True Mobile Group, Which Includes Loyalty
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Content Financial Highlights 2 Company Background and Major Developments and Awards 3 Nature of Business 8 Revenues Breakdown 30 Corporate Information 31 Group Investment Structure 44 Shareholders 46 Management 47 Corporate Governance Report 84 Dividend Policy 94 Risk Factors 95 Connected Transactions 106 References 115 Audit Fees 116 Report of the Audit Committee for the Year 2011 117 Report of the Compensation and Nominating Committee for the Year 2011 119 Report of the Corporate Governance Committee for the Year 2011 120 Report of the Finance Committee for the Year 2011 121 Report of the Board of Directors’ Responsibilities for Financial Statements for the Year 2011 122 Management’s Discussion and Analysis 123 Financial Statements 135 Better Life Together 1 (Unit: Baht million) 2011 2010 2009 (restated) Consolidated Financial Results Service revenues1/ 56,802 52,649 52,605 Total revenues 71,938 62,378 62,474 EBITDA 17,104 18,392 19,582 Operating profit 4,074 7,139 8,752 Results from ongoing operations (5,399) (1,358) (518) Results from ongoing operations before deferred tax (3,200) 264 511 Net profit (loss) to equity holders of the Company (2,694) 1,211 1,228 Consolidated Balance Sheets and Cash Flows Total assets 151,518 114,276 116,421 Total liabilities 130,049 102,569 105,779 Total shareholders’ equity 21,469 11,707 10,642 Cash flow from operations 4,630 9,269 9,444 Free cash flow2/ (6,391) 1,786 4,155 Key Financial and Efficiency Ratios EBITDA margin (on revenues excl. IC and network rental) 26.9% 32.9% 35.3% Operating profit margin 5.7% 11.4% 14.0% Asset turnover (times) 0.5 0.5 0.5 EBITDA / Interest coverage ratio (times)3/ 2.4 2.8 2.6 Net debt / EBITDA (times)3/ 3.9 3.3 3.1 Per Share Data and Others Profit (loss) per share (Baht)4/ (0.23) 0.17 0.18 Book value per share (Baht) 1.48 1.51 1.37 Share price at year-end (Baht) 3.14 7.10 3.06 No. of outstanding shares at year-end (million shares) 14,503 7,776 7,776 Market capitalization 45,540 55,208 23,794 1/ Revenues from telephone and other services excluding interconnection (IC) revenue and network rental revenue 2/ Cash flow from operations less capital expenditure 3/ Excluding liabilities under finance leases 4/ After accumulated dividends for preferred shares (only applied to 2009 results) 2 Better Life Together Better Life Together True Corporation Plc (“the Company”, “the seek to enhance value for shareholders, Group” or “True Group”), one of Thailand’s customers, the organization, society and strongest and most recognizable brands, is the employees alike. only fully-integrated, nationwide telecom operator providing services to some 24 million Our convergence strategy allows us to meet the subscribers. demands of our subscribers’ lifestyles by building upon the complementary strengths of True Group’s strength is its ability to offer the convergence benefits of its networks, products our communications services and solutions. This and services. Our three core business segments in turn helps drive subscriber growth and are: True Mobile Group, which includes loyalty. Packages bundling TrueOnline with True TrueMove, Thailand’s third-largest mobile Mobile Group or TrueVisions services, or operator, TrueMove H, our 3G brand which in TrueVisions with True Mobile Group services, conjunction with CAT Telecom Public Company have proven successful in terms of customer Limited (“CAT”) provides nationwide commercial acquisitions and retention. Meanwhile our digital 3G+ services via HSPA technology on the content and e-commerce offerings add value 850 MHz spectrum, and Hutch, which provides across the Group. CDMA services; TrueOnline, the largest fixed- line phone provider in the Bangkok Metropolitan The Company is backed by the Charoen Area (“BMA”) and the Broadband and WiFi Pokphand Group (“CP Group”) – Asia’s largest operator with the most comprehensive agro-conglomerate – with a shareholding of nationwide network using ADSL, DOCSIS 3.0 64.7% of the total registered and paid-up capital cable modem and FTTH (fiber to the home) of Baht 145,032 million as at December 31, 2011. technologies; and TrueVisions, the only nationwide pay TV and high-definition TV At the end of 2011, True Group had an annual (“HDTV”) operator. The results of our digital turnover of Baht 71.9 billion (including convergence and other businesses, which interconnection revenue), infrastructure include digital commerce under TrueMoney, investments of Baht 225.6 billion, and employed convergence packages and digital content and 18,702 permanent staff. media which are grouped under the TrueLife brand, and the lifestyle venture True Coffee, are reported under TrueOnline. Business background True Group seeks to promote the development of the country through innovation and We were incorporated in November 1990 as a technology. We work to bridge the digital divide fixed-line phone service provider and the and build a sustainable knowledge-based society following year we signed a build-transfer- by delivering the possibilities and opportunities operate concession with TOT Corporation Public offered by the digital revolution to every Company Limited (“TOT”) to build, install, jointly household, and especially the youth of Thailand. operate and maintain a 2.6 million-line wireline Four key brand values – credible, creative, network in the BMA for a period of 25 years, caring and courageous – guide our work as we ending in October 2017. Better Life Together Better Life Together 3 Our company was registered as a public limited In January 2006, True Group purchased shares company in 1993 under the name TelecomAsia of the United Broadcasting Corporation (“UBC”) Corporation Public Company Limited and was from MIH and completed the tender offer for listed on the Stock Exchange of Thailand in UBC shares held by the public in March 2006, December 1993 under the security symbol “TA”. allowing the Company to own 91.8% (effective We rebranded under the “True” name and holding) of UBC. The pay TV operator was adopted the security symbol “TRUE” in April renamed “TrueVisions” at the beginning of 2004. 2007. After the restructuring of TrueVisions Group in the first half of 2010 and the In addition to our traditional fixed-line phone, repurchasing of shares from minority public phone, and WE PCT (personal shareholders from November 2010 to February communication telephone) services, we started 2011, the Group’s effective holding in providing hi-speed data communication services, TrueVisions increased to 99.3%. While including ADSL and cable modems, in 2001, TrueVisions’ main revenue source comes from WiFi services in 2003, International Internet monthly subscription fees, MCOT in 2009 Gateway services in 2007, and International authorized the Company to carry advertising Data Gateway and International Direct Dialing which presented a new opportunity to drive (IDD) services in 2008. During 2011, our cable revenue growth and profitability at the business. modem network was expanded and upgraded Throughout 2011, TrueVisions also focused on using DOCSIS 3.0 technology, which enables us combating piracy. The rollout of an enhanced, to offer the fastest consumer Broadband service more secure broadcasting system featuring in Thailand. We target to cover 3 million MPEG-4 encryption began in October 2011 and households within 2012 using both ADSL and is expected to be completed within 12 months. DOCSIS 3.0 technologies, up from 2.3 million This will significantly reduce the illegal accessing households at the end of 2011. of TrueVisions’ content and will help increase subscriber acquisitions and service revenue. We extended our services into the mobile telecommunications segment through a Our convergence and other businesses subsidiary, Bangkok Inter Teletech Public underpin the strength of the Group’s core Company Limited (“BITCO”) (the parent operations – True Mobile Group, TrueOnline company of TA Orange), by acquiring a 41.1% and TrueVisions – by providing a diverse range equity interest in BITCO in October 2001. of products and services which integrates the TA Orange’s mobile services were fully launched Company’s telecommunications, content and in March 2002. TA Orange was subsequently media services into a single, seamless offering. rebranded “TrueMove” at the beginning of Since 2010, this section has been organized into 2006. We gradually increased our indirect three main businesses. True Life Plus offers shareholding in BITCO to 99.4% as at convergence bundles of products and services December 31, 2011. drawn from True Group’s core businesses. True Digital Plus is our gaming and E-sports We further expanded our mobile business operation which publishes online games. We through the purchase of shares of four local also operate an online games business through companies from Hutchison Group which was NC True, a joint-venture with NCsoft, Korea’s completed in January 2011. The transaction largest developer and publisher of online games. gave the Company a first-mover advantage in Lastly, True Digital Content and Media launching commercial 3G services nationwide produces key content, media and publishing using HSPA technology on the 850 MHz (such as e-books and e-magazines). It also spectrum. Full commercial 3G+ services were operates the True App Center, an application officially launched by our subsidiary Real Move training center aimed at stimulating content Co., Ltd. (“Real Move”) under the TrueMove H development and driving mobile non-voice brand on August 30, 2011 and will operate revenue. By the end of 2011, the center had until at least 2025. developed more than 220 custom applications 4 Better Life Together Better Life Together for leading smartphone platforms including iOS, • March - June: A Baht 13.1 billion recapitalization Android and BlackBerry, up from 122 a year plan was announced in March. The subsequent earlier. True Coffee, is our chain of coffee shops rights offering was over-subscribed (by which provide a key touchpoint with customers 10.58%) during the subscription period which and act as a prime venue for showcasing our new ran from May 30 to June 3, 2011.