8 Annual Report 2014 Message from the Chairman

TOT Public Company Limited is a state enterprise providing telecommunications services to all sectors particularly the government and the population for 60 years in 2014. Being encountered with various changes and challenges this year, the Board of Directors has set up new policies and solutions to manage TOT more efficiently and effectively. The objectives are for TOT to provide public services, support national security, operate competitively under an efficient, transparent and sustainable management. In 2014, the State Enterprises Policy Committee sets forth new policies for all state enterprises under the same category to handle their organization’s issues. Under the new policy, TOT is divided into 6 business groups each defined with competitive capabilities and clear business directions for further consideration to the Committee. Moreover, TOT has other projects to strive for such as High Speed Broadband Internet 2 million ports and International Submarine Cable Network in Asia-Africa-Europe (AAE-1) which is a significant project in compliance with the government’s policy to mobilize the Digital Economy to have high speed internet network nationwide with reasonable service rates, reduce the gap between urban and rural areas as well as support and leverage capabilities for all Thai entrepreneurs at the time of the official opening of the ASEAN Economic Community. TOT, under the policies set forth by the State Enterprises Policy Committee aims to provide public services, support national security, operate competitively under an efficient and transparent management and enable to continue sustainable existence. On behalf of the Chairman of the Board of Directors, I value good corporate governance and anti-corruption in all management levels. Lastly, I would like to thank all shareholders, business partners, the State Enterprises Policy Committee including all stakeholders who have strongly supported TOT all along. I am also confident that with joint efforts, strong determination and adherence to good corporate governance of the Board of Directors, executives and all employees, TOT can become a leading and strong telecommunications entity for our nation and citizens.

General (Surapong Suwana-adth) Chairman, Board of Directors

TOT Public Company Limited 9 Message from the President

10 Annual Report 2014 2014 is a challenging year for TOT given the dynamic and increasing competition in the industry in Thailand. As a nation’s Telecommunication State Enterprise, TOT has a mission to support country Digital Economy Agenda while we commit to continue our excellent services to our clients and stay competitive in the market. In addition, TOT also need to prepare for the end of mobile concession in September 2015 which eventually impact TOT’s income. According to the policy from State Enterprise Policy Committee, TOT did a major organization restructure to support 6 business units, namely Infrastructure Telecommunication Business, Tower Business, Mobile Business, Fixed Line and Broadband Internet Business, IT, IDC and Cloud Business, and International Submarine Cable and Internet Gateway Business. We believe that this would not only improve our customer coverage for a better client satisfaction but also improve internal process, efficiency, competitive and transparency for sustainable business. I was appointed Acting President during later part of 2014. It was very fortunate to get all necessary support to lead the state enterprise turning around to be profitable business instead of anticipated loss. I would like to take this opportunity to extend my appreciation to the Chairman, Board of Directors, Managements, all employees and stakeholders for their dedication and hard work pushing TOT forward and conquer their challenging time. I would also like to render my full support and encourage TOT to strive strongly for the benefit of our nation and our people. I thank you all.

(Mr.Thanwa Laohasiriwong) Director and Acting President

TOT Public Company Limited 11 Statement of Direction, Vision, Mission, Values and Goals

Statement of Direction - Overview To mobilize the nation’s economic and social strategies based on efficient work performance and good corporate governance. - Communications To continuously develop the infrastructure, human resource and business operations in information technology and national communications efficiently as well as focus on building business alliances to raise the organization’s value and support the coverage of information technology. - TOT To accelerate its strategic planning ensuring an efficient telecommunications business operation including sharing resources with other state enterprises in order to reduce duplicate investments and build partnerships with other operators.

Vision “To become a leading telecommunications service provider in Thailand”

Mission • Focus on customers as core of our business operations • Provide quality telecommunications services • Ensure public accessibility of all information and communication services

Values • Customers, our priority • International standard service quality • Rapid service response • Responsibility, honesty and transparency • Teamwork and collaboration for the corporation • Determination and readiness for change

Goals 1. To generate revenue from TOT’s end-to-end services ranging from Fixed Line Telephone, 3G Mobile, Broadband, Multimedia, ICT Solution and Infrastructure services. 2. To improve the organization structure to be competitive with the private operators. 3. To provide quality telecommunications services, create positive corporate image and raise accountability to the society. 4. To expand the service coverage of High speed Internet Network nationwide in compliance with the Digital Economy policy.

12 Annual Report 2014 TOT Information

TOT Public Company Limited operated as the Telephone Organization of Thailand for 48 years before being transformed into TOT Public Company Limited on July 31, 2002, under the State Enterprise Corporatisation Act B.E. 2542 (1999). Accordingly, all rights, entitlements, debts, obligations, assets, and staff formerly belonging to the Telephone Organization of Thailand were transferred to TOT Public Company Limited. TOT remains a state enterprise of which the Ministry of Finance is the sole shareholder. Short Forms: TOT or The Company Registered Number: 0107545000161 Type of Business: Provides telecommunications and other related services either directly or through joint ventures with other entities. Activities also include investment in other companies. Head Office Location: 89/2 Moo 3 Chaengwattana Road, Thungsonghong, Laksi, Bangkok 10210, Thailand

Metropolitan Sales and Metropolitan Sales and Service 1: 977 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Customer Service Office www.tot.co.th/ Location: Metropolitan Sales and Service 2: 175 Soi 49, Ramkhamhaeng Road, Saphansoong, Bangkok 10240, Thailand www.tot.co.th/ Metropolitan Sales and Service 3: 90 Moo 6, Rama 2 Road, Bangmod, Chomthong, Bangkok 10150, Thailand www.tot.co.th/ Metropolitan Sales and Service 4: 89/2 Moo 3 Chaengwattana Road, Thungsonghong, Laksi, Bangkok 10210, Thailand www.tot.co.th/ Regional Sales and Customer Regional Sales and Service 1: 22/2 Ramesuan Road, Pratuchai, Pranakornsriayuthaya, Service Office Location: Pranakornsriayuthaya 13000, Thailand www.tot.co.th/central Regional Sales and Service 2: 293/3 Moo 13, Namuang Road, Naimuang, Muang, Khonkaen 40000, Thailand www.tot.co.th/northeast Regional Sales and Service 3: 128 Moo 1, Chiangmai-Lumpang Road, Saraphi, Chiangmai 50140, Thailand www.tot.co.th/northern Regional Sales and Service 4: 2112 Moo 4, Sanambin-Lopburiramet Road, Khuanlang, Hadyai, Songkhla 90110, Thailand www.tot.co.th/southern Regional Sales and Service 5: 77/5 Sukhumvit Road, Sriracha, Chonburi 20110, Thailand www.tot.co.th/eastern Customer Relation Centre: telephone: 1100, +662 240 0701 Website: www.tot.co.th Issued and Paid-up Share Capital: 6,000 million baht (six thousand million baht) Share Type: 600 million common shares (six hundred million common shares) Par value: 10 baht per share (ten baht per share) Reference: Auditor: Office of the Auditor General of Thailand Office: Rama VI Road, Phayathai, Bangkok 10400, Thailand Telephone: 0 2271 8000 Facsimile: 0 2618 5769 TOT Public Company Limited 13 Financial Overview

Operating Revenues 1/ Operating Expenses 1/ Million Baht Million Baht 60,000 37,000 35,000 33,000 40,000 31,000 29,000

55,163 52,795 43,121 27,000 30,431 33,649 35,817 20,000 25,000 2012 2013 2014 2012 2013 2014

EBITDA Net Profit Million Baht Million Baht 24,500 10,900

19,500 8,400

14,500 5,400

9,500 7,304 3,400 24,732 19,147 10,892 1,948 4,500 900 4,414 2012 2013 2014 2012 2013 2014

Financial Status 2014 2013 2012 Total Assets 191,167 199,280 223,961 Total Liabilities 69,852 77,901 100,457 Total Shareholders’ Equity 121,315 121,379 123,504

Financial Ratios 2014 2013 2012 • Current Ratio (excluding deferred income) (Times) 1.69 1.73 1.81 • Debt to Equity Ratio (excluding deferred income) (Times) 0.48 0.47 0.43 • EBITDA Margin (%) 16.84 36.27 44.83 • Net Profit Margin (%) 3.08 5.07 13.70 • Rate of Return on Shareholders’ Equity (%) 1.61 3.60 8.83 • Earnings per share (Baht) 3.26 7.35 18.15

Remarks 1/ These numbers exclude amortisation of deferred income - from concession agreements as well as depreciation and loss on impairment - assets from concession agreements. For further details, see Auditor’s report and financial statements. 2/ Restated Statements of Financial Position in 2012 is as same as New accounting standards adopted in 2013.

14 Annual Report 2014 Key Services Information

% Increase (Decrease) Services 2014 2013 2012 2014/2013 Fixed line telephone Million lines Fixed line telephone 7 6 5.29 5.63 5.94 5 Number of lines in service (Unit : line) 5,291,848 5,629,105 5,938,917 (5.99) 4 3 2 - TOT (Metropolitan & Provincial) 3,326,198 3,489,647 3,630,596 (4.68) 1 0 - TRUE (Metropolitan) 1/ 1,471,807 1,555,603 1,633,994 (5.39) 2014 2013 2012 - TT&T (Provincial) 1/ 493,843 583,855 674,327 (15.42) Payphone Hundred thousand lines 2/ Number of lines in service per 100 population 8.13 8.69 9.21 (6.47) 4 3 2.26 2.03 2.17 - Metropolitan 31.42 33.07 34.75 (5.00) 2 - Provincial 4.29 4.69 5.03 (8.36) 1 0 Payphone 2014 2013 2012 Number of lines in service (Unit : line) 202,598 216,629 226,472 (6.48) Mobile phone Million lines - TOT (Metropolitan & Provincial) 151,598 165,629 175,472 (8.47) 40 35.83 1/ 30 24.99 - TRUE (Metropolitan) 26,000 26,000 26,000 0.00 20 1/ 10 - TT&T (Provincial) 25,000 25,000 25,000 0.00 4.14 2/ 0 Number of lines in service per 1,000 population 3.11 3.34 3.51 (6.89) 2014 2013 2012 - Metropolitan 6.54 6.94 7.33 (5.76) Broadband Internet Million ports - Provincial 2.55 2.75 2.89 (7.27) 3 2 Mobile phone 1.49 1.53 1.41 Number of lines in service (Unit : line) 4,141,378 24,994,146 35,832,604 (83.43) 1 0 - TOT : 470 MHz System 1,579 1,657 1,699 (4.71) 2014 2013 2012 Leased Line : 3G 594,806 517,147 197,602 15.02 Thousand circuits 1/ 12 11.33 - AIS (900 MHz System) 3,544,993 24,475,342 35,633,303 (85.52) 10 9.27 9.35 3/ 8 Broadband Internet 6 4 Number of ports in service (Unit : port) 1,490,924 1,528,864 1,407,278 (2.48) 2 0 Leased Line 2014 2013 2012 Game Online Number of circuits in service (Unit : circuit) 9,270 9,347 11,325 (0.82) Million IDs - Analog 4/ 5,431 5,594 1,591 (2.91) 10 8.63 8 7.99 7.09 - Digital 4/ 3,839 3,753 9,734 2.29 6 4 Game Online 2 0 Number of Registered 2014 2013 2012 IPTV - Customers (Unit : Person) 8,632,975 7,985,419 7,092,637 8.11 Hundred thousand persons 2 1.85 - Internet Shops (Unit : Unit) 41,752 39,200 36,709 6.51 1.60

IPTV 1

Number of persons 184,740 159,762 4,460 15.63 0.04 0 2014 2013 2012

Remarks 1/ Joint investment and joint operational companies 2/ Includes joint investment and joint operational companies 3/ Including ADSL, DSL-VPN, FTTx, Wi-Net and IPStar 4/ The database of 2013 was updated. TOT Public Company Limited 15 Business/Social Activities and Awards

Major Business Activities 1. Throughout 2014, TOT has launched ongoing and proactive marketing approaches both in the metropolitan and provincial areas in order to boost sales and gain income to compensate the loss revenue from the concession contracts under the campaigns called “Surprise” and “Miracle”. Both campaigns received great cooperation from TOT executives and its employees to change their corporate culture by focusing on generating income by every TOT employee. TOT offers a total service package for customers ranging from service recommendation, installation in order to complete the installation and activate the service within the request date, repairs and maintenance. This service package received high feedback from the customers and was able to increase sales and revenue close to the set target besides changing customers’ perception. The approach also focused on close customer care right at their households, shops and offices. 2. TOT set 2014 as year of service quality. Thereby, it improved network quality, specified standards, and solutions of Broadband Internet which is the main service with high potential growth in order to enhance the service quality for customers and business opportunities by : 1) Leveraging network quality through the improvement and expansion of the transmission system to reduce problems in core network and International Internet Gateway, increase bandwidth in the network and solve international internet circuits including TOT-NIX, TOT-IIG and operation plan for BB-IP Offload; 2) Setting up on par national standards for FTTx service in the Optical Distribution Network as well as considering standards of terminal equipment specifications including FTTx Service Management; 3) Managing the efficiency of ADSL service such as Preventive Maintenance, Electricity System, and Ventilation System as well as improving Local Network Projects. Moreover in 2014, TOT aimed to raise the service quality to meet customer satisfaction by setting a standard of manpower and work load in all Customer Service Centers, prioritizing the need to reform certain Customer Service Centers or increase such centers in department stores. The change also included adjusting the sales channels, standard work operations, improving IT system to support customer service and trainings for employees to be ready for their work. 3. TOT invited business partners with potentials in finance and know-how in marketing and technology to joint in different forms in all 6 business groups. The scope of collaboration is opened to all formats focusing on mutual benefits with all business partners. This provided better opportunity to both domestic and international telecommunications operators to work with TOT in strengthening the service in this severe telecommunications competitive market. 4. With its national coverage, network diversity and service quality, TOT received confidence and trust from the public sector and several academic institutions which TOT will sustain this relationship. In 2014, TOT provided telecommunications service, wireless network to several institutions and agencies such as Ministry of Labor and Social Welfare, Chiangmai University, King Mongkut’s University of Technology North Bangkok and its campuses namely King Mongkut’s University of Technology Prachinburi and Rayong campuses. 5. TOT developed “TOT Easy Life” application on smart phones facilitating customers to have access to TOT products and services conveniently and quickly in all places at all times. Customers are able to check their service fee and make a payment through QR Code/Barcode on their smart phones.

Significant Social Activities 1. Education and Community – TOT supports education and communities in remote areas to have access on Information Technology equally and limitlessly through our national network coverage. This also eliminates the inequality in education development, medical/public health, transportation, economy and society. A prominent project initiated in 2014 was the collaboration with Electronic Government Agency, the Office of Non-Formal and Informal Education, Phayao University providing Digital Content program to expand TOT GIN coverage in 4 northern pilot provinces: Chiangrai, Phayao, Prae and Naan. Five community internet centers were established in 5 schools including Rujirapath School, Suan Pueng District, Rajburi province. This is an academic fund project that His Majesty King Bhumiphol granted his personal asset to the Chief Privy Councilor and Privy Councilors to develop the quality of teaching and learning skills to students in remote and poor areas. Other schools include Baan Kong Mong Ta School, Kanchanaburi province, Samakompamaihaengpratedthaiutid School Kanchanaburi province, Baan Huay Krai School, Prachuap Khiri Khan province and Sup Muang School, Sra Kaew province.

16 Annual Report 2014 2. Medical and Public Health – TOT made the following contributions to support medical and public health to the underprivileged: 1) TOT donated 3,516,440 Baht raised during the Thai Red Cross Fair in 2013 to the Thai Red Cross under the patronage of Her Royal Highness Princess Maha Chakri Sirindhorn; 2) TOT contributed 2,000,000 Baht to the Faculty of Medicine, Chiangmai University to purchase a “Trans-Esophageal Echocardiogram”, a scope which takes a detailed picture of the heart blood vessels using infrared frequency; 3) TOT granted 600,000 Baht to Siriraj Hospital to help surgeries under the Cleft Lip and Cleft Palate Project on TOT’s 60th Anniversary. TOT also helped Amyotrophic Lateral Sclerosis (ALS) patients as well as other foundations assisting the sickness and those in poverty. 3. Environment – TOT in collaboration with other telecommunications operators joined the Provincial Electricity Authority (PEA) to place telecommunications wires and cables on the PEA posts for safety and beauty of the community depicting the conscience of the organization towards the society. 4. Sports – TOT aided sports in forms of funds and sponsors of different sports competitions such as “39th Volleyball Competition”, “39th Marksmanship Competition” among state enterprises in 2014 and “TOT CUP 2014 for Youth Badminton Competition Master Series 3 that TOT has hosted for 8 years. Moreover, TOT sponsored “TOT Football Academy Events” in 2014 twice in Bangkok and once in the following provinces: Petchaburi, Angthong, Cholburi, Nakorn Rajchasima and Chacheungsao. This offered the young to have basic training in soccer by professional ex-national soccer players from TOT. Another activity for the youth was the improvement of libraries. 5. Society included : 1) TOT hosted a monkhood ceremony for its 60th Anniversary in commemoration to His Majesty the King, Her Majesty the Queen and the Supreme Patriarch to strengthen the bond, cooperation, virtues and morals among TOT employees and their families. There were 72 men who went into monkhood under this project; 2) TOT donated 500,000 Baht to help select a young candidate to study and gain cultural exchange experience and sports in England under the “Hero San Fun Pun Rak Projectæ” (Creating Dreams & Sharing Love) to the youths in the 5 Southern Border provinces. This is 13th year project of the Association of Physically Handicapped of Thailand and the Office of Educational Development for Special Adhoc Zone, Southern Border provinces of Thailand; 3) TOT supported in the live broadcast of the Mega Concerts for all Thai viewers through “Thai Stage”. The live concert were conducted in 12 provinces to help unite and spread happiness to the Thai viewers.

Awards 1. TOT received an Appreciation Award under the Outstanding Innovation Award from “Multi Port Power over Ethernet (PoE) for Access Point Equipment”. This award was presented in 2014 by the Office of State Enterprises Policy Committee, Ministry of Finance under the concept “A Decade of Diamond Hearts: Transparency, Moral Hearts and 10 Years Outstanding Awards of State Enterprises”. This is to create pride, encourage determination in organization development and leverage work operation. 2. TOT received an award from “Just Pay Mobile POS Software” which is a value added software from the Just Pay system used in all TOT Customer Service Centers. TOT participated in “Seoul International Invention Fair (SIIF) 2014 and won 2 awards: 1) Silver Medal from Korean Invention Promotion “Association: KIPA 2) Special Award from Association of Polish Inventor and Rationalizers 3. TOT received Silver Medal for “Telephones for the Vision Impaired” in the “42nd International Exhibition of Invention of Geneva” in Geneva, Switzerland. 4. TOT received “Best Game Provider” and “Best Racing Game” awards in 2014 at Thailand Game Show BIG Festival Award 2014, which is the largest game festival of the year held at Royal Paragon Hall, 5th floor of Paragon Shopping Center.

TOT Public Company Limited 17 Major Factors Impacting Business Operations

In 2014, TOT encountered several internal and external challenges all affecting the success and competition in the future more than any other competitors in the telecommunications industry namely: 1. Act on Radio Frequency and Regulatory on Broadcasting, Television and Telecommunications Services B.E. 2553 (2010) Section 84 Clause 3. This Act mandates that TOT render part of the revenue sharing from the mobile phone concession contract with Advanced Info Service Plc. to the National Broadcasting and Telecommunications Commission (NBTC) as national revenue as of December 20, 2013. This significantly impacted the finance and liquidity of TOT. 2. Rights of 900 MHz radio frequency and the related assets after the termination of the period of the mobile phone concession contract between TOT and Advanced Info Service Plc., if TOT’s rights of use in 900 MHz radio frequency are terminated, all related assets received by TOT from concessionaire shall be considered for their impairment in some parts due to such assets must be used together with that 900 MHz radio frequency. 3. Disputes and Lawsuits - After the Telephone Organization of Thailand has been corporatized to TOT Public Company Limited under the State Enterprise Corporatization Act B.E. 2542 (1999), there were several disputes and lawsuits derived from the contract parties both as the plaintiff and the defendant. 4. Trends in High Speed Internet by 3G operators - Three companies won the bid for 2100 MHz Radio Frequency when the Office of National Broadcasting and Telecommunications Commission (NBTC) initiated the bidding process in 2012. The 3 companies were Advanced Wireless Network Co., Ltd. (a subsidiary of AIS), DTN Co., Ltd. (a subsidiary of DTAC) and Real Future Co., Ltd. (a subsidiary of True). All 3 companies installed and provided services through 3G-UMTS2100 and 4G-LTE since the second trimester in 2013. The service format of all 3 companies changed from Voice to Mobile Internet which is a direct competition with Fixed High Speed Internet offered by TOT as users can use the service with high mobility. Nevertheless, TOT received positive impacts to grow in the long term i.e. the Digital Economy Policy of the government and the growth of Internet Broadband especially the expansion of FTTx 1. Digital Economy In compliance with the government’s policy to provide a backbone in digital economy enabling all economic sectors to advance globally and competitively with the objectives in 3 parts as follows: Part 1: Possess sufficient digital infrastructure with the service rates not higher than other countries in the region. Part 2: Enhance the quality of life and accessibility of public services for every individual, group and region equally and widely. Part 3: Initiate and support digital businesses and their potentials to be competitive as well as develop manpower, research, innovations and fundamental education. In order to mobilize to a digital economy and society, “Hard Infrastructure” aiming to develop communications network nationwide down to the sub-districts with reasonable rates and stability is required. In this regard, TOT is the main entity to accelerate this project as it has 66% stable nationwide telecommunications network down to the sub-districts. 2. The growth of Broadband Internet Service – There is an ongoing business growth in broadband internet with 5.4 million users in 2014, a 9.3% increase from 2013 and about 27% household users. There are numerous business opportunities particularly FTTx a Broadband Internet Service via fiber optic cable network with stability and capacity in supporting high speed enabling to offer multi-media and diverse content. Thus, TOT’s broadband internet has great stride particularly in economic and potential districts for customers requiring various service types with faster and more data. A proactive marketing approach along with different services of TOT are in place to persuade and retain customers especially the Small and Medium Enterprises (SMEs) which amounts to 90% in the country. The government also has a policy to support and promote source of investment funds.

18 Annual Report 2014 Thailand Telecommunications Industry in 2014 and Its Future Trends

Telecommunications Industry in 2014 The recovery or deceleration of the economy affected the investments in the country’s telecommunications infrastructure. The expansion of the communications industry has a positive influence on the nation’s economy in Information Technology and communications for the people. As the global economy was recovering along with better political stability, investments in the communications industry had a positive trend in 2014. The value of telecommunications market consists of 2 main markets: communications equipment market and communications service market with the latter being the main driving force. In 2013, there was a total of 298,424 million Baht, a 64% of the entire communications market. It was anticipated that it would be 505,831 million Baht, an 8.4% growth in 2014. The main driving force was the demand for high speed communications service particularly Mobile Internet. (Source: Thailand’s Communications Market Survey 2012-2013 and forecast in 2014 NBTC). Fixed line telephones market reduced continuously according to the trend in technology and the users’ demand. This enforced all fixed line service providers to adjust their strategies to persuade users to still use fixed lines such that the reduced revenue from this service be at the minimal. A new bundle service with complete package promotion of voice, data, multimedia and content was offered to generate revenue in fixed lines. The service providers for mobile phones all focused on transferring 2G customers to 3G along with the increase of smart phone users’ base by offering interesting packages and competitive rates when purchasing the mobile device. Moreover, the major providers emphasized on the development and improvement of the network quality and coverage. Moreover, broadband service providers still proceed with their strategy in expanding customer base by focusing on High Speed Internet on fiber optic cable. Accordingly, TOT has transited from ADSL to FTTx for better service quality. TOT has developed service formats for high speed Internet FTTx with its business partners (BVNO) in the “Internet Co-service” project aiming to expand its customer base.

Telecommunications Service Trends in 2015 It is anticipated that in 2015, Thailand’s economy will slowly and continuously recover in tune with the global economy particularly in Europe and Japan which are recovering gradually. The stimulation from the public sector in particular the disbursement of investments which is lower than expected has lowered the investments from the private sector as it awaits the clarity from the government. Moreover, the downturn from the agricultural sector caused the slow rate of consumption. However, the expenditure in consumption still has other supporting factors other than agriculture such as the adjustment of the civil servants salary and the lower gas prices. Exports is still at stake with the global economy while tourism is adjusting positively though still lower than the usual level. Fixed lines and public telephones services have been decreasing continuously from 2014 whilst mobile phones and broadband services will be the main driving force for telecommunications growth in 2015 despite the unclear general economy of the country. IDC forecasts that the spending in telecommunications service will grow strongly up to 14.5% based on the high demand of data communications whether that be mobile data or FTTx. The usage focuses on social media, mobile games, online music and video. Most Thai telecommunications service providers will invest more to improve its network and service quality as well as to support 4G in the future. All these are factors that will prepare Thailand for “Digital Economy”, which is a new source of income for all telecommunications service providers and other related businesses.

TOT Public Company Limited 19 Business Operations and Operations Jointly Provided with Private Companies Business In order to leverage customer base to cover all segments and compensate the loss of revenue sharing from concession contracts, TOT is offering total solution service which consist of fixed lines telephone, 3G mobile, broadband, multimedia, ICT Solution including adjusting the business structure to be ready for being a telecommunication service provider to telecommunications and television operators. Realizing the significance of broadband service in terms of its potential and capabilities to be competitive, TOT accelerated the expansion of both wired and wireless network coverage as well as leveraged business management to international standard, improved the network efficiency, service and quality for a better corporate image or better acceptance and competitive edge in the current telecommunications industry. Characteristics of Business Operations Business operations include 5 groups of telecommunications services as follows: 1. Voice Service 2. Internet and Data Service 3. 3G Mobile Service 4. Multimedia and Content Service 5. ICT Solution 1. Voice Service includes Fixed Line Telephone Service delivered through TOT’s nationwide basic telecommunications network. TOT is the largest telecommunication service provider in Thailand. Additionally, TOT offers a wide variety of value added services in order to facilitate users via Intelligent Network (IN). Payphone offers service for customers who do not have their own home phones such as students, people in remote areas, and also the general public. International Telephone Service is offered through its “007” and “008” access codes via the International Direct Dial (IDD) network with Time Division Multiplexing (TDM) and Voice over IP (VoIP) respectively. 2. Internet and Data Services include High speed Internet service or broadband allowing data transmission via High speed Internet connection via land line (ADSL and FTTH) and wireless (Wi-Fi, Wi-Net and IP Star) technologies and complying with the speed required by the customers. Global IP Transit Service by TOT provides an Internet connection service to both the National Internet Exchange (NIX) and the International Internet Gateway (IIG). Data Services in the mode of a Leased Line feature with multi-network technologies can be accessed through a nationwide network. Being the main Network Provider, TOT offers leased Dark Fiber, Lambda and Communication Circuits ensuring the efficiency, quality and safety in compliance with the Service Level Agreement (SLA). 3. 3G Mobile Service supports voice and data communications allowing customers to download at speed up to 42 Mbps. This can accommodate a higher Internet usage demand. TOT is offering a range of postpaid and prepaid airtime packages, including various data services based on customer usage. TOT 3G’s customers can access the service on Smart phones, Tablets PC, PCs by plugging an air card into a computer. 4. Multimedia and Content Service include Game Online that TOT offered such as Tales Runner, We Do, H.A.V.E, Cloud Nine, Valiant, and the latest Toy Wars. TOT iptv is an Internet TV broadcast through High speed Internet networks. This service is available to a variety of apparatus such as TV, computer, tablet, PC, or smart phone, and allows replay of TV shows within 72 hours. CloudApps Powered by TOT is a rental service of supporting programs for business operations through websites, designed for Small and Medium Enterprises (SMEs) which is economical as it is a pay per use method. TOT e-Learning is a method for learning and educating via multimedia technology. TOT Netcall is a telephone service over the Internet network. TOT e–Conference is an online service allowing distance conferencing via the Internet. TOT e–Market is an electronic commercial center to buy and sell numerous products or services anywhere at any time. TOT Mail Service offers an e-mail solution suitable for government agencies, corporations and SMEs customers. Our clients will be provided a communication channel with their own domain name. 5. ICT Solution is a service to respond to the customers’ demand in various forms such as finance/banking, hospital and transportation. An ICT Solution Package consisting of suitable TOT services and its partners are offered to the customers. This includes IT equipment, installation and maintenance of ICT system.

20 Annual Report 2014 Core Business Services

1. Voice • Fixed Line Telephone • Payphone • International Telephone

2. Internet and Data • High speed Internet • Internet Connection • Data

3. 3G Mobile • TOT 3G

• Game Online • TOT iptv 4. Multimedia and Content • CloudApps Powered by TOT • e-Learning • TOT Netcall • TOT e-Conference • TOT e-Market • TOT Mail Sevice

• ICT System Design for Enterprise Customer 5. ICT Solution • ICT Equipment Supply • ICT Installation and Maintenance

TOT Public Company Limited 21 Services Jointly Provided with Private Companies

To expand TOT communication system nationwide with up-to-the-minute technology and services, TOT has opened opportunities for private companies to jointly provide various services, seven groups of which are shown below.

Company Name Service Name 1. Fixed Line Telephone Service 1.1 True Corporation Public Company Limited 2.6 Million fixed lines in the metropolitan area 1.2 TT&T Public Company Limited 1.5 Million fixed lines in the provincial area

2. Mobile Service Advanced Info Service Public Company Limited Mobile Phone Cellular 900

3. Network Transmission Service True Multimedia Company Limited High speed transmission circuit via multimedia networks

4. Data Communication Network Service Advanced Datanetwork Communications Company Limited Data communication service in the Datakit Virtual Circuit Switch, Frame Relay, ATM, and ADSL

5. Audiotex 5.1 Samart Multimedia Company Limited 1900 Audiotex 5.2 Quality Digital Lines Company Limited 1900 Audiotex 5.3 Mono Technology Public Company Limited 1900 Audiotex 5.4 Teleinfo Media Public Company Limited 1900 Audiotex 5.5 Triple A Asset Management Company Limited 1900 Audiotex

6. Payphone Plan B Media Public Company Limited Advertising Display on Payphone Booths

7. Other Services 7.1 Thaicom Public Company Limited Leasing a satellite channel to provide Communications services such as Voice over IP and Broadband, etc, via IPStar Satellite. TOT is the sole National Service Operator (NSO) for Thailand. 7.2 Internet Thailand Public Company Limited Network System Service via EDC Network Pool (Electronic Draft Capture) 7.3 Trade Siam Company Limited Electronic business data exchange service 7.4 Consortium Starcom Upgrading a NMT 470 MHz mobile phone network

22 Annual Report 2014 Shareholdings in Other Companies

Company Name & Core Business Date of Share Head Office Address Investment holding (%)

1. ACT Mobile Co., Ltd. 1900 MHz August 7, 2000 99.03 89/2 Moo 3, Chaengwattana Road, Thungsonghong, mobile phone Laksi, Bangkok 10210 system leasing

2. Lenso Datacom Co., Ltd. Data communication September 10, 1999 49.00 292 Lenso House, Srinakarin Road, Huamark service Bangkapi, Bangkok 10240

3. Advanced Datanetwork Communications Data communication September 25, 1997 48.12 Co., Ltd. service 408/157 Phaholyothin Place Building, 38/F, Phaholyothin Road, Samsennai, Phayathai, Bangkok 10400

4. Mobile Communication Services Co., Ltd. Technical and December 12, 1997 30.00 200 Moo 4, Jasmine International Tower, marketing service Chaengwattana Road, Pakkred, Nonthaburi 11120 for NMT 470 MHz mobile phone network

5. Telcard Co., Ltd. Manufacturing November 14, 2000 26.00 71/22 Soi Chaengwattana 1, Chaengwattana Road, of chip cards Talad Bangkhen, Laksi, Bangkok 10210

6. TOT Sport Club Co., Ltd. Sport event August 19, 2011 25.00 89/2 Moo 3 Chaengwattana Road, Thungsonghong, management Laksi, Bangkok 10210 service and advertisement

7. TOT Outsourcing Services Co., Ltd. Outsourcing service January 18, 2013 25.00 89/2 Moo 3 Chaengwattana Road, Thungsonghong, Laksi, Bangkok 10210

8. Thai-Amadeus Southeast Asia Co., Ltd. Air ticket December 3, 1999 20.00 999/9 The Offices At Central World reservation Unit 3406-3412, 34/F, Rama 1 Road, system service Patumwan, Bangkok 10330

TOT Public Company Limited 23 Shareholdings in Other Companies

Company Name & Core Business Date of Share Head Office Address Investment holding (%)

9. Clearing House for Number Portability Co., Ltd. Clearing house February 1, 2010 20.00 598 Q House Ploenchit Building, 6/F, service for Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 number portability

10. Internet Thailand Public Co., Ltd. Internet service May 13, 1997 16.00 1768 Thai Summit Tower, 10-12/F and IT/F, New Petchburi Road, Bangkapi, Huay Khwang, Bangkok 10310

11. Thai Long Distance Telecommunications Co., Ltd. Submarine fiber May 13, 1996 10.00 200 Moo 4, Jasmine International Tower, optic cable network Chaengwattana Road. Pakkred, Nonthaburi 11120 service

12. True Multimedia Co., Ltd. High-speed data February 13, 1997 8.92 18 True Tower, Ratchadapisek Road, transmission service Huay Khwang, Bangkok 10310

13. Total Access Communication Public Co., Ltd. Mobile phone November 9, 1995 5.58 319 Chamchuri Square Building, 22-41/F, service Phayathai Road, Pathumwan, Bangkok 10330

14. Trade Siam Co., Ltd. Electronic May 29, 1997 3.50 EDI Center Building, Royal Thai Customs, commercial service Sunthornkosa Road, Klongtoey, Bangkok 10110

24 Annual Report 2014 Strategic Plan and Annual Operations in 2014

TOT’s Strategic Plan for 2014 - 2017 In 2014, TOT has reformed its organization structure as a total solution service provider to be competitive with the private operators. It is determined to generate revenues from a new service called ICT Solution besides Quad Play service (Fixed Line, 3G Mobile Phone, Broadband and Multimedia). Moreover, TOT is committed to continue to improve its service quality to fully satisfy all customers, build the company’s image, enhance its internal management procedures and maintain its liquidity in preparation for the loss of revenue from concession contracts. The business structure was adjusted to better facilitate TOT’s capacity as a telecommunications infrastructure service provider. Moreover, TOT has been supporting government policies by providing universal telecommunications services aligned with social responsibility. TOT’s Strategic Operations for 2014-2017 consists of: Strategy 1: Developing business operations and improving its organization structure to be competitive with the private sector. TOT strives to adjust its structure to a Holding Company and have a clearer business role in the Core Business as an Infrastructure and Total Solution Service Provider. It terminates the products/services that are at loss or with low growth along with the plan to separate subsidiary companies with higher potentials. TOT adjusts its organization structure in all areas to be competitive with the private sector. Revenues from the Non-Core Business are generated from the properties with potentials. Strategy 2: Moving towards becoming a Total Solution Service Provider. TOT provides the so-called “Quad Play” service which consists of fixed line, 3G mobile phone, broadband, and multimedia services. The products and services are bundled as a package required by the customers. Cloud Service, Managed Service & ICT Solution are being offered to the government and SMEs customers. In order to maintain TOT’s existing high speed internet customers and the value added services that come along, TOT accelerated the expansion of both wired and wireless networks particularly in the urban areas and communities. TOT also seeks for business partners in different areas to reduce its investment. Strategy 3: Aiming at being a Telecommunications Infrastructure Service Provider. TOT adjusts its business role as a telecommunications infrastructure service provider with a stable and secure network. This is to generate revenue from the infrastructure services and the broadcasting and television networks besides being the telecommunications center in the ASEAN region. Strategy 4: Enhancing the service quality to fully satisfy the customers Along with the determination to upgrade service quality of broadband service and higher efficiency of all expired telephone exchanges and network, TOT also focuses on after sales service with all customers to a maximum (24x7) in 2014 in order to retain its existing customers and create the highest customer satisfaction particularly in the unexpected services that will bring trust and credibility to TOT.

TOT Public Company Limited 25 Annual Operations Plans in 2014 TOT put its strategies to operations through the annual operation plans in order to achieve its business targets. In 2014, TOT’s annual operation plans can be summarized as follows: Product Development TOT aimed at being a total solution service provider offering telecommunication services such as fixed line telephones, broadband (wired and wireless), multimedia and mobile phones as a bundle. Products and services come in a package with a variety of services including ADSL bundle Mobile TOT3G, ADSL bundle IPTV and ADSL bundle Miracle Eyes. Network TOT geared at being a telecommunications infrastructure service provider with a stable and secure network. This also covers the broadcasting, television and other businesses. Marketing TOT launched marketing campaigns for ADSL Broadband service to be competitive in the market and satisfy customers’ needs by integrating broadband service with other services like 3G mobile phone and IPTV to build a corporate image as a Total Solution Service Provider. Human Resources TOT adjusted its human resource structure to enhance the capability to compete in the telecommunications industry as well as manage human resource in terms of quantity and quality both short and long terms. TOT also created a proactive and joint effort work culture and improved the quality of life and work environment. Information Technology TOT took greater advantage of information technology to support its in-house administration, reduce unnecessary expenses, and upgrade its reporting system. Service with Social Commitment TOT expanded both wired and wireless broadband networks to efficiently reach comprehensive coverage. This is to respond to the requirement of the general public and to boost the country’s potential and competitive edge.

26 Annual Report 2014 Management Analysis Report and Key Projects

In 2014, the government policies in communications and telecommunications have changed from “Smart Thailand” to “Digital Economy”. With significant mission, TOT revised and improved different projects and plans still under the approval from the previous Cabinet in order to comply with the policy and strategy such as: 1. High Speed Broadband Service 2 Million Ports Project 2. International Submarine Cable Project which supports international internet. In 2014, the Asia-Africa-Europe (AAE-1) route was the first among the 3 routes approved with the contract signed on September 25, 2014. 3. Plans/Projects related to the government policies including Public Free Wi-Fi, establishment of Wi-Fi in schools to support learning through Tablet PC, and USO Bidding of NBTC (which has a cancellation or extension policy). During trimester 3 & 4 in 2014, the State Enterprises Policy Committee set up a policy for TOT to resolve the organization’s problems, improve its operation efficiency and reduce its expenditure. TOT reformed its organization structure by downsizing the number of work sectors, set up a structure to support future business groups (effective in January 2015) and set up guidelines to handle legal disputes. Moreover, TOT was still affected by Section 84 Clause 3 of Organization to Assign Radio Frequency to Regulate Broadcasting, Television and Telecommunications Services Act B.E 2553 (2010) from 2013 where all TOT net income had to be submitted to NBTC enforcing TOT to strategize its operations to recuperate the organization for 2014-2017. The estimated net loss in 2014 was 6,597 million Baht, but during the year, TOT set up several means to reduce the loss including development in finance, marketing, product and service. As a result, TOT made a net profit of 1,850.1 million Baht, a 3% increase from the previous year. There was also a management in expenditure and investment.

Key Projects In 2014-2017, TOT has a milestone during each period for the 2 key projects which are High Speed Broadband Service 2 Million Ports and International Submarine Cable Project to support international internet service.

High Speed Broadband Service 2 Million Ports Project This project aims to generate revenue to compensate with the loss of revenue from the previous services as well as to comply with the Country Strategy from the government on January 22, 2013 and to support the strategy set forth by the Ministry of Information and Communications Technology 2014-2017 to leverage Smart Thailand policy. It focuses on nationwide coverage for high speed internet connecting Smart Network and e-Government. This provides a significant fundamental in the nation’s development with competitive edge and ready to join the ASEAN Community. TOT initiated internet service in 2004 using communication technology called Digital Subscriber Line (DSL) over copper cable. The sending and receiving data use the same network as fixed lines starting at 128 Kbps-2 Mbps. Currently, TOT offers high speed internet via ADSL technology (Asymmetric Digital Subscriber Line) with a speed higher than 6-12 Mbps with subscribers over 1,360,000 in December 2014. ADSL has limitations in its copper cable network by not being able to provide high speed service. Thus, TOT invested in High Speed Broadband Service 2 Million Ports using fiber optic cable which is capable of service speed up to 1,000 Mbps.

TOT Public Company Limited 27 International Submarine Cable Project This project is a collaboration with other main international telecommunications service providers to support the ongoing usage demand in international internet circuits in line with the internet broadband growth. TOT has 170 Gbps international internet circuits in December 2014, a 71% average growth in 2008-2011 CAGR. It is anticipated that in 2015, TOT will have no less than 428 Gbps international internet circuits to support 2 million ports high speed broadband service. This International Submarine Cable Project will enable TOT to operate its international internet circuits with efficiency and stability through protection of connectivity to major countries as centers of internet connection both in Asia and Europe including investments in Southeast Asia-Japan Cable System (SJC), Asia-Africa-Europe Cable System (AAE-1) and Southeast Asia-Middle East-Europe 5 (SEA-ME-WE5). TOT will gain its highest capacity at 8,600 Gbps with no less than 3,100 Gbps in Protected Capacity which is sufficient for TOT usage in 10 years. This project also includes the investment in developing the infrastructure and expansion of domestic network to support the connection with the submarine cable system.

28 Annual Report 2014 Organizational Structure

Board of directors

Nomination Committee Remuneration Committee

Affairs Relations Committee Management Committee

Law and Contract Committee Risk Management Committee

Penalty Appeal Committee Top Executive Nomination Committee

Sub - Committee on President’s Good Corporate Governance Remuneration and Responsibility Towards the Society and Environment Committee

Corporate Strategy and Business Supervisory Committee

President

Administrative Board of Office* Director Office* Audit Committee Public Relations Regulatory and Corporate Affairs Communication Department Department Corporate Audit and Assurance

Legal & Human Enterprise Finance Beneficial Property Resources Effectiveness Assurance Management Management

Marketing Wireless and Core Network and Product Universal Mobile TowerCo Services Business Business Development Obligation

Metropolitan Regional Sale and Sale and Customer Customer Service Service * Work unit equivalent to the Department

TOT Public Company Limited 29 30

Annual Report 2014 TOT Organizational Structure (1 January 2015)

Board of Directors

President Audit Committee

Corpotate Audit and Assurance Office President Office Legal Office

Business Business Business Business Development Business Business Development of Development Development of Development of Fixed Line and Development of Internet Gateway of Infrastructure Telecommunication of Mobile Internet Broadband IT, IDC and International Tower and Cloud Submarine Cable Organization Marketing and Finance and Property Development Information Technology Management Product and Service Development

Infrastructure and Mobile Development Office Fixed Line and Broadband Development Office Corporate Strategy Marketing Management Finance and Office Office Accounting Office

Operations Human Resources Information Technology Corporate Treasury Office Operations Office and Debt Management Office Infrastructure and Mobile Operations Office Fixed Line and Broadband Operations Office Asset Management Office Government and Corporation Sales and Service

Government Sales Office Corporation sales Office

Sales and Customer Service

Metropolitan Sales and Customer Service Office 1 Regional Sales and Customer Service Office 1

Metropolitan Sales and Customer Service Office 2 Regional Sales and Customer Service Office 2

Metropolitan Sales and Customer Service Office 3 Regional Sales and Customer Service Office 3

Metropolitan Sales and Customer Service Office 4 Regional Sales and Customer Service Office 4

Regional Sales and Customer Service Office 5 TOT Board of Directors

From January to December 2014, the Company’s Board of Directors consists of the following members:

Name Position Appointment Resignation

Mr.Satit Rungkasiri Director Feb 20, 2012 Jul 25,2014 Mr.Pipat Khanthong (substitute) Vice-Chairman* Aug 6, 2014 ACM. Pitthaporn Glinfuang Vice-Chairman Oct 30, 2012 Jul 25, 2014 Mr.Pongsit Chaichutpornsuk (substitute) Director Aug 6, 2014 Mr.Wanlop Ploytabtim Director Oct 30, 2012 Jul 25, 2014 Mr.Worapat Tiewthanom (substitute) Director Aug 6, 2014 Mr.Prasit Siripakorn Director Apr 20, 2011 Jun 13, 2014 Mrs.Siriporn Luangnual (substitute) Director Aug 6, 2014 Mr.Chumpol Rimsakorn Director Nov 1, 2011 Jul 24, 2014 Mrs.Urai Romphotiyok (substitute) Director Aug 6, 2014 Aug 28, 2014 Mr.Surasak Riangkrul Director Nov 1, 2011 Jul 4, 2014 Col. Somkiat Sampan (substitute) Director Aug 6,2014 Mr.Pongpat Chitsomreang Director Oct 30, 2012 Jul 25, 2014 Mr.Krisda Punyasmita (substitute) Director Aug 6, 2014 Dr.Pongrak Chindasombathcharoen Director Oct 30, 2012 Jul 25, 2014 Mr.Natwut Amornvivat (substitute) Director Aug 6, 2014 Mr.Exkasuck Satho Director Oct 30, 2013 Jul 31, 2014 Assoc. Prof. Schitt Laowattana (substitute) Director Aug 6, 2014 Mr.Youngyuth Wattanasin Director Feb 14, 2013 Sep 29, 2014

Remark: Appointed as the Director in replacement of the vacant position by the Notification of Ministry of Finance on the resolution passed at the 2014 Annual Shareholder Meeting of TOT Public Company Limited * Vice-Chairman of TOT Board of Directors as of Aug 19, 2014

From January to July 2014, the Company’s Board of Directors consists of the following members

Name Position Appointment Resignation

Pol. Col. Suchart Wongananchai Vice-Chairman Nov 1, 2011 Jul 4, 2014 Chairman* Mr.Jackrit Suthakorn Director Oct 30, 2012 Jul 25, 2014 Mr.Kobpong Trisukhee Director Oct 30, 2012 Jul 25, 2014 Group Captain Associate Professor Dr.Prasong Praneetpolgrang Director Oct 30, 2012 Jul 25, 2014 Mr.Booncherd Kidhen Director Oct 30, 2013 May 29, 2014

Remark : * Chairman of TOT Board of Directors as of Oct 30, 2013

TOT Public Company Limited 31 From August to December 2014, the Company’s Board of Directors consists of the following members

Name Position Appointment Resignation

General Surapong Suwana-adth Chairman* Aug 6, 2014 Mr.Suranan Wongvithayakam Director Aug 6, 2014 Mr.Thanwa Laohasiriwong Director Aug 6, 2014 Mr.Anuphan Kitnitchiva Director Aug 6, 2014 Mr.Montree Sornpaisarn Director Aug 6, 2014 Aug 27, 2014

Remark: Appointed as the Director by the Notification of Ministry of Finance on the resolution passed at the 2014 Annual Shareholder Meeting of TOT Public Company Limited * Chairman of TOT Board of Directors as of Aug 19, 2014

In adherence to TOT by laws, legal and policies, numerous special committees have been appointed in order to assist the Board of Directors in conducting business and overseeing particular corporate issues. The special issue committees are as follows:

Committee in accordance with TOT by laws • Audit Committee • Nomination Committee • Remuneration Committee

Committee in accordance with the law • Affairs Relations Committee

Committee in accordance with TOT Board of Directors Policies e.g. • Management Committee • Law and Contract Committee • Risk Management Committee • Penalty Appeal Committee • Top Executive Nomination Committee • Sub-Committee on President’s Remuneration • CEO’s Performance Appraisal Committee • Good Corporate Governance and Responsibility Towards the Society and Environment Committee • Corporate Strategy and Business Supervisory Committee

Committee in accordance with TOT by laws Audit Committee For the period January – July 2014, members of the Audit Committee were as follows: 1. Mr.Wanlop Ploytabtim Chairman 2. Mr.Satit Rungkasiri Committee Member 3. Gp. Capt. Assoc. Prof. Dr. Prasong Praneetpolgrang Committee Member 4. Mr.Prasit Siripakorn Committee Member 5. Mr.Exkasuck Satho Committee Member

32 Annual Report 2014 For the period August – December 2014, member of the Audit Committee were as follows: 1. Mr.Anuphan Kitnitchiva Chairman 2. Mr.Pongsit Chaichutpornsuk Committee Member 3. Mr.Krisda Punyasmita Committee Member 4. Mr.Natwut Amornvivat Committee Member Authority and Duties 1. Establish Internal Audit Charter of the Audit Committee with respect to responsibilities of the company’s operations, which must be approved by the Board of Directors. Also, verify the proper use of the Charter at least once a year. 2. Verify the efficiency and effectiveness of the internal control process, good corporate governance process, and risk management process. 3. Verify that TOT has an accurate and reliable financial report. 4. Verify that the company’s operation complies with any laws, regulations, restrictions and code of conduct, Cabinet’s resolutions, announcements or orders relating company’s operations. 5. Verify that TOT has a good internal audit system and safeguard the independence of the internal audit unit. 6. Consider connected transitions or possible conflicts of interest or potential corruption affecting on the company’s practice. 7. Provide recommendations to the Board of Directors on appointments, promotion, reshuffles, assessments of the head of internal audit. 8. Co-ordinate with auditor relating to the audit’s result and suggest reviewing or examining any items deemed necessary. Also, propose the auditor’s remuneration to the Board of Directors. 9. Report on the internal audit performance of the Audit Committee to the Board of Directors at least once every quarter within sixty days after the end of quarter, except performance report of the fourth quarter that is required to be revealed in the annual performance report. Submit same to the Ministry of Information and Communications Technology and the Ministry of Finance within ninety days after the end of company’s fiscal year. 10. Evaluate the internal audit performance of the Audit Committee at least once each fiscal year, and submit an evaluations report on any problems, hindrances, or needed operational improvements, to the Board of Directors. 11. Disclose annual performance report of the Audit Committee and the remuneration of the auditor in the company’s annual report. 12. Complete any other assignments under the provisions of related laws or given by the Board of Directors. Nomination Committee For the period January – July 2014, members of the Nomination Committee were as follows: 1. Mr.Booncherd Kidhen Chairman 2. Mr.Satit Rungkasiri Committee Member 3. Dr.Pongrak Chindasombatcharoen Committee Member For the period August – December 2014, members of the Nomination Committee were as follow: 1. Mr.Pipat Khanthong Chairman 2. Mr.Worapat Tiewthanom Committee Member 3. Mr.Suranan Wongvithayakamjorn Committee Member Authority and Duties Consider and nominate eligible candidates to be appointed as TOT Directors to the Board of Directors and/or shareholders in accordance with the law. Remuneration Committee For the period January – July 2014, members of the Remuneration Committee were as follows: 1. Mr.Pongpat Chitsomreang Chairman 2. Mr.Booncherd Kidhen Committee Member 3. Mr.Exkasuck Satho Committee Member For the period August – December 2014, members of the Remuneration Committee were as follows: 1. Mr.Worapat Tiewthanom Chairman 2. Mr.Krisda Punyasmita Committee Member 3. Mrs.Siriporn Luangnual Committee Member TOT Public Company Limited 33 Authority and Duties 1. Consider and propose for approval at shareholders’ meeting the remuneration scheme and benefits policy for the Board of Directors, Nomination Committee, Remuneration Committee, and Audit Committee, in conformity with TOT by laws and other relevant regulations. 2. Consider and propose remuneration schemes and benefits policy to the Board of Directors for approval for special issue committee members, subcommittee members, or any individual appointed or authorized by the Board of Directors to undertake any task.

Committee in accordance with the Law Affairs Relations Committee For the period January – July, 2014, members of the Affairs Relations Committee were as follows: 1. Gp. Capt. Assoc. Prof. Dr.Prasong Praneetpolgrang Chairman 2. Nine Members of the TOT Executive Representatives Committee Member 3. Nine Members of the TOT Employees Committee Member For the period August – December, 2014, members of the Affairs Relations Committee were as follows: 1. Mr.Worapat Tiewthanom Chairman 2. Nine Members of the TOT Executive Representatives Committee Member 3. Nine Members of the TOT Employees Committee Member Authority and Duties 1. Advise on ways to increase the operational efficiency of TOT as well as promote and develop good labor relations. 2. Find solutions to labor disputes in TOT through compromise and settlement. 3. Review and revise work rules and regulations which benefit all employees as well as TOT. 4. Discuss and resolve grievance filed by employees or the labor union and consider complaints about disciplinary actions. 5. Hold discussion to improve employment and working conditions.

Committee in accordance with TOT Board of Directors Policies Executive Committee For the period January – July, 2014, members of the Executive Committee were as follows: 1. ACM Pitthaporn Glinfuang Chairman 2. Dr.Pongrak Chindasombatcharoen Committee Member 3. Mr.Kobpong Trisukhee Committee Member For the period August – December 2014, members of the Executive Committee were as follows: 1. Mr.Pipat Khanthong Chairman 2. Assoc. Prof. Schitt Laowattana Committee Member 3. Mr.Thanwa Laohasiriwong Committee Member 4. Col. Somkiat Sampan Committee Member 5. Mr.Suranan Wongvithayakamjorn Committee Member Authority and Duties 1. Consider, and propose to the Board of Directors of TOT, any items proposed by TOT management for the Board’s agreement authorization to proceed or to establish a sub-committee or work group to deal with specific issues. 2. Approve, in principle; purchase orders, procurements, and rental activities including amendments to contracts or agreements. Overall price increase in contracts or agreements shall not exceed the following amounts: 2.1 All rental costing over 50 million baht, but not greater than 400 million baht. 2.2 All purchase orders and procurements costing over 200 million baht, but not greater than 400 million baht. 2.3 Hiring consultants costing over 20 million baht, but not greater than 40 million baht. In procurement approvals on the first paragraph, if the Executive Committee consider as appropriated, it could submit to the Boards of Directors for consideration. 3. Executive Committee shall report on it results to the Board of Directors monthly meeting. 34 Annual Report 2014 Law and Contract Committee For the period January – July 2014, members of the Law and Contract Committee were as follows: 1. Mr.Prasit Siripakorn Chairman (Resigned at June 13, 2014) 2. Dr.Pongrak Chindasombatcharoen Committee Member 3. Mr.Chumpol Rimsakorn Committee Member For the period August – December 2014, members of the Law and Contract Committee were as follows: 1. Mr.Krisda Punyasmita Chairman 2. Mr.Nutwut Amornvivat Committee Member 3. Mr.Pongsit Chaichutpornsuk Committee Member 4. Mr.Anuphan Kitnitchiva Committee Member Authority and Duties 1. Provide advice on legal issues, laws, rules, regulations, and contracts which directly affect TOT’s business. 2. Provide advice for cases and disputes which directly affect TOT’s business or risk. 3. Consider the operational and legal disputes with other agencies, which include tax disputes. 4. Study, analyze, and give suggestions to the Board of Directors in order to set guidelines relating concession agreements in accordance with relevant laws, and giving the greatest benefits. 5. Examine, supervise and monitor the implementation of the agreement in accordance with the Board of Directors of TOT. Also, perform any other assignments relating to the agreement assigned by the Board of Directors. Risk Management Committee For the period January – July 2014, members of the Risk Management Committee were as follows: 1. Dr.Pongrak Chindasombatcharoen Chairman 2. Mr.Surasak Riangkrul Committee Member 3. Mr.Chumpol Rimsakorn Committee Member For the period August – December 2014, members of the Risk Management Committee were as follows: 1. Mr.Suranan Wongvithayakamjorn Chairman 2. Mrs.Siriporn Luangnual Committee Member 3. Col. Somkiat Sampan Committee Member Authority and Duties 1. Examine and recommend risk management plan and policies of TOT. 2. Monitor the TOT’s risk management. 3. Support the operations of the Risk Management Department to determine a more effective and productive risk management. 4. Monitor and report on the results of TOT’s risk management to the Board of Directors sequentially. 5. Perform any other actions assigned by the Board of Directors. Penalty Appeal Committee For the period January – July 2014, members of the Penalty Appeal Committee were as follows: 1. Mr.Chumpol Rimsakorn Chairman 2. Mr.Pongpat Chitsomreang Committee Member 3. Dr. Pongrak Chindasombatcharoen Committee Member 4. Mr. Exkasuck Satho Committee Member For the period August – December 2014, members of the Penalty Appeal Committee were as follows: 1. Mr.Pongsit Chaichutpornsuk Chairman 2. Mr.Krisda Punyasmita Committee Member 3. Mr.Pipat Khanthong Committee Member 4. Mr.Anuphan Kitnitchiva Committee Member

TOT Public Company Limited 35 Authority and Duties 1. Act for the TOT Board of Directors for consideration to appeal against the penalty order under the TOT Board of Directors’ authority. Except; under specific conditions, shall propose to the TOT Board of Directors as follows: 1.1 The issue of which the TOT Board of Directors submits to the Penalty Appeal Committee for consideration. 1.2 The issue of which the Penalty Appeal Committee deems appropriate to propose to the TOT Board of Directors. 2. Request investigation records and submit the relevant document for consideration. 3. Report on the results to the Board of Directors to be informed accordingly. Top Executive Nomination Committee For the period January – July 2014, members of the Top Executive Nomination Committee were as follows: 1. Mr.Wanlop Ploytabtim Chairman 2. ACM Pitthaporn Glinfuang Committee Member 3. Mr.Surasak Riangkrul Committee Member 4. Gp. Capt. Assoc. Prof. Dr. Prasong Praneetpolgrang Committee Member 5. Mr. Exkasuck Satho Committee Member For the period August – December 2014, members of the Top Executive Nomination Committee were as follows: 1. Mr.Pipat Khanthong Chairman 2. Asso. Prof. Schitt Laowattana Committee Member 3. Mr.Pongsit Chaichutpornsuk Committee Member 4. Mr.Worapat Tiewthanom Committee Member 5. Mrs.Siriporn Luangnual Committee Member Authority and Duties Undertake the nomination of top executives of TOT in compliance with the rule and procedure specified to the Standard Qualifications of Directors and State Enterprise Employees Act B.E. 2518 (1975) and its amendments. Sub – Committee on President’s Remuneration For the period January – July 2014, members of the Sub – Committee on President’s Remuneration were as follows: 1. Mr.Chumpol Rimsakorn Chairman 2. ACM Pitthaporn Glinfuang Sub - Committee Member 3. Representative from State Enterprise Policy Sub - Committee Member Office, Ministry of Finance For the period August – December 2014, members of the Sub – Committee on President’s Remuneration were as follows: 1. Asso. Prof.Schitt Laowattana Chairman 2. Mr.Worapat Tiewthanom Sub - Committee Member 3. Mr.Pongsit Chaichutpornsuk Sub - Committee Member 4. Representative from State Enterprise Sub - Committee Member Policy Office, Ministry of Finance Authority and Duties 1. Consider the President’s remuneration in line with laws, Cabinet’s resolutions, regulations and related practices. 2. Negotiate remuneration for those who have been nominated by Top Executive Nomination Committee. 3. Draft an employment agreement for the President. 4. Report on its result to the Board of Directors of TOT. CEO’s Performance Appraisal Committee For the period January – July 2014, members of the CEO’s Performance Appraisal Committee were as follows: 1. Mr.Surasak Riangkrul Chairman 2. ACM Pitthaporn Glinfuang Committee Member 3. Mr.Kobpong Trisukhee Committee Member

36 Annual Report 2014 For the period August – December 2014, members of the CEO’s Performance Appraisal Committee were as follows: 1. Mrs.Siriporn Luangnual Chairman 2. Assoc. Prof. Schitt Laowattana Committee Member 3. Col. Somkiat Sampan Committee Member 4. Mr.Suranan Wongvithayakamjorn Committee Member Authority and Duties 1. Consider the set Key Performance Indicator (KPI) and process the assessment of the TOT’s President subject to criteria and conditions set out in the Management Contract. 2. Propose the results and the recommendations to the Board of Directors for further consideration. Good Corporate Governance and Responsibility Towards the Society and Environment Committee For the period January – July 2014, members of the Good Corporate Governance and Responsibility Towards the Society and Environment Committee were as follows: 1. Gp. Capt. Assoc. Prof. Chairman Dr. Prasong Praneetpolgrang 2. Dr. Pongrak Chindasombatcharoen Committee Member 3. Asst. Prof. Dr. Jackrit Suthakorn Committee Member 4. Mr.Prasit Siripakorn Committee Member For the period August – December 2014, members of the Good Corporate Governance and Responsibility Towards the Society and Environment Committee were as follows: 1. Mr.Worapat Tiewthanom Chairman 2. Mr.Nutwut Amornvivat Committee Member 3. Mr.Thanwa Laohasiriwong Committee Member 4. Col. Somkiat Sampan Committee Member Authority and Duties 1. Determine and review to have the good corporate governance principle of TOT with comprehensible policies and target goal of good governance. Settle characteristic of management model and control systems to be a performance guideline of the Board of Directors, the special issue committees, executives and employees, as a guideline for executives and employees in moving toward its set target goal. 2. Supervise the business performance of TOT, the works undertaken by the Board of Directors, the Special Issues Committees, executives and employees to align with good corporate governance practices by TOT and the government agency as the regulatory body. Such practices must be consistent, appropriate for TOT business, and compatible with international standard of good corporate governance principles. 3. Determine guideline and policy for business management of TOT in order to commit to social responsibility and environment, and in appropriate with TOT business, as well as, in accordance with international standard of good corporate governance principles. 4. Report on the results of TOT good corporate governance; recommend appropriate development to the Board of Directors, including supervising the proposal of information pertaining to good corporate governance to all stakeholders and the general public. 5. Report on the results of TOT’s social responsibility and environment to TOT Board of Directors. Corporate Strategy and Business Supervisory Committee For the period August – December 2014, members of the Corporate Strategy and Business Supervisory Committee were as follows: 1. Assoc. Prof. Schitt Laowattana Chairman 2. Mr.Krisda Punyasmita Committee Member 3. Mr.Nutwut Amornvivat Committee Member 4. Mr.Thanwa Laohasiriwong Committee Member 5. Mr.Worapat Tiewthanom Committee Member 6. Mrs.Siriporn Luangnual Committee Member 7. Col. Somkiat Sampan Committee Member 8. Mr.Suranan Wongvithayakamjorn Committee Member

TOT Public Company Limited 37 Authority and Duties 1. Determine strategic policies, master plan and strategy related to financial operation, investment and asset management, investment structure and corporate debts making, cooperation with resources usage to perform related business. Including, determine target goal and directions of TOT performance and ICT master plan, ICT security master plan and related plans to initiate the efficiency integration in response of customers demand and introducing sustainable corporate development. 2. Propose guideline for TOT business supervision in accordance with strategic policies, master plan and other related plans. 3. Report on the results to the Board of Directors for further consideration. In addition, the Board of Directors appointed other committees in accordance with the TOT Board of Directors Policies in order to help provide suggestions, comments and policies that should be implemented, including: • Committee on the Telecommunications Business Policy Development Coordination Between CAT Telecom Public Company Limited and TOT Public Company Limited • Committee on Domestic Network Development Study to connect to international networks • Committee on Accelerating and Monitoring Network Development to push forward the Smart Thailand Policy • Committee on Regulating and Managing 3G Mobile Phone Service Expansion Project • Committee on Negotiating Mobile Service License • Committee on Finance, Investment and Property Administration • Committee on Development of Organizational Structure and Top Executive Personnel Selection of Directors and Executives In selecting to fill vacancies that occur, TOT follows these practices: 1. In case where a position of director becomes vacant because of reasons other than retiring by rotation, the Board of Directors, through the Nomination Committee, shall select a person who possesses appropriate qualifications and is not disqualified under Company regulations, as a replacement director. At the following Board meeting the appointment is confirmed by a vote of not less than three-fourths of the numbers of the remaining directors. Unless the remaining tenure of such director is less than 2 months, the replaced person shall hold the directorship for the remaining term of such vacant office. 2. In the annual general meeting of the Company, the retirement of one-third of the directors in the first and second years after registration of the Company shall be effected by drawing lots. In subsequent years, directors holding office the longest shall retire. A director who retires from office may be re-elected. In the appointment of directors, guidelines established by the Ministry of Finance relating to the appointment of directors must be followed. Appointment of directors must be made from the Directors’ Pool. Selection of a President is based on nomination according to the Standard Qualifications of Directors and State Enterprise Employees Act, (No.6) B.E.2550 (2007), the Company’s Regulations as well as the compensation policy for directors and the management. Compensation Policy for Directors and the Management To determine remuneration for the Board of Directors, the Remuneration Committee shall propose policy and criterion on appropriate remuneration given to the Board and Special Issue Committees in compliance with notification from the Ministry of Finance according to a resolution made at the Annual General Shareholders’ Meeting in 2014. The remuneration for the President is determined according to criteria set by the Minister of Finance. The remuneration for high ranking executives is based on TOT payroll structure and work performance of each executive as agreed in the Management Contract. Information provided by Directors according to Section 88 of the Public Limited Company Act B.E.2535 (Regarding direct loss or indirect loss result from any agreement that TOT made during the year) • None of the Directors has any such direct or indirect loss resulting from agreements during the year. Benefits, share, investments or other related sources of benefit that Directors receive from TOT Together with a detailed list of Directors who receive such benefits. • None of the Directors receive any benefits from shares, investments, or other related sources form TOT. 38 Annual Report 2014 Details about Directors who are holding the property (share) relevant of the state enterprise • None of the Directors hold such security (share) that relevant with TOT.

Related items • None of the Directors involve such interest that occurred as of accounting year 2013.

Self-Appraisal of the Board of Directors TOT requires the Board of Directors to assess their performance through regular self-appraisal. In 2014, the Company has designed the 3 self-appraisal forms for Directors as self-appraisal of the entire Board, cross directional appraisal and self - appraisal by individual directors. The assessment criterion is divided into five score levels as follows: • Score level 1 completely disagree or no action taken • Score level 2 disagree or little action taken • Score level 3 agree of sufficient action taken • Score level 4 agree somewhat strongly or action well taken • Score level 5 strongly agree or outstanding action taken Summary of Assessment Results: 1. Self - appraisal of the entire Board: The Board of Directors unanimously agreed that, overall, they had performed their duties according to the principles and guidelines of good corporate governance at an “Excellent” level (average score 4.62). 2. Cross directional appraisal: 12 members of the Directors agreed that was assessed by his peers as having performed their duties for TOT according to good corporate governance principles at a “Good” to “Excellent” level (score between 4.43 - 4.97) 3. Self-appraisal by individual directors: 12 members of the Director agreed that he performed his duties in compliance with good corporate governance principle at a “Moderate” to “Excellent” level (score between 3.50 - 5.00)

Directors’ Attendances at the Board Meetings and Special Issue Committee Meetings (From January - July 2014)

Name Board of Audit Nomination Remuneration Affair Relations Directors Committee Committee Committee Committee

Pol. Col. Suchart Wongananchai 5/5 ACM Pitthaporn Glinfuang 5/5 Mr.Surasak Riangkrul 3/5 Mr.Chumpol Rimsakorn 5/5 Mr.Prasit Siripakorn 3/5 6/6 Mr.Satit Rungkasiri 3/5 5/6 1/1 Mr.Wanlop Ploytabtim 3/5 6/6 Dr. Pongrak Chindasombatcharoen 5/5 1/1 Gp. Capt. Assoc. Prof. Dr. Prasong Praneetpolgrang 5/5 5/6 1/1 Mr.Pongpat Chitsomreang 5/5 1/1 Asst. Prof. Dr. Jackrit Suthakorn 3/5 Mr.Kobpong Trisukhee 4/5 Mr. Booncherd Kidhen 3/5 1/1 1/1 Mr. Exkasuck Satho 4/5 6/6 1/1 Mr.Yongyuth Wattanasin 5/5 Remark: In the table above, the figures, e.g., 1/2, represent the number of attendances out of the total number while being office TOT Public Company Limited 39 Directors’ Attendances at Special Issue Committee Meetings (From January – July 2014)

รายนามคณะกรรมการName คณะกรรมการ คณะกรรมการManagement คณะกรรมการLegal and คณะกรรมการRisk คณะกรรมการPenalty ทีโอที Committeeตรวจสอบ Contractสรรหา Managementก�ำหนดค่า กิจการสัมพันธ์Appeal Committee Committeeตอบแทน Committee

Pol. Col. Suchart Wongananchai ACM Pitthaporn Glinfuang 4/4 Mr.Wanlop Ploytabtim Mr.Surasak Riangkrul 3/3 Mr.Chumpol Rimsakorn 1/1 3/3 3/3 Mr.Prasit Siripakorn 1/1 Dr. Pongrak Chindasombatcharoen 4/4 0/1 3/3 3/3 Mr.Pongpat Chitsomreang 3/3 Mr.Kobpong Trisukhee 4/4 Mr. Exkasuck Satho 3/3

Remark: In the table above, the figures, e.g., 1/2, represent the number of attendances out of the total number while being office

Directors’ Attendances at Special Issue Committee Meetings (From January – July 2014)

รายนามคณะกรรมการName คณะกรรมการ Topคณะกรรมการ Executives คณะกรรมการPresident คณะกรรมการCEO’s Goodคณะกรรมการ Corporate ทีโอที Nominationตรวจสอบ Remunerationสรรหา Performanceก�ำหนดค่า Governanceกิจการสัมพันธ์ and Committee Consideration Appraisalตอบแทน Responsibility Sub- Committee Towards the Committee Society and Environment Committee ACM Pitthaporn Glinfuang 1/1 Mr.Wanlop Ploytabtim Mr.Surasak Riangkrul 1/1 Mr.Chumpol Rimsakorn Dr. Pongrak Chindasombatcharoen 5/5 Mr.Prasit Siripakorn 2/5 Gp. Capt. Assoc. Prof. Dr. Prasong Praneetpolgrang 5/5 Asst. Prof. Dr. Jackrit Suthakorn 5/5 Mr.Kobpong Trisukhee 1/1 Mr.Exkasuck Satho

Remark: In the table above, the figures, e.g., 1/2, represent the number of attendances out of the total number while being office

40 Annual Report 2014 Directors’ Attendances at Board of Directors and Special Issue Committee Meeting (From August – December 2014)

Name Board of Audit Nomination Remuneration Affair Relations Directors Committee Committee Committee Committee

General Surapong Suwana-adth 7/7 Mr.Pipat Khanthong 7/7 1/1 Mr.Suranan Wongvithayakamjorn 7/7 1/1 Mr.Thanwa Laohasiriwong 7/7 Mr.Anuphan Kitnitchiva 6/7 6/6 Mr.Natwut Amornvivat 7/7 4/6 Mrs.Siriporn Luangnual 7/7 1/1 Mr.Worapat Tiewthanom 7/7 1/1 1/1 3/3 Assoc. Prof. Schitt Laowattana 7/7 Mr.Pongsit Chaichutpornsuk 6/7 5/6 Col. Somkiat Sampan 7/7 Mr.Krisda Punyasmita 6/7 6/6 1/1 Mr.Montree Sornpaisarn 1/1 Mrs.Urai Romphotiyok 1/2 Mr.Youngyuth Wattanasin 2/2

Remark: In the table above, the figures represent the number of attendances out of the total number while being office.

Directors’ Attendances at Special Issue Committee Meetings (From August - December 2014)

รายนามคณะกรรมการName คณะกรรมการ คณะกรรมการManagement คณะกรรมการLaw and คณะกรรมการRisk คณะกรรมการPenalty ทีโอที Committeeตรวจสอบ Contractสรรหา Managementก�ำหนดค่า กิจการสัมพันธ์Appeal Committee Committeeตอบแทน Committee

Mr.Pipat Khanthong 8/9 1/1 Mr. Suranan Wongvithayakamjorn 8/9 1/1 Mr.Thanwa Laohasiriwong 9/9 Mr.Anuphan Kitnitchiva 5/5 1/1 Mr.Natwut Amornvivat 5/5 Mrs.Siriporn Luangnual 1/1 Mr.Worapat Tiewthanom Assoc. Prof. Schitt Laowattana 9/9 Mr.Pongsit Chaichutpornsuk 4/5 1/1 Col. Somkiat Sampan 9/9 1/1 Mr.Krisda Punyasmita 5/5 1/1

Remark: In the table above, the figures represent the number of attendances out of the total number while being office.

TOT Public Company Limited 41 Directors’ Attendances at Special Issue Committee Meetings (From August - December 2014)

รายนามคณะกรรมการName Topคณะกรรมการ Executive คณะกรรมการSub- คณะกรรมการCEO’s Goodคณะกรรมการ Corporate คณะกรรมการCorporate Nominationทีโอที Committeeตรวจสอบ on Performanceสรรหา Governanceก�ำหนดค่า and กิจการสัมพันธ์Strategy and Committee President’s Appraisal Responsibilityตอบแทน Business Remuneration Committee Towards the Supervisory Society and Committee Environment Committee Mr.Pipat Khanthong 2/2 Mr. Suranan Wongvithayakamjorn 6/8 Mr.Thanwa Laohasiriwong 2/2 8/8 Mr.Anuphan Kitnitchiva Mr.Natwut Amornvivat 2/2 8/8 Mrs.Siriporn Luangnual 2/2 7/8 Mr.Worapat Tiewthanom 2/2 2/2 3/8 Assoc. Prof. Schitt Laowattana 2/2 8/8 Mr.Pongsit Chaichutpornsuk 2/2 Col. Somkiat Sampan 2/2 8/8 Mr.Krisda Punyasmita 4/8 Remark: In the table above, the figures represent the number of attendances out of the total number while being office.

Meeting Allowances and Bonuses for the Board of Directors and Meeting Allowances for the Special Issue Committee in 2014

Unit : Baht รายนามคณะกรรมการName Board คณะกรรมการMeeting คณะกรรมการSpecial Issue คณะกรรมการBonus in 2013 คณะกรรมการ as คณะกรรมการTotal Allowanceทีโอที Committeeตรวจสอบ Meeting สรรหาpaid in 2014ก�ำหนดค่า กิจการสัมพันธ์ Allowance ตอบแทน The Board of Directors (January – July 2014) Mr.Udom Puasakul 0.00 0.00 42,361.11 42,361.11 Pol. Co. Suchart Wongananchai 184,435.48 0.00 57,325.27 241,760.75 ACM Pittaporn Klinfuang 123,991.92 50,000.00 51,075.27 225,067.19 Mr.Walop Ploytabtim 90,967.74 75,000.00 37,500.00 203,467.74 Mr.Surasak Riangkrul 91,935.48 30,000.00 50,000.00 171,935.48 Mr.Prasit Siripakorn 83,333.33 123,999.96 50,000.00 257,333.29 Mr.Chumpol Rimsakorn 117,419.34 77,500.00 50,000.00 244,919.34 Mr.Satit Rungkasiri 36,741.92 70,000.00 37,500.00 205,241.92 Dr.Pongrak Chindasombatcharoen 117,741.92 137,500.00 50,000.00 305,241.92 Mr.Pongpat Chitsomreang 117,741.92 42,500.00 50,000.00 210,241.92 Gp. Capt. Assoc. Prof. Dr.Prasong Praneetpolgrang 117,741.92 165,000.00 50,000.00 332,741.92 Asst. Prof. Dr. Jackrit Suthakorn 97,741.92 82,500.00 50,000.00 230,241.92 Mr.Kobpong Trisukhee 107,741.92 90,000.00 50,000.00 247,741.92 Mr.Boooncherd Kidhen * 80,000.00 52,500.0 8,602.15 141,102.15 Mr.Exkasuck Satho * 110,000.00 130,000.00 8,602.15 248,602.15 42 Annual Report 2014 Meeting Allowances and Bonuses for the Board of Directors and Meeting Allowances for the Special Issue Committee in 2014

Unit : Baht รายนามคณะกรรมการName Boardคณะกรรมการ Meeting คณะกรรมการSpecial Issue คณะกรรมการBonus in 2013 คณะกรรมการ as คณะกรรมการTotal Allowanceทีโอที Committeeตรวจสอบ Meeting สรรหาpaid in 2014ก�ำหนดค่า กิจการสัมพันธ์ Allowance ตอบแทน

The Board of Directors (January – July 2014) Mr.Pote Chiravutikul 0.00 0.00 29,301.08 29,301.08 Mr.Youngyuth Wattanasin 60,000.00 0.00 27,361.11 87,361.11

Remark : * Appointed as Board of Directors from October 30, 2013

Meeting Allowances and Bonuses for the Board of Directors and Meeting Allowances for the Special Issue Committee in 2014

Unit : Baht รายนามคณะกรรมการ คณะกรรมการ คณะกรรมการ คณะกรรมการ คณะกรรมการ คณะกรรมการ Name ทีโอที Boardตรวจสอบ Meeting สรรหาSpecial Issueก�ำหนดค่า กิจการสัมพันธ์Total Allowance Committee Meetingตอบแทน Allowance

The Board of Directors (August – December 2014) General Surapong Suwana-adth 155,080.00 0.00 155,080.00 Mr.Pipat Khanthong 104,637.00 75,000.00 179,637.00 Mr.Suranan Wongvithayakamjorn 98,387.00 82,500.00 180,887.00 Mr.Thanwa Laohasiriwong 78,387.00 82,500.00 160,887.00 Mr.Anuphan Kitnitchiva 88,387.00 110,000.00 198,387.00 Mr.Natwut Amornvivat 98,387.00 110,000.00 208,387.00 Mrs.Siriporn Luangnual 98,387.00 70,000.00 183,387.00 Mr.Worapat Tiewthanom 98,387.00 90,000.00 188,387.00 Assoc. Prof. Schitt Laowattana 98,387.00 85,000.00 183,387.00 Mr.Pongsit Chaichutpornsuk 98,387.00 102,500.00 200,887.00 Col. Somkiat Sampan 98,387.00 80,000.00 178,387.00 Mr.Krisda Punyasmita 98,387.00 130,000.00 228,387.00 Mr.Montree Sornpaisarn 18,387.00 0.00 18,387.00 Mrs.Urai Romphotiyok 10,000.00 0.00 10,000.00

Remark : Appointed as Board of Directors from August 6, 2014

TOT Public Company Limited 43 Board of Directors

General Surapong Suwana-adth Chairman

Age 57 Years Education Experiences • Armed Forces Academy Preparatory School • Defense and Military Attache, Washington D.C. USA. • B.S. (Physics), Virginia Military Institute, U.S.A. • Director of Intelligence Division, Directorate of Army Intelligence • M.S. (Physics), University of Virginia, U.S.A. • Director of External Relations, J2 Rtarf. • Command and General Staff College, RTA • Director of Policy and Plan, J3 Rtarf. • Command and General Staff College, Fort Leavenworth, U.S.A. • Director, Directorate of Joint Intelligence, Rtarf. • M.M.A.S. US Army Command and General Staff College, • Director, Directorate of Joint Operations, Rtarf. U.S.A. Training • Diploma, National Defence College, The Joint State – Private Sector Course Class 21 • Georgetown Leadership Seminar, U.S.A. Present Position • Deputy Chief of Joint Staff

44 Annual Report 2014 Mr. Pipat Khanthong Mr. Suranan Wongvithayakamjorn Vice Chairman and Chairman of Management Director Committee Age 62 Years Age 57 Years Education Education • Bachelor of Economics (Financial and Fiscal Policy), Thammasat • B.A. in Economics (Fiscal Policy) , Ramkhamhaeng University University • M.B.A., Chulalongkorn University • Master of Arts (Development Economics), Williams College, U.S.A. Training Training • Public Economics Management for Executives (Class 2), • Thammasat Leadership Program Class 3 King Prajadhipok’s Institute • Advanced Security Management Program (ASMP 4), • Diploma, National Defence College, The National Defence The Association National Defence College of Thailand under Course Class 48 the Royal Patronage of His Majesty The King • Capital Market Academy Leader Program, Class 11 • Advanced Political and Electoral Development Program (AEPD) • Advanced Certificate Course in Public Economics Management (Class 3), Political and Electoral Development Institute, Office of for Executives Class 8, King Prajadhipok’s Institute The Election Commission of Thailand • Diploma, National Defence College, The Joint State Present Position – Private Sector Course Class 14 • Principal Advisor on Performance Improvement (Senior Advisor), Present Position The Revenue Department of Thailand • Board of Directors, The Marketing Organization for Farmers, • Board of Directors, MFC Asset Management Public Company Ministry of Agriculture and Cooperatives Limited • Board of Directors, Liquor Distillery Organization, Experiences Excise Department, Ministry of Finance • Director, Nakhon Ratchasima Area Revenue Office • Qualified Expertise in Economics, Public Private Partnership • Tax Economist, Expert level, Bureau of Tax Collection Standards Committee • Tax Economist, Expert level, Bureau of large Business Tax Experiences Administration • Advisor to the National Broadcasting and Telecommunications • Director, Regional Revenue Office 9 (Supervision Area Revenue Commission Offices in The Southern Part of the North-eastern Region of • Commissioner, The National Telecommunications Commission Thailand) • Secretary General to the National Telecommunications • Director, Regional Revenue Office 5 (Supervision Area Revenue Commission, Office of The National Telecommunications Offices in The Eastern Region of Thailand) Commission • Advisor on Policy and Planning to The Office of the National Economic and Social Development Board

TOT Public Company Limited 45 Mr. Anuphan Kitnitchiva Mr.Natwut Amornvivat Director Director

Age 52 Years Age 41 Years Education Education • Ph.D. School of Public Administration (International Doctoral • Massachusetts Institute of Technology (MIT), Program), The National Institute of Development Administration, Sloan School of Management, MBA, U.S.A. Thailand. • Georgia Institute of Technology, Master of Science • LL.M. (Business Law), Thammasat University, Thailand. in Industrial Engineering, U.S.A. • LL.B. (Honors), Thammasat University, Thailand. • Chulalongkorn University, Bachelor of Engineering in Electrical Training Engineering • Advanced Audit Committee Program (AACP), Training Thai Institute of Directors • Program for Directors of the Board and Top Executives of • Director Certificate Program (DCP), Thai Institute of Directors State-owned Enterprises and Public Organizations, elected as • Certificate of Senior Executive Program, Sasin, an alumni director, 2010, King Prajadhipok’s Institute Graduate Institute of Business Administration of Present Position Chulalongkorn University • Director and Director of the Board, TESCO CO., LTD. Present Position • CEO, FOCAL INTELLIGENCE CO., LTD. • Senior Partner, Dherakupt International Law Office Ltd. • Co-founder, T2P CO., LTD. • Chairman of Audit Committee/ Independent Director, • Executive Program Director, Strategy and Innovation for Thai Poly Acrylic Public Company Limited Businesses in Asia (SIBA), CMMU & MIT • Chairman of Audit Committee/ Independent Director, Experiences TOT Public Company Limited • President & Director of the Board, • Director, Alpha Capital Asset Management Co., Ltd. Thailand Convention & Exhibition Bureau (Public Organization) • Director, Humanica Co., Ltd. • Deputy Director - Internet Services – True Corporation Plc. Experiences • General Manager – True Internet Co., Ltd. • Lead Partner of PricewaterhouseCoopers Legal • Associate, Booz Allen & Hamilton Consulting and Tax Consultants Ltd. and Member of Management Board PricewaterhouseCoopers • Associate, Dr. Mana & Associates Law and Tax Office

46 Annual Report 2014 Mrs. Siriporn Luangnual Mr. Worapat Tiewthanom Director Director

Age 55 Years Age 61 Years Education Education • Master of Business Administration, Pittsburg State University, • Master of Public Administration, Chulalongkorn University U.S.A. • Bachelor of Arts (Political Science), Chulalongkorn University • Bachelor of Business Administration, Ramkhamhaeng University Present Position Training • Retired government official • Leader Program, Capital Market Academy (CMA-18) (2014) Experiences • Diploma, National Defence College, The National Defence • Director-General, The Thai Meteorological Department, Course Class 55/2012 Ministry of Information and Communication Technology • Director Certification Program (DCP) Class 72/2006, • Deputy Permanent Secretary, Ministry of Information and Thai Institute of Directors Communication Technology • Government Management and Public Law Program (Class 8), King Prajadhipok’s Institute • Inspector General, Ministry of Information and Communication • TLCA Executive Development Program, Technology Thai listed Companies Association • Board of Directors, TOT Public Company Limited • Breakthrough Program for Senior Executives, IMD, Switzerland • Board of Directors, Liquor Distillery Organization, Present Position Excise Department, Ministry of Finance • Deputy Director General, State Enterprise Policy Office • Director, Ratchaburi Electricity Generating Company Limited • Metropolitan Waterworks Authority, Corporate Development Subcommittee Experiences • Director and Chairman of Audit Committee, ASEAN Potash Mining Public Co., Ltd. • Director and Member of Audit Committee, TOT Public Co., Ltd. • Director, Government Housing Bank • Director, Erawan Hotel Public Co., Ltd. • Member of the Board, Ratchaburi Power Company Limited

TOT Public Company Limited 47 Assoc. Prof. Schitt Laowattana Mr.Pongsit Chaichutpornsuk Director Director

Age 53 Years Age 50 Years Education Education • Ph.D. (Robotics), Carnegie Mellon University, U.S.A. • Bachelor of Law • M.Eng, Carnegie Mellon University, U.S.A. Training • B.Eng (Hons), King Mongkut’s University of Technology • Defence Criminal USSS Thonburi • Federal Bureau Of Investigation U.S.A. : FBI • Diploma, Precision Mechanics, Kyoto University • Diploma, National Defence College, The Joint State • Diploma, Management of Technology, – Private Sector Course Class 24 Massachusetts Institute of Technology • National Security Management Course, Batch 2th Present Position • Advance Strategic Management (IMD : International Institute • Director, Institute of Field Robotics, King Mongkut’s University for Management Development) Switzerland of Technology Thonburi Present Position Experiences • First Executive Vice President, Siam Commercial Bank • Board of Directors, TOT Public Company Limited Experiences • Advisor to Minister of Ministry of Information and • Chairman of Working Group, The Thai Bankers’ Association Communication Technology • Special Instructor, Royal Police Cadet Academy, Superintendent • Board of Directors, Suksapattana Foundation Course, Senior Command Course • Coordinator between MIT and Thailand • Committee on the Draft of Legal Electronic Card Group • Legal Profession, Asia-Pacific Region (Citibank)

48 Annual Report 2014 Col. Somkiat Sampan Director

Age 52 Years Education Experiences • Ph.D. in EE., Virginia Polytechnic Institute and State University, • Director of Science and Technology Division, DSTD Virginia, U.S.A. • Director of Project Plan and Budget Division, DSTD • M.S. in EE., Virginia Polytechnic Institute and State University, • Director of Project Analysis and Evaluation Division, DSTD Virginia, U.S.A. • Deputy Director of Project Analysis and Evaluation Division, DSTD • B.S. in EE., Virginia Military Institute, Virginia, U.S.A. • Teacher, Education Division, • High School, Armed Forces Academies, Chulachomklao Royal Military Academy Preparatory School Class 23 Training • Artillery Officer Advance Course, Artillery School, Lopburi • Command and General Staff Course, The Command and General Staff College • RTARF & COE Relationship Course, Royal Thai Armed Forces Headquarters • How to Develop a Risk Management Plan (HRP) Course, Thai Institute of Directors • Successful Formulation & Execution the Strategy (SFE) Course, Thai Institute of Directors Present Position • Deputy Director of Defense Science and Technology Policy Office, Defence Science and Technology Department (DSTD)

TOT Public Company Limited 49 Mr. Krisda Punyasmita Mr. Thanwa Laohasiriwong Director Director and Acting President

Age 60 Years Age 49 Years Education Education • Bachelor of Laws, Ramkhamhaeng University • Bachelor of Computer Engineering, • Thai Barrister at law, Institute of Education Thai Bar Association King Mongkut’s Institute of Technology Ladkrabang Present Position Training • Deputy Director General, Office of The Attorney General • Director Certification Program (DCP 43/2004), • Advisor to The Royal Institute Thai Institute of Directors • Board of Directors, The Market Organization, • Certification, Successful Formulation & Execution of Strategy Ministry of Interior (SFE 22/2014), Thai Institute of Directors Experiences Present Position • Board of Commissioner, Port Authority of Thailand • Director, Independent Director and Audit Committee Member, • Deputy Secretary to the Attorney of General Asiasoft Corporation Public Company Limited • Executive Director, Office of The Attorney General • Independent Director and Member of Audit Committee, Easy Buy Public Company Limited • Chairman of Audit Committee, Thai Plastic Bags Industries Company Limited • Director, F.A.S.T Solutions Company Limited • Director (Expert), Finance and Asset Committee, King Mongkut’s Institute of Technology Ladkrabang • Columnist, Prachachart turakij newspaper Experiences • Managing Director, IBM Thailand Company Limited • Director and Country Manager, System and Technology Group, IBM Thailand Company Limited • Director, IBM Solution Delivery Company Limited

50 Annual Report 2014 Executive Vice President

1 2

3

4 5 6

7

1 Mr.Thanwa Laohasiriwong 3 Dr.Kamthon Waithayakul 5 Mr.Phithakphong Thapinphrom Director, Acting President and Senior Executive Vice President Senior Executive Vice President Acting Senior Executive Vice President - Senior Advisory Committee - Enterprise Effectiveness – Human Resources 4 Mr.Rungsun Channarukul 6 Mrs.Preeya Danchaivijit 2 Dr.Montchai Noosong Senior Executive Vice President Senior Executive Vice President Senior Executive Vice President - Corporate Audit and Assurance - Finance – Senior Advisory Committee 7 Mrs.Nutnucha Chaipresert Senior Executive Vice President - Legal and Beneficial Assurance Management

TOT Public Company Limited 51 8 9

10

11 12 13

14

8 Mr.Narulcha Chittreekan 10 Mr.Morakot Thienmontree 12 Mr. Wudthidanai Thitakasikorn Senior Executive Vice President Senior Executive Vice President Senior Executive Vice President - Property Management – Marketing and Product Development - Wireless and Universal Services Education Obligation 9 Mr. Suphachai Tangvorachai Senior Executive Vice President 11 Mr.Chate Phanchan 13 Mr. Jumpon Thanasopon - Core Network Senior Executive Vice President Senior Executive Vice President – Mobile business – Metropolitan Sale and Customer Service and Acting Senior Executive Vice President – Provincial Sale and Customer Service

14 Mr. Somsak Mahaviriyo Executive Vice President – Senior Advisory Committee

52 Annual Report 2014 15 16

17

18 1912 20

21

15 Mr. Apiruck Preechayasomboon 17 Mrs. Wimolpan Chattanond 19 Mr.Veerachai Lert-Assavarat Executive Vice President Executive Vice President Executive Vice President – Corporate Strategy – Finance and Accounting – Engineering

16 Mr.Chao Punrungchitti 18 Mrs.Chorthip Ruennarm 20 Mr. Sophon Netsuwan Executive Vice President Executive Vice President Executive Vice President – Quality and Business Process – Legal – Operations

21 Miss Jantana Techasirinugool Executive Vice President – Product Development

TOT Public Company Limited 53 22 23

24

25 26 27

28

22 Mrs. Somchit Terachutikul 24 Mr. Thongchai Suwanchawee 26 Mr. Niwat Kimtrakool Executive Vice President Executive Vice President Executive Vice President – Marketing - Mobile Corporate Development - Mobile Finance and Accounting

23 Mrs. Wannaporn Lilahajiva 25 Mrs. Pimvimol Wongsuwan 27 Mr. Nattawut Satrawaha Executive Vice President Executive Vice President Executive Vice President – Enterprise Customer Sales and - Mobile Marketing - Mobile Technology Services 28 Mrs. Jureerat Sanuanngam Executive Vice President – Mobile Material Management and Legal

54 Annual Report 2014 29 30

31

32 33 34

35 36

29 Mr. Ruengsak Chinaroj 31 Mr. Sommai Suksumek 34 Mr. Boonlua Fuangchoom Executive Vice President Executive Vice President Executive Vice President – Metropolitan Sale and Service 1 – Metropolitan Sale and Service 4 – Regional Sale and Service 3 Acting Executive Vice President- Metropolitan Sale and Service 3 32 Mr. Charnchai Buranabanyat 35 Mr. Anurut Uthairat Executive Vice President Executive Vice President 30 Mr. Noparat Toprasertpong – Regional Sale and Service 1 – Regional Sale and Service 4 Executive Vice President – Metropolitan Sale and Service 2 33 Mr. Somyos Sumpuntananon 36 Mr. Prajak Manochanpen Executive Vice President Executive Vice President – Regional Sale and Service 2 – Regional Sale and Service 5

TOT Public Company Limited 55 Top Executives and their Remuneration

1 Mr. Thanwa Laohasiriwong 3 Dr. Kamthon Waithayakul Director, Acting President Senior Executive Vice President and Acting Senior Executive Vice President – Senior Advisory Committee – Human Resources Education • Diploma de Docteur (Informatique), Paris University, France 2 Dr. Montchai Noosong • Mastere (Data Communication), Ecole Nationale Superieure Senior Executive Vice President Des Telecommunications France – Senior Advisory Committee • Bachelor of Engineering (Electrical Engineering), Education King Mongkut’s Institute of Technology Ladkrabang • Master and Doctor Degree (Computer Networks), Training Telecom Paris, France • The 4th training course on administrative law and methods of • Bachelor of Engineering (Electrical Engineering), adjudication used by the Administrative Court under standard King Mongkut’s Institute of Technology Ladkrabang certified by the Administrative Court Judicial Service Commission, Training Foundation for Research and Development of the Administrative • The 1st Training Course on Administrative Law for Executives Justice System (FRDA) under academic support from (ALE), The Administrative Court Administrative Court • Director Certification Program (DCP) Course, • Director Certification Program (DCP) Course, Thai Institute of Thai Institute of Directors Directors • Financial Statements for Directors (FSD) Course, • Financial Statements for Directors (FSD) Course, Thai Institute Thai Institute of Directors of Directors • 41st Royal Thai Air Force Air War College (RTAF.AWC.), • The Executive Program for Senior Management (EX-PSM), The Royal Thai Air Force Institute of Higher Education Fiscal Policy Research Institute Foundation, Ministry of Finance • 90th Psychological Operations Staff Course, in associate with The Kellogg School of Management, National Defence Studies Institute The Schulich School of Business and Maxwell School of Experiences Citizenship and Public Affairs • Senior Executive Vice President – Investment Management • 48th Major Command Course, Royal Thai Army War College, • Executive Vice President – Product Development The Royal Thai Army Institute of Advanced Military Studies Experiences • Senior Executive Vice President – Mobile Business • Senior Executive Vice President - Wireless and Universal Services Obligation • Executive Vice President – Engineering • Executive Vice President – Product Development

56 Annual Report 2014 4 Mr. Rungsun Channarukul 7 Mrs. Nutnucha Chaipresert Senior Executive Vice President - Corporate Audit and Senior Executive Vice President Assurance - Legal and Beneficial Assurance Management์ Education Education • Master of Business Administration, Thammasart University • Master of Laws (Public Law), Rangsit University • Master of Engineering, Graduate School, • Master of Laws (Private and Business Law), Chulalongkorn University Dhurakij Pundit University • Bachelor of Engineering, • Bachelor of Laws, Ramkamhaeng Univiersity King Mongkut’s Institute of Technology Ladkrabang Training Training • The 1st training course on administrative law and methods of • Director Certification Program (DCP) Course, adjudication used by the Administrative Court under standard Thai Institute of Directors certified by the Administrative Court Judicial Service Commission, • Financial Statements for Directors (FSD) Course, Foundation for Research and Development of the Administrative Thai Institute of Directors Justice System (FRDA) under academic support from • Security Psychology Course, Applied Psychology Institute Administrative Court • National Security Management for Senior Executives, • The 1st Training Course on Administrative Law for Executives National Intelligence Agency (ALE), Foundation for Research and Development of the • Command and General Staff Course, Command and General Administrative Justice System (FRDA) under academic support Staff College from Administrative Court Experiences • The 5th Training Course on Administrative Justice for Executives, • Senior Executive Vice President - Corporate Audit Foundation for Research and Development of the Administrative • Senior Executive Vice President - Wireless and Universal Justice System (FRDA) under academic support from Services Obligation Administrative Court • Executive Vice President - Regional Sale and Service 3 • Director Certification Program (DCP) Course, Thai Institute of Directors 5 Mr. Phithakphong Thapinphrom • Financial Statements for Directors (FSD) Course, Thai Institute Senior Executive Vice President – Enterprise Effectiveness of Directors Education • Deregulating & Privatizing the Telecommunications Sector and • Bachelor of Engineering (Electrical Engineering), Building Strategic Alliances at Intrados International Management King Mongut’s University of Technology North Bangkok Group Course, in cooperation with the George Washington Training University in Washington, U.S.A. • Director Certification Program (DCP) Course, Thai Institute of Directors • Human Resources Management Course, Nippon Telegraph • Financial Statements for Directors (FSD) Course, Thai Institute Telephone Corporation in Japan of Directors Experiences • How to Develop a Risk Management Plan (HRP) Course, • Executive Vice President - Mobile Material Management and Legal Thai Institute of Directors • Executive Vice President - Law Experiences • Executive Vice President, Quality and Business Process 8 Mr. Narulcha Chittreekan Senior Executive Vice President - Property Management 6 Mrs. Preeya Danchaivijit Education Senior Executive Vice President – Finance • Master of Public Administration, National Institute of Development Education Administration • MPCC Account, U.S.A. • Bachelor of Industrial Technology (Industrial Electrical Technology), • MBA program, U.S.A. King Mongkut’s University of Technology North Bangkok • Master of Accounting, Thammasat University Training • Bachelor of Accounting (Capital), Chulalongkorn University • Democratic Political Knowledge, King Prajadhipok’s Institute Training • Director Certification Program (DCP) Course, Thai Institute of • Director Certification Program (DCP) Course, Directors Thai Institute of Directors • Digital Course, TOT Academy • Post and Telecommunication Course, Germany • Telecom Management Course, TOT Academy Experiences Experiences • Executive Vice President - Finance and Accounting • Executive Vice President – Metropolitan Sale and Service 4

TOT Public Company Limited 57 9 Mr. Suphachai Tangvorachai 12 Mr. Wudthidanai Thitakasikorn Senior Executive Vice President - Core Network Senior Executive Vice President Education - Wireless and Universal Services Obligation • Master of Business Administration, Kasetsart University Education • Bachelor of Science in Industrial Education (Telecommunication), • Bachelor of Arts (General Business Management), King Mongkut’s Institute of Technology Ladkrabang Rajanagarindra Rajabhat University Training Training • Broadcasting Executive Forum (BCF), NBTC • Director Certification Program (DCP) Course, • Director Certification Program (DCP) Course, Thai Institute of Directors Thai Institute of Directors • Financial Statements for Directors (FSD) Course, • Public Management and Public law Course, Thai Institute of Directors King Prajadhipok’s Institute Experiences Experiences • Executive Vice President - Metropolitan Sale and Service 3 • Executive Vice President - Engineering • Executive Vice President - Senior Advisory Committee

10 Mr. Morakot Thienmontree 13 Mr. Jumpon Thanasopon Senior Executive Vice President Senior Executive Vice President – Marketing and Product Development - Metropolitan Sale and Customer Service and Education Acting Senior Executive Vice President • Master of Engineering (Electrical Engineering), - Provincial Sale and Customer Service Kasetsart University Education • Bachelor of Engineering (Electrical Engineering), • Bachelor of Industrial Technology (Telecommunications), Prince of Songkhla University King Mongkut’s Institute of Technology Ladkrabang Training Experiences • Director Certification Program (DCP) course, • Executive Vice President – Metropolitan sale and Service 1 Thai Institute of Directors • Executive Vice President – Quality and Business Process • Financial Statements for Directors (FSD) course, • Executive Vice President – Operation Thai Institute of Directors Experiences • Executive Vice President – Product Development

11 Mr. Chate Phanchan์ Senior Executive Vice President – Mobile business Education • Master of Public Administration, Sripatum University • Bachelor of Engineering (Electrical Engineering), King Mongkut’s Institute of Technology Ladkrabang Training • Director Certification Program (DCP) Course, Thai Institute of Directors • Financial Statements for Directors (FSD) Course, Thai Institute of Directors Experiences • Executive Vice President – Mobile Technology

Remuneration for Top Executives (As of the year end)

2014 2013 2012 37.797 Million Baht 44.897 Million Baht 40.867 Million Baht

58 Annual Report 2014 Good Corporate Governance Policy

TOT continues its commitment to good corporate governance in 2014 based on international standards which are 1) accountability; 2) responsibility; 3) equitability; 4) transparency; 5) vision to create long-term value; 6) ethics; 7) good leadership and participation; and 8) human dignity. For the first time this year, TOT incorporated the State Enterprise Performance Appraisal (SEPA) to Good Corporate Governance to create a systematic workforce and support the objective and integration for a long lasting organization. TOT Board of Directors has set up “Good Corporate Governance and Responsibility Towards the Society and Environment Committee” chaired by Mr. Worapat Thiewtanom with Mr. Natwut Amornviwat, Mr. Thanwa Laohasiriwongse and Colonel Somkiat Samphan as committee members. Their responsibility is to define clearly the policies and objectives of Good Corporate Governance for TOT and ease agility in the management sector as well as support the collaboration of all sectors. Therefore, a Working Group on Planning and Developing of Good Corporate Governance and Scheme for Responsibility towards the Society and Environment was set up and led by Dr. Apiruck Preechayasomboon, Executive Vice President – Corporate Strategy. The responsibilities include revising and setting development plans for Good Corporate Governance, scheme of responsibility towards the society and environment and annual operation plans. Realizing the difficulty in assessing the accomplishment of Good Corporate Governance which is subjective, TOT created a system to support the objective and integration in the organization by the Working Group on Planning and Developing of Good Corporate Governance and Scheme for Responsibility towards the society and environment to come up with an efficient development plan “Rolling plan” (4 year period) being annually revised. The current Good Governance Development Plan B.E. 2557-2560 (2014-2017) is being processed in the action plan by brainstorming all pertinent matters into a good action plan for Good Corporate Governance 2014. The 13 plans derived from this action plan are assigned to related work sectors to take action under the strategy of a good development plan for corporate governance with 3 key approaches: 1) development of effective good corporate governance; 2) enhancement and supervision of legal and ethical behavior; and 3) promotion of corporate social responsibility and community support and its implementation. To complete the procedure, an assessment was implemented every trimester in 2014 with a documented report of accomplishments to the Committee and the Board of Directors respectively. TOT promotes better understanding of Good Corporate Governance to all executives and employees through different channels such as e-Learning, website CG&CSR, internal audio announcement and surveys via website. The awareness of Good Corporate Governance from the executives and employees was at 89%; however, only one third has the right understanding of the concept. More improvement will be undertaken thereafter. In order to sustain the aforementioned operation, TOT implemented a Workflow consisting of 4 processes: 1) Development of Policies and Principles of Good Corporate Governance 2) Implementation of Development Plan of Good Corporate Governance of TOT and Annual Action Plan 3) Assessment and Report 4) Communications and Dissemination of Good Corporate Governance Policies and Principles.

TOT Public Company Limited 59 Policies and Plans on Corporate Social Responsibility

TOT is a business operator in the telecommunications industry, a key factor in developing the country and empowering the quality of life. With its Core Competency in designing and implementing the technology in communications and telecommunications network while enhancing the quality and efficiency of TOT’s products and services, TOT upgrades its business operations while balancing with the society including environmental conservation. It also aims to increase its potential, rendering quality to the organization and society. TOT’s responsibility towards the society covers the economy, society and the environment under “Good Corporate Governance”. Thus, TOT has set up a Master Plan towards Social and Environmental Responsibility B.E 2557-2560 (2014-2017) with the aim of having mutual trends in social and environmental operation as a whole and sustain its development as follows: Strategy 1: Vigorously support and strengthen the communities to gain access to Information Technology, education, environment conservation and support profession to reinforce the stability of the local communities such as Satellite Tele-Education Project, TOT Young Club Project, Wireless Network for Tele-Education and Tele-Medicine between The Chaipattana Foundation, Prince of Songkla University and TOT. Strategy 2: Enhance all eco-friendly projects using ICT applications and development and raise awareness of environmental concerns in every step throughout the life cycle of ICT products through conscience of TOT executives and employees. Such projects include Green ICT and E-Garbage. Strategy 3: Support economic development of the nation as well as all businesses beneficial to the society through nationwide coverage of modern telecommunications network facilitating products and services development widely and equally. Such projects are USO Project and High Speed Broadband Project. To further accord with the policy, TOT applies ISO 200 Social Responsibility as a framework for policy and strategy for Corporate Social Responsibility (CSR) with 3 main strategies namely creating corporate culture for TOT executives and employees to have responsibility to the society and environment, modernizing IT to support education equally to all youths and the underprivileged and cultivating sense of responsibility towards conserving the environment. Throughout 2014, TOT has implemented several projects for the society and environment. However, the 3 most prominent projects by TOT executives and employees are:

KruTu Project TOT presented 50 million Baht to His Majesty the King on the auspicious occasion of His Majesty the King’s Fiftieth Anniversary Accession to the Throne which served as the capital investment in the establishment of the Satellite Tele-education Foundation (KruTu). This project solves the insufficient number of teachers in remote areas and upgrades the quality of education in the rural areas equally to the urban areas. Both the Fiber Optic Cable and High Speed Internet Projects supported KruTu Project in broadcasting teaching and learning of Grade 1-12 from Wang Klaikangwon School to all remote schools with insufficient teachers around the country totaling 31,348 schools and 4 neighboring countries schools. The total number of students under this project is 3,134,800 enabling equal education throughout the nation via TOT’s nationwide telecommunications network.

60 Annual Report 2014 Moreover, TOT helps develop 626,960 teachers through distance trainings via video. KruTu Project also facilitates the general public to get further education through www.dlf.ac.th which currently has over 2,000,000 viewers/year to the website. TOT is proud of KruTu Project as it creates equal education opportunity for kids in the rural and remote areas with the urban areas.

TOT Young Club (TYC) – Creating community economy through online “My Community Highlights” is one of TOT’s activities depicting social responsibility towards the society and environment by cultivating the love of one’s community to the youths and help grow the economy by delivering good products from their communities to online market. This is a collaboration among the District Administration Organization, universities and schools within the communities with TOT as the central point in supporting the telecommunications network, ICT know-how, online marketing including mentoring from TOT employees to the youth volunteer groups to publicize their culture, values and beautiful national resources to online market in 14 communities which are Ban Rangmaidaeng in Rachaburi, Ban Pho in Ayutthaya, Ban Samran in Khonkhaen, Ban Koodchoomseang in Chaiyapoom, Ban Bom in Lampang, Ban Krang in Pitsanulok, Ban Khobulon in Satun, Ban Siriwong in Nakorn Sithammarat, Ban Dong in Nakorn Nayok, Ban Chong Samaesan in Chonburi, Ban Bangphriang in Samutprakran, Ban Saikhao in Pattani, Ban Taporyo in Narathiwat and Talaad Samchook in Supanburi.

The Royal Suksala health Clinic Project This project responds to the royal wish of Her Royal Highness Princess Maha Chakri Sirindhorn that aims at uplifting the life quality of the poor people. By development of nursing units that exist in Border Patrol Police Schools to become a royal Suksala health clinic or royal happiness health pavilion, it relieves the suffers in health problem of people in a rural areas and frontier population. Healthcare will equally provided throughout the country in both regular and emergency times, also, attaining reliability in government officers which partly support the national security. TOT has taken this royal wish into practice by providing technological system, communication network and IT equipment to use for telemedicine treatment, equally installing satellite devices over iPSTAR, Internet with telephone service, computer sets with IT accessories and setting up web conference for distance medical communication in isolated sites nationwide. TOT has supported technology and communication network in the Border Patrol Police schools since 2009 until now, totally 14 royal Suksala health clinics at Ban Saen Kham Lue, Maehongson province; Ban Mae Jan Ta and Ban Lay Tong Ku, Tak province; Ban Pong Luek, Petchburi province; Ban Ti Lai Pa, Kanchanaburi province; Ban Ai Bue Tae and Ban O, Narathiwas province: Thanphuying Praphai Siwa Kosol Border Patrol Police School and Border Patrol Police School in Indira Gandhi Award, Chiang Mai province; Ban Pilok Khi, Kanchanaburi, Ban Pa Mark, Prachuap Khiri Khan province; Ban Huay Kuk, Chiang Rai province, Mom Ratchawong Chalermlak Border Patrol Police School, Tak province; Leenanon Border Patrol Police School, Narathiwas province.

TOT Public Company Limited 61 Universal Basic Telecommunications and Social Services (USO)

USO is a social service which TOT has provided under the policy of the National Broadcasting and Telecommunications Commission (NBTC). Details are as follows: 1. Phase 1: Basic Telecommunications and Social Services (2006 – 2010): TOT installed 21,607 numbers in public telephones and fixed lines: • 12,302 public telephones in communities • 6,507 public telephones for the disabled • 2,798 fixed lines in government offices, public health stations, and border patrol police stations. 2. Phase 2: Basic Telecommunications and Social Services (2010-2012): • installed one public telephone number in each community in 302 villages • installed one public telephone number, one fixed line number and hi-speed Internet service for each academic institution in 206 schools • set up 119 Internet service centers, one center for each community • established 25 community Internet service centers for social related agencies • established 14 community Internet service centers (additional 2014) 3. Phase 3: Basic Telecommunications and Social Services (2012 – 2016):

62 Annual Report 2014 Section 27(12) and Section 50 on Act on Organization to Assign Radio Frequency and Regulate the Broadcasting and Telecommunications Services B.E. 2553 (2010) stipulates that the NBTC must formulate the Universal Basic Telecommunications and Social Services (USO) plan in remote and low profit areas in order to support and expand telecommunications network, both wired and wireless to all areas. The target is that no less than 95% of the Thai people are able to access personal telephone service, public telephone service for 1-2 numbers per village, and no less than 80% of Thai people can access hi-speed Internet service, community Internet, Internet in academic institutions and Internet in district hospitals. The NBTC is to select a telecommunications service provider through a bidding process, and to achieve these goals in the period of 5 years. In the beginning, the NBTC initiated two pilot projects in Nong Kai and Phitsanuloke provinces. A bidding process for both projects started in 2014, and the remaining targets are expected to hold biddings in four phases in order to cover areas across the country by 2016. In 2014, TOT was well-prepared in bidding for Phase 3 Social Service by surveying the equipment and optical fiber cable networks in different areas and found out that TOT’s network is extensive and could efficiently and cost-effectively provide services to all target areas where the NBTC requires. Furthermore, TOT has sufficient staff to cover the network maintenance in the entire country. TOT proposed the lowest cost and awaits for the announcement of the result. In 2014, the work in Universal Basic Telecommunications and Social Services (USO) can be summarized as follows: 1. Completed the additional installation of 14 community Internet centers. 2. Provided maintenance for 302 numbers of USO public telephones installed in different villages during Phase 2. 3. Provided maintenance for 312 numbers of USO public telephones and fixed lines installed in different schools during Phase 2; and 4. Provided repair and maintenance services for computer equipment installed in schools and communities under the Phase 2 USO project every 6 months for 3 years.

TOT Public Company Limited 63 Research and Development

TOT Innovation Institute is the primary agency for research and development mainly focusing on communications with a define target to boost skills for technology development. All innovations are constantly upgraded for higher efficiency and effectiveness. A strong support towards creative innovation is practiced by giving opportunities to employees to participate in proposing research areas or innovation ideas, providing funds for the related research and development, organizing contests for inventions and innovations, providing technical consulting and becoming the center for TOT intellectual property rights. In order to reinforce confidence in telecommunications services, the TOT Innovation Institute also has a laboratory to test the quality of materials, networks, tools and equipment as well as monitor the accuracy of all measuring equipment. The lab has been in operation for over 50 years since the start of cooperation between the Thai Government and the United Nations under the United Nations Development Program (UNDP).

Major Researches and Innovations in 2014 1. TOT Xdsl Tester is an equipment to support the installation and maintenance of VDSL and ADSL with sufficient functions in application and standard at a reasonable price. 2. Multi-Port Power over Ethernet (POE) for Access Point Equipment is an equipment for power supply to several Access Point ports by utilizing remaining UTP wires with uninterrupted direct current. 3. Just Pay Mobile POS Software is a system to support service payment of Just Pay on Android mobile phones enabling to scan the barcode of the statement, accept payment and print out the receipts like normal system. However it is a portable device. 4. Fiber Distribution Hub is a device to switch outdoor optic cables with the highest capacity of 144 ports. Made of lightweight aluminum, it could be attached on the post with Splice & Distribution Module 12 ports with adapters at an angle. 5. DC Power Supply 48 V. is an equipment to monitor the operation of Module Rectifier to transmit AC current to Module Rectifier in normal situation and stop the transmission when problems arise. It also controls the power supply distribution of batteries and monitors any voltage spikes.

64 Annual Report 2014 Repair Works and Accreditation All inspections and repairs of measuring and electrical equipment including fiber optic to TOT internal and external customers are serviced in our accredited laboratory with ISO/IEC 17025 standard certification. Among these customers are industrial groups, service network providers, distributors of measuring equipment and network system technicians. It is also a network of the National Broadcasting & Telecommunications Commission (NBTC) in testing the technical standard of broadcasting equipment in community radio stations.

Test Results and Development TOT offers testing of any telecommunications tools and equipment to both internal and external customers such as FTTx equipment before it is registered.

Innovation Awards 1. Silver Medal for “Telephones for the Vision Impaired” in the “42nd International Exhibition of Invention of Geneva” in Geneva, Switzerland. 2. Silver Medal for “Mobile Just Pay Service” in “Seoul International Invention Fair 2014 (SIIF)”. 3. Appreciation Award on “Multi-Port Power over Ethernet (POE) for Access Point Equipment” in the “2014 Outstanding State Enterprises Awards” organized by State Enterprise Policy Office, Ministry of Finance.

TOT Public Company Limited 65 Manpower Structure, Human Resource Management and Development

Manpower Structure Number of Employees and Contract workers (As of the year end)

2014 2013 2012 Employee Groups Employees Contract Employees Contract Employees Contract (Person) workers (Person) workers (Person) workers (Person) (Person) (Person) Executives 576 - 592 - 529 - Technicians 6,889 245 6,892 158 6,970 196 Sales/Service & Marketing 4,501 88 4,451 48 4,857 44 Supporting 4,084 69 4,343 57 4,702 45 Total 16,096 402 16,278 263 17,058 285 Grand Total 16,498 16,541 17,343

Total Expenditure on Employees and Contract workers (As of the year end)

2014 2013 2012 13,391 million Baht 17,969 million Baht 17,758 million Baht

66 Annual Report 2014 Human Resource Development TOT manages its human resource in accordance with TOT’s Strategic Plan which emphasize on improving the competence of each employee in order to be competitive in the ongoing and increasing telecommunications business environment. TOT’s Human Resource Development Policies have 4 approaches (4Rs) as follows: 1. Recruit: TOT manages its human resource in compliance with the organization’s strategy to attain the highest efficiency in recruiting. New recruitments are selected according to the required position while applying Competency Based Interview process. This includes hiring contract workers under specific time frame before employing the most potential candidate, outsourcing specific or short-term workers, contracting for a fast service job that can be evaluated in terms of quality rather than full-time hires and granting scholarships to students in leading academic institutions and employ them upon their graduation. 2. Retain: TOT retains skillful and capable employees to ensure continuity of business operations. A manpower structure of job description, roles and responsibilities are clearly defined as well as promotions, career advancement, monetary compensation according to good work performance, benefits and welfare, health awareness and safe work place are all standardized. Thus, a bond for the employee to work in the organization happily and effectively is cultivated. 3. Renewal: TOT has undertaken development and continuous learning activities to promote and support employees at all levels in different forms such as Training, Project Assignment, Job Rotation, On the Job Training and Self-Directed Study. The focus has been on developing staff skills in line with their job description and responsibilities applicable to their work under the Competency Based Development scheme. Employees also have the opportunity for job rotation to match the knowledge and skills under the Career Movement Model.

TOT Public Company Limited 67 4. Reinforce: TOT applies job evaluation linking to TOT’s vision, mission and business goals in order to ensure its workforce in the right direction. Work performances are used to determine the raise, promotion, and appointment. TOT has also set up a mechanism to strengthen the conduct of employees such as creating awareness among employees of company’s policy, promoting conscience and good ethical conduct, promoting morals and virtues as well as activities.

Establish Corporate Culture Focusing on Customers TOT continuously adjusts its corporate culture and value to create a business-like corporate culture while strengthening TOT in line with the vision and policy of the leader and the organization’s strategy sited in “TOT Strategy Map”. It starts with the top executives passing down to the employees at all levels to adhere and conform to the policy. The top executives set a role model in cultivating the culture for cooperating with other sectors in the organization while supporting all employees to have creative thinking, cooperate and share skills among other personnel to generate revenue, reduce work expenses, increase business competitiveness, focus on customers’ requirements and attain the highest satisfaction through these projects: Innovation Competition, TOT Outstanding Skills Competition (Broadband Access, Wi-Net, IP-VPN and Fiber 2U Services), TOT Service Excellence, Network Excellence and Quality Excellence. 1. TOT Service Excellence has been continuously developed since 2009 through TOT Service Standard Operation Procedure that all customer service employees at Customer Service Centers including installation, maintenance and repair technicians be trained “Service Standard” before actual work on the floor in order to satisfy the customers quickly and precisely under TOT’s service standard. An assessment on the conduct of service is measured by examiners trained under “TOT Customer Service Center Examiner Certificate” focusing on customers’ satisfaction level towards 425 TOT Customer Service Centers and technicians services through installation and repairs as well as high speed internet nationwide. 2. Network Excellence gears towards offering ongoing services in all circumstances by having a set duration time frame in preventive maintenance and repairs. 3. Quality Excellence emphasizes on after sales activities with direct impact on customers such as installation, repairs, appeals and corrections on incomplete customers information relating to the main services. As a result, a continuous standard service improvement is in place. A process in notifying fallacy issues is implemented in the same manner nationwide. Best Practice to relay the know-how is done systematically through TOT KBS (TOT Knowledge Base Society).

68 Annual Report 2014 Human Resource Development TOT has encouraged and supported all employees towards ongoing development and learning to be ready for the job assigned through appropriate learning approaches including training, on-the-job training, coaching, mentoring, training with external institutions as well as visiting domestic and international leading organizations to gain and exchange knowledge and experience then apply. TOT also grants scholarships for academic degrees in different dificient fields. TOT believes that continuous development in the employees responsible tasks will help them work effectively and efficiently cultivating satisfaction and bond towards the organization. TOT has adopted the concept of “Competency Based Development” by using “Training Roadmap” for ongoing trainings to support employees’ career path development. Moreover, TOT promotes the sharing of knowledge among groups of employees through Community of Practice (CoP) in various topics or issues related to the direction and goals of the organization creating “Good Practice” that can be applied across the organization. In 2014, TOT organized training courses and seminars in ICT and Management for employees as well as sending employees for trainings and seminars outside TOT with an average of over 20 training hours per person per year for technology operation group, sales and marketing group, supporting group and management group. Furthermore, TOT continues to develop outside personnel through activities such as Broadband Access Network Project, Competition Project for the Best Technician in Telecommunications and ICT in honor of His Majesty the King. Besides, TOT Academy has been appointed by the Ministry of Labor to be the National Skill Standardization Center in areas of outside plants and data communications while also cooperating with the government, private sector and academic institutions to set capability standards for ICT personnel such as the Institution for Occupational Development. On the international level, TOT has been assigned by the Ministry of Information and Communication Technology as a Center of Excellence (CoE) in Business Management field according to Center of Excellence Network Project for the Asia and Pacific Region under the International Telecommunications Union (ITU) to further develop personnel within the member countries in the Asia and Pacific region on IT and communications. TOT has been trusted till present by Asia Pacific Telecommunity (APT) to arrange ongoing training courses to member countries to support the establishment of ASEAN Community in 2015. TOT Academy has accelerated its partnerships with many organizations in both public and private sectors as well as with academic institutions both local and international to raise standards in personnel development on par with international standards and become a leader in providing knowledge in IT and communications in the region.

TOT Public Company Limited 69 Risk Management

TOT has integrated risk management to leverage work operation according to the strategic plan and to better use the available information in various systems. All personnel in the organization are requested to cooperate in pursuing risk management efficiently and effectively and abiding to the measures to promptly reduce risks and damages to the organization by using the Guideline for Risk Management which includes risk management, principles and process, measurement criterion in different levels to have similar direction in risk management.

Major Risks and Solutions Strategic Risk TOT has encountered drastic telecommunications competition along with the continued reduced revenue from our main services and the remittance of the shared revenue from concession contracts to the National Broadcasting and Telecommunications Commission (NBTC). Therefore, TOT focuses on adjusting itself to cope with the circumstance by utilizing its existing strength and options to optimize its products and services potential. These projects include High Speed Broadband and International Submarine Cable Internet, Cloud Service, Solution Service and Maintenance Agreement (MA). All these generate revenues for new services and compensate the portion remitted to NBTC. Operational Risk In telecommunications service, quick and ongoing response to customers is a requirement to meet customers’ satisfaction; thereby, making network quality a crucial factor for our services. TOT is constantly improving its network to upgrade its quality and service capacity to a standard level while retaining and increasing its customer base. This also includes the research on consumer behavior to boost our services as well as direct marketing approaches to target customers on different services. In 2014, there were several unexpected events like political crisis causing TOT to emphasize on Business Continuity Plan and information technology recovery plans to ensure that TOT can provide ongoing services with no impact on the customers. Financial Risk In order to maintain TOT’s financial liquidity which was affected by the reduced revenue and the remittance to NBTC, TOT has set up financial measures and securing more revenue from different services including significant financial key performance indicators such as EBITDA Margin, Return on Assets (ROA), Return on Investment (ROI), debt collection, and expenditure reduction. These key indicators are set in the annual management contract of TOT executives and employees to ensure profit making capability and competitiveness in the telecommunications business. Compliance Risk TOT prioritizes preventive approach of legal procedures along with negotiations and mediations on disputes of both parties to reduce the impact from legislations enacted such as the Act on Organization to Assign Radio-Frequency 2010, the announcement of rules and regulations of NBTC, and previous concession contracts obligations. All these have a dramatic impact on TOT’s financial status and its business operations. Moreover, TOT analyzes both the advantages and disadvantages aspects of the situation to achieve a solution that is beneficial for both parties. It also assures that all TOT employees strictly abide by the announcement of all related rules and regulations.

70 Annual Report 2014 Internal Control

TOT realizes the significance of internal control which is an important mechanism towards Good Governance by integrating internal control and risk management on all significant activities undertaken by TOT to ensure efficient business operations. TOT also assures that TOT personnel of all levels are cognizant of the necessity and importance of internal control to leverage its business operations, to protect company’s resources and assets and to ensure accuracy and reliability of financial reporting including adherence to the law, company regulations and related rules. The Risk Management Committee is in charge of verifying that the management team completes its duties as per set goals. In addition, the Audit Committee reviews the internal audit assessment results to ensure that the management sets up the internal control system consistent with acceptable risk management standards and appropriate to the company context as well as in line with the internal control standards determined by the Office of the Auditor General of Thailand, which consists of the following 5 internal control aspects: 1. Control Environment TOT has defined policies, regulations and stipulations in encouraging honesty and integrity as well as control and audit system to ensure that business operations comply with regulations and rules set forth by the organization and other external entities. TOT has also created a clear organizational structure and scope of work for its employees in writing. In addition, TOT has set Key Performance Indicators (KPIs) as an operational framework to evaluate the work performance of staff according to the company’s objectives. TOT also has policies and human resource management guidelines in writing to analyze the basic level of education and skills of staffs necessary for their positions. This is to ensure that TOT’s staffs have the knowledge, skills and operational competency relevant to their job descriptions. 2. Risk Assessment TOT has performed risk management systematically according to the guidelines of the Committee of Sponsoring Organizations of the Tread way Commission-Enterprise Risk Management (COSO-ERM) and internal control in line with COSO oversight by the Risk Management Committee of the company’s overall risk management. The Audit Committee investigates and makes recommendations to the organization’s internal control with the executives as the Risk and Control Owner to assess ongoing risks on the unit level by indicating risk components, analyzing the causes and effects of risks and determining measures and activities that could prevent or reduce risks. The responsible individuals are designated with defined Key Performance Indicators (KPIs) and implementation period. TOT has also factored in early warning for any risks or important irregular incidents that may occur. The Risk Management Department supports the operations by reviewing, assessing and reporting the results consistently. 3. Control Activities TOT realizes the significance of control activities particularly on major tasks. It regulates that all employees work according to their duties and responsibilities conforming to the internal control system e.g. segregation of duties, authorizations and responsibilities including preventive and solving mechanisms and verification of work performance by the management consistently. This also covers work operations, financial and accounting to ensure complete, accurate and creditable reports including a systematic filing of all important documents. 4. Information Technology and Communications System TOT envisions the importance of information technology (IT) and communications system to facilitate its management of major tasks by promoting IT Governance for appropriate, sufficient, prompt and reliable IT to support management and work operations. TOT has also focused on providing various communications channels to ensure convenient and safe accessibility for all internal communications at all levels as well as external communications. TOT also concentrates on resource sharing among TOT’s units in order to reduce operational cost. 5. Follow up and Evaluation TOT has a follow up and evaluation system for internal control as follows: 1) Follow up during work operation to cover all important activities continuously and regularly by all management levels and top executives such as Minutes of the Meeting. 2) Evaluate per transaction which consists of Control Self-Assessment (CSA) conforming to the rules of the State Audit Commission of Thailand on Internal Control Standards B.E. 2544 (2001) and the CSA manual. TOT also appointed a Risk and Internal Control Manager to carry out duties including tracking, evaluating and revising internal controls in all departments and units via Independent Assessment. With this system, TOT is ensuring that independent assessments are carried out by internal control units and the existing internal control system is adequate, appropriate, cost-effective, and practical. Audit findings and other verifications are expected to be considered to help adjust the company’s operations appropriately without delay while bearing the constant change in situations.

TOT Public Company Limited 71 Internal Audit

TOT performs a systematic internal audit in compliance with the Internal Audit Manual of State Enterprises B.E. 2555 (2012) and International Standards for the Professional Practice of Internal Auditing issued by the Institute of Internal Auditors (IIA) with the following approaches: 1. The structure of the internal auditing body is independent under the oversight of the chief audit executive reporting directly to the Audit Committee and the President. 2. Roles, responsibilities and ethics are addressed in writing by applying and revising internal audit charter, policies and manuals on a regular basis. 3. Good relationship with the Audit Committee is established facilitating both formal and informal meetings and discussions. 4. Good relationship exists with top management, auditors, and other regulatory entities. 5. Internal auditors are consistently trained on matters related to work internally and externally. Also, internal auditors are matched to the right jobs according to their knowledge and abilities so that desired objectives are reached. 6. A strategic audit plan is considered on significant risk factors of TOT and other related risks including information derived from the Audit Committee, top management, and auditors. 7. Establish an audit plan with appropriate details, including objectives, risk assessment, internal control activities, audit procedures as well as corruption related risks. 8. Report and conclude an audit effectively with an audit report to executives of each audited unit as well as meetings to share recommendations. 9. Provide an assessment through an internal and external evaluation of the quality of the audit performance (Quality Assurance Review: QAR), including the preparation of strategy development plan to improve the efficiency of internal audit tasks. 10. Internal auditors perform their duties with circumspection as professionals abiding by the guidelines defined in the Internal Audit Charter as well as policies and the manual of internal audit practice issued by TOT’s Corporate Audit.

72 Annual Report 2014 Policy to Prevent Disputes on Conflict of Interests

TOT has clearly defined policies and guidelines with regards to corporate conflict of interests in line with TOT Public Company Limited Regulation Ror Kor 1/2553 (2010) on Conflict of Interests. Essential elements of the regulation include definitions of actions and omissions or cases causing conflict of interests such as exploitation of inside information for personal or others’ benefits, receiving and giving gifts; and reporting facts related to conflict of interests. Moreover, all executives and employees should record in a form via Web Application on disclosure of information on conflict of interests individually to serve as evidence for tracking information on the executives and employees. All TOT Directors and procurement/purchasing directors should also countersign all conflict of interests’ cases. TOT clearly formulates guidelines with regards to safeguarding confidential and inside information in accordance with TOT’s Regulation Ror Bor 4/2551 on Information and News in parallel with the Official Information Act B.E. 2540 (1997). This is to monitor directors, executives and all employees from exploiting TOT’s information for their own or others’ interests for the fairness and equitability of the stakeholders. All personnel must strictly safeguard and avoid disclosure of internal information which is deemed confidential and prevent it from being disclosed to outsiders. Using inside information is allowed solely within the applicable scope of each employee’s duties and responsibilities. In addition, TOT personnel must not exploit information gained while employed at TOT as directors, executives or employees for personal gain or to be used in competition against TOT or any of its related subsidiaries. All staff must comply with TOT’s Code of Ethics B.E.2553 (2010). Disclosure of confidential information to the general public must be solely authorized by the Board of Directors or the President. This is to ensure that the Board and management conduct business with integrity and transparency in line with the good corporate governance policy of TOT. Furthermore, TOT has a policy for the accessibility rights on important information to related individuals i.e. Executive Dashboard and Debt Dashboard.

TOT Public Company Limited 73 Report on Performance in Compliance with The Official Information Act B.E. 2540 (1997)

TOT established a Public Information Center in 1998 complying with the objective of the Act on Official Information B.E. 2540 (1997) with the intention to provide information to the public on TOT’s performance and to create opportunities for the public to comment and offer feedback about the services. This is a significant element for efficient and transparent management. The Public Information Center provides this service to the public through the Public Relations and Corporate Communications Department located on the 1st floor of Building 1, TOT Headquarters, 89/2 Moo 3 Chaengwattana Road, Thungsonghong, Laksi, Bangkok, 10210, Tel. 02 505 1218. The Center is open on business days from 08:30 hrs.-16:30 hrs.

Information and News Disclosure TOT issued Order No. Ror Bor. 4/2551(2008) for TOT Public Company Limited on information and news. It stipulates the framework and procedures serving as guidelines for clear work operations and having the Information Committee in conformity with the Official Information Act B.E. 2540 (1997). The Public Information Center publicizes information specified in the Official Information Act B.E. 2540 (1997). For instance, the organization and management structures, location, a list of TOT executives, concession contracts, joint-operations and joint ventures, contracts worth over 50 million baht and orders concerning work procedures that may affect any rights and duties of the private sector. Such orders include documentation on requests for telecommunications services, standards of service quality and annual reports. All these disclose significant information and summaries of TOT’s annual performance as well as news and information on TOT products and services including periodicals published on special occasions, public relations news, brochures etc. As for purchasing and procurements, TOT is fully compliant with Section 9 of the Official Information Act B.E. 2540 (1997) by publishing the bid and tender documents over an electronic system platform as well as providing monthly procurement summary reports.

Performance In 2014 TOT provided its information services through various media and formats i.e. printouts, CD, internet, telephones and people media offering recommendations at the Public Information Center. An index of TOT documents and CDs was available to facilitate information searches. In 2014, TOT provided information services at the Center to 54 visitors and 208 phone enquirers. The most requested data were on purchasing and procurement information, followed by concession contracts with the private sector. The most frequent visitors were private companies followed by students.

Information Service over IT System TOT publishes information for interested individuals on its website (www.tot.co.th). People can access the list of documents which are disclosed at the Center through the website at the section “Customer Service”. Information is regularly updated such as location, bid and procurement documents, concession contracts, and joint-operation and joint-venture contracts worth over 50 million Baht. Moreover, all purchasing and procurement results are announced within 1-2 months. In 2014, there were 4,715,589 website entries.

74 Annual Report 2014 Management Discussion and Analysis

Operating Results : A Comparison Between 2014 and 2013 Unit : Million Baht Increase (Decrease) Details 2014 % 2013 % Amount % Revenue from telecommunication services 29,167.3 46.1 28,320.8 32.5 846.5 3.0 Revenue from concession agreements 1,562.3 2.5 1,797.8 2.1 (235.5) (13.1) Revenue from revenue sharing agreements 11,673.6 18.5 22,001.9 25.2 (10,328.3) (46.9) Amortisation of deferred income - from 16,151.7 25.6 31,271.2 35.9 (15,119.5) (48.3) concession agreements Other services income 718.1 1.1 674.7 0.8 43.4 6.4 Other income 3,926.3 6.2 3,066.0 3.5 860.3 28.1 Total Revenues 63,199.3 100.0 87,132.4 100.0 (23,933.1) (27.5) Cost of services 24,248.3 38.4 24,531.9 28.1 (283.6) (1.2) Revenue sharing submission under regulation 5,806.9 9.2 505.8 0.6 5,301.1 1,048.1 Depreciation and loss on impairment - assets 10,252.6 16.2 30,620.8 35.1 (20,368.2) (66.5) from concession agreements Selling expenses 1,836.7 2.9 2,109.1 2.4 (272.4) (12.9) Administrative expenses 16,211.9 25.6 20,540.6 23.6 (4,328.7) (21.1) Other expenses 1,598.1 2.5 3,338.9 3.9 (1,740.8) (52.1) Finance cost 538.5 0.9 405.9 0.5 132.6 32.7 Total Expenses 60,493.0 95.7 82,053.0 94.2 (21,560.0) (26.3) Share of profit from investments in associates 0.7 0.0 0.7 0.0 - - Profit before income tax 2,707.0 4.2 5,080.1 5.9 (2,373.1) (46.7) Income tax (759.3) (1.2) (666.3) (0.8) (93.0) 14.0 Profit for the year 1,947.7 3.0 4,413.8 5.1 (2,466.1) (55.9)

Total Revenues: TOT’s total revenues decreased 27.5% to 63,199.3 million baht for the year 2014, compared to 87,132.4 million baht last year. This decrease was primarily attributable to revenue from concession agreements, revenue from revenue sharing agreements, and Amortisation of deferred income - from concession agreements. Despite the increase of revenue from telecommunication services, other services income and other income, overall revenue decreased in 2014. Revenue from telecommunication services increased 3.0% to 29,167.3 million baht in 2014, compared to 28,320.8 million baht in the same period last year as a result of the increase in revenues by TOT operations, including revenue from Broadband and multimedia service, data service, and other telecommunication services. Revenue from concession agreements decreased 13.1% to 1,562.3 million baht in 2014, compared to 1,797.8 million baht in 2013 mostly due to a decrease in revenue gained from TRUE and TT&T. Revenue from revenue sharing agreements decreased 46.9% to 11,673.6 million baht in 2014, compared to 22,001.9 million baht in 2013 as a result of a decrease in revenue sharing with AIS.

TOT Public Company Limited 75 Amortisation of deferred income - from concession agreements decreased 48.3% to 16,151.7 million baht in 2014 from 31,271.2 million baht in 2013. Other services income increased 6.4% to 718.1 million baht in 2014 from 674.7 million baht in 2013 primarily because of a rise in revenue from sales of telecommunication products and equipment. Other income increased 28.1% to 3,926.3 million baht in 2014 from 3,066.0 million baht in 2013. This increase was primarily attributable to taxes refund and interest income. Total Expenses: TOT’s expenses (excluding share of profit (loss) from investments in associates and income tax) decreased 26.3% to 60,493.0 million baht in 2014 from 82,053.0 million baht in 2013. This reduction was primarily attributable to a decrease in cost of services, depreciation and loss on impairment - assets from concession agreements, selling expenses, administrative expenses, and other expenses. Cost of services decreased 1.2% to 24,248.3 million baht in 2014 from 24,531.9 million baht in 2013 primarily because of a decrease in USO fees (Universal Basic Telecommunications and Social Services fees), telecommunications licence fee by virtue of Act on Organization to Assign Radio Frequency and to Regulate the Broadcasting and Telecommunications Services, and service fee for fault notification and maintenance of TRUE and TT&T. Revenue sharing submission under regulation increased 1,048.1% to 5,806.9 million baht in 2014 from 505.8 million baht in 2013 primarily because of an increase in Expense against Section 84 by virtue of Act on Organization to Assign Radio Frequency and to Regulate the Broadcasting and Telecommunications Services B.E. 2553 (2010). Depreciation and loss on impairment - assets from concession agreements decreased 66.5% to 10,252.6 million baht in 2014 from 30,620.8 million baht in 2013 because of a decrease in transferred assets from concession agreements during the period. Selling expenses decreased 12.9% to 1,836.7 million baht in 2014 from 2,109.0 million baht in 2013 primarily as a consequence of a decrease in advertising expense, incentive compensation and bonus, and selling wages. Administrative expenses decreased 21.1% to 16,211.9 million baht in 2014 from 20,540.6 million baht in 2013 primarily because of a decrease in doubtful debt, outsourcing fees (including contracts), and advisory expenses. Other expenses decreased 52.1% to 1,598.1 million baht in 2014 from 3,338.9 million baht in 2013 primarily because of a decrease in loss on disposal of property, plant, and equipment from concession agreements. Finance cost increased 32.7% to 538.5 million baht in 2014 from 405.9 million baht in 2013. Share of profit from investments in associates was 0.7 million baht, remaining constant compared to last year. Income tax increased 14.0% to 759.3 million baht in 2014 from 666.3 million baht last year. Profit for the year: TOT’s profit decreased 55.9% to 1,947.7 million baht in 2014 from 4,413.8 million baht in 2013. This decrease was caused by the decreased revenues as aforementioned, despite the decreased expenses as a result of capability management in operating, and capital expenditures.

Financial Status Unit : Million Baht Increase (Decrease) Details 2014 % 2013 % Amount % Total Assets 191,167.2 100.0 199,280.2 100.0 (8,113.0) (4.1) Total Liabilities 69,852.6 36.5 77,901.5 39.1 (8,048.9) (10.3) Total Shareholders’ Equity 121,314.6 63.5 121,378.7 60.9 (64.1) (0.1)

76 Annual Report 2014 • As at December 31, 2014, TOT’s total assets decreased 4.1% to 191,167.2 million baht, compared to 199,280.2 million baht as at December 31, 2013. This reduction was mainly caused by the reduction of property, plant, and equipment of the company, and from concession agreements. However, current assets decreased from short-term investments, and current portion of funds for redemption of long-term liabilities. • The Company’s total liabilities decreased 10.3% to 69,852.6 million baht or 36.5% of its total assets, compared to 77,901.5 million baht as at December 31, 2013. This decline was primarily caused by a decrease in deferred income as a consequence of the decreased transferred assets from concession agreements during the period. • The Company’s total shareholders’ equity amounted to 121,314.6 million baht or 63.5% of its total assets. This represents a decrease of 0.1% compared to 121,378.7 million baht as at December 31, 2013, because of a decrease in unrealised gain on changes in fair value of available-for-sale investments, particularly shares of DTAC.

Financial Ratios

Item 2014 2013

Current Ratio (excluding deferred income) (Times) 1.69 1.73 Debt to Equity Ratio (excluding deferred income) (Times) 0.48 0.47 EBITDA Margin (%) 16.84 36.27 Net Profit Margin (%) 3.08 5.07 Rate of Return on Shareholders’ Equity (%) 1.61 3.54 Earnings per share (Baht) 3.26 7.35

• Liquidity Ratio For 2014, Current Ratio was 1.69 times less than the end of 2013, mainly due to current liabilities, particularly according to accrued expense against Section 84 by virtue of Act on Organization to Assign Radio Frequency and to Regulate the Broadcasting and Telecommunications Services B.E. 2553 (2010). • Leverage Ratio TOT’s Debt to Equity Ratio was 0.48 times at the end of 2014, increased over 2013 because of an increase current liabilities according to expense against Section 84 by virtue of Act on Organization to Assign Radio Frequency and to Regulate the Broadcasting and Telecommunications Services B.E. 2553 (2010). • Profitability Ratio At the end of 2014, profitability was less than 2013, EBITDA Margin decreased to 16.84% from 36.27% at the end of 2013, Net profit margin decreased to 3.08% from 5.07%, and Rate of Return on Shareholders’ Equity decreased to 1.61% from 3.54%.

TOT Public Company Limited 77 Status Report of Long-term Borrowings As end of Fiscal Year 2012-2014

Details Government Currency 2012 2013 2014 Guaranteed 1. Domestic Borrowings 1.1 Loan Agreement for 3G Network non-guaranteed THB 6,524.52 11,958.43 12,084.181/ 2. International Borrowings 2.1 Loan Agreement from guaranteed JPY 5,224.26 -2/ - JICA No.TXV-9 (equivalent to THB) 1,852.16 - - 2.2 Loan Agreement from guaranteed JPY 6,464.46 5,289.10 4,113.75 JICA No.TXIII-7-2 THB (after Swap) 2,231.84 1,826.05 1,420.263/ Total Borrowings THB 10,608.52 13,784.48 13,504.44

Notes 1. Domestic Borrowings : 1/ Loan Agreement for 3G Network was fully drawn down as at March 28, 2014 2. International : 2/ Loan Agreement from JICA No.TXV-9 was done prepayment in Year 2013 : 3/ Loan Agreement from JICA No.TXIII-7-2 was signed foreign exchange currency swap contract (Cross Currency Swap : FX Option with Contingent Payment) from Yen to THB currency at JPY/THB = 0.345248 until Year 2006. 3. The Currency translation of International Borrowings (Equivalents to Baht) : The company used exchange rates quoting by The Bank of Thailand as at the end of years, and calculated rates in accordance with the State Enterprise Policy Office (SEPO) guideline as follows : average buying rates (Fax/transfer payment) + average selling rates 2

2012 2013 2014 average buying rates (1) 0.351101 0.310215 0.271169 average selling rates (2) 0.357960 0.315869 0.276511 Average rate (3) = (1)+(2)/2 0.354531 0.313042 0.273840

Dividend Payment

Year Baht per share Amount (Baht)

2011 600,000,000 shares,12.00 Baht per share 7,200,000,000

2012 600,000,000 shares,12.33 Baht per share 7,398,000,000

2013 600,000,000 shares,3.27 Baht per share 1,962,000,000

78 Annual Report 2014 Connected Transactions

1. Related-party transactions

Related party / Nature of For the year ended For the year ended Rationale relationship transactions December 31, 2014 December 31, 2013 and to the Company (million baht) (million baht) necessity

Company Consolidated Company Consolidated

Ministry Ultimate 1. Revenue from Transactions of and only services: are in the Finance shareholder 1) Telephone 40.39 40.39 36.29 36.29 normal of the Group services course of 2) Other 22.63 22.63 39.34 39.34 business. telecommunication services 2. Purchase of 66.67 66.67 98.67 98.67 services 3. Outstanding balances arising from purchases/ sales of services: 1) Telecommunication 18.24 18.24 51.09 51.09 receivables 2) Prepayment for 171.29 171.29 180.75 180.75 crown property land rental 3) Trade accounts 19.32 19.32 7.82 7.82 payable 4) Other accounts 0.21 0.21 0.21 0.21 payable

TOT Public Company Limited 79 Related party / Nature of For the year ended For the year ended Rationale relationship transactions December 31, 2014 December 31, 2013 and to the Company (million baht) (million baht) necessity

Company Consolidated Company Consolidated

CAT Under 1. Revenue from Transactions Public common services: are in the Company control 1) Telephone 21.19 21.19 5.83 5.83 normal course Limited by Thai services of business. government 2) Other 65.20 65.20 15.47 15.47 telecommunication services 2. Purchase of 168.33 168.33 213.33 213.33 services 3. Outstanding balances arising from purchases/ sales of services: 1) Telecommunica- 611.22 611.22 578.93 578.93 tion receivables 2) Trade accounts 28.89 28.89 3.79 3.79 payable 3) Other accounts 32.50 32.50 54.47 54.47 payable 4. Other income - - 242.60 242.60 5. Other administrative - - 0.51 0.51 expenses

80 Annual Report 2014 Related party / Nature of For the year ended For the year ended Rationale relationship transactions December 31, 2014 December 31, 2013 and to the Company (million baht) (million baht) necessity

Company Consolidated Company Consolidated

Government Under 1. Revenue from Transactions Departments common services: are in the and State- control 1) Telephone 7,380.68 7,380.68 2,408.95 2,408.95 normal course Owned by Thai services of business. Enterprises government 2) Other 5,388.73 5,388.73 3,209.39 3,209.39 telecommunica- tion services 2. Outstanding balances arising from purchases/ sales of services: 1) Telecommunica- 2,361.05 2,361.05 1,565.63 1,565.63 tion receivables

TOT Public Company Limited 81 Related party / Nature of For the year ended For the year ended Rationale relationship transactions December 31, 2014 December 31, 2013 and to the Company (million baht) (million baht) necessity

Company Consolidated Company Consolidated

Subsidiary 1. Revenue from 0.36 - 0.07 - Transactions ACT Subsidiary, telephone services are in the Mobile 98.57% 2. Other telecommu- 0.61 - 2.81 - normal course Company shareholding nication services of business. Limited 3. Other service 0.90 - 0.45 - income TOT Subsidiary, 4. Other income 20.00 - 15.56 - Outsourcing 25.99% 5. Purchase of 673.64 - 303.50 - Service shareholding services Company 6. Outstanding Limited balances arising from purchases/ TOT Subsidiary, sales of services: Sport Club 25.00% 1) Telecommunica- 0.17 - 0.03 - Company shareholding tion receivables Limited 2) Trade accounts 16.00 - 28.21 - payable 3) Other accounts 90.86 - 46.91 - payable 7. Other current 60.43 - 63.14 - assets 8. Other current 10.27 - 10.25 - liabilities 9. Loan to subsidiary - - 87.52 - 10. Other administrative 383.33 - 177.25 - expenses

82 Annual Report 2014 Related party / Nature of For the year ended For the year ended Rationale relationship transactions December 31, 2014 December 31, 2013 and to the Company (million baht) (million baht) necessity

Company Consolidated Company Consolidated

Associate 1. Revenue from Transactions Telcard Associate, services: are in the Company 26% 1) Telephone 1.52 1.52 11.77 11.77 normal course Limited shareholding services of business. 2) Other 7.67 7.67 20.47 20.47 Advance Associate, telecommunica- Data 48.12% tion services Network shareholding 2. Purchase of - - 0.74 0.74 Communi- services cation 3. Outstanding Company balances arising Limited from purchases/ sales of services: Lenso Associate, 1) Telecommunica- 4.97 4.97 11.02 11.02 Datacom 49% tion receivables Company shareholding 2) Trade accounts 0.57 0.57 9.93 9.93 Limited payable 3) Other accounts - - 0.41 0.41 Mobile Associate, payable Communi- 30% 4. Other current 3.01 3.01 3.01 3.01 cation shareholding liabilities Services Company Limited

TOT Public Company Limited 83 Related party / Nature of For the year ended For the year ended Rationale relationship transactions December 31, 2014 December 31, 2013 and to the Company (million baht) (million baht) necessity

Company Consolidated Company Consolidated

Krung Thai Under 1. Cash and cash 25,094.75 25,094.75 17,947.66 17,947.66 Transactions Bank common equivalents are in the control by normal course Thai of business. government

Government Under Housing common Bank control by Thai government

Government Under Saving common Bank control by Thai government

Bank for Under Agriculture common and control by Agricultural Thai Coopera- government tives

Isalamic Under Bank of common Thailand control by Thai government

84 Annual Report 2014 2. Key management compensation Key management compensation is the compensation that management and directors receive or should receive from the Company and the Group including short-term employee benefits (e.g. salary, bonuses and meeting allowance) and any other long-term benefits. Key management includes the board of directors, president and vice president. Details are as follows:

Consolidated The Company 2014 2013 2014 2013 Short-term employee benefits 46.63 59.72 45.97 59.06 Post-employment benefits - Compensation from the State Enterprise Labour Relations Board and other retirement benefit 1.00 5.33 1.00 5.33 - Employee benefit fund 0.37 0.47 0.37 0.47

Total 48.00 65.52 47.34 64.86

3. Financial assistance to related business On January 31, 2011, the Company entered into a contract of loan to a subsidiary of Baht 979.22 million, at an interest rate of 6% per annum. This transaction is in the normal course of business and is approved by the Company’s Board of Directors. The loan is due to repayment within seven years on monthly basis of Baht 14.31 million. The repayments started on the same day that the Company paid the rental for network equipment and mobile equipment to the subsidiary until the payment is complete and the debt can be offset with such rental expense. The subsidiary already settled all balance of loan in 2014.

4. Necessity and rationale of the transaction The related-party transactions were performed in the normal course of business on an arm’s length basis. The remuneration can be calculated based on assets or reference values that comply with the regulations of the Stock Exchange of Thailand and is approved by the appropriate authorities under their limit. The audit committee reviewed the related-party transactions, which must be considered by the board of directors of the Company according to the rules of the Stock Exchange of Thailand. The audit committee is of the opinion that the related-party transactions are in the ordinary course of business of the Company. Details of the related-party transactions are disclosed in a note to the financial statements for the period ended December 31, 2014.

TOT Public Company Limited 85 5. Measures and procedures for approving related-party transactions The Company has policies and procedures governing the approval and management of related-party transactions, which may result in conflicts of interest, as follows: Transactions that are considered to be related-party transactions according to the principles of the Stock Exchange of Thailand shall accurately and completely comply with both the regulations of the Stock Exchange of Thailand and the Securities and Exchange Commission and must be verified by the audit committee if they are required to be reviewed by the Board. The provision of financial assistance transactions to subsidiaries and affiliate companies, such as granting revolving facilities, loans and guaranties, shall be at the market rate. Directors who have a beneficial interest in a subject matter shall have no right to vote and shall not be allowed to attend the meeting. In the case where related-party transactions are in the normal course of business or supporting the normal course of business and empowered by executives, the price and conditions applied by the Company must be the same as those that apply to transactions with third parties. If there is no comparable third-party transaction for significant related-party transactions, the Company shall compare products or services of third parties (subject to the same or similar conditions) or use a report by an independent appraiser employed by the Company to ensure that the price is rational and for the utmost benefit of the Company. Determination of the authority of an approved person must also be in accordance with the appropriate limits, and an executive who has a beneficial interest in the transaction shall not be an approved person.

6. Policy or tendency to make future related-party transactions Related-party transactions that have occurred or may occur in the future are in the normal course of business and do not transfer any interest between the Company, its subsidiaries and persons who may cause conflicts. The Company will appoint the audit committee to review and provide an opinion in relation to the appropriate price when making such transactions. In addition, the classification, value and rationale behind such transactions shall be disclosed to the shareholders in accordance with the regulations of the Securities and Exchange Commission and the Stock Exchange of Thailand. This is to ensure that the benefits of the shareholders and stakeholders are fairly and equally taken into consideration under the policy of good corporate governance.

86 Annual Report 2014 Report of the Audit Committee

The Audit Committee of TOT Public Company Limited consists of independent Board of Directors, who are qualified persons, with seniority and expertise, with professional competencies in law, finance, information technology, and corporate management. They are appointed by the Board of Directors. In 2014, Two committee groups were appointed to perform their duty during January-July 2014, The Audit Committee consists of 5 Board of Directors Mr.Wanlop Ploytabtim was Chairperson of the Audit Committee. Mr. Satit Rungkasiri, Group Captain, Associate Professor Dr. Prasong Praneetponlgrang, Mr. Prasit Siripakorn, and Mr. Exkasuck Satho were Audit Committee members. Board of Directors appointed new Audit Committee consists of 4 Board of Directors during August 2014 – present Mr. Anuphan Kitnitchiva as Chairperson of the Audit Committee, Mr. Pongsit Chaichutpornsuk, Mr. Krisda Punyasmita and Mr. Natwut Amornvivat as another Audit Committee member. The Audit Committee has performed its duties and responsibilities assigned by the Board of Directors, the Audit Committee Charter, and the Manual for the Audit Committee of State Enterprises of the Ministry of Finance. In 2014, the Audit Committee held a total of twelve meetings with management, internal auditors, and external auditors, to provide pertinent information and opinions on relevant matters. The following is a summary of the important issues discussed: 1. Proposed the appointment and remuneration of the Office of the Auditor General of Thailand (OAG) as the company’s external auditor under the Constitution Act on State Audit B.E. 2542 (1999). 2. Reviewed the company’s 2014 annual and quarterly financial reports with management and the auditors to ensure the company’s financial statements were according to generally accepted accounting principles and disclosed information properly, in compliance with the Thai Financial Reporting Standards. 3. Reviewed the effectiveness and the adequacy of the internal control system with management, the external auditors, and nternal auditors on a regular basis to ensure the company contained adequate and effective internal controls as well as performed in compliance with laws, restrictions, regulations, work instructions, and orders relevant to company’s operation. 4. Reviewed the significant risk management procedures based upon the 2014 risk management plan of the company by giving priority to BCP (Business Continuity Planning) to efficiently reduce the impact of potential threats. 5. Reviewed the principles of good governance as practiced by the Ministry of Finance, International Standards for the Professional Practice, and the good corporate governance manual of the company to ensure its transparent operations, including comprehensive and accurate disclosure of connected transactions or items that may endanger conflicts of interest. 6. Reviewed the Audit Committee Charter, determining the agenda of the Committee’s meetings, including an evaluation of the Committee’s performance as a whole and individual self-assessment. The assessment report was subsequently submitted to the Board of Directors to ascertain the effectiveness and reliability of the Audit Committee’s performance. In 2014, the results of the assessment attained a very good-very good level. 7. Oversaw the internal audit performance to ensure independence attained, especially by reconsidering and approving the Internal Audit Charter, the Manual of Internal Audit Practice, the long-term audit plan, the annual audit plan based on risk management guidelines, the control self assessment support plan, the human resource development policy, the internal audit recruitment plan, and training programs for 2014. The Audit Committee has performed its duties as assigned based on professional knowledge with due care, adequate independence, and fairness for the benefit of stakeholders. In 2014, the financial reports were prepared in accordance with generally accepted accounting principles and properly disclosed information related to risk management system, the internal control system, and the effective internal audit, performed in compliance with good corporate governance to enhance company’s transparency and competitive advantage, provided recommendations to the Board of Directors, Management, related parties with great concern and for the sake of the company.

(Mr. Anuphan Kitnitchiva) Chairperson of the Audit Committee 2nd February 2015 TOT Public Company Limited 87 Report of the Nomination Committee

The Nomination Committee of TOT Public Company Limited is consisting of 3 directors with the authorized duties to consider and nominate eligible candidates to be appointed as Director to the Board of Directors and to report to the shareholder in the Annual General Meeting in accordance with the laws and the company’s regulations TOT Public Company Limited Regulation Item 19 stipulates that one-third of the Board of Directors with the longest term in the position be discharged (according to a tenure dismissal) during the Annual General Meeting. However, that members could be reappointed as director conforming to Public Company Limited Act B.E 2535 (1992), Section 71 and Standard Qualifications of Directors and State Enterprise Employees Act B.E 2518 (1975), Section 8, Paragraph 2, which set the tenure of Director shall not exceed 3 years and may be reappointed. In case where a position of director becomes vacant because of reasons other than retiring by rotation, Company Regulations Item 23 stipulates that the Board of Directors, through the Nomination Committee, shall select a person who possesses appropriate qualifications and is not disqualified under Company Regulations Item 17, as a replacement director. At the following Board meeting the appointment is confirmed by a vote of not less than three-fourths of the numbers of the remaining directors unless the remaining tenure of such director is less than 2 months. The replaced person shall hold the directorship for the remaining term of such vacant office. In the appointment of directors, guidelines established by the Ministry of Finance relating to the appointment of directors from the Directors’ Pool must be followed. During 2014, TOT appointed 2 Nomination Committees as follows: the period of January - July 2014 were Mr.Booncherd Kidhen as Chairman, Mr.Satit Rungkasiri and Dr.Pongrak Chindasombatcharoen as Committee Members, and the period of August – December 2014 were Mr.Pipat Khanthong as Chairman, Mr.Worapat Tiewthanom and Mr.Suranan Wongvithavakamjorn as Committee Members Both Nomination Committees held totally 2 meetings. However, all the recruitments determined by the Committee has already been considered and approved by the Board of Directors as the following details: 1. Nominating the directors who were discharged and the directors who will be reappointed as TOT directors for another term to the 2014 Annual General Meeting. 2. Listing candidates who possess appropriate qualifications and are not disqualified as the director to replace the vacancy due to the resignation. Informed the findings of the Nomination Committee to the Board of Directors Meeting No. 10/2557

88 Annual Report 2014 Report on the Board of Directors’ responsibilities in respect of the financial statements

The Board of Directors is responsible for the preparation and fair presentation of TOT Public Company Limited’s financial statements and the consolidated financial statements of TOT Public Company Limited and its subsidiary. The aforementioned financial statements have been prepared in accordance with Financial Reporting Standards, using appropriate accounting policies, consistency and applying careful judgment and the best estimation. Important information is adequately disclosed in the notes to the financial statements.

The Board of Directors has established and maintained a risk management system and appropriate and efficient internal controls to ensure that accounting records are accurate and adequate to protect the Company’s assets and identify weaknesses in order to prevent fraud or materially irregular operations.

To accomplish this task, the Board of Directors has appointed an Audit Committee, which consists of independent directors responsible for the quality of the financial statements and the internal control system, whose comments on these issues are included in the Audit Committee Report in this Annual Report.

The financial statements of the Company and the consolidated financial statements of the Company and its subsidiary have been audited by the Company’s auditor, the Office of the Auditor General. For the purpose of these audits and in order to enable the auditor to express an opinion in accordance with generally accepted auditing standards, the Company provided all of its records and related data. The auditor’s opinion is presented in the auditor’s report as part of this Annual Report.

The Board of Directors believes that the Company’s overall internal control system is satisfactory and rendered credibility and reliability to TOT Public Company Limited’s financial statements and the consolidated financial statements of TOT Public Company Limited and its subsidiary for the year ended December 31, 2014, which have been prepared in accordance with Financial Reporting Standards and related regulations.

General (Surapong Suwana-adth) Chairman

TOT Public Company Limited 89 Auditor’s Report

To The Shareholders of TOT Public Company Limited

The Office of the Auditor General of Thailand has audited the accompanying consolidated financial statements of TOT Public Company Limited and its subsidiaries and company’s financial statements of TOT Public Company Limited, which comprise the consolidated and company’s statements of financial position as at December 31, 2014, and the consolidated and company’s statements of comprehensive income, the consolidated and company’s statements of changes in equity and the consolidated and company’s statements of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated and Company’s Financial Statements Management is responsible for the preparation and fair presentation of these consolidated and company’s financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated and company’s financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility The Office of the Auditor General of Thailand’s responsibility is to express an opinion on these consolidated and company’s financial statements based on the audit. The Office of the Auditor General of Thailand conducted the audit in accordance with Thai Standards on Auditing. Those standards require that the Office of the Auditor General of Thailand comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and company’s financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated and company’s financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated and company’s financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated and company’s financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated and company’s financial statements. The Office of the Auditor General of Thailand believes that the audit evidence the Office of the Auditor General of Thailand has obtained is sufficient and appropriate to provide a basis for the Office of the Auditor General of Thailand’s audit opinion.

Basis for Qualified Opinion According to Note 17 to the financial statements, the amount of Baht 14,242.33 million of 3G network assets was included in the amount of Bath 76,126.93 million of property plant and equipment as at December 31, 2014. The plan of using 3G network to maximise the Company’s benefit is under consideration of the Company’s management. Unless the management finalizes the plan, the Office of the Auditor General of Thailand could not assess the recoverable amount from using 3G network. Therefore, the Office of the Auditor General of Thailand could not quantify the effect of this matter to statement of financial position for property plant and equipment item and statement of comprehensive income for cost of providing services items which may occur in case the recoverable amount of 3G network asset lower than net book value.

Qualified Opinion In the Office of the Auditor General of Thailand’s opinion, except for the possible effects of the matters described in the basis for qualified opinion paragraph, the above mentioned consolidated and company’s financial statements present fairly, in all material respects, the consolidated financial position of TOT Public Company Limited and its subsidiaries and company’s financial position of TOT Public Company Limited, respectively, as at December 31, 2014, and their consolidated and company’s financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards. 90 Annual Report 2014 Emphasis of Matters Without qualifying the opinion, the Office of the Auditor General of Thailand draws attention to the following Notes to the financial statements. 1. Note 18 to the financial statements, the amount of Baht 22,814.62 million of assets transferred from private operator under 2G mobile service concession agreement was included in the amount of Baht 30,298.98 million of property plant and equipment under the cooperation and investment agreement as at December 31, 2014. The expiration date of the concession agreement is September 30, 2015 and may cause to end the right to use frequency at the same day. This is subject to the conditions of licensing frequency. In case that the Company is no longer permitted, either by the National of Telecommunications Commission, the National of Broadcasting, and Telecommunications Commission or by the governmental policy of frequency allocation to state-owned enterprises in telecommunication business, to receive the license to use 900 MHz frequency; the assets under 2G mobile service concession agreement as well as the revenue of the Company will be significantly impacted and consequently affect the Company’s liquidity. 2. Note 38.1.1 to the financial statements, regarding contingent liabilities from contractual arrangement which indicate that the Company is the defendant amounting to Baht 75,264.19 million. 3. Note 38.1.3 to the financial statements, regarding contingent liabilities from unrecognised penalty and surcharge of the value added tax of excise tax deducted from revenue sharing amounting to Baht 2,937.77 million. 4. Note 38.1.4 to the financial statements, regarding contingent liabilities arising from numbering fee of special numbers from the National Broadcasting and Telecommunications Commission amounting to Baht 656.51 million. 5. Note 40 to the financial statements regarding a disputed of interconnection charge which has not yet finalised.

å(Signed) Sirin Phankasem (Mrs. Sirin Phankasem) Deputy Auditor General Acting Auditor General

(Signed) Pattra Showsri (Mrs. Pattra Showsri) Director of Financial Audit Office No.6

TOT Public Company Limited 91 92 Annual Report 2014 Financial Statements

TOT Public Company Limited 93 Statements of Financial Position

TOT Public Company Limited and Subsidiary As at December 31, 2014

Unit : Baht

Consolidated Company Notes 2014 2013 2014 2013 ASSETS Current Assets Cash and cash equivalents 7 4,940,334,305 8,342,521,783 4,858,539,567 8,312,762,138 Short-term investments 8 22,266,866,119 16,372,453,964 22,086,586,640 16,343,453,964 Current portion of funds for redemption of long-term liabilities 9 23,237,092,300 21,845,789,390 23,237,092,300 21,845,789,390 Trade accounts receivable 10 11,684,883,709 12,454,153,240 11,685,042,256 12,454,616,439 Current portion of loans to employees 15 64,738,187 68,816,938 64,738,187 68,816,938 Other receivables 124,342,184 129,432,878 124,342,184 129,432,878 Inventories and supplies 11 909,862,550 938,881,857 909,368,062 938,373,808 Other current assets 12 2,388,275,529 2,496,667,200 2,387,418,410 2,449,379,189 Total Current Assets 65,616,394,883 62,648,717,250 65,353,127,606 62,542,624,744

Non-Current Assets Available-for-sale investments 13 12,893,177,048 12,954,089,250 12,893,177,048 12,954,089,250 Investments in associates 14 33,058,453 32,383,045 30,000,000 30,000,000 Investments in subsidiaries 14 - - 892,279,894 892,279,874 Other long-term investments 13 772,140,415 586,016,448 772,140,415 586,016,448 Loans to employees 15 436,179,883 519,311,028 436,179,883 519,311,028 Loans to subsidiary 39.8 - - - 87,517,079 Funds for redemption of long-term liabilities 9 85,000,000 535,000,000 85,000,000 535,000,000 Investment properties 16 366,743,373 366,743,373 366,743,373 366,743,373 Property, plant and equipment 17 77,007,874,660 81,896,787,796 76,126,934,842 80,835,087,710 Property, plant and equipment from concession agreements 18 30,298,979,306 35,599,107,553 30,298,979,306 35,599,107,553 Intangible assets 19 3,508,975,577 3,983,942,338 3,508,489,677 3,983,501,149 Other non-current assets 148,710,276 158,074,484 147,575,009 158,074,484 Total Non-Current Assets 125,550,838,991 136,631,455,315 125,557,499,447 136,546,727,948 Total Assets 191,167,233,874 199,280,172,565 190,910,627,053 199,089,352,692

The accompanying notes are an integral part of these financial statements.

94 Annual Report 2014 Statements of Financial Position

TOT Public Company Limited and Subsidiary As at December 31, 2014

Unit : Baht

Consolidated Company Notes 2014 2013 2014 2013 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Trade accounts payable 20 1,348,193,409 3,241,572,433 1,386,052,162 3,248,832,950 Payables to private operators 21 15,046,917,480 15,255,052,818 15,046,917,480 15,255,052,818 Other payables 612,133,689 519,836,686 612,133,689 519,836,686 Current portion of long-term borrowings 26.1 2,264,893,937 2,000,247,000 2,264,893,937 2,000,247,000 Current portion of financial lease liabilities 26.2 1,936,843,994 1,936,843,994 1,936,843,994 1,936,843,994 Accrued expenses 22 12,980,851,665 8,254,883,348 13,057,532,370 8,300,396,958 Subscriber deposits 23 1,667,857,279 1,682,988,158 1,667,857,279 1,682,988,158 Current portion of deferred income 25 10,083,418,164 11,473,764,899 10,083,418,164 11,473,764,899 Accrued income tax 574,966,195 436,862,902 564,368,217 435,272,175 Other current liabilities 24 2,415,729,192 2,983,362,294 2,398,299,594 2,981,310,957 Total Current Liabilities 48,931,805,004 47,785,414,532 49,018,316,886 47,834,546,595

Non-Current Liabilities Deferred income 25 1,404,577,199 9,645,776,075 1,404,577,199 9,645,776,075 Long-term borrowings 26.1 11,239,548,729 11,784,237,573 11,239,548,729 11,784,237,573 Deferred income tax liabilities 27 938,736,526 1,742,042,965 939,540,835 1,741,566,356 Employee benefit obligations 28 7,337,894,343 6,943,994,585 7,330,814,343 6,943,965,052 Total Non-Current Liabilities 20,920,756,797 30,116,051,198 20,914,481,106 30,115,545,056 Total Liabilities 69,852,561,801 77,901,465,730 69,932,797,992 77,950,091,651

The accompanying notes are an integral part of these financial statements.

TOT Public Company Limited 95 Statements of Financial Position

TOT Public Company Limited and Subsidiary As at December 31, 2014

Unit : Baht

Consolidated Company Notes 2014 2013 2014 2013 Shareholdersí Equity Share capital Authorised share capital 600,000,000 ordinary shares of par Bath 10 each 6,000,000,000 6,000,000,000 6,000,000,000 6,000,000,000 Issued and paid-up share capital 600,000,000 ordinary shares of par Bath 10 each 6,000,000,00 6,000,000,000 6,000,000,000 6,000,000,000 Retained earnings Appropriated 29 2,120,229,066 2,118,110,793 2,118,110,793 2,118,110,793 Unappropriated 105,743,394,107 105,752,156,424 105,432,314,030 105,544,216,248 Other components of Shareholders’ Equity 31 7,427,404,238 7,476,934,000 7,427,404,238 7,476,934,000 Total Shareholdersí Equity of the Company 121,291,027,411 121,347,201,217 120,977,829,061 121,139,261,041 Non-controlling interests 32 23,644,662 31,505,618 - - Total Shareholdersí Equity 121,314,672,073 121,378,706,835 120,977,829,061 121,139,261,041 Total Liabilities and Shareholdersí Equity 191,167,233,874 199,280,172,565 190,910,627,053 199,089,352,692

The accompanying notes are an integral part of these financial statements.

(Mr. Pipat Khanthong) (Col.Somkiat Sampan) Director Director TOT Public Company Limited TOT Public Company Limited

96 Annual Report 2014 Statements of Comprehensive Income TOT Public Company Limited and Subsidiary As at December 31, 2014 Unit : Baht Consolidated Company Notes 2014 2013 2014 2013 REVENUES Revenue from telecommunication services 29,167,331,016 28,320,783,819 29,167,736,593 28,320,862,384 Revenue from concession agreements 1,562,281,629 1,797,794,441 1,562,281,629 1,797,794,441 Revenue from revenue sharing agreements 11,673,553,513 22,001,960,220 11,673,553,513 22,001,960,220 Amortisation of deferred income - from 25 16,151,692,258 31,271,214,830 16,151,692,258 31,271,214,830 concession agreements Other services income 718,155,054 674,687,388 681,452,587 663,345,850 Other income 3,926,327,520 3,065,962,227 3,943,412,114 3,078,684,848 Total Revenues 63,199,340,990 87,132,402,925 63,180,128,694 87,133,862,573 EXPENSES Cost of services 24,248,323,221 24,531,920,165 24,265,427,973 24,593,753,913 Revenue sharing submission under regulation 35 5,806,877,032 505,751,874 5,806,877,032 505,751,874 Depreciation and loss on impairment - 18, 35 10,252,586,450 30,620,796,865 10,252,586,450 30,620,796,865 assets from concession agreements Selling expenses 1,836,686,844 2,109,025,057 1,838,505,838 2,107,377,061 Administrative expenses 39.9 16,211,901,799 20,540,614,183 16,280,425,923 20,542,793,830 Other expenses 1,598,135,641 3,338,924,567 1,597,716,388 3,338,590,658 Finance cost 33 538,475,437 405,887,887 538,451,313 405,837,887 Total Expenses 60,492,986,424 82,052,920,598 60,579,990,917 82,114,902,088 Share of profit from investments in associates 14 675,408 676,272 - - Profit before income tax 34 2,707,029,974 5,080,158,599 2,600,137,777 5,018,960,485 Income tax 34 (759,357,055) (666,322,541) (750,039,995) (664,596,561) Profit for the year 1,947,672,919 4,413,836,058 1,850,097,782 4,354,363,924 Other comprehensive income - Unrealised gain (loss) on changes in fair value of available- for-sale investments 13 (61,912,202) 1,193,070,937 (61,912,202) 1,193,070,937 - Income tax relating to components of other comprehensive income for the year 34 12,382,440 (211,778,374) 12,382,440 (211,778,374) - Actuarial losses on defined employee benefit plans 34 - (134,179,065) - (134,179,065) Total other comprehensive income (49,529,762) 847,113,498 (49,529,762) 847,113,498 Total comprehensive income for the year 1,898,143,157 5,260,949,556 1,800,568,020 5,201,477,422 Profit attributable to: Equity holders of the Company 1,955,355,956 4,409,032,118 1,850,097,782 4,354,363,924 Non-controlling interests 32 (7,683,037) 4,803,940 - - Profit for the year 1,947,672,919 4,413,836,058 1,850,097,782 4,354,363,924 Total comprehensive income attributable to: Equity holders of the Company 1,905,826,194 5,256,145,616 1,800,568,020 5,201,477,422 Non-controlling interests 32 (7,683,037) 4,803,940 - - Total comprehensive income for the year 1,898,143,157 5,260,949,556 1,800,568,020 5,201,477,422 Earnings per share for profit attributable to the equity holders of the Company Basic earnings per share 36 3.26 7.35 3.08 7.26 The accompanying notes are an integral part of these financial statements.

TOT Public Company Limited 97 98

Annual Report 2014 Statements of Changes in Equity TOT Public Company Limited and Subsidiary For the year ended December 31, 2014

Unit : Baht

Consolidated Equity holders of the Company Issued and Appropriated Unappropriated Other Total attributable Non-controlling Total to the equity paid-up retained retained components holders of the interests shareholder’s Notes share capital earnings earnings of equity Company equity Balance as at January 1, 2014 6,000,000,000 2,118,110,793 105,752,156,424 7,476,934,000 121,347,201,217 31,505,618 121,378,706,835 Transactions with owners, recorded directly in equity Distributions to owners of the Company - Reserve of subsidiary - 2,118,273 (2,118,273) - - - - - Cash received from issuing shares - - - - - 9,000 9,000 - Transfer of shares - - - - - (19) (19) - Dividends to owners of the Company 30 - - (1,962,000,000) - (1,962,000,000) (186,900) (1,962,186,900) Total transactions with owners, recorded directly in equity - 2,118,273 (1,964,118,273) - (1,962,000,000) (177,919) (1,962,177,919) Comprehensive income for the year - Profit for the year 32 - - 1,955,355,956 - 1,955,355,956 (7,683,037) 1,947,672,919 - Other comprehensive income 31 - - - (49,529,762) (49,529,762) - (49,529,762) Total comprehensive income for the year - - 1,955,355,956 (49,529,762) 1,905,826,194 (7,683,037) 1,898,143,157 Balance as at December 31, 2014 6,000,000,000 2,120,229,066 105,743,394,107 7,427,404,238 121,291,027,411 23,644,662 121,314,672,073

The accompanying notes are an integral part of these financial statements. Statements of Changes in Equity TOT Public Company Limited and Subsidiary For the year ended December 31, 2013

Unit : Baht Consolidated Equity holders of the Company Issued and Appropriated Unappropriated Other Total attributable Non-controlling Total to the equity paid-up retained retained components holders of the interests shareholder’s Notes share capital earnings earnings of equity Company equity Balance as at January 1, 2013 6,000,000,000 2,118,110,793 108,848,467,558 6,522,477,250 123,489,055,601 15,122,850 123,504,178,451 Transactions with owners, recorded directly in equity Distributions to owners of the Company - Investment in subsidiary - - - - - 11,579,978 11,579,978 - Dividends to owners of the Company 30 - - (7,398,000,000) - (7,398,000,000) - (7,398,000,000) - Acquisition of non-controlling interests without a change in control - - - - - (1,150) (1,150) Total transactions with owners, recorded directly in equity - - (7,398,000,000) - (7,398,000,000) 11,578,828 (7,386,421,172) Comprehensive income for the year - Profit for the year 32 - - 4,409,032,118 - 4,409,032,118 4,803,940 4,413,836,058 - Other comprehensive income 31 - - (107,343,252) 954,456,750 847,113,498 - 847,113,498

TOT Public CompanyLimited Total comprehensive income for the year - - 4,301,688,866 954,456,750 5,256,145,616 4,803,940 5,260,949,556 Balance as at December 31, 2013 6,000,000,000 2,118,110,793 105,752,156,424 7,476,934,000 121,347,201,217 31,505,618 121,378,706,835

The accompanying notes are an integral part of these financial statements. 99 100

Annual Report 2014 Statements of Changes in Equity TOT Public Company Limited and Subsidiary For the year ended December 31, 2014

Unit : Baht

Company

Issued and Appropriated Unappropriated Other Total paid-up retained retained components shareholder’s Notes share capital earnings earnings of equity equity

Balance as at January 1, 2014 6,000,000,000 2,118,110,793 105,544,216,248 7,476,934,000 121,139,261,041 Transactions with owners, recorded directly in equity Distributions to owners of the Company - Dividends to owners of the Company 30 - - (1,962,000,000) - (1,962,000,000) Total transactions with owners, recorded directly in equity - - (1,962,000,000) - (1,962,000,000) Comprehensive income for the year - Profit for the year - - 1,850,097,782 - 1,850,097,782 - Other comprehensive income 31 - - - (49,529,762) (49,529,762) Total comprehensive income for the year - - 1,850,097,782 (49,529,762) 1,800,568,020 Balance as at December 31, 2014 6,000,000,000 2,118,110,793 105,432,314,030 7,427,404,238 120,977,829,061

The accompanying notes are an integral part of these financial statements. Statements of Changes in Equity TOT Public Company Limited and Subsidiary For the year ended December 31, 2013

Unit : Baht Company

Issued and Appropriated Unappropriated Other Total paid-up retained retained components shareholder’s Notes share capital earnings earnings of equity equity

Balance as at January 1, 2013 6,000,000,000 2,118,110,793 108,695,195,576 6,522,477,250 123,335,783,619 Transactions with owners, recorded directly in equity Distributions to owners of the Company - Dividends to owners of the Company 30 - - (7,398,000,000) - (7,398,000,000) Total transactions with owners, recorded directly in equity - - (7,398,000,000) - (7,398,000,000) Comprehensive income for the year - Profit for the year - - 4,354,363,924 - 4,354,363,924 - Other comprehensive income 31 - - (107,343,252) 954,456,750 847,113,498 Total comprehensive income for the year - - 4,247,020,672 954,456,750 5,201,477,422 Balance as at December 31, 2013 6,000,000,000 2,118,110,793 105,544,216,248 7,476,934,000 121,139,261,041 TOT Public CompanyLimited

The accompanying notes are an integral part of these financial statements. 101 Statements of Cash Flows

TOT Public Company Limited and Subsidiary For the year ended December 31, 2014

Unit : Baht Consolidated Company Notes 2014 2013 2014 2013 CASH FLOWS FROM OPERATING ACTIVITIES Profit for the year 1,947,672,919 4,413,836,058 1,850,097,782 4,354,363,924 Reconciliation of profit to cash provided by (used in) operating activities: Depreciation and amortisation 17,18,19 19,571,417,400 24,604,947,633 19,389,965,458 24,423,616,211 Bad debts expense and doubtful debt 35 416,686,595 438,434,071 416,686,595 438,434,071 (Reversal) Loss on stock obsolescence (33,502,835) 2,945,020 (33,502,835) 2,945,020 Share of profit from investments in associates - equity method 14 (675,408) (676,272) - - Reversal of loss from impairment of investment (187,123,967) - (187,123,967) - Loss from impairment of property, plant and equipment 2,632,734,771 18,189,113,481 2,632,734,771 18,189,113,481 Amortisation of deferred income 25 (16,151,692,258) (31,271,214,830) (16,151,692,258) (31,271,214,830) Unrealised loss on exchange rate 908,395 12,651,387 908,395 12,651,387 Realised gain on exchange rate - borrowings - (309,714,087) - (309,714,087) Loss on disposal of property, plant and equipment 1,535,363,328 3,171,860,934 1,535,363,328 3,171,860,934 Income from received donated assets 17 (819,450) (2,223,139) (819,450) (2,223,139) Interest income (1,474,505,318) (1,446,812,422) (1,473,534,102) (1,460,914,281) Dividend income (635,381,928) (771,075,845) (635,381,928) (771,075,845) Finance costs 33 538,475,345 405,887,776 538,451,222 405,837,776 Income tax expenses 34 759,357,055 666,322,541 750,039,995 664,596,560 Others (33,362,261) (10,247,788) (32,374,031) (37,677,866) 8,885,552,383 18,094,034,518 8,599,818,975 17,810,599,316 Changes in operating assets (increase) decrease Trade accounts receivable 155,944,650 721,748,265 156,249,303 721,285,066 Other receivables 7,417,506 27,517,814 7,417,506 27,517,814 Loans to employees 86,986,872 98,621,566 86,986,872 98,621,566 Inventories and supplies (673,091,916) (1,398,005,059) (673,105,478) (1,397,497,009) Other current assets (97,534,555) (418,605,394) (145,463,549) (444,456,428) Changes in operating liabilities increase (decrease) Trade accounts payable 431,317,029 1,660,714,449 557,216,684 1,908,085,861 Payables to private operators (33,983,950) (765,521,714) (33,983,950) (765,521,714) Other payables 92,297,002 74,867,915 92,297,002 74,867,915 Accrued expenses 4,738,858,526 1,330,220,526 4,770,359,556 1,376,024,904 Subscriber deposits (15,130,879) (7,247,603) (15,130,879) (7,247,603) Other current liabilities (547,178,608) 887,154,274 (567,784,369) 875,738,593 Employee benefit obligation 393,899,757 2,551,650,497 386,849,291 2,551,620,963 Income tax paid (1,412,177,759) (4,912,839,878) (1,410,568,644) (4,899,507,122) Net cash provided by operating activities 12,013,176,058 17,944,310,176 11,811,158,320 17,930,132,122

The accompanying notes are an integral part of these financial statements.

102 Annual Report 2014 Statements of Cash Flows

TOT Public Company Limited and Subsidiary For the year ended December 31, 2014

Unit : Baht Consolidated Company Notes 2014 2013 2014 2013 CASH FLOWS FROM INVESTING ACTIVITIES Interest received 1,578,485,768 1,324,130,522 1,577,173,811 1,323,862,738 Dividend received 635,381,928 771,075,845 635,381,928 771,075,845 Increase in short-term investments 8 (34,163,470,527) (30,192,133,726) (34,012,191,048) (30,163,133,726) Decrease in short-term investments 8 28,269,058,372 24,762,026,908 28,269,058,372 24,762,026,908 Increase in funds for redemption of long-term liabilities 9 (18,856,403,424) (25,732,506,917) (18,856,403,424) (25,732,506,917) Decrease in funds for redemption of long-term liabilities 9 17,911,484,825 24,936,109,184 17,911,484,825 4,936,109,184 Cash paid for purchase of other long-term investments 13 - (101,000,000) - (101,000,000) Cash received (paid) for investment in subsidiary-net of cash acquired - 5,060,000 - (1,890,550) Cash received from disposal of property, plant and equipment 89,729,961 81,674,188 89,729,961 81,674,188 Cash paid for purchase of property, plant and equipment (8,058,292,839) (14,025,128,325) (8,058,416,339) (14,025,545,475) Cash paid for purchase of intangible assets (25,288,161) (86,179,675) (25,164,661) (85,762,525) Net cash used in investing activities (12,619,314,097) (18,256,871,996) (12,469,346,575) (18,235,090,330) CASH FLOWS FROM FINANCING ACTIVITIES Cash paid for changes in ownership interests - (1,250.00) - (1,250.00) Cash received from issuing shares 9,000 - - - Payments of interest (554,209,935) (470,471,668) (554,185,812) (470,421,668) Cash received from long-term local borrowings 1,984,852,030 6,198,021,199 1,984,852,030 6,198,021,199 Payments of long-term borrowings (2,264,893,937) (2,730,257,783) (2,264,893,937) (2,730,257,783) Dividend paid 30 (1,962,000,000) (7,398,000,000) (1,962,000,000) (7,398,000,000) Net cash used in financing activities (2,796,242,842) (4,400,709,502) (2,796,227,719) (4,400,659,502)

Net decrease in cash and cash equivalents (3,402,380,881) (4,713,271,322) (3,454,415,974) (4,705,617,710) Opening balance of cash and cash equivalents 8,342,521,783 13,054,634,590 8,312,762,138 13,017,221,333 Effects of exchange rate changes at end of year 193,403 1,158,515 193,403 1,158,515 Closing balance of cash and cash equivalents 7 4,940,334,305 8,342,521,783 4,858,539,567 8,312,762,138

Additional disclosure of cash flow information: Non-cash transactions

Unit : Million Baht

Acquisition of donated assets 17 0.82 2.23 0.82 2.23 Acquisition of assets transferred under concession agreements 18, 25 6,545.22 5,548.28 6,545.22 5,548.28 Acquisition of property, plant and equipment not yet paid 1,080.11 2,233.42 1,080.11 2,233.42 Offset between accounts receivable and mount due to related parties - - - 960.00 Offset between loans to subsidiary and trade accounts payble to subsidiary - - - 222.58

The accompanying notes are an integral part of these financial statements.

TOT Public Company Limited 103 Notes to the financial statements

TOT Public Company Limited and Subsidiary For the year ended December 31, 2014 (Unit: Million Baht unless otherwise stated)

1 General information 1.1 Company establishment TOT Public Company Limited (“the Company”) was incorporated as a public limited company in Thailand. The address of its registered office is: 89/2 Moo 3, Chaengwattana Road, Toong-song-hong District, Laksi, Bangkok, Thailand. Ministry of Finance is a shareholder only and ultimate shareholder of the Company. For financial statement presentation purpose, the Company and its subsidiaries are represented as the “Group”. The Company is principally engaged in telecommunication activities. Details of the Company’s subsidiaries as at December 31, 2014 and 2013 were as follows:

Name of the entity Type of business Country of incorporation Ownership interest (%) 2014 2013 Direct subsidiaries ATC Mobile Company Limited Telecommunication Thailand 98.57 98.57 TOT Outsourcing Services General Thailand 25.00 25.00 Company Limited subcontract service TOT Sport Club Company Limited Copyright and Thailand 25.00 25.00 rights management

On January 18, 2013 the Company invested in TOT Outsourcing Service Company Limited at 25%. By having four representatives as the Board of Directors from the total of six members of the Board of Directors, the Company has control over TOT Outsourcing Service Company Limited and presented this investment in financial statements as investment in subsidiaries (Note 14). On January 16, 2013 the Company paid for shares in TOT Sport Club Company Limited with the investment proportion of 25%. By having four representatives as the Board of Directors from the total of seven members of the Board of Directors, the Company has control over TOT Sport Club Company Limited and presented this investment in financial statements as investment in subsidiaries (Note 14). 1.2 Business activities The Company and the subsidiaries (“Group”) are principally engaged in telecommunication activities, such as providing fixed line telephone services, mobile phones, card and coin operated public telephones, personal identification number phones, integrated services digital network (ISDN), wireless services, pager phones, data transmission, leased lines and leased circuit interference, internet, and other related and similar communications businesses. These services are provided to both local and overseas customers. The Company has issued various concessions to private operators to encourage development in the fixed line telephone and related telecommunications services. Under these concessions, certain private operators must pay compensation fees to the Company based on certain percentages of service income, other operators pay the fees based on certain percentage of service income or at the minimum payment specified in the individual agreements, whichever is higher. In addition, certain operators, in

104 Annual Report 2014 accordance with their concession agreements, are required to procure property and equipment to operate and to transfer the ownership of such property and equipment to the Company within the periods specified in the concession agreements. Under most concession agreements, the legal title to the assets is transferred to the Company upon completion of construction and installation, when they are ready to be used; however, the operator retains the right to use the assets to generate revenue over the concession period. The revenue recognition policy and the recognition of assets received from private operators are discussed in Note 2.14. On July 10, 2008, the Company was transferred the exclusive rights and obligations of ownership and use of the 1900 MHz and 3G mobile phone frequency (IMT-2000) from CAT Telecom Public Company Limited (CAT) according to the Memorandum of Understanding (MOU) on the transfer of the rights and obligations relating to the frequency, the termination of the joint venture agreement, and asset management under the 1900 MHz mobile phone services project. Moreover, the National Telecommunications Commission (NTC) (On December 20, 2010, NTC was renamed to the National Broadcasting and Telecommunications Commission (NBTC)) approved the transfer of the license to use this frequency on March 13, 2009 and gave the Company permission to operate a telecommunications business as a service wholesaler for 3G mobile phones (IMT-2000) in the frequency ranges of 1965-1980 MHz and 2155-2170 MHz on November 11, 2009. The Company provides the mobile phone service by acting as a Mobile Network Operator (MNO) that sells services to wholesale customers, known as Mobile Virtual Network Operators (MVNO), who are mobile phone service providers that do not have right in the frequency by means of buying Traffic (MNOs’ networks) to provide service to retail customers and to have their own distribution channels and marketing. In December 2009, the Company commenced providing 3G (third generation) mobile phone services in Bangkok Metropolitan area and has recently had the total of 5,320 base stations around Bangkok and other provincial parts. As at December 31, 2014 and 2013, the principal concession arrangements with private operators are as follows:

1.2.1 Arrangements under which private operators are required to transfer the ownership of property and equipment to the Company

Operators Service provided Concession period 1. True Corporation Public Company Limited Telephone services - 2.6 million fixed lines in Bangkok 25 years from metropolitan area October 29, 1992 - Coin operated public telephones January 15, 1997 in Bangkok metropolitan area to October 29, 2017 - Value added services: DID, leased May 13, 1996 to line services, etc. October 29, 2017 - Personal communication telephone August 15, 1996 to services October 29, 2017 2. TT&T Public Company Limited Telephone services - 1.5 million fixed lines in provincial 25 years from areas October 25, 1993 - Coin operated public telephones August 20, 1997 to in provincial areas October 25, 2018 - Value added services: DID, leased February 14, 2001 line services, etc. to October 25, 2018 3. Advanced Data network Communications Data transmission service using Datakit 25 years from Company Limited Virtual Circuit Switch, Frame Relay, ATM September 25, 1997 Switch and ADSL 4. Advanced Info Service Mobile phone network - Cellular 900 NMT 25 years from Public Company Limited and GSM October 1, 1990 5. True Multi-Media Company Limited Leased high-speed signal transmission 20 years from system via multi-media network October 20, 1997

TOT Public Company Limited 105 1.2.2 Arrangements under which private operators are not required to transfer the ownership of property and equipment to the Company

Operators Service provided Concession period 1. Samart Multimedia Company Limited Audiotext for special 1900 telephone number 15 years from September 29, 1999 2. Quality Digital Lines Company Limited Audiotext for special 1900 telephone number 15 years from January 21, 2002 3. Level UP Online Company Limited Audiotext for special 1900 telephone number 15 years from October 14, 2002 4. Mono Technology Public Company Limited Audiotext for special 1900 telephone number 15 years from September 11, 2003 5. Tele-Info Media Public Company Limited Audiotext for special 1900 telephone number 15 years from September 29, 2004 6. Tripple A Asset Management Audiotext for special 1900 telephone number 15 years from Company Limited August 18, 2005

1.2.3 Granting of Telecommunication and Broadcasting License The Company has obtained seven telecommunication and broadcasting licenses as follows:

1. Type-one Telecom license, which allows the Company to provide audiotext services and phone card services. - Revenue from service providing of Type-one Telecom license for the year ended December 31, 2014 was Baht 211.72 million (2013 : Baht 296.62 million). 2. Type-one Internet license - Revenue from service providing of Type-one Internet license for the year ended December 31, 2014 was Baht 11,773.40 million (2013 : Baht 11,034.20 million). 3. Type-three Telecom license, which allows the Company to provide fixed line services, mobile services (470 MHz, 900 MHz and 1900 MHz), radio services for specific groups, leased line services and international call services, including wholesaling service of 3G mobile phones service. The expiration date of license is August 3, 2025. - Revenue from service providing of Type-three Telecom license for the year ended December 31, 2014 was Baht 25,452.91 million (2013 : Baht 36,565.58 million). 4. Type-two International Internet Gateway and Internet Exchange license with their own networks. - Revenue from service providing of Type-two Internet license for the year ended December 31, 2014 was Baht 216.66 million (2013 : Baht 212.66 million). 5. Broadcasting license for service providing of broadcasting network not using the National Frequency Spectrum. - Revenue from service providing of broadcasting network not using the National Frequency Spectrum for the year ended December 31, 2014 was Baht 65.86 million (2013 : Baht 40.33 million). 6. Broadcasting license for service providing of TOT channel broadcasting. - No revenue generated from the service providing of TOT channel broadcasting for the year ended December 31, 2014. (2013 : nil). 7. Broadcasting license for service providing of broadcasting network of Nation - No revenue from service providing of broadcasting network of Nation for the year ended December 31, 2014. (2013 : nil).

Annual license fees associated with telecommunication and broadcasting service operation shall be paid within 150 days from the end of the accounting period or within May 30, 2014. The fee rates are in accordance with the NBTC announcement.

As the Company is granting the telecommunication and broadcasting licenses, the Company shall strictly comply with the conditions stated in the licenses.

106 Annual Report 2014 2 Basis of preparation and accounting policy The basis of preparation and the principal accounting policies applied in the preparation of these consolidated and Company financial statements are set out below. 2.1 Basis of preparation of the financial statements The financial statements are prepared in accordance with Thai Financial Reporting Standards including guidelines promulgated by the Federation of Accounting Professions (“FAP”) under the Accounting Profession Act B.E.2547 and the requirements of the Securities and Exchange Commission and the Securities Exchange of Thailand regarding the financial reporting preparation and presentation under the Securities and Exchange Act B.E.2535.

The financial statements have been prepared under the historical cost convention in the valuation of the element of financial statements except those stated in the following accounting policies.

Significant transactions between the Company and subsidiaries were eliminated in consolidated financial statement. 2.2 Accounting standards, financial reporting standards, accounting standard interpretation, financial reporting interpretation, and accounting treatment guidance

Accounting standards, financial reporting standards, accounting standard interpretation, financial reporting interpretation, and accounting treatment guidance effective in this year and the future are as follows:

Effective for the period beginning on or after January 1, 2014

TAS 1 (Revised 2012) Presentation of financial statements TAS 7 (Revised 2012) Statement of cash flow TAS 12 (Revised 2012) Income taxes TAS 17 (Revised 2012) Leases TAS 18 (Revised 2012) Revenue TAS 19 (Revised 2012) Employee benefits TAS 21 (Revised 2012) The effects of changes in foreign exchange rates TAS 24 (Revised 2012) Related party disclosures TAS 28 (Revised 2012) Investments in associates TAS 31 (Revised 2012) Interest in joint ventures TAS 34 (Revised 2012) Interim financial reporting TAS 36 (Revised 2012) Impairment of assets TAS 38 (Revised 2012) Intangible assets TFRS 2 (Revised 2012) Share-based payment TFRS 3 (Revised 2012) Business combinations TFRS 5 (Revised 2012) Non-current assets held for sale and discontinued operations TFRS 8 (Revised 2012) Operating segments TSIC 15 Operating leases - incentives TSIC 27 Evaluating the substance of transactions in the legal form of a lease TSIC 29 Service concession arrangements: Disclosure TSIC 32 Intangible assets - Web site costs TFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities TFRIC 4 Determining whether an arrangement contains a Lease TFRIC 5 Rights to interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds TOT Public Company Limited 107 TFRIC 7 Applying the restatement approach under IAS 29 TFRIC 10 Interim financial reporting and impairment TFRIC 12 Service concession arrangements TFRIC 13 Customer loyalty programmes TFRIC 17 Distributions of non - cash assets to owners TFRIC 18 Transfers of assets from customers Accounting guidance for record stock dividends.

The management of the Company assessed and considered that these accounting standards, financial reporting standards, accounting standard interpretation, financial reporting interpretation, and accounting treatment guidance do not have any significant impact on the financial statements being presented,

Effective for the period beginning on or after January 1, 2015

TAS 1 (Revised 2014) Presentation of Financial Statements TAS 2 (Revised 2014) Inventories TAS 7 (Revised 2014) Statement of Cash Flow TAS 8 (Revised 2014) Accounting Policies, Changes in Accounting Estimates and Errors TAS 10 (Revised 2014) Events after the Reporting Period TAS 11 (Revised 2014) Construction Contracts TAS 12 (Revised 2014) Income Taxes TAS 16 (Revised 2014) Property, Plant and Equipment TAS 17 (Revised 2014) Leases TAS 18 (Revised 2014) Revenue TAS 19 (Revised 2014) Employee Benefits TAS 20 (Revised 2014) Accounting for Government Grants and Disclosure of Government Assistance TAS 21 (Revised 2014) The Effects of Changes in Foreign Exchange Rates TAS 23 (Revised 2014) Borrowing Costs TAS 24 (Revised 2014) Related Party Disclosure TAS 26 (Revised 2014) Accounting and Reporting by Retirement Benefit Plans TAS 27 (Revised 2014) Separate Financial Statements TAS 28 (Revised 2014) Investments in Associates and Joint Ventures TAS 29 (Revised 2014) Financial Reporting in Hyperinflationary Economies TAS 33 (Revised 2014) Earnings per Share TAS 34 (Revised 2014) Interim Financial Reporting TAS 36 (Revised 2014) Impairment of Assets TAS 37 (Revised 2014) Provisions, Contingent Liabilities and Contingent Assets TAS 38 (Revised 2014) Intangible Assets TAS 40 (Revised 2014) Investment Property TFRS 2 (Revised 2014) Share – based Payment TFRS 3 (Revised 2014) Business Combinations TFRS 5 (Revised 2014) Non-current Assets Held for Sale and Discontinued Operations TFRS 6 (Revised 2014) Exploration for and Evaluation of Mineral Resources TFRS 8 (Revised 2014) Operating Segments TFRS 10 Consolidates Financial Statements TFRS 11 Joint Arrangements TFRS 12 Disclosure of Interest in Other Entities TFRS 13 Fair Value Measurement

108 Annual Report 2014 TSIC 10 (Revised 2014) Government Assistance – No Specific Relation to Operating Activities TSIC 15 (Revised 2014) Operating Leases - Incentives TSIC 25 (Revised 2014) Income Taxes – Changes in the Tax Status of an Entity or its Shareholders TSIC 27 (Revised 2014) Evaluating the Substance of transactions Involving the Legal From of a Lease TSIC 29 (Revised 2014) Disclosure – Service Concession Arrangements TSIC 31 (Revised 2014) Revenue – Barter Transactions Involving Advertising Services TSIC 32 (Revised 2014) Intangible Assets – Website Costs TFRIC 1 (Revised 2014) Changes in Existing Decommissioning, Restoration and Similar Liabilities TFRIC 4 (Revised 2014) Determining whether an Arrangement contains a Lease TFRIC 5 (Revised 2014) Rights to interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds TFRIC 7 (Revised 2014) Applying the Restatement Approach under IAS 29 TFRIC 10 (Revised 2014) Interim Financial reporting and Impairment TFRIC 12 (Revised 2014) Service Concession Arrangements TFRIC 13 (Revised 2014) Customer Loyalty programmes TFRIC 14 (Revised 2014) The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction TFRIC 15 (Revised 2014) Agreements for the Construction of Real Estate TFRIC 17 (Revised 2014) Distributions of Non- cash Assets to Owners TFRIC 18 (Revised 2014) Transfers of Assets from Customers TFRIC 20 (Revised 2014) Stripping Costs in the Production Phase of a Surface Mine

Effective for the period beginning on or after January 1, 2016

TFRS 4 (Revised 2014) Insurance Contract

Federation of Accounting Professions revised accounting standard, financial reporting standards, accounting standard interpretation, financial reporting interpretation and the new accounting treatment guidance which are effective beginning on or after January 1, 2015 and 2016. The Company’s management assessed the effect of these standards and believed that there is no significant changes and significant impact to the financial statements. However, the new standard and revised standard which are significant changed and may impact to consolidate and company financial statement of the year which is effective, are as detail below.

TAS 1 (Revised 2014) Presentation of Financial Statements require for entities to group items presented in ‘other comprehensive income’ (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). This standard has impact on only presentation and no impact to the Group’s financial position and operating result.

TAS 16 (Revised 2014) Property, Plant and Equipment indicates that spare part, stand-by equipment and servicing equipment are recognised as PPE when they meet the definition of PPE. Otherwise, such items are classified as inventory.

TOT Public Company Limited 109 TFRS 10 Consolidates Financial Statements has a single definition of control and supersedes the principles of control and consolidation included within the original TAS 27, ‘Consolidated and separate financial statements’. The standard sets out the requirements for when an entity should prepare consolidated financial statements, defines the principles of control, explains how to apply the principles of control and explains the accounting requirements for preparing consolidated financial statements. The key principle in the new standard is that control exists, and consolidation is required, only if the investor possesses power over the investee, has exposure to variable returns from its involvement with the investee and has the ability to use its power over the investee to affect its returns.

TFRS 11 Joint Arrangements defined that a joint arrangement is a contractual arrangement where at least two parties agree to share control over the activities of the arrangement. Unanimous consent toward decisions about relevant activities between the parties sharing control is a requirement in order to meet the definition of joint control. Joint arrangements can be joint operations or joint ventures. The classification is principle based and depends on the parties’ exposure in relation to the arrangement. When the parties’ exposure to the arrangement only extends to the net assets of the arrangement, the arrangement is a joint venture. Joint operations have rights to assets and obligations for liabilities. Joint operations account for their rights to assets and obligations for liabilities. Joint ventures account for their interest by using the equity method of accounting.

TFRS 12 Disclosure of Interest in Other Entities require entities to disclose information that helps readers of financial statements to evaluate the nature of risks and financial effects associated with the entity’s interests in subsidiaries, associates, joint arrangements and unconsolidated structured entities. 2.3 Presentation currency

Functional and presentation currency

Items included in the financial statements of each of the group’s entities are measured by using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Thai Baht, which is the Company’s functional and the Group’s presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency by using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the profit or loss.

When a gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange component of that gain or loss is recognized in other comprehensive income. 2.4 Basis of consolidation

The consolidated financial statements comprise the Company and the subsidiaries (together referred to as the “Group”) and the Group’s interests in associates.

2.4.1 Business combinations

The Company and Group uses the acquisition method of accounting for business combinations. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities assumed at the acquisition date. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the

110 Annual Report 2014 acquisition date, irrespective of the extent of any non-controlling interests.

The excess of the cost of acquisition over the fair value of the Group’s share of the subsidiary’s identifiable net assets acquired is recorded as goodwill.

If the cost of acquisition is less than the fair value of the Group’s share of the subsidiary’s identifiable net assets, the difference is recognized directly in the statement of comprehensive income.

2.4.2 Subsidiary

The subsidiary is the entity over which the Company has the power to govern the financial and operating policies generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entities. The subsidiary is fully consolidated from the date on which control is transferred to the Group. It is de-consolidated from the date that control ceases.

The accounting policies of the subsidiary have been changed where necessary to ensure consistency with the policies adopted by the Company and Group.

Losses applicable in a subsidiary are allocated to non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

Eliminated transactions in the consolidated financial statements

The balances, transactions and unrealized gains (losses) between group companies are eliminated except for intragroup losses that indicate impairments.

Loss of control

Upon the loss of control, the Company and Group derecognise the assets and liabilities of the subsidiary, non-controlling interests and other components of equity related to the subsidiary. Gain or loss on the loss of control is recognised in the statement of comprehensive income. If the Group retains any interest in the former subsidiary, such interest is measured at its fair value at the date when control is lost and classified as an investment in associate or an available-for-sale financial asset depending on the level of influence retained.

A list of subsidiaries is set out in Note 14.

2.4.3 Associates

Associates are all entities over which the Company and Group has significant influence but not control. In the consolidated financial statements, investments in associates are accounted for using the equity method of accounting. In the Company’s financial statements, investments in associates are accounted for using the cost method of accounting. The Group’s share of the associates’ post-acquisition profits or losses is recognized in the statement of comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Company’s and Group’s share of losses in an associate equals or exceeds its interest in the associate, the Company and Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate.

TOT Public Company Limited 111 Unrealized gains on transactions between the Company and Group and its associates are eliminated to the extent of the Company’s and Group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Company and Group.

Details of investment in associates are described in Note 14. 2.5 Cash and cash equivalents

Cash and cash equivalents are cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less from the date of acquisition. 2.6 Short-term investments

Short-term investments are fixed deposits with banks, bills of exchange and promissory notes with original maturity of more than three months, but less than 12 months, and the current portion of long-term bonds and debentures. 2.7 Accounts receivable

Trade accounts receivable and other accounts receivable are carried at the original invoice amount and subsequently measured at the remaining amount less allowance for doubtful receivables based on a review of all outstanding amounts at the year-end. The amount of the allowance is the difference between the carrying amount of trade accounts receivable and other accounts receivable and the amount expected to be collectible. Doubtful accounts are recognized in the statement of comprehensive income within administrative expense. 2.8 Inventories and supplies

Inventories and supplies are stated at the lower of cost or net realisable value. Cost of inventories and supplies is determined by the weighted average method. The cost of purchase comprises both the purchase price and costs directly attributable to the acquisition of the inventories and supplies, such as import duties and transportation charges, less all attributable discounts, allowances or rebates. Net realisable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses. During the year, the Company and Group recorded provision for obsolete, slow-moving and defective inventories and supplies. 2.9 Investments in subsidiaries and associates

In the Company’s financial statements, investments in subsidiaries and associates are accounted for using the cost method. In the consolidated financial statements, investments in associates are accounted for using the equity method. 2.10 Investments acquired in exchange for rights to operate under concession agreements

Investments acquired from private companies in exchange for rights to operate under concession agreements which the Company and Group does not have obligations to pay the investment costs or provide services in the future or does not obtain stock for service payment received in advance shall be recognised as revenue at fair value. The Company and Group records the investments acquired within either investments in associates or other long-term investments.

112 Annual Report 2014 2.11 Other long-term investments

Marketable investments intended to be held for an indefinite period of time, which may be sold in response to liquidity needs or changes in interest rates, are classified as available-for-sale. These are included in non-current assets unless management has expressed intention of holding the investments for less than 12 months from the statement of financial position date or unless they will need to be sold to raise operating capital, in which case they are included in current assets. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis.

The available-for-sale investments that are marketable securities are measured at fair value. For marketable securities traded in an active market, fair value is determined by reference to the quoted bid price of the Stock Exchange of Thailand or the Stock Exchange of the countries in which such investments are registered. The unrealized gains and losses on changes in fair value of available-for-sale investments are recognized in equity.

Investments with fixed maturity that management has the intent and ability to hold to maturity are classified included in non-current assets, except for those with maturities within 12 months from the statement of financial position date, which are classified as current assets.

Held-to-maturity investments are carried at amortized cost using the effective interest rate.

Investments in non-marketable equity securities are classified as non-current assets general investments and are carried at cost less allowance for impairment in the statements of financial position.

An impairment test is carried out when there is a factor indicating that an investment might be impaired. If the carrying value of the investment is higher than its recoverable amount, impairment loss is charged to the statement of comprehensive income.

On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged to the statement of comprehensive income.

When disposing of part of the Group’s holding of a particular investment in debt or equity securities, the carrying amount of the disposed part is determined by the weighted average carrying amount of the total holding of the investment.

2.12 Investment property

Investment property is property which is held to earn rental income or for capital appreciation or both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property also includes lands held by the Company and Group for a currently undetermined future use.

Investment property is stated at cost less accumulated depreciation and allowance for impairment.

The costs of investment property include expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, and other costs directly attributable to bring the investment property to a condition for its intended use and capitalised borrowing costs.

Reclassification to property, plant and equipment

When there is a change in the usage of investment property and the reclassification has been made, no change in its carrying value and cost incurs on the reclassification date.

TOT Public Company Limited 113 2.13 Property, plant and equipment

Property, plant and equipment except for land owned by the Company and Group are stated at cost less accumulated depreciation and allowance for impairment.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials, direct labour and any other costs directly attributable to bringing the assets to a condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and borrowing costs. Purchased software that is integral the functionality of the related equipment is capitalized as part of that property plant and equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Subsequent costs

Replacement cost is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and Group, and the cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property, plant and equipment are recognized in the statement of comprehensive income as incurred.

Depreciation

Depreciation is calculated based on the depreciable amount, which is the cost of an asset, or other amount substituted for cost, less its residual value.

Depreciation is charged to the statement of comprehensive income on a straight-line basis over the estimated useful lives of each component of a plant and equipment item. The estimated useful lives are as follows:

Years Land improvement 3 - 10 Buildings and facilities 2 - 35 Network equipment 2 - 35 Office furniture and equipment 2 - 15 Computers and equipment 2 - 7 Vehicles 5 - 8

Land and assets under construction are not depreciated.

Depreciation methods, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each financial year.

Assets from donations are recognised at cost as other income in the year in which they are received.

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

114 Annual Report 2014 Gains and losses on disposals of property, plant and equipment are recognized in the statement of income in the period in which they incur.

Borrowing costs on borrowings to finance the construction of property, plant and equipment are capitalized as part of the cost of the asset during the period of time required to complete and prepare the property for its intended use. The borrowing costs include interest on short-term and long-term borrowings, and related taxes. The capitalization rate used to determine the amount of borrowing costs to be capitalized is the weighted average interest rate applicable to the outstanding borrowings during the year where funds are borrowed specifically for the acquisition, construction or production of assets. 2.14 Property, plant and equipment from concession agreements

Assets transferred from concession operators are recognized at the date on which concession operators transfer the ownership to the Company. Such assets are recognized at the cost notified by the concession operators, with a corresponding entry for deferred income, which is presented as a liability.

Deferred income is recognized as income in the statements of comprehensive income according to the shorter of the useful life of the transferred assets or the term of the concession agreement.

Depreciation of transferred assets is calculated over its estimated useful life and recognized as expenses in statement of comprehensive income, as follows:

Years Buildings and facilities 5 - 35 Network equipment 5 - 35 Office furniture and equipment 5 - 15 Computers and equipment 3 - 10

Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. 2.15 Impairment of assets

Assets that have an indefinite useful life (for example goodwill) are not subject to amortization and are tested annually for impairment. Other assets that are subject to amortization are reviewed for impairment whenever circumstances indicate that the carrying amount of asset is less than its recoverable amount. An impairment loss is recognized when the carrying amount of an asset exceeds its recoverable amount, which is the higher of an asset’s fair value less costs to sell and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. 2.16 Intangible assets

Computer software

Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over the estimated useful lives of three to seven years.

TOT Public Company Limited 115 Right - educational software programs

Right - educational software programs represents the right granted solely to the Company according to the joint operating contract with another private company under which the Company shall render services or distribute the software throughout the country for a period of not less than ten years. The Company amortizes the right over the contract period.

Right to hold the frequency

The right to hold the frequency is the right to hold and use the 1900 MHz and the 3G mobile phone frequency (IMT 2000) which arise from the Memorandum of Understanding (“MOU”) on the transfer of the exclusive rights and obligation relating to the frequency, the termination of the joint venture agreement and asset management under the 1900 MHz mobile phone service project between the Company and Group and CAT. The amortization is calculated using the straight-line method over the useful life of 17 years (from September 30, 2008 to August 4, 2025) according to the period of Telecom license Type III granted to the Company and Group.

Amortization

Amortization is calculated over the cost of the asset less its residual value.

Amortization is recognized in the statement of income on a straight-line basis that mostly reflects the pattern in which the asset’s future benefits are expected to be consumed over the estimated useful lives of intangible assets.

Amortization methods, useful lives and residual values are reviewed, and adjusted if appropriate, at the end of each financial year.

2.17 Accounting for long-term leases

Determining whether an arrangement contains a lease

At the inception of an arrangement, the Company and Group determines whether such an arrangement is or contains a lease by assessing a specific asset. If the fulfillment of the arrangement is dependent on the use of a specific asset and the arrangement conveys a right to use the asset, the Company and Group has a right to control the use of the underlying asset.

At the inception or the reassessment of an arrangement, the Company and Group separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Company and Group concludes for a finance lease that it is impracticable to separate the payments reliably, an asset and a liability are recognized at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognized using the Company’s and Group’s incremental borrowing rate.

Where the Company and Group is the lessee

Leases of property, plant and equipment which substantially transfer all the risks and rewards of ownership to the Company are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to both the principal and the finance charges so as to achieve a constant rate on the balance outstanding. The outstanding lease obligations net of finance charges are included in long-term liabilities. The interest expense is charged to the statement of comprehensive income over the lease period. An asset under finance lease is depreciated over the shorter of its useful life or the lease term.

116 Annual Report 2014 Leases of assets in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the statements of comprehensive income on a straight-line basis over the period of the lease.

When an operating lease is terminated before the expiration date, any payment required to be made to the lessor such as penalty is recognized as an expense in the period in which the termination takes place.

Where the Company and Group is the lessor

Operating leases

Assets leased out under operating leases are included in property, plant and equipment in the statement of financial position. They are depreciated over their expected useful lives on a basis consistent with other similar property, plant and equipment owned by the Group. Rental income is recognised on a straight-line basis over the lease term. 2.18 Trade and other accounts payable

Trade and other accounts payable are stated at cost. 2.19 Provisions

Provisions are recognised when the Company and Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. For significant provisions, their amounts are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as finance cost. 2.20 Revenue recognition

- Revenue from domestic fixed line phone, domestic mobile phones and international long-distance calls is recognised based on call time at the tariffs set by the Company or Group. The Company and Group will estimate the service revenue not yet billed to customers based on the customers’ historical usage and include this amount in accrued income that is presented within accounts receivable. - Revenue from international long-distance calls provided by CAT is recognised as revenue at the specific tariffs when services are rendered according to the customer usage report from CAT. - Revenue derived from the installation of fixed line phone is recognised upon the completion of installation services. - Revenue from public telephone services is recognised when services are provided following the collection of the revenue. - Revenue from leases of coaxial cables and circuits is recognised over the service period at the rate prescribed by the Company and Group. - Revenue from leases of equipment is recognised over the lease period at the rate specified in the agreement. - Revenue from access charge is recognised when the network is connected at the rate specified in the agreement and it is probable that the revenue is collectible. - Sales of equipment are recognised on delivery and customer acceptance. - Revenue from sales of telephone and internet cards is recognised when the Company sells the products to customers. - Revenue from revenue sharing arrangements under concession agreements is recognised as: minimum guarantee and revenue sharing in excess of the minimum guarantee are recognised on an accrual basis based on the statement of revenue provided by concession operators. If the Company and Group is responsible for cash collection from customers, the Company and Group will record trade account receivables at the gross amount, revenue sharing according to the revenue sharing stipulated in the

TOT Public Company Limited 117 agreements and revenue sharing payables net of allowance for doubtful accounts that the private operators are responsible for. - Revenue from assets transferred from concession agreements is discussed in Note 2.14. - Revenue from investments acquired in exchange for rights to operate under concession agreements is discussed in Note 2.10 - For the Company’s and Group’s trade transactions that are considered as agent rather than principle, the revenue is recognised as commission on the net basis. - Rental income from investment property is recognised in statement of comprehensive income on a straight-line basic over the lease term. The initial expenses relating to the lease agreement is recognised as lease payment. Contingent rentals are recognised as income in the accounting period in which they incur. - Dividend income is recognised in statement of income on the date that the Company’s and Group’s right to receive payment is established. - Interest income is recognised on a time proportion basis, taking into account of the effective rate over the period to maturity and the outstanding principal, when it is determined that such income will accrue to the Company and Group, unless there is an uncertainty in collectability.

All revenues are presented net of value added taxes and discounts. 2.21 Related party transactions

Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Company, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals and companies associated with these individuals also constitute related parties.

In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form. 2.22 Employee benefits

2.22.1 Defined contribution plans

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity (provident fund) and will have no legal or constructive obligation to pay further contributions. Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in the statement of comprehensive income for the period in which employees render service. The Company’s and Group’s defined contribution plans are as follows:

The registered provident fund of TOT Public Company Limited

The Company established a provident fund, “The registered provident fund of the Telephone Organization of Thailand” on September 29, 1997. According to the corporatization under the State Enterprise Capital Act B.E.2542, the name of the fund was changed to “The registered provident fund of TOT Corporation Public Company Limited” on November 14, 2002. Later on September 7, 2005, the name of the fund was changed again to “The registered provident fund of TOT Public Company Limited”. All employees joining the Company on or after September 29, 1997 are required to be members of the provident fund. Employees joining prior to September 29, 1997 were able to elect to be members of the provident fund or the employee benefit fund. The Company contributed at the rate of 10% per month of salary/wage for employees who had been working with the Company for more than 20 years and at the rate of 9% per month for employees who had been working with the Company for less than 20 years. Since January 1, 2006, the Company has changed the contribution rate to 13% and 12% for employees who have been working with the Company for more than 20 years and less than 20 years respectively. The contributions to the provident fund are charged as expenses to the

118 Annual Report 2014 statement of comprehensive income as incurred. The provident fund’s assets are separated from the Company’s assets and managed by the provident fund management company.

2.22.2 Defined benefit plans

A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s and Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in exchange for their service in the current and prior periods. The benefit is discounted to determine its present value. The calculation is performed annually by a qualified actuary.

The Company and Group recognises gains and losses based on actuarial techniques in other comprehensive income.

The Company’s and Group’s defined benefit plans are as follows:

2.22.2.1 The compensation from the State Enterprise Labor Relations Board and other retirement benefits

The Company and Group has the policy to define employee retirement age equal to 60 years at the end of budget year. The retired employees will receive the compensation under the announcement of the State Enterprise Labour Relations Board and other benefits. Employees who have been working with the Company consecutively for 5 years but less than 15 years and those who have been working with the Company consecutively for 15 years are entitle to the compensation equal to 180 days and 300 days at the last salary rate respectively.

2.22.2.2 Employee welfare and benefit fund

The Company established its employee welfare and benefit fund or pension fund as the Telephone Organisation of Thailand Act B.E.2497 in order to provide money to employees who resign from the Company and for employees who want to borrow money with a security or personal guarantee. The Company contributes an amount equal to 10% of its employee’s salary into the fund on monthly basis. At the statement of financial position date, the Company contributes an additional amount to the fund, up to a maximum of the obligation as at the statement of financial position date. At December 31, 2004 the contribution amount was calculated using the latest salary rate of each employee multiplied by the length of service in accordance with the previous policy in respect of the employee benefit fund. Subsequently, on August 26, 2005, the Company changed the policy according to the resolution of the Board of Directors’ Meeting dated August 8, 2005, which had an effective date of October 1, 2005. At December 31, 2005 the calculation method for the retirement benefit plan was divided into two parts. Firstly, the calculation was based on salary rate at September 30, 2005 multiplied by the service period from the employment date to September 30, 2005. Secondly, the calculation for the period from October 1, 2005 to December 31, 2005 was based on salary rate at the end of the year. The fund’s assets that are included in the statement of financial position of the Company’s comprise cash and cash at banks, loans to employees and accrued interest income.

2.22.3 Other long-term employee benefits

The Company’s and Group’s net obligation in respect of long-term employee benefits other than defined benefit plans is the amount paid in the future in exchange for their services in the current and prior periods. The benefit is discounted to determine its present value. The calculation is performed annually by an actuary. Actuarial gains and losses are recognized in the statement of comprehensives income in the period in which they arise.

TOT Public Company Limited 119 Other long-term employee benefits of the Company’s and Group’s are as follows:

Compensation for 25 and 36 service years

The Company and Group has preferences of the long-term rewards to employees who have been working for 25 years and 36 years.

2.22.4 Termination benefits

Termination benefits are recognized as an expense when the Company and Group is committed demonstrably, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.

If benefits are payable more than 12 months after the statement of financial position date, they are discounted to their present value.

2.22.5 Short-term employee benefits

Short-term employee benefit obligations are measured using undiscounted basis and are expensed as the related services are provided.

A liability is recognized for the amount expected to be paid under short-term cash bonus or profit sharing if the Company and Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

2.22.6 Share-based compensation

The Company initiated a share-based award plan for its employees from the privatization from TOT to TOT Corporation Public Company Limited in July 2002 by granting the right to employees to purchase shares at par value equivalent to six times of each employee’s salary and receive free shares (based on par value) equivalent to two times of each employee’s salary. The employees can exercise this right on the date of the Company’s initial public offering. However, the total share allocation under this option plan shall not exceed 6.5% of the registered share capital on the completion of the initial public offering. The Company does not recognize this compensation until the date of issuing shares under this option scheme. 2.23 Research and development expenditure

Expenditure on research activities that are undertaken with the prospect of gaining new scientific or technical knowledge is recognized in the statement of income as incurred.

Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company and Group intends to and has sufficient resources to complete development and to use or sell the asset. The expenditure capitalized includes the cost of materials, direct labor, overhead costs that are directly attributable to preparing the asset for its intended use, and borrowing costs. Other development expenditure is recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.

Capitalized development expenditures are amortized from the commencement of the commercial production or use by using a straight-line basis over there estimated useful lives.

120 Annual Report 2014 2.24 Current tax and deferred income tax

The income tax comprises current and deferred tax. In accordance with Thai (International) Accounting Standards, current tax and deferred income tax would be recognised in statement of comprehensive incom, except to the extent that is related to the items recognised directly in equity or other comprehensive income.

Current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (tax loss) for a period. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of reporting period in the countries where the company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognised, using the liability method, on temporary differences arising from differences between the tax base of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination. At the date of the transaction occurs, it affects neither accounting nor taxable profit or loss.

Deferred income tax is determined by using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period. The tax rates are expected to be applied when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Deferred income tax is provided on taxable temporary differences arising from investments in associates and interests in joint venture, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities related to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. 2.25 Dividend Payment

The Company recognized dividend payment in liabilities of company group financial statement in period of Minutes of Ordinary Meeting of Shareholders approved dividend payment 2.26 Earnings per share

The Company and Group presents basic earnings per share for ordinary shares. The basic earnings per share is calculated by dividing the net profit attributable to shareholders of the company by the weighted average number of ordinary shares in issue during the year

TOT Public Company Limited 121 3 Change in presentation

Comparative figures in statement of comprehensive income for the year ended December 31, 2013 have been adjusted to conform with changes in presentation in statement of comprehensive income for the year ended December 31, 2014.

Statement of comprehensive income

Consolidated Company 2013 2013 Decrease in cost of services (505.75) (505.75) Increase in revenue sharing submission under regulation 505.75 505.75 Decrease in cost of services (154.88) - Increase in administrative expenses 154.88 - 4 Financial risk management 4.1 Financial risk factors

The Company and Group’s activities expose them to a variety of financial market risks that are market risk (the effects of changes in foreign currency exchange rates and interest rates), credit risk and liquidity risk. The Company and Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance of the Company and Group especially the effect of changes in foreign currency exchange rates and interest rates. The Company and Group uses derivative financial instruments such as cross currency swaps to diversify the exchange rate risk and repay borrowings before maturities to reduce the obligation. Risk management is carried out by the Treasury Department in accordance with policies approved by the Board of Directors.

4.1.1 Financial market risk

(1) Foreign currency exchange rate risk

The Company and Group is exposed to foreign exchange rate risk arising from US dollar and Japanese yen currencies because they have foreign currency liabilities, which comprise borrowings, trade accounts payable and other payables. For assets, the Company and Group has deposits denominated in US dollars with local banks, which are used for repayment of foreign currency liabilities. In addition, there is foreign exchange rate risk arising from borrowings, commercial transactions, assets and liabilities which will incur in the future.

In order to manage the risks arising from fluctuations in currency exchange rates, the Company and Group has taken the following measures:

- Entering into cross currency swaps (Cross Currency Swap) - Maintaining deposits in foreign currencies to settle foreign currency liabilities (Natural Hedging) - Repayment of borrowings before maturities (Prepayment)

The Company and Group uses derivative financial instruments to manage foreign exchange rate risk for some Japanese yen borrowing agreements, not all borrowing agreements. Therefore, the Company and Group is still exposed to foreign exchange rate risk for the remaining Japanese yen and US dollar borrowing agreements as well as other commercial transactions such as the purchase of network equipment and the settlement of supplier liabilities. The Company and Group does not use any derivative financial instruments for these transactions. 122 Annual Report 2014 (2) Interest rate risk

The Company and Group earn interest on cash and cash equivalents which exposes them to market interest rate fluctuation. The Company and Group manages this risk by maintaining deposits with various maturities and various interest rates according to market interest rates and cash expected to be received in the future. The Company and Group is exposed to risk arising from fixed interest rates defined at the inception date of the finance leases in which the Company and Group is the lessee, long-term borrowings, and investment in government debt securities, promissory notes, and bonds.

4.1.2 Credit risk

The Company and Group has deposits with state-owned banks and other commercial banks (Note 7, 8 and 9), both local banks and Thai branches of foreign banks with good reputation and creditability. For investment in debt securities, the Company and Group invests in low risk securities that comprise government debt securities and bonds issued by banks classified the reputation in A level up. The Company and Group has policies in place to ensure that services are provided to customers with an appropriate credit history.

4.1.3 Liquidity risk

The Company and Group manages liquidity risk by maintaining sufficient cash and marketable securities. 4.2 Accounting for financial instruments and hedging activities

Cross Currency Swaps

In foreign currency swap contracts, which are taken out in respect of borrowings, the Company and certain counterparties enter into currency swaps of the same value in different foreign currencies at the contract date. On maturity date, the Company will repay debts in the new foreign currency as agreed. Borrowings are presented in the new currency from inception of the cross currency swap. Differences between the original and new currency are recognized in the statement of comprehensive income as they occur. Borrowings in foreign currencies as at the balance sheet date are translated into Baht at the exchange rate at the balance sheet date. Gain (loss) from translation is recognized in the statement of comprehensive income. The Company is also a party to prepayment contracts, which are intended to reduce exposure to fluctuations in foreign currency exchange rates and reduce foreign borrowings at the balance sheet date. Gains or losses from prepayment contracts are recognized as income or expenses in the statement of comprehensive income at the period of the transaction.

Disclosures with respect to derivative financial instruments to which the Company is a party are provided in Note 37. 5 Accounting estimates and judgments

The preparation of financial statements in conformity with TFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. Actual results may differ from estimates.

Estimates and underlying assumptions are continually reviewed. The effect of the changes in accounting estimate is recognized in the current and future periods affected by the change.

TOT Public Company Limited 123 5.1 Property, plant and equipment and intangible assets

The Company’s and Group’s business is capital intensive and depreciation of operating assets is a significant charge to the statements of comprehensive income. The costs of property, plant and equipment purchased, acquired through finance lease or in a business combination are depreciated over their estimated useful lives and residual values using the straight-line method. The useful lives are estimated at the time the assets are acquired and are based on historical experience with similar assets as well as taking into account anticipated technological, industry average and related factors. The Company and Group reviews on an annual basis changes in technology, industry and competitive conditions, asset retirement activity, and residual values to determine whether any adjustment is required to estimate remaining useful lives and depreciation rates. Actual economic lives may differ from the estimated useful lives, and periodic reviews in the future could result in change in useful life.

Property, plant and equipment mainly comprise fixed-line and mobile phone telecommunications networks, submarine cables, and international gateways. Major intangible assets are rights to hold and use 1900 MHz and 3G mobile phone frequencies (IMT 2000). Changes in technology or changes in the Company’s intended use of these assets may cause the estimated period of use or value of these assets to change. The Company and Group assesses at each statement of financial position date whether there is an indication that one or more of its property, plant and equipment and intangible assets are impaired. If any such indication exists, the Company and Group carries out an impairment test to determine the recoverable amount, and monitors its businesses, markets, and business environments for indicators that suggest impairment may have occurred. An impairment loss is recognized for amount by which the carrying amount of the assets exceeds its recoverable amount which is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Value in use is estimated from present value of future net cash flows expected to be received from continuous use of asset. Many assumptions such as the growth of telecommunication market, the trend of the change in numbers, changes in regulations and the application of proper discount rate are involved in the estimation. 5.2 Impairment of trade accounts receivable

The Company and Group maintains an allowance for doubtful accounts to reflect impairment of trade accounts receivables relating to estimated losses resulting from the inability of customers to make required payments. The allowance for doubtful accounts is significantly impacted by the Company’s and Group’s assessment of future cash flows, such assessment being based on consideration of historical collection experience, known and identified instances of default and consideration of market trends.

The Company and Group also has disputes with some accounts in respect of telecommunication services and revenue sharing that were recorded as accounts receivable in the financial statements and no payments have been received. These trade accounts receivable comprise receivables in respect of international call revenue sharing, access charges and the revenue sharing agreements specified in Note 10 to the financial statements. The Company and Group has considered the collectability by taking into account the relevant legal issues and believed that the Company and Group has sufficient reasons to dispute and expected the full amount will be collectible, so no allowance for doubtful accounts is reserved. 5.3 Financial leases where the Company and Group is lessee.

The Company and Group has entered into various lease agreements with third parties for telecommunication equipment. Payment terms depend on many factors such as actual usage and subscriber number. After considering all definitions and conditions specified in the agreements, leases of property, plant or equipment where the Company and Group has substantially all the risks and rewards of ownership are recorded as the Company’s and Group’s property, plant and equipment.

124 Annual Report 2014 5.4 Measurement of defined employee benefit obligation

The present value of defined benefit plan is determined based on various assumptions which include inflation rate, salary increase rate, mortality rate, and discount rate used in actuarial calculation. Any changes in these assumptions will impact the net periodic cost recorded for defined benefit plan obligation. The Group applies the appropriate discount rate by using government bond interest rate that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related liability.

The principal actuarial assumptions of defined benefit plan obligation which are based on the current market situation are disclosed in Note 28 to the financial statements. 6 Capital risk management

The Company’s and Group’s objectives when managing capital are to safeguard the Company’s and Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to minimize the cost of capital. 7 Cash and cash equivalents as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Cash on hand 10.57 12.30 10.31 12.13 Deposits held at call with banks 2,931.55 3,173.38 2,850.02 3,143.79 Fixed deposits at banks 1,998.21 5,156.84 1,998.21 5,156.84 Total 4,940.33 8,342.52 4,858.54 8,312.76

At December 31, 2014, the weighted average effective interest rate of deposits held at call with banks and fixed deposits at banks was 1.34% per annum (At December 31, 2013: 2.27% per annum).

At December 31, 2014, cash and cash equivalents include current accounts, savings accounts and fixed deposits with a maturity of three months in respect of the employee benefit fund amounting to Baht 51.17 million (at December 31, 2013: Baht 22.86 million) and deposits in US dollar currency amounting to Baht 16.09 million (at December 31, 2013: Baht 33.86 million). The deposits in US dollar currency were held in order to reduce the exposure to exchange rate fluctuation.

At December 31, 2014, the Company’s deposits held at call with banks for consolidated financial statement and the Company’s financial statement at the amount of Baht 2,931.55 million and Baht 2,850.02 million respectively (at December 31, 2013: Baht 3,173.38 million and Baht 3,143.79 million respectively) included secured bank deposits for the agreement amounting to Baht 52.41 million (Note 26.1).

TOT Public Company Limited 125 8 Short-term investments as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Fixed deposits with maturities of 6-12 months 22,266.87 15,942.45 22,086.59 15,913.45 Held - to - maturity investments - 430.00 - 430.00 22,266.87 16,372.45 22,086.59 16,343.45

At December 31, 2014, fixed deposits with maturities of 6-12 months in consolidated financial statement and the Company’s financial statement at the amount of Baht 22,266.87 million and Baht 22,086.59 million (at December 31, 2013: Baht 15,942.45 million and Baht 15,913.45 million) included fixed deposit of employee welfare and benefit fund of Baht 188.00 million (at December 31, 2013: Baht 186.47 million).

Movements of short-term investments were as follows:

Consolidated The Company 2014 2013 2014 2013 Opening balance - net 16,372.45 10,933.69 16,343.45 10,933.69 Increase during the year 34,163.47 30,192.13 34,012.19 30,163.13 Decrease during the year (28,269.05) (24,762.03) (28,269.05) (24,762.03) Amortised discount on debt securities - 8.66 - 8.66 Closing balance - net 22,266.87 16,372.45 22,086.59 16,343.45

At December 31, 2014, the weighted average effective interest rate was 2.83% per annum (at December 31, 2013: 3.22% per annum). 9 Funds for redemption of long-term liabilities as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Funds for redemption of long-term liabilities - within 1 year 23,237.09 21,845.79 23,237.09 21,845.79 Funds for redemption of long-term liabilities - over 1 year 85.00 535.00 85.00 535.00 23,322.09 22,380.79 23,322.09 22,380.79

Movements of funds for redemption of long-term liabilities were as follows:

Consolidated The Company 2014 2013 2014 2013 Opening balance - net 22,380.79 21,565.93 22,380.79 21,565.93 Increase during the year 18,856.40 25,732.51 18,856.40 25,732.51 Decrease during the year (17,911.48) (24,936.11) (17,911.48) (24,936.11) Amortized discount (premium) on debt securities (3.62) 18.46 (3.62) 18.46 Closing balance - net 23,322.09 22,380.79 23,322.09 22,380.79

126 Annual Report 2014 Consolidated The Company 2014 2013 2014 2013 Funds for redemption of long-term liabilities - within 1 year Bank deposits 23,187.09 20,442.17 23,187.09 20,442.17 Debt securities 50.00 1,403.62 50.00 1,403.62 23,237.09 21,845.79 23,237.09 21,845.79 Funds for redemption of long-term liabilities - over 1 year Debt securities 85.00 535.00 85.00 535.00 Total Funds for redemption of long-term liabilities 23,322.09 22,380.79 23,322.09 22,380.79

As at December 31, 2014, funds for redemption of long-term liabilities comprise time deposits at banks with a maturity period within 24 months, investments in promissory notes, treasury bills, bonds and debentures. The Company contributes to the funds for the purpose of redeeming long-term liabilities on an annual basis. The Company can withdraw the funds to settle liabilities as necessary, subject to the approval of the financial management at vice managing director level up by reporting to the managing director. At December 31, 2014, the weighted average effective interest rate was 3.08% per annum (at December 31, 2013: 3.49% per annum). 10 Trade accounts receivable as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Trade accounts receivable - telecommunication services (Note 10.1) 8,358.73 7,753.69 8,358.89 7,754.16 Trade accounts receivable - customers under concession agreements (Note 10.2) 1,124.87 1,293.00 1,124.87 1,293.00 Trade accounts receivable - revenue sharing (Note 10.3) 2,201.28 3,407.46 2,201.28 3,407.46 Total trade accounts receivable 11,684.88 12,454.15 11,685.04 12,454.62

10.1 Trade accounts receivable - telecommunication services

Consolidated The Company 2014 2013 2014 2013 Trade accounts receivable – billed - Third parties 4,284.13 4,448.38 4,284.30 4,448.41 - Related parties 2,433.20 1,644.25 2,433.20 1,644.25 Trade accounts receivable – unbilled - Third parties 3,610.22 3,456.30 3,610.21 3,456.74 - Related parties 562.45 562.89 562.45 562.89 Total trade accounts receivable - telecommunication service 10,890.00 10,111.82 10,890.16 10,112.29 Less Allowance for doubtful accounts (2,531.27) (2,358.13) (2,531.27) (2,358.13) Total trade accounts receivable - telecommunication service 8,358.73 7,753.69 8,358.89 7,754.16

Trade accounts receivable - telecommunication services comprise receivables in respect of services provided by the Company using its own network such as fixed line phones, leased cable conduits, leased circuit interference and access charge.

As at December 31, 2014, trade accounts receivable - billed include government and state enterprise receivables amounting to Baht 2,200.92 million (at December 31, 2013: Baht 1,633.21 million).

TOT Public Company Limited 127 On September 8, 2008, CAT issued a letter to cancel the agreement of revenue sharing from international calls and requested to make payment by an interconnection charge (IC) at the rate already submitted to the NBTC instead, commencing November 1, 2008. However, the Company sent the letter in response, announcing to CAT that the existing agreement remained effective. On March 22, 2011, the Company filed NBTC to revoke the above verdict and decision of dispute of the Commission of the Dispute of IC which it is not beneficial to the Company. On April 4, 2012, the Company filed a lawsuit against CAT at the Central Administrative Court to pay compensations with an interest rate of 7.5% per annum of its capital of Baht 4,348.22 million. The Central Administrative Court accepted an accusation and is being consideration. However, CAT had not sent the information from the existing agreement. As a result, the Company could not reliably measure the amount of revenue and estimate the sharing cost. Therefore, the Company had not recorded revenue sharing of international calls from CAT as well as the cost related to revenue sharing that had to be paid to other service providers in these financial statements since November 1, 2008.

CAT entered into an agreement with the Company regarding the mobile network connection of the three concession operators who provide CAT’s wireless cellular services; Total Access Communication Public Company Limited (“DTAC”), True Move Company Limited (“True Move”) and Digital Phone Company Limited (“DPC”) which are agreed by three parties, being the Company, CAT and the concession operators, so as to connect and use the network of the Company and the concession operators. Then on November 17, 2001, the Telecommunication Act became effective which in section 2 of Telecom Act was mentioned about the use and interconnection of the telecom network. In 2006, NBTC has announced the use and interconnection of network resulting in the two concession operators of CAT, DTAC and True Move using this as an accuse to cease the payment of the access charge and requested to negotiate in making an agreement of using and interconnection of the network and interconnection charge (IC) rate. The concession operator will pay the access charge until November 17, 2006. During the negotiation period, the concession operators will pay IC from November 18, 2006 onward at the agreed rate or temporary rate set by NBTC. DPC is the third party who defended the payment of the access charges. During the second quarter of 2009, DPC issued a letter asked for the IC agreement in accordance with the announcement of NBTC and informed to terminate the access charge agreement and stopped to pay access charge since June 1, 2009. The Company did not recognize revenue from access charge of DPC from that date.

However, the Company believes that although NBTC has announced the interconnection charge, every agreement on the access charge is still effective. Therefore, concession operators have no right to cease the payment of the access charge. Thus, the Board of Directors’ Meeting on November 20, 2006 passed a resolution to inform the two concession operators to pay the access charge according to the existing agreement and the Company’s management will pursue legal action till the end. On August 31, 2007, the Company filed a lawsuit against NBTC at the Central Administrative Court of Thailand to request an order to revoke the announcement regarding the use and interconnection of the telecommunication network B.E.2006. On September 15, 2010, the Central Administrative Court dismissed the lawsuit. The Company, subsequently, appealed to the Court on October 15, 2010 and this is currently in consideration of the Supreme Administrative Court. On November 16, 2007, the Company filed a lawsuit against CAT and the two concession operators at the Civil Court for the default in the contract and penalty payment which the Court received the 2 requests for consideration. On November 3, 2008 and September 16, 2009, the Civil Court dismissed the case between the Company, CAT, and DTAC and between the Company, CAT, and True Move, respectively, from its content, which these was considered to be under the Administrative Court’s content. The Company’s management, therefore, passed a resolution to submit the case to the Office of the Attorney General but based on the Office of the Attorney General’s opinion, the litigation should be processed by the Company. Due to the cessation on payment of the access charge, the three concession operators of CAT did not comply with the agreement regarding the submission of information relating to the access charge to the Company. The Company did not record revenue from the access charge of DTAC and True Move since January 1, 2007 up to present and of DPC since June 1, 2009 up to present.

Furthermore, since the fourth quarter of 2007, CAT has defaulted on the payment of access charge relating to its operation from October 2007 onwards. The Company got the access charge information for this part up to October 2007, therefore; the Company recorded revenue only for October 2007 at the amount of Baht 84.02 million and ceased to record this part of revenue since November 1, 2007, onwards. Moreover, CAT defaulted on the payment by half of its revenue derived from DPC and also need to pay additional to the minimum revenue sharing received by the Company for the period from September 16, 2006 to September 15,

128 Annual Report 2014 2007 in the amount of Baht 345.50 million, and the revenue sharing for the period from October 1, 2007 to December 31, 2007 in the amount of Baht 130.12 million which the payments were due in the first quarter of 2008 and be pursued for payment from CAT. However, though the Company received the half of DPC revenue sharing from CAT until June 2008, but the Company received a notification letter from CAT in March 2008 stating that CAT would make a payment if the Court issued a final judgment for the Company’s filing a lawsuit against CAT and concession operators, DTAC and True Move at the Civil Court on the payment of access charge. Therefore, the Company ceased the recognition of this revenue portion since the first quarter of 2008. However, the Company’s management expected that the Company would be able to collect the full amount of the access charge payment and by half of the revenue sharing mentioned above, which were included in the accounts receivable - telecommunication services. Therefore, no allowance for doubtful accounts has been recorded in the financial statements.

On May 9, 2011, the Company has submitted the case to the Central Administrative Court against CAT and 3 contract parties of CAT for debt and damage amounting to Baht 162,477.27 million and adjusted to Baht 348,327.51 million on July 31, 2014 to the Central Administrative Court for obtaining settle and damages. The court ordered the lawsuit be considered. The case is currently under consideration by the Central Administrative Court.

Since the year 2007, the Company did not record the corporate income tax expense related to the disputed access charge revenue as the Company has not recognised as revenue in these financial statements (Note 38.1.2).

In addition, TT&T Public Company Limited (“TT&T”), which is an operator in the concession agreement, has encountered the liquidity problems and filed a business rehabilitation petition with the Central Bankruptcy Court on April 22, 2008. On November 7, 2008, the Central Bankruptcy Court ordered TT&T to enter the business rehabilitation process and ordered the appointment to P Planner Co., Ltd. as a rehabilitation plan preparer on July 22, 2009. Subsequently, on March 3, 2014, the court appointed PCL Planer Co., Ltd, to be a planner instead of P Planner Co., Ltd. It is in the process of revising the rehabilitation plan. The Company has already filed a claim for the settlement of both trade and other balances. The Company recorded TT&T’s trade balance as an account receivable as at December 31, 2014 in the amount of Baht 1,096.01 million (at December 31, 2013: Baht 915.79 million). Presently, TT&T has made the regular payments for the transactions incurred after November 7, 2008. Due to, the uncertainty regarding the success on the business rehabilitation plan and the settlement amount received by the Company, therefore, the Company recorded allowance for doubtful accounts of the uncertainty collection of the Company’s debt in the amount of Baht 1,054.18 million.

Concentrations of credit risk with respect to trade accounts receivable are limited due to the Company’s large number of customers who are end users of telephone services, covering business, government and state enterprises and residential customers. The Company’s experience in the collection of accounts receivable indicates that the allowance provided will be sufficient. Due to these factors, the management believes that no additional credit risk beyond the amounts provided for collection losses is inherent in its trade accounts receivable. 10.2 Trade accounts receivable - customers under concession agreements

Consolidated The Company 2014 2013 2014 2013 Trade accounts receivable - customers under concession agreements - billed - Third parties 5,061.24 5,076.19 5,061.24 5,076.19 Accrued income - Third parties 232.43 257.97 232.43 257.97 Total trade accounts receivable - customers under concession agreements 5,293.67 5,334.16 5,293.67 5,334.16 Less Allowance for doubtful accounts (4,168.80) (4,041.16) (4,168.80) (4,041.16) Total trade accounts receivable - customers under concession agreements 1,124.87 1,293.00 1,124.87 1,293.00

TOT Public Company Limited 129 Trade accounts receivable - customers under concession agreements comprise fixed line phone receivables for services provided by True Corporation Public Company Limited (“True”) and TT&T. The Company is responsible for billing, collection and sharing the revenue to service providers upon collection based on the rates specified in the relevant agreements. As at December 31, 2014, trade accounts receivable - customers under concession agreements include government and state enterprise receivables amounting to Baht 227.14 million (at December 31, 2013: Baht 236.27 million). 10.3 Trade accounts receivable - revenue sharing

Consolidated The Company 2014 2013 2014 2013 Trade accounts receivable - revenue sharing - Third parties 770.64 772.77 770.64 772.77 Accrued income - Third parties 1,810.36 3,014.41 1,810.36 3,014.41 Total trade accounts receivable - revenue sharing 2,581.00 3,787.18 2,581.00 3,787.18 Less Allowance for doubtful accounts (379.72) (379.72) (379.72) (379.72) Total trade accounts receivable - revenue sharing 2,201.28 3,407.46 2,201.28 3,407.46

Trade accounts receivable - revenue sharing comprises receivables from minimum shared revenue or a certain percentages of service income before expense, whichever is higher as specified in the relevant agreements. Such receivables comprise receivables from mobile phone services, public phone services and phone cards.

Trade accounts receivable - revenue sharing included accrued income from Advanced Info Service Public Company Limited (“AIS”) amounting to Baht 681.04 million which is the excise tax that was deducted from revenue sharing by AIS during January 23, 2007 - February 26, 2007. AIS has already submitted such excise tax to the Excise Department and refused to pay to the Company. On February 26, 2007, the Ministry of Commerce announced a reduction of excise tax rate for telecommunication services to zero percent but the Company’s management viewed that AIS has no right to deduct excise tax from revenue sharing according to the resolution of the Cabinet dated January 23, 2007. Therefore, the Company recorded the said excise tax as accrued income whilst. On January 22, 2008, the Company filed a dispute at Arbitration Office of Thailand to call for AIS to deliver revenue sharing parts amounting to Baht 31,462 million, which have not been paid for in the period of January 2003 to September 2007. The dispute is regarded to accrued income amounting to Baht 681.04 million. On May 20, 2011 Arbitration Officer adjudged for AIS to not deliver those revenue sharing parts. But, the Company filed a withdrawal to the judgment on September 22, 2011. The judgment is currently process at the Central Administrative Court. However, the Company cannot reliably estimate the result of lawsuit, thus no allowance for doubtful accounts is provided in these financial statements. The trade accounts receivables do not include the access charge compensations for the period 17 – 20 that AIS deserved to earn regarding Cellular Mobile Telephone (Contract No.30) amounting to Baht 17,803.38 million, because AIS filed a dispute to Arbitration Office of Thailand which no compensation rights will be given to AIS. This resulted in the Company unable to reliably estimate the amount of revenue sharing that AIS deserved to earn. The dispute is currently in consideration of Arbitration Office of Thailand.

As at September 25, 2014, the Company proposed claim to Thai Arbitration Institute for the arbitration committees adjudged AIS to stop action that customers changed network system from AIS 900 MHz to AWN that is not in compliance with the law permitted. Moreover, the Company demanded AIS to pay damages or reimbursement amount 9,126.02 million baht with interest rate 7.5 % per annum, including fees and other expenses about the arbitration procession

130 Annual Report 2014 10.4 Aging analysis

Billed trade accounts receivable under telecommunication services and customers under concession agreements can be aged as follows:

Items Consolidated Trade accounts receivable - Trade accounts receivable - telecommunication services customers under concession agreements 2014 2013 2014 2013 Not later than 6 months 4,001.86 3,606.04 660.43 764.33 Later than 6 months but not later than 1 year 531.22 324.87 130.65 134.13 Later than 1 year but not later than 2 years 352.67 436.53 167.62 74.40 Later than 2 years 1,831.58 1,725.19 4,102.54 4,103.33 6,717.33 6,092.63 5,061.24 5,076.19

Items The Company Accounts receivable - Accounts receivable - telecommunication services customers under concession agreements 2014 2013 2014 2013 Not later than 6 months 4,002.03 3,606.07 660.43 764.33 Later than 6 months but not later than 1 year 531.22 324.87 130.65 134.13 Later than 1 year but not later than 2 years 352.67 436.53 167.62 74.40 Later than 2 years 1,831.58 1,725.19 4,102.54 4,103.33 6,717.50 6,092.66 5,061.24 5,076.19

11 Inventories and supplies as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Finished goods 173.24 207.07 172.75 206.56 Supplies for telephone services, expansion, and repair and maintenance 863.16 892.13 863.16 892.13 Office supplies 5.68 5.40 5.68 5.40 1,042.08 1,104.60 1,041.59 1,104.09 Less Allowance for decrease in value (1.17) (5.07) (1.17) (5.07) Allowance for slow - moving and obsolete (131.05) (160.65) (131.05) (160.65) Inventories and supplies 909.86 938.88 909.37 938.37

TOT Public Company Limited 131 12 Other current assets as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Interest receivable 201.49 301.87 199.99 301.85 Value added tax refundable 949.61 998.26 932.77 926.53 Prepayment 260.24 257.99 318.67 307.49 Undue input value added tax 1,019.28 909.29 1,019.28 909.28 Advance payment for equipment 125.11 225.48 125.11 225.48 Other current assets 155.35 126.58 114.40 101.55 Total other current assets 2,711.08 2,819.47 2,710.22 2,772.18 Less Allowance for value added tax refundable (Note 38.1.3) (322.80) (322.80) (322.80) (322.80) Total other current assets 2,388.28 2,496.67 2,387.42 2,449.38 13 Available-for-sale investments and other long-term investments as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Available-for-sale investments Opening balance - net 12,955.09 11,761.02 12,955.09 11,761.02 Change in fair value of available-for-sale investments (Note 31) (61.91) 1,193.07 (61.91) 1,193.07 Closing balance - net 12,893.18 12,954.09 12,893.18 12,954.09

Other long-term investments Opening balance - net 585.02 485.02 585.02 485.02 Increase in other long-term investments - 101.00 - 101.00 Reverse the loss on impairment of other long-term investments 187.12 - 187.12 - Closing balance - net 772.14 586.02 772.14 586.02 Total 13,665.32 13,540.11 13,665.32 13,540.11

132 Annual Report 2014 Available-for-sale investments and other long-term investments as at December 31, 2014 and 2013 are as follows:

Consolidated Available-for-sale Held-to-Maturity General Total investments investments investments 2014 2013 2014 2013 2014 2013 2014 2013 Debt securities Debenture of PTT Public Company Limited - - 100.00 100.00 - - 100.00 100.00 Debenture of SCG Public Company Limited - - 130.00 130.00 - - 130.00 130.00 Debenture of Thanachart Public Company Limited - - 50.00 50.00 - - 50.00 50.00 Total debt securities - - 280.00 280.00 - - 280.00 280.00

Equity securities Thai Long-distance Telecommunication Company Limited - - - - 30.90 30.90 30.90 30.90 Thai-Amadeus South East Asia Company Limited - - - - 3.00 3.00 3.00 3.00 Trade Siam Company Limited - - - - 1.75 1.75 1.75 1.75 True Multi-Media Company Limited - - - - 585.25 350.82 585.25 350.82 Clearing House Company Limited - - - - 0.40 0.40 0.40 0.40 Total Access Communication Public Company Limited 3,567.92 3,567.92 - - - - 3,567.92 3,567.92 Internet Thailand Public Company Limited) 40.00 40.00 - - - - 40.00 40.00 Vayupak 1 Mutual Fund 1.00 1.00 - - - - 1.00 1.00 3,608.92 3,608.92 - - 621.30 386.87 4,230.22 3,995.79 Less Provision for impairment of investments - - - - (129.16) (81.85) (129.16) (81.85) Add Unrealised gain on available-for-sale investments 9,284.26 9,346.17 - - - - 9,284.26 9,346.17 Total equity securities 12,893.18 12,955.09 - - 492.14 305.02 13,385.32 13,260.11 Total 12,893.18 12,955.09 280.00 280.00 492.14 305.02 13,665.32 13,540.11

TOT Public Company Limited 133 The Company Available-for-sale Held-to-Maturity General Total investments investments investments 2014 2013 2014 2013 2014 2013 2014 2013 Debt securities Debenture of PTT Public Company Limited - - 100.00 100.00 - - 100.00 100.00 Debenture of SCG Public Company Limited - - 130.00 130.00 - - 130.00 130.00 Debenture of Thanachart Public Company Limited - - 50.00 50.00 - - 50.00 50.00 Total debt securities - - 280.00 280.00 - - 280.00 280.00 Equity securities Thai Long-distance Telecommunications Company Limited - - - - 30.90 30.90 30.90 30.90 Thai-Amadeus South East Asia Company Limited - - - - 3.00 3.00 3.00 3.00 Trade Siam Company Limited - - - - 1.75 1.75 1.75 1.75 True Multi-Media Company Limited - - - - 585.25 585.25 585.25 585.25 Clearing House Company Limited - - - - 0.40 0.40 0.40 0.40 Total Access Communication Public Company Limited 3,567.92 3,567.92 - - - - 3,567.92 3,567.92 Internet Thailand Public Company Limited 40.00 40.00 - - - - 40.00 40.00 Vayupak 1 Mutual Fund 1.00 1.00 - - - - 1.00 1.00 3,608.92 3,608.92 - - 621.30 621.30 4,230.22 4,230.22 Less Provision for impairment of investments - - - - (129.16) (316.28) (129.16) (316.28) Add Unrealised gain on available-for-sale investments 9,284.26 9,346.17 - - - - 9,284.26 9,346.17 Total equity securities 12,893.18 12,955.09 - - 492.14 305.02 13,385.32 13,260.11 Total 12,893.18 12,955.09 280.00 280.00 492.14 305.02 13,665.32 13,540.11

At December 31, 2014, the debt securities of Baht 280.00 million (at December 31, 2013: Baht 280.00 million) were held-to- maturity debt securities with maturities of 2.58 to 6.51 years (at December 31, 2013: 3.44 – 7.19 years) and the weighted average effective interest rate during the year at 4.29% per annum (during 2013: 4.28% per annum). 14 Investments in associates and subsidiaries as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Investments in associates and subsidiaries - Investments in associates 83.42 82.74 612.05 612.05 Less Provision for impairment of investments (50.36) (50.36) (582.05) (582.05) 33.06 32.38 30.00 30.00 - Investment in subsidiaries - - 1,057.69 1,057.69 Less Provision for impairment of investment - - (165.41) (165.41) - - 892.28 892.28 33.06 32.38 922.28 922.28

134 Annual Report 2014 Changes in investments in associates and subsidiaries comprise:

Consolidated The Company 2014 2013 2014 2013 Associates Opening net book amount 32.38 31.71 30.00 30.00 Share of gain in investments under equity method 0.68 0.67 - - Closing net book amount 33.06 32.38 30.00 30.00

Subsidiaries Opening net book amount - - 890.39 890.39 Purchase of investment in TOT Outsourcing Service Company Limited - - 1.25 1.25 Purchase of investment in TOT Sport Club Company Limited - - 0.64 0.64 Closing net book amount - - 892.28 892.28 Total 33.06 32.38 922.28 922.28

National Economic and Social Development Board (NESDB) has approved the company’s investment in establishment of TOT Outsourcing Services Limited (TOT OS) to support the management of the company’s operations and services. On January 18, 2013, the Company held in TOT OS Limited 12,500 shares at Baht 100.00 per share totalling to Baht 1.25 million, which are all ordinary shares. This accounts for 25.00% of the common shares and preferred shares issued and paid up share capital totalling to Baht 5.00 million.

The Company has presented its investment in TOT OS as investment in subsidiary, although the company has equity in the company of 25.00%, as the Company has four representatives on the board of directors out of six, the company then holds over 50.00% of all votes. Company has the power to control the company.

On January 16, 2013, Board of Directors has approved the Company to pay TOT Sports Club Limited (TOT SC) for the purpose of advertising, public relations through football, and to support the company’s sport with total of 5,000 shares at Baht 128.11 per share, amounting to Baht 0.64 million, which are all ordinary shares. This accounts for 25.00% of total registered shares of 20,000 shares with value of Baht 2.00 million.

The Company has presented its investment in TOT SC as investment in subsidiary, although the company has equity in the company of 25.00%, as the Company has four representatives on the board of directors out of seven, the company then holds over 50.00% of all votes. Company has the power to control the company.

TOT Public Company Limited 135 136 Details of associated companies as at December 31, 2014 are as follows: Annual Report 2014 Consolidated Paid-up Accumulated Investment Investment share of gain Incorporated share portion Investment (loss) of Provision for balance - Company Business country Relationship capital (%) cost investment impairment equity method Associates Tel-card Company Limited Producing plastic chip cards Thailand Shareholder 50.00 26.00 13.00 (13.00) - - Advanced Data Network Providing information media Thailand Shareholder 957.52 48.12 460.76 (460.76) - - Communication Company Limited services via telephone lines Lenso Datacom Company Limited Providing information media Thailand Shareholder 221.00 49.00 108.29 (57.93) (50.36) - services via telephone lines Mobile Communication Operating network and providing Thailand Shareholder 100.00 30.00 30.00 3.06 - 33.06 Services Company related network services

Total Investments in associated 612.05 (528.63) (50.36) 33.06

Details of associated companies as at December 31, 2013 are as follows: Consolidated Paid-up Accumulated Investment Investment share of gain Incorporated share portion Investment (loss) of Provision for balance - Company Business country Relationship capital (%) cost investment impairment equity method Associates Tel-card Company Limited Producing plastic chip cards Thailand Shareholder 50.00 26.00 13.00 (13.00) - - Advanced Data Network Providing information media Thailand Shareholder 957.52 48.12 460.76 (460.76) - - Communication Company Limited services via telephone lines Lenso Datacom Company Limited Providing information media Thailand Shareholder 136.47 49.00 108.29 (57.93) (50.36) - services via telephone lines Mobile Communication Operating network and providing Thailand Shareholder 100.00 30.00 30.00 2.38 - 32.38 Services Company related network services

Total Investments in associates 612.05 (529.31) (50.36) 32.38 Details of associated companies and subsidiary as at December 31, 2014 are as follows:

The Company Paid-up Investment Investment Incorporated share portion Investment Provision for balance – Company Business country Relationship capital (%) cost impairment equity method

Associates Tel-card Company Limited Producing plastic chip cards Thailand Shareholder 50.00 26.00 13.00 (13.00) - Advanced Data Network Communication Providing information media Thailand Shareholder 957.52 48.12 460.76 (460.76) - Company Limited services via telephone lines Lenso Datacom Company Limited Providing information media Thailand Shareholder 136.47 49.00 108.29 (108.29) - services via telephone lines Mobile Communication Operating network and providing Thailand Shareholder 100.00 30.00 30.00 - 30.00 Services Company Limited related network services Total Investments in associates 612.05 (582.05) 30.00

Subsidiaries ACT Mobile Company Limited Telecommunication Thailand Shareholder 1,200.00 98.57 1,055.80 (165.41) 890.39 TOT Outsourcing Service Company Limited Providing general subcontract services Thailand Shareholder 4.81 25.00 1.25 - 1.25 TOT Sport Club Company Limited Providing management services on Thailand Shareholder 2.00 25.00 0.64 - 0.64 business copyrights and privileges Total Investments in subsidiary 1,057.69 (165.41) 892.28 Total Investments in associates and subsidiary

TOT Public CompanyLimited 1,669.74 (747.46) 922.28 137 138 Details of associated companies and subsidiaries as at December 31, 2013 are as follows: Annual Report 2014 The Company Paid-up Investment Investment Incorporated share portion Investment Provision for balance – Company Business country Relationship capital (%) cost impairment equity method Associates Tel-card Company Limited Producing plastic chip cards Thailand Shareholder 50.00 26.00 13.00 (13.00) - Advanced Data Network Providing information media Thailand Shareholder 957.52 48.12 460.76 (460.76) - Communication Company Limited services via telephone lines Lenso Datacom Company Limited Providing information media Thailand Shareholder 136.47 49.00 108.29 (108.29) - services via telephone lines Mobile Communication Operating network and providing Thailand Shareholder 100.00 30.00 30.00 - 30.00 Services Company Limited related network services Total Investments in associates 612.05 (582.05) 30.00

Subsidiaries ACT Mobile Company Limited Telecommunication Thailand Shareholder 1,200.00 98.57 1,055.80 (165.41) 890.39 TOT Outsourcing Service Company Limited Providing general subcontract services Thailand Shareholder 4.81 25.00 1.25 - 1.25 TOT Sport Club Company Limited Providing management services on Thailand Shareholder 2.00 25.00 0.64 - 0.64 business copyrights and privileges Total Investments in subsidiaries 1,057.69 (165.41) 892.28 Total Investments in associates and subsidiaries 1,669.74 (747.46) 922.28 Detail statements of financial position and statements of income of associate companies for the year ended December 31, 2014 and 2013 as follows:

Investment Incorporated portion Company Business country Assets Liabilities Income Profit (Loss) (%)

For the year ended December 31, 2014 Tel-card Company Limited Producing plastic chip cards Thailand - - - - 26.00 Advanced Data Network Communication Company Limited Providing information media Thailand 142.38 58.92 51.36 (60.81) 48.12 services via telephone lines Lenso Datacom Company Limited Providing information media Thailand 47.37 0.03 0.51 (0.60) 49.00 services via telephone lines Mobile Communication Operating network and providing Thailand 110.61 0.41 3.32 2.25 30.00 related network services

For the year ended December 31, 2013 Tel-card Company Limited Producing plastic chip cards Thailand 16.46 54.02 0.16 (3.83) 26.00 Advanced Data Network Communication Company Limited Providing information media Thailand 227.92 83.64 254.41 (44.52) 48.12 services via telephone lines Lenso Datacom Company Limited Providing information media Thailand 47.96 0.02 0.55 (0.46) 49.00 services via telephone lines Mobile Communication Operating network and providing Thailand 108.33 0.39 3.33 2.25 30.00 related network services TOT Public CompanyLimited

Detail of associate companies is the information for the year ended December 31, 2014 and 2013, except Tel-card Company Limited which has detail only year 2013. 139 Since September 30, 2008, the Company and CAT agreed to terminate the joint venture agreement and any verbal or written agreements relating to the said agreement which resulted in the dissolution of joint venture Thai Mobile (“Thai Mobile”). In this regard, the Company is required to absorb all liabilities arising from Thai Mobile at fair value. On November 26, 2008, the Company received all shares in ACT held by CAT, totalling of 50,816,987 shares, consequently, the Company has control over ACT. The Company presented investment in ACT as subsidiary and prepared the first time adoption on consolidated financial statements for the year ended December 31, 2008.

The Company held additional shares of ACT from the transfer of shares from the Company’s employees, who would not like to hold ACT’s shares, of 1.466 million shares, valued at Bath 10 per share, totalling of Baht 14.66 million and in the third quarter of 2010 ,the Company purchased additional shares of ACT from Aeronautical Radio of Thailand Ltd. and the transfer of shares from the Company’s employees, who would not like to hold ACT’s shares, of 0.024 million shares, valued at Bath 10 per share, totalling of Baht 0.24 million. In the second quarter of 2011, the Company purchased additional shares of ACT from the Company’s employees, who would not like to hold ACT’s shares, of 0.0005 million shares, valued at Baht 10 per share, totalling of Baht 0.005 million. In the second quarter of 2012, the Company purchased additional shares of ACT from the Company’s employees, who would not like to hold ACT’s shares, of 0.000125 million shares, valued at Baht 10 per share, totalling of Baht 0.00125 million, and in the forth quarter of 2013, the Company purchased additional shares of ACT from the Company’s employees, who would not like to hold ACT’s shares, of 0.000125 million shares, valued at Baht 10 per share, totalling of Baht 0.00125 million.

The Company accounted for its investment in True Multi-Media Company Limited (“True Multi-Media”) as investment in an associated company, even though the Company has a shareholding of less than 20%, because the Company can appoint not less than one member of the total eleven members according to its investment portion. The Company currently has two directors in the Board of Directors from a total of eight members. The Company considers that it has significant influence because it has proxies in the Board of Directors for which the voting rights are more than 20% of total voting rights. However, since the first quarter of 2009, the Company has not received the financial statements accounted for using the equity method of True Multi-media Company Limited for recording the shares of result from investment in the consolidated financial statements. Therefore, the Company has ceased the recognition on sharing of results from investment in True Multi-media Company Limited and reclassified the investment in True Multi-media Company Limited from “investment in associates” to “other long-term investment”.

On October 10, 2008, the Company’s Board of Directors approved a resolution to sell the Company’s shares in Mobile Communication Company Limited, Tel-card Company Limited, True Multi-media Company Limited and Trade Siam Company Limited. Subsequently, on May 21, 2009, the Company’s Board of Directors approved a resolution to sell the Company’s shares in Advance Data network Communication Company Limited (“Advance”), which such action has been proposed to the Cabinet of Information and Communication Technology Minister for approval. In the fourth quarter of 2009, an additional impairment of the investment in Advance was recorded in the Company’s financial statements for the full amount of the net investment of Baht 190.71 million because Advance had a significant net loss for the year 2009 and resulted to accumulated deficits exceed its capital, and on September 25, 2013, the Company’s Board of Directors approved a resolution to withdraw the selling of shares in the five associates mentioned previously from the Cabinet of Information and Communication Technology Minister, as the selling of shares owned by state-owned enterprises is complex in nature and requires an amount of time, together with there are no shareholders currently willing to buy shares, and the operating condition for individual company has significant changed. This results in reconsideration for overall management of the Company.

On March 5, 2010, the Board of Directors of Lenzo Datacom Company Limited (“Lenzo”) agreed to terminate ADSL and Broadband Internet services as well as approved the resolution to terminate the concession agreement. Therefore, the Company has recorded the full amount of impairment for the net investment of Baht 52.19 Million in the first quarter of 2010.

140 Annual Report 2014 15 Loans to employees as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Loans to employees 512.11 600.31 512.11 600.31 Less Current portion of loans to employees (64.74) (68.82) (64.74) (68.82) 447.37 531.49 447.37 531.49 Less Allowance for doubtful account (11.19) (12.18) (11.19) (12.18) 436.18 519.31 436.18 519.31

At December 31, 2014, the outstanding balance of loans to employees above represented receivable in respect of the employee benefit fund amounting to Baht 111.11 million (at December 31, 2013: Baht 119.23 million) (which is included in the financial statements of the Company, as explained in Note 2.22.2.2) and receivable in respect of the Company amounting to Baht 400.99 million (at December 31, 2013: Baht 481.07 million). The interest rate charged on loans to employees is not less than the interest rate on 12-month fixed deposits with commercial banks. These loans are fully supported by collateral security or guaranteed by individuals depending on the type of loan. The Company will deduct loan repayments from the employees’ basic salary on a monthly basis. On May 30, 2005, the Board of Director’s Meeting approved the resolution to transfer receivables in respect of the employee benefit fund to receivables in respect of the Company in the case that the particular employees transfer to join the provident fund. 16 Investment property as at December 31, 2014 and 2013 are as follows:

Consolidated Cost At January 1, 2013 526.42 At December 31, 2013 and January 1, 2014 526.42 At December 31, 2014 526.42

Impairment loss At January 1, 2013 (159.68) At December 31, 2013 and January 1, 2014 (159.68) At December 31, 2014 (159.68)

Net book value At January 1, 2013 366.74 At December 31, 2013 and January 1, 2014 366.74 At December 31, 2014 366.74

TOT Public Company Limited 141 The Company Cost At January 1, 2013 526.42 At December 31, 2013 and January 1, 2014 526.42 At December 31, 2014 526.42

Impairment loss At January 1, 2013 (159.68) At December 31, 2013 and January 1, 2014 (159.68) At December 31, 2014 (159.68)

Net book value At January 1, 2013 366.74 At December 31, 2013 and January 1, 2014 366.74 At December 31, 2014 366.74

Investment property was lands held for a currently undetermined future use. Some lands were appraised using market approach by Justice Property and Appraisal Co., Ltd., an independent value. The others were determined using appraised prices announced by the Department of Land. The result as at December 31, 2014 represented that the carrying values of some lands were higher than the appraised values and no provision for impairment be reserved (at December 31, 2013: Baht 159.68 million).

The Company pledged land amounting to Baht 61.74 million as collateral of the penalty and surcharge in respect of tax as mentioned in Note 38.1.3.

142 Annual Report 2014 17 Property, plant and equipment

Consolidated Assets under construction Land and land Buildings and Network Office furniture Computers and and improvements facilities equipment and equipment equipment Vehicles installation Total Cost At January 1, 2013 4,284.28 18,274.33 237,036.37 5,141.77 5,134.31 590.65 8,375.77 278,837.48 Additions - 0.18 369.27 130.61 349.58 1.19 14,088.33 14,939.16 Transfers in (out) 3.38 299.06 17,085.82 54.84 231.29 - (17,625.30) 49.09 Donations - - 1.50 0.23 0.01 0.49 - 2.23 Disposals (2.65) (64.75) (5,763.06) (139.32) (107.17) (2.85) - (6,079.80) At December 31, 2013 and January 1, 2014 4,285.01 18,508.82 248,729.90 5,188.13 5,608.02 589.48 4,838.80 287,748.16 Additions - 0.07 485.95 150.23 103.11 1.73 5,871.27 6,612.36 Transfers in (out) 1.96 164.96 8,197.88 149.28 33.29 13.21 (8,559.47) 1.11 Donations - - 0.35 0.44 0.03 - - 0.82 Disposals (1.24) (110.64) (6,139.37) (280.80) (197.12) (12.22) - (6,741.39) At December 31, 2014 4,285.73 18,563.21 251,274.71 5,207.28 5,547.33 592.20 2,150.60 287,621.06

Accumulated depreciation and impairment loss At January 1, 2013 (1,562.58) (11,237.93) (177,721.44) (4,529.63) (4,532.36) (563.52) - (200,147.46) Depreciation for the year (Note 35) (13.22) (673.02) (9,908.95) (250.02) (276.13) (16.79) - (11,138.13) Impairment losses (Note 35) - (5.89) (520.16) (1.59) (0.12) - - (527.76)

TOT Public CompanyLimited Transfers (in) out 0.50 (0.01) (0.49) (0.12) (53.27) - - (53.39) Disposals 2.60 61.01 5,703.34 138.43 107.14 2.85 - 6,015.37 At December 31, 2013 and January 1, 2014 (1,572.70) (11,855.84) (182,447.70) (4,642.93) (4,754.74) (577.46) - (205,851.37) Depreciation for the year (Note 35) (12.15) (668.91) (10,079.01) (264.56) (278.59) (10.89) - (11,314.11) Impairment losses (Note 35) (0.03) (7.19) (127.18) (1.76) (1.34) (0.01) (1.06) (138.57) Transfers (in) out - (20.52) 19.60 (0.09) (0.10) - - (1.11) Disposals 1.20 103.99 6,097.91 279.75 196.92 12.21 - 6,691.98

143 At December 31, 2014 (1,583.68) (12,448.47 (186,536.38) (4,629.59) (4,837.85) (576.15) (1.06) (210,613.18) 144

Consolidated Annual Report 2014 Assets under construction Land and land Buildings and Network Office furniture Computers and and improvements facilities equipment and equipment equipment Vehicles installation Total Net book value

At January 1, 2013 2,721.70 7,036.40 59,314.93 612.14 601.95 27.13 8,375.77 78,690.02

At December 31, 2013 2,712.31 6,652.98 66,282.20 545.20 853.28 12.02 4,838.80 81,896.76

At December 31, 2014 2,702.05 6,114.74 64,738.33 577.69 709.48 16.05 2,149.54 77,007.88 Property, plant and equipment

The Company Assets under construction Land and land Buildings and Network Office furniture Computers and and improvements facilities equipment and equipment equipment Vehicles installation Total Cost At January 1, 2013 4,284.28 18,274.33 235,236.22 5,138.51 5,134.31 590.65 8,375.77 277,034.07 Additions - 0.18 369.27 129.64 349.58 1.19 14,087.84 14,937.70 Transfers in (out) 3.38 299.06 17,085.82 54.26 231.29 - (17,625.30) 48.51 Donations - - 1.50 0.23 0.01 0.49 - 2.23 Disposals (2.65) (64.75) (5,763.06) (139.32) (107.17) (2.85) - (6,079.80) At December 31, 2013 and January 1, 2014 4,285.01 18,508.82 246,929.75 5,183.32 5,608.02 589.48 4,838.31 285,942.71 Additions - 0.07 485.95 149.62 103.11 1.73 5,871.27 6,611.75 Transfers in (out) 1.96 164.47 8,197.88 149.28 33.29 13.21 (8,558.98) 1.11 Donations - - 0.35 0.44 0.03 - - 0.82 Disposals (1.24) (110.64) (6,139.37) (280.80) (197.12) (12.22) - (6,741.39) At December 31, 2014 4,285.73 18,562.72 249,474.56 5,201.86 5,547.33 592.20 2,150.60 285,815.00

Accumulated depreciation and impairment loss At January 1, 2013 (1,562.58) (11,237.93) (177,162.17) (4,526.57) (4,532.36) (563.52) - (199,585.13) Depreciation for the year (Note 35) (13.22) (673.02) (9,728.02) (249.67) (276.13) (16.79) - (10,956.85) Impairment losses (Note 35) - (5.89) (520.16) (1.59) (0.12) - - (527.76)

TOT Public CompanyLimited Transfers (in) out 0.50 (0.01) (0.49) 0.01 (53.27) - - (53.26) Disposals 2.60 61.01 5,703.34 138.43 107.14 2.85 - 6,015.37 At December 31, 2013 and January 1, 2014 (1,572.70) (11,855.84) (181,707.50) (4,639.39) (4,754.74) (577.46) - (205,107.63) Depreciation for the year (Note 35) (12.15) (668.87) (9,898.23) (264.01) (278.59) (10.89) - (11,132.74) Impairment losses (Note 35) (0.03) (7.19) (127.18) (1.76) (1.34) (0.01) (1.06) (138.57) Transfers (in) out - (20.52) 19.60 (0.09) (0.10) - - (1.11) Disposals 1.20 103.99 6,097.91 279.75 196.92 12.21 - 6,691.98

145 At December 31, 2014 (1,583.68) (12,448.43) (185,615.40) (4,625.50) (4,837.85) (576.15) (1.06) (209,688.07) 146

The Company Annual Report 2014 Assets under construction Land and land Buildings and Network Office furniture Computers and and improvements facilities equipment and equipment equipment Vehicles installation Total Net book value

At January 1, 2013 2,721.70 7,036.40 58,074.05 611.94 601.95 27.13 8,375.77 77,448.94

At December 31, 2013 2,712.31 6,652.98 65,222.25 543.93 853.28 12.02 4,838.31 80,835.08

At December 31, 2014 2,702.05 6,114.29 63,859.16 576.36 709.48 16.05 2,149.54 76,126.93

Property, plant and equipment in the Company’s financial statements as at December 31, 2014 amount 76,126.93 million baht, included asset of 3G network amount 14,242.33 million baht, the majority of the assets are network equipment. The management team of the company is considering plans to get the most out of the 3G network and select a suitable business partner.

The company pledged the land amount 2,889.93 million baht as collateral to abate the penalty and surcharge in respect of tax as mentioned in Note 38.1.3.

Borrowing cost relating with 3G network construction was recorded as a part of assets under construction in progress amount Baht 2.51 million (Note 33) with the capitalization rate at 3.26%.

The depreciations for the year ended December 31, 2014 were charged to the Consolidated and the Company financial statements amounting to Baht 11,314.11 million and Baht 11,132.74 million, respectively (2013: Baht 11,138.13 million and Baht 10,956.85 million, respectively). 18 Property, plant and equipment from concession agreements Consolidated Office furniture Buildings and Network and Computers Land facilities equipment equipment and equipment Total Cost At January 1, 2013 2,333.00 4,891.57 270,466.17 90.71 5,673.69 283,455.14 Transfer from concession operators (Note 25) - 0.75 5,546.94 - 0.59 5,548.28 Transfers out ------Disposals - (23.72) (12,689.40) - (0.65) (12,713.77) Devaluation of assets - (0.03) (56.74) - (0.13) (56.90) At December 31, 2013 and January 1, 2014 2,333.00 4,868.57 263,266.97 90.71 5,673.50 276,232.75 Transfer from concession operators (Note 25) - 18.66 6,526.45 - 0.11 6,545.22 Transfers out - - (1.26) - (0.12) (1.38) Disposals - (17.62) (12,303.34) - (1.05) (12,322.01) Devaluation of assets - (0.04) (53.18) - (0.03) (53.25) At December 31, 2014 2,333.00 4,869.57 257,435.64 90.71 5,672.41 270,401.33 Accumulated depreciation and impairment losses At January 1, 2013 - (3,377.81) (210,393.72) (90.71) (5,673.68) (219,535.92) Depreciation for the year (Note 35) - (130.66) (12,828.79) - - (12,959.45) Impairment losses (Note 35) - (160.09) (17,500.67) - (0.59) (17,661.35) Transfers out ------Disposals - 23.08 9,497.21 - 0.65 9,520.94 Devaluation of assets - - 2.01 - 0.13 2.14 At December 31, 2013 and January 1, 2014 - (3,645.48) (231,223.96) (90.71) (5,673.49) (240,633.64) Depreciation for the year (Note 35) - (109.90) (7,648.49) - - (7,758.39) Impairment losses (Note 35) - (7.09) (2,487.00) - (0.11) (2,494.20) TOT Public CompanyLimited Transfers out - - 1.26 - 0.12 1.38 Disposals - 17.47 10,738.57 - 1.04 10,757.08 Devaluation of assets - 0.01 25.38 - 0.03 25.42 At December 31, 2014 - (3,744.99) (230,594.24) (90.71) (5,672.41) (240,102.35) Net book value At January 1, 2013 2,333.00 1,513.76 60,072.45 - 0.01 63,919.22 At December 31, 2013 and January 1, 2014 2,333.00 1,223.09 32,043.01 - 0.01 35,599.11 At December 31, 2014 2,333.00 1,124.58 26,841.40 - - 30,298.98 147 148 Property, plant and equipment from concession agreements Annual Report 2014 The Company Office furniture Buildings and Network and Computers Land facilities equipment equipment and equipment Total Cost At January 1, 2013 2,333.00 4,891.57 270,466.17 90.71 5,673.69 283,455.14 Transfer from concession operators (Note 25) - 0.75 5,546.94 - 0.59 5,548.28 Transfers out ------Disposals - (23.72) (12,689.40) - (0.65) (12,713.77) Devaluation of assets - (0.03) (56.74) - (0.13) (56.90) At December 31, 2013 and January 1, 2014 2,333.00 4,868.57 263,266.97 90.71 5,673.50 276,232.75 Transfer from concession operators (Note 25) - 18.66 6,526.45 - 0.11 6,545.22 Transfers out - - (1.26) - (0.12) (1.38) Disposals - (17.62) (12,303.34) - (1.05) (12,322.01) Devaluation of assets - (0.04) (53.18) - (0.03) (53.25) At December 31, 2014 2,333.00 4,869.57 257,435.64 90.71 5,672.41 270,401.33 Accumulated depreciation and impairment losses At January 1, 2013 - (3,377.81) (210,393.72) (90.71) (5,673.68) (219,535.92) Depreciation for the year (Note 35) - (130.66) (12,828.79) - - (12,959.45) Impairment losses (Note 35) - (160.09) (17,500.67) - (0.59) (17,661.35) Transfers out ------Disposals - 23.08 9,497.21 - 0.65 9,520.94 Devaluation of assets - - 2.01 - 0.13 2.14 At December 31, 2013 and January 1, 2014 - (3,645.48) (231,223.96) (90.71) (5,673.49) (240,633.64) Depreciation for the year (Note 35) - (109.90) (7,648.49) - - (7,758.39) Impairment losses (Note 35) - (7.09) (2,487.00) - (0.11) (2,494.20) Transfers out - - 1.26 - 0.12 1.38 Disposals - 17.47 10,738.57 - 1.04 10,757.08 Devaluation of assets - 0.01 25.38 - 0.03 25.42 At December 31, 2014 - (3,744.99) (230,594.24) (90.71) (5,672.41) (240,102.35) Net book value At January 1, 2013 2,333.00 1,513.76 60,072.45 - 0.01 63,919.22 At December 31, 2013 and January 1, 2014 2,333.00 1,223.09 32,043.01 - 0.01 35,599.11 At December 31, 2014 2,333.00 1,124.58 26,841.40 - - 30,298.98 Depreciation charged for the year ended December 31, 2014 in the consolidated and the company financial statements amounting to Baht 7,758.39 million (2013: Baht 12,959.45 million) was recorded as an expense in the statements of income.

For the year ended December 31, 2014, the Company recorded impairment loss on equipment from concession agreements amounting to Baht 2,494.20 million which most of them are 2G equipment which is addition in 2014. The total allowance for impairment is Baht 22,128.22 million.

In September 2015, Company obtain mobile service (2G) license from Telecommunication entrepreneur will end on September 30, 2015 which the result is 900 MHz frequency license end unless National Telecommunications Commission of NBTC and NBTC will consider to other, yet the Company still use asset from license. However, there are uncertainties in decision of National Telecommunications Commission of NBTC and NBTC. The Company may be not get 900 MHz frequency license. If the Company does not get 900 MHz frequency license, the Company may be impacted significantly on future income from the exploitation of assets 2G with the investment plans and the management of the company. However, the company is confident that the company will have the license of 900 MHz frequencies and propose 900 MHz mobile service plans after the end of the contract to National Broadcasting and Telecommunication Commission (NBTC) and alter condition in telecommunication license number 3.

19 Intangible assets

Consolidated Right to use the Right- international educational Right to submarine software Right to use hold the optical fibre program software frequency cable Total Cost At January 1, 2013 8.74 2,484.21 4,187.21 591.20 7,271.36 Addition - 86.18 - - 86.18 Transfers out - (48.46) - - (48.46) Disposals - (9.68) - - (9.68) At December 31, 2013 and January 1, 2014 8.74 2,512.25 4,187.21 591.20 7,299.40 Additions - 25.29 - - 25.29 Disposals - (95.84) - - (95.84) At December 31, 2014 8.74 2,441.70 4,187.21 591.20 7,228.85

Amortization At January 1, 2013 (6.80) (1,729.19) (1,052.94) (82.09) (2,871.02) Amortization charge for the year (Note 35) (0.88) (217.64) (249.22) (39.63) (507.37) Transfers out - 53.25 - - 53.25 Disposals - 9.68 - - 9.68 At December 31, 2013 and January 1, 2014 (7.68) (1,883.90) (1,302.16) (121.72) (3,315.46) Amortization charge for the year (Note 35) (0.87) (209.19) (249.23) (39.63) (498.92) Transfers out - - - - - Disposals - 94.51 - - 94.51 At December 31, 2014 (8.55) (1,998.58) (1,551.39) (161.35) (3,719.87)

Net book value At January 1, 2013 1.94 755.02 3,134.27 509.11 4,400.34 At December 31, 2013 and January 1, 2014 1.06 628.35 2,885.05 469.48 3,983.94 At December 31, 2014 0.19 443.12 2,635.82 429.85 3,508.98

TOT Public Company Limited 149 Intangible assets

The Company Right to use the Right- international educational Right to submarine software Right to use hold the optical fibre program software frequency cable Total Cost At January 1, 2013 8.74 2,484.18 4,187.21 591.20 7,271.33 Additions - 85.76 - - 85.76 Transfers out - (48.51) - - (48.51) Disposals - (9.68) - - (9.68) At December 31, 2013 and January 1, 2014 8.74 2,511.75 4,187.21 591.20 7,298.90 Additions - 25.16 - - 25.16 Disposals - (95.84) - - (95.84) At December 31, 2014 8.74 2,441.07 4,187.21 591.20 7,228.22

Amortization At January 1, 2013 (6.80) (1,729.19) (1,052.94) (82.09) (2,871.02) Amortization charge for the year (Note 36) (0.88) (217.59) (249.22) (39.63) (507.32) Transfers out - 53.26 - - 53.26 Disposals - 9.68 - - 9.68 At December 31, 2013 and January 1, 2014 (7.68) (1,883.84) (1,302.16) (121.72) (3,315.40) Amortization charge for the year (Note 35) (0.87) (209.11) (249.23) (39.63) (498.84) Transfers out - - - - - Disposals - 94.51 - - 94.51 At December 31, 2014 (8.55) (1,998.44) (1,551.39) (161.35) (3,719.73)

Net book value At January 1, 2013 1.94 754.99 3,134.27 509.11 4,400.31 At December 31, 2013 and January 1, 2014 1.06 627.91 2,885.05 469.48 3,983.50 At December 31, 2014 0.19 442.63 2,635.82 429.85 3,508.49

Amortisation for the year ended December 31, 2014 in the Consolidated financial statement amounting to Baht 498.92 million and the Company financial statement amounting to Baht 498.84 million (2013: Baht 507.37 million and Baht 507.32 million respectively) which was classified as cost of services at the amount of Baht 289.73 million (2013: Baht 289.73 million) and administrative expenses at the amount Baht 209.19 million and Baht 209.11 million, respectively, (2013: Baht 217.64 million and Baht 217.59 million respectively) in the statements of income. 20 Trade accounts payable as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Trade accounts payable 1,346.51 3,238.25 1,384.37 3,245.51 Long distance call payables 1.68 3.32 1.68 3.32 1,348.19 3,241.57 1,386.05 3,248.83

150 Annual Report 2014 21 Payables to private operators

Payables to private operators represent payables in respect of which the Company has to share revenue according to concession agreements. As at December 31, 2014 and 2013, the details of payables to private operators are as follows:

Consolidated The Company 2014 2013 2014 2013 Payable to private operators for which the Company is responsible for collection : Fixed-line phone services 4,468.69 4,565.81 4,468.69 4,565.81 Public telephone services 15.84 19.10 15.84 19.10 4,484.53 4,584.91 4,484.53 4,584.91 Less Allowance for doubtful accounts for trade accounts receivable which are the responsibility of private operators (3,364.11) (3,259.02) (3,364.11) (3,259.02) Payables to private operators for which the Company is responsible for collection - net 1,120.42 1,325.89 1,120.42 1,325.89 Fiber-optic cable connection, along railway lines 13,497.13 13,497.13 13,497.13 13,497.13 Submarine cable connection services 330.01 330.01 330.01 330.01 International call services 0.17 0.11 0.17 0.11 Information via telephone line through special 1900 number 56.75 58.21 56.75 58.21 Others 42.44 43.70 42.44 43.70 15,046.92 15,255.05 15,046.92 15,255.05

22 Accrued expenses as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Accrued interest payable to subscriber bonds 89.91 90.18 89.91 90.18 Accrued interest payable on borrowings 430.60 443.82 430.60 443.82 Satellite rental 0.60 0.60 0.60 0.60 Accrued service fee for fault notification and maintenance 622.30 593.27 622.30 593.27 Accrued bonus 960.00 1,277.65 960.00 1,277.65 Accrued telecommunication license fee and excise tax 7,990.81 2,429.69 7,990.81 2,429.69 Accrued maintenance for assets under finance lease 586.02 586.02 586.02 586.02 Other accrued expenses 2,300.61 2,833.65 2,377.29 2,879.17 12,980.85 8,254.88 13,057.53 8,300.40

23 Subscriber deposits

The Telecommunication Act B.E.2544 effective on November 17, 2001, states that telecommunication operators shall no longer collect deposits or other types of advance payments from subscribers. The Company’s Board of Directors passed a resolution on December 13, 2001 to cease the collection of all types of deposits from both services which the Company provides itself and services provided by concession operators. The Company determined a variety of methods for refunding these amounts. The refund process commenced in May 2002, therefore, the Company classified subscriber deposits as a current liabilities. As at December 31, 2014, the ending balance for subscriber deposit was Baht 1,667.86 million (at December 31, 2013: Baht 1,682.99 million)

TOT Public Company Limited 151 24 Other current liabilities as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Employee benefit obligation - vacation leave 348.22 336.16 348.22 336.16 Subscriber bonds 71.62 71.84 71.62 71.84 Advance received for telephone services 293.97 960.71 293.97 960.71 Undue output value added tax 731.19 636.90 731.19 636.90 Output value added tax - net 110.16 122.37 110.16 122.37 Other current liabilities 860.57 855.38 843.14 853.33 2,415.73 2,983.36 2,398.30 2,981.31

25 Deferred income from assets transferred under concession agreements as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Opening balance - net 21,119.54 46,894.02 21,119.54 46,894.02 Add Additional assets transferred in during the period (Note 18) 6,545.22 5,548.28 6,545.22 5,548.28 Less Realized as income during the year (16,151.69) (31,271.21) (16,151.69) (31,271.21) Devaluation of assets (25.07) (51.55) (25.07) (51.55) Closing balance - net 11,488.00 21,119.54 11,488.00 21,119.54 Less Current portion - to be realized as income within one year (10,083.42) (11,473.76) (10,083.42) (11,473.76) Long-term liabilities 1,404.58 9,645.78 1,404.58 9,645.78

26 Interest - bearing liabilities 26.1 Borrowing as at December 31, 2014 and 2013 are as follows: Consolidated 2014 2013 International Domestic Total International Domestic Total Bank borrowings Current portion of long-term borrowings 405.79 1,859.10 2,264.89 405.79 1,594.46 2,000.25 Long-term borrowings 1,014.47 10,225.08 11,239.55 1,420.26 10,363.97 11,784.23 Total borrowings 1,420.26 12,084.18 13,504.44 1,826.05 11,958.43 13,784.48

The Company 2014 2013 International Domestic Total International Domestic Total Bank borrowings Current portion of long-term borrowings 405.79 1,859.10 2,264.89 405.79 1,594.46 2,000.25 Long-term borrowings 1,014.47 10,225.08 11,239.55 1,420.26 10,363.97 11,784.23 Total borrowings 1,420.26 12,084.18 13,504.44 1,826.05 11,958.43 13,784.48

152 Annual Report 2014 The borrowings’ interest rate risk as at December 31, 2014 and 2013 are as follows:

Consolidated 2014 2013 International Domestic International Domestic Total borrowings Fixed rate 1,420.26 - 1,826.05 - Float rate - 12,084.18 - 11,958.43 1,420.26 12,084.18 1,826.05 11,958.43

The Company 2014 2013 International Domestic International Domestic Total borrowings Fixed rate 1,420.26 - 1,826.05 - Float rate - 12,084.18 - 11,958.43 1,420.26 12,084.18 1,826.05 11,958.43

The weighted average effective interest rates as at December 31, 2014 and 2013 are as follows:

Unit : Percent

Consolidated 2014 2013 International Domestic International Domestic Total borrowings Borrowings from banks 6.02 3.26 6.02 3.91

Unit : Percent The Company 2014 2013 International Domestic International Domestic Total borrowings Borrowings from banks 6.02 3.26 6.02 3.91

Borrowings from international banks as at December 31, 2014 amounting to Baht 1,420.26 million were guaranteed by a related party, the Ministry of Finance.

Borrowings from banks as at December 31, 2014 amounting to Baht 1,420.26 million (at December 31, 2013: Baht 1,826.05 million) were covered by cross currency swap agreements (Note 37).

TOT Public Company Limited 153 Maturities of borrowings as at December 31, 2014 and 2013 are as follows: Consolidated 2014 2013 International Domestic Total International Domestic Total Due within 1 year 405.79 1,859.10 2,264.89 405.79 1,594.46 2,000.25 Later than 1 year but not later than 2 years 405.79 1,859.10 2,264.89 405.79 1,594.46 2,000.25 Later than 2 year but not later than 5 years 608.68 5,577.32 6,186.00 1,014.47 4,783.37 5,797.84 Later than 5 years - 2,788.66 2,788.66 - 3,986.14 3,986.14 1,420.26 12,084.18 13,504.44 1,826.05 11,958.43 13,784.48

The company 2014 2013 International Domestic Total International Domestic Total Due within 1 year 405.79 1,859.10 2,264.89 405.79 1,594.46 2,000.25 Later than 1 year but not later than 2 years 405.79 1,859.10 2,264.89 405.79 1,594.46 2,000.25 Later than 2 year but not later than 5 years 608.68 5,577.32 6,186.00 1,014.47 4,783.37 5,797.84 Later than 5 years - 2,788.66 2,788.66 - 3,986.14 3,986.14 1,420.26 12,084.18 13,504.44 1,826.05 11,958.43 13,784.48

The carrying amount and fair value of long-term borrowings as at December 31, 2014 and 2013 are as follows:

Consolidated 2014 2013 Carrying Carrying amount Fair value amount Fair value Borrowings from banks International 1,014.47 1,054.81 1,420.26 1,468.12 Domestic 10,225.08 10,187.34 10,363.97 10,088.52 11,239.55 11,242.15 11,784.23 11,556.64

The company 2014 2013 Carrying Carrying amount Fair value amount Fair value Borrowings from banks International 1,014.47 1,054.81 1,420.26 1,468.12 Domestic 10,225.08 10,187.34 10,363.97 10,088.52 11,239.55 11,242.15 11,784.23 11,556.64

The fair value of long-term borrowings is calculated based on the present value of future cash flows discounted with the interest rate on borrowings that the Company would expect to pay at the reporting date.

154 Annual Report 2014 On May 24, 2011, the Company entered into the 10-years period loan agreement with 2 banks amounting to Baht 14,707.39 million for 3G network. The interest rate used is the average of interest rate on fixed deposits of four main commercial banks plus 1.53% per annum. The loan period is 10 years with grace period 2 years from the first drawdown (May 27, 2011). Interest and principal will be repaid by semi-annually. The first installment is a last date of 30th month since the first withdraws date. The Company must maintain certain financial ratios, insurance, guarantee and sold or transfer asset under the 3G network including the payment collateral from the condition of a collection transfer under the Mobile Virtual Network Operator (MVNO) agreement, the transfer right of insurance contract, the transfer right in deposit account with the conditions. As at December 31, 2014, letter of guarantees amount Baht 52.41 million (note 7). The Company has withdrawn full credit amount of Baht 14,707.39 million on March 28, 2014, Then, the Company repayment principal 3 times amount of Baht 2,623.21 million. Lastly, the accrued principle amount of Baht 12,084.18 million 26.2 Financial lease liabilities as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Financial lease liabilities 1,936.84 1,936.84 1,936.84 1,936.84 Less Current portion (1,936.84) (1,936.84) (1,936.84) (1,936.84) Long-term financial lease liabilities - - - -

Financial lease liabilities as at December 31, 2014 and 2013 are as follows:

Consolidated 2014 2013 Minimum Interest Present value Minimum Interest Present value lease of minimum lease of minimum payments lease payments lease payments payments

Due within 1 year 1,936.84 - 1,936.84 1,936.84 - 1,936.84

The Company 2014 2013 Minimum Interest Present value Minimum Interest Present value lease of minimum lease of minimum payments lease payments lease payments payments

Due within 1 year 1,936.84 - 1,936.84 1,936.84 - 1,936.84

TOT Public Company Limited 155 27 Deferred taxes

Assets and liabilities of deferred tax can be analyzed as follows:

Consolidated The Company 2014 2013 2014 2013 Deferred tax assets - Current portion of deferred tax assets (960.84) (1,144.09) (960.84) (1,144.09) - Non-current portion of deferred tax assets (1,299.56) (2,013.85) (1,298.15) (2,013.85) (2,260.40) (3,157.94) (2,258.99) (3,157.94)

Deferred tax liabilities

Consolidated The Company 2014 2013 2014 2013 - Current portion of deferred tax liabilities 2,549.17 2,615.58 2,549.17 2,615.59 - Non-current portion of deferred tax liabilities 649.97 2,284.40 649.36 2,283.92 3,199.14 4,899.98 3,198.53 4,899.51 Deferred tax - net 938.74 1,742.04 939.54 1,741.57

Movements of deferred income tax are as follows:

Consolidated The Company 2014 2013 2014 2013 At January 1 1,742.04 4,405.48 1,741.57 4,405.14 Increase/(decrease) in profit or loss (Note 34) (790.92) (2,875.22) (789.65) (2,875.35) Increase/(decrease) in other comprehensive income (12.38) 211.78 (12.38) 211.78 At December 31 938.74 1,742.04 939.54 1,741.57

156 Annual Report 2014 Components of assets and liabilities of deferred taxes are as follows:

Consolidated At Jan 1, Recorded Recorded as At Dec 31, 2014 as expense expense 2014 (income) (income) in in Other Profit or Loss Comprehensive Income Deferred tax assets Trade receivables (allowance for doubtful accounts) (51.60) 0.83 - (50.77) Inventory and supplies (allowance for obsolete inventories and decrease in value) (33.15) 6.70 - (26.45) Other long-term investments (provision for impairment of investments) (63.26) 37.43 - (25.83) Property, plant and equipment (provision for impairment and depreciation)) (960.42) 413.89 - (546.53) Employee benefit obligations (1,456.02) (81.19) - (1,537.21) Other (593.49) 519.88 - (73.61) Total deferred tax assets (3,157.94) 897.54 - (2,260.40) Deferred tax liabilities Available-for-sale Investments 1,869.23 - (12.38) 1,856.85 Property, plant and equipment and deferred income from joint operation agreements 3,030.28 (1,688.60) - 1,341.68 Other 0.47 0.14 - 0.61 Total deferred tax liabilities 4,899.98 (1,688.46) (12.38) 3,199.14 Deferred tax - net 1,742.04 (790.92) (12.38) 938.74

The Company At Jan 1, Recorded Recorded as At Dec 31, 2014 as expense expense 2014 (income) (income) in in Other Profit or Loss Comprehensive Income Deferred tax assets Trade receivables (allowance for doubtful accounts) (51.60) 0.83 - (50.77) Inventory and supplies (allowance for obsolete inventories and decrease in value) (33.15) 6.70 - (26.45) Other long-term investments (provision for impairment of investments) (63.26) 37.43 - (25.83) Property, plant and equipment (provision for impairment and depreciation) (960.42) 413.89 - (546.53) Employee benefit obligations (1,456.02) (79.78) - (1,535.80) Other (593.49) 519.88 - (73.61) Total deferred tax assets (3,157.94) 898.95 - (2,258.99) Deferred tax liabilities Available-for-sale Investments 1,869.23 - (12.38) 1,856.85 Property, plant and equipment and deferred income from joint operation agreements 3,030.28 (1,688.60) - 1,341.68 Total deferred tax liabilities 4,899.51 (1,688.60) (12.38) 3,198.53 Deferred tax - net 1,741.57 (789.65) (12.38) 939.54

TOT Public Company Limited 157 28 Employee benefit obligations

Consolidated The Company 2014 2013 2014 2013 Employee benefit obligations in the statement of financial position comprise - The compensation from the State Enterprise Labor in relations Board and other post - employment benefits 6,955.70 6,582.93 6,948.62 6,582.90 - Employee welfare and benefit fund 323.08 304.36 323.08 304.36 - Compensation for 25 and 36 service year award 59.11 56.71 59.11 56.71 Total 7,337.89 6,944.00 7,330.81 6,943.97

Consolidated The Company 2014 2013 2014 2013 Expenses in the statements of income - The compensation from the State Enterprise Labor in relations Board and other post - employment benefits (Note 35) 557.39 2,545.67 550.34 2,545.64 - Employee welfare and benefit fund (Note 35) 25.22 29.20 25.22 29.20 - Compensation for 25 and 36 service year award (Note 35) 4.86 8.40 4.86 8.40 Total 587.47 2,583.27 580.42 2,583.24

28.1 The compensation from the State Enterprise Labor Relations Board and other post-employment benefits

The Company and Group has the policy to define employee retirement age equal to 60 years at the end of budget year. The retired employees will receive the compensation under the announcement of the State Enterprise Labour Relations Board and other benefits. Employees who have been working with the Company consecutively for 5 years but less than 15 years and those who have been working with the Company consecutively for 15 years are entitle to the compensation equal to 180 days and 300 days at the last salary rate respectively.

The details of the liability in the statements of financial position are as follows:

Consolidated The Company 2014 2013 2014 2013 Statement of financial position The plan’s liabilities presented in the statements of financial position 6,955.70 6,582.93 6,948.62 6,582.90

158 Annual Report 2014 The movements in present values of the plan’s liabilities are as follows:

Consolidated The Company 2014 2013 2014 2013 Beginning liabilities 6,582.93 4,532.98 6,582.90 4,532.98 Benefits paid during the year (173.96) (235.44) (173.96) (235.44) Transfer to accrued expenses in current liabilities (10.66) (396.32) (10.66) (396.32) Recognized liabilities as expenses in the statements of income 557.39 2,545.67 550.34 2,545.64 Curtailment loss - 136.04 - 136.04 Ending liabilities 6,955.70 6,582.93 6,948.62 6,582.90

Expenses recognized in the statements of income comprise:

Consolidated The Company 2014 2013 2014 2013 Obligation recognized as expenses during the transition - 1,955.39 - 1,955.39 Current service cost 293.29 284.18 286.24 284.15 Past service principal recognized during year - 20.28 - 20.28 Interest expense 264.10 256.55 264.10 256.55 Curtailment loss - 29.27 - 29.27 Total (Note 35) 557.39 2,545.67 550.34 2,545.64

28.2 Employee welfare and benefit fund

The Company established its employee welfare and benefit fund or pension fund as the Telephone Organisation of Thailand Act B.E.2497 in order to provide money to employees who resign or retire. The calculation is based on salary rate at September 30, 2005 multiplied by the service period from the employment date to September 30, 2005 and the last salary rate multiplied by the service period from October 1, 2005 to the fund resignation date.

The details of the liability in the statements of financial position are as follows:

Consolidated The Company 2014 2013 2014 2013 Statement of financial position The plan’s liabilities presented in the statements of financial position 323.08 304.36 323.08 304.36

TOT Public Company Limited 159 The movements in present values of the plan’s liabilities are as follows:

Consolidated The Company 2014 2013 2014 2013 Beginning liabilities 304.36 306.25 304.36 306.25 Benefits paid during the year (6.50) (28.25) (6.50) (28.25) Transfer to provident fund - (0.98) - (0.98) Recognized liabilities as expenses in the statements of income 25.22 29.20 25.22 29.20 Curtailment gain - (1.86) - (1.86) Ending liabilities 323.08 304.36 323.08 304.36

Expenses recognized in the statements of income comprise:

Consolidated The Company 2014 2013 2014 2013 Obligation recognized as expense during the transition - 2.34 - 2.34 Current service cost 12.88 15.61 12.88 15.61 Past service principal recognized during year - (0.05) - (0.05) Interest expense 12.34 14.42 12.34 14.42 Curtailment gain - (3.12) - (3.12) Total (Note 35) 25.22 29.20 25.22 29.20

The Company contributes an amount equivalent to 10% of its employees’ salaries to the fund on a monthly basis, together with additional contributions up to a maximum of the obligation at the end of the accounting period.

At December 31, 2014, the employee welfare and benefit fund has 309 members (at December 31, 2013: 315 members).

28.3 Compensation for 25 and 36 service year award

The Company has preferences of the long-term rewards to employees who have been working for 25 years and 36 years.

The Liabilities in the statements of financial position are as follow:

Consolidated The Company 2014 2013 2014 2013 Statement of financial position Long-term employee benefit obligations presented in the statements of financial position 59.11 56.71 59.11 56.71

160 Annual Report 2014 The movements in present values of the plan’s liabilities are as follows:

Consolidated The Company 2014 2013 2014 2013 Beginning liabilities 56.71 50.69 56.71 50.69 Benefits paid during the year (2.46) (2.38) (2.46) (2.38) Recognized liabilities as expenses in the statements of income 4.86 8.40 4.86 8.40 Ending liabilities 59.11 56.71 59.11 56.71

Expenses recognized in the statements of income comprise:

Consolidated The Company 2014 2013 2014 2013 Current service cost 2.62 2.48 2.62 2.48 Obligation recognized as expense during the transition - 3.71 - 3.71 Interest expense 2.24 2.03 2.24 2.03 Curtailment gain - (1.06) - (1.06) Loss from actuarial estimates - 1.24 - 1.24 Total (Notes 35) 4.86 8.40 4.86 8.40

Principal actuarial assumption as at December 31, 2014 and 2013

The future salary increase rate is applied by using weighted average rate of 3.5% - 8.0% per annum, classified by the employees’ age ranges.

Demographic assumptions

1) Mortality rate assumption

Assumption related to future mortality rate is derived from Thailand Mortality Ordinary 2008 (TMO08) prepared by the Office of Insurance Commission.

2) Employee turnover rate assumption

Employee turnover rate is applied by using weighted average turnover rate of 0.0% - 3.0% per year, classified by the employees’ age ranges.

3) Financial assumption

The discount rate for Thailand is according to the of the government bond yields and the rate for 2014 is 4.1% per annum (2013: 4.1% per annum)

TOT Public Company Limited 161 29 Appropriated retained earnings as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Reserve for expansion 1,519.93 1,518.11 1,518.11 1,518.11 Legal reserve 600.30 600.00 600.00 600.00 Total 2,120.23 2,118.11 2,118.11 2,118.11

Reserve for expansion

The reserve for telephone business expansion is appropriated at a certain percentage of the previous year’s net profit. Each reserve requires approval by the Ministry of Finance. The reserve for expansion is not a legally restricted reserve.

Legal reserve

Under the Public Company Limited Act B.E.2535, the Company is required to set aside a legal reserve at least 5% of its net profit after the accumulated deficit brought forward (if any) until the reserve is not less than 10% of the registered capital. The reserve is non-distributable.

30 Dividend payment

At the annual general meeting of the shareholders of the Company held on August 6, 2014, the shareholders approved on the payment of dividends in respect of the operating result for the year 2013 for 600 million shares with Baht 3.27 per share, totalling Baht 1,962.00 million. The Company paid the dividends in full to shareholders on October 1, 2014.

At the annual general meeting of the shareholders of the Company held on June 14, 2013, the shareholders approved on the payment of dividends in respect of the operating result for the year 2012 for 600 million shares with Baht 12.33 per share, totalling Baht 7,398.00 million. The Company paid the dividends in full to shareholders July 24, 2013.

162 Annual Report 2014 31 Other components of Equity

Other components of equity comprise of available-for-sales investments and income taxes related to components of other comprehensive income are as follows:

Consolidated The Company 2014 2013 2014 2013 Beginning balance 7,476.93 6,522.48 7,476.93 6,522.48 Change during the year - Gain from change in fair value of available-for-sale investments (Note 13) (61.91) 1,193.07 (61.91) 1,193.07 - Income taxes related to components of other comprehensive income 12.38 (238.62) 12.38 (238.62) (49.53) 954.45 (49.53) 954.45 Ending balance 7,427.40 7,476.93 7,427.40 7,476.93

32 Non-controlling interests for the years ended December 31, 2014 and 2013 are as follows:

Consolidated 2014 2013 Beginning balance 31.50 15.12 Business acquisition 0.01 11.58 Dividend receivable from subsidiary (0.18) - Share of net profit (loss) from investments in subsidiaries (7.68) 4.80 Ending balance 23.65 31.50

33 Income tax for the years ended December 31, 2013 and 2012 are as follows:

Consolidated The Company 2014 2013 2014 2013 Interest expenses - borrowings 539.80 453.49 539.80 453.49 Interest expenses - amount due to related parties - 8.75 - 8.75 Other finance costs 1.18 13.39 1.16 13.34 540.98 475.63 540.96 475.58 Cost of assets under construction (Note 17) (2.51) (69.74) (2.51) (69.74) Total finance costs - net 538.47 405.89 538.45 405.84

TOT Public Company Limited 163 34 Income tax for the years ended December 31, 2013 and 2012 are as follows:

Consolidated The Company 2014 2013 2014 2013 Income tax for the current year: - Corporate income tax for the year 1,506.79 3,600.32 1,496.19 3,598.73 - Adjustments from prior period 43.49 (58.78) 43.49 (58.78) 1,550.28 3,541.54 1,539.68 3,539.95 Deferred tax: - Amounts from temporary difference (Notes 27) (790.92) (2,875.22) (789.64) (2,875.35) Total income tax expense 759.36 666.32 750.04 664.60

The Company’s income taxes calculated from profit before income tax differ from income tax calculated from accounting profit multiplied by the country’s tax rate:

Consolidated The Company 2014 2013 2014 2013 Profit before tax 2,707.03 5,080.16 2,600.14 5,018.96 Tax based on tax rate - 20% 541.40 1,016.03 520.03 1,003.79 Effects - Non-taxable income (382.37) (77.11) (382.37) (77.11) - Non deferred tax deductible expenses 556.84 (213.82) 568.89 (203.30) - Adjustments from prior period 43.49 (58.78) 43.49 (58.78) Income tax 759.36 666.32 750.04 664.60

Income tax (decrease) / increase related to components of other comprehensive income is as follows: Consolidated 2014 2013 Before tax Tax After tax Before tax Tax After tax (decrease)/ (decrease)/ increase increase

Gain (loss) from change in fair value of available-for-sale investments (61.91) 12.38 (49.53) 1,193.07 (238.62) 954.45 Actuarial loss for employees’ benefit plan - - - (134.18) 26.84 (107.34) Other comprehensive income (61.91) 12.38 (49.53) 1,058.89 (211.78) 847.11

164 Annual Report 2014 The Company 2014 2013 Before tax Tax After tax Before tax Tax After tax (decrease)/ (decrease)/ increase increase

Gain (loss) from change in fair value of available-for-sale investments (61.91) 12.38 (49.53) 1,193.07 (238.62) 954.45 Actuarial loss for employees’ benefit plan - - - (134.18) 26.84 (107.34) Other comprehensive income (61.91) 12.38 (49.53) 1,058.89 (211.78) 847.11

On December 21, 2011, the government enacted the Decree under the Revenue Code on Reduction and Exemption (No.530) B.E.2554. The decree determines to reduce corporate income tax rate on profits for three accounting periods. Accounting periods include the years 2012, 2013 and 2014, from 30% tax rate to 23% for fiscal years beginning on or after January 1, 2012 and 20% of net income for the following two periods (2013 and 2014). 35 Expense by nature

Significant expenses by nature have been charged in the statements of income for the years ended December 31, 2014 and 2013 as follows:

Consolidated The Company 2014 2013 2014 2013 1) Depreciation and amortisation Depreciation on property, plant and equipment - The Company’s assets (Note 17) 11,314.11 11,138.13 11,132.74 10,956.85 - Assets under concession agreements (Note 18) 7,758.39 12,959.45 7,758.39 12,959.45 Total depreciation 19,072.50 24,097.58 18,891.13 23,916.30 Amortisation of intangible assets (Note 19) 498.92 507.37 498.84 507.32 Total 19,571.42 24,604.95 19,389.97 24,423.62 2) Loss on impairment of property, plant and equipment (Note 17) 138.57 527.76 138.57 527.76 3) Loss on impairment of property, plant and equipment from concession agreements (Note 18) 2,494.20 17,661.35 2,494.20 17,661.35 4) Gain (loss) on foreign exchange rates (1.13) 300.08 (1.13) 300.08 5) Audit fee 2.05 1.20 1.90 1.20 6) Bad debts expense and doubtful accounts 416.69 438.43 416.69 438.43

TOT Public Company Limited 165 Consolidated The Company 2014 2013 2014 2013 7) Operating lease rentals - Machinery, equipment and vehicles 1,516.44 1,491.89 1,767.36 1,742.81 - Land and buildings 192.29 153.53 192.29 153.53 Total 1,708.73 1,645.42 1,959.65 1,896.34 8) Staff costs - Salaries, wages and bonus 11,407.90 12,229.61 10,758.69 12,060.47 - Contributions to provident fund 1,286.66 1,263.13 1,286.66 1,263.13 - The compensation from the state Enterprise Labor Relations Board and other post-employment benefits (Note 28.1) 557.39 2,545.67 550.34 2,545.64 - Employee welfare and benefit fund (Note 28.2) 25.22 29.20 25.22 29.20 - Compensation for 25 and 36 service year award (Note 28.3) 4.86 8.40 4.86 8.40 - Short-term benefit obligation – vacation leave 20.36 23.38 20.36 23.38 - Compensation for early retirement benefit plan - 1,208.47 - 1,208.47 Total 13,302.39 17,307.86 12,646.13 17,138.69 9) Section 84 Expenses 5,806.88 505.75 5,806.88 505.75

The operating lease rentals in the Company’s financial statements include phase 3 mobile network rental which ACT Mobile Co., Ltd. (“ACT”) is the investor. The Company recorded the rental as expense in the statements of income. On August 5, 2011, the Board of director approved to pay monthly rental to ACT of Baht 20.91 million, effective on December 3, 2009. The contract shall be renewed annually. Subsequently, on June 14, 2012, the Board of director approved to purchase the equipments of phase 3 mobile network rental from ACT. The acquisition is currently in process.

Section 84 Expenses

Act on Organization to assign radio frequency and to regulate the broadcasting and telecommunication service B.E.2553 (2010) in section 84 space 3 stated that when three years have lapsed after the day on which this Act has come into force, the state enterprises’ revenues, which are derived from the undertakings under the authorization, concession or contract according to paragraph two that the state enterprises operated under the law on private participation in state undertaking whether the undertaking is in whole or in part, shall be subtracted by the following expenses and remitted to the NBTC upon which it shall transfer the said money to the state treasury.

166 Annual Report 2014 36 Basic earnings per share

Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average number of paid-up ordinary shares issued during the years ended December 31, 2014 and 2013 as follows:

Consolidated The Company 2014 2013 2014 2013 Profits of Company 1,955.36 4,409.03 1,850.10 4,354.36 Weighted average number of ordinary shares during the year (Unit: Million shares) 600 600 600 600 Basic earnings per share (Unit: Baht) 3.26 7.35 3.08 7.26

There were no potential dilutive ordinary shares issued during the years 2014 and 2013. 37 Financial instruments Cross currency swap contracts

The maturity dates of the conditions and principal of foreign currency swap contracts as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Not later than 1 year 405.79 405.79 405.79 405.79 Later than 1 year but not later than 2 years 405.79 405.79 405.79 405.79 Later than 2 years but not later than 5 years 608.68 1,014.47 608.68 1,014.47 1,420.26 1,826.05 1,420.26 1,826.05

Net fair values

The net fair values of derivative financial instruments as at December 31, 2014 and 2013 were as follows:

Consolidated The Company 2014 2013 2014 2013 Cross currency swap contract liabilities 365.64 268.29 365.64 268.29

The fair values of cross currency swap contracts are calculated by using rates quoted by the Company’s counterparties as if they are terminated at the reporting date.

Contingent liabilities from cross currency swap contracts

The Company entered into cross currency swap contracts (Cross Currency Swap: FX Option with Contingent Payment) in the year 2006 to swap borrowings in Yen currency to Baht currency with the obligation that if the reference exchange rate i.e. the Yen to US Dollar exchange rate as at two days before the repayment date of each period is below 72.50, the Company has to pay the additional amount according to the swap contracts together with the normal repayment.

TOT Public Company Limited 167 38 Contingent liabilities and commitments 38.1 Contingent liabilities

38.1.1 Contractual arrangements

As at December 31, 2014 the Company is the defendant in contract cases and misconduct cases amounting to Baht 75,264.19 million (at December 31, 2013: Baht 72,130.61 million), of which the significant cases amount of Baht 70,416.88 million are as follows:

The significant lawsuits with True consist of: True claims to the arbitrator to request the Company to pay the revenue sharing generated from the Company’s provision of special services using True’s network (Access Charges) amounting to Baht 15,415.37 million. The arbitrator concluded on February 17, 2006 that the Company has to pay the revenue sharing from the beginning to August 22, 2002 of Baht 9,175.82 million with interest charged from August 22, 2002 to the payment date at the rate of 7.5% per annum. For the revenue sharing from August 22, 2002 onwards, the Company has to share with True at 50% of the actual benefits that the Company receives from the services that use True’s networks under concession agreement. However, the Company’s legal department submitted an objection to the case to the Administrative Court of Thailand, which the Administrative Court of Thailand acknowledged on May 16, 2006. True subsequently submitted objection to the mentioned case, but the Company submitted an objection to True’s objection on January 9, 2007 and True submitted an additional objection on May 8, 2007. On September 19, 2012, the Central Administrative Court justified to reject the decision and enforcement of the arbitrator’s decision. On October 17, 2012, True appealed to the Supreme Administrative Court, and the Company already submitted a plea against the appeal on April 23, 2013. This is currently in consideration of the Supreme Administrative Court. However, the result of a claim cannot be reliably estimated at the present. The Company’s management believes that there is sufficient justification for the refusal process of the decision of the arbitrator through the court and as a result the Company will not have obligation to pay this revenue sharing to True.

On January 22, 2005, True claims to the arbitrator include a claim requesting for damages and revenue sharing from international incoming calls on the basis that the Company allegedly made a miscalculation amounting to Baht 8,407.68 million. At the present, it is under the consideration of arbitrator’s process. True’s claims to the arbitrator to request the Company to pay the revenue sharing from the service charge for international calls that the Company received from CAT. True claims that the method and data used by the Company to calculate the revenue sharing to True were incorrect. The total claim is supposed to be Baht 1,968.70 million. The Company submitted an objection on April 29, 2008, and it is currently under consideration by the arbitrator. On August 27, 2009, True subsequently filed a request with the Central Administrative Court to oppose the Company’s arbitrator. The Central Administrative Court withdrew the claim request and True appealed to the Supreme Administrative Court. This lawsuit is in process of consideration of the Supreme Administrative Court.

The significant lawsuits with TT&T consist of:

TT&T’s claims to the arbitrator to request the Company to pay charges of Baht 28,000 million for the Company’s action that allows other operators to provide special services on TT&T’s network. Currently, TT&T changes the total claim to Baht 23,777.99 million. On March 31, 2008, the arbitration committee adjudged the Company to pay access charge to TT&T from 1993 until March 2005 in the total of Baht 23,777.99 million and benefit from special services from April 1, 2005 until the end of agreement with the interest charge at MLR of average rate of commercial bank + 1% starting from April 8, 2005 until the Company pay the final payment. On May 7, 2008, TT&T filed a petition with the Civil Court to enforce the above ruling from the arbitrator. However, the Company’s legal department and its prosecutor filed a petition to dismiss the ruling with the Central Administrative Court of Thailand on July 1, 2008. The case is currently under consideration by the Central Administrative Court. 168 Annual Report 2014 TT&T’s claims to the arbitrator to the Company to pay the damages and revenue sharing from international calls and the charge for fault notification and maintenance services for the distribution point on the basis that the Company allegedly did not follow the concession agreement, the agreement on marketing surveys for local long distance call usage, and the appendix in the agreement regarding fault notification and maintenance services between distribution point and protector. Moreover, TT&T claimed that the Company agreed with CAT to reduce the service charge for international calls, without prior notice to TT&T. Overall, TT&T claimed that they have lost a benefit of Baht 753.48 million. Currently, TT&T changes the total claim to Baht 2,598.19 million. On September 1, 2009, a final judgment by majority vote of the arbitrators prescribed that the Company pay compensation to TT&T in the amount of Baht 2,553.71 million. On December 4, 2009, the legal department of the Company and the prosecuting attorney requested the Central Administrative Court to revoke the pronouncement. On December 29, 2010, TT&T file the complaint about pronouncement to arbitration. The case is currently under consideration by the Central Administrative Court.

The lawsuits regarding Thai Electric Corporation Company Limited (“Thai Electric”), Target Network Company Limited (“Target”) and Telemetics Company Limited (“Telemetics”)

During the fourth quarter of 2007, Thai Electric filed a civil case against the Company for alleged violation of the public phone lease contract that non-assignment of usable numbers was used since the service started (the contract specified 10,000 numbers for 10 years, but the Company provided only 4,217 numbers and 3,269 numbers is used). The monetary claim is Baht 2,780.06 million, comprising damages, business opportunities lost and public phone rental payment and interest. The Civil Court and the Central Administrative Court subsequently released an opinion that the public phone lease contract was an administrative contract under the consideration of Administrative Court. Thus, on August 20, 2008, the Civil Court had an order to remove the case from its case list and transfer the case to the Central Administrative Court. On March 20, 2012, the Central Administrative Court adjudged the Company to pay Baht 0.74 million to Thai Electric Corporation Company Limited. The Company filed the case to the Supreme Administrative Court on April 19, 2012 and it is currently being considered by the Supreme Administrative court. During the third quarter of 2008, Target filed a case in the Central Administrative Court against the Company for alleged violation of the public phone lease contract that non-assignment of usable numbers was used since the service started (the contract specified 10,000 numbers for 10 years, but the Company provided only 4,675 numbers and 4,675 numbers is used). The monetary claim is for Baht 766.55 million, comprising damages, business opportunities lost and public phone rental payment and interest. It is currently being considered by the Central Administrative court. On January 19, 2010, Telemetics filed a civil case against the Company regarding the violation on the billing system lease contract and related equipment. The total claim is Baht 3,269.68 million, comprising the cost of using more than 4 million telephone number, the charge of administrative and operating on the billing system for the period of 57 months, the damage cost of using the billing system program in excess as stated in the agreement, the damage cost of using the envelope filling system exceeding 40% as stated in the agreement, the development and improvement cost throughout the lease period, the cost of business opportunity lost, and the damage cost from not submitting the billing system back to Telemetics. On April 9, 2010, the Company has submitted a defense. On December 9, 2010, The Civil Court has an order to remove the case from its case list and transfer the case to the Central Administrative Court. It is currently being considered by the Central Administrative Court.

The lawsuits regarding Total Access Communication Public Company Limited (“DTAC”)

On March 31, 2011, DTAC filed a case in the Central Administrative Court against the Company and True to claim for network access charge since November 18, 2006 to December 31, 2010 amounting of Baht 5,358.34 million. On September 16, 2011, the Company assigned the prosecuting attorney to be a representative to file a case. It is being considered by the Central Administrative Court. On December 29, 2011, DTAC filed a case in the Central Administrative Court against the Company and True to claim for network access charge since January 1, 2011 to October 31, 2011 amounting to Baht 433.73 million. It is being considered by the Central Administrative Court. Then, on December 27, 2013, DTAC sued the Company to the Center

TOT Public Company Limited 169 Administrative Court for paying interconnection networks compensation since November 1, 2011 to July 31, 2013 in amount of Baht 201.48 million. On June 12, 2014, the Company answered to the Center Administrative Court. Currently, this is under consideration by the Center Administrative Court (Note 40.1).

The lawsuits regarding Advance Info Service Public Company Limited (Thailand) (“AIS”)

On January 16, 2013, AIS has filed a suit to the Arbitrator against the Company for the payment of revenue sharing from international calls to countries with no border with Thailand from November 2008 until September 2012 totalling Baht 1,527.45 million. Later, on June 21, 2013, the prosecutor filed an objection given the reason that CAT has breached the contract by terminating the payment of the revenue sharing. The Company will pay to AIS upon receipt of the mentioned revenue share (Note 10.1). The outcome is now being considered by the arbitrator.

On March 27, 1990, the Company issued license permitting AIS to operate NMT 900 and GSM mobile services for 25 years starting from October 1, 1990 to September 30, 2015 in which AIS invested in appliance and equipment and pay to the Company in accordance with the agreed rate in no.30 which AIS has transferred the ownership over appliance and equipment to the Company. Later, on August 7, 2013, AIS dismissed the transferred of assets which is tower, totaling 13,198 items. It is stated that tower was not appliance and equipment mentioned in the contract, thus, it did not have to pay the revenue sharing from using tower to the Company. On November 12, 2013, the Company disputed and refused that the tower is under the Company’s ownership since the installation of tower was done in accordance with the license no.4. That caused a dispute about tower ownership and revenue sharing. On July 21, 2014, AIS filed a case to the Office of the Attorney General’s arbitration to make a decision on ownership of towers and request the company to compensate a revenue sharing of shared tower is received from AIS since the beginning until June 30, 2014 amount of Baht 516.31 million. Currently, the Company is in the process of sending the matter to the Attorney General’s Office to defend instead the Company.

The lawsuits regarding Jasmine Submarine Telecommunications Company Limited (“Jasmine”)

On October 4, 1991, the Company entered into an agreement with joint venture, Jasmine Submarine Telecommunications Company Limited (Jasmine) to construct Submarine Optical Fibre Cable Project. Period of time is 20 years. Jasmine will get revenue sharing following policy and condition under the agreement which is 2 methods. There are actual revenue from operating or formula. However, the Company use the method which is highest income. At that time, there wasn’t actual revenue from operating thus, the Company chose calculate revenue from formula. As at September 10, 2008, the company met with Jasmine and concluded that the company will use calculation from actual revenue from operating method by traffic measure which is operated and effect since September, 2008 However on July 17, 2009, Jasmine has argued that the measure revenue at the actual measurements of the traffic was defective, we should use formula method. There was the cause of conflict because the Company desist sharing payment since September 2008, October 2011. Then, Jasmine filed the dispute to the Arbitration Institute on December 22, 2014 to enforcement the Company to pay revenue sharing of September 2008 – October 2011 include interest amount of Baht 3,395.35 million. Now, the Company is preparing demurrer to the Arbitration Institute. Law department of the Company confident that the company doesn’t have liabilities about revenue sharing. However, the company record accrued expense with properly amount.

In terms of other contractual arrangements, the Company’s legal department has fully examined all oral and documentary witnesses and believes that the Company should not be in a losing position. The Company believes that these claims will not give rise to any significant loss to the Company, and therefore provision for liabilities has not been recorded in the financial statements. However, the outcome will depend on the consideration of the judges.

170 Annual Report 2014 38.1.2 Contingent liabilities regarding corporate income tax

As discussed in Note 10.1 to the financial statements, the Company did not record the income tax expenses from revenue of the access charge regarding the dispute with CAT and CAT’s concession operators which were not recognised as revenue in the financial statements. However, the Company received the notification from the State Enterprise Policy Office, Ministry of Finance, and Revenue Department that if the Company provides mobile phone connection services with the concession operators according to the connection services contract, the Company should have right to claim services income although the Company did not receive payment of the access charge under dispute with the concession operators. The Company shall include the revenue of the access charge as the Company’s taxable income according to the Revenue Code section 65 paragraph 2 and the Revenue Department Announcement TP 1/2528 No.2: “The usage of accrual basis to calculate revenue and expense for the company and partnership” dated August 28, 1985. On March 30, 2012, The Bureau of Large Business Tax Administration, the Revenue Department, responded for the corporate income tax obligations arising from access charge revenue which company has not recognised. It was concluded that the Company shall not recognise the corporate income tax obligations arising from access charge revenue if the Company has no adequate information to ensure that the company will receive such access charges which means amount can be reliably measured. Therefore, the Company can exclude the profit or loss arising from access charge revenue in corporate income tax calculation according to Section 65 of the Revenue Code.

38.1.3 Contingent liabilities regarding value added tax

The value added tax arises from the revenue sharing of mobile phone concession agreement after excise tax deductions.

On February 11, 2003, the Cabinet’s resolution agreed that excise tax would be deducted from the concession operators’ revenue sharing payable to the counterparty according to the proposal of the Ministry of Information and Communication Technology. Therefore, AIS paid revenue sharing of mobile phone concession agreement after excise tax deductions to the Company and the Company has calculated the value added tax payment based on the actual revenue sharing after excise tax deduction basis which the procedure was discussed and agreed with the Revenue Department at that time. During 2007, the Revenue Department has challenged the Company to pay the additional value added tax on the excise tax deducted from the revenue sharing for the period from February 2003 to November 2007 amounting of Baht 2,202.38 million together with penalty and surcharge until the date of payment on value added tax of Baht 3,152.05 million. The Revenue Department offset certain amounts against the Company’s refundable value added tax of Baht 322.80 million comprising value added tax of Baht 108.52 million and penalty and surcharge of Baht 214.28 million. On July 26, 2008, the Company’s Board of Directors passed a resolution to pay the remaining assessment value added tax of Baht 2,093.86 million (2,202.38 - 108.52) to decline further burden on surcharges and requested the Company to submit the appeal and mortgaged land value at Baht 2,951.67 million (Note 16, 17) as guarantee for tax relief in the part of penalty and surcharge. The Company paid the value added tax amounted to Baht 2,093.86 million in September 2008 and obtained approval for the suspense penalty and surcharge payment on October 1, 2008. Although, the Company’s management had an opinion that the Company complied with the Cabinet’s resolution and should not be obliged to pay value added tax to the Revenue Department. In consequence, it was uncertain whether the Company would get a refund on value added tax payment and recording as allowance for refundable value added tax of Baht 322.80 million including in other current assets and already set up allowance for refundable value added tax in full amount (Note 12). However, the Company still has a remaining penalty and surcharge of Baht 2,937.77 million (3,152.05 – 214.08). Later on January 24, 2011, the Company has been informed the decision by the Board of Appeals decision that stands above the opinion of the Revenue Department. On May 23, 2011, the Company claims to the Central Tax Court to oppose tax assessment and the decision by the Board of Appeals and refund value added tax, penalty, surcharge and interest totalling Baht 5,356.58 million. On December 3, 2012, the Central Tax Court’s justification is to dismiss the case that the Company filed Revenue Department in respect of the value added tax obligation. The Company appealed to Supreme Court on July 18, 2013. Then, the court is considering. However, the Company’s legal consultant’s has an opinion that the Company should not have further liabilities to the Revenue Department because it has complied with the Revenue Code in respect of the value added tax obligation. Therefore, the Company did not record liabilities on the remaining penalty and surcharge in these financial statements.

TOT Public Company Limited 171 38.1.4 Contingent liabilities arising from numbering fee of special numbers

On January 8, 2010, the NBTC notified the Company for the fees on the special numbers and the incremental of 137 numbers that the Company had assigned to stated-owned and private enterprises from August 2005 until August 2008, totalling Baht 656.51 million. With regard on the mentioned claims, NBTC has referred to the announcement of the NBTC’s committee regarding the Assignment of Temporary Telecommunication Numbers and Rules of Assignment and Permission in Using Special Numbers. However, the Company’s management believes that the Company does not have to pay the mentioned fees as the Company already reported the details of all special numbers users to NBTC. NBTC should be responsible for the operation and management of those special numbers on behalf of the Company, including, the operation on the notification and collection of numbering fees from special number directly from those service users. The Company also submitted a letter of intent to deny the payment to NBTC. On February 9, 2011, the Company claims to NBTC to oppose judgment ordering which NBTC forced the Company to pay for numbers. Therefore, the Company did not record a provision for numbering fees from special numbers in these financial statements. 38.2 Commitments

38.2.1 Capital commitments

Capital expenditure contracted at the statement of financial position date, but not recognized as liabilities in the financial statements, as at December 31, 2014 and 2013 are as follows: Consolidated The Company 2014 2013 2014 2013 Property, plant and equipment 1,081.58 4,628.63 1,081.58 4,628.63

38.2.2 Operating lease commitments - where the Company is the lessee

The future minimum lease payments under non-cancellable operating leases as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Not later than 1 year 1,208.89 1,241.50 1,208.89 1,241.50 Later than 1 year but not later than 5 years 2,703.12 3,222.63 2,703.12 3,222.63 More than 5 years 625.00 1,250.00 625.00 1,250.00 4,537.01 5,714.13 4,537.01 5,714.13

172 Annual Report 2014 39 Related party transactions

The Company is wholly owned by the Ministry of Finance which is the ultimate parent company. The Company conducts business with Thai departments and state-owned enterprises, which are either directly or indirectly owned or controlled by the Royal Thai Government (“Departments and State-Owned Enterprises”). The Departments and State-Owned Enterprise are significant customers of the Company and transactions are carried out in the normal course of business. The Company presents the aggregate revenue and receivables from the Departments and State-Owned Enterprises except for transactions with CAT, which are presented separately because CAT is under common control and operates in a related business.

Relationships with the related parties are the relationship with the entities that we held common control and the entities that transactions initiated. However, only the entities that the Company provides service via the Company’s network were as follows:

Name of entities Nature of relationships Ministry of Finance Only and ultimate shareholder of the Group CAT Public Company Limited related parties and have Thai government as an jointly controlling shareholder Departments and State-Owned Enterprises related parties and have Thai government as an jointly controlling shareholder Krung Thai Bank related parties and have Thai government as an jointly controlling shareholder Government Housing Bank related parties and have Thai government as an jointly controlling shareholder Government Saving Bank related parties and have Thai government as an jointly controlling shareholder Bank for Agriculture and Agricultural Cooperatives related parties and have Thai government as an jointly controlling shareholder Isalamic Bank of Thailand related parties and have Thai government as an jointly controlling shareholder Isalamic Bank of Thailand Subsidiary, 98.57% shareholding TOT Outsourcing Service Company Limited Subsidiary, 25% shareholding TOT Sport Club Company Limited Subsidiary, 25% shareholding Telcard Company Limited Associate, 26% shareholding Advance Data Network Communication Company Limited Associate, 48.12% shareholding Lenso Datacom Public Company Associate, 49% shareholding Mobile Communication Services Company Limited Associate, 30% shareholding True Multimedia Company Limited Related parties, no more than 20% shareholding

The purchases of goods and services from the Departments and State-Owned Enterprises relate to the supply of electricity, water, travel (air, rail and bus), fuel, postal services and land and building rental, etc. These transactions are in the normal course of business. The Company also acts as an agent to collect personal income tax, value added taxes and withholding tax for the Thai Government without any remuneration. The details of goods and service purchases from CAT are presented separately, but the Company cannot disclose the expenses and payables with the Departments and State-Owned Enterprises separately in these financial statements because the information cannot be collected.

TOT Public Company Limited 173 The Company has cash, bank deposits and promissory notes with government controlled bank such as Krung Thai Bank, Government Housing Bank, Government Saving Bank, Bank for Agriculture and Agricultural Cooperatives, an Isalamic Bank of Thailand. Furthermore, the Company has investments in treasury bills and government bonds - Bank of Thailand. As at December 31, 2014, cash and cash equivalents, short-term investments and funds for redemption for long-term liabilities with government controlled banks amounting to Baht 25,094.75 million (at December 31, 2013: Baht 17,947.66 million).

The Company did not disclose transactions with employees and management of the Departments and State-Owned Enterprises and close members of the family of these individuals as related party transaction because the Company cannot collect this large and varied transactions. However, these transactions are carried out in the normal course of business.

The Company assured that the disclosure of the transaction with related parties are sufficient in consideration.

The following are transactions with related parties, only via the Company’s own networks: 39.1 Service revenue

Consolidated The Company 2014 2013 2014 2013 Revenue from telecommunication services - Ministry of Finance 40.39 36.29 40.39 36.29 - Subsidiaries - - 0.36 0.07 - Associates 1.52 11.77 1.52 11.77 - Other related parties - CAT 21.19 5.83 21.19 5.83 - Other departments and stated owned enterprises 7,380.68 2,408.95 7,380.68 2,408.95 7,443.78 2,462.84 7,444.14 2,462.91

Revenue from other telecommunication services - Ministry of Finance 22.63 39.34 22.63 39.34 - Subsidiaries - - 0.61 2.81 - Associates 7.67 20.47 7.67 20.47 - Other related parties - CAT 65.20 15.47 65.20 15.47 - Other departments and stated owned enterprises 5,388.73 3,209.39 5,388.73 3,209.39 5,484.23 3,284.67 5,484.84 3,287.48

39.2 Revenue from other services

Consolidated The Company 2014 2013 2014 2013 - Subsidiaries - - 0.90 0.45 - - 0.90 0.45

174 Annual Report 2014 39.3 Other income

Consolidated The Company 2014 2013 2014 2013 - Subsidiaries - - 20.00 15.56 - Other related parties - CAT - 242.60 - 242.60 - 242.60 20.00 258.16

39.4 Purchases of services

Consolidated The Company 2014 2013 2014 2013 Telecommunication services - Ministry of Finance 66.77 98.67 66.77 98.67 - Subsidiaries - - 673.64 303.50 - Associates - 0.74 - 0.74 - Other related parties - CAT 168.33 213.33 168.33 213.33 235.10 312.74 908.74 616.24

39.5 Outstanding balances arising from purchases and sales of services as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Receivables from related parties: Telecommunication receivables: - Ministry of Finance 18.24 51.09 18.24 51.09 - Subsidiaries - - 0.17 0.03 - Associates 4.97 11.02 4.97 11.02 - Other related parties - CAT 611.22 578.93 611.22 578.93 - Other departments and stated owned enterprises 2,361.05 1,565.63 2,361.05 1,565.63 2,995.48 2,206.67 2,995.65 2,206.70 Less Allowance for doubtful accounts (4.79) (5.02) (4.79) (5.02) 2,990.69 2,201.65 2,990.86 2,201.68 Prepayment for Crown Property land rental - Ministry of Finance 171.29 180.75 171.29 180.75

TOT Public Company Limited 175 Consolidated The Company 2014 2013 2014 2013 Trade accounts payable - Ministry of Finance 19.32 7.82 19.32 7.82 - Subsidiaries - - 16.00 28.21 - Associates 0.57 9.93 0.57 9.93 - Other related parties - CAT 28.89 3.79 28.89 3.79 48.78 21.54 64.78 49.75 Other accounts payable - Ministry of Finance 0.21 0.21 0.21 0.21 - Subsidiaries - - 90.86 46.91 - Associates - 0.41 - 0.41 - Other related parties - CAT 32.50 54.47 32.50 54.47 32.71 55.09 123.57 102.00

39.6 Other current assets as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Subsidiaries - - 60.43 63.14

39.7 Other current liabilities as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013

- Subsidiaries - - 10.27 10.25 - Associates 3.01 3.01 3.01 3.01 3.01 3.01 13.28 13.26

176 Annual Report 2014 39.8 Loan to subsidiary as at December 31, 2014 and 2013 are as follows:

Consolidated The Company 2014 2013 2014 2013 Loan to subsidiary - - - 87.52

The Company made the contract to lend the subsidiary on January 31, 2011 for Baht 979.22 million, at 6% p.a. interest rate and 7 years time to maturity. The monthly payment, principal plus interest, was Baht 14.31 million. The first payment started from the same day since the Company paid the rental of network equipment and mobile equipment to the subsidiary until pay off and the debt could be offset. On September 28, 2012, the Company has offset the rental of network equipment and mobile equipment that Company must pay to subsidiary for the periods of December 3, 2009 to August 31, 2012 with the principal and interests which subsidiary has to pay according to loan contract. The subsidiary already paid remaining outstanding loan during the second quarter of 2014. 39.9 Administrative expenses

Administrative expenses for the year ended December 31, 2014 in consolidated financial statements amounting to Baht 16,211.90 million and in the Company financial statements amounting to Baht 16,280.43 million include key managements’ compensation which is the compensation that managements and directors receive or should receive from the Company. It comprises short-term benefit e.g. salary, bonus, meeting fees and any other long-term benefits received. Key managements include Board of Directors, Managing Director, and Vice Managing Directors.

The key managements’ compensation is as follows: Consolidated The Company 2014 2013 2014 2013 Short-term benefits 46.63 59.72 45.97 59.06 Post-employment benefits - The compensation from the State Enterprise Labour Relations Board 1.00 5.33 1.00 5.33 - Employee benefit fund 0.37 0.47 0.37 0.47 Total 48.00 65.52 47.34 64.86

Consolidated The Company 2014 2013 2014 2013 Other administrative expenses - Subsidiaries - - 383.33 177.25 - Other related parties - CAT - 0.51 - 0.51 - 0.51 383.33 177.76

TOT Public Company Limited 177 40 Dispute of interconnection charge 40.1 Total Access Communication Public Company Limited (DTAC)

On January 17, 2007, DTAC, a concession operator of CAT under the wireless cellular service agreement, made a claim to the Central Administrative Court of Thailand to request the Company to comply with the law by allowing the 1.5 million new subscribers of DTAC allocated from NBTC to be able to use and access the Company’s network without collecting access charge but rather permit to collect the interconnection charge at the specific rate apply for all operators as approved by NBTC. DTAC also requested the Company to compensate the loss from being unable to connect to the Company’s network, which monthly numbering fee should be paid to NBTC of Baht 3 million per month starting from the mid of December 2006, the opportunity cost from loss of prospective subscribers amounting to Baht 15 million per day since the claim date, and the damage cost on DTAC’s reputation regarding services suspicion amounting to Baht 70 million etc. On January 19, 2007, the Central Administrative Court of Thailand issued an order for a particular rules/protection for temporary relief before the final judgment delivered. The order is to request the Company to activate a connection of the telecom network allowing DTAC’s subscribers, allocated by NBTC, to be connected with the Company’s system until the case is finalised or any other instructions issued by the Court. However, the Company has submitted the alleviation together with appeal the judgment of the Administrative Court of Thailand to the Supreme Administrative Court on January 30, 2007. On April 10, 2007, the Supreme Administrative Court validated the judgment of the Central Administrative Court of Thailand and concluded the decision of the Central Administrative Court was equitably. On February 26, 2009, the Central Administrative Court issued judgment ordering the Company to connect the telecom network by preparing office data and opening the translator to allow the 1.5 million new subscribers of DTAC, allocated by NBTC, to be able to completely connect to the Company’s network. On the final judgment date, the Central Administrative Court of Thailand also ordered the Company to pay compensation of Baht 1 million to DTAC and extended the period of its order, a particular rules/protection for temporary relief, to be valid until the case would be finalised. On March 27, 2009, the Company submitted appeal the judgement. Currently, this is under consideration by the Supreme Administrative Court.

On June 18, 2007, NBTC issued an award in respect of interconnection charges with DTAC No. 1/2550 stating that the Company was required to negotiate the interconnection charge agreement with DTAC within seven days since acknowledging the award, and the agreement shall be finalised within 30 days from the first day of negotiations. If the Company did not conform to the said award, this would be considered as violation to section 25 of the Telecommunication Business Act B.E.2544 whilst NBTC may supplementary enforce the administrative code section 66 of the Telecommunication Act B.E.2544. The Company continuously defended its all legal issues as disclosed in the financial statements for the year ended December 31, 2007. However, on April 22, 2008, the NBTC instructed the Company to pay a penalty of Baht 60,000 per day starting from February 1, 2008 until the Company has fully complied with the award and negotiated the interconnection charge agreement with DTAC. On May 8, 2008, the Company sent a notification letter to DTAC for the negotiation of the interconnection charge agreement and paid the penalty from February 1, 2008 to May 7, 2008 to NBTC. However, the Company is not able to accomplish the negotiations with DTAC. On June 16, 2008, DTAC sent a letter to the NBTC requesting NBTC to conclude the disagreeable conditions, one of the requests was that NBTC would consider an administrative penalty of 60,000 Baht per day and this shall be further paid by the Company until the Company has fulfilled with the NBTC’s order (if any). On December 26, 2008, NBTC concluded the case and requested the Company to enter into an interconnection agreement with DTAC, the agreement shall be covered all telecom numbers which DTAC had the legal right to provide services. At the present, both DTAC and the Company are on negotiations to enter into such contract.

On February 2, 2010, NBTC’s secretariat gave notice to the Company in complying with the award regarding the interconnection charge no.4/2551 of NBTC by entering into the interconnection agreement with DTAC within 15 days upon receipt of the notice. Disregarding to perform within the specified period, this will be resulted in a fine of Baht 20,000 per day according to Section no. 58 an Act on Establishment of Administrative Court Procedure B.E.2539 granting by NBTC’s secretariat. On April 9, 2010, NBTC’s secretariat notified the Company regarding the Board of NBTC’s resolution giving the Company to negotiate the interconnection charge agreement to be completed within 30 days. If any disagreements might be arising, the Company shall be filing to the Central Administrative Court of Thailand. Presently, the Company has already filed to the Central Administrative Court of Thailand to revoke the submission of objection on July 9, 2010. NBTC and the Company submitted the petition. On July 16, 2012, the

178 Annual Report 2014 Central Administrative Court justified to dismiss the Company’s revoke. The Company appealed a case to the Supreme Administrative Court on August 9, 2012. The case is currently in consideration of the Supreme Administrative Court. On January 3, 2013, NBTC notified the Company to take an appropriate action regarding DTAC instituted a case to court against the Company for alleged violation of payment revenue from the access charges by referring to the Central Administrative Court’s Justification on July 16, 2012. NBTC adjudged the Company to pay a fine of Baht 20,000 per days until the interconnection charge agreement is completed. On January 21, 2013, the Company appealed the Administrative Court’s decision to NBTC. On August 18, 2014, the Company claimed for temporary relief when appealing to the Supreme Administrative Court and this is currently in consideration of the Supreme Administrative Court. However, on March 31, 2011, DTAC filed a case in the Central Administrative Court against the Company and True to claim for network access charge since November 18, 2006 to December 31, 2010 amounting to Baht 5,358.34 million. On September 16, 2011, the Company assigned the prosecuting attorney to be a representative to file a case. It is being considered by the Central Administrative Court. On December 29, 2011, DTAC filed a case in the Central Administrative Court against the Company and True to claim for network access charge since January 1, 2011 to October 31, 2011 amounting to Baht 433.73 million. The Company assigned the supreme prosecuting attorney to be a representative to file a case. The Central Administrative Court is considering. On December 27, 2013, DTAC sued the Company with the Central Administrative Court to pay interconnection network compensation of November 1, 2011 – July 31, 2013 amount Baht 201.48 million. Subsequently, the company answered the Central Administrative Court on June 12, 2014. Currently, this is under consideration by the Central Administrative Court (Notes 38.1.1). 40.2 True Move Company Limited (True Move)

On January 25, 2007, True Move, another concession operator of CAT under the wireless cellular service agreement, made a claim to the Central Administrative Court of Thailand to request the Company to comply with the law by allowing the 1.5 million new subscribers of True Move allocated from NBTC to be able to use and access the Company’s network without collecting access charge but rather permit to collect the interconnection charge at the specific rate apply for all operators as approved by NBTC. True Move also requested the Company to compensate the loss from being unable to connect to the Company’s network, which monthly numbering fee should be paid to NBTC of Baht 3 million per month starting from the mid of October 2006, the opportunity cost from loss of prospective subscribers amounting to Baht 14 million per day since the claim date, and the damage cost on True Move’s reputation regarding services suspicion amounting to Baht 70 million etc. On January 26, 2007, the Central Administrative Court of Thailand issued an order for a particular rules/protection for temporary relief before the final judgment be delivered. The order is to request the Company to activate a connection of the telecom network allowing True Move’s subscribers, allocated by NBTC, to be connecting with the Company’s system until the case is finalised or any other instructions issued by the Court. However, the Company has submitted the alleviation together with appeal the judgment of the Central Administrative Court of Thailand to the Supreme Administrative Court on January 30, 2007. On April 9, 2007, the Supreme Administrative Court validated the judgment of the Central Administrative Court of Thailand and concluded the decision of the Central Administrative Court was equitably. On February 26, 2009, the Central Administrative Court issued judgment ordering the Company to connect the telecom network by preparing office data and opening the translator to allow the 1.5 million new subscribers of True Move, allocated by NBTC, to be able to completely connect to the Company’s network. On the final judgment date, the Central Administrative Court of Thailand also ordered the Company to pay compensation of Baht 1 million to True Move and extended the period of its order, a particular rules/protection for temporary relief, to be valid until the case would be finalised. On March 27, 2009, the Company submitted appeal the judgement. Currently, this is under consideration by the Supreme Administrative Court.

Furthermore, on November 28, 2007, NBTC has an award of interconnection charge with True Move No. 2/2550 asking the Company to negotiate for the interconnection charge with True Move within seven days since acknowledging the award, and the agreement has to be finalised within 30 days from the first date of negotiations. Currently, it is on negotiation process. 41 Financial statement approval The Company’s Board of Directors approved these financial statements for issue on April 8, 2015.

TOT Public Company Limited 179