total access communication plc.

total access communication plc. 333/3 moo 14 chai building vibhavadi rangsit road, chomphon, chatuchak, 10900 Tel: (662) 202 8000 Fax: (662) 202 8929 www..co.th annual report 2007 00 01 contents financial highlights part page

1 financial highlights 01 The Company, operating under “dtac” brand, was founded in August 1989 to provide wireless service in 2 the history and evolution 02 the 800 Mhz and 1800 Mhz frequency bands in under a 27-year “Build-Transfer-Operate” concession granted by CAT Telecom Public Company Limited (formerly known as Communications Authority of Thailand-”CAT”). 3 the change 04 begin with...feeling goood 2003 2004 2005 2006 2007 and goood things will follow Operating Results (in million Baht) Service Revenues 30,521 37,841 41,979 47,013 64,491 4 feel goood is not just an emotion, - message from the chairman and CEO 08 Total Revenues 31,780 38,943 43,129 48,474 65,590 it’s a philosophy EBITDA 12,122 15,073 16,523 17,817 18,893 Operating Profit 6,186 8,838 9,610 10,324 10,613 5 have a goood team - board of directors 012 Net Profit 2,587 4,480 4,611 4,938 5,841 step by step, hand in hand - executive management 014 Balance Sheet (in million Baht) we strive for only the best Total Assets 82,859 84,122 87,219 95,116 100,875 Total Liabilities 53,578 50,371 50,700 53,660 49,009 6 business performance - business overview 020 Total Shareholders’ Equity 29,281 33,751 36,519 41,457 51,866 a goood start to any endeavor begins - prepaid 022 Ratio from within - post-paid 024 EBITDA Margin 37.9% 38.7% 38.1% 36.5% 28.6% - business customers & international roaming 026 Operating Profit Margin 19.5% 22.7% 22.3% 21.3% 16.2% - value added services (VAS) 028 Net Debt:EBITDA 3.6 2.5 2.2 2.0 1.5 - business outlook 029 Net Debt:Equity 1.5 1.1 1.0 0.9 0.5 - people 030 Shares No. of shares (million) 474 474 474 458 2,368 7 dtac and the community - dtac and the community 034 Earning per share (Bt) 5.45 9.44 9.72 10.54 2.50 dtac, helping to make a better world Book value per share (Bt) 61.77 71.20 77.04 88.58 22.20 Share price 8 operations - milestones 038 SET (Bt per share) n/a n/a n/a n/a 39.25 we never stop making things better for you - risk and mitigation 040 SGX-ST (USD per share) 1.80 3.55 3.25 4.30 1.15 - corporate governance 049 Note: On 17 May 2007, dtac reduced the par value of its ordinary shares from THB 10 to THB 2 per share. - interested person transactions 061 - shareholder structure 069

9 results - MD&A 074 Subscribers and Penetration rate ARPU (THB / month) Service Revenues (THB billion) infinite goood feeling - director’s report 079 410 414 406 82% 374 64.5 356 - audit committee report 082 63% 47.0 - financial statement and notes of financial statement 084 42.0 48% 37.8 43% - glossary 129 35% 30.5 287 50.1

6.6 7.8 8.7 12.2 15.8

2003 2004 2005 2006 2007 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007

dtac Sub (in million) ARPU Service Revenues Penetration rate in Thailand ARPU Including IC Service Revenues Including IC

Net Profit (THB billion) Subscribers and Revenues Market share Note:

- Definition of prepaid sub was changed in 2007, 5.8 31.2% 30.6% from validity + 45 days to active within 90-day 29.8% 4.9 period. 4.6 4.5 28.7% 28.5% 30.4% 29.7% - Interconnection revenue was booked for the first 2.6 28.1% time in 2007, starting from 1 February.

26.3% - Based on old subscriber definition, market share 25.8% of subscriber at the end of 2007 was 31.4%. 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007

Rev Sub

จำนวนผู�ใช�บริการ และจำนวนผู�ใช�บริการต�อประชากรรวม รายได�เฉลี่ยต�อเลขหมายต�อเดือน (บาทต�อเดือน) รายได�จากการให�บริการโทรศัพท�เคลื่อนที่ (พันล�านบาท)

410 414 406 82% 374 64.5 356 63% 47.0 42.0 48% 37.8 43% 35% 30.5 287 50.1

6.6 7.8 8.7 12.2 15.8

2546 2547 2548 2549 2550 2546 2547 2548 2549 2550 2546 2547 2548 2549 2550

จำนวนผู�ใช�บริการ จำนวนผู�ใช�บริการต�อประชากรรวม รายได�เฉลี่ยต�อเลขหมายต�อเดือน รายได�จากการให�บริการโทรศัพท�เคลื่อนที่ รายได�เฉลี่ยต�อเลขหมายต�อเดือน รวม IC รายได�จากการให�บริการโทรศัพท�เคลื่อนที่ รวม IC

กำไรสุทธิ (พันล�านบาท) ส�วนแบ�งทางการตลาดของผู�ใช�บริการและรายได�

5.8 31.2% 30.6% 29.8% 4.9 4.6 30.4% 29.7% 4.5 28.7% 28.5%

2.6 28.1%

26.3% 25.8%

2546 2547 2548 2549 2550 2546 2547 2548 2549 2550

จำนวนผู�ใช�บริการ รายได�

annual report 2007 08 09 message from the chairman and CEO

Our passion for the business and commitment “to become the most admired wireless operator Dear Shareholders, in Thailand are driving us to be more innovative and customer-oriented.

In 2007 we managed to gain another record high of 3.9 million net additional customers, beating the previous record of Sigve Brekke ” Chief Executive Officer 3.5 million set just one year ago. At the end of 2007, our total customer base was 15.8 million, up from 11.9 million last year. We continued to contribute to the development of the Thai telecom market and bring mobile telephone services to more Thai people through our network expansion and innovative product and service offerings, particularly to those living in remote areas. Our service revenues and net profit grew by 6.6 percent and 18.3 percent respectively in 2007, and our market and financial position continued to improve over the past year.

We firmly believe in being a There were 4 main highlights for dtac in 2007: (1) the introduction of interconnection billing, (2) the listing of dtac’s shares on “good corporate citizen and it the Stock Exchange of Thailand (SET), (3) the rebranding campaign, and (4) other regulatory developments. is part of our promise to integrate social contribution into our business practices. The introduction of Interconnection (IC) billing among telecom operators early in 2007 has had a profound impact on the Thai telecom industry. It has opened a new chapter and brought us one step closer to a level playing field. Throughout 2007, the Boonchai Bencharongkul ” Chairman of the Board market has been adjusting to the new IC regime, and we have seen some positive developments. There was a shift from focus on of Directors tariffs to competitive strengths, such as network coverage and technology, service offerings, and the customers’ experience.

We reached another milestone in our history by successfully listing our shares on the SET and becoming the first dual-listed Thai company with shares quoted on both the SET and the Singapore Stock Exchange (SGX-ST). We would like to take this opportunity to thank our shareholders for their support and confidence during this process. The listing on the SET has provided our customers the opportunity to share our success and strengthened our corporate image in Thailand. Furthermore, upon the completion of the listing on the SET in 2007, we received a 5 percent reduction in corporate income tax for a period of 3 years, staring from the fiscal year 2008.

The Thai market is now approaching saturation and, as a company, we need to reposition and prepare ourselves to enter into this new era. In the last quarter of 2007, the “feel goood” marketing campaign was launched with the objective to further strengthen the dtac brand and enhance the customer experience.

On the regulatory front, apart from the start of IC billing as mentioned above, there have been several other positive developments throughout 2007. Several rulings from both the Administrative Court and the NTC supported our view regarding the IC regime. These steps contribute to making the Thai telecom industry move towards a more level playing field and improve the regulatory environment in which we are operating.

Our success has primarily been driven by our people, who are encouraged to be involved in our marketing activities and go out to meet the real customers. We are not a technological or a marketing company. We are in fact a people company serving our customers with wireless communication services. Our passion for the business and commitment to become the most admired wireless operator in Thailand are driving us to be more innovative and customer-oriented.

We firmly believe in being a good corporate citizen and it is part of our promise to integrate social contribution into our business practices with the hope that we, as a public company, can help contribute to the economic and social development of the country in the long run.

Finally, we would like to close this letter by thanking our shareholders for their trust and confidence in our company. We continue to be passionate about driving our business forward and delivering on our promises.

annual report 2007 012 013

Mr. Chulchit Bunyaketu Mr. Knut Borgen board of directors 4 Director 8 Director

Academic background Academic background Master degree Master of Arts in Political Science, Kent State University, USA Master degree Master of Business Administration, University of Michigan, USA Bachelor’s degree Bachelor of Law, Chulalongkorn University Bachelor’s degree B.A. Economics, San Jose State University, USA

Work Experience Work Experience 2006-present Chairman of Audit Committee, Total Access Communication PLC. Feb 06–present Director, Total Access Communication PLC. 2004-present Chairman, Ekarat Engineering PLC. 2006-present Vice President, Business Development, Telenor Asia (ROH) Ltd. 2004-present Group Deputy Chairman, King Power International Group Co., Ltd. 2005-present Director, Thai Telco Holdings Limited 2000- present Director, Total Access Communication PLC. 2005-2007 Director, United Communication Industry PLC. 1998-2003 Managing Director, Thai Oil Power Co., Ltd. 2001–2006 Finance Director, Telenor Asia Pte Ltd 1998-2003 Managing Director , Thai Oil Co., Ltd. 1998-2001 Finance Manager, Telenor Mobile Communications AS 1994-1998 Deputy Managing Director, Thai Oil Co., Ltd.

1 2 3 4 Mr. Soonthorn Pokachaiyapat Mr. Sompol Chanprasert 5 Director 9 Director

Academic background Academic background Bachelor’s degree Bachelor of Law, Thammasat University Master degree Master of Business Administration, Thammasat University Master degree Master of Engineering (Electronic), Chulalongkorn University Work Experience Bachelor’s degree Bachelor of Engineering (Electronic), Chulalongkorn University Certificate National Defense College of Thailand 2000-present Director, Total Access Communication PLC. 1974- present Head of Chaiyapat Law Office Work Experience Jul 06 - present Director, Total Access Communication PLC. 5 6 7 8 May 07 - present Senior Advisor Class 13, CAT Telecom PLC. Mr. Ragnar H. Korsaeth Jun 06–Mar 07 Senior Executive Vice President for Information Technology, CAT 6 Director Telecom PLC. May 05–Dec 05 Act for Senior Vice President for Sales and Marketing, CAT Telecom PLC. Academic background Apr 05-Jun 06 Senior Executive Vice President for Business Partner, CAT Telecom PLC. Mar 04-Apr 05 Senior Executive Vice President for Corporate Strategy, CAT Telecom PLC. Master degree Master of Science, the Norwegian School of Economics and Business 1996-2004 Vice President, Telecommunication Service Group, Administration, Norway The Communications Authority of Thailand Master degree Certified Financial Analyst 1994-1996 Director, Data Telecommunication Service Division, The Communications Authority of Thailand Work Experience 1993-1994 Director, Policy and Planning Division, The Communications 2006-present Executive Vice President, Head of Global Coordination, Telenor ASA Authority of Thailand 9 10 Feb 05-present Director, Total Access Communication PLC. 1990-1994 Assistant Director, Data Telecommunication Service Division, 2004-Jan 06 Chief Operating Officer, Telenor International Mobile The Communications Authority of Thailand 2000-2004 Chief Financial Officer, Telenor International and Telenor Mobile 1977-1990 Engineer, Telegraph Division, The Communications Authority of Thailand 1974-1977 Third Engineer, Domestic Telecommunication Division, Post and Telegraph Department Mr. Boonchai Bencharongkul Mr. Arve Johansen 1 Chairman of the Board of Directors 2 Vice Chairman of the Board of Directors 7 Mr. Roar Wiik Andreassen 10 Mr. Sigve Brekke Director Director and Chief Executive Officer Academic background Academic background Doctoral degree Honorary Doctoral Degree in Economic Science, Ramkhamhaeng Master Degree M.Sc.EE (), Norwegian Institute of Technology, University Trondhiem, Norway Academic background Academic background Bachelor’s degree B.Sc. in Management, Northern Illinois University, USA Master Degree Master of Business and Administration in Accounting and Tax Law, Master degree Master Degree in Public Administration, John F. Kennedy School of the Norwegian School of Management, BI Sandvika, Norway Government, Harvard University, USA Work Experience Bachelor’s Degree Business Economics (part time courses), Harstad University College, Bachelor’s degree Bachelor Degree Program in Management, the Norwegian School of Work Experience 2006-present Deputy Chief Executive Officer, Telenor Group/Head of Region Asia Norway Management, Buskerud, Norway 1990-present Chairman of the Board of Directors, Total Access Communication PLC. 2002-present Vice Chairman of the Board of the Directors, Total Access Bachelor’s degree Degree in Business and Administration, Telemark College, Norway 1990-present Chairman of the Board of Directors, Benchachinda Holding Co.,Ltd. Communication PLC. 1989-present Chairman of the Board of Directors, Private Property Co., Ltd. 2000-2002 Director, Total Access Communication PLC. Work Experience 1998-present Chairman, Sam Nuek Rak Ban Kerd Foundation 1999-2006 Senior Executive Vice President, Telenor Group and Chief Executive 2007-Present Director, Total Access Communication PLC. Work Experience Senior Vice President, Corporate Development , Telenor Asia (ROH) Ltd., 2001-present Chairman, Ruamduay Chuaykan Co-Operative Limited Officer, Telenor Mobile Feb 06–present Director and Chief Executive Officer, Total Access Communication PLC. 2004-2007 Chief Executive Officer, Telenor Real Estate, Norway 2002-present Director, United Distribution Business Co., Ltd. 1995-1998 Managing Director and Chief Executive Officer, Telenor International AS Director and Chief Executive Officer, United Communication 2004 Chief Financial Officer, Avinor Group, Norwegian Air Traffic and Air 2001-2006 Chairman, Hornbill Research Foundation Industry PLC. Management, Norway 2002-2005 Chief Executive Officer and President, United Communication Industry PLC. Oct 05–Feb 06 Chief Executive Officer, Total Access Communication PLC. 2000-2004 Director, Telenor Group Finance, Norway 2001-2002 Chief Executive Officer, Total Access Communication PLC. Mr. Stephen Woodruff Fordham Director and Chief Executive Officer, United Communication 3 1996-2000 Manager, KPMG Consulting AS, Norway 2000-2001 Managing Director, Total Access Communication PLC. Director Industry PLC. 1994 Research Assistant, the Norwegian School of Management, Norway 1984-1999 Chairman of the Executive Committees, United Communication Feb -Oct 05 Co-Chief Executive Officer, Total Access Communication PLC. 1992-1994 IT Coordinator, ABS & SGP Pumper, Norway Industry PLC. Academic background 2002–Jan 05 Co-Chief Executive Officer, Total Access Communication PLC. Master Degree MA Jurisprudence, Oxford University, UK 2000–Jan 05 Director, Total Access Communication PLC. Royal Decorations 2000-2002 Managing Director, Telenor Asia Pte. Ltd. 2003 The Grand Cross (Third Class, Higher Grade) of the Most Illustrious Order of Chula 1999-2000 Manager, Business Development, Telenor Asia Pte. Ltd. Chom Klao Work Experience 1996-1997 Associate Research Fellow at Harvard University, Center for Science 1997 The Knight Grand Cross (First Class) of the Admirable Order of the Direkgunabhorn 2007-present Director, Total Access Communication PLC. and International Affairs, J.F. Kennedy School of Government, USA 1994 The Knight Grand Cross (First Class) of the Most Noble Order of the Crown of Thailand 2003-present Partner, Wikborg Rein 1996 Advisor, Norwegian Defense Research Establishment, Norway 1995-present Chairman, Masterbulk Pte Ltd. 1993-1996 Deputy Minister (State Secretary) of Defence, Ministry of Defence, 1998-2003 Consultant, Watson, Farley & Williams Norway 1998-2000 Managing Director, Argonaut Shipping Pte Ltd. 1986-1998 Partner, Sinclair Roche & Temperley annual report 2007 014 015 executive management

11 9 1 10 2 5 12 8 3 4 7 6

1 2 3 4

Mr. Sigve Brekke Mr. Rolf Marthinusen Mr. Terje Borge Mr. Thana Thienachariya Director and Chief Executive Officer Chief Technology Officer Chief Financial Officer Chief Commercial Officer

Academic background Academic background Academic background Academic background Master degree Master Degree in Public Administration, John F. Kennedy School of Master degree Electronic and Computer Engineering, Ostfold College of Master degree Master of Science in Business Administration, the Norwegian School of Master degree Master of Business Administration, Washington State University, USA Government, Harvard University, USA Engineering Economics and Business Administration, Norway Bachelor’s degree Bachelor of Economics (2nd Honor), Chulalongkorn University Bachelor’s degree Bachelor Degree Program in Management, the Norwegian School Bachelor’s degree Electronics, the Norwegian University of Science and Technology, of Management, Buskerud, Norway Norway Work Experience Work Experience Bachelor’s degree Degree in Business and Administration, Telemark College, Norway 2007 – present Chief Financial Officer, Total Access Communication PLC. 2005 - present Chief Commercial Officer, Total Access Communication PLC. Work Experience 2005 – 2007 Director Business Development, Telenor Asia 2004 - 2005 Business Unit II Group Director, Total Access Communication PLC. Work Experience Sep 07 - present Chief Technology Officer, Total Access Communication PLC. 2001 - 2005 Senior Vice President, Telenor International Mobile 2003 Prepaid Business Unit Group Director, Total Access Communication PLC. Feb 06 – present Director and Chief Executive Officer, Total Access Communication PLC. Aug 04 - 2007 Chief Technical Officer , Maxis, Malaysia 2000 - 2001 Senior Vice President Corporate Development, Dyno Nobel 2002 Product & Service Group Director, Total Access Communication PLC. Director and Chief Executive Officer, United Communication Industry PLC. June 02 - 2004 Deputy Chief Technical Officer, Total Access Communication PLC. 1997 – 1999 Senior Vice President Finance & Strategy, Dyno Industrier 2001 Consumer Product Management Department Director, Total Access Oct 05 – Feb06 Chief Executive Officer, Total Access Communication PLC. Jan 00 - May 02 Senior Vice President for Network & Technology, Telenor Mobile 1994 – 1997 Corporate Controller, Dyno Industrier Communication PLC. Director and Chief Executive Officer, United Communication Aug 00 - May 02 Director, Stavtelesot , Russia 2000 Convergence Group Director, Total Access Communication PLC. Industry PLC. Apr 96 - 1999 GSM Project Manager, Norconsult telematics, Saudi Telecom, 1996 - 2000 Corporate Finance Group Director, Total Access Communication PLC. Feb-Oct 05 Co-Chief Executive Officer, Total Access Communication PLC. Saudi Arabia 1991 - 1996 Investment Banking Group Assistant Director, Securities One PLC. 2002 – Jan 05 Co-Chief Executive Officer, Total Access Communication PLC. 1993 - 1996 Head of the Network Planning department, Telenor Mobile 2000 – Jan 05 Director, Total Access Communication PLC. 2000 - 2002 Managing Director, Telenor Asia Pte. Ltd. 1999 - 2000 Manager, Business Development, Telenor Asia Pte. Ltd. 1996 - 1997 Associate Research Fellow at Harvard University, Center for Science and International Affairs, J.F. Kennedy School of Government, USA 1996 Advisor, Norwegian Defense Research Establishment, Norway 1993 - 1996 Deputy Minister (State Secretary) of Defence, Ministry of Defence, Norway annual report 2007 016 017

5 7 9 11

Mrs. Patraporn Sirodom Mr. Andrew McBean Mr. Vatcharaphong Siripark Mr. Worawat Pridaphatrakun Chief People Officer Senior Vice President Senior Vice President Senior Vice President

Academic background Academic background Academic background Academic background Master degree Master of Business Administration, the George Washington Higher Diploma Higher Diploma in Computer, Scotland Master Degree Master Degree in Business Administration, Saint Louis University, Master Degree Master Degree in Business Administration, Thammasat University University, Washington DC, USA Saint Louis, USA Master Degree Master Degree in Computer Science, City University of New York, USA Bachelor’s degree Bachelor of Economics, Chulalongkorn University Work Experience Bachelor’s Degree Bachelor of Business Administration in Marketing, Assumption Bachelor’s Degree Bachelor Degree in Business Administration, Ramkhamhaeng Apr 07 – present Senior Vice President - Business Division, Total Access Communication PLC. University University Work Experience May 03 – Apr 07 Managing Director, Microsoft Thailand Bachelor’s Degree Bachelor Degree in Computer Engineering, King Mongkut’s Feb 06 - present Chief People Officer, Total Access Communication PLC. Mar 01 - Apr 03 President Director, Microsoft Indonesia Work Experience Institute of Technology Ladkrabang 2002 – 2006 Head of Investor Relations, Total Access Communication PLC. Jan 2001 Sales Director, Microsoft Asia Pacific Region Oct 00 - present Senior Vice President– dtac Communications Division, Total 2000 – 2002 Investor Relations and Business Analyst, Electricity Generating Sep 2000 Partner Director, Microsoft Asia Pacific Region Access Communication PLC. Work Experience Public Company Limited Aug 1999 Regional Manager, Microsoft Asia Pacific Region Nov 94 - June 00 Client Service, Ogilvy & Mather Advertising (Thailand), Ltd Present Senior Vice President - Change Division, Total Access 1996 - 1999 Economic Officer, Office of Economic and Financial Affairs Royal Thai 1997 Corporate Sales Manager, Microsoft in South Africa. Communication PLC. Embassy in Washington DC, USA 1996 Cape Town branch manager, Lotus in South Africa May 2005 Unit Head of Information Systems, Total Access Communication 1995 Account Manager, IBM’s Lotus in South Africa PLC. 1988 Mr. Andrew was in volved in a variety of business development roles May 2003 Group Director of Information System, Total Access including starting business in France and Germany for European Communication PLC. Solftware publishing (ESP), and Starts Symantec in the U.K. Sep 1998 Department Director of Information System, Total Access 1986 Technical Support Analyst, Ashton-Tate Communication PLC. 1985 Programmer in BASIC

6 8 10 12

Mr. Premon Pinskul Mr. Pakorn Pannachet Mr. Chaiyod Chirabowornkul Dr. Ketchayong Skowratananont Deputy Chief Financial Officer Senior Vice President Senior Vice President Senior Vice President

Academic background Academic background Academic background Academic background Master degree Master of Business Administration, University of Detroit, USA Master degree Master of Science in Telecommunication, Southern Methodist Master degree Master Degree in Engineering Management, University of Missouri- Ph.D. Electrical Engineering, Imperial College, University of London, UK Master degree Master of Arts (Economics), University of Detroit, USA. University, Dallas, Texas, USA Rolla, Missouri, USA Bachelor’s degree Bachelor of Business Administration, Thammasat University Master degree Master in Business Administration in Finance, Drexel University, Master degree Master Degree in Electrical Engineering, Louisiana State University, Philadelphia, Pennsylvania, USA Louisiana, USA Work Experience 2006-present Senior Vice President, Prepaid Business Division, Total Access Work Experience Bachelor’s degree Bachelor of Science in Computer Science, Thammasat University Bachelor’s Degree Bachelor Degree in Electrical Engineering, Chulalongkorn University Communication PLC. 2004-present Deputy Chief Financial Officer, Total Access Communication PLC. 2000 - 2006 Unit Head of Prepaid Business, Total Access Communication PLC. 2001-2004 Assistant Chief Financial Officer & Controller, Total Access Work Experience Communication PLC. 2006 – present Senior Vice President – Value Added Service Division, Total Access Work Experience 2000 - 2001 Assistant Managing Director and Department Director of Communication PLC. Aug 07 - present Senior Vice President - Post-paid Business Division, Total Access Accounting, Total Access Communication PLC. 2005 - 2006 Department Head of Product Development, Total Access Communication PLC. 1999 - 2000 Assistant Managing Director and Department of CSU, Total Access Communication PLC. May 05 - Aug 07 Senior Vice President, Commercial Development Division, Total Communication PLC. 2004 - 2005 Unit Head of Business Development, Total Access Communication Access Communication PLC. 1996 - 1999 Department Director, CSU, Total Access Communication PLC. PLC. Dec 04 - May 05 Group Director of Marketing, Total Access Communication PLC. 1994 - 1996 Department Director, Accounting, Total Access Communication PLC. 2003 - 2004 Unit Head of Premium Consumer Product, Total Access Communication Jun 02 - Dec 04 Senior Vice President - Marketing Strategy and Planning, Hutchison 1992 - 1994 Department Director, Finance and Accounting, Fonepoint (Thailand) PLC. CAT Wireless Multimedia Ltd. (HCWML) Co., Ltd. Dec 99 - Jun 02 Retail Strategy and Development Manager - Shell Oil Product - East Nov 97- Nov 99 Retail Business Manager - Shell Thailand Nov 96 - Nov 97 Product Development (Fleet Card) manager - Shell Thailand

annual report 2007 020 021 business overview

2. The “feel goood” brand campaign was launched in the final quarter of 2007 in order to further improve the dtac brand. Whereas competition over the last few years has been mainly driven by price to increase the customer base, dtac expects that competition in the future, will be focused more on quality and customer experience. The “feel goood” campaign aims at improving the customer experience at all touch points we have with the customer. dtac aims to make the use of our mobile Mobile services in Thailand are mainly provided by private sector operators operating under concessions awarded by the services as easy and convenient as possible for the customer. Amongst others, this means that it should be easy to become two formerly state-owned agencies, which have been corporatised as TOT (formerly Telephone Organization of Thailand) a customer, the tariff plans should be simple, it should be easy to pay for the services and it should be easy to communicate and CAT (formerly Communications Authority of Thailand). The concessions were granted in the early 1990s in the form of with dtac. An even stronger dtac, which is already the most admired local brand in Thailand, will be an important contributor in “Build-Transfer-Operate” (BTO) agreements to assist the state agencies to respond to the growing demand in the country for terms of attracting new customers and it will be equally important in increasing the loyalty of our existing customers. Both these telecommunications and wireless services. factors will be key drivers of future growth in revenues and profitability.

Under the BTO agreements, private sector enterprises are required to build a network infrastructure and to transfer the assets to Financial Highlights the state agency granting the concessions. The operators thereafter have an exclusive right to use the assets during the term of In 2007, dtac successfully listed its shares on the Stock Exchange of Thailand (SET), with the first trading day on 22 June 2007. the concession and to provide services on a revenue sharing basis with the state agency awarding the concession in return for dtac was the first Thai company with shares being quoted on both the SET and the Singapore Stock Exchange (SGX-ST). Upon the right to use the allocated frequency band. the completion of the listing on the SET, dtac received a benefit of income tax reduction for a period of 3 years, starting from 2008. dtac provides wireless telecommunication services on the 800 MHz and 1,800 MHz frequency bands under the 27-year BTO concession from CAT in 1994. Under the concession, which will expire in 2018, we have an agreement to share a portion of our The financial status of dtac continued to strengthen in 2007, with the Debt/Equity ratio below 1 and the Debt/EBITDA ratio below revenues as revenue sharing with CAT. 2, moving dtac’s rating towards investment grade. Operational Highlights The pricing environment improved slightly in 2007 as a consequence of the introduction of interconnection charging among There are 3 principal mobile telecommunication service providers in Thailand. We are the 2nd largest player, operating cellular telecommunication operators in the early part of the year. However, due to a number of external factors, consumer confidence services under the Company brand “dtac”. We have a strong commitment to deliver innovative products and services to satisfy in Thailand was subdued and consumers were more cautious about their spending. dtac nonetheless generated annual the needs of our customers. As of 31 December 2007, dtac had a market share of approximately 30 percent. revenues and EBITDA of THB 65.6 and 18.9 billion, respectively, a growth of 35.3 percent and 6 percent from the previous year, respectively. In addition, net income grew to THB 5.8 billion in 2007, a growth of 18.3 percent. The growth was primarily driven In 2007, we achieved 3.9 million net additional customers and by year-end 2007 the dtac’s total number of customers by the increase in the customer base. amounted to 15.8 million.

dtac believes that the current capital structure is appropriate for the need of both current businesses and future expansion to The Thai mobile market continued to grow strongly in 2007 as seen in the growth of the penetration rate from 63 percent at the serve the increasing number of subscribers and their needs, as well as the investment in next generation technology. Therefore, end of 2006 to 82 percent at the end of 2007. Total mobile customers in the market reached approximately 53 million, a 33 dtac is committed to distribute annual dividends to shareholders of a minimum of 30 percent of net income from fiscal year percent growth from approximately 40 million at the end of the previous year. Furthermore, 89 percent of those customers, or 2007 onwards. 47 million, were in the prepaid segment.

dtac continued to roll-out new base stations in rural areas, primarily in the North and the North East. The penetration rates in these two regions are still well below the average penetration level in Thailand and as such these two regions present interesting business opportunities in terms of attracting new customers. dtac succeeded in increasing its presence in these two regions, and this was partly the reason for the strong increase in our customers base during 2007. The average revenue per user in these two regions is lower than elsewhere, however it still makes good commercial sense for dtac to add these customer as they are valuable additions to the existing customer base.

Year 2007 was a year of major change in the telecommunication industry. The most significant changes of the year were We need to change ourselves to prepare for a 100% penetrated market. “The “feel goood” campaign was just the beginning. 1. The commencement of interconnect (IC) charging as of 1 February 2007 between telecommunication operators based on bilateral agreements constituted a new era in the Thai telecommunication industry. It brought the Thai telecom industry up to ” international standards and towards a level playing field. The interconnection charges are cost-based and have to be approved by the National Telecommunication Commission (NTC) before any bilateral agreement can be reached and signed between “In 2007, we successfully listed our shares on the Stock Exchange of operators. The IC charging between telecommunication operators resulted in differentiated pricing for on-net and off-net traffic. Thailand. We have a solid foundation and are well prepared for further Various promotions aimed at increasing the on-net traffic were successful and resulted in increase in on-net traffic throughout growth, and to continue to strengthen our financial position. the year. ” annual report 2007 022 023 prepaid

The prepaid market continued its strong growth in 2007. dtac was able to add a record high 3.9 million prepaid customers to its customer base for the year, bringing the total prepaid customer base at the end of 2007 to 13.7 million.

The majority of new prepaid customers came from areas outside Bangkok, especially in the northern and the northeastern region of the country, where dtac has continuously been expanding its network coverage over the past few years. In 2007 alone, dtac put up a total of 963 new base stations, mostly located outside city areas where we previously had limited coverage. Moreover, the mobile phone penetration rates in those areas were still much lower than the national average, showing a potential for Last year, dtac was able to grow its prepaid customer base at the fastest- further growth in term of new customers, usually prepaid. “ ever pace due in part to the strength of our “HAPPY” brand. ” Along with network coverage expansion into rural areas, dtac also expanded its distribution network of telecom channels and increased distribution channels of both SIM cards and refill vouchers to cover convenience stores, and non-telecom channels. E-Refills and top-up via dtac post-paid subscribers were also introduced to the market.

The introduction of interconnection charging among telecom operators in the first quarter of 2007 improved the competitive environment in the prepaid market. Each operator was more cautious in using low tariffs to attract new customers. Overall, tariffs were more stable in 2007 compared to the previous years, which was a good sign for the industry as a whole.

dtac added two new members to its “Jai-dee” family of services, namely “Jai-dee Free Days” and “Jai-dee Emergency”. The “Jai-dee Free Days” service enabled prepaid customers to increase their validity if they still had money left in their accounts by paying only the SMS fees for requesting additional days. The other service, “Jai-dee Emergency”, provided prepaid customers with the ability to make an emergency call when they had no money left in their accounts. The previously launched “Jai-dee” services included “Jai-dee Exchange”, “Jai-dee Lending”, and “Jai-dee Transfer”.

For 2008, dtac believes that the market for prepaid customers will continue to grow at the same level as last year. New customers will mostly come from the remote areas, where penetration rates are still below the national level. In order to accommodate the growth in customers, dtac will continue to roll out its network coverage and offer attractive products and services in those areas. annual report 2007 024 025 post-paid

dtac has been successful in the post-paid market and its customer base has continuously increased over the past few years. However, the rapid growth of the post-paid customer base in early 2007 brought in a number of customers who should not have been using the post-paid service. dtac, therefore, had to adjust its strategy and take a different approach to the post-paid market.

Later in 2007, dtac revamped its post-paid marketing strategy along with the introduction of the “feel goood” brand campaign, which constituted the next generation post-paid service. The full life cycle of the post-paid customer was addressed. It began Next Generation post-paid aim to make everything simple and more convenient with the acquisition of new customers by expanding distribution channels to cover more retail phone shops. Then the registration “ for our customers. Ultimately, to make them “feel goood” process was redesigned to make it much easier to apply for the services although the verification process remained intense. ” Next, the tariff structure was more customized to serve different target groups.

dtac put a great effort to make services more convenient for post-paid customers to enable them to (1) access new payment channels, currently being expanded from 300 to 6,000 outlets, including 7-11, Counter Service, and Family Mart, in addition to conventional payment channels via dtac shops or service halls, (2) postpone payment date by themselves, (3) check call detail records via the web, (4) refill prepaid accounts, (5) change price plans by themselves and switch to prepaid services at no extra charge, and (6) easily terminate services by calling the call center.

These changes address the whole life cycle of post-paid customers with an aim to make them “feel goood” and continue using our services, and to continue to expand the post-paid customer base in the future.

At the end of 2007, dtac had a total of 2.1 million post-paid customers, adding new 37,000 during 2007.

dtac believes that the post-paid market still has futher room for growth and is not only restricted to urban areas. Areas with payment channels, such as 7-11, post office, Counter Services, and Family Marts, are also the potential targeted areas. dtac will continue to expand its services and target customer groups. Furthermore, we will develop services to reward our existing customers, depending on how long they have been using our service. We want to maintain and grow the “feel goood” experience. annual report 2007 026 027 business customers & international roaming

dtac saw a potential in strengthening its market position in the business customer segment. In 2007, a new division was set up to focus mainly on this customer segment. The division is responsible for taking care of the business customers throughout their life cycle, from acquisition to termination of the services, and the international roaming business.

We recognize that the needs of the business customer is different from the individual customer. We therefore had to do a lot of things differently in order to better serve the business customers. In 2007, several initiatives were implemented, including a new business customer database, a new data warehouse system, a new distribution system, as well as a new sales force automation By the end of 2010, we want to be the No. 1 provider in telecommunication system. In addition, a new management team was recruited. Each team member concentrates on only a very focused business “products and solutions in the business customer and traveler market. customer group - such as big enterprises, SMEs just to name a few. Business processes were also redesigned to accommodate ” the business expansion and streamline additional services in the future. In summary, 2007 was the year that we laid an operating infrastructure for future business growth.

For big enterprises, dtac can act as their partner in planning long-term telecommunication needs and provide solutions for them to better serve their end customers. Telecommunication will always be at the heart of doing business. In the future, as more and more workers are becoming mobile, wireless communication will take the center stage in bringing those workers close to their customers and help them work more efficiently. In addition, in the foreseeable future, data services will increase in importance in providing integrated services to our customers. dtac, as one of the biggest wireless operators, can offer those kinds of solutions to our business partners on a long-term basis.

The International roaming business has changed significantly over the past 2 years around the world. In 2007, dtac signed more agreements with roaming partners than we have done before. Not only will this help improve inbound roaming revenues, it will help improve pricing for our outbound customers as well. In addition, it will also provide us with the opportunity to make our customers’ lives simpler, and to offer a higher service quality. annual report 2007 028 029 value added services (VAS) business outlook

dtac believes that the mobile phone market will continue to grow for the next few years, bringing the penetration rate to or possibly in excess of 100 percent. The growth in the market, however, depends on a number of factors including changes in the regulatory environment, coverage expansion, and general economic conditions in Thailand.

Overall the market will be driven by prepaid customer growth, mainly from rural areas. Although post-paid customers accounts for approximately 13 percent of total customers at the end of 2007, they are still generating a significant revenue stream. In addition, corporate customers are a potential group for future revenue development.

As the mobile penetration rate is approaching maturity, customer satisfaction will take a center stage in dtac’s future activities in addition to the acquisition activities that have been ongoing for the past few years. The “feel goood” marketing campaign will Value added services for the year 2007 continued to grow strongly both in terms of number of users and revenues. In particular, be pushed further in 2008 in order to improve both current and new subscribers’ satisfaction towards dtac’s service offerings. the number of mobile internet users and service revenues generated from their usage more than doubled from last year. This was In addition, dtac will focus on offering innovative but simple tariff structures in order to stimulate usage and satisfy the individual driven by the expansion of high speed data network using EDGE technology to cover the whole country, which was completed needs of each customer segment. in 2007. Even though voice services will continue to predominate revenue generation, VAS, especially data services will most likely VAS revenues are at present evenly split 4 ways, based on type of services, consisting of Short Message Service (SMS), Mobile contribute to future revenue growth, as seen in the growth of revenue from data services in 2007. dtac will continue to enhance Internet Service on EDGE/GPRS network, Ring Back Tone, and Content Download. The high growth of revenue from dtac’s mobile our innovative products, network quality and customer services, and which will be our main focus for the years to come. internet service will make it become a more important revenue contributor to the overall VAS revenues in the future. In addition, the rollout of nationwide EDGE coverage will also help dtac better understand the need of data users and better prepare for the development of future products and services that need high speed data transfer.

For 2008, dtac will concentrate not only on developing new products and services to match the customers’ needs and generate satisfactory revenue streams, but also on lowering service costs. The focus will be on 3 main areas: (1) expansion of distribution channels and product and service offerings in order to better serve the customers’ needs and provide seamless customer services, (2) development of products and services to take advantage of dtac’s nationwide EDGE network, and (3) development of a new business model for content download in order to reduce cost of services.

The growth of data usage on our EDGE network provides us with more “understanding of data users’ needs and prepares ourselves for the next generation of wireless services. ” annual report 2007 030 031 people

Continue to communicate At dtac, communication channel is the backbone of the Company in creating better understanding among employees at all levels. Because all employees are responsible for the success of the company, it is necessary for them to understand the company’s situation and direction. Moreover, they are encouraged to participate in relationship building activities, which have been organized regularly in the organization. Giving employees an opportunity to speak their minds and share their opinions is also part of dtac’s culture and communication channel.

Develop programs and activities We have never stopped searching for new programs and activities to enhance our employees’ skills and knowledge. Up-to-date information along with business direction and on-going arrangement of internal activities will help inspire and motivate all dtac Start from the top employees. No matter how big or small the issues, dtac management always sets a good example by showing all employees how to think out of the box, how to develop and provide products and services that match customers’ needs, how to keep promises, how to live the “dtac way”, and how to treat everyone equally.

Lead by example At dtac, we communicate our culture through what we’ve seen in everyday’s life, including our management’s thinking process, our employees’ dedication, and their friendliness. All these will pass on to the way we treat our customer with sincerity.

Learn by doing At dtac, we accept failure with no regret as we believe that those who fail are the ones who are willing to take risks and to do things that they are not familiar with. Furthermore, failure also teaches us valuable lessons that can never be found in any textbooks. We provide our employees the opportunities to step out of their routine jobs to confront new challenges as we firmly believe that it will help push our organization towards future success.

Hire for attitude Though knowledge and experience are crucial in conducting our normal business operation, employees’ attitude is a more important ingredient in creating positive motivation and helping stimulate determination to learn and create new things. The Passion is our energy to make things happen. We dare to step out right attitude will give the organization flexibility to move towards new directions and make it become more dynamic. “of our comfort zones to challenge ourselves, and we learn from our mistakes to get better everyday. Keep consistency ” Our path to success does not comprise only of learning, doing, and then success. It has to start with embedding the Company’s values into every employee’s mind, and then reiterating and practicing it over and over again, to become part of their everyday lives. annual report 2007 034 035 dtac and the community

Big Organizations supports Small Society units To ensure that all our activities are in line with the Sufficiency Economy concept which requires big companies to help support small businesses and corporations, dtac has also coorporated and provided support to various social projects to other organizations. Among them are :

“Friends in Need (of “PA”) Volunteers Foundation” dtac has been a good partner with Friends in Need (of “PA”) Volunteers Foundation (under the Thai Red Cross Society) in implementing social activities to help people, especially when natural disasters occur. Since the tsunami wave hit the southern provinces in Andaman region, dtac has been working closely with the foundation to help people affected from disasters such as flood, mudslides and fires. The assistance is provided both during emergency needs, such as giving rescue bags and communication devices including phones and SIM cards, and also help them in the rehabilitation process after the disaster. dtac also offered SIM cards to the foundation for communication use of the National Disaster Warning Center.

Total Access Communication Public Company Limited is a forefront business organization that has been engaged in Corporate “dtac Khon Khon Dee Project” In honor of HM the King on his 80th Birthday, dtac created a special project by joining force Social Responsibility for a very long time. Over the past decade, we have been doing business and social activities based on His with TV Burapa to do “dtac Khon Khon Dee” in order to search for those who have devoted themselves and dedicated their time Majesty the King’s concept of the Sufficiency Economy with the aim to help create sustainable development of Thailand. Our to help less-fortunate people. The project received quite considerable support from our customers and general public. solid social contribution on this has won us the honorable present award from the Office of Royal Development Project Board as a large-scale business organization that has successfully integrated Sufficiency Economy concept into its business practices as “Rescue Boat Project” dtac joined hands with various organizations in Norway to raise fund for building a rescue boat with the well as social activities including : aim to prevent incidents in the Andaman sea. The rescue boat was already handed to the Krabi Provincial Administration for use in preventing and helping people in incidents in the Andaman Sea. “Sam Nuek Rak Ban Kerd Foundation” is an ongoing social project that dtac has been supporting for over a decade by granting sponsorships to youths studying in junior to undergraduate levels from all provinces. So far, there are five generations “Sharing Knowledge to Communities” Throughout the year 2007, dtac has donated computers to a total of 27 schools in of youths who have completed the undergraduate level and gone back to work in their hometown. The project is considered remote areas nationwide to provide them opportunities for distant learning and education. the most sustainable and practical social project that dtac has been supporting and will continue to support for the many more years until all the 999 students have completed their university education. In dtac, we firmly believe in being a good corporate citizen and it is part of our mission and vision to integrate social contribution into our business practices with the hope that we, as a public company, can help bring about the economic and social “Ruam Duay Chuay Kan Happy Station” is the partnership between dtac and the network of 23 radio stations covering development of the country in the long run. more than 40 provinces across the country. Based on the concept of the “Network of Happiness and Virtue”, we have jointly developed social activities by integrating communication technologies for the benefit of the people nationwide. Among the projects developed together is the Hotline Number 1677, which is a center to help people with their problems, at any time and anywhere; and website www.rakbankerd.com which is a communication channel providing news and content for people in the community. Ruam Duay Chuay Kan Happy Station has effectively integrated the communication networks of mobile phone, radio and the internet for the benefit of the society as a whole.

“Promoting Self-sufficient Living” On various occasions, dtac has organized special workshops to promote self-sufficiency practices to local communities. In 2007, we helped several communities such as Ban Hae community in , Umphang Wittayakhom School in Umphang district, Tak province and Ban Gerda under the Children’ Rights Foundation in Lop Buri province to teach them ways for sustainable living by encouraging them to produce products such as home-grown vegetables, detergents, dish-washing liquid and chemical-free fertilizer for household consumption. The project has successfully created better quality of living and self-sufficient practices for people in different communities. we never stop making things better for you annual report 2007 038 039 milestones

OCTOBER • Received “Disclosure Report Award 2003” from the Securities and Exchange Commission, Thailand (“SEC”) 2004 APRIL • In the “Asia’s Best Company 2004” survey conducted by Financial Asia Magazine, the The Company was established as a limited company in August 1989 by Bencharongkul family to provide wireless telecommu- Company received: nications services in 800 MHz and 1800 MHz frequency bands under a “Build-Transfer-Operate” concession granted by 1. Best Company in Investors Relations (4th rank); and CAT Telecom Public Company Limited (formerly known as Communication Authority of Thailand -“CAT”) in 1991 and 1994 DECEMBER • Won “Technology Fast 500 Asia Pacific 2004 Award” of Asia Pacific from Deloitte respectively. • Standard & Poor’s announced that the Company’s credit rating was BB and the outlook was stable 2005 JUNE • Won “Mobile Operator of the Year Award” in Thailand from Asian MobileNews Magazine The Company’s landmark developments in the subsequent year include: JULY • Introduced the first mobile email solution in Thailand for corporate segment, called “Push Mail” OCTOBER • Telenor and Thai Telco Holdings made a tender offer for the shares in the Company after 1990 NOVEMBER • TAC was granted a concession from CAT to operate wireless services on a revenue sharing Thai Telco Holdings bought shares in UCOM basis under the term of “Build-Transfer-Operate” DECEMBER • The tender offer by Telenor and Thai Telco Holdings completed on 22 December 2005 1994 FEBRUARY • TAC entered into an Access Charge Agreement with TOT Public Company Limited (formerly with 16,457,400 shares (or 3.47 percent) tendered known as Telephone Organization of Thailand -“TOT”) in order to access their networks 2006 JANUARY • Standard & Poor’s announced that the Company’s credit rating was BB+ and the outlook was stable 1995 FEBRUARY • TAC was registered as a public company MARCH • Moody’s Asia Pacific Limited announced that the credit rating of senior and unsecured foreign OCTOBER • TAC sold 13 percent of its paid-up capital to the public and listed the shares on the Singapore facility and debenture of the Company was increased to Ba1 with positive outlook Exchange Trading Limited APRIL • Fitch Ratings (Thailand) Limited announced that the domestic long-term foreign facility was NOVEMBER • TAC issued new 42.8 million shares to TOT and TOT agreed to provide discounts on access improved to BB+, the domestic long-term facility to A(tha) and the domestic short-term charge payments facility to F1(tha) 1996 NOVEMBER • CAT agreed to extend concession period until 2018 JUNE • Won the “Mobile Operator of the Year 2006 Award” in Thailand from Asian MobileNews 2000 MAY • United Communication Industry Public Company Limited (“UCOM”) sold 5.5 million outstanding Magazine for the second consecutive year shares of TAC to Telenor Asia Pte. (“Telenor”) JULY • TRIS Rating announced that the Company’s credit rating of long-term local currency facility JUNE • TAC issued new 21.5 million shares and sold these shares to Telenor, as a result, Telenor held was improved to A with stable outlook 6.34 percent equity interest in the Company AUGUST • NTC approved the term of reference on the interconnection charge as a basis for negotiation AUGUST • TAC issued new 48.5 million shares and sold these shares to Telenor, as a result, Telenor held among operators 29.94 percent equity interest in the Company SEPTEMBER • Standard & Poor’s announced that the Company’s credit rating was BB+ and the outlook was stable 2001 MARCH • Launched new brand “dtac” and adopted a radically different approach to doing business in • Implemented 10-digit mobile phone numbers by replacing the prefix 0 with 08 the Thai market OCTOBER • dtac launched SIM Muan Suen in North East of Thailand ; the first regional marketing campaign APRIL • TOT agreed to amend the basis of calculation of the access charge for prepaid services from • dtac launched Postpaid Life Care Baht 200 per month per number to 18 percent of the value of the prepaid vouchers sold NOVEMBER • dtac signed Interconnection agreement with True Move NOVEMBER • Launched GPRS-based data service across the entire dtac network • dtac signed Interconnection agreement with AIS 2002 APRIL • Unlocked IMEI (International Mobile Equipment Identity) codes to allow all mobile handsets DECEMBER • dtac signed Interconnection agreement with Triple T Broadband to use the Company’ s network 2007 JUNE • dtac issued 82 million new shares to be listed in Stock Exchange of Thailand and become the MAY • Discontinued handset and accessories sales and distributions by transferring this business to first dual listing (SET and SGX) company in Thailand UD (United Distribution Business Company Limited –“UD” a company in which the Company • Won “Mobile Operator of the Year Award” in Thailand from Asian MobileNews Awards 2007. and UCOM has 25 percent and 75 percent equity interest, respectively. (At present UCOM Organized by Asian MobileNews Magazine for the third consecutive year assigns all of the rights and benefits to Benchachinda Holding) AUGUST • “Marketing Excellence Awards 2006” from Thailand Corporate Excellent Awards, organized by 2003 JANUARY • Excise Tax was enforced Thailand Management Association (TMA) and Sasin Graduate Institute of Business Administration APRIL • In the “Asia’s Best Company 2003” survey conducted by Financial Asia Magazine, the Company of Chulalongkorn University received: OCTOBER • Refreshed “dtac” brand by launching a new logo featuring a blue fan with an aim to make 1. Best Company in Financial Management (4th rank); customers “feel goood” 2. Best Company in Enhancing of Shareholders’ Wealth (5th rank); DECEMBER • dtac launched SIM Muan Okk Muan Jai in North of Thailand 3. Best Company in Investors Relations (6th rank); annual report 2007 040 041 risk and mitigation

In October 2004, the NTC was established as the new independent regulator of the telecommunications sector in Thailand. It is empowered, under the TBA and the Frequency Act, to issue a number of policies and regulations that may have a significant impact on the telecommunications sector, including those relating to (i) fair and orderly market competition among telecommunications service providers, (ii) fees and tariffs for telecommunications services, (iii) allocation of frequency and other The Company is exposed to a number of risks that may affect its business and the value of its shares. The following sets out telecommunications resources, (iv) consumer protection, (v) the promotion of specific telecommunications services deemed some of the significant risks that could affect the Company and the value of its shares. However, there are some risks that the beneficial to economic and social development, and (vi) the establishment of emergency telecommunications services. Company may not currently be aware of and some risks that the Company considers to be immaterial. These risks could have an impact upon the operation of the Company in the future. The Company is unable to predict how the NTC will exercise its regulatory authority, the nature and scope of the policies and 1. Risks from Business Operations regulations it will issue in the future, and how it will supervise the implementation of such policies, as well as the enforcement of the legislation and regulations, both at present and which may be enacted in the future. However, the Company believes The Thai telecommunications sector has undergone major changes, both in terms of technological and regulatory reform, which that the NTC will exercise its regulatory authority in accordance with the TBA and the Frequency Act, on the basis of free and may render the business operations of the Company vulnerable to the following risks: fair competition.

1.1 Risk on continued long-term operations This uncertainty poses risks to the Company. While the Company believes that the establishment of the NTC is a positive The Company’s core business is the operation and provision of cellular system radio telecommunications services under the development for private operators such as the Company, it cannot be assured that any actions undertaken by the NTC, or any Telecommunication Business Act (TBA). According to Section 80 of the TBA, the Company is able to continue to provide such services pursuant to the terms of the Cellular Agreement between the Company and CAT, without the requirement to obtain a other regulatory bodies, or the reform of the telecommunications regulatory regime will not impact its business, financial licence from the NTC. Under the Cellular Agreement, CAT may exercise its rights, including the right to terminate the Cellular condition, results of operations and prospects. Agreement, if the Company is in breach of the Cellular Agreement and fails to rectify the breach within the specified period and, as a result, CAT suffers losses and damages, or if the Company becomes disqualified under the FBA. Therefore, it is possible that b) Legal issues concerning the Amendments to the Cellular Agreement are being considered by the Government if the Company is in breach of the Cellular Agreement, CAT may terminate the Cellular Agreement and if such the termination Under the Act on Private Sector Undertaking of State Businesses B.E. 2535 (1992) (the “PUA”), which became effective on 8 April is validly and legally made, the right of the Company to continue to operate the telecommunication business may be affected, 1992, a government agency that wishes to engage private entities to join or undertake a government project, having a capital unless it obtains the relevant telecommunication licences from the NTC. However, the Company cannot be assured or determine investment of Baht 1 billion or more, must comply with the following 3 stages. First, the government agency that is the owner of whether it will be granted such licences, and if such licences will be granted, what terms and conditions will be imposed upon the project must submit a report on the study and analysis of the project to the Ministry of Finance to obtain approval from the the Company. Therefore, if the Cellular Agreement is validly and legally terminated and the Company is not granted the relevant Cabinet. Second, once the Cabinet’s approval has been obtained, the process of selecting private entities to join or undertake licenses from the NTC, this may have a material and adverse effect on the business, financial position, results of business the project, including negotiating agreements, in particular those relating to the Government’s interest, may begin. Third, this operations and prospect of the Company. stage involves the supervising and monitoring of the results of the operation under the agreements.

1.2 Risk from expiration of the Cellular Agreement The Company entered into the Cellular Agreement with CAT on 14 November 1990 before the PUA became effective. The project The Company’s core business is the operation and provision of cellular system radio telecommunications services under the under the Cellular Agreement had a capital investment of more than Baht 5,500 million and a term of 15 years. Although the Cellular Agreement between the Company and CAT, dated 14 November 1990, using the Analog AMPS network at 800 MHz Cellular Agreement was entered into before the PUA became effective, such Cellular Agreement still remained in full force frequency band and the Digital GSM network at 1800 MHz frequency band. The Cellular Agreement originally had a term of and effect. The PUA provides that any stages proceeded by government project before the PUA became effective will be valid. 15 years, but was later extended by two subsequent amendments, dated 23 July 1993 and 22 November 1996, to cover a term However, any stages proceed thereafter must comply with the PUA. Therefore, The Cellular Agreement, which was entered into of 22 years and 27 years, respectively. The Cellular Agreement will expire on 15 September 2018. After the enactment of the on 14 November 1990, remains valid without having to comply with stages one and two. Only stage three under the PUA, which TBA, a telecommunications business operator must obtain a licence from NTC, and CAT no longer has the authority to grant a involves the supervising and monitoring of the project, must be complied with. concession to any person to operate a telecommunications business. If the Company wishes to continue its telecommunications business operations after the Cellular Agreement expires, the Company must apply for a licence from NTC. After the PUA became effective, the Company and CAT entered into 3 amendments to the Cellular Agreement as follows: Amendment No. 1/2536 on 23 July 1993, Amendment No. 2/2539 on 26 June 1996, and Amendment No. 3/2539 on 22 Therefore, after the Cellular Agreement expires, the Company cannot be assured that it will be granted a telecommunications November 1996. Such amendments include the term of the agreement, rate of compensation payable by the Company to CAT business licence from NTC and, if granted, under what terms and conditions. Such uncertainties may have a material adverse and certain other issues. effect on the business, financial condition, results of operations and prospects of the Company. On 23 January 2007, the Cabinet resolved that the Office of the Council of State review legal issues to ascertain whether CAT, 1.3 Risks from changes in laws and regulations concerning the telecommunications business as the project owner, is required and has complied with stages one and two with respect to the amendments to the Cellular a) The telecommunications industry is in a state of transition and not all laws and regulations concerning the Agreement. If the amendments to the Cellular Agreement must comply with stages one and two of the PUA, and if further facts telecommunications business are clear. indicate that the amendments of the Cellular Agreement did not comply with stages one and two above, the Company will As a member of the World Trade Organization (WTO), Thailand was obliged to liberalise its infrastructure telecommunications proceed to rectify such in accordance with the PUA. However, if it cannot be rectified, the effect of the PUA on the amendments business by the year 2006. As a result, the Thai government launched a reform package of the telecommunications regulatory regime. to the Cellular Agreement may have a material adverse affect on the Company, in particular to the term of the Cellular Agreement and the rate of compensation payable by the Company to CAT. Legal issues arising under the relevant law, particularly the TBA and the Frequency Act are uncertain because the TBA and the Frequency Act remain largely untested in the Thai courts. annual report 2007 042 043

The Company believes that the amendments to the Cellular Agreement are not required to comply with stages one and two of 3. TBA the PUA. The Council of State has stated in its ruling No. 291/2536 that the extension to the term of the Cellular Agreement can Under the TBA, “foreign entities” under the FBA are not eligible for Type 2 and/or Type 3 telecommunications business be done by complying with stage three (supervising and monitoring of the project under the Cellular Agreement) as the Cellular licences. Agreement had been entered into by the Company and CAT before the PUA became effective. In February 2007, DTAC Network Co., Ltd obtained a letter from the Ministry of Commerce confirming its Thai company The Company will take all appropriate actions to minimise the impact, if any, of the PUA on the Company’s business. status under the FBA and, as a result of the letter from the Ministry of Commerce, NTC has granted DTAC Network Co., Ltd Type 3 telecommunications business licence to engage in international direct dialling services. If the Company, through DTAC c) The operation costs of the Company under the terms of the interconnection agreements between the Company Network Co., Ltd, wishes to continue its international direct dialling services, it must maintain its status as a Thai company under and certain operators are not clear. the FBA. Pursuant to the TBA, an operator who wishes to inter-connect with the network of another operator must enter into an interconnection agreement with the owner of the network. At present, certain operators have not entered into negotiations on In addition, the Cellular Agreement requires that the Company maintain its qualifications under the FBA. the interconnection charge that the Company will charge. In particular, TOT, who entered into an Access Charge Agreement with the Company in 1994 and 2001, has not come to any agreement with the Company on the interconnection charge. Pursuant to Despite the restrictive effect of the FBA, which has been in effect for more than 8 years, several provisions of the FBA remain the Access Charge Agreements, the Company is required to pay an access charge to TOT at a flat rate per number in respect of largely untested in the Thai courts and in practice there exists no guidance from any regulatory bodies which would enable the a post-paid customer and a fixed percentage of the value of the prepaid vouchers. However, at present, the interconnection Company to accurately evaluate or determine the effect of these statutory restrictions on the Company. between business operators is subject to the TBA and the Interconnection Notification. The TBA and the Interconnection Notification require that the interconnection charge be calculated on a fair and cost-based basis and must not purport to If the Company fails to maintain its status as a Thai Company or its qualifications under the FBA, or is in breach of the FBA or discriminate. In this regard, on 17 November 2006, the Company informed TOT and CAT that it will pay the access charge at the the TBA (as may be amended), this may give rise to a breach of contract and may constitute a ground for the counterparties to rate prescribed by the applicable laws, instead of the access charge prescribed in the Access Charge Agreement under the Old terminate certain commercial contracts. The Company may also be in breach of the condition of the licences or permits, if such Regime. The Company believes that the access charge under the Access Charge Agreement is not in compliance with the TBA licences or permits require the Company to maintain its foreign shareholding limit or comply with the FBA. and the Interconnection Notification, which require that TOT charge the interconnection charge at a fair, reasonable and cost- oriented rate. The Cabinet passed resolutions on 9 January 2007 and 10 April 2007 to approve the Draft Amendments, pursuant to which, the definition of a “foreigner” or “foreign entity” under Section 4 of the Foreign Business Act was proposed to be amended to include TOT has argued that the Company is obliged to make payment at the rate specified in the Access Charge Agreements and has a company which is majority-controlled in terms of the shareholders’ voting right (directly or indirectly) by a foreigner(s). If the refused the payment of the interconnection charge (calculated by the Company in accordance with the law). On 16 November Draft Amendments are enacted in their current forms, and if, at that time, the Company is majority-controlled by a foreigner(s), the 2007, TOT submitted a case to the Civil Court requiring that CAT and the Company make payment of Access Charge and penalty Company might be considered to be a “foreign entity” under the Foreign Business Act, as amended by the Draft Amendments. from November 2006 to 31 October 2007 amounting to Baht 11,705,066,637.11 and of Access Charge from 1 November 2007 until the case is final. At present, the case is under the court proceedings. There is no judical decision indicating that the However, since telecommunications business is not restricted under Annex 1 or Annex 2 to the Foreign Business Act, it would be above-mentioned payment of Interconnection Charge instead of Access Charge is incorrect. However, if any ruling or decision regarded as service business under Annex 3 to the Foreign Business Act. In this regard, if the Draft Amendments were enacted in is made by the competent agencies or the Court that the Company must pay the access charge prescribed in the Access Charge their current forms, the Company believes that the Company would be entitled to apply for a certificate from the MOC to continue Agreement, such ruling or decision may have an effect on the financial condition of the Company. its business operation until the cessation of its business, pursuant to Section 8 of the Draft Amendments. At present, the MOC has not prescribed rules and regulations for applying for such a certificate. Therefore, it is not entirely clear at this stage whether d) The Company’s ability to raise capital may be restricted due to statutory or contractual restrictions on foreign such rules and regulations would impose conditions which would make it impossible or impracticable for the Company to apply ownership. for such a certificate or whether, upon application, the MOC would be willing to grant such a licence to the Company. Generally, the foreign shareholding restrictions differ from statute to statute, and from contract to contract. Any breach of these restrictions may result in a revocation of permits or termination of contracts and/or the Company may not be able to provide However, it is not certain whether the new FBA will be enacted in the current form of the Draft Amendments and when it will be telecommunications services under Section 80 of the TBA because of such breach. enacted.

Major restrictions imposed by laws are summarised as follows: In light of the Draft Amendments, if enacted in the current form, the Company’s ability to raise capital through its foreign partners may be restricted. However, subject to compliance with certain conditions and formalities, the Draft Amendments provide for 1. Land Code grandfathering provisions for business operators, including the Company, if they are regarded as “foreign entities” under the Foreigners are prohibited from owning land under the Land Code, except where permission is granted under the relevant law. new FBA, to continue engaging in certain restricted businesses. Without permission, foreigners are required to dispose of the land in their possession within a period of not less than 180 days and not more than 1 year. It is possible that these statutory restrictions or regulatory changes could adversely affect the ability of the Company to provide telecommunications services and/or to compete in the market. The term “foreigners” under the Land Code is defined to include a public or private company with more than 49 percent of its registered capital being held by foreigners or more than half of its shareholders being foreigners. e) Prohibition on acts constituting foreign dominance

2. FBA Section 8 of the TBA authorises the NTC to require applicants for a licence of certain types to prescribe a prohibition on acts “Foreign entities”, as defined under the FBA, are prohibited from engaging in certain businesses, including telecommunications constituting foreign dominance. The NTC is in the process of drafting a regulation governing actions or behaviours that constitute services, unless a licence (the “FBA Licence”) from the Director-General of the Department of Business Development of the business dominance by foreigners or tend or are likely to constitute business dominance by foreigners. Given that the relevant MOC is obtained. regulation has not yet been issued, it is currently unclear as to how the regulation, once issued, would affect the business operations of the Company. annual report 2007 044 045 f) Inspection of contracts or agreements entered into with foreign entities, foreign governments or international On 11 January 2008, CAT submitted the dispute to the Arbitration Institute requesting the Company make additional concession organisations payments for the 12th – 16th concession year together with penalties totalling Baht 21,982 million, by claiming that the Company Section 54 of the TBA prescribes that any contract or agreement for the business operation and supply of telecommunications paid incorrect amount of revenue sharing during that period. services (as prescribed in the relevant notification of the NTC), to be entered into between the licensee under the TBA and foreign governments, international organisations and a natural person or juristic person residing in a foreign country (including Currently, the dispute is still in the arbitration process, and the process of resolving these matters could take several years. The any amendment thereto or cancellation thereof) must be approved by the NTC, except for regular procurements. Pursuant to Company is currently at the stage of preparing to lodge its plea in the case. The Company’s management believes, based on the Foreign Contract Notification, the licensees are required to obtain the NTC’s approval before entering into a contract in advice from legal counsel, that the arbitral award would not have a material adverse effect on the financial position of the Company. connection with the telecommunications business with a foreign counterparty, except for regular procurement contracts or exempted contracts as prescribed by the NTC. In addition, the NTC is also empowered to order the licensees to amend such 1.4 Risk from competition contacts in the case where the terms and conditions of such contracts are not in compliance with the applicable laws or may a) The Thai mobile telecommunications industry is highly competitive and has recently experienced periods of cause a monopoly or restrict competition in a manner in which customers may be treated unfairly. In this regard, the ability intense price competition. of the Company to enter into a contract may be restricted by the requirements of the Foreign Contract Notification. However, From the second quarter of 2005, price competition was particularly intense, with each operator significantly reducing prepaid pursuant to the Foreign Contract Notification, contracts entered into by the Company prior to the issuance of this Notification and post-paid tariffs and extending promotional periods. If high competition in the market continues and the Company cannot will not be affected, except where the terms and conditions of such contracts are not in compliance with the applicable laws or respond to it in a timely and cost-efficient manner, high competition may adversely affect the business, result of operations, financial conditions and prospects of the Company. may cause a monopoly or restrict competition in a manner in which customers may be treated unfairly. At present, the Company’s agreements with foreign entities include the international roaming agreements. However, the value of these agreements is Price competition has had a negative impact on the telecommunication industry as a whole, both in terms of operating results insignificant. The Company also has an agreement with a foreign entity which relates to a procurement in the normal course of and revenue growth. The Company believes that market participants would be more careful before launching new promotion business of the Company. campaigns, especially since the last price war had an adverse impact on the operating results of market participants and resulted in network congestion problems. However, with appropriate measures put in place to respond to market competition, g) Tariffs the Company believes that it would be able to minimise the impact of such competition. The NTC has the authority to prescribe the maximum tariffs that the Company and other telecommunications service providers can charge for providing various types of telecommunications services in Thailand, and to regulate the ability of b) The Company may face increased competition from new market entrants telecommunications service providers to offer discounts and bundled services. Adoption by the NTC of a new tariff regime could At present, the NTC has the authority to issue telecommunication business licences to new operators on the basis of free and conflict with some of the Company’s current contractual commitments and the new regime may require the Company to reduce fair competition in the market. The Company cannot determine at this stage how many applicants will be granted licences from the fees it currently charges customers or may prevent the Company from changing or increasing tariffs in a timely manner. the NTC and the granting of new licences will result in an increase in the number of market players and, hence, may cause more However, if a new tariff regime were adopted, it would be applicable to all operators across the industry. intense competition. In any event, it is believed that competition in the market will be more intense if the number of licensed operators increases. h) The operation costs of the Company may change due to a change in the excise tax In 2003, the Emergency Decree for the Amendment to the Excise Tax Act B.E. 2527 (1984) imposed an excise tax on The regulatory reform to liberalise the Thai telecommunication market may also add to an increase in the competition level and telecommunications service businesses. The excise tax was originally imposed on industrial operations and entertainment may have an impact on the competitiveness of the existing operators and the Company. It is possible that they may also adopt establishments. In addition, the Emergency Decree for the Amendment to the Excise Tax Tariff Act B.E. 2527 (1984) imposed an an aggressive pricing policy or a subsidy approach to gain more market share. However, the Company believes that, since it has excise tax at the rate of 10 percent for wireless operators and 2 percent for fixed line operators. a recognised brand and market position, and quality network, and has reached a significant scale of market share and customer base, it will be able to maintain its competitiveness and remain one of the leading operators in the wireless service business. The excise tax payment (excluding interest, penalty or any surcharge) could be made by offsetting this with the revenue sharing payment that the telecommunications service providers are required to make to their respective state agencies party. c) Technological changes may adversely affect the Company’s business The Company currently operates on the most advanced GSM technology in the Thai market, including high-speed data using a The two Emergency Decrees drew heavy criticism, as the state agencies who are parties to concession agreements suffered a nationwide GPRS and EDGE platform, which is an additional requirement developed for application with a GSM network. significant burden on excise tax payment at a rate of 10 percent for wireless operator counterparties and 2 percent for fixed line operator counterparties, causing a significant loss of state revenue. The imposition of the excise tax on telecommunications businesses Despite the fact that EDGE is a smooth transitional path for GSM technology towards 3G technology and permits about 3-4 times also contradicts the principle on taxation. Excise tax should be imposed on goods and services whose consumption is under the state’s faster data transfer speed rates than GPRS and that, through EDGE, the Company is currently able to satisfy the demands of control policy, such as luxury items. Telecommunications does not fall within the ambit as it is a fundamental public service. customers who need services with higher wireless data transfer speeds, it is still possible that the Company may face significant competition from other new technologies or the technologies currently being developed in other more advanced markets. The On 23 January 2007, the Cabinet passed a resolution cancelling the Cabinet resolution on the right of telecommunications Company may, for example, face significant competition from a possible introduction of 3G technology into the Thai market. service providers to offset the excise tax from the total annual revenue sharing payment payable to CAT or TOT under the Such 3G technology, Wi-Fi (a wireless, short-range connection for access to the internet or other equipment), and WiMAX (a relevant agreements and instructed the Ministry of Finance to prescribe a new excise tax rate of 0 percent. However, it is possible high-speed, wireless large data transfer) are now being deployed in other advanced markets. that the Thai government may decide to increase the excise tax rate in the future or increase tax payable on revenues from telecommunications business. In such case, the operational costs of the Company may increase, which may ultimately have an Technology has continuously changed, both in wireline and wireless market such as Wireline Broadband, Fiber to the Home, effect on the Company’s financial condition and results of operations. Wireless Broadband (3G, CDMA 2000 1x EV-DO, WiMAX, and Wi-Fi). These technologies have been employed in various countries, including Thailand. annual report 2007 046 047

However, without a solid business plan, to invest in the latest technology could not guarantee the success in business operation. b) The Company relies on third parties to maintain telecommunications devices Besides, the uncertainties in regulatory environment such as 3G and WiMAX license, or Frequency Allocation Master Plan have In providing mobile telecommunications services, the Company relies on complex telecommunications devices, including mobile hindered the operators to start new businesses. telecommunications network and 8,166 cell sites all over the country (as at 31 December 2007). The success of the business of the Company, therefore, depends on the effective maintenance and repair of the Company’s telecommunications devices. The Company has already got a permission to test WiMAX and has also requested a type III license for broadband from the NTC. CAT and dtac have been studying the feasibility to provide mobile broadband (HSDPA) on 850 MHz frequency. At present, the Company engages UTEL and Benchachinda Holding to provide maintenance and repair services on all telecommunications devices, including the transmission network, of the Company. If UTEL and Benchachinda Holding are, by The Company still believes that the demands for wireless data services in Thailand can be satisfied by current technologies whatever reasons, unable to perform services in a timely and cost-effective manner, the Company may have to bear higher and that Thai customers usually put a greater value on nationwide coverage services than the provision of sophisticated data operating costs. In addition, it may affect the speed and quality of the services of the Company, which may result in the Company services, which need to be supported by more advanced technologies. Moreover, given the uncertainties regarding the granting losing its customers and significant amount of revenues. This may effect on the business, financial condition, results of operations of 3G licences (i.e. the NTC has not yet provided any official or precise details of the rules and conditions for applying for 3G and prospects of the Company. licences), the Company believes that it would not be easy for any company to introduce 3G technology into the Thai market at this time. c) Risk from reliance on UD However, since the telecommunications sector is characterised by changing technologies, it is still possible that the Company The Company has appointed UD, one of the Company’s affiliates, as the principal distributor of starter kits and refill vouchers to may face increased competition from the introduction of other new technologies into Thailand. The Company cannot assure wholesale and retail outlets in Thailand. Most of these products are sold to UD for distribution through the Company’s distribution that it will be successful in responding in a timely and cost-effective manner to these developments and the introduction of network. Accordingly, a large percentage of the Company’s trade receivable’s come from UD. As of 31 December 2007, Baht these technologies into the Thai market. Furthermore, changing products and services of the Company in response to market 4,907.2 million, or approximately 35.5 percent of the Company’s total trade receivables, was owed by UD to the Company. Any demand may require the adoption of new technologies that could render many of the technologies the Company currently uses failure or delay on the part of UD to pay such amounts owed to the Company, due to the bankruptcy of UD or otherwise, may less competitive. To respond successfully to technological changes, the Company may be required to make substantial capital cause a material adverse effect on the business, financial status, operational results and business opportunities of the Company. expenditures and/or obtain access to related or enabling technology. The Company’s ability to fund such capital expenditures However, UD has a good payment record over previous years. in the future will depend on its future operating performance, which is subject to prevailing economic conditions, levels of interest rates and other factors, many of which are beyond its control, and upon its ability to obtain additional external financing. At present, the Company is expanding the sale of electronic refill, which will reduce the reliance on UD. The volume of selling The Company cannot be assured whether additional financing will be available to it on commercially acceptable terms. E-refill vouchers (Happy Online) directly to customers is continuing upward.

Even if the Company has sufficient capital resources to fund capital expenditures, it may not be able to have access to the latest 2. Financial Risks technology in a timely and cost-effective manner. If the Company cannot procure appropriate technologies in a timely and 2.1 Risk from the fluctuation of foreign exchange rates cost-effective manner, this could adversely effect the Company’s quality of services, business, financial condition, results of The Company is exposed to a risk from the fluctuation of foreign exchange rates because the principal revenues of the Company operations and prospects. are denominated in Baht while the capital expenditures or operating costs of the Company, i.e. trade payables from the purchase of equipment and accessories, long-term facilities denominated in foreign currencies, are denominated in foreign currency. 1.5 Risks relating to the Company’s operations a) Risk inherent to equipment, systems, computers, networks and other assets used in operations of the Company The Company’s business relies on its ability to continue network operations and manage all the systems, such as the information As of 31 December 2007, the Company’s liabilities which were nominated in foreign currency accounted for Baht 10,911 million system, the billing system, the customer services and network management system, to be functioning at all times with a view to or 35 percent of the total liabilities of the Company. To mitigate the foreign exchange risk, the Company has entered into forward ensuring the best satisfaction of the customers. exchange contracts and cross currency swap contracts with leading financial institutions with a credit rating equal to or higher than investment grade, covering 100 percent of the total liabilities of the Company which are denominated in foreign currency. The Company continually trains its staffs to understand their responsibilities and sets forth procedures which they must apply, to particularly those applicable during operational failures. In addition, the Company has arranged an appropriate risk assessment However, in operating its telecommunications business, the Company will continue to incur operating costs denominated and management system, which is under the supervision and recommendation of its Audit Committee and management. in foreign currency, i.e. payment for new equipment and devices and new technology, while the principal revenues of the Moreover, the Company took steps to formalise its approach to business risks and, in 2003, the Company established a revenue Company will be denominated in Baht. In this regard, although the Company maintains its hedging policy by entering into swap assurance function tasked with the supervision of the entire revenue generation cycle and any potential leakage in the process, arrangements to hedge foreign exchange risks in relation to all or almost all of its liabilities denominated in foreign currency, to help ensure that the Company can generate revenue from the services it provides. The Company is running risk reviews of there is no assurance that such swap arrangements will be entered into on the best terms under the conditions of the foreign certain areas on a regular basis, and making appropriate adjustments to ensure all aspects of the risk management programs exchange market at the time. This may cause an increase in the operating costs of the Company. run smoothly. The Company also utilises software tools to enhance the quality of its service fee calculation. For network maintenance, the Company has a monitoring system and clear maintenance schedules to maintain the entire network in order 2.2 Risk from bill collection of telephone services to efficiently deliver its service to its customers, and an indispensable insurance policy has also been put in place for any possible The Company is exposed to credit risk with respect to trade receivables, mainly, from mobile phone services on its post-paid losses that may occur to its network. This insurance policy, however, does not cover losses from business interruption. package, whose revenues from voice services account for 20 percent of total revenue as of 31 December 2007. However, due to the large number of the Company’s customers, the Company believes that such potential risk may not have any adverse effect However, there can be no assurance that the measures that the Company has taken in this regard will be sufficient to address on the Company’s financial status. Nevertheless, as regard this potential risk, the Company has also set up an allowance for these risks, and flaws or failures in such systems could impair the Company’s network and ability to provide service to its customers. doubtful debts, as stated in its balance sheets. annual report 2007 048 049

The Company has set up an allowance for doubtful accounts at a certain percentage of post-paid service revenues and aging of account receivables on a progressive basis. As at 31 December 2007, the account receivables, which are overdue by more corporate governance than 180 days, was in the amount of Baht 664 million, representing 21.8 percent of total account receivables from telephone services.

2.3 Risk from interest rate fluctuation Changes in market interest rates affect the fair value of financial assets and liabilities of the Company, especially the financial The Directors and Management of the Company are committed to the practice of appropriate corporate governance to protect assets and liabilities with fixed interest rates. Interest income and interest expense to the Company will also be affected because long-term shareholder’s value through enhancing corporate performance and accountability, whilst taking into account certain portions of the financial assets and liabilities of the Company are subject to floating interest rates. the interests of all stakeholders. A Corporate Governance Committee, comprising senior executives of the Company, has been established to promote the Company’s adherence to the principles of good corporate governance in accordance with As of 31 December 2007, the financial assets with floating interest rates of the Company accounted for Baht 1,182 million or internationally accepted practices and standards recognized by shareholders, investors, regulators and other stakeholders. 11 percent of the total financial assets of the Company, while the financial liabilities with floating interest rates of the Company (after taking into account the effect of the relevant derivatives contract) accounted for Baht 7,938 million or 20 percent of the The following broadly outlines the Company’s corporate governance practices and procedures. For ease of reference, these total financial liabilities of the Company. have been set out under the principles established in the Corporate Governance Code for companies listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”). The Company has a policy to manage interest rate risks by entering into interest rate swap contracts with leading financial institutions with a credit rating equal to or higher than investment grade in order to maintain the risks from changes in the fair BOARD MATTERS value of liabilities of the Company and interest rate fluctuation in appropriate level. Principle 1: Effective Board to lead and control the Company

However, as of 31 December 2007, the Company did not have substantial financial assets with floating interest rate and most of The duties and responsibilities of the Board of Directors are set out in the Company’s Articles of Association, in the Thai Public such assets were short-term. Therefore, the Company did not enter into any swap arrangements in relation to such assets. Company Limited Act and in the regulations of SGX-ST and Stock Exchange of Thailand (“SET”)

Since the Company has financial liabilities with floating rate interest (after taking into account the effect of the relevant The principal duties and responsibilities of the Board of Directors are to: derivatives contract), changes in market interest rates will cause an increase in the operating costs of the Company. • Authorize and delegate responsibility for the performance of the Company’s business in accordance with the law, the Company’s objectives and Articles of Association, and resolutions of shareholders’ general meetings. 3. Other Risks • Establish the Company’s vision and strategic directions and supervise management in the implementation of these. 3.1 Risk from natural disasters • Ensure that the Company has internal control systems, including an Office of Internal Audit and Committee of the Board, and Risk from disasters may occur and may have a material adverse impact on its business operations. For example, the outbreak of covering such matters as related party transactions and reporting to the shareholders and regulators. SARS in March–April 2003 and the outbreak of Avian Influenza or Bird Flu, starting from October 2003, reduced the number of • Report accurate and sufficient financial and other relevant information to the shareholders and investors regularly. tourists. The Tsunami disaster in December 2004 also caused damages to a number of cell sites in some areas. Although the Tsunami disaster resulted in a reduction in the Company’s international roaming revenue, such revenue accounted, however, for The Board of Directors defines the power and authority of management to approve different types of transaction by way of a an insignificant amount of its service revenve in 2007. Corporate Authority Index, reviewed by Audit Committee. This authority is divided into 3 main areas as follow: 1) Set up credit limit and authority for the following items: (1) Capital Expenditures, (2) Expenditures, (3) Personnel, (4) Procurement, (5) Contracting and Power of attorney, (6) Selling, To ensure the continuity of its business activities and services to its customers, the Company has a recovery plan in case of (7) Financial transaction, (8) Accounting, (9) Disposal and write-off, (10) Public disclosure, (11) Customer services, and, technical interruption. To relieve network problems, the Company also provides mobile cell sites in the form of cars to support (12) Computer system authorization. its cell site in areas that face network problems. In addition, the Company has also entered into insurance policies to cover any 2) Set up credit limit and authority in case of over or without budget. damage that may occur to its network equipment. The insurance proceeds, which the Company receives under the insurance 3) Set up authority to sign on the following documents: policies, shall be used to repair network equipment and/or to purchase new equipment to replace lost or damaged equipment (1) Purchasing order, (2) Cheque/instruments/documents related to financial transactions, and (3) Tax applications to in accordance with the terms and conditions of the Cellular Agreement. The Company also has a back-up system on billing and Revenue Department and Excise Department. customer data, which are collected by the Company on a regular basis. Despite these measures, there can be no assurance that the Company’s business will not be materially adversely affected by disasters in the future. The Company’s Articles of Association also provide guidelines for transactions and matters that require board approval. Those transactions and matters are generally not in the normal course of business or are not specified in the Corporate Authority Index. annual report 2007 050 051

The Board of Directors meets as often as necessary, but at least on a quarterly basis. During the financial year ended 31 December To maintain the number of the member of the Board of Directors at eleven, the nominating working group, which has been 2007, the Board of Directors held 5 meetings. The directors’ attendances at those meetings were as follows appointed by the Board, is now in the process of selecting another director who possesses all the necessary qualifications required under the Thai Public Limited Company Act, the Securities and Exchange Act and other relevant laws, as well as Number of Meetings Attended regulations issued by the SGX-ST and the SET, and the Company’s Articles of Association. The Board will consist of 11 directors Name Board of Audit Remuneration after the new director is appointed. Directors Committee Committee Mr. Boonchai Bencharongkul 5 - - Currently there are 3 independent directors who carry out their functions independent from the directors and the management Mr. Sigve Brekke 5 - - of the Company. The independent directors are fully qualified pursuant to the requirements of the SGX-ST and SET. In addition, Mr. Knut Borgen 5 - - independent directors are capable of performing their duties and giving opinions or reporting the results of their performance Mr. Arve Johansen 5 - - according to the duties delegated to them by the Board of Directors, free and clear from the control or the influence of any person 1 Mr. Christian Storm 4 - - or group of persons, and in no circumstance, shall be so influenced. These qualifications also apply to the Audit Committee. Mr. Ragnar H. Korsaeth 3 - - Mr. Chulchit Bunyaketu 4 12 4 At present, the Company is in the process of seeking one more independent director, who is resident in Singapore, to replace the 2 Mr. Stephen Woodruff Fordham 4 12 3 resigned director. As a result, the number of the independent directors will exceed one-third of the Board in accordance with Mr. Soonthorn Pokachaiyapat 5 12 4 the SGX-ST’s Corporate Governance Code. Mr. Sompol Chanprasert3 5 - - 4 Mr. Roar Wiik Andreassen - - - CHAIRMAN AND EXECUTIVE OFFICER Total 5 12 4 Principle 3: Clear division of responsibilities at the top of the Company Note: (1) Mr. Christian Storm resigned as a director at the Board of Directors’ Meeting No. 5/2007, held on 12 December 2007. The Board of Directors’ Meeting No. 1/2007, The Chairman of the Board is responsible for scheduling meetings and setting meeting agendas, exercising control over quality, held on 8 February 2007, approved the appointment of Mr. Christian Storm as the Remuneration Committee member. (2) Mr. Stephen Woodruff Fordham was appointed to be a member of the Board of Directors and a member of the Audit Committee at the Board of Directors’ Meeting quantity and timeliness of the flow of information between the management and the Board, and ensuring compliance with the No. 6/2006, held on 17 November 2006. The Board of Directors’ Meeting No. 2/2007, held on 19 March 2007, approved the appointment of Mr. Stephen Woodruff Company’s guidelines on corporate governance. The Chairman is also the Chairman of Board meetings, and in the case of a tied Fordham as the Remuneration Committee member. (3) Mr. Sompol Charnprasert was appointed to be a member of the Board of Directors at the Board of Directors’ Meeting No. 2/2006, held on 29 June 2006. vote, the Chairman of the meeting has an additional casting vote. Each director has one vote, and a decision at the meeting is (4) Mr. Roar Wiik Andreassen was appointed to be a member of the Board of Directors at the Board of Directors’ Meeting No.5/2007, held on 12 December 2007. made by a majority vote. A director who has any interest in any matter is not entitled to vote on such matter.

To ensure that incoming directors are familiar with the Company’s business, and governance practices, all relevant information BOARD MEMBERSHIP / BOARD PERFORMANCE on the Company’s business is made available to new directors when first appointed to the Board. In addition, an orientation Principle 4: Formal and transparent process for appointment of new directors program may be conducted for new directors upon request. The Company, from time to time, informs directors regarding Principle 5: Formal assessment of the effectiveness of the Board and contribution of each director appropriate available training courses, which would help them to conduct their duties as members of the Board. Appointment to, and withdrawal and retirement from, the Board of Directors are governed by the Company’s Articles of Association that requires: BOARD COMPOSITION AND BALANCE 1. The Board of Directors must have at least 5 members and at least half of the directors appointed must have permanent Principle 2: Strong and independent element on the Board residence in Thailand. 2. Shareholders appoint the members of the Board: As at 31 December 2007, the Board consisted of ten directors, including three independent directors and one director a) Voting is in proportion to the number of shares held. nominated by CAT. Details of their academic and professional qualifications and other appointments are set out on page 12 to 13. b) Votes can be for one or a group of nominees, but cannot be split between a number of nominees. The members of the Board of Directors were: c) Nominees with the highest number of votes are appointed. Where there is a tie, the chairman of the meeting has the right to cast a tie-breaking vote. Date of Initial Last Appointed Directors Position Age 3. A board member wishing to resign from his position must submit a letter of resignation to the Company. A resignation takes Appointment Date effect when the Company receives it. 4. Shareholders’ meeting may resolve to remove any director before the expiration of his/her term out of office by having votes 1. Mr. Boonchai Bencharongkul Chairman 53 29 Oct 1990 30 Apr 2007 of not less than three-fourths of the number of shareholders attending the meeting and having the rights to vote with no less 2. Mr. Arve Johansen Vice Chairman 58 29 Sep 2000 30 Apr 2007 than one-half of the shares held by all the shareholders attending the meeting and having the right to vote. 3. Mr. Sigve Brekke Director and CEO 48 8 Feb 2006 30 Apr 2007

4. Mr. Knut Borgen Director 47 8 Feb 2006 30 Apr 2007 At every Annual General Meeting (AGM) one-third of the directors must retire, determined on the basis of the longest serving. 5. Mr. Ragnar H. Korsaeth Director 41 25 Feb 2005 8 Feb 2006 A retiring director is eligible for re-election. 6. Mr. Sompol Chanprasert Director 55 6 Jul 2006 6 Jul 2006 7. Mr. Chulchit Bunyaketu Independent Director and Audit Committee Chairman 64 6 Mar 2000 28 Apr 2005 8. Mr. Soonthorn Pokachaiyapat Independent Director and Audit Committee member 70 6 Mar 2000 8 Feb 2007 9. Mr. Stephen Woodruff Fordham Independent Director and Audit Committee member 56 17 Nov 2006 17 Nov 2006 10. Mr. Roar Wiik Andreassen Director 40 12 Dec 2007 12 Dec 2007 annual report 2007 052 053

Currently, the Nominating Committee, which is to be responsible for the nomination of new directors for the Board’s approval Directors’ Remuneration for the year 20071 and the assessment of the Board’s performance, has not yet been established. Pursuant to the Cellular Agreement which the Company has entered into with CAT, the Company agrees that CAT may appoint at least 1 representative to sit on the Board of Meeting Share Directors’ Remuneration by Band Salary Bonus the Company. However, the appointment and removal of such director are still subject to the above procedures. allowance 2 options Above SGD 750,000 ACCESS TO INFORMATION -Nil- - - - - Principle 6: Board members have complete, adequate and timely information Above SGD 500,000 to 750,000 Mr. Boonchai Bencharongkul 40% 60% - - The management recognizes its obligation to provide the Board with complete, adequate information in a timely manner, and Above SGD 250,000 to 500,000 the Board also has independent access to the Company’s senior management. -Nil- - - - - Below SGD 250,000 As a general rule, information papers, including background and explanatory information relating to matters, are provided to Mr. Arve Johansen - - - - 3 the Board members to provide a better understanding of the matter to be discussed at least 7 days prior the Board meeting. Mr. Christian Storm 100% - - - The Board of Directors also has access to the Company’s management for additional insight and other relevant information on Mr. Ragnar H. Korsaeth - - - - any matter. Mr. Chulchit Bunyaketu 100% - - - Mr. Soonthorn Pokachaiyapat 100% - - - Currently, the Company does not have a Company’s Secretary. However, related secretary duties as applied to companies in Mr. Sigve Brekke - - - - Singapore are generally under the responsibility of the Legal Unit which is served by experienced officers who can perform such Mr. Knut Borgen - - - - 4 duties properly. At present, the secretary of the Board is the Head of the Legal Unit. Mr. Stephen Woodruff Fordham 100% - - - Mr. Sompol Chanprasert5 100% - - - REMUNERATION MATTERS / LEVEL AND MIX OF REMUNERATION / DISCLOSURE OF REMUNERATION Mr. Roar Wiik Andreassen6 - - - - Principle 7: Formal and transparent procedure for fixing remuneration packages for directors Note: Principle 8: Remuneration of directors should be adequate but not excessive (1) Based on amounts received in 2007. Principle 9: Remuneration policy, level and mix of remuneration and procedure for setting remuneration (2) Remuneration comprised meeting allowances paid to 6 directors (3) Mr. Christian Storm resigned as a director at the Board of Directors’ Meeting No. 5/2007, held on 12 December 2007. (4) Mr.Stephen Woodruff Fordham was appointed to be a member of the Board of Directors and a member of the Audit Committee at the Board of Directors’ The Company established the Remuneration Committee, comprising four persons who have knowledge and experience in the Meeting No. 6/2006, held on 17 November 2006 field of executive compensation. (5) Mr. Sompol Charnprasert was appointed to be a member of the Board of Directors at the Board of Directors’ Meeting No. 2/2006, held on 29 June 2006. (6) Mr. Roar Wiik Andreassen was appointed to be a member of the Board of Directors at the Board of Directors’ Meeting No.5/2007, held on 12 December 2007. 1. Mr. Chulchit Bunyaketu (as Chairman) (7) As of December 2007, there was no other employee who is immediate family member, as defined in the Listing Manual of SGX-ST of a director or the Chief 2. Mr. Soonthorn Pokachaiyapat Executive Officer, and whose remuneration exceeds SGD 150,000 during the year. 3. Mr. Stephen Woodruff Fordham 1 4. Mr. Roar Wiik Andreassen2

Note: (1) The Board of Directors’ Meeting No. 2/2007, held on 19 March 2007, approved the appointment of Mr. Stephen Woodruff Fordham as the Remuneration Committee member. (2) Mr. Roar Wiik Andreassen was appointed to be a member of the Remuneration Committee member at the Board of Directors’ Meeting No. 5/2007, held on 12 December 2007.

This committee has the responsibility of recommending to the Board a framework for the executive directors’ remuneration and administering any share option scheme for key executives. The committee also reviews appropriate remuneration packages that would attract, retain and motivate directors and key executives to conduct their responsibilities effectively.

According to the Company’s Articles of Association, the remuneration of directors is determined by the shareholders’ general meeting.

As of 31 December 2007, the Company did not have any kind of remuneration payable to its employees in the form of Company’s shares.

The following table sets out the remuneration of the directors and key executives in accordance with the Listing Manual and the Code of Corporate Governance of the SGX-ST and SET for the year 2006 and 2007: annual report 2007 054 055

Directors’ Remuneration for the year 20061 Remuneration of Key Executives (who are not directors) for the year 2007

Meeting Share Key Executives’ Remuneration by Band1 Base Salary Bonus Share options Directors’ Remuneration by Band Salary Bonus Allowances 2 Options Above SGD 500,000 Above SGD 750,000 -Nil- - - - - Mr.Sigve Brekke 82% 18% -

Above SGD 250,000 to 500,000 Above SGD 500,000 to 750,000 - Nil- - - - - Mr. Thana Thienachariya 63% 37% -

Below SGD 250,000 Above SGD 250,000 to 500,000 Mr. Boonchai Bencharongkul 25% - 75% - Mr. Petter-Borre Furberg 66% 34% - Mr. Chai Nasylvanta3 9% - 91% - Mr. Gunnar John Bertelsen 85% 15% - Mr. Arve Johansen - - 100% - Mr. Somlak Sachjapinan 86% 14% - Mr. Vichai Bencharongkul4 7% - 93% - Mr. Sunti Medhavikul 73% 27% - Mr. Sigve Brekke - - - - Mr. Premon Pinskul 80% 20% - Mr. Knut Borgen - - - - Mrs. Patraporn Sirodom 70% 30% - Mr. Christian Storm 13% - 87% - Mr. Andrew McBean 82% 18% - Mr. Ragnar H. Korsaeth - - 100% - Mr. Chaiyod Chirabowornkul 64% 36% - Mr. Pakkaporn Sathienpakiranakorn5 13% - 87% - Dr. Ketchayong Skowratananont 63% 37% - M.R. Tongnoi Tongyai6 37% - 63% - Mr. Chulchit Bunyaketu 42% - 58% - Below SGD 250,000 Mr. Soonthorn Pokachaiyapat 42% - 58% - Mr. Terje Borge 91% 9% - Mr. Sompol Chanprasert 100% - - - Mr. Rolf Marthinusen 94% 6% - Mrs. Netima Urthamapimuk 82% 18% - Note: Ms. Panida Tungwinyoo 78% 22% - (1) Based on amounts received in 2006. Mr. Pakorn Pannachet 80% 20% - (2) Remuneration comprised meeting allowances paid to 9 directors (3) Mr. Chai Nasylvanta resigned as a Vice Chairman at the Board of Directors’ Meeting No. 1/2006, held on 8 February 2006. Mr. Vatcharapong Siripark 59% 41% - (4) Mr. Vichai Bencharongkul resigned as a director at the Board of Directors’ Meeting No. 1/2006, held on 8 February 2006. Mr. Worawat Pridaphatrakun 76% 24% - (5) Mr. Pakkaporn Sathienpakiranakorn resigned as a director on 27 April 2006. (6) M.R. Tongnoi Tongyai resigned as a director and the Audit Committee Chairman on 18 October 2006. The Board of Directors’ Meeting No. 6/2006, held on 17 Ms. Tipayarat Kaewsringarm 91% 9% - November 2006, approved the appointment of Mr. Stephen Woodruff Fordham as the replacement director and the Audit Committee member. (7) As of December 2006, there was no other employee who is immediate family member, as defined in the Listing Manual of SGX-ST of a director or the Chief Note: Executive Officer, and whose remuneration exceeds SGD 150,000 during the year. (1) Remuneration for key executives includes salaries, bonuses, and car allowances for the year ended 31 december 2007 annual report 2007 056 057

Remuneration of Key Executives (who are not directors) for the year 2006: The directors and the management of the Company are committed to good corporate governance and corporate accountability to serve the long-term interests of the Company’s shareholders. The Corporate Governance Committee is comprised of the senior Executives’ Remuneration by Band1 Salary Bonus Share Options executives of the Company and has been established to promote the Company’s good corporate governance in accordance with internationally accepted practices and standards which are recognised by the Company’s shareholders, investors, regulators Above SGD 750,000 and other stakeholders. Mr. Sigve Brekke 77% 23% - The duties and responsibilities of the Corporate Governance Committee are: Above SGD 500,000 to 750,000 - To determine appropriate good corporate governance policies, to provide direction and guideline, and to ensure compliance Mr. Petter-Borre Furberg 92% 8% - therewith. - To promote good corporate governance best practices within the organisation. Above SGD 250,000 to 500,000 - To ensure that actions are taken in full compliance with the corporate governance policies and other requirements, as Mr. Somlak Sachjapinan 69% 31% - prescribed by the SGX-ST and the SET. Mr. Gunnar John Bertelsen 78% 22% - - To appropriately disclose information on the Company’s corporate governance in its annual report. Mr. Sunti Medhavikul 68% 32% - - To promote understanding on and commitment to corporate governance policies and compliance among the Company’s Mr. Thana Thienachariya 68% 32% - management and employees at all levels. Mr. Premon Pinskul 70% 30% - Mrs. Patraporn Sirodom 73% 27% - The Corporate Governance Committee consists of the Chief Executive Officer, Chief Financial Officer, Chief People Officer, Deputy Chief Financial Officer, and other Division Heads, and aims to establish and promote corporate governance good practice. Below SGD 250,000 Mrs. Thitima Brownnel 80% 20% - AUDIT COMMITTEE / INTERNAL CONTROL / INTERNAL AUDIT Mrs. Netima Urthamapimuk 73% 27% - Principle 11: Establishment of Audit Committee (“AC”) with written terms of reference Ms. Panida Tungwinyoo 73% 27% - Principle 12: Sound system of internal controls Ms. Matchima Chanswangpuwana 81% 19% - Principle 13: Setting up of independent Internal Audit Function

Note: (1) Remuneration for key executives includes salaries, bonuses, and car allowances for the year ended 31 december 2006 The Audit Committee comprises all the three independent directors. A member of the Audit Committee, Mr. Chulchit Bunyaketu has knowledge and experience in finance, accounting, and financial management. Mr. Chulchit Bunyaketu served as Managing Director of Thai Oil Company Limited from 1998 – 2003, and now serves as the Group Deputy Chairman of King Power International ACCOUNTABILITY Group, and Chairman of Ekarat Engineering Public Company Limited. Principle 10: Accountability of the Board and Management

The Audit Committee’s responsibilities include: The Board of Directors recognizes the importance of providing the shareholders with a balanced and understandable assessment of the Company’s performance, position, and prospects on a timely basis; therefore, the Company reports and 1. Reporting and auditing: makes public its financial statements on a quarterly basis. • Reviewing the Company’s financial statements and accounts. • Considering and proposing the appointment and remuneration of the auditor for approval, and cooperating with the auditor. To assist the directors, Board Committees have been established with clear scope of work and responsibilities. Currently there • Presenting the Audit Committee’s report, signed by the Chairman of the Audit Committee, as an integral part of the are two Board Committees, namely the Audit Committee, and the Remuneration Committee. Company’s Annual Report.

A number of committees have been established by management as key elements of the Company’s internal control system. 2. Monitoring and giving advice: These include an Investment Committee and a Corporate Governance Committee. • Monitoring the Company’s business to ensure that it is in accordance with the law and regulations of the SET and the SGX-ST and any other relevant laws. Investment Committee • Disclosing complete and accurate information of the Company in the events of related transactions or transactions that The Investment Committee, comprising the Chief Executive Officer, Chief Financial Officer, Chief Technology Officer and Deputy may result in conflicts of interest occur. Chief Financial Officer, reviews and, if appropriate, approves all investment in the Company’s assets that is Baht 2 million or • Advising the Board of Directors on matters that have an impact on the Company’s financial conditions or results of operations, more. result in conflicts of interest and/or fraud flowing from material mistakes or matters that are contrary to the law and regulations of the SET and/or the SGX-ST or any other laws applicable to the Company’s business. Corporate Governance Committee • Directing and supervising the internal audit units, comprising the Operational Audit Department, the Information Technology The Board of Directors recognises the importance of good corporate governance and has formulated corporate governance Audit Department, and the Audit Support Department, to ensure that they perform independently and efficiently. policies which are based on 5 fundamental principles of good corporate governance, i.e. transparency, responsibility, accountability, efficiency, and fairness. Good corporate governance is aimed at promoting long-term interests ofthe shareholders in line with the legal framework and business ethics. annual report 2007 058 059

3. Internal Control COMMUNICATION WITH SHAREHOLDERS • Reviewing the Company’s internal control and internal audit system to ensure that they are suitable and effective. The Principle 14: Regular, effective and fair communication with shareholders Company believes that the Audit Committee possesses necessary experience, knowledge, and expertise to effectively perform Principle 15: Shareholder participation at AGMs the above specified tasks. If the Audit Committee deems necessary and appropriate, it may seek the opinions or recommendations from the internal audit units, as well as the Company’s auditor, for finance and accounting details in order The Board realises that the Company’s information, both financial and non-financial, is important to the decision-making of to better perform their tasks. investors and related parties. To ensure that it discloses material information correctly, timely, and transparently, the Company has established an Investor Relations Department to engage in regular, effective and fair communication with shareholders. The Audit Committee reviews the performance, including the independence, of the external auditor annually in making its The Company regularly reviews its procedures for reporting information with a view to improving the awareness and transparency recommendation to the Board on the appointment of the external auditor. To ensure that the audit system is appropriate, the of its business strategies, goals, and results. Audit Committee meets with the external auditor without the presence of the Company’s management on an annual basis. The Audit Committee also has full access and cooperation from the management in the case that any issue or concern may arise. At present, a conference call and a physical meeting at the Company’s office in Bangkok for quarterly operating results has been organised for investors and analysts hosted by senior management. It offers the best opportunity to share ideas, comments, The Company believes that the Audit Committee possesses the appropriate experience, knowledge, and skills that are fully questions or recommendations among related parties. supportive of the above specified operations. If necessary, the Audit Committee may seek comments and recommendations in respect of financial and accounting matters from the Office of Internal Audit and the auditor to ensure high standard of Timely disclosure of material information is also provided to shareholders in accordance with the Corporate Disclosure Policy of performance. SGX-ST and SET, and the shareholders are kept informed of the Company’s developments, operational information, quarterly operating results, and performances through announcements and Investor Releases made public through SGX-ST’s SGXNET, The auditor, Ms. Sumalee Reewarabandith, of Ernst and Young Office Limited, who currently performs audit services for the SET website, as well as the Company’s website and other distribution channels. Company, was first appointed at the Annual General Meeting of Shareholders No. 1/2006 held on 28 April 2006. Accordingly, the appointment of Ms. Sumalee Reewarabandith is in compliance with Rule 713 (1) of the SGX-ST. In addition, one of the primary roles of the Company’s Corporate Governance Committee is to ensure appropriate policies and practices are adopted for the disclosure of information to all stakeholders. In the financial year ended 31 December 2007, the Company had not paid any non-audit fees to the auditor. The Company holds its Annual General Meeting within 4 months from the end of each financial year. The notice of the meeting The Audit Committee held 12 meetings during the year ended 2007 with attendances as follows: indicating the place, date, time, agendas, and matters to be proposed to the meeting with appropriate detail including the annual report is sent to the shareholders not less than 7 days prior to the meeting date, and it is also published in a newspaper Directors Position No. of Meetings for 3 consecutive days with at least 3 days prior to the meeting date. Attended 1. Mr. Chulchit Bunyaketu Audit Committee Chairman 12 The Company’s articles association allows a shareholder to appoint a proxy to attend and vote on any matter at any General 2. Mr. Soonthorn Pokachaiyapat Audit Committee Member 12 Meeting. 3. Mr. Stephen Woodruff Fordham* Audit Committee Member 12 The chairman of the meeting ensures fair opportunity for the shareholders to make inquires or comments at the meeting. * The Board of Directors’ Meeting No.6/2006, held on 17 November 2006, approved the appointment of Mr. Stephen Woodruff Fordham as director and the Audit Committee Member to replace M.R. Tongnoi Tongyai who resigned as a director and the Audit Committee Chairman on 18 October 2006. Sarbanes-Oxley Act - Section 404 The Audit Committee Report on page 82-83 reviews the major areas of the Committee’s work. In addition to the above mentioned internal control systems which have been in place for some time, the Company has implemented internal financial control procedures in accordance with Sarbanes-Oxley Act (SOA), which significantly The Board of Directors’ Meeting 1/2007, held on 8 February 2007, which all independent directors and members of the Audit strengthened the Company’s internal control system as well as ensuring good corporate governance. Committee attended, assessed the sufficiency of the Company’s internal controls in 5 areas: organization and environment control; risk management; operational control; information; communication and monitoring. The Company’s internal control The SOA is a law passed by the United States Congress in January 2002 with an aim to strengthen corporate governance and systems are sufficient and suitable for the Company’s business. The external auditors also reported no significant weaknesses in restore investor confidence in the US stock exchanges after the collapses of Enron Corporation and WorldCom Inc. and resulting the internal control system, which are likely to have a material impact on the financial statement. corporate scandals. The SOA primarily addresses the significant personal obligations of Chief Executive Officers and Chief Financial Officers to ensure that financial information provided to the market is accurate and reliable. annual report 2007 060 061

Best Practice Guide regarding dealings in securities The Company is on a regular basis monitoring any use of inside information in order to ensure that the management is complying interested person transactions with its policy regarding this matter. In early 2004, the Company formalised policies and guidelines for dealings in securities of the Company that comply with the Best Practice Guide on Dealings in Securities issued by SGX-ST. These policies include:

• A regular issuance of circular letters to officers informing them about restrictions on dealing in the Company’s securities while they are in possession of price sensitive information which has not yet been disclosed, or restrictions on tradings of securities The Companies and its subsidiaries have entered into business transactions with each other and with associated and related for short-term speculation. companies as shown in the Note 7 to the Financial Statements for the year ended 31 December 2007. Such transactions, which have been concluded on terms and conditions determined by the Company and those related companies and are in the normal • A prohibition of tradings of the Company’s securities by directors and executives for a period of 10 days prior to the end of each course of business, are summarized below: quarterly accounting period and ending on the date the financial results of the same accounting period are made public. 1. Transactions with UCOM (Ended 31 August 2007) • The Company’s directors and executives are required to inform the Company’s Investor Relations Department about any Aggregate value of change to the directors’ or executives’ interest in the Company’s securities within 24 hours from the date of the change. transactions during the Principal Transactions financial year • In the case of directors, Investor Relations will file a notice of changes in the holding of the Company’s securities to the SGX-ST (Million Baht) via SGXNET, and Securities and Exchange Commission of Thailand (“SEC”). 2006 2007 1. Revenue In addition, directors and management are required to prepare and submit a report of their shareholding or changes in their - Accounts receivable 4.7 - shareholding, and their spouse and minor in a prescribed form and within a period of time specified under the regulations - Sales on right of E-refill service 75.7 181.7 concerning disclosure of securities holding to the SEC with a copy to the Company on the same date. Directors and management - Sales on Vouchers - 242.7 of the Company are required to report any acquisition or disposition of securities resulting in a multiple increase or decrease of 5 percent of the total number of issued securities of the Company on the date of such acquisition or disposition or the following 2. Expenses and other payments business day. - Service fees to UCOM for network operations and management 93.5 - - Rent for space in Benchachinda Building 2.5 - - Commission expenses 2.9 5.2 - Advances 2.7 2.7

Rationale for the transactions: • In 2006, the operation and maintenance of transmission network was a core business of UCOM, which had managed and maintained the network efficiently for the Company over many years. In addition, the Company leased space for offices, mobile switching, including parking on a 3 year term from UCOM, at a rate comparable to market rate. However, UCOM stopped providing such businesses in 2007; therefore, the Company assigned Benchachinda Holding Company Limited to be responsible for the operation and maintenance of transmission network and leased such space from Private Property Company Limited. UCOM became the Company’s subsidiary since 31 August 2007.

• In May 2006, the Company appointed UCOM as a provider for E-refill business and granted UCOM the right to sell vouchers within authorized area in February 2007. UCOM received a commission fee in return for the period from 1 January - 31 August 2007 but after UCOM became a subsidiary on 31 August 2007, this was no longer an interested person transaction.

• In reviewing the pricing arrangements, the Audit Committee will take into consideration various factors, i.e., the reputation of the service provider, consistency in provision of high quality services, the switching costs that may be involved, the strategic purposes of the transactions and others. annual report 2007 062 063

2. Transactions with UD • Contractual prices are obtained by price bidding prior to entering into the agreement. Senior management (with no Aggregate value of direct or indirect interest) will obtain quotations from at least two service providers. The Company will award the agreement

transactions during the to the party with the most competitive pricing, taking into consideration the following factors, the working relationship, Principal Transactions financial year quality of service, the timeframe, project size, and the reputation of the service provider. (Million Baht) 2006 2007 4. Transactions with UIH Aggregate value of 1. Revenue - Sales of SIM cards, SIM card packages, refill vouchers and Starter Kits to UD 27,915.9 25,819.2 transactions during the - Dividend 20.0 30.0 Principal Transactions financial year - Accounts receivable 5,109.7 4,868.8 (Million Baht) 2006 2007 1. Revenue 2. Expenses and other payments - Revenue from base station sublease and electricity 2.2 3.6 - Purchase of mobile handsets from UD 158.2 125.0 - Sale of assets 0.8 - - Marketing support expense 156.3 34.5 - Rental fee 14.4 13.1 2. Expenses and other payments - Advances 5.1 4.4 - Rent to UIH for high speed leased circuit for the company’s data communication 14.8 15.1 - Advances 6.7 12.2 Rationale for the transactions: • In June 2002, the Company and UCOM transferred their sales and distribution business to UD. UD also has an exclusive Rationale for the transactions: right to distribute and sell the Company’s telecommunication products. The business relationship is beneficial as it allows the • UIH provides high-speed data communications service via a nationwide leased optical fiber network to public and private Company to expand its product and services reach while controlling the cost of distribution. organizations. UIH has one of the most extensive and high quality fiber optic networks in Thailand and has been providing consistent and high quality data communication services to the Company for many years. • The Company purchases handsets from UD for resale at dtac shops and service centers. • It is benefitial to conduct business with UIH as the Company does not have such data communication networks. In addition, 3. Transactions with UTEL UIH has one of the most extensive and high quality fiber optic networks throughout Thailand. Aggregate value of

transactions during the • Senior management (with no direct or indirect interest) will obtain quotations from at least two service providers as part of Principal Transactions financial year the review of pricing arrangements. The Company will continue to rent the high speed leased circuits from UIH if the pricing (Million Baht) arrangements continue to be more favorable to the Company than those extended by other service providers, taking 2006 2007 into consideration the following factors, reputation, the size and quality of the leased circuit, the switching cost, and 1. Revenue strategic purposes of the transaction. - Operating income 0.4 - 5. Transactions with TELENOR Group 2. Expenses and other payments Aggregate value of - Hire of UTEL for installation and maintenance services of base stations 1,614.0 1,783.0 transactions during the and cell site equipment Principal Transactions financial year - Advances 0.8 9.0 (Million Baht) - Account payable 286.7 304.9 2006 2007 1. Revenue Rationale for the transactions: - International Roaming Service Income 213.6 278.0 • UTEL provides fully integrated services in the areas of system design, project implementation, distribution, leasing of - Revenue from interconnection - 0.9 telecommunications equipment, consulting services and system maintenance of telecommunications, information - Revenue from marketing campaign 7.5 - technology, broadcasting and network equipment. Such services are provided on a project-by-project basis and are - Account receivable 55.1 77.8 subjected to tender processes along with other unrelated third party service providers. - Advance 3.6 -

• To remain competitive, the Company has to ensure that its network achieves the widest possible coverage by constantly 2. Expenses and other payments increasing the number of base stations and cell sites throughout the year. Normally, the Company hires UTEL for maintenance - Fees to Telenor under a service agreement. 133.3 151.5 service (including installation of base stations and cell sites equipment). - Advances 14.8 56.0 - International Roaming Service Cost 6.4 7.4 - Cost of interconnection - 46.9 - Account payable - 23.0 annual report 2007 064 065

Rationale for the transactions: 9. Transactions with I.N.N. Group • It is a policy that Telenor provides secondments with appropriate experience and capacity as requested by the Company to Aggregate value of jointly manage the business operations for the shareholders’ best interest by charging an applicable service fee. The Internal transactions during the Audit Department submits the report on this matter to the Audit Committee for review and approval. Principal Transactions financial year (Million Baht) • International Roaming service income arises from the usage of Telenor subsidiaries customers who travel to Thailand and use 2006 2007 the roaming service of dtac’s network. The fee is charged at the market rate on the agreement. 1. Expenses and other payments - Marketing expense 16.9 36.4 • Revenue and cost from interconnection arises from the interconnection between DTAC Network Company Limited and Telenor - Information service fee - 39.2 Global Services. - Account payable - 5.8 6. Transactions with Bang-san Townhouse - Advance - 11.3 Aggregate value of Rationale for the transactions: transactions during the • The Company purchased airtime from I.N.N. Radio Company Limited to advertise the Company’s product via radio network. Principal Transactions financial year The advertising rate is of normal commercial terms. (Million Baht) 2006 2007 • The Company advertised the Company’s products and services through I.N.N.’s radio program. The advertising rate is of normal 1. Expenses and other payments commercial terms. - Rent for land 0.2 1.2

Rationale for the transactions: 10. Transactions with Setthakij Ruam Duay Chuay Kun • The Company leased a plot of land to install transmission networks on a 17 - year term at a rate comparable with the market rate. Aggregate value of

transactions during the 7. Transactions with International Cool Storage and Agricultural Principal Transactions financial year Aggregate value of (Million Baht)

transactions during the 2006 2007 Principal Transactions financial year 1. Expenses and other payments (Million Baht) - Marketing expense 6.2 9.0 2006 2007 - Advance 6.4 - 1. Expenses and other payments - Rent for office space 10.8 10.8 Rationale for the transactions: • The Company advertised the Company’s products and services through Setthakij Ruam Duay Chuay Kun’s radio program. The Rationale for the transactions: advertising rate is of normal commercial terms. • The Company rent office space to install transmission networks on a 3 - year term at a rate comparable with the market rate. 11. Transactions with Private Property 8. Transactions with Connect One Aggregate value of

Aggregate value of transactions during the

transactions during the Principal Transactions financial year Principal Transactions financial year (Million Baht) (Million Baht) 2006 2007 2006 2007 1. Revenue 1. Revenue - Mobile service revenue from VIP number - 0.2 - Sponsor fee 1.6 3.6 - Advance 0.3 1.1 2. Expenses and other payments - Rent for space in Benchachinda Building 5.0 8.3 2. Expenses and other payments - Advance 1.9 - - Information service fee 828.3 1,105.7 Rationale for the transactions: - Account payable 149.5 292.6 • The Company rent the space in Benchachinda Building to install transmission networks on a 3-year term at a rate comparable with the market rate. Rationale for the transactions: • Connect One Co., Ltd. is a content provider providing information service to mobile phone users. annual report 2007 066 067

12. Transactions with Benchachinda Holding 15. Transactions with King Power Suvarnabhumi Aggregate value of Aggregate value of

transactions during the transactions during the Principal Transactions financial year Principal Transactions financial year (Million Baht) (Million Baht) 2006 2007 2006 2007 1. Revenue 1. Expenses and other payments - Sale of assets 2.5 - - Rental expense - 2.0 - Sale of investment in subsidiaries - 0.5 - Advance - 0.2 Rationale for the transactions: • The Company leased the land for service hall and it was charged on annual basis. 2. Expenses and other payments - Service fees to UCOM for network operations and management 750.4 746.1 Other than the Interested Person transactions set out above, there was no material contract involving the interests of any of the - Account payable 212.6 129.1 Chief Executive Officer, Directors and controlling shareholders, either still subsisting at the end of the financial year ending 31 December 2007, or if not subsisting at the end of the financial year ending 31 December 2007, entered into since the end of the Rationale for the transactions: previous year ending 31 December 2006. • The Company hired Benchachinda to operate and maintain the Company’s entire transmission network and to install additional transmission in case of network expansion. The maintenance fee is charged in fixed amount based on the number of According to the Annual General Shareholders’ Meeting for the year 2007, the shareholders approved the general mandate existing cell sites while the installation fee is charged on actual quantity of work carried out during the year. In considering the for interested person transactions, which are recurring transactions of a revenue or trading nature or are necessary for the extension of the service agreement, the Company compares service fees proposed by Benchachinda with the rate the Company’s day-to-day operations, such as the purchase and sale of supplies and equipment (but not in respect of the purchase Company would otherwise pays to an independent service provider, who can render similar service in a particular area, to of sale of assets, undertakings or business) that may be carried out with interested persons. ensure the reasonableness of new pricing.

The Company will be seeking the shareholders’ approval for a renewal of the general mandate for interested person transactions 13. Transactions with Universal Communication Service for 2008 at the upcoming Annual General Shareholders’ Meeting for the year 2008. Aggregate value of

transactions during the Further information relating to interested persons transaction pursuant to Rule 907 of the SGX-ST’ s Listing Manual is as Principal Transactions financial year follows: (Million Baht) 2006 2007 Aggregate value of all interested 1. Expenses and other payments person transactions during the Aggregate value of all interested - Advance 0.2 0.2 financial year under review (excluding person transactions conducted under transactions less than SGD 100,000 shareholders’ mandate Interested Persons and transactions conducted under pursuant to Rule 920 14. Transactions with Ekarai. shareholders’ mandate pursuant to (Unit: Million Baht) Aggregate value of Rule 920)

transactions during the (Unit: Million Baht) Principal Transactions financial year 2006 2007 2006 2007 (Million Baht) UCOM 78 - 96 430 2006 2007 UD 192 30 28,074 25,992 1. Expenses and other payments UTEL - - 1,614 1,783 - Rental expense - 2.9 UIH - - 15 19 Rationale for the transactions: Telenor 361 48 - 437 • The Company leased the residence for Chief Executive Officer and it was charged on annual basis. Connect One - - 828 1,109 International Cold Storage 11 - - 11 I.N.N 19 4 - 72 Setthakij Ruam Duay Chuay Kun 6 - - 9 Private Property 5 - - 9 Benchachinda 750 - - 746 Ekarai - 3 - - annual report 2007 068 069

Notes: shareholder structure The Company - Total Access Communication Public Company Limited. UCOM - United Communication Industry Public Company Limited. UCOM is a major shareholder of TAC with 43.13 percent shareholding (from 1 Jan – 31 Aug 2007). Total Access Communication Public Company Limited UD INFORMATION ON SHARE CAPITAL AND SHAREHOLDING - United Distribution Business Company Limited. UD is a subsidiary of UCOM with 75 percent shareholding (transferred to As at 7 March 2008 Benchachinda Holding Company Limited. (“BCH”) since 16 February 2006) and an associate of the Company with 25 percent shareholding. Mr. Boonchai Bencharongkul is a director of United Distribution Business Company Limited and a shareholder Share Capital of BCH. Authorized Share Capital : Bt 4,744,161,260 UTEL Issued Share Capital : Bt 4,735,622,000 - United Telecom Sales and Services Company Limited. UTEL is a subsidiary of UCOM with 99.99 percent shareholding Class of Share : Ordinary Shares of Bt 2 each (transferred to BCH since 16 February 2006). Mr. Boonchai Bencharongkul is a director of United Telecom Sales and Services Voting Rights : One vote per share Company Limited and a shareholder of BCH. UIH - United Information Highway Company Limited. UIH is a subsidiary of UCOM with 75 percent shareholding (transferred to Distribution of Shareholdings BCH since 16 February 2006). Mr. Boonchai Bencharongkul is a director of United Information Highway Company Limited and Size of Shareholdings No. of Shareholders % No. of Shares % a shareholder of BCH. 1 - 999 21,922 83.51 1,028,043 0.04 TELENOR Group 1,000 - 10,000 3,499 13.33 10,682,571 0.45 - Telenor Asia Pte. Limited’s group. TELENOR is a major shareholder of TAC with 32.7 percent shareholding. 10,001 - 1,000,000 792 0.03 70,058,881 2.96 Bang-San Townhouse 1,000,001 and above 371 0.00 2,286,041,505 96.55 - Bang-san Townhouse Company Limited. Mr. Boonchai Bencharongkul is a director of Bang-san Townhouse. Total 26,250 100 2,367,811,000 100.00 International Cold Storage

- International Cold Storage Company Limited. Mr. Boonchai Bencharongkul is a director of International Cold Storage. 1. Includes CDP (see details in the Statistics of shareholding in the CDP in Singapore, page 70) Connect One – Connect One Company Limited. Connect One is an associate of UCOM with 49 percent shareholding (transferred to BCH since 16 February 2006) Mr. Boonchai Bencharongkul is a director of Connect One. Substantial Shareholdings (Holding 5% and above) I.N.N. Group Direct Interest Indirect Interest1 – Currently changed to I.N.N Radio. I.N.N. Group includes I.N.N. News (Thailand) Limited. Mr. Boonchai Bencharongkul is a No. of Shares % No. of Shares % director of I.N.N. Telenor Asia PTE LTD2 774,555,113 32.71 1,548,600,297 65.40 Setthakij Ruam Duay Chuay Kun Thai Telco Holdings Limited 774,045,184 32.69 - - – Mr. Boonchai Bencharongkul is a director of Setthakij Ruam Duay Chuay Kun Limited. TOT Public Company Limited 132,145,250 5.58 - - Private Property DBS Nominees Pte Ltd 126,834,565 5.36 - - – Private Property Company Limited. Mr. Boonchai Bencharongkul is a director and shareholder of Private Property with 33 percent shareholding. 1. Unlike Singapore incorporated companies which as listed on the SGX-ST, the Company does not maintain a Register of Substantial Shareholders or a Register of Directors’ Shareholding. The shareholders of the Company are not required under the Singapore Companies Act to provide the Company with notices of Benchachinda Holding substantial shareholding or of changes in substantial shareholding. Similarly, the Directors are not required to provide the Company with notices of changes in – Benchachinda Holding Company Limited. Mr. Boonchai Bencharongkul is a director and shareholder of Benchachinda with their respective indirect interests in the Shares. Accordingly, the information relating to indirect interests of the relevant shareholders and Directors is based on knowledge of the Company except where the relevant indirect interest rates to Shares owned through a direct securities account which the relevant 35 percent shareholding. shareholder or Director has opened with CDP in which case the information will be based on the number of Shares standing to the credit of his securities account Universal Communication Service with CDP. – Benchachinda holds 27 percent interest in Universal Communication Service. 2. Telenor is a major shareholder of Thai Telco Holdings. Accordingly, Telenor is deemed to have an indirect interest in the 774,045,184 Shares owned by Thai Telco Holdings Limited. Ekarai – Mrs. Torgunn Aas Reggestad is a director of Ekarai Company Limited. King Power Suvarnabhumi – Mr. Chulchit Bunyaketu is a director of King Power Suvarnabhumi Company Limited. annual report 2007 070 071

Top Largest Shareholders Twenty Largest Shareholders No Name No. of share % No Name No. of share % 1. Telenor Asia PTE LTD 774,555,113 32.71 1. DBS Nominees Pte Ltd 126,834,565 48.26 2. Thai Telco Holdings Limited 774,045,184 32.69 2. HSBC (Singapore) Nominees Pte Ltd 54,395,470 20.70 3. The Central Depository (PTE) Limited 263,014,233 11.11 3. DBSN Services Pte Ltd 44,607,714 16.97 4. Thai NVDR Company Limited 185,985,472 7.86 4. Citibank Nominees Singapore Pte Ltd 9,148,808 3.48 5. TOT Public Company Limited 132,145,250 5.58 5. United Overseas Bank Nominees Pte Ltd 7,315,821 2.78 6. RBC Dexia Investor Services Trust 82,720,400 3.49 6. Raffles Nominees Pte Ltd 7,080,101 2.69 7. Nortrust Nominees Limited 7,718,00 0.33 7. Citigroup GM Singapore Securities Pte Ltd 2,168,200 0.83 8. Chase Nominees Limited 1 6,562,700 0.28 8. Telenor Asia Pte Ltd 1,638,200 0.62 9. Government Pension Fund 5,791,800 0.25 9. UOB Kay Hian Pte Ltd 1,260,000 0.48 10. Nomura Singapore Limited 566,000 0.22 11. Ong Soo Yong 395,000 0.15 DETAIL OF THE SHAREHOLDINGS BY 12. Merrill Lynch (S'pore) Pte Ltd 380,400 0.14 THE CENTRAL DEPOSITORY (Pte) LIMITED IN SINGAPORE 13. Lam Hup Sum 360,000 0.14 As at 7 March 2008 14. OCBC Securities Private Ltd 251,600 0.10 15. Phillip Securities Pte Ltd 242,334 0.09 16. DB Nominees (S) Pte Ltd 155,400 0.06 Distribution of Shareholdings 17. Choy Yew Kuan 150,000 0.06 Size of Shareholdings No. of Shareholders % No. of Shares % 18. ING Nominees (S'pore) Pte Ltd 143,900 0.05 1 - 999 18 3.51 4,917 0.00 19. Choo Seng Kwee 140,000 0.05 1,000 - 10,000 359 69.98 1,444,903 0.55 20. Lim Hup Yee 135,000 0.05 10,001 - 1,000,000 126 24.56 6,890,534 2.62 1,000,001 and above 9 1.95 254,448,879 96.83 Total 512 100.00 262,789,2331 100.00

NOTE: 1. This discrepancy of 225,000 shares arose due to the difference of book closing time between CDP and TSD, 5.00 pm of 7 March 2008 for CDP and 12.00 pm on the same date of TSD

annual report 2007 074 075

MD&A

Early 2007, the implementation of interconnection charge (IC) reshaped the Thai Telecom industry. All operators were adjusting Operation Summary to the new environment which resulted in operators being more cautious in terms of offering aggressive promotions than in the past. This improved the competitive environment during the course of the year. Furthermore, tariffs were generally structured 2006 2007 % YoY into on/off-net pricing, with relatively cheaper on-net prices. This resulted in substantial growth in on-net traffic and double-SIM Additional subscribers users, which had a negative impact on the ARPU development during the year. However, it had a positive impact on subscriber Post-paid 571,019 36,643 -93.6% growth and net IC cost, which has been improving throughout the year. Prepaid 2,977,539 3,866,369 29.9% Total 3,548,558 3,903,012 10.0% 2007 also marked an all-time high subscriber growth for the whole market due in one part to the increase in double-SIM users mentioned above and the other part to the expansion of network coverage into under-penetrated areas. The penetration rate Total subscribers at the end of 2007 is estimated at 82 percent, a 20 percent points increase in one year. dtac added a record high 3.9 million Post-paid 2,036,102 2,072,745 1.8% subscribers and the total subscriber base amounted to 15.8 million at year end 2007. This was a result of our improved brand Prepaid 10,189,396 13,699,281 34.4% position, and continued network coverage and distribution channel expansion. Total 12,225,498 15,772,026 29.0%

While subscriber growth was strong, service revenues were growing at a lower rate owing to the double-SIM effect, consistently ARPU high fuel prices, a difficult economic situation and low consumer confidence. In 2007, underlying service revenues grew by 6.6 Post-paid 809 823 1.7% percent due mainly to subscriber growth, while total service revenues grew by 37.2 percent as a result of the inclusion of IC Prepaid 269 297 10.6% revenues. EBITDA grew by 6.0 percent but EBITDA margin dropped to 28.6 percent, from the effect of a larger revenue base due Blended 356 374 5.1% to inclusion of interconnect revenues. Total sites on air 7,203 8,166 13.4% There were several positive development on the regulatory front throughout 2007, especially on IC. dtac brought TOT to the

NTC’s Dispute Resolution Process and got a ruling in its favor. The NTC ordered TOT to enter into IC negotiations with dtac but TOT Note: refused to do so. Furthermore, TOT’s request for an injunction against the NTC’s order was also rejected by the Administrative 1. Total and net additional prepaid subscribers for 2006 are based on old definitions, which are validity + 45 days. Court. dtac then submitted a letter to TOT to cancel the access charge agreements and informed TOT that it would stop accruing 2. MOU and ARPU for 2006 do not include IC minutes and revenues. 3. MOU for 2006 is based on charged minutes. IC charges. TOT in return filed a civil lawsuit against CAT and dtac for the overdue payment of access charge.

CAT has publicly indicated interest in converting dtac’s concession agreement into a network rental agreement. Separately, dtac and CAT have been exploring alternative 3G options using the 850 MHz frequency currently occupied by dtac. annual report 2007 076 077

Financial Summary Cost Breakdown

(THB million) 2006 2007 %YoY 1) Cost of Services for 2007, amounted to Baht 44.3 billion, an increase of 50.5 percent as a result of the inclusion of IC costs. Revenue from Telephone Services (with IC*) 47,013 64,491 37.2% Revenue from Telephone Services (without IC*) 47,013 50,113 6.6% % of cost of services Growth COST OF SERVICES Revenue from Starter Kits and Telephone sets 1,159 735 -36.6% 2006 2007 %YOY Revenue from Other Operating Income 301 364 20.9% Regulatory costs 57% 27% -27.1% Total Revenues 48,474 65,590 35.3% Amortization of deferred rights 22% 16% 14.0% Cost of Telephone Services (with IC*) 29,456 44,342 50.5% Interconnection cost n/a 42% n/a Cost of Telephone Services (without IC*) 29,456 27,412 -6.9% Others operating costs 21% 15% 4.2% Cost of Starter Kits and Telephone sets 327 366 11.9% Cost of services 100% 100% 50.5% Total Costs 29,783 44,708 50.1% SG&A 8,367 10,269 22.7% 1.1) Regulatory costs comprised revenue share to CAT, excise tax, access charge to TOT, and numbering fees. For 2007, Operating Profit 10,324 10,613 2.8% regulatory costs declined 27.1 percent because of the amendment of access charge to IC charge, offset by higher revenue Net Profit 4,938 5,841 18.3% sharing from higher revenue base. EBITDA 17,817 18,893 6.0% 1.2) Amortization of deferred rights increased 14.0 percent as a result of the continuation of cellular network expansion EBITDA margin 36.5% 28.6% - 7.9 pp and lower amortization period (which is based on concession life). 1.3) Interconnection costs (IC) comprised IC with TOT (IC-TOT) and with AIS & True Move (IC-AIS & True Move). * IC charges include revenues and costs between operators with IC agreement. • IC-TOT is the cost of traffic transited via TOT’s network net of the balance of dtac’s traffic terminated on TOT network and TOT’s traffic terminated on dtac’s network. However, dtac stopped accruing IC with TOT since 8 November, 2007 Revenues Breakdown following termination of the Access Charge Agreement. It accounted for 3.7 percent of total cost of services. • IC-AIS & True Move accounted for 38.2 percent of total cost of services in 2007. 1) Service Revenues in 2007 grew 37.2 percent from the inclusion of IC revenues. Excluding IC, service revenues grew 6.6 1.4) Others percent due to higher subscriber base, and comprised revenues from voice service, value added services (VAS), international • Production costs, including refill vouchers and sales margin, grew 4.2 percent due to higher revenues. roaming (IR), and interconnection (IC). • Roaming charges and cost of international and long distance calls (IR and IDD) included costs paid to roaming partners, CAT Telecom PLC, and TOT PLC, and declined 7.2 percent from 2006. % of service revenues Growth • Other operating costs, mainly comprising repair & maintenance and electricity, grew by 8.6 percent due to higher SERVICE REVENUE 2006 2007 %YOY number of cell sites. Voice revenue 81% 62% 5.1% Value added service revenue 8% 8% 33.2% 2) Cost of starter kits and telephone sets was Baht 366 million and rose 11.9 percent from the previous year. International roaming 5% 4% 3.9% Others 6% 4% -7.6% 3)SG&A Interconnection revenue 0% 22% n/a Service revenues 100% 100% 37.2% SG&A for 2007 amounted to THB 10.3 billion, a growth of 22.7 percent from the previous year due mainly to higher marketing expenses for rebranding activities in Q407 and IEC (International Engineering Public Company Limited) one-time charge relating 1.1) Voice revenues in 2007 grew 5.1 percent from 2006, from customer base expansion, and represented 61.9 percent of to the termination of a service provider agreement in Q307. total service revenues. 1.2) Revenues from Value Added Services (VAS) grew by 33.2 percent due to higher data and SMS usages, and accounted % of SG&A Growth SG&A for 8.1 percent of total service revenues. 2006 2007 %YOY 1.3) Revenue from International Roaming (IR) increased 3.9 percent from previous year, and contributed 3.6 percent to General administration expenses 49% 52% 31.2% total service revenues. Depreciation and amortization 9% 7% -7.6% 1.4) Interconnection Revenue (IC) represented an addition of approximately 28.7 percent to service revenues excluding IC Selling and marketing expenses 38% 34% 8.6% in 2007, and accounted for 22.3 percent of total service revenues. Provision for doubtful accounts 4% 7% 115.8% SG&A 100% 100% 12.7% 2) Revenue from starter kits and telephone sets was Baht 735 million in 2007, declining 36.6 percent from 2006 due to lower average SIM prices

3) Revenue from other operating income, e.g. lease revenue from transmission circuit, initial franchise fee, and repair service revenue, increased by 20.9 percent. annual report 2007 078 079

EBITDA and Net Profit director’s report For 2007, EBITDA was THB 18,893 million, up 6.0 percent from the previous year, and EBITDA margin was 28.6 percent, down from 36.5 percent in 2006 due to the inclusion of IC revenue which has had a dilutive impact on the EBITDA margin.

For 2007 net profit was THB 5,841 million, a growth of 18.3 percent, partly from lower financial cost and reduction in net IC cost. The Directors present their report to the members together with the audited accounts of the company and its subsidiaries for Financial Summary – Balance Sheet and Cash flow the financial year ended 31 December 2007

(THB million) 2006 2007 %YoY 1. Directors of the Company Cash and cash equivalent 1,816 3,277 80.4% a. The Directors of the Company in office at the date of this report are: Current assets 11,614 13,595 17.1% Non-current assets 83,473 87,280 4.6% 1. Mr. Boonchai Bencharongkul Chairman of the Board of Directors Total assets 95,086 100,875 6.1% 2. Mr. Arve Johansen Vice Chairman of the Board of Directors Current liabilities 22,429 24,870 10.9% 3. Mr. Chulchit Bunyaketu Director Non-current liabilities 31,201 24,139 -22.6% 4. Mr. Soonthorn Pokachaiyapat Director Total liabilities 53,630 49,009 -8.6% 5. Mr. Ragnar H. Korsaeth Director Shareholders’ equities 41,457 51,849 25.1% 6. Mr. Roar Wiik Andreassen1 Director Total liabilities and shareholders’ equities 95,086 100,875 6.1% 7. Mr. Sompol Chanprasert Director 8. Mr. Sigve Brekke Director and CEO Assets 9. Mr. Knut Borgen Director Assets at the end of 2007 were THB 100.9 billion, increasing 6.1 percent YoY from the continued roll out of network coverage. 10. Mr. Stephen Woodruff Fordham Director

Liabilities Note: 1. Mr. Roar Wiik Andreassen had been appointed as new Director to replace the resigned Director (Mr. Christian Storm) as of the resolution of the Board of Directors Meeting No. 5/2007 dated 12 December 2007. Liabilities at the end of 2007 were THB 49.0 billion, down 8.6 percent due to the reduction in interest-bearing debt. b. The direct and indirect interests of the Directors and the substantial shareholders, as defined in the Companies Act, Shareholder Equities Chapter 50 of Singapore (the “Singapore Companies Act”) and Section 59 of Securities and Exchange Act B.E. 2535 of Shareholder Equities at the end of 2007 was THB 51.8 billion, up 25.1 percent from the IPO in Thailand and net profit generated Thailand, of the Company in the ordinary shares (“Shares”) at the par value of THB 2 each in the capital of the Company in 2007. are shown in the following table:

Cash flow Direct Interest Indirect Interest1 For 2007, dtac generated THB 17.9 billion of net cash from operating activities and used THB 11.1 billion for investing activities, Directors 2 (As at 7 March 08) (As at 7 March 08) mainly on network capacity and coverage expansion. Net cash used in financing activities was THB 5.4 billion mainly for loan No. of Shares % No. of Shares % repayment. Mr. Boonchai Bencharongkul 10 0.00 - - Mr. Sompol Chanprasert 3,900 0.00 - - Financial Summary – Financial Ratios Mr. Sigve Brekke 900,000 0.04 - -

2006 2007 1. Unlike Singapore incorporated companies which are listed on the SGX-ST, the Company does not maintain a Register of Substantial Shareholders or a Register of Directors’ Shareholdings. The shareholders of the Company are not required under the Singapore Companies Act to provide the Company Net debt to Equity 0.9 0.5 with notices of substantial shareholding or of changes in substantial shareholding. Similarly, the Directors are not required to provide the Company with Net debt to EBITDA 2.0 1.5 notices of changes in their respective indirect interests in the Shares. Accordingly, the information relating to indirect interests of the relevant shareholders Interest Coverage Ratio 5.7 8.7 and Directors is based on knowledge of the Company except where the relevant indirect interest relates to Shares owned through a direct securities account which the relevant shareholder or Director has opened with CDP in which case the information will be based on the number of Shares standing FFO to Total Debt (%) 37.4 52.4 to the credit of his securities account with CDP. 2. Other than Mr. Boonchai Bencharongkul, Mr. Sompol Chanprasert, and Mr. Sigve Brekke, none of the other Directors have any interest, whether direct or indirect in any shares. Key financial ratios strengthened from lower interest-bearing debt level and better operating results. 3. For further detail on the substantial shareholders, please see page 69 annual report 2007 080 081

2. Audit Committee 8. Other statutory information The Audit Committee of the Board of Directors comprises three independent Directors. Members of the Committee are: a. Before the accounts of the Company were finalized, the directors took reasonable steps to ascertain that proper action 1. Mr. Chulchit Bunyaketu had been taken in relation to the writing off for bad debts and the making of provision for doubtful amounts receivable 2. Mr. Soonthorn Pokachaiyapat and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for 3. Mr. Stephen Woodruff Fordham doubtful accounts receivable.

The Committee recommended to the Board of Directors the re-appointment of Ernst & Young Office Limited as auditors of the At the date of this report, the directors are not aware of any circumstances which would render (i) the amount written off Company at the forthcoming annual meeting of shareholders. for bad debts or the amount of the provision for doubtful accounts receivable inadequate to any substantial extent; and (ii) the values attributed to current assets misleading. 3. Principal Activity The principal activity of the Company is to provide wireless telecommunication services in Thailand under a concession granted b. At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in the report of by CAT Telecom Public Company Limited. accounts, which would render any amount stated in the accounts of the Company, and the consolidated accounts misleading. There has been no significant change in the nature of this principle activity during the financial year. c. As at the date of this report, (i) there are no charges in the assets of the Company which have arisen since the end of the On 12 November 2004, the Board of Directors Meeting No. 5/2004 and No. 1/2007 passed a resolution approving the financial year to secure the liabilities of any other person, and (ii) there are no material contingent liabilities which have dissolution of TAC Investment Limited (a subsidiary company) and TAC Finance Company B.V., respectively. arisen since the end of the financial year.

4. Results of the financial year (in thousands of Thai Baht) d. In the opinion of the directors, no item, transaction or event of a material and unusual nature has arisen in the interval between the financial year and the date of this report which is likely to affect substantially the results of the operation of 2007 2006 the Company and of the Group for the financial year in which this report is made. Profit for the financial year (after taxation and minority interests) 5,841,426 4,937,546 9. Statutory Auditors: Ernst & Young Office Limited, Certified Public Accountants, our auditor, have expressed their willingness to accept In the opinion of the directors, the results of the operations of the Company, on a consolidated basis, during the financial year re-appointment as statutory auditors of the Company. have not been affected by any item, transaction or event of a material and unusual nature.

5. Dividend On behalf of the Board The Board of Directors Meeting No. 1/2008 passed a resolution approving that the company make dividend payment on ordinary shares at the rate of Bath 0.73 per share, less deductions as required by law, for the operation from 1 January 2007 to 31 December 2007. The dividend payment will be proposed to approve by the Annual General Meeting of the Company’s shareholders, and payment will be made on 14 May 2008. Mr. Boonchai Bencharongkul 6. Material movement in reserves and provisions Chairman of Board of Directors There was no material movement in reserves and provisions during the financial year except as disclosed in the notes to the 8 February 2008 accounts.

7. Related Party Transactions The Company and its subsidiaries have entered into business transactions with each other and with associated and related companies as shown in the Note 7 to the Financial Statements. Such transactions have been concluded on terms and conditions determined by the Company and those related companies and are in the normal course of business. The Company will be seeking shareholders’ approval for a general mandate for interested person transactions, which are recurrent transactions of a revenue or trading nature or are necessary for the Company’s day-to-day operations, such as the purchase and sale of supplies and materials, that may be carried out with the Interested Persons. annual report 2007 082 083 audit committee report

7. Performed a self-assessment in relation to the Audit Committee Charter as assigned by the Board of Directors based on the best practice and the result was satisfactory.

8. Reviewed and proposed to the Board of Directors for the appointment and remuneration of the Auditor General as the To Shareholders of Total Access Communication Public Company Limited Company’s external auditors for fiscal year 2008.

The Audit Committee of Total Access Communication Public Company Limited is comprised of three independent directors In our opinion, the Company presents the financial statements in accordance with generally accepted accounting principles, qualified in Finance, Law, and Business Management. All of the members are not executive directors, employees or advisors of appropriately disclose information. The Company’s operation performance presents good corporate governance and the Company as follows. appropriate internal control systems and internal audit system without material deficiency.

1. Mr. Chulchit Bunyaketu Chairman of Audit Committee 2. Mr. Soonthorn Pokachaiyapat Member of Audit Committee 3. Mr. Stephen Woodruff Fordham Member of Audit Committee

In 2007, the Audit Committee fulfilled all its responsibilities in accordance with the Audit Committee Charter approved by the Board of Directors. The Audit Committee Meeting was held on monthly basis. In 2007, the Audit Committee conducted 12 Mr. Chulchit Bunyaketu meetings with the Executive Management including Head of Internal Audit, Head of Risk Management and Head of Legal in Chairman of Audit Committee relation to the meeting agenda as appropriate. The major tasks undertaken by the Audit Committee were as follows: Total Access Communication Public Company Limited

1. Reviewed the consolidated quarterly and annual financial statements of the Company for fiscal year 2007 before submitting it to the Board of Directors for approval. Those financial statements were prepared in accordance with generally accepted accounting standards and sufficient disclosure of information.

2. Reviewed the related party transactions of the Company to ensure compliance with generally accepted business practice and the regulations of Stock Exchange.

3. Reviewed the appraisal of adequacy of internal control system, risk management, compliance with laws related to the Company’s business. Conducted meetings with the Management and Internal Audit and made recommendations for the benefits of the Company’s operations.

4. Approved the audit plan, which was prepared based on Risk Based Approach, and considered the audit reports of the Internal Audit carried out by Operational Audit Unit and Information Technology Audit Unit. It was concluded that the Company had an effective internal control system and no significant weakness area.

5. Reviewed the Corporate Authorization Index Guideline including the Control System Procedure Guidelines in accordance with the terms of Good Corporate Governance.

6. Reviewed the Risk Management Policy and Guidelines and followed up the progress of Risk Management as Risk Management Unit proposed. annual report 2007 084 085 report of independent auditor

Based on advice from the Company’s legal counsel, the Company’s management is confident that the Company is not obliged to make payment of access charge under the agreements because such agreements do not comply with current legal principles (NTC notification). The Company’s management believes that the court’s decision will not have a substantial impact on the Company’s financial position and operating results.

To the Shareholders of Total Access Communication Public Company Limited At present, the case is in before the court and its outcome cannot be determined and depends on the future judicial process.

I have audited the accompanying consolidated balance sheets of Total Access Communication Public Company Limited and subsidiaries as at c) As discussed in Note 32 to the financial statements, the Company has significant outstanding lawsuit and commercial disputes. At present, 31 December 2007 and 2006, the related consolidated statements of income, changes in shareholders’ equity and cash flows for the years such lawsuit and disputes are under legal and formal arbitration proceedings. Their outcomes can not yet be determined and depend on the then ended, and the separate financial statements of Total Access Communication Public Company Limited for the same period. These financial future judicial process. statements are the responsibility of the management of the Company and subsidiaries as to their correctness and the completeness of the presentation. My responsibility is to express an opinion on these financial statements based on my audits. These financial statements have been prepared under accounting principles generally accepted in Thailand. Note 40 to the financial statements describing significant differences between accounting principles generally accepted in Thailand and International Financial I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to Reporting Standards (IFRS) is not a required part of basic financial statements prepared under accounting principles generally accepted in obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test Thailand and is presented for the purpose of giving preliminary information only. I have applied certain limited procedures to this information basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles which consisted principally of enquiries of management regarding the methods of its measurement and presentation. However, I did not audit used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my such information and do not express any audit opinion on it. audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Total Access Communication Public Company Limited and subsidiaries and of Total Access Communication Public Company Limited as at 31 December 2007 and 2006, the result of their operations and cash flows for the years then ended, in accordance with generally accepted accounting principles. Sumalee Reewarabandith Without qualifying my opinion on the above financial statements, I draw attention to the following matters: Certified Public Accountant (Thailand) No. 3970 Ernst & Young Office Limited a) As discussed in Note 4 to the financial statements whereby, effective 1 January 2007, the Company changed its accounting policy for Bangkok: 8 February 2008 recording investments in subsidiaries and associate in the separate financial statements from the equity method to the cost method. The Company has thus restated the separate financial statements as at 31 December 2006 and for the year then ended to reflect this accounting change. b) As discussed in Note 31 to the financial statements regarding the litigation between the Company and TOT Public Company Limited (“TOT”), on 17 November 2006, the Company sent written notice informing TOT and CAT Telecom Public Company Limited (“CAT”) that the Company would amend the rates for calculating the Access Charge under the Access Charge Agreement entered into with TOT and also informed TOT that it would pay the Interconnection Charge to TOT at the rate which is in compliance with the law or at the provisional rate announced by the National Telecommunications Commission (“NTC”) while negotiations on the interconnection agreement with TOT has not been concluded. The Company accrued interconnection charges for the period 17 November 2006 to 7 November 2007 amounting to Baht 1,973 million in the financial statements. However, TOT refused to accept payment of such interconnection charges, and informed the Company that it was not entitled to interconnect its network with the TOT network because the Company had not been granted a telecommunications license by the NTC, and did not have its own telecommunications network. TOT also claimed that the Access Charge Agreement did not violate any law. Therefore on 8 November 2007, the Company sent TOT a notice cancelling its offers to make payment of interconnection charges and to terminate the two access charge agreements. Therefore, from 8 November 2007 to 31 December 2007 the Company did not accrue the access charge in its financial statements because of the termination of access charge agreements.

On 16 November 2007, TOT lodged suit with the Civil Court, calling for the Company and CAT to jointly make payment of Access Charge and penalties totaling Baht 11,705 million for period between 17 November 2006 to 31 October 2007, including default interest and value added tax, and to pay Access Charge from 1 November 2007 until the agreements among TOT, CAT and the Company expire, together with default interest at a rate of 1.25% per annum from the date of default of each installment until fully repayment is made to TOT. annual report 2007 086 087

TOTAL ACCESS COMMUNICATION PUBLIC COMPANY LIMITED AND SUBSIDIARIES TOTAL ACCESS COMMUNICATION PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS BALANCE SHEETS (Continued) AS AT 31 DECEMBER 2007 AND 2006 AS AT 31 DECEMBER 2007 AND 2006

(Unit: Baht) (Unit: Baht) Consolidated financial statements Separate financial statements Consolidated financial statements Separate financial statements Note 2007 2006 2007 2006 Note 2007 2006 2007 2006 (Restated) (Restated) ASSETS LIABILITIES AND SHAREHOLDERS’ EQUITY Current assets Current liabilities Cash and cash equivalents 3,276,655,130 1,816,014,350 1,476,562,439 1,740,637,738 Short-term loans from financial institutions 17 - 1,000,000,000 - 1,000,000,000 Accounts receivable - trade, net 6 3,010,130,985 2,710,306,698 3,010,130,985 2,710,306,698 Trust receipts 50,934,910 1,667,879,763 50,934,910 1,667,879,763 Accounts receivable - trade: related parties Accounts payable - trade 18 8,668,443,860 5,934,415,604 8,656,322,971 5,934,011,459 Accounts receivable - trade: subsidiary, net 7 - - 31,902,990 - Accounts payable - trade : related parties Account receivable - trade: associated company 7 4,868,753,321 5,109,672,132 4,868,753,321 5,109,672,132 Accounts payable - trade : subsidiary 7 - - 10,983,790 5,212,729 Accounts receivable - trade: related companies 7 78,052,267 59,752,326 77,163,853 59,752,326 Accounts payable - trade : related companies 7 755,366,421 648,792,051 732,394,185 648,792,051 Advances to related parties, net 7 1,489,879 4,054,767 35,586,866 39,300,367 Advances : related parties Inventories - net 8 121,533,457 80,231,618 121,533,457 80,231,618 Advances from subsidiary 7 - - 36,363,361 - Deferred cost of unearned revenue from Advances from associated company 7 4,428,274 5,146,643 4,428,274 5,146,643 telephone services 561,696,706 907,838,894 561,696,706 907,838,894 Advances from related companies 7 91,373,216 38,699,316 88,456,353 35,782,453 Other current assets - net 9 1,676,770,178 925,674,588 1,569,173,926 918,996,740 Current portion of long-term loans 19 1,657,600,262 5,657,600,262 1,657,600,262 5,657,600,262 Total current assets 13,595,081,923 11,613,545,373 11,752,504,543 11,566,736,513 Current portion of bonds 20 5,500,000,000 - 5,500,000,000 - Non-current assets Unearned revenue from telephone service 3,768,697,266 3,655,368,355 3,771,734,128 3,655,368,355 Pledged deposits at financial institutions 30.3 772,759 1,044,559 - - Other current liabilities 21 4,373,635,724 3,820,605,442 4,321,723,408 3,793,638,214 Investments in subsidiaries 10 - - 3,482,567,436 4,999,955 Total current liabilities 24,870,479,933 22,428,507,436 24,830,941,642 22,403,431,929 Investment in associated company 11 239,732,782 231,057,485 50,000,000 50,000,000 Non-current liabilities Other long-term investments 12 199,599,191 199,687,241 199,599,191 199,687,241 Long-term loan from subsidiary 7 - - 1,721,209,677 - Amounts due from related parties Long-term loans - net of current portion 19 9,253,304,976 10,910,905,238 9,253,304,976 10,910,905,238 Amount due from subsidiary 7 - - 1,271,284,608 1,325,052,439 Bonds - net of current portion 20 14,500,000,000 20,000,000,000 14,500,000,000 20,000,000,000 Amounts due from related companies - net 7 454,948 220,505 - - Provision for post employee benefit - statutory Account receivable from assignment of right - net 13 579,741,804 579,741,804 579,741,804 579,741,804 severance pay 79,673,105 71,292,206 79,673,105 71,292,206 Property, plant and equipment - net 14 4,858,352,184 4,407,206,755 3,612,278,240 3,123,661,309 Other non-current liabilities 305,646,830 218,892,920 178,733,868 104,590,123 Deferred right to use of equipment - net 15 73,812,555,473 72,763,030,489 73,812,039,889 72,763,030,489 Total non-current liabilities 24,138,624,911 31,201,090,364 25,732,921,626 31,086,787,567 Equipment under installation 2,896,734,361 1,766,237,133 2,896,734,361 1,766,237,133 Total liabilities 49,009,104,844 53,629,597,800 50,563,863,268 53,490,219,496 Deferred tax assets 25 1,191,535,136 977,368,965 1,208,065,323 977,368,965 Other non-current assets Deposits and prepayment for purchase and The accompanying notes are an integral part of the financial statements. installation of equipment 487,262,869 177,333,579 487,262,869 177,333,579 Others 16 3,013,312,974 2,369,623,945 2,956,932,602 2,377,060,221 Total non-current assets 87,280,054,481 83,472,552,460 90,556,506,323 83,344,173,135 TOTAL ASSETS 100,875,136,404 95,086,097,833 102,309,010,866 94,910,909,648

The accompanying notes are an integral part of the financial statements. annual report 2007 088 089

TOTAL ACCESS COMMUNICATION PUBLIC COMPANY LIMITED AND SUBSIDIARIES TOTAL ACCESS COMMUNICATION PUBLIC COMPANY LIMITED AND SUBSIDIARIES BALANCE SHEETS (Continued) INCOME STATEMENTS AS AT 31 DECEMBER 2007 AND 2006 FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006

(Unit: Baht) (Unit: Baht) Consolidated financial statements Separate financial statements Consolidated financial statements Separate financial statements Note 2007 2006 2007 2006 Note 2007 2006 2007 2006 (Restated) (Restated) Shareholders’ equity Revenues from sales and services Share capital 22 Revenue from telephone services 64,491,292,545 47,013,378,718 64,442,911,209 47,013,378,718 Registered Revenue from sales of telephone sets and starter kits 735,211,994 1,159,334,688 735,211,994 1,159,334,688 2,372,080,630 ordinary shares of Baht 2 each Other operating income 363,982,819 301,174,004 439,933,051 300,518,483 (2006: 511,416,126 ordinary shares of Total revenues from sales and services 65,590,487,358 48,473,887,410 65,618,056,254 48,473,231,889 Baht 10 each) 4,744,161,260 5,114,161,260 4,744,161,260 5,114,161,260 Cost of sales and services Issued and fully paid Cost of telephone services 44,341,692,423 29,455,851,251 44,425,098,379 29,460,077,552 2,367,811,000 ordinary shares of Baht 2 each Cost of sales of telephone sets and starter kits 365,883,827 327,047,049 365,883,828 327,047,049 (2006: 458,016,126 ordinary shares of Total cost of sales and services 44,707,576,250 29,782,898,300 44,790,982,207 29,787,124,601 Baht 10 each) 4,735,622,000 4,580,161,260 4,735,622,000 4,580,161,260 Gross profit 20,882,911,108 18,690,989,110 20,827,074,047 18,686,107,288 Premium on ordinary shares 23,543,446,204 20,794,742,634 23,543,446,204 20,794,742,634 Selling and administrative expenses (10,269,459,965) (8,366,529,296) (10,237,238,653) (8,354,284,158) Capital surplus of subsidiary arising as a result of Operating profit 10,613,451,143 10,324,459,814 10,589,835,394 10,331,823,130 the Company’s purchase of the subsidiary at a price Interest income 197,899,432 133,389,443 180,757,173 132,931,217 lower than the net book value of subsidiary at the Other income 182,248,017 142,468,302 209,881,984 161,841,192 acquisition date 10 1,647,137,361 - 1,647,137,361 - Foreign exchange gain (loss) (17,396,935) 8,872,621 (24,244,472) 73,802,274 Retained earnings Net operating profit 10,976,201,657 10,609,190,180 10,956,230,079 10,700,397,813 Appropriated - statutory reserve 23 560,057,915 535,001,026 560,057,915 535,001,026 Share of income from investment in associated Unappropriated 21,362,964,137 15,546,595,113 21,258,884,118 15,510,785,232 company accounted for under equity method 38,675,297 111,344,060 - - 21,923,022,052 16,081,596,139 21,818,942,033 16,045,786,258 Gain on sale of investment in available-for-sale Equity attributable to the Company’s shareholders 51,849,227,617 41,456,500,033 51,745,147,598 41,420,690,152 securities 12 - 55,376,490 - 55,376,490 Minority interest - equity attributable to minority Income before financial costs and income tax 11,014,876,954 10,775,910,730 10,956,230,079 10,755,774,303 shareholders of subsidiary 16,803,943 - - - Financial costs 24 (2,327,855,682) (3,377,820,619) (2,354,410,773) (3,521,404,066) Total shareholders’ equity 51,866,031,560 41,456,500,033 51,745,147,598 41,420,690,152 Corporate income tax 25 (2,845,762,736) (2,460,543,954) (2,828,663,531) (2,446,851,087) TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 100,875,136,404 95,086,097,833 102,309,010,866 94,910,909,648 Income after corporate income tax 5,841,258,536 4,937,546,157 5,773,155,775 4,787,519,150 Net income attributable to minority shareholders of subsidiary 167,377 - - - The accompanying notes are an integral part of the financial statements. Net income for the year 5,841,425,913 4,937,546,157 5,773,155,775 4,787,519,150

Basic earnings per share Net income 26 2.50 2.11 2.47 2.04 Weighted average ordinary shares (shares) 2,332,663,002 2,341,302,550 2,332,663,002 2,341,302,550

The accompanying notes are an integral part of the financial statements. annual report 2007 090 091

- - - 470,048 - Total Total 16,501,272 114,217,126 (Unit: Baht) (Unit: Baht) 1,647,137,361 (35,809,881) 1,647,137,361 5,773,155,775 4,787,519,150 4,937,546,157 2,904,164,310 2,904,164,310 5,841,258,536 51,745,147,598 36,633,171,002 51,866,031,560 36,518,953,876 41,420,690,152 41,420,690,152 36,518,953,876 41,456,500,033 41,456,500,033 41,456,500,033

- 470,048 ------(167,377) 16,501,272 16,501,272 114,217,126 16,803,943 subsidiary to minority to (35,809,881) 5,773,155,775 (25,056,889) 4,787,519,150 Unappropriated 21,258,884,118 of shareholders 15,510,785,232 15,510,785,232 15,546,595,113 12,356,615,326 (1,633,349,244) Minority interest - Minority interest 12,242,398,200 equity attributable

- - - -

------(25,056,889) 5,841,425,913 4,937,546,157 Unappropriated 15,546,595,113 15,546,595,113 Appropriated 21,362,964,137 25,056,889 560,057,915 (1,633,349,244) 535,001,026 535,001,026 535,001,026 535,001,026 535,001,026 12,242,398,200 - statutory reserve

Retained earnings Retained

Retained earnings Retained

------

------reserve

- statutory at the 25,056,889 Appropriated 560,057,915 535,001,026 535,001,026 535,001,026 1,647,137,361 1,647,137,361 date acquisition of the subsidiaryof

------at the

-

of purchase ------1,647,137,361 date acquisition 1,647,137,361 price lower than lower price

of the subsidiaryof Capital surplus of surplus of Capital the subsidiary at a book value the net subsidiary arising as book value 1,797,349,244 a result of the Company’s the Company’s of a result purchase of the of purchase Shares pending Shares Capital surplus of Capital (1,797,349,244) (1,797,349,244) lower than the net than the net lower subsidiary at a price subsidiary arising as

capital reduction due reduction capital settlement dispute to

a result of the Company’s the Company’s of a result

financial statements Consolidated

Separate financial statements Separate

------

------Shares pending Shares 1,797,349,244 (1,797,349,244) capital reduction due reduction capital settlement dispute to Premium on Premium 2,748,703,570 ordinary shares

20,794,742,634 20,794,742,634 20,794,742,634 20,794,742,634 20,794,742,634 23,543,446,204

------

-

- - - - - Premium on Premium ordinary shares 2,748,703,570 2,748,703,570 paid-up 20,794,742,634 20,794,742,634 23,543,446,204 Issued and 155,460,740 20,794,742,634 capital share 4,744,161,260 4,744,161,260 4,580,161,260 4,580,161,260

4,580,161,260 (164,000,000) 4,735,622,000

------4 4 10 22.1 Note 22.2 paid-up Issued and capital share 155,460,740 155,460,740 4,744,161,260 4,580,161,260 4,580,161,260 (164,000,000) 4,735,622,000 4,735,622,000

10 Note 22.1 22.2

settlement dispute due to reduction of the Company’s purchase of the subsidiary of purchase the Company’s of the of book value than the net lower at a price date subsidiary at the acquisition policy for investments in subsidiaries and investments policy for company associated policy for investments in subsidiaries and investments policy for company associated settlement dispute due to reduction reported - as previously - as previously reported - as previously Statutory reserve Net income for the year 2007 the year for income Net subsidiary sell of from Minority interest subsidiary of purchase from Minority interest Capital surplus of subsidiary surplus of arising as a result Capital the subsidiary of purchase the Company’s of book value than the net lower at a price date the subsidiary of at the acquisition Net income for the year 2006 the year for income Net Balance - as at 31 December 2005 - as at 31 December Balance 2006 - as at 31 December Balance 2006 - as at 31 December Balance 2007 - as at 31 December Balance partthe financial statements. of an integral are notes The accompanying Increase in share capital capital in share Increase capital pending for - share decrease Capital

TOTAL ACCESS COMMUNICATION PUBLIC COMPANY LIMITED AND SUBSIDIARIES PUBLIC COMPANY COMMUNICATION ACCESS TOTAL EQUITY OF CHANGES IN SHAREHOLDERS’ STATEMENTS 2007 AND 2006 ENDED 31 DECEMBER THE YEARS FOR Statutory reserve Net income for the year 2007 the year for income Net Capital surplus of subsidiary surplus of arising as a result Capital 2006 (restated) the year for income Net the change in accounting of effect Cumulative

Cumulative effect of the change in accounting the change in accounting of effect Cumulative Increase in share capital capital in share Increase capital pending for - share decrease Capital

TOTAL ACCESS COMMUNICATION PUBLIC COMPANY LIMITED AND SUBSIDIARIES PUBLIC COMPANY COMMUNICATION ACCESS TOTAL EQUITY OF CHANGES IN SHAREHOLDERS’ STATEMENTS 2007 AND 2006 ENDED 31 DECEMBER THE YEARS FOR 2005 - as at 31 December Balance 2005 - as restated - as at 31 December Balance 2006 - as restated - as at 31 December Balance 2006 - as at 31 December Balance 2006 - as restated - as at 31 December Balance 2007 - as at 31 December Balance

partthe financial statements. of an integral are notes The accompanying annual report 2007 092 093

TOTAL ACCESS COMMUNICATION PUBLIC COMPANY LIMITED AND SUBSIDIARIES TOTAL ACCESS COMMUNICATION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS STATEMENTS OF CASH FLOWS (Continued) FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006 FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006

(Unit: Baht) (Unit: Baht) Consolidated financial statements Separate financial statements Consolidated financial statements Separate financial statements Note 2007 2006 2007 2006 Note 2007 2006 2007 2006 (Restated) (Restated) Cash flows from operating activities Increase (decrease) in operating liabilities Net income 5,841,425,913 4,937,546,157 5,773,155,775 4,787,519,150 Accounts payable - trade 3,844,340,195 360,960,607 3,832,623,450 360,960,607 Adjustments to reconcile net income to net cash Accounts payable - trade : subsidiaries - - 5,771,061 5,212,729 provided by (used in) operating activities: Accounts payable - trade : related companies 106,574,366 246,798,782 83,602,132 246,798,782 Share of income from investment in associated Advances from subsidiary - - 62,187,108 - company accounted for under equity method (38,675,297) (111,344,059) - - Advance from associated company (718,370) 5,146,643 (718,370) 5,146,643 Dividend received from investment in associated Advances from related companies 31,001,571 (13,882,447) 52,673,900 (13,882,447) company - - (30,000,000) (20,000,000) Other current liabilities 680,730,856 1,775,344,770 644,450,962 1,930,517,179 Gain on sales of investment in subsidiary (19,952) - - - Other non-current liabilities 155,411,726 (17,245,764) 145,068,319 (17,245,764) Allowance for inventory obsolescence 1,360,001 18,971,263 1,360,001 18,971,263 Net cash from operating activities 17,942,391,234 14,110,335,516 17,862,162,871 15,147,857,630 Allowance for doubtful accounts - accounts receivable - trade (Reversal) 174,683,827 (7,650,085) 174,683,827 (26,616,713) Cash flows from investing activities Reversal allowance for doubtful accounts - Decrease in deposits with maturity of more than 3 months accounts receivable - trade: related companies - (7,000,000) - - or have commitment 271,800 - - - Depreciation and amortisation 27 8,205,206,346 7,286,721,167 8,121,159,100 7,378,178,997 Dividend received from investment in associated company 30,000,000 20,000,000 30,000,000 20,000,000 Provision for asset retirement obligation (147,097,489) 5,239,678 (147,097,489) 5,239,678 Investments in subsidiaries - - (143,583,450) (4,000,000) Gain on sales of investment in available-for-sales - (55,376,490) - (55,376,490) Decrease in other long-term investments 88,050 179,407,179 88,050 179,407,179 Amortisation of deferred interest expense on bills Decrease in accounts receivable in subsidiaries - - 53,767,831 - of exchange : long-term loan from a subsidiary - - - 267,039,070 (Increase) decrease in amounts due from related companies (234,443) 8,646,689 - - Amortisation of premium on forward contracts - - - 550,508,472 Decrease in amounts due from subsidiaries - - - 53,577,950 Fixed assets written-off 3,581,360 5,943,229 3,105,211 5,943,229 Cash and cash equivalents acquired in exchange of Gain from sales of property, plant and equipment (11,659,503) (8,856,454) (11,659,503) (8,856,454) interest in subsidiary 10 1,654,197,764 - - - Increase/decrease in deferred tax assets/liabilities (214,166,171) (160,956,161) (230,696,358) (160,956,161) Acquisition of property, plant and equipment (1,212,684,680) (684,776,330) (1,170,199,271) (684,776,330) Increase/decrease in provision for statutory Proceed from sales of property, plant and equipment 12,034,591 21,386,432 12,034,591 21,386,432 severance pay 8,380,899 7,666,865 8,380,899 7,666,865 Acquisition of investment in subsidiary (32,396,554) - - - Net income attributable to minority shareholders Proceed from sales of investment in subsidiary 490,000 - - - of subsidiary (167,377) - - - Acquisition of deferred right to use of equipment Income from operating activities and equipment under installation (9,989,976,099) (11,216,722,543) (9,989,435,749) (11,216,722,543) before changes in operating assets and liabilities 13,822,852,557 11,910,905,110 13,662,391,463 12,749,260,906 (Increase) decrease in deposits and prepayment for Decrease (increase) in operating assets purchase and installation of equipment (309,929,291) 441,052,906 (309,929,291) 441,052,906 Trade accounts receivable (474,508,114) (480,760,792) (474,508,114) (461,840,296) Increase in other non-current assets (1,271,770,047) (1,574,827,430) (1,247,139,336) (1,583,187,315) Trade accounts receivable - subsidiary - - (31,902,990) 6,700 Net cash used in investing activities (11,119,908,909) (12,805,833,097) (12,764,396,625) (12,773,261,721) Trade account receivable - associated company 240,918,811 58,905,255 240,918,811 58,905,255 Trade accounts receivable - related companies (122,019,776) (25,422,407) (17,411,527) (25,422,407) Advances to subsidiaries - - 958,583 21,018,747 The accompanying notes are an integral part of the financial statements. Advance to associated company - 556,778 - 556,778 Advances to related companies 2,754,918 (1,745,482) 2,754,918 (1,745,482) Inventories (42,661,840) 18,717,034 (42,661,840) 18,717,034 Other current assets (302,285,666) 272,057,429 (304,034,995) 270,892,666

The accompanying notes are an integral part of the financial statements. annual report 2007 094 095

TOTAL ACCESS COMMUNICATION PUBLIC COMPANY LIMITED AND SUBSIDIARIES TOTAL ACCESS COMMUNICATION PUBLIC COMPANY LIMITED AND SUBSIDIARIES STATEMENTS OF CASH FLOWS (Continued) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006 FOR THE YEARS ENDED 31 DECEMBER 2007 AND 2006

(Unit: Baht) Consolidated financial statements Separate financial statements 1. GENERAL INFORMATION Note 2007 2006 2007 2006 1.1 Corporate information (Restated) Total Access Communication Public Company Limited (“the Company”) is a public company incorporated and domiciled in Thailand. The Cash flows from financing activities Company listed on the Stock Exchange of Singapore in 1995 and listed on the Stock Exchange of Thailand in 2007. The Company has two major Repayment of short-term loans from financial institutions (1,000,000,000) (2,400,000,000) (1,000,000,000) (2,400,000,000) shareholders who are Telenor Asia Pte Ltd., a company incorporated in Singapore, and Thai Telco Holding Co., Ltd., a company incorporated Decrease in trust receipts (1,616,944,853) (422,691,746) (1,616,944,853) (422,691,746) in Thailand. The Company is principally engaged in the provision of wireless telecommunications services and the sale of handsets and Repayment of long-term loan from a subsidiary - - - (14,380,743,469) accessories. Drawn down of long-term loans - 11,812,818,000 - 11,812,818,000 Repayment of long-term loans (5,657,600,262) (158,812,500) (5,657,600,262) (158,812,500) The Company’s registered address is 333/3 Chai Building, Vibhavadi Rangsit Road, Chomphon, Chatuchak, Bangkok. Repayment of convertible debenture - (37,935,000) - (37,935,000) Cash receipt from Baht bond issuance - 6,000,000,000 - 6,000,000,000 In 2007 the Company restructured its shareholding and listed the Company’s ordinary shares on the Stock Exchange of Thailand. Cash received from share capital increase (net) 2,912,703,570 - 2,912,703,570 - Repayment of bonds - (15,448,700,000) - (2,142,600,000) Resolutions of the Board of Directors No. 2/2007 held on 19 March 2007 and the Extraordinary General Meeting of Shareholders No. 1/2007 Net cash used in financing activities (5,361,841,545) (655,321,246) (5,361,841,545) (1,729,964,715) held on 30 April 2007 approved restructuring between United Communication Industry Plc. (“UCOM”) and the Company (“TAC”) for the purpose Net increase (decrease) in cash and cash equivalents 1,460,640,780 649,181,173 (264,075,299) 644,631,194 of listing TAC on the Stock Exchange of Thailand (“SET”). UCOM derives its income from its investment in TAC since it had no other core business Cash and cash equivalents at beginning of year 1,816,014,350 1,166,833,177 1,740,637,738 1,096,006,544 operations, it was therefore categorized as a holding company and, under the SET Regulation No. BorJor/Ror 01-00 Re: Listing of Ordinary Cash and cash equivalents at end of year 3,276,655,130 1,816,014,350 1,476,562,439 1,740,637,738 Shares and Preference Shares as Listed Securities B.E. 2544 (2001), was required to hold not less than 51 percent of the total voting shares of a company that was an operating company (a core company) that invested in an infrastructure project. Such “core company” may not be a Supplemental cash flow information: listed company. Therefore, if TAC was listed on the SET, it (being the core company of UCOM) would no longer meet the criteria to be the “core Cash paid during the years for: company” of UCOM, and UCOM would consequently have to delist its shares from the SET. The key steps of the restructuring, approved by the Interest expense 1,954,093,344 3,454,284,061 1,980,648,434 2,957,969,590 Board of Directors and the Extraordinary General Meeting of Shareholders, which have already been implemented, are summarised below. Corporate income tax 3,549,664,266 1,280,824,835 3,537,818,619 1,265,064,203 Non cash transaction: 1. A reduction of the par value of TAC’s ordinary shares from Baht 10 per share to Baht 2 per share. The total numbers of issued shares of TAC Share capital reduction due to dispute settlement then changed from 458,016,126 ordinary shares with a par value of Baht 10 each to 2,290,080,630 ordinary shares with a par value of Baht 2 at par value 1.2.2 - 164,000,000 - 164,000,000 each. The reduction of the registered share capital from Baht 5,114 million to Baht 4,580 million. The increase of the registered share capital to Amount in excess of par value of shares capital Baht 6,439 million by issuing 82 million of new ordinary shares with a par value at Baht 2 each to support the initial public offering and issuing reduction 1.2.2 - 1,633,349,000 - 1,633,349,000 843,423,335 new ordinary shares to allocate to the shareholders of UCOM. Share capital increase in exchange for interest in subsidiary - - 3,333,984,031 - 2. An initial public offering of 222 million TAC ordinary shares, or 9.36 percent of total issued share capital, comprising 82 million newly issued shares with a par value of Baht 2 each and the sell down of 140 million TAC ordinary shares with a par value of Baht 2 each held by UCOM; and the listing of TAC on the SET.

The accompanying notes are an integral part of the financial statements. 3. A tender offer for all UCOM ordinary shares in accordance with Notification of the Office of the Securities Exchange Commission No. GorJor. 6/2543, settled by means of an issue of new TAC ordinary shares, with a share exchange ratio of 1.95 TAC shares with a par value of Baht 2 each to 1 UCOM share with a par value of Baht 10 each with no cash alternative offered.

4. A selective capital reduction by cancelling 847,692,965 TAC ordinary shares with a par value of Baht 2 held by UCOM and making cash distribution to UCOM at par value of each TAC share that was cancelled of Baht 1,695,385,930, in order to avoid cross-shareholding between UCOM and TAC in accordance with the related regulations.

1.2 Agreements to operate cellular telephone services 1.2.1 On 14 November 1990, the Company entered into an agreement with the Communications Authority of Thailand, now CAT Telecom Public Company Limited (“CAT”), to provide cellular telephone services. Under the Cellular Telephone Service Agreement with CAT (“the Concession”), the Company has an obligation to transfer operating assets to CAT free of charge. The value added tax imposed on the transfer of these assets has been charged to CAT and recorded as “Value added tax refundable from CAT” in the balance sheet.

The Concession originally covered a 15-year period but the agreement was amended on 23 July 1993 and 22 November 1996, with Concession period being extended to 22 years and 27 years, respectively. The service rates and fees charged to subscribers are subject to approval by CAT. The Company is obliged to comply with various conditions and pay fees in accordance with the Concession.

Fees are based on the greater of a minimum annual payment and a percentage of revenues from services. The percentages of revenues from services for each year and minimum annual payments are as follow: annual report 2007 096 097

Year Percentage of Revenues per annum Minimum Annual Payment As described in Note 13 to the financial statements, DPC defaulted on payment and the Company is under the Arbitration process. (Million Baht) 1 - 4 12 22 to 154 DPC commenced commercial operation of a cellular telephone service on 16 March 1998. 5 25 353 6 - 15 20 382 to 603 1.3 Excise tax 16 - 20 25 748 to 770 On 28 January 2003, the Ministry of Finance announced the introduction of an excise tax for telecommunication businesses, whereby excise tax 21 - 27 30 752 to 1,200 is to be collected on revenue from mobile telecommunication service at a rate of 10 percent. This tax can be deducted from the fees to be paid to CAT, as described in Note 1.2.1 to the financial statements, and is payable to the Excise Department on a monthly basis. The Company commenced commercial operations on 16 September 1991. However, on 26 February 2007 the Ministry of Finance approved that excise tax on telecommunication services is collected at a zero rate, thus 1.2.2 On 9 November 1995, the Company entered into an agreement with the Telephone Organization of Thailand, now TOT Public Company the Company changed a calculation of excise tax using the zero rate from 26 February 2007 onwards. Limited (“TOT”), to allow TOT to hold ordinary shares of the Company. The Company issued 42,829,050 new shares to TOT at a par value of Baht 10 each. TOT was not required to pay for the shares as the Company deemed the transaction to be beneficial to its interests, and the cost of the 1.4 Interconnection charge shares was therefore recorded as “Goodwill” and was amortised over the concession period. The Notification re Uses and Interconnections of Telecommunication Networks B.E. 2549 (the “Interconnection Notification”) stipulates that telecommunication business operators who have telecommunication networks are required to grant other operators effective access to their As a result of TOT’s acquisition of an interest in the Company, TOT and CAT agreed to reduce certain fees payable (reduction on access charges networks. during year 1995 - 2013) by the Company. The Company has received an approval from the National Telecommunications Commission (NTC) for the Reference of Interconnect Offer (RIO) On 14 March 2005 and 26 May 2005, in order to settle its dispute over its not yet receiving certain amounts of fee reductions on access on 29 August 2006, which requires the licensee who owns network and the licensee who request for interconnection shall negotiate among charges for the concession period during 1997 to 2004 from TOT, the Company submitted the disputes to the Arbitration Office, and called themselves in relation to the Interconnection Charge Contract pursuant to the RIO of the interconnection provider, within 90 days from the for TOT to make payment of the fee reductions to the Company. However on 24 June 2005, the Company and TOT entered into a compromise receiving date of the intention letter as stipulated in the Interconnection Notification. memorandum to settle this dispute and to terminate the agreement to hold the Company’s shares. TOT agreed that 16.4 million shares of the Company held by TOT would be cancelled by way of a capital reduction, and to terminate the agreement to hold the Company’s shares as of In case, any both licensees can not reach the agreement within mentioned period it shall be considered that the dispute has occurred. Each the date of the memorandum. For its part, the Company agreed to withdraw the disputes it had lodged with the Arbitration Office (the Company party shall have the right to submit the case according to the dispute dissolution pursuant to the Interconnection Notification. submitted a petition to the Arbitration Office to withdraw the disputes on 24 June 2005). The Company has entered into the interconnection charge agreements with other operators and the effective period of the agreements is listed below. The transactions related to the proposed cancelling of shares by TOT under the compromise memorandum were recorded by the Company in the balance sheet, presented as a deduction against shareholder’s equity under the heading of “Shares pending capital reduction due to dispute Operators Effective period settlement” amounting to Baht 1,797 million. During the third quarter of 2006, the Company recorded the decrease in its registered, issued and a) True Move Co., Ltd. 17 November 2006 onwards paid-up share capital of 16.4 million shares at Baht 10 per par value, totaling Baht 164 million and recorded net loss of the amount in excess of b) Advance Info Service Plc. 30 November 2006 onwards par value of shares pending capital reduction amounting to Baht 1,633 million in retained earnings. c) Triple T Broadband Co., Ltd. 22 December 2006 onwards d) DTAC Network Co., Ltd. 9 July 2007 onwards 1.2.3 Assignment of Airtime Provider Agreement with The International Engineering Public Company Limited. e) Digital Phone Co., Ltd. 16 July 2007 onwards On 10 April 1998, the Company entered into the “Airtime Provider Agreement” with The International Engineering Public Company Limited (“IEC”), to assign to IEC the right to operate as an airtime provider for a cellular telephone service for a period of 17 years commencing from the The interconnection charges have already been applied between the Company and the above operators from the beginning of 2007. date following the date of the agreement. IEC is to receive a fee based on a percentage of revenues from its telephone services.

However, the Company and IEC agreed to terminate the Airtime Provider Appointment Agreement prior to its expiry date. In this regard, the 2. BASIS OF PREPARATION Company paid compensation for canceling the agreement, recording the amount as an expense in the third quarter of 2007. 2.1 The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Profession Act B.E. 2547, except for the Thai Accounting Standard No. 56 regarding “Income Taxes” (This accounting standard corresponds to 1.2.4 Assignment of a certain portion of rights and obligations under an agreement to operate cellular telephone services with Digital Phone IAS No. 12 “Income Taxes” (revised 1996)), which the Company has early adopted before the date of enforcement, and except for the recording Company Limited. of post employee benefit which is in accordance with International Accounting Standard No.19 since there is presently no Thai Accounting On 19 November 1996, the Company, CAT and Digital Phone Company Limited (“DPC”) entered into an agreement to assign a certain portion Standard for the employee benefit. of rights and obligations under the Agreement to Operate Cellular Telephone Services. With the consent of CAT, the Company assigned and transferred to DPC a certain portion of the Company’s rights and obligations to operate a cellular telephone service (Digital PCN 1800). The The presentation of the financial statements has been made in compliance with the stipulations of the Notification of the Department of Company agreed to terminate an earlier Agreement on the Appointment of Agent to provide the cellular telephone service (Digital PCN 1800) Business Development dated 14 September 2001, issued under the Accounting Act B.E. 2543. (the Service Provider Agreement) with Samart Corporation Public Company Limited (“Samart”) prior to 16 March 1998 or on such earlier date that DPC commenced commercial operations. The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies.

On 7 January 1997, the Company, Samart and DPC entered into a Shareholders Agreement, the Unwind the Service Provider Agreement and other relevant agreements which include the conditions that the Company will receive approximately Baht 5,400 million from DPC as consideration for allowing DPC to use the Company’s network and facilities and the transfer to DPC of a certain portion the rights and obligations to operate the cellular telephone service. The Company recognises this amount in the income statement as a reduction against cost of providing service evenly over the remaining concession period.

On 9 October 1998, the Company entered into an Amendment Agreement to the Unwind Agreement to receive early payment of certain amounts before the repayment date in the Unwind Agreement in return for a discount on the consideration due of approximately USD 10 million and rescheduled the repayment of the balance of the consideration. annual report 2007 098 099

2.2 Basis of consolidation 3. ADOPTION OF NEW ACCOUNTING STANDARDS a) The consolidated financial statements include the financial statements of Total Access Communication Public Company Limited and the The Federation of Accounting Professions (FAP) has issued Notifications No. 9/2550, 38/2550 and 62/2550 regarding Accounting Standards. following subsidiaries: The notifications mandate the use of the following new Accounting Standards.

Percentage a) Thai Accounting Standards which are effective for the current year Country of of shareholding TAS 44 (revised 2007) Consolidated Financial Statements and Separate Financial Statements Company’s name Nature of business incorporation 2007 2006 TAS 45 (revised 2007) Investments in Associates Percent Percent TAS 46 (revised 2007) Interests in Joint Ventures Subsidiaries directly held by the Company These accounting standards become effective for the financial statements for fiscal years beginning on or after 1 January 2007. During the first WorldPhone Shop Company Limited Ceased operations in 2003 Thailand 100 100 quarter of the current year, the Company changed its accounting policy for recording investments in subsidiaries, jointly controlled entities and TAC Property Company Limited Asset management Thailand 100 100 associates in the separate financial statements in order to comply with the revised Thai Accounting Standards No. 44, 45 and 46 as discussed TAC Investment Limited Holding company (financial Western Samoa 100 100 in Note 4 to the financial statements. statements presented in US dollars and ceased operation b) Thai Accounting Standards which are not effective for the current year in 2005) TAS 25 (revised 2007) Cash Flow Statements TAC Service Company Limited Ceased operation in 2001 Thailand 100 100 TAS 29 (revised 2007) Leases DTAC Network Company Limited Incorporate to provide Thailand 100 100 TAS 31 (revised 2007) Inventories telecommunications network TAS 33 (revised 2007) Borrowing Costs services TAS 35 (revised 2007) Presentation of Financial Statements Wide Broadbrand Company Limited Incorporate to provide mobile Thailand 51 100 TAS 39 (revised 2007) Accounting Policies, Changes in Accounting Estimates and Errors phone services (not yet TAS 41 (revised 2007) Interim Financial Reporting commenced operation) TAS 43 (revised 2007) Business Combinations DTAC Internet Service Company Limited Incorporate to provide internet Thailand 100 100 TAS 49 (revised 2007) Construction Contracts service (not yet commenced TAS 51 Intangible Assets operation) Public Radio Company Limited Incorporate to provide taxi Thailand 100 100 These accounting standards will become effective for the financial statements for fiscal years beginning on or after 1 January 2008. The radio services (not yet management has assessed the effect of these revised accounting standards and believes that they will not have any significant impact on the commenced operation) financial statements for the year in which they are initially applied. United Communication Industry Sale of voucher cards and Thailand 99.51 - Public Company Limited (Note 10) sale on right of E-Refill service 4. CHANGE IN ACCOUNTING POLICY FOR RECORDING INVESTMENTS IN SUBSIDIARIES AND ASSOCIATE IN THE SEPARATE PaySbuy Company Limited (Note 10) Incorporate to provide an Thailand 98.13 - FINANCIAL STATEMENTS online payment service During the first quarter of the current year, the Company changed its accounting policy for recording investments in subsidiaries and associate in the separate financial statements from the equity method to the cost method, in compliance with Accounting Standard No. 44 (Revised Subsidiaries held through TAC Property Company Limited 2007) regarding “Consolidated Financial Statements and Separate Financial Statements”, under which investments in subsidiaries, jointly controlled entities and associates are to be presented in the separate financial statements under the cost method. Eastern Beach Company Limited Land development Thailand 100 100 TAC Finance Company B.V. Finance company (financial Netherlands 100 100 In this regard, the Company has restated the previous period’s separate financial statements as though the investments in the subsidiaries and statements presented in US associate had originally been recorded using the cost method. The change has the effect of decreasing net income in the separate income dollars) statements for the year ended 31 December 2007 and 2006 by Baht 68 million (Baht 0.03 per share) and Baht 150 million (Baht 0.06 per Viphavadee Office Building Company Limited Property development (office Thailand 100 100 share) (calculated from ordinary shares as adjusted share split), respectively. The cumulative effect of the change in accounting policy has been building) presented under the heading of “Cumulative effect of the change in accounting policy for investments in subsidiaries and associate” in the separate statements of changes in shareholders’ equity.

Assets and revenues of the Company which are included in the consolidated financial statements constitute approximately 97 and 100 percent Such change in accounting policy affects only the accounts related to investments in subsidiaries and associate in the Company’s separate of the consolidated totals, respectively (2006: 99% of assets and 100% of revenues) financial statements, with no effect to the consolidated financial statements.

In the first quarter of 2007, DTAC Network Co., Ltd. was awarded an International Direct Dialing License (type 3) by the National 5. SIGNIFICANT ACCOUNTING POLICIES Telecommunication Commission (NTC), for a duration of 20 years. The company commenced providing such service since 2 August 2007. 5.1 Revenue recognition Prepaid b) Material balances and transactions between the Company and its subsidiary companies have been eliminated from the consolidated Unearned revenue from telephone service of prepaid system represents the unused portion of the face value of prepaid phone cards. It is financial statements. Book value of investments and shareholder’s of its subsidiaries have also been eliminated from the consolidated financial deferred and recognized based on the actual usage or the expiration of the usage as stated on cards, depending on which comes first. statements. Post-paid 2.3 The separate financial statements, which present investments in subsidiaries and associates presented under thecost Unearned revenue from postpaid service represents the unused portion of monthly airtime fee that subscribers can carry forward to the next method, have been prepared solely for the benefit of the public. period not exceeding 365 days.

Revenue from telephone services Revenue related to domestic calls, international calls and roaming service calls is recognized when the telephone services have been rendered. annual report 2007 100 101

Discounts are often provided in the form of cash discount, free products or free services. Discounts are recorded systematically throughout the Depreciation of buildings and equipment is calculated by reference to their costs on a straight-line method over the following estimated useful period the discounts are earned. Cash discounts and free products are recorded as revenue reductions. lives: Buildings 20 - 40 years As for discount schemes (such as loyalty programs, etc.), the accrued discounts must not be higher than estimated discounts, based on past Leasehold rights over the period of lease liable discount estimation. The exact amount and income period of the discount are estimated with estimation techniques and reconciled in the Building and leasehold improvements 5 - 20 years period where there is an adjustment to estimation or the final outcome is known. Equipment for supporting Cellular Telephone Services The remaining life of the Concession period and 10 years Equipment network for supporting International Interconnection charge income/expense Telephone service 8 years Interconnection charge income derived from the other licensed operators for incoming calls from these operators’ networks is recognised on an Telephone transmission station improvements 20 years accrual basis at the rates stipulated in the agreements. Costs of interconnection charges paid to the other licensed operators for outgoing calls Others 3 years and 5 years to these operators’ networks is recoginsed on an accrual basis at the rates stipulate in the agreements. Depreciation is included in determining income. Revenue from sales of telephone sets and starter kits Sales of goods are recognized when the significant risks and rewards of ownership of the goods have passed to the buyer. Sales are the invoiced No depreciation is provided for land, building in progress, work in progress and equipment under installation. value, excluding value added tax, of goods supplied after deducting discounts and allowances. 5.6 Intangible assets and amortisation Revenue arrangements with multiple deliverables are divided into separate units of accounting is objective and reliable evidence of the fair Intangible assets are stated at cost less accumulated amortisation. Amortisation is calculated by reference to cost on a straight-line basis over value of delivered items. The subsequent services are recorded at the normal selling price or at a discounted value, depending on the facts and the expected future period of economic benefit of each type of intangible asset, as follows: circumstances. Deferred right to use of equipment is amortised on a straight-line basis over the remaining life of the Concession period. Operating income Other revenues are recognized when the economic benefit flows to the entity and the earnings process is complete. Deferred charges, which are mainly expenditures relating to transmission facilities and software fees are amortised on a straight-line basis over periods of 3 to 10 years or the remaining life of the Concession period. Revenues are shown excluding of value added tax. Deferred financial costs, which are mainly expenditures relating to loan arrangement fees, bond underwriting fees and fees for the extension of 5.2 Trade accounts receivable and allowance for doubtful accounts loan agreements are amortised using the related effective interest rate over the borrowing period. Trade accounts receivable are stated at the net realisable value. Allowance for doubtful accounts is provided for the estimated losses that may be incurred in collection of receivables. The allowance is generally based on collection experiences and analysis of debtor aging. Amortisation is included in determining income.

5.3 Inventories 5.7 Related party transactions Inventories are finished goods valued at the lower of cost (moving average basis) and net realisable value. Related parties comprise enterprises and individuals that control, or are controlled by, the Company, whether directly or indirectly, or which are under common control with the Company. 5.4 Investments a) Investment in associates is accounted for in the consolidated financial statements using the equity method. They also include associated companies and individuals which directly or indirectly own a voting interest in the Company that gives them significant influence over the Company, key management personnel, directors and officers with authority in the planning and direction of the b) Investments in subsidiaries and associates are accounted for in the separate financial statements using the cost method. Company’s operations. c) Other long-term investments in marketable securities, which the Company intends to hold as available-for-sale, are stated at fair value. 5.8 Impairment of long-lived assets Gains or losses arising from changes in the value of such investment are separately shown in shareholders’ equity under the caption “Unrealised The Company and subsidiaries assesses at each reporting date whether there is an indication that an asset may be impaired. If any such gain/loss on changes in the value of investments in available-for-sale securities”. When the securities are sold, the change is included in indication exists, the Company and subsidiaries make an estimate of the asset’s recoverable amount. Where the carrying amount of the determining income. asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses are recognised in the income statement. An asset’s recoverable amount is the higher of fair value less costs to sell and value in use. d) Other long-term investments in non-marketable equity securities, which the Company holds as other investments, are stated at cost net of allowance for loss on diminution in value (if any). 5.9 Income tax/Deferred income tax assets/liabilities Current income tax of the Company and Thai subsidiaries is calculated based on the taxable profits determined in accordance with the basis Loss on impairment of other long-term investments is recognised in the income statements when there is permanent diminution in the value of regulated in the Revenue code. the investments. Previously recognised impairment losses of other long-term investments are reversed when there is a change in the estimates used to determine the impairment loss. The carrying amount of the investment is increased to its recoverable amount, not exceeding the carrying Deferred income tax assets/liabilities are recognised for temporary differences arising between the tax bases of assets and liabilities and their amount that would have resulted had no impairment loss been recognised in prior years. The reversal of an impairment loss is recognised in carrying amounts for financial reporting purposes as at the balance sheet date. There will be realised in future periods when the income is income statements immediately. realised, or the expenses provided for are actually incurred and considered deductible for income tax purposes.

5.5 Property, plant and equipment/depreciation Deferred income tax assets are recognised for deductible temporary differences if it is highly probable that the Company will generate Property is stated at cost. Plant and equipment are stated at cost less accumulated depreciation. The cost of an asset comprises its purchase sufficient taxable profits from its future operations to utilise these assets. price and any directly attributable costs of bringing the asset to working condition for its intended use. Expenditures for additions, improvements and renewals are capitalised, while expenditures for maintenance and repairs are charged to the income statements. When assets are sold or Deferred income tax liabilities are recognised for all payable temporary differences. retired, their cost and accumulated depreciation are removed from the accounts and any gain or loss resulting from their disposal is included in the income statements. As each balance sheet date, the Company reviews and reduces the carrying amount of deferred tax assets to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. annual report 2007 102 103

The Company records deferred tax directly to equity if the tax relates to items that are recorded directly to equity. 6. ACCOUNTS RECEIVABLE - TRADE (Unit: Baht) Deferred tax assets and liabilities are calculated based on the tax rate that is expected to apply to the period when the asset is realised or the Consolidated financial statements Separate financial statements liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date. 2007 2006 2007 2006 Accounts receivable - telephone services 3,046,862,125 2,678,278,071 3,046,862,125 2,678,278,071 5.10 Foreign currencies Accounts receivable - international Foreign currency transactions are translated into Baht at the exchange rates ruling on the transaction dates. Assets and liabilities telephone roaming services 451,847,790 459,991,976 451,847,790 459,991,976 denominated in foreign currencies outstanding at the balance sheet date are translated into Baht at the exchange rates ruling on the balance Accounts receivable - sales of sheet date. Gains and losses on exchange are included in determining income. telephone sets and starter kits 231,726,992 113,747,193 217,285,159 99,305,360 Accounts receivable - others 104,255,741 108,167,295 34,964,981 38,876,535 5.11 Derivative instrument Total 3,834,692,648 3,360,184,535 3,750,960,055 3,276,451,942 Forward exchange contracts Less: Allowance for doubtful accounts (824,561,663) (649,877,837) (740,829,070) (566,145,244) Receivables and payables arising from forward exchange contracts are translated into Baht at the rates of exchange ruling on the balance Accounts receivable - trade, net 3,010,130,985 2,710,306,698 3,010,130,985 2,710,306,698 sheet. Gains and losses from the translation are included in determining income. Premiums or discounts on forward exchange contracts are amortized on a straight-line basis over the contract periods. The aging of the outstanding balances of trade accounts receivable - telephone services as at 31 December 2007 and 2006, based on due Interest rate swap contracts date, is as follows: The net amount of interest to be received from or paid to the counterparty under the interest rate swap contracts is recognised as income or (Unit: Baht) expenses on an accrual basis. Consolidated financial statements/Separate financial statements Cross currency swap agreements 2007 2006 Payables and receivables arising from the cross currency swap agreements are translated into Baht at the rates of exchange ruling on the Age of receivables balance sheet. Gains and losses from the translation are included in determining income. In due 1,448,524,336 1,529,995,535 Over due less than 1 month 467,498,681 430,176,683 5.12 Employee benefits Over due 1 month to 3 months 210,232,444 204,852,769 Salaries, wages, bonuses and contributions to the social security fund and provident fund are recognised as expenses when incurred. Over due 3 months to 6 months 256,983,021 213,964,230 Over due over 6 months 663,623,643 299,288,854 The cost of statutory severance pay is recognised as a charge to results of operations over the employee’s service period. The determination of Total 3,046,862,125 2,678,278,071 the provision for statutory severance pay plan is actuarially determined. Less: Allowance for doubtful accounts (720,826,210) (537,808,953) Accounts receivable - telephone services, net 2,326,035,915 2,140,469,118 5.13 Cash and cash equivalents Cash and cash equivalents consist of cash in hand and cash at financial institutions with an original maturity of three months or less and not subject to withdrawal restrictions. The Company has set up allowance for doubtful accounts based on collection experience. The Company establishes the allowance for doubtful accounts at the period-end at a certain percentage of revenue from telephone services, to provide against the balance of all accounts receivable 5.14 Long-term lease - telephone services in each aging period on a progressive basis. Leases of property, plant or equipment, which transfer substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The The aging of the outstanding balances of trade accounts receivable - international telephone roaming services as at 31 December 2007 and outstanding rental obligations, net of finance charges, are included in other long-term payables, while the interest element is charged to the 2006, based on due date, is as follows: income statements over the lease period. The property, plant or equipment acquired under finance leases is depreciated over the shorter of the (Unit: Baht) useful life of the asset and the lease period. Consolidated financial statements/Separate financial statements 5.15 Provisions 2007 2006 Provisions are recognised when the Company has a present obligation as a result of a past event, it is probable that an outflow of resources Age of receivables embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. In due 364,207,054 367,118,672 Over due less than 1 month 52,445,246 66,782,720 5.16 Use of accounting estimates Over due 1 month to 3 months 24,299,544 15,895,865 Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and Over due 3 months to 6 months 6,718,424 5,416,166 assumptions in certain circumstances, affecting amounts reported in these financial statements and related notes. Actual results could differ Over due over 6 months 4,177,522 4,778,553 from these estimates. Total 451,847,790 459,991,976 Less: Allowance for doubtful accounts (4,353,486) (5,061,491) Accounts receivable - international telephone roaming services, net 447,494,304 454,930,485 annual report 2007 104 105

The aging of the outstanding balances of trade accounts receivable - sales of telephone sets and starter kits as at 31 December 2007 and 2006, 7. RELATED PARTY TRANSACTIONS based on due date, is as follows: During the years, the Company and its subsidiaries had significant business transactions with related parties. These transactions, which have been concluded on commercial terms and bases agreed upon in the ordinary course of businesses between the Company and those companies. (Unit: Baht) Below is a summary of those transactions. Consolidated financial statements Separate financial statements 2007 2006 2007 2006 Transactions with associated company, subsidiaries and related companies Age of receivables (Unit: Million Baht) In due 202,046,253 82,850,782 202,046,253 82,850,782 Consolidated Separate financial Overdue less than 1 month 1,671,681 1,443,557 1,671,681 1,443,557 financial statements statements Transfer pricing policy Overdue 1 month to 3 months 3,701,187 316,344 3,701,187 316,344 2007 2006 2007 2006 Overdue 3 months to 6 months 81,496 174,193 81,496 174,193 Transactions with subsidiaries (eliminated from the consolidated financial statements) Overdue 6 months 24,226,375 28,962,317 9,784,542 14,520,484 Sales on right of E-Refill service - - 115 - as per agreement Total 231,726,992 113,747,193 217,285,159 99,305,360 Sales of voucher card - - 47 - as per agreement Less: Allowance for doubtful accounts (24,796,639) (29,529,451) (10,354,806) (15,087,618) Service income - - 79 - as per agreement Accounts receivable - sales of telephone Rental and service expenses - - 234 75 as per agreement sets and starter kits 206,930,353 84,217,742 206,930,353 84,217,742 Interest expense - - 26 304 as per agreement

Transactions with associated company: United Distribution Business Co., Ltd.* The aging of the outstanding balances of trade accounts receivable - others as at 31 December 2007 and 2006, based on due date, is as Sales of goods 25,819 27,916 25,819 27,916 selling price less a certain margin, follows: as per agreement Dividend income 30 20 30 20 as declared (Unit: Baht) Purchases of goods 125 158 125 158 market price Consolidated financial statements Separate financial statements Rental and service expense 14 14 14 14 as per agreement 2007 2006 2007 2006 Age of receivables Transactions with related company: United Communication Industry Plc. (“UCOM”) (Until 31 August 2007) In due 25,695,118 5,003,570 25,695,118 5,003,570 Sales on right of E-Refill service 182 76 182 76 as per agreement Overdue less than 1 month 1,916,054 15,414,981 1,916,054 15,414,981 Sales of voucher card 243 - 243 - as per agreement Overdue 1 month to 3 months 524,574 7,860,909 524,574 7,860,909 Commission expenses - 3 - 3 as per agreement Overdue 3 months to 6 months 183,336 285,966 183,336 285,966 Service expenses 5 96 5 96 as per agreement Overdue 6 months 75,936,659 79,601,869 6,645,899 10,311,109 Total 104,255,741 108,167,295 34,964,981 38,876,535 Transactions with other related companies Less: Allowance for doubtful accounts (74,585,328) (77,477,942) (5,294,568) (8,187,182) International roaming service income 278 214 278 214 as per agreement Accounts receivable - others, net 29,670,413 30,689,353 29,670,413 30,689,353 Sales of fixed asset - 4 - 4 as agreed Service income 8 11 8 11 market price Service expenses 2,031 1,639 1,984 1,639 as per agreement Service fees for installation of cell site equipment 1,783 1,614 1,783 1,614 as per agreement Management fee 151 133 151 133 as per agreement Sales of investment in subsidiary 0.5 - 0.5 - at par value

* The Company paid marketing support expense for year ended 31 December 2007 at Baht 34 million (2006: Baht 156 million) to dealers through United Distribution Business Co., Ltd. annual report 2007 106 107

The significant outstanding balances arising from the above transactions, as separately presented in the balance sheets, comprisethe (Unit: Baht) following: Consolidated financial statements Separate financial statements 2007 2006 2007 2006 (Unit: Baht) Amounts due from related companies Consolidated financial statements Separate financial statements Amounts due from related companies 159,685,234 159,450,792 - - 2007 2006 2007 2006 Less: Allowance for doubtful accounts (159,230,286) (159,230,287) - - Trade accounts receivable - subsidiaries Total amounts due from related companies - net 454,948 220,505 - - WorldPhone Shop Co., Ltd. - - 199,503,476 199,503,476 United Communication Industry Plc. - - 18,021,970 - Trade account payable - subsidiary DTAC Network Co.,Ltd. - - 13,881,020 - TAC Property Co., Ltd. - - 10,983,790 5,212,729 Less: Allowance for doubtful accounts - - (199,503,476) (199,503,476) Total trade account payable - subsidiary - - 10,983,790 5,212,729 Total trade accounts receivable - subsidiary - net - - 31,902,990 - Trade accounts payable - related companies Trade account receivable - associated company United Telecom Sales and Services Co., Ltd.(2) 304,913,239 286,736,297 304,913,239 286,736,297 United Distribution Business Co., Ltd. (Note 7.1) 4,868,753,321 5,109,672,132 4,868,753,321 5,109,672,132 Connect One Co., Ltd.(2) 292,632,610 149,468,603 292,632,610 149,468,603 Total trade account receivable - associated company 4,868,753,321 5,109,672,132 4,868,753,321 5,109,672,132 Benchachinda Holding Co., Ltd.(2) 129,070,550 212,586,135 129,070,550 212,586,135 Telenor Global Service AS(1) 22,972,236 - - - Trade accounts receivable - related companies Others 5,777,786 1,016 5,777,786 1,016 United Communication Industry Plc.(2) - 4,688,692 - 4,688,692 Total trade accounts payable - related companies 755,366,421 648,792,051 732,394,185 648,792,051 TN Mobile AS(1) 31,118,668 25,873,295 31,118,668 25,873,295 Digi Telecom(1) 4,081,116 4,036,527 4,081,116 4,036,527 Advances from related parties Sonofon AS(1) 6,325,001 5,381,894 6,325,001 5,381,894 Advances from subsidiary Telenor Sverige AB(1) 30,697,382 16,732,939 30,697,382 16,732,939 DTAC Network Co., Ltd. - - 36,363,361 - Others 5,830,100 3,038,979 4,941,686 3,038,979 Total trade accounts receivable - related companies Advances from associated company (Note 7.2) 78,052,267 59,752,326 77,163,853 59,752,326 United Distribution Business Co., Ltd. 4,428,274 5,146,643 4,428,274 5,146,643

Advances to related companies Advances from related companies Advances to subsidiaries Telenor Consult AS(1) 7,204,598 14,823,297 7,204,598 14,823,297 WorldPhone Shop Co., Ltd. - - 16,579,883 16,579,883 Telenor ASA(1) 48,812,854 - 48,812,854 - TAC Service Co., Ltd. - - 30,950,650 35,245,600 Others 35,355,764 23,876,019 32,438,901 20,959,156 Others - - 3,527,996 191,629 Total advances from related companies 91,373,216 38,699,316 88,456,353 35,782,453 Less: Allowance for doubtful accounts - - (16,771,512) (16,771,512) - - 34,287,017 35,245,600 Long-term loan from subsidiary United Communication Industry Plc. (Note 7.4) - - 1,721,209,677 - Advances to related companies 7,432,153 9,997,041 7,242,123 9,997,041 Less: Allowance for doubtful accounts (5,942,274) (5,942,274) (5,942,274) (5,942,274) Relationship with the related companies 1,489,879 4,054,767 1,299,849 4,054,767 (1) have same ultimated shareholder Total advances to related companies - net 1,489,879 4,054,767 35,586,866 39,300,367 (2) have same directors

Amounts due from related parties Amounts due from subsidiary TAC Property Co., Ltd. (Note 7.3) - - 1,271,284,608 1,325,052,439 Total amounts due from a subsidiary - - 1,271,284,608 1,325,052,439 annual report 2007 108 109

7.1 The aging of trade account receivable - associated company as at 31 December 2007 and 2006 based on due date, is as follow: 10. INVESTMENTS IN SUBSIDIARIES

(Unit: Thousand Baht) Separate financial statements Consolidated financial Paid-up share Percentage of Impairment loss on Investments at cost Net statements/Separate financial statements capital shareholding investments 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 Age of receivables Million Million Percent Percent Thousand Thousand Thousand Thousand Thousand Thousand In due 4,021,627 3,962,891 Baht Baht Baht Baht Baht Baht Baht Baht

Over due less than 1 month 847,039 1,146,846 (Restated) (Restated) Over due 1 month to 3 months - (153) Subsidiaries directly held by the Company Over due 3 months to 6 months - 58 WorldPhone Shop Co., Ltd. 450 450 100 100 450,000 450,000 (450,000) (450,000) - - Over due over 6 months 87 30 TAC Investment Ltd.(*) - - 100 100 ------Trade account receivable - associated company 4,868,753 5,109,672 TAC Service Co., Ltd. 20 20 100 100 19,998 19,998 (19,998) (19,998) - - TAC Property Co., Ltd. 1 1 100 100 1,000 1,000 - - 1,000 1,000 DTAC Network Co., Ltd. 60 1 100 100 60,000 1,000 - - 60,000 1,000 7.2 As at 31 December 2007, most of the outstanding trade accounts receivable - related companies are current and over due Wide Broadbrand Co., Ltd. 1 1 51 100 510 1,000 - - 510 1,000 less than three months. DTAC Internet Service Co., Ltd. 1 1 100 100 1,000 1,000 - - 1,000 1,000 Public Radio Co., Ltd. 1 1 100 100 1,000 1,000 - - 1,000 1,000 7.3 The amount due from TAC Property Co., Ltd. (a subsidiary) comprises receivables arising from sales of equipment to support United Communication Industry Plc. 4,347 - 99.51 - 3,333,984 - - - 3,333,984 - cellular telephone services. There is no fixed term for repayment and no interest is charged. Paysbuy Co.,Ltd. 61 - 98.13 - 85,073 - - - 85,073 - Subsidiaries held through TAC Property Co., Ltd. 7.4 Loan from United Communication Industry Plc. (“UCOM”) is subject to interest at a rate of 4.52% per annum, with due of Eastern Beach Co., Ltd. 80 80 100 100 ------payment upon receiving the funds returned when UCOM reduces its capital in future. TAC Finance Company B.V. 0.5 0.5 100 100 ------Viphavadee Office Building Co., Ltd. 208.6 208.6 100 100 ------The loan represents the amount the Company has to pay UCOM as a result of the selective reduction of capital made by cancelling shares of the Total investments in subsidiaries, net 3,952,565 474,998 (469,998) (469,998) 3,482,567 5,000 Company held by UCOM, as discussed in Note 22.2.5 to the financial statements.

Directors and management’s remuneration (*) In the process of the dissolving In 2007 the Company paid salaries, meeting allowance and gratuities to their directors and management totaling Baht 88 million (2006: Baht 112 million) (Subsidiaries: none). a) In 2007 and 2006, the subsidiaries did not pay dividend.

Guarantee obligations with related parties b) In accordance with the resolution passed by a meeting of the Company’s Board of Directors, approving the provision of financial support The Company had outstanding guarantees with its related parties as described in Note 30.4 to the financial statements. to DTAC Network Co., Ltd. for the operation of an International Direct Dialing (IDD) business, during the third quarter of 2007 the Company purchased all of the 590,000 newly issued ordinary shares of DTAC Network Co., Ltd. with a par value of Baht 100 each, for a total of Baht 59 8. INVENTORIES million. The Company made payment for these additional shares on 12 July 2007.

(Unit: Baht) c) During the third quarter of 2007, the Company restructured its shareholding by means of a selective capital reduction involving all of Consolidated financial statements Separate financial statements the ordinary shares in the Company that were held by UCOM. In addition, the Company made a tender offer for all UCOM shares, with new 2007 2006 2007 2006 shares of the Company to be issued to UCOM’s shareholders in consideration for those shares. As a result of UCOM shareholders accepting Inventories 143,966,604 106,645,739 142,436,439 105,115,574 the tender, the Company acquired a total of 432,524,792 shares of UCOM, and the Company’s shareholding in UCOM stands at 99.51 percent. Less: Allowance for inventory obsolescence (22,433,147) (26,414,121) (20,902,982) (24,883,956) The Company and UCOM have the same major shareholders and management team as before, and the tender offer was made in order Inventories - net 121,533,457 80,231,618 121,533,457 80,231,618 to restructure shareholdings within the group of companies. The Company therefore recorded the investment in UCOM equally to the net book value of UCOM as at 31 August 2007 and also recorded the excess of the net book value of the assets acquired over the cost of acquisition, amounting to approximately Baht 1,647 million, in shareholders’ equity in the consolidated financial statements and the 9. OTHER CURRENT ASSETS separate financial statements under the caption “Capital surplus of subsidiary arising as a result of purchase of subsidiary at a price lower than its attributable net book value of at the acquisition date”. (Unit: Baht) Consolidated financial statements Separate financial statements 2007 2006 2007 2006 Income tax refundable 153,143,953 153,143,953 153,143,953 153,143,953 Value added tax suspension 715,990,325 120,972,605 697,386,052 113,474,081 Prepaid expenses 211,194,163 120,643,690 210,106,548 120,643,690 Prepaid rental - land for cell sites 243,482,143 203,883,937 243,482,143 203,883,937 Value added tax refundable 14,160,237 28,799,763 14,099,977 28,333,211 Withholding tax deducted at source 91,356,035 9,576,650 - - Account receivable - CAT 195,862,604 253,578,772 195,862,604 253,578,772 Others 64,791,530 48,286,030 55,092,649 45,939,096 Total 1,689,980,990 938,885,400 1,569,173,926 918,996,740 Less: Provision for impairment of assets (13,210,812) (13,210,812) - - Total other current assets - net 1,676,770,178 925,674,588 1,569,173,926 918,996,740 annual report 2007 110 111

The net asset value of UCOM, at the acquisition date, consisted of the followings: - (Unit: Thousand Baht) (Unit: Baht) Share of income/loss from investments in Dividend received 31 August 2007 Company’s name associates during the year during the year Assets 2007 2006 2007 2006 Cash and cash equivalents 1,654,197,764 United Distribution Business Co., Ltd. 38,675 111,344 30,000 20,000 Inventories 26,068,202 Other current assets 103,932,711 Investment in associated company - net 1,695,385,930 11.2 Summarised financial information of associate Equipment - net 1,350,083 Other non-current assets 464,002 (Unit: Million Baht) Total assets 3,481,398,692 Paid-up capital Total revenues Net income as at 31 Total assets as Total liabilities as for the year ended for the year ended Liabilities Company’s name December at 31 December at 31 December 31 December 31 December Trade account payable - related party 105,274,940 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 Amount due from related party 21,672,329 United Distribution 200 200 6,022 6,322 5,077 5,411 34,528 38,675 154 445 Accrued expenses 652,527 Business Co., Ltd Other current liabilities 3,397,901 Total liabilities 130,997,697 12. OTHER LONG-TERM INVESTMENTS Total net asset value 3,350,400,995 (Unit: Baht) Percentage of investment by the Company (%) 99.51 Consolidated financial statements Separate financial statements Net asset value in the percentage of investment by the Company 3,333,984,031 2007 2006 2007 2006 Capital surplus of the subsidiary company arising as a result Debt securities 399,191 487,241 399,191 487,241 of the Company’s purchase of the subsidiary at a Other investments price lower than its attributable net book value of Digital Phone Co., Ltd. 197,600,000 197,600,000 197,600,000 197,600,000 the subsidiary at the acquisition date (1,647,137,361) Other companies 31,933,381 67,333,381 31,933,381 56,933,381 Shares issued in exchange for interest in subsidiary 1,686,846,670 Less: Provision for impairment loss (30,333,381) (65,733,381) (30,333,381) (55,333,381) Other companies - net 1,600,000 1,600,000 1,600,000 1,600,000 Total other investments 199,200,000 199,200,000 199,200,000 199,200,000 d) In October 2007, the Company has acquired 112,510 shares with a par value of Baht 100 each in PaySbuy Co., Ltd., or 75.01% of that Total other long-term investments 199,599,191 199,687,241 199,599,191 199,687,241 subsidiary’s paid-up capital for Baht 38.8 million. Subsequently, in November 2007, the subsidiary increased its registered share capital from Baht 15 million to Baht 200 million by issuing 1,850,000 additional ordinary shares with a par value of Baht 100. The subsidiary called up In 2007 and 2006, the Company received dividend income from Digital Phone Co., Ltd. amounting to Baht 34 million and Baht 71 million, 25% of its additional share capital and the Company exercised its right to acquire all of the additional shares. As such, the percentage of respectively. shareholding of the Company increased to 98.13%. In November 2007, the Company paid up the 25% of the additional capital, amount of Baht 46.3 million, that has been called. In January 2006, the Company sold all 25.4 million of its shares in The International Engineering Public Company Limited at an average selling price of Baht 7.06 per share with gain on sale of Baht 55.4 million. 11. INVESTMENTS IN ASSOCIATED COMPANY 11.1 Details of associate: 13. ASSIGNMENT OF RIGHTS AND OBLIGATIONS UNDER THE AGREEMENT TO OPERATE CELLULAR TELEPHONE SERVICES (Unit: Thousand Baht) As at 31 December 2007, the Baht 580 million (2006: Baht 580 million) balance of “Account receivable from assignment of right - net” Consolidated financial statements represents the consideration receivable from DPC as a result of the Company’s permitting DPC to use the Company’s network and facilities Carrying amounts and transferring to DPC part of the rights and obligations to operate cellular telephone services, discussed in Note 1.2.4 to the financial Company’s name Nature of business Country of Shareholding Cost based on statements, together with related accrued interest, less the balance of “Advance received - other” (which represents unearned revenue from incorporation percentage equity method DPC) and provision for loss. The consideration receivable from the assignment of right is secured by a portion of the rights and obligations under 2007 2006 2007 2006 2007 2006 DPC’s agreement to operate cellular telephone services (although if DPC defaults, the return of certain rights and obligations to the Company Percent Percent would have to be approved by CAT). United Distribution Sale of mobile phone, Thailand 25 25 50,000 50,000 239,733 231,057 Business Co., Ltd. simcards, voucher cards The outstanding balance of consideration receivable under the assignment of rights agreement (Note 1.2.4), which was due for payment and supplementary between 30 September 2002 and 30 September 2005, was converted using an exchange rate based on the lower of Baht 38.57 per USD 1 equipments or the average prevailing exchange rate quoted by the Bank of Thailand at the date specified in the agreement, and earns interest at a rate (Unit: Thousand Baht) of 9.50 percent per annum. As at 31 December 2007 the Company has not received the amounts totaling USD 122.9 million which, according Separate financial statements to the assignment of rights agreement, were due to be paid by DPC between 30 September 2002 and 30 September 2005. As discussed Provision for Carrying amounts in Note 32.2 (a) to the financial statements, currently the Company submitted disputes to the Arbitration Office in relation to the payments Company’s name Nature of business Country of Shareholding Cost impairment of based on defaulted on by DPC totalling USD 134.5 million (including interest amounting to USD 11.6 million calculated from the date of default until incorporation percentage invesment cost method-net the date that the Company submitted the disputes) and called for settlement of the amounts then due. The Company’s management 2007 2006 2007 2006 2007 2006 2007 2006 believes that the outcome of the arbitration process is unlikely to materially affect the financial position of the Company. Percent Percent United Distribution Sale of mobile phone, Thailand 25 25 50,000 50,000 - - 50,000 50,000 Business Co., Ltd. simcards, voucher cards and supplementary equipments annual report 2007 112 113 - - - - Total Total (Unit: Baht) (Unit: Baht) 91,718,978 11,464,945 85,974,630 85,974,630 107,971,323 96,506,378 107,719,597 758,445,817 758,445,817 707,086,776 674,429,380 674,429,380 789,099,016 5,176,663,153 1,170,199,269 3,123,661,309 (158,534,468) (150,809,510) (157,962,468) 1,212,684,680 4,858,352,184 6,010,091,432 3,612,278,240 (150,905,360) 11,675,674,374 4,407,206,755 9,398,535,893 5,700,283,023 6,709,350,867 10,513,804,565 8,386,299,092

------Others Others 18,447,083 10,827,447 10,768,987 83,231,622 83,231,622 89,750,014 39,673,109 30,759,845 37,982,566 30,759,847 20,196,084 212,715,423 89,810,692 82,974,630 82,974,630 210,707,210 116,406,364 116,408,582 (37,880,712) (37,425,337) 230,140,839 (37,880,712) (37,425,337) 230,400,051

(1,677) (1,677) - 347,121 347,121 - - - - (39,707) (39,707) 11,384,288 equipment 11,386,020 117,457,147 92,148,372 24,961,654 88,874,670 97,048,788 24,959,639 equipment 113,834,309 (3,208,493) (3,942,939) (3,208,493) (3,942,939) 100,324,222 366,278,570 269,229,782 communication communication 256,426,907 Advertising and Advertising 369,901,408 256,426,907 269,230,065 communication communication Advertising and Advertising

(7,688) (7,688) - - 5,145,517 (653,793) (653,793) 11,464,945 16,610,462 91,393,766 411,704,719 Equipment 551,418,140 105,710,107 510,916,862 662,315,285 759,577,804 Equipment (65,634,188) 409,864,333 662,315,299 801,090,106 (65,634,188) (62,490,283) 4,709,121,118 3,413,291,344 Machinery and (62,490,283) 4,520,235,510 Machinery and 4,118,280,852 3,760,657,706 3,891,420,550 4,075,606,629 3,450,820,036

6,896 136,553 - - - 162,909 930,994 6,896 53,132,714 4,233,629 4,233,629 136,553 53,177,662 Furniture, Furniture, and office and office 73,220,790 equipment 72,985,658 613,867,351 (33,148,136) (32,211,967) 108,488,170 576,031,795 fixtures and fixtures (33,148,136) 127,534,602 (32,211,967) 767,729,473 684,519,965 128,492,993 635,002,851 724,494,040 108,488,292 726,589,272 596,959,438 office equipment office Furniture, fixtures fixtures Furniture,

------4,231,067 62,121,063 Telephone Telephone 29,051,847 86,941,843 86,941,843 10,534,542 93,148,750 24,820,780 213,011,352 213,011,352 57,889,996 82,614,208 improvement Telephone Telephone based station based station 130,397,144 119,862,602 improvement based station based station

------services services 29,147,984 91,697,892 29,147,984 supporting supporting 513,601,634 supporting supporting 421,903,742 841,261,639 138,602,293 Equipment for Equipment for 1,491,719,312 1,485,141,599 979,863,932 Equipment for Equipment for 1,514,289,583 1,063,237,857 2,362,128,935 1,000,687,949 2,332,980,951 1,382,265,003 cellular telephone cellular cellular telephone cellular

- - - 162,303 548,489 548,489 (133,536) (133,536) 1,078,496 (1,284,921) (1,284,921) 173,311,665 173,127,584 62,707,256 62,809,756 50,094,822 (15,134,875) 50,094,822 (17,134,546) 158,361,868 157,840,243 493,745,061 288,370,122 335,904,818 461,497,706 improvement 368,106,043 527,016,400 improvement (16,562,546) (15,039,024) 320,402,395 and leaseholdand 494,262,549 and leaseholdand Leasehold right Leasehold Leasehold right Leasehold

------136,005 1,841,868 (793,947) (434,405) 136,005 Buildings (793,947) Buildings 59,403,378 1,841,868 30,642,843 (434,406) 551,673,827 509,597,911 752,023,781 and building 733,725,785 917,046,677 456,417,007 277,308,778 improvement 262,633,575 223,079,953 223,079,953 and building 246,964,336 492,568,849 improvement 1,244,592,630 1,468,720,504

------Land ------Land 9,100,000 3,000,000 3,000,000 9,100,000 745,118,291 748,118,291 3,000,000 3,000,000 736,018,291 739,018,291 1,033,229,761 1,045,329,761 1,042,329,761 1,036,229,761

Disposals/written-off 2007 31 December SEPARATE FINANCIAL STATEMENTS SEPARATE Cost 2006 31 December depreciation Accumulated 2006 31 December impairment for Provision 2006 31 December book value Net 2006 31 December the years for statements included in the income Depreciation 2006 Purchases in (out) Transferred 2007 31 December the year for Depreciation - disposals/written-off Depreciation in (out) Transferred 2007 31 December 2007 31 December 2007 Baht 4,141 million to amounted assets those of depreciation accumulated deducting before The original cost, depreciated. been fully have the Company of equipment items 2007, certain As at 31 December (2006: Baht 3,634 million). Disposals/written-off Purchases subsidiaries purchased from Addition in (out) Transferred 2007 31 December 2007 31 December 2007 As at 31 December 2007, certain equipment items of the and Company subsidiaries have been fully depreciated. The original cost, before deducting accumulated depreciation of those assets amounted to Baht 4,141 million (2006: Baht 3,636 million). 14. PROPERTY, PLANT AND EQUIPMENT 14. PROPERTY, CONSOLIDATED Cost 2006 31 December depreciation Accumulated 2006 31 December impairment for Provision 2006 31 December book value Net 2006 31 December the years for statements included in the income Depreciation 2006 Addition from purchased subsidiaries purchased from Addition the year for Depreciation subsidiaries purchased from Addition 2007 31 December Depreciation - disposals/written-off - Depreciation Transferred in (out) Transferred 2007 31 December annual report 2007 114 115

15. DEFERRED RIGHT TO USE OF EQUIPMENT 19.1 On 27 June 2002 the Company entered into a Facility Agreement with Nordic Investment Bank (“NIB”). The principal terms Deferred right to use of equipment represents the cost of tools and equipment for providing cellular telephone services that are required to be of this facility are: procured by the Company and transferred to CAT under the Concession from CAT outlined in Note 1.2.1 to the financial statements. Ownership of Facility : USD 30 million (Fully drawn down) the tools and equipment were transferred to CAT at the date of commencing service or when the equipment was put into use. Interest rate : LIBOR plus 1.15 percent per annum Interest period : every six months The cost of such tools and equipment is deferred and amortised over the remaining life of Concession period. Principal repayment schedule : 8 semi-annual installments in the amounts stipulated in the payment schedule of the agreement, between 2006 and 2010. Deferred right to use of equipment consists of the following: (Unit: Baht) In order to hedge the foreign exchange rate and interest rate risks associated with the above loan, the Company entered into a cross currency Consolidated financial statements Separate financial statements swap agreement with a foreign financial institution to swap the loan to a Baht 1,270 million loan with a floating Baht interest rate as stipulated 2007 2006 2007 2006 in the agreement. The possible future financial impact of this agreement is reflected in the estimates of the fair value of derivative instruments Deferred right to use of equipment 115,230,125,517 107,513,274,550 115,229,585,167 107,513,274,550 provided in Note 29.5 to the financial statements. Deferred expenses on transmission facilities 702,852,715 670,516,749 702,852,715 670,516,749 Less: Accumulated amortisation (42,120,422,759) (35,420,760,810) (42,120,397,993) (35,420,760,810) 19.2 On 31 May 2005 the Company entered into a Facility Agreement with Nordic Investment Bank (“NIB”). The principal terms Net deferred right to use of equipment 73,812,555,473 72,763,030,489 73,812,039,889 72,763,030,489 of this facility are: Amortisation included in the income statements 6,699,641,950 5,751,014,686 6,699,617,184 5,751,014,686 Facility : USD 40 million (Fully drawn down) Interest rate : LIBOR plus 1.0 percent per annum 16. OTHER NON-CURRENT ASSETS Interest period : every six months (Unit: Baht) Principal repayment schedule : 11 semi-annual installments in the amounts stipulated in the payment schedule of the agreement between Consolidated financial statements Separate financial statements 2010 and 2015 2007 2006 2007 2006 Deferred expenses - net 1,935,827,275 1,186,587,553 1,880,520,618 1,194,300,965 In order to hedge the foreign exchange rate and interest rate risks associated with the above loan, the Company entered into a cross currency Deferred underwriting fees / arrangement fees for swap agreement to swap the full amount of the loan to a Baht 1,644 million loan, with a fixed Baht interest rate as stipulated in the agreement loans and bonds - net 329,029,852 476,087,261 329,029,852 476,087,261 for the period from 30 November 2005 to 30 November 2007, and a floating interest rate as stipulated in the agreement from 30 November Deposits 615,351,641 637,632,814 614,549,579 637,359,678 2007 onwards. The possible future financial impact of this agreement is reflected in the estimates of the fair value of derivative instruments Others 133,104,206 69,316,317 132,832,553 69,312,317 provided in Note 29.5 to the financial statements. Total other non-current assets 3,013,312,974 2,369,623,945 2,956,932,602 2,377,060,221 Amortisation included in the income statements 600,355,127 746,607,466 600,349,084 920,077,535 19.3 On 18 November 2005, the Company entered into a Facility Agreement with a group of financial institutions. The principal terms of these facilities are : 17. SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS As at 31 December 2006, short-term loan from financial institution represented loan in the form of promissory note which mature on March 2007. Baht loan Facility : Baht 4,000 million (Fully drawn down) 18. ACCOUNTS PAYABLE - TRADE Interest rate : THBFIX plus 0.25 percent per annum (Unit: Baht) Interest period : every three months Consolidated financial statements Separate financial statements Principal repayment schedule : Repayment in full in 18 November 2007 2007 2006 2007 2006 Accounts payable for the purchase The interest expense of this Baht loan has been covered by interest rate swap agreement with the fixed interest rate. The Company had wholly of equipment for providing telephone services 1,632,904,560 2,737,744,971 1,621,185,202 2,737,744,971 repaid its principal on 16 November 2007. Accounts payable - CAT 3,809,191,138 1,722,067,806 3,809,191,138 1,722,067,806 Accounts payable - TOT 1,289,311,364 1,170,336,560 1,289,311,364 1,170,336,560 JPY loan Account payable - Interconnection charge 1,511,252,576 - 1,511,252,576 - Facility : JPY 9,515 million (Fully drawn down) Others 425,784,222 304,266,267 425,382,691 303,862,122 Interest rate : LIBOR plus a margin (the margin is between 0.525% and 0.625% per annum depending on certain Total accounts payable - trade 8,668,443,860 5,934,415,604 8,656,322,971 5,934,011,459 conditions as stipulated in the agreement) Interest period : every six months 19. LONG-TERM LOANS Principal repayment schedule : 12 semi-annual installments in the amounts specify in the agreement from 18 May 2007 to 18 November 2012 (Unit: Baht) Consolidated financial The Company entered into the cross currency and interest swap agreement with the Thailand branch of a foreign financial institution, to swap the statements/Separate financial statements loan of JPY 9,515 million to a Baht 3,151 million loan, with a fixed Baht interest rate as stipulated in the agreement. The possible future financial 2007 2006 impact of this agreement is reflected in the estimates of the fair value of derivative instruments provided in Note 29.5 to the financial statements. 19.1 USD 30 million loan facility from Nordic Investment Bank 794,062,500 1,111,687,500 19.2 USD 40 million loan facility from Nordic Investment Bank 1,644,000,000 1,644,000,000 19.4 On 8 September 2005 the Company entered into a Facility Agreement of USD 170 million with Finnish Export Credit Ltd 19.3 Loan obtained from a group of financial institutions 2,836,231,200 7,151,368,000 (“FEC”). The principal terms of this facility are : 19.4 USD 170 million loan facilities from Finnish Export Credit Ltd. 5,636,611,538 6,661,450,000 Total 10,910,905,238 16,568,505,500 Tranche A Less: Current portion (1,657,600,262) (5,657,600,262) Facility : USD 85 million (Fully drawn down) Long-term loans - net of current portion 9,253,304,976 10,910,905,238 Interest rate : 4.55 percent per annum Interest period : every six months Principal repayment schedule : 13 equal semi-annual installments, from 30 June 2007 to 30 June 2013 annual report 2007 116 117

Tranche B The movements of Thai Baht debentures for the year ended 31 December 2007 are as follows: Facility : USD 85 million (Fully drawn down) (Unit: Million Baht) Interest rate : 4.77 percent per annum Balance Less : Balance Interest period : every six months as at Addition - Debentures as at Principal repayment schedule : 13 equal semi-annual installments, from 30 June 2007 to 30 June 2013 1 January 2007 debentures issued repayment 31 December 2007 20.1 Debentures of Baht 5,000 million The Company entered into cross currency and interest swap agreements with the Thailand branch of a foreign financial institution, to swap (issued on 30 October 2002) the full amount of the Tranche A, effective on 3 April 2006 and 28 August 2006 and Tranche B, effective on 31 October 2006 to a Baht a) Debentures of Baht 4,000 million 4,000 - - 4,000 6,661 million loan, with a fixed Baht interest rate as stipulated in the agreements. The possible future financial impact of these agreements b) Debentures of Baht 1,000 million 1,000 - - 1,000 is reflected in the estimates of the fair value of derivative instruments provided in Note 29.5 to the financial statements. 20.2 Debentures of Baht 9,000 million (issued on 25 September 2003) 19.5 On 26 September 2006, the Company entered into a Facility Agreement with a group of financial institutions. The principal a) Debentures of Baht 3,000 million 3,000 - - 3,000 terms of these facilities are: b) Debentures of Baht 2,500 million 2,500 - - 2,500 c) Debentures of Baht 3,500 million 3,500 - - 3,500 Baht loan 20.3 Debentures of Baht 6,000 million Facility : Baht 2,000 million (issued on 24 August 2006) Interest rate : THBFIX that present on Reuters Screen and, plus a margin as stipulated in the agreement a) Debentures of Baht 3,000 million 3,000 - - 3,000 Interest period : as agreed with a group of financial institutions (to be determined later) b) Debentures of Baht 3,000 million 3,000 - - 3,000 Principal repayment schedule : 8 semi-annual installments in the amounts specify in the agreement from 26 March 2008 to 20,000 - - 20,000 26 September 2011 20.1 On 30 October 2002 the Company issued Baht 5,000 million (5,000,000 units of debentures of Baht 1,000 each) of As at 31 December 2007 and 2006, this loan has not yet been drawn down. registered, unsubordinated, unsecured debentures with a trustee, comprising:

JPY loan - Debentures of Baht 4,000 million bearing interest at 5.8 percent per annum and due for repayment in full in October 2009. The interest Facility : JPY 12,000 million expenses of these debentures for the period from 30 September 2003 to 30 April 2006 had been covered by an interest rate swap agreement Interest rate : JPYLIBOR plus a margin that results in the Company paying floating interest rates plus a certain margin. Under the terms of the agreement (daily range accrual), interest Interest period : as agreed with a group of financial institutions (to be determined later) is received from the counterparty at the rate found in the agreement or less if certain conditions were met at certain dates specified in the Principal repayment schedule : 8 semi-annual installments in the amounts specify in the agreement from 26 March 2008 to agreements. In the first quarter of 2005, the Company entered into an agreement to restructure the interest rate swap agreement, whereby 26 September 2011 the condition under which interest income to be received from the counterparty based on daily range accrual was terminated. The possible future financial impact of these agreements and the termination of the condition related to the receipt of interest income based on daily As at 31 December 2007 and 2006, this loan has not yet been draw down. range accrual are reflected in the estimates of the fair value of derivative instruments provided in Note 29.5 to the financial statements.

19.6 As at 31 December 2007 and 2006, the Company had undrawn credit facility of USD 119 million from Finnish Export Credit - Debentures of Baht 1,000 million bearing interest at 8.3 percent minus the “6-month THBFIX” per annum for the first to third years, interest at Ltd. (“FEC”). However, the period for draw down from this credit facility expired in January 2008. the fixed 5.8 percent per annum for the fourth to seventh years and due for repayment in full in October 2009.

The above long-term loan facility agreements contain covenants relating to various matters, such as the maintenance of financial ratio, 20.2 On 25 September 2003 the Company issued Baht 9,000 million (9,000,000 units of debentures of Baht 1,000 each) of restrictions on incurring indebtedness and creating or permitting the subsistence of security interest on property and assets, a prohibition on registered, unsubordinated, unsecured debentures with a trustee, comprising: making loans or granting guarantees except under certain conditions, and restrictions on the payment of dividends. - Debentures of Baht 3,000 million bearing interest at “6-month THBFIX” plus 0.95 percent per annum and due for repayment in full in 20. BONDS September 2008. The interest expenses of these debentures had been covered by interest rate swap agreements and a risk protection (Unit: Million Baht) structure against increasing interest risk. However, in the third quarter of 2005 the Company entered into an agreement amending the risk Consolidated financial statements Separate financial statements protection structure, as a result of which of the Company is to pay interest at a fixed rate specified in the agreement from 25 September 2005 2007 2006 2007 2006 to 25 March 2007 and at the floating rate specified in the agreement for the remaining period. The future financial impact of these agreements Thai Baht debentures 20,000 20,000 20,000 20,000 is reflected in the estimates of the fair value of derivative instrument provided in Note 29.5 to the financial statements. Less: Current portion (5,500) - (5,500) - Bonds - net of current portion 14,500 20,000 14,500 20,000 - Debentures of Baht 2,500 million bearing interest at 3.3 percent per annum and due for repayment in full in September 2008. The interest expenses of these debentures had been covered by interest rate swap agreements and a risk protection structure against increasing interest rates. However, in the third quarter of 2005 the Company entered into an agreement amending the risk protection structure, as a result of which of the Company is to pay interest at a fixed rate specified in the agreement from 25 September 2005 to 25 March 2007 and at the floating rate specified in the agreement for the remaining period. The possible future financial impact of these agreements is reflected in the estimates of the fair value of derivative instruments provided in Note 29.5 to the financial statements.

- Debentures of Baht 3,500 million bearing interest at 3.9 percent per annum and due for repayment in full in September 2010. The interest expenses of these debentures have been covered by interest rate swap agreements and a target redemption swap agreement that result in the Company paying a floating interest rate until the cumulative total interest received reaches a certain level. Thereafter the Company will pay a fixed interest rate. However, in the second quarter of 2005 the Company entered into an additional derivative instrument whereby the target redemption condition has been off-set and the Company is obliged to pay an additional interest margin. The possible future financial impact of these agreements is reflected in the estimates of the fair value of derivative instruments provided in Note 29.5 to the financial statements. annual report 2007 118 119

20.3 On 24 August 2006, the Company issued Baht 6,000 million (6,000,000 units of debentures of Baht 1,000 each) of Total proceed from the Company’s newly share offering was Baht 3,280 million, with a share premium of Baht 2,749 million, net of related registered, unsubordinated, unsecured debentures with a trustee, comprising: expenses incurred in making the offering. The Company registered the change in its paid-up share capital of Baht 4,744 million with the Ministry of Commerce on 19 June 2007. a) Debentures of Baht 3,000 million, with interest rate at 6.06 percent per annum and redemption in full in August 2009. b) Debentures of Baht 3,000 million, with interest rate at 6.35 percent per annum and redemption in full in August 2011. The Stock Exchange of Thailand approved the listing of the Company’s ordinary shares and permitted them to commence trading on 22 June 2007.

All Thai Baht debentures contain covenants relating to various matters such as the maintenance of financial ratio, restrictions on creating or 22.2.5 A selective reduction of capital by cancelling 847,692,965 ordinary shares of the Company held by UCOM with a par value of Baht permitting the creation of security interest on property and assets, a prohibition on making loans or granting guarantees except under certain 2 each. The Company registered the reduction of its registered share capital from Baht 6,439 million to Baht 4,744 million and paid-up conditions, and restrictions on the payment of dividends. share capital from Baht 4,744 million to Baht 3,049 million with the Ministry of Commerce on 30 August 2007.

21. OTHER CURRENT LIABILITIES 22.2.6 The issuance and offering of no more than 847,692,965 ordinary shares of the Company with a par value of Baht 2 each to the (Unit: Baht) UCOM shareholders who accept the Company’s tender offer, with 1.95 shares of the Company with a par value of Baht 2 each to be Consolidated financial statements Separate financial statements allocated to the UCOM shareholders in exchange for each UCOM ordinary share with a par value of Baht 10 each. 2007 2006 2007 2006 Excise tax payable - 446,996,214 - 446,996,214 The Company made a tender offer to acquire all shares of UCOM during the period from 25 July 2007 to 30 August 2007, and UCOM’s Interest payable 350,680,795 386,878,150 350,680,795 386,878,150 shareholders accepted tenders to acquire a total number of 432,524,792 shares of UCOM, with the Company issuing 843,423,335 new Accrued expenses 1,125,881,496 734,850,279 1,093,761,593 723,334,959 ordinary shares in consideration for those shares. The Company registered the increase in its paid-up share capital from Baht 3,049 million Other accounts payable 955,843,576 860,471,071 954,944,050 860,467,738 to Baht 4,736 million with the Ministry of Commerce on 3 September 2007 (recording the additional expenses incurred in relation to the Corporate income tax payable 874,189,132 1,325,411,093 862,066,570 1,317,681,196 restructuring of its shareholding in share premium). The Stock Exchange of Thailand approved the new shares as listed securities on 14 Others 1,067,040,725 65,998,635 1,060,270,400 58,279,957 September 2007. 4,373,635,724 3,820,605,442 4,321,723,408 3,793,638,214 Reconciliation of number of ordinary shares 22. SHARES CAPITAL (Unit: Million Shares) 22.1 2006 2007 2006 On 17 August 2006, the Company registered the decrease in its registered and paid-up capital amounting Baht 164 million (16.4 million ordinary (Adjusted to reflect shares at Baht 10 per par value) (as described in note 1.2.2 to the financial statements) in accordance with the resolution of the minute of the change in par 2006 annual general meeting of the shareholders held on 28 April 2006. value to Baht 2 per share) 22.2 2007 Registered share capital On 30 April 2007, a resolution of the Extraordinary General Meeting of the Company’s shareholders no.1/2007 authorised the following Number of ordinary shares at the beginning of the year 2,557 2,639 transactions: - Decrease in number of registered shares (1,115) (82) Increase in number of registered shares 930 - 22.2.1 Reduction of the par value of the Company’s ordinary shares from Baht 10 per share to Baht 2 per share, with the Company’s then Number of ordinary shares at the end of the year 2,372 2,557 share capital (before the initial public offering in June 2007) comprising 458,016,126 ordinary shares with a par value of Baht 10 each, to Issued and paid-up share capital comprise 2,290,080,630 ordinary shares with a par value of Baht 2 each following the reduction. The reduction of the par value was Number of ordinary shares at the beginning of the year 2,290 2,372 registered with the Ministry of Commerce on 17 May 2007. Decrease issued and paid-up share capital (847) (82) Increase due to the initial public offer of shares 82 - 22.2.2 Reduction of registered share capital from Baht 5,114 million to be Baht 4,580 million. The Company registered its reduction of Increase in paid-up share capital 843 - registered share capital to be Baht 4,580 million with the Ministry of Commerce on 18 May 2007. Number of ordinary shares at the end of the year 2,368 2,290

22.2.3 Increase of registered share capital from Baht 4,580 million to be Baht 6,439 million by issuing 82 million new ordinary shares 23. STATUTORY RESERVE with a par value at Baht 2 each to support the initial public offering and issuing up to 847,692,965 new ordinary shares to allocate to the Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside a statutory reserve of at least 5 shareholders of United Communication Industry Plc. (UCOM). The Company registered the increase of the registered share capital of Baht percent of its net income after deducting accumulated deficits brought forward (if any), until the reserve reaches 10 percent of the registered 6,439 million with the Ministry of Commerce on 21 May 2007. share capital. The statutory reserve is not available for dividend distribution.

22.2.4 An initial public offering (including the Company’s employees, patrons, general investors, local and international institutional 24. FINANCIAL COSTS investors) of 222 million ordinary shares of the Company, comprising 82 million newly issued shares with a par value of Baht 2 each, and (Unit: Baht) the sell down of 140 million of the Company’s ordinary shares with a par value of Baht 2 each held by UCOM at a price of Baht 40 per share. Consolidated financial statements Separate financial statements 2007 2006 2007 2006 Interest expense 2,181,092,230 3,274,569,405 2,207,647,321 3,244,682,782 Amortisation on deferred financial cost and deferred expenses of early redemption on bills of exchange 146,763,452 103,251,214 146,763,452 276,721,284 Total financial costs 2,327,855,682 3,377,820,619 2,354,410,773 3,521,404,066 annual report 2007 120 121

25. CORPORATE INCOME TAX 28. OPERATING INCOME BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTISATION (EBITDA) Corporate income tax expenses for the years ended 31 December 2007 and 2006 comprised: (Unit: Baht) (Unit: Baht) Consolidated financial statements Consolidated financial statements Separate financial statements Note 2007 2006 2007 2006 2007 2006 Net income for the year 5,841,425,913 4,937,546,157 Income tax payable on taxable profit for the year 3,076,459,094 2,621,500,115 3,059,359,889 2,607,807,248 Add/Less : Financial costs 24 2,327,855,682 3,377,820,619 Add/Less: Net increase/decrease in deferred tax assets/ : Corporate income tax 25 2,845,762,736 2,460,543,954 liabilities on temporary differences and : Depreciation expense 14 758,445,817 789,099,016 other related write-off (310,216,277) (160,956,161) (310,216,277) (160,956,161) : Amortisation expense 7,299,997,077 6,394,370,938 Adjusted: Deferred tax assets from reduction of : Interest income (197,899,431) (133,389,443) corporate income tax rate to 25% 79,519,919 - 79,519,919 - : Foreign exchange gain/loss 17,396,935 (8,872,621) Income tax expenses - net 2,845,762,736 2,460,543,954 2,828,663,531 2,446,851,087 : Net income attributable to minority interest (167,377) - EBITDA 18,892,817,352 17,817,118,620

As at 31 December 2007 and 2006 the deferred tax assets/liabilities arose from the following temporary differences: 29. FINANCIAL INSTRUMENTS (Unit: Thousand Baht) 29.1 Financial risk management Consolidated financial statements Separate financial statements The Company’s financial instruments, as defined under Thai Accounting Standard No. 48 “Financial Instruments: Disclosure and Presentations”, 2007 2006 2007 2006 principally comprise cash and cash equivalents, trade accounts receivable, loans, investments, and short-term and long-term loans. The Allowance for doubtful accounts : accounts financial risks associated with these financial instruments and how they are managed is described below. receivable - trade 725,180 542,870 725,180 542,870 Provision for loss on account receivable from 29.2 Interest rate risk assignment of right (Note 25.1) 1,894,760 1,894,760 1,894,760 1,894,760 The Company’s and subsidiaries’ exposure to interest rate risk relate primarily to their deposits at financial institutions, short-term loan, trust Allowance for inventory obsolescence 20,903 24,884 20,903 24,884 receipts, long-term loans and bonds. Accrued expenses 40,405 19,433 40,405 19,433 Unrealised loss on derivative instruments for As at 31 December 2007 the significant financial assets and liabilities (Part of these are under derivative instruments as described in Notes 19 long-term loans and bonds 1,479,317 1,099,416 1,479,317 1,099,416 and 20 to the financial statements) are classified by type of interest rate as follows: Licence on mobile money business (premium from (Unit: Million Baht) subsidiary acquisition) (55,101) - - - Consolidated financial statements Others 131,385 (323,466) 131,385 (323,466) Floating Fixed Zero 4,236,849 3,257,897 4,291,950 3,257,897 Items Note interest rate interest rate interest rate Total Deferred tax assets/liabilities calculated from Financial assets tax rate 30% 793,935 977,369 810,465 977,369 Cash and cash equivalents 1,182 1,980 115 3,277 Deferred tax assets/liabilities calculated from Accounts receivable - trade, net - - 3,010 3,010 tax rate 25% 397,600 - 397,600 - Accounts receivable - trade: related parties - - 4,947 4,947 1,191,535 977,369 1,208,065 977,369 Financial liabilities 25.1 Deferred tax assets relate to the provision for loss on accounts receivable from the assignment of rights. As at the balance Trust receipts - 51 - 51 sheet date the Company is in the process of recovery of those balance from this receivable through an arbitration process, as Accounts payable - trade - - 8,668 8,668 discussed in Note 32.2 (a) to the financial statements. Accounts payable - trade: related parties - - 755 755 Advances: related parties - - 96 96 26. EARNINGS PER SHARE Long-term loans 19 2,438 8,473 - 10,911 Basic earnings per share is calculated by dividing the net income for the year by the weighted average number of ordinary shares in issue during Bonds 20 5,500 14,500 - 20,000 the year, after adjusting the number of ordinary shares held by outside shareholders in proportion to the change in the number of shares as a result of the change in par value from Baht 10 each to Baht 2 each as discussed in Note 22 to the financial statements. The number of ordinary Financial assets and liabilities carry fixed interest rates can be classified by maturity (or the date of new interest rate is introduced) (if any). shares is adjusted as if the share spilt had occurred at the beginning of the earliest period reported. (Unit: Million Baht) 27. DEPRECIATION AND AMORTISATION EXPENSES Consolidated financial statements Depreciation and amortisation expenses for the years ended 31 December 2007 and 2006 comprised:- Within Over (Unit: Baht) Items Note 12 months 12 months Total Interest rate Consolidated financial statements Separate financial statements Financial assets 2007 2006 2007 2006 Cash and cash equivalents 1,980 - 1,980 0.63% - 5.30% Depreciation expense Property, plant and equipment 758,445,817 789,099,016 674,429,380 707,086,776 Financial liabilities Amortisation expense Trust receipts 51 - 51 3.86% - 3.89% Deferred right to use of equipment 6,699,641,950 5,751,014,686 6,699,617,184 5,751,014,686 Long-term loans 19 1,340 7,133 8,473 5.38% - 6.59% Other non-current assets Thai Baht debentures 20 14,500 - 14,500 3.90% - 6.35% - group as selling and administration expenses 600,355,127 643,356,252 600,349,084 643,356,252 - group as financial cost 146,763,452 103,251,213 146,763,452 276,721,283 Total depreciation and amortisation expenses 8,205,206,346 7,286,721,167 8,121,159,100 7,378,178,997 annual report 2007 122 123

29.3 Foreign currency risk The fair value of financial instruments is estimated on the following criteria. The Company and subsidiaries’ exposure to foreign currency risk arised mainly from purchasing of equipment transactions and borrowing that are denominated in foreign currencies. The Company and subsidiaries primarily utilise forward exchange contracts and currency swap - The fair values of long-term loans and Thai Baht debentures have been determined based on discounted cash flow analysis, by using discount agreements to manage the exchange rate risk arising from these instruments (Note 19). rates equal to the prevailing rates of return as of the balance sheet date for financial instruments having substantially the same terms and characteristics. As at 31 December 2007 the Company and subsidiaries had the following foreign currency assets and liabilities (after the execution of forward exchange contracts and cross currency swap agreements for certain parts of their liabilities) which were not covered by forward contracts to - The fair values of Thai Baht bonds are presented at their fair value, based on the latest yield rated quoted by the Thai Bond Market Association reduce foreign exchange rate risk: as of the date on which the investments are value or the discounted cash flow method. The discounted rate is based on the prevailing rates of return as of the balance sheet date for financial instruments having substantially the same terms and characteristics. Exchange rate Consolidated financial statements as at - The fair values of derivative instruments have been calculated using quoted market rates to terminate the contracts at the balance sheet date. Amount Foreign currency 31 December 2007 (Million) (Baht per foreign 30. COMMITMENTS Assets currency) 30.1 Lease commitments Deposits at financial institutions 2.80 USD 33.6496 As at 31 December 2007 the Company has the following operating lease commitments for the lease of office buildings and operating lease 0.60 EUR 49.0408 obligations with regard to land for cell sites: 0.50 GBP 67.0381 (Unit: Million Baht) Trade accounts receivable - other companies 5.40 SDRs 53.3937 Consolidated financial statements/ Trade accounts receivable - related companies 0.72 SDRs 53.3937 Separate financial statements Liabilities 2008 472.9 Trade accounts payable* 32.71 USD 33.8850 2009 256.3 0.20 EUR 49.6202 2010 onwards 67.5 Amount due to related company 9.00 NOK 6.2222 Net assets (liabilities) (29.91) USD 30.2 Capital commitments 0.40 EUR As at 31 December 2007 the Company has capital commitments of Baht 1,554 million (2006: Baht 1,252 million) mainly in respect of the 0.50 GBP purchase of tools and equipment for providing cellular telephone services. 6.12 SDRs 9.00 NOK 30.3 Pledged deposits at financial institutions As at 31 December 2007 deposits at financial institutions of a subsidiary amounting to Baht 0.7 million (2006: Baht 1 million) are pledged with (*) net of the amounts of USD 10.4 million covered by forward contracts with due during January 2008 to May 2008 the bank to secure facilities granted by the bank.

29.4 Credit risk 30.4 Bank guarantees The Company is exposed to credit risk primarily with respect to trade accounts receivable. The Company’s management manages the risk by As at 31 December 2007 there were outstanding bank guarantees of Baht 1,664 million (2006: Baht 861 million) issued by banks on behalf of adopting credit control policies and procedures. In addition, the Company does not have high concentration of credit risk since it has a large the Company in respect of certain performance bonds required in the normal course of business of the Company. Bank guarantees are primarily customer base. Therefore, the Company does not expect to incur material financial loss. The maximum exposure to credit risk is limited to the issued to CAT to secure the royalty fee paid under the Agreement to Operate Cellular Telephone Services. carrying amount of receivables less allowance for doubtful debts as stated in the balance sheets. As at 31 December 2007 there were outstanding bank guarantees of Baht 3 million (2006: Baht 3 million) issued by banks on behalf of 29.5 Fair value subsidiaries and related company in respect of certain performance bonds required in the normal course of business of the subsidiaries and A fair value is the amount for which an asset can be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length related company. These guarantees are secured by deposits at financial institutions of the subsidiaries and by the Company’s guarantee. transaction. 30.5 Agreements to install cell site equipment The fair value is determined by reference to the market price of the financial instrument or by using an appropriate valuation technique. As at 31 December 2007 the Company has an outstanding commitment of approximately Baht 512 million (2006: Baht 692 million) under an agreement to install cell site equipment made with United Telecom Sales and Services Co., Ltd., a related company. Given that all financial assets are short-term, parts of financial liabilities are short-term, the Company’s management believes that the fair value of financial assets and short-term financial liabilities does not materially differ from their carrying value. 30.6 Agreement to install and maintain transmission networks On 4 May 2006 the Company entered into an agreement to install and maintain transmission networks with Benchachinda Holding Ltd. a The carrying values (original values excluded the carrying values of related forward exchange and cross currency swap contracts) and fair values related company. This related company will provide transmission engineering network design and configuration, installation and maintenance of long-term financial liabilities and the fair values of derivative instruments as at 31 December 2007 are presented below. services for transmission networks for a period of 3 years. The Company is committed to pay service fees at the rate specified in the agreement. (Unit: Million Baht) Currently, the Company pays such service fees at a rate of approximately Baht 38 million per month. Consolidated financial statements Carrying values Fair values 31. LEGAL CASE BETWEEN THE COMPANY AND TOT PLC. (“TOT”) IN RELATION THE ACCESS CHARGE PAYMENT Hedged 1) TOT, CAT Telecom Public Company Limited (“CAT”) and the Company concluded the Postpaid Access Charge Agreement, on 22 February Loan from Finnish Export Credit Ltd. 4,874 4,947 1994 and the Prepaid Access Charge Agreement on 2 April 2001. Under these Agreements, TOT would make interconnection with the Loan from a group of financial institutions 2,567 2,615 Company, and would impose the Access Charge of 200 Baht per month for the postpaid service and 18 percent of the price specified in the Thai Baht debentures 6,000 5,908 prepaid card, including VAT, for the prepaid service. Unhedged Loan from Nordic Investment Bank 1,991 2,000 On 17 May 2006, the National Telecommunications Commission (“NTC”) issued the Notification on Use and Interconnection of Thai Baht debentures 14,000 14,435 Telecommunications Network of 2006 applicable to telecommunication licensees who have its own telecommunication network, requiring Derivative instruments the licensees to interconnect with each other on request, so as to provide good cross-network connections, with the interconnection Unfavourable derivative instruments - (560) provider entitled to apply an interconnection charge that reflect its costs. annual report 2007 124 125

On 2 October 2006, the Company issued a letter to TOT requesting it to enter into negotiation regarding the interconnection agreement deposit the Court fees within the required period. The Plaintiff then appealed to the Supreme Court against the Appeal Court’s order, and the between the Company’s network and TOT’s network and, on 17 November 2006, the Company issued a written notification informing TOT Supreme Court has been considering the case. The Company’s management is not able to determine the extent of losses, if any, that may arise and CAT that the Company would amend the rates for calculating the access charge under the Access Charge Agreement entered into with from this case, but it is believed that any possible liability that may arise will not be material to the Company’s financial position. Consequently, TOT on the basis that the rate and the collection of access charge under the Access Charge Agreement were contrary to the law in a number as at 31 December 2007, the Company has not provided for losses that may arise as a result of this case in its financial statements. of respects. The Company also informed TOT and CAT that it would pay the interconnection charge to TOT at the rate which is in compliance with the law or at the provisional rate announced by the NTC while negotiations on the interconnection agreement with TOT has not been 32.2 Commercial disputes concluded. (a) Dispute between the Company and DPC regarding the default on payments of amounts due as a result of the assignment of a certain portion of the rights and obligations to operate a telephone service under the PCN 1800 system. On 23 November 2006, TOT issued a letter to the Company informing the Company that it was not entitled to interconnect its network with the TOT network because the Company was not a telecommunications licensee, as granted by the NTC, and did not have its own As discussed in Note 13 to the financial statements, DPC defaulted on payment of amounts due to be paid to the Company between 30 telecommunications network. TOT also claimed that the Access Charge Agreement did not violate any law. Therefore, the rate and the September 2002 and 30 September 2005 totaling USD 122.9 million. The Company currently submitted its disputes with regard to DPC’s collection of access charge under the Access Charge Agreement continued to apply. TOT later refused to accept payment of due interconnection default on payment of amounts due to be paid to the Company totaling USD 134.5 million (including interest from the default date until the charges. date that the Company submitted the disputes amounting to USD 11.6 million) to the Arbitration Office for settlement and called for DPC to make payment of the amount due, including due interest, plus interest from the default date until the date that DPC makes payment to the Company. 2) On 18 June 2007, according to award on dispute No. 1/2550 re: Dispute on Interconnection of Telecommunications Networks, the NTC The arbitration proceedings are continuing, and the process of resolving these matters could take several years. The Company’s management ordered that TOT negotiate with the Company within 7 days and engage in the agreement with the Company within 30 days from the believes that the outcome of the arbitration process is unlikely to have a material adverse effect on the financial position of the Company. commencement of the negotiation. In addition, on 9 October 2007, the NTC unanimously determined to confirm the NTC secretary’s order which required TOT to negotiate the Interconnection Contract with the Company. (b) Dispute between the Company and CAT regarding fees on amounts received from the cellular mobile telecommunications network roaming agreement with DPC. 3) On 8 November 2007, the Company sent TOT a notice regarding the interconnection charges; informing TOT that since it had not accepted the offers made by the Company to accrue, in good faith, the interconnection charges payable to TOT at a rate to be agreed by the parties In 2002 CAT requested the Company pay fees on amounts received as a result of the provision of roaming services to DPC on its telecommunications and/or at the rate as specified in TOT’s RIO and had subsequently refused to enter into the interconnection agreement with the Company, network. CAT subsequently submitted a letter dated 25 August 2003 requesting the Company pay fees amounting to Baht 477 million to CAT the Company therefore had to cancel all offers made and to terminate the two access charge agreements. Therefore, the Company accrued on the amounts received as a result of the provision of such roaming services. On 31 August 2004 CAT submitted the dispute in relation to the the access charged (with interconnection charge rate) for the period 18 November 2006 to 7 November 2007, amounting to Baht 1,973 million, fees on revenue received from the cellular mobile telecommunications network roaming to the Arbitration Office for settlement and called for in the financial statements, but from 8 November 2007 the Company did not accrue access charge in its accounts because of the termination the Company to make payment of such fee together with a penalty totaling Baht 692 million (calculated to the date of submitted the dispute). of access charge agreements. The Company’s management contend that the revenue received from DPC is to compensate the Company for the costs incurred to expand the network to accommodate the increase in network traffic as a result of DPC being granted such roaming, and this kind of revenue is not part of 4) On 16 November 2007, TOT lodged suit with the Civil Court, calling for the Company and CAT jointly make payment of Access Charge and the service revenue which forms the basis for the calculation of the fees to be paid to CAT under the agreement to operate cellular telephone penalties totaling Baht 11,705 million for the period between 17 November 2006 to 31 October 2007, including default interest and value services made between the Company and CAT. In addition, DPC pays fees to CAT on the revenue that it generates from its roaming on the added tax, and to pay Access Charge from 1 November 2007 until the agreements among TOT, CAT and the Company expired, together with Company’s network. Therefore as at 31 December 2007 the Company has not accrued the fees requested by CAT in its financial statements. default interest at rate of 1.25% per annum from the default of each installment until full payment is made to TOT. The arbitration proceedings are continuing, and the process of resolving these matters could take several years. The Company’s management believes that the outcome of the arbitration process is unlikely to have a material adverse effect on the financial position of the Company. 5) At present, the case is in before the court, at the stage of the legal process whereby the Company and CAT have prepared pleas disputing the claims. However, the legal process may take several years. (c) Dispute between the Company and CAT regarding the calculation methodology for the revenue sharing that the Company submitted to CAT relating to the fee reduction on access charge. Based on advice from the Company’s legal counsel, that Company’s management is confident that the Company is not obliged to make payment of access charge under the agreement because such agreement does not comply with current legal principles (NTC notification). On 18 May 2005 and 19 July 2005, CAT submitted a letter informing the Company that its calculation methodology for the revenue sharing from The Company’s management believes that the court’s decision will not have a substantial impact on the Company’s financial position and the date that the Company received the fee reduction on access charge from TOT was incorrect. According to CAT, the Company had underpaid operating results. revenue sharing to CAT by a total of Baht 448 million (calculated from 16 September 1996 to 15 September 2004). However the Company has already informed CAT that the calculation was based on the methodology that the Company was supplied by CAT for revenue sharing purposes, The net effect (before income tax) as at 31 December 2007: and to which the Company consented. Therefore, the present CAT management disagreed with the calculation methodology used by the former (Unit: Million Baht) Amount CAT management and claimed that the Company’s calculation methodology was incorrect which resulted that lowering CAT’s revenue sharing. Net effect of the Company amending its recording of the access charge under the previous Access CAT requested that the Company shall make such payment to CAT but the Company refused and has not accrued such fee in its financial Charge Agreement by recording interconnection charges in what it considers to be compliance statements. On 16 August 2007, CAT submitted the dispute to the Arbitration Institute, claiming such revenue sharing and stipulated penalty all with current law for the period as from 18 November 2006 to 7 November 2007 resulting together Baht 749 million. At present the dispute has been under the Arbitration’s procedure, and the process of resolving these matters could in a reduction in the Company’s expenses 6,271 take several years. Net effect of the Company ceasing recognition the access charge under the previous Access Charge Agreement and interconnection charges for the period as from 8 November 2007 to (d) The commercial dispute between the Company and CAT regarding the payment of the numbering fee which CAT (an NTC-licensed 31 December 2007, resulting in a reduction in the Company’s expenses 1,188 telecommunication business operator) is obliged to pay to the National Telecommunications Commission (NTC) on a monthly basis under the Total 7,459 Telecommunications Business Act.

32. SIGNIFICANT OTHER LITIGATION AND OTHER COMMERCIAL DISPUTES During the fourth quarter of 2005, CAT submitted a letter calling for the Company to make payment of numbering fees for those numbers which The Company is subject to significant outstanding legal proceedings and claims arising out of its businesses as follows: the Company has been allocated to provide telecommunication service under the Concession agreement at a rate of 1 Baht per numbering per month, as from September 2005 to August 2006, totalling of Baht 169.6 million. The Company submitted a request for a ruling on which party 32.1 Outstanding litigation is responsible for the numbering fee burden to the NTC. The NTC’s response was that the licensed telecommunications operator is responsible In March 2003 the Company, WorldPhone Shop Company Limited (“the subsidiary”) and directors of the subsidiary were sued by am/pm for the payment of the numbering fee and any third party which is not the licensed telecommunications operator has no obligation to pay the (Thailand) Company Limited which claimed damages totaling Baht 450 million in relation to improper transfer of the license to use the am/ numbering fee previously allocated to the Company. Management of the Company is therefore confident that the Company is not responsible for pm trademark in Thailand, and subsequent benefit of use of this trademark. (On 1 January 2003 the subsidiary terminated the assignment the numbering fees. The Company therefore has not accrued the numbering fees requested by CAT in its financial statements. On 7 September agreement to operate am/pm shops in Thailand and stopped using the am/pm trademark since 31 December 2003.) The Court has already 2006 CAT filed the complaint to the Arbitration Office demanding the Company to compensate the principal amount together with interests dismissed the complaint. Furthermore, the Appeal Court ordered not to accept the appeal filed by am/pm (Thailand) because to they did not totaling Baht 171 million. Currently, the dispute is still in the arbitration process, and the process of resolving these matters could take several years. annual report 2007 126 127

e) Dispute between the Company and CAT regarding fees on revenue received from the network roaming, revenue from customers who Agreement, the Company was required to pay an access charge to TOT at a fixed rate per number per month or at a percentage of value of the fraudulently registered documents and which cannot be collected. prepaid vouchers. However, at present, the interconnection between operators, including the Company, is subject to the Telecommunications Act and the NTC Interconnection Notification. Both the Telecommunications Act and the NTC Interconnection Notification require that the On 4 April 2006, CAT submitted a dispute to the Arbitration Office in relation to requesting additional fees from the Company on revenues as interconnection charge be calculated on a cost-based basis and must not purport to discriminate. The Company believes that the access follows: charge that TOT has fixed under the old regulatory regime is not in compliance with the Telecommunications Act and the NTC Interconnection Notification. - Fees on revenues from interconnection charges amounting to Baht 7.8 million, which the Company charged to other operators for permission to use the Company’s network. The Company contends that the revenues received from other operators represent compensation for the As discussed in Note 31 to financial statements, as at 31 December 2007 the Company and TOT are in dispute as a result of the above matters. costs incurred to expand the network to accommodate the increase in network traffic as a result of these other operators being granted such Currently, the dispute is in the arbitration process and the outcome can not yet be determined, since it depends on the future judicial process. roaming. The Company’s management believes that the court’s decision will not have a substantial impact on the Company’s financial position and operating results. - The fees on uncollectible service revenues from customers of the 1800 system who fraudulently registered documents amount to Baht 38.9 million. The Company contends that in the past CAT waived the fees on uncollectible revenues from customers of the 800 system who The Company is subject to revenue sharing arrangement under the Cellular Agreement. fraudulently used of the services, and that the nature of the fraud in the case of the additional fees which CAT is requesting the Company pay Under the Cellular Telephone Service Agreement, the Company has an obligation to pay revenue sharing to CAT. is the same. CAT, which is a party to the Cellular Telephone Service Agreement, has now become an operator in direct competition with the Company in the Currently, the dispute is still in the arbitration process, and the process of resolving these matters could take several years. telecommunications business.

As at 31 December 2007, the Company has not accrued the additional fees requested by CAT, which including fines and surcharges (calculated Following the enactment of the Telecommunications Act, it is still unclear whether, and to what extent, the revenue sharing arrangement under to the date of submitted the dispute) total Baht 58.3 million in its financial statements because the Company’s management believes that the the Cellular Telephone Service Agreement would affect the financial condition or business operation of the Company. If the Company continues various revenues do not constitute part of the service revenue which forms the basis for the calculation of the fees to be paid to CAT and CAT has to make payment to CAT pursuant to this revenue sharing arrangement, it could be placed at a competitive disadvantage and this may have a formerly waived collection of fees of this type. material adverse effect on the business and financial condition of the Company.

(f) Dispute between the Company and CAT regarding revenue sharing payment under concessionary agreement However, Section 80 of the Telecommunications Act provides that any person who has entered into an agreement with TOT or CAT for the operation of a telecommunications business must be subject to the Telecommunications Act and the conditions prescribed by the NTC on the basis of free On 11 January 2008, CAT submitted the dispute to the Arbitration Institute requesting the Company make concession payments for the 12th – 16th and fair competition. Therefore, the Company believes that the Company has the right and duty to compete in the telecommunications business concession years amounting to Baht 16,887 million, together with penalties totaling Baht 21,982 million. The statement of claim made by CAT with other operators, including CAT, on an equal footing in accordance with the principle of free and fair competition. did not refer to the reason that the Company did not make payment in the full amount. Conversion of the Cellular Telephone Service Agreement Currently, the dispute is still in the arbitration process, and the process of resolving these matters could take several years. The Company is Discussions have been made by the Company regarding the regulatory reform of the telecommunications business, particularly the possibility currently at the stage of preparing to lodge its plea in the case. The Company’s management believes, based on advice from legal counsel, that of a conversion of the concession of the Cellular Telephone Service Agreement. However, at present, the conversion issue remains inconclusive the arbitral award would not have a material adverse effect on the financial position of the Company. and the Company is unable to assess the effect, if any, such conversion may have on the business and financial condition of the Company.

33. RISK FROM CHANGES IN LAWS AND REGULATIONS CONCERNING THE TELECOMMUNICATIONS BUSINESS 34. FINANCIAL INFORMATION BY SEGMENT Reform of telecommunication regulatory regime The principal operations of the Company and subsidiaries involve a single industry segment, operating wireless telecommunications services As a member of the World Trade Organisation (WTO), Thailand was obliged to liberalise its infrastructure telecommunications business by the and distributing handsets, are carried out exclusively in Thailand. As a result, all revenues, operating profits and assets reflected in these financial year 2006. As a result, the Thai Government has launched a reform package of the telecommunications regulatory regime. statements pertain to this industry segment and geographic area.

In October 2004, the NTC was established as a new independent organisation to regulate the telecommunications sector in Thailand. It is 35. PROVIDENT FUND empowered, under the Telecommunications Business Operation Act B.E. 2544 (2001) (“Telecommunications Act”) and the Act on Organisations The Company and its employees have jointly registered a provident fund scheme under the Provident Fund Act B.E. 2530. The fund is contributed Allocating Frequency Waves and Supervising Radio/Television Broadcasting and Telecommunications Business B.E. 2543 (2000) (“Frequency to by both the employees and the Company at a rate of 3 percent of their employees’ salaries. The accumulated contributions of the employee Act”), to issue policies and regulations that may have a significant impact on the telecommunications sector, including those relating to (i) free and the Company and the fund earnings from the contributions will be paid to the employees upon termination in accordance with the rules of and fair market competition among telecommunications service providers, (ii) fees and tariffs for telecommunications services, (iii) allocation the fund. The fund was previously managed by UOB Asset Management (Thai) Company Limited, with management taken over by TMB Bank Plc. of frequency and other telecommunications resources, (iv) consumer protection, (v) promotion of other telecommunications services deemed on 1 July 2006 and by TMB Asset Management Company Limited on 1 March 2007. During the year ended 31 December 2007 Baht 34.53 million beneficial to the economic and social development of Thailand and (vi) establishment of emergency telecommunications services. (2006: Baht 29.27 million) has been contributed to the fund by the Company.

Legal issues arising under the Telecommunications Act and the Frequency Act are uncertain. The Company is unable to determine how the NTC 36. EMPLOYEES AND RELATED COSTS will exercise its regulatory authority, the nature and scope of the policies and regulations it will issue in the future, or how it will supervise the Consolidated financial statements Separate financial statements implementation of any such policies, or the enforcement of the legislation and regulations, both at present and which may be enacted in the future. 2007 2006 2007 2006 Number of employees at end of year (persons) 5,573 4,463 5,573 4,463 The uncertainties arising as a result of this significant reform of the telecommunications regulatory regime may adversely affect the Company’s Employee costs for the year (Thousand Baht) 2,540,454 2,037,844 2,540,454 2,037,844 ability, among other things, to implement its business strategy or successfully adapt to any changes in market conditions. While the Company believes that the establishment of the NTC is a positive development for private operators such as the Company, it cannot be assured that the 37. SUBSEQUENT EVENTS NTC, or any other regulatory bodies, will not take any actions which may be detrimental to its business, financial position, results of business 37.1 Forward exchange contracts operations and prospect. Subsequent to 31 December 2007, the Company has entered into a number of significant forward exchange contracts with banks to purchase approximately USD 15.89 million, to cover payments for the purchases of cellular telephone service equipment in 2008. Operation costs of interconnection between the Company and certain operators are unclear. Pursuant to the Telecommunications Act, an operator who wishes to interconnect with the network of another operator must enter into an interconnection agreement. At present, certain operators have not entered into negotiations on the interconnection charge with the Company, in particular, TOT, who had entered into an Access Charge Agreement with the Company in 1994 and 2001. Pursuant to the Access Charge annual report 2007 128 129

37.2 Dividend payment The Company’s Board of Directors, held on 8 February 2008, passed a resolution approving the payment of a dividend of Baht 0.73 per share to glossary the ordinary shareholders, from the 2007 operating results. The dividend payment will be proposed to approve by the Annual General Meeting of the Company’s shareholders, and payment will be on 14 May 2008.

38. RECLASSIFICATION In addition to the change in accounting policy as mentioned in Note 4, which affects the previously reported net income and shareholder’s equity, certain other amounts in the financial statements for the year ended 31 December 2006 have been reclassified to conform to the current 3G Technology Third Generation Mobile Phone Technology year’s classification but with no effect to previously reported net income or shareholders’ equity other than from the change in accounting policy. Access Charge (“AC”) The charge paid to TOT for an access to TOT’s telecommunications network AIS Advanced Info Service Public Company Limited 39. APPROVAL OF FINANCIAL STATEMENTS ARPU Average revenue per user These financial statements were authorised for issue by the Company’s Board of Directors on 8 February 2008. CAT CAT Telecom Public Company Limited (formerly The Communication Authority of Thailand) 40. SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THAILAND AND CDP The Central Depository (Pte.) Limited INTERNATIONAL FINANCIAL REPORTING STANDARDS Churn Rate The number of customers moved out of the network divided by the total number of These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Thailand (“Thai customers in the network GAAP”), which differ in certain significant respects from International Financial Reporting Standards (“IFRS”). Certain significant differences Concession Agreement Agreement to operate and to provide Cellular system Radio Telecommunication (other than classification, presentation and disclosure requirements) between Thai GAAP and IFRS as applicable to the consolidated financial Service (including its Amendment) statements of the Company and its subsidiaries for the year ended 31 December 2007 and 2006 are summarised below. This summary should DPC Digital Phone Company Limited not be construed as being exhaustive nor presenting a true and fair view of the Company’s operating results and financial position as it is EDGE Enhanced Data-Rates for GSM Evolution presented for the purpose of giving preliminary information only. Frequency Act Act on Organisations, Allocating frequency Waves, and Supervising Radio/Television Broadcasting and Telecommunication Business, B.E. 2543 Significant differences between Thai GAAP and IFRS - outstanding GPRS General Packet Radio Service 40.1 Accounting for derivatives GSM Global System for Mobile Communications Thai GAAP does not presently have any effective accounting guidance for accounting for derivatives. IMEI International Mobile Equipment Identity Interconnection Charge (“IC”) The cost-based charge paid to other operators for connecting into their networks Under IFRS, a company has to recognise all of its derivative instruments as either assets or liabilities in the balance sheet at fair value. The IVR Interactive Voice Response System accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies MMS Multimedia Messaging Service as part of a hedging relationship and further, on the type of hedging relationship (i.e. as either a fair value hedge, cash flow hedge, or a hedge NBC The National Broadcasting Commission of a net investment in a foreign operation). NTC The National Telecommunications Commission On net – Off net The calls made within the same network – to other networks 40.2 Deferred financial costs PCN 1800 Digital GSM wireless telecommunication service under the 1800 MHz frequency band Thai GAAP does not presently have any effective accounting guidance for accounting for financial instruments, in respect of recognition and Penetration Rate The number of SIM cards divided by total population measurement. In general, there is no prohibition on deferral of the financial costs of extinguished debts on a refinancing deal provided that the Refill Card Refill card for prepaid service Company has derived benefit from such refinancing. SEC Securities and Exchange Commission of Thailand SET Stock Exchange of Thailand IFRS requires an exchange of financial liabilities with substantially different terms and conditions to be accounted for as an extinguishment of SGX-ST Singapore Exchange Securities Trading Limited (SGX-ST) the old financial liability and the recognition of a new financial liability. Therefore, the outstanding deferred cost attributable to the issue of the Sim Card Subscriber Identity Mobile Card old financial liability is to be written off. SMS Short Message Service Starter Kit A bundled package of a SIM card and a handset The following table is a summary of numerical reconciliation of consolidated net income for the years ended 31 December 2007 and 2006 and TOT TOT Public Company Limited (formerly known as Telephone Organisation of Thailand) consolidated total shareholders’ equity as at 31 December 2007 and 2006 between those shown in consolidated financial statements prepared True Move True Move Company Limited under Thai GAAP and IFRS. This summary should not be construed as being exhaustive nor presenting a true and fair view of the Company’s TSD Thailand Securities Depository Company Limited operating results and financial position as it is presented for the purpose of giving preliminary information only. UCOM United Communication Industry Public Company Limited.

(Unit: Million Baht) Consolidated Consolidated net income total shareholders’ equity 2007 2006 2007 2006 As reported in these consolidated financial statements under Thai GAAP 5,841 4,938 51,849 41,457 Add (Less): Thai GAAP /IFRS significant differences (net of tax effect) 1. Accounting for derivatives (Note 40.1) (23) 468 (328) (332) 2. Deferred financial costs (Note 40.2) 49 54 (61) (109) Under International Financial Reporting Standard (“IFRS”) 5,867 5,460 51,460 41,016