ADVANC : Annual Report 2003 by ar.advanc

Customer Relationship Management

Network Quality

Non-voice ser vice

Solutions for Corporate Customers

Good

Corporate Governance

Annual Report 2003 Advanced Info S er vice Public Company Limited

Differentiate by Quality

0:1

Differentiate by Quality Distinctive... with quality and moving forward Why has AIS maintained its status as the leader in the wireless communications business, while many competitors have emerged in the market? It is because of the Company's vision, excellent management structure, good governance system, qualified personnel and customer care system, and because our creativity never ceases with the introduction of new technology and services to meet its customers' needs, applicable to different organisational cultures and individual lifestyles. AIS are determined to maximise its customers' satisfaction and maintain the highest level of confidence among valued customers. "Continual Development of Quality in all aspects" is an appropriate epilogue to distinguish AIS from its competitors and affirm its position as business leader ahead of its competitors now and in the future.

○

Financial Highlights

01 02 03

126,085.37

124,949.18 ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

113,538.39 ○

○ ○

○ ○ ○ ○

○ ○ ○

11,430.30

18,529.02 ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

3,851.32 ○

○ ○

○ ○ ○

○ ○

○

○ ○

01 02 03

○

80,251.40

89,491.70 ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○

6.51% 11.14% 24.12% 1.39 0.40 14.79

○

14.24% 24.78% 28.51% 3.89 1.55 17.46

○

20.70% 33.43% 36.38% 6.32 4.10 20.32

○

Financial ratio Net Profit Margin Return on Equity Return on Asset Earning per share (Baht) Dividend per share (Baht) Book Value per share (Baht)

○

59,189.77

Unit : Million Baht

○

2003 2002 2001 Financial results Revenue from services and equipment rentals 73,749.94 60,925.97 41,741.06 Sales 15,741.76 19,325.43 17,448.71 Total revenue 89,491.70 80,251.40 59,189.77 Gross Profit 40,073.14 35,410.78 24,014.49 Net Profit 18,529.02 11,430.30 3,851.32 Total Assets 124,949.18 126,085.37 113,538.39 Total Liabilities 65,322.97 74,844.12 72,516.89 Total Shareholders' Equity 59,626.20 51,241.25 41,021.50 Cash flows from operating activities 40,378.17 22,037.95 13,776.90

01 02 03

Total Revenue..........Net Profit...........Total Assets

* The Company has changed the par value from Baht 10 per share to Baht 1 per share since 2001

2 :3

2nd "Thailand‘s Leading Companies 2003" by the Far Eastern Economic Review Disclosure Award and Popular Award by SEC “AA“ Company Rating by TRIS “BBB“ (Stable Outlook) Rating by S&P

A Company with Good Governance and Global Acceptance AIS moves forward to sustain the

confidence rating for a non-state enter-

Company's quality and standard of good

prise private company; Standard and

governance, establishing the Company's

Poor's (S&P) placed AIS in the BBB

policy

(Stable Outlook) rating.

with

special

emphasis

management transparency which may be cross checked. The Company strictly

Besides this, AIS were named a

follows regulations, upholds morale,

leading Thai company with excellent

and are dedicated to rendering social

management by many well known

contributions. These are the reasons

international business magazines

why AIS, a Thai-owned company, are

and financial institutions as well

widely trusted by both Thai and over-

as investors, top executives and

seas investors. International rating

financial analysts around the world.

companies

Rating

This is an unquestionable credential

Company Limited (TRIS), gave AIS an

of trust and confidence expressed

"AA" company rating, the highest

by global investors.

including

TRIS

4 :5

The world of communications has

Network Quality Assurance Process and

changed dramatically over the years,

a Network Management Centre to

where customers' demands have leapt

maximise network efficiency and quality

beyond

voice

for the provision of both voice and

communication. Now non-voice com-

information services, allowing greater

munication plays an important role in

flexibility and convenience to match

both our personal and professional lives.

the needs of individual lifestyles.

the

boundary

Hence, AIS decided to introduce a

A New Dimension of Network Quality

Network Technology Network Quality Management Network Quality Assurance Network Management Centre

6 :7

In parallel to the Company's position at

AIS' Personal Assistant Service is ready to

the forefront of the telecommunications

assist our customers in every service area

business, offering a high-quality network,

required both within and outside the

AIS has continued to place special

country. An extensive range of attractive

emphasis on strengthening and building

benefits is offered for added convenience

customer relationships.

and flexibility in mobile phone services, which includes discounts from leading

From a customer-base of over 13 million,

stores, health centres, hotels, spas and

AIS were able to identify different

exclusive privileges to join activities

segments of customers according to

organised for AIS valued customers only.

their demands and lifestyles, as well as design appropriate services, activities and benefits for each.

Service Companion for Comprehensive Demands

GMS Advance Exclusive Sport GMS Advance Exclusive Party GMS Advance Exclusive Shopping GMS Advance Exclusive Trip

GMS Advance Premium Movie

8 :9

In order to maximise our customers'

important aspect that the Company has

satisfaction, AIS brought in the C-Care

continued to enhance. Development of

Smart System (C-Care) to increase service

personnel at each service centre, our

efficiency, delivering only high quality

website and customer activities are

products and services of equal standard

the key areas to ensure our customers'

to meet their requirements at any

pleasant experience, which in turn will

location. Enhancing service excellence at

strengthen relationships and confidence

each customer contact point is another

in the Company.

Superior Service Standard for Valued Customers

C-Care Smart System Service Excellence

10 : 11

AIS has constantly reviewed and regulated

With over 60 types of services today,

the Company's marketing strategy to

mobileLIFE is ready to fulfil the needs of

promptly respond to changes in customers'

every customer lifestyle. With just a tap on

demands

advance-

the mobile phone, customers can simply

ments. A Future Lab Team was appointed to

access the mobileLIFE WAP Portal and

conduct research on service expansion to

enter the world of boundless experience to

meet the demand of each customer group

make business contacts or personal arrange-

and allow greater comfort and convenience.

ments. AIS are more ready than ever before

The refined wireless service is not simply

to offer unrivalled convenience and

a service that meets customers' demands;

flexibility... anytime, anywhere.

and

technological

such a service generates potential to supplement revenue for shareholders in the long run.

Wireless Service... Boundless Experience... Anytime, Anywhere

Video Mail

MobileLIFE

TV on Mobile JAVA Game Multimedia Messaging Stock Mobile Karaoke

12 : 13

GPRS for credit card readers SMS fuel price updates SMS car location tracking Order Confirmation Update sales Information Updating lottery ticket accounts Mpaging to verify customer documents

Ultimate Choice of Service to Accomplish any Business Need Survival in today's fierce business setting

service selection suitable for business

and maintaining a position in the market

requirements, which includes cooperation

may be achieved by those who move

with Microsoft to allow corporate

with greater speed, make available a

customers easy access to their companies'

wider range of services and offer more

database via mobile phone.

superior business technology. Recognising the needs of corporate clients, AIS

SMS car location tracking and SMS

introduced Smart Solution to support any

fuel price updates are amongst the

business requirement, offering state-of-

choice of services that have been

the-art technology to simplify and allow

developed in response to each business

greater flexibility in business operations.

requirement, increasing flexibility and

Through cooperation with other business

profit, as well as ensuring business

operators, AIS are able to offer extensive

success for corporate clients.

Message from the Chairmen Dear Shareholders, I am pleased to announce that 2003 has been another successful year for Advanced Info Service Public Company Limited. The Company was able to increase its number of subscribers by 24.2 percent, which accounted for an additional 2.57 million subscribers between January and December 2003. At the end of 2003, AIS had achieved a total of 13.23 million subscribers, comprising 2.11 million Post Paid customers (GSM Advance and GSM 1800) and 11.12 million Pre-Paid customers (1-2-Call!), despite a user growth rate decline since 2002, and an emergence of a new service provider, Hutchison CAT Wireless Multimedia, the operator of the CDMA mobile phone system. The continued growth of the Company reflects our customers‘ trust and confidence in quality, and the modern and dynamic services offered in response to our customers‘ needs as well as the Company‘s effective management. Operational Performance and Net Profit The Company is determined to provide the highest quality products and standard of service to all its customers and has continued to maintain effective operational management. As a result, the Company achieved total revenue of Baht 89,491 million, compared to Baht 81,366 million in 2002, an increase of Baht 8,125 million or 9.98 percent. Net profit reached Baht 18,529 million, compared to Baht 11,430 million in 2002, an increase of Baht 7,099 million or 62.1 percent. Unique Quality Offering a unique range of quality products and services has differentiated AIS from other operators; likewise, this is one of the Company‘s main priorities. Besides establishing service excellence in Network, Technology, Service and People, AIS strives to develop and promote various aspects of operations including: CRM (Customer Relationship Management), in order to develop outstanding customer relations through an understanding of our customers‘ ever-changing behaviour. This allows our customers to gain an exceptional experience through AIS‘ premium service - adding to the already wide range of services suitable to their individual lifestyles. In appreciation of our customers‘ trust and loyalty, AIS organises numerous activities to show our gratitude in harmony with the preferences of each customer group on a continual basis. CEM (Customer Experience Management), in order to enhance a positive experience for our customers when contacting AIS services. Every customer contact point or touch point, both human and non-human, is continually developed in order to secure a refined experience for all AIS customers. This will, in turn, strengthen the relationship between the Company and its customers, as well as its customers‘ desire to continue selecting AIS as their preferred choice of service provider. In a new dimension, AIS is determined to develop Network Quality and efficiency in order to create confidence among its customers. In addition to network coverage, accessibility and reliability, AIS has also developed the following areas: - Network Technology by introducing state-of-the-art technology and expanding network capability to deliver fast and dynamic services to its customers in response to changing trends such as EDGE, WAP and GPRS. - Managing and regulating network quality by Network Quality Management and Network Management Centre Units, which control and monitor network operations in order to maximise efficiency both in areas of voice and non-voice services 24-hours a day. The Network Quality Assurance Process ensures network quality to guarantee that our customers receive the highest quality services beyond their expectation. Non-voice services offer data communication for added convenience under the name mobileLIFE via SMS, EMS, MMS, WAP, GPRS and EDGE technology, which are expected to develop further in the future. AIS set up Future Lab to amplify services in various dimensions to suit different customer target groups and their daily lifestyles as well as increase their comfort and convenience, ready to step towards a wireless society. AIS has developed business solutions for corporate customers to match the needs of different businesses and respond appropriately to the needs of individuals within each organisation.This ensures comfort and maximises the benefits from AIS services such as GPRS for credit card readers, SMS fuel price updates, SMS car location tracking, Updated sales information and Mpaging to verify customer documents. Good Corporate Governance AIS has continued to place special emphasis on a transparent management policy which may be reviewed and cross checked. In addition, AIS strictly complies with company regulations and believes in a business practice with morale principles and honesty as well as readiness to offer community services, making AIS a quality and exemplary organisation. Therefore, AIS has earned trust and confidence from investors both within and outside Thailand. AIS‘ credit is rated at AA by TRIS Rating Company, the highest rating for a private organisation. Standard and Poor (S&P) also gave AIS a BBB rating, (Stable Outlook).

Competition in Mobile Telecommunications Business Over the past year, we have experienced more creative competition in the mobile telecommunications business arena. We see less of the cutthroat price slashing techniques to attract customers; instead the operators offer a wider selection of more dynamic price packages for customers to select according to their preference. This reaches the market segment of SME business operators, allowing quality business growth and development. In 2003, there was a 25 percent increase in the number of mobile phone users, which accounted for 34 percent of the Thai population who now use mobile phones - equivalent to 22 million people. In addition, mobile phone operators compete in maintaining a customer base and encourage the growth of non-voice services. AIS has stimulated the development of this service among its customers through mobileLIFE and has prepared for the growth of non-voice services with the introduction of EDGE technology to its network, which has been operational since October 2003. EDGE will further accelerate the AIS network to provide three-times faster transmission of information. Movement of Government Sector in Response to Liberalisation of Telecommunications Business Policy In 2003, there were changes in the government sector in order to prepare for the liberalisation of the Telecommunications business. The government issued an Act to regulate excise duty, which requires operators of both mobile and fixed-line phones to allocate part of their revenue to the concessioners, instead of paying the entire amount, to the Ministry of Finance in the form of excise. Operators of fixed-line phones pay at the rate of 2 percent while those operating mobile phone services pay 10 percent. In addition, the government has prepared to collect an interconnection charge from operators. There has been a lot of discussion and negotiation between concerned parties and a final conclusion on this issue has yet to be reached. A selection of National Telecommunication Committee members is making further progress on the submission, by the Selection Committee, of a name list of appropriate individuals to the Senator for further consideration. This process is expected to become more apparent later in 2004. On this occasion, the Company wishes to thank all shareholders, customers and business partners for their trust and confidence in the Company, supporting our continual growth and development. We would like to thank all staff members who have dedicated their time and knowledge to render outstanding services to our customers throughout the years. The Company is confident that our determination and concerted efforts to respond to customersâ&#x20AC;&#x2DC; needs, offering quality services and a good corporate governance management system, will bring the Company towards a successful future and position AIS as a true leader of Thailandâ&#x20AC;&#x2DC;s telecommunications industry.

Dr. Paiboon Limpaphayom (PhD) Chairman of the Board of Directors

Mr. Somprasong Boonyachai Chairman of the Executive Committee

Contents 1 ....... Financial Highlights 14 ....... Message from the Chairmen 17 ....... Audit Committee’s Report 18 ....... Shareholding Structure of the Group Company 19 ....... Development and Key Events 2003 20 ....... General Information 23 ....... Nature of Business 30 ....... Risk Factors 34 ....... Shareholding Structure 35 ....... Management and Corporate Governance 48 ....... Related Transactions 54 ....... Analysis of Results of Operations and Financial Position 59 ....... Directors and Management Team 63 ....... Board of Directors’ Responsibilities with Regards to Financial Reporting 64 ....... Auditor’s Report 68 ....... Consolidated and Company Financial Statements 107 ....... Directors’ shareholding in the company and its subsidiaries of the year 2003 108 ....... Social Activities

16:17

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

To the Shareholders of Advanced Info Service Public Company Limited The Audit Committee comprises 3 independent directors, with Mr. Suphadej Poonpipat as the Chairman, Mr. Arun Churdboonchart and Mr. Boonchoo Direksathapon as the Committee, and Mrs. Suvimon Kulalert as the Secretary. The Audit Committee has performed all responsibilities in accordance with the requirements of the Stock Exchange of Thailand. The Audit Committee conducted a total of 10 meetings and 2 ad hoc meetings, and appropriately consulted with senior management, certified public accountants and internal auditors during 2003 aligned with the scope of responsibility assigned. This can be summarised as follows: 1. Reviewed quarterly and annual financial statements of the Company and its subsidiaries before submitting them to the Board of Directors for approval; this considered the financial statements previously audited by certified public accountants and the management letter. The Audit Committee agreed that these financial statements were accurately presented and were adequately disclosed. 2. Reviewed the disclosure of related transactions and transactions that created a conflict of interest. It was agreed that these transactions be proposed to the Board for approval in accordance with the requirements of the Stock Exchange of Thailand. The Audit Committee came to the conclusion that the above mentioned transactions were fair, and gave the most benefit to AIS; similarly, transactions with related companies were performed at a reasonable price and impartially. 3. Reviewed the internal control system, including the security of the C-Care system and the newly developed IT system to be used in company business processes. In addition, the Audit Committee reviewed internal control of scratch card management, including a scratch card distribution system, balance on-top system, revenue record system, collection system and preventive maintenance system. The Committee agreed that the internal control system was adequate and effective; moreover, internal control is being continuously and regularly developed. 4. The Audit Committee agreed to the audit action plan 2003/2004 and considered reports of major business processes, for exam, revenue system, mobile switching system, computer center security, provisioning system, branch/outlet operation, collection and purchasing system. The Audit Committee concluded that the Company's operation had an effective internal control system, adequate risk management system and good corporate governance system. In addition, the Audit Committee oversaw internal audit jobs and guided the internal audit process to follow the standard. 5. Proposed Audit Committee reports to the board quarterly, and provided useful recommendations for managing business operations to the Company's management; management appropriately improved in accordance to these recommendations. 6. Sought approval from the Company's Board of Directors for the General Shareholders' Meeting 2004 to appoint PricewaterhouseCoopers ABAS Ltd. as the Certified Public Accountant of the Company for 2004. Regarding the operation of the Company in 2003, it is in our opinion that the Board of Directors and Management have operated with an ethical mind and have had the intention of performing its duties professionally to achieve the Company's goals. The Company has committed itself to an "importance of business" operation under an effective internal control system. In addition, the Company has continuously conducted a concise and appropriate risk management system, and also has effective corporate governance.

Suphadej Poonpipat Chairman of Audit Committee 20 February 2004

Shareholding Structure of the Group Company

...............................................................

Shin Corporation Plc.

1), 2)

. . 67.95% Advanced Datanetwork Communications Co., Ltd. . . 49.00% Data Network Solutions Co., Ltd.

. . 98.55% Digital Phone Co., Ltd.

. . 99.99% Advanced Contact Center Co., Ltd.

.....

. . 99.99% Advanced Wireless Marketing Co., Ltd

Shin Broadband Internet (Thailand) Co., Ltd. . . 50.02% CS Loxinfo Plc. 4) 94.19

Loxley Information Services Co., Ltd

. . 99.99% I.T. Applications and Services Co., Ltd.

ITV Plc. 2), 3) 99.93%

Artware Media Co., Ltd.

. . 99.96%

99.99%

..................

. . 99.99%

Teleinfo Media Co., Ltd.

..................

Shin Satellite Plc. 2)

.......................................................................

Advanced Info Service Plc.2)

................................

. . .42.99% . . . . . . . . . . . . . . . . . . . . . 51.48% . . . . . . . . . . . . . . . . . . . . . . . . . . .38.25% . . . . . . . . . . . . . . . . . . . . . . .53.22% ...................

AD Venture Co., Ltd.

. . 100% Shenington Investments Pte. Ltd. 1)

70.00%

Shineedotcom Co., Ltd. 47.50%

ArcCyber Co., Ltd. 100%

Cambodia Shinawatra Co., Ltd. 49.00%

Lao Telecommunication Co., Ltd.

. . 98.88% iPSTAR Co., Ltd.

. . 70.00% SPACECODE LLC.

1) Holding Company 2) Listed Company of the Stock Exchange of Thailand 3) On process of capital increase to Mr. Tripop Limpapath amount 150 million shares and Kantana Group Public Company Limited amount 150 million shares 4) On process of approval capital increase from SEC and acquiring Teleinfo Media Co., Ltd. from Shin Corporation Public Company Limited As at February 10, 2004

Thai AirAsia Co., Ltd.

. . 60.00%

SC Matchbox Co., Ltd.

Shinawatra Information Technology Co., Ltd.

C.S. Loxinfo Solution Co., Ltd.

Merry International Investment Corp.1)

. . 50.00%

. . 90.91%

44.99%

100%

Capital OK Co., Ltd.

18:19

Development and Key Events 2003

January 2003 The Cabinet announced the use of Royal Decree for Excise Tax on the Telecommunications business, which requires telecommunication service providers to allocate part of its revenue to the Excise Department, under the supervision of the Ministry of Finance. This practice is conducted instead of sending all the revenue to the concession owners , as specified in the cooperation agreement between the concession owners and concessionaires. As a result, AIS and DPC both allocate ten percent of their revenue to the Ministry of Finance and the rest of the payment is made to the concession owners. ○

○

March 2003 AIS, together with Microsoft Corporation launched the first innovative design in the Asian region called Smart Solution 2003, through mobile phone Windows Powered Smart Solution. Users are able to select a range of applications from Pocket Outlook, Pocket Internet Explorer, MSN Messenger and Windows Media Player. ○

○

April 2003 AIS re-emphasised its brand identity as an Innovative Operator by offering a new dimension to its mobileLIFE service, the centre of all value-added services, under the concept "mobileLIFE is your everyday life". This added extra value and enjoyment for mobile phone users, suitable for today's life in the modern world. AIS launched an exciting "TV on Mobile" service, where users can enjoy television programs broadcast on Thai TV Channels 3, 5, 7, 9, 11 and ITV via their mobile phone through the GPRS system under the concept "Anytime Anywhere Everyone". ○

○

August 2003 AIS has continued to place special emphasis on creating value added services by developing GSM Advance Evolution-Power to Connect or Borderless Evolution. This was done to underscore that mobile handsets will not only be a communication tool in the future, but will also add fun, convenience and quality to life, through wireless services. ○

○

October 2003 AIS launched a wireless service through Enhanced Data Rates for GSM Evolution or EDGE, covering key provinces throughout Thailand including Bangkok, Pattaya, Chonburi, Nakorn Ratchasrima, Konkaen, Chiang Mai and Phuket. With this technology, AIS is able to better respond to customers' demand for both voice and information utilisation compared to other operators. ○

○

November 2003 The Office of the Securities and Exchange Commission named AIS as an exemplary company for disclosing quality information in view of investors and fund managers, and the company was awarded the Disclosure Report Award 2003. The Institutional Investor magazine also voted AIS as having the Most Improved IR (Buy-side View) from a survey conducted among analysts and fund managers in the Asian region. ○

○

December 2003 AIS was ranked third by ASSET magazine under the category "Best in Corporate Governance 2003". AIS was ranked second by the Far Eastern Economic Review magazine as "Thailand's Leading Companies 2003". AIS received AA rating from TRIS Rating Company Limited for corporate reliability and loans, moving up from the previous rating of AA-. ○

○

General Information % of Investment ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

Paid-up Capital

(Baht Million) ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Par Value

(Baht per share) ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

67.95

○

457.52

○

○ ○ ○ ○ ○ ○ ○

○

As of February 10, 2004

99.99

○

Home Page : www.adc.co.th

○

Fax. (662) 256-9922

○

area

Tel. (662) 256-9461-70

○

Bangkok 10330

○

Bangkok and metropolitan

○

telephone line network in

Ploenchit Road, Lumpini, Pathumwan,

○

500 17th Floor, Amarin Plaza Tower

45.75

○

communications via

○

Service provider of voice/data

Communications Co., Ltd.

○

Advanced Data Network

○

Fax. (662) 502-5800

240.00

○

○ ○ ○ ○

○

Tel. (662) 502-5899

○

accessories (non-operated)

○

Phayathai, Bangkok 10400

○

cellular phones and

○

Importer and distributor of

414 Phaholyothin Road , Samsennai,

○

Advanced Wireless Marketing Co., Ltd.

○

Its subsidiaries

○

Home Page : www.ais.co.th

○

Fax. (662) 299-6005

○

Tel. (662) 299-6000

○

Samsennai, Phayathai, Bangkok

○

Branch : 1291/1 Phaholyothin Road,

○

Fax. (662) 299-5165

2,939.17

○

Tel. (662) 299-5000

○

○ ○ ○ ○ ○ ○ ○

○

Samsennai, Phayathai, Bangkok 10400

○

and 1-2-Call!

○

Head Office : 414 Phaholyothin Road,

5,000

○

Service provider of Digital GSM

○

Advanced Info Service Plc.

Registered Capital

Business

○

Company

(Million Shares)

The Company and its subsidiaries

% of Investment ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

99.99

○

Paid-up Capital

(Baht Million) ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

98.55

○

272.00

○

Par Value

(Baht per share) ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

As of February 10, 2004

49.00

○

Fax. (662) 299-5959

○

Tel. (662) 299-6000

○

Samsennai, Phayathai, Bangkok

27.2

○

414 Phaholyothin Road,

Call Center service

○

Advanced Contact Center Co., Ltd.

○

nication equipments

Home Page : www.dpc1800.com

○

Fax. (662) 299-5455

○

accessories, and telecommu-

○

of cellular phones including

Tel. (662) 502-5100, 5000

○

Lardyao, Chatuchak, Bangkok 10900

○

and importer and distributor

○

operator of Digital GSM 1800

22nd-26th Floor, Vibhavadi-Rangsit Road,

1.00

10 14,621.86

○

1010 Shinawatra Tower 3,

1,462.19

○

Mobile phone network

○

Digital Phone Co., Ltd.

○

Fax. (662) 256-9993

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

Tel. (662) 256-9461-70

○

telephone line network

○

data communications via

Pathumwan, Bangkok 10330

○

500 9th Floor, Amarin Plaza Tower Lumpini,

○

0.10

○

Service provider of voice/

○

Data Network Solutions Co., Ltd.

○

Business

(Million Shares)

Company

Registered Capital

20:21

○ ○ ○ ○ ○

○ ○

Fax. (662) 359-1262-3

○ ○

www.tsd.co.th

○ ○ ○

Mr. Prasan Chuaphanich

○ ○ ○

179/74-80, Bangkok City Tower 15th Floor,

○ ○

South Sathorn Road, Yannawa, Bangkok 10120

○ ○

Tel. (662) 286-9999, (662) 344-1000

○

○ ○ ○ ○

○

9 Ratchadapisek Road, Lardyao,

○ ○

Chatuchak, Bangkok 10900

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Tel. (662) 544-3866-76

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DBS Thai Danu Bank Plc.

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393, Silom Road, Bangrak,

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Bangkok 10500

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Tel. (662) 230-6170, 230-5304

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www.dbs.co.th

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www.scb.co.th

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/Debentureholders' Representative

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Siam Commercial Bank Plc.

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Debenture Registrar

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www.pwc.com/thailand

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Fax. (662) 286-5050

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PricewaterhouseCoopers ABAS Limited

○

○ ○

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Certified Public Accountant Registration Number 3051

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Auditor

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Tel. (662) 229-2800, 645-5599

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Klongtoey, Klongtoey, Bangkok 10110

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62, Ratchadapisek Road,

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○ ○ ○

○ ○ ○ ○ ○ ○

○

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Thailand Securities Depository Company Limited

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Ordinary Share Registrar

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Other references

22:23

Nature of Business

Overview The core business of Advanced Info Service Plc. (AIS) and its subsidiaries are 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. In 1990, AIS was granted permission to operate a nationwide 900MHz cellular network and provide integrated services for a period of 20 years by the Telephone Organization of Thailand ( TOT ) under the BTO concession agreements. In 1996, this concession was extended to 25 years. Under the BTO concession agreements, AIS have to build the cellular network, raise capital and transfer network ownership. AIS have the responsibility in all aspects including network engineering, network planning, equipment procurement and installation, network maintenance, and service commercialisation. AIS have to share a total of 25% of its postpaid service revenue with TOT and the government through excise tax. For prepaid services, AIS shares a total of 20% of its prepaid revenue with TOT and the government through excise tax. In 1996, Digital Phone Co., Ltd. (DPC), a subsidiary of AIS, was also awarded a BTO concession to operate a nationwide 1800MHz cellular network by the Communication Authority of Thailand (CAT). DPC shares a total of 20% of its revenue with CAT and the government through excise tax. Additionally, AIS have invested in two subsidiaries, Advanced Data Network Co., Ltd (ADC) and Data Network Solutions Co., Ltd (DNS) which provide nationwide voice-data communication via telephone line networks. Advanced Contact Center (ACC) provides call centre services for AIS and DPC customers, as well as for other companies that wish to outsource their call centre functions. In 2003, total subscribers reached 13.2 million, up from 10.7 million or 24.2%. Subscriber growth resulted from policies of economic expansion, an improved economy, increased customer satisfaction due to high network quality, and superior customer care and services. Additionally, AIS created new services that catered for the various needs and demands of its customers, emphasising on non-voice services that matched their lifestyles. AIS is Thailandâ&#x20AC;&#x2DC;s first mobile network operator to offer EDGE (Enhanced Data Rates for GSM Evolution), which transmits data three times faster than GPRS, and improves the efficiency of data service applications.

Revenue Structure Revenues gained from products and services provided to third parties by the Company and its subsidiaries, during the past 2 years and

○ ○ ○

○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

0.02

○

59,189.76 100.00 80,251.40 100.00 89,491.69 100.00

○

0.02

○

0.44

○

0.04

○

○ ○ ○ ○ ○ ○ ○

○

0.40

○ ○

21.46

○

○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

17.72 99.53

○

○ ○ ○

○

○ ○ ○ ○

○

21.46

○

0.01

3.51

○

398.12

○

○ ○

0.01

78.30

○

○ ○

37.73

○

0.48

○

○ ○ ○ ○ ○ ○ ○

○

360.39

○

0.04

○

○ ○ ○ ○ ○

0.45

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○

0.01 0.10

○

○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

0.09

○ ○ ○

2.34 15,862.15

○

3,141.74

99.41 89,072.11

○ ○

4.83

○

○ ○ ○ ○ ○ ○ ○ ○ ○

○

22.17

○

5.90

○

○ ○ ○ ○

○

4.83

Revenue (MB)

69.00 70,068.23

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387.77

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30.19

○

○ ○

○

○ ○ ○ ○ ○ ○ ○ ○

○

357.57

○

0.57

○

0.08

○

6.81 79.25

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○

○

0.50

○ ○

72.45

○

○ ○ ○

0.12 1.03

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1,880.96

○

○ ○ ○ ○ ○ ○

0.91 0.00

○ ○

○

○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

0.15

98.40 79,779.55

○

○ ○

4,736.36

29.79 17,790.54

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338.39

○

44.59

Revenue (MB)

2003

○

○ ○ ○ ○ ○ ○ ○ ○ ○

○

293.80

○ ○

○

70.05 608.60

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1.10

○

2.36

○

537.45

○

58,242.77

2002

66.10 55,371.69

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86.71

○

17,635.47

○ ○ ○

○

○ ○ ○

○

1,397.68

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39,122.91

○ ○ ○ ○

○

○ ○

○

○ ○ ○ ○

Revenue (MB)

○

○ ○ ○ ○ ○

99.99

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2001

○

○ ○

○

49.00

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Co.,Ltd.

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○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

67.95

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Advanced Contact Center

○ ○ ○

○

Grand Total

98.55

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Total

99.99

○

○ ○

Call Center

98.55

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

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Total

Company‘s Percentage of Shares Held as at 31 Dec. 03

○

○ ○ ○ ○ ○

○

Advanced Data Network

○

○ ○

○

telephone lines

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Data transmission via

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○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Advanced Paging Co., Ltd.

○

○ ○ ○ ○ ○ ○ ○

Advanced Paging Co., Ltd. Advanced Paging Co., Ltd.

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Total

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Paging sales

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Digital Phone Co., Ltd.

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Paging rental fees

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Paging services

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Marketing Co., Ltd.

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Pager

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Total

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Advanced Wireless

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Mobile phone sales & rental

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mobile phones

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Advanced Info Service Plc. Digital Phone Co., Ltd.

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Service & sales of

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Mobile phone services

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Operating companies

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Mobile phone services

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Mobile phone

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Product/Services

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the year ending 31 December 2003, are as follows:

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.

24:25

Products & Services As a mobile communications service provider, AIS' service portfolio in 2003 broadly consisted of four services: * Postpaid subscription service * Prepaid subscription service * Non-voice service * Enterprise business service Postpaid Subscription Service Postpaid is a contractual cellular phone subscription service for which customers are required to register and pay some sort of monthly subscription fee and per-minute airtime usage. The payment of a monthly subscription fee and airtime usage is made at the end of a billing cycle after the usage has occurred. An extensive network of payment channels has been established throughout the country: AIS branches, Telewiz (AIS' sole distribution channel), and many other selected outlets and modern trades. The postpaid subscription services in 2003 were provided under two brand names - "GSM advance Evolution" and "GSM 1800". * GSM advance Evolution - a digital cellular phone service deploying GSM 900MHz technology. "GSM advance Evolution" appeals to more sophisticated user segments that require more than basic voice communication. It features a variety of value-added services and other non-voice and wireless services for every lifestyle segment. These services, available not only on mobile handsets but on various wireless communication devices, have been designed to help subscribers live fuller lives, both personally and professionally. * 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.Marketing of the analogue NMT cellular phone service, "Cellular 900", has been entirely discontinued, as NMT technology has lost its popularity to the newer and more-advanced digital GSM technology. By the end of 2003, all of the "Cellular 900" subscribers opted to migrate to AIS' own GSM networks. Prepaid Subscription Service Prepaid service requires neither registration nor payment of a monthly subscription fee. Immediately after purchase, subscribers can activate their numbers and use their phones. Once the prepaid balance has been spent, top-up can conveniently be done through various channels. * Refill cards which can be purchased at countless outlets around the country * Automatic Teller Machines (ATMs) of the six major banks in Thailand * Refill on mobile - on-request, direct debit from a designated bank account * E-Refill - electronic Top-up machines available at stores around the country * Phone Banking Top-up service * Internet Top-up * VISA card Top-up * AIS branches around the country This prepaid service is offered under the brand name "1-2-Call!" The selling point of "1-2-Call!" is "Freedom". This service appeals to user segments that enjoy the freedom to manage their own expenses and usage, and pay as they use, such as youth groups and low-usage subscribers. Non-voice Service In 2003, AIS' non-voice services were revamped. The brand "mobileLIFE" was re-launched with a WAP portal creation, which functions as a centralised, single-location access point to various non-voice services and contents. Subscribers with applicable handsets or devices are only one-click away from the mobileLIFE portal that has been categorised in three sections according to their level of technological orientation: mobileLIFE Pro, mobileLIFE Plus, and mobileLIFE Basic.

mobileLIFE Pro offers and showcases services with leading-edge technology for tech-savvy subscribers. Examples of services are as follows: * TV on Mobile - video streaming of Thai free TV live broadcasts and VDO clips of headline news, sport, music VDO, talk shows, dramas, concerts etc. * Video Mail - a synopsis of Video Mail services with links to download video-recording applications to be installed on applicable devices prior to using the service. * remoteCAMERA - a synopsis of the remoteCAMERA service that allows subscribers with applicable devices to capture or receive images via MMS from anywhere (i.e. the home or office) where an observation camera has been installed. * Digital Pen - a synopsis of services that allows the subscribers to send short messages in their own handwriting to other subscribers. mobileLIFE Plus offers services and applications that are designed to make lives more colourful and in-trend with all the latest available entertainment applications. Examples of services are as follows: * JAVA Games - a portal for a variety of downloadable JAVA Games grouped in top hits, new releases, game categories, developers etc. * Mobile Karaoke - a synopsis of services with links to download the karaoke application to be installed on the applicable device. New songs can be downloaded at any time once the karaoke application has been installed. * mDictionary - a synopsis of the English-Thai or Thai-English dictionary service via SMS or JAVA application. * Multimedia Messaging - an archive of various images to be sent along with customised messages to express feelings at any occasion. This service would appeal more to those subscribers who own MMS phones without cameras. * Stock - choices of stock investment applications that allow subscribers to monitor movement of any particular stock, market index, or a virtual investment portfolio performance. mobileLIFE Basic offers a wide variety of non-voice services and content that bring convenience to everyday life. Some examples of these services are as follows: * Digital Coupons - downloadable electronic coupons via SMS for discounts at many stores and restaurants around the country. * Fun Voice - Music2gether (sending music to others) and voice-recorded horoscopes, movie previews, restaurant guides, lottery information etc. * Fun on Mobile - downloadable logos, ringtones, screensavers, text SMS, animated SMS, picture messages, mCards etc. * News - local news, international news, business/finance news etc. * Messaging - GSM e-mail, Yahoo! Messenger, chat etc. * Business - banking info, Yahoo! Finance, Business Directory etc. * Shopping - mBook, mTicketing etc. * Travel & Traffic - traffic reports, world times, airline flight schedules, real-time flight status, weather, mClose2Me etc. * Directory - Police Stations, Companies, Phone Directory, Yahoo! Directory. Enterprise Business Service During 2003, AIS launched a new collection of services under the new brand name, "Smart Solution", specifically for the enterprise segment. "Smart Solution" integrates a range of services engineered to be the most suitable and varying from one business operation to another. The fact that enterprise needs for wireless communications vary across the industries, means that AIS is committed to formulate the most relevant blend of services that, not only propel business productivity, but also promote cost efficiency. These services can be broadly categorised into: Customised Business Solutions, GSM Business Packages, and Bill Management. Customised Business Solutions A joint development of services between enterprise customers and AIS' consulting team with an aim to develop and customise solutions that perfectly match any business operation.The outcome is a combination of services that allow freedom to communicate in the rapidly growing world of business. For retail and wholesale businesses, Mobile Sale Force Automation will allow the sale team to

26:27

access customer account information or marketing and promotional campaigns via mobile devices or PDA compatible devices using real-time wireless technology. For transportation businesses, Fleet Management will enable convenient monitoring of all vehicles, locating their whereabouts, and analysing routes by installing electronic devices that will send information back to headquarters. For financial and banking businesses, Mobile Banking and Mobile Payment will allow end-customers to conduct banking and financial activities effortlessly right on the phone. Regardless of the type of business operation, a customised solution can be developed. Maintaining good relationships with customers is always very important to any business. AIS also offers Corporate E-mail and Mobile Paging services that allow businesses to share or push information to single or multiple end-customers via e-mail and SMS. Mobile devices have become a very effective media that businesses can rely on when communicating with their target customers, as the push for information can conveniently be viewed on the mobile device anytime and anywhere. GSM Business Packages GSM Business Packages provide businesses with the option of airtime tariff plans that suit various usage behaviours such as: Individual Package that may be modified for the needs of different employees, Business Sharing that allows everyone in the same organisation to share airtime together and consolidates all mobile phone bills into one and so on. Bill Management Employing the latest technology of the C-Care Smart System, Bill Management provides options for business payment methods and billing. For instance, a business can choose: Group Bill - to have all mobile phone charges on one bill, Group Mail - to have all unit bills mailed in a single envelope, Call Detail - to view a detailed call list on the statement or, Bill Cycle - to customise the billing period as preferred. Industry & Competition After a year of intense competition and triple-digit subscriber growth rate, the competitive landscape in the Thai cellular industry during 2003 had to some extent been rationalised, especially from the pricing standpoint. The industry had gone through a phase of so-called "Creative Growth" where the major operators were competing on quality and variety of products and services. In 2003, though the industry subscriber growth rate had not been as phenomenal as in the previous year; nonetheless it had grown at a respectable rate of about 25%. The market subscriber base had expanded by about 4.6 million to 22 million subs at the end of the year. The two major operators, namely AIS and Total Access Communications Plc. (DTAC), still commanded nearly 90% of the market share of the active subscriber base.

The notion of "Creative Growth" was evidenced by the series of tariff plans and marketing campaigns that had been launched by the operators throughout the year. There had been traces of attempts to offer creative tariff plans and promotional campaigns that were not a straight price cut. These campaigns were instead geared toward segmentation tariffing and providing consumers with

the freedom to choose tariff plans that best fit their usage behaviours while also enjoying some airtime discounts. This on the other hand allowed operators to grow their subscriber bases without hefty margin erosion, which could be considered as a positive development for the industry as a whole. Marketing campaigns and activities specifically targeting the enterprise market were also evidence of "Creative Growth". The Operators in search of new subscribers and new sources of revenue had rushed to compete in the largely untapped corporate and small-and-medium-enterprise (SME) segments. These segments are different from the person-to-person market in that they generally serve heavy-usage and high-quality subscribers. Moreover, these subscribers have a higher tendency to adapt to the variety of non-voice and wireless services as these services have been designed to help them improve their efficiency and competitive edge in conducting business. "Creative Growth" in terms of revenue during 2003 was the operators' efforts in promoting new innovative services. This could also be seen through the revitalisation of non-voice service marketing. For some, WAP portal had been created for their subscribers' ease of access to non-voice content and the Internet in a well-organized, single location being only one-click away. Some might have claimed to position themselves to compete in the non-voice/data service arena. Others stayed committed to creating opportunities in this new business and pursued new revenue sources by further investments in the non-voice network (i.e. EDGE and GPRS) to serve as a platform for high-speed wireless services in the near future. Some might have slightly lost track in the course of competition throughout the year. Nonetheless, the operators' push in non-voice service provisioning was rewarded with promising non-voice usage and revenue trends, which is expected to improve further in the upcoming years. Despite the positive developments in the "Creative Growth" notion, some might argue that elements of pricing competition still existed during 2003. This argument is true. Upon its full commercial entry into the market, a new comer, with the aim to make its presence felt in a rather short time, had opted to repeat the handset subsidisation strategy. Certainly the market did react to the new low-price alternative and did subscribe to the service. The new operator was recording healthy numbers of new subscribers during the months that the campaign was being promoted. However, the incumbents, who had already experienced the bitter taste of heavy handset subsidisation and aggressive airtime bundling, did not react too irrationally to the challenge. Instead, other tactics were employed, such as offering segmentation tariffs as well as providing distribution channels with additional incentives to sign up new subscribers for them. As such, the "battle" in 2003 was not so damaging, and market growth was well-managed at about 4.6 million net additions for the total market as mentioned above, compared to nearly 10 million in 2002. With the continual increase in the total market subscriber base, Thailand's cellular industry ended 2003 with a 34% penetration rate, an increase from 27% at the end of the previous year. Compared with the other regional markets' penetration rates, an opportunity for market growth should still remain, though it may not be at an increasing rate. The continual improvement in national economic conditions, together with upcoming industry liberalisation, should contribute to the remaining industry growth in terms of the subscriber base. On the regulatory front, a few developments towards industry liberalisation had taken place in 2003. First, the Communication Authority of Thailand Plc. (CAT) was successfully privatised and registered as a public company, CAT Telecom Plc.Secondly, the Cabinet issued a royal decree regarding taxation for the service industries. Under the decree, part of the revenue sharing of telecommunication operations would be converted into excise tax. Fixed line operators would pay the excise tax at the rate of 2% of service revenue to the Finance Ministry, while mobile operators would pay 10%. The balance of the original revenue sharing percentage would still be paid to the concession providers, namely TOT Corporation Plc. and CAT Telecom Plc. The Government was also preparing for the introduction of an interconnection charge. There had been a series of active discussions and negotiations among the players and all stakeholders on the issue and an agreeable interconnection rate. A conclusion and implementation could be expected by 2004.

28:29

As for the new industry regulator, some progress had also been made. After the Supreme Administrative Court had ruled in 2002 that the selection process of the National Telecommunications Commission (NTC) was unconstitutional, the new list of qualifying candidates was developed and short-listed for the Senate's consideration again at the end of 2003. According to statements from various governmental units, 2004 appears to be a year of many changes on the regulatory regime. Now that the two telecommunication state enterprises have successfully been privatised and the NTC is on the verge of being established, the possibility for the introduction of interconnection and final concession conversion should increase. Full industry liberalisation to create a level-playing field should then not be too far off. Network Procurement In order to provide quality network AIS has procured network equipments by importing them directly from the suppliers which are the world‘s leading in telecommunication technology, namely Ericsson, Nokia, NEC, Seimens and Huawei. As the number of mobile phone user is continuously increasing, AIS has to increase its network capacity to serve the increasing need of the customers. More base stations have to be added to expand coverage area especially in newly founded communities, villages and industrial estates around the country.

Research & Development Research & Development and the application of available technologies are key factors that help create and increase valueadded products and services. AIS have always placed great importance on these features, and have made significant investments in Research & Development and new technologies in order to satisfy our customers’ needs. One particular investment includes the formation of ”Future Lab” headed by a team of experts in engineering, marketing and finance. This unit is dedicated to creating new non-voice services via the integration of device, network, and application of content (DNA). These practical new services are expected to satisfy customers‘needs while ensuring commercial viability and strategic suitability with AIS‘ business plan. One such new service was launched in 2003, featuring a TV on mobile capability. Not only have AIS been keen in creating value-added services and maximising customer satisfaction, but have always placed great emphasis on high network quality-a vital part of our business. AIS define network quality in three major components: Network Coverage, Accessibility and Reliability.

Risk Factors Risk related to law amendment, regulations and government’s policy

The Company has been operating telecommunication service through government‘s agencies in the form of concession agreements and in line with the government regulations. In the futre, telecommunications business has to be operated under the supervision of the National Telecommunication Committee. There will be a complete conversion of the concession agreements prior to liberalisation of telecommunications industry. This will allow all operators, existing and new, (including Telephone Organization of Thailand (TOT), which have been privatised and are now known as Telephone Organization Corporation Public Company Limited on 31st July 2002, and Communications Authority of Thailand (CAT), which have been privatised and are now known as Telecommunications Public Company Limited on 14th August 2003) to have equal rights in their operations under the rules, regulations and supervision of the National Telecommunications Committee. The conversion of these concession agreements has raised the issues in the area of principles and guidelines, which are yet to be concluded. Also, the process in selection of members for the National Telecommunications Committee to assist in establishing rules, as well as the control and management of future telecommunication operations, faced various difficulties, and a new selection committee was established as a result. However, there is no definite time frame as to when the National Telecommunications Committee will be fully operational, as it depends on consideration of the Senate, which is beyond authority of the Parliament. Therefore, there is a lack of clarity in many important issues relating to operation of telecommunications business, such as interconnection charges concerning its implementation.

Although, the company is experiencing preliminary risk from unclear conversion of concession agreements as well as other issues relating to the setting up of the National Telecommunications Committee to determine new rules and regulations in operating telecommunication business, the Company are carefully managing risks with the help of officially appointed individuals. This covers news monitoring on a continual basis and providing accurate information to government sectors. This will enable the government to determine appropriate rules and regulations, resulting in unbiased and open business competition, which will not cause any adverse effects on the image of the company. However, when an open competition is launched and more operators enter the arena, they are likely to face barriers in areas of investment funds and building a customer base, as well as network development and finding a market niche. Therefore, the Company‘s risk factor as a result of a change of law, regulations and government‘s policy will not be so worrisome, as all operators will have to operate under the same rules and regulations. The Company, as the major operator in this business, are fully prepared and may be able to transform this change and competition into business advantage.

Risks from Market Situation and Competition

Risk of the industry approaching saturation After a few years of phenomenal subscriber growth fuelled by aggressive pricing competition, market growth in 2003 had shown some sign of slowing down. The consequences of cutthroat pricing strategies had put some operators dormant for the most part of the year. Creative marketing had been employed by others in an attempt to capture the remaining potential market segments. Thus, unless industry liberalisation invites aggressive newcomers into the market, the Thai cellular industry might be heading closer towards

30:31

saturation point.That means growth drivers can no longer rely on the subscriber base. New sources of revenue must be generated in order for operators to continue to deliver value to their shareholders. Also a customer retention strategy must be in place in defence of potential poaching.

AIS has been anticipating this trend and throughout the year has been continuously trying to mitigate this risk by developing new sources of revenue streams to help renew the subsiding subscriber growth. The two areas that are expected to be the new growth drivers are non-voice services and enterprise business services.

For non-voice services, as discussed in the Products & Services section, a WAP portal has been created to centralise all the non-voice contents, applications, and services at one single location for the subscribers’ ease of access by only one-click. This strategy has proven to be successful, as non-voice usage and revenue growth are continuing to show a promising trend. In addition, “Future LAB” has been established as a research and development unit that continuously incorporates ideas and new technologies, and builds a roadmap of new services that meet the daily-life needs of the customers in each lifestyle segment. Furthermore, AIS is going one step further with the concept of “Wireless Society” where wireless services will be created to enrich lives, allow convenient living, and become a platform for business convergence. This will also pave the way for the next generation of wireless communication (3G) that is only around the corner.

Enterprise service development is another area that has been fully emphasised throughout the year. Platforms for customisation of business solutions and tariffs have been put in place, along with business industry segmentation, to be able to create services that help improve productivity and cost efficiency for any business. Efforts in enterprise service development, once combined with the non-voice service and the Wireless Society concept, have the potential to become a major revenue growth driver, as the enterprise segment has a higher tendency to adapt to new non-voice and wireless services.

As for the risk of potential subscriber poaching, AIS has always strived to keep good relationships with its customers. For example, AIS was the first cellular operator with a Call Centre in 1997. Soon after that, Customer Relationship Management (CRM) was brought in, and a dedicated department was set up to handle all relationship management activities with customers. Then subscriber base segmentation was initiated to understand and better serve the different needs and requirements of different customer segments. Churn predictive models were then developed.

State-of-the-art computer systems (the C-Care Smart System) and the Customer Experience Management (CEM) programs are AIS’ latest efforts in attempting to improve customer experience and services through all touch points. Thus, with the longest and most persistent CRM activities, AIS is confident, but not complacent, that our customer retention strategy will be sufficient to withhold any attempt or challenge to poach our subscriber base.

Risks on Technology and Operations

Risk from assuring quality of third party service providers and content providers

The introduction of new technologies in mobile phone industry such as GPRS and Location Based Service creates 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 customerperceived 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 to achieve customer satisfaction. With additional assistant 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 ease the difficulty in controlling the quality of service delivered to customer.

Risk from change of 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 risk of unability 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 group of customers who require such high technology. Therefore, market readiness and financial feasibility should be closely considered. The Company has followed the trend of Third Generation technology closely. The Third Generation mobile phone has slowly gain 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.

Risk from unsuccessful bill collections

Although most subscribers are now using the prepaid product, the revenue generated from subscribers in the postpaid products, including International Roaming is still significant. Currently AIS bills postpaid subscribers on monthly basis. As such, AIS is subjected to risk of incurring bad debts due to unsuccessful bill collections. However, AIS has implemented a number of measures to mitigate such risk. AIS has implemented software known as Fraud

32:33

Management to handle this risk, whereby the service provided to customers who have overdue payments will be terminated. A credit limit, which is considered from the usage and payment behavior, is also used to control the amount of unpaid debts, where 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 of fraud management system to alleviate the risk, AIS also has developed the business application system to manage company’s customer base. This will lead AIS to have the efficacious customer database and enhance the capability to manage the immense customer base, who have the various usage behaviors. AIS also strongly directs every related internal department to focus on conducting a 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.

Conducting a black list verification before making a registration in order to ensure that a new customer has not been previously rejected.

Conducting a post audit after a registration to confirm a status of customer.

Most customers choose AIS as their preferred network because of superior coverage and quality. These customers are less sensitive to pricing and would normally present lower risk of bad debt. Hence, AIS have lesser risk from unsnecessful bill collections than its competitors.

Risk from Executive and Staff Attrition

AIS realize that business success is based on the retention of high-calibre executives and staff committed to their work and achieving targets. In 2003, we experienced less key executives and staff loss to our competitors. However, the recovery of national economy which exceeded the forecast of 6 percent has widened external labor market and increased possibility of losing key executives and professional staff. In response, we have established a plan to address this challenge. This involved continuously developing and enhancing inter-staff and inter-departmentl relations, and stepping up the recruitment of quality candidates who share our corporate vision. We have launched the talent management program and reviewed the compensation package to fit with each talent group. It is not only an effective tool for retention but also motivates employee to be more efficient and produces higher quality of work.

The Challenge of Developing Human Resources

The change within the telecommunications industry is still an important factor. Most companies are facing the risk of lacking enough high-performance future leaders to fill our many positions. So, AIS need determination to develop the right skills and the most suitable training programs for management to move forward successfully. AIS’ priority to lessen this risk is to implement a “Talent Development Program” in order to prepare talented staff for accelerate business growth and retain them by moving forward with AIS’ success.

Shareholding Structure

○

% of holding

○ ○ ○ ○ ○ ○ ○ ○ ○

3.11

○ ○

2.18

○ ○

2.16 2.01 1.37 1.08

○

1.05

○

28,308,670

○

30,974,134

○

31,782,471

○

40,222,038

○

○ ○

59,175,393

○ ○

19.34

○

○ ○

63,342,600

* As of February 10, 2004, the total paid-up capital is Baht 2,939,173,381, Shin Corporation Plc. has 42.99% ownership in the Company. Source : Major shareholders‘ report as of August 25,2003 prepared by Thailand Securities Depository Co.,Ltd.

43.03

○

○ ○

64,039,000

○

HSBC Bank Plc-Clients General A/C

○

○ ○ ○ ○ ○ ○ ○

91,337,249

○

○ ○

568,000,000

○

10.

○

○ ○

Boston Safe Deposit and Trust Company

○

○ ○

Nortrust Nominees Ltd.

○

○ ○

The Bank of New York (Nominees) Limited

○

○ ○

State Street Bank and Trust Company

○

○ ○

Littledown Nominees Limited 9

○

○ ○

Thai Trust Fund Management Company Limited

○

○ ○

HSBC (Singapore) Nominees Pte. Ltd.

○

1,263,712,000

○

○ ○

Singtel Strategic Investments Pte Ltd.

○

○ ○

Shin Corporation Plc.

○

No. of Shares

○

Name

○

No.

○

Major Shareholders as of August 25,2003

0.96

34:35

Management and Good 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 19 February 2004, there are 10 members of the Board of Directors as follows: 1. Dr. Paiboon Limpaphayom Ph.D. Chairman of the Board of Directors *2. Mr. Boonklee Plangsiri Director *3. Mr. Somprasong Boonyachai Director *4. Mrs. Siripen Sitasuwan Director **5. Mr. Lum Hon Fye Director 6. Mr. Chow, Wing Keung Lucas Director 7. Mrs. Tasanee Manorot Director 8. Mr. Suphadej Poonpipat Chairman of the Audit Committee 9. Mr. Arun Churdboonchart Member of the Audit Committee 10. Mr. Boonchoo Direksathapon Member of the Audit Committee * Authorized Director ** The Board of Directors has approved the appointment of Mr. Lim Chuan Poh, the representative director of Singapore Telecom, to replace Mr. Lum Hon Fye who resigned from the Company’s director to comply with Share Purchase Agreement. The Company’ 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 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.

2) Executive Committee List of the Members of the Executive Committee As of 19 February 2004, 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 The Executive Committee will convene the meetings every months. In 2003, the Executive Committee convened a total of twelve general and two extraordinary meetings and reported to the Board of Directors quarterly. 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 Directors. 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.

36:37

3) Audit Committee List of the Members of the Audit Committee As of 19 February 2004, 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 The Audit Committee convenes the meetings regularly. In 2003, the Audit Committee convened a total of ten general and two extraordinary meetings and reported to the Board of Directors quarterly. 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 follow: 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. 4) Remuneration Committee List of the Members of the Remuneration Committee As of 19 February 2004, 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 In 2003, the Remuneration Committee convened a meetings and reported to the Board of Directors. 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 Shareholders’ Meeting for approval as the case may be.

3. 4. 5.

To report 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 Shareholders’ meeting. To report the policy concerning the remuneration of the Board of Directors, the principle/reason and purpose of the policy in the annual report. To proceed any other matters assigned by the Board of Directors.

5) Nominating Committee List of the Members of the Nominating Committee As of 19 February 2004, 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 In 2003, the Nominating Committee convened a meetings and reported to the Board of Directors. The scope of Authoiriy and Duties of the Nominating Committee The Nominating Committee shall have the authority and duties as follows: 1. To set up regulations and policies in nominating directors and the committees of the Company. 2. To select directors and the committees by considering appropriate persons in order to propose to the Board of Directors and/or Shareholders’ Meeting for approval as the case may be. 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. 4. To proceed any other matters assigned by the Board of Directors. 6) Management Team List of the Members Team As of 19 February 2004, 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. Miss 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 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;

38:39

(2) Each shareholder may exercise all the votes he/she has under the (1) above to elect one or several director(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 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. 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. Good Corperate Governance The policy was formulated to encourage good corporate governance, vision and responsibility on the part of board and management to enhance the competitiveness and increase the confidence of the shareholders, the investors and other related persons. Furthermore, it has the mechanism to control and balance the management authority enabling management transparency including the respectability to shareholdersâ&#x20AC;&#x2DC; rights and the responsibility to stakeholders. The aforementioned is regarded as the major issue in long-term increasing value and maximum profit to AISâ&#x20AC;&#x2DC; shareholders. The company has complied with fifteen criteria of the good corporate governance principles as follows; 1. 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, bring added-value to its business, increase potentiality in competition with others and enhance managerial skills within the organization. It will also strengthen the confidence of all shareholders, investors and other related parties. Therefore, since 2002 the Board of Directors, approved by the committee, has determined the policy on corporate governance in accordance with the regulations of the Stock Exchange of Thailand (SET). This policy contains following 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 accurate, complete, appropriate, reliable and timely 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. 2. Shareholders: Rights and Equitable Treatment The company realizes the rights and the equitable treatment of its shareholders. The company sends an invitation letter including details of the agenda for every meeting to its shareholders at least 14 days prior to a meeting taking place, and after the meeting session has ended, the minutes are recorded correctively and completely to support shareholdersâ&#x20AC;&#x2DC; review. In the invitation letter, there are the details informing shareholders to bring all necessary documents to each meeting, which preserves the voting right of the shareholders. On the meeting day, shareholders can register 1 hour before the meeting starts. During such meetings shareholders enjoy equal rights to receive information, express opinions, and raise any concerns with regard to the agendum or presented matters. The company consistently informs its shareholders of their voting rights and how to vote before the meeting begins. The Chair has the responsibility of managing time in the meeting in an appropriate way, and encouraging participants to express opinions and raise questions. At every shareholders meeting, at least one independent committee must be appointed in accordance with the Company's policy. This committee will take responsibility for informing the attendees of the meeting of the intentions of those shareholders who cannot attend the meeting in person, which should be done through proxy letter. All shareholders have an independent voting right.

Furthermore, the company facilitates its shareholders by preparing a convenient meeting room, the size of which appropriate to the number of participants. The shareholders can grant their voting and attendance right to a representative by a proxy letter in the case that they are unable to attend the meeting. 3. 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. 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 these 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, and wealth, and meet the interests of all parties equally. For example: Shareholders :

Employees :

Communities : Customers :

Suppliers :

Competitors :

The Company aims to represent the best interests of its shareholders in the operation of the business by concentrating on long-term growth and value. The Company will provide continuous and good returns to its shareholders, including transparent and accurate disclosure of information. 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. 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. The Company aims to ensure that customers are both satisfied and confident that they will receive quality products and services at a reasonable price. The Company will also provide accurate, comprehensive and honest information relating to the goods and services it provides. Business operations with 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 equitable 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 its customers. 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.

4. Shareholders‘ Meetings In the Shareholders' Meeting, the Company delegates members of the Board, especially the Chair of the Board and the Chair of the committee to attend the meeting, and thus answer any inquiries raised by the shareholders in a meeting. Moreover, audit committee, which is independent to the Company, is present in every Shareholders‘ Meeting. The Chairman of the meeting, or any person so delegated, has a responsibility to allocate adequate time to shareholders, encourage sharehoders to express their opinions and recommendations, and raise any questions during 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. In 2003, the Company held its annual general meeting on 29 April 2003 from 10.00am to 10.55am at Shinawatra Tower 1, Phaholyothin Road, Bangkok. In the meeting, the voting is undertaken sequentially according to the agenda and each agenda item is agreed on by the shareholders. 5. 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. There is the clear segregation of duty between the Board of Director and management, and between the Board and the shareholders. In addition, the Board of Directors must prepare the assessment process for appropriate internal control systems, corporate governance systems, internal audits, risk management, financial reports and regular business follow-up processes.

40:41

The Board of Director's Responsibility 1. To perform its duties in compliance with the law, objectives, and the Articles of Association of the Company including resolutions of the Shareholders’ Meetings with honesty, integrity and prudence while protecting the Company‘s interest. 2. To set up the policy and direction of the Company‘s business operation and monitor the implementation of company policy by the management team to ensure efficiency and effectiveness, and maximum value for the Company and its shareholders. 3. To consider and approve material issues as stipulated by law. 4. To evaluate performance and determine remuneration of the Company‘s management team. 5. To set up the Company‘s vision and responsibility to the result of operations and the management process by stating the intention and caution for every working process. 6. To establish reliable systems of accounting, financial reporting, and auditing. This includes procedures in internal control assessment and follow-ups, and ensuring the efficiency and effectiveness of internal audits, risk management and financial reports. 7. To ensure that no conflicts of interest occur among stakeholders. 8. To monitor business operations to ensure ethical work standards. 6. 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. In terms of conflicts of interest, the Board of Directors will be informed of any conflict of interest or related transaction 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 (at Arm’s Length Basis). All details of transactions, including their value, reasons and necessity are disclosed in the Annual Report and 56-1 Form. Some related transactions are assessed by individual assessors and individual financial consultants, and other transactions are compared to the market price. 7. 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 for furthering of the performance of the Company and achieving its mission. This is to be adhered to with integrity and 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. In 2003, the company communicates the code of conduct to the management and employee at every level, and also publicised it in the intranet systems; furthermore, the Company provided a training course for management and established the follow-up processes. Management and superiors have the responsibility of monitoring and supporting their subordinates to comply with the code of conduct, and should themselves be good role models. 8.Balance of Power for Non-Executive Directors The appointment of the board of director is compliant with the shareholders‘ agreement stating that the one member of the Board must be a shareholder representative. The Board has 10 members, comprised of 6 managements, and 4 individuals (fourtenths of the total members) who provide a balance between the governance and the management. The Directors with authorised signatures are Mr.Boonklee Plangsiri, Mr. Somprasong Boonyachai and Mrs Siripen Sitasuwan. Signatures of any two of the three are required and are suffice to place the official company’s seal on a document. The Board of Directors consists of 10 Directors, four (four-tenths) of which are Independent Directors. 9.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. The structure of the Board of Directors consists of Independent Directors, who comprise more than one-third of the totle members. The Company clearly segregates the duty, the authorities and the responsibilities between the Chairman of the Board of Directors and the Chairman of the Executive Committee.

10.Remuneration for Directors and the Management The Companyâ&#x20AC;&#x2122;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 Companyâ&#x20AC;&#x2122;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 Shareholdersâ&#x20AC;&#x2122; General Meeting for approval. Money Remuneration 1.

Remuneration* for the Board of Directors, comprising of five (5) members, for the period ended December 31, 2003, amounts to Baht 3.72 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 3 SHIN representative directors who are paid directly by SHIN)

Remuneration* for four (4) management, for the period ended December 31, 2003, amounts to Baht 39.38 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 and an Executive Committee who receive remuneration from SHIN, and Chief Finance Officer.

Other Remuneration Employee Stock Option Plan The Extraordinary General Meeting of Shareholders of Advanced Info Service Public Company 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. This should in turn bring about long-term benefit to the Company, as well as retain them with the Company. The overall program consists of 5 plans during a period of 5 years. The Company will issue and offer warrants to directors, employees, and advisors of the Company once a year, for 5 consecutive years. The terms of warrants issued each year will not exceed 5 years from the date of issuance, while other details of warrants will be similar for all five issuance. Total amount of warrants to be issued and offered during the 5-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. In 2002, the Shareholders' Meeting resolved to approve the issuance and offering of 8,467,200 warrants to directors, employees and advisors of the Company and the allocation of 8,467,200 ordinary shares, at the par value of Baht 1 each, equivalent to 0.29 percent of the Company total paid-up capital, reserve for the exercise of the warrants.

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○

○ ○ ○

8,467,200 units

○ ○ ○ ○ ○ ○

May 30, 2003

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○

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.

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

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.

○

Third 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.

○

Second Year

○

○ ○

○

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.

○

○ ○ ○ ○ ○

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.

○

○ ○

○

First Year

○

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

○

Exercise Period

○

March 27, 2002

○

Issuance and Offering Date

○

Baht 43.139 per share [old: Baht 43.38 per share] ○

○

Baht 47.733 per share [old: Baht 48.00 per share]

○

Exercise Price*

○

1 unit of warrant per 1.00559 ordinary shares. [old: 1:1]

○

Not exceeding five years from the issuance and offering date.

○

No price (zero)

○

Exercise Ratio*

○

○ ○ ○ ○ ○ ○ ○ ○

Warrants to purchase the Company's ordinary shares, in registered form and non-transferable unless by hereditary or beneficiary transfer

○

14,000,000 units

○

○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○

○

Warrants to purchase the Company's ordinary shares, in registered form and non-transferable unless from the subrogated securities purchaser or by hereditary transfer

○

ESOP Grant 2

○

Terms

○

Offering Price per Unit

○

Total Number of Warrants to be Offered

○

Type of Warrants

○

ESOP Grant 1

○

Details of the ESOP Program

○

42:43

○

○ ○

ESOP Grant 2

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○

Between 9.00 a.m. to 4.00 p.m. of the last business day of the month all time of exercise period

○ ○

○

○ ○

○

Between 9.00 a.m. to 4.00 p.m. within the last five business days of the month all time of exercise period

○

○ ○ ○

○

Exercise Date

○

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.

○

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.

○

○ ○ ○ ○ ○ ○ ○

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.

○

○ ○ ○

○

Exercise Period (continued)

○

○ ○

○

ESOP Grant 1

○

Details of the ESOP Program

* Because the Company paid interim dividends over 50% of net profit to comply with the Prospectus that affected on the exercise price and exercise ratio of ESOP Grant 1 and 2 in August 2003.

○ ○

○

○ ○ ○

○

○ ○ ○

○

○ ○

○ ○ ○ ○ ○

○

1.17

○

4.96

○

○ ○ ○ ○

○

6.84

○

99,100

○

9.28

○

420,000

○

9.28

○

○ ○ ○

○

579,000

○

○ ○ ○ ○

786,000

○

○ ○

8.06

○

○ ○ ○ ○

○

8.56

○ ○

786,000

○

Business and Director of Subsidiary

○

○ ○

Assistant Vice President - Enterprise

○

○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○

○

1,128,600

○

Support and Director of Subsidiary

8.93

○

○ ○

1,197,800

○

Vice President - Information System

7.20

○

○ ○

○

Chief Technology Officer

○ ○

○

6. Mr. Sutichai Cheunchoosil

1,250,000

○

Terminal Business Officer

○

○ ○

609,400

○

○ ○

10.51

○

○ ○ ○ ○ ○

○

Chief Customer Champion &

○

○ ○

President - Wireless

○

○ ○

○

5. Mrs. Arpattra Sringkarrinkul

○

4. Mr. Vikrom Sirprataks

○

Committee - Wireless Communications

○

○ ○

○

3. Mrs. Suwimol Kaewkoon

○

2. Ms. Yingluck Shinawatra

% of Warrants

○ ○

○

1,471,800

○

Director and Chairman of the Executive

○

○ ○ ○ ○

1. Mr.Somprasong Boonyachai

○ ○ ○

○

Amount of Warrants

○

○ ○

Warrants

○

% of

○

Amount of Warrants

○

Position

○

○ ○ ○

Name

○

○ ○

○

ESOP Grant 2

○

ESOP Grant 1

○

○ ○ ○

○

○ ○

○

The list of Directors, employees and advisors of the Company are allocated warrants as follow:

44:45

11.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 2003, the Board of Directors convened a total of five general and extraordinary meetings with attendance as detailed below: 1. Dr. Phaiboon Limpaphayom (Ph.D.) 5 attendances 2. Mr. Boonklee Plangsiri 5 attendances 3. Mr. Somprasong Boonyachai 5 attendances 4. Mrs. Siripen Sitasuwan 4 attendances 5. Mr. Lum Hon Fye 4 attendances 6. Mr. Chow, Wing Keung Lucas 1 attendance 7. Mrs. Tasanee Manorot 4 attendances 8. Mr. Suphadej Poonpipat 3 attendances 9. Mr. Arun Churdboonchart 5 attendances 10. Mr. Boonchoo Dircksathaporn 5 attendances 12. Sub-Committee Please see the details in the topic “Management Structure” 13. Internal Control System, Internal Audit and Risk Management Internal Control System The company has established an internal control system which refers to the standards of the Committee of Sponsoring Organizations of the Treadway Commission (COSO). This covers every business aspect including financial, operation and compliance. The Company recognises 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 to ensure: 1. Programs, plans and objectives are achieved. 2. Significant financial, managerial and operating information is accurate, reliable and timely. 3. Organization and employees’ actions are in compliance with policies, standards, procedures and applicable laws and regulations. 4. Resources are acquired economically, used efficiently and protected adequately. 5. Quality and continuous improvement are fostered in the organisation’s control process. The Company pays the attention to the adequacy and effectiveness of the internal control system for all five components stated in COSO as follows. 1. A Sound Control Environment The Company has an appropriate organizational structure, clear assignment of authority and responsibility, and written policies and procedure in financial and general management. Management and employee at every level adhere to the written code of conduct. 2. A Sound Risk Assessment Process The Company sets clear business objectives as guidelines for managements and employees. Management and employees are responsible to evaluating business risks arising from both external and internal factors, and for stipulating risk management methods to reduce risks to acceptable level.

3. Sound Operational Control Activities The Company set the control activities that are significant for every business system, to guarantee the quality of a product from its starting point to its finishing point in the production process. Moreover, the Company provided training courses for management and employees at every level on the topic of Risk Management, which can be applied to the real life existing process. The Company also reports its operating results on a regular and timely basis to support management decision-making and problem solving by providing a clear segregation of duties in the area of authorization, recording of accounting transaction and data, and custody of assets. 4. An Effective Information and Communication System The Company has an adequate data system for supporting timely decision-making. Management and employee at every level are cautious with Information Technology use according to the code of conduct and IT security regulatory.Moreover, the Company provides an effective IT security system, including the business continuity and emergency response systems for The Information Technology system to protect data loss. The Company provides a good communicating channel, as the basis for its communication system. For example, communication over the Intranet system to ensure that employees in every level can acknowledge and understand the policies and regulations of the Company; in addition this channel is where employees can raise and discuss issues. 5. An Effective Monitoring and Evaluation System The Company holds an Board of Directors meeting four times a year and arranged a meeting of the management every month to review and follow up the result of the business operations reguardless of whether objectives were met or not. Moreover, the Company has established a process to report the Internal Audit results to the Audit Committee once a month, and the Audit Committee reports to the Board quarterly. The Company assigns the Board of Directors, management and all employees to be accountable for and take responsibility for the operation and management of effective internal controls. The Audit Committee attended the Board of Directors’ meeting no. 2/2004 dated February 19 2004 and assessed the five key components of the internal control system.The Board of Directors found that the Company has implemented complete and effective internal control system. In addition, PricewaterhouseCoopers ABAS Limited, the Company’s external auditor and the auditor of the 2003 financial statement, has concluded that there is no material deficiency in the Company’s internal control system. Internal Audit 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 is done by having the systematic method of assessing and improving the effectiveness of the risk management system, the internal control system and the corporate governance system according to SPPIA (Standard for the Professional Practice of Internal Auditing), and regularly monitoring and adjusting the implemented system accordingly to the changing environment. The company also pays attention to developing the Internal audit staff to achieve the CIA (Certified Internal Auditor) and CISA (Certified Information System Auditor). In 2003, there are six CIA and four CISA qualified staff. Every year, additional IA prepare for the exam to acquire these certificates. Risk Management The Company has a clear policy to integrate risk management in order to achieve its objectives, targets and strategies as planned by providing training courses for the management and staff at every level to realise risk and be able to manage risk systematically in the real working environment. Every member of management and staff in the Company is responsible for managing 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.

46:47

14.The Board of Director’s Responsibility for the Financial Statement The accompanying consolidated financial statement and all of the data included in the annual report has been prepared by and are the responsibility of the management of the Company. The Company has developed a risk management systems, and maintain and assures appropriate and efficient systems of internal control. The Board of Directors exercises its responsibilities through the Audit Committee to reviews the accounting policy, the reliability of its financial statement, the internal control, system and internal audit and risk management system. 15.Relations with Investors The Company 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 website www.ais.co.th. An Investor Relations Department has been established by AIS to communicate with its shareholders and investors to ensure that the Company has completely complied with the law and regulations. AIS regularly organises conferences with the investment community on a quarterly basis. The Company’s top management team gives 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 by e-mail at investor@ais.co.th Protection Against the Use of Inside Information Interms of the use of sensitive information, the Company adheres to ethics, faithfulness and honesty in operating its business along with its customers, suppliers, investors and shareholders by establishing a code of conduct and IT security regulations. These are guidlines for the Company‘s Director, management and employees at all levels to follow to prevent unauthorization. Confidential information disclosure or any conflict of interest is regarded as a serious regulatory breach and is subjected to discipline. 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 repoering on changes in the Company‘s securities, as well as those held by individuals, spouses and minors, in a format and time frame specified in the Securities Holding Report‘s regulations. The management is required to submit copies of such reports to the Company on the same day the Company reports to the Stock and Exchange Commission (SEC).

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 the ordinary courses 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 reviewed the inter-company transactions entered into by the Company or subsidiaries in order to ensure that there is no conflict of interest. Since the inter-company transactions are entered into under the ordinary courses of business, the transactions will continue in the future, whereby the Company, in entering into such transactions, will take into a fair field and no favor for each transactions. In 2002 and 2003, the Company and its subsidiaries entered into inter-company transactions with persons of potential conflict, whereby the Company’s auditor give his opinion related thereto in the note to audited financial statement for the accounting period of 2002 and 2003 reflecting that such transactions are entered under the ordinary courses of business. The prices of transactions for goods and services 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 related 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 Audit Committee. Details of the inte-company transactions with persons of potential conflict entered into during such periods are as follows:

○ ○ ○ ○ ○ ○ ○

○ ○

○

○ ○ ○

○ ○

benefit for AIS's Group and

○

the best result that would

○ ○

holding company.

○

○ ○ ○ ○ ○ ○ ○

determined by market price of

○

○ ○

4.89

management fee that is

○

1.34

○

consulting and financial

actual transaction.

○

BCG to evaluate advisory fee,

○

Consulting Group (Thailand)-

○

15% which SHIN engages Boston

○

percentage of total assets, of

○

○ ○ ○ ○ ○ ○

monthly basis based on a

○

○ ○ ○ ○

○

1.53

○

4.83

○

0.88

○

○ ○

4,486.18

○

2.59

○

0.83

Advisory fee is charged on

○

○ ○ ○ ○ ○ ○ ○

○

1.19

○

○ ○ ○ ○ ○

○

0.09

4,486.18

○

2.59

○

○ ○

0.73

regulate AIS's group to obtain

○ ○ ○ ○ ○ ○ ○ ○

○ ○

○ ○ ○ ○ ○ ○

0.09

505.48

232.12

○

5. Payable to associated companies

○

4. Service income

○

○ ○ ○ ○ ○

3. Rental and other service expenses

505.48

219.36

○

2. Dividend Payable

248.54

○

○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○

235.27

○

management fee

○

1. Advisory and financial

It's the SHIN Group's policy to

○ ○ ○ ○ ○ ○

○ ○ ○

○

on actual cost

○

shares directors

○

financial management fee is paid

○

holds 42.99% and

○

○ ○ ○ ○

○ ○ ○ ○ ○

○ ○

15,760,671.04 a month. The

○

advisory fee of Baht

○

of the Company,

○

○ ○

○

a major shareholder

○

○ ○

○ ○ ○ ○

management. The Company pays

○

SHIN to provide advisory and

○

○ ○ ○ ○

○

○ ○

Company Consolidated Company Consolidated

○

○ ○ ○

The Company and DPC employ

○

Limited (SHIN) /

○

○ ○

○

Public Company

Rational and necessity

○

(Million Baht)

○

○ ○ ○ ○

1. Shin Corporation

○

○ ○ ○

31 December 2003

○

31 December 2002 (Million Baht)

○

○ ○ ○

○

○ ○ ○ ○ ○

○

Details of transactions

○

Related parties/ Relation to the company

○

Inter-Company transactions with persons of conflict of interest

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○

○

○ ○

○ ○ ○

○

○ ○ ○ ○

○

○ ○ ○

○

○ ○ ○

○

○ ○

○

○ ○ ○

○

○ ○

○ ○ ○

○

○ ○

○

○ ○

○

-SMB Media (Full service) 10%,

○

-Third party Media (Full Service) and

○

Production 12.00-17.65%

○

○ ○

○

○ ○ ○

○

The Company pays the service charge

○

○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○

○

other Content Providers’s.

○

○ ○

○ ○ ○ ○ ○ ○

○ ○

from 40-60% which is the same as

○

the kind of service. The rate ranges

○

2.45

from customers which depends on

○

by the percentage based on revenue

○

3.05

1.99

○

2.29

○

1.99

○

0.34

○

3.04

30.14

○

30.14

○

○ ○ ○

○

○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Agency Fee

○

market on job-by-job basis.

○

3.05

Advertising fee is compared to

○

4. Payable to associated companies

40.73

○

0.34

confidentiality.

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

3.00

○

3. Trade accounts payable

○

2. Advertising fee

maintains information in strict

Production 12.00%

○

40.57

○

1. Service fee

○

monthly basis.

○

○ ○ ○

Company pays for actual services on

543.64

○

533.48

○

○ ○ ○ ○ ○

astrology, lotto, and comic story. The

of the Company’s products and

○

○ ○ ○ ○

○

shares directors

○ ○

phone’s value added service such as

agency with a good understanding

○

furnish the information for mobile

○ ○

396.32

○

○ ○ ○ ○ ○

The Company employs TMC to

○

holds 38.25% and

○

major shareholder,

○

Ltd. (TMC)/SHIN is a

The Agency is a creative advertising

○

361.16

○

○ ○

○ ○ ○ ○ ○

5. Teleinfo Media Co.,

1,997.92

○ ○

1.19

○

○ ○

1.19

to charge in following year.

○

1,883.34

○

○ ○ ○ ○ ○

○

3. Payable to associated companies

685.32

○ ○

1,936.68

○

○ ○ ○ ○

and computer program

of particular company from prior year

○

658.09

○

1,626.93

○

○ ○

○

○ ○

Advertising fee, gross 2. Purchase of office equipment

in annually, then average by CPU usage

○ ○

○

765.31

○

658.89

○

○ ○

○

Advertising fee, net

ment fee is charged on actual cost of

○

○ ○ ○

○

1. Advertising fee ○

○ ○

○

directors

group, the consulting and manage-

○ ○

○ ○ ○

freelance basis

○

99.96 % and shares

○

campaign through various media on

○

shareholders, holds

○ ○

○ ○ ○ ○ ○

○ ○ ○

the agency to produce advertising

○

○ ○

(SMB)/SHIN is a major

accounting processing under SHIN

Hardware and Software maintenance

19.97

○

○ ○ ○ ○

The Company and DPC employ SMB as

○

○ ○

4. SC Matchbox Co., Ltd.

The Computer system of SIT is used for

○

19.76

○

○ ○ ○

○

○ ○

directors

○

○ ○ ○ ○

○ ○ ○

○ ○ ○ ○ ○ ○

15.62

○

14.02

○

○ ○ ○

○ ○

99.99% and shares

24.64

○

1.10

○

2. Rental and other service expenses

5.64

○

○ ○ ○ ○

○

23.59

○

○ ○

shareholders, holds

1.03 ○

○

for computer system

indirect major

1.99

○

○ ○ ○ ○

1. Consulting and management fee

○

pay amount of Baht 1,513,160 a month

○

Limited (SIT)/ SHIN is

○

○ ○

○

Techonology Company

customers.

○

○ ○ ○ ○ ○

computer service provided by SIT and

the same rate as any other

○

5.64

○

6.15

○

The Company and DPC utilize

○ ○

Information

Thailand. The Company is charged at

○

1.87

○

○ ○

1.89

○

○ ○

3. Shinawatra

70.77

○

6.15

○

3. Trade accounts payable

○

○ ○

directors

○

70.77

○

1.76

○

2. Service Income

○

○ ○

51.48% and shares

The only one Satellite operator in

○ ○ ○ ○ ○ ○

73.37

○

73.37 ○

○

1. Rental and other service expenses

○

○ ○

○ ○ ○ ○

○ ○ ○

○ ○

○

1,700,000 per year.

○

shareholder, holds

○

○ ○

○

SHIN is a major

○

○ ○

○ ○ ○

○ ○

from SATTEL for the lease fee of USD

○

(SATTEL)/

○

○ ○

○ ○ ○

○ ○

○

transponder on the Thai Com 1A

○ ○ ○

○ ○

○

○ ○

The Company leases Satellite

○

○ ○

○

Company Limited

Rational and necessity

○

(Million Baht)

Company Consolidated Company Consolidated

○

○ ○ ○ ○

2. Shin Satellite Public

○

○ ○

○

31 December 2003

○

○ ○

31 December 2002 (Million Baht)

○

○ ○

○

○ ○ ○ ○

○

Details of transactions

○

Related parties/ Relation to the company

○

48:49

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○

○

○ ○

○

○ ○

○

○ ○ ○

○ ○

○

associate with location, facility, cost of

○ ○

consideration of rental agreement.

○

moving and modification for

○

○ ○

○

○ ○

Company from the beginning. The

○

○ ○

They have been utilized by the

○

○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○

○ ○

13.49

○

○ ○ ○

13.49

○

○ ○ ○

○ ○ ○ ○

○ ○ ○ ○ ○

16.98

○

○ ○ ○

moving and modification for

○

property rental rate for guidance

○

which are accepted by SEC to evaluate

○

The Company uses external appraisers

○

of rental agreement.

○

moving and modification to consider

○

associate with location, facility, cost of

○

property rental rate for guidance

○

appraisers accepted by SEC to evaluate

○

○ ○

fully utilize. The Company uses external

○

utilities on the leased premises and

○

○ ○

company also invested in the full

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○

○ ○ ○ ○ ○ ○

14.01

○ ○

○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

property rental rate for guidance

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○

which accepted by SEC to evaluate

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○

○

Wang Hin Condo Town project - Rental and other service expenses

The Company uses external appraisers

consideration of rental agreement.

Bangkhen District, and roof-top space for base station installation at the

company also invested in the full utilities

associate with location, facility, cost of

district,building space located at the Thong Song Hong Sub-district

They have been utilized by the

○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○

○

15.73

○

○ ○

Thanonnakhornchasri Sub-

○

holds 69.99 %

15.73

○

of a building located in the

shareholder of SHIN,

23.18

○

○ ○ ○ ○ ○ ○ ○ ○ ○

district,office space and roof-top space

○

family, the major

22.96

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

The Company rents the warehouse

Ltd. (PT)/ The Shinawatra space located in the Kanna Yao Sub-

○

9. P.T. Corporation CO.,

6.32

○ ○

○ ○ ○ ○

○ ○ ○ ○ ○

○

- Rental and other service expenses

○

SHIN, holds 72.18%

○ ○

Mai)

agreement.

○

○ ○

○ ○ ○ ○ ○

○

○ ○

Shinawatra Group's building (Chiang

0.19

○

○ ○

Shinawatra family, the major shareholder of

○

The company rents the office space, in total of 2,338.60 square metres, in the

Co.,Ltd. (WS)/ The

○

8. Worth Supplies

191.84

○

6.03

○

0.19

○

3.81

○

0.87

○

3.81

○

○ ○

○

3. Payable to associated companies

0.87

cost for consideration of rental

○ ○ ○ ○ ○ ○

185.77

○

133.28

○

○ ○ ○

2. Trade account payable

location, facility, relocate and decoration

○ ○ ○ ○ ○ ○ ○

○ ○

130.69

○

○ ○

○ ○ ○

1. Rental and other service expenses

○

○ ○ ○

square metres.

rental rate for guidance associate with

on the leased premises and fully utilize.

○ ○

goods storage and ACC rents 684.90

○

DPC rents 2,708 square metres for

accepted by SEC to evaluate property

Company from the beginning. The

○ ○ ○

○

○ ○ ○ ○

○ ○ ○

SHIN, holds 60%

○

○ ○ ○ ○ ○ ○ ○

○

rental fee of Baht 11,033,435 a month.

major shareholder in ○

○

Shinawatra Tower 1 and 2 for a total

0.11

○ ○

○ ○ ○ ○

○

space of 25,216.36 square metres in ○

○ ○

Shinawatra family, a

90.94

○

○ ○ ○

○

○ ○ ○ ○

The Company rents the total office

Company uses external appraisers which

○

0.11

○

6.17

○

○ ○ ○ ○ ○

○

7. SC Office Park Co., Ltd. (SOP)/ The

leasehold premises and fully utilize. The

○ ○ ○ ○

87.71

○

○ ○

6.14

○

○ ○

2. Payable to associated companies

○

○ ○ ○ ○ ○

○

158.29

○

155.29

○

○ ○

○

○ ○

○

○ ○ ○

1. Rental and other services expenses

invested in the full utilities on the

○ ○ ○

○

○ ○

○

Phaholyothin Soi 13.

from the beginning. The company also

○ ○

○

MWA building and parking space at

○

○ ○

holds 99.99%

They have been utilized by the Company

○ ○ ○ ○

○

building/ office and parking space in

○

shareholder in SHIN,

○

○ ○ ○ ○

○

parking space in the White House

○

○ ○ ○ ○

○ ○ ○

○ ○

○

Shinawatra Tower2/ office and

○

○ ○ ○ ○

○

○ ○ ○

The Company rents: office space in

○

family, a major

○

(OAIA)/ The Shinawatra

Rational and necessity

○

(Million Baht)

Company Consolidated Company Consolidated

○

○ ○ ○ ○

6. OAI Asset Co., Ltd.

○

○ ○ ○

31 December 2003

○

○ ○ ○ ○

○

○ ○

31 December 2002 (Million Baht)

○

○ ○ ○ ○

○

Details of transactions

○

Related parties/ Relation to the company

○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○

○

○ ○

○

○ ○

○

○ ○ ○

○

○ ○

○

○ ○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○ ○ ○ ○

○

○ ○

○

○ ○

○

the Company and other related companies.

○

○ ○ ○

○

○ ○

ITAS provides Computer program only for

○

the close rate if compared with the other

○

ITAS charges the Company at the below or

○

○ ○

○

○ ○ ○

○

kind of work and the level of consultant.

○

The average service charge depends on the

○

consultant company’s rate.

○

○ ○

○

○ ○

○

The Company uses external

○

○ ○

○

○ ○

SEC to evaluate property rental rate

○

○ ○

appraisers which are accepted by

○

○ ○

for guidance associate with location,

○ ○ ○

○

○ ○ ○ ○

○

○ ○

○

○ ○ ○ ○ ○ ○ ○

accepted price deducted the profit

○

○ ○

○

Both parties charge each other at the

○

foreign operators.

○

International mobile service with

○

since the company expands into

○

under the ordinary course of business

from their customers.

○

○ ○ ○ ○ ○ ○

The International Roaming with STM

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

7.27

○

7.27

○

44.10

○

155.79

○

5.01

modification for consideration of

○

○ ○ ○ ○ ○ ○ ○ ○ ○

○

44.10

○

155.79

facility, cost of moving and

○

○ ○ ○ ○ ○ ○ ○ ○ ○

○

41.24

○

provide efficient quality services.

○ ○ ○

○

159.79

○

companies at reasonable prices and

rental agreement.

○

5.01

vehicles, serve only for related

○ ○

2.50

○

41.24

agreement.

○ ○ ○ ○

○

1.80

○

0.90

○

○ ○ ○

3.13

0.90

○

3. Trade accounts payable

0.93

○ ○ ○

159.79

○

2. Amount due from related parties

81.39

○

2.06

○

1. Service income

○

○ ○ ○

0.76

○

operation of International Roaming.

○

○ ○

61.56

○

major shareholders

○

(SingTel), the Company’s

○

Mobile Pte.Ltd. for the joint

○

○ ○ ○

○

agreement with Singapore Telecom

○

The Company enters into an

○

○ ○ ○

○

Investments Pte. Ltd.

○

3. Payable to associated companies

○

○ ○ ○ ○

○

Mobile Pte. Ltd./ Group

○

14. Singapore Telecom

of Singtel Strategic

○

2. Trade accounts payable

modification for consideration of rental

○

○ ○ ○ ○ ○ ○

○ ○

149.51

○

57.44

○

○ ○

1. Rental and other service expenses

10.62

○

○ ○ ○ ○ ○

○ ○

Shinawatra Tower 3.

○

○ ○ ○

SHIN, holds 60.82%

○

major shareholder of

○

○ ○ ○ ○

metres for the office space in

○

metres and DPC rents 1,024 square

guidance associate with location,

○

10.62

○ ○ ○

○ ○

The Company rents 1,799.55 square

○

Shinawatra family, the

○

○ ○

○

Co.,Ltd. (SC OPP) / The

○

○ ○

○

3.35

○

○ ○ ○

13. SC Asset Corp

32.25

○

3.24

○

3.35

to evaluate property rental rate for

○

32.25

○

○ ○ ○

3.24

○ ○

○

3. Payable to associated companies

○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○

24.49

○

24.49

○

○ ○

2. Cost of office equipment and computer

○

○ ○

basis. 1. Consulting and management fees

○

○ ○

with Joint-Directors

○

shareholder, hold 99.99%

38.66

○

○ ○ ○ ○

computer programs on a job-by-job

○

○ ○

(ITAS) / SHIN is the major

appraisers which are accepted by SEC

They are specialized in the lease of

○

○ ○ ○ ○

improvement and development of

○

The Company engages ITAS for the

○ ○

Services Co.,Ltd.

manner. The Company uses external

facility, cost of moving and

○

○ ○ ○

○

○ ○ ○

○

12. I.T. Applications and

meet the route requirement in a timely

○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

33.91

○

33.52

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

31.48

○

○ ○

SHIN, holds 45%

○

from OAIL. - Rental and other service expenses

○

○ ○

major shareholder of ○

vehicles to use at various branches

129.85

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

The Company and ADC lease 223

○ ○ ○

Shinawatra family, the

○

Co.,Ltd. (OAIL) / The

spaces throughout the country, which

○ ○ ○ ○

129.85

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

11. OAI Leasing

They are specialized in providing rental

○

○ ○ ○ ○ ○

○

95.93

○

95.08

○

Rental and other service expenses

○

SHIN, holds 99.99%

○

provinces, totaling 103 sites.

○

major shareholder of

○

○ ○

○ ○ ○ ○

○ ○ ○

○ ○

○

installation in Bangkok and the other

○

○ ○

Shinawatra family, the

○

○ ○

○ ○ ○ ○

○ ○ ○

some spaces for base station

○ ○ ○

○ ○

○

○ ○

The Company rents office space and

○ ○

Co.,Ltd. (UP)/ The

Rational and necessity

○

(Million Baht)

Company Consolidated Company Consolidated

○

○ ○ ○ ○

○

10. Upcountry Land

○

○ ○

○

31 December 2003

○

○ ○

31 December 2002 (Million Baht)

○

○ ○

○

○ ○ ○ ○

○

Details of transactions

○

Related parties/ Relation to the company

○

50:51

○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○ ○ ○

○

○ ○ ○

○

○ ○

○ ○ ○

○

○ ○ ○

○

○ ○ ○ ○

○

○ ○

○

○ ○

○

○ ○

property rental rate for guidance

○

○ ○ ○

○

○ ○

○

associate with location, facility, cost of moving and modification for

○

○ ○ ○

○

consideration of rental agreement.

○

○ ○

Shinee is specialized in designing and

○

as the Company needs.

○

○ ○ ○

creating website with variety contents

○ ○ ○

○

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

○

price close to the other Contractors.

○

○ ○

○

station and charge at comparative

○

They are specialized in installing base

○

Content Provider's.

○

40-60% which is the same as other

○

kind of service. The rate ranges from

○

○ ○ ○ ○ ○ ○

from customers which depends on the

○ ○ ○ ○

○

○ ○ ○

by the percentage based on revenue

○

○ ○ ○ ○

○

○ ○ ○ ○

○

The Company pays the service charge

○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○

○ ○ ○ ○

○

22.55

○

20.44

○

which are accepted by SEC to evaluate

○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○

The Company uses external appraisers

○ ○

○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○

33.93

188.64

○

32.65

188.11

○

holds 99.99%

2. Trade accounts payable

184.29

○

shareholder of SHIN,

181.81

○

1. Cost of communication equipment

○

○ ○

cation equipment.

○

family, the major

○

○ ○ ○ ○

○

for the installation of telecommuni-

○

○ ○

(BTE) / The Shinawatra

○ ○ ○ ○

The Company and DPC engage BTE

○

Engineering Co.,Ltd.

○

20. Bangkok Telecom

○

3.19

○

3.19

○

7.10

4.12

○

7.10

4.12

○

2. Trade accounts payable

4.14

○

4.14

Contractors.

○ ○

○

○ ○ ○ ○

○ ○ ○

1. Rental and other service expense

○

Directors

○

shareholder with Joint-

comparative price close to any other

○

○ ○ ○ ○

customer.

○

services providing for the Company's

0.60

○

○ ○

○ ○ ○

The Company engages Shinee for its

○

is indirect major

○

○ ○ ○

Co.,Ltd. (Shinee) /SHIN

banquet service and charge at

○

0.60

○

○ ○ ○ ○

19. Shineedotcom

They are specialized in providing

○

○ ○ ○

○

0.62

○

0.62

○

○ ○

- Rental and other service expense

charging on any other customers.

○ ○

○ ○ ○ ○

○ ○

○

○ ○

○

SHIN, holds 78.22%

charge the company at the same rate

○

○ ○ ○

○ ○ ○ ○

equipment.

○

SC Sathorn Mansion to install some

0.63

○

○ ○ ○

○ ○

The Company rents roof-top space of

○

the major shareholder of

○

○ ○

○

/ The Shinawatra family,

They provide Internet service and

○

○ ○ ○ ○ ○

0.63

○ ○

○

○ ○ ○

18. BP Property Co.,Ltd.

2.00

○ ○

○

0.95

○

0.95

○

84.21%

12.72

○

○ ○

○ ○ ○

○

shareholder of SHIN, holds - Rental aand other service expense

69.12

○

○ ○ ○ ○

○ ○

○

family, the major

○

○ ○

○

(OCM) / The Shinawatra

○

12.69

○ ○ ○

○

AIS to train staffs and seminar.

agreement.

○

10.32

○

○ ○

OCM serves the banquet ballroom for

○

○ ○

○

management CO.,Ltd .

STI by the actual basis or by the

○

16.53

○

0.04

The Company pays the service fee to

○ ○ ○ ○ ○ ○ ○

2.28

○

15.48

○

○ ○ ○

17. OAI consultant and

9.81

○

79.72

○

3. Trade accounts receivable

2,016.40

○ ○ ○ ○ ○ ○ ○

○

0.15

○

2. Rental and other service expenses

○

1. Service income

○

Director

○

○ ○

○

shareholder with Joint-

○

9.81

○

○ ○ ○

the Internet service to the Company.

operational staff to help the Company

○ ○

○

11.44

○

Company and CSL, while CSL serves

○

2,016.40

○

11.44

○

○ ○

ADC provides Datanet service to the

○

indirect major

○

○ ○

○

Ltd. (CSL) / SHIN is

28.16

○

227.20

○

○ ○ ○

16. C.S. Lox info Co.,

○

28.16

○

3. Payable to associated companies

Company that STI needs to provide

for management and any technique.

○ ○

21.94

○

○ ○

227.20 ○

○

2. Dividend payment

shareholders

STI has an agreement with the

○

○ ○ ○ ○ ○

○

21.94 ○

1. Salary and other remuneration

○

Company's major

○

○ ○

○ ○ ○ ○

○ ○ ○

○ ○

on an actual basis.

○

company in Singtel, the

○

STI operational staff. The expense is charged

○

○ ○

(STI)/ An associated

○

○ ○

○ ○ ○ ○

○ ○ ○

remuneration to STI in consideration of the

○

○ ○ ○

○ ○

○

○ ○

The Company pays the salary and

○ ○

International Pte. Ltd.

Rational and necessity

○

(Million Baht)

Company Consolidated Company Consolidated

○

○ ○ ○ ○

○

15. Singapore Telecom

○

○ ○ ○

31 December 2003

○

○ ○

31 December 2002 (Million Baht)

○

○ ○

○

○ ○ ○ ○ ○

○

○ ○ ○ ○

○

Details of transactions

○

Related parties/ Relation to the company

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○

○

○ ○ ○

○

○ ○

○

○ ○

○

○ ○ ○ ○

○

rate charging on any other customers.

○ ○

and charge the company at the same

○ ○

○

They provide finance lease service

○

0.75

○

○ ○ ○

○

on any other customers.

○

○ ○

company at the same rate charging

○

○ ○

0.33

They provide insurance service for the

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

117.11

○

117.11

○ ○

0.93

○

0.35

○

○ ○

2. Rental and other service expense

○

○ ○ ○

the MD of NFS.

○ ○ ○

90.90

○

90.90 ○

○

1. Computer leased rental expense

11.68

○

○ ○ ○ ○

○ ○

○

of computer and rent office space.

○ ○

11.21

○

○ ○ ○

○

The Company pays finance leasing

○

Audit committee of AIS is

○

○ ○ ○

Public Co., Ltd./ The

1.76

○ ○ ○

8.71

○

○ ○

24. National Finance

32.00

○ ○ ○ ○

8.71 ○

Insurance payment. ○

shareholder.

○

○ ○

○

SHIN is the major

○ ○ ○

1.76

○

32.00

○ ○ ○

base station and equipment.

○

○ ○

Co., Ltd. / The Director of

returns.

○ ○ ○ ○ ○

2.53

○

○ ○

○

The Company pays insurance for the

23. National Insurance

and debenture holders obtain good

○ ○ ○

○

51.00

○

2.53

○

51.00

○

2. Interest payment

○

○ ○ ○

○

debentures of the Company 1. Investment funds in Company’s debentures

0.54

○

○ ○

○

The Company's Directors hold

○

○ ○ ○

○

Directors

10.00

○

○ ○ ○

22. The Company's

debentures are rated at AA by TRIS

○

0.54

○

4.49

○

4.49

public offer at market price. AIS’s

○

○ ○ ○ ○

10.00 ○

○

10.00

○

2. Interest payment

The Company issued debentures for

○ ○

○ ○ ○

○ ○

10.00 ○

○

Company’s debentures

○

○ ○ ○

○ ○

○ ○ ○

○ ○

○

1. Investment funds in

○

○ ○ ○ ○

○ ○

○ ○ ○ ○

company

○

○ ○ ○

○ ○

○

Company Consolidated Company Consolidated

family and affiliate

Rational and necessity

○

(Million Baht)

○

○ ○

○ ○ ○

21. The Shinawatra

○

○ ○ ○

31 December 2003

○

○ ○

31 December 2002 (Million Baht)

○

○ ○

○

○ ○ ○ ○

○

Details of transactions

○

Related parties/ Relation to the company

○

52:53

Procedures for the approval of inter-company transactions and the policy for inter-company transactions The procedures for processing inter-company transactions are based on the similar procedures of processing transactions in general with third parties, comparing with market prices which authorized persons have a limit of their approval on transaction values. The Company strictly complies with applicable rules and regulations on any other inter-company transactions falling under the notification of the Stock Exchange of Thailand “Principles, Methods and Disclosure of Related Transactions of a Listed Company”. The Audit Committee reviews all inter-company transactions entered into by the Company, its subsidiaries and related parties in each quarter in order to ensure that there is no conflict of interest. Even though the Company has persons of potential conflict holding DNS’s shares more than 5% of issued and authorized shares, those persons have held DNS’s shares since 1998 which was occurred before the Company has invested in DNS’s shares in 1999. However, DNS does not have any inter-company transactions among the Company and persons of potential conflict. Besides, the Company processes procedures for inter-company transactions as above statement to prevent the conflict of interest for one another. Since inter-company transactions are the ordinary courses of business, inter-company transactions with persons of potential conflict will continue in the future. Thus the Company will consider such transactions in appropriate and reasonable prices for each transaction.

Analysis of Results of Operations and Financial Position Analysis of Results of Operations Overview As of year-end 2003 our Company and its subsidiaries had 13,239,200 consolidated subscribers, a net increase of 24.2%, or 2,576,700 additional subscribers, compared with 2002. Subscriber growth for the year, however, showed a decrease from its earlier record of 104.9%. The slower subscriber growth rate during 2003 was ascribed to various changes in the entire industry, namely notable expansions in the wireless market due to entries of new service providers, reductions in handset prices, the unlocking of IMEI (International Mobile Equipment Identity) and a rising popular trend towards easily purchased prepaid mobile phones. Among our subscriber base, 2,115,400 were digital GSM subscribers (GSM Advance and GSM 1800), while 11,123,800 were 1-2-Call! subscribers. Despite a slight 1% drop in our market share caused by competitive pricing pressures experienced within the mobile segment, as of year-end 2003, we remained favourably positioned with our market share at 60%. We recorded a consolidated net profit of Baht 18,529 million in 2003, compared with Baht 11,430 million the year before. The remarkable profitability upsurge was due to the combined effects of an increase in total revenues, a reduction in selling and administrative expenses, and a tax benefit from loss carried forward utilisation of certain subsidiaries. Total revenues Services and equipment rentals have been our primary source of income, which includes revenues associated with the mobile telecommunication business, data network communication services (Datakit Virtual Circuit Switch), and the provision of call centre services.

○ ○ ○

○

○ ○

○

○ ○

0.0 82.4

○ ○ ○

○

100.0 ○

○

89,492 ○

○

17.6

○

15,742

100.0 ○

0.0

○

24.1

80,251

17.6

○

15,735

○

73,750

○

0.4

○

○ ○

392

○

0.0

○

19,325

○

○ ○ ○ ○

82.0

○

○ ○ ○ ○ ○ ○

0.0 ○

○ ○

○

24.1

○

29.5 100.0

○

75.9

○ ○

19,309

○

○ ○ ○ ○

59,190 ○

Grand Total

0.0

○

17,449

○

Total

0.2 ○

○

Data Communications

29.3

○

Pager

0.0

60,926

○

17,359

○

Handset

73,337

○

70.5 ○

41,741

○

Sale revenues

0.5

○

○ ○

Total

0.0

○

378

○

0.5

○

Call centre

○

318

○

Data Communications

75.4

○

60,471

○

0.9

○

539

○

Paging

Million Baht

○

○ ○

69.1

○

40,884

○

○ ○ ○

Mobile phone

○

Million Baht ○

○

% ○

○

Million Baht

○

Revenues from services and equipment rentals

2003

○

2002

○

2001

○

Revenues classified by nature of activities

- Revenues from services and equipment rentals Income from mobile phone services, the main contributor to our service and rental income in 2003, increased 21.3% to Baht 73,337 million from Baht 60,471 million in 2002. Continued expansion in the number of mobile users was a principal underlining factor for this revenue growth. Such expansion was particularly strong in 2002 and hence played a major part in our 47.9% revenue growth for that year. In 2003 our ongoing marketing efforts and customer care campaigns such as the famous “Freedom Free Style” scheme - which offers specific individual choices for suitable airtime packages and charge options - successfully paid off, and enhanced the larger and more widespread subscriber base as well as an overall increase in minutes of use, especially for the 1-2-Call! system.

○ ○ ○ ○

○

GSM 1800

○

1-2-Call!

○

○ ○

○ ○ ○

GSM Advance

○

○ ○ ○

NMT 900

○

○ ○

○

ARPU ( Baht/month )

1,043

○

335

○

1,170

○

707

○

289,200

○

8,136,200

○

2,233,700

○

3,400

○

(101,100)

○

5,847,700

○

(26,000)

○

(261,400)

○

1,102

○

○ ○

341

○

○ ○

1,187

○

○ ○

○

199,600

○

○ ○

11,123,800

○

○ ○

1,915,800

○

○ ○

○

(89,600)

○

○ ○

2,987,600

○

(317,900)

○

○ ○

(3,400)

○

2003

○

2002

○

1,035

○

380

○

1,295

○

984

○

390,300

○

2,288,500

○

2,259,700

○

264,800

○

174,200

○

1,934,000

○

1,102,500

○

(200,800)

○

2001

○

GSM 1800

○

○ ○

1-2-Call!

○

GSM Advance

○

○ ○

○

NMT900

○

○ ○ ○

Consolidated Subscribers

○

○ ○

GSM 1800

○

1-2-Call!

○

GSM Advance

○

○ ○ ○

NMT 900

○

New subscriber additions

○

Breakdown of Subscribers and Average Revenue Per User (ARPU)

54:55

The above figures reveal a continued trend in subscriber growth, particularly in 2002. Underlying elements, which supported such trends, were mentioned earlier. As of year-end 2002, consolidated subscribers increased to 10,662,500 compared to 5,203,300 at year-end 2001. As of year-end 2003, consolidated subscriber numbers reached 13,239,200. As of year-end 2003, apart from an increase in subscriber numbers and a decline in churn rate, our monthly ARPU for GSM advance, 1-2-Call! and GSM 1800 increased to Baht 1,187, Baht 341 and Baht 1,102 respectively thanks to the success of our marketing efforts and customer campaigns, which focused on specific individual choices for suitable airtime packages and charge options. - Sale revenues Handsets and accessory sales accounted for most sales revenues. In 2003, declined sales volumes pushed our handset sale revenues down to Baht 15,735 million from Baht 19,309 million in 2002, and Baht 17,359 million in 2001. Indeed, the 11.2% growth in handset sales achieved in 2002 resulted from an increased volume sold due to continued wireless market expansion. Such an increase thereby offset the negative effects caused by a general decrease in equipment prices. Total costs Our total costs includes cost of sales, cost of services and equipment rental, concession fees paid under existing concession agreements, and excise taxes. In 2003, our total costs grew by 10.2% to end the year at Baht 49,419 million, compared with Baht 44,841 million in 2002 and Baht 35,175 million in 2001. - Cost of services and equipment rentals As a result of enduring capital investments in concession networks and value added service equipment (to support steady growth in the subscriber base, traffic volume and a variety of non-voice services), we faced growth in depreciable assets and hence higher depreciation and amortisation expenses. This, together with rising maintenance costs, imposed upward pressure on the cost of services and equipment rentals. In 2003 this cost increased by 33.4%, amounting to Baht 19,352 million, compared with Baht 14,511 million in 2002 and Baht 11,253 million in 2001. The increase in 2003 was due mainly to: 1. 2.

A Baht 3,519 million increase in amortisation expenses, which resulted not only from the earlier mentioned capital investment, but also from a change in the amortisation policy. A three-year estimated useful life was applied instead of a five-year one. A Baht 829 million increase in network maintenance expenses, brought about by a growth in depreciable assets and a write-off of Baht 545 million in obsolete spare parts as a consequence of out of date technology.

- Concession fees paid under existing concession agreements and excise taxes The Ministry of Finance promulgated a royal decree governing the excise tax rate applicable to the telecommunication industry, which took effect in early 2003. This 10% excise tax, collectable on telecommunication service revenues, is deducted from the concession fees payable to TOT and CAT under existing concession agreements. The sum of these concession fees and the relevant excise tax amounts, however, remained equivalent to the concession fees previously paid to TOT and CAT prior to the promulgation of this particular decree. Continued growth in the income from mobile phone services in turn increased both the concession fee and excise tax payable. These amounts added to Baht 17,726 million in 2003 compared to Baht 15,255 million in 2002 and Baht 10,383 million in 2001. The gross profit margin calculated from service and equipment rental revenues was 49.7% in 2003, 51.1% in 2002 and 48.2% in 2001. - Cost of sales Costs of equipment sales including handsets and accessories were the major component of our cost of sales. During 2003 our cost of sales accounted to Baht 12,341 million, reflecting a continued reduction from Baht 15,075 million in 2002 and Baht 13,539 million in 2001. The gross profit margin calculated from sales revenues was 21.6% in 2003, 22.0% in 2002 and 22.4% in 2001, reflecting a gradual decline. - Selling and administrative expenses Our selling and administrative expenses increased from Baht 9,483 million in 2001 to Baht 13,802 million in 2002 (or a 45.5% increase) and then declined to Baht 12,320 million in 2003 (or a 10.7% decrease). This decline resulted from: 1. 2. 3. 4.

A Baht 335 million reduction in marketing expenses. In the past year, we engaged in a user campaign, which promoted switching from the analogue NMT system to digital GSM advance. A Baht 1,980 million decline in bad debts brought about by improved efficiency in receivable management and debt collection. A Baht 598 million loss from network equipment write-offs in one of our subsidiaries. This write-off involved site preparation and network installation expenses relating to base stations, which were not operated owing to network optimisation. During 2003 a subsidiary wrote off Baht 294 million in obsolete network equipment.

- Interest expenses In 2002, we issued new debentures and obtained additional long-term loans to finance our network expansion. Additionally, redemptions and repayments of certain matured debentures and loans took place during 2003. Interest expenses for 2003 amounted to Baht 2,579 million, compared with Baht 3,069 million in 2002 and Baht 1,573 million in 2001. - Income taxes During 2002, income taxes rose to Baht 7,816 million from Baht 6,238 million in 2001, or a 25.3% increase, due to higher consolidated pre-tax profits obtained for the reasons given earlier. In the same year, we also enjoyed a Baht 434 million reduction in tax liability due to a tax credit obtained from loss on disposal of our investments in Advance Paging Company Limited to a third party. In 2003 the income tax expense was reduced by Baht 7,529 million despite a continued growth in consolidated pre-tax profits due to the fact that: As our subsidiaries started to show pre-tax profits, the tax benefit from losses carried forward was then utilised. During 2003 the Revenue Department also awarded us a Baht 251 million tax reduction. The reduction resulted from an alteration in the tax calculation method associated with a revenue sharing scheme on scratch card revenues from 1-2-Call!. The alteration involved a change from usage revenue to sales revenue as the basis of calculation. Net profit Our net profit increased from Baht 3,851 million in 2001 to Baht 11,430 million in 2002 (or an increase of 196.8%) and eventually to Baht 18,529 million in 2003 (or an increase of 62.1%). The slower rate of profit growth was due to a Baht 4,265 million provision for impairment losses on network equipment of the analogue NMT system and Digital Display paging system.

Analysis of Financial of Position Assets As of year-end 2003 our total assets amounted to Baht 124,949 million, reflecting a minor reduction from the previous year. Current assets accounted for 14.3% while non-current assets stood at 85.7%. Details of major items therein are as follows: - Cash & cash equivalents Cash and cash equivalents outstanding as of year-end 2003 were Baht 8,637 million, an increase of Baht 4,568 million from the previous year. The increase in the year-end balance was accredited to the year’s accumulated net cash flow. At year-end 2002, cash and cash equivalents were Baht 4,069 million, a sharp drop from Baht 15,284 million at year-end 2001. During 2002 we had aggressively and continuously expanded our network investments; as a result net cash payment to investing activities exceeded net cash flow from operations and from financing activities. - Trade account receivables - net Net trade account receivables totalled Baht 5,459 million as of year-end 2003, a 24.6% decrease from Baht 7,239 million in 2002. This decrease occurred despite an increase in total revenues. The increasing share of prepaid (as opposed to postpaid customers) in service revenues, and the implementation in 2002 of temporary service suspension based on subscriber’s payment patterns, were the factors, which also supported the decline in net account receivable figures. The improvement in trade account receivables turnover from 8.02 in 2001 and 8.60 in 2002 to 11.07 in 2003 also implied an effective collection cycle. Breakdown of trade account receivables by age

.. .. .. .. .. .. .. .. .. ..

Less than 3 months Over 3 months but less than six months Over 6 months but less than one year Over one year Total trade account receivables Allowance for doubtful accounts Total net trade account receivables

.. .. .. .. .. .. .. .. .. .. .. .. .

December 31, 2001 Baht million 7,762 746 260 304 9,072 (1,398) 7,674

.. .. .. .. .. .. .. .. .. .. .. .. .

December 31, 2002 Baht million 7,774 815 898 94 9,581 (2,342) 7,239

.. .. .. .. .. .. .. .. .. .. .. .. .

December 31, 2003 Baht million 6,292 197 70 34 6,593 (1,134) 5,459

.. .. .. .. .. .. .. .. .. .. .. .. .

The age schedule reflects our effective collection policy. We have successfully reduced allowances for doubtful accounts from the previous year’s level by introducing the “Fraud Management Program”. Using these random checks on irregular usage patterns, we are able to execute temporary service suspension whenever necessary.

56:57

Previously, a provision for doubtful accounts set for any overdue payments in excess of three months would take into consideration subscriber status as well as subscriber deposited monies. Upon the implementation of returning subscriber deposited monies, which took place in 2002, only subscriber status was then considered. Thus the provision for doubtful accounts set in 2002 was higher than in 2001. - Inventories - net As of year-end 2003, inventory turnover was 8.26, posing a reduction from the previous year's level of 7.18. The improvement reflected an efficient inventory policy, which trimmed down the year-end balance of net inventories from Baht 2,238 million in 2001 to Baht 1,961 million in 2002 and Baht 1,027 million in 2003. - Other current assets As of year-end 2003, other current assets stood at Baht 1,810 million, reduced from Baht 2,754 million at the previous year-end. The reduction came from a Baht 1,047 million decline in claims for the year on net value added tax returns. - Property and equipment Our property and equipment increased from Baht 6,233 million in 2001 to Baht 9,748 million in 2002, and eventually to Baht 12,120 million in 2003. The growth trend resulted from continued investments in network equipment associated with supplementary applications. We undertake our asset assessments and review any possibility of asset value impairment every year in order to properly adjust the relevant book value. The effort is aimed to make our balance sheet reflect, as closely as possible, the true economic value of those assets. - Assets under concession agreements Investment costs of the cellular network are the main items under the concession agreements. As of year-end 2003 the net assets under the concession agreements totalled Baht 78,549 million, a slight decline from Baht 79,795 million recorded as of year-end 2002. In 2002 we increased our investments in network equipment for digital GSM systems in both Bangkok and provincial areas. The investments in 2002 (with the aim to support a growing subscriber base), were larger than the amounts in 2003. In addition, we also wrote-off Baht 892 million in network equipment. (see further details in "Selling and administrative expenses") Liabilities As of year-end 2003, our total liabilities were Baht 65,323 million, lower than Baht 74,844 million in 2002 and Baht 72,517 million in 2001 respectively. Total liabilities comprised 26.9% current liabilities and 25.4% non-current liabilities. Details of major items therein are as follows: - Trade account payables - net As of year-end 2003, trade account payables were Baht 5,714 million, compared with Baht 7,649 million in 2002, and Baht 10,701 million in 2001. Turnover in trade account payables increased from 2.70 in 2001 to 3.22 in 2002, and 4.74 in 2003. The strong increase, particularly in 2003, was brought about by our decision in making use of offered trade discounts on certain prepaid portions of our payables. Major capital investment schemes relating to network equipment undertaken in 2002 also pushed the year-end account payables to a considerably high level. The same level, however, was not met in the subsequent year. - Accrued concession fees, concession rights payable and accrued excise taxes Concession rights are paid for operational rights granted to one of our subsidiaries under the digital GSM 1800 concession agreement. As of yearend 2003, concession rights payable and accrued interest payable to Total Access Communication (Public) Ltd (TAC) amounted to Baht 4,373 million, a certain part of which was accrued in 2002. It should be noted that the matter remains inconclusive. We have negotiated for a payment reduction; however, in 2003, TAC took the matter to arbitration and our subsidiary filed for an appeal. Concession fees, concession rights payable and accrued excise taxes reduced from Baht 7,006 million in 2002 to Baht 6,810 million in 2003 due to a decline in accrued excise taxes. In early 2003, following the promulgation of a royal decree governing the excise tax rate for the telecommunication industry, all mobile network operators are required to promptly settle their relevant excise tax dues 15 days into the following month after customer payment date. Such action resulted in a lower outstanding amount of accrued excise taxes. - Debentures and Loans Debentures and loans are composed of long-term debentures, short-term loans from financial institutions, long-term loans, and financial leases. As of year-end 2001, this item of liabilities was recorded at Baht 46,641 million, compared to Baht 51,764 million in 2002, and Baht 42,645 million in 2003. The reduction in 2003 occurred as a result of a Baht 7,050 million debenture redemption, of which Baht 7,000 million related to the current year's maturity, and another Baht 50 million to an earlier redemption. In 2003, one of our subsidiaries increased its short-term borrowing, from financial institutions by Baht 30 million, while another subsidiary amended its syndicated loan agreement to allow currency conversion on its outstanding loans, a reduction in prevailing interest rates, as well as modifications of the terms and conditions on its loans. During the year, our subsidiaries repaid Baht 5,896 million in long-term loans and borrowed

an additional Baht 3,943 million in long-term finances. This, in turn, resulted in a Baht 1,953 million decline in the net consolidated balance of our long-term loans. As for our own accounts, in the same year, we also repaid Baht 80 million for a matured long-term loan. During the year, we settled our Baht 138 million financial lease obligations and engaged in a new financial lease arrangement worth Baht 13 million. As of year-end 2003, we recorded, in our consolidated statements, the balances of Baht 60 million in short-term loans, Baht 12,079 million in current portions of debentures and long-term loans, and Baht 30,506 million in debentures and long-term loans, net of the recorded current portions. - Other current liabilities Other current liabilities amounted to Baht 6,124 million in 2001, Baht 7,969 million in 2002, and Baht 9,512 million in 2003 (the majority of which was composed of Baht 4,020 million advanced payments received from scratch cards and Baht 3,439 million accrued tax liabilities), showing a continual increase over the period of review. Shareholders' equity As of year-end 2003, our shareholdersâ&#x20AC;&#x2122; equity totalled Baht 59,626 million, reflecting an increase when compared to Baht 51,241 million in 2002, and Baht 41,021 million in 2001. Our paid-up capital was Baht 2,939 million, and premiums on share capital were Baht 20,169 million. Our capital base increased from the previous year due to the issuance of 3.5 million new common stocks worth Baht 169 million to provide shares for possible executions of some outstanding warrants. Payments made in advance for another 0.5 million newly issued shares amounted to Baht 26 million. A Baht 18,529 million net profit for the year contributed largely to retained earnings of Baht 36,220 million. During the year we made Baht 10,410 million in cash dividends, of which Baht 4,541 million was paid out on May 23, 2003 at a dividend ratio of Baht 1.55 per share. Baht 5,869 million was paid out on September 4, 2003 at a dividend ratio of Baht 2 per share. We also bought back 0.38 million common shares at an average price of Baht 33.08 per share. Total treasury stock on hand amounted to 2.54 million at an average buyback price of Baht 32.73 per share. During the year, various credit rating agencies had conducted credit reviews of our entity and subsidiaries. They were: 1. Standard & Poor's Rating Services rated our local and foreign currency at BBB 2. TRIS Rating Agency rated our company and our unsecured debentures at AA Capital Structure Analysis Our debt to equity ratio improved from the previous level of 1.77:1 at year-end 2001 to 1.46:1 at year-end 2002, and 1.10:1 at year-end 2003. The improvement in the balance sheet leverage, particularly in 2003, was brought about both by continual decline in total liabilities caused by repayments of due debentures and matured loans, and by improved profitability as evidenced by the impressive bottom line of Baht 18,529 million in 2003. It should be noted that it is our policy to maintain the debt to equity ratio of both our entity and our subsidiaries at a level not exceeding 2:1. Liquidity Analysis At year-end 2003, consolidated net cash flow from operating activities was Baht 40,378 million, showing astounding growth from the previous yearâ&#x20AC;&#x2122;s level. A sustained rise in service revenues was the major underlying reason. Consolidated cash outlays relating to investment activities declined from Baht 36,746 million in 2002 to Baht 16,366 million in 2003, as there was less capital expenditure relating to network equipment undertaken in 2003 than in 2002. Net cash flow from financing activities was negative at Baht 19,419 million, reflecting the use of funds for dividend payment, loan repayment and debenture redemptions. The amount of net cash flow from financing activities was larger in 2003 than in 2002. Thus, as of year-end 2003, our consolidated net cash balance had increased by Baht 4,593 million as a result of a significant reduction in investment activities. Current ratio declined from 0.94:1 in 2001 to 0.63:1 in 2002, and 0.53:1 in 2003. Operating cash flow to current liability ratio, however, improved from 0.42:1 in 2001, to 0.76:1 in 2002, and 1.20:1 in 2003. The collection period improved from 42 days in 2002 to 33 days in 2003. The holding period was shortened from 50 days in 2002 to 44 days in 2003. The payment period declined from 112 days in 2002 to 76 days in 2003. On the whole, we maintained enough liquidity position to support our operations. We expect to use our operating cash flows for repayments and redemptions of loans and debentures, which fall due in 2004 and 2005. We also anticipated a lower level of capital investment for network equipment in the next few years, as a significant amount of investments were successively made recently. In addition, an expanding subscriber base has led to a continued growth in service revenues, which remains our core income source. Solvency Analysis In terms of the ability to meet our long-term debt obligations, our solvency depends on both its level of future cash flows and the level of debts. As of year-end 2003, the interest coverage ratio slightly declined from 13.85 in 2001 to 12.21 in 2002, but substantially increased to 21.55 in 2003 as a result of repaid debentures and loans by cash flow from our operations.

58:59

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

Communications Business, Shin Corporation Group

President, Advanced Info Service Plc.

○

1992 - 1993 Executive Vice President (Operation 4), Shinawatra Group

○

1993

○

1993 - 1994 President, Shin Satellite Plc.

○

1994 - 1995 President, Advanced Info Service Plc.

○

1995 - 1996 Senior President, Advanced Info Service Plc.

○

Communications Business, Shin Corporation Group

○

1997 - 1998 Vice Chairman of the Executive Committee -Wireless

○

Director, Advanced Info Service Plc.

○

1999 - presentChairman of the Executive Committee - Wireless

○

○ ○ ○ ○

Shin Corporation Group Member of the Executive Committee, Shin Satellite Plc.

○

2000 - present Group Vice Chairman of the Group Executive Committee,

○

○ ○ ○

1993 - 1994 President of Shinawatra Group

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

Shinawatra Group

○

Vice Chairman of the Executive Commmittee (Operation),

○

1995-1996

○

and Shin Satellite Plc.

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Corporation Plc., Advanced Info Service Plc.

○

Shin Group 1997 - 2000 Director and Member of the Executive Commmittee, Shin

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

1999 -presentDirector and Chairman of the Group Executive Committee,

○

1997 -present Director, Advanced Info Service Plc. and Shin Satellite Plc.

○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○

○

Chairman of the Executive Committee , ITV Plc.

○

2001-2002

○

None

○

% Shareholding

Business

○

○ ○

Wireless Communications

○

None

○

Illegal Record in the past 10 years

○

None

○

of the Executive Committee - Institute of Technology (AIT)

○

Relationship with Management

○

Age 48

Master of Engineering, Asian

○

Dirertor and Chairman

1988 - 1992 Managing Director, Telephone Organization of Thailand

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○

○

Mr. Somprasong Boonyachai

○

None ○

(Urbama Champaign), USA.

Shin Group

○

% Shareholding

University of Illinois,

○

None

1992 - 1993 Advisor, Telephone Organization of Thailand

M.A. in Computer Engineering, 2001-present Chairman of the Board of Director, ITV Plc.

○

Illegal Record in the past 10 years

○

○ ○ ○ ○

○

Executive Committee,

○

of the Group

○

○ ○

○

None

○

Relationship with Management

○

Director and Chairman

○

Mr. Boonklee Plangsiri Age 52

○

○ ○ ○

○

None

○

% Shareholding

○ ○

Shin Corporation Group

Illegal Record in the past 10 years None

○ ○

1993 - 1998 Director and Member of the Executive Committee,

○

○ ○

○

○ ○

College, Thailand Class 33

○

1999 - 2002 Vice Chairman of the Board of Directors, Shin corporation Plc.

○

- Diploma, National Defense

○

○ ○

1999 -present Chairman of the Board of Director, Advanced Info Service Plc.

○

Iowa State University, USA.

○

○ ○ ○

○ ○ ○ ○ ○ ○

○ ○ ○

Experience

- Ph.D. (Electrical Engineering), 2000 -present Director and Executive Director, Thai Military Bank Plc.

○

Board of Directors

○

○ ○

○

○ ○ ○ ○ ○

Chairman of the

○

None

Highest Education

○

○ ○

Relationship with Management

○

Title

○

Age 62

○

Dr. Paiboon Limpaphayom,(Ph.D.)

○

Name

○

Directors and Management Team

○

Experience

○

Highest Education

○

Title

○

2001-present Director and Member of the Executive Committee,

○

MBA, Wichita State

○

Director and Member of

○

Mrs. Siripen Sitasuwan

○

ITV Plc.

○

University,

○

the Exective Committee

○

Age 55

○

Shin Corporation Plc.

○

- Director Certification

○

2000-present President and Group Chief Finance Officer, ○

○ ○ ○ ○

○ ○

None

Wichita, Kansas, USA. ○

Relationship with Management

○

○ ○ ○

Satellite Plc.

○

Corporation Plc., Advanced Info Service Plc. and Shin

○

Institute of Director (IOD).

○

% Shareholding

1998-present Director and Member of the Executive Committee, Shin -

○ ○ ○ ○ ○ ○ ○ ○

○

Channels, Telecom Equipment

○

○ ○

Chief Executive Officer, SingTel Paging

○

University of Oxford, UK.

○ ○

1998-1999

Singapore Telecom Ltd.

○

Vice President/ Chief Executive Officer - Sales and

○

1999-2001

○

Class Honours),

○

○ ○ ○ ○

○

Vice President - Regional Mobile/Consumer Business,

○

- Engineering Science (1st

○

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

○

Executive Vice President (Consumer Business Group)

○

○ ○

○

○ ○

○

Director and Member of the Executive Committee,

○

○ ○

○

University of Aston,

○

1999-present Vice President (Consumer Marketing)

○

Advanced Info Service Plc.

○ ○

1998 - 1999 Group Director of Total Quality

○

CEO (SingTel Mobile)

○

Birmingham, UK.

○

Executive Committee

○

Operation Manager of Hewlette

○

1998

○

2002-present Senior Executive Vice President, TOT Corporation Plc.

○

- Bachelor Degree in

○

○ ○

○

Director

○

○ ○

○

2000-2002

Senior Executive Vice President,

1999-2000

Executive Vice President, Telephone Organization of

1996-1999

Vice President of Finance Department,

○

Chulalongkorn University

○ ○

Telephone Organization of Thailand

○

○ ○

- Director Certification

○

Thailand

○

Institute of Director (IOD).

○

Program, DCP#32, Thai

○

None

○

Illegal Record in the past 10 years

○ ○

○

% Shareholding

○ ○

Telephone Organization of Thailand

○ ○

Master Degree, University

1998 - present Director and Chairman of the Audit Committee,

○

○ ○

Director and

○ ○

Advanced Info Service Plc. 1990 - present President and Chief Executive Officer, National Finance Plc.

○

○ ○

of Wisconsin, USA.

○

Committee

○

○ ○

Chairman of the Audit

○

None

○

Illegal Record in the past 10 years

○

None

○

None

○

% Shareholding

○

Relationship with Management

○

Age 53

○

Mr. Suphadej Poonpipat

○

None

○

None

○

Relationship with Management

Commerce and Accountancy, 2001-present Director, Advanced Info Service Plc.

○

Age 58

○

Mrs. Tasanee Manorot

○

None

○

% Shareholding

○

○ ○ ○

Vice President - Finance, Shinawatra Group

2002-present Director, Advanced Info Service Plc.

○

None

○ ○

1991-1993

○

Stanford University, USA.

○

Illegal Record in the past 10 years

○

None

○ ○ ○

Executive Vice President - Finance, Shinawatra Group

Director and Member of the Bachelor of Science (Honours), Present

○

Relationship with Management

○

Age 50

○ ○

1994-1998

○

Mr. Chow, Wing Keung

Chief Finance Officer, Shin Corporation Plc.

○

○ ○ ○ ○

Management,

○ ○ ○ ○ ○

○

○ ○ ○ ○ ○

None

- Master of Science in

○

% Shareholding

○

None

○

Illegal Record in the past 10 years

○

○ ○ ○ ○ ○

Executive Vice Chairman

1998-2000

○

○ ○ ○

Director and

○

None

○

Relationship with Management

○ ○

○

○ ○

○

Age 41

○

Mr. Lum Hon Fye

○ ○

○

None

○

None

Program, DCP#33, Thai

○

Illegal Record in the past 10 years

○

Name

○

Experience

○

Highest Education

○

○ ○

○

Title

○

○ ○

Advanced Info Service Plc.

○

1998-present Director and Member of the Audit Committee,

○

University, Long Beach,

○

- BBA, California State

○

Director and Member of the Audit

○

Present

Executive Director, Trinity Group

Present

Director & Member of Audit Committee,

○

California, USA.

○

Committee

○

Relationship with Management

○ ○

Thailand National Defense

○

○ ○

○ ○ ○ ○

- Diploma (Private Sector, Class 3),

○

○ ○ ○

Illegal Record in the past 10 years

○ ○

○

College

○

None

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Deputy Governor - Account and Finance,

○

○ ○

1997-1999

Electricity Generating Authority of Thailand

○

○ ○

○

2000-present Group Vice Chairman of the Group Executive Committee, Shin Corporation Plc.

○

Massachusetts Institute of

○ ○

Member of the Executive Committee, Advanced Info

○

○ ○

○

Technology, USA.

○ ○

○

Service Plc. 1997-present Chairman of the Executive Committee, Satellite and

○

○ ○

International Business, Shin Corporation Plc.

○

None

○

○ ○

○

Vice Chariman of the Executive Committee, Policy, Shinawatra Group

○

1995-1997

○

None

○

% Shareholding

○ ○

○

President, Shinawatra Satellite Plc.

1993-1994

Executive Vice President,

○

○ ○

1994-2000

○ ○

○ ○ ○

○

○ ○

International Broadcasting Corporation Limited

○ ○

○

Senior Manager-Business Development, Shinawatra Group

○

○ ○

1991-1992

○ ○

○

○ ○

○

Program Manager-Integrated Optoelectronics, GE

○

○ ○

1989-1991

○

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

○

1986-1989

○

Aerospace, New York, USA.

○

○ ○

Corporation Limited

○

General Manager-International Broadcasting

○

Illegal Record in the past 10 years

○

None

○

Relationship with Management

○

Committee

○

Ph.D., Electrical Engineering ○

○

Member of the Executive

○

Authority of Thailand

○

○ ○

○

Institute of Director (IOD)

○

Deputy Governor - Account and Finance and Acting Deputy Governor-Administration, Electricity Generating

○

1999-2000

○

- Director Certification Program, DCP#14, Thai

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Authority of Thailand

○

Thai Institute of Director

Acting Chief Finance Officer, Electricty Generating

○

- Diploma, Fellow Member,

○ ○

Director, SCB Asset Management Company Limited

○

College

○ ○ ○

Director, Ratchaburi Energy Company Limited Director, Tri Energy Company Limited

○

-Diploma , Nation Defence

○

England and Wales

○ ○ ○

○ ○ ○ ○ ○ ○ ○

Company Limited

○

Chartered Accountant in

○

Generating Holding Plc. Director, Ratchaburi Electricity Generating

○

The Institute of

○

- Fellow Member of

○

Advanced Info Service Plc. Director & Managing Director, Ratchaburi Electricity

○

○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

Age 49

○

Dr. Dumrong Kasemset, (Ph.D.)

○ ○ ○

○

○ ○ ○ ○ ○

Chulalongkorn University

○

○ ○

- B.A. (Accounting) , (2nd Class Honor),

○ ○ ○ ○ ○ ○

○ ○ ○

○ ○

○

None

○

% Shareholding

○

None

○

Illegal Record in the past 10 years

○

○ ○ ○ ○ ○

Committee

○

○ ○ ○

Director and Member of the Audit

○

None

○

Relationship with Management

○ ○

○

Age 57

○

Mr. Boonchoo Direksathaporn

○

None

○

% Shareholding

○

None

○

Age 62

○

Mr. Arun Churdboonchart

○

Name

○

60:61

○

Experience

○

Highest Education

○

○ ○

○

Title

○

1991 - 1994 Manager, Shinawatra Directories Co., Ltd.

○

1995 - 1996 General Manager, Shinawatra Directories Co., Ltd.

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

1997 - 1998 Vice President - Shinawatra Directories Co., Ltd.

○

2002-present Chief Techonology Officer, Advanced Info Service Plc.

○

Master Degree Thammasat

○

Chief Technology Officer

○

○ ○

○

Advanced Info Service Plc.

○

President, Digital Phone Co., Ltd.

1998-2000

Senior Executive President - Engineering, Advanced

1995-1998

Executive Vice President, Shinawatra International Co., Ltd.

○

○ ○

○

2000-2002

○ ○

○

○ ○

Info Service Plc.

○

○ ○

○

University

○ ○

○

2002-present Chief Customer Champion & Terminal Business Officer,

○

- Master in Business

○

○ ○

○

Chief Customer

○

Advanced Info Service Plc.

○

Management

○

○ ○

○

Champion &

○

Managing Dirtector, Advanced Wireless Marketing Co., Ltd

1982-1994

President, Robinson Department Store Plc.

1980-1981

Allied Management Consultant of Asia Co., Ltd

○

1995-2002

○

Management,

○

○ ○

from Asian Institute of

○ ○

○

Philippines

○

Illegal Record in the past 10 years

○ ○

○

- Advanced Management

○

None

○ ○ ○

○

Harvard Business School,

○

○ ○

○

0.0003%

○ ○

Boston,USA.

○

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

○

Master of Management,

○

Chief Finance

○

Mr. Pong-Amorn Nimpoonsawat

Financial Director, Shinawatra Paging Co., Ltd. ,

○ ○

○

1994-1998

○

Financial Director, Dentsu Young & Rubicam Ltd.

○

1998-2001

○

○ ○ ○

○

Relationship with Management

SASIN

○

Pager Sales Co., Ltd

○

None

○

Illegal Record in the past 10 years

○ ○

○

None

○

% Shareholding

○

○ ○

○

None

○

Officer - Wireless

○

Age 41

○

Program,

○

% Shareholding

○

None

Terminal Business Officer

○

Age 48

○

Mrs. Suwimol Kaewkoon

○

None

○

% Shareholding

○

1999 - 2001 Executive Vice President - Service Operation,

○

None

○

Illegal Record in the past 10 years

○

Planning, Advanced Info Service Plc.

○

None

○

2001 - 2002 Senior Executive Vice President - Wireless Corporate

○

Relationship with Management

○

Age 51

○

2002-present President Advance Info Service Plc.

○

Mr. Vikrom Sirprataks

Relationship with Management ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○

Executive Committee

0.0034% ○

State University, USA.

○

% Shareholding

○

○ ○ ○ ○

Communication and Member of the

○

None

Master Degree, Kentucky

○

○ ○

President - Wireless

○

Illegal Record in the past 10 years

○

None

○

Relationship with Management

○

Age 36

○

Ms. Yingluck Shinawatra

○

Name

62:63

Board of Directors’ Responsibilities with Regards to Financial Reporting

Board of Directors’ Responsibilities with Regards to Financial Reporting The Board of Directors is responsible for Advance 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 annul 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 consolidated financial statements of Company and its subsidiaries have been examined by an external auditor, PriwaterhouseCoopers 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, 2003 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

Auditorâ&#x20AC;&#x2122;s Report

To the Shareholders of Advanced Info Service Public Company Limited I have audited the accompanying consolidated and company balance sheets as at 31 December 2003 and 2002, and the related consolidated and company statements of income, changes in shareholdersâ&#x20AC;&#x2122; equity and cash flows for the years then ended of Advanced Info Service Public Company Limited and its subsidiaries, and of Advanced Info Service Public Company Limited, respectively. These financial statements are the responsibility of the Companyâ&#x20AC;&#x2122;s management. My responsibility is to express an opinion on these financial statements based on my audits. I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion. In my opinion, the consolidated and company financial statements referred to above present fairly, in all material respects, the consolidated and company financial position as at 31 December 2003 and 2002, 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 13 February 2004

64:65

Advanced Info Service Public Company Limited

Balance Sheets

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

26,988,573,112

○

○ ○ ○

○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

104,861,260,419

○

628,058,806

118,552,926,933

○

115,473,184,773

○

○ ○ ○ ○ ○ ○

○

67,846,177,643

○

105,302,841,292

○

○ ○ ○

489,553,864

○

The accompanying notes on pages75 to 106 are an integral part of these consolidated and company financial statements.

○

126,085,368,315

9,398,450,858

○

○ ○ ○ ○ ○

○

67,803,211,705

○

○ ○

11,857,666,955

○

107,703,754,944

○

785,646,017

○

12,504,658,669

○

124,949,175,850

25,152,408,768

○

4,870,396,567

○

107,053,588,586

○

○ ○ ○ ○ ○ ○ ○

○

79,795,412,932

○

622,963,261

○

11,337,754,668

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○

○ ○ ○ ○ ○ ○ ○

9,747,640,759

○

4,415,573,526

○

○ ○ ○

1,927,119,247 13,691,666,514

○

10,170,343,481

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

78,549,049,497

○ ○ ○

○ ○

Total Assets

○

Total Non-Current Assets

○

Other assets, net

○

Goodwill, net

○

Concession rights, net

12,120,174,228

○

○ ○

○

agreements, net

○

Assets under concession

○

Other assets

○

Property, plant and equipment, net

8,073,406

○

Investments in subsidiaries, net

○

receivable, net

418,303 1,530,545,936

○

1,735,842,696

○ ○

○

18,381,613,371

○

○ ○

Forward and swap contracts

○ ○ ○

○ ○

408,929,733

○ ○

○

2,754,421,296

○

1,810,263,601 17,895,587,264

○

○ ○ ○

Non-Current Assets

608,368,520

○ ○

○

1,530,545,936

○

○ ○

Total Current Assets

○

○ ○ ○

1,000,803

○

16,146,813 409,574,673

○

○ ○ ○

○

Other current assets

○

○ ○

333,825,786

○ ○ ○

○

○ ○ ○

760,884,864

○

352,913,435

○

○ ○ ○

swap contracts receivable, net Advances to suppliers

149,265,258

○

1,961,215,240

○

○ ○ ○

phone network maintenance, net Current portion of forward and

○

○ ○ ○

31,260,351

○

1,026,840,782

○

Spare part inventories for mobile

7,780,514,135

○

○ ○

4,445,440

○

1,364,737

○

Inventories, net

○

to related parties

1,695,435,115

○

6,181,075,744

○ ○

Amounts due from and loans

○ ○ ○ ○ ○

○ ○ ○ ○

1,479,409,171

○ ○

61,882,443 7,238,678,506

○

5,458,841,499

○

○ ○ ○ ○

○ ○ ○

○

182,800,426

○

Trade accounts receivable, net

○ ○ ○

○

○ ○ ○ ○ ○

4,068,538,843

○

8,636,841,298

○

Short-term investments

○

Cash and cash equivalents

Baht

○

○ ○ ○

○ ○ ○ ○

Current Assets

2002

○

Baht

○

○ ○

ASSETS

○

2003

○ ○

Baht

○

Baht

○

2002

○

2003

○

○ ○

Notes

○

Company

○

Consolidated

○

As at 31 December 2003 and 2002

Advanced Info Service Public Company Limited

Balance Sheets

○

○ ○

○ ○ ○

○

2,169,129,798

○ ○ ○

○

○ ○ ○

○ ○

○ ○ ○

○ ○

○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

39,567,159,126

○

○ ○

67,583,580,332

○

56,202,926,339

○

○ ○ ○ ○

○

○ ○ ○ ○

37,406,803,700

○

○ ○ ○

29,508,707,785

○

The accompanying notes on pages 75 to 106 are an integral part of these consolidated and company financial statements.

2,160,355,426

○

○ ○ ○ ○

○

74,844,121,141

○

○ ○ ○ ○

○

45,781,588,051

○

65,322,972,170

○

○ ○ ○ ○

○

31,745,976,167

○

14,687,673

○

1,225,103,203

○

16,730,583

29,391,460,146

○

2,532,258,127

○

29,391,460,146

○

37,406,803,700

117,247,639

○

5,825,795,641

○

○ ○

1,114,725,145

○

○ ○ ○ ○ ○ ○ ○

Total Liabilities

○

Total Non-Current Liabilities

○

Deposits from customers

○

○ ○

○

Concession right payable

○ ○

Long-term debentures, net

○

Long-term borrowings

○

○ ○

Non-Current Liabilities

28,016,421,206

○

26,694,218,554

○

○ ○

29,062,533,090

○

33,576,996,003

○

○ ○

Total Current Liabilities

7,258,562,367

○

8,889,020,859

○

○ ○

7,969,294,527

○

9,512,260,423

○

○ ○

Other current liabilities

2,940,675,178

○

○ ○

4,474,048,313

○

5,584,446,369

○

○ ○ ○

○

○ ○

concession fee and excise tax

6,970,452,412

○

○ ○ ○

○ ○

right payable, accrued

○

○ ○ ○

○

○ ○

6,970,452,412

○

7,973,320,909

○

○ ○

Current portion of concession

191,057,160

○

○ ○

○

○ ○

debentures, net

○

○ ○ ○

1,531,002,263

○

○ ○

Current portion of long-term

4,551,806,663

○

○ ○

4,105,918,317

○

○ ○

7,973,320,909

○

○ ○

2,053,729,677

○

438,339,928

○

○ ○

Current portion of long-term borrowings

○

1,154,910,667

○ ○

○

○ ○

related parties

6,103,867,426

○

4,454,106,644

○

○ ○

Amounts due to and loans from

○ ○

7,649,395,647

○

○ ○

Trade accounts payable

○

○ ○ ○

627,032,309

30,000,000

○

5,714,017,676

○

60,000,000

○ ○

○ ○ ○ ○ ○ ○

○

○ ○

○

institutions

○

Short-term loans from financial

○

Current Liabilities

○

○ ○

○

○ ○

○

○ ○ ○

○ ○

SHAREHOLDERS‘ EQUITY

Baht

○

○ ○ ○

LIABILITIES AND

○

Baht

○

Baht

○

Baht

○

2002

○

2003

○

2002

○

2003

○

Notes

○

Company

○

Consolidated

○

As at 31 December 2003 and 2002

66:67

Advanced Info Service Public Company Limited

Balance Sheets

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

51,040,008,014

○ ○ ○ ○ ○

○

50,969,346,601

○

○ ○

○ ○ ○

○

118,552,926,933

○

○ ○

(70,661,413)

○ ○ ○

115,473,184,773

○

○ ○

51,040,008,014

○

○ ○ ○

○

The accompanying notes on pages 75 to 106 are an integral part of these consolidated and company financial statements.

○

59,270,258,434

○

○ ○ ○ ○

126,085,368,315

○

○ ○

27,601,008,014

○ ○ ○ ○ ○ ○

○ ○ ○

○

○ ○

51,241,247,174

○

(70,661,413)

○

51,311,908,587

○

500,000,000

○

○ ○

○ ○ ○ ○

271,900,573

○

○ ○ ○ ○ ○ ○ ○

124,949,175,850

○ ○ ○ ○

(83,129,756)

○

59,353,388,190

○

○ ○ ○ ○ ○ ○ ○ ○

59,626,203,680

○

○ ○ ○ ○ ○ ○ ○

Shareholders' Equity

○

Total Liabilities and

○ ○

○

○ ○ ○

Total Shareholders' Equity, net

○

Less Treasury stock

○

○ ○ ○ ○ ○ ○

○

51,040,008,014

○

○ ○ ○ ○ ○ ○

Total Shareholders' Equity

○

Minority interests

○ ○

59,353,388,190

○

27,601,008,014

○

○ ○ ○

○

Total Parent's Shareholders' Equity

○ ○ ○ ○ ○

35,720,062,307

○

500,000,000

○

(83,129,756)

25,525,832

○

59,709,333,436

○

○ ○

355,945,246

○

59,353,388,190

500,000,000

○

○ ○ ○

Unappropriated

20,004,000,000

○

○ ○ ○ ○

35,720,062,307

○ ○

○

20,169,275,161

○

500,000,000

○

25,525,832

○

○ ○

Appropriated - Legal reserve

2,935,000,000

○

○ ○

20,004,000,000

○

20,169,275,161

○

○ ○

Retained earnings

○

2,938,524,890

○

○ ○ ○ ○ ○

2,935,000,000

○

2,938,524,890

○

19, 35

○

share subscription

○

Advanced receipts for

○

Premium on share capital

5,000,000,000

○

○ ○

○ ○ ○

○

share capital

○

Issued and fully paid-up

○ ○ ○ ○ ○ ○

5,000,000,000

○

5,000,000,000

○

○ ○ ○ ○ ○ ○ ○

5,000,000,000

○

○ ○

Authorised share capital

Baht

○

○ ○ ○ ○

Share capital

2002

○

Baht

○

○ ○ ○

Shareholders' Equity

○

2003

○ ○

Baht

○

Baht

○

2002

○

2003

○

Notes

○

Company

○

Consolidated

○

As at 31 December 2003 and 2002

Advanced Info Service Public Company Limited

Statements of Income

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

28,751,249,354

○ ○ ○

10,284,521,027

○ ○ ○ ○

18,466,728,327

○ ○

667,937,844

The accompanying notes on pages 75 to 106 are an integral part of these consolidated and company financial statements.

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

20,162,265,677

○

1,520,419,780

○

○ ○

○ ○ ○

○

18,641,845,897

○

27,507,597,013

○

○ ○

22,299,813,013

(3,805,000)

○

3,923,834,215

○

○ ○

(258,625,157)

○

○ ○

○

23,583,762,798

○

○ ○ ○

22,299,813,013

○

(3,812,500)

(230,390,117)

○

○ ○

○ ○ ○ ○ ○ ○

(258,625,157)

○

○ ○

(3,721,000)

○ ○ ○

(161,101,928)

○ ○

28,720,691,557

○ ○

25,686,504,087

○

1,114,957,419

○

○ ○ ○ ○

18,632,289

○

21,608,395,179

○

○ ○ ○ ○ ○

○

○ ○ ○

○ ○

598,649,010

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

28,720,691,557

○

○ ○

Profit before interest and tax

○

- equity method

○

Share of net profit of investments

○

Operating results

○

Directors' remuneration

○ ○ ○

(3,728,500)

22,970,202,499

○

9,196,356,544

○

35,998,952

32,166,559,043

○

935,749,007

13,802,387,186

○

○ ○ ○ ○ ○

○

a subsidiary

○

Impairment loss for investment in

○

Net gain (loss) on exchange rate

○

35,153,734,866

○

27,752,672,098

○

12,320,471,505

35,410,782,365

○

○ ○

Other operating income

○

40,073,143,603

○

○ ○

equipment rentals

13,611,217,480

○

44,840,619,041

○

○ ○

49,418,554,679

○

○ ○

Profit from sales, services and

○

16,089,995,455

○

15,074,702,667

○

○ ○

12,341,072,892

○

○ ○ ○

○

expenses

12,075,286,607

○

15,254,778,794

○

○ ○

17,725,935,766

○ ○ ○ ○

○ ○ ○ ○ ○ ○

○ ○

19,063,739,411

○

○ ○

14,511,137,580

○

○ ○ ○

Selling and administrative

○ ○ ○ ○ ○

○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○

19,351,546,021

○

Gross profit

○

Total Cost

○

Cost of sales

○

Concession fee and excise tax

○

equipment rentals

54,437,753,441

○

○ ○ ○

○ ○

Cost of services and

○

67,320,293,909

○

80,251,401,406

○

○ ○ ○ ○

Cost

○

89,491,698,282

○

○ ○

Total revenues

54,437,753,441

○

19,325,433,272

○

○ ○

15,741,759,135

○ ○ ○

○ ○

○ ○ ○

67,320,293,909

○

60,925,968,134

○

○ ○

73,749,939,147

○

○ ○

Sales

Baht

○

○ ○ ○

○ ○

equipment rentals

2002

○ ○

Revenues from services and

○

Baht

○

Baht

○

Baht

○

○ ○ ○

Revenues

○

2003

○

2002

○

2003

○

Notes

○

Company

○

○ ○

Consolidated

○

For the years ended 31 December 2003 and 2002

68:69

Advanced Info Service Public Company Limited

Statements of Income (continued)

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○

○

○ ○ ○

○

○ ○ ○

○

6.31

○

○ ○ ○ ○

3.89

○

○ ○ ○

3.89

○

6.32

○

○ ○ ○ ○ ○

3.89

○ ○

The accompanying notes on pages 75 to 106 are an integral part of these consolidated and company financial statements.

○

11,430,301,397

○

18,529,018,503

○

○ ○ ○ ○ ○

6.31

○ ○

○ ○ ○ ○

○ ○

○

11,430,301,397

○ ○

6.32

○

○ ○

○

11,430,301,397)

○

(15,360,802)

○

18,529,018,503

○ ○

○ ○ ○

○ ○

18,529,018,503

○ ○

84,046.113

○

Net profit for the year

○

Diluted earnings per share

○

Net profit for the year

○

○ ○

11,414,940,595

○

18,613,064,616

○

○ ○ ○ ○

○

Basic earnings per share

(6,294,753,345)

○

(6,842,152,813)

○

○ ○ ○

○

Net profit for the year

○

○ ○

○

(7,816,088,747)

○

○ ○ ○ ○ ○

○ ○

to minorities, net

(2,437,210,935)

○

(2,136,425,697)

○

(7,528,559,340)

○

○ ○ ○

Profit (loss) attributable

20,162,265,677

○

(3,068,783,681)

○

(2,579,067,601)

○

○ ○ ○ ○

Profit before minorities

○

27,507,597,013

○

22,299,813,013

○

○ ○ ○

○

Income tax

Baht

○ ○

28,720,691,557

○

○ ○

Interest expense

2002

○

Baht

○

○ ○

Profit before interest and tax

○

2003

○ ○

Baht

○

○ ○

Baht

○

○ ○

○

2002

○

2003

○

Notes

○

Company

○

Consolidated

○

For the years ended 31 December 2003 and 2002

Advanced Info Service Public Company Limited

Statements of Changes in Shareholdersâ&#x20AC;&#x2122; Equity For the years ended 31 December 2003 and 2002

Consolidated (Baht) Issued and paid up Share capital (Note 19)

Premium on share capital

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

Net profit for the year

18,529,018,503

- 18,529,018,503

Dividend paid (Note 26)

(10,409,964,210)

(1,440)

- (10,409,965,650)

3,524,890

165,275,161

168,800,051

(12,468,343)

25,525,832

84,046,113

Opening balance 2003

Additional shares (Note 19) Repurchased shares

Advanced receipt for share subscription

Legal reserve

Unappropriated retained earnings

Minority interests

Treasury Stock

Total

Advanced receipt for share subscription (Note 19, 35) Profit attributable to minorities Closing balance 2003

Opening balance 2002

2,938,524,890 20,169,275,161

25,525,832 500,000,000

35,720,062,307 355,945,246 (83,129,756) 59,626,203,680

2,935,000,000

20,004,000,000

500,000,000

17,321,686,859

260,812,310

- 41,021,499,169

Net profit for the year

11,430,301,397

- 11,430,301,397

Dividend paid

(1,163,314,402)

(750)

- (1,163,315,152)

Returned dividend

12,334,160

Repurchased shares

(70,661,413)

159,600

(15,360,802)

26,290,215

Additional shares in subsidiary 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

The accompanying notes on pages 75 to 106 are an integral part of these consolidated and company financial statements.

27,601,008,014 271,900,573 (70,661,413) 51,241,247,174

70:71

Advanced Info Service Public Company Limited

Statements of Changes in Shareholdersâ&#x20AC;&#x2122; Equity (continued) For the years ended 31 December 2003 and 2002

Consolidated (Baht) Issued and paid up Share capital (Note 19)

Premium on share capital

2,935,000,000

20,004,000,000

Net profit for the year

Dividend paid (Note 26)

Opening balance 2003

Additional shares (Note 19) Repurchased shares

Advanced receipt for share subscription

Legal reserve

Unappropriated retained earnings

Treasury Stock

Total

- 500,000,000

27,601,008,014

(70,661,413)

50,969,346,601

18,529,018,503

- (10,409,964,210)

3,524,890

165,275,161

168,800,051

(12,468,343)

25,525,832

Advanced receipt for share subscription (Note 19, 35) Ending balance 2003

Opening balance 2002

2,938,524,890 20,169,275,161 25,525,832 500,000,000 35,720,062,307 (83,129,756) 59,270,258,434

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

(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

The accompanying notes on pages 75 to 106 are an integral part of these consolidated and company financial statements.

Advanced Info Service Public Company Limited

Statements of Cash Flows

○

Company 2002 Baht

○

Baht

○

Baht

○

Baht

○

17,000,979,162

○

1,121,616,203

○

913,557

○

4,855,517

○

○ ○ ○

○ ○ ○ ○ ○

○

○ ○ ○

○ ○ ○ ○

○

○ ○ ○

(6,185,362,054)

○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○

(31,549,594,515)

○

○ ○

2,999,999,250

○ ○ ○

(8,808,848,841)

○ ○ ○

○ ○ ○ ○ ○ ○

○

(228,000,000)

○

○ ○

5,759,998,560

○ ○ ○

200,000,000

○

○ ○ ○ ○

○

The accompanying notes on pages 75 to 106 are an integral part of these consolidated and company financial statements.

(27,223,157,001)

○

○ ○ ○ ○

28,000,000

○

○ ○

(36,745,825,402)

○

○ ○ ○

(9,720,052,399)

○

○ ○ ○

○

○ ○ ○ ○ ○

○ ○

(16,365,674,054)

○

○ ○

○

12,851,429

○

○ ○ ○ ○

(6,003,071,369)

○ ○ ○ ○

○

235,730,000

○

○ ○ ○

4,660,164

○

(32,202,013,060)

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

(6,326,325,437)

○

○ ○ ○ ○ ○

○

(11,459,715,904)

○

○ ○ ○ ○ ○ ○

○

○ ○ ○

(6,044,651,803)

○

12,866,873

○

○ ○ ○ ○ ○ ○ ○

investing activities

○

Net cash payments for

○

a subsidiary

○

Dividend received from

○

loans to a subsidiary

○

Payment of short-term

○

short-term loan to a subsidiary

○

Proceed from repayment of

○

agreements

○

Purchases of assets under concession

○

117,750,277

○ ○ ○ ○

equipment

○

Purchases of property, plant and

○

and equipment

○

○ ○ ○ ○

○ ○

25,665,000

○

Proceeds from disposals of property

(2,999,840,400)

○

○ ○ ○ ○

○

disposed

○

○ ○ ○

net of cash and cash equivalents

○

Proceed from disposals of a subsidiary,

○

○ ○

a subsidiary

○

○ ○

Acquisition of investment in

1,638,184,261

○

1,638,184,261

○

1,120,971,263

○

to suppliers

○

Net changes in advances

○

investments

○

Net changes in short-term

○

activities:

○

○ ○

Cash flows from investing

○

29,588,907,254

○

22,037,950,421

○

40,378,167,134

○

activities

○

Cash flows from operating

○

2003

○

2002

○

2003

○

Notes

○

Consolidated

○

For the years ended 31 December 2003 and 2002

72:73

Advanced Info Service Public Company Limited

Statements of Cash Flows (continued)

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○

○

15,728,984

○

1,695,435,115

○

○ ○

9,604,146,474

○ ○

○ ○ ○

○ ○ ○ ○

(7,924,440,343)

○

○ ○ ○ ○ ○ ○ ○ ○ ○

6,624,175,010

○

1,479,409,171

○

The accompanying notes on pages 75 to 106 are an integral part of these consolidated and company financial statements.

○

4,068,538,843

(1,163,314,402) 12,334,160 -

○

(24,942,978)

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

1,695,435,115

○

○ ○

15,728,984

○ ○

(191,082,966)

○

○ ○

15,284,024,896

○

8,636,841,298

(20,971,141,379)

○

○ ○ ○

(11,231,215,037)

○

(24,942,979)

(10,409,964,210) -

○

○ ○ ○

3,476,659,944

○

4,068,538,843

○

○ ○

○ ○ ○ ○ ○ ○ ○ ○

26,290,215 (1,163,314,402) 12,334,160 (750)

○

4,593,245,434

○

(1,600,000,000) 2,000,000,000 14,943,034,302 (6,357,450,000) (93,009,911) (70,661,413) -

○

(19,419,247,646)

○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

(5,500,000,000) (80,000,000) (7,000,000,000) (50,000,000) (113,034,709) 3,524,890 165,275,161 (12,468,343) 25,525,832

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

2,940,000,000 (1,227,002,105) 14,943,034,302 (6,357,450,000) (199,971,937) 159,600 (70,661,413) -

○

(10,409,964,210) (1,440)

○

○ ○ ○

4,400,000,000

○

3,943,265,000 (5,976,077,747) (7,000,000,000) (50,000,000) (138,326,789) 3,524,890 165,275,161 (12,468,343) 25,525,832

○

(5,446,757,726)

○

2,000,000,000

○

○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○

(5,446,757,726)

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

20,000,000

○

○ ○ ○

30,000,000

○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○

○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Unrealised gain (loss) on exchange rate of cash and cash equivalents Cash and cash equivalents at the end of the year

19 19 21 35

○

Cash flows from financing activities: Proceeds from short-term loans from financial institutions Repayments of short-term loans from financial institutions Proceeds from short-term loans from subsidiaries Repayments of short-term loans from subsidiaries Proceed from long-term borrowings Repayments of long-term borrowings Proceeds from long-term debentures Repayments of long-term debentures Redemption of long-term debentures Finance lease principal payment Proceeds from capital increase Proceeds from share premium Repurchased shares Cash received for share subscription Changes in percentage of minority interests to the Company from additional shares in a subsidiary Payments of dividend Returned dividend Payments of dividend to minorities Net cash receipts (payments) from financing activities

2002 Baht

○

2003 Baht

○

○ ○

○

○ ○

2002 Baht

○

2003 Baht

○

○ ○

Note

○

Company

○

Consolidated

○

For the years ended 31 December 2003 and 2002

Advanced Info Service Public Company Limited

Statements of Cash Flows (continued) For the years ended 31 December 2003 and 2002

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 2003 and 2002 comprise:

○ ○ ○ ○ ○

○

1,695.44

○

368.71

○

1,479.41

○

○ ○ ○ ○ ○

○

1,326.73

○

413.37

○

4,068.54

○

368.71

2002 Million Baht

○

1,066.04

○

2003 Million Baht

○

Company

○

○ ○ ○ ○

3,699.83

○

8,636.84

○

Total cash and cash equivalents

4,592.22

○

Short-term investments with maturities of three months or less

○

4,044.62

○

Cash and deposits at financial institutions

2002 Million Baht

○

2003 Million Baht

○

Consolidated

Interest paid, income tax and non-cash investing activities Interest paid, income tax and non-cash investing activities for the years ended 31 December 2003 and 2002 comprise:

○ ○ ○ ○ ○ ○ ○ ○

2,771.97

○

5,958.92

○

○ ○ ○ ○ ○ ○ ○

○

2,320.33

○ ○

1,998.90

○

○ ○ ○ ○ ○ ○ ○

2002 Million Baht

○

6,630.80

○

2,197.50

○

○ ○ ○

3,429.30

○

○ ○ ○ ○

○

2003 Million Baht

○

○ ○ ○ ○

○

7,364.03

○ ○

2,204.78

Company

○

The accompanying notes on pages 75 to 106 are an integral part of these consolidated and company financial statements.

2,622.55

○

○ ○ ○

and assets under concession agreements

○

to investments in property, plant and equipment

○

Outstanding debts arising from the addition

○

Non-cash investing activities

○

7,713.81

○

Income tax paid

○

○ ○

2,340.65

○

Interest paid

○

Interest paid and income tax paid

2002 Million Baht

○

2003 Million Baht

○

Consolidated

74:75

Advanced Info Service Public Company Limited

Notes to Consolidated and Company Financial Statements For the years ended 31 December 2003 and 2002

1. General Information Advanced Info Service Public Co., Ltd. (“the Company”) is a public company limited and is incorporated and resident in Thailand. The address of the Company’s registered office is as follows: 414 Shinawatra Tower 1, Phaholyothin Road, Phayathai, Bangkok 10400. The Company is listed on the Stock Exchange of Thailand. For reporting purposes, the Company and its subsidiaries are referred to as the “Group”. The principal business operations of the Group are summarised as follows: 1)

The operation of a 900-MHz CELLULAR TELEPHONE SYSTEM under a concession granted from TOT Corporation Public Company Limited (“TOT”), under an agreement dated 27 March 1990, trading mobile phones and related accessories, rendering repair services for mobile phones and providing mobile phones for rent.

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.

The operation of a 1800-MHz CELLULAR TELEPHONE SYSTEM under concessions granted by CAT Telecom Public Company Limited (“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”).

The operation of PROVIDING CALL CENTER SERVICE

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 was agreed that the subsidiary returned the paging business to TOT effective 1 June 2002 and the Group no longer operates the business.

Under the above agreements made with TOT, the Company and its subsidiary, Advanced Datanetwork Communications 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 joint venture agreement between a subsidiary, 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 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, and DATAKIT VIRTUAL CIRCUIT SWITCH to TOT upon completion of equipment installation. Under the concession agreements with CAT dated 19 November 1996, which expires on 15 September 2013, the Company’s subsidiary, Digital Phone Company Limited (“DPC”), 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. On 28 January 2003, the Ministry of Finance announced the introduction of excise tax on revenue from mobile telecommunication at the rate of 10%. The excise tax is to be deducted from the concession fee payable to TOT and CAT. Total excise tax and concession fee is the same amount as the concession fee payable to the TOT and CAT prior to the introduction of the excise tax.

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 under the Securities and Exchange Act B.E. 2535. The consolidated and company financial statements have been prepared under the historical cost convention except as modified by the accounting policies below. 2.2

Group Accounting - Investments in subsidiaries

Subsidiaries, which are those entities in which the Group has power to govern the financial and operating policies are consolidated. The existence and effect of potential voting rights that are presently exercisable or presently convertible are considered when assessing whether the Group controls another entity. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the net assets of the subsidiary acquired is recorded as goodwill. See Note 2.10 for the accounting police on goodwill. Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated; unrealised losses are also eliminated unless cost cannot be recovered. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group. In the Companyâ&#x20AC;&#x2122;s separate financial statements investments in subsidiaries are reported by using the equity method of accounting. A list of the Groupâ&#x20AC;&#x2122;s principal subsidiaries is set out in Note 10. The effects disposals of subsidiary are shown in Note 30. 2.3

Foreign currencies translation

Items included in the financial statements of each entity in the Group are measured using Thai Baht. The consolidated financial statements are presented in Thai Baht.Foreign currency transactions are translated into Thai Baht using the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currency are translated to Thai Baht at the exchange rate prevailing at the balance sheet date. Gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognised in the statement of income 2.4

Financial instruments

Financial instruments carried on the balance sheet include cash and deposits at financial institutions, short-term investments, trade receivables, related party receivables and payables, 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 end 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 fluctuations in floating interest rates. 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 statements of income. Disclosures about financial instruments to which the Group is a party are provided in Note 28.

76:77

2.5

Cash and cash equivalents

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less. 2.6

Trade accounts receivable

Trade accounts receivable are carried at anticipated realisable value. An estimate is made for doubtful accounts receivable, which is equivalent to the estimated collection losses that may be incurred. The estimated losses are based on historical collection experience combined with a review of the current status of the existing receivables at the balance sheet date. 2.7

Other investments

Investments other than investments in subsidiaries, associates and interests in joint ventures are classified into the following four categories: trading, held-tomaturity, available-for-sale and general investments. The classification is dependent on the purpose for which the investments were acquired. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. 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; for the purpose of these financial statements short term is defined as three months. 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, except for maturities within 12 months from the balance sheet date which are classified as current assets. Investments intended to be held for an indefinite period of time, which may be sold in response to liquidity needs or changes in interest rates, are classified as available-for-sale; and are included in non-current assets unless management has expressed the 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. Investments in non-marketable equity securities are classified as general investments. Cost of investment includes transaction costs. Trading and available-for-sale investments are subsequently carried at fair value. Held-to-maturity investments are carried at amortised cost using the effective yield method. Realised and unrealised gains and losses arising from changes in the fair value of trading investments are included in the income statement in the period in which they arise. Unrealised gain and losses arising from changes in the fair value of investments classified as available-for-sale are recognised in equity. The fair value of investments are based on quoted bid price by reference to the Stock Exchange of Thailand. When investments classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from investment in securities. In the statement of income, the unrealised gains and losses of trading investments are recognised in the other income. In the statement of cash flows, trading investments are presented within the section on operating activities as part of changes in working capital. General investments are carried at cost less impairment. A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If the carrying value of the investment is higher than its recoverable amount, impairment loss is charged to the statement of income. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the statement of income. 2.8

Inventories

Inventories comprise mobile phones, refill cards for 1-2-Call, sim cards 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: Mobile phones, refill cards for 1-2-Call and sim cards Spare parts (mobile phones and network) Datanet equipment

- Moving weighted average 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. 2.9

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.

2.9

Investments in subsidiaries (continued)

Equity accounting involves recognising in the income statement the Company’s share of the subsidiaries’ profit or loss for the year. The Company’s interest in the subsidiary is carried in the balance sheet an amount that reflects its share of the net assets of the subsidiary and includes goodwill on the acquisition. 2.10 Intangible assets Assets under concession agreements Assets under concession agreements represent the costs of certain equipment and other assets which have been or have to be transferred to the concession grantor. The costs of mobile phone networks under concession agreements are amortised as expense on the straight-line method over a period of 10 years not exceeding the remaining concession period for the digital system and the straight-line method over a period of 10 years not exceeding June 2003 for the analogue system. The cost of Datanet tools and equipment under concession agreement is amortised as expense on the straight-line method over the period of 10 years not exceeding the remaining concession period. In April 2002 the Company changed the estimated useful life of the costs of mobile phone networks under concession agreements for the analogue 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: -

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 10 years not exceeding the remaining concession period.

Concession rights The subsidiary’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. Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiary undertaking at the date of acquisition. Goodwill on acquisitions of subsidiaries 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. At each balance sheet date the Group assesses whether there is any indication of impairment. If such indications exist an analysis is performed to assess whether the carrying amount of goodwill is fully recoverable. A write down is made if the carrying amount exceeds the recoverable amount. 2.11 Property, plant and equipment Property, plant and equipment are recorded at cost. Property, plant 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:

78:79

2.11 Property, plant and equipment (continued) Years Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 20 Leasehold building improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 10 Tools and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 5 Furniture, fixtures and office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-5 Communication equipment for rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Communication equipment for major corporate customer rental . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Over period of rental agreement Vehicles (including vehicles under finance leases) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 The Group’s policy is to review asset values annually and to adjust depreciation schedules to match estimated useful lives. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Estimated recoverable amount is the higher of the anticipated discounted cash flows from the continuing use of the asset and the amount obtainable from the sale of the asset less any costs of disposal. Expenditure incurred for addition, renewal or betterment, which results in a substantial increase in an asset’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. 2.12 Accounting for leases - where the Group is the lessee Leases of property, plant or equipment which substantially transfer all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to the principal and to the finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the statement of income over the lease period so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant or equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset or the lease term. Leases not transferring a significant portion of the risks and rewards of ownership to the lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of income on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. 2.13 Impairment of long-lived assets Property, plant and equipment and other non-current assets, including goodwill and intangible assets are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the assets exceeds its recoverable amount which is the higher of an asset’s net selling price and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there is separately identifiable cash flows. 2.14 Treasury stock Where the Company or its subsidiaries purchases the Company’s equity share capital, the consideration paid including any attributable incremental external costs net of income taxes is deducted from total shareholders’ equity as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders’ equity. 2.15 Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

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 that is a defined contribution plan. The assets of which are held in a separate trust fund. The provident fund is funded by payments from employees and the relevant Group companies. Contributions to the provident fund are charged to the statement of income in the year to which they relate. 2.19 Income tax The Group calculates income tax according to the Revenue Code and records income tax on the 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 earnings per share is calculated by dividing the net profit for the year attributable to shareholders by the weighted average number of paid-up ordinary shares in issue during the year. For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potential dilutive ordinary shares which are the weighted average number of ordinary shares which would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares. The assumed proceeds from the exercise of warrants is considered to have been received from the issue of shares at fair value. These represent warrants where the exercise price is less than the average market price of the Company’s shares during the year ended 31 December 2003. 2.21 Dividends Dividends are recorded in the Group’s and Company’s financial statements in the period in which they are approved by the Group’s shareholders. 2.22 Segment reporting The segmental reporting has been prepared based on the Group’s method of internal reporting, which desegregates business by service or product. 2.23 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.

80:81

2.24 Credit risk The Group has no significant concentrations of credit risks. The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. Derivative conterparties and cash transactions are limited to high credit quality financial institutions. The Group has policies that limit the amount of credit exposure to any one financial institution. 2.25 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 2003.

3 Change in accounting estimate Previously, the Company amortised the cost of mobile phone networks under concession agreements for analogue system on a straight-line basis over a period of 10 years not exceeding year 2005. During the second quarter of 2002, the Company’s management has reviewed the economic useful life of such networks and revised the remaining useful life to be the period of 10 years not exceeding September 2002. These changes in useful life increased the amortisation charge for the year ended 31 December 2002 by Baht 322.56 million. The Company’s management considers that this presents more fairly the economic substance and benefits expected to flow from the use of these assets under the terms of the concession agreement.

4 Cash and cash equivalents

○ ○ ○ ○ ○ ○ ○ ○

1,695.44

○

384.49

○ ○

1,479.41

○

413.37

○

1,296.97

○

13.98

○

1,047.68

○

○ ○

2002 Million Baht

○

○ ○ ○ ○

○

18.36

○

388.34 4,068.54

○

2003 Million Baht

○

3,665.24

○

14.96

○

8,636.84

○

○ ○ ○

2002 Million Baht

○

○ ○

Cash and cash equivalents

○

413.37

○

and fixed deposits with maturities of three months or less

○

Other currency deposits held at call with banks

○

8,203.77

○

with maturities of three months or less

○

19.70

○

Baht deposits held at call with banks and fixed deposits

○

Cash on hand

Company

○

2003 Million Baht

○

Consolidated

The interest rates of deposits held at call with banks were between 0.25% and 1.19% per annum (2002: 0.20% - 1.50% per annum). Other currency deposits mainly represent 10.34 million US Dollars deposits (2002: 8.92 million US Dollars) on a consolidated basis and 10.34 million US Dollars deposits (2002: 8.83 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.

5 Short-term investments Short-term investments mainly represent marketable securities and fixed deposits. At 31 December 2003, marketable securities represent investment in Shin Corporation’s share of 4.39 million shares (2002: 4.60 million shares) and the closing price was Baht 38.75 per share (2002: Baht 10.10 per share). Fixed deposits bear interest at rates ranging from 0.50% - 1.00% per annum. (2002: 1.00% - 1.25% per annum) Consolidated fixed deposits amounting to Baht 11.16 million (2002: Baht 13.84 million) have been pledged with a bank in respect of bank guarantees.

○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○

(1,303.60) 7,780.51

○

○ ○ ○

(978.60) 6,181.08

○ ○

3,821.72 2,618.31 2,644.08 9,084.11

○

○ ○ ○ ○ ○ ○

2,199.93 2,655.17 2,304.58 7,159.68

○ ○

(2,342.18) 7,238.68

○

○ ○

○

○ ○ ○ ○ ○ ○

○

6,579.18 57.99 2,943.69 9,580.86

○

○ ○

(1,134.07) 5,458.84

○

2002 Million Baht

○

○ ○

○ ○ ○

○

3,989.24 54.15 2,549.52 6,592.91

○

Trade accounts receivable: Third parties Related parties (Note 31) Accrued income Gross trade accounts receivable Less allowance for doubtful accounts of third parties Trade accounts receivable, net

○

2003 Million Baht

○

○ ○

2002 Million Baht

○

2003 Million Baht

○

Company

○

Consolidated

○

6 Trade accounts receivable, net

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○

5,677.27 559.94 203.09 25.50 6,465.80

○

5,162.20

○

3,525.91

○

○ ○

(1,303.60)

○

○ ○

7,180.69

○

(978.60)

○

○ ○ ○ ○ ○ ○ ○

○

4,240.38 171.06 65.70 27.37 4,504.51

○

(2,342.18)

○

5,404.69

○

○ ○

2002 Million Baht

○

○ ○ ○ ○ ○ ○ ○ ○

○

7,716.44 815.09 897.76 93.58 9,522.87

○

(1,134.07)

○

○ ○ ○ ○ ○ ○ ○ ○

6,236.99 197.02 70.36 34.39 6,538.76

○ ○

○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○ ○

Current - 3 months Overdue 3 - 6 months Overdue 6 - 12 months Overdue over 12 months Total Less allowance for doubtful accounts of third parties Trade accounts receivable - third parties, net

○

Company

○

Consolidated

○

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

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. Concentrations of credit risk with respect to trade accounts receivable are limited due to the Group’s large number of customers. Due to this factors, management believes that no additional credit risk beyond amounts provided for collection losses is inherent in the Group’s trade accounts receivable.

7 Inventories, net

○

2002 Million Baht

○ ○ ○ ○ ○

1,038.69 13.44 1,052.13 (25.29) 1,026.84

○

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

○

2003 Million Baht

○

Consolidated

1,830.58 131.60 1,962.18 (0.97) 1,961.21

82:83

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○

○

(0.42)

○

○ ○ ○

○

○ ○

(1.00)

○ ○

8.07

○

○ ○ ○ ○ ○ ○

328.00 (327.58) 0.42

○

○ ○ ○ ○

○

○ ○

(16.15)

○

2002 Million Baht

○

○ ○ ○ ○ ○

1,405.36 (1,404.36) 1.00

○

821.67 (797.45) 24.22

○ ○

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

○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○ ○ ○ ○

○

Contracts receivable Contracts payable

○

Company

○

Consolidated

○

8 Forward and swap contracts receivable, net

○

○ ○ ○ ○ ○ ○ ○ ○ ○

517.98 1,097.27 295.19 16.68 1,927.12

○

○ ○ ○ ○ ○ ○

222.28 1,501.14 12.42 1,735.84

○

○ ○ ○ ○ ○ ○

528.17 1,126.95 1,056.87 42.43 2,754.42

○

○ ○ ○ ○ ○ ○ ○ ○

222.35 1,532.74 55.17 1,810.26

○

2002 Million Baht

○

○ ○ ○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○ ○ ○ ○ ○ ○ ○ ○

Other receivables Prepaid expenses Value added tax receivable, net Others Other current assets

○

Company

○

Consolidated

○

9 Other current assets

10 Investments in subsidiaries, net

○

2002 Million Baht

○ ○ ○ ○ ○ ○ ○ ○

26,988.57 3,923.84 (5,760.00) 25,152.41

25,957.72 1,520.26 (3,000.00) (3,000.00) (258.63) (230.78) 26,988.57

○

Opening net book value Share of net profit of investments - equity method Acquisitions Dividend income from a subsidiary Allowance for impairment of investment in subsidiary Disposal of investment in a subsidiary (Note 30) Closing net book value

○

2003 Million Baht

○

Company

On 29 August 2002, Shin Digital Company Limited, a subsidiary, 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. On 12 September 2002, Advanced Paging Company Limited, a subsidiary, registered with the Ministry of Commerce to change its name to “Curtain Property Company Limited”. As at 30 June 2002, the Company provided Baht 258.63 million in respect of impairment in the carrying value of its investment in its subsidiary, Curtain Property Co., Ltd. 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 returned its paging business to TOT in June 2002. On 16 September 2002, the Company sold 34,999,994 ordinary shares in Curtain Property Co., Ltd., its subsidiary, to third parties. The 34,999,994 shares represented 99.99% ownership in the subsidiary. The investment was sold at Baht 255.78 million, with a gain on sale of the investment of Baht 25.00 million being recognised in the statement of income for the year ended 31 December 2002. As a result, Curtain Property Co., Ltd. was no longer consolidated as a subsidiary (Note 30) from 16 September 2002.

10 Investments in subsidiaries, net (continued) During the third quarter of 2002, the Company paid for 300 million shares additional in Digital Phone Company Limited, a subsidiary, totalling Baht 3,000.00 million. The subsidiary registered the increase in its share capital of Baht 3,000.00 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. 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, refill cards for 1-2-Call!, sim cards, and after sales services for mobile phones, to another subsidiary, Digital Phone Company Limited. AWM ceased substantially all operations in December 2002. Company - 31 December 2003 and 2002

Subsidiaries

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

Paid-up Cost Country of Nature of capital Investment incorporation relationship (Million Baht) portion (%) (Million Baht)

Nature of business

Equity (Million Baht)

Dividend (Million Baht)

31 December 31 December 31 December 31 December 31 December 31 December

2003

2002

2003

2002

2003

2002

Advanced Wireless Marketing Co., Ltd. (Temporary ceased)

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

Thailand Shareholder

240

99.99

600.00 8,542.40 8,521.35

382.40 6,121.35 (5,760.00)(3,000.00)

Advanced Datanetwork Communications Co., Ltd.

Service provider of voice/data communications via telephone line

Thailand Shareholder

458

67.95

420.37

340.52

340.88

Datanetwork Solutions Co., Ltd.

Service provider of voice/ data communications via telephone line

Thailand Shareholder

49.00

8.00

8.93

21.59

16.93

Advanced Contact Center Co., Ltd. (formerly “Shin Digital Co., Ltd.”)

Service provider of call center

Thailand Shareholder

272

99.99

810.96 (740.47) (767.79)

70.49

43.17

Digital Phone Co., Ltd.

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

Thailand Shareholder14,622

98.55 23,300.00 1,037.41(2,833.76) 24,337.41 20,466.24

Investments in subsidiaries, net

(79.85) (79.49)

13.59

25,139.33 8,773.08 4,849.24 25,152.41 26,988.57 (5,760.00)(3,000.00)

○

11 Property, plant and equipment, net ○ ○ ○

○

○ ○ ○ ○ ○

○

○ ○

20,525.55 (8,405.38) 12,120.17

○

○ ○ ○

○ ○ ○ ○ ○ ○

9,747.64 6,140.42 26.65 (3,741.24) 12,120.17

○ ○

○

○ ○ ○ ○

○

14,473.72 (4,726.08) 9,747.64

○

Additions include Baht 12.60 million (2002: Baht 437.10 million) and disposals include Baht 1.18 million (2002: Baht nil) assets leased under finance leases (where the Group is the lessee).

○

271.68 271.68

○

294 398.85 (421.17) 271.68

○

294.00 294

○ ○ ○

174.18 (74.96) 99.22

○

92.12 39.93 (3.41) 29.42 99.22

○

146.48 (54.36) 92.12

○ ○ ○

25.89 (10.24) 15.65

○

21.47 11.26 (0.08) (3.78) (13.22) 15.65

○

21.94 (0.47) 21.47

○ ○ ○

1,311.72 (922.49) 389.23

○

420.27 138.93 6.81 (2.61) (174.17) 389.23

○

1,186.57 (766.3) 420.27

○ ○ ○

17,850.13 (7,122.47) 10,727.66

○

8,440.67 5,419.85 272.82 (1.74) (3,403.94) 10,727.66

○

12,163.85 (3,723.18) 8,440.67

○ ○ ○

416.16 (200.98) 215.18

○

212.00 53.02 23.38 (1.00) (72.22) 215.18

○

340.64 (128.64) 212.00

○ ○

470.59 (74.24) 396.35

○

○ ○

5.2 5.20

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

267.11 73.38 118.24 (14.11) (48.27) 396.35

○

○ ○ ○ ○

At 31 December 2003 Cost Less accumulated depreciation/amortisation Net book value

320.24 (53.13) 267.11

○

○ ○ ○ ○ ○ ○ ○

5.2 5.2

○

For the year ended 31 December 2003 Opening net book value Additions Transfers in/(out), net Disposals, net Depreciation/amortisation charges Closing net book value

○

○ ○

○

Cost Less accumulated depreciation/amortisation Net book value

○

○ ○

○

Total

○

At 31 December 2002

○

Assets under construction and installation

○

Vehicles

○

○ ○ ○

○

○ ○ ○

Tools and equipment

Furniture, fixtures Communication and office equipment equipment for rental ○

○

○ ○ ○ ○

○

Land

Buildings Leasehold and building improvements improvements

○

Consolidated (Million Baht)

84:85

○

11 Property, plant and equipment, net (continued) ○ ○

○

○ ○ ○ ○ ○

○

13,748.92 (4,350.47) 9,398.45

○

○ ○ ○

○

19,821.42 (7,963.76) 11,857.66

○

○ ○ ○

○

9,398.45 6,096.78 (5.19) (3,632.38) 11,857.66

○

○ ○

Total

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

271.68 271.68

○

166.84 (69.81) 97.03

○

200.77 398.18 (327.27) 271.68

○

86.94 39.85 (2.12) (27.64) 97.03

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

200.77 200.77

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○

○

132.06 (45.12) 86.94

○

Assets under construction and Vehicles installation

○ ○ ○ ○

842.18 (563.17) 279.01

○

17,761.87 (7,063.60) 10,698.27

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

256.85 123.42 6.05 (1.27) (106.04) 279.01

○

○ ○ ○ ○ ○ ○ ○ ○ ○

○

724.89 (468.04) 256.85

○

○ ○ ○ ○

Furniture, fixtures and office equipment

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

8,403.66 5,415.61 272.82 (0.80) (3,393.02) 10,698.27

○

○ ○ ○ ○

○

12,078.69 (3,675.03) 8,403.66

○

Tools and equipment

○

○ ○ ○ ○ ○

413.00 (199.53) 213.47

○

365.85 (67.65) 298.20

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

212.00 52.04 22.10 (1.00) (71.67) 213.47

○

○ ○

○

At 31 December 2003 Cost Less accumulated depreciation Net book value

○

238.23 67.68 26.3 (34.01) 298.20

○

For the year ended 31 December 2003 Opening net book value Additions Transfers in/(out), net Disposals, net Depreciation charge Closing net book value

340.64 (128.64) 212.00

○

271.87 (33.64) 238.23

○

At 31 December 2002 Cost Less accumulated depreciation Net book value

Leasehold building improvements

○

Buildings and improvements

○

Company (Million Baht)

Additions include Baht 12.60 million (2002: Baht 435.91 million) and disposals include Baht 1.18 million (2002: Baht nil) assets leased under finance leases (where the Company is the lessee).

○

○ ○ ○ ○

(37.57) 406.81

○

444.38

○

○ ○

455.79 (127.25) 328.54

○

○ ○ ○ ○

592.45 (142.89) 449.56

○

○ ○ ○ ○ ○

524.33 (179.43) 344.90

○

2002 Million Baht

○

○ ○ ○

○

2003 Million Baht

○

2002 Million Baht

○

○ ○ ○

○ ○

2003 Million Baht

○ ○ ○ ○ ○

Less accumulated depreciation Net book value

○

Cost - capitalised finance leases

○

Company

○

Consolidated

○

As at 31 December 2003 and 2002, leased assets included above, where the Group and the Company is a lessee under a finance lease, comprise equipment and vehicles:

Leased assets of Digital Phone Company Limited, a subsidiary, as at 31 December 2003 at a net book value of Baht 16.36 million (2002: Baht 42.70 million) are pledged for the subsidiary’s finance lease liabilities of Baht 7.23 million (2002 : Baht 38.07 million) as mentioned in Note 16.

12 Assets under concession agreements, net ○ ○

○

116,643.86 (32,878.45) 3,970.00 79,795.41

○

Total

○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○

79,795.41 10,152.23 (891.66) (10,506.93) 78,549.05

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

125,047.57 (43,125.81) (3,970.00) 77,951.76

1,347.20 (749.91) 597.29

○

At 31 December 2003 Cost Less accumulated amortisation allowance for asset impairment Net book value

589.78 92.82 (85.31) 597.29

○

79,205.63 10,059.41 (891.66) (10,421.62) 77,951.76

○

For the year ended 31 December 2003 Opening net book value Additions Write-offs, net Amortisation charge Closing net book value

1,254.37 (664.59) 589.78

○

115,389.49 (32,213.86) (3,970.00) 79,205.63

Cost of Datanet tools and equipment

○

At 31 December 2002 Cost Less accumulated amortisation allowance for asset impairment Net book value

○

Consolidated ( Million Baht) Cost of mobile phone networks

126,394.77 (43,875.72) (3,970.00) 78,549.05

During the year 2003, Digital Phone Company Limited, a subsidiary, has written off assets pertaining to its mobile phone network operation in the amount of Baht 891.66 million. Those assets were no longer used in the operation and will not create future economic benefits to the subsidiary. Management has decided to write off the total amount of carrying value of the assets of Baht 891.66 million. Company Cost of mobile Phone Networks (Million Baht) At 31 December 2002 Cost Less accumulated amortisation allowance for assets impairment Net book value For the year ended 31 December 2003 Opening net book value Additions Amortisation charge Closing net book value At 31 December 2003 Cost Less accumulated amortisation allowance for assets impairment Net book value

101,553.42 (29,737.24) (3,970.00) 67,846.18

67,846.18 8,865.87 (8,908.84) 67,803.21

110,419.29 (38,646.08) (3,970.00) 67,803.21

13 Goodwill, net Consolidated (Million Baht) At 31 December 2003 Cost Less accumulated amortisation Net book value

14,398.91 (1,894.25) 12,504.66

For the year ended 31 December 2003 Opening net book value Amortisation charge Closing net book value

12,504.66 (1,166.91) 11,337.75

At 31 December 2003 Cost Less accumulated amortisation Net book value

14,398.91 (3,061.16) 11,337.75

86:87

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

930.22 (307.26) 622.96

○

○ ○

○

6,992.90 (2,577.32) 4,415.58

○

○ ○ ○ ○ ○ ○ ○

○

785.64 66.09 (165.43) (63.34) 622.96

○

○ ○

○

At 31 December 2003 Cost Less accumulated amortisation Net book value

○

○ ○ ○

○

4,870.40 (454.82) 4,415.58

○

For the year ended 31 December 2003 Opening net book value Additions Write-offs, net Amortisation charge Closing net book value

1,068.28 (282.64) 785.64

○

6,992.90 (2,122.50) 4,870.40

○

At 31 December 2002 Cost Less accumulated amortisation Net book value

○

Consolidated (Million Baht) Concession Deferred charges rights and others

○

14 Other assets, net

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

645.84 (156.29) 489.55

○

628.06 63.92 (165.43) (37.00) 489.55

○

786.06 (158.00) 628.06

○

○ ○

○

Total

○ ○

199.38 199.38

○

○ ○ ○ ○ ○

○

446.46 (156.29) 290.17

○

○ ○ ○ ○ ○ ○ ○ ○

○ ○

At 31 December 2003 Cost Less accumulated amortisation Net book value

192.01 7.37 199.38

○

○ ○

○

436.05 56.55 (165.43) (37.00) 290.17

○

○ ○ ○ ○ ○

○ ○

For the year ended 31 December 2003 Opening net book value Additions Write-off, net Amortisation charge Closing net book value

192.01 192.01

○

594.05 (158.00) 436.05

○

○ ○

At 31 December 2002 Cost Less accumulated amortisation Net book value

Others

○

Deferred charges

○

Company (Million Baht)

○

○ ○ ○

○

○ ○ ○

6,036.33 67.54 6,103.87

○

○ ○ ○

4,175.33 278.78 4,454.11

○

○ ○ ○ ○

7,599.43 49.96 7,649.39

○

○ ○ ○

5,670.60 43.42 5,714.02

○

2002 Million Baht

○

○ ○ ○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○ ○ ○ ○ ○

Trade accounts payable Third parties Related parties (Note 31) Total trade accounts payable

○

Company

○

Consolidated

○

15 Trade accounts payable

16 Borrowings

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○

80.00 6,970.45 111.06 7,161.51

○ ○

○

○ ○ ○ ○ ○ ○ ○

1,920.00 37,406.80 240.36 39,567.16 46,728.67

○

○ ○ ○ ○ ○ ○

29,391.46 117.25 29,508.71 39,535.76

○

5,582.98 37,406.80 242.82 43,232.60 51,764.05

○

○ ○ ○

1,920.00 7,973.32 133.73 10,027.05

○

30.00 1,384.33 6,970.45 146.67 8,531.45

○

997.47 29,391.46 117.25 30,506.18 42,645.42

○

○ ○

2002 Million Baht

○

○ ○ ○ ○ ○ ○ ○ ○ ○

60.00 3,964.96 7,973.32 140.96 12,139.24

○ ○ ○ ○ ○ ○ ○ ○

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

○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○

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

○ ○

○

Company

○

Consolidated

○

Current and non-current borrowings

○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○

46,728.67 12.60 (7,243.03) 37.52 39,535.76

○

51,764.05 3,985.86 (13,176.53) 37.52 34.52 42,645.42

○

For the year ended 31 December 2003 Opening net book value Additions Repayments and redemption Amortisation of bond issuing cost Loss on exchange rate Closing net book value

○

Company Million Baht

○

Consolidated Million Baht

○

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

Maturity of borrowings

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

133.73 96.23 7.76 4.65 8.61 250.98

○

○ ○ ○ ○ ○ ○ ○ ○ ○

9,893.32 3,975.69 14,226.05 6,493.92 1,496.95 3,198.85 39,284.78

○

○ ○ ○ ○ ○ ○ ○ ○ ○

140.96 96.23 7.76 4.65 8.61 258.21

○

○ ○ ○ ○ ○ ○ ○ ○ ○

11,938.27 4,973.17 14,226.05 6,493.92 1,496.95 3,198.85 42,327.21

○

○ ○ ○ ○ ○ ○ ○ ○ ○

2004 2005 2006 2007 2008 2009

○

○ ○

○

Finance lease Million Baht

○

○ ○

Borrowings Million Baht

○

Finance lease Million Baht

○

○ ○

Borrowings Million Baht

○

○ ○

○

Company

○

Consolidated

○

Maturity of long-term borrowings, long-term debentures and finance lease liabilities (including current portion of long-term borrowings, debentures and finance lease liablilities) as at 31 December 2003 are as follows:

88:89

16 Borrowings (continued) Interest rate

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

3.00% 5.20% 5.21%

○

○ ○ ○ ○ ○

3.00% 4.95% 5.47%

○

○ ○ ○ ○ ○

3.00% 4.27% 5.20% 5.29%

○

42,244.16 4,484.50 46,728.66

○

○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○

○

35,048.38 4,487.38 39,535.76

○

○ ○ ○ ○ ○

42,312.24 9,451.81 51,764.05

○

2.24% 3.15% 4.95% 5.50%

○

○ ○

2002 Million Baht

○

○ ○

○ ○ ○ ○

37,360.60 5,284.82 42,645.42

○ ○ ○ ○ ○ ○ ○

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

○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○

Total borrowings: - at fixed rates - at floating rates

○

Company

○

Consolidated

○

The interest rate exposure of the borrowings, before taking into account of interest rate swaps, of the Group and the Company was as follows:

Short-term loans from financial institutions As at 31 December 2003, short-term loans from financial institutions represent unsecured promissory notes with maturities of less than one year. Long-term borrowings As at 31 December 2003, the Company had long-term loan from banks denominated in Thai Baht in the amount of Baht 1,920.00 million (2002 : Baht 2,000.00 million). The loan bears interest at a fixed rate of 3.00 % per annum (2002 : 3.00% 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 16.00 million bearing interest at LIBOR plus a margin as agreed by the subsidiary and banks and Baht loans of Baht 4,124.44 million bearing interest at TBBR (the higher of Baht fixed or fixed deposit rate) plus a margin as agreed by the subsidiary and the banks. The loans are not secured. During the second quarter of 2003, Digital Phone Company Limited, a subsidiary, re-packaged its syndicated loan by changing nominal currency, reducing interest rate and changing loan conditions such that as at 31 December 2003, Digital Phone Company Limited, has an unsecured syndicated Japanese Yen loan of 2,231.25 million, bearing interest at JPY LIBOR plus a margin of 1.20% per annum and Baht loan of Baht 2,160 million, bearing interest at a fixed interest rate of 3.25% per annum, payable on a semi-annual basis commencing from the issuing date. The syndicated loan will be redeemed by 4 equal installments, commencing the sixth month after the dates of drawing until 28 April 2005. Under the agreement of the syndicated loans the subsidiary has to comply with certain restrictions and maintain certain financial ratios.

16 Borrowings (continued) Long-term debentures, net As at 31 December 2003, long-term debentures represent unsubordinated and unsrecured debentures with a par value of Baht 1,000 each and are detailed as follows. ○ ○ ○ ○ ○ ○

○

○ ○

2,000.00

○

10,500.00

○

7,500.00

○

5,000.00 10,000.00

○

4,500.00

3,000.00 ○

○ ○

○

○ ○

○ ○ ○

37,450.00 (85.22) 37,364.78

○

○ ○ ○

Total debentures Less bond issuing cost balance at 31 December Total debentures, net

○

○ ○ ○

○

○ ○ ○

○

○ ○ ○

○

○ ○

○

5,000.00

○

○ ○

5,00.00

○

○ ○

Semi-annual 5 equal installments commencing on 21 October 2005 until 21 October 2007 ○

○

○ ○

○

○ ○

○

3.65

○

5,000

○

5.0

○

21/10/2003

○

3,000.00

○

Quarterly Entirely redeemed on 21 March 2007 ○

3.65

○

5,000

○

3.0

○

21/03/2003

○

○ ○

○

○ ○

○

○ ○

4,500.00

○

○ ○ ○

○

Semi-annual 6 equal installments commencing in the fifty - four month after the issuing date until 21 March 2009

○

○ ○ ○

Average highest 6months of fixed deposit plus margin 2.10%

○

○ ○

○

○ ○ ○

○

○ ○

4,500

○

4.5

○

21/03/2003

○

2,450.00

○

2,450.00

○

Semi-annual Entirely redeemed on 21 March 2009*

○

6.25%

○

2,500

○

2.5

○

21/03/2002

○

○ ○

10,000.00

○

Quarterly Entirely redeemed on 28 November 2006 ○

5.85%

○

10,000

○

10.0

○

28/11/2001

○

5,000.00

○ ○ ○

○

Semi-annual Entirely redeemed on 28 November 2004

○

4.70%

○

5,000

○

5.0

○

28/11/2001

○

○ ○

○

2,000.00

○

○ ○ ○

○

2002 (Million Baht)

○

○ ○

○

○ ○ ○

2003 (Million Baht)

○

○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○

○

Semi-annual 8 equal installments commencing in the eighteenth month after the issuing date until 20 March 2006 ○

○ ○

Quarterly Entirely redeemed on 31 March 2003

○ ○

Semi-annual 4 equal installments commencing in the eighteenth month after the issuing date until 20 March 2003

○

5.30%

○

6.25%

Repayment term

○

Term of interest payment

○

○ ○ ○ ○ ○

○

6.5%

○

12,000

○

Interest rate

○

○ ○ ○ ○ ○ ○ ○ ○ ○

2,000

○

○ ○

12.0

○

23/03/2001

○

○ ○ ○ ○

2.0

○

31/03/2000

8,000

○

8.0

○

20/03/2000

○

Issue date

○

Balance as at 31 December No. of units Amount (Million (Million Unit) Baht)

44,500.00 (122.75) 44,377.25

* On 18 November 2003, the Company partly redeemed 50,000 units of Baht 1,000 each of debentures which were issued on 21 March 2002 bearing interest at a fixed rate of 6.25% per annum amounting to Baht 50.00 million. The premium cost of early redemption of these debentures amounting to Baht 4.11 million was charged to the income statement. Under the terms and conditions of the debentures, the Company has to comply with certain restrictions and maintain certain financial ratios. Financial lease liabilities As at 31 December 2003, the subsidiary’s finance lease liabilities of Baht 7.23 million (2002: Baht 38.07 million) are collateralized by the underlying leased assets as mentioned in Note 11.

○

○ ○ ○ ○ ○

111.06 240.36 351.42

○

○ ○ ○ ○

133.73 117.25 250.98

○

○ ○ ○

146.67 242.82 389.49

○

○ ○ ○

140.96 117.25 258.21

○

2002 Million Baht

○

○ ○ ○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○ ○ ○ ○ ○

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

○

Company

○

Consolidated

○

Finance lease liabilities-minnimum lease payment.

90:91

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

2,808.21 2,986.18 388.77 407.27 156.30 511.83 7,258.56

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

3,019.56 4,239.71 292.07 308.67 212.74 339.45 476.82 8,889.02

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

3,665.63 2,304.30 456.10 412.01 223.00 908.25 7,969.29

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

3,438.78 4,019.93 345.20 325.77 287.41 415.10 680.07 9,512.26

○

2002 Million Baht

○

○ ○ ○

○

2003 Million Baht

○

2002 Million Baht

○

○ ○ ○

○ ○

2003 Million Baht

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Income tax payable Unearned income Accrued bonus Accrued interest expense Value added tax payable, net Other payables Other current liabilities Total other current liabilities

○

Company

○

Consolidated

○

17 Other current liabilities

18 Concession right payable Concession right payable comprises 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 2003, the subsidiary has concession rights payable and accrued interest to Total Access Communications Public Company Limited (“TAC”) of Baht 4,373.06 million (2002: Baht 4,065.63 million). Under the terms of the agreement, the exchange rate used for payments is fixed at 38.57 Baht per US dollar. In the event of non-payment, TAC is entitled to revoke the concession right. Since September 2002, the subsidiary has not paid concession fee payable to TAC which was due on 30 September 2002. The subsidiary is negotiating to reduce the concession right payable and interest payable. In 2003, TAC submitted the case to the Arbitration Institute for settlement. The subsidiary has engaged legal advisors and submitted its case to the Arbitration Institute for settlement. The arbitration process is not completed in this year end. The interest rate exposure on the concession right payable is fixed at a rate of 9.50% per annum. These financial statements include full recognition of the concession payable and outstanding interest thereon.

19 Share capital and premium

○ ○ ○ ○ ○ ○ ○ ○

22,939.00 22,939.00

○ ○ ○

168.80 23,107.80

○

○ ○ ○ ○

165.28 20,169.28

○

○ ○ ○

○

Total Million Baht

○

20,004.00 20,004.00

○ ○ ○ ○

3.52 2,938.52

○

○ ○ ○ ○

○

Share premium Million Baht

○

○ ○ ○ ○ ○

2,935.00 2,935.00

○ ○ ○

3.52 2,938.52

○

○ ○ ○

Ordinary shares Million Baht

○

○ ○ ○ ○

Issue of shares As at 31 December 2003

○

○ ○ ○ ○

2,935.00 2,935.00

○

As at 1 January 2002 Issue of shares As at 31 December 2002

○

Number of shares Million shares

○

Movement of share capital and premium for the years ended 31 December 2003 and 2002 :

As at 31 December 2003 the total authorised number of ordinary shares is 2,938.52 million shares (2002: 2,935.00 million shares) with a par value of Baht 1 per share (2002: Baht 1 per share). All issued shares are fully paid.

19 Share capital and premium (continued) Warrants granted to directors and employees

○ ○ ○ ○ ○ ○ ○ ○

14.00 8.47 (4.05) 18.42

○

Total Million units

○ ○ ○ ○

12.53 7.86 (3.56) 16.83

○

○ ○ ○ ○

1.47 0.61 (0.49) 1.59

○

Beginning balance Granted Exercised Closing balance

○

Employees Million units

○

○ ○

Directors Million units

○

For the year ended 31 December 2003

○

: ○

Movements in the number of warrants outstanding are as follow

Issuance of warrant grant I On 27 March 2002, the Company granted 14.00 million units of warrants at Baht nil per unit, or equivalent to 0.48% of the Company’s total paid-up share capital (before dilution) to directors and employees. The exercise ratio of warrant to purchase the Company’s share is 1:1. 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 was the share closing price as of 26 March 2002. Issuance of warrant grant II At the Annual General Meeting of the Company’s shareholders held on 29 April 2003, the shareholders passed a resolution to approve additional issuance of warrants of 8.47 million unit at Baht nil per unit, or equivalent to 0.29% of the Company’s total paid-up share capital (before dilution) to directors and employees. The exercise ratio of warrant to purchase the Company’s share is 1:1. 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 27 May 2003, and the warrants were granted on 30 May 2003. The exercise price is set at Baht 43.38 per unit, which was the weighted average closing price for 30 days prior to 29 April 2003. The adjustment to exercise price and exercise ratio of warrant grant I and grant II At the Board of Directors’ meeting held on 7 August 2003, the Board passed a resolution to approve the adjustments of exercise prices of warrants grant I and grant II from Baht 48.00 per unit to Baht 47.73 per unit and from Baht 43.38 per unit to Baht 43.14 per unit, respectively. In addition, the exercise ratio was approved to be changed from 1:1 to 1:1.00559 for both grant I and grant II. The new exercise price and exercise ratio were effective on 20 August 2003 onwards. Exercised warrants During the year ended 31 December 2003, a total of 4.05 million units, being 0.49 million and 3.56 million units, were exercised by the Company’s directors and employees, respectively. Exercised 3.52 million units of warrants increased paid-up share capital and premium on share capital by Baht 3.52 million and Baht 165.28 million, respectively. The Company registered the increase in share capital with the Ministry of Commerce during this period. The Company registered the increase in share capital from the remaining exercised warrants of 0.53 million units on 5 January 2004 (Note 35). The exercise of warrants complied with the terms and conditions of the issuance of warrants which were approved by the Company’s shareholders.

20 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.

21 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 conditions in an amount not exceeding 90 million shares or equivalent to 3.07% of total issued shares. The objective of the treasury stock is to increase value added per share. During the year ended 31 December 2003, the Company repurchased 0.38 million shares (2002: 2.16 million shares) at an average price of Baht 33.07 per share (2002: Baht 32.67 per share) being a total of Baht 12.47 million (2002: Baht 70.66 million).

92:93

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

115.49 80.62 218.08 25.00 228.75 667.94

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

56.33 2.34 273.92 266.06 598.65

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

205.04 111.59 259.82 124.28 25.00 389.23 1,114.96

○

91.09 27.74 331.26 15.94 125.77 343.95 935.75

○

2002 Million Baht

○

○ ○ ○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Interest income Amortisation of forward contracts discount Bad debt recovery Marketing support Gains on sale of investment (Note 30) Unrealised gain on change in value of investment Others Total other operating income

○

Company

○

Consolidated

○

22 Other operating income

23 Directors’ remuneration During the year ended 31 December 2003 the remuneration of the directors amounted to Baht 3.72 million (2002 : Baht 3.81 million), which did not exceed amounts which had been approved by the annual general meetings of the shareholders of the Company and its subsidiaries. Directors’ remuneration represents salaries, meeting fees and gratuities.

24 Operating profit

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

2,858.37 1,614.76 3,279

○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○

165.43 1,858.95 1,606.71 3,354

○

○ ○ ○ ○ ○ ○

4,251.89 2,150.49 4,942

○

○ ○ ○ ○ ○ ○ ○ ○ ○

891.66 165.43 2,271.88 2,149.31 4,760

○ ○

○

413.85

○

○ ○

545.01

○

○ ○ ○ ○ ○ ○

7,349.23 38.28 -

○

8,908.84 37.00 -

○

○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○

8,528.75 1,206.79 78.30 454.82

○

10,506.93 1,166.91 63.34 454.82

○

○ ○ ○ ○ ○

○

1,576.81

○

○ ○

3,632.38

○ ○ ○ ○ ○ ○ ○ ○

2002 Million Baht

○

○ ○

○ ○ ○

1,725.33

○

3,741.24

○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○ ○ ○ ○ ○ ○ ○ ○

Depreciation on property, plant and equipment (Note 11) Amortisation of intangible assets: - Assets under concession agreements (Note 12) - Positive goodwill (Note 13) - Deferred charges (Note 14) - Concession right(Note 14) Loss on obsolete spare parts for mobile phone network maintenance Loss on write-off of assets under concession agreements (Note 12) Loss on write-off deferred charges (Note14) Doubtful accounts and bad debts Staff costs Weighted average number of staff (Persons)

○

Company

○

Consolidated

○

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

○

○ ○ ○ ○ ○

○ ○ ○ ○

○

○ ○ ○ ○

2,935 3.89

○ ○

2,935 3.89

○

○ ○ ○

2,936 6.31

○

○ ○ ○ ○

2,935 3.89

○

○ ○ ○ ○ ○ ○

○

○ ○ ○ ○

2,936 6.31

○

○ ○ ○ ○

2,934 6.32

○

○ ○ ○ ○ ○ ○

○ ○ ○ ○

Effect of dilutive potential ordinary shares (Million shares) Weighted average number of ordinary shares for diluted earnings per share (Million shares) Diluted earnings per share (Baht)

11,430.30

○

○ ○

18,529.02

○

○ ○ ○ ○

2,935 3.89

○

2,934 6.32

○

○ ○ ○ ○ ○

○

○ ○

11,430.30

○

18,529.02

○

Diluted earnings per share (Baht)

2002

○

○ ○

○

Net profit attributable to shareholders (Million Baht) Weighted average number of paid-up ordinary share in issue during the year (Million shares) Basic earnings per share (Baht)

○

2003

○

2002

○

○ ○

○

2003

○

Basic earnings per share (Baht)

○

Company

○

Consolidated

○

25 Earnings per share

26 Dividend paid At the annual ordinary shareholders’ meeting on 29 April 2003, it was approved to declare a dividend for 2,935 million shares of Baht 1.55 each, totalling Baht 4,549.25 million. Dividends of Baht 4,541.13 million was paid to the shareholders on 23 May 2003. The remaining amount of Baht 8.12 million pertained to shareholders that were not entitled to receive the dividend and thus the Company did not pay such amount. At the board of directors’ meeting on 7 August 2003, it was approved to declare an interim dividend for the first half year 2003 for 2,935 million shares of Baht 2 each, totalling Baht 5,869.01 million. Dividends of Baht 5,868.84 million was paid to the shareholders on 4 September 2003. The remaining amount of Baht 0.17 million pertained to shareholders that were not entitled to receive the dividend and thus the Company did not pay such amount.

27 Provident fund The Group has established a contributory registered provident fund in accordance with the Provident Fund Act B.E. 2530. The registered provident fund plan was approved by the Ministry of Finance on 23 July 1990 and subsequently amended the provident fund’s name on 21 January 1993. Under the plan, the employees must contribute 3% - 7% of their basic salaries, to be matched by the Group. The Group 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.

28 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

94:95

28 Financial instruments (continued) long-term foreign borrowings. The currency exchange risks of the Group occurs in various currency combinations, but mostly in United States Dollars and Japanese Yen 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 its 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 Company has entered into interest rate swap contracts to alter the interest rate for long-term debenture that entitle it to obtain interest at fixed rates on the notional principal amount of long-term debenture 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 3-month on the THBFIX page of Reuters.

○

○ ○ ○

○

○ ○

○

2,000.00 2,000.00

○

○ ○

○

○ ○

2,000.00 2,000.00

○

2002 Million Baht

○

○ ○ ○

○

2003 Million Baht

○

2002 Million Baht

○

○ ○ ○

○ ○

2003 Million Baht

○ ○ ○

○

Later than 1 year and not later than 5 years

○

Company

○

Consolidated

○

The remaining terms and notional principal amounts of the outstanding interest rate swap contracts at 31 December 2003 and 2002 were:

To better manage interest rate risk, the Company terminated all interest rate swap contracts in January 2004 for the notional principal amounts of Baht2,000.00 million. On termination, the Company realized a net gain of Baht 45.00 million in January 2004. 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 an outstanding interest rate cap agreement with a total notional principal amount of USD 12 million ( 2003: None).

○

○ ○ ○ ○

○

○ ○ ○

○

○ ○

519.65 519.65

○

○ ○

○

2002 Million Baht

○

○ ○ ○

○

2003 Million Baht

○

2002 Million Baht

○

○ ○ ○

○ ○

2003 Million Baht

○ ○ ○

○

Later than 1 year and not later than 5 years

○

Company

○

Consolidated

○

The remaining terms and notional principal amount of the outstanding interest rate cap agreement at 31 December 2003 and 2002 were :

Forward foreign exchange contracts Forward foreign exchange contracts are entered into to manage exposure to fluctuations in foreign currency exchange rates on specific transactions. The amounts to be paid and received and contractual exchange rates of the outstanding contracts at 31 December 2003 and 2002 were:

28 Financial instruments (continued) ○

○

○ ○ ○ ○

○

○ ○ ○ ○

327.58 327.58

○

○ ○ ○ ○

○

○ ○ ○

○

1,404.36 1,404.36

○

○ ○ ○ ○

○

215.14 215.14

○

○ ○

2002 Million Baht

○

○ ○

○

○ ○ ○ ○

○

The amounts to be received USD 7.61 million (Baht 43.03 - Baht 43.12/US$) USD 32.61million (Baht 43.02 - Baht 43.16/US$)

○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○ ○ ○

○

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

○

Company

○

Consolidated

○

Forward foreign exchange contacts (continued)

On 7 January 2003, Advanced Wireless Marketing, a subsidiary, unwound forward contract receivables and payables in the amounts of USD 5.00 million and USD 5.00 million, respectively. The purpose of unwinding the contracts was the cessation of its operations as mentioned in Note 10. Cross currency swap Cross currency swap contracts are entered into to manage exposure to fluctuations in foreign currency exchange rates and interest rates on specific transactions. On 30 April 2003, Digital Phone Co., Ltd, a subsidiary, entered into a cross currency swap contract to manage exposure to fluctuations in foreign currency exchange rates of its foreign loan for the period of 2 years in the amount of Japanese Yen 2,975.00 million as mentioned in Note 16 and its interest payable in Japanese Yen at floating rate. The subsidiary is entitled to receive interest in Japanese Yen at floating rate on the Japanese Yen notional principles and is obliged to pay interest at the fixed rate on its Thai Baht notional principles. As at 31 December 2003, the fixed rate is 3.25% per annum and the floating rate linked to Japanese LIBOR plus 1.20% per annum.

○

○ ○ ○ ○ ○

○

○ ○

○

○ ○

○

○ ○ ○

○

○ ○ ○

265.82 797.45

○ ○

○ ○ ○

○

531.63

○

○ ○

2002 Million Baht

○

○ ○

○ ○ ○ ○ ○

○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○ ○ ○

○

Within 1 year : JPY 1,487.50 million (Baht 0.3574/JPY and interest 3.25 %) Over 1 year and not later than 5 years : JPY 743.75 million (Baht 0.3574/JPY and interest 3.25 %)

○

Company

○

Consolidated

○

As at 31 December 2003 and 2002, the outstanding cross currency swap contract was:

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

96:97

28 Financial instruments (continued) Fair values The carrying amounts of cash and cash equivalents, short-term investment, receivables, related party receivables and payables, accounts payable and short-term borrowings approximate their fair value due to the short maturities of these instruments.

○

The net fair values of the derivative financial instruments at 31 December 2003 are: ○

Company Million Baht

○

Million Baht

○

Consolidated

○

45.72

○

19.44

Favourable interest rate swap

○

Favourable cross currency swap

The fair values of cross currency swap and interest rate swap contracts have been calculated using quoted market price rates 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: ○ ○

○

Fair values

38,646.09

○

Million Baht

○

37,450.00

○

38,646.09

○

○ ○ ○

○

Million Baht

○

○ ○

Company

Fair values Carrying amounts Million Baht

○

37,450.00

○

Long-term debentures (Note 16)

○

Million Baht

○

Carrying amounts

○

Consolidated

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 2003.

29 Cash flows from operating activities Reconciliation of net profit to cash flows from operating activities for the years ended 31 December 2003 and 2002 : ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○

1,576.81 7,349.23 38.28 2,858.37

○

○ ○ ○ ○ ○ ○ ○

○

11,430.30

○

○ ○

(281.98)

2002 Million Baht

○

○ ○ ○ ○ ○ ○ ○ ○

3,632.38 8,908.84 37.00 1,858.95

○

○ ○ ○ ○ ○

18,529.02

○

1,725.33 8,528.75 454.82 78.30 4,251.89

○

○ ○ ○ ○ ○ ○ ○ ○ ○

2003 Million Baht

○

○ ○ ○ ○

○

11,430.30

○ ○

28.02

○

2002 Million Baht

○

Company

○

3,741.24 10,506.93 454.82 63.34 891.66 2,271.88

○

○ ○ ○ ○

18,529.02

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○

2003 Million Baht

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

11 12 14 14 12

○

Cash flows from operating activities: Net profit Adjusted by: Depreciation Amortisation of assets under concession agreements Amortisation of concession right Amortisation of deferred charges Loss on write-off assets under concession agreements Doubtful accounts and bad debts Loss (reversal) on obsolete inventories and diminution in value of finished goods

○

Notes

○

Consolidated

○

29 Cash flows from operating activities (continued) Company ○

2002

○

2003

○

2002

○

2003

○

Notes

○

Million Baht

○

Million Baht

○

Million Baht

○

○ ○

Million Baht

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

36.28 2.04 16.96 2.00 -

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

413.86 3.83 (0.16) 165.43 0.69 7.02 -

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○

115.39 (10.88) 28.92 9.09 24.51 18.35 (9.59) 1,206.79

○

258.63

○

258.63

○

○ ○ ○ ○

(25.00) 43.41 (1,520.42)

○

○ ○ ○ ○

37.52 (3,923.84)

○

○ ○ ○ ○

(25.00) 43.41 -

○

○ ○ ○

37.52 -

○

○ ○ ○

16 10

○

(15.36)

○

84.04

○

22,066.89

○

29,670.54

○

27,831.67

○

38,384.68

○

○ ○ ○ ○ ○ ○ ○ ○

545.01 3.83 (2.40) 165.43 15.98 19.34 (12.12) (125.77) 1,166.91

○

○ ○ ○ ○ ○

(3,988.74) (89.78) 18.36 -

○

○ ○ ○ ○ ○

(253.68) 90.00 0.42 -

○

○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○

(3,741.52) (1.90) (1.00) 559.55

○

○ ○

29,588.91

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

17,000.98

○

○ ○

○

○ ○

22,037.95

○

40,378.17

○

○ ○ ○ ○

404.87 (2,935.97) 2,571.66

○

(771.55) (22.23) 1,655.03

○

○ ○ ○ ○ ○ ○

○ ○ ○ ○

942.69 (2,509.40) 1,853.28

○

(337.46) (31.86) 1,733.91

○

(356.75) (501.95) (208.04) 248.65 (228.22) -

○

○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○

(139.30) 185.10 (63.92) (864.60) 103.10 -

○

○ ○ ○ ○ ○ ○ ○ ○ ○

(402.30) (723.56) (283.08) (1,581.14) 98.32 (3.66)

○

(137.04) 938.00 (66.08) (694.67) 188.69 -

○

(486.21) 3.08 (23.22) 906.35

○ ○ ○ ○ ○ ○ ○ ○

Cash flows from operating activities

○

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 - Concession right payable, accrued concession fee and excise tax - Deposits from customers - Other current liabilities

○

Loss on obsolete spare parts for mobile phone network maintenance Amortisation of forward and swap premiums (Gain) loss on disposals of property, plant and equipment Loss on damaged of property, plant andequipment Loss on write-off deferred charges Loss on write-off intangible assets Loss on write-off property, plant andequipment Unrealised loss on foreign exchange rate Realised gain on foreign exchange rate for loans Unrealised gain on changes in value of investment Amortisation of goodwill Impairment loss on goodwill of investment in a subsidiary Gain on disposal of investment in a subsidiary Amortisation of bond issuing cost Share of net profit in subsidiaries Share of net profit (loss) from subsidiaries to minority interests Net profit before changes in operating assets and liabilities

○

Consolidated

98:99

30 Disposal of a subsidiary On 16 September 2002, the Company disposed of its 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 210.07 14.05 10.83 15.21 (1.37) (4.41) (13.60) 230.78 (235.73) (20.05) (25.00)

Cash and cash equivalents Other current assets Equipment, net Other assets Trade accounts payable Deposits from customers Other current liabilities Net assets of the investment sold Less Proceeds from sale of investment Account receivable from sale of investment Gain on disposal Proceed from sale of investment Less Cash and cash equivalents in subsidiary sold Net cash inflow from sale of investment

235.73 (210.07) 25.66

The operating result of the subsidiary up to the disposal date is shown in note 34.

31 Related party transactions Shin Corporation Public Company Limited is a major shareholder, holding 43.00% (2002 : 43.06%) of the share capital of the Company. SingTel Strategic Investments Pte Ltd. is a shareholder holding 19.33% (2002 : 19.35%) of the share capital of the Company. The principal shareholder of the Company’s major shareholder is the Shinawatra family. Transactions related to companies in which the Shinawatra family are the principal shareholders or directors are recognised as related parties 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’s length 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 rates are not available.

○

○ ○ ○ ○

○ ○

○ ○ ○ ○

159.79 1,221.25

○

155.79 574.22

○

1,053.17 8.29

○

159.79 249.33

○

○ ○ ○

390.87 27.56

○

○ ○ ○ ○

89.54

○ ○ ○ ○

155.79 252.64

○

○ ○

2002 Million Baht

○

○ ○ ○ ○

96.85

○

2003 Million Baht

○

○ ○

2002 Million Baht

○

2003 Million Baht

○ ○ ○ ○

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

○

Company

○

Consolidated

○

Sales of goods and services

○

The following transactions were carried out with related parties:

○

○ ○

○

0.11

0.22

○ ○

○

20,364.35

○

○ ○

○

37,801.33

○

○ ○ ○ ○

○

○ ○

○

2002 Million Baht

○

○ ○ ○

○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○ ○

Sales of prepaid cards Subsidiary Interest income Subsidiary

○

Company

○

Consolidated

○

a) Sales of goods and services(continued)

○

31 Related party transactions (continued)

○

Company

○

Consolidated

○ ○

2002 Million Baht

○

○ ○

2003 Million Baht

○

2002 Million Baht

○

○ ○

2003 Million Baht

○ ○

○

○ ○

○

○ ○

○

415.93 691.68

○

○ ○

3,171.75 761.58

○

○ ○

798.51

○

○ ○ ○ ○

799.23

○ ○ ○

○

21.94 1,129.55

○ ○

○

○ ○

○

○ ○ ○ ○

○ ○

○

16.98

○

○ ○

658.09

○

○ ○

○

16.98

○

117.95

○

○ ○ ○

○ ○

○ ○ ○

685.32

658.09

○

117.95

○

○ ○ ○

○

685.32

○ ○

Advertising expense - net* Shin Corporation and its related parties (Advertising expense - gross** - Consolidated 2003 : 2,029.66 Million Baht 2002 : 1,984.54 Million Baht - Company 2003 : 1,913.73 Million Baht 2002 : 1,650.49 Million Baht Total advertising expenses

○

28.16 3,961.49

○

○ ○ ○

○

21.94 820.45

○

28.16 827.39

○

○ ○ ○

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

○

b) Purchases of services

○ ○ ○ ○ ○ ○ ○

23.97

○ ○

2.53

○

4.49

○

○ ○

37.21

○

1.76

○

○ ○ ○ ○

16.95

○

0.54

○

273.00

○

908.18

○

○ ○

34.91

○ ○ ○

7.02

○

2.53

○

256.81

○

54.69

○ ○

4.49

○

○ ○ ○

○

○ ○ ○ ○ ○ ○ ○

○

308.84

○

2.30

○

1.76

○

○ ○

Total interest expense

○

Directors of related parties

○

○ ○

0.54

○

Major shareholder of Shin Corporation

○

Subsidiaries

○

Interest expense

○

293.11

○

Shin Corporation and its related parties

○

Consulting and management fees

○

Promotion expense Subsidiaries

○

* Net balance represents fees charged on advertising production and the gross margin of media work at advertising agency. ** Gross balance represents total advertising expense charged to the Group and the Company. The Group records such expense on a gross in the statements of income.

100:101

31 Related party transactions (continued)

○

Company

○

2002 Million Baht

○

2003 Million Baht

○

○ ○

○

505.48

○

4,486.18

○

505.48

○

○ ○

4,486.18

227.20 732.68

○

○ ○

2,016.40 6,502.58

○

○ ○

227.20 732.68

○

○ ○

2,016.40 6,502.58

○

○ ○ ○ ○

Dividend paid Shin Corporation and its related parties Related party of SingTel Strategic Investment Pte Ltd. Total dividend paid

○

2002 Million Baht

○

○ ○ ○

○

2003 Million Baht

○

Consolidated

○

c) Dividend paid

○

○ ○ ○ ○ ○

12.06 151.01 163.07

○

2002 Million Baht

○

○ ○

28.44 147.63 176.07

○

159.49 159.49

○

○ ○ ○ ○

147.63 147.63

○

○ ○ ○

○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○

Subsidiaries Shin Corporation and its related parties

○

Company

○

Consolidated

○

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

○

Company

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○

120.61 0.66 121.27

○ ○

28.00

○

○ ○ ○

○

○ ○ ○ ○ ○

○

31.43 (0.17) 31.26

○

○ ○ ○

○

○ ○ ○

41.24 2,618.31

○

○ ○ ○ ○ ○ ○

4.45 4.45

○

○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○

44.10 2,655.17

○

1.36 1.36

○

○ ○ ○

○ ○ ○ ○ ○

2,576.56 0.51

○ ○ ○ ○

41.24 57.99

○

44.10 54.15

○ ○ ○

○ ○ ○ ○ ○

2,608.31 2.76

○ ○ ○ ○ ○

○

○ ○

16.75

○ ○ ○ ○ ○

○

○ ○ ○

○

46.46

○ ○ ○ ○

10.05

○ ○ ○

Loan to a subsidiary Subsidiary

2002 Million Baht

○

○ ○

170.11

○

Trade accounts receivable Subsidiaries Shin Corporation and its related parties Related party of SingTel Strategic Investments Pte Ltd. Total trade accounts receivable Amounts due from related parties Subsidiaries Shin Corporation and its related parties Total amounts due from related parties

○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○ ○

Short-term investments Shin Corporation (Note 5)

○

Consolidated

○

e) Outstanding balance arising from short-term investments, sales/purchases of goods/services and loan to/from related parties

Short-term loan to a subsidiary represents a promissory note, bearing interest at the rate of 2.1 % per annum. Repayment is at call. The loan was fully repaid during the quarter ended 31 March 2003.

31 Related party transactions (continued) ○

○

○ ○ ○

○ ○ ○ ○ ○ ○ ○

○

○ ○

○

149.74 390.63 11.44 551.81

○

4,000.00

○

○ ○ ○

500.00

○

○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○

○

69.10 576.00 9.81 654.91

○

○ ○ ○ ○

20.88 41.65 5.01 67.54

○

○ ○ ○ ○ ○ ○

238.03 33.48 7.27 278.78

○

○ ○ ○ ○

○

426.90 11.44 438.34

○

○ ○ ○

○

44.95 5.01 49.96

○

○ ○ ○ ○ ○ ○ ○ ○

617.22 9.81 627.03

○ ○ ○

Short-term loans from related parties Subsidiary

○ ○

○ ○ ○ ○ ○ ○ ○ ○

36.15 7.27 43.42

○

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

2002 Million Baht

○

2003 Million Baht

○

○ ○ ○

○ ○

2002 Million Baht

○

2003 Million Baht

○

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

○

Company

○

Consolidated

○

e) Outstanding balance arising from short-term investments, sales/purchases of goods/services and loan to/from related parties (continued)

As at 31 December 2003, short-term loans from a subsidiary represents a promissory note, bearing interest at the rate of 3.25% per annum

○

○ ○

○

○ ○

10.00 35.75 45.75

○

○ ○

○

10.00 32.00 42.00

○

10.00 35.75 45.75

○

○ ○ ○ ○ ○ ○

10.00 32.00 42.00

○

2002 Million Baht

○

○ ○ ○ ○ ○ ○

○

2003 Million Baht

○

2002 Million Baht

○

○ ○ ○

○ ○

2003 Million Baht

○

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

○

Company

○

Consolidated

○

(2002: 1.75% per annum). Repayment is at call (2002: paid during the quarter ended 31 March 2003).

Commitments with related parties

○

○ ○ ○

○

780.12

○

420.08

○

- over 5 years

621.56

○

800.46

○

638.55

- within 2 to 5 years

○

Payment due - within 1 year

420.08

○

Company Million Baht

○

Consolidated Million Baht

○

The Group has entered into lease and related service agreements for office space, cars, and base stations for periods ranging from 1 month to 9 years with options to renew. At 31 December 2003, the Group is committed to pay for rental and related services in respect of agreements as follows:

102:103

31 Related party transactions (continued) f)

Commitments with related parties

The Company has entered into agreements with a subsidiary of a major shareholder under which the related provides satellite transponder services. The Company is committed to pay for transponder services amounting to approximately Baht 5.64 million per month (2002: Baht 6.31 million per month). 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 15.76 million per month, and plus the rate per event as prescribed in the agreements (2002 : Baht 14.19 million per month). The Company has entered into agreements with a relate party under which the related part 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 1.51 million per month (2002 : Baht 1.09 million per month). g)

Shin Corporation’s warrants

On 27 March 2002, Shin Corporation Public Company Limited, a major shareholder, granted its warrants to the Company’s directors totalling 3.24 million units at Baht nil per unit. The exercise price is set at Baht 17.80 per unit, which was Shin Corporation’s share closing price as of 26 March 2002. During the year ended 31 December 2003, the Company’s directors exercised 0.40 million units of warrants to acquire 0.40 million ordinary shares of Shin Corporation. On 30 May 2003, Shin Corporation Public Company Limited, a major shareholder, granted its warrants to the Company’s directors totalling 1.79 million units at Baht nil per unit. The exercise price is set at Baht 13.67 per unit. There has been no movement from the date the warrants were granted to 31 December 2003. Shin Corporation Public Company Limited does not charge the Company for the grant of these warrants. h)

Special reward program

During the second quarter of 2002, Advanced Datanetwork Communications Company Limited, a subsidiary, granted rights to receive special reward (“Special Reward Program”) to a director of the subsidiary. The program will grant 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 (subsequently amended). Calculation of Special Reward Program shall be based on the improvement of the subsidiary’s operational performance on the exercised date compared to that or the grant date of the subsidiary. However, such program will not exceed each person’s budget. The first grant of the Special Reward Program to directors of the subsidiary is 3.41 million units. At the Annual General Meeting of a subsidiary, Advanced Datanetwork Communication Company Limited’s shareholders held on 28 April 2003, the shareholders passed a resolution to approve additional issuance of rights not exceeding 1.62 million units, or not exceeding Baht 2.00 million, to receive special reward (çSpecial Reward Programé) by the director of the subsidiary. The program will grant the rights once a year for 5 consecutive years. The rights can be exercised within 3 years from the grant date. The subsidiary granted 1.62 million rights to receive the special reward on 2 May 2003. Additionally, the shareholders passed a resolution to approve the change in the terms of the exercise period of the previous Special Reward Program. The exercise period has been changed from within 5 years to 3 years from the grant date. Movement in the number of rights to receive special reward are as follows: Million units For the year ended 31 December 2003 Beginning balance Granted Exercised Closing balance

3.41 1.62 (1.13) 3.90

Rights of 1.13 million units were exercised during the year ended 2003. The subsidiary paid under the exercised rights a total amount of Baht 0.32 million which is charged to selling and administrative cost in the income statement.

32 Commitments with third parties (continued) Capital expenditure commitment (continued)

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

242.74 11.16

○

○ ○ ○

242.74 11.16

○

Property and equipment Thai Baht US Dollars

○

3,570.14 31.18 1,249.45 6.10 0.39

○

○ ○ ○ ○ ○ ○ ○ ○

3,796.61 43.12 1,249.45 13.81 0.39

○

Assets under concession agreements Thai Baht US Dollars Japanese Yen Euro Pound Sterling

○

Million

○

Million

○

Company

○

Consolidated

○

As at 31 December 2003, 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:

The Group has commitments under letters of credit with overseas suppliers amounting to approximately Baht 89.41 million (2002 : Baht 133.65 million) on a consolidated basis and Baht Nil million (2002 : Baht 19.05 million) on a company basis.

○ ○

Company

○

Million

○ ○

429.34 471.32

○

527.17 546.43

○

- within 1 year - within 2 to 5 years

○

Payment due

○

Million

○

Consolidated

○

The Group has entered into lease and related service agreements for office space, cars, and base stations for periods ranging from 1 month to 5 years with options to renew. As at 31 December 2003 the Group is committed to pay for rental and related services in respect of the agreements as follows:

33 Contingencies As at 31 December 2003, 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 1,365.72 million (2002: Baht 2,264.29 million) on a consolidated basis and Baht 1,056.82 million (2002 : Baht 1,916.39 million) on a company basis. As mentioned in note 10 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 were 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. To date no claims have been received from the purchaser under the terms of this indemnity.

104-105

34 Financial information by segment (continued) 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 (ceased in 2002) 3) trading of mobile phones, rendering repair services for mobile phone and providing mobile phones for rent 4) the operations of data network

Financial information by business segment for the years ended 31 December 2003 and 2002 are shown as follows:

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

84.04 18,529.01 124,949.18 65,322.97 3,741.24 12,233.35

○

36.00 91.09 (2,579.07) 26,141.61 (7,528.56) 18,613.05

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

821.62 270.38 8.93 95.07

○

(49,418.56) (11,432.54) (891.66) 28,593.59

○

○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

73,749.94 15,741.75 844.66 90,336.35

○

○ ○ ○

124,127.56 65,052.59 3,732.31 12,138.28

Group Million Baht

○

(227.30) (108.66) 62.33

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○

(12,471.36) (471.25) 2,925.36

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

391.51 6.61 0.17 398.29

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

Finance cost Net gain on exchange Interest income Interest expenses Income before tax Income tax Profit before minority interests Share of net gain in subsidiaries to minority interests Net profit Consolidated total assets Consolidated total liabilities Depreciation charge Amortisation charge

○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

(36,719.90) (10,852.63) (891.66) 25,605.90

○

Cost of sales and services and equipment rentals Selling and administrative expenses Impairment loss on asset Operating profit

Datanet service Million Baht

○

○ ○ ○ ○ ○ ○ ○ ○ ○

127.01 15,735.14 5.82 15,867.97

○

73,231.42 838.67 74,070.09

○

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

○

Mobile phone sales Million Baht

○

○ ○ ○ ○

Pager sales and services Million Baht

○

Consolidated 2003

34 Financial information by segment (continued)

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

(15.36) 11,430.30 126,085.37 74,844.12 1,725.33 10,427.46

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

840.68 339.93 8.72 101.81

(161.10) 205.04 (3,068.78) 19,231.03 (7,816.09) 11,414.94

○

○ ○ ○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

(44,840.62) (13,806.20) (258.63) 22,255.87

○

○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○

1,706.00 1,061.07 35.26 38.05

60,925.97 19,325.43 909.92 81,161.32

○

○ ○ ○ ○ ○ ○ ○ ○ ○

(240.93) (92.60) 54.23

○ ○ ○

Group Million Baht

○

○ ○ ○ ○ ○ ○ ○ ○ ○

378.16 9.60 387.76

○

○ ○ ○

Datanet service Million Baht

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

(15,294.82) (485.69) 4,095.68

○

(139.65) (121.94) (65.58)

○ ○ ○ ○ ○ ○

123,538.69 73,443.12 1,681.35 10,287.60

○

Finance cost Net loss on exchange Interest income Interest expenses Income before tax Income tax Profit before minority interests Share of net loss in subsidiaries to minority interests Net profit Consolidated total assets Consolidated total liabilities Depreciation charge Amortisation charge

362.48 19,309.02 204.69 19,876.19

○

○ ○ ○ ○ ○ ○ ○ ○ ○

(29,165.22) (13,105.97) (258.63) 18,171.54

○

72.44 6.81 116.76 196.01

○

Operating expenses Cost of sales and services and equipment rentals Selling and administrative expenses Impairment loss on asset Operating profit

○ ○ ○

○ ○ ○ ○ ○ ○ ○ ○

60,112.89 588.47 60,701.36

○

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

Mobile phone sales Million Baht

○

○ ○ ○ ○ ○

Pager sales and services Million Baht

○

Mobile phone and call center services Million Baht

○

Consolidated 2002

As mentioned in note 30 the Company disposed of its subsidiary, Curtain Property Co., Ltd. (formerly “Advanced Paging Co., Ltd.”) on 16 September 2002, and the figures stated above in “Pager sales and services” segment represent the operations of the subsidiary accumulated until the date of disposal.

35 Subsequent event As mentioned in Note 19, as at 31 December 2003, of the Company’s warrants 0.53 million units were exercised at Baht 47.73 each. The Company registered the increase in the share capital with the Ministry of Commerce on 5 January 2004. In January 2004, 0.11 million units of the Company’s warrants were exercised at Baht 47.73 each. The Company registered the increase in the share capital with the Ministry of Commerce on 2 February 2004. As a result of the two transactions mentioned above, the total issued and paid up share capital and premium on share capital of the Company will increase from Baht 2,938.52 million to Baht 2,939.17 million, and from Baht 20,169.28 million to Baht 20,199.58 million, respectively.

106:107

○ ○ ○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○ ○ ○

○

○ ○

○

○ ○

○

1 ○

○

○ ○

○

○ ○

○

○ ○

○

○ ○

○

5,000

○

○ ○

○

○ ○

○

○ ○

○

○ ○ ○ ○

○

○ ○

○

○ ○ ○ ○ ○

○

○ ○

○

○ ○ ○ ○ ○

○

○ ○

○

○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○

○

○ ○

○

○ ○ ○ ○ ○

○

○ ○

○

○ ○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○

○

○ ○ ○

○ ○ ○ ○

○ ○

○ ○ ○ ○ ○

○ ○

○ ○ ○

○ ○ ○ ○ ○

○

○ ○

○

○ ○ ○ ○ ○

○

2,000

○

2,000

○

Committee

○

of the Audit

○

○ ○ ○ ○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○ ○ ○ ○

○ ○

○ ○ ○ ○ ○ ○

○

Member

Including held by spouse and minor children

2) None Debentures

○ ○

of the Audit

*As of December 31, 2003

1) Amount of Units

○ ○

○

○ ○

Member

○

Mr. Boonchoo Direksathapon

○

of the Audit

Committee

○ ○

○

40,000

○

○ ○ ○

○

○ ○ ○ ○ ○ ○

○

Mr. Arun Churdboonchart

○ ○

5,000

○

Chairman

Committee

○ ○ ○

○

Director

○

Mr. Suphadej Poonpipat

○ ○ ○

○

○ ○

Director

○

Mrs. Tasanee Manorot

○

○ ○ ○

○ ○ ○ ○ ○ ○

○

○ ○

Director

○ ○

Mr. Chow,Wing Keung Lucas

10,000

○

○ ○

○

Director

○ ○

Mr. Lum Hon Fye

5,000 ○

5,000

○ ○

○

Director

○

○ ○ ○ ○

○ ○

○

○ ○ ○ ○

○ ○

○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○

○

○ ○

○

Director

○

○ ○

Mrs. Siripen Sitasuwan

○ ○

Advanced Contact Center Co.,Ltd.2)

○ ○ ○ ○ ○

○ ○

○

of Directors

○

○ ○

Mr. Somprasong Boonyachai

○ ○

Digital Phone Co.,Ltd.2)

○ ○

○ ○ ○ ○

○

of the Board

○

○ ○ ○ ○ ○

Mr. Boonklee Plangsiri

○

Data Network Solutions Co.,Ltd.2)

○ ○

○

○ ○ ○

Chairman

○

○ ○

(Ph.D.)

○

○ ○ ○ ○ ○

Dr. Paiboon Limpaphayom

○

Advanced Data Network Communications Co.,Ltd.2)

31/12/03 31/12/02 31/12/03 31/12/02 31/12/03 31/12/02 31/12/03 31/12/02 31/12/03 31/12/02 31/12/03 31/12/02 31/12/03 31/12/02

○

○ ○

Debentures

○

Ordinary Shares

○

○ ○ ○ ○ ○

○

Position ○

○

Name

Advanced Wireless Marketing Co.,Ltd.2)

○

○ ○ ○ ○

○

Advanced Info Service Plc.

○

Directors’ Shareholding in the Company and its Subsidiaries of the Year 2003

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 recognising 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 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 performance in honour 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” This “light and sound” show 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 Impossible, Surasee Ittikul, Nantida Kaewbuasai, Amita Tata Young and many others. 2003 Charity Concert “Tipyasangkheet” Celebrating the 48th birthday anniversary of Her Royal Highness Princess Maha Chakri Sirindhorn. The concert was graciously performed by HRH The Princess and honorary musicians from Klong Toey Palace. 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-Hart and Ajarn Jutupol Chompunich. Proceeds were donated to underprivileged patients of Thammasat Chalermprakiet Hospital. 2003: A mixed comedy musical and talk show by famous comedians and Ajarn Jatupol Chompunich. Proceeds were donated to the Children Heart Foundation, under the Royal Patronage of HRH Princess Galayaniwatana.

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AIS Family Rally for Sai Jai Thai An activity designed to promote family and social relationships, whilst making merit. The application fees were presented to the Sai Jai Thai Foundation, under Royal Patronage. Proceeds from the games were granted to local charity organizations to be spent on important projects. 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 in Kanchanaburi. 2003: AIS organized "The 11th AIS Family Rally for Sai Jai Thai: Hawaiian Night" on 17th May from Bangkok to Cha-Am. Proceeds from the games were granted to the Border Patrol Police Rama VI Base. 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's Foundation, to build a kindergarten for underprivileged children. The construction of "Moo Ban Dek Sarn Rak" kindergarten, located on Buddhamonthon IV Road, began in 2002 and was completed in 2003. The school was opened and presented to the Children's Foundation in November 2003 to provide educational opportunities to underprivileged, abused and needy children, as well as children from Ban Tantawan. April: National Senior Day's activities were organized in conjunction with the Rajaprajanugroh Foundation in order to establish an AIS fund for seniors of the Rajaprajanugroh Foundation. Since 2002, AIS has donated THB 5 million each year to support the AIS fund for seniors. 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". In 2003, AIS presented THB 5 million to Chulalongkorn Hospital to set up a Breast Cancer Centre and support the procurement of medical equipment. 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 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. 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 and creative education. AIS therefore established youth projects that incorporate activities designed to enhance the growth and development of Thai children.

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 imaginations and gain new perspectives through drawing with the well-known artist Ajarn Chalermchai Kositpipat, who specialises in colour drawing techniques. The winner received a trophy and a scholarship from Her Royal Highness Princess Bajarakitiyabha. On Saturday 26 October 2002, AIS organised “the 2nd San Silpa San Thai”, welcoming over 200 youths to participate in the project at the Wimanmek Royal Hall in the Dusit Grand Palace, Bangkok. The “3rd San Silpa San Thai” was organized on Friday 26 October 2003 at the Wimanmek Royal Hall. Conserve Thai Sea (Rak Talay Thai) An activity aimed at helping young people realise the importance of nature conservation and participate in environment and ecology preservation as a way to spend their 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 Sattaheep Naval Base, Sattaheep amphoe, Cholburi province. In 2003, the “2nd Rak Talay Thai” was organised in December at Sattaheep Naval Base with 100 participants. 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 and aid for flood victims in the North and Northeast. August 21 2001: “AIS Joins Forces to relieve the Flood Disaster”. AIS prepared 6,000 survival kits, valued at more than THB 600,000. Under the auspicious Rajaprajanogroh Foundation and under Royal Patronage, the kits were distributed to flood victims in Namkor District, Petchaboon, and the northeastern provinces of 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. September-November 2003: “AIS Joins Forces to Relieve the Flood Disaster”. AIS prepared 2,000 survival kits, valued at THB 380,000, distributed by AIS Regional Offices to help flood victims in North and Central regions. 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, AIS provided 2,000 blankets for victims of extremely cold weather in the North and upper Northeast. February 6 2003: “AIS Joins Forces to Relieve Winter Weather”. AIS presented 3,000 blankets, valued at THB 400,000, to the Royal Thai Navy to help the victims of extremely cold weather in the North and upper Northeast.

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6. Life Quality Project AIS wishes to see Thai people enjoy a high quality of life and are proud of our social activities that contribute to this: The Procurement of Traffic Equipment Project AIS, in conjunction with the Metropolitan Police Bureau and the National Office of Police, improved the availability of operation equipment in order to enhance the efficiency of traffic administration, which benefit drivers, commuters and pedestrians. In 2003, AIS supported the procurement of traffic light control equipment for Traffic Police in Central, North and Northeast regions. AIS cares for Health AIS, in conjunction with the Ministry of Public Health, organised “AIS cares for Health” to urge its staff to regularly exercise for better health. AIS also presented THB 15 million to the Ministry to support the making of tee shirts for the 2nd National Health Activity “Ruam-Phon-Kon-Sua-Leung” at Sanam Luang. Sarn-Rak (Weaving Love) 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-Rak” is an AIS project promoting the family. The project is the fruit of AIS’s belief in the fundamental importance of the family as the foundation for a caring society. AIS Smiling on Children’s Day AIS organised this event to bring happiness into children’s lives through activities, educational games and entertainment on their special day. “AIS Smiling on Children’s Day” was run at every AIS Service Office nationwide. Children enjoyed a variety of entertainment and skill development activities whilst being exposed to wireless communication technology. 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 emphasised 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-Rak members. The seminar content included Communication Skills in the family, Mum and Dad and the Making of Happy Family, and Emotional Intelligence Bringing Happiness to Family. The “Sarn-Rak Project” from AIS, principally hosts seminars on 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 realise the importance of communication, AIS organised 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 inspires others to follow their example. The Prizes that “Sarn Rak Project” has been awarded: “1999’s Outstanding Mass Media Award” for the 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 Productions of Mass Media for Youth” “Kon-Keng-Hua-Jai-Krang” was awarded ‘The Documentary for youth aged 15-25’ from the National Youth Bureau. “2002’s Outstanding Mass Media” for the Family Documentary “Kon-Keng-Hua-Jai-Krang” from the Catholic Mass Media of Thailand. “2003’s Family Support Award” for continuously organising family support campaigns from the Council on Social Welfare of Thailand under the Royal Patronage of His Majesty the King.