising: - Network AIS focused on Network Quality maintained by specialist engineering taskforces. AIS defined network quality in terms of user perspective, which comprised three aspects: 1. Service area coverage (Coverage) 2. Ability to access the network (Accessibility) 3. Reliability of the network (Reliability). These enabled customers to access our service and enjoy the widest possible coverage, clear voice quality and consistent connectivity. - Technology AIS developed an improved service operating system under the "C-Care" project. This involved the development and enhancement of the hardware and software utilized in every functional area of AIS, which empowered AIS to not only focus on providing a convenient and fast service, but also on providing new types of services essential to meeting customers' individual requirements.

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The project took its first important step with the launch of C-Care Release 1 in September 2002 and focused on technological applications for the provision of value-added services and a broader variety of communication modes. Service demands vary considerably among our customer groups, often depending on their own particular lifestyles. Keenly aware of this, AIS launched a wide array of innovative Non Voice services. These included MMS (a graphic and voice data transmission service) and additional value added services for One-2-Call! products, in order to respond more effectively to a greater variety of uses, such as International Roaming. - Service AIS set up Regional Operation Offices to comprehensively and promptly meet customers' needs. Employing local people who possess an insight into the behavior and life styles of local service users, the Company believes that all five Regional Operation Offices will be able to deliver a service that creates the highest levels of satisfaction amongst customers nationwide. - Human Resources AIS organized a much-acclaimed "People Excellence" event with the objective of empowering employees with three fundamental concepts: Self, Team and Organization. This nurtured self-development, teamwork and encouraged the application of knowledge to the formulation of direction and policy of the organization. When AIS gets good results from employees, it is able to create a service increasingly responsive to customers' demands and needs. Market Direction of the Mobile Phone Business and Competition The mobile phone market reached new heights in 2002. This was evidenced by an increase in the number of combine subscriber bases across every network, from 5-6 million to 16-17 million within one year; of which 10.7 million was occupied by AIS, 5.2 million by DTAC and 1.3 million by TA Orange respectively. The major driving force behind the dramatic expansion in the mobile phone market was the liberalization of handsets (IMEI unlocking), which took place in the second quarter of the year. This turned a new chapter in the Thai telecommunications industry as it allowed all handsets registered in the GSM network to freely access the services of other networks. This triggered severe competition in the market, especially in the price-awareness segment following the separation of handset and SIM card package distribution. The usage rate of prepaid products, such as One-2-Call! by AIS or D-Prompt by DTAC reflected their enormous popularity and contributed to a larger user base than that of postpaid products. At present, prepaid customers exceed more than 10 million in number. Concession Conversion and Liberalization of the Telecommunication Industry In 2002, the Government established the Ministry of Information and Communication Technology or ICT. This has placed great importance on the conversion of telecommunication concessions, a key factor in successfully introducing Liberalization of Telecom Service Industry. The framework for concession conversion recently proposed by the National Economic and Social Advisory Council evolved as a third alternative to two earlier proposals put forward by the Thai Development and Research Institute (TDRI) and Intellectual Property Institute of Chulalongkorn University. ICT is confident that an agreement will be reached that meets the needs of all parties involved. The Company abides by the principles of liberalized and fair competition and believes that it is well placed to operate within the competitive, business arena. The Company wishes to take this opportunity of thanking shareholders, customers, staff and its business partners for contributing to the Company's ongoing growth and continuing successful performance. The Company is a dynamic organization striving for continuous improvement at all levels. Grounded in clear-sighted policies and strategy, good corporate governance and an emphasis on service quality and customer satisfaction, the Company is confident that it will continue to lead the telecom service industry well into the future.

Dr. Paiboon Limpaphayom (Ph.D.)

Mr. Somprasong Boonyachai

Chairman of the Board of Directors

Chairman of the Executive Committee

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Check List - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Financial Highlights

Message from the Chairmen

Audit Committee's Report

Shareholding Structure of the Group Company

Key Major Events in 2002

General Information

Nature of Business Operations

Risk Factors

Shareholding Structure

Management and Corporate Governance

Related Transactions

Management Discussion and Analysis

Directors and Management Team

Board of Directors' Responsibilities with Regards to Financial Reporting

Consolidated and Company Financial Statements

105

Directors' Shareholding in the Company and its Subsidaries of the Year 2002

106

Social Activities

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

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Audit Committee's Report

To the Shareholders of Advanced Info Service Public Company Limited In 2002 the Board of Directors, following the resignation of one of the members, made a new appointment to the Audit Committee. The replacement was necessary in order to comply with the requirements of the Audit Committee size specified by the Stock Exchange of Thailand. At present, the Audit Committee comprises three independent directors, with Mr. Supadej Poonpipat, as a chairman, Mr. Arun Churdboonchart, and Mr. Boonchoo Direksathapon as a Committee, and Mrs. Suvimon Kulalert, as a Secretary. The Audit Committee fulfilled all its responsibilities in accordance with the requirement of the Stock Exchange of Thailand. The Audit Committee conducted a total of eleven meetings in 2002 within the scope of assigned responsibilities, which can be summarized as follows: 1. Reviewed quarterly and annual financial statements of the Company and its subsidiaries before submitting to the Board of Directors for an approval. Those financial statements were presented in accordance with generally accepted accounting principles and adequately disclosed. 2. Reviewed the disclosure of related transactions including the basis of control in accordance with the requirements of the Stock Exchange of Thailand and concluded that the Company had operated within a fair and strict business manner. 3. Considered the audit reports of the Internal Audit Office carried out in 2002 in accordance with the annual plan, and concluded that the Company had an effective internal control system and a comprehensive information security system. In addition, the Company possessed an effective risk management system and was transparent in terms of corporate governance. 4. Conducted meetings with the Management, certified public accountants and internal auditors, and made recommendations that were deemed useful to the furtherance of the Company's operations. 5. Proposed to the Company's Board of Directors that approval be sought at the General Shareholder's Meeting in 2003 to appoint the PricewaterhouseCoopersABAS Ltd. as a Certified Public Accountant of the Company for the year 2003. It is the opinion of the Audit Committee that in 2002 the Board of Directors and Management operated the Company and performed its duties in an ethical, professional manner, in pursuance of the Company's goals. The Company is strongly committed to its business operations being run with an effective internal control system. Furthermore, the Company has implemented an appropriate continuous risk management system and effective corporate governance.

Suphadej Poonpipat Chairman of Audit Committee 20 February 2003

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Key Major Events in 2002

January 2002 Along with the introduction of 3G network technology, AIS launched its new Advanced In Building Network, a modern network for a superior lifestyle, as well as changing the logo from GSM 2 Watts to GSM advance under the ground-breaking concept of "Innovative Brand". - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

January 2002 The C-Care Project was gradually implemented to enable AIS service operations to provide an unlimited response to customers needs both now and in the future. - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

January 2002 Asia Money magazine ranked AIS "Best Managed Company in Thailand." Moreover, AIS was honored as "Number One" in seven other categories, including: - Overall Best Investor Relations

- Investor Relations

- Corporate Governance

- Corporate Strategy

- Management of Financial

- Treatment of Minority Shareholders

- Best Annual Report - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Finance Asia magazine ranked AIS "Best Managed Company in Thailand." Moreover, AIS was honored as "Number One" in five other categories, including: - Company Most committed to Corporate Governance - Best Investor Relations - Strongest Commitment to enhancing Shareholder Value - Best Financial Management - Best CFO - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Far Eastern Econonics Review magazine ranked AIS "Number Two" in two categories: - High Quality Services / Products - Financial Soundness - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

March 2002 AIS issued Baht THB10,000 Million Debentures offered to institutional investors in order to raise funds and enhance network capacity. This would ensure that the highest level of customer satisfaction was attained. The AIS debentures were rated "AA-" - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

August 2002 Multimedia Message Service or MMS was launched together with the concept "Speak your heart with words and pictures" - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

October 2002 Asia Money Magazine awarded AIS the Corporate Governance: Company Self Assessment Award for its best internal assessment. - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

November 2002 SET Board of Governors presented AIS with the Disclosure Award 2002 for being the best in terms of information disclosure - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

November 2002 The Board of Director's passed a resolution for the repurchase of shares worth Baht 3,500 million for the Company's financial management. - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

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General Information % of Investment

Paid-up Capital

(Baht Million)

Par Value

(Baht per share)

Business

Registered Capital

Company

(Million Share)

The Company and its subsidiaries

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Advanced Info Service Plc.

Service provider of Digital GSM

Head Office : 414 Phaholyothin Road,

and NMT Cellular 900

5,000

2,935

Samsennai, Phayathai, Bangkok Tel. (662) 299-5000 Fax. (662) 615-3330 Branch : 1291/1 Phaholyothin Road, Samsennai, Phayathai, Bangkok Tel. (662) 299-6000 Fax. (662) 299-6005 Home Page : www.ais900.com - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Advanced Wireless Marketing Co., Ltd.

240

99.99

414 Phaholyothin Road , Samsennai, Phayathai, Bangkok Tel. (662) 299-5000 Fax. (662) 299-5455 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Advanced Data Network

Service provider of voice/data

Communications Co., Ltd.

communications via telephone

500 17 Floor, Amarin Plaza Tower

line network in Bangkok and

Ploenchit Road, Lumpini,

metropolitan area

45.75

457.52

67.95

Pathumwan, Bangkok Tel. (662) 256-9461-80 Fax. (662) 256-9922 Home Page : www.adc.co.th - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

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% of Investment

Paid-up Capital

(Baht Million)

Par Value

(Baht per share)

Registered Capital

Business

(Million Share)

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Data Network Solutions Co., Ltd.

Service provider of voice/data

500 9th Floor, Amarin Plaza Tower

communications via upcountry

Lumpini, Pathumwan, Bangkok

telephone lines network in

Tel. (662) 256-9461-80

upcountry

0.10

49.00

Fax. (662) 256-9993 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Digital Phone Co., Ltd.

Mobile phone network

414 Shinawatra Tower 1,

operator of Digital GSM 1800

Phaholyothin Road,

and importer and distributor

Samsennai, Phayathai, Bangkok 10400

of cellular phones including

Tel. (662) 299-5000

accessories, and other

1,462.19

14,409.28

98.55

Fax. (662) 299-5455 Home Page : www.dpc1800.com - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Advanced Contact Center Co., Ltd.

Call center service

27.2

272

99.99

414 Phaholyothin Road, Samsennai, Phayathai, Bangkok Tel. (662) 299-6000 Fax. (662) 299-5959 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - As of February 28, 2003

..25

Other references - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Ordinary Share Registrar

Thailand Securities Depository Company Limited 62, Ratchadapisek Road, Klongtoey, Klongtoey, Bangkok 10110 Tel. (662) 229-2800, 645-5599 Fax. (662) 359-1262-3

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

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. (662) 286-9999, (662) 344-1000 Fax. (662) 286-5050

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Debenture Registrar /

Siam Commercial Bank Plc.

Debentureholders' Representative

9 Rachadapisek Road, Lardyao, Chatuchak, Bangkok 10900 Tel. (662) 544-3866-76 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

DBS Thai Danu Bank Plc. 393, Silom Road, Bangrak, Bangkok 10500 Tel. (662) 230-6170, 230-5304 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..26

Nature of Business Operations

Overview The core business of Advanced Info Service Plc. (AIS) and its subsidiaries is the operation of cellular networks in the 900MHz and 1800MHz frequency spectrum under the Build-Transfer-Operate (BTO) concession agreements and the import and distribution of cellular phones and accessories. AIS was awarded a 20-year BTO concession in 1990 by the former Telephone Organization of Thailand* (TOT) to operate a nationwide 900MHz cellular network and provide integrated after-sale services. In 1994, the concession added Digital GSM Network. Subsequently, in 1996, the concession was extended to 25 years. Digital Phone Co., Ltd. (DPC), a subsidiary of AIS, was also awarded a BTO concession in 1996 to operate a nationwide 1800MHz cellular network by the Communication Authority of Thailand (CAT). Under the BTO concession agreements, AIS and DPC are to build the cellular networks, then transfer the network ownerships to the respective concession providers, and then operate the networks by sharing the revenues with the respective concession providers. The companies are responsible for all aspects including network engineering, financing, and service commercialization. The engineering aspect includes network planning, equipment procurement and installation, network rollout, as well as network operations and maintenance. The companies are to seek the necessary sources for funds and capital to finance all of the network engineering processes as well as the commercial activities. Currently AIS shares 25% of its revenue from postpaid services with the TOT and 20% of its revenue from prepaid services. DPC shares 20% of its service revenue with the CAT. During 2002, AIS experienced a substantial growth in its subscriber base. The combined subscribers of both the 900MHz and 1800MHz networks, as of December 31, 2002, totaled 10.66 million subscribers. Of this amount, about 5.46 million subscribers had signed up in 2002, equivalent to approximately 105% growth in only one year. This phenomenal increase can be attributed to both external and internal factors. Externally, the mobile phone market had been strongly stimulated by the entry of a new cellular operator in the first quarter of the year. Low-priced strategies and tactics were employed to attract new subscribers. Heavy airtime promotions and handset liberalization had all contributed to making mobile phone subscription more affordable to a much wider group of people than ever before. Internally, AIS' business principle has always been to ensure superior quality in all aspects of service provisioning, not only in network operation, but also in customer care and services. As a result, it is strongly believed that AIS' premium quality has proven once again to be the most important key to its success, not only in terms of subscriber retention but also in the acquisition of value-accretive, quality-conscious subscribers. Other than the network operator business, AIS also had a subsidiary called Advanced Wireless Marketing Co., Ltd. (AWM) which was an importer and distributor of cellular phones and accessories to be used in 900MHz and 1800 MHz networks. However, to enhance efficiency of the overall business, the import and distribution business was restructured in December 2002. AWM's operation has now been merged with that of DPC. * The Telephone Organization of Thailand has been privatized in 2002 and is now known as TOT Corporation Plc.

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During the first half of 2002, AIS had another subsidiary called Advanced Paging Co., Ltd. (APG). APG was granted a concession by the TOT to provide a digital paging service under the trade name of "Phonelink." However, due to the fact that paging services were becoming obsolete whilst cellular phones were becoming more affordable, APG's operation was discontinued. The concession was then returned to the TOT in June 2002. Subsequently APG was sold to a third party in September 2002 and ceased to be a subsidiary of AIS. Moreover, two other subsidiaries, Advanced DataNetwork Communications Co., Ltd (ADC) and DataNetwork Solutions Co., Ltd (DNS) together provide voice/data communications via a nationwide telephone line network. Lastly, Advanced Contact Center Co., Ltd. (ACC) began it operations in September 2002 and now provides call center services for AIS and DPC as well as for other companies that wish to outsource such functions.

Revenue Structure Revenues gained from products and services provided to third parties by the Company and its subsidiaries, during the past two years and the year ending 31 December 2002, are as follows:

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Products/Services

Operating companies

Company's Percentage 2001 Before Retroactive

2000

2001

Revenue

2002 %

Revenue

as at 31 Dec.02

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Mobile phone Mobile phone services

Advanced Info Service PCL.

Mobile phone services

Digital Phone Co., Ltd.

Service & sales of mobile phones

Advanced Wireless Marketing Co., Ltd.

Mobile phone sales & rental

Digital Phone Co., Ltd.

Total

98.55 99.99 98.55 -

24,622.03 10,718.97 35,341.00

64.90 28.25 93.16

39,122.91 1,397.68 17,635.47 86.71 58,242.77

64.48 2.30 29.07 0.14 96.00

55,371.69 4,736.36 17,790.54 1,880.96 79,779.55

68.04 5.82 21.86 2.31 98.03

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Paging services Paging services

Advanced Paging Co., Ltd.

Paging rental fees

Advanced Paging Co., Ltd.

Paging sales

Advanced Paging Co., Ltd.

Total

1,144.32 3.59 193.92 1,341.83

3.02 0.01 0.51 3.54

537.45 1.10 70.05 608.60

0.89 0.00 0.12 1.00

72.45 6.81 79.25

0.09 0.01 0.10

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Data transmission

Advanced Data Network

via telephone lines

Communications Co., Ltd. Datanetwork Solution Co., Ltd.

Total

67.95

209.06

0.55

293.80

0.48

357.57

0.44

49.00 -

66.75 275.81

0.18 0.73

44.59 338.39

0.07 0.56

30.19 387.77

0.04 0.48

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Call center

Advanced Contact Center Co., Ltd.

Total

99.99 -

Others

978.78

2.58

1,480.79

2.44

4.83 4.83 1,114.96

0.01 0.01 1.37

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Grand Total

37,937.42

100.00

60,670.55

100.00

81,366.36

100.00

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Remark : 1) The Company sold fully investment in subsidiary - Advanced Paging Co., Ltd. to third party in September 2002 2) In August 2002, Shin Digital Co., Ltd. had changed its name to Advanced Contact Center Co., Ltd. by enganged in Call Center Business. 3) The Company held 98.17 % shares of Digital Phone Co., Ltd. in December 2001, and additional investment to 98.55% in October 2002. 4) Other revenues are interest income and others exclude gains from exchange rate.

..28

Products & Services AIS products can be broadly categorized into postpaid and prepaid. Postpaid products are a contractual cellular phone subscription service for which customers are required to register and pay some sort of monthly subscription fee and per-minute usage. The payment for the monthly subscription fee and usage charge is made at the end of every month. Postpaid products include: - Cellular 900 - an analog cellular phone service deploying NMT technology. "Cellular 900" has, up to the year 2002, been positioned for basic analog users who require only voice communications with extensive nationwide coverage. However, today NMT technology has lost its popularity to newer and more-advanced digital technologies, namely GSM. A large number of "Cellular 900" subscribers migrated to AIS' own GSM networks during 2002. As such, the number of remaining "Cellular 900" subscribers at the end of 2002 was almost negligible and AIS has since stopped promoting this product. - GSM advance - a digital cellular phone service deploying GSM 900MHz technology. "GSM advance" appeals to more sophisticated user segments that require more than basic voice communications. Being a more-efficient, digital service, "GSM advance" features a variety of value-added services and other non-voice services. All of which have been designed to help subscribers live more fulfilling personal and professional lives. - GSM 1800 - a digital cellular phone service deploying GSM 1800MHz technology, operated by DPC. "GSM 1800" is positioned for basic users who prefer the postpaid method of payment, signing contracts at registration and paying after they use it. Prepaid products require neither registration nor the payment of a monthly subscription fee. Immediately after purchase, subscribers can activate their numbers and use the phone. Once the prepaid balance is spent, top-up can be done either by purchasing refill cards at numerous outlets around the country or by electronic refill service at almost all ATM machines. The prepaid product is offered under the brand of "One-2-Call!", the selling point for which is "Freedom." Users have the freedom to manage their own expenditure and usage.

Corporate Objective AIS key objective is to enhance shareholder value. The business philosophy adopted as the guide to enhance shareholder value involves excelling in four key areas: - Network Excellence: Discreet network engineering to achieve superior network quality, - Service Excellence: Courteous service provision to achieve superior service quality, - Technology Excellence: Prudent technology deployment that meets the needs and requirements of the customer, - People Excellence: Ongoing human resource development to improve competency and productivity. Excellence in these four areas has contributed significantly to shareholder value enhancement over the years. New, value-accretive subscribers have continued to register for AIS superior-quality networks.

..29

Industry & Competition Thailand's cellular phone operator industry during 2002 could be described as one of the most competitive markets in the region. Three new operators - TA Orange (TAO), Thai Mobile, and Hutchison CAT Wireless Multimedia Ltd. (HUTCH) - had either staged their full official entry into the market or soft-launched or re-launched their products to join the two incumbents - AIS and Total Access Communications Plc. (DTAC) - in the development of the Thai cellular phone industry. By the end of the year, the industry had witnessed a phenomenal growth in the subscriber base of approximately 120%. Nonetheless, the market was still dominated by the two incumbents, which continued to command over 90% of the total market share.

25.0

30 % 27 %

20.0

25 % 20 %

15.0 15 %

AIS

December 2001

0.0

Million subs

5.0

TAC

8.0 m

TAO

December 2002

13 %

10.0

Other

17.5 m

10 % 5% 0%

Penetration rate

Source: Data from corporate websites where available, otherwisr estimated

Of the three new operators, TAO had played the most critical role in shifting the face of the competitive landscape in 2002. Upon the entry of TAO during the first quarter of the year, most of the strategies and tactics employed by operators to compete centered on pricing. A price war erupted when a form of handset subsidy was introduced into the Thai market for the first time. To counteract this, one operator almost immediately initiated handset liberalization by unlocking IMEI, thereby allowing any handset, regardless of where it was purchased, to be used with its network. Moreover, low-priced SIM packages were introduced as an alternative for new users who did not wish to purchase SIM-handset bundled packages. At the same time, heavy airtime promotions were offered along with both SIM-handset bundled packages and SIM-only packages. All of these activities made a tremendous impact on the affordability of mobile phone subscription to a much wider group of people. The popularity of cellular phones spilled over into rural areas all over the country, prompting competition to widen from the nearly saturated Bangkok market. Not until the third quarter of the year, did operators begin to experience the negative consequences of cutthroat pricing. By that time every operator had achieved an impressive number of new registrations. However, margins began to deteriorate as a result of dramatic price reductions. At that point, the operators were beginning to shift focus and put more emphasis on increasing revenues and margins. To curve the sharp downtrend in ARPU, for example, efforts to champion the more lucrative enterprise market were starting to surface. Capitalizing on new and readily available high-speed data transmission technology, namely GPRS, some operator had also been gearing towards digital convergence and the development of other wireless communications services such as mobile data, multimedia, etc. By the end of the year competitive pricing had largely run its course and, although the handset market remained liberalized, airtime promotions had become noticeably less aggressive. Low prices on SIM packages were adjusted upwards. In spite of less attractive offers, subscriber growth (though was not as strong as the first three quarters of the year) still continued at a significant rate, suggesting that the saturation point for Thailand was yet to be reached.

..30

In spite of the sharp increase in the total market subscriber base, Thailand's cellular phone industry ended the year 2002 with about a 27% penetration rate. Although penetration has more than doubled from the 13% at the end of the previous year, the opportunity for market growth should remain strong as Thailand is still ranked as one of the under-penetrated markets amongst its regional peers. If the country's economics condition continues on its path to recovery and as long as new operators continue to make their presence felt in the industry, the market should continue to grow. However, a chance for the industry to experience more than 100% subscriber growth is considered unlikely. Other major developments that took place in 2002 and altered the industry on the regulatory front were the privatization of the two telecommunications state enterprises and the establishment of a new ministry to govern the telecommunications industry. As part of the preparation for industry liberalization, the Ministry of Information and Communications Technology (ICT) was successfully established, one of whose key tasks is to administer the telecommunications industry as well as preparing it for liberalization. Meanwhile the Telephone Organization of Thailand was privatized and registered as a public company as the TOT Corporation Public Company Limited, while the Communication Authority of Thailand Plc. is currently in the process of being privatized. One setback to regulatory development was the ruling by the Supreme Administrative Court that the selection process of the National Telecommunications Commission (NTC) was unconstitutional. The ruling has prompted a number of members of the selection committee to resign, stalling the formation of the NTC. In the absence of the NTC, the privatization of the two state enterprises has prompted the ICT to propose a new revenue-sharing scheme whereby the concessionaries would share some of the revenue generated from their networks with the Ministry of Finance in the form of an excise tax. As of December 31, 2002, however, no concrete formula for the telecommunications excise tax or for the TOT and CAT compensation has been released. Nonetheless, the ICT has reiterated its belief that the telecommunications industry must be liberalized and that the concession and revenue-sharing scheme must be adjusted to pave the way for fairer competition for new operators as well as for incumbents. 2003 may well be the year that the NTC is successfully established, enabling the CAT & TOT to become pure operators.

Network Procurement & Service Provisioning Network equipment is primarily imported directly from leading telecommunications technology suppliers around the world. Ericsson, Nokia, NEC, Siemens, Nortel, DMC, and Huawei are the major brands of network equipment that AIS has procured. A team of experienced telecommunications and communications engineers selects appropriate technology and network components to be installed and configured to achieve the highest level of network quality and optimization. The overall network is divided into geographical regions. Principally, two or more network equipment vendors supply equipment to be installed in one region. For the entire country, AIS thus has multiple vendors supplying equipment for the network in any given region: the "Multi-vendor Approach." This network engineering approach is implemented to achieve optimization of investment costs. The benefit of this approach is to safeguard dominance of any particular supplier, not only in technological terms, but also with regards to pricing - all of which should contribute to a higher return on invested capital.

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AIS-DPC combined digital network information as compared to the cumulative digital subscribers as follows:

12.0

11.2*

10.0 8.0

8.1

6.8 6.0

GSM advance

December 2001

0.0

Million subs

2.0

December 2002

2.3

4.0

0.4 2.3

GSM 1800

One-2-Call!

0.3 2.2

Capacity*

* Optimized dual-band GSM network capacity

Research & Development As a user of technology, the research & development function at AIS revolves around mapping new, readily available technology to the customers' needs and requirements. AIS has always been keen on bringing applicable, leading-edge technology to its customers in the form of services that the customers can relate to. When value-accretive technology is identified, new services are brainstormed by a team of experts equipped with expertise in engineering, marketing, and finance. The viable, new services will then be passed onto another business analysis team who will carefully scrutinize the feasibility of the new services as well as ascertaining that they will fit into the corporate service roadmap and be align with corporate strategic direction. The new services are then subjected to a thorough testing process by a focus group to ensure its commercial viability. In the implementation phase, the rollout is usually confined to the areas where the target groups are densely populated, then slowly expanded out nationwide if the services show a high commercial potential and momentum. The research and development process is necessary to ensure shareholders' value enhancement. The key success factor to maximize return on investment is prudent technology deployment process in a timely manner.

..32

For AIS, network quality is defined in terms of the customer and is divided into three major elements: Coverage, Accessibility and Reliability. The most important of these in the mobile telephone network is "coverage", which by the end of 2002 extended to more than 80% of populated areas. Further, AIS aims to continually expand both its outdoor and in-building network coverage in order to maintain its leadership and successfully meet the continually evolving needs of its customers. "Accessibility" is the ability of customers to access the AIS network and is measured as the maximum number of customers in relation to an acceptable blocking rate. It is also focused on compliance with international quality engineering standards. The last element, "reliability", is concerned with the provision of good voice quality and continuity throughout call conversations. The AIS Engineering Division cascades those three quality elements into Engineering Key Performance Indicators (KPI), by defining and distributing targets to all engineering functions. This enables them to create their own initiatives and action plans in order to achieve committed targets.

A IS Networ k Q ua li t y KPI will be aligned with the Customer Satisfaction Survey (CSI) as well as customer complaints reports, to ensure that all KPI will be driven in the same direction towards the highest level of customer satisfaction. In order to optimize investment, Quality KPI will also be balanced with financial KPI such as Investment Cost Per Subscriber and Equipment Utilization. Routine Network Quality Benchmarking has been performed by AIS against other mobile phone operators in Thailand and six further operators throughout Asia and Australia. The main objective of benchmarking is to monitor AIS network quality positioning and take any necessary steps to maintain its national and regional leadership. AIS has commenced development of a Network Quality Assurance process. Working on Quality Planning, Controlling and Improvement, the primary goal is to achieve the highest Network Quality that will meet customers' needs, comply with designated specifications and achieve optimum functional efficiency. The benefit of AIS Network Quality Management will be significantly greater customer satisfaction and more efficient network cost management that will satisfy all stakeholders in the value chain, as well as ensuring the continuous development of a quality network and long-term stability.

..33

Risk Factors

1. Risks Involving Changes in Legislation, Regulations and Government Policies The telecommunication business is now operating under the concession of state agencies. However, in the future it will be controlled by the National Telecommunication Committee in accordance with Section 40 of the Constitution of 1997, which states that an independent organization must be established with authority 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 in order to ensure 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 B.E.2517 (1974) (No.2) shall be replaced. From the aforementioned changes the most significant, in terms of impacting AIS and the operators under the concessions of state agencies, is the concession conversion, which is expected to be implemented before the beginning of telecom liberalization. Liberalization will result in all telecom operators abiding by the National Telecommunications Commission (NTC)'s rules and regulations. This will include both existing operators and newcomers - for example, the Telephone Organization of Thailand, privatized since July 31, 2002 as TOT Corporation Public Company Limited, and the Communication Authority of Thailand (CAT), which will be privatized in the near future. There are a number of outstanding issues with regards to concession conversion concerning principles and framework. Moreover, certain other issues prescribed by the Telecom Act on November 16, 2001 have yet to be concluded. These include limiting foreign shareholding to no more than 25% of any telecom company, the prohibition on the collection of service deposits and cash advances from customers, and the implementation of Interconnection Charge. This is especially true of the latter, where issues remain concerning implementation and rates. AIS does have some primary risks on the aforementioned issues of the concession conversion, as do others with in the Telecom Act. However, AIS will manage these risks by assigning a working group to take direct responsibility for this issue. The working group will closely following up the progress of the Act and actively provide the appropriate information to the government agencies concerned, in order to facilitate the establishment of rules and regulations which will ensure free and fair competition. In fact, once liberalization begins, all telecom operators must play on the same level field and even then there will be new players coming in. They will face tough entry-barriers such as the challenge of building up of a competitive customer base, the requirement for large capital funds and the time required to develop network and marketing channels. Thus, AIS does not consider these as serious risks.

2. Risks from Market Situation and Competition 2.1) Risk from irrational competition For a cellular market that has not yet reached saturation, one of the most serious risks is irrational competition initiated by newcomers. In a market with a relatively low penetration rate and only a few major groups of operators, naturally the market appears attractive to new players. To make their entries and presences felt, the simplest strategy that the new operators can employ is a low-priced approach. The Thai cellular market had in a way experienced this in 2002 upon the entry of TAO. Many low-priced tactics (discussed in the Industry and Competition section) had been used both to expand the size, and maximize their share, of the overall pie. Retaliation by all parties, incumbents and newcomers, by further and deeper price undercutting, finally led to irrational competition, which was of little benefit to anyone in the long term.

..34

Although the risk from irrational competition seems to be external and uncontrollable, AIS continues to believe that a low-priced strategy can only create awareness, and that the quality of network and services is the essential key to success in creating preferences and strengthening customer loyalty. In addition, a low-priced strategy cannot be sustained for a long period in the cellular operator business, as it is too capital intensive. New operators require a large amount of capital and time to rollout the network to achieve reliable network quality and extensive coverage. Aggressive pricing and heavy advertisements will attract more customers than the network can accommodate in the short term, thus ultimately jeopardizing the brand and customer trust and confidence. Instead, AIS focuses on quality and has been able to create product preference among quality-conscious, value-accretive customers. Year 2002 was a testimony to the fact that quality is of great importance. Towards the end of the year, strong momentum on new registrations to AIS networks continued despite less aggressive discounts offerings, keeping AIS' market share above 60%. Without being complacent, however, AIS closely and continuously monitors market developments to accurately evaluate the situation and to be able to formulate appropriate strategies in response, with a prime objective being to uphold shareholder's value.

2.2) Risk of low market acceptance of non-voice communications services Wireless voice communications in Thailand can be regarded as approaching maturity. The next wave of growth and competition is in the non-voice communications arena. In a mature stage of pure voice communications, revenue and ARPU are trending down. To renew the growth in revenue and maintain the innovative edge, non-voice communications services must be developed in earnest. With low market acceptance, investments in non-voice services will not generate the desired new sources of revenue and will also become detrimental to the return on overall investment. Market and customer base segmentation should help alleviate this risk. With accurate market analysis and thorough segmentation, AIS should be able to identify and develop services that cater towards the needs and requirements of the customers identified in each lifestyle. Every new service, prior to the launch, is under the scrutiny of a group of experts and a professional business analysis team as well as a competent focus group to ensure its viability both commercially and financially. Thus, most of the new non-voice telecommunications services are expected to be well received by the market and add value to the overall business.

3. Risks on Technology and Operations 3.1) Risk from assuring quality of third party service providers and content providers The introduction of new technologies in the mobile phone industry such as GPRS and Location Based Service create opportunities for third parties to cooperate with AIS in order to provide innovative services for subscribers. This cooperation introduces a complex structure of network providers, service providers and content providers, bounded by service level agreements. The quality is more difficult to control in this situation because any providers who fail to meet the service level agreement will affect the customer-perceived quality of the end-to-end service. So the control of service level agreements and the introduction of quality assurance measures for each cooperating provider are very important in achieving customer satisfaction. With additional assistance from the mobile industry, which has GSMA (GSM Association) as a central organization, AIS has decided to establish an Open Architecture Platform to standardize the interconnection between different platforms. This will help to ease the difficulty in controlling the quality of service delivered to customer.

..35

3.2) Risk from change in technology Mobile technology is moving towards high-speed data and multimedia communications. In the near term, such technology change will not affect AIS because the vast majority of subscribers, mostly in provincial areas, still only require mobile phones with basic functions. However, the suppliers are shifting their interest and moving their skilled, competent people to develop applications for the Third Generation mobile phone system. This could present the risk of not being able to obtain good support for the current technology in the long term. It is possible to migrate the GSM network into Third Generation mobile phone systems by reusing some parts of the switching and transmission network. However, such new technology may not immediately suit the mass market in Thailand because there may be only limited groups of customers who require such high technology. Therefore, market readiness and financial feasibility should be closely considered. AIS has followed the trend of Third Generation technology closely. The Third Generation mobile phone has slowly gained some momentum in establishing itself as a future service for the mobile phone service industry, when the right moment has come AIS will join the main stream of Third Generation Mobile Service. 3.3) Risk from unsuccessful bill collections Although most subscribers are now using the prepaid product, the revenue generated from postpaid products, including International Roaming, is still significant. Currently AIS bills postpaid subscribers on a monthly basis. As such, AIS is subject to the risk of incurring bad debts due to unsuccessful bill collections. However, AIS has implemented a number of measures to mitigate such risks. AIS has implemented software known as 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, whereby any customers who have an unpaid bill exceeding the fee limit will not be able to use their mobile phone until they settle the bill. In addition to implementing a fraud management system to alleviate the risk, AIS also strongly directs every related internal department to focus on conducting rigorous audits and problem prevention. AIS has many methodologies in preventing risk, which are as follows: 1. An increasingly sophisticated audit by Call Detail Record (CDR), which helps immediately identify abnormal mobile phone usage so actions, such as service termination, can be taken swiftly. 2. Conducting a blacklist verification before making a registration in order to ensure that a new customer has not been previously rejected. 3. Conducting a post audit after a registration to confirm the status of a customer. The One-2-Call! prepaid product is an effective way to eliminate the risk of unpaid bills. One-2-Call! is very successful and, as of 31 December 2002, prepaid subscribers account for approximately 80% of AIS' total subscribers. Therefore, the risk of unpaid bills has been significantly reduced.

..36

3.4) Risk of Executive and Staff Attrition AIS realizes that business success is based on the retention of high-calibre executives and staff committed to their work and achieving targets. In 2002 we experienced the loss of key executives and staff to our competitors. In response, we have established a plan to address this challenge. This will involve developing and enhancing inter-staff and inter-departmental relations, and stepping up the continuous recruitment of quality candidates who share our corporate vision. 3.5) The Challenge of Change and HRD The challenge facing HRD is to develop staff able to meet the challenge of change in the modern business environment. We will achieve this through developing a professional staff that strives for excellence. Utilizing state-of-the-art technology, such as E-learning, and continuous self-development programs we will immerse staff members in The AIS Way culture. This will create a "Great Place to Work". Furthermore, we will build a Knowledge Management system to capture and retain our knowledge capital for the future.

..37

Shareholding Structure Shareholders

Name

No. of Shares

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

1. Shin Corporation Plc.

1,263,712,000

43.06

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

2. SingTel Strategic Investments Pte Ltd.

568,000,000

19.35

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

3. HSBC (Singapore) Nominees Pte Ltd

80,477,010

2.74

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

4. Littledown Nominees Limited 9

80,322,100

2.74

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

5. Thai Trust Fund Management Company Limited

64,039,000

2.18

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

6. State Street Bank and Trust Company

58,270,717

1.99

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

7. HSBC Bank Plc.

44,868,050

1.53

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

8. Chase Nominees Limited 1

40,902,530

1.39

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

9. Government of Singapore Investment Corporation C

30,606,320

1.04

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

10. Boston Safe Deposit and Trust Company

29,769,450

1.01

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Source : Major shareholders' report as of February 20 September 2002 prepared by Thailand Securities Depository Co.,Ltd.

..38

Management and Corporate Governance

Management Structure The Company's structure comprises of the Board of Directors and the Executive Committee including three sub-committees namely the Audit Committee, Remuneration Committee and Nominating Committee as detailed below: 1) Board of Directors - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

List of the Members of the Board of Directors As of 25 February 2003, there are 10 members of the Board of Directors as follows: 1. Dr. Paiboon Limpaphayom Ph.D. *2. Mr. Boonklee Plangsiri

Chairman of the Board of Directors 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. Mr. Boonchoo Direksathapon

Member of the Audit Committee

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

*Authorized Director *The Company' secretary is Mr. Somprasong Boonyachai *The Assistant company's secretary is Mr. Vivat Songsasen

Scope of Authority and Duties of the Board of Directors 1. The Board is empowered to appoint and make amendments to the directors authorized to affix their signatures binding the Company. 2. 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. 3. The Board may appoint any other person to carry out the Company's business under the supervision of the Board, or empower such persons, 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.

..39

2) Executive Committee - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

List of the Members of the Executive Committee As of 25 February 2003, there are 5 members of the Executive Committee as follows: 1. Mr. Somprasong Boonyachai

Chairman of the Executive Committee

2. Dr. Dumrong Kasemset Ph.D.

Member of the Executive Committee

3. Mrs. Siripen Sitasuwan

Member of the Executive Committee

4. Miss Yingluck Shinawatra

Member of the Executive Committee

5. Mr. Chow Wing Keung Lucas

Member of the Executive Committee

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Scope of Authority and Duties of the Executive Committee 1. 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. 2. 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. 3. To examine and monitor that those Company's policies and various administrative regulations are implemented effectively and support the operations of the business. 4. To examine and monitor that the results of the Company's operations are in accordance with the prior approved business plans. 5. To consider large-scale investment projects of the Company. 6. To occasionally conduct other activities, as requested by the Board of Directors. 7. The Executive Committee may give partial authorization but 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 to 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, the Executive Committee may subrogate such authority to executive officer of the Company to approve any financial matter as the 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 25 February 2003, there are three members of the Audit Committee as follow; 1. Mr. Suphadej Poonpipat

Chairman of the Audit Committee

2. Mr. Arun Churdboonchart

Member of the Audit Committee

3. Mr. Boonchoo Direksathapon

Member of the Audit Committee

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Scope and Duties of Audit Committee 1. The Audit Committee shall supervise and oversee the Company's state of affairs in order to precisely show that the management with honesty and responsibilities of the executive directors and the Management owing to the shareholders of the company exist, and to ensure that the Management executes the duties in accordance with the policy of the board of directors accurately and the policy of the Company completely, reaching the level of standard practice. 2. The Audit Committee shall have the duties and responsibilities as follows: 2.1

Review that company financial statements are represented in accordance with generally accepted accounting principles and adequately disclosed.

2.2

Review that the Company has appropriate and effective internal control and internal audit.

2.3

Review that the Company complies with the rules and regulations of the Stock Exchange of Thailand and other applicable laws.

2.4

Consider towards appointment of the auditor and the annual audit fee.

2.5

Consider the accuracy and completeness of related transaction's disclosure.

2.6

Review the appropriateness and effectiveness of company's risk management system.

2.7

Review and express on audit plan and audit activities of internal audit office, and coordinate with external auditor.

2.8

Produce the corporate governance's report and disclose the same in the Company's annual report. The Chairman of the Audit Committee must sign the report.

2.9

Report the outcome of the Audit Committee's meeting to the Board of Directors at least four times per year.

2.10 Have the authority to invite the concerned executive directors and the Management or related employees to gives statements or useful information or to attend the meeting. 2.11 Have the authority to obtain the necessary assistance of consultant or other specialized services from outside the organization. 2.12 Undertake other matters as designated or assigned by the Board of Directors of the Company which agreed with the Audit Committee. Remark: As revised and approved by the Board of Directors dated February 25, 2003.

4) Remuneration Committee - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

List of the Members of the Remuneration Committee As of 25 February 2003, there are three members of the Remuneration Committee

as follow;

1. Dr. Paiboon Limpaphayom Ph.D.

Chairman of the Remuneration Committee

2. Mr. Boonklee Plangsiri

Member of the Remuneration Committee

3. Mr. Arun Churdboonchart

Member of the Remuneration Committee

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The Scope of Authority and Duties of Remuneration Committee The Remuneration Committee shall have the authority and duties as follows: 1. To designate necessary and proper remuneration both in and not in monetary form of the Board of Directors, the Committees and the Chairman of Executive Committee in every year. 2. To set up regulations and policies in designating remuneration of the Board of Directors and the Chairman of the Executive Committee to propose to Board of Directors and/or to Shareholdersâ&#x20AC;&#x2122; Meeting for approval as the case may be. 3. To be reported directly to the Board of Directors and be responsible for informing and answering all queries concerning remuneration of the Board of Directors and the Chairman of Executive Committee in Shareholdersâ&#x20AC;&#x2122; Meeting. 4. To report the policy concerning the remuneration of the board of Directors, the principle/reason and purpose of the policy in the annual report. 5. To proceed any other matters assigned by the Board of Directors. Remark: As revised and approved by the Board of Directors dated February 25, 2003.

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5) Nominating Committee - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

List of the Members of the Nominating Committee As of 25 February 2003, there are 3 members of the Nominating Committee as follow; 1. Dr. Paiboon Limpaphayom Ph.D.

Chairman of the Nominating Committee

2. Mr. Boonklee Plangsiri

Member of the Nominating Committee

3. Mr. Arun Churdboonchart

Member of the Nominating Committee

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The scope of Authority and Duties of the Nominating Committee The Nominating Committee shall have the authority and duties as follows: 1.1 To set up regulations and policies in nominating directors and the committees of the Company. 1.2 To select directors and the committees by considering appropriate persons in order to propose to the Board of Directors and/or Shareholdersâ&#x20AC;&#x2122; Meetings for approval as the case may be. 1.3 To select appropriate person to be appointed as the Chairman of the Executive Committee in case of vacancy including regulations in succeeding the position. 1.4 To proceed any other matters assigned by the Board of Directors. Remark: As revised and approved by the Meeting of the Board of Directors dated February 25, 2003

6) Menagement Team - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

List of the Members Team As of 25 February 2003, the Company's Management Team is as follows: 1. Mr. Somprasong Boonyachai

Chairman of the Executive Committee

2. Mr. Lum Hon Fye

Executive Vice Chairman - Future Business Opportunities

3. Ms. Yingluck Shinawatra

President-Wireless Telecommunications Business

4. Mr. Vikrom Sriprataks

Chief Technology Officer

5. Mrs. Suwimol Kaewkoon

Chief Customer Champion & Terminal Business Officer

6. Mr. Pong-amorn Nimpoonsawat

Chief Finance Officer - Wireless

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Selection of Directors The Company has prescribed the following guidelines for the selection and appointment of directors: (1) 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. (2) 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 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 has set up a Nominating Committee to designate principle and policy in nominating qualified person to attend the Board of Directors. 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. (1) Every shareholder shall have one vote for each share of which he/she is the holder ; (2) Each shareholder may exercise all the votes he/she has under the (1) above to elect one or several directors(s). In the event of electing several directors, he/she may not allot his/her votes to each unequally. (3) The persons receiving the highest votes in their respective order of the votes shall be elected as directors at the number equal to the number of directors required at that time. In the event of an equality of votes among the persons elected in order of respective high numbers of votes, which number exceeds the required number of directors of the Company at that time, the chairman of the meeting shall be entitled to a second or casting vote.

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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 Corporation Plc. (SHIN) and Singtel Strategic Investments Pte. Ltd. (STI), SHIN shall appoint four directors and two directors appointed by STI. As a result, the Company has ten directors as of 25 February 2003, as follows: 1. Dr. 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 STI

7. Mr. Chow Wing Keung Lucas

representing STI

8. Mr. Suphadej Poonpipat

Chairman of the Audit Committee

9. Mr. Arun Churdboonchart

Member of the Audit Committee

10. Mr. Boonchoo Direksathapon

Member of the Audit Committee

Executive Remuneration The Company’s policy is to provide remuneration for Directors commensurate with the industry as a whole and sufficient to attract and retain quality individuals. For members of management, remuneration will be individually evaluated and linked to the Company’s performance. The Board evaluates appropriate monetary and non-monetary remuneration for the Board of Directors, sub-Committee and Executive through proposals made to the Annual Shareholders’ General Meeting for approval. Money Remuneration (1) Remuneration* for the Board of Directors, comprising of five members, for the period ended December 31, 2002, amounts to Baht 3.805 million, which includes payment to the Chairman of the Board of Directors, Audit Committee, and TOT's representative director. * Remuneration comprises of a salary, bonus, provident fund and allowance for meetings (This excludes remuneration for three SHIN representative directors who are paid directly by SHIN)

(2) Remuneration* for management, for the period ended December 31, 2002, amounts to Baht 31.991 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 - wireless.

Other Remuneration Employee Stock Option Plan The Extraordinary General Meeting of Shareholders of Advanced Info Service Plc. No. 4/2001, held on December 19, 2001, approved the issuance and offering of warrants to purchase the Company's ordinary shares to directors, employees and advisors of the Company as a new ESOP. The objective of the program is to compensate and motivate the directors, employees, and advisors to perform their duties in the best interests of the Company. Not only should this play an important part in retaining them it will also be of long-term benefit to the Company. The overall program consists of five plans over a period of five years. The Company will issue and offer warrants to directors, employees, and advisors of the Company once a year, for five consecutive years. The terms of warrants issued each year will not exceed five years from the date of issuance, while other details of warrants will be similar for all five issuances. Total amount of warrants to be issued and offered during the five-year period is approximately 51,400,000 units, implying that about 51,400,000 ordinary shares (at Baht 1 par value) are to be reserved for the exercise of rights pursuant to the warrants. These ordinary shares account for about 1.75 percent of the total paid-up shares. In 2001 , the Shareholders' Meeting resolved to approve the issuance and offering of 14,000,000 warrants to directors, employees and advisors of the Company and the allocation of 14,000,000 ordinary shares, at the par value of Baht 1 each, equivalent to 0.48 percent of the Company total paid-up capital, reserve for the exercise of the warrants.

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Details of the ESOP Program - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Type of Warrants

Warrants to purchase the Company's ordinary shares, in registered form and non-transferable

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unless from the subrogated securities purchaser or by hereditary transfer (hereinafter referred to - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

as the "Warrants") - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total Number of Warrants

14,000,000 units

to be Offered - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Offering Price per Unit

No price (zero)

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Terms

Not exceeding five years from the issuance and offering date.

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Exercise Ratio

One unit of warrant per one ordinary share.

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Exercise Price

Baht 48 per share

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Issuance and Offering Date

March 27, 2002

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Exercise Period

The Company's directors, employees and advisors could exercise the warrants to purchase the Company's ordinary shares as shown in the following details:

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First Year

Directors, employees and advisors are entitled to exercise one-third of their allocated warrants to purchase ordinary shares one year after the warrants are issued to them, until the warrants are expired. In case the exercise of warrants creates a fraction of share(s) less than the board lot determined by the Stock Exchange of Thailand (the "SET"), such fraction will be exercisable at the last exercise of warrants.

Second Year

Directors, employees and advisors are entitled to exercise one-third of their allocated warrants to purchase ordinary shares two years after the warrants are issued to them, until the warrants are expired. In case the exercise of rights pursuant to warrants creates a fraction of share(s) less than the board lot determined by the SET, such fraction will be exercisable at the last exercise of warrants.

Third Year

Directors, employees and advisors are entitled to exercise the remaining of their allocated warrants to purchase ordinary shares three years after the warrants are issued to them, until the warrants are expired. In case the exercise of rights pursuant to warrants creates a fraction of share(s) less than the board lot determined by the SET, such fraction will be exercisable at the last exercise of warrants.

Exercise Period of Warrants

Directors, employees and advisors of the Company have to submit their intention to exercise their warrants within the last five business days of each month during the Exercise Period, provided that for the last Exercise Period, the intention will be made 15 days prior to the last Exercise Period and can be made until the last day of the last Exercise Period. At least 7 days each exercise period, the Company will inform the exercise period, exercise ratio and exercise price of the warrants by notifying the directors, employees and advisors, in advanced at the head office. Except for the last exercise, the Company will inform them for those information by delivering registered letter to their post address or by hand at their offices at least 7 days prior to the last exercise period.

Exercise Date

Between 09.00 a.m. to 4.00 p.m. within the last five business days of the month all time of exercise period

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The list of Directors employees and advisors of the Company are allocated warrants as follows: - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Amount of Warrant

% of Warrant

1. Mr. Somprasong Boonyachai

Name

1,471,800

10.51

2. Ms. Yingluck Shinawatra

1,250,000

8.93

3. Mrs. Suwimol Kaewkoon

1,197,800

8.56

4. Mr. Vikrom Sirpratak

1,128,600

8.06

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Good Corporate Governance The policy was formulated to encourage good corporate governance, vision and responsibility on the part of board and management. Furthermore, it seeks to balance management authority with shareholder's rights and responsibility to stakeholders. Policy on Corporate Governance The Company places great importance on good corporate governance and is confident that by doing so it will ensure the Company operates on a secure foundation, will bring added-value to its business, increases potentiality in competition with others and enhance managerial skills within the organization. It will strengthen the confidence of all shareholders, investors and other related parties. Therefore the board of directors, approved by the committee, determines the policy on corporate governance in accordance with the regulations of the Stock Exchange of Thailand. This policy contains following the important principles: 1. The committee aims to manage the business in order to achieve excellence in the areas of network quality, technology, human resources and service standards, including the creation of added-value business for shareholders. The committee should possess outstanding business knowledge, ability and managerial skills. 2. An equal and just treatment of all shareholders and stakeholders. 3. Disclose appropriate and relevant information to other related parties. 4. The management and all employees will always undertake their work with an awareness of risk management, which will incorporate the foundation and implementation of appropriate, effective internal control systems. 5. The Company determines business philosophy and business ethics as a guide to the professional conduct of the committee, directors and employees. Shareholders: Rights and Equable Treatment In the year 2002, the Company has held three shareholder's meetings, one of which was the Annual General meeting and two were Extraordinary General meetings. During such meetings shareholders enjoy equal rights to receive information, express opinions, and raise any concerns with regards to the agendum or presented matters. The Chair has a responsibility to manage the time in the meeting in an appropriate way, and to encourage participants to express opinions and raise questions. At every shareholder meeting at least one independent committee must be appointed in accordance with the Company's policy. This committee will take responsibility for informing the meeting of the intentions of those shareholders who cannot attend the meeting in person, which shall be done through the use of a proxy letter. All shareholders have an independent voting right. A Range of Stakeholder Groups The Company recognizes stakeholders' legal rights and has a policy to protect and treat such rights with due care in order to instill confidence among all stakeholders. The Company identifies and prioritizes stakeholder groups in an appropriate way, to include shareholders, the management, employees, customers, suppliers, competitors and the wider community. In addition, the Company provides cooperative support among the various groups of stakeholders in accordance with their roles and duties. This will enable the Company, in the operation of its business, to generate stability, wealth and meet the interests of all parties equably.

..45

For example: Shareholders : The Company aims to represent the best interests of shareholders in the operation of the business by concentrating on long-term growth and value. The Company will provide continuous and good returns to shareholders, including transparent and accurate information disclosure. Employees

: The Company aims to develop and create a dynamic, positive working culture, which includes the promotion of teamwork, creating opportunities and continuously enhancing the competency of employees. The maximization of personnel resources is considered to be of great benefit to the Company.

Communities : The Company is owned by Thai people and strongly identifies with the community. It takes on a wide range of responsibilities, which involve helping local communities and supporting public events. Customers

: The Company aims to ensure that customers are both satisfied and confident that they will receive quality products and services at a reasonable price. And that the Company will provide accurate, comprehensive and honest information relating to the goods and services it provides.

Suppliers

: Business operations with other competitors should not damage the reputation of the Company nor be in conflict with any laws or regulations. The Company places great importance on the common interest shared with suppliers with regards to the conduct of equable business operations. The selection of suppliers is conducted with great care as the Company recognizes that suppliers are an important factor in creating a viable business value chain to the customer.

Competitors : The Company supports and encourages a free trade policy. The business must operate within a fair and just system, without monopoly, or limitation on the Company’s suppliers to sell only the Company’s goods. Shareholders’ Meetings In the shareholders' meeting, the Chairman of the meeting or any person so delegated has a responsibility to allocate appropriate time and encourage shareholders to express their opinions and recommendations, raise any questions at the meeting and facilitate equal opportunities for shareholders to audit the Company’s operations. In addition, any questions, issues or important opinions are recorded in the minutes. Leadership and Vision The Board of Directors should participate in determining the vision, policy and business direction of the Company, including asserting control over administration in order to ensure an efficient and effective business operation that is run to a pre-determined business plan and budget. In addition, the Board of Directors must prepare the assessment process for appropriate internal control systems, internal audits, risk management, financial reports and regular business follow-up processes. Conflicts of Interest In order to prevent conflicts of interest, the Board of Directors clearly documents all policy and related approval processes. In addition, policies and monitoring systems are in place to prevent management or concerned parties using inside information from the Company for personal gain. The Board of Directors will be informed of any conflict of interest or related transactions that might arise and will then carefully consider such issues in accordance with the Company’s compliance with Stock Exchange of Thailand’s regulations, under the same conditions as outside parties are dealt with (Arm’s Length Basis). All details of transactions, including their value, reasons and necessity are disclosed in the Annual Report and 56-1 Form.

..46

In terms of the use of sensitive information, the Company has established a Code of Conduct that provides guidelines for all management and staff at every level, especially those working in departments where sensitive information may be accessed. The guidelines state that any sensitive information pertaining to the Company or Group is not disclosed to the public for personal gain, either for those in or outside the organization. In addition, the trading of the Company’s securities one month prior to financial information disclosure is to be avoided. Furthermore, the management is responsible for declaring stock holding lists and reporting on changes in the Company’s securities, as well as those held by individuals, spouses and minors, in the format and time frame specified in the regulations of the Securities Holding Report. The management is required to submit copies of such reports to the Company on the same day as the Company reports to the Stock and Exchange Commission (SEC). Business Ethics The Company has established a corporate philosophy and code of business ethics, which the Board of Directors, management and staff at all levels adhere to in the furtherance of the performance of the Company and achievement of its mission. This is to be adhered to with integrity, justice and the equable treatment of the Company and all concerned parties, including the public and society at large. The Company rigorously enforces its code of ethics. Balance of Power for Non-Executive Directors The Board of Directors consists of 10 Directors, four (four-tenths) of which are Independent Directors. Aggregation or Segregation of Positions The Chairman of the Board of Directors and Chairman of the Executive Committee are roles that must be occupied by different persons and the structure of the Board of Directors consists of Independent Directors, who comprise more than one-third of the Board of Directors. Board of Directors’ Meeting A Board of Directors meeting is scheduled for at least once every quarter and, when deemed necessary, the Chairman of the Board of Directors may call additional, extraordinary meetings. A clearly stated meeting agenda along with invitations and sufficient supplementary documentation are distributed at least seven days in advance to every Board of Directors in order that information pertaining to the meeting might be studied in advance, the only exception to this is in the event of an urgent meeting. In which case the minutes of the meeting shall be provided, as shall verifiable, documentation for reference purposes. In a meeting, the Chairman of the Board of Directors allocates sufficient time for Directors and Management to freely discuss, question and formulate suggestions relating to critical issues. In 2002, the Board of Directors convened a total of eight general and extraordinary meetings with attendance as detailed below: 1. Dr. Phaiboon Limpaphayom (Ph.D.)

8 attendances

2. Mrs. Tasanee Manorot

8 attendances

3. Mr. Boonklee Plangsiri

4 attendances

4. Mrs. Siripen Sitasuwan

7 attendances

5. Mr. Suphadej Poonpipat

7 attendances

6. Mr. Arun Churdboonchart

8 attendances

7. Mr. Lum Hon Fye

6 attendances (started at Bod. No. 2)

8. Mr. Chow, Wing Keung Lucas

1 attendance

9. Mr. Somprasong Boonyachai

7 attendances

10. Mrs. Charintorn Vongspootorn*

7 attendances

*Resigned on November 13, 2002 and Mr. Boonchoo Dircksathaporn replace on November 13, 2002.

..47

Control System and Internal Audit The Company recognizes the importance of internal controls both in terms of management and operations. The responsibilities, accountability and authority of all operations staff and management are clearly defined. For example, there is the control of asset protection, the delineation of duties, separation of supervisory and performance assessment in order to balance authority and finally financial statements that are presented to management by line staff. The Company has established an internal audit office that reports directly to the audit committee. The duties of the internal audit office relate to auditing and consultation to ensure that the Company’s objectives can be achieved as targeted. This includes, for example, the assessment of control self-assessment, risk management and corporate governance. The Company has a clear policy to integrate risk management in order that it will achieve its objectives, targets and strategies as planned. Every member of management and staff in the Company is an owner of risk and has the responsibility of assessing such risks at every departmental and process level, including the assessment of existing controls and the presentation of plans to mitigate existing risks. The Board of Director's Responsibility for the Financial Statement The accompanying consolidated financial statement and all of the data included in annual report have been prepared by and are the responsibility of the management of the Company. The Company has developed risk management and maintains systems of internal controls in order to assure, on a reasonable and efficiency. The Board of Directors exercises its responsibilities through the Audit Committee of the Board of Directors to reviews the accounting policy, the reliability of its financial statement, internal control, internal audit and risk management system. Relations with Investors The Company’s Board of Directors gives a high priority to the disclosure of the Company’s information to the public. Strategic directions, operational guidelines and financial reports are released to investors on an equal and transparent basis. Releases are made through the Stock Exchange of Thailand and the Company’s web site. An Investor Relations Department has been established by AIS to communicate with investors and investment analysts. AIS has regularly organized conferences with the investment community on an annual and quarterly basis. The Company’s top management team makes their business presentations, and investors and analysts then have the opportunity to ask questions and explore relevant issues. For further information please contact the Investor Relations Department on +662 299 5900 or at www.shincorp.com. Internal Controls The interna control system is valued and respected by the Company because it can ensure the management of reducing business risk, increasing the effectiveness of business operations (resource management), achieving targets, protecting shareholder's investments, ensuring the accuracy of financial statements, protecting Company assets and ensuring that all staff comply with laws and regulations. The Company assigns the Board of Directors, management and all staff to be accountable and take reponsibility for the operation and management of effective internal controls. The Audit Committee attended the Board of Directors' meeting no. 2/2003 dated February 25, 2003 and assessed the five key components of the internal control system: 1. Control Environment 2. Risk Assessment 3. Control Activity 4. Information and Communication 5. Monitoring and Evaluation

..48

The result of the assessment shows that the Company's operation of its five internal control components is both comprehensive and effective. In addition, a certified public accountant, PricewaterhouseCoopersABAS Limited, conducted an audit of the financial statements in the year 2002, assessed the effectiveness of the internal control system and determined that there were no significant weaknesses. Protection Against the Use of Inside Informatiom The Company adheres to recognized ethical standards in the conduct of its business with competitors and shareholders through a code of conduct and regulations for management and staff at all levels. The code of conduct prevents members of management or staff from using inside information, which they might have access to, in order to purchase Company shares one month prior to the public disclosure of its financial statements. In addition, the Company requires that the Board of Directors and management submit a report detailing any securities held and changes there of relating to either themselves, their spouses or children. Such reports will be submitted within a time frame in accordance with the regulations governing the disclosure of securities held. In addition, the management is required to submit of a copy such reports on the same day as they are submitted to the Stock and Exchange Commission (SEC).

..49

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 2001 and 2002, the Company and its subsidiaries entered into several inter-company transactions with persons of potential conflict, whereby the Company's auditor gives his/her opinion related there to in the notes to the audited financial statements for the accounting period of 2001 and 2002 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 inter-company 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

Details of transactions

31 December 2001 (Million Baht)

31 December 2002 (Million Baht)

Retional and necessity

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - Company Consolidated Company Consolidated - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

1. Shin Corporation Public

The Company AWM and DPC

Advisory fee is charged on

Company Limited (SHIN) /

employ SHIN to provide advisory and

monthly basis based on a

a major shareholder of the

management. The Company pays

percentage of total assets,

Company, holds 43.06%

advisory fee of Baht 14,187,016.33

of 15% which SHIN

and shares directors

a month. The financial management

engages Boston Consulting

fee is paid on actual cost.

Group (Thailand)- BCG to

1. Advice and financial management fee 2. Dividends payable 3. Rental and other service expenses 4. Service income 5. Payable to associated companies

140.48 437.48 4.36 0.90 6.19

156.29 437.48 5.26 1.17 6.24

235.27 505.48 0.09 0.73 2.59

248.54 505.48 0.09 0.83 2.59

evaluate advisory fee, consulting and financial management fee that is determined by actual market price transactions.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

2. Shin Satellite Public

The Company leases Satellite transponder

The only one satellite

Company Limited (SATTEL) /

on the Thai Com 1A from SATTEL for the

operator in Thailand.

SHIN is a major shareholder,

lease fee of USD 1,700,000 per year.

The Company is Charged

holds 51.53% and shares

1. Rental and other service expenses

directors

2. Service income 3. Purchase of telecommunications equipment 4. Trade account payable

76.19 1.28 2.55 6.20

76.19 1.53 2.55 6.20

73.37 1.76 6.15

73.37 1.89 6.15

at the same rate as any other customer.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..50

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Related parties/Relation to the Company

Details of transactions

31 December 2001 (Million Baht)

31 December 2002 (Million Baht)

Retional and necessity

3. Shinawatra Information

The Company AWM and DPC

The Computer system of

Technology Company Limited

utilize a computer service provided by

SIT is used for accounting

(SIT) SHIN is a major

SIT and pay amount of Baht 1,093,000

processing under SHIN

shareholders, holding 99.99%

a month.

and shares directors

1. Consulting and management fee for

group, the consulting and

9.00

13.25

35.81

0.99

18.48 0.99

1.60 -

2. Rental and other service expenses 3. Purchase of office equipment and

management fee is charged on actual cost of Hardware

Computer System

and Software maintenance in annually, then average by CPU usage of particular

computers

company from prior year to charge in the following year. - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

4. SC Matchbox Co.,Ltd.

The Company AWM and DPC

The Agency is a creative

(SMB) / SHIN is a major

employ SMB as the agency to produce

advertising agency with a good understanding

shareholders, holding 99.96%, advertising campaign through various and shares directors

of the Company’s

media on freelance basis. 1. Advertising fee, net 2. Purchase of office equipment and

222.46 5.71

448.28 5.73

658.89 1.19

765.31 1.19

58.99

191.11

361.16

396.32

strict confidentiality. Advertising fee is compared

computer program 3. Payable to associated companies

products and maintains

to market on job by job basis.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

5. Teleinfo Media Co.,Ltd.

The Company employs TMC to furnish

The Company pays the

(TMC) / SHIN is a major

the information for mobile phone’s value

service charge by the

shareholder, holds 38.24%

added service such as astrology, lotto,

percentage based on

and shares directors

comic story. The Company pays for

revenue from customers which depends on the

actual services on monthly basis. 1. Service fee 2. Advertising fee 3. Trade account payable 4. Payable to associated companies

52.24 1.98 8.02 0.22

52.24 6.15 8.02 0.22

40.57 3.00 0.34 3.05

40.73 3.04 0.34 3.05

kind of service. The rate ranges from 10-60% which is the same as Content Provider’s

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

6. OAI Asset Co.,Ltd.

They have been utilized by

The Company rents : office space in

(OAIA) / The Shinawatra family, Shinawatra Tower 2 / office and parking

the Company from the

a major shareholder in SHIN,

space in the White House building /

beginning. The company

holds 100 %

office and parking space in MWA

also invested in the full

buildings / warehouse and parking space

utilities on the leasehold premises and fully utilize.

at a building on Phaholyothin Soi 13. 1. Rental and other service expenses 2. Payable to associated companies

150.80 0.39

166.72 0.40

155.29 6.14

158.29 6.17

The Company uses external appraisers accepted by SEC to evaluate property rental rate for guidance associate with location, facility, relocate and decoration cost for consideration of rental agreement

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..51

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Related parties/Relation to the Company

Details of transactions

31 December 2001 (Million Baht)

31 December 2002 (Million Baht)

Retional and necessity

7. SC Office Park Co.,Ltd.

The Company and AWM rented the total

They have been utilized by

(SOP) / The Shinawatra

office space of 13,197 square meters in

the Company from the

family, a major shareholder

Shinawatra Tower 1 for a total rental

beginning. The company

in SHIN, holds 60.00%

fee of Baht 6,316,575.73 a month.

also invested in the full

1. Rental and other service expenses 2. Trade account payable 3. Payable to associated companies

87.21 0.18

117.47 0.24

130.69 0.87 3.81

133.28 0.87 3.81

utilities on the leased premises and fully utilize. The Company uses external appraisers which are accepted by SEC to evaluate property rental rate for guidance associate with location, facility, cost of moving and modification for consideration of rental agreement

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

8. Worth Supplies Co.,Ltd.

The Company rents the office space, in

They have been utilized by

(WS) / The Shinawatra

total of 3,937.80 square meters, in the

the Company from the

family, the major shareholder

Shinawatra Group's building

beginning. The company

of SHIN, holds 72.19%

(Chiang Mai)

also invested in the full

- Rental and other service expenses

17.24

19.56

22.96

23.18

utilities on the leased premises and fully Utilize. In the leased premises, the Company has the policy to consider the leases and continue the leases based on comparative market rates, location, facilities, and the cost of moving and modifications.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

9. P.T. Corporation Co.,Ltd.

The Company rents: the warehouse

They have been utilized by

(PT) / The Shinawatra family,

space located in the Kanna Yao Sub-

the Company from the

the major shareholder of SHIN, district/ office space and roof-top

beginning. The company

holds 70.%

space of a building located in the

also invested in the full

Thanonnakhornchasri Sub-district/

utilities on the leased

building space located at the Thong Song

premises and fully Utilize.

Hong Sub-district, Bangkhen District and

In the leased premises, the

roof-top space/ a space for base station

Company has the policy to

installation at the Wang Hin Condo Town

consider the leases and

project/ APG rents the space of a Mini-

continue the leases based

office (Tower D) located at Thong Song

on comparative market

Hong Sub-district.

rates, location, facilities,

- Rental and other service expenses

10.41

19.88

14.01

16.98

and the cost of moving and modifications.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..52

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Related parties/Relation to the Company

Details of transactions

31 December 2001 (Million Baht)

31 December 2002 (Million Baht)

Retional and necessity

10. Upcountry Land Co.,Ltd.

The Company rents office space and

They are specialized in

(UL) / The Shinawatra family,

some spaces for base station installation

providing rental spaces throughout the country,

the major shareholder of SHIN, in Bangkok and the other provinces, hold 99.98%

which meet the route

totaling 95 sites. - Rental and other service expenses

112.25

112.58

95.08

95.93

requirement in a timely manner. The Company has the policy to consider the leases and continue the leases based on comparative market rates, location, facilities and the cost of moving and modifications.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

11. OAI Leasing Co.,Ltd.

They are specialized in the

The Company and AWM lease 122

lease of vehicles, serve

(OAIL) / The Shinawatra family vehicles to use at various branches and Damapong family, the

only for related companies

from OAIL.

major shareholder in SHIN,

1. Rental and other service expenses

hold 99.99%

2. Vehicle acquisition

22.92 0.65

23.72 0.93

31.48 -

33.52 -

at reasonable prices and provide efficient quality services.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

12. I.T. Applications and

The Company engages ITAS for the

ITAS charges the Company

Service Co.,Ltd. (ITAS)

improvement and development of

at the lower or the close rate if compared with the

/ SHIN is the major shareholder computer programs on a job by job with Joint-Directors

other consultant companyâ&#x20AC;&#x2122;s

basis. 1. Consulting and management fees 2. Cost of office equipment and

14.93 0.70

24.49 3.24

5.14

3.35

The average service charge is around 800-1,000 Baht

computer 3. Payable to associated companies

rate.

per hour depending on the kind of work and the level of consultant.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

13. OAI Property Co.,Ltd.

They have been utilized by

The Company, AWM and DPC rent the

(OPP) / The Shinawatra family, office space in Shinawatra Tower 3 with

the Company from the

the major shareholder of SHIN, total area of 4,912 square meters. The

beginning. The company

hold 67.00%

Company also rents some portions of

also invested in the full

Shinawatra Tower 3, totaling 689.90

public utilities on the leased premises and the

square meters. 1. Rental and other service expenses 2. Trade account payable 3. Payable to associated companies

19.70 0.36

93.40 1.17 0.76

57.44 0.76 2.06

149.5 0.93 3.13

utilities are fully functioning. In the leased premises, the Company has the policy to consider the leases and continue the leases based on comparative market rates, location, facilities, and the cost of moving and modifications.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..53

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Related parties/Relation to the Company

Details of transactions

31 December 2001 (Million Baht)

31 December 2002 (Million Baht)

Retional and necessity

14. Singapore Telecome

The Company enters into an agreement

The International Roaming

Mobile Pte. Ltd. / Group of

with Singapore Telecom Mobile Pte.Ltd.

with STM in the ordinary

Singtel Strategic Investments

for the joint operation of International

course of business since

Pte. Ltd. (SingTel), the

Roaming.

Company’s major shareholders 1. Service income 2. Payable to associated companies 3. Trade account payable

the company expands into

157.84 53.76 4.76

159.79 41.24 5.01

International mobile service with foreign operators. Both parties charge each other at the accepted price deducted the profit from their customers.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

15. Singapore Telecom

The Company pays the salary and

The Company pays the

International Pte. Ltd.

remuneration to STI in consideration of

service charges to STI on

(STI) / An associated company the STI operational staff. The expense is in Singtel, the Company’s

charged on an actual basis.

major shareholders

1. Salary and other remuneration 2. Dividend payment 3. Payable to associated companies

the actual basis or by the agreement.

39.62 28.12

43.79 28.12

21.94 227.20 11.44

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

16. C.S. Loxinfo Co., Ltd.

ADC provides Datanet service to the

They provide an Internet

(CSL) / SHIN is indirect major

Company and CSL.

service and charge the

shareholder with Joint-Director

AWM and APG engage CSL to provide

company at the same rate

Internet service with a monthly service

charging on any other

fee. 1. Service income 2. Rental and other service expenses 3. Trade account receivable

customers.

0.19 2.47 0.19

75.62 5.22 0.31

0.15 15.48 0.04

79.72 16.53 10.32

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

17. Shineedotcom Co.,Ltd.

The Company engages Shinee for its

The Company pays the

(Shinee) /SHIN is indirect

services via the Internet, with a monthly

service charge by the

major shareholder with

service fee.

Joint-Directors

1. Rental and other service expense 2. Payable to associated companies

percentage based on

14.21 -

4.14 7.10

revenue from customers which depends on the kind of service. The rate ranges from 10-60% which is the same as Content Provider’s.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

18. Bangkok Telecom

The Company and DPC engage BTE for

They specialize in installing

Engineering Co.,Ltd. (BTE) /

the installation of telecommunication

base station and charge at

The Shinawatra family, the

equipment.

major shareholder of SHIN,

1. Cost of communication equipment

holds 99.99%

2. Trade account payable

comparative price close to

116.91 8.69

465.50 31.85

181.81 32.65

184.29 33.93

the other Contractor. They have to submit tenders in line with acquisition and employment policy.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..54

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Related parties/Relation to the Company

Details of transactions

31 December 2001 (Million Baht)

31 December 2002 (Million Baht)

Retional and necessity

19. The Shinawatra family and affiliate company

1. Investment funds in Companyâ&#x20AC;&#x2122;s

280.00

10.00

22.40 5.59 2.07 1.23

22.40 6.73 2.30 1.23

4.49 1.65 2.63 -

4.49 1.65 2.78 -

debentures 2. Interest payment 3. Rental and other service expenses 4. Service income 5. Purchase of office equipment

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

20. The Company's Directors

The Company's Directors hold debentures of the Company. 1. Investment funds in the Company's

45.08

51.00

2.05

2.53

debentures 2. Interest payable

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

21. National Insurance

The Company pays insurance for the

Co., Ltd. / The Director of

base station and equipment.

SHIN is the major shareholder

1. Insurance payment.

8.71

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

22. National Finance Plc. /

The Company pays finance leasing of

Chairman of the Audit

computer and rent office space.

Committee is a managing

1. Computer leased rental expense

director of NFS

2. Rental and other service expense

They provide a finance lease service and charge the

3.92

11.88

90.90 0.35

0.93

company at the same rate charging on any other customers.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

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 inter-company transactions between the Company, its subsidiaries and related parties in each quarter in order to ensure that there is no conflict of interest.

..55

Management Discussion and Analysis

EXPLANATION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS 1. OVERVIEW As of the end of the year 2002, the Company and its subsidiaries had a total of 10,662,500 mobile phone subscribers, comprising of 2,526,300 GSM Advance and GSM 1800 subscribers and 8,136,200 One-2-Call! subscribers, which represents an increase of 5,459,200 subscribers or 104.9%. The main factors were the significant growth in the mobile phone market, the changes in this industry such as the lower handset price, unlocking IMEI (International Mobile Equipment Identity), and the popularity of prepaid system usage which costs less and is more convenient for purchasers. Last year, the entrance of a new operator in the industry caused intense competition. As a result, the Company's market share decreased from 65% at the end of 2001, to 61% at the end of 2002. The Company's financial performance, however, significantly increased from last year. In 2002, the Company and its subsidiaries gained a total revenue of Baht 81,366 million and a net profit of Baht 11,430 million, an increase from revenue of Baht 60,670 million and net profit of Baht 3,851 million in 2001. 2. ANALYSIS OF OPERATION RESULTS CONSOLIDATED FINANCIAL STATEMENT FOR THE YEAR ENDED OF DECEMBER 2002, COMPARED TO THE YEAR ENDING OF DECEMBER 2001. The primary source of revenue of the Company and its subsidiaries comprises of revenue from services and equipment rental and revenue from sales, deriving mainly from the Company's mobile phone business, data communication service business, and call center business. - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Audited - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2000 2001 2002 - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Income from Services and Equipment Rentals Mobile Phone Pager Data Communication Service Total

24,792

67.1

40,884

69.1

60,476

75.4

1,148

3.1

539

0.9

0.0

257

0.8

318

0.5

378

0.5

26,197

70.9

41,741

70.5

60,926

75.9

10,549

28.5

17,359

29.3

19,309

24.1

194

0.5

0.2

0.0

Income from Sales Mobile Phone Pager Data Communication Service

0.1

0.0

Total

10,762

29.1

17,449

29.5

19,325

24.1

Grand Total

36,959

100.0

59,190

100.0

80,251

100.0

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Revenue from Services and Equipment Rental Income from services and equipment rental of the Company and its subsidiaries increased 59.3 % in 2001 and 46% in 2002 when compared with last year. Income from services and equipment rentals continuously grew from Baht 24,792 million in 2000, up to Baht 40,884 million in 2001, and Baht 60,476 million in 2002. The result is largely due to the increase of the customer base, especially with regards to the prepaid service.

..56

Number of mobile phone users and average monthly income per user - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net rise in users (persons) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - NMT 900

GSM Advance

One-2-Call!

GSM 1800

Acccummulated users (persons) - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - NMT 900

GSM Advance

One-2-Call!

GSM 1800

Average revenue per users (Baht / month) - - - - - - - - - - - - - - - - - - -- - - - - - - NMT 900

GSM Advance One-2-Call!

GSM 1800

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2000

(144,900)

561,200

330,800

83,100

465,600

1,157,200

354,500

2001

(200,800)

1,102,500

2002

(261,400)

(26,000)

216,100

1,106

1,309

1,295

1,934,000

174,200

264,800

2,259,700

2,288,500

390,300

984

1,295

380

1,035

5,847,700

(101,100)

3,400

2,233,700

8,136,200

289,200

707

1,170

335

1,043

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

The Mobile phone user market has expanded tremendously since 2000, resulting in an increase in mobile phone subscribers from 1,977,300 at the end of 2000, to 5,203,300 at the end of 2001, and up to 10,662,500 at the end of 2002. ARPU of GSM advance and One-2-Call! stood at Baht 1,170 and Baht 335, respectively. This figure represents a decline from last year, resulting from a tariff promotion in 2002, as well as the company's larger and wider subscriber base. Revenue from Sales Revenue from sales rose from Baht 10,762 million in 2000, up to Baht 17,449 million in 2001, and Baht 19,325 million in 2002, an increase of Baht 6,687 million or 62.1% in 2001 and Baht 1,876 million or 10.8% in 2002. The increase was primarily due to the dramatic growth of the total mobile phone market in 2002, reflecting an increase in the Company sales volume, despite facing lower handset selling prices after unlocking IMEI. Cost of Services and Equipment Rental Cost of services and equipment rental was Baht 29,766 million in 2002, up Baht 8,130 million, or 37.6% from the year of 2001. There are two main components; (1) the increase of annual revenue sharing payment to TOT as a percentage of the continuously increased income from mobile phone services, and (2) the amortization costs of mobile phone networks. In addition, the Company had changed the amortization period of NMT analog system from not exceeding June 2003, to not exceeding September 2002. The result of the amortization period change is an increase in the amortization expense in 2002 by Baht 322 million. The gross margin from services, however, increased from 48.2% in 2001 to 51.1% in 2002 due to a growth rate of revenue over that of cost of service. Costs of Sales The Costs of sales rose from Baht 7,472 million in 2000 to Baht 13,539 million in 2001 and Baht 15,075 million in 2002 in line with revenue from sales. The gross profit margin from sales was maintained at 22% in 2002, almost the same level as previous year. Selling and Administrative Expenses Selling and administrative expenses of the Company and its subsidiaries rose from Baht 5,364 million in 2000, up to Baht 9,483 million in 2001 and Baht 13,802 million in 2002, or up 76.8% and 45.5% in 2001 and 2002, respectively, due to the following main factors. - Increase in staff expenses of Baht 307 million. - Increase in marketing expenses by Baht 921 million, mainly from Baht 660 million of the expense in NMT analog migration campaign to digital GSM advance system. - Increase in allowance for doubtful accounts and bad debts of the company and its subsidiaries by Baht 2,104 million. - Increase in amortization of goodwill of Baht 578 million. - Increase in billing and collection expenses of Baht 217 million.

..57

Interest Expenses Interest expenses rose from Baht 729 million in 2000, to Baht 1,573 million in 2001, and Baht 3,069 million in 2002 due to debenture issued and increased loans in order to finance the network expansion. Income Tax Income tax rose from Baht 4,283 million in 2000, to Baht 6,238 million in 2001, and Baht 7,816 million in 2002, or up 45.6% in 2001 and 25.3% in 2002 due to a significant increase in profit before tax of the Company and its subsidiaries, as the Company gained tax benefit of Baht 434 million from selling the investment in Advanced Paging Co., Ltd. to third party. Net Profit Net profit of the Company and its subsidiaries grew from Baht 3,851 miilion in 2001, up to Baht 11,430 million in 2002, an increase of Baht 7,579 million, or 196.8%, when compared with last year due to the reasons as mentioned above. In 2001, the Company also recorded the allowance for impairment loss of NMT analog network and paging network cost in the amount of Baht 4,265 million. 3. ANALYSIS OF FINANCIAL POSITION 3.1 Analysis of Assets Cash on Hand and Cash Equivalents and Short-Term Investments At the end of 2002, the Company and its subsidiaries' cash on hand and cash equivalents was Baht 4,068 million and short-term investments was Baht 62 million. While compared with the end of 2001, the amount of cash on hand and cash equivalents was Baht 15,284 million, and short-term investments was Baht 88 million. The decrease was primarily from the Company and its subsidiaries investment in continual network expansion higher than cash flow received from operating and financing sources. Trade Accounts Receivable - Net Net trade accounts receivable increased from Baht 5,445 million at the end of 2000, to Baht 7,674 million at the end of 2001, then down to Baht 7,239 million at the end of 2002. The decrease was primarily due to that the Company has strengthened the collection performance. Inspection of fraud has become more stringent. In addition, the application of an intelligent database system enables the Company to segment the customer and thus improve receivable management. Moreover, the higher proportion of prepaid revenue results in the decline of average debt collection period from 40 days in 2001 to 33 days. Trade Account Receivables of the Company and Subsidiary Companies, Classified by Default Period

Current Trade Accounts Receivable

31 December 2000

31 December 2001

31 December 2002

(million Baht)

5,251

7,762

7,774

316

746

815

260

898

Default Trade Accounts Receivable More than 3 months, but less than 6 months More than 6 months, but less than 12 months More than 12 months

304

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total default accounts receivable

432

1,310

1,807

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total Trade Accounts Receivable

5,683

9,072

9,581

Allowance for doubtful accounts

(238)

(1,398)

(2,342)

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total Net Trade Accounts Receivable

5,445

7,674

7,239

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..58

In providing the allowances for doubtful accounts, for the trade account receivable with a default period over 3 months, 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 1,970 million at the end of 2000, to Baht 2,238 million at the end of 2001, but decreased to Baht 1,961 million at the end of the year 2002. The main reason was the lower cost of inventories due to the drastic expansion of total mobile handset market, manufacturer achieved economies of scale. Property and Equipment - Net Net property and equipment rose from Baht 2,340 million at the end of 2000, to Baht 6,233 million at the end of 2001, and Baht 9,748 million at the end of 2002. The size of the increase was due to valued added service equipment expansion. The Cost of Mobile Phone and Pager Networks and the Cost of Tools and Equipment for the Operation of DataNet Under the Joint Venture Agreement - Net The net cost of mobile phone and pager networks and the cost of tools and equipment for the operation of DataNet rose from Baht 33,947 million at the end of 2000, to Baht 56,334 million at the end of 2001, and Baht 79,795 million at the end of 2002. This was due to the Company's network expansion of the digital GSM system in Bangkok and the provinces. 3.2 Analysis of Liabilities Trade Accounts Payable Trade accounts payable amounted to a balance of Baht 7,658 million and Baht 10,701 million, on an average payable period of 105 days and 118 days at the end of 2000 and 2001, respectively, resulting from greater investment in network expansion. As of the end of 2002, the trade account payable balance was Baht 7,649 million, on an average payable period of 108 days. The shorter average payable period, caused by advance payments to suppliers for cash discounts in return, has resulted in a decrease in trade A/P though network expansion continued. Long-term Debentures and Long-term Loans The Company and its subsidiaries' long-term debentures and long-term loans totaling Baht 11,387 million at the end of 2000, rose to Baht 41,184 million at the end of 2001. The Company and its subsidiaries issued additional long-term debentures to the amount of Baht 14,986 million, and drew down new long-term loans and financial lease amounting to Baht 3,358 million, totaling Baht 18,344 million. The Company repaid long-term debentures and long-term loans amounting Baht 6,357 million and Baht 1,437 million, respectively, totaling Baht 7,794 million. As of the end of 2002, the Company and its subsidiaries had long-term debentures and loans to the amount of Baht 51,734 million. The portion of long-term debentures and loans, maturing within 1 year, amounted to Baht 8,501 million. And the portion of long-term debentures and loans, maturing longer than 1 year, amounted to Baht 43,233 million. Other Current Liabilities Other current liabilities increased from Baht 3,893 million at the end of 2000, to Baht 6,124 million at the end of 2001, and Baht 7,969 million at the end of 2002. The major items were Baht 3,666 million income tax payable and Baht 2,304 million unearned income from prepaid revenue. 3.3 Anaysis of Shareholders' Equity As of the end of 2002, the Company had Baht 51,241 million in equities, an increase from Baht 41,021 million at the end of 2001, and Baht 28,125 million at the end of 2000. Its paid-up capital was Baht 2,935 million with Baht 20,004 million premium and Baht 28,101 million retained earnings. As at November 14, 2002, the Company passed the resolution of the board of directors approving the repurchase stocks, not exceeding 90 million shares, or 3.07% of total issued and fully paid-up share capital. During December, 2002, the Company repurchased 2.16 million shares at the average price of Baht 32.67 per share.

..59

3.4 Analysis of Capital Structure The company has the policy of maintaining debt to equity ratio at the level of not over than 2 to 1. At the end of year 2000, the ratio of debt to equity was 1.10, due to the issuance of loan term debenture worth Baht 10 billion in March 2000, together with increasing in short-term debts and long-term debts Baht 2,671 and the Company's profit increased from 1999 by 140%. As a result of shareholder's equity, the Balance Sheet showed an increase of Baht 6,600 million from year 1999. As the end of year 2001, debt to equity ration was up to 1.77, due to 2 issuance of long-term debentures in March and November 2001 totaling Baht 26,890 million, together with increasing in short-term debts and long-term debts. As the end of year 2002, debt to equity ratio was down to 1.46, due to the Company's profit drastic increased from year 2001 by 197%. As a result of shareholder's equity, the Balance Sheet showed an increase of Baht 10,220 million from year 2001. In year 2002, the issuance of long-term debentures totaling Baht 15 billion in March and October respectively and drew down of long-term loan worth Bath 2 billion. Repayment of short-term loan and long-term loan and debentures amounted Bath 13,031 million. 3.5 Anaysis of Liquidity As part of the network coverage expansion, as well as increasing capacity, the Company continued to invest high-quality service to its customers. In 2002, the Company and its subsidiaries had net cash payments to investing activities of Baht 36,746 million. As a result of strong growth in revenue from services and equipment rental and revenue from sales, the Company's net cash flow from operation was Baht 22,038 million. In addition, the Company received Baht 14,943 million from long-term debentures, Baht 2,940 million from long-term loans, and Baht 20 million of short-term loans from commercial bank. The Company cash outflow stemmed from Baht 13,231 million of loans and debentures repayment, Baht 1,151 million of dividend payment, and Baht 71 million of stock repurchase. Thus, the Company had the net cash receipts from financing activities of Baht 3,477 million. As a result, cash and cash equivalent of the Company and its subsidiaries totally decreased by Baht 11,231 million in 2002. The liquidity ratio fell from 1.22 at the end of 2000, to 0.94 as of the end of 2001, owing to a sharp increase in trade accounts payable and accrued annual revenue sharing, due within one year. The ratio gradually declined to 0.63 at the end of 2002, resulting from a significant decrease of cash and cash equivalents due to continually investing in mobile phone network expansion.

..60

Directors and Management Team

Dr. Paiboon Limpaphayom (Ph.D.) Chairman of the Board of Director - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Age 62

Experience

Shareholding (%)* None

2000 - present

Director, Thai Military Bank Plc.

Highest Education

1999 - present

Chairman of the Board of Director, Advanced Info Service Plc.

Ph.D. (Electrical Engineering),

1998 - 2002

Vice Chairman of the Board of Directors, Shin Corporation Plc.

Iowa State University, USA.

1993 - 1998

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

Diploma, National Defense College, Thailand Class 33

1992 - 1993

Advisor, Telephone Organization of Thailand

Illegal Record in the past 10 years None

1988 - 1992

Managing Director, Telephone Organization of Thailand

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Mr. Boonklee Plangsiri Director and Chairman of the Group Executive Committee - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Age 52

Experience

Shareholding (%)* None

2001 - present

Chairman of the Board of Director, ITV Plc.

Highest Education

2001 - 2002

Chairman of the Board of Director and Chairman of the Executive

University of Illinois (Urbama Champaign), USA.

2000 - present

Director, Advanced Info Service Plc., Shin Satellite Plc.

Illegal Record in the past 10 years None

1999 - present

Director and Chairman of the Group Executive Committee,

M.A. in Computer Engineeing,

Committee, ITV Plc.

Shin Corporation Plc. 1997 - 2000

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

1995 - 1996

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

1993 - 1994

President of Shinawatra Group

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Mr. Somprasong Boonyachai Director and Chairman of the Executive Committee Wireless Communications - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Age 48

Experience

Shareholding (%)* None

2000 - Present

Highest Education

Shin Corporation Plc.

Master of Engineering, Asian Institute of Technology (AIT) Illegal Record in the past 10 years None

Group Vice Chairman of the Group Executive Committee,

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

Chairman of the Executive Committee - Wireless Communications, Shin Corporation Plc., Director Advanced Info Service Plc.

1997 - 1998

Vice Chairman of the Executive Committee - Wireless Communications, Shinawatra Group

1995 - 1996

Senior President, Advanced Info Service Plc.

1994 - 1995

President, Advanced Info Service Plc.

1993 - 1994

President, Shin Satellite Plc.

1993

President, Advanced Info Service Plc.

1992 - 1993

Executive Vice President (Operation 4), Shinawatra Group

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

* Includes holdings by spouse and minor children

..61

Mrs. Siripen Sitasuwan Director, Member of the Executive Committee - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Age 55

Experience

Shareholding (%)* None

2001 - present

Highest Education

2000 - present

President, Shin Corporation Plc.

MBA, Wichita State University, Wichita, Kansas, USA.

1998 - present

Director and Member of the Executive Committee,

Illegal Record in the past 10 years None

Director and Member of the Executive Committee, ITV Plc.

Shin Corporation Plc., Advanced Info Service Plc., Shin Satellite Plc. 1998 - 2000

Chief Finance Officer, Shin Corporation Plc.

1994 - 1998

Executive Vice President - Finance, Shinawatra Group

1991 - 1993

Vice President - Finance, Shinawatra Group

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Mr. Lum Hon Fye Director and Executive Vice Chairman - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Age 40

Experience

Shareholding (%)* 0.001

2002 - present

Director, Advanced Info Service Plc.

Highest Education

2001 - present

Executive Vice Chairman, Advanced Info Service Plc.

Master of Science in Management,

2001

Vice President - Regional Mobile/Consumer Business,

Standford University, USA. Engineering Science (1st Class Honours), University of Oxford, UK.

Singapore Telecom Ltd. 1999 - 2001

Illegal Record in the past 10 years None

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

1998 - 1999

Chief Executive Officer, SingTel Paging

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Mr. Chow, Wing Keung Lucas Director and Member of the Executive Committee - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Age 49

Experience

Shareholding (%)* None

Present

Highest Education

Director and Member of the Executive Committee,

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

Executive Vice President (Consumer Business Group),

Advanced Info Service Plc. 1999 - present

Illegal Record in the past 10 years None

Vice President (Consumer Marketing) CEO (SingTel Mobile)

1998 - 1999

Group Director of Total Quality

1998

Operation Manager of Hewlette

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Mrs. Tasanee Manorot Director - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Age 58

Experience

Shareholding (%)* None

2002 - present

Senior Executive Vice President, TOT Corporation Plc.

Highest Education

2001 - present

Director, Advanced Info Service Plc.

Bachelor Degree in Commerce and Accountancy,

2000 - 2002

Chulalongkorn University Illegal Record in the past 10 years None

Senior Executive Vice President, Telephone Organization of Thailand

1999 - 2000

Executive Vice President, Telephone Organization of Thailand

1996 - 1999

Vice President of Finance Department, Telephone Organization of Thailand

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

* Includes holdings by spouse and minor children

..62

Mr. Suphadej Poonpipat Director and Chairman of the Audit Committee - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Age 53

Experience

Shareholding (%)* None

1998 - Present

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

Highest Education

1990 - Present

President and Chief Executive Officer, National Securities Plc.

Master Degree, University of Wisconsin, USA. Illegal Record in the past 10 years None - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Mr. Arun Churdboonchart Director and Member of the Audit Committee - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Age 62

Experience

Shareholding (%)* None

1998 - present

Highest Education BBA, California State University, Long Beach, California, USA.

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

present

Executive Director, Trinity Group

Diploma (Private Sector, Class 3), Thailand National Defense College Illegal Record in the past 10 years None - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Mr. Boonchoo Direksathaporn Director and Member of the Audit Committee - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Age 57

Experience

Shareholding (%)* None

Present

Director & Member of Audit Committee, Advanced info Service Plc.

Highest Education

Director & Managing Director, Ratchaburi Electricity Generating

B.A. (Accounting), Chulalongkorn University

Holding Plc.

Fellow Member of The Insitute of Chartered Accounting

Director & Acting Managing Dirctor, Ratchaburi Electricity

in England and Wales

Generating Co., Ltd.

Diploma, Nation Defence College Diploma, Fellow Member, Thai Institute of Director

Director, Ratchaburi Energy Company Limited 1999-2000

Deputy Governor - Account and Finance and Acting Deputy

Directors Certification

Governor Administration, Electricity Generation Authority

Illegal Record in the past 10 years None

of Thailand

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Dr. Dumrong Kasemset (Ph.D.) Member of the Executive Committee - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Age 49

Experience

Shareholding (%)* None

2000 - Present

Highest Education Ph.D., Electrical Engineering Massachusetts Institute of Technology, USA.

Group Vice Chairman of the Group Executive Committee, Shin Corporation Plc. Member of the Executive Committee, Advanced Info Service Plc.

1997 - Present

Illegal Record in the past 10 years None

Chairman of the Executive Committee-Satellite Communications and International Business, Shin Corporation Plc.

1995 - 1997

Vice Chariman of the Executive Committee-Policy, Shinawatra Group

1994 - 2000

President, Shinawatra Satellite Plc.

1993 - 1994

Executive Vice President, International Broadcasting Corporation Plc.

1991 - 1992

Senior Manager-Business Development, Shinawatra Group General Manager-IBC Cable TV

1989 - 1991

Program Manager Integrated Optoelectronics, GE Aerospace, New York, USA.

1986 - 1989

Manager, GE As IC Materials, Siemens, New Jersey, USA.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

* Includes holdings by spouse and minor children

..63

Ms. Yingluck Shinawatra President - Wireless Communication - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Age 34

Experience

Shareholding (%)* None

2002 - Present

Highest Education

2001 - 2002

Master Degree, Kentucky State University, USA. Illegal Record in the past 10 years None

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

1999 - 2001

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

1997 - 1998

Vice President - Shinawatra Directories Co., Ltd.

1995 - 1996

General Manager, Shinawatra Directories Co., Ltd.

1991 - 1994

Manager, Shinawatra Directories Co., Ltd.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Mr. Vikrom Sriprataks Chief Technology Officer - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Age 51

Experience

Shareholding (%)* None

2002 - Present

Highest Education

Chief Techonology Officer, Advanced Info Service Plc.

Master Degree Thammasat University

2000 - 2002

Illegal Record in the past 10 years None

1998 - 2000

President - Digital Phone Co., Ltd. Senior Executive Vice President - Engineering Advanced Info Service Plc.

1995 - 1998

Executive Vice President - Shinawatra International Plc.

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Mrs. Suwimol Kaewkoon Chief Customer Champion & Terminal Business Officer - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Age 48

Experience

Shareholding (%)* None

2002 - Present

Highest Education

Chief Customer Champion & Terminal Business Officer Advanced Info Service Plc.

Master in Business Management from AIM., Philippines

1995 - 2002

Advanced Management Program,

1982 - 1994

President - Robinson Department Store Plc.

Harvard Business School, Boston, USA.

1980 - 1981

Allied Management Consultant of Asia Co., Ltd

Managing Dirtector - Advanced Wireless Marketing Co., Ltd.

Illegal Record in the past 10 years None - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

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

Age 41

Experience

Shareholding (%)* None

2001 - Present

Chief Finance Officer - Wireless, Advanced Info Service Plc.

Highest Education

1998 - 2001

Financial Director, Dentsu Young & Robicam Ltd.

Master of Management, SASIN

1997 - 1998

Illegal Record in the past 10 years None

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

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

* Includes holdings by spouse and minor children

..64

Board of Directors' Responsibilities with Regards to Financial Reporting

The Board of Directors is responsible for Advanced Info Service Public Company Limited’s financial statements and for Advanced Info Service Public Company Limited and its subsidiaries' consolidated financial statements, including the financial information presented in this annual report. The aforementioned financial statements are prepared in accordance with generally accepted accounting principles, using careful judgment and the best estimation. Important information is adequately and transparency disclosed in the financial statements notes to the Company shareholders and investors. The Board of Directors has provided and maintained a risk management system and appropriate and efficient internal controls to ensure that accounting records are accurate, honest and able to protect assets and uncover weakness in order to prevent fraud or materially irregular operations. In this regard, the Board of Directors has entrusted an Audit Committee with the responsibility to review the accounting policy and financial reports, review internal controls, internal audit and risk management system. Comments on these issues have been included in the Audit Committee Report presented in this annual report. The financial statements of the Company and the consolidated financial statements of Company and its subsidiaries have been examined by an external auditor, PricewaterhouseCoopers ABAS Limited. In conducting their audits and to express an opinion in accordance with generally accepted auditing standards, the Company has supported all of the Company’s records and related data. The auditor’s opinion is presented in the auditor’s report as part of this annual report. The Board of Directors believes that the Company’s overall internal control system has performed satisfactorily and lent credibility and reliability to Advanced Info Service Public Company Limited’s financial statements for the period ended December 31, 2002 and have been prepared to generally accepted principles and related regulations.

Dr. Paiboon Limpaphayom (Ph.D.)

Mr. Somprasong Boonyachai

Chairman of the Board of Directors

Chairman of the Executive Committee

..65

Consolidated and Company Financial Statements

Auditor'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 2002 and 2001, and the related consolidated and company statements of income, changes in shareholders' 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 Company'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 2002 and 2001, 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 20 February 2003

..66

Balance Sheets Advanced Info Service Public Company Limited As at 31 December 2002 and 2001

Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002

2001

2002

2001

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Noters

Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

ASSETS Current Assets Cash and cash equivalents

4,068,538,843

15,284,024,896

1,695,435,115

9,604,146,474

Current in vestments

61,882,443

88,096,705

Trade accounts receivable, net

7,238,678,506

7,674,224,357

7,780,514,135

6,649,990,974

4,445,440

1,027,166

149,265,258

31,483,244

1,961,215,240

2,238,468,727

760,884,864

358,586,057

608,368,520

251,616,746

1,000,803

418,303

17,939,665

1,530,545,936

3,168,730,197

1,530,545,936

3,168,730,197

2,754,421,296

2,254,533,367

1,927,119,247

1,522,002,088

Amounts due from and loans to related parties, net Inventories, net Sparepart inventories for mobile phone network maintenance Current portion of forward and swap contracts receivable, net

Advances to suppliers Other current assets

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total Current Assets

18,381,613,371

31,067,691,472

13,691,666,514

21,245,909,388

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Non-Current Assets Investments in subsidiaries, net

26,988,573,112

25,957,723,564

Property and equipment, net

9,747,640,759

6,233,122,217

9,398,450,858

4,369,722,477

79,795,412,932

56,334,130,518

67,846,177,643

48,710,389,413

Goodwill, net

12,504,658,669

13,943,787,826

Concession rights, net

4,870,396,567

5,325,219,607

Other assets, net

Other assets Property and equipment under concession agreements, net

785,646,017

634,436,817

628,058,806

458,292,276

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total Non-Current Assets

107,703,754,944

82,470,696,985

104,861,260,419

79,496,127,730

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total Assets

126,085,368,315

113,538,388,457

118,552,926,933

100,742,037,118

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

The notes to the consolidated and company financial statements on pages 75 to 105 are an integral part of these financial statements.

..67

Balance Sheets Advanced Info Service Public Company Limited As at 31 December 2002 and 2001

Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002

2001

2002

2001

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Noters

Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

LIABILITIES AND SHAREHOLDERS没 EQUITY Current Liabilities Short-term loans from financial institutions

30,000,000

5,456,757,726

5,446,757,726

Trade accounts payable

7,649,395,647

10,701,380,202

6,103,867,426

6,557,659,168

Amounts due to and loans from related parties

438,339,928

334,270,817

4,551,806,663

1,980,030,105

Current portion of long-term borrowings

1,531,002,263

919,763,276

191,057,160

1,475,092

Current portion of long-term debentures

6,970,452,412

6,346,124,222

6,970,452,412

6,346,124,222

5,166,673

Current portion of accrued concession fees

4,474,048,313

2,990,140,404

2,940,675,178

2,535,804,009

Other current liabilities

7,969,294,527

6,123,684,062

7,258,562,367

4,663,600,105

Current portion of forward and swap contracts payable, net

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total Current Liabilities

29,062,533,090

32,877,287,382

28,016,421,206

27,531,450,427

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Non-Current Liabilities Long-term borrowings, net

5,825,795,641

4,515,980,551

2,160,355,426

7,874,752

Long-term debentures, net

37,406,803,700

29,402,139,845

37,406,803,700

29,402,139,845

Accrued concession fee

2,532,258,127

3,073,473,116

Deposite from customers

16,730,583

2,648,008,394

3,039,885,235

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total Non-Current Liabilities

45,781,588,051

39,639,601,906

39,567,159,126

32,449,899,832

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total Liabilities

74,844,121,141

72,516,889,288

67,583,580,332

59,981,350,259

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Shareholders' Share capital Authorised share

5,000,000,000

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Issued and fully paid-up share capital Premium on share capital

2,935,000,000

20,004,000,000

500,000,000

27,601,008,014

17,321,686,859

27,601,008,014

17,321,686,859

Retained earnings Appropriated-Legal reserve Unappropriated

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total Parent没s Shareholders' Equity

51,040,008,014

40,760,686,859

51,040,008,014

40,760,686,859

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Minority interests

271,900,573

260,812,310

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total Shareholders' Equity

51,311,908,587

41,021,499,169

51,040,008,014

40,760,686,859

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Less Treasury stock

(70,661,413)

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total Sharehloders' Equity, net

51,241,247,174

41,021,499,169

50,969,346,601

40,760,686,859

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total Liabilities and Shareholders' Equity

126,085,368,315

113,538,388,457

118,552,926,933

100,742,037,118

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

The notes to the consolidated and company financial statements on pages 75 to 105 are an integral part of these financial statements.

..68

Statements of Income Advanced Info Service Public Company Limited For the years ended 31 December 2002 and 2001

Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002

2001

2002

2001

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Noters

Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

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

Share of net profit of investments-equity method

60,925,968,134

41,741,057,517

54,437,753,441

39,169,603,782

19,325,433,272

17,448,710,158

2,799,530

1,114,957,419

1,480,787,989

667,937,844

1,191,726,950

1,520,419,780

673,506,419

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total revenues

81,366,358,825

60,670,555,664

56,626,111,065

41,037,636,681

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Expenses Cost of services and equipment rentals

29,765,916,374

21,636,239,940

25,686,504,087

19,773,750,382

Cost of sales

15,074,702,667

13,539,035,012

Selling and administrative expenses

13,802,387,186

9,482,958,176

10,284,521,027

7,111,136,469

161,101,928

105,727,756

230,390,117

11/13

4,264,621,047

3,970,000,000

258,625,157

3,812,500

2,780,734

3,805,000

2,720,734

Net loss on exchange rate Impairment loss on assets Impairment loss for investment in a subsidiary Directors' remuneration

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total expenses

59,066,545,812

49,031,362,665

36,463,845,388

30,857,607,585

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Profit before interest and tax

22,299,813,013

11,639,192,999

20,162,265,677

10,180,029,096

Interest expenses

(3,068,783,671)

(1,572,896,489)

(2,437,210,935)

(1,329,841,956)

(7,816,088,747)

(6,238,438,543)

(6,294,753,345)

(4,998,870,045)

Income tax

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Profit before minority interests

11,414,940,595

3,827,857,967

11,430,301,397

3,851,317,095

(15,360,802)

(23,459,128)

Share of net loss in subsidiaries to minority interests

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Net profit for the year

11,430,301,397

3,851,317,095

11,430,301,397

3,851,317,095

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Basic earnings per share Net profit for the year

28 3.89

1.39

3.89

1.39

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

The notes to the consolidated and company financial statements on pages 75 to 105 are an integral part of these financial statements.

..69

Statements of Changes in Shareholders' Equity Advanced Info Service Public Company Limited For the years ended 31 December 2002 and 2001

Consolidated (Baht) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total Issued and paid up Premium on Legal reserve Unappro-priated Minority interests Treasury Stock share capital share capital retained earnings - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Opening balance 2002

2,935,000,000

20,004,000,000

500,000,000

17,321,686,859

260,812,310

41,021,499,169

11,430,301,397

(15,360,802)

Dividend paid during the year

(1,163,314,402)

(750)

(1,163,315,152)

Returned dividend

12,334,160

Repurchased shares

(70,661,413)

Additional shares in a subsidiary

159,600

26,290,215

Net profit for the year Share of net loss from subsidiaries

Change in percentage of minority interests to the Company from additional shares in a subsidiary

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Closing balance 2002

2,935,000,000

20,004,000,000

500,000,000

27,601,008,014

271,900,573

(70,661,413)

51,241,247,174

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Opening balance 2001

2,700,000,000

10,215,000,000

500,000,000

14,550,369,764

159,418,160

28,124,787,924

Increase during the year

235,000,000

9,789,000,000

10,024,000,000

3,851,317,095

(23,459,128)

Net profit for the year Share of net loss from subsidiaries Acquisition of investment in subsidiary (Note 4)

92,149,431

Dividend paid during the year

(1,080,000,000)

(48)

(1,080,000,048)

Additional shares in subsidiaries

268,930

32,434,965

Change in percentage of minority interests to the Company from additional shares in a subsidiary

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Closing balance 2001

2,935,000,000

20,004,000,000

500,000,000

17,321,686,859

260,812,310

41,021,499,169

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

The notes to the consolidated and company financial statements on pages 75 to 105 are an integral part of these financial statements.

..70

Statements of Changes in Shareholders' Equity (continued) Advanced Info Service Public Company Limited For the years ended 31 December 2002 and 2001

Company (Baht) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total Issued and paid up Premium on Legal reserve Unappro-priated Treasury Stock share capital share capital retained earnings - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Opening balance 2002

2,935,000,000

20,004,000,000

500,000,000

17,321,686,859

40,760,686,859

Net profit for the year

11,430,301,397

Dividend paid during the year

(1,163,314,402)

Returned dividend

12,334,160

Repurchased shares

(70,661,413)

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Ending balance 2002

2,935,000,000

20,004,000,000

500,000,000

27,601,008,014

(70,661,413)

50,969,346,601

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Beginning balance 2001

2,700,000,000

10,215,000,000

500,000,000

14,550,369,764

27,965,369,764

235,000,000

9,789,000,000

10,024,000,000

Net profit for the year

3,851,317,095

Dividend paid during the year

(1,080,000,000)

Increase during the year

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Ending balance 2002

2,935,000,000

20,004,000,000

500,000,000

17,321,686,859

40,760,686,859

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

The notes to the consolidated and company financial statements on pages 75 to 105 are an integral part of these financial statements.

..71

Statements of Cash Flows Advanced Info Service Public Company Limited For the years ended 31 December 2002 and 2001

Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002

2001

2002

2001

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Noters

Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Cash flows from operating activities

22,037,950,421

13,776,902,497

17,000,979,162

12,668,440,255

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Cash flows from investing activities: Net change in current investments

913,557

(73,777,834)

1,638,184,261

(2,180,078,860)

1,638,184,261

(2,180,078,860)

200,000,000

Loan to subsidiaries

(228,000,000)

Dividend received from a subsidiary

2,999,999,250

279,999,952

120,763,296

25,665,000

235,730,000

(2,999,840,400)

(21,110,962,200)

117,750,277

33,817,810

12,851,429

6,525,036

(6,326,325,437)

(3,997,752,243)

(6,185,362,054)

(3,214,144,113)

(32,202,013,060)

(25,539,039,132)

(27,223,157,001)

(24,970,291,374)

Net change in advance to suppliers Proceed from repayment from a subsidiary of short-term loan to a subsidiary

Net cash and cash equivalent received from investments in subsidiaries Proceed from disposal of a subsidiary, net of cash and cash equivalents disposed

Cash invested in investment in subsidiareis, net Proceeds from disposals of property and equipment Purchases in property and equipment Cash invested in property and equipment under concession agreements

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Net cash payments to investing activities

(36,745,825,402)

(31,636,066,963)

(31,549,594,515)

(51,188,951,559)

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

The notes to the consolidated and company financial statements on pages 75 to 105 are an integral part of these financial statements.

..72

Statements of Cash Flows (continued) Advanced Info Service Public Company Limited For the years ended 31 December 2002 and 2001

Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002

2001

2002

2001

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Noters

Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Cash flows from financing activities: Proceed from short-term loans from financial institutions

20,000,000

5,946,757,726

(5,446,757,726)

(2,539,960,000)

(5,446,757,726)

(2,529,960,000)

4,400,000,000

1,200,000,000

20,315,518,167

Repayments of short-term loans from financial institutions Proceeds from short-term loans from a subsidiary Proceed from repayment from a subsidiary of loans to a subsidiary Loans to a subsidiary

(20,315,518,167)

Repayments of loans from related parties

(17,278,567,494)

(1,600,000,000)

Proceeds from long-term debentures

14,943,034,302

26,890,347,540

14,943,034,302

26,890,347,540

Repayments of long-term debentures

(6,357,450,000)

(2,308,000,000)

(6,357,450,000)

(2,308,000,000)

Proceed from long-term borrowings Repayments of long-term borrowings Finance lease principal payment Proceeds from capital increase

2,940,000,000

1,159,186,252

2,000,000,000

(1,227,002,105)

(199,971,937)

(31,311,989)

(93,009,911)

(1,104,910)

159,600

10,024,268,930

10,024,000,000

26,290,215

32,434,965

(70,661,413)

(1,163,315,152)

(1,080,000,048)

(1,163,314,402)

(1,080,000,000)

Changes in percentage of minority interests to the Company from additional shares in a subsidiary Payments of treasury stock Payments of dividend Returned dividend

12,334,160

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Net cash receipts from financing activities

3,476,659,944

20,815,155,882

6,624,175,010

38,142,040,356

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

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

(11,231,215,037)

2,955,991,416

(7,924,440,343)

(378,470,948)

15,284,024,896

12,352,023,392

9,604,146,474

10,006,607,334

15,728,984

(23,989,912)

15,728,984

(23,989,912)

Unrealised gain (loss) on exchange rate of cash and cash equivalents

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Cash and cash equivalents, closing balance

4,068,538,843

15,284,024,896

1,695,435,115

9,604,146,474

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

The notes to the consolidated and company financial statements on pages 75 to 105 are an integral part of these financial statements.

..73

Statements of Cash Flows

(continued)

Advanced Info Service Public Company Limited For the years ended 31 December 2002 and 2001

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 2002 and 2001 comprise: Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002

2001

2002

2001

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Cash on hand and at banks Current inventments with maturities of three months or less

3,699.83

6,519.02

1,326.73

4,289.15

368.71

8,765.00

368.71

5,315.00

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total cash and cash equivalents

4,068.54

15,284.02

1,695.44

9,604.15

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Interest paid, income tax and non-cash investing activities Interest paid, income tax and non-cash investing activities for the years ended 31 December 2002 and 2001 comprise: Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002

2001

2002

2001

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Interest paid and income tax Interest paid

2,622.55

1,474.16

2,320.33

1,177.16

Income tax paid

7,364.03

5,168.03

5,958.92

4,318.65

3,429.30

4,994.51

2,771.97

3,493.14

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 75 to 105 are an integral part of these financial statements.

..74

Notes to the Consolidated and Company Financial Statements Advanced Info Service Public Company Limited For the years ended 31 December 2002 and 2001

1. General information Advanced Info Service Public Co., Ltd. ("the Company") is a public company limited and is incorporated and domiciled in Thailand. The address of its registered office is as follows: 414 Shinawatra Tower 1, Phaholyothin Road, Phayathai, Bangkok 10400. The Company is listed on the Stock Exchange of Thailand. The principal business operations of the Company and its subsidiaries ("the Group") are summarised as follows: 1) The operation of a 900-MHz CELLULAR TELEPHONE SYSTEM under a concession granted from the TOT Corporation Public Company Limited ("TOT"), under the agreement dated 27 March 1990, trading mobile phones and related accessories, 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. According to the memorandum of understanding held on 30 July 2002 between TOT and Curtain Property Co.,Ltd. (formerly "Advanced Paging Co., Ltd."), a subsidiary, it has been agreed that the subsidiary returned paging business to TOT effective 1 June 2002. 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, Curtain Property 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 Curtain Property Co.,Ltd. From 1 March 1997, the fee has been waived by TOT as the subsidiary reduced fees for pager service charged to its customers. On 16 September 2002, the Company sold the subsidiary to third parties as mentioned in note 32. As a result, Curtain Property Co.,Ltd. was no longer considered a subsidiary. 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 Companyâ&#x20AC;&#x2122;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.

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2. 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 translation 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 manage exposure to fluctuations in foreign currency exchange and interest rates. These instruments, which mainly comprise forward foreign currency contracts, interest rate swap agreements, and interest rate cap agreements are recorded in the financial statements on the contract date. The purpose of these instruments is to manage 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 derivatives help the Group to better manage effects from fluctuation in floating interest rate. Any differential to be paid on an interest rate derivative is recognised as a component of interest expense over the period of such instrument. Gains and losses on early termination of interest rate derivatives or on repayment of the borrowing are charged to the income statements. Disclosures about financial instruments to which the Group is a party are provided in Note 30.

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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 realisable value. An estimate is made for doubtful receivables, 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 Mobile phones Spare parts (pagers, mobile phones, network) Datanet equipment

Moving weighted average method First-in, first-out (FIFO) method Moving weighted average method 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.

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In April 2002 the Company changed the estimated useful life of the costs of mobile phone networks under concession agreements for analog system to be a period of 10 years not exceeding September 2002 (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. 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, 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. - 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 which is considered to have an indefinite life, 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

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. Expenditure incurred for addition, renewal or betterment, which results in a substantial increase in an assetâ&#x20AC;&#x2122;s current replacement value, is capitalised. Repair and maintenance costs are recognised as an expense when incurred. 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.

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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 Treasury stock Treasury stock is carried at cost. Gains and losses on disposal of treasury stock are determined by reference to its carrying amount and are taken to "Premium on treasury stock" or "Retained earnings". 2.16 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. 2.17 Advertising costs Advertising costs are expensed in the financial period during which they are incurred. 2.18 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. 2.19 Income tax The Group calculates income tax according to the Revenue Code and records them on accrual basis. The group does not recognise income tax payable or receivable in future periods in respect of temporary differences. 2.20 Earnings per share Basic consolidated earnings per share is calculated by dividing the consolidated net earnings after considering minority interests in subsidiaries, attributable to shareholders by the weighted average number of ordinary shares in issue during the year. Basic company earnings per share is calculated by dividing the Companyâ&#x20AC;&#x2122;s net earnings by the weighted average number of ordinary shares in issue during the year.

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2.21 Dividends Dividends proposed are payable when declared by the board of directors and approved by the shareholders. 2.22 Segment reporting The segmental reporting has been prepared based on the Groupâ&#x20AC;&#x2122;s method of internal reporting, which desegregates business by service or product. 2.23 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. 2.24 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 2002.

3. 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 and the second quarter of 2002, the Companyâ&#x20AC;&#x2122;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 and September 2002, respectively. These changes in useful life increased the amortisation charge for the year ended 31 December 2002 and 2001 by Baht 322 million and Baht 778 million respectively. The Companyâ&#x20AC;&#x2122;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.

4. 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 from Shin and Singtel 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.

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The fair value of assets and liabilities acquired on Shin Digital Company Limited were as follows: Million Baht - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Cash on hand and at banks 437.47

Short-term investments

223.25

Trade accounts receivable, net

485.05

Inventories, net

34.35

Other current assets

419.55

Equipment, net

287.16

Assets under concession, net Intangible assets, net Concession rights Other assets Trade accounts payable Amounts due to and loans from related parties Current portion of concession fees payable Concession fee payable

7,321.47 13.41 5,477.00 52.08 (1,998.23) (12,120.62) (868.00) (2,772.40)

Other current liabilities

(297.00)

Short-term borrowings

(5,124.13)

Long-term borrowings

(4,047.41)

Deposits from customers

(154.69)

Other liabilities

(874.05)

Minority interests

(92.15) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Fair value of net assets (13,597.89) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Interest acquired 99.99% - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Fair value of net liabilities acquired (13,597.89) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Consolidated - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2001 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht Purchase consideration

539.96

Fair value of net liabilities acquired

13,597.89 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Positive goodwill 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 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, the Company purchased ordinary shares in DPC from 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. 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 Companyâ&#x20AC;&#x2122;s separate financial statements, no goodwill arose on this transaction. On 24 December 2001, the Company purchased ordinary shares in 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. During the third quarter of 2002, the Company paid for additional 300 million shares in DPC, a subsidiary, totalling Baht 3,000 million. The subsidiary registered the increase in its share capital of Baht 3,000 million with the Ministry of Commerce on 1 October 2002. The Company had 98.55% ownership in the subsidiary upon the completion of the transaction.

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5. Cash and cash equivalents Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Cash on hand Baht deposits held at call with banks

14.96

25.29

13.98

7.28

3,665.24

10,902.67

1,296.97

5,244.73

Other currency deposits held at call 388.34 4,356.06 384.49 4,352.14 with banks - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Cash and cash equivalents 4,068.54 15,284.02 1,695.44 9,604.15 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

The weighted average effective interest rates of deposits held at call with banks were between 0.20% and 1.50 % (2001: 0.37% - 1.40%). Other currency deposits mainly represent 8.92 million US Dollars deposits (2001: 98.60 million US Dollars) on a consolidated basis and 8.83 million US Dollars deposits (2001: 98.51 million US Dollars) on a company basis. The Group holds US Dollars deposits to reduce currency exchange exposure arising on expected future payments denominated in US Dollars.

6. Current investments Current investments mainly represent marketable securities and fixed deposits. Marketable securities are classified as trading equity securities. Fixed deposits bear interest at rates ranging from 1.00% - 1.25% per annum. Consolidated fixed deposits amounting to Baht 15.42 million (2001: Baht 13.96 million) have been pledged with a bank in respect of bank guarantees.

7. Trade accounts receivable, net Consolidated

Company

2002 2001 2002 2001 - - - - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

6,579.18 57.99

6,090.42

3,821.72

4,115.43

68.39

2,618.31

770.84

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Trade accounts receivable: Third parties Related parties (Note 33) Accrued income

2,943.69 2,913.00 2,644.08 2,653.42 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 9,580.86 9,071.81 9,084.11 7,539.69

Gross trade accounts receivable

Less allowance for doubtful accounts

(2,342.18) (1,397.59) (1,303.60) (889.70) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 7,238.68 7,674.22 7,780.51 6,649.99 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Trade accounts receivable, net

Outstanding trade accounts receivable from third parties can be aged as follows: Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Current - 3 months

7,716.44

7,693.76

5,677.27

6,099.97

Overdue 3 - 6 months

815.09

745.66

559.94

529.43

Overdue 6 - 12 months

897.76

259.84

203.09

104.37

Overdue over 12 months

93.58 304.16 25.50 35.08 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total 9,522.87 9,003.42 6,465.80 6,768.85

Less allowance for doubtful accounts of third parties

(2,342.18) (1,397.59) (1,303.60) (889.70) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 7,180.69 7,605.83 5,162.20 5,879.15 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Trade accounts receivable - third parties, net

The directors are of the opinion that allowance for doubtful accounts of the Group and bank guarantees received from dealers by a subsidiary, are sufficient to cover exposure to the bad debt risk.

..82

8. Inventories, net Consolidated - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 - - - - - - - - - - --- - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 1,830.58 2,446.71 Finished goods - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Supplies and spare parts 131.60 186.96

Total inventories

1,962.18

2,633.67

Less allowance for obsolete inventories and diminution in value of inventories

(0.97) (395.20) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Inventories, net 1,961.21 2,238.47 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

9. Forward and swap contracts receivable/(payable), net Consolidated

Company

Million Baht

1,405.36

8,039.25

327.99

5,922.09

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Contracts receivable Contracts payable

(1,404.36) (8,044.42) (327.58) (5,904.15) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 1.00 (5.17) 0.41 17.94

Less current portion of forward and swap contracts receivable/ (payable) (1.00) 5.17 (0.41) (17.94) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Long-term forward and swap contracts receivable/ (payable), net - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

10. Other current assets Consolidated

Company

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Other receivables

528.17

388.32

517.98

353.39

Prepaid expenses

1,126.95

476.17

1,097.27

417.77

Value added tax receivable

1,056.87

1,128.90

295.19

679.29

Others

42.43 261.14 16.68 71.55 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Other current assets 2,754.42 2,254.53 1,927.12 1,522.00 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

11. Investments in subsidiaries, net Company - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Opening net book value

25,957.72

4,453.25

Share of net profit of investments - equity method

1,520.26

673.51

Acquisitions (Note 4)

3,000.00

21,110.96

(3,000.00)

(280.00)

(258.63)

Dividend income from a subsidiary Allowance for impairment of investment in subsidiary

Disposal of investment in a subsidiary (Note 32) (230.78) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Closing net book value 26,988.57 25,957.72 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..83

As at 30 June 2002, the Company has provided Baht 258.63 million in respect of impairment in the carrying value of its investment in its subsidiary, Advanced Paging Company Limited. The carrying value of the investment, before impairment, was Baht 452.63 million, Baht 258.63 million of which represents goodwill on paging business which has been fully provided for impairment as the subsidiary has returned its paging business to TOT in June 2002. On 12 September 2002 and 1 November 2002, Advanced Paging Company Limited, a subsidiary, has registered with the Ministry of Commerce to change its name to "Curtain Property Company Limited". On 16 September 2002, the Company sold 34,999,994 ordinary shares in Curtain Property Co.,Ltd. (formerly "Advanced Paging Company Limited"), its subsidiary, to third parties. The 34,999,994 shares represent 99.99% ownership in the subsidiary. The investment was sold at Baht 255.78 million, with gain on sale of the investment of Baht 25.00 million, which has been recognised in income statement for the year ended 31 December 2002. As a result, Curtain Property Co.,Ltd. was no longer considered a subsidiary (Note 32). On 29 August 2002, Shin Digital Company Limited, a subsidiary, has registered with the Ministry of Commerce to change its name from "Shin Digital Company Limited" to "Advanced Contact Center Company Limited". The subsidiary is principally engaged in Call Center business. During the fourth quarter of 2002, Advanced Wireless Marketing Co., Ltd. ("AWM"), a subsidiary, transferred all of its operations, being the operations of distribution, servicing, marketing for mobile phone, refilled card for 1-2 Call, sim card, and after sales services for mobile phone, to another subsidiary, Digital Phone Company Limited. AWM ceased most of its operation in December 2002. Company - 31 December 2002 / 31 December 2001 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Subsidiaries

Nature of business

Country

Nature

Paid-up

Invest-

Cost

of of relationship

capital

ment

(Million

portion

Baht)

(%)

incorporation

Accumulated share

Equity

Dividend

of profit (loss) in

(Million Baht)

subsidiaries (Million Baht)

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 31 December

31 December

31 Decembe

31 December

2002

2001

2002

2001

2002

2001

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Curtain Property Co., Ltd. (Formerly "Advances Paging Co., Ltd.")

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

Thailand

Shareholder

350

99.99

1,703.36

(178.95)*

(183.97)

789.41*

784.39

(280.00)

Advanced Wireless Marketing Co., Ltd.

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

Thailand

Shareholder

240

99.99

600.00

8,521.35

4,777.17

6,121.35

5,377.17

(3,000.00)

Advanced Datanetwork Communications Co., Ltd. (Formerly "Shinawatra Datacom Co., Ltd.")

Service provider of voice/data Communications via telephone line

Thailand

Shareholder

458

67.95

420.37

(79.49)

(78.90)

340.88

341.47

Datanetwork Solutions Co., Ltd.

Service provider of voice/data Communications via telephone line

Thailand

Shareholder

49.00

8.00

8.93

7.25

16.93

15.25

Advanced Contact Center Co., Ltd. ("Formerly "Shin Digital Co., Ltd.)

Service provider of call center

Thailand

Shareholder

272

99.99

810.96

(767.79)

(807.79)

43.17

3.17

Digital Phone Co., Ltd.

Importer and distributor of cellular phones and related accessories, cellular phone rental cellular provider and cellular provider of digital mobile phone system in 1800 MHZ

Thailand

Shareholder

14,622

98.55

23,300.00

(2,833.76)

(563.73)

20,466.24

19,736.27

26,842.69

4,670.29

3,150.03

27,777.98

26,257.72

(3,000.00)

(280.00)

(558.63)

(300.00)

Less allowance for impairment of investment in a subsidiary sold Less disposal of investment in a subsidiary (Note 32) Total investments in subsidiaries

(1,703.36)

178.95

(230.78)

25,139.33

4,849.24

3,150.03

26,988.57

25,957.72

(3,000.00)

(280.00)

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - * Amounts were accumulated upto 16 September 2002.

..84

12. Property and equipment,net Consolidated (Million Baht) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Land

Buildings

Leasehold

Total and

Furniture,

Pagers and

Vehicles Assets under

and

rights

building

equipment

fixtures

mobile

construction

and office

phones

and

equipment

for rent

installation

Improvements

Total

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - At 31 December 2001 Cost Less accumulated depreciation

3.40

159.24

21.43

334.32

6,053.47

1,201.81

75.13

111.47

1,645.00

9,605.27

(36.09)

(15.44)

(97.72)

(2,407.72)

(713.49)

(48.01)

(53.62)

(3,372.09)

allowance for asset impairment (0.06) (0.06) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net book value 3.40 123.15 5.99 236.60 3,645.75 488.26 27.12 57.85 1,645.00 6,233.12 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - For the year ended 31 December 2002 Opening net book value

3.40

123.15

5.99

236.60

3,645.75

488.26

27.12

57.85

1,645.00

Additions

119.83

1.42

51.63

6,114.43

176.83

17.56

64.81

232.76

6,779.27

Transfers

61.06

13.91

103.16

32.50

1.21

(1,580.13)

(1,368.29)

Subsidiary sold (Note 32) Disposals, net Depreciation/amortisation charges

6,233.12

(10.83)

(3.40)

(5.53)

(6.23)

(29.90)

(12.83)

(81.94)

(8.03)

(8.87)

(3.63)

(160.36)

(31.40)

(1.18)

(60.24)

(1,409.84)

(184.61)

(15.18)

(22.88)

(1,725.33)

Reversal of allowance for asset impairment 0.06 0.06 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Closing net book value 267.11 212.00 8,440.67 420.27 21.47 92.12 294.00 9,747.64 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Consolidated (Million Baht) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Land

Buildings

Leasehold

Total and

Furniture,

Pagers and

Vehicles Assets under

and

rights

building

equipment

fixtures

mobile

construction

and office

phones

and

equipment

for rent

installation

Improvements

Total

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - At 31 December 2002 Cost

320.24

340.64

12,163.85

1,186.57

21.94

146.48

294.00

14,473.72

Less Accumulated depreciation/amortisation (53.13) (128.64) (3,723.18) (766.30) (0.47) (54.36) (4,726.08) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net book value 267.11 212.00 8,440.67 420.27 21.47 92.12 294.00 9,747.64 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Additions include Baht 437 million (2001: Baht 12 million) assets leased under finance leases (where the Group is the lessee). Company (Million Baht) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Buildings

Leasehold

Total and

Furniture,

and

building

equipment

fixtures

Improvements

Vehicles

Assets under

Total

construction

and office

and

equipment

installation

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - At 31 December 2001 Cost Less accumulated depreciation Net book value

97.49

325.61

5,885.60

606.19

83.37

195.59

7,193.85

(11.31)

(95.22)

(2,297.92)

(382.31)

(37.37)

(2,824.13)

86.18

230.39

3,587.68

223.88

46.00

195.59

4,369.72

For the year ended 31 December 2002 Opening net book value

86.18

230.39

3,587.68

223.88

46.00

195.59

4,369.72

Additions

113.32

53.39

6,088.89

126.44

63.45

191.91

6,637.40

Transfers

61.06

9.58

116.09

(186.73)

(22.94)

(3.35)

(2.21)

(3.36)

(31.86)

Depreciation charges

(22.33)

(58.42)

(1,385.65)

(91.26)

(19.15)

(1,576.81)

Closing net book value

238.23

212.00

8,403.66

256.85

86.94

200.77

9,398.45

271.87

340.64

12,078.69

724.89

132.06

200.77

13,748.92

Disposals, net

At 31 December 2002 Cost

Less accumulated depreciation (33.64) (128.64) (3,675.03) (468.04) (45.12) (4,350.47) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net book value 238.23 212.00 8,403.66 256.85 86.94 200.77 9,398.45 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Additions include Baht 435 million (2001: Baht 10 million) assets leased under finance leases (where the Company is the lessee).

..85

As at 31 December 2002 and 2001, leased assets included above, where the Group and the Company is a lessee under a finance lease, comprise equipment and vehicle: Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

592.45

96.85

444.38

9.67

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Cost - capitalised finance leases Less accumulated depreciation

(142.89) (25.87) (37.57) (0.33) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net book value 449.56 70.98 406.81 9.34 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Leased assets of Digital Phone Company Limited, a subsidiary, as at 31 December 2002 at net book value of Baht 42.70 million (2001: Baht 133.04 million) are pledged for the subsidiaryâ&#x20AC;&#x2122;s finance lease liabilities of Baht 38.07 million (2001 : Baht 145.60 million) as mentioned in Note 17.

13. Cost of mobile phone and pager service networks and Datanet tools and equipment under concession agreements, net Consolidated (Million Baht) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Cost of

mobile phone

pager service

Datanet

newtworks

tools and

Total

equipment - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

At 31 December 2001 Cost Less accumulated amortisation

83,587.43

1,326.21

1,195.08

86,108.72

(23,903.39)

(980.75)

(574.99)

(25,459.13)

allowance for asset impairment (3,970.00) (345.46) (4,315.46) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net book value 55,714.04 620.09 56,334.13 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - For the year ended 31 December 2002 Opening net book value

55,714.04

620.09

56,334.13

Additions

30,562.42

59.64

30,622.06

Transfer Write-offs

1,368.29

(0.32)

Amortisation charge

(8,439.12) (89.63) (8,528.75) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Closing net book value 79,205.63 589.78 79,795.41 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

At 31 December 2002 Cost

115,389.49

1,254.37

116,643.86

Less accumulated amortisation

(32,213.86)

(664.59)

(32,878.45)

allowance for asset impairment (3,970.00) (3,970.00) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net book value 79,205.63 589.78 79,795.41 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 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 considers 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 for the year ended 31 December 2001.

..86

Company - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht Cost of mobile phone networks - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

At 31 December 2001 Cost Less accumulated amortisation

75,068.40 (22,388.01)

allowance for assets impairment

(3,970.00) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net book value 48,710.39 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

For the year ended 31 December 2002 Opening net book value

48,710.39

Additions

26,485.02

Amortisation charge (7,349.23) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Closing net book value 67,846.18 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - At 31 December 2002 Cost

101,553.42

Less accumulated amortisation

(29,737.24)

allowance for assets impairment

(3,970.00) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net book value 67,846.18 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

14. Good, net - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Consolidated Million Baht - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

At 31 December 2001 Cost

15,479.29

Less accumulated amortisation allowance for

(1,235.50)

for impairment of investment in a subsidiary (300.00) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net book value 13,943.79 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - For the year ended 31 December 2002 Opening net book value Additions Write offs Amortisation charge

13,943.79 26.29 (558.63) (1,206.79)

Allowance for impairment of investment in a subsidiary 300.00 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Closing net book value 12,504.66 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - At 31 December 2002 Cost

14,398.91

Less accumulated amortisation allowance for

(1,894.25)

impairment of investment in a subsidiary - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net book value 12,504.66 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..87

15. Other assets, net Consolidated (Million Baht) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Concessioon

Deferred

rights

charges and

Total

other - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

At 31 December 2001 Cost

6,992.90

855.16

7,848.06

Less accumulated amortisation

(1,667.68) (220.73) (1,888.41) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net book value 5,325.22 634.43 5,959.65 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

For the year ended 31 December 2002 Opening net book value

5,325.22

634.43

5,959.65

Additions

253.81

Write-offs

(9.09)

Subsidiary sold (Note 32)

(15.21)

Amortisation charge (454.82) (78.30) (533.12) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Closing net book value 4,870.40 785.64 5,656.04 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - At 31 December 2002 Cost

6,992.90

1,068.28

8,061.18

Less accumulated amortisation (2,122.50) (282.64) (2,405.14) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net book value 4,870.40 785.64 5,656.04 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Company (Million Baht) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Deferred charges

Other

Total

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

At 31 December 2001 Cost

415.70

162.31

578.01

Less accumulated amortisation (119.72) (119.72) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net book value 295.98 162.31 458.29 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - For the year ended 31 December 2002 Opening net book value

295.98

162.31

458.29

Additions

178.35

29.70

208.05

Amortisation charge

(38.28) (38.28) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Closing net book value 436.05 192.01 628.06 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

At 31 December 2002 Cost

594.05

192.01

786.06

Less accumulated amortisation

(158.00) (158.00) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net book value 436.05 192.01 628.06 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

16. Trade accounts payable Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Trade accounts payable Third parties Related parties (Note 33)

7,599.43

10,640.19

6,036.33

6,520.35

49.96 61.19 67.54 37.31 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total trade accounts payable 7,649.39 10,701.38 6,103.87 6,557.66 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..88

17. Borrowings Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Current Short-term loans from financial institutions

30.00

5,456.76

Current portion of long-term borrowings

1,384.33

818.68

80.00

5,446.76 -

Current portion of long-term debentures

6,970.45

6,346.12

6,970.45

6,346.12

Current portion of finance lease liabilities 146.67 101.08 111.06 1.48 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total short-term borrowings 8,531.45 12,722.64 7,161.51 11,794.36 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Non-current Long-term borrowings

5,582.98

4,462.11

1,920.00

Long-term debentures

37,406.80

29,402.14

37,406.80

29,402.14

242.82

53.87

240.36

7.87

Finance lease liabilities Total long-term borrowings

43,232.60 33,918.12 39,567.16 29,410.01 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total borrowings 51,764.05 46,640.76 46,728.67 41,204.37 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

The movements in the above borrowings can be analysed as follows: - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Consolidated

Company

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

For the year ended 31 December 2002 Opening net book value

46,640.76

Additions

18,383.54

17,422.35

(13,241.65)

(11,898.06)

Repayments

41,204.37

Unrealised gain on exchange rate (18.60) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Closing net book value 51,764.05 46,728.66 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Short-term loans from financial institutions As at 31 December 2002, short-term loans from financial institutions represent promissory notes with maturities of less than one year. The loans are unsecured. Long-term borrowings As at 31 December 2002, the Company had long-term loan denominated in Thai Baht in the amount of Baht 2,000 million. The loan bears interest at a fixed rate of 3% per annum. According to the agreement, the Company has to comply with certain restrictions and maintain certain financial ratios. As at 31 December 2002, a subsidiary, Digital Phone Company Limited, has a syndicated US Dollars loan of 16 million (2001: US Dollars 30 million) bearing interest at LIBOR plus a margin as agreed by the subsidiary and banks (2001: LIBOR plus a margin as agreed by the subsidiary and banks) and Baht loans of Baht 4,124 million (2001: Baht 3,700 million) bearing interest at TBBR (the higher of Thai Baht fixed or fixed deposit rate) plus a margin as agreed by the subsidiary and the banks (2001: MLR less a margin as agreed by the subsidiary and the banks). First settlement was due in December 2002. The loans are not secured. According to the agreement of syndicated loan, the subsidiary has to comply with certain restrictions and maintain certain financial ratios. During the year, a subsidiary, Digital Phone Company Limited has re-packaged its syndicated loan by decreasing interest rate or margin, expanding term of payment and increasing facility. The fee for re-packaging amounting to Baht 20 million was charged to the statement of income as period cost. The subsidiaryâ&#x20AC;&#x2122;s finance lease liabilities of Baht 38.07 million as at 31 December 2002 (2001: Baht 145.60 million) are collateralized by the underlying leased assets as mention in Note 12.

..89

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. On 21 March 2002, the Company issued 2.5 million units of Baht 1,000 each of unsubordinated, unsecured debentures, amounting to Baht 2,500 million. Such debentures bear interest at a fixed rate of 6.25% per annum throughout the debenture terms, payable on a semi-annual basis commencing from the issue date. The debentures will be entirely redeemed on 21 March 2009. On 21 March 2002, the Company issued additional 4.5 million units of Bath 1,000 each of unsubordinated, unsecured and amortised debentures, amounting to Baht 4,500 million. Such debentures bear interest at an average of the highest six-month fixed deposit rates from certain banks plus a margin of 2.10% per annum throughout the debenture terms, payable on a semi-annual basis commencing from the issue date. The debentures will be redeemed by 6 equal installments, commencing the fifty-four month after the issuing date until 21 March 2009. On 21 March 2002, the Company issued additional 3 million units of Baht 1,000 each of unsubordinated, and unsecured debentures, amounting to Baht 3,000 million. Such debentures bear interest at a fixed rate of 5.25% per annum throughout the debenture terms, payable on a quarterly basis commencing from the issuing date. The debentures will be entirely redeemed on 21 March 2007. On 21 October 2002, The Company issued 5.0 million units of Baht 1,000 each of unsubordinated, unsecured and amortised debentures, amounting to Baht 5,000 million. Such debentures bear interest at a fixed rate of 3.65% per annum throughout the debentures terms, payable on a semi-annual basis commencing from the issue date. The debentures will be redeemed in 5 equal installments, commencing on 21 October 2005 until 21 October 2007. 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

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

42,312.24

41,359.97

42,244.16

41,204.37

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Total borrowings: - at fixed rates - at floating rates

9,451.81 5,280.79 4,484.50 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 51,764.05 46,640.76 46,728.66 41,204.37 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Weighted average interest rates: - short-term loan from financial institutions

3.00%

3.31%

- long-term borrowings

4.27%

5.97%

3.00%

- long-term debentures

5.20%

5.69%

5.20%

5.69%

- finance lease liabilities

5.29%

11.62%

5.21%

9.63%

..90

3.30%

Maturity of long-term borrowings and finance lease liabilities as at 31 December 2002 is as follows: Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Borrowings

Finance lease

Borrowings

Finance lease

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2004

11,141.60

134.21

9,887.27

131.91

2005

5,177.42

94.44

3,973.10

94.28

2006

15,431.04

7.44

14,226.71

7.44

2007

6,493.92

6.73

6,493.92

6.73

2008

1,496.95

2009 3,248.85 3,248.85 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 42,989.78 242.82 39,326.80 240.36 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Finance lease liabilities ( minimum lease payments: Consolidated

Company

Million Baht

146.67

101.08

111.06

1.48

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Not later than 1 year Later than 1 year but not later than 5 years

242.82 53.87 240.36 7.87 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total 389.49 154.95 351.42 9.35 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

18. Other current liabilities Consolidated

Company

Million Baht

Income tax payable

3,665.63

3,267.08

2,808.21

2,472.37

Unearned income

2,304.30

821.66

2,986.18

1,045.86

Accrued bonus

456.10

353.82

388.77

269.67

Accrued interest expense

412.01

599.98

407.27

389.16

Other payables

223.00

279.86

156.30

96.74

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Others

908.25 801.28 511.83 389.80 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total other current liabilities 7,969.29 6,123.68 7,258.56 4,663.60 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

19. 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 2002, the subsidiary has concession fee payable and accrued interest to Total Access Communications Public Company Limited relating to its concession rights of Baht 4,065 million (2001 : Baht 3,727 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 and accrued interest are collateralized by the concession rights, included in other assets (note 15) of Baht 4,870 million (2001 : Baht 5,325 million) as at 31 December 2002. 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.

20. Deposits from customers At the Board of Directorsâ&#x20AC;&#x2122; meeting on 28 February 2002, the Board approved to refund to customers the deposits from mobile phone customers. Majority of the deposits were refunded by 31 December 2002.

..91

21. Share capital and premium - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Number of shares

Share capital

Share premium

Total

Million

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

31 December 2000

270.00

2,700.00

10,215.00

12,915.00

Issue of shares on 24 September 2001

23.50 235.00 9,789.00 10,024.00 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 293.50 2,935.00 20,004.00 22,939.00 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Par value alteration on 2 October 2001 31 December 2001 2,935.00 2,935.00 20,004.00 22,939.00 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 31 December 2002 2,935.00 2,935.00 20,004.00 22,939.00 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 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 27 March 2002, the Company granted its warrants of 14 million units at Baht nil per unit, or equivalent to 0.48% of the Company’s total paid up share capital (before dilution) to directors, employees. The warrants are in registered form and non-transferable. Term of warrant is not exceeding 5 years and there is no offering price. The Security and Exchange Commission of Thailand approved this offer on 13 March 2002. The exercise price is set at Baht 48 per unit, which is the share closing price as of 26 March 2002. Movements in the number of warrants outstanding are as follows: - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Directors

Employees

Total

Million units

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

27 March 2002 Granted

1.6

12.4

14.0

Exercised - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 31 December 2002 1.6 12.4 14.0 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - On 27 March 2002, Shin Corporation Public Company Limited, a major shareholder, granted its warrants to the Company’s director of 3.2 million units at Baht nil per unit. The exercise price is set at Baht 17.80 per unit, which is Shin Corporation’s share closing price as of 26 March 2002. There has been no movement from the date the warrants were granted to 31 December 2002.

22. Legal reserve 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.

23. Treasury stock At the Board of Directors’ meeting held on 14 November 2002, the Board passed a resolution to approve a repurchase of the Company’s shares within stipulated condition in the amount of not exceeding 90 million shares or equivalent of 3.07% of total issued shares. The objective of the treasury stock is to increase value added per share. During December 2002, the Company repurchased its shares of 2.16 million shares at an average price of Baht 32.67 per share.

..92

24. Other operating income Consolidated

Company

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Interest income

205.04

389.09

115.49

Amortisation of forward contracts discount

111.59

392.88

80.62

325.49

Bad debt recovery

259.82

198.03

218.08

138.06

Marketing support

124.28

317.36

25.00

1.89

Gains on sales of investment (Note 32) Gains on disposals of property and equipment

567.10

Others

389.23 183.43 228.75 159.19 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total other operating income 1,114.96 1,480.79 667.94 1,191.73 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

25. Directorsâ&#x20AC;&#x2122; remuneration During the year ended 31 December 2002 the remuneration of the directors amounted to Baht 3.81 million (2001 : Baht 2.78 million), which did not exceed amounts which had been approved by the annual general meetings of the shareholders of the Company and its subsidiaries. Directorsâ&#x20AC;&#x2122; remuneration represents salaries, meeting fees and gratuities.

26. Operating profit The following expenditures, classified by nature, have been charged in arriving at operating profit: Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Concession fee Depreciation on property and equipment (Note 12)

14,320.21

10,197.49

13,611.22

9,942.32

1,725.33

1,028.74

1,576.81

922.99

8,528.75

7,042.53

7,349.23

6,348.34

1,206.79

592.95

Amortisation of intangible assets: - Property and equipment under concession agreements (Note 13) - Positive goodwill (included in "Selling and administrative expenses") (Note 14) - Deferred charges (included in "Selling and administrative expenses") (Note 15) - Concession right

78.30

62.94

38.28

33.52

454.82

151.61

4,251.89

2,236.23

2,858.37

1,990.93

1,795.10

1,675.54

1,438.71

1,128.74

4,942

5,179

3,279

2,674

Doubtful accounts and bad debts (included in selling and administrative expenses) Staff costs Weighted average number of staff (Persons)

27. Income tax Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Profit before tax Less share of net profit in subsidiaries

19,231.03

10,066.30

17,725.05

8,850.19

(1,520.42)

(673.51)

Add impairment loss for investment in subsidiary

258.63 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Operating profit 19,231.03 10,066.30 16,463.26 8,176.68 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Tax calculated at a tax rate of 30% 5,769.31 3,019.89 4,938.98 2,453.00

30% of expenses not deductible for tax purposes 2,046.78 3,218.55 1,355.77 2,545.87 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Income tax 7,816.09 6,238.44 6,294.75 4,998.87 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..93

28. Basic earnings per share Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares in issue during the year. Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Net profit attributable to shareholders (Million Baht) 11,430.30 3,851.32 11,430.30 3,851.32 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Weighted average number of ordinary shares in issue during the year (Million shares) 2,935 2,773 2,935 2,773 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Basic earnings per share (Baht) 3.89 1.39 3.89 1.39 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - The warrants outstanding are in connection with the directors, employees and advisors share option plan and did not affect the diluted earnings per share since the average share price calculated from the date the warrants were granted to the reporting period was below the exercise price of the outstanding warrants.

29. 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.

30. 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

Company

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Later than 1 year and not later than 5 years 3,000.00 3,000.00 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 3,000.00 3,000.00 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..94

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. Interest rate cap The Group has entered into an interest rate cap agreement which in future years will reduce the exposure of the Group to any potential increases in interest rates on floating rate borrowings. The floating rate is linked to LIBOR. As at 31 December 2002, the Group had outstanding interest rate cap agreement with a total notional principal amount of USD 12 million. The remaining terms and notional principal amount of the outstanding interest rate cap agreement at 31 December 2002 were: Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Later than 1 year and not later than 5 years 519.65 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 519.65 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 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 2002 the settlement dates on open forward contracts is on 24 March 2003 (2001 : ranged between 6 days and 278 days). The amounts to be paid and received and contractual exchange rates of the outstanding contracts were: Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

215.14

USD 7.61 million (Baht 43.03 - Baht 43.12/US$)

327.58

USD 134.05 million (Baht 35.68 - Baht 44.95/US$)

5,904.15

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

The amounts to be paid USD 5 million (Baht 43.03/US$)

The amounts to be received

US$ 32.61million (Baht 43.02 - Baht 43.16/US$)

1,404.36

USD 174.47 million (Baht 35.68 - Baht 45.45/US$)

7,712.97

EUR 8.02 million (Baht 38.77 - Baht 38.96/EUR)

310.99

SGD 0.84 million (Baht 23.91 - Baht 24.78/SGD)

20.46 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 1,404.36 8,044.42 327.58 5,904.15 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

On 7 January 2003, Advanced Wireless Marketing, a subsidiary, unwinded forward contract receivable and payable in the amounts of USD 5 million and USD 5 million, respectively. The purpose of unwinding the contracts is the cease of operation as mention in Note 11. Credit risk The management are of the opinion that the Company and the Group have no significant concentration of credit risk. Cash and current investments are placed with substantial financial institutions.

..95

Fair values The carrying amounts of cash and cash equivalents, current 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 2002 are: - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Consolidated

Company

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Favourable forward foreign exchange contracts 7.30 1.62 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Unfavourable interest rate cap (10.01) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - The fair values of forward foreign exchange and interest rate cap 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

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Carrying amounts

Fair values

Carrying amounts

Fair values

- - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 44,500.00 46,729.37 44,500.00 46,729.37 Long-term debentures - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

The fair values of the remaining long-term borrowings (excluding obligations under finance leases and long-term debentures ) approximate their carrying amounts as at 31 December 2002.

..96

31. Cash flows from operating activities Reconciliation of net profit to cash flows from operating activities for the years ended 31 December 2002 and 2001 : Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Notes

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Cash flows from operating activities: Net profit for the year Adjusted by: Depreciation charge Amortisation of property and equipment under concession agreements Amortisation of concession right Impairment loss on assets Amortisation of deferred charges Amortisation of prepaid expenses Doubtful accounts and bad debts Allowance for inventory obsolescence and diminution in value of finished goods Provision for loss of mobile phone deposit Amortisation of forward and swap premiums (discount) Loss (gain) on disposals of fixed assets Loss from damage of property and equipment Loss on write-off deferred charges/intangible assets Loss on write-off property and equipment Unrealised loss on foreign exchange rate Realised (gain) loss on foreign exchange rate for loans Amortisation of goodwill Impairment loss on goodwill of investment in a subsidiary Impairment loss for investment in a subsidiary (Gain) on disposal of investment in a subsidiary Share of net profit in subsidiaries Amortisation of bond issuing cost Share of net loss in subsidiaries to minority interests

11,430.30

3,851.32

11,430.30

3,851.32

1,725.33

1,028.74

1,576.81

922.99

8,528.75

7,042.53

7,349.23

6,348.34

454.82

151.61

4,264.62

3,970.00

78.30

62.94

38.28

33.52

2.22

4,251.89

2,236.23

2,858.37

1,990.93

(281.98)

134.64

(12.88)

115.39

(256.01)

36.28

(256.68)

(10.88)

(0.93)

2.04

(1.89)

28.92

2.57

9.09

0.29

24.51

1.29

16.96

1.29

18.35

22.98

2.00

72.63

(9.59)

51.82

1,206.79

592.95

258.63

(25.00)

(1,520.42)

(673.50)

43.41

29.93

43.41

29.93

(15.36) (23.46) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Net income before changes in operating assets and liabilities

27,833.89 19,181.18 22,066.89 16,289.17 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Net income before changes in operating assets and liabilities Changes in operating assets and liabilities Trade accounts receivable Amounts due from related parties Forward and swap contracts receivable Inventories Spare part inventories for mobile network maintenance Other current assets Other assets Trade accounts payable Amounts due to related parties Forward and swap contracts payable Accrued concession fee Deposits from customers Other current liabilities

27,833.89

19,181.18

22,066.89

16,289.17

(3,741.52)

(3,986.25)

(3,988.74)

(3,711.34)

(1.90)

3.17

(89.78)

(31.41)

(1.00)

212.92

18.36

145.00

559.55

(726.98)

(402.30)

(356.75)

(725.78)

(1,289.31)

(501.95)

(1,049.07)

(283.08)

(1.21)

(208.04)

(127.07)

(1,581.14)

(264.99)

248.65

(612.40)

98.32

40.06

(228.22)

715.26

(3.66)

6.76

942.69

871.70

404.87

721.90

(2,509.40)

(1,421.35)

(2,935.97)

(1,498.92)

1,853.28 1,151.20 2,571.66 1,827.32 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Cash flows from operating activities 22,037.95 13,776.90 17,000.98 12,668.44 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..97

32. Disposal of a subsidiary At 16 September 2002, the Company disposed a subsidiary, Curtain Property Co.,Ltd., (formerly "Advanced Paging Co., Ltd."). The fair value of assets and liabilities of the subsidiary were as follows: Million Baht - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Cash and cash equivalents 210.07

Other current assets

14.05

Equipment, net (Note 12)

10.83

Other assets (Note 15)

15.21

Trade accounts payable

(1.37)

Deposits from customers

(4.41)

Other current liabilities

(13.60) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net assets of the investment sold 230.78

Less Proceed from sale of investment

(235.73)

Account receivable from sale of investment (20.05) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Gain on disposal (25.00) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Proceed from sale of investment

235.73

Less Cash and cash equivalents in subsidiary sold (210.07) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net cash inflow from sale of investment 25.66 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - The operating result of the subsidiary up to the disposal date is shown in note

33. 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 which are negotiated on arm lengths basis in the ordinary course of business and according to normal trade conditions. Consulting and management service fees are charged on a mutually agreed basis as a percentage of assets. Treasury management fees which are included in consulting and management service fees are charged on a percentage of transaction amount. The Group uses external appraisers to evaluate property rental rate in the case that market rate is not available. The following transactions were carried out with related parties: a) Sales of goods and services Consolidated

Company

Million Baht

1,053.17

455.88

89.54

512.36

8.29

421.02

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

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

159.79 157.84 159.79 157.84 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total service income 249.33 670.20 1,221.25 1,034.74 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Sales of prepaid cards Subsidiary 20,364.35 5,053.91 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Interest income Subsidiary 0.22 254.74 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..98

b) Purchases of services Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Rental and other service expenses Subsidiaries Shin Corporation and its related parties

415.93

202.92

798.51

749.10

691.68

593.98

Related party of Singapore Strategic Investments Pte Ltd. 21.94 43.79 21.94 39.62 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total rental and other service expenses 820.45 792.89 1,129.55 836.52 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Advertising and promotion expenses Subsidiaries

908.18

1,016.38

Shin Corporation and its related parties 1,984.54 1,477.06 1,650.49 566.82 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total advertising and promotion expenses 1,984.54 1,477.06 2,558.67 1,583.20 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Consulting and management fees Shin Corporation and its related parties 308.84 181.72 273.00 165.91 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total consulting and management fees 308.84 181.72 273.00 165.91 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Interest expenses Subsidiaries Major shareholder of Shin Corporation

16.95

9.25

4.49

22.40

4.49

22.40

Directors of related parties 2.53 2.05 2.53 2.05 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total interest expenses 7.02 24.45 23.97 33.70 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Dividend paid Shin Corporation

505.48

437.48

505.48

437.48

Singapore Strategic Investments Pte Ltd.

227.20 181.08 227.20 181.08 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total dividend paid 732.68 618.56 732.68 618.56 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

c) Purchases of property, equipment, computer software and cost of mobile phone network Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Subsidiaries

12.06

21.48

Shin Corporation and its related parties

159.49 479.31 151.01 130.40 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 159.49 479.31 163.07 151.88 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

..99

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

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Trade accounts receivable Subsidiaries Shin Corporation and its related parties

2,576.56

716.79

16.75

14.63

0.51

0.29

Related party of Singapore Strategic Investments Pte Ltd.

41.24 53.76 41.24 53.76 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total trade accounts receivable 57.99 68.39 2,618.31 770.84 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Amounts due from related parties Subsidiaries

120.61

31.39

Shin Corporation and its related parties 4.45 1.03 0.66 0.09 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total amounts due from related parties 4.45 1.03 121.27 31.48 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Loan to a subsidiary Subsidiary 28.00 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total loan to a subsidiary 28.00 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Short-term loan to a subsidiary represents a promissory, bearing interest at the rate of 2.1% per annum. The repayment is at call. Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 2001 2002 2001 - - - - - - - - - - --- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Trade accounts payable Subsidiaries Shin Corporation and its related parties

20.88

9.29

44.95

56.43

41.65

23.26

Related party of Singapore Strategic Investments Pte Ltd.

5.01 4.76 5.01 4.76 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total trade accounts payable 49.96 61.19 67.54 37.31 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Consolidated

Company

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Amounts due to related parties Subsidiaries Shin Corporation and its related parties

149.74

584.02

426.90

306.15

390.63

167.89

Related party of Singapore Strategic Investments Pte Ltd. 11.44 28.12 11.44 28.12 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total amounts due to related parties 438.34 334.27 551.81 780.03 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Loans from related parties Subsidiary 4,000.00 1,200.00 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total loans from related parties 4,000.00 1,200.00 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Short - term loan from a subsidiary represents promissory notes, bearing interest at the rate of 1.75% per annum (2001: 2.5% per annum). The repayment is at call. The loan is unsecured.

..100

Consolidated

Company

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Deposits from customers, net Subsidiary

549.15

Shin Corporation

63.29 63.29 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total deposits from customers, net 63.29 612.44 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Long-term debentures Major shareholder of Shin Corporation

10.00

280.00

10.00

280.00

Directors of the Company and its related parties

35.75 45.08 35.75 45.08 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total long-term debentures 45.75 325.08 45.75 325.08 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

e) Commitments with related parties The Group has entered into lease and related service agreements for office spaces, cars, and base stations for periods ranging from 1 month to 13 years with options to renew. At 31 December 2002, the Group is committed to pay for rental and related services in respect of the agreements as follows: Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Payment due

- within 1 year

336.78

330.85

- within 2 to 5 years

436.11

434.08

- over 5 years

468.89

The Company has entered into agreements with a subsidiary of a major shareholder under which the related party provides satellite transponder services. The Company is committed to pay for transponder services amounting to approximately Baht 35.64 million within the year 2003. The Company has entered into agreements with a related party under which the related party 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 14 million per month, and plus the rate per event as prescribed in the agreements (2001 : Baht 13 million per month). The Company has entered into agreements with a related party under which the related party 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 (2001 : Baht 1 million per month). f) Warrants granted to directors (see note 21 ) g) Special reward program During the second quarter of 2002, Advanced Datanetwork Communications Company Limited, a subsidiary, had granted the rights to receive special reward (çSpecial Reward Programé) to the eligible directors and employees of the subsidiary. The program will be granted the rights once a year for 5 consecutive years. The rights will be exercised after the first year but within 5 years after grant date. Calculation of Special Reward Program shall be based on the improvement of the subsidiary’s operational performance on the exercised date comparing with that of the grant date of the subsidiary. However, such program will not exceed each person’s budget. The first grant of Special Reward Program to directors of the subsidiary is 3.41 million units. There is no movement from the beginning to the end of the period ended 31 December 2002.

..101

34. Commitments with third parties Capital expenditure commitment As at 31 December 2002, the Group and the Company have commitments in respect of the construction and installation of mobile phone networks, which have not been completed, and purchases of property and equipment as follows: Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Construction and installation of mobile phone networks Thai Baht

7,439.32

US Dollars

6,647.64

152.83

119.36

1,765.38

Swedish Kroners

15.52

Euro

33.24

21.76

1.90

72.32

Japanese Yen

Pound Sterling Property and equipment Thai Baht

The Group has commitments under letters of credit with overseas suppliers amounting to approximately Baht 133.65 million (2001 : Baht 64.29 million) on a consolidated basis and Baht 19.05 million (2001 : Baht 64.29 million) on a company basis. The Group has entered into lease and related service agreements for office spaces, cars, and base stations for periods ranging from 1 month to 7 years with options to renew. As at 31 December 2002 the Group is committed to pay for rental and related services in respect of the agreements as follows: Consolidated

Company

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Payment due

within 1 year within 2 to 5 years over 5 years

680.04 527.49 0.59

576.72 426.72 -

35. Contingencies As at 31 December 2002, 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 2,264.29 million (2001: Baht 7,454.35 million) on a consolidated basis and Baht 1,916.39 million (2001 : Baht 7,254.13 million) on a company basis. As mentioned in note 11 that the Company sold its investment in Curtain Property Co.,Ltd., a subsidiary, (formerly "Advanced Paging Co., Ltd.") the Company is obligated under the sale agreement to: - have full responsibility for 2 years after the date of this agreement, 16 September 2002, for any and all debts and liabilities suffered, sustained or incurred by the subsidiary which are outstanding at and incurred prior to the date of this agreement including without limitation (except all debts as specified in the agreement at the amount of Baht 20.43 million); - indemnify the Purchasers of the subsidiary against all loss and damages sustained by the Purchaser arising from non-performance or default of any kind by the subsidiary under the Concession agreement; - with in three years from the date of the agreement, indemnify the Purchasers from and against and thus will pay to the Purchasers the amounts of any taxation, relevant cost and penalty of the subsidiary occurred prior and upto the date of the agreement.

36. Financial information by segment The business operations of the Group, as reflected in the consolidated financial statements, are classified into four major segments as follows: 1) the operations of a 1800-MHz DIGITAL, 900-MHz CELLULAR TELEPHONE SYSTEM network, and call center service 2) the operations of a DIGITAL DISPLAY PAGING SYSTEM network, trading pagers, providing pagers for rent 3) trading of mobile phones, rendering repair services for mobile phone and providing mobile phones for rent 4) the operations of data network

..102

Financial information by business segment for the years ended 31 December are shown as follows: Consolidated - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Mobile phone

Page sales

Mobile phone

Datanet

and call center

and services

Sales

service

Group

service - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Million Baht

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Revenue from services and equipment rentals Sales

60,112.89

72.44

362.48

378.16

60,925.97

6.81

19,309.02

9.60

19,325.43

Other operating income

588.47 116.76 204.69 909.92 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total revenues 60,701.36 196.01 19,876.19 387.76 81,161.32 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

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

(29,165.22)

(139.65)

(15,294.82)

(240.93)

(44,840.62)

(13,105.97)

(121.94)

(485.69)

(92.60)

(13,806.20)

Impairment loss on asset

(258.63) (258.63) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Operating profit 18,171.54 (65.58) 4,095.68 54.23 22,255.87 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Finance cost Net loss on exchange Interest income

(161.10) 205.04

Interest expenses

(3,068.78) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Income before tax 19,231.03

Income tax (7,816.09) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Profit before minority interests 11,414.94 Share of net loss in subsidiaries to minority interests (15.36) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Net profit 11,430.30 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Consolidated total assets 123,538.69 1,706.00 840.68 126,085.37 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Consolidated total liabilities 73,443.12 1,061.07 339.93 74,844.12 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Depreciation charge 1,681.35 35.26 8.72 1,725.33 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Amortisation charge 10,287.60 38.05 104.03 10,429.68 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - As mentioned in note 32 that the Company disposed its subsidiary, Curtain Property Co.,Ltd. (formerly "Advanced Paging Co., Ltd.") on 16 September 2002, the figures stated above in "Pager sales and services" segment represents operation of the subsidiary accumulated until the date that the subsidiary was disposed.

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Consolidated - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 2002 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Mobile phone

Page sales

Mobile phone

Datanet

and call center

and services

Sales

service

Group

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -service - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -Million - - - - -Baht - - - - - - - - - -Million - - - - -Baht - - - - - - - - - -Million - - - - -Baht - - - - - - - - - -Million - - - - -Baht - - - - - - - - - -Million - - - - -Baht ---

Revenue from services and equipment rentals

40,520.59 538.55 363.70 318.21 41,741.05 70.05 17,358.48 20.18 17,448.71 Other operating income 605.32 87.92 396.20 2.26 1,091.70 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Total revenues 41,125.91 696.52 18,118.38 340.65 60,281.46 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Sales

Operating expenses Cost of sales and services and equipment rentals

(20,697.37) (589.56) (13,627.02) (261.32) (35,175.27) (6,921.20) (408.82) (2,066.45) (89.26) (9,485.73) Impairment loss on asset (3,970.00) (294.62) (4,264.62) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Operating profit 9,537.34 (596.48) 2,424.91 (9.93) 11,355.84 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Selling and administrative expenses

Finance cost Net loss on exchange

(105.73) Interest income 389.09 Interest expenses (1,572.90) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Profit before tax 10,066.30 Income tax (6,238.44) - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Profit before minority interests 3,827.86 Share of net loss in subsidiaries to minority interests

(23.46) 3,851.32 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Consolidated total assets 105,738.30 288.69 6,649.47 861.93 113,538.39 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Consolidated total liabilities 69,705.79 149.14 2,589.62 72.34 72,516.89 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Depreciation charge 945.84 35.42 39.94 7.54 1,028.74 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Amortisation charge 7,211.62 297.52 15.54 99.27 7,623.95 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

Net profit

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - -

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Directors' Shareholding in the Company and its Subsidiaries of the Year 2002 - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Name

Position

Advanced

Advanced Wireless

Advanced

Data Network

Info Service Plc.

Marketing

datanetwork

Solutions

- - - - - - - - - - - - - - - - - - -- -

Co., Ltd. 2)

Communications

Co., Ltd. 2)

Digital Phone Co., Ltd.

Advanced Contact Center Co., Ltd. 2)

Ordinary Debentures Co., Ltd. - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - 31/12/01

31/12/02

31/12/01

31/12/02

31/12/01

31/12/02

31/12/01

31/12/02

31/12/01

31/12/02

31/12/01

31/12/02

31/12/01

31/12/02

- - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - Dr. Paiboon Limpaphayom

Chairman of the

(Ph.D.)

Board of Directors

Mr. Boonklee Plangsiri

Director

Mr. Somprasong Boonyahcai

7,750,000 5,750,000

7,500,000 2,500,000

Director

Mrs. Siripen Sitasuwan

Director

Mr. Lum Hon Fye

Director

40,000

Mr. Chow, Wing Keung Lucas

Director

Mrs. Tasanee Manorot

Director

Chairman

2,250,000

Mr. Suphadej Poonpipat

12,500,000 7,500,000

of the Audit Committee Mr. Arun Churdboonchart

Member of the Audit Committee

Mr. Boonchoo Direksathapon

Member of the Audit

Committee - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - As of December 31, 2002 Including held by spouse and minor children 1) Amount of Baht 2) None Debentures

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Social Activities

AIS initiates and supports a wide array of public activities, as well as celebrating Thai culture through making contributions to Thai society.

1. Public Charity Projects As part of Thai society, and recognizing the importance of Thai identity and culture, AIS strives to contribute to the Kingdom and create happiness through a number of charity events. Charity Concert AIS hosts annual charity concerts featuring musical education and entertainment. Proceeds from these events are presented to His Majesty the King to be used at his gracious behest for royal charities. 1997 Concert "Dream of Musicals" The first AIS - hosted concert brought together an array of unforgettable Broadway musicals, including My Fair Lady, The Sound of Music, West Side Story, Cats and Phantom of the Opera 2000 Charity Concert "Terd Phrakiat Navamintra" A piano concerto concert in honor of His Majesty the King's musical achievements in both performance and composition. His Majesty was the world's first monarch to be presented with the Sanford Medal, one of the world's most prestigious awards in the field of music, from Yale University. 2001 Charity Concert "Contacting the Thai Ways" Integrating a "light and sound" show, this concert integrated traditional and modern Thai musical styles. Local artists from every region of Thailand performed the song "Satukarn", considered by some to be the world's first song, along with a medley of folksongs. 2002 Charity Concert "Bangkok 220 Music Memories" Celebrating the 220th anniversary of Bangkok and its rich musical heritage, the concert featured a tremendous variety of songs and performers, which included the Chalermraj band, Suthep Wongkumhaeng, Sawalee Pakapan, The Impossibles, Surasee Ittikul, Nantida Kaewbuasai, Amita TaTa Young and many others. AIS Teen Talk An exciting, innovative talk show introducing a new perspective on family relationships, using the discussion of family issues to facilitate greater awareness, communication and understanding between parents and their teenage children. 2001 A talk show to raise funds for underprivileged patients of Chulalongkorn Hospital under the patronage of the Thai Red Cross. 2002 A talk show concert by the famous artists Byrd-Heart and Ajarn Jatupol Chompunich. Proceeds were donated to underprivileged

patients of Thammasat Chalermprakiet Hospital.

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AIS Family Rally for Sai Jai Thai An activity designed to promote family and social relationships, whilst making merit. The Sai Jai Thai, under Royal patronage, funded all application fees. Proceeds from the games were granted to local charity organizations to be spent on important projects. In 2002, AIS organized "the 10th AIS Family Rally for Sai Jai Thai: Enjoy rally in Thai way" to compete for the Princess Maha Chakri Sirindhorn Trophy. Taking place on November 16th, the rally routed from Bangkok to Kanchanaburi. Proceeds from the games were granted to the children of the Children's Village School of Kanchanaburi.

2. Special Projects In recognition of being a Thai company and part of Thai society, AIS in conjunction with various charity organizations, organized activities on various special occasions throughout the year. January Children Day's activities, in conjunction with the Children Foundation, to build a kindergarten school for underprivileged children. April

National Senior Day's activities were organized in conjunction with the Rajaprajanugroh Foundation, in order to establish an AIS fund for the seniors of the Rajaprajanugroh Foundation.

August National Mother's Day was organized in conjunction with the Thai Red Cross of Chulalongkorn Hospital, and included activities linked to the Chalermprakiat project: "Develop mother's life and family for healthy life."

3. Public Benefit Project AIS sports field AIS has developed public parks and wasteland in order to build a broad array of sports and leisure areas for people of all age ranges, which will also enhance their local communities. 2001 The first AIS sports field was constructed at the Train Garden behind Jatuchak park. Two standard and fully equipped basketball

courts were built for the BMA on August 3, 2001. 2002 Began construction of an international standard basketball court located under the Rama IX Bridge.

4. AIS Youth Project Blessed with creativity and purity of heart, children require sensitive, creative education. AIS, therefore, established youth projects that incorporate activities designed to enhance the growth and development of Thai children. Novice Ordainment AIS, in conjunction with the Office of Budhamonthol, the Religious Affairs Department, Department of Public Welfare and Organization for Homeless Children, organized the ordination of novice monks in order to give underprivileged children the opportunity to study Buddhism and perform Dharma. This will enable them to find peace, spend their free time wisely and learn how to live in harmony with society. 2001 AIS Summer Novice Ordainment Project ordained 1,250 novices to be blessed and undertake good deeds on the auspicious

occasion of Her Majesty the Queen's Birthday, August 12, 2001. 2002 To bless and present good deeds to His Royal Highness Crown Prince Maha Vajiralongkorn on the auspicious occasion of His

Royal Highness' 50th Birthday, 1,251 novices were ordained on April 6, 2002 Crafting Art Crafting Thai AIS (San Silpa San Thai AIS) An activity that encourages children to spend their free time effectively, opening up opportunities for them to express their imagination and gain new perspectives through drawing with the well-known artist Ajarn Chalermchai Kositpipat, who specializes in color drawing techniques. The winner received a trophy and a scholarship from Her Royal Highness Princess Bajrakitiyabha. In 2002, AIS organized "the 2nd San Silpa San Thai" on Saturday 26 October, welcoming over 200 youths to participate in the project at the Wimanmek Royal Hall in the Dusit Grand Palace, Bangkok.

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Conserve Thai Sea (Rak Talay Thai) An activity aimed at helping young people realize the importance of nature conservation and participating in environment and ecology preservation as a way to spend free time wisely. Starting in 2002, the project, in cooperation with the Royal Thai Navy, led 100 high school students from schools countrywide to undertake activities at the Sattaheep Naval Base, Amphoe Sattaheep, Cholburi province.

5. Disaster Relief Project Throughout the country Thai people have been faced with the threat of natural disaster and AIS has always been ready to respond with prompt emergency aid. Join Forces to Relieve the Flood Disaster August 17, 2001

AIS, in conjunction with ITV and 13 Government and Private Agencies, organized the project "Helping with the Heart, Thais Never Leave a Friend in Trouble" to raise funds and provide relief for aid flood victims in the North and Northeast.

August 21, 2001

"AIS Joins Forces to Relieve the Flood Disaster" prepared 6,000 survival kits, valued at more than THB 600,000. Under the auspices of the Rajaprajanugroh Foundation, under Royal patronage, the kits were distributed to flood victims in Numkor district, Petchaboon and the northeastern provinces in Udonthani and Kalasin.

September-October 2002

"AIS Joins Forces to Relieve the Flood Disaster" AIS prepared 6,450 survival kits, valued at THB 1.5 million. These were presented to regional offices for distribution.

Join Forces to Relieve the Winter Weather December 17, 2001

"AIS Joins Forces to Relieve Winter Weather," in conjunction with the Department of Civil Affairs and the Royal Thai Navy, to provide 2,000 blankets for victims of extremely cold weather in the North and upper Northeast.

6. Life Quality Project We wish to see Thai people enjoy a high quality of life and are proud of our social activities that contribute to this: Anti-Drugs Abuse Campaign AIS, in collaboration with the National Office of Police, Ministry of Education, Ministry of Health, Ministry of Labor and Social Welfare, and BMA, investigated drug abuse among students in order to identify effective preventive measures. This was in response to increasing concern at the growth of drug abuse among young people and students. Traffic AIS, in conjunction with the Ministry of Education, National Office of Police by Metropolitan Police Bureau, published 4,000 handbooks and trained 2,324 police officers and teachers in traffic regulations in order that they then pass on this knowledge to students. The Procurement of Traffic Equipment Project AIS, in conjunction with Metropolitan Police Bureau, the National Office of Police, improved the availability of operational equipment in order to enhance the efficiency of traffic administration, which benefit drivers, commuters and pedestrians. Nurturing the Education of Thai Children AIS, in conjunction with Ministry of Education, provided 400 computers to schools who were selected from four participating regions.

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Weaving Love (Sarn-Ruk) Since 1999, not only has the development of cellular network excellence been a priority for AIS but also making a meaningful contribution to society. "Sarn Ruk," is an AIS project promoting the family. The project is the fruit of AIS' belief in the fundamental importance of the family as the foundation for a caring society. AIS Smiling on Children's Day AIS organized the event to bring happiness into children's through activities, educational games and entertainment on their special day. "AIS Smiling on Children's Day" was run at every AIS Service Office nationwide. The children enjoyed a variety of entertainment and skills development activities whilst being exposed to wireless communication technology. AIS Valentine's Day For February 14th many couples choose Valentine's Day to begin their life together. AIS, in cooperation with Office of District Administration in Bangkok, hosted Valentine's activities, which included giving the book "Sarn-Ruk" as a special gift to newly wed couples. This special edition gave valuable advice on how to achieve a successful marriage and family life. AIS Family Camp AIS Family Camp enabled family members to become closer. Fun activities throughout the family camp included the Walk Rally, Team Building and a variety of games that emphasized brainstorming and problem solving. Participants were also taught how to live together in society as well as being given in-depth knowledge - both theoretical and practical - by experts, in order to encourage understanding and love within the family. AIS Family Seminar A scholarly seminar for families led by experts from the Department of Mental Health, psychiatrists and personalities from all walks of life, who are successful in family life. They shared their experiences and ideas with Sarn-Ruk members. The seminar content included Communication Skills in the Family, Dad Mum and the Making of Happy Family and Emotional Intelligence Bringing Happiness to Family. "Sarn-Ruk Project" from AIS principally hosts seminar in various family related days three times a year including Family Day (April), Mother's Day (August) and father's Day (December). It also distributes articles and handbooks at seminars around the country, aimed at helping families learn to live more happily together. AIS School Program To encourage students, parents and teachers to realize the importance of communication, AIS organized the "AIS School Program". This was an activity to show how love in the family could be expressed through card writing (Love Cycle Card). Short messages coming from the heart may help bring family members closer. AIS Family Walk Rally Bringing families together to think, share and understand, the "AIS Walk Rally" was an activity to promote family relationships and make merit together. AIS presented the proceeds from the competition to the Anandhamahidol Foundation. Strong Heart Great Man (Kon-Keng-Hua-Jai-Krang) AIS showcases true stories of young Thai people who, through their good deeds and words, provide outstanding role models for their peers. This is done through a TV documentary, "Kon-Keng-Hua-Jai-Krang" which grants scholarships and funds in recognition of their achievements and to inspire others to follow their example.

..109

The prizes that "Sarn-Ruk Project" has been awarded: "1999's Outstanding Mass Media Award" for outstanding movie ad from the Catholic Mass Media of Thailand. - The movie ad "Friday Night" "2000's Outstanding Mass Media Award" for the movie ad encouraging family commitment from the Catholic Mass Media of Thailand. - The movie ad "Everyday" - The movie ad "Home Alone" - The movie ad "Mother Day" "2001's Outstanding Production of Mass Media for Youth" "Kon-Keng-Hua-Jai-Krang" was awarded "The Documentary for the Youth between 15-25" from the National Youth Bureau. "2002's Outstanding Mass Media" for Family Documentary "Kon-Keng-Hua-Jai-Krang" from Catholic Mass Media of Thailand.

..110