Creating Asia Pacific's Leading Communications Company

CREATING ASIA PACIFIC'S LEADING COMMUNICATIONS COMPANY

SingTel's goal to be the leading pan-Asian integrated communications service provider is underpinned by a three-pronged strategy: • Maintaining leadership in Singapore through customer-focused initiatives; • Establishing and operating a world class network infrastructure; and • Expanding into major markets in the region. As the global telecommunications industry continues to witness change, SingTel remains committed to improving long term shareholder value. By being innovative, by understanding the changing needs of our customers, by nurturing an environment of excellence, and by exerting a positive influence in the communities in which we operate, SingTel seeks to demonstrate on a daily basis, our determination to return the benefits of corporate success to our shareholders.

Serving our customers In an increasingly competitive telecommunications market, SingTel continues to maintain its leading position in all its key market segments. We remain focused on enhancing the range, quality and value of our products and services, while at the same time ensuring that they are competitively priced.

Data solutions To serve corporate customers better, SingTel launched two important initiatives in October 2000 - GigaWave and Meg@POP. GigaWave is an optical network which supports transmission speeds of up to 2.5 gigabits per second, with speeds of 10 gigabits per second to be available by the end of the year. The almost unlimited amount of bandwidth capacity enables swift transmission of voice, data and video applications, without the need to install new fibre cables. Meg@POP is a $50-million new generation Internet Protocol (IP)-centric service platform targeted at organisations with multiple sites in various locations. It provides a single, high performance and secure IP connection for intra- and inter-corporate communications, as well as for e-commerce applications, without the need for multiple connections to link up the various locations. SingTel's leadership position and competitive strengths continue to receive industry and customer recognition. In June 2001, SingTel was voted by readers of Telecom Asia as Best Asian Telecom Operator for the fourth consecutive year. This followed recognition in US-based magazine, Red Herring, as one of the 'Top 100 Most Innovative Companies in the World', an annual list of top private and public technology companies. In early 2001, SingTel was named Asia's Most Competitive Telecoms Hub in the Asia Pacific Telecommunications Index, published by the National University of Singapore's Centre for Telemedia Strategy.

Mobile communications SingTel Mobile was the first operator to introduce the concept of wireless Internet to Singapore, through technologies such as Wireless Access Protocol (WAP) and high-speed platforms such as General Packet Radio Services (GPRS). More than 110,000 SingTel Mobile customers currently have access to WAP-based e-commerce services on their mobile phones. These include taxi booking, food ordering and the purchase of movie tickets. SingTel Mobile's $35-million GPRS network was launched in November 2000. It can transmit broadband multi-media data such as news, interactive information and entertainment at speeds of up to 115 kilobits per second. Video clips can be viewed on hand-held devices which support video applications. GPRS phones are connected to the Internet in an 'always-on' mode and users need not dial a separate data number to access data services. Furthermore, they are charged only when data is transmitted and not for the length of time they stay connected. To take advantage of the growing popularity of text-based services, SingTel Mobile launched its innovative *Send service which provides information on a wide range of topics including stock prices, sports, foreign exchange rates, the weather and lottery results. It also enables customers to locate the nearest banks, teller machines, fast food outlets and clinics, depending on their location. 3 Multimedia services To meet demand for basic high-speed Internet access, SingNet launched its Broadband service in September 2000. Meanwhile, the SingTel Magix service was re-positioned to assume the role of a broadband content aggregator. SingTel's total broadband customer base increased by more than 35 per cent to approximately 35,000 during the year. SingTel plans to launch a trial for interactive television services by the end of the year. The convergence of telecommunications, computing and broadcast technologies provides SingTel with a unique opportunity to test this concept among its customers. Offerings will include pay TV, video-on-demand, Internet access, on-line gaming and e-commerce.

Developing a world class infrastructure SingTel owns the most extensive communications network in Singapore with state-of-the-art technology that enables us to offer a comprehensive array of voice and data services. We also have extensive interests in submarine cable and satellite systems in the Asia Pacific and beyond. SingTel's capital expenditure for the year amounted to $1.7 billion. More than half of this ($917 million) was invested in the C2C cable network. Capital expenditure for the rest of the Group was fairly stable at $800 million. Major projects included the enhancement of our GSM networks, investments in consortium submarine cable systems, and maintenance and upgrade of switching equipment and cables used in the domestic network. In April 2001, SingTel Mobile was awarded 3G spectrum rights to operate 3G services in Singapore, after payment of the licence fee of $100 million. We intend to roll out a 3G network that will maintain our competitive edge, subject to the availability of handset technology and to market readiness. SingTel constantly seeks to invest in new submarine cable systems to achieve the lowest optimal unit cost for international bandwidth. SingTel is an investor in some of the world's major submarine cable systems, such as SEA-ME-WE 2, SEA-ME-WE 3, APCN, Japan-US, China-US, Australia-Japan and APCN2. SingTel is taking the lead in implementing two new submarine cable projects in the pan-Asian and Indian Ocean regions, namely the C2C and i2i cable networks. Both will utilise the most up-to-date technology. The C2C cable network is expected to be completed in December 2001 and will connect Singapore to other Asian countries such as China, Hong Kong, Japan, Korea, the Philippines and Taiwan. C2C will further provide onward bandwidth connectivity to North America via capacity on new trans-Pacific cable systems. SingTel's equity in C2C is about 60 per cent. The first cable of the i2i cable network is expected to be ready for commercial service by the first quarter of 2002 and will provide direct connectivity from Singapore to India. SingTel's equity in i2i is approximately 50 per cent, and its initial financial commitment to the i2i cable network is estimated to be approximately US$75 million. Cable & Wireless Optus Limited (Optus), Telecom Corporation of New Zealand (TCNZ) and SingTel are currently involved in feasibility studies for a submarine cable project linking Australia, Indonesia and Singapore. It is currently envisaged that the cable may be ready for commercial service by the fourth quarter of 2002. As part of the feasibility studies, Optus, TCNZ and SingTel have commissioned market demand surveys and desktop surveys for the project. The three sponsors have also called for tenders. It is currently anticipated that each sponsor will contribute equally to the equity component of the project financing. In January 2001, SingTel announced a US$112 million investment to double its long-term satellite transponder capacity. Under an agreement signed with APT Satellite Company Limited, a wholly- owned subsidiary of Hong Kong-based APT Satellite Holdings Limited, SingTel will lease 15 C- band transponders for the useful life of the APSTAR V satellite, which is expected to be more than 13 years. APSTAR V is scheduled to be launched in early 2003. SingTel has an effective equity interest of 20.35 per cent in APT Satellite Holdings Limited.

Expanding overseas for growth SingTel seeks to establish a significant presence in the most important markets across the entire Asia Pacific region. It is an area of unparalleled opportunity and potential, with abundant growth opportunities for telecommunications services and products. 4 We have chosen our target markets with a view to driving shareholder returns on three fronts; scale, growth and diversity. Scale can be achieved by having a presence in the major developed markets in the region, with access to extensive networks and large customer bases. Growth over the long term will come from having a presence in the larger developing markets such as India, Thailand, the Philippines, Indonesia and China. These are characterised by large populations and low tele-densities. SingTel is also focusing its business on growth platforms such as wireless and data, in both developed and developing markets. Finally, SingTel achieves diversification by having a presence in multiple markets and by employing the integrated services model.

Proposed acquisition of Optus During the year, there were a number of significant developments with regard to SingTel's regional activities. The most important was the Group's proposed acquisition of Optus, the second largest telecommunications service provider in Australia, with a significant market share across its key business lines. SingTel's acquisition of Optus would provide SingTel with immediate exposure to one of the Asia Pacific's largest and most attractive communications markets. Australia is one of four major communications hubs in the region, together with Singapore, Hong Kong and Japan. Telecommunications expenditure constitutes about five per cent of Australia's GDP and the Australian communications market ranks as one of Asia's largest outside of Japan. Optus is an established service provider with a successful track record of growth. It is today the strongest competitor to Telstra, the incumbent operator in Australia. As at 31 March 2001, Optus had 3.7 million cellular subscribers, or a market share of 33 per cent. Its cellular network covers 94 per cent of Australia's population. Optus, like SingTel, has developed a strong brand name in its own market that supports an innovative product range and has an extensive and diverse customer base. It has also established an extensive, high-capacity, next-generation infrastructure, to capture growth in the data communications market and provide connectivity to key international markets through ownership interests in 26 submarine cable systems and three satellites in service. The Optus acquisition will help SingTel build on its presence in key markets such as Singapore, India, Indonesia, the Philippines and Thailand. Following the acquisition of Optus, SingTel will: • be one of the five largest listed communications companies in the Asia Pacific region (excluding Japan), based on pro-forma market capitalisation as at 30 April 2001; • have one of the Asia Pacific region's most extensive multiple market cellular operations, with a total subscriber base close to 11 million subscribers across five markets; • have one of the most extensive and advanced data communications networks in the Asia Pacific region, consisting of submarine, satellite and domestic backhaul networks covering key markets in the region and providing global connectivity; • have more diverse, stable revenue streams, with attractive growth prospects; • be of a greater size and scale than the stand-alone SingTel and Optus groups with potential to continue expansion; and • remain financially strong with the flexibility to continue to fund the future growth of its businesses. SingTel's intention is for Optus' day-to-day operations to be managed, for the foreseeable future, as a stand-alone business, utilising Optus' existing core brands. SingTel plans to ensure sufficient investment in the rollout of Optus' 3G network and to examine the advantages of combining international networks and services, including satellite and submarine cable assets, of SingTel and Optus.

Investment in the Bharti Group In August 2000, SingTel announced a US$400 million investment in the Bharti Group, a leading private fixed line and mobile communications service provider in India. Bharti also provides Internet services in India. With the liberalisation of the telecommunications industry in India, Bharti is looking to add domestic long distance telephone services to its existing communications portfolio in addition to extending its cellular and fixed line services footprint to new territories within India. 5 SingTel's interest in Bharti Group consists of a 20 per cent equity interest in Bharti Telecom Limited and a 15.5 per cent equity interest in Bharti Tele-Ventures Limited, a subsidiary of Bharti Telecom Limited. SingTel's effective equity interest in Bharti Tele-Ventures Limited is approximately 28.5 per cent. In May 2001, SingTel announced that it would increase its investment in the Bharti Group by up to US$200 million. It is expected that SingTel's effective interest in the Bharti Group will increase. The percentage shareholding will depend on the investment structure which is yet to be finalised. Bharti also announced that a number of financial investors, including E.M. Warburg Pincus, had also committed investments in the Bharti Group totalling up to US$260 million.

NCIC begins operations SingTel's investment in Taiwan, New Century InfoComm Tech Co. Ltd (NCIC), was awarded in March 2000 a facilities-based licence to operate a fixed line network in Taiwan. NCIC plans to offer data and broadband services, leased line and Internet backbone services, as well as international, domestic long distance and local voice services. NCIC launched its commercial operations in March 2001 using the brand name sparq*. SingTel's effective equity interest in NCIC is 24.3 per cent. SingTel's strategic partner in NCIC is the Far Eastern Group, which is one of Taiwan's largest non-electronics industrial groups. The Far Eastern Group also has a significant interest in Taiwan's fast-growing cellular player, Far EasTone.

Other investments In November 2000, SingTel entered into a joint venture agreement with the Virgin Group to provide mobile virtual network services in Singapore and other Asian countries (excluding Japan). The joint venture, Virgin Mobile Asia, intends to launch its services in Singapore later this year. It also plans to enter the Hong Kong and Taiwan markets in the next 18 months, depending on the feasibility of the business case in each market. SingTel will hold an effective equity interest of 50 per cent in Virgin Mobile Asia upon the completion of its agreed capital injection. In May 2001, SingTel announced its acquisition of an interest in Shin Digital Company Limited (SDT), which has a 47.56 per cent equity interest in Digital Phone Company Limited (DPC). Through this acquisition, SingTel has an effective equity interest of 14.3 per cent in DPC, which provides cellular services in Thailand using the digital PCN system. Shin Corporations Public Company Limited, SingTel's partner in Advanced Info Service, is also our strategic partner in SDT.

Moving ahead SingTel's increasingly diversified portfolio of investments achieves a good balance, with exposure to stable and developed markets such as Singapore and Australia as well as high-growth developing ones such as Thailand, the Philippines and India. Since its IPO in 1993, SingTel has successfully diversified its revenue and profit streams across a wide range of communications services including data, mobile, IT and engineering services, and has rapidly reduced its traditional dependence on international telephony. Post-Optus, mobile and data services are expected to account for more than 50 per cent of SingTel's revenues. The Optus acquisition will also result in more than 50 per cent of our enlarged revenues coming from overseas. SingTel is actively working with its associated companies and regional partners to tap on its growing scale to reap benefits from cost savings and revenue enhancement. The advantages of a ubiquitous network and the ability to provide end-to-end connectivity will differentiate SingTel from the competition. SingTel's ultimate objective is to acquire customers in strategic markets and offer them compelling services through an advanced and extensive network in a cost-effective manner. These are the keys to value creation in the telecommunications industry.

6 EBITDA : REPORTING FOR OPERATING PERFORMANCE

Financial year 2000/2001 marked the fifth successive year of growth in SingTel's EBITDA as the Group continued to perform well in all facets of its operations.

Consistent Growth in EBITDA $M

4,000 3,290 3,037 2,738 2,818 3,000 2,626 2,324 1,838 1,913 1,839 2,000 1,603

1,000

0 1997 1998 1999 2000 2001

EBITDA Net Profit before Extraordinary Items

EBITDA is earnings before interest, tax, depreciation and amortisation, including compensation income and contributions from associated and joint venture companies. As a measure of a company's operating business performance, EBITDA is gaining popularity amongst publicly-listed companies and investors. EBITDA serves as a proxy measure for the amount of cash from a company's operations that is available to meet the needs of capital and investment expenditures, tax liabilities and capital providers, including lenders and equity owners. Unlike traditional net profit measures, it is not affected by accounting allocations or choice of accounting methods - notably, for depreciation and amortisation. In its simplest form, an investor pays for goodwill if the purchase consideration is above the fair values of the assets acquired. It is intended to capture the values of intangibles in the investee company such as branding, reputation, management expertise and customer loyalty. While it is agreed that these intangibles yield future economic profits and thereby contribute value, these values cannot be separately identified nor quantified under conventional accounting rules. In Singapore, goodwill is recognised as an asset and systematically amortised over its useful life not exceeding 20 years. The amortised amount for each year is booked as an expense. As it is inherently difficult to determine the useful life of intangibles, the resultant amortisation expenses are usually arbitrary accounting allocations. It is precisely because of this reason that many global companies have increasingly replaced net profits with EBITDA as the parameter for performance reporting. As the Group seeks expansion in overseas markets, EBITDA has increasing relevance to the Group as it removes uncertainty in earnings posed by accounting treatment for goodwill. Investors will also find that many global telecommunications providers have adopted EBITDA for reporting. Accordingly, the Group will focus on EBITDA as its predominant measure of operating performance. This will allow meaningful comparisons to be drawn between the Group and these global telecommunications providers.