Page 1

(Translation)

Annual Registration Statements (Report Form 56-1) For the Year 2003 TelecomAsia Corporation Public Company Limited


Contents Part I

Executive Summary

Part II

The Listed Company

Part III

Page 1 2

1. Risk Factors 2. Nature of Business 3. Details of each Business Line

3 8 18

3.1 Products and Services under the Build Transfer Operate Concession with TOT and CAT 3.2 Marketing Strategy 3.3 Distribution Scheme and Distribution Channel 3.4 Procurement of Products and Services 3.5 Thai Telecom Industry 4. Research and Development 5. Operating Assets 6. Future Projects 7. Legal Disputes

18 27 27 28 29 36 37 39 40

8. Capital Structure 8.1 Company’s Securities 8.2 Shareholders

41 41 49

8.3 Dividend Policy 8.4 Liabilities Structure 9. Management 9.1 Management Structure

53 53 71 71

9.2 Remuneration for the Company’s Directors and Executive Officers 9.3 Corporate Governance Compliance Report

76 80

9.4 Insider Trading Policy 9.5 Personnel

86 86

10. Internal Controls 11. Connected Transactions 12. Financial Status and Performance 12.1 Company Auditors and Significant Accounting Policies 12.2 Summary of Financial Statements 12.3 Financial Ratios

89 90 105 105 106 109

12.4 Management’s Discussion and Analysis 13. Other Related Information Appendix 1: Information of Directors and Executive Officers Appendix 2: Information of Director of Subsidiaries

111 125 133 145

Correct Certification of Disclosed Information

150


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

PART I EXECUTIVE SUMMARY TelecomAsia Corporation Public Company Limited (“TA” or the “Company”) and its affiliates, provide telecommunications services under the concession awarded by the Telephone Organization of Thailand (currently is TOT Corporation Plc or “TOT”) and the Communications Authority of Thailand. The Company’s businesses could be classified into five categories as follows: Fixed line services and value-added services from which the companies earn major income about 56 percent of the total income, Personal Communication Telephone services and Mobile Phone business operated by a TA’s affiliates, Data Transmission Services, Multimedia Services and Broadband, Internet and e-commerce services operated by a TA’s affiliates. The company aims to become a communication solution provider that responses to the communication needs knitting consumers, the public at large, society, economics and the world on an integrated basis. The company continually develops new services to meet requirements of the customers both from business segmentation and consumer segmentation to correspond the customer centric strategy. More details could be found in Section 2 of this report which is corporate information.

TATB: Executive Summary

1


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

PART II THE LISTED COMPANY

TelecomAsia Corporation Public Company Limited, Type of Business: Telecommunication Head Office: 18 Telecom Tower, Ratchadaphisek Road, Huai Khwang, Bangkok 10310 Public Company Registration No. Bor Mor Jor. 82

Home Page: www.telecomasia.co.th

Telephone: 66(0) 2643-1111

Fax: 66(0) 2643-1651

TATB: The Listed Company

2


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

1. RISK FACTORS Risk Factors Related to Operations The relationship with TOT and CAT creates a number of business risks that are outside TelecomAsia’s ability to control. TelecomAsia (the Company) operates a number of telecommunications-related businesses under concessions granted by the TOT Corporation Public Company Limited (TOT) and the CAT Telecom Public Company Limited (CAT). The TOT and CAT oversee the Company’s compliance with the terms of each concession agreement. Differences of interpretation with TOT and CAT over the material terms of a concession agreement could impair the Company’s ability to conduct business or otherwise deny the Company its rights. For example, we are in dispute with TOT over TOT’s launch of low-cost domestic long distance tariffs under Ytel 1234. The Company has brought the dispute to the Administrative Court, which has yet to make a ruling. The Company currently depends on the operation of a concession-based wireline telephone network for a significant portion of its operating revenues. The concession expires in 2017. The Company’s fixed line concession could be cancelled by TOT if the Company violates the law, a court orders the Company’s assets to be absolutely received in a bankruptcy lawsuit, or the Company willfully and continually breaches a concession agreement in any material respect. The Company believes it has rights granted under its concession agreement, however, if the Company’s concession is cancelled by the ruling of the Court or the Arbitrator, the Company, in certain circumstances, would no longer be able to conduct a substantial portion of its business. Under the revenue-sharing provisions of the concession, TOT collects and retains a portion of the Company’s revenues and can withhold or delay the forwarding of these payments to the Company to offset obligations it believes the Company owes it.

TATD: Risk Factors

3


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

As a provider of wireline services in the Bangkok Metropolitan Area, TOT is simultaneously the Company’s regulator and a direct competitor. At times, TOT's interests may be different from the Company’s. As a result, TOT is able to affect the Company’s ability to provide services to customers. For example, TOT could deny or put on hold the Company’s requests for launches of new services. The pending liberalization of the Thai telecommunications industry exposes us to uncertainties. The Thai telecommunications industry is heavily regulated and supervised by the Thai Government. To fulfill its commitment to the World Trade Organization, the Government has announced plans to liberalize the industry before 2006. The ICT Ministry has developed several initiatives for industry liberalization, which could affect the Company’s operations. These include preparation work for an interconnection regime, concession conversion, and the listing of TOT and the CAT on the Stock Exchange of Thailand. Recently the ICT Ministry approved the trial launch of reduced tariff promotions for fixed-line businesses, with revenue sharing based on actual revenue received from customers. The Ministry has also set up a sub-committee to oversee the concession conversion process. The private operators can decide whether to convert their concessions. The conversion can be carried out in different ways by operators, depending on conditions set in their concession agreements. If other telecommunication operators negotiate better terms than the Company for their concession conversions, the Company could be placed at a competitive disadvantage, which could affect its operations. The Government is in the process of selecting members of the National Telecommunications Committee (NTC), a new independent regulator. There is no clear regulatory role for TOT and the ICT Ministry until the NTC is set up. The new regulatory body may implement policies that increase our operating cost and/or increase competition in sectors in which we operate.

TATD: Risk Factors

4


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Increased competition in Thailand has had, and may continue to have, an adverse effect on the Company’s operational results and financial condition. The telecommunications sector in Thailand is rapidly evolving. The Company faces increasing competition from cellular operators and TOT, which is preparing itself for a more competitive environment. The Company’s revenue per user for its fixed line business has been affected by competition from cellular service providers, which have been offering lower tariffs through a variety of promotional packages and services. This has resulted in a traffic migration from fixed line to cellular calls. The Company expects competition to remain intense in future. However, we expect the migration of traffic from fixed line to cellular providers to slow as fixed line tariffs are lowered and can better compete with cellular rates. The telecommunications industry is subject to rapid technological change. Emerging and future technological changes may adversely affect the viability or competitiveness of the Company’s businesses. Furthermore, changing market demand may require the Company to adopt new technologies that could render many of its current technologies less competitive or obsolete. Substantial capital expenditure and access to related or enabling technologies may be required to integrate new and existing technology into the Company’s network infrastructure. Risk Factors Related to Financial Situation The Company’s operations are restricted by various financial agreements. Agreements covering long-term debt and restructured debt contain conditions and limitations on the Company’s operations, such as the issuance of equity and debt

TATD: Risk Factors

5


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

instruments, the sale and acquisition of assets, and dividend payments. These limitations could force the Company to pursue less than optimal business strategies or forego business arrangements that could be financially advantageous to the Company and its shareholders. Repayment of the Company’s indebtedness could be accelerated beyond its control. The Company’s restructuring agreements permit its creditors to accelerate or seek immediate repayment of secured debt if: ƒ TOT materially breaches its concession agreement with the Company ƒ Principal shareholders are unable to direct the Company’s management. In the event of a default under the financial agreements with lenders, TOT would allow the Company to assign its rights and obligations under the concession to WTA (Thailand) Co., Ltd, a special purpose vehicle in which shares are held for the benefit of TA secured creditors. In such a situation, the Company would have no further rights under the concession, but would continue to be jointly liable for all of the assigned obligations. The Company is subject to exchange and interest rate fluctuations Any further depreciation of the Thai Baht against foreign currencies, principally Japanese Yen, would increase the Company’s outstanding foreign debt and related interest expenses, as well as the amount of Baht revenue required to meet capital expenditure plans. The Company’s total foreign debts as of December 31, 2003 amounted to Baht 13 billion, excluding those of TA Orange, which have been fully hedged. This accounted for 21 percent of total outstanding debt as at the same date. Most of the Company’s foreign debt is denominated in Japanese Yen and is subject to a long-term maturity period between 2014 and 2017.

TATD: Risk Factors

6


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

The Company is not required to pay the principal and interest for 37 percent of this debt, which is in the form of Deferred Payment Notes, until it becomes due in 2014. Therefore, the impact of exchange rate fluctuations before 2014 would be recorded as a non-cash accounting transaction and would not impact the Company’s current debt servicing capacity. The Company made Baht 3 billion in capital expenditure in 2003, approximately 10 percent of which was denominated in foreign currencies, excluding TA Orange expenditure. The Company expects capital expenditure of the same amount in 2004, with some of this to be denominated in foreign currencies. As at December 31, 2003, approximately Baht 22 billion or 35 percent of debt, excluding TA Orange’s, was subject to floating interest rates. Therefore, an increase in interest rates would incur additional costs to the Company.

TATD: Risk Factors

7


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

2. NATURE OF BUSINESS Company Background and Major Developments TelecomAsia Corporation Public Company Limited (the “Company”) was established on 13 November, 1990, initially under the name of CP Telecommunications Company Limited to undertake the Build Transfer Operate (BTO) concession from the Telephone Organization of Thailand (now TOT Corporation PLC or “TOT”). This was to construct, install and jointly operate a 2.6 million fixed telephone lines expansion in the Bangkok Metropolitan Area (the “BMA”), which includes Bangkok, Nonthaburi, Samutprakarn and Pathumthani) for a period of 25 years. The Company must also provide maintenance of the network of 2.6 million lines throughout the term of the agreement. In addition to the original fixed line concession with the TOT, the Company has been granted approval to expand a range of valued-added services for its fixed line subscribers. These include Public Phone Service, Personal Communication Telephone Service (“PCT”), Data Transmission Service, Multimedia Services and Broadband, and Internet, including Contents and Applications. The Company has also invested in Pay Television and the Mobile Phone Business. The Company subsequently registered as a public company limited with registration no. Bor Mor Jor 82 on 11th February 1993 and listed on the Stock Exchange of Thailand in December 1993 with the security symbol “TA”. Currently CP Group is the major shareholder with approximately 44% shareholding. Key developments in operations and management Key Developments before 2003 November 1990

Company established with registered capital of Baht 1,000 million.

August 1991

Entered into the BTO concession with the TOT to build, install, jointly operate and maintain a 2 million fixed telephone lines in the Bangkok Metropolitan Area (BMA) for a period of 25 years.

December 1991

Telecom Holding Company Limited established to invest in telecommunications projects.

TATE: Nature of Business

8


TelecomAsia Public Company Limited

July 1992 December 1993

March 1995

Annual Registration Statements (Report Form 56-1)

Fifteen percent shareholding in the Company acquired by Nynex Network System (Thailand) Company Limited. Company listed on the Stock Exchange of Thailand with registered capital of Baht 22,230 million. Start of cable TV service of UTV Cable Network Company Limited (UTV), one of the Company’s affiliates.

September 1995 Company received approval for additional 600,000 fixed lines expansion in the BMA. May 1996

Company gained approval to provide value-added services, such as digital network services and TA Connex.

August 1996

The Company gained approval to provide PCT service.

January 1997

The Company received approval to provide a public telephone service in the BMA.

May 1998

UTV and International Broadcasting Corporation PLC (IBC) merged to become a leading cable TV service provider under the name of United Broadcasting Corporation PLC (UBC).

November 1999

Official start of PCT service.

March 2000

Debt restructuring successfully completed with a principle term that Kreditanstalt für Wiederaufbau (KfW), a major foreign creditor, subscribed 702 million preference shares totaling USD 150 million, equal to 24 % of total shares of the Company after the capital increase.

August 2000

Start of Click TA service, an alternative Internet service that allows customers to log on for up to 2 hours.

November 2000

“TA 1234” service, an economical rate for long distance calls launched.

February 2001

Prepayment of loans of Baht 532 million from cash surplus.

April 2001

Start of prepaid PCT service under the name “PCT Buddy”.

TATE: Nature of Business

9


TelecomAsia Public Company Limited

July 2001

Annual Registration Statements (Report Form 56-1)

High-speed data transmission services, including ADSL, Cable Modem and TA Megaport services launched. Prepayment of loan of Baht 368 million from cash surplus.

September 2001 Entered into a cross-currency swap agreement with KfW for repayment of loans of $US97 million in Baht to reduce foreign exchange risk. October 2001

Invested 41% in shares of Bangkok Inter Teletech Co., Ltd (“BITCO”), which holds 99.81% of shares in TA Orange Company Limited (formerly known as CP Orange Company Limited) via a share swap transaction. TA Orange is a GSM 1800 cellular operator under a concession granted by the Communication Authority of Thailand (“CAT”).

December 2001

Entered into a new Baht loan agreement of Baht 5 billion to repay US dollar-denominated debt to reduce foreign exchange risk.

March 2002

TA Orange, a 41% joint venture of TelecomAsia Corporation Public Company Limited launched its cellular service under the “Orange” brand name. Additional prepayment of loan of Baht 948 million from the Company’s cash surplus.

April 2002

The Company gained approval to install and operate an additional 6,000 public phone sets, increasing the Company’s capability to provide public phone service to 26,000 sets.

July 2002

Telecom Holding Company Limited and its subsidiaries entered into a Restructuring Agreement with its creditors. Further prepayment of loans of Baht 345 million from the Company’s cash surplus.

August 2002

TATE: Nature of Business

The Company signed a Memorandum Of Understanding with Thailand’s 10 leading providers of information, entertainment, healthcare, financial services and on-line games in order to jointly promote and develop fully integrated services for Thailand’s first Broadband Community.

10


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

September 2002 Approval granted by the Extraordinary General Shareholders Meeting No. 1/2545 to increase the registered capital of the Company from Baht 34,278 million to Baht 44,461 million by issuing 1,018 million new shares at a par value of Baht 10 each. The proceeds were used for investment in TA Orange and repayment of debts. Launch of a new business Broadband solution called “TA Metronet”, which is based on Fiber-to-Building technology. This technology provides transmission rates of 512 Kbps to 1 Gbps for each customer. October 2002

Successfully placed Baht 18,465 million in new debentures, the largest offering of corporate debentures rated by TRIS and the second largest offering in Thai history. Prepayment of the Company’s indebtedness in the amount of US Dollar 452 million or Baht 19,590 million, funded by the proceeds from Thai Baht Debentures of Baht 18, 465 million and Baht loan from IFC of Baht 1,125 million. Offered new ordinary shares to the existing shareholders. The number of total shares subscribed was 461,997,236 shares or 85.75% of the total shares offered to the existing shareholders. The Company registered the change in the Company’s paid up capital from Baht 32,325 million to Baht 36,945 million. The proceeds from this rights offering of Baht 3,003 million, which came from the CP Group and other existing shareholders, was used for additional investment in TA Orange through Bangkok Inter Teletech Company Limited. The Company’s holding stake in TA Orange increased from 41% to 44% after the transaction.

December 2002 Bought back Yen-denominated, long-term trade accounts worth Baht 3.6 billion (Yen 10.1 billion) at a 81.3% discount to their book value, representing a gain from the buy-back of Yen-denominated notes of approximately Baht 3.1 billion in the Company’s fourth quater 2002 results.

TATE: Nature of Business

11


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Key developments in 2003 Operations January 2003

Organizational structure changed to help the Company transform into a customer-centric communication solutions provider. Top executives appointed to take responsibility for the three core customer segments - Corporate, SMEs, and Home/Consumer.

February 2003

Placed 3,319 million Baht in new debentures on February 18. The proceeds were used to repay all remaining US dollar-denominated debt of $78 million.

April 2003

An increase in registered capital to Baht 43,892.28 million (up from Baht 38,897.79 million) was approved by shareholders at the Annual General Meeting. An Allotment of 499.45 million new shares with par value of 10 Baht each was reserved, including 450 million shares for private placement, 19.86 million shares for the ESOP and 29.59 million shares for offering to the International Finance Corporation.

July 2003

Nynex Network System (Thailand), one of the Company’s major shareholders, sold all its 369,500,126 TelecomAsia (TA) shares (or 10.001 percent) to Golden Tower Trading Ltd. (a representative from CP Group) and Mission Gain Investments Ltd, which made the CP Group the largest TA shareholder with 45.03 percent. The July 17 sale was in line with Verizon Communication Inc.’s policy to focus on US investments and had no effect on the Company’s operations.

October 2003

Signed a new Baht 21,419 million loan with local banks and financial institutions to refinance all existing Baht loans, resulting in an approximately Baht 200 million a year reduction in interest expense and greater operational flexibility.

November 2003

Decision made to change the Company’s name to True Corporation Public Company Limited at Extraordinary General Shareholders Meeting No. 1/2003. The name change, which is in line with the Company’s strategy to become a customer-centric provider of voice

TATE: Nature of Business

12


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

and non-voice communications solutions, will take effect after the new name is registered at the Ministry of Commerce. Business Line March 2003

TA easy Click, a post-paid Internet service for fixed-line customers launched by Asianet Corporation, a Company subsidiary. Customers are charged for actual time used. Monthly service charges are consolidated into the fixed-line statement. Launched PCT Wireless Group call service. This post-paid service allows for unlimited calls among group members using a special four-digit number and is designed for business customers.

April 2003

Asianet Corporation takes a 70 percent shareholding in True Internet Data Center Company Ltd (True IDC). Other shareholders include DACOM Corporation and Korean Internet Data Center (a DACOM’s subsidiary). True IDC plans to provide the largest Internet Data Center in Thailand and began operation in 2004.

June 2003

Launched TA Caller ID, an additional fixed line service that shows incoming call numbers through Caller ID phone. Launched TA WiFi, a wireless Broadband service and signed contract with the Queen Sirikit National Convention Center to install first WiFi facility.

July 2003

Launched hi-speed Internet solution that bundles Broadband and Internet Access for customer convenience. The service can provide Internet access from 128 Kbps to 8 Mbps. Also launched TA Station, a public high-speed Internet kiosk.

August 2003

Launched PCT Next service. It provides wireless Internet access at the stable speed of 32 Kbps via a PCT Next Data Card that can be connected to a PDA and Notebook computer. Launched Billing Solution, which consolidates fixed line and TA easy Click statements into one bill for customers who use both services.

TATE: Nature of Business

13


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

September 2003 Reduced tariff for domestic long-distance calls from September 1 to December 31 as part of a joint promotion with TOT and TT&T. The promotion offered two packages, which reduced long-distance domestic calls and mobile phone charges nationwide to as little as Baht 3 per minute. After the promotion was launched the ICT Ministry approved a flexible tariff promotion under which charges should not be higher than those provided by the packages. October 2003

Launched another three TA easy Click services, including the TA easy Ragnarok online game and the TA easy Mail and TA easy Entrance applications.

December 2003

PCT provider Asia Wireless Communication joined forces with KDDI Japan (parent company of KDDI-Pocket, the biggest PHS phone system provider in Japan) to enable international roaming between the Pocket PHS system and PCT. This allowed subscribers in Bangkok and Japan to use the service. Reduced high-speed Internet charges to as low as Baht 550 per month for transmission speed of 256 Kbps. Also offered special price TA Cable Modem service to cover the Chiang Mai, Khon Kaen, Korat and Hat Yai provinces. Expanded on-line game business by signing contract with Korean company Triglow Picture to be the sole provider of PristonTale in Thailand. This was a milestone of the Company as it signaled its move to become a content and application aggregator for home solutions consumers. Opened new subsidiary True Digital Entertainment, which is 99.99 percent owned by Asianet Corporation to operate on-line game business.

TATE: Nature of Business

14


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Business Profile of the Company, Subsidiaries and Associated Companies Currently, the Company’s products and services can be classified into major categories as follows: 1. Fixed line Services and Value Added Services 2. Wireless Services; Personal Communication Telephone (PCT) and Mobile Phone (TA Orange) 3. Data Transmission Services 4. Multimedia Network and Broadband 5. Internet, Content and Application Services 6. Other Services

TATE: Nature of Business

15


Q

Q

Asia Multimedia Co., Ltd. Asianet Corporation Limited

Multimedia Network and Broadband

Q

Q

TelecomAsia Corporation Public Company Limited Asia Multimedia Co., Ltd.

Digital Data Network

2.6 million line Telephone Services, Value Added Service and Digital Data Network TelecomAsia Corporation Public Company Limited

As at 31 December 2003

BUSSINESS GROUP STRUCTURE

Annual Registration Statements (Report Form 56-1)

Q

Q

Q

Q

Asianet Corporation Limited Asia Infonet Co., Ltd. True Digital Entertainment Co., Ltd. True Internet Data Center Co., Ltd.

Internet Provider

7

NOTE : Non activities companies The group registration in Thailand as follows: K.I.N. (Thailand) Co., Ltd., Tele Engineering and Services Co., Ltd., Yai Kaew Co., Ltd., Asia DBS Public Company Limited, Telecom International Co., Ltd., Telecom Holding Co., Ltd. U-Net Co., Ltd., Telecom Equipment Manufacturing Co., Ltd., The group registration in foreign as follows : Telecom International China Co.,Ltd., TA Orient Telecom Investment Co., Ltd., Telecom Asia (China) Co., Ltd., Chongqing Communication Equipment Co., Ltd., K.I.N. (Thailand) Co., Ltd., Nilubon Co., Ltd.,

Asia Wireless Communication Co., Ltd. Bangkok Inter Teletech Co., Ltd. - TA Orange Co., Ltd.

TATE: Nature of Business

Q

Q

Wireless

TelecomAsia Public Company Limited

Construction and Distributor Q Wire & Wireless Co., Ltd. Rental Business Q Nilubon Co., Ltd. Q W7 Rental Services Ltd. Others Q Telecom Training and Development Co., Ltd. Q Thai Smart Card Company Limited

Other Business


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Revenues Breakdown by Business Group Business Group / Operation by

Percentage 31 December of Shares 2003 Held by the Baht % Company Million

31 December 2002 Baht % Million

31 December 2001 Baht % Million

1. Fixed line and Value Added Service1 TelecomAsia Corporation Public Company Limited Revenues 16,893 60.4% 2. Personal Communication Telephone (PCT) and Cellular (TA Orange) Asia Wireless Communication Co., Ltd. Wire & Wireless Co., Ltd.

TA Orange Co., Ltd.

15,618 75.7%

7,228 25.9%

6,096 23.6%

3,072 14.9%

1,097 3.9%

954 3.7%

894 4.3%

1,183 4.2%

1,199 4.7%

503 2.4%

471 1.7%

198 0.8%

154 0.8%

1,078 3.9% 27,950 100%

1,203 4.7% 25,775 100%

395 1.9% 20,636 100%

99.99% 87.50% 43.86%

Revenues 3. Multimedia Network and Broad Band Asia Multimedia Co., Ltd.

16,125 62.5%

90.45% Revenues

4. Data Service TelecomAsia Corporation Public Company Limited Asia Multimedia Co., Ltd.

90.45% Revenues

5. Internet Asia Infonet Co., Ltd. Asianet Corporation Co., Ltd.

65.00% 99.99% Revenues

6. Other Business W7 Rental Services Co., Ltd. Nilubon Co., Ltd. Wire & Wireless Co., Ltd. Other Companies

99.99% 99.99% 87.50% Revenues

Total Revenues Source: The Company

1

Includes Fault Reporting and Dropwiring, Public Phone and Audiotext TATE: Nature of Business

8


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

3. DETAILS OF EACH BUSINESS LINE 3.1 Products and Services Under the Build Transfer Operate Concession with TOT and CAT TelecomAsia is a leading integrated telecommunications service provider of voice, video, and data, enabling the Company to offer communication solutions customized to all customers’ needs. Fixed line is the Company’s core business and contributed 48.8 percent of consolidated revenues in 2003. TelecomAsia had the highest wireline business market share in the Bangkok Metropolitan Area (BMA) at around 56 percent. The Company’s core fixed line network combines a fiber-optic network and a high-speed digital transmission network. The Company has installed ATM (Asynchronous Transfer Mode) and IP (Internet Protocol) networks on its core network to expand the capacity and speed of data transmission and to offer new alternative services to customers. The Company has a Network Management System, which enables it to track errors and provide highly effective maintenance 24-hours a day, and also has an advanced Customer Relationship Management System. In addition, the Company has changed itself into a customer-centric organization in order to better serve customers’ needs. The Company, its subsidiaries and affiliates provide: 1. 2. 3. 4. 5. 6. 1.

Fixed line and Value-Added Services Wireless Services; Personal Communication Telephone (PCT) and Mobile Phone (TA Orange) Digital Data Network (DDN) services Multimedia and Broadband services Internet, Content and Application services Other services, such as outsourced Call Center services Fixed line and Value-Added Services

In 1991, the Company was formally awarded a Build Transfer Operate (BTO) 25-year concession by TOT to construct, install and jointly operate a 2.6 million wireline telephone expansion in the BMA. The Company shares its revenue with TOT. TOT collects service charges from customers and then sends back a proportion of revenue to the Company.

TATF: Details of each business line

18


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Under the concession, this is based on gross revenue before the deduction of related expenses, at the rate of 84 percent for 2 million lines and 79 percent for 600,000 lines. The Company has 82 percent revenue sharing from each value-added service and 76.5 percent of the public phone . At the start of 2003 the Company reintroduced the installation fee for new fixed line subscribers and speeded up the fixed line cancellation process and resale of phone numbers (from cancellations). These initiatives resulted in the number of subscribers declining by 58,328 in 2003. As at December 31, 2003 the Company had 1,962,074 fixed line subscribers, but continued to have the highest BMA market share at approximately 56 percent. Telephone Subscription and Installation Customers can subscribe for wireline telephone services at 45 TelecomAsia outlets and kiosks throughout the BMA, or through the Tele-ordering Center, Telesales, an account executive or a direct sales representative. Customers can contact the Call Center and report faults using the same easy to remember number (02900-9000). They can also report faults through the 1177 Service Center, which provides 24-hour service. Technical support is provided by 35 Network Maintenance Centers throughout the BMA, which can fix business customer problems within fours hours and residential faults within 24–hours. Value-Added Services In addition to fixed line or wireline services, the Company offers a range of value-added services to meet customers’ needs, such as the public phone service, TA Voice Mailbox, TA Connex, Direct Inward Dialing, TA Hunting Lines and the Integrated Service Digital Network. •

The Company has provided a public phone service in the BMA since 1997 with 20,000 telephone units. In April 2002, the Company gained approval to install an additional 6,000 telephone units, bringing the total number of units to 26,000.

Voice Mailbox is an automatic telephone answering service that answers incoming calls when the line is engaged or there is no answer. This service

TATF: Details of each business line

19


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

does not require any additional equipment, and allows customers to receive their voicemail by calling the Voice Mailbox Center. •

TA Connex provides Call Waiting, Conference Calling, Call Forwarding, Hot Line, Abbreviated Dialing, Automatic Call Repetition and Outgoing Call Barring.

TA Caller ID displays incoming call number on Call ID phone.

The Company also provides services for corporate customers requiring a large number of telephone lines and provides a range of valued-added services including:

(2)

Direct Inward Dialing (DID automatically directs incoming calls to a party).

The TA Hunting Lines service bundles two or more telephone lines at one location into a single number.

The Integrated Service Digital Network (ISDN) enables a telephone network to handle all forms of voice, data and image communications simultaneously on the same telephone line.

TA Vote is a special service for companies with peak periods of short message traffic. It enables companies to perform a lot of marketing activity without investing in infrastructure. Vote results are available in as little as five seconds.

Free Phone 1-800 allows businesses to provide their customers with a free contact call service. The cost of customer Free Phone calls are automatically billed to the business. Customers can call from any telephone by dialing 1-800 followed by six digits.

Personal Communications Telephone (PCT) and Mobile Phone Business (TA Orange)

The PCT business is operated by Asia Wireless Communication Company Limited, (AWC) a TelecomAsia subsidiary. The mobile phone business is operated by TA Orange Co., Ltd.

TATF: Details of each business line

20


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

(TA Orange). TelecomAsia has an almost 44 percent shareholding in TA Orange, held through Bangkok Inter Teletech Co., Ltd. (BITCO). 2.1 Personal Communications Telephone (PCT) Together with AWC, the Company officially launched its PCT Service in November 1999. PCT is a wireless service that has the same number as a fixed line telephone , therefore it is easy to remember. PCT can be used anywhere within the inner area of the BMA. PCT combines two leading technologies; The Personal Handy Phone System (PHS); developed from the cordless telephone system and the Public Switched Telephone Network (PSTN), and the advanced Intelligent Network. PCT is provided under the BTO concession with TOT. All revenue from the PCT service is collected by TOT and the Company is paid 82 percent of this, before deduction of related expenses, of which about 70 percent is paid to AWC as compensation for operating the PCT service. The PCT service is also available to TOT subscribers. Because the PCT network belongs to the Company, TOT shares approximately 80 percent of revenue received from its subscribers to the Company as a PCT network rental fee (in the event that the foreign exchange rate is below Baht 38 per USD1) or approximately 82 percent of revenue (in the event that the foreign rate is Baht 38-45 per USD1). As at December 31, 2003 the Company had 549,295 PCT subscribers, including PCT Buddy (Prepaid PCT service) subscribers. In 2003 the Company launched value-added services for PCT to increase revenue and better utilize its network. These voice and data services included: PCT Smart One works as a home phone without cabling (because it uses the PCT network), which gives more freedom to home users. PCT Smart One can connect with facsimiles and the Internet and has a call ID feature. Virtual Private Network (VPN) allows PCT users to combine as a group. Group members can make lower cost post-paid calls between themselves using special four or five digit numbers. This service is particularly suitable for business customers.

TATF: Details of each business line

21


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Roaming Service allows international roaming between BMA and Japan using PCT. AWC has signed a contract with DDI-Pocket, a subsidiary of KDDI Japan, which operates the biggest Japanese PHS service. This allows customers from both countries to enjoy voice and data services. From December 16, 2003 the Company has provided services in the Japanese language to attract Japanese residents and tourists in Thailand. PCT Next Data Card provides wireless Internet access at a speed of 32 or 64 Kbps and can handle data, voice, image and animation transmission, as well as remote video conferencing. PCT Next also has a wireless LAN capability and can be used with notebook computers and PDAs. Other content services launched included PCT Next Intrend (content delivery service to suit individuals requirements), PCT Next 2U (content delivery service to third parties) and the PCT Next Planner scheduling service . In addition, AWC launched an SMS service through PCT (available on PCT AWC X-Series II, AWC X-Series III, AWC H-Series). 2.2

Mobile Phone Business (TA Orange)

In October 2001, the Company invested in a 41 percent shareholding in BITCO, which holds 99.81 percent of the shares in TA Orange to operate a GSM 1,800 MHz cellular business under a concession granted by the Communication Authority of Thailand (CAT) until 2013. In March 2002, TA Orange formally launched its business in both post-paid and pre-paid mobile phone services. In October 2002, the Company used the proceeds from a Bt 3 billion Capital Increase to increase its investment in TA Orange to 44 percent. At December 31, 2003, after being in operation for 21 months TA Orange had 1,824,990 subscribers and an 8 per cent market share. This is seen as a successful entry into the intensely competitive cellular market, which had two existing major players.

TATF: Details of each business line

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TelecomAsia Public Company Limited

3.

Annual Registration Statements (Report Form 56-1)

Data Transmission Services

The Company offers a range of alternatives in both speed and flexibility for data transmission to meet customers’ needs. After the installation of ATM/IP and Remote Access Server (RAS) in mid-2000, the capacity for data transmission increased in speed and quality. Data transmission services include: •

Digital Data Network (DDN) or Leased Line is a private network that facilitates voice, data and image transmission between two different points at a stable speed. This service is especially suited to customers, such as banks and financial institutions, which rely upon continuous transmission of accurate data or information, often in large volumes. The Company can provide a wide range of DDN speeds to suit customer needs, starting from 64 kbps to more than 140 Mbps with guaranteed service quality. As of December 31, 2003 the Company had installed 7,835 circuits.

IP Access Service (IPAS) This service, offered under the name TA Megaport, provides a total remote dial access solution for customers who require an external access port. These include Internet service providers, Web information providers, and business groups, which require a Virtual Private Network Service, but do not want to bear the additional cost for equipment and management of the access port.

Trunking access is an Internet connection circuit, which connects to your access server to receive 30 lines (or multiple of 30 lines) dialing concurrently from a nationwide telephone system, with a single easy to remember number.

TA Metronet is fiber-to-the-building technology that enables high-speed data transmission through Fiber-optic cable, with reliable ring network architecture. It is designed to provide a simple network configuration, with wider bandwidth capacity for business customers. TA Metronet offers a range of data transmissions speeds from 512 Kbps to 1 Gbps.

TATF: Details of each business line

23


TelecomAsia Public Company Limited

4.

Annual Registration Statements (Report Form 56-1)

TA Network Manager is an outsourced network management service that can advise on a range of functions, from infrastructure investment to network design and implementation. The service also provides network system monitoring, performance reporting and planning for future network expansion. The Company started trialing this service in the third quarter of 2003.

Multimedia and Broadband Services

Multimedia services are provided through Asia Multimedia Co., Ltd. (AM), the Company’s subsidiary that owns a large-scale, hybrid fiber-optic coaxial (HFC) network. AM has received permission from the TOT to provide non-fixed-line telephone services for 20 years from October 20, 1997. AM has rented its HFC network of 35 analog channels to United Broadcasting Corporation Public Company Limited (UBC), the Company’s affiliate, for broadcasting cable TV programs. In addition, AM is a drop-wire distributor and provides UBC subscribers with drop-wire installation services, including the maintenance of UBC set-top boxes installed at a subscriber’s house. High-speed Internet (Broadband) Service AM also provides wireline Broadband services through two technologies. AM started offering the services in July 2001: Cable Modem is an external device that allows computers to send and receive data via the HFC network at very high speed. The transmission speed through AM’s cable modem service is up to 100 times higher than other dial-up modems currently used by Internet users. As at December 31, 2003 the Company had 1,018 Cable Modem subscribers. ADSL (Asymmetric Digital Subscriber Line), launched under the name TA Express, is an always-on, high-speed Internet service. Customers can select the speed (up to 8 Mbps) that suits their needs and can surf the Internet and talk on the phone at the same time. As at December 31, 2003 the Company had 10,643 TA Express subscribers.

TATF: Details of each business line

24


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

In July 2003, the Company launched a bundled Broadband and Internet access service under the name ‘Hi-speed Internet Solution’, which was well received by the market. In December, it launched higher transmission services but lower price starting at Bt 550 per month for 256 Kbps. At the same time it launched the TA Cable Modem service in four major provinces – Chiang Mai, Khon Kaen, Korat and Hat Yai. The Company anticipates that the Thailand Broadband market will continue to grow at a high rate. To meet demand it plans to expand the ADSL network to cover all BMA and increase capacity by another 100,000 ports. This expansion is expected to be completed in April 2004. Wireless Broadband TA WiFi is the latest wireless communication technology, which provides data transmission at speeds of upto 11 Mbps. The Company launched this service in the second quarter of 2003. TA Station TA station is a coin-operated kiosk offering Internet access at a speed of 512 Kbps. Each station has a built-in digital camera so users can take their photographs and email them to their friends. The station can also provide movie, music, game, ring-tone and logo downloads, as well as karaoke services. 5.

Internet, Content and Applications

Since receiving approval from CAT in November 1996, the Company’s subsidiary, Asia Infonet Co., Ltd. (AI) has provided Internet and e-commerce services under the name of Asianet. AI is currently one of the biggest Internet service providers in Thailand. As at December 31, 2003 AI had 652,726 subscribers. AI customers are offered various service alternatives. Corporate customers can, for example, select leased line, ISDN and web-hosting services, while private users can select from monthly or hourly membership packages, or purchase an Internet kit or international roaming services. In addition to AI’s Internet service, the Company offers an economical Internet service designed to exclusively serve its telephone subscribers via the ClickTA.com website. ClickTA.com is an on-line portal that provides customers with high-speed, data transmission through a special gateway to the Internet. ClickTA.com contains a variety of useful information and entertainment content and has a free e-mail service for its TATF: Details of each business line

25


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

subscribers. Customer can connect to the Internet using TA phone number 0-2900-9600 and stay connected for up to 3 hours per dialup (with unlimited dialup). Service charges collected by AI are shared with the Company at different ratios according to subscriber numbers. In the first quarter of 2003 the Company and AI launched another Internet service for fixed line customers under the name TA easy Click, which charges for actual time used at the rate Bt 12 per hour (Bt 0.20 per minute). Charges are billed to customers together with the fixed-line charges. Customers can connect to TA easy Click by dialing TA phone number 0-2900-0000. Other TA easy products launched in 2003 include TA easy PristonTale and TA easy Ragnarok (online games), TA easy PCT (for wireless Internet connection at a speed of 32 kbps), TA easy Entrance (which provides information and online tutoring), and TA easy Mail (a personal email service for TA easy Click customers). The Company provides corporate and institutional customers with e-commerce services and end-to-end web development solutions. In the second quarter of 2003 AsiaNet Corporation Ltd. (ANC), a Company’s affiliate, entered a joint-venture with Dacom Corporation (the biggest IDC provider in Korea and Asia) to create the True Internet Data Center Co., LTD. The True Internet Data Center is expected to open in mid-2004 and provide a full range of Internet services to business customers. Since the end of 2002 the Company has signed agreements with more than 20 information providers, health and financial services and online game companies to setup a Broadband Community and provide a range of content and applications through the website www.tabroadband.com. The Company currently provides movie, music and game content under the name E Zone. It also provides news content, information for high school students and access to university entrance examination results at www.taentrance.com. In the fourth quarter of 2003, the Company launched an on-line game business via a newly set up company, True Digital Entertainment Co., LTD., in which ANC has a 99.99% shareholding. ANC signed an agreement with Triglow Pictures Company Limited of the

TATF: Details of each business line

26


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Republic of Korea for the exclusive right to distribute PristonTale, a popular online game which has received awards from the Cultural and Tourism Ministry of South Korea. 6.

Other services

The Company also provides an outsourced contact call center service under the name ContactAsia. Using ContactAsia can reduce technology investment and overhead costs for customers, while providing the highest levels of customer relationship management. 3.2 Marketing Strategy The Company aims to provide customers with tailored solutions and a range of bundled telecommunications services. It believes that demand for a combination of wireline, wireless, Internet and multimedia products and services will increase significantly in future. In addition to providing access to the latest products and services, the Company and its subsidiaries want to become more customer-centric and improve distribution channels. Nature of Customers and Target Group The Company recently separated its customers into three segments (Corporate, SME and Consumer) to enable staff to better focus on providing these segments with the most appropriate high technology products and services. The Corporate and SME segments comprise the banking, finance, insurance, government and State enterprises sectors and Wholesale Services and Solutions. The Corporate segment also includes customers who need lot of telephone lines, such as telecom operators, Internet providers and e-commerce businesses that required modern telephone systems. The SME segment also includes schools and educational centers. The Consumer segment covers teenagers, housewives and families, businessmen and new householders. 3.3 Distribution Scheme and Distribution Channels Distribution channels are divided into two sections: 1) Business Channel (for Corporate and Medium Enterprises): 1.1 Account Executives who are trained to understand customers’ requirements. 1.2 Telesales, which contact customers to offer products.

TATF: Details of each business line

27


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

2) Consumer Channel 2.1 Outlets and kiosks at 45 locations around the BMA. 2.2 Teleordering centers, which customer can call to request a new phone line or other services. 2.3 Direct Sales are by area, which have dedicated sales managers and executives. Marketing activities are tailored and include mail drops, promotional activities, and mobile outlets. 3.4 Procurement of Products and Services Network Capacity for Services The Company believes that its extensive fiber-optic network covering all over BMA gives it a key competitive advantage. Voice, graphic and data travels through the fiber-optic cable network at a higher speed than through copper wire or radio wave. In addition, the network architecture can eliminate call failures due to accidental interruption of communication route or any other causes. The network has a spider web design covering all over the service area, which enables the Company to utilize other routes when one breaks down. Network Acquisition The Company has employed a number of suppliers to assist in network acquisition and installation (including outside plant installation) to expand its service coverage, to assist in drop wire installation, acquisition of switching equipment, technical support, repair and maintenance of transmission equipment, ATM equipment and Remote Access Servers. The Company has not depended upon any specific distributor or supplier and has not faced with problems in hiring the suppliers due to shortages. Technical and Management Support The Company has acquired technical and management support from Verizon Communications, Inc. On July 17, 2003 Verizon sold its shareholding in the Company, but Verizon-assigned executives continue to work as executives of the Company.

TATF: Details of each business line

28


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

3.5 Thai Telecom Industry Fixed line Telephone Business Fixed-line telephone growth slowed in 2003, partly due to the reintroduction of installation fees for new phone lines and a speeded up fixed-line cancellation processes. However the penetration rate in BMA remained relatively low at 32 percent, compared with other developed Asian countries, presenting room for growth. As at June 30, 2003 the Company remained the leader in the BMA with approximately 56 percent overall market share. Table : Number of fixed line subscribers as of June 30, 2003 Fixed-line operator TOT* The Company** TT&T* Total

BMA 1,542,231 2,007,273 3,549,504

As of June 30, 2003 Provinces 1,854,227 1,210,442 3,064,669

Total 3,396,458 2,007,273 1,210,442 6,614,173

source: * Data from www.tot.co.th **Data from the Company

Competition within the Thai fixed line telephone market was higher in 2003 than the previous year as the TOT improved its marketing to compete with private companies. In addition, aggressive promotion campaigns were launched by cellular operators as new operators entered the market. The traffic migration from fixed line to mobile showed sign of leveling off in 2003 as the cellular market growth slowed and cellular operators moved their focus to retaining their customer base instead of attracting new customers through price cuts. In addition, fixed line telephone operators have been offering value-added services to better serve customers’ needs. From September 1, 2003, fixed line operators have been allowed to launch reduced-tariff promotions for domestic long distance calls and calls to mobile phones. In early 2004 fixed-line operators were allowed for 6-month promotions under a flexible tariff structure, with the two earlier packages setting ceiling rates. All these measures have made fixed line services more competitive.

TATF: Details of each business line

29


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Cellular and PCT businesses The cellular market grew 27 percent in 2003. Subscribers increased by five million to 22 million, but the growth rate declined compared to the doubling in total subscribers in 2002. The penetration rate at the end of 2003 was at 36 percent, an increase from 28 percent in 2002. Most analysts expect the cellular market to continue to grow by four million subscribers or 18 percent in 2004. Competition is expected to stabilize as operators focus on increasing ARPU and providing new value-added services. Three new cellular operators have entered the market since 2002. TA Orange, which provides GSM 1800 MHz cellular services, officially opened for business in March 2002. Thai Mobile (joint venture between TOT and CAT), which provides Digital 1900 MHz cellular services started operating in November 2002. Hutchison CAT Wireless Media Company Limited, a joint venture between Hutchison Wireless Multimedia Holding Limited and CAT, provides CDMA cellular services and started operating in November 2002. Table : Number of cellular subscribers as of December 31, 2003 Cellular operator AIS DTAC TA ORANGE Total

Subscribers as at December 31, 2003 13,239,200 6,550,496 1,824,990 21,614,686

Remark: Excluding Hutch and Thai Mobile

As at December 31, 2003 TA Orange had 1,824,990 subscribers. However, PCT subscribers declined further to 549,295. PCT subscribers have declined since the second half of 2002 due to intense competition from cellular service. In early 2003 AWC changed its PCT strategy to focus on retaining its customer base by providing new customer solutions and emphasizing PCT cost-saving and safety attributes, as well as improving the quality of the network. While customer retention has improved, ARPU declined by 26 percent in 2003. In order to improve the PCT business the Company is negotiating with creditors to reduce PCT debt down to a reasonable level. These negotiations are expected to be completed in mid-2004.

TATF: Details of each business line

30


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Digital Data Network (DDN) business The DDN market in Thailand continues to grow at about 20-30 percent a year due to the popularity of on-line data transmission and an increase in Internet users. There is high competition between the large number of DDN businesses and suppliers of alternatives, such as ADSL providers. In 2003 the Company’s DDN circuit grew by only 10 percent, mainly because TA Orange cancelled some of the Company’s DDN leasing contracts. TA Orange also completed the construction of its additional network. DDN circuits for non-TA Orange customers, however, increased by 20 percent. The Company has a competitive advantage in having the most modern network. In addition, it seeks to differentiate itself from competitors through a focus on service quality. In 2003 the Company launched the Managed Data Network service, which combines three network operation services including network performance management, fault management and configuration management. Broadband business The Broadband business is at an early stage of development with the relatively small number of subscribers growing at a rapid rate. In 2002 the Company’s Broadband customers more the doubled to approximately 3,700 subscribers, representing more than 50 percent of the total market share. In 2003, Broadband subscribers grew by 214 percent to 11,661 (as at December 31, 2003), mostly from ADSL service. One of the drivers of this rapid subscriber growth has been the falling cost of modems. In addition, on-line content such as games has became more popular. Broadband monthly fees have also fallen as Broadband service providers have increased the size customer bases. The Government has also reduced International Internet Gateway fees, lowering costs for service providers. Broadband penetration in Thailand remains low (less than 0.5 percent of population) compared to penetration rates in other developed Asian countries, such as Korea (21.7 percent), Hong Kong (14.6 percent), Taiwan (9.1 percent) and Singapore (5.5 percent).

TATF: Details of each business line

31


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

(Source: Asia Pacific and Broadband Market Forecast, 2003-2007 by Gartner). This suggests that the Thailand market has a lot of room to grow. In 2003 there were six operators in the Thailand Broadband market; United Broadband Technology Co., Ltd. (UBT) under the UCOM group; Lenso DataCom Co.,Ltd (under Q-Net service); Samart; TOT; TT&T, and the Company. Only TOT and the Company own a Broadband network in BMA, which gives both companies a competitive advantage. The Company has more coverage of the network compared to others. It also has the most modern network with extensive fiber optic cabling, which is most suitable for providing Broadband services. In addition, the Company can offer a greater range of Broadband services. In early 2003 some service providers, including the Company, started offering wireless Broadband services or WiFi (Wireless Fidelity). Competition in this market is not high because there are a small number of providers. Internet services There were an estimated six million Internet users in Thailand in 2003, an increase of approximately 25 percent compared with 2002. [Source: National Electronics and Computer Technology Center (NECTEC)]. This represents a penetration rate of approximately nine percent. This is relatively low when compared with other developed countries, such as Korea (55 percent), Singapore (50 percent), Japan (45 percent), Hong Kong (43 percent) and Taiwan (38 percent). (Source: International Telecommunication Union, 2002). The growth in Internet users in 2003 was partly the result of Government ICT initiatives designed to transform Thailand into a knowledge society. These initiatives were grouped into five projects; e-Government, e-Commerce, e-Industry, e-Education and e-Society. To support this goal the Government has provided low-cost computers and Internet access and reduced the cost of international lease circuits. It has also approved the installation of an additional 565,500 fixed-line telephones across the country in 2004 and supported the introduction of low-cost hi-speed Internet in order to increase the number of users to one million by the end of 2004. Competition among Internet businesses was high in 2003 because of the large number (18) of Internet Service Providers (ISPs). Because of intense competition, Internet service TATF: Details of each business line

32


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

charges have fallen by almost half during the past two years to approximately Bt 5-7 per hour for a dial up service. The Company provides Internet services through its subsidiary, Asia Infonet Co., Ltd. (AI), which had 652,726 subscribers as at December 31, 2003. Other major operators, include CS Loxinfo, Internet Thailand, KSC Internet, Pacific Internet and A-Net. The Company (through AI) is committed to becoming a leader in the business e-services market. In 2003, AI focused on high-speed Internet and launched new services such as TA Easy click. The Company believes its state-of-the-art technology network, its wide coverage in the BMA and its ability to bundle services will enable it to increase sales. The Company expects to see continued rapid growth in Internet services in 2004 due to Government initiatives and increasing demand. The popularity of online games is also expected to boost domestic Internet usage, as well as content development. Further reduction in international leased circuit rates by the Government will help to promote the overall industry, as the operators will be able to offer cheaper services to customers. Regulatory Update Regulatory developments have been accelerated during 2002-2003. Key developments in 2002 included the corporatization of the Telephone Organization of Thailand and the Communications Authority of Thailand and the establishment of an Information and Communication Technology (ICT) Ministry by the Government to support and oversee the telecommunications industry. In 2003, approval was given to convert part of revenue sharing into excise tax and a new tariff structure for fixed-line service providers was allowed to be launched via two promotion packages. In addition, a joint study was carried out by private operators and a government agency into the feasibility and implementation of an the interconnection regime. The establishment of the National Telecommunications Commission (NTC) -

A 17-member panel for NTC Selection Committee was formed in May 2003 after the Administrative Court ruled that the previous selection process was not transparent. A 14-member panel to nominate candidates for seats on the

TATF: Details of each business line

33


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

NTC was selected in December 2003. Seven candidates nominated by the panel are expected to be selected by the Senate in the future. TOT and CAT privatization -

In July 2002 Cabinet gave approval for TOT and CAT to continue their existing businesses and to be separately listed on the SET. It was decided not to set up a holding company as previously planned.

-

Effective from 31 July, 2002, the Telephone Organization of Thailand was corporatized and became a public company under the name TOT Corporation Public Company Limited�

-

The Communications Authority of Thailand was separated into two companies: CAT Telecom Public Company Limited and Thailand Post Company Limited on July 8, 2003.

Concession Conversion - The Government has been trying to facilitate the concession conversion for the telecom sector since 2000. It has appointed committees and advisors to perform a feasibility study and outline the concession conversion framework, but cannot find the solution that all parties can agree on. -

On December 25, 2002, the ICT Ministry proposed a new scheme for the concession conversion. It proposed that part of revenue sharing be converted into excise tax. Private operators would be required to pay the excise tax to the Excise Department.

-

On January 28, 2003 the Cabinet approved the Finance Ministry’s proposal to immediately impose a 10 percent excise tax on mobile phone carriers and a 2 percent tax on fixed-line operators.

Interconnection regime In 2003, the ICT Ministry initiated a study on Interconnection charges in order to create a fairer playing field for all operators. The ICT Ministry appointed the Post and Telegraph TATF: Details of each business line

34


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Department (now called Thailand Post Co., Ltd.) to be a coordinator and to hold meetings with telecom operators to study and recommend rules and regulations for the interconnection regime. At the time of publishing there was still no official conclusion in these discussions. However, it is generally expected that the rate of the interconnection charge would be the same for both fixed line and cellular services. Reduced tariff for domestic long distance calls for fixed line service From September 1 to November 30, 2003, all fixed-line operators were given approval by the ICT Ministry to jointly launch three-month reduced tariff promotions for domestic longdistance and call-to-mobile services via two packages. The promotion was extended one more month to December. Details of the two options are as follows. For package one, the monthly fee (Baht 100) and local call tariff (Baht 3 per call) remained the same. The domestic long-distance call tariff was reduced to Baht 3,6 and 9 per minute (from Baht 3,6,9,12, 15 and 18 per minute). Charges for calls to mobiles within the same area remained the same (Baht 3 per minute), but reduced to Baht 6 per minute (from Baht 8, 12 per minute) for different areas. For the second package, the rates were reduced to Baht 3 per minute nationwide for calls from fixed-line to fixed-line and to mobile phones, while monthly fee was raised by Baht 100 to Baht 200. At the start of 2004 fixed-line operators were allowed to launch 6-month promotions under a flexible tariff structure, which used the two packages as ceiling rates.

TATF: Details of each business line

35


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

4. RESEARCH AND DEVELOPMENT The Company did not invest any on Research and Development (R&D) activities for the technology or communication apparatuses as technology network and equipments that the Company used in providing the services to the customers. The Company decided to purchase the ready-made communication networks and equipments from the various suppliers which the Company has an opinion that those products are efficient, high-technological and appropriate to the Company’s activities. Therefore, it was unnecessary for the Company to invest on the R&D to create and build its own network and communication equipments. However, most of its R&D Budget is contributed to the marketing which the Company strongly developed and intended to improve on its service to meet the growing demands and the customers’ needs. The Budget was divided into three main areas, R&D in Marketing, New Services and Service System. During the last three years, the total expenses for R&D are as follows:

YEAR

Thai Baht (thousand)

2003

4,659.67

2002

17,410.11

2001

16,730.72

TATG: Research and Development

36


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

5. OPERATING ASSETS 5.1 Property, plant and equipment Network equipment and non-network equipment are included in property, plant and equipment. Under the Joint Operation and Joint Investment for Expansion of Telephone Services Agreement of 2.6 million lines Mobile phone and Internet services, the assets pertaining to these agreements must be transferred to TOT and CAT. As at 31 December 2003, the Group's assets are listed below : Network equipment Net book value (Baht Million) Consolidated Company Land and land improvement Building and construction Telephone network equipment Mobile phone network equipment Public Phone Multimedia network equipment Power supply and computer Work in progress

1,863 1,341 28,133 22,017 1,161 2,007 459 351

1,863 1,341 28,212 1,962 1,161 459 351

Total

57,332

35,349

Network equipment in the consolidated financial statements at net book value of Baht 43,273 million and the Company at net book value of Baht 38,888 million was transferred to TOT and CAT under the concession agreements. According to the agreement, the Group has the right to operate and maintain these assets over the concession periods. The Company assign the right to operate network equipment which transfer to TOT (according to the conditional assignment over the concession) to secure of the Thai Baht borrowings. In part of Non-network , assets are the right of the Group to operated, utilised and disposal those assets. As at 31 December 2003, the Group's assets are listed below : Non-network equipment

Land and land improvement Leasehold right & improvement Furniture, fixture and equipment Vehicle Power Supply & computer Work in progress Total

TATH: Operating Assets

Net book value (Baht Million) Consolidated Company 231 1,126 52 618 218 1,337 1 1,980 317 395 2 5,687 590

37


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

5.2 Intangible assets Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired associated at the date of acquisition. At 31 December 2003, goodwill from acquisition of an associate (UBC) at the amount of Baht 3,896 million was presented in the balance sheet under the investment in subsidiaries, joint venture and associates. And the goodwill from acquisition of BITCO amount of Baht 224 million was presented in the balance sheet under intangible asset. Computer software development cost Computer software development cost which enhances or extends the performance of computer software programmers beyond their original specifications is recognised as a capital improvement and added to the original cost of the software. At 31 December 2003 net book value is Baht 1,127 million. Trademarks Trademarks represent the consideration paid by a joint venture to use another venture’s trademark in Thailand. At 31 December 2003 net book value is Baht 108 million. The right to operate NON-POTS and to hang dropwire The right to operate NON-POTS and to hang dropwire is expenditure for license, which represent fair value of subsidiaries’ share exchange. At 31 December 2003 net book value is Baht 428 million. Investment in subsidiaries and associates policy Investment in subsidiaries and associates of the Company has been done through Telecom Holding Co., Ltd. (“TH”), which the Company holds 99.99% of TH shares. TH was established as a holding company to invest in telecommunication projects and related business. The Company has policy to invest in provisions that it will be the major shareholder of subsidiaries or associates and/or will be the operator or manage the invested project on its own, except when conditions in the market does not allow the Company to do so. The amount of investment made by TH will not be more than the existing issued capital of TH. The Company can not borrow new money to invest in any projects unless the creditors under the Company’s debt restructuring agreement permit. Thus, the risk associated with the investment would be limited by the amount of issued capital of TH. Moreover, the Company will appoint a representative to be the director of subsidiaries or associates as per the percentage of shareholding to closely monitor the management of such subsidiaries or associates. TATH: Operating Assets

38


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

6. FUTURE PROJECTS The Company and its subsidiaries have investment plans in 2004 for the following projects: 1. Payment Center The Company plans to create a payment center to receive payment from customers using credit cards and debit bank accounts. Payment will be made via credit card readers and Multimedia Kiosks, which increase payment channels for business and retail customers. This investment will support the Company strategy of becoming a customer-centric communications solutions provider. 2. Retail and Service Center The Company plans to upgrade outlets that offer Company and subsidiary products, as well as other IT products, so that they are in line with the new corporate branding. 3. Expansion of Data Network Service The Company expects that the Data Network sector will continue to grow rapidly by 20 – 30 percent per annum. To cope with the expected market growth, the Company plans to expand its data network service and the range of products and services it offers by providing data network solutions to customers. 4. Data Network Expansion to provinces The Company’s subsidiary, Asia Multimedia (AM), plans to expand its Fiber Optic network to the provinces to support the mobile phone network expansion of TA Orange and the Internet service of Asia Infonet. Part of this Fiber Optic network will also support the DDN and Broadband network of AM, which will reduce duplication of investment between subsidiaries, and improve network management efficiency.

TATI: Future Projects

39


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

7. LEGAL DISPUTES (1) Lawsuits that may have negative effect on the Assets of the Company and subsidiaries in the amount of over 5% of the shareholders equity as at December 31, 2003

: None

(2) Lawsuits that may have material effect on the Company’s business but could not be appraised the quantitative amount

: None

TATJ: Legal Disputes

40


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

8. CAPITAL STRUCTURE 8.1 Company’s Securities As of 31st December 2003, the Company has 6 securities namely: 1. Ordinary Shares 2. Preferred Shares 3. Warrants under the Employee Stock Option Plan Year 2000 (“ESOP 2000”) 4. Warrants under the Employee Stock Option Plan Year 2002 (“ESOP 2002”) 5. Warrants under the Employee Stock Option Plan Year 2003 (“ESOP 2003”) 6. NVDR (Non-Voting Depository Receipt) Details of each security are as follows: 1. Ordinary Shares At 31st December 2003, the Company has registered capital in total of THB 43,892.28 million, consisting of 3,689.58 million ordinary shares with par valued THB 10 each and 699.65 million preferred shares with par valued THB 10 each, of which THB 36,944.97 million are paid up capital divided into 2,994.85 million ordinary shares of THB 10 each and 699.65 million preferred shares with par valued THB 10 each. 2. Preferred Shares At 14th February 2000, the Extraordinary General Shareholders Meeting No.1/2000 has resolved to approve the allocation of 702,000,000 news preferred shares to offer for sale to KfW and/or wholly owned subsidiaries of KfW and/or the Thai Trust Fund with the total offering price of USD 150 Million. On March 30, 2000 the Company allocated 343.98 million preferred shares or 49% to KfW and 358.02 million preferred shares or 51% to Thai Trust Fund, the details of preferred shares’ rights, as summarized below: a. During the period between the date of the issuance of the Preferred Shares to and including the 8th anniversary of the issuance of the said Preferred Shares, the rights conferred to the holders of Preferred Shares shall be as follows:

TATK: Capital Structure

41


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

(1)

The holders of Preferred Shares shall be entitled to receive dividends in priority to the holders of the ordinary shares at the rate of THB 1 per share per fiscal year (except for the first fiscal year in which the Preferred Shares have been issued and for the last fiscal year of the said 8-year period).

(2)

The right of the holders of the Preferred Shares to receive dividends at the rate specified in Clause a (1) above is the right to receive cumulative dividends for any fiscal year in which the payment of such dividends has not been at all declared or not been declared in full (the “Cumulative Dividends in Arrears�). The holders of the Preferred Shares shall first receive the dividends before the holders of ordinary shares. After the Preferred Shareholders have received the foregoing dividends in full, any remaining profits shall be divided in equal amount per share and paid to the Preferred Shareholders and the ordinary shareholders.

(3)

Upon liquidation or dissolution of the Company, any assets remaining after payment of all amounts payable in respect of indebtedness and other obligations of the Company shall be paid to the holders of the Preferred Shares in priority to the holders of the ordinary shares, in the amount equivalent to the par value of Preferred Share per each share held by such holder of the Preferred Shares plus any Cumulative Dividends in Arrears. If there remains proceed of liquidation of the assets of the Company, they shall be divided and paid to the holders of the ordinary shares. And if there still remains proceeds of liquidation of the assets of the Company, they shall be divided and paid in equal amount to the

TATK: Capital Structure

42


Telcom AsiaPubCpny Limited

(4)

(5)

Annual Registration Statements (Report Form 56-1)

holders of the preferred shares and the holders of the ordinary shares. The Preferred Shares may be converted into ordinary shares at any time. Each Preferred Share shall carry the right to one vote at any meeting of the shareholders of the Company.

b. After the 8th anniversary of the issuance of the Preferred Shares and onwards, the rights conferred to the Preferred Shares shall be as follows: (1)

The holders of the Preferred Shares shall be entitled to receive dividends in priority to the holders of the ordinary shares at a rate of THB 0.01 per share per fiscal year (plus any Cumulative Dividends in Arrears). In case there are remaining profits which are to be paid as dividends in any fiscal year after the foregoing dividends have been paid in full, such remaining profits shall be divided in equal amount per share and paid to the holders of the Preferred Shares and the holders of the ordinary shares.

(2)

The Preferred Shares under Clause b (1) above, the right of the holders of the Preferred Shares to receive dividends at the rate of THB 0.01 per share per fiscal year is not the right to receive dividends on a cumulative basis for any fiscal year.

(3)

The holders of the Preferred Shares shall also have the rights as specified in Clause a (3), (4) and (5).

Provided always that ordinary shares resulting from conversion shall have no right to receive any Cumulative Dividends in Arrears during the time they were Preference Shares. However, KfW issued Purchase Rights to all shareholders of the Company. The Purchase Rights entitle holders to be able to buy back those preferred shares from KfW at the ratio of 1 Purchase Rights to 1 preferred share. The Purchase Rights Holders can exercise their rights on the second anniversary TATK: Capital Structure

43


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

of Purchase Rights Issuance as the first time and semiannually from year 3 to year 8. The exercise price on the second anniversary date will be equal to KfW’s cost plus 20% per annum. The exercise prices for other periods will be in different formulas, which factor in share price changes. 3. Warrants under the Employee Stock Option Plan Year 2000 (“ESOP 2000”) The Annual General Meeting of the Shareholders of the Company for the year 2000 held on April 27, 2000 has approved the issuance and the offer of non-transferable warrants to certain Directors and employees at executive level not exceeding 35 persons. Details of which are summarized as follows: Total Outstanding Number of Warrants Issued Offering

:

Issuing Date

: 9th June 2000

Maturity

: 10 years from the issuance date

Expiry Date

: 9th June 2010

Exercise Period

:

36,995,000 units

(a) Warrant Type 1: Each Warrant Holder received 3 separate warrant certificates. Each certificate represented 1/3 of the whole amount of warrants allotted and is exercisable for subscribing ordinary shares starting from June 30, 2000, 2001 and 2002 respectively. (b) Warrant Type 2: Each Warrant Holder received 3 separate warrant certificates. Each certificate represented 1/3 of the whole amount of warrants allotted and is exercisable for subscribing ordinary shares starting from December 31, 2000, 2001 and 2002 respectively.

Exercise Ratio

TATK: Capital Structure

: One unit of warrant entitles its holder to purchase one ordinary share of the Company at Baht 10.60 44


Telcom AsiaPubCpny Limited

Annual Registration Statements (Report Form 56-1)

4. Warrants under the Employee Stock Option Plan Year 2002 (“ESOP 2002�) The Annual General Meeting of the Shareholders of the Company for the year 2002 held on April 12, 2002 has approved the issuance and the offer of non-transferable warrants to Directors and employees at executive level not exceeding 35 persons. Details of which are summarized as follows: Total Outstanding Number of Warrants Issued Offering

:

37,131,597 units

Issuing Date

:

14th June 2002

Maturity

:

5 years from the issuance date

Expiry Date

:

13th June 2007

Exercise Period

:

Each Warrant Holder received 3 separate warrant certificates. Each certificate represented 1/3 of the whole amount of warrants allotted and shall be exercisable for subscribing ordinary shares as follow:

Exercise Ratio

TATK: Capital Structure

:

The 1st Certificate:

Warrant Holders shall be starting exercising from 14th June 2003 until its expiration.

The 2nd Certificate:

Warrant Holders shall be starting exercising from 14th June 2004 until its expiration.

The 3rd Certificate:

Warrant Holders shall be starting exercising from 14th June 2005 until its expiration.

One unit of warrant entitles its holder to purchase one ordinary share of the Company at Baht 10.60

45


Telcom AsiaPubCpnyLim ted

Annual Registration Statements (Report Form 56-1)

5. Warrants under the Employee Stock Option Plan Year 2003 (“ESOP 2003�) The Annual General Meeting of the Shareholders of the Company for the year 2003 held on April 11, 2003 has approved the issuance and the offer of non-transferable warrants to Directors and employees at executive level not exceeding 35 persons. Details of which are summarized as follows: Total Outstanding Number of Warrants Issued Offering

:

19,862,729 units

Issuing Date

:

17th June 2003

Maturity

:

5 years from the issuance date

Expiry Date

:

16th June 2008

Exercise Period

:

Each Warrant Holder received 3 separate warrant certificates. Each certificate represented 1/3 of the whole amount of warrants allotted and shall be exercisable for subscribing ordinary shares as follow:

Exercise Ratio

TATK: Capital Structure

:

The 1st Certificate:

Warrant Holders shall be starting exercising from 17th June 2004 until its expiration.

The 2nd Certificate:

Warrant Holders shall be starting exercising from 17th June 2005 until its expiration.

The 3rd Certificate:

Warrant Holders shall be starting exercising from 17th June 2006 until its expiration.

One unit of warrant entitles its holder to purchase one ordinary share of the Company at Baht 5.20

46


Telcom AsiaPubCpny Limited

Annual Registration Statements (Report Form 56-1)

6. NVDR (Non-Voting Depository Receipt) An NVDR or is a Non-Voting Depository Receipt trading instrument issued by the Thai NVDR Company Limited, a subsidiary wholly owned by The Stock Exchange of Thailand (SET). The NVDR is a security as specified by the SEC and is automatically regarded as a listed security in the SET. By investing in NVDRs, investor will receive all financial benefit, as if they had invested in a company’s ordinary shares. The only difference between investing in the NVDR and the company’s ordinary shares is NVDR holders have no right to vote. At 31st December 2003, Thai NVDR Company Limited invested in a company’s ordinary shares in the amount of 41,667,500 shares, which represents 1.13% of the total shares to be issued and paid-up of said company. Obligation in stock issuance in the future 1. For Convertible Preferred Shares In the successful debt restructuring process, Kreditanstalt fur Wiederaufbau (“KfW”) has an equity injection of USD 150 million in the Company and the Company issued 702 million convertibles preferred shares to KfW and Thai Trust Fund. Due to the terms specified that the preferred shares are set to be converted into ordinary shares before distributed to Purchase Rights Holders who exercise their rights, as described above. Therefore, the Company is obliged to issue the ordinary shares to replace the preferred shares as per the amount of the exercised Purchase Rights on each exercise date. 2. For Exercise of Warrants under the Employee Stock Option Plan (ESOP 2000) The Annual General Shareholders Meeting for the year 2000 held on 27 April 2000 has resolved to approve the Company’s Employee Stock Option Plan 2000. The warrants of 58,150,000 units were issued and offered to certain Directors and employees at executive level. In this regard, the Shareholders Meeting has resolved to approve the allocation of 58,150,000 new ordinary shares to be reserved for exercise of the warrants rights according to such plan.

TATK: Capital Structure

47


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

3. For Exercise of Warrants under the Employee Stock Option Plan (ESOP 2002) The Annual General Shareholders Meeting for the year 2002 held on 12th April 2002 has approved the issuance and the offer of non-transferable warrants to certain Directors and Employees at executive level, not exceeding 35 persons in the total of 37,131,597 units (“ESOP 2002”). In this regard, the Shareholders Meeting has resolved to approve the allocation of 37,131,597 new ordinary shares to be reserved for exercise of the warrants rights according to such plan. 4. For Exercise of Warrants under the Employee Stock Option Plan (ESOP 2003) The Annual General Shareholders Meeting for the year 2003 held on 11th April 2003 has approved the issuance and the offer of non-transferable warrants to certain Directors and Employees at executive level, not exceeding 35 persons in the total of 19,862,729 units (“ESOP 2003”). In this regard, the Shareholders Meeting has resolved to approve the allocation of 19,862,729 new ordinary shares to be reserved for exercise of the warrants rights according to such plan. 5. For the capital increase to reserve for IFC The Extraordinary General Shareholders Meeting No. 1/2545 held on 18th September 2002 has resolved to approve the capital increase from Baht 34,277,815,750 to Baht 44,461,181,920 by issuing new ordinary shares 1,018,336,617 shares at a par value of Baht 10 each in order to reinvest in the cellular business, TA Orange Co., Ltd. through Bangkok Interteletech Co., Ltd. and to partly repay indebtedness. The Company also allocated part of these increasing shares to reserve for IFC under the C Loan Agreement. Secondary Market of Common shares in the Present Presently, Ordinary shares of the company are now available on SET. On 22nd August 2003 the Company delisted all Global Depository Receipts – GDR in the amount of 2.5 million GDR (1 GDR equal to 10 ordinary shares of the Company), from the Foreign Stock Exchange, as foreign investors can directly invest by trading a company’s ordinary shares or NVDRs in the Stock Exchange of Thailand.

TATK: Capital Structure

48


Telcom AsiaPubCpnyLim ted

Annual Registration Statements (Report Form 56-1)

8.2 Shareholders TelecomAsia Corporation Public Company Limited List of Major Shareholders1 (as of 29th December 2003) NAME

No. of Shares (Million Shares)

% of Total Issued Shares

1.

CP Group2

1,642.33

44.45

2.

THAI TRUST FUND3

357.99

9.69

3.

KREDITANSTALT FÜR WIEDERAUFBAU (“KfW”)

341.65

9.25

4.

MORGAN STANLEY & CO INTERNATIONAL LIMITED

117.87

3.19

5.

CLEARSTREAM NOMINEES LTD

78.90

2.14

6.

GOLDMAN SACHS INTERNATIONAL

51.87

1.40

7.

THAI NVDR CO., LTD

41.67

1.13

8.

MISSION GAIN INVESTMENTS LIMITED

40.00

1.08

9.

HSBC (SINGAPORE) NOMINEES PTE LTD

34.82

0.94

10.

CHASE NOMINEES LIMITED 1

30.87

0.84

1 2

3

Including common shares and preferred shares. There are Charoen Pokphand Group Co., Ltd. and its related persons, namely, Bangkok Telecom Holding Company Limited, Charoen Pokphand Foods Public Company Limited, Bangkok Produce Merchandising Public Company Limited, Bangkok AgroIndustrial Products Public Company Limited, Charoen Pokphand Northeastern Public Company Limited, Kasetphand Industry Company Limited, Charoen Pokphand Enterprise Company Limited, Unique Network Company Limited, Wide Broad Cast Company Limited, C.P. Interfood (Thailand) Company Limited, Star Marketing Company Limited, Advance Pharma Company Limited and Golden Tower Trading Ltd. Shares, in Thai Trust Fund, are preferred shares of KfW, which have no right to vote.

TATK: Capital Structure

49


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

On 17th July 2003, one of the Company’s major shareholder, Nynex Network Systems (Thailand) Company, a subsidiary of Verizon Communications Inc. (Verizon) sold all the shares 369,500,126 shares of the Company which equivalent to 10.001% of the total issued shares to Golden Tower Trading Ltd. and Mission Gain Investments Limited in the amount of 234,500,126 shares and 135,000,000 shares, respectively. Golden Tower Trading Ltd. is a representative from CP Group and Mission Gain Investments Limited is a long term investor. Verizon’s decision to exit is base solely on strategic decision to focus on the Americas. As a result of that strategy, Verizon has already sold its investments in Philippines and other Asian countries including Thailand. This Verizon’s decision matter does not affect the operating of the Company in any respect. The top management still working as a team, Mr. William E. Harris ,Chief Financial Officer, Mr. Frank D. Mercer, Chief Technical Officer, the both executive of Verizon have resigned from Verizon and still works at the Company.

TATK: Capital Structure

50


Telcom AsiaPublicCom pany Limited

Annual Registration Statements (Report Form 56-1)

The Shareholders Agreement The Shareholders Agreement dated December 22, 1999 Kreditanstalt fur Wiederaufbau ("KfW"), Nynex Network Systems (Thailand) Company (“Verizon�), and the CP Group (comprising of Charoen Pokphand Feedmill Public Company Limited, Bangkok Produce Merchandising Public Company Limited, Charoen Pokphand Group Company Limited and Bangkok Telecom Holding Company Limited) entered into a Shareholders Agreement dated December 22, 1999. Terms and conditions specified therein shall be summarized as follows: 1

In addition to the right of KfW under the Debt Restructuring Agreement, KfW is entitled to nominate its representatives to the Company's Board of Directors in proportion to the percentage of its shareholding as against the total number of the directors representing the parties to the Shareholders Agreement. However, in any case, KfW is entitled to appoint at least one director and said right shall exist as long as KfW holds shares in the Company, directly or indirectly, not less than 5% of total shares of the Company.

2

During the first three years from the date of KfW's subscription of the shares in the Company and so long as KfW holds shares in the Company, directly or indirectly, at least 5% of the paid-up shares, the parties to the Shareholders Agreement will vote against each of the following actions unless KfW agrees to such action: (i) any amendment to the Memorandum and Articles of Association and amendments to rights attached to shares; (ii) any increase or reduction in the authorized share capital of the Company or any issuance of new shares or the private placement of shares or a proposed public offering; (iii) any voluntary liquidation, dissolution, cease of the business, recapitalization or reorganization of the Company or any merger, consolidation, amalgamation or other business combination of the Company with or into another person or any sale of all or a

TATK: Capital Structure

51


Telcom AsiaPublicCom panyLited

Annual Registration Statements (Report Form 56-1)

(iv) (v) (vi)

substantial part of the assets of the Company or any of its material subsidiaries; any change in the number of directors or the quorum for meetings of the Board of directors; delisting of the shares in the Stock Exchange of Thailand; and carry on any business other than Authorized Businesses (as defined in the Debt Restructuring Agreement).

3

Subject to any other conditions binding on KfW with regard to the right granted to the Company's shareholders, KfW may sell or enter into an agreement to sell for a cash selling price all of its shares or not less than 25% of its shareholding, at any time after the expiration of the first three years from the date KfW was allotted the shares in the Company. The foregoing does not prohibit KfW from selling its shares when its shareholding is illegal or restricted by the applicable law.

4

During the first three years from the date of KfW’s subscription of shares, the parties to the Shareholder Agreement (other than KfW) agree to refrain from transferring more than 10% of the shares so held by each party as specified in the Shareholders Agreement.

5

The parties agree to refrain from amending or modifying the Verizon Shareholders Agreement dated June 23, 1992 except obtaining prior written consent from KfW.

6

Each party shall disclose to the other party any conflict of interest or related transactions which the party, or any of its subsidiaries, has entered into or will enter into with the Company.

7

In each fiscal year, subject to availability of cash flow (without incurring additional indebtedness), other legal requirements, the SET regulations and restrictions imposed by the Debt Restructuring Agreements or any other agreements, the parties agree to cause the Company to pay dividends at least 50% of the net profit of the Company after statutory reserves have been established to its shareholders.

TATK: Capital Structure

52


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

8.3 Dividend Policy The Company has not paid or declared any dividends on its issued shares since operation commencement. The Company can pay dividends only out of its profits after deducting its cumulative losses, and only if it has set aside as a legal reserve. The Company’s restructuring agreement also limits its ability to pay dividends until all of its indebtedness is repaid in full. The Company’s principal shareholders have entered into a shareholders’ agreement under which they agreed to vote for and cause their representatives appointed to the Company’s Board of Directors to declare an annual dividend equal to at least 50% of its net profits for that year, after statutory reserves and subject to availability of cash, the regulations of SET, and its credit facilities. Before dividends can be paid to holders of its ordinary shares, however, dividend payments on preferred shares must be paid in full. Within March 31, 2008, the eighth anniversary from the date its preferred shares were issued, the Company’s preferred shareholders are entitled to receive cumulative dividends at the rate of THB 1 per share per fiscal year. After March 31, 2008, holders of our preference shares are entitled to a non-cumulative dividend at the rate of THB 0.01 per share per fiscal year. The right to receive cumulative dividends for any fiscal year in which the payment of those dividends was not declared ceases once a holder converts its preferred shares into ordinary shares. For dividend policy of subsidiary company, each subsidiary company’s Board of Directors will consider the payment of dividends from the balance of cash flows compare with capital investment of individually subsidiary company. Subject to the availability of cash flows of subsidiary company and only if it has set aside as a legal reserve, each Board of Directors of individually subsidiary company shall consider the payment of dividends just in case. 8.4 Liabilities Structure As of December 31, 2003, the total liabilities of the Company and its subsidiaries according to the consolidated financial statements is Baht 85,265 million. The details are as follows:

TATK: Capital Structure

53


TelecomAsia Public Company Limited

Liabilities of the Company on consolidated basis Current liabilities Short-term borrowings Trade account payable Current portion of long-term borrowings Unearned income Accrued expenses Other current liabilities Total current liabilities Non-current liabilities Long-term borrowings Long-term trade account payable Other non-current liabilities Total non-current liabilities Total liabilities

Annual Registration Statements (Report Form 56-1)

(Unit:million Baht) Amount 773 2,434 19,133 276 2,206 2,585 27,407

49,423 7,858 577 57,858 85,265

As of December 31, 2003, the total borrowings including the total long-term trade account payable of the Company and its subsidiaries is Baht 77,187 million consisting of the borrowings and long-term trade account payable that were denominated in Baht currency of Baht 62,453 million; denominated in US Dollar currency of Baht 3,153 million (or USD 79 million); and denominated in Yen currency of Baht 11,581 million (or Yen 31,042 million). Since the debt restructuring on December 22, 1999 until December 31, 2003, the Company has always made repayment of its secured loan on due date. And it had made prepayment to its Secured Creditor by the Company’s excess cash in the amount of approximately Baht 2,000 million to decrease its interest payment obligation and to reduce its foreign currency exposure. In the past, the Company had large amount of US Dollar loan. It has had policy to reduce fluctuation from foreign currency exchange, and has successfully reduced US dollar loan through the following measures:

TATK: Capital Structure

54


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

February 2001

The Company used its excess cash to partially prepay its secured loan in the amount of approximately Baht 532 million.

June 2001

As of June 28, 2001, the Extraordinary Shareholder Meeting No. 1/2001 had a resolution to approve the Company to issue and offer debentures to the public in the amount not exceeding Baht 36,000 million with the term that is not longer than 20 years to prepay the Company’s existing foreign debt.

July 2001

The Company used its excess cash to partially prepay its secured loan in the amount of approximately Baht 368 million.

September 2001

The Company entered into the currency swap transaction with KfW, its major foreign creditor, in the amount of approximately USD 97 million or around Baht 4,483 million.

December 2001

The Company borrowed New Baht Loan in the amount of 5,000 million Baht, and used the proceeds from the new loan to partially prepay its US Dollar loan

March 2002

The Company and its subsidiaries repaid its loan in the amount of approximately Baht 948 million.

July 2002

The Company used its excess cash to partially prepay its secured loan in the amount of approximately Baht 345 million. As of July 31, 2002, the Company entered into several financing agreements with the former Secured Creditors, IFC as the lender of C Loan and the guarantor of the debentures No. 2/2002, and the trustee of the debentures No. 1/2002 to set up a mechanism for collateral sharing between the new Secured Creditors and the former Secured Creditors.

October 2002 TATK: Capital Structure

As of October 15, 2002, the Company issued 2 tranches of 55


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Baht debentures, i.e., the debentures No.1/2002 and the debentures No.2/2002. The aggregate amount of proceeds received from both tranches of the debentures was Baht 18,465 million. And the Company borrowed Baht loan from IFC (C Loan) in the amount of Baht 1,125 million as of October 17, 2002. The Company used the proceeds from the debentures and IFC loan to prepay US Dollar loan in the amount of USD 452 million. The holders of both tranches of the debentures have participated in collateral sharing with the former Secured Creditors after the issuance of the debentures. December 2002

The Company used its internal cash flow to repurchase the deferred payment notes denominated in Yen currency in the amount of approximately Yen 10.1 billion or around Baht 3.6 billion.

February 2003

As of 18 February 2003, the Company issued Baht debentures No. 1/2546 which is the third tranche in the amount of Baht 3,319 million. The company used the proceeds received from the debentures to prepay all remaining US Dollar loan in the amount of USD 78 million.

October 2003

The company signed a loan agreement with a group of local commercial banks and financial institutions in the amount of Baht 21,419 million to refinance Baht loan in equal amount. The new Baht loan bear lower interest rate resulting in reduction of the Company’s interest expense.

When the Company prepaid the secured loan by its excess cash, the proceeds of prepayment was applied to the repayment schedule by Inverse Chronological Order and was pro-rated per the outstanding of each Secured Creditor. After the debenture issuance and the borrowing of the IFC loan in October 2002, it resulted in great reduction of US Dollar loan portion. Although the result from the debenture issuance and the borrowing of the IFC loan did not effect the total balance of the Company’s loan, but it fulfill the Company’s goal to reduce the foreign currency exposure by decreasing the portion of foreign debt at a very substantial level. TATK: Capital Structure

56


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

In addition, the Company continued to reduce its debt by repurchasing of its deferred payment notes denominated in Yen currency (“DPN”) on December 27, 2002. The Company bought back the DPN at a significant discount rate from the note holders who desired to receive the money before due date. The DPN book value in the amount of approximately Yen 10.1 billion (or approximately Baht 3.6 billion) was reduced, and the Company’s internal cash flow in the amount of around Yen 1.9 billion (or around Baht 679 million) was used to repurchase the DPN. After the implementation of all measures as described above to reduce the foreign currency exchange fluctuation, the Company has decreased the portion of the foreign debt from 68.3% at the end of 2000 to 19.1% as of December 31, 2003. Chart : Loan Structure Movement Unit: million Baht 8 0 ,0 0 0

7 6 ,5 2 0 6 ,5 9 1

7 8 ,7 1 0

7 5 ,0 5 1

8 ,2 0 5

7 3 ,6 3 4

7 3 ,3 7 9

7 7 ,1 8 7 1 1 ,5 8 1

1 6 ,0 9 1

1 6 ,2 3 9

6 0 ,0 0 0

1 1 ,3 7 6 3 ,1 5 3 5 ,6 2 4

3 7 ,6 5 7

3 2 ,2 5 3 2 5 ,2 4 2 3 5 ,1 3 4

4 0 ,0 0 0

5 6 ,3 7 9

2 0 ,0 0 0 3 2 ,2 7 1

3 8 ,2 5 2

6 2 ,4 5 3

3 2 ,1 5 2 2 3 ,8 2 6

0

1 998

1 999

Baht loan

2 000

US$ Loan

2 001

2 002

2 003

Yen Loan

Thai Baht Debentures On 28th June 2002, The Extraordinary General Shareholders Meeting No. 1/2544 has approved the issuance and offer to sell various types of debentures in order to repay existing foreign debt. The principal amount of debentures will not exceed Baht 36,000 million and maturity is not exceeding 20 years. Therefore, the Company offered the Thai

TATK: Capital Structure

57


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Baht Debenture on 7th –14th October 2002 in 2 tranches and on 10th – 14th February 2003 in 1 tranche as follows: 1. Early Redeemable Secured Debenture with Periodic Payments No. 1/2545, Due 2008 1) Name of the debentures : Early Redeemable Secured Debenture with Periodic Payments of TelecomAsia Corporation Public Company Limited No. 1/2545, due 2008 2) Type of the debentures

: Early Redeemable Secured Debenture with Periodic Payments in registered form, unsubordinated, with a debentureholders’ representative

3) Amount and value of the debentures

: 11,715,400 units, valuing in the amount of Baht 11,715,400,000 (eleven billion seven hundred fifteen million and four hundred thousand Baht)

4) Par value per unit

: 1,000 Baht (one thousand Baht)

5) Offering price per unit

: 1,000 Baht (one thousand Baht)

6) Issuing Date

: 15 October 2002

7) Maturity Date

: 7 July 2008

8) Status of the debentures

: The debentures are indebtedness of the Company, which rank equally among themselves and have no less favorable status than other current and future secured indebtedness of the Company throughout the duration of the debentures

9) Principal Repayment

: The Company shall repay principal by installment on every interest payment date commencing on 7 January 2003 onwards. The last principal repayment date will occur on the date of redemption.

TATK: Capital Structure

58


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Table of Principal repayment

Installment Date 7th January 2003 7th April 2003 7th July 2003 7th October 2003 7th January 2004 7th April 2004 7th July 2004 7th October 2004 7th January 2005 7th April 2005 7th July 2005 7th October 2005 7th January 2006 7th April 2006 7th July 2006 7th October 2006 7th January 2007 7th April 2007 7th July 2007 7th October 2007 7th January 2008 7th April 2008 7th July 2008

TATK: Capital Structure

(unit : Baht) Principal repayment per unit 5.00 8.00 8.00 10.00 10.00 16.00 16.00 19.00 19.00 19.00 45.00 45.00 55.00 55.00 60.00 60.00 70.00 70.00 70.00 70.00 90.00 90.00 90.00

59


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

10) Interest Rate and Interest Payment

: The Company shall pay interest of the debentures at the rate of 6.1% p.a. during every three (3)-month period on 7 January, 7 April, 7 July and 7 October of each year commencing on 7 January 2003. The amount of interest on the debentures during each interest period shall be calculated on the unpaid principal amount multiplied by the actual number of days elapsed of the relevant debenture interest period, multiplied by the interest rate as specified above and divided by three hundred and sixty five (365) days.

11) Redemption of the debentures

: The redemption of the debentures will be made by paying the last installment of unpaid principal amount including the last interest payment then due in whole to the debentureholders per one (1) unit of the debentures.

12) Repurchase of the debentures

: Subject to the Inter-Creditor Agreement, the Company is entitled to purchase the Debentures No. 1/2545 in the secondary market or anywhere and at any time. When the Company has purchased the Debentures No. 1/2545, indebtedness under the Debentures No. 1/2545 shall be deemed extinguished. The Company must notify the Registrar to immediately terminate the purchased Debentures No. 1/2545.

TATK: Capital Structure

60


TelecomAsia Public Company Limited

13) Early Redemption

14) Collateral

TATK: Capital Structure

Annual Registration Statements (Report Form 56-1)

: Subject to the Inter-Creditor Agreement the Company is entitled to call for an early redemption of the Debentures No. 1/2545 under the following conditions: The Call Option Date is on any Interest Payment Date after the third anniversary of the Issuing Date; The redemption prices (excluding unpaid interest) must be the Unpaid Principal; The Company must pay the Debentureholders a fee at the rate of one half of one percent. (0.50%) of the Unpaid Principal on the Call Option Date; And in relation to a partial early redemption of the Debentures No. 1/2545 the Company shall redeem not less than Twenty Five percent. (25%) of the unredeemed Debentures No. 2/2545 at that time and the redemption of the Debentures No. 1/2545 held by each Debentureholder is pro-rated against the number of Debentures No. 1/2545 held by each of them. : Throughout the duration of the Debentures No. 1/2545, the Company will provide and maintain security for being collateral of the debenture, such as, Conditional Assignment of Concession, Conditional Assignment of Debenture Payment Account and etc. According to the Security Documents and the Debenture Collateral Documents, upon fully repayment of the debt of the Original Secured Creditors, some security would cease to be operative. Except the Assignment of Insurances, in respect of which the Company will cause security contemplated therein to be perfected no later than Sixty (60) days after the Issuing Date, within Seven (7) days of the close of the offering period, unless the Company provides and maintains security for payments, both interest and principal, under the Terms & Conditions, Lead Underwriter or Underwriter (as the case may be) would return the subscription proceeds with accrued interest (if any) to the subscribers who subscribed for purchasing of the debenture through such Lead Underwriter or Underwriter within Fourteen (14) days after the Issuing Date.

61


TelecomAsia Public Company Limited

15) Credit Rating

Annual Registration Statements (Report Form 56-1)

: The Company will cause the Debentures No. 1/2545 to be rated by TRIS Rating Co., Ltd. (or other credit rating companies approved by the SEC) throughout the duration of the Debentures No. 1/2545. The Debentures No. 1/2545 are rated by TRIS Rating Co., Ltd. at “BBB” on January 14, 2004. The rating is subject to change from time to time under credit review performed by TRIS Co., Ltd.

2. Partially Guaranteed Early Redeemable Secured Debenture with Periodic Payments No. 2/2545, Due 2011 1) Name of the debentures : Partially Guaranteed Early Redeemable Secured Debenture with Periodic Payments of TelecomAsia Corporation Public Company Limited No. 2/2545, due 2011 2) Type of the debentures

:

Partially Guaranteed Early Redeemable Secured Debenture with Periodic Payments in registered form, unsubordinated, with a debentureholders’ representative

3) Amount and value of the : 6,750,000 units, valuing in the amount of Baht debentures 6,750,000,000 (six billion seven hundred fifty million Baht) 4) Par value per unit

: 1,000 Baht (one thousand Baht)

5) Offering price per unit

: 1,000 Baht (one thousand Baht)

6) Issuing Date

: 15 October 2002

7) Maturity Date

: 3 February 2011

TATK: Capital Structure

62


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

8) Status of the debentures : The debentures are indebtedness of the Company, which rank equally among themselves and have no less favorable status than other current and future secured indebtedness of the Company throughout the duration of the debentures 9) Principal Repayment

: The Company shall repay principal by installment on every interest payment date commencing on 3 November 2009 onwards. The last principal repayment date will occur on the date of redemption.

Table of Principal repayment

Installment Date November 2009 rd 3 February 2010 3rd May 2010 3rd August 2010 3rd November 2010 3rd February 2011 3rd

TATK: Capital Structure

(unit : Baht) Principal repayment per unit 160.00 160.00 160.00 160.00 180.00 180.00

63


TelecomAsia Public Company Limited

10) Interest Rate and Interest Payment

Annual Registration Statements (Report Form 56-1)

: The Company shall pay interest of the debentures at the rate of MLR p.a. during every three (3)-month period on 3 February, 3 May, 3 August and 3 November of each year commencing on 3 February 2003. The amount of interest on the debentures during each interest period shall be calculated on the unpaid principal amount multiplied by the actual number of days elapsed of the relevant debenture interest period, multiplied by the interest rate as specified above and divided by three hundred and sixty five (365) days. MLR or Minimum Lending Rate means in respect of any debenture interest period, the average of the reference rates quoted by Bangkok Bank Public Company Limited, The Siam Commercial Bank Public Company Limited, Krung Thai Bank Public Company Limited and Thai Farmers Bank Public Company Limited as of the third Thai Business Day before the beginning of the relevant debenture interest period. If on such date there are less than four (4) above captioned banks offering the reference rated for any reason, the calculation of the average interest rate will be based upon the remaining reference rates, as determined in Terms and Conditions.

11) Redemption of the debentures

TATK: Capital Structure

: The redemption of the debentures will be made by paying the last installment of unpaid principal amount including the last interest payment then due in whole to the debentureholders per one (1) unit of the debentures.

64


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

12) Repurchase of the debentures

: Subject to the Inter-Creditor Agreement, the Company is entitled to purchase the Debentures No. 2/2545 in the secondary market or anywhere and at any time. When the Company has purchased the Debentures No. 2/2545, indebtedness under the Debentures No. 2/2545 shall be deemed extinguished. The Company must notify the Registrar to immediately terminate the purchased Debentures No. 2/2545.

13) Early Redemption

: Subject to the Inter-Creditor Agreement the Company is entitled to call for an early redemption of the Debentures No. 2/2545 under the following conditions: The Call Option Date is on any Interest Payment Date after the third anniversary of the Issuing Date; The redemption prices (excluding unpaid interest) must be the Unpaid Principal; The Company must pay the Debentureholders a fee at the rate of one half of one per cent. (0.50%) of the Unpaid Principal on the Call Option Date; And in relation to a partial early redemption of the Debentures No. 2/2545 the Company shall redeem not less than Twenty Five percent. (25%) of the unredeemed Debentures No. 2/2545 at that time and the redemption of the Debentures No. 2/2545 held by each Debentureholder is pro-rated against the number of Debentures No. 2/2545 held by each of them.

14) Collateral

: Throughout the duration of the Debentures No. 2/2545, the Company will provide and maintain security for being collateral of the debenture, such as, Conditional Assignment of Concession, Conditional Assignment of Debenture Payment Account and etc. According to the Security Documents and the Debenture Collateral Documents, upon fully repayment of the debt of the

TATK: Capital Structure

65


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Original Secured Creditors, some security would cease to be operative. In addition, the Debenture No. 2/2545 has been partially guaranteed by International Finance Corporation (“IFC”), who is a guarantor for the payment of principal and interest of the debentures, not exceeding Fifty (50) percent of Debentures Except the Assignment of Insurances, in respect of which the Company will cause security contemplated therein to be perfected no later than Sixty (60) days after the Issuing Date, within Seven (7) days of the close of the offering period, unless the Company provides and maintains security for payments, both interest and principal, under the Terms & Conditions, Lead Underwriter or Underwriter (as the case may be) would return the subscription proceeds with accrued interest (if any) to the subscribers who subscribed for purchasing of the debenture through such Lead Underwriter or Underwriter within Fourteen (14) days after the Issuing Date. 15) Credit Rating

: The Company will cause the Debentures No. 2/2545 to be rated by TRIS Rating Co., Ltd. (or other credit rating companies approved by the SEC) throughout the duration of the Debentures No. 2/2545. The Debentures No. 2/2545 are rated by TRIS Rating Co., Ltd. at “A” on January 14, 2004. The rating is subject to change from time to time under credit review performed by TRIS Co., Ltd.

TATK: Capital Structure

66


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

3. Secured Debenture with Periodic Payments No. 1/2546, Due 2007 1) Name of the debentures : Secured Debenture with Periodic Payments of TelecomAsia Corporation Public Company Limited No. 1/2546, due 2007 2) Type of the debentures

: Secured Debenture with Periodic Payments with the particulars of the holders, have a trustee.

3) Amount and value of the : 3,319,000 units, valuing in the amount of Baht debentures 3,319,000,000 (three billion three hundred and nineteen million Baht) 4) Par value per unit

: 1,000 Baht (one thousand Baht)

5) Offering price per unit

: 1,000 Baht (one thousand Baht)

6) Issuing Date

: 18 February 2003

7) Maturity Date

: 7 October 2007

8) Status of the debentures : The debentures are indebtedness of the Company, which rank equally among themselves and have no less favorable status than other current and future secured indebtedness of the Company throughout the duration of the debentures 9) Principal Repayment

TATK: Capital Structure

: The Company shall repay principal by installment on every interest payment date commencing on 7 January 2005 onwards. The last principal repayment date will occur on the date of redemption.

67


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Table of Principal repayment

Installment Date 7th January 2005 7th April 2005 7th July 2005 7th October 2005 7th January 2006 7th April 2006 7th July 2006 7th October 2006 7th January 2007 7th April 2007 7th July 2007 7th October 2007

(unit : Baht) Principal repayment per unit 12.50 12.50 97.50 97.50 97.50 97.50 97.50 97.50 97.50 97.50 97.50 97.50

10) Interest Rate and Interest Payment

: The Company shall pay interest of the debentures at the rate of fixed at 5.8% during every three (3)-month period on 7 January, 7 April, 7 July and 7 October of each year commencing on 7 April 2003. The amount of interest on the debentures during each interest period shall be calculated on the unpaid principal amount multiplied by the actual number of days elapsed of the relevant debenture interest period, multiplied by the interest rate as specified above and divided by three hundred and sixty five (365) days.

11) Redemption of the debentures

: The redemption of the debentures will be made by paying the last installment of unpaid principal amount including the last interest payment then due in whole to the debentureholders per one (1) unit of the debentures.

TATK: Capital Structure

68


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

12) Repurchase of the debentures

: Subject to the Inter-Creditor Agreement, the Company is entitled to purchase the Debentures No. 1/2546 in the secondary market or anywhere and at any time. When the Company has purchased the Debentures No. 1/2546, indebtedness under the Debentures No. 1/2546 shall be deemed extinguished. The Company must notify the Registrar to immediately terminate the purchased Debentures No. 1/2546.

13) Collateral

: Throughout the duration of the Debentures No. 1/2546, the Company will provide and maintain security for being collateral of the debenture, such as, Conditional Assignment of Concession, Conditional Assignment of Debenture Payment Account and etc. According to the Security Documents and the Debenture Collateral Documents, upon fully repayment of the debt of the Original Secured Creditors, some security would cease to be operative. Within Seven (7) days of the close of the offering period, unless the Company provides and maintains security for payments, both interest and principal, under the Terms & Conditions, Lead Underwriter or Underwriter (as the case may be) would return the subscription proceeds with accrued interest (if any) to the subscribers who subscribed for purchasing of the debenture through such Lead Underwriter or Underwriter within Fourteen (14) days after the Issuing Date.

TATK: Capital Structure

69


TelecomAsia Public Company Limited

14) Credit Rating

Annual Registration Statements (Report Form 56-1)

: The Company will cause the Debentures No. 1/2546 to be rated by TRIS Rating Co., Ltd. (or other credit rating companies approved by the SEC) throughout the duration of the Debentures No. 1/2546. The Debentures No. 1/2546 are rated by TRIS Rating Co., Ltd. at “BBB� on January 14, 2004. The rating is subject to change from time to time under credit review performed by TRIS Co., Ltd.

Secondary Market of Debentures Currently, Debentures of the Company can be traded and invested on Thai Bond Dealing Centre.

TATK: Capital Structure

70


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

9. MANAGEMENT 9.1 Management Structure Management Structure of the Company consists of the Board of Directors, the Committees and the executive officers, details of which are as follows: Board of Directors As of 31st December 2003, the Board of Directors comprises of 20 directors who are (a) Executive Directors (b) Non-Executive Directors including directors representing the creditors, and (c) Independent Directors. The Board of Directors of the Company is as follows: 1. 2.

Mr. Narong Mr. Vitthya

Srisa-an Vejjajiva

3.

Dr. Kosol

Petchsuwan

4.

Mr. Joti

Bhokavanij

5. 6. 7. 8. 9. 10. 11. 12. 13.

Mr. Dhanin Mr. Sumet Dr. Ajva Mr. Chaleo Mr. Athueck Mr. Supachai Mr. Soopakij Mr. Chatchaval Mr. Vichaow

Chearavanont Jiaravanon Taulananda Souvannakitti Asvanund Chearavanont Chearavanont Jiaravanon Rakphongphairoj

14. 15. 16. 17. 18. 19. 20.

Mr. Umroong Mr. Heinrich Mr. Klaus Mr. Claus Mr. Andreas Mr. Harald Dr. Lee G.

Sanphasitvong Heims Tuengeler Stadler Klocke Link Lam

Remark :

Independent Director Independent Director and Chairman of the Audit Committee Independent Director and Member of the Audit Committee Independent Director and Member of the Audit Committee Chairman Vice Chairman Vice Chairman Vice Chairman Vice Chairman and Group General Counsel Director, President and Chief Executive Officer Director Director and Managing Director-Group Investment Director, Managing Director and Chief Operating Officer Director Director Director Director Director Director Director

Additional information related to the Company’s Board of Directors is as follows: a) History of Offence : none b) Debt owed to the Company or its Subsidiaries : none c) Material Connected Transactions : none

TATL: Management

71


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Authority and responsibility of the Board of Directors The Board of Directors is granted the authority and duty to manage the Company in compliance with the objectives and articles of association of the Company and the resolutions of the shareholders meetings. With regard to the management of the Company, the Board of Directors has authority to make any decision related to the Company’s regular operation except for the matter required the approval of the shareholders meeting as specified by law. In addition, the Board of Directors may grant the authorization to one director or more or any other person to perform any acts on its behalf, however, any decision on major operations such as major investment and major procurement of loan, the management team shall propose the said transactions to the Board of Directors for approval. Authorized Directors Mr.Supachai Chearavanont or Mr. Vichaow Rakphongphairoj jointly sign with Mr. Athueck Asvanund or Mr. Soopakij Chearavanont or Mr. Chatchaval Jiaravanon to with the Company’s seal affixed, execute any act, thing or legal action whatsoever on the Company’s behalf. Appointment of Directors The Compensation and Nominating Committee assists the Board of Directors in reviewing and proposing the compensation and nominating directors of the Company prior to proposing to the Company’s shareholders meeting for final approval. With regard to the right of shareholders to appoint directors, each shareholder shall appoint the directors by a majority vote. All Shareholders have the rights to appoint directors. Each shareholder shall have one right to vote per one share and shall appoint one director or more, provided that he cannot divide his votes to any person to any extent. Audit Committee As of 31st December 2003, the Audit Committee of the Company consists of 3 persons as follows:

TATL: Management

72


TelecomAsia Public Company Limited

1. 2. 3.

Mr. Vitthya Dr. Kosol Mr. Joti

Vejjajiva Petchsuwan Bhokavanij

Annual Registration Statements (Report Form 56-1)

Chairman of the Audit Committee Member of the Audit Committee Member of the Audit Committee

The scope of duty and responsibility of the Audit Committee is as follows: 1. To review the Company’s financial reports to ensure accuracy and adequate information for public disclosure; 2. To ensure the appropriateness and effectiveness of internal control system and internal auditing system of the Company; 3. To consider and propose the appointment and remuneration of an external auditor of the Company; 4. To regularly review the practice of the Company to ensure the compliance with the regulations of the Securities and Exchange Act, Rules and Regulations of the Stock Exchange of Thailand and related law and regulations; 5. To review the disclosure of information of the Company to ensure the accuracy and adequacy of said information in case that there is a connected transaction that may lead to a conflict of interest; 6. To prepare the Audit Committee Report on the Corporate Governance with the approval of the Chairman of the Committee appeared therein to be disclosed in the annual report of the Company; and 7. To perform any other act as required by law or as delegated by the Board of Directors. Independent Committee The Independent Committee is responsible for reviewing and monitoring the entering into any connected transactions, which may involve a conflict of interest with the Company. The Committee consists of the following members: 1. 2. 3. 4. 5.

Mr. Narong Mr. Joti Mr. Klaus

Independent Director Independent Director KfW-nominated Director (with the alternate of Mr. Andreas Klocke or Mr. Claus Stadler) Mr. Supachai Chearavanont CP-nominated Director Mr. Athueck Asvanund CP-nominated Director

TATL: Management

Srisa-an Bhokavanij Tuengeler

73


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

In the case of any major shareholder having a conflict of interest, Directors nominated by the said shareholder will abstain from the Independent Committee Meeting. Compensation and Nominating Committee The Compensation and Nominating Committee is responsible for determining the compensation and considering the nomination of the directors of the Company. The committee consists of the following members: 1. 2. 3. 4.

Mr. Dhanin Mr. Heinrich Mr. Soopakij Mr. Umroong

Chearavanont Heims Chearavanont Sanphasitvong

Finance Committee The Finance Committee assists the Company in reviewing and monitoring the financial management of the Company. The committee consists of the following members: 1. 2. 3. 4.

Dr. Ajva Mr. Chaleo Mr. Heinrich Mr. Umroong

Taulananda Souvannakitti Heims (alternates being Mr. Klaus Tuengeler or Mr. Andreas Klocke) Sanphasitvong

Corporate Governance Committee Corporate Governance Committee is responsible for setting policy on Corporate Governance of the Company. The Committee consists of the following members: 1. 2. 3. 4. 5. 6.

Dr. Ajva Taulanada Mr. Vitthya Vejjajiva Mr. Claus Stadler Mr. Athueck Asvanund Mr. Supachai Chearavanont Mr. William E. Harris

TATL: Management

74


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Executive Officers As of 31st December 2003, the executive officers of the Company are as follows: 1.

Mr. Supachai Chearavanont

2.

Mr. Vichaow Rakphongphairoj

3. 4.

Mr. ChatchavalJiaravanon Mr. Athueck Asvanund

5. 6.

Mr. William E. Harris Mr. Chitchai Nantapat

7.

Mr. Adhiruth Thothaveesansuk

8.

Mr. Songtham Phianpattanawit

Director, President and Chief Executive Officer Director, Managing Director and Chief Operating Officer Director and Managing Director-Group Investment Vice Chairman, Group General Counsel and Acting Company Secretary Chief Financial Officer Managing Director Home / Consumer Solution & Highspeed Access Managing Director Office / SME Solution & Wireless Access Managing Director Corporate Solution, Wholesales & Data

Remark: 1.

2.

Executive Officers mean Directors, President or persons with managerial authority who are among the top four ranking individuals in the Company, after the President, and all other persons who occupy a position equivalent to such a top four ranking individual. Additional information related to the Company’s Executive Officers is as follows: a) History of Offence : none b) Debt owed to the Company or its Subsidiaries : none c) Material Connected Transactions : none

Authority and Responsibility of the President The President has the authority to supervise and carry on the Company’s day-to-day business, and in case any matter/ transaction is important, the President will submit said matter/ transaction to the independent directors and/or the relevant Committee (such as the Finance Committee, the Compensation and Nominating Committee or the Independent Committee) and/or the Board of Directors, as the case may be, to approve said matter/ transaction. In addition, the President has no authority to approve any matter/ transaction that he or the person who may have a conflict of interest or any other form of conflict,

TATL: Management

75


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

which the Company or the Company’s subsidiaries have or propose to enter into, with the Company or the Company’s subsidiaries. In such case, such matter/ transaction shall have to be approved by the independent directors and/or the relevant Committee and/or the Board of Directors, as the case may be. 9.2 Remuneration for the Company’s Directors and the Executive Officers (1) Remuneration of the Directors The 24 committee members are remunerated Baht 36.90 million for the Year 2003 (from January to December, which are the meeting allowance. (Remark: During the Year 2003, four directors, Ms. Gabriele Gunia, Mr. Daniel C. Petri, Mr. Stephen G. Parker and Mr. John J. Lack resigned as members of the Board of Directors of the Company. Dr. Lee G. Lam was appointed to be an additional director.) (2) Remuneration of the Executive Officers The 8 executives at the top level received remuneration totaling Baht 86.23 million for the Year 2003 (from January to December), which included Baht 76.86 million for salary, Baht 5.72 million for bonus and Baht 3.65 million for provident fund. (3) Other Compensation (3.1) Employee Stock Option Plan 2003 (3.2) Employee Stock Option Plan 2002 (3.3) Employee Stock Option Plan 2000

TATL: Management

76


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

(3.1) Employee Stock Option Plan 2003 The Annual General Shareholders Meeting of the Company for the year 2003 held on April 11, 2003 has approved the issuance and the offer of non-transferable warrants to purchase the Company’s ordinary shares to certain Directors and employees at executive level totaling not exceeding 35 persons. Summary details are as follows: Total Outstanding Number of Warrants issued

: 19,862,729 units

Date of Issuance

: 17th June 2003

Maturity

: 5 years from the issuance date

Date of Expiry

: 16th June 2008

Exercise Period

: Each Warrant Holder received 3 separate warrant certificates. Each certificate represented 1/3 of the whole amount of warrants allotted and shall be exercisable for subscribing ordinary shares as follow: The 1st Certificate: Warrant Holders shall be starting exercising from 17th June 2004 until its expiration. The 2nd Certificate: Warrant Holders shall be starting exercising from 17th June 2005 until its expiration. The 3rd Certificate: Warrant Holders shall be starting exercising from 17th June 2006 until its expiration.

Exercise Ratio

TATL: Management

: One unit of warrants entitles to purchase one ordinary share at Baht 5.20

77


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

(3.2) Employee Stock Option Plan 2002 The Annual General Shareholders Meeting of the Company for the year 2002 held on April 12, 2002 has approved the issuance and the offer of non-transferable warrants to purchase the Company’s ordinary shares to certain Directors and employees at executive level totaling not exceeding 35 persons. Summary details are as follows: Total Outstanding : Number of Warrants issued

: 37,131,597 units

Date of Issuance

: 14th June 2002

Maturity:

: 5 years from the issuance date

Date of Expiry

: 13th June 2007

Exercise Period:

: Each Warrant Holder received 3 separate warrant certificates. Each certificate represented 1/3 of the whole amount of warrants allotted and shall be exercisable for subscribing ordinary shares as follow: The 1st Certificate: Warrant Holders shall be starting exercising from 14th June 2003 until its expiration. The 2nd Certificate: Warrant Holders shall be starting exercising from 14th June 2004 until its expiration. rd The 3 Certificate: Warrant Holders shall be starting exercising from 14th June 2005 until its expiration.

Exercise Ratio:

TATL: Management

: One unit of warrants entitles to purchase one ordinary share at Baht 10.60

78


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

(3.3) Employee Stock Option Plan 2000 The Annual General Shareholders Meeting of the Company for the year 2000 held on April 27, 2000 has approved the issuance and offer of non-transferable warrants to purchase the Company’s ordinary shares to certain Directors and employees at executive level totaling not exceeding 35 persons. Summary details are as follows: Total Outstanding Number of Warrants issued

: 36,995,000 units

Date of Issuance

: 9th June 2000

Maturity

: 10 years from the issuance date

Date of Expiry

: 9th June 2010

Exercise Period

: (a) Warrant Type 1: Each Warrant Holder received 3 separate warrant certificates. Each certificate represented 1/3 of the whole amount of warrants allotted and is exercisable for subscribing ordinary shares starting from June 30, 2000, 2001 and 2002 respectively. (b) Warrant Type 2: Each Warrant Holder received 3 separate warrant certificates. Each certificate represented 1/3 of the whole amount of warrants allotted and is exercisable for subscribing ordinary shares starting from December 31, 2000, 2001 and 2002 respectively.

Exercise Ratio

TATL: Management

: One unit of warrants entitles to purchase one ordinary share at Baht 10.60

79


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Details of Warrant-holding under ESOP Plan

Name

Warrants under ESOP 2003 No. of % of warrants project

Warrants under ESOP 2002 No. of % of warrants project

Warrants under ESOP 2000 No. of % of warrants project

1. Dr. Ajva

Taulananda

-

-

-

-

2,240,000

6.06

2. Mr. Soopakij

Chearavanont

-

-

-

-

4,130,000

11.16

3. Mr. Supachai

Chearavanont

3,696,402

18.61

7,058,824

19.01

6,510,000

17.60

4. Mr. Vichaow

Rakphongphairoj

1,617,176

8.14

3,088,235

8.32

2,800,000

7.57

5. Mr. Chatchaval

Jiaravanon

1,940,611

9.77

3,705,882

9.98

4,130,000

11.16

6. Mr. Athueck

Asvanund

2,021,470

10.18

3,860,294

10.40

5,320,000

14.38

7. Mr. William

E. Harris

1,297,838

6.53

3,000,000

8.08

945,000

2.55

8. Mr. Adhiruth

Thothaveesansuk

850,404

4.28

1,503,662

4.05

-

-

9.3 Corporate Governance Compliance Report 2003 Good corporate governance has long been an integral part of the Company’s business philosophy. Over the years, the Company has progressively increased efforts to share information and raise transparency about the TelecomAsia Group. Now in its fifth year, this annual corporate governance report has become a tradition of which the Board members and every employee of the Company can be proud. 1. Policy on Corporate Governance. [Principle 1] In 2003, the Company accelerated its course towards responsible and value-oriented corporate management. Executives participated actively in programs led by international leaders in value-based management. The principles instilled through these programs are now being sewn into the fabric of the way business is conducted within the TelecomAsia Group. Already in its second year of implementation, the Company’s Corporate Governance Guidelines (the “Guidelines”) was developed by a working group comprised of members TATL: Management

80


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

of the Board and executive management. It is based on internationally recognized codes of best practice. The Guidelines cover: À DUTIES AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS À COMPOSITION AND SELECTION OF THE BOARD OF DIRECTORS À BOARD STRUCTURE AND PROCEDURES À BOARD LEADERSHIP À BOARD RELATIONSHIP TO MANAGEMENT À MEETING PROCEDURES À COMMITTEES OF THE BOARD OF DIRECTORS À GENERAL COMMITTEE MATTERS À POLICY REGARDING RELATED PARTY TRANSACTIONS AND CODE OF CONDUCT 2. Rights and Equitable Treatment of Shareholders and of Various Groups of Stakeholders. [Principles 2, 3, 4, 7, 11 and 15] As with previous years, the majority of the common stock of the Company continues to be held by the ten largest common shareholders. Nevertheless, the Board and the Company recognize that, being a publicly listed company, the shareholder base remains numerous and diverse. In respect of this diversity, the Company is committed to fostering an open dialogue with the financial community and ensuring fair and equal treatment of all shareholders. With respect to financial information, the Company has raised transparency and enabled comparability with major competitors by preparing financial statements in accordance with the International Accounting Standards (IAS). Great importance is also placed on making all material information available to all interested parties at the same time. The financial community is kept informed about major financial events through press releases and quarterly bulletins and on the corporate website. The Investor Relations department strives to publish all key financial information in English and Thai, and make such information accessible to all via the Internet. In addition to detailed information about the TelecomAsia Group and corporate governance, such as the Guidelines, Board Committee Charters and the Insider Trading Policy & Internal Controls, the website also offers regulatory filings, reports, press releases, webcasts, presentations and transcripts of General Meetings, analyst conferences and other events of interest to investors. TATL: Management

81


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

These are some of the building blocks for fair and equitable treatment of the Company’s shareholders: À allocating not less than four (4) Board seats to independent persons; À holding all shareholder meetings, there having been one general and one extraordinary in 2003, within Bangkok; À providing written proxy materials to shareholders sufficiently prior to each meeting to enable careful consideration of the agenda matters; À allowing shareholders or their proxy an opportunity to speak and ask questions of Directors and management at shareholder meetings; À scheduling all Board of Directors meetings at the final Board meeting of the prior year and providing written notice of every meeting in accordance with all applicable rules and regulations; À posting material financial, management and operational information, including information required by law, on the Company’s publicly accessible website; À chartering the Independent Committee to add an additional tier of scrutiny to matters that may give rise to conflicts of interest or favor any particular interest group; and À utilizing independent advisors to give opinions and provide expertise on matters of material concern. In November 2003 the Company was recognized for its fairness and transparency efforts, having received the Disclosure Report Award 2003 for Excellence in Information Disclosure from the Securities and Exchange Commission of Thailand. The Company’s employees, customers, suppliers and other vendors, creditors and competitors, as well as the government and the local community have always been recognized as key stakeholders in the Company. Last year represented an important milestone for the Company when the Board approved and the Company implemented a Code of Conduct. The Code of Conduct is a blueprint by which to instill appropriate regard for the interests of all stakeholders of the Company. The Code of Conduct is a moral guideline for the Company’s employees, encompassing both business and personal ethics within the workplace. The Company has always been committed to enriching the well being of Thai society. In addition to increasing quality of life through communications, the Company endeavors to make direct social contributions to the communities of Thailand. Education and cultureoriented programs, such as the following, have life-long effects on youths who participate in the programs. TelecomAsia's Nature Classroom, TelecomAsia's Arts and Culture TATL: Management

82


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Classroom, and TelecomAsia's Science Classroom are programs which aim to foster selfimprovement and are designed to help students gain knowledge and insight from the classrooms, adding valuable and enriching experiences to their lives. Pirab Noi invites students studying mass communications in Thailand's universities to participate in the production of high quality content, while also promoting responsibility and ethics in the area of communications/journalism. Further information about community projects including the following can be found at the Social Contributions page of the Company’s website. 3. Leadership and Vision. [Principles 5, 8, 9 and 10] Although global events made travel a challenge for many directors, four Board meetings were convened during 2003 and each standing committee met regularly in order to attend to business at hand. Attendance at the Board meetings is reflected in the accompanying table. Directors 1. Mr. Narong 2. Mr. Vitthya 3. Dr. Kosol 4. Mr. Joti 5. Mr. Dhanin 6. Mr. Sumet 7. Dr. Ajva 8. Mr. Chaleo 9. Mr. Athueck 10. Mr. Supachai 11. Mr. Soopakij 12. Mr. Chatchaval 13. Mr. Vichaow 14. Mr. Umroong 15. Mr. Heinrich 16. Mr. Klaus 17. Mr. Claus 18. Mr. Andreas 19. Mr. Harald 20. Dr. Lee G.

Srisa-an Vejjajiva Petchsuwan Bhokavanij Chearavanont Jiaravanon Taulananda Souvannakitti Asvanund Chearavanont Chearavanont Jiaravanon Rakphongphairoj Sanphasitvong Heims Tuengeler Stadler Klocke Link Lam

Attendance / Number of Meetings (times) 4/4 4/4 4/4 4/4 2/4 0/4 * 4/4 4/4 4/4 4/4 1/4 3/4 3/4 4/4 3/4 3/4 3/4 4/4 4/4 2/2 **

* Overseas Business ** Be appointed on 24th April 2003

TATL: Management

83


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

The Company has always sought to ensure that there is an appropriate number of directors to fairly represent each interest group, whether the group consists of large or minority shareholders, of creditors or of employees. The Board is composed of 20 members who are diverse in their professional background and nationalities. Selection is based upon experience, wisdom, integrity and an understanding of telecommunications technologies and the industry as a whole. Non-executive directors remain a majority of the Board, keeping the balance of power with non-executives and ensuring credible oversight of management. The Chairman of the Board is a non-executive director. Compensation of top executives and the Board is recommended by the Compensation and Nominating Committee (which utilizes the services of an independent advisor in performing this function) and approved by the entire Board. Remuneration consists of a fixed salary and, when deemed appropriate, a variable component. The variable component is linked to individual and corporate performance. The Company’s shareholders have approved the remuneration presently paid to Board members. Key members of executive management have also been provided, with approval of the Company’s shareholders given at the 2000, 2002 and 2003 Annual General Shareholders Meetings, stock options as a key component of their compensation in order to link their compensation to the performance of the Company and to establish a long term performance incentive. In 2003 Hewitt Associates, a consulting firm specializing in human capital management, completed its mandate to assess the Company’s remuneration principles and policies on executive compensation, particularly within Thailand’s telecommunications industry. The Hewitt Associates assessment confirmed that the structure of the Company’s remuneration plan is both solidly grounded and appropriate for the present market. 4. Risk Management and Oversight. [Principles 12, 13, 14 and 15] Risk is managed at both the Board and the management levels, in several complementary ways. The Company keeps an open working dialogue with Marsh UK Ltd., which is the insurance advisor to the Company’s secured creditors. In addition, each year the Company sits with its insurance broker to develop and evaluate a comprehensive and secure insurance package. In the fourth quarter of 2003 the Company selected two of the top global insurance brokers to competitively design a secure and a cost-effective insurance package for the Company and to market the same to top regional and international insurance companies. TATL: Management

84


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

The Board has four very active standing committees, which bear much of the responsibility for risk management and oversight: (a) the Independent Audit Committee; (b) the Finance Committee; (c) the Independent Committee; and (d) the Compensation and Nominating Committee. Beginning in 2002 and continuing into 2003 the Independent Audit Committee utilized the expertise of PricewaterhouseCoopers Risk Management Services Limited to increase the effectiveness of the internal audit function of the Company and to improve internal controls throughout the Company. Each committee regularly provided periodic detailed reports on its activities to the entire Board, within the scope of the charter, which specifies its role and responsibilities. The addition of several newly hired senior executives to the Group Management Committee (GMC) brought valuable new perspectives to this body which consists of the Company’s most senior executive management, the Chief Financial Officer, the Internal Audit Department, and the Group General Counsel. The GMC is a weekly forum where usually tough questions are asked and where major projects are thoroughly vetted. Management’s activities are regularly reported to the Board by the President and, if suitably material, described in the Management’s Discussion and Analysis included in the latter part of this Annual Report. At all times, Board members have direct access to members of executive management to discuss any business-related matter. 5. Conflicts of Interests. [Principles 1, 6 and 7] The Board, management and employees are reminded regularly to avoid situations , which may involve a conflict of interest. In addition to government regulations, the Guidelines and the Code of Conduct address situations when there may be a conflict of interest and are resources for resolving such conflicts of interest. Of course, the Independent Committee retains its oversight responsibility over any Board matter involving a related party transaction or a corporate opportunity, as well as all matters which are covered by the Stock Exchange of Thailand’s Rules and Procedures and Disclosure of Connected Transactions of Listed Companies. The Company has its own complementary standards for transactions with related entities, which are stated in the Policy Regarding Related Party Transactions. Situations such as trading on insider information and having a personal relationship in matters involving the Company are explained and explored in detail in the Code of Conduct that every employee is required to read and to acknowledge. TATL: Management

85


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

9.4 Insider Trading Policy The Company is currently in compliance with applicable laws to monitor and prevent the personal use of confidential information of the Company by its management, including the use of said information for the purpose of insider trading. Material information which has not yet been disclosed will be kept confidential but will be disclosed only to the relevant senior management of the Company. The relevant senior management of the Company who shall access or receive said information are required to report their trading of shares in the Company pursuant to the Regulations of the Office of Securities and Exchange Commission Regarding Rules, Conditions, and Procedures Governing the Preparation and Disclosure of Reports on Securities Holdings, in order to prevent insider trading using internal information, and to ensure that the trading of shares by “insiders� of the Company is transparent. In addition, the Company has been carrying on the comparative study of the insider trading policies of various foreign institutions to be applied as a guideline to enhance transparency and boost the confidence in the Company amongst the analyst and investor community. 9.5 Personnel As of 31st December 2003, the total number of employees is as follows:

Work Group and Classification Management Service Area & Network Operation Marketing & Sales Information Technology Customer Services Finance & Accounting Supporting Total Source : the Company

TATL: Management

No. of Employee 63 2,243 395 361 700 218 259 4,239

86


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Remuneration for the Company’s Employees Remuneration In 2003, the total remuneration for employees was approximately Baht 1,934 million which consists of wages, salaries, bonus, overtime compensation, commission, provident fund and others. (please see details in the note 26 to the financial statements) Other Compensation & Benefits - Health Plans and Employee Welfare  In-house clinic  Annual Medical Check-up  New Employees’ Medical Check-up  Group Health Insurance  Group Accident Insurance  Group life Insurance - In case of death:Baht 30,000. - / Person  Social Security Fund - Each of the Company and employees contributes 3% of monthly salary (If any employee’s salary is more than Baht 15,000 a month, it was calculated only Baht 15,000 as the basic of funding). Said employee will gain special benefits from the Fund to have medical treatment at designated hospitals. -

Paid Annual Leave

In the case that the employee is unable to take annual leave, annual leave can be accumulated to the subsequent year subject to the approval of an authorized superior. Â Employees at the level of Vice President and upwards can take annual leave for 15 days and can accumulate remaining annual leave to the subsequent year, but can carry a balance of no more than 30 days. If the accumulated

TATL: Management

87


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

annual leave balance exceeds 30 days, the Company will compensate for the excess.  Employees at the level lower than Vice President can take annual leave for 10 days and can accumulate remaining annual leave to the subsequent year, but can carry a balance of no more than 20 days. If the accumulated annual leave balance exceeds 20 days, the company will compensate for the excess. - Compensation  Monthly Salary  Annual Performance Pay: between 0-4 times of monthly salary, subject to the Company’s performance and financial status.  Retirement: the employee must be at the age of 60 years or early retirement by agreement of company and employee, severance pay will be paid accord to the labor law.

Employee Training and Development Employee Training and Development Policy To encourage all employees to develop their knowledge, skills and attitude to be able to perform their jobs effectively and to be more competent for career advancement, which assists the Company in achieving its corporate strategy and goals. At present, the Company provides employees with various training and development programs, such as Core Competency Program, Functional Competency Program, TA Core Business Program, etc.

TATL: Management

88


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

10. INTERNAL CONTROLS After an assessment of the Company’s internal controls with all the Audit Committee, the Board of Directors Meeting no. 1/2547 held on 27th February 2004, which all 4 independent directors attended the meeting, has an opinion that the Company’s internal controls are adequate and suitable. Moreover, the external auditor has an opinion that it did not encounter any matter involving internal controls and its operation which are considered to be material weaknesses that could have a material effect on the financial statements. The Board also emphasized the development of the Company’s Corporate Governance in order to help improve the internal controls within the Company on a continuing basis.

TATM: Internal Controls

89


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

11. CONNECTED TRANSACTIONS During 2003, the Group carried out the transactions with subsidiaries, associates, joint ventures and related companies as disclosed in the Note 4, Note 9, Note 12, Note 17, Note 22 and Note 31 to financial statements for year ended 31st December 2003. Related parties of the Company and subsidiaries were relate transaction with associate and related companies as follows: Details of transactions 1. Sales of goods 1.1 Asia Multimedia Co., Ltd. (AM) Sales of goods to Asia Infonet Co., Ltd. (AI)

1.2 Asia Multimedia Co., Ltd. (AM) Sales of RG accessories to UBC Cable Network Public Company Limited (UBC CABLE)

2003 (Baht'000)

Rationale and necessity

21 The Company indirectly holds 90.45% in AM’s equity interest and 65.00% in AI's equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont and Mr. Chatchaval Jiaravanon.

The transactions arosed in ordinary course of business that AM proposed to the third party.

17 UBC directly holds 98.62% in UBC CABLE’s equity interest. The Company indirectly holds 40.96% in UBC's equity interest and 90.45% in AM's equity interest. These companies are related through directorships, i.e. Mr. Soopakij Chearavanont, Mr. Supachai Chearavanont, Mr. Chatchaval Jiaravanon, Mr. Athueck Asvanund and Mr. Vichaow Rakphongphairoj.

The transactions arosed in ordinary course of business that AM proposed to the third party.

1.3 Asia Wireless Communication Co., Ltd. (AWC) Sales of goods and PCT accessories 2,044 to Charoen Pokphand Group of companies (CPG)

TATN: Connected Transactions

Relationship

CPG is a major shareholder of the Company. The Company indirectly holds 99.99% in AWC's equity interest. These companies are related through directorships.

The transactions arosed in ordinary course of business that AWC proposed to the third party.

90


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

2003 Relationship (Baht'000) 1.4 Asia Wireless Communication Co., Ltd. (AWC) Sales of goods and PCT accessories 14 The Company indirectly holds 99.99% in to AWC’s equity interest and 65.00% in AI’s Asia Infonet Co., Ltd. (AI) equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont and Mr. Chatchaval Jiaravanon. 1.5 Asia Wireless Communication Co., Ltd. (AWC) Sales of goods and PCT accessories 112 BITCO is a cellular telephone operator to which the Company directly holds Bangkok Inter Teletech Group of 43.86% of equity interest and indirectly companies (BITCO) holds 99.99% in AWC's equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont and Mr. Athueck Asvanund. 1.6 Wire & Wireless Co., Ltd. (WW) Sales of goods to 1,014 CPG is a major shareholder of the Charoen Pokphand Group of Company. The Company indirectly holds companies (CPG) 87.50% in WW’s equity interest. These companies are related through directorships. 1.7 Wire & Wireless Co., Ltd. (WW) Sales of goods and PCT accessories 33 The Company indirectly holds 87.50% in to WW’s equity interest and 65.00% in AI's Asia Infonet Co., Ltd. (AI) equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont, Mr. Chatchaval Jiaravanon and Mr. William Edward Harris. 1.8 Wire & Wireless Co., Ltd. (WW) Sales of telecommunication 3,388 BITCO is a cellular telephone operator equipment to Bangkok Inter which the Company directly holds Teletech Group of companies 43.86% of equity interest and indirectly (BITCO) holds 87.50% in WW’s equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont and Mr. Athueck Asvanund. Details of transactions

TATN: Connected Transactions

Rationale and necessity The transactions arosed in ordinary course of business that AWC proposed to the third party.

The transactions arosed in ordinary course of business that AWC proposed to the third party.

The transactions arosed in ordinary course of business that WW proposed to the third party. The transactions arosed in ordinary course of business that WW proposed to the third party.

The transactions arosed in ordinary course of business that WW proposed to the third party.

91


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

2003 Relationship (Baht'000) 1.9 Bangkok Inter Teletech Group of companies (BITCO) Sales of mobile handset to 4,388 CPG is a major shareholder of the Charoen Pokphand Group of Company. BITCO is a cellular telephone companies (CPG) operator which the Company directly holds 43.86% of equity interest. These companies are related through directorships. 1.10 Company Sales of goods to 13 The Company indirectly holds 65.00% in Asia Infonet Co., Ltd.(AI) AI's equity interest and related through directorships, i.e. Mr. Supakij Chearavanont, Mr. Supachai Chearavanont, Mr. Chatchaval Jiaravanon and Mr. Ajva Taulananda. Total Sales of goods 11,044 2. Sales of services 2.1 Asia Infonet Co., Ltd. (AI) Internet services to 34,999 CPG is a major shareholder of the Charoen Pokphand Group of Company. The Company indirectly holds companies (CPG) 65.00% in AI's equity interest. These companies are related through directorships. 2.2 Asia Infonet Co., Ltd. (AI) Internet services to 113 UBC is a pay television operator which the United Broadcasting Corporation Company indirectly holds 40.96% of equity Public Company Limited (UBC) interest and indirectly holds 65.00% in AI's equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont and Mr. Chatchaval Jiaravanon. 2.3 Asia Infonet Co., Ltd. (AI) Internet services to 603 BITCO is a cellular telephone operator Bangkok Inter Teletech Group of which the Company directly holds 43.86% companies (BITCO) of equity interest and indirectly holds 65.00% in AI's equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont and Mr. Soopakij Chearavanont. Details of transactions

TATN: Connected Transactions

Rationale and necessity The transactions arosed in ordinary course of business that BITCO proposed to the third party.

The transactions arosed in ordinary course of business that the Company proposed to the third party.

The transactions arosed in ordinary course of business that AI proposed to the third party. The transactions arosed in ordinary course of business that AI proposed to the third party.

The transactions arosed in ordinary course of business that AI proposed to the third party.

92


TelecomAsia Public Company Limited

Details of transactions 2.4 Asia Multimedia Co., Ltd. (AM) Providing multimedia network services to Satellite Services Co., Ltd. (SS)

2.5 Asia Multimedia Co., Ltd. (AM) Providing multimedia network services and dropwire installation services to UBC Cable Network Public Company Limited (UBC CABLE)

2.6 Asia Multimedia Co., Ltd. (AM) Commission charges to United Broadcasting Corporation Public Company Limited (UBC)

2.7 Asia Multimedia Co., Ltd. (AM) Asset rental and multimedia network services providing to Asia Infonet Co., Ltd. (AI)

TATN: Connected Transactions

Annual Registration Statements (Report Form 56-1)

2003 Relationship (Baht'000) 3,321 UBC directly holds 97.17% in SS’s equity interest. The Company indirectly holds 40.96% in UBC's equity interest and 90.45% in AM’s equity interest. These companies are related through directorships, i.e. Mr. Soopakij Chearavanont, Mr. Supachai Chearavanont, Mr. Chatchaval Jiaravanon, Mr. Athueck Asvanund and Mr. Vichaow Rakphongphairoj. 841,291 Same as 1.2

365 UBC is a pay television operator which the Company indirectly holds 40.96% of equity interest and 90.45% in AM’s equity interest. These companies are related through directorships, i.e. Mr. Soopakij Chearavanont, Mr. Supachai Chearavanont, Mr. Chatchaval Jiaravanon, Mr. Athueck Asvanund and Mr. Vichaow Rakphongphairoj. 31,520 Same as 1.1

Rationale and necessity The transactions arosed in ordinary course of business that AM proposed to the third party.

AM is the owner of multimedia network. UBC CABLE and AM have entered into the agreement to rent the network and providing dropwire installation services. The transactions arosed in ordinary course of business that AM proposed to the third party. AM is the representative to acquire subscriber for UBC. AM obtain the reward at the ordinary course of business that UBC gives to the third party.

The transactions arosed in ordinary course of business that AM proposed to the third party.

93


TelecomAsia Public Company Limited

Details of transactions 2.8 Asia Multimedia Co., Ltd. (AM) Service data network to Bangkok Inter Teletech Group of companies (BITCO)

Annual Registration Statements (Report Form 56-1)

2003 Relationship (Baht'000) 39,362 BITCO is a cellular telephone operator which the Company directly holds 43.86% of equity interest and indirectly holds 90.45% in AM's equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont and Mr. Athueck Asvanund.

2.9 Asia Multimedia Co., Ltd. (AM) Digital Data Network services to Charoen Pokphand Group of companies (CPG)

17,751 CPG is a major shareholder of the Company. The Company indirectly holds 90.45% in AM's equity interest. These companies are related through directorships. 2.10 Asia Wireless Communication Co., Ltd. (AWC) Repairment of PCT service to 825 Same as 1.3 Charoen Pokphand Group of companies (CPG)

2.11 Asia Wireless Communication Co., Ltd. (AWC) Repairment of PCT service to 216 Same as 1.4 Asia Infonet Co., Ltd. (AI)

2.12 Asianet Corporation Ltd. (ANC) Internet service and leased line to Charoen Pokphand Group of companies (CPG)

2.13 Asianet Corporation Ltd. (ANC) Audiotext and internet services to United Broadcasting Corporation Public Company Limited (UBC)

TATN: Connected Transactions

Rationale and necessity The transactions arosed in ordinary course of business that AM proposed to the third party.

The transactions arosed in ordinary course of business that AM proposed to the third party. The transactions arosed in ordinary course of business that AWC proposed to the third party. The transactions arosed in ordinary course of business that AWC proposed to the third party.

3,121 CPG is a major shareholder of the Company. The Company directly holds 99.99% in ANC’s equity interest. These companies are related through directorships.

The transactions arosed in ordinary course of business at market price.

1,413 UBC is a pay television operator which the Company indirectly holds 40.96% of equity interest. The Company directly holds 99.99% in ANC’s equity interest. These companies are related through directorships, i.e. Mr. Soopakij Chearavanont and Mr. Supachai Chearavanont.

The transactions arosed in ordinary course of business that ANC proposed to the third party.

94


TelecomAsia Public Company Limited

Details of transactions 2.14 Asianet Corporation Ltd. (ANC) Audiotext services and internet dealer to Asia Infonet Co., Ltd. (AI)

2.15 Asianet Corporation Ltd. (ANC) Audiotext services and internet services to Bangkok Inter Teletech Group of companies (BITCO)

2.16 Nilubon Co., Ltd. (NB) Office rental and related services to Charoen Pokphand Group of companies (CPG)

2.17 Nilubon Co., Ltd. (NB) Office rental and related services to UBC Cable Network Public Company Limited (UBC CABLE)

2.18 Nilubon Co., Ltd. (NB) Office rental and related services to Asia Infonet Co., Ltd. (AI)

TATN: Connected Transactions

Annual Registration Statements (Report Form 56-1)

2003 (Baht'000)

Relationship

Rationale and necessity

487 The Company directly holds 99.99% in ANC's equity interest and indirectly holds 65.00% in AI’s equity interest. These companies are related through directorships, i.e. Mr. Soopakij Chearavanont, Mr. Supachai Chearavanont, Mr. Chatchaval Jiaravanon and Mr. Ajva Taulananda.

The transactions arosed in ordinary course of business that ANC proposed to the third party.

4,044 BITCO is a cellular telephone operator which the Company directly holds 43.86% of equity interest and 99.99% in ANC's equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont and Mr. Soopakij Chearavanont.

The transactions arosed in ordinary course of business that ANC proposed to the third party.

10,973 CPG is a major shareholder of the Company. The Company indirectly holds 99.99% in NB's equity interest. These companies are related through directorships.

The transactions arosed in ordinary course of business. The maturity are normally in 3 years and are allowed to be renewed.

531 UBC directly holds 98.62% in UBC CABLE’s equity interest. The Company indirectly holds 40.96% in UBC's equity interest and 99.99% in NB's equity interest. These companies are related through directorships, i.e. Mr. Chatchaval Jiaravanon and Mr. Soopakij Chearavanont.

The transactions arosed in ordinary course of business. The maturity are normally in 3 years and are allowed to be renewed.

780 The Company indirectly holds 99.99% in NB’s equity interest and 65.00% in AI’s equity interest. These companies are related through directorships, i.e. Mr. Chatchaval Jiaravanon, Mr. Soopakij Chearavanont and Mr. Ajva Taulananda.

The transactions arosed in ordinary course of business. The maturity are normally in one year and are allowed to be renewed

95


TelecomAsia Public Company Limited

Details of transactions 2.19 Nilubon Co., Ltd. (NB) Office rental and related services to Bangkok Inter Teletech Group of companies (BITCO)

2.20 Nilubon Co., Ltd. (NB) Office rental and related services to True Internet Data Center Co., Ltd. (TRUE IDC)

2.21 W 7 Rental Services Ltd. (W7) Car rental and related services to Charoen Pokphand Group of companies (CPG)

2.22 W 7 Rental Services Ltd. (W7) Car and office equipment rental services to Asia Infonet Co., Ltd. (AI)

2.23 W 7 Rental Services Ltd. (W7) Car rental and related services to Bangkok Inter Teletech Group of companies (BITCO)

TATN: Connected Transactions

Annual Registration Statements (Report Form 56-1)

2003 (Baht'000)

Relationship

Rationale and necessity

3,818 BITCO is a cellular telephone operator which the Company directly holds 43.86% of equity interest. The Company indirectly holds 99.99% in NB's equity interest. These companies are related through directorships, i.e. Mr. Soopakij Chearavanont and Mr. Kachorn Chiaravanont.

The transactions arosed in ordinary course of business and at market prices.

937 The Company indirectly holds 99.99% in NB’s equity interest and 70.00% in TRUE IDC’s equity interest. These companies are related through directorship, i.e. Mr. Chatchaval Jiaravanon.

The transactions arosed in ordinary course of business and at market prices.

430,261 CPG is a major shareholder of the Company. The Company indirectly holds 99.99% in W7's equity interest. These companies are related through directorships.

The transactions arosed in ordinary course of business and at market prices. The maturity are normally in 3 years basis.

101 The Company indirectly holds 99.99% in W7’s equity interest and 65.00% in AI’s equity interest. These companies are related through directorships, i.e. Mr. Chatchaval Jiaravanon, Mr. Soopakij Chearavanont and Mr. Ajva Taulananda.

The transactions arosed in ordinary course of business and at market prices. The maturity are normally in 3 years basis.

2,211 BITCO is a cellular telephone operator which the Company directly holds 43.86% of equity interest. The Company indirectly holds 99.99% in W7's equity interest. These companies are related through directorships, i.e. Mr. Soopakij Chearavanont and Mr. Kachorn Chiaravanont.

The transactions arosed in ordinary course of business and at market prices. The maturity are normally in 3 years basis.

96


TelecomAsia Public Company Limited

Details of transactions 2.24 W 7 Rental Services Ltd. (W7) Car rental and related services to UBC Cable Network Public Company Limited (UBC CABLE)

2.25 Wire & Wireless Co., Ltd. (WW) Installation of telephone systems to Charoen Pokphand Group of companies (CPG)

2.26 Wire & Wireless Co., Ltd. (WW) Discount for Telecommunication installation in the previous year to Asia Infonet Co., Ltd. (AI) 2.27 Wire & Wireless Co., Ltd. (WW) Network installation to Bangkok Inter Teletech Group of companies (BITCO)

2.28 Wire & Wireless Co., Ltd. (WW) Network installation to True Internet Data Center Co., Ltd. (TRUE IDC)

Annual Registration Statements (Report Form 56-1)

2003 Relationship (Baht'000) 12,938 UBC directly holds 98.62% in UBC CABLE’s equity interest. The Company indirectly holds 40.96% in UBC's equity interest and 99.99% in W7's equity interest. These companies are related through directorships, i.e. Mr. Soopakij Chearavanont and Mr. Chatchaval Jiaravanon. 625 Same as 1.6

(127) Same as 1.7

189,604 Same as 1.8

13,804 The Company indirectly holds 87.50% in WW’s equity interest and 70.00% in TRUE IDC’s equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont, Mr. Chatchaval Jiaravanon and Mr. William Edward Harris. 2.29 Bangkok Inter Teletech Group of companies (BITCO) Scratch card to 661,609 Same as 1.9 Charoen Pokphand Group of companies (CPG)

TATN: Connected Transactions

Rationale and necessity The transactions arosed in ordinary course of business that W7 proposed to the third party.

The transactions arosed in ordinary course of business that WW proposed to the third party. The transactions arosed in ordinary course of business. The transactions arosed in ordinary course of business that WW proposed to the third party. The transactions arosed in ordinary course of business that WW proposed to the third party.

The transactions arosed in ordinary course of business that BITCO proposed to the third party.

97


TelecomAsia Public Company Limited

Details of transactions 2.30 Company Consulting service – SAP to UBC Cable Network Public Company Limited (UBC CABLE)

2.31 Company Coin distribution to Charoen Pokphand Group of companies (CPG)

2.32 Company Digital Data Network services to Asia Infonet Co., Ltd.(AI)

2.33 Company Digital Data Network and other services to Bangkok Inter Teletech Group of companies (BITCO)

2.34 Company Other services to True Internet Data Center Co., Ltd. (TRUE IDC)

Total sales of services

TATN: Connected Transactions

Annual Registration Statements (Report Form 56-1)

2003 (Baht'000)

Relationship

64 UBC directly holds 98.62% in UBC CABLE’s equity interest. The Company indirectly holds 40.96% in UBC's equity interest and related through directorships, i.e. Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont, Mr. Chatchaval Jiaravanon, Mr. Athueck Asvanund and Mr. Vichaow Rakphongphairoj. 1,493 CPG is a major shareholder of the Company.

Rationale and necessity The transactions arosed in ordinary course of business.

The transactions arosed in ordinary course of business that the Company proposed to the third party.

17,421 Same as 1.10

The transactions arosed in ordinary course of business that the Company proposed to the third party.

38,928 BITCO is a cellular telephone operator which the Company directly holds 43.86% of equity interest and related through directorships, i.e. Mr. Dhanin Chearavanont, Mr. Joti Bhokavanij, Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont, Mr. Athueck Asvanund and Mr. Heinrich Heims.

The transactions arosed in ordinary course of business, net of discount rate.

41 The Company indirectly holds 70.00% in TRUE IDC’s equity interest and related through directorships, i.e. Mr. Supachai Chearavanont and Mr. Chatchaval Jiaravanon.

The transactions arosed in ordinary course of business that the Company proposed to the third party.

2,365,443

98


TelecomAsia Public Company Limited

Details of transactions 3. Purchase of services 3.1 Asia Infonet Co., Ltd. (AI) Office rental and related services from Charoen Pokphand Group of companies (CPG)

3.2 Asia Infonet Co., Ltd. (AI) Advertising services from Cineplex Co., Ltd. (CN)

Annual Registration Statements (Report Form 56-1)

2003 Relationship (Baht'000)

7,738 Same as 2.1

3.6 Asia Wireless Communication Co., Ltd. (AWC) Cable TV services and membership 17 from UBC Cable Network Public Company Limited (UBC CABLE)

TATN: Connected Transactions

The transactions arosed in ordinary course of business at market price on annually basis and are allowed to be renewed.

18 UBC indirectly holds 99.99% in CN’s equity The transactions interest. The Company indirectly holds arosed in ordinary 40.96% of UBC's equity interest and course of business. 65.00% in AI’s equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont and Mr. Chatchaval Jiaravanon.

3.3 Asia Infonet Co., Ltd. (AI) Mobile phone monthly fee from 6 Same as 2.3 Bangkok Inter Teletech Group of companies (BITCO) 3.4 Asia Wireless Communication Co., Ltd. (AWC) Distribution and other services from 322 Same as 1.3 Charoen Pokphand Group of companies (CPG) 3.5 Asia Wireless Communication Co., Ltd. (AWC) Internet services from 85 Same as 1.4 Asia Infonet Co., Ltd. (AI)

3.7 Asianet Corporation Ltd. (ANC) Office rental and related services from Charoen Pokphand Group of companies (CPG)

Rationale and necessity

UBC indirectly holds 98.62% in UBC CABLE’s equity interest. The Company indirectly holds 40.96% of UBC's equity interest and 99.99% in AWC’s equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont, Mr. Chatchaval Jiaravanon, Mr. Athueck Asvanund and Mr. Vichaow Rakphongphairoj.

2,134 Same as 2.12

The transactions arosed in ordinary course of business. The transactions arosed in ordinary course of business. The transactions arosed in ordinary course of business. The transactions arosed in ordinary course of business.

The transactions arosed in ordinary course of business.

99


TelecomAsia Public Company Limited

Details of transactions 3.8 Asianet Corporation Ltd. (ANC) Cable TV services and membership from UBC Cable Network Public Company Limited (UBC CABLE)

3.9 Asianet Corporation Ltd. (ANC) Internet services from Asia Infonet Co., Ltd. (AI) 3.10 Asianet Corporation Ltd. (ANC) Mobile phone monthly fee from Bangkok Inter Teletech Group of companies (BITCO) 3.11 Nilubon Co., Ltd. (NB) Land rental and other services from Charoen Pokphand Group of companies (CPG)

3.12 Nilubon Co., Ltd. (NB) Internet services from Asia Infonet Co., Ltd. (AI) 3.13 Telecom Holding Co., Ltd. (TH) Service charge from Charoen Pokphand Group of companies (CPG)

3.14 Telecom Holding Co., Ltd. (TH) Internet services from Asia Infonet Co., Ltd. (AI)

TATN: Connected Transactions

Annual Registration Statements (Report Form 56-1)

2003 Relationship (Baht'000)

Rationale and necessity

24 UBC indirectly holds 98.62% in UBC The transactions CABLE’s equity interest. The Company arosed in ordinary indirectly holds 40.96% in UBC's equity course of business. interest and directly holds 99.99% in ANC's equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont and Mr. Chatchaval Jiaravanon 21,186 Same as 2.14

The transactions arosed in ordinary course of business.

8 Same as 2.15

The transactions arosed in ordinary course of business.

987 Same as 2.16

The transactions arosed in ordinary course of business at market price with 3 years long and are allowed to be renewed.

6 Same as 2.18

The transactions arosed in ordinary course of business.

6 CPG is a major shareholder of the Company. The Company directly holds 96.40% in TH’s equity interest. These companies are related through directorships.

The transactions arosed in ordinary course of business.

4 The Company directly holds 96.40% in TH’s equity interest and indirectly holds 65.00% of AI’s equity interest. These companies are related through directorships, i.e. Mr. Soopakij Chearavanont, Mr. Supachai Chearavanont, Mr. Chearavanont and Mr. Ajva Taulananda.

The transactions arosed in ordinary course of business.

100


TelecomAsia Public Company Limited

Details of transactions 3.15 Wire & Wireless Co., Ltd. (WW) Cable TV services from UBC Cable Network Public Company Limited (UBC CABLE)

3.16 Wire & Wireless Co., Ltd. (WW) Insurance premium charge from Charoen Pokphand Group of companies (CPG) 3.17 Wire & Wireless Co., Ltd. (WW) Internet services from Asia Infonet Co., Ltd. (AI) 3.18 Wire & Wireless Co., Ltd. (WW) Mobile phone monthly fee from Bangkok Inter Teletech Group of companies (BITCO) 3.19 Asia Multimedia Co., Ltd. (AM) Cable TV services from UBC Cable Network Public Company Limited (UBC CABLE) 3.20 Asia Multimedia Co., Ltd. (AM) Insurance premium charge from Charoen Pokphand Group of companies (CPG) 3.21 Asia Multimedia Co., Ltd. (AM) Internet services from Asia Infonet Co., Ltd. (AI) 3.22 Asia Multimedia Co., Ltd. (AM) Mobile phone monthly fee from Bangkok Inter Teletech Group of companies (BITCO) 3.23 W 7 Rental Services Ltd. (W7) Mobile phone monthly fee from Bangkok Inter Teletech Group of companies (BITCO)

TATN: Connected Transactions

Annual Registration Statements (Report Form 56-1)

2003 Relationship (Baht'000) 30 UBC indirectly holds 98.62% in UBC CABLE’s equity interest. The Company indirectly holds 40.96% of UBC's equity interest and 87.50% in WW’s equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont, Mr. Chatchaval Jiaravanon, Mr. Athueck Asvanund and Mr. Vichaow Rakphongphairoj.

Rationale and necessity The transactions arosed in ordinary course of business.

299 Same as 1.6

The transactions arosed in ordinary course of business.

71 Same as 1.7

The transactions arosed in ordinary course of business.

83 Same as 1.8

The transactions arosed in ordinary course of business.

8,247 Same as 1.2

The transactions arosed in ordinary course of business.

140 Same as 2.9

The transactions arosed in ordinary course of business.

246 Same as 1.1

The transactions arosed in ordinary course of business.

488 Same as 2.8

The transactions arosed in ordinary course of business.

31 Same as 2.23

The transactions arosed in ordinary course of business.

101


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

2003 Relationship (Baht'000) 3.24 Bangkok Inter Teletech Group of companies (BITCO) Office rental and related services 25,824 Same as 1.9 from Charoen Pokphand Group of companies (CPG) 3.25 Bangkok Inter Teletech Group of companies (BITCO) Advertising services from 4,887 UBC indirectly holds 98.62% in UBC UBC Cable Network Public Company CABLE’s equity interest. The Company Limited (UBC CABLE) directly holds 43.86% in BITCO’s equity interest and indirectly holds 40.96% in UBC's equity interest. These companies are related through directorships, i.e. Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont and Mr. Athueck Asvanund. 3.26 Company Repair and maintenance services 10,906 The Company indirectly holds 9.62% in from NEC's equity interest and related through directorship by Mr. Chatchaval NEC Corporation (Thailand) Co., Ltd. (NEC) Jiaravanon. 3.27 Company Rental space for public phone from 10,363 Same as 2.31 Charoen Pokphand Group of companies (CPG) 3.28 Company Office rental and related services 25,061 Same as 2.31 from Charoen Pokphand Group of companies (CPG) Details of transactions

3.29 Company Other services from Charoen Pokphand Group of companies (CPG) 3.30 Company Cable TV services from UBC Cable Network Public Company Limited (UBC CABLE) 3.31 Company Internet services from Asia Infonet Co., Ltd. (AI)

TATN: Connected Transactions

Rationale and necessity The transactions arosed in ordinary course of business.

The transactions arosed in ordinary course of business.

The transactions arosed in ordinary course of business.

The transactions arosed in ordinary course of business. The transactions arosed in ordinary course of business. The maturity are normally in the year and are allowed to be renewed.

18,323 Same as 2.31

The transactions arosed in ordinary course of business.

12,641 Same as 2.30

The transactions arosed in ordinary course of business.

2,420 Same as 1.10

The transactions arosed in ordinary course of business.

102


TelecomAsia Public Company Limited

Details of transactions 3.32 Company Promotion expenses for incentive used Digital Data Network services and mobile phone monthly fee from Bangkok Inter Teletech Group of companies (BITCO) Total purchase of services 4. Purchase of goods 4.1 Asianet Corporation Ltd. (ANC) Sim card from Bangkok Inter Teletech Group of companies (BITCO) 4.2 Wire & Wireless Co., Ltd. (WW) Purchase of goods from Asia Infonet Co., Ltd. (AI) 4.3 Wire & Wireless Co., Ltd. (WW) Mobile handsets for sales from Bangkok Inter Teletech Group of companies (BITCO) 4.4 Company Network equipment from NEC Corporation (Thailand) Co., Ltd. (NEC) 4.5 Company Pay phone assets from Charoen Pokphand Group of companies (CPG) 4.6 Company Mobile handsets from Bangkok Inter Teletech Group of companies (BITCO) Total purchase of goods 5. Interest expense 5.1 Company Repayment interest expense of borrowing to Kreditanstalt fuer Wiederaufbau (KfW)

Total interest expense

TATN: Connected Transactions

Annual Registration Statements (Report Form 56-1)

2003 Relationship (Baht'000) 7,281 Same as 2.33

Rationale and necessity The transactions arosed in ordinary course of business.

159,882

1 Same as 2.15

The transactions arosed in ordinary course of business.

48 Same as 1.7

The transactions arosed in ordinary course of business.

12,732 Same as 1.8

The transactions arosed in ordinary course of business.

67,306 Same as 3.26

The transactions arosed in ordinary course of business.

2,459 Same as 2.31

The transactions arosed in ordinary course of business.

206 Same as 2.33

The transactions arosed in ordinary course of business.

82,752

106,743 KfW is financial institution of Germany, who is the preferred shareholder and secured vender.

The transactions arosed in repayment interest expense of borrowing to KfW at the rate as stipulated in the agreement.

106,743

103


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Measures and Procedures for Approving the Entering into of Connected Transactions The Company has measures and procedures for approving the entering into the connected transactions in compliance with the Rules and Regulations of the office of Securities and Exchange Commission (“SEC”) and the Stock Exchange of Thailand (“SET”), and the provisions of the Public Companies Act, i.e. related party transactions must obtain approval from the Independent Directors. If any related party transaction is deemed to be a connected transaction, said transaction must obtain approval from the Audit Committee, the Board of Directors and/or Shareholders Meeting as the case may be, according to the Regulation of the Stock Exchange of Thailand. Moreover, the Company must comply with the terms and conditions of the Common Terms Agreement First Amendment and Restatement Agreement dated 14th October 2003 which is the principal debt agreements executed between the Company and its Secured Creditors, and related agreements. The key terms and conditions in said Agreement and related agreements with regard to connected transactions specify that the Company shall not enter into any contract, agreement, or arrangement with any affiliates other than on arms’ length open market terms. Apart from the foregoing obligation, the terms and conditions of the Shareholders Agreement executed with Kreditanstalt fÜr Wiederaufbau dated 22nd December 1999 specify that the Company shall have to disclose the entering into any connected transactions of the major shareholders or its affiliates.

Policy for Future Connected Transactions In addition, in order to strictly comply with the rules and regulations of the SEC and the SET, the Company has applied said rules and regulations in implementing an internal guideline for connected transactions by undertaking a comparative study of the connected transactions guidelines from various foreign institutions to enhance transparency and create parallel understanding with foreign analysts and investors. With regard to future connected transactions, the Company anticipates that there will be connected transactions in the ordinary course of business of the Company with its affiliates and the Company shall proceed with such transactions in a transparent manner pursuant to the good corporate governance policy of the Company as well as all relevant regulations.

TATN: Connected Transactions

103


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

12. FINANCIAL STATUS AND PERFORMANCE 12.1 Company’s Auditor and Significant Accounting Policies The auditors appointed by the Board of Directors to be the Company’s auditor in order to perform the audit of the Company and consolidated financial statements during the past three years were as follows: Financial statements for the year ended 31 December 2003

:

PricewaterhouseCoopers ABAS Limited

Financial statements for the year ended 31 December 2002

:

PricewaterhouseCoopers ABAS Limited

Financial statements for the year ended 31 December 2001

:

PricewaterhouseCoopers ABAS Limited

According to the three (3) years’ Reports of Certified Public Accountant, the Company’s auditors had expressed his/her unqualified opinions on the financial statements as follows: The Year Ended 31 December 2003 The auditor had expressed his/her unqualified opinion that the consolidated and Company financial statements present fairly, in all material respects, the consolidated and Company financial position as at 31 December 2003 and results of operations and cash flows for the year then ended in accordance with generally accepted accounting principles. The Year Ended 31 December 2002 The auditor had expressed his/her unqualified opinion that the consolidated and Company financial statements present fairly, in all material respects, the consolidated and Company financial position as at 31 December 2002 and results of operations and cash flows for the year then ended in accordance with generally accepted accounting principles. The Year Ended 31 December 2001 The auditor had expressed his/her unqualified opinion that the consolidated and Company financial statements present fairly, in all material respects, the consolidated and Company financial position as at 31 December 2001 and results of operations and cash flows for the year then ended in accordance with generally accepted accounting principles.

TATO: Financial Status and Performance

105


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

12.2 Summary of Financial Statements TELECOMASIA CORPORATION PUBLIC COMPANY LIMITED Consolidated Balance Sheet As at 31 December 2003, 2002 and 2001 (Unit: Thousand Baht)

Assets Current assets Cash and cash equivalents Restricted cash investments Short-term investments Trade accounts receivable, net Short-term loans to related parties Inventories, net Income tax deducted at source Claimable value added tax Other current assets Total current assets

31 December 2003

Common Size (%)

31 December 2002

Common Size (%)

31 December 2001

Common Size (%)

1,883,185 2,752,641 3,537,953 5,510,171 727,158 1,113,611 1,176,625 468,046 17,169,390

2.17 3.17 4.08 6.35 0.84 1.28 1.36 0.54 19.79

3,135,696 4,482,279 21,210 6,897,931 781 1,184,275 680,153 895,507 1,331,246 18,629,078

3.37 4.82 0.02 7.42 0.01 1.27 0.73 0.97 1.43 20.04

2,684,256 4,576,450 177,337 5,689,657 2,646 1,113,378 508,497 352,958 1,779,100 16,884,279

3.10 5.29 0.21 6.58 0.01 1.29 0.59 0.41 2.05 19.53

Non-current assets Investments : - Available-for-sale securities - Investments in subsidiaries, joint ventures and associates - Other long-term investments - Investment property Property, plant and equipment, net Other assets: - Intangible assets, net - Negative Goodwill, net - Other non-current assets Total non-current assets

3,623,336

4.18

4,009,108

4.31

1,036,273 4,492,129

1.20 5.19

75,571 53,874 63,018,960

0.09 0.06 72.64

75,572 53,874 66,870,643

0.08 0.06 71.92

52,322 54,294 64,032,659

0.06 0.06 74.05

1,887,057 931,873 69,590,671

2.17 1.07 80.21

1,771,042 1,567,935 74,348,174

1.90 1.69 79.96

804,300 (2,336,785) 1,452,822 69,588,014

0.93 (2.70) 1.68 80.47

Total assets

86,760,061

100.00

92,977,252

100.00

86,472,293

100.00

Liabilities and shareholders' equity Current liabilities Short-term borrowings Trade accounts payable Current portion of long-term borrowings Unearned income Accrued expenses Other current liabilities Total current liabilities

773,216 2,434,231 19,132,993 275,730 2,205,862 2,584,897 27,406,929

0.89 2.81 22.05 0.32 2.54 2.98 31.59

721,933 2,244,583 5,132,246 230,511 3,260,268 2,536,669 14,126,210

0.78 2.40 5.52 0.25 3.51 2.73 15.19

2,740,023 3,214,292 227,979 2,495,300 1,915,992 10,593,586

3.17 3.72 0.26 2.89 2.21 12.25

Non-current liabilities Long-term borrowings Long-term trade accounts payable Other non-current liabilities Total non-current liabilities

49,423,049 7,857,920 577,100 57,858,069

56.96 9.06 0.67 66.69

59,329,885 8,012,583 4,310,326 71,652,794

63.81 8.62 4.64 77.07

61,944,182 8,299,425 740,060 70,983,667

71.63 9.60 0.86 82.09

Total liabilities

85,264,998

98.28

85,779,004

92.26

81,577,253

94.34

Shareholders' equity Share capital Authorised share capital Preferred shares Common shares Issued and fully paid-up share capital Preferred shares Common shares Premium on shares capital Common shares Discount on shares capital Preferred shares Common shares Foreign currency translation adjustment Unrealised gain(loss) on changes of fair value on available- for-sale securities Retained earnings (deficit) Appropriated legal reserve Deficit Total parent's shareholders'equity Minority interest in subsidiaries Total shareholders’ equity Total liabilities and shareholders' equity

TATO: Financial Status and Performance

6,996,485 36,895,796

6,997,535 37,463,647

7,020,000 25,305,000

6,996,485 29,948,487

8.06 34.52

6,997,535 29,947,437

7.53 32.21

7,020,000 25,305,000

8.12 29.26

11,432,046

13.18

11,432,046

12.30

11,432,046

13.22

(1,493,460) (1,943,495) 104,344

(1.72) (2.24) 0.11

(1,493,683) (1,943,271) 104,344

(1.61) (2.09) 0.11

(1,498,478) (316,640) 104,344

(1.73) (0.37) 0.12

(2,713)

(0.01)

(4,703,366)

(5.44)

4,549

0.01

34,881 (44,005,657) 1,078,180 416,883 1,495,063

0.04 (50.72) 1.24 0.48 1.72

34,881 (38,331,553) 6,745,023 453,225 7,198,248

0.04 (41.23) 7.25 0.49 7.74

34,881 (32,937,104) 4,440,683 454,357 4,895,040

0.04 (38.09) 5.13 0.53 5.66

86,760,061

100.00

92,977,252

100.00

86,472,293

100.00

106


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

TELECOMASIA CORPORATION PUBLIC COMPANY LIMITED Consolidated Statements of Income For the year ended 31 December 2003, 2002 and 2001 (Unit: Thousand Baht)

Revenues Revenues from telephone and other services Revenues from product sales Total revenues Operating expenses Cost of services Cost of sales Total costs Gross profit Selling and administrative expenses Profit from sales and services Other revenues Other expenses Operating results Share of profit (loss) in subsidiaries, joint ventures and associates Loss on impairment of investment Gain on sales of investment Other non-operating income (expenses) Profit(loss) before interest and tax Interest income Interest expense Foreign exchange gain (loss) Loss before income tax Income tax Loss before extraordinary item Extraordinary item -Gain from debt restructuring Loss before minority interest Loss attributable to minority interest Net loss for the year Basic and diluted loss per share Loss from ordinary activities Extraordinary item -Gain from debt restructuring Net loss for the year

TATO: Financial Status and Performance

31 December 2003

Common Size (%)

31 December 2002

Common Size (%)

31 December 2001

Common Size (%)

27,001,000 948,950 27,949,950

96.60 3.40 100.00

24,214,524 1,568,462 25,782,986

93.92 6.08 100.00

20,117,764 518,678 20,636,442

97.49 2.51 100.00

20,203,343 1,001,422 21,204,765 6,745,185

17,651,533 1,758,073 19,409,606 6,373,380

6,468,524 276,661 343,251 (935,822) (315,910)

72.28 3.58 75.86 24.14 23.14 1.00 1.23 (3.35) (1.12)

14,241,482 684,642 14,926,124 5,710,318

6,171,230 202,150 245,620 (1,827,048) (1,379,278)

68.46 6.82 75.28 24.72 23.94 0.78 0.95 (7.09) (5.36)

4,816,156 894,162 280,134 (225,173) 949,123

69.01 3.32 72.33 27.67 23.34 4.33 1.36 (1.09) 4.60

(444,249) 3,989 (77,451) (833,621) 37,614 (4,480,538) (311,132) (5,587,677) (122,769) (5,710,446)

(1.59) 0.01 (0.28) (2.98) 0.13 (16.03) (1.11) (19.99) (0.44) (20.43)

1,844,460 (5,721,988) 943,248 3,196,229 (1,117,329) 54,299 (3,880,857) (403,466) (5,347,353) (143,683) (5,491,036)

7.15 (22.19) 3.66 12.40 (4.34) 0.21 (15.05) (1.56) (20.74) (0.56) (21.30)

(628,473) 320,650 42,418 (4,718,427) 954,874 (3,400,485) (68,933) (3,469,418)

(3.05) 1.55 0.20 (22.86) 4.63 (16.48) (0.33) (16.81)

(5,710,446) 36,342 (5,674,104)

(20.43) 0.13 (20.30)

95,454 (5,395,582) 1,133 (5,394,449)

0.37 (20.93) (20.93)

(3,469,418) 44,291 (3,425,127)

(16.81) 0.21 (16.60)

(2.13)

(2.37)

(1.81)

(2.13)

0.03 (2.34)

(1.81)

107


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

TELECOMASIA CORPORATION PUBLIC COMPANY LIMITED Consolidated Statements of Cash Flow For the year ended 31 December 2003, 2002 and 2001 (Unit: Thousand Baht) 31 December 2003

31 December 2002

31 December 2001

Cash flows from operating activities Loss before minority interest Add : Income tax Interest expense Loss before interest and tax Adjustments for: Depreciation and amortisation (Gain)loss on disposal of property, plant and equipment Doubtful accounts Impairment charge of investment Impairment charge of fixed assets Obsolete inventories Other operating assets and liabilities written-off Gain on sales of available-for-sale securities Unrealised loss on foreign exchange Gain on repayment of borrowings Gain from forgiveness Share of loss (profit) in subsidiaries, joint ventures and associates Changes in operating assets and liabilities - Trade accounts receivable - Short-term investment-trading securities - Inventories - Other current assets - Other non-current assets - Trade accounts payable - Accrued expenses and other current liabilities - Other non-current liabilities Cash generated from operations Less: Interest paid Income tax paid Net cash from operating activities

942,591 (304,175) 43,041 742,857 (9,052) 94,705 (2,255,887) (54,878) 11,635,981 (3,801,252) (759,221) 7,075,508

(2,352,324) (552,798) (112,838) (131,082) (373,585) 874,241 560,355 8,501,087 (3,538,548) (507,093) 4,455,446

61,699 (1,499,311) (590,372) (20,032) 524,364 1,535,615 (195) 9,291,431 (4,481,730) (330,670) 4,479,031

Cash flows from investing activities Withdrawal (deposit) in restricted cash investments (Deposit) withdrawal in short-term investments Acquisition of joint venture, net of cash acquired Acquisition of long-term investment in other companies Purchases of property, plant and equipment Purchases of intangible assets Proceeds from sale of available-for-sale securities Disposal of property, plant and equipment Net cash used in investing activities

1,729,639 (3,207,193) (10,378,024) (181,277) 5,832 135,051 (11,895,972)

94,171 161,264 (402,162) (23,250) (8,753,438) (279,922) 83,262 (9,120,075)

(251,124) (82,811) 2,782,126 (100) (3,930,956) (33,881) 117,268 (1,399,478)

Cash flows from financing activities Proceeds from short-term borrowings Issue of common shares Proceeds from debentures Proceeds from borrowings Repayments on long-term trade accounts payable Repayments on borrowings and debt issuance costs Net cash received from (used in) financing activities

27,868 3,291,942 7,863,189 (181,124) (7,433,922) 3,567,953

670,045 2,998,136 18,065,058 7,721,915 (677,547) (23,661,538) 5,116,069

5,265,405 (187,973) (6,527,350) (1,449,918)

Net (decrease) increase in cash and cash equivalents Openning balance Closing balance

(1,252,511) 3,135,696 1,883,185

451,440 2,684,256 3,135,696

1,629,635 1,054,621 2,684,256

TATO: Financial Status and Performance

(5,710,446) 4,480,538 122,769 (1,107,139)

(5,395,582) 3,880,857 143,683 (1,371,042)

(3,469,418) 4,718,427 68,933 1,317,942

11,365,829 (54,540) 665,321 647,962 225,951 20,152 (3,982) 232,981 (5)

9,276,717 20,681 828,512 5,721,988 1,613,414 180,418 2,968 (943,249) 394,881 (3,291,683) (27)

8,004,149 (101,751) 166,699 192,804 30,631 (13,996) (944,940) (348)

(1,844,460)

628,473

444,249

108


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

12.3 Financial Ratios

FINANCIAL RATIOS TelecomAsia Corporation Public Company Limited and Subsidiaries 2003

2002

2001

Liquidity Ratios Current Ratio Times 0.63 1.31 1.59 Quick Ratio-Accrual Basis Times 0.50 1.03 1.31 Quick Ratio-Cash Basis Times 0.34 0.31 0.54 Receivable Turnover Ratio Times 4.51 4.01 3.58 Average Collection Period Days 79.91 89.68 100.50 Average Collection Period * Days 49.80 47.82 41.19 * Excluding accounts receivable from TOT which represents the amount that was already paid by customers but TA has not yet received its revenue sharing from TOT. Inventory Turnover Ratio Times 19.12 16.65 14.85 Average Inventory Turnover Period Days 18.83 21.63 24.24 Payable Turnover Ratio Times 8.97 7.67 6.68 Average Payment Period Days 40.12 46.92 53.91 Cash Cycle Days 58.61 64.39 70.84 Profitability Ratios Gross Margin Net Profit Margin Return on Equity Efficiency Ratios Return on Total Assets Return on Fixed Assets Assets Turnover Ratio

TATO: Financial Status and Performance

% % %

% % Times

30.53% -20.30% -130.54%

24.70% -20.93% -89.21%

28.23% -16.60% -50.66%

-6.31% 7.61% 0.31

-6.00% 5.43% 0.29

-3.92% 6.57% 0.24

109


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

TelecomAsia Corporation Public Company Limited and Subsidiaries 2003

2002

2001

Financial Policy Ratios Debt to Equity Ratio Interest Coverage Ratio Cashflow Coverage Ratio-Cash Basis Dividend Ratio

Times Times Times %

51.11 2.61 0.48 -

10.17 2.18 0.33 -

15.01 1.96 0.79 -

Per Share Analysis Book Value per Share Earnings (Loss) per Share (Basic and Diluted) Dividend per Share

Baht Baht Baht

0.40 (2.13) -

1.95 (2.34) -

1.51 (1.81) -

% % % % %

-6.69% -0.60% 8.40% 8.70% -5.18%

7.83% 5.48% 24.90% 28.82% -57.50%

-2.16% 2.28% 6.44% 11.72% -3.54%

Growth Ratios Total Assets Total Liabilities Revenues from Sales and Services Total Operating Expenses Net Profit

Note : 1/ The following adjustments below caused changes in financial ratios for 2000 - 2001 from the previous release. - Consolidated selling administrative expenses for 2001 were adjusted upward by Baht 9 million from previous release due to reclassification of accounts. - Leased circuit and conduit rental (booked under cost of providing services) for 2001 was adjusted downward by Baht 114 million, a Baht 43 million less than previous release following recent review with the TOT. - Change in classification of account receivables, short-term loans to related parties, account payable and due to related parties in 2001. - The Company changed the calculation method for inventory and payable turnover ratios to include cost of providing service which also resulted in chages of average inventory turnover period, average payment period and cash cycle. 2/ Operating expenses excluded one-off transactions which consisted of the followings; - out-of-period booking for leased circuit and conduit rentals of Baht 286 million in 2002, Baht 114 million in 2001 for the underbooked amount in the previous years. - out-of-period booking for leased circuit and conduit rentals of Baht 685 million in 2000 for the overbooked amount in the previous years - one-time compensation for staff of Baht 33 million in 2002. 3/ Depreciation and amortization for FY2003 exclude a write-off of PCT acquisition cost; Bt. 215 million on consolidated basis.

TATO: Financial Status and Performance

110


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

12.4 Management’s Discussion and Analysis Overview TelecomAsia’s full-year 2003 results show that our strategy of investing in high-growth business areas, while reducing costs and improving margin, is working. They indicate that if we maintain this strategy, become more customer-centric and continue to transform our operations under the new TRUE branding, we can expect further growth and reduced losses in the future. In 2003 our core wireline business generated strong free cash flows, providing a solid platform for servicing debt and investing in new high-growth business. Revenue from valued-added services rose 33.3 percent, while the Data, Internet and Broadband group of businesses continued to grow strongly, increasing revenue by 16.6 percent to Baht 2.8 billion. New Internet subscribers almost doubled, total Broadband subscribers increased by more than 200 percent and ADSL customers almost tripled during the year. As a whole, this business group contributed 12.1 percent to consolidated revenues (excluding TA Orange), up from 10.4 percent in 2002. Our revenues were stable at Baht 23 billion, (excluding TA Orange) as the increase in revenue from fixed line value-added services, Internet and Broadband helped to offset declines in our PCT and non-core business. However, we managed to increase EBITDA margin by 90 basis points to 52 percent (excluding TA Orange) through cost controls, as well as taking further steps to enhance our balance sheet. Consolidated revenues grew 8.4 percent to Baht 28 billion, including TA Orange’s improved contribution of Baht 5.1 billion, up 74.4 percent on 2002. TA Orange reached EBITDA break-even for the first time in September 2003 and contributed Baht 107 million in the fourth quarter. As a result, consolidated EBITDA increased 18.8 percent to Baht 11.6 billion. Excluding TA Orange, EBITDA increased 1.4 percent to Baht 11.9 billion from the successful cost controls. However, the Company still incurred a net loss from ongoing operations of Baht 1.5 billion, excluding TA Orange and non-recurring items. This was higher than the 2002 net loss of Baht 446 million, mainly due to depreciation for new investments.

TATO: Financial Status and Performance

111


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

In the year ahead we expect to make continue improvements in operations. With our imminent rebranding, our market leadership in new high growth areas and our status as an integrated provider of wireline and wireless communications solutions, we are in position to grow strongly. TA Orange reached EBITDA break-even point in September 2003, after 18 months of operation, and contributed a Baht 107 million to fourth quarter results. The cellular operator’s subscribers grew by 488,762 or 36.6 percent to 1.8 million in 2003, a higher rate than the industry average of 26 percent. Despite reintroducing installation fees at the start of 2003 and accelerating the disconnection process for line reutilization, TelecomAsia maintained its 56 percent market share in the fixed line market in the BMA. In 2003 we expect single-digit growth in fixed line subscribers as demand from SMEs and large corporations and for second home lines for Internet-use increases. Starting on September 1, 2003, all operators launched a joint reduced-tariff promotion, as approved by the ICT Ministry. At the start of 2004, operators also gained approval to launch a six-month flexible tariff promotion, which uses the tariff for the first promotion as ceiling rates. This is seen as a first step in creating a more level playing field between mobile and fixed line operators, improving overall fixed-line business competitiveness. Consolidated Results of Operations The results of operations are discussed on a normalized basis without taking into account non-recurring items. We believe this enables a better overview of the Company’s operating results and trends from period to period. All non-recurring items are disclosed in the consolidated profit and loss statement on an adjusted basis. The Company has recognized results from TA Orange based on a proportionate consolidation method, starting fourth quarter of 2001. In 2003, TA Orange’s contribution had a material impact on the Company’s consolidated results. The results, presented below, therefore, exclude TA Orange where appropriate, so that trends for core operations are clear. x Consolidated revenues increased 8.4 percent in 2003 to Baht 28.0 billion, due mainly to a 74.4 percent increase in the proportionate revenue contribution from TA Orange (Baht 5.1 billion in 2003, compared with a Baht 2.9 billion contribution in 2002). TATO: Financial Status and Performance

112


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Excluding TA Orange, revenues were stable at Baht 23.0 billion, as an increase in revenue from the wireline value-added, Broadband and Internet group of services offset a decline in revenue from PCT, DDN and non-core business. Wireline revenue grew 4.8 percent to Baht 16.9 billion, principally from public telephone and other value-added services, while basic fixed line telephone revenue was stable at Baht 13.6 billion. Public telephone revenue grew 18.8 percent to Baht 2.1 billion. Data, Internet and Broadband group revenue (referred to as the DDN, Multimedia and Internet segments in the audited financial statements) grew by 16.6 percent to Baht 2.8 billion. This was derived mainly from a strong 138.0 percent growth in Internet revenue to Baht 471 million and 16.4 percent growth in multimedia revenue to Baht 1.1 billion, mainly from managed data network and Broadband services. DDN revenue declined slightly by 3.0 percent to Baht 1.2 billion due to TA Orange disconnecting part of the network rented from the Company. PCT revenue fell by 29.2 percent to Baht 2.1 billion from declines in subscriber base and ARPU. x Consolidated operating expenses were reported at Baht 27.7 billion in 2003, compared with Baht 25.6 billion in 2002. If a one-off item of Baht 215 million relating to the write-off of PCT subscriber acquisition cost is stripped out, adjusted operating expense in 2003 amounted to Baht 27.5 billion, an increase of 8.7 percent compared with 2002. The increase was mainly due to depreciation, while cash operating expenses grew only 2.0 percent, largely due to revenue sharing. The small increase in cash operating expenses was due to wireline business reductions of 4.8% and TA Orange successfully containing costs in the second half of the year. Core operating expense (cash operating expense less revenue sharing and cost of sales) declined by 0.8 percent to Baht 9.9 billion, mostly due to lower network operating expenses and lower direct cost of services. This resulted in a significant decline in the ratio of core operating expense as a percentage of total revenues (35.3 percent in 2003, compared with 38.5 percent in 2002). This decline was a result of effective cost control measures at both TA and TA Orange.

TATO: Financial Status and Performance

113


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

x Consolidated EBITDA grew 18.8 percent in 2003 to Baht 11.6 billion, with the EBITDA margin improving 270 basis points to 41.7 percent. This was due mainly to an improved performance by TA Orange. Excluding TA Orange, EBITDA grew 1.4 percent to Baht 11.9 billion, due to a 90 basis point margin improvement to 52.0 percent. The core wireline and data businesses, which had stable revenue, grew EBITDA by 5.7 percent to Baht 10.1 billion in 2003, due to cost reductions. x Depreciation and amortization increased Baht 1.9 billion (Baht 11.2 billion in 2003, compared with Baht 9.3 billion in 2002), of which Baht 1.3 billion was from TA Orange as TA Orange operated at a higher capacity. The Company recognized a Baht 1.9 billion depreciation and amortization from TA Orange in 2003. x Operating profits decreased to Baht 491 million in 2003 (compared with Baht 521 million in 2002), due to the increased depreciation fully offsetting the increased EBITDA. x Consolidated interest expenses increased Baht 600 million to Baht 4.5 billion in 2003 due to TA Orange drawing down more loans and the higher cost of TelecomAsia’s Baht loans compared with US dollar-denominated loans. All TelecomAsia’s US Dollar-denominated loans, excluding TA Orange, have been replaced by Baht loans from banks and Baht bonds. x Consolidated share of loss in associated companies in 2003 was Baht 444 million, principally relating to investment in United Broadcasting Corporation Public Company Limited. A share of profit in associated companies of Baht 1.8 billion in 2002 consisted of a loss contribution from UBC of Baht 483 million and a net gain from amortization of goodwill from TA Orange of Baht 2.3 billion. TelecomAsia invested in TA Orange at a discount to book value of Baht 2.6 billion. The discount was booked as negative goodwill and its amortization was treated as a gain. x The net loss from ongoing operations, including TA Orange, increased to Baht 4.5 billion in 2003 from Baht 1.6 billion in 2002. This was due mainly to no gains from the Baht 2.3 billion amortization of negative goodwill (booked under share of gain from affiliates), a Baht 600 million increase in interest expenses, and depreciation of Baht 1.9 billion. TATO: Financial Status and Performance

114


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

x The reported net loss was Baht 5.7 billion in 2003, compared with a Baht 5.4 billion loss in 2002. The net loss in 2003 included non-recurring losses of Baht 1.2 billion. Excluding TA Orange, net loss for 2003 was Baht 2.8 billion, representing a significant improvement compared with the Baht 4.9 billion loss in 2002. The difference was mainly due to fewer non-recurring losses. x Non-recurring items in 2003 included other expenses of Baht 936 million, primarily impairment of fixed assets (Baht 648 million) and loss from obsolete inventory (Baht 226 million). In addition, there was a Baht 215 million write-off of PCT subscriber acquisition cost, a Baht 311 million loss from foreign exchange, due to depreciation of the Baht against the Yen, and other revenues of Baht 343 million. Non-recurring items in 2002 totaling Baht 3.8 billion included a loss from the impairment of the Company’s investment in FLAG (Baht 5.7 billion), other expenses (mainly impairment of the Intelligent Network of Baht 1.6 billion) and a foreign exchange loss of Baht 403 million. These losses were partially offset by major nonrecurring gains including other non-operating income (mainly gain from settlement of Yen-denominated Deferred Payment Note of Baht 3.1 billion) and a gain on the sale of investments (mainly from the unwinding of SAILS contracts for FLAG shares of Baht 943 million).

TATO: Financial Status and Performance

115


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Consolidated Results of Operations - Adjusted Basis (Unaudited) Baht in millions unless otherwise indicated) Revenues Revenues from telephone and other services Revenues from product sales Total revenues Operating expenses Cost of services Depreciation and amortization Revenue sharing Network operating expenses Cost of sales Selling and administrative expenses Total operating expenses EBITDA Depreciation & amortization Operating profit Interest income Interest expense Tax Income from continuing operations Share of profit (loss) in subsidiaries and associates Net income (loss) from continuing operations including share of profit (loss) in subsidiaries Non recurring items Gain ( loss ) on foreign exchange Accounting adjustment-leased circuit & conduit rental Adjustment-personnel compensation Write-off of PCT subscriber acquisition cost Other (expenses) income Gain from DPN buy-back Loss on impairment of investment Loss on impairment of IN Gain on sale of investment Gain from debt restructuring Net profit (loss) before minority interest (Income) loss attributable to minority interest Net profit (loss) for the period Balance Sheets Current assets Property, plant and equipment, net Total assets Current liabilities Borrowing Total liabilities Shareholder's equity Cash Flow Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Ending cash balance

FY 2003

FY 2002

% Change FY 2003/ FY 2002

27,001 949 27,950

24,215 1,568 25,783

11.5 (39.5) 8.4

19,989 10,123 5,452 4,414 1,001 6,469 27,459 11,642 11,151 491 38 (4,481) (123) (4,074) (444)

17,366 8,772 4,290 4,303 1,758 6,138 25,262 9,798 9,277 521 54 (3,881) (144) (3,449) 1,844

15.1 15.4 27.1 2.6 (43.0) 5.4 8.7 18.8 20.2 (5.8) (30.7) 15.5 (14.6) (18.1) NM

(4,519) (1,192) (311) (215) (670) 4 (5,710) 36 (5,674)

(1,605) (3,791) (403) (286) (33) 89 3,088 (5,722) (1,562) 943 95 (5,396) 1 (5,395)

(181.6) 68.6 22.9 100.0 100.0 NM NM (100.0) 100.0 100.0 (99.6) (100.0) (5.8) 3,598.9 (5.2)

17,169 63,019 86,760 27,407 49,423 85,265 1,495

18,629 66,871 92,977 14,126 59,330 85,779 7,198

(7.8) (5.8) (6.7) 94.0 (16.7) (0.6) (79.2)

7,076 (11,896) 3,568 1,883

4,455 (9,120) 5,116 3,136

58.8 (30.4) (30.3) (39.9)

Note : 1/ There were retroactive adjustments for FY2002 results relating to reclassification in accounts. These resulted in slight changes in the following accounts from the previous release ; revenues, SG&A, interest expenses and other income (expenses). 2/ Normalized operating expenses for FY2002 excluded one-off transactions which consisted of the followings; - out-of-period booking of leased circuit and conduit rental of Baht. 286 million following the reviews with the TOT. - one-time compensation for workforce reduction of Baht. 33 million. 3/ Depreciation and amortization for FY2003 excluded a write-off of PCT subscriber acquisition cost of Baht. 215 million. 4/ Other expenses in FY2003 consisted of major items as follows; impairment for value of Voice Mail Box system (Baht 294 million), impairment of the old billing system (Baht 283 million) and loss from obsolete inventory (Baht 226 million).

TATO: Financial Status and Performance

116


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Segment Results Fixed line x In 2003 wireline revenue increased 4.8 percent to Baht 16.9 billion, compared with Baht 16.1 billion in 2002. Basic fixed line telephone revenue declined 0.3 percent in 2003 to Baht 13.6 billion, compared with Baht 13.7 billion revenue in 2002. x Public telephone revenue increased 18.8 percent to Baht 2.1 billion in 2003 from Baht 1.8 billion in 2002, as the Company managed to increase operational efficiency. x The number of fixed line subscribers fell by 58,328 or 2.9 percent to 1,962,074, due to the reintroduction of installation fees at the start of 2003 and the acceleration of the disconnection process for line reutilization. However, the Company maintained its position as the dominant player in the BMA market with a 56 percent market share as at October 2003. The fall in Average Revenue Per User (ARPU) for fixed line telephones slowed, decreasing 5.3 percent to Baht 542 in 2003, compared with ARPU of Baht 572 in 2002 (which fell 9.6 percent on the previous year). x All operators received permission by the ICT Ministry to offer reduced-tariff and flexible tariff promotions. This is seen as a first step in creating a more level playing field between mobile and fixed line operators, thus improving overall fixed line business competitiveness. Starting on September 1, 2003, all fixed line operators launched a joint reduced-tariff trial promotion via two customer packages. In the first package, long distance call tariffs were halved from the maximum of Baht 18 to Baht 9 for fixed line to fixed line calls and from Baht 12 to Baht 6 from fixed line to mobile calls. In the second package the tariff was changed to a nationwide rate of Baht 3 per minute for both fixed line to fixed line and fixed-line to mobile calls and the monthly fee was raised by Baht 100 to Baht 200. On January 16, 2004, TelecomAsia launched a six-month flexible tariff promotion which offers six different calling plans with a range of per minute call rates from Baht 1.5 – Baht 2.75. The Company gained valuable market experience from the promotions, despite receiving no significant positive impact to fixed line performance TATO: Financial Status and Performance

117


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

in 2003. In 2004 the Company will seek to increase customer awareness of the promotion through a range of marketing activities and expects this to yield positive results in the year ahead. Wireless Personal Communication Telephone (PCT) x PCT revenue decreased 29.2 percent to Baht 2.0 billion in the full year 2003 (from Baht 3.0 billion in full-year 2002). x Subscribers declined by 9.1 percent in 2003 to 549,295 from 604,340 in 2002, due mainly to intense competition from cellular services. PCT ARPU declined by 22.1 percent from Baht 361 in 2002 to Baht 282 in 2003. In 2003, the Company focused on retaining its subscriber base by implementing various retention programs, launching new services (wireless Internet, Virtual Private Network and the IR service) and improving the network. The Company has also been in discussion with PCT creditors to reduce the level of debt. TA Orange x Total subscribers increased 488,762 or 36.6 percent during full-year 2003 to 1.8 million, up from 1.3 million in 2002. x The ARPU of TA Orange declined slightly from Baht 495 in 2002 to Baht 484 in 2003. x TA Orange reached EBITDA break-even in September 2003. The trend continued into the fourth quarter, resulting in an EBITDA contribution of Baht 107 million to the Company’s consolidated results. TA Orange’s negative EBITDA contribution for full year 2003 was Baht 266 million, a significant decline from the Baht 1.8 billion in 2002. This resulted from a 74.4 percent growth in revenue contribution to Baht 5.1 billion in 2003, compared with Baht 2.9 billion in 2002, while cash operating expense grew only 12.2 percent.

TATO: Financial Status and Performance

118


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

x However, TA Orange contributed Baht 2.8 billion to the Company’s net loss in 2003, compared with Baht 335 million in 2002. This was due to the lack of a gain from a negative goodwill write-back, compared with a gain of Baht 2.3 billion in 2002. DDN (Digital Data Network x Revenues decreased 3.0 percent from 2002 to Baht 1.2 billion in 2003. This was mainly due to TA Orange expanding its own network and disconnecting parts of its network rented from the Company to reduce costs. x DDN circuits, however, grew by 10.3 percent in 2003 to 7,835, due mainly to strong 20.4 percent growth in non-TA Orange circuits in 2003 (to 6,529 circuits from 5,424 in 2002). x In 2003, TelecomAsia launched a new data solution service called TA Network Manager. The services combines three major network operation services, including network performance management, fault management and configuration management. Internet x Internet revenue grew strongly by 138.0 percent to Baht 471 million in 2003, compared with Baht 198 million in 2002. x Subscriber numbers grew by 89.4 percent to 652,726, driven by the successful launch of new services, including TA easy click. In addition, there was a high uptake of the ready-to-use Internet kit, and an increase in Broadband and business customers. x TelecomAsia moved into the on-line game business in 2003 and now operates seven popular games including Priston Tale, from the Republic of Korea. The expansion into on-line game business is designed to further grow the Company’s Broadband business. There are now more than 1 million on-line game users in Thailand.

TATO: Financial Status and Performance

119


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Multimedia / Broadband x Revenue increased by 16.4 percent to Baht 1.0 billion in the full year 2003, most of which came from managed data network and broadband services. x Total Broadband subscribers, including ADSL and cable modem users, increased 214 percent in 2003 to 11,661. ADSL subscribers almost tripled to 10,643. x The Company was voted ‘Thailand’s most preferred Broadband provider’ by customers. x The Company expanded its ADSL network to cover most of the BMA area, which will increase capacity by another 100,000 ports by April 2004. x In July 2003, the Company launched a bundled broadband and Internet service called hi-speed Internet to provide one-stop, Broadband Internet access to home users at the speed of 128 Kilobits per second (Kbps) to 8 Megabits per second (Mbps) with a self-installed modem. Ease of use and affordability resulted in the service being well received by the market. x In December 2003 the Company made Broadband more affordable by offering Hispeed Internet at a reduced charge starting at Baht 550 per month for unlimited local use of 256 Kbps service. The service has been positively received by the market, powering rapid growth in the business. The revenue from this service has been recorded under the Internet segment. x In 2003, TelecomAsia installed TA stations, a coin-operated, high-speed net kiosk, which offers a net access speed of 512 Kbps. The stations, which have a built in digital camera, can also download movies, music, games, ring-tones and logos, as well provide karaoke services, at a charge of Baht 1.5 per minute. x The Company also launched TA WiFi, a wireless technology that provides high speed (11 Mbps) Internet access at designated ‘hot spots’. The technology allows for wireless online information dispatch and receipt via notebook computers and PDAs

TATO: Financial Status and Performance

120


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

through high frequency radio waves. This business is at a developmental stage. Gaining first mover advantage is seen as a key success factor for the business. Results by Segment

(Baht in millions)

Fixed line Basic (POTS) Value-added services Digital Data Network (DDN) Wireless PCT TA Orange 1/ Multimedia/Broadband Internet Others Group Unallocated Costs

2003

Turnover 2002

16,893 13,644 3,249 1,183 7,228 2,087 5,141 1,097 471 1,078 27,950

16,125 13,687 2,438 1,219 6,096 2,949 3,147 942 198 1,203 25,783

% Change 4.8 (0.3) 33.3 (3.0) 18.6 (29.2) 63.4 16.4 138.0 (10.4) 8.4

Segment Results 2003 2002 % Change 5,373

5,093

5.5

689 (2,757)

742 (2,397)

(7.1) (15.0)

102 182 169 3,758 (3,859)

40 25 200 3,703 (3,200)

157.6 615.6 (15.5) 1.5 (20.6)

Notes : 1/ Including handset sales by other subsidiaries. 2/ Segment results excluding non-recurring items. 3/ Segment results for wireline and DDN represent gross profit but those for wireless, multimedia and Internet represent operating profit. 4/ There were retroactive adjustments in FY2002 results relating to reclassification in accounts. These resulted in slight changes in the following accounts from the previous release ; revenues, SG&A, interest expenses and other income (expenses).

TATO: Financial Status and Performance

121


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Financial Position Assets x The Company’s total consolidated assets decreased by Baht 6.2 billion to Baht 86.8 billion, due mainly to reduce value of property, plant and equipment, after this year depreciation. x Cash and cash equivalents, restricted cash and short-term investments. The Company and its subsidiaries had a stronger cash position in 2003 compared with 2002. The combined amount of cash and cash equivalent, restricted cash and shortterm investments totaled Baht 8.2 billion in 2003, compared with Baht 7.6 billion in 2002. As at December 2003, the Company had short-term investments of Baht 3.5 billion, most of which were treasury bills at the parent company level. A portion of short-term investment was freed-up cash from the refinancing of Thai bank Baht loans in October 2003. x Trade accounts receivable (net) decreased Baht 1.4 billion to Baht 5.5 billion, due mainly to the absence of disputed Value Added Tax amounting to Baht 890 million as the Company resolved the issue in July 2003. In addition, receivables from TOT (the amount paid by customers which the Company has not yet received from TOT) decreased Baht 344 million, while allowance for doubtful debt increased slightly by Baht 212 million. The average collection period improved from 90 days in 2002 to 80 days in 2003. x Investment in subsidiaries, joint ventures and associates dropped Baht 386 million to Baht 3.6 billion, all of which related to investment in UBC. The decline was primarily due to amortization of goodwill for investment in UBC (Baht 380 million). Investment in subsidiaries, joint ventures and associates on a stand-alone basis was Baht 6.4 billion as of December 31, 2003, a decrease of Baht 4.2 billion from 2002, of which Baht 2.8 billion was a decrease in the value of investment in TA Orange due to its loss. x Property, Plant and Equipment decreased Baht 3.9 billion to Baht 63.0 billion at the end of 2003 due to depreciation of Baht 11.2 billion. The Company made additional investments in property, plant and equipment of Baht 6.9 billion, of which Baht 3.2 billion was for investment in the wireless network, principally TA Orange’s. TATO: Financial Status and Performance

122


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Liabilities x Total liabilities in 2003 decreased Baht 514 million to Baht 85.3 billion due mainly to the absence of accrued long-distance and conduit rental to TOT of Baht 866 million, as this issue was settled with TOT in July 2003. x Consolidated long-term borrowings and long-term trade accounts payable increased Baht 4.1 billion to Baht 76.8 billion as the increase in debt of Baht 8.1 billion, principally contributed by TA Orange, was offset by repayments from the Company and other subsidiaries totaling Baht 3.8 billion. The outstanding loans as of year-end 2003 included local debentures totaling Baht 21.1 billion. The current portion of long-term borrowings increased significantly by Baht 14 billion, due to most of TA Orange borrowings being recognized by the Company in the period maturing in March 2004. TA Orange is in negotiation with the creditors to refinance these loans into a long-term portion. The negotiations are expected to be complete in the second quarter of 2004. Shareholders’ Equity x Shareholders’ Equity decreased by Baht 5.7 billion to Baht 1.5 billion because of losses during the year. Capital Structure x The Company still has a high gearing ratio. Excluding TA Orange, the net debt to equity ratio increased from 7.0 times in 2002 to 9.6 times in 2003 due to the loss of Baht 5.7 billion in 2003. However, the net debt to EBITDA ratio was at 4.7 times as at December 31, 2003, compared with 5.1 times in 2002, due to repayment of debt and the improved cash position. x The Company plans to reducing debt further to obtain a more comfortable net debt to EBITDA ratio of around 3-4 times.

TATO: Financial Status and Performance

123


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Liquidity x Cash flows for the core fixed-line and data business were strong and continued to grow in 2003. Cash flow from operations (on a stand-alone basis) increased 3.1 percent to Baht 6.7 billion, mainly from the improvement in EBITDA. As a result, free cash flows (cash flows from operations less capital expenditure) grew by 6.9 percent to Baht 4.5 billion in 2003, after funding capital expenditure of Baht 2.2 billion. This was used for the repayment of loans totaling 2.9 billion while the remainder was invested in short-term investments. As a result the Company’s cash flow position in 2003 was stronger by Baht 1.4 billion (to Baht 5.3 billion, including cash and cash equivalents, restricted cash and short-term investments). x Including TA Orange, consolidated cash flows from operating activities increased Baht 2.6 billion to Baht 7.1 billion, mostly from TA Orange. However, this was insufficient to fund capital expenditure, therefore the Company and its subsidiary drew down additional loans of Baht 8.1 billion (Baht 7.4 billion of which was TA Orange). x Capital expenditure. The Company (on a stand-alone basis) expended Baht 2.2 billion of capital in 2003, principally in the AMDOC system, drop-wiring for new customers and for the development of value-added services. The Company also recognized capital expenditure made by TA Orange of Baht 7.4 billion (including payment of Baht 3.3 billion for work-in-process as of end of 2002).

TATO: Financial Status and Performance

124


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

13. OTHER RELATED INFORMATION The Board of Directors’ meeting of TelecomAsia Corporation Public Company Limited (the “Company”) No.2/2547 has passed the following important resolutions: 1. Approvals were given for the Company to enter into agreements with Orange S.A., Orange Personal Communications Services Ltd. and Wirefree Services Belgium S.A. (together the “Orange Group”) which were shareholders of Bangkok Inter Teletech Co., Ltd. ("BITCO") and which was in turn the parent company of TA Orange Co., Ltd. (“TAO”) (collectively referred to as “BITCO/TAO”) and for the Company to enter into other agreements relating to the purchase of shares in BITCO, including the shareholders agreement. Details of which were summarized as follows: As from the date of the agreement, Orange Group would hand over the management in BITCO/TAO to the Company in order to improve the business condition of BITCO and to find a long term loan (“Refinancing”) for TAO. After TAO obtained the Refinacing, then the Company would purchase from Orange Group 819,000,000 ordinary shares in BITCO, or amounting to 39% of the total issued shares of BITCO, at the total purchase price of Baht 1 (One Baht). After such sale, Orange Group would hold approximately 10% shares in BITCO and no longer participate in the management of BITCO. Orange Group would also not undertake to provide financial support to BITCO/TAO in relation to the TAO Refinancing. In addition, each party agreed that upon completion of TAO Refinancing, each of them agreed to forgive the debts TA Orange Co., Ltd. owed to each of them in the amount of Baht 200 million each as a financial support to TAO. However, in case TAO was unable to procure for the Refinancing within 29 September 2004, the Company would not purchase the shares in BITCO and all other agreements would also not become effective. Further, the completion of the purchase of BITCO shares from Orange Group would result in BITCO becoming the new subsidiary of the Company.

TATP: Other Related Information

125


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

The sale of ordinary shares in BITCO by Orange Group to the Company would not affect the operation of TAO (which is a subsidiary of BITCO in which BITCO holds 99.81% shares) because Orange Group agreed that in case TAO could arrange for the Refinancing and the Company completed the purchase of shares in BITCO from Orange Group, then TAO was still licensed to continue using trademark and service mark of “Orange”, including the name “Orange” and logo and slogan of Orange for another 3 year period from the date of the sale and purchase of the shares with no royalty charge. In case TAO started using new service mark, then the period the TAO was licensed to use the various marks of Orange would be reduced to 6 months from the date of use of the new service mark. The Board of Directors was of the view that even though those matters were in favor of the Company but these matters were also in the interest of the shareholders in general. Therefore, in order to be in line with the principle of Good Corporate Governance, the matters should therefore be brought for consideration and approval of the shareholders meeting. Details of the purchase of said ordinary shares appeared in the Information on Purchase of Ordinary Shares in BITCO enclosed herewith. Information on Purchase of Ordinary Shares in BITCO 1. Agreement for Purchase of Shares and the Purchase of Shares The Board of Directors’ meeting of the Company approved the Company to enter into agreements with Orange S.A., Orange Personal Communications Services Ltd. and Wirefree Services Belgium S.A. (together the “Orange Group”) which were shareholders of Bangkok Inter Teletech Co., Ltd. ("BITCO") and which was in turn the parent company of TA Orange Co., Ltd. (“TAO”) (collectively referred to as “BITCO/TAO”) and approved the Company to enter into other agreements relating to the purchase of shares in BITCO, including the shareholders agreement. Details of which were summarized as follows: As from the date of the agreement, Orange Group would hand over the management in BITCO/TAO to the Company in order to improve the business condition of BITCO and to find a long term loan (“Refinancing”) for TAO. After TAO obtained the Refinancing, then the Company would purchase from Orange Group 819,000,000 ordinary shares in BITCO, TATP: Other Related Information

126


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

or amounting to 39% of the total issued shares of BITCO, at the total purchase price of Baht 1 (One Baht). After such sale, Orange Group would hold approximately 10% shares in BITCO and no longer participate in the management of BITCO. Orange Group would also not obligate to provide financial support to BITCO/TAO in relation to the TAO Refinancing. At present, the Company holds 43.86% shares in BITCO. After completion of the share purchase from the seller of the shares, the Company would hold 82.86% shares in BITCO. The seller of the shares will still hold 10% shares in BITCO. Orange Group and the Company is not a connected person pursuant to the notification of Board of The Stock Exchange of Thailand regarding disclosure of information and performance of listed company on connected transaction, B.E. 2546. 2. Size of Transaction The size of the transaction is less than 0.01% calculated by comparing the value of the consideration (eg, purchase price of the shares of Baht 1) with the value of the total assets of the Company and its subsidiaries pursuant to the audited consolidated financial statements of the Company as of 31 December 2003. As a result, said share purchase transaction is not required to prepare and disclose such information pursuant to the notification of The Stock Exchange of Thailand regarding criteria, procedures and disclosure of acquisition or disposition of assets of listed companies in any respect. However, the Board of Directors of the Company considered and was of the view that this matter was important to the shareholders and investors and therefore was appropriate for the shareholders’ meeting to consider and approve the said share purchase transaction, including any implementation in relation thereto, in order to illustrate transparency and promote good corporate governance, and that the Company will hold the shareholders’ meeting to consider this matter on 9 April 2004 at 2.00 p.m. 3. Information on BITCO Nature of business:

TATP: Other Related Information

Holding shares for investment purpose whereby BITCO holds 99.81% of shares in TA Orange Company Limited, who is the operator of the GSM 1800 MHz cellular phone business under a 127


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

concession granted by the Communication Authority of Thailand Authorized capital:

Baht 21,000 million

Issued and paid-up capital: Baht 21,000 million Board of Directors: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

Mr. Dhanin Chearavanont Mr. Sunthorn Arunanondchai Mr. Vallobh Vimolvanich Mr. Athueck Asvanund Mr. Soopakij chearavanont Mr. Supachai Chearavanont Mr. Kachorn Chiaravanont Mr. Heinrich Wilhelm Fritz Heims Mr. Joti Bhokavanij Mr. Hans Roger Snook Mr. Wilfried A. Verstraete Mrs. Brigitte Marie Castagnet Bourgoin Mr. Richard Frank Moat Ms. Martial Antoine Marcel CARATTI Mr. Pierre Marie Jacques DELMOND-BEBET Mr. David Jeremy Holliday Mr. James McPherson Heywood Mr. Yong Tick Chee

4. Determination of Share Purchase Price The price is an agreed price between the buyer and the seller of the shares. It was an intention of the seller to enable TAO to arrange the Refinancing and that the seller would no longer obligate to inject additional equity in TAO. The agreements have not specified that the Company had to assume debt obligations or obligate to provide any financial support the seller or Orange has with the creditors of BITCO/TAO in any respects. In addition, the debt obligations or obligation to provide TATP: Other Related Information

128


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

financial support of the seller or Orange to inject money into TAO should be extinguished when BITCO/TAO complete the debt restructuring negotiations with the creditors and the creditors agree to the discharge of said obligations in favor of the seller. At present, the Company cannot anticipate the outcome of the said debt restructuring negotiations. When such debt obligation is extinguished, the Company would then purchase the said shares in BITCO. 5. Expected Benefits for the Company The Company would not bear any risk on the uncertainty of the outcome of the TAO debt restructuring negotiation, because the Company will buy the shares when the TAO debt restructuring negotiation is completed to the satisfaction of the Company. In other word, the Company would buy those shares when there is no risk. In case the TAO debt restructuring is not successful, the Company then will not buy the shares and will not incur any additional responsibility. The obligations towards the TAO creditors will remain the same. In case the TAO debt restructuring is successful, the Company could have full management control over TAO since the Company will hold 82.86% shares in BITCO and BITCO in turn hold 99.81% shares in a mobile phone company, TAO. This is not only resulting in a more flexibility in managing TAO business but also making the group become a more full service business. In other word, the Company will be the operators of both fixed line and mobile phone businesses and would gain other benefits from this combination using the same network and customer base. Eventually it will expedite the growth of the Company’s business. The seller of the shares also foresees said benefits and therefore retained certain portion of shares in BITCO in expectation for certain return that should derive from future operation as the shareholders of BITCO. Further, TAO entered into a Brand License Agreement with Orange Personal Communication Services Ltd. (“OPC”) who is the owner of the Brand/Right “Orange” and “Wirefree”. Under said Agreement, OPC agrees to license TAO to continue the use of its trade and service marks, name, logo or slogan of Orange and as well as any other relevant rights in Thailand for another 3 years from the date of completion of the share sale and purchase with no royalty fee. When TAO uses its own mark, the royalty free period of using the Orange mark will be reduced to 6 months. If the debt restructuring is not successful and the Company does not buy shares, the said Brand License Agreement will be inapplicable and therefore TAO can still use the “Orange” mark according to the TATP: Other Related Information

129


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

original Brand License Agreement up to its original term of 20 years with an annual royalty fee payment. 6. Key Financial Information of BITCO (According to the audited consolidated financial statements as of 31 December 2003) Year 2003 (Million Baht) Total revenue Net profit (loss) Total assets Total liabilities Net tangible assets

11,792 (6,637) 44,264 38,670 2,994

7. Other Information (a)

If the TAO debt restructuring is completed and the Company purchases the shares in BITCO, the Company and Orange Group agree to forgive the debts TAO has with the Company and Orange Group in the amount of up to Baht 200 million each, so that TAO will have more financial liquidity which will be beneficial to the business operation of TAO.

(b)

The Company, Wirefree Services Belgium S.A. and Charoen Pokphand Group enters into a shareholders agreement in relation to BITCO. Details of the agreement were that Wirefree Services Belgium S.A. still has the right to nominate one director in BITCO and one in TAO insofar as Wirefree Services Belgium S.A. and/or companies in its group hold not less than 4% shares in BITCO. The seller of the shares will reduce their role to be just a general shareholders in BITCO/TAO (financial investor) without participating in the management. The seller will be afforded anti-dilution right with respect to capital increase by issuing shares at a price less than par value. In other word, in case there will be a capital increase in BITCO/TAO for the purpose of the debt restructuring at the price less than par value, said capital increase will not result in reducing the seller’s than 10% shareholding in TAO to be less than 4%. In case of capital increase by

TATP: Other Related Information

130


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

issuing new shares at par value or higher price, the said anti-dilution will be inapplicable. This shareholders agreement is in effect insofar as Wirefree Services Belgium S.A. or companies in its group hold not less than 4% shares in BITCO. This shareholders agreement does not require the Company or Charoen Pokphand Group Company Limited to vote in the same direction and therefore is not considered as a connected transaction. In case the shareholders meeting does not approve the entering into of said agreement, Charoen Pokphand Group Company Limited can purchase the shares in BITCO and to assume the rights and obligations in place of the Company. 2. Approvals were given in respect of amendment of agenda of the Annual General Shareholders Meeting for the year 2004 to be held on 9 April 2004 at 2:00 p.m. at the Auditorium Room on the 21st Floor, Telecom Tower, located at No. 18 Ratchadaphisek Road, Huai Khwang District, Bangkok, to be as follows: 1) Adopt the minutes of the Extraordinary General Shareholders Meeting No. 1/2547 (the Board recommended the said minutes be adopted); 2) Acknowledge the report on the result of business operation of the Company for the year 2003; 3) Consider and approve the Balance Sheet and the Profit and Loss Statements of the Company for the fiscal year ended 31st December 2003 (the Board recommended the said Balance Sheet and the Profit and Loss Statements of the Company be approved); 4) Consider and approve the payment of dividends and appropriation of net profits for the year 2003 as reserve (the Board recommended the Company not to pay dividends nor appropriate a reserve); 5) Consider the election of directors in place of those who retired by rotation (the Board recommended the retiring directors, namely, 1. Mr. Narong Srisa-an, 2. Mr. Athueck Asvanund, 3. Mr. Heinrich Heims, 4. Mr. Umroong Sanphasitvong,

TATP: Other Related Information

131


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

5. Mr. Vichaow Rakphongphairoj, 6. Mr. Chatchaval Jiaravanon, and 7. Mr. Soopakij Cheravanont be re-elected to resume their positions as the directors of the Company); 6) Consider the appointment of the Company’s auditors and fix their remuneration for the year 2004 (the Board recommended that auditors from Pricewaterhouse Coopers ABAS Limited should be appointed as the Company’s auditors and the Board would submit their remuneration to the shareholders meeting for consideration); 7) Consider and approve the purchase of ordinary shares in Bangkok Inter Teletech Co., Ltd. (after completion of Refinancing) pursuant to the Agreement for the purchase of shares and the entering into the shareholders agreement (the Board recommended that said purchase transaction under the Agreement for the purchase of shares and the entering into the shareholders agreement should be proceeded) 8) Other business, if any. 3. Approved that the closing date of the Share Register Book of the Company to determine the rights to attend the Annual General Shareholders Meeting of the Company for the year 2004 remained on 22 March 2004 at 12.00 noon until the shareholders meeting would be finished.

TATP: Other Related Information

132


Independent Director

Independent Director and Chairman of the Audit Committee

Mr. Vitthya Vejjajiva

Position

Mr. Narong Srisa-an

Name

67

76

Age (year)

-

10,000 shares

TA Share Ownership (31/12/03)

-

-

Family Relationship

DIRECTORS’ INFORMATION (AS OF 31ST DECEMBER 2003)

English Barrister Gray’s Inn Association

Bachelor of Laws University of Cambridge, London

Master Degree of Arts University of Cambridge, London

Master Degree of Laws Harvard University, U.S.A.

Honorary Master Degree of Economics, Thammasat University

Education

1981 1979

1984

1991-1992 1988

1998-Present

Present

1998-Present

Independent Director and Chairman of the Audit Committee, TelecomAsia Corporation Public Company Limited Chairman K Line (Thailand) Limited and its subsidiaries Permanent Secretary of the Ministry of Foreign Affairs Ambassador Extraordinary and Plenipotentiary of the United States of America Ambassador Extraordinary and Plenipotentiary of Belgium and the European Community Ambassador Extraordinary and Plenipotentiary of Canada Director General of Department of Economic Affairs

Independent Director TelecomAsia Corporation Public Company Limited Chairman Eastern Seaboard Industrial Estate (Rayong) Company Limited Chairman Advanced Agro Public Company Limited Chairman of the Executive Board Beer Thai (1991) Public Company Limited Vice Chairman and Chairman of the Executive Board Siam Food Products Public Company Limited Vice Chairman General Tobacco Company Limited Vice Chairman Berli Jucker Public Company Limited Executive Director Com-link Company Limited

Experience

Appendix 1


Independent Director and Member of the Audit Committee

Mr. Joti Bhokavanij

Chairman

Independent Director and Member of the Audit Committee

Dr. Kosol Petchsuwan

Mr. Dhanin Chearavanont

Position

Name

64

61

65

Age (year)

-

-

-

TA Share Ownership (31/12/03)

Mr. Supachai and Mr. Soopakij’s father

-

-

Family Relationship

Shantou Secondary School The People’s Republic of China

Commercial School, Hong Kong

Marketing Management Programme, Stanford University, Graduate School of Business (U.S.A.)

Programme for Management Development, Harvard Business School(U.S.A.)

Fellow of The Association of Chartered Certified Accountants, England

Bachelor of Engineering, University of London, England

Doctorate of Engineering, University of London, England

Education

1989-Present

1992-1994

1994-1997

2000-2001

Present

1999-Present

1998-2000

1997-2001

2000-2001

1999-Present

1999-Present

Chairman TelecomAsia Corporation Public Company Limited Chairman and Chief Executive Officer Charoen Pokphand Group Company Limited and Chia Tai Group Company Limited Chairman Charoen Pokphand Foods Public Company Limited

Independent Director and member of the Audit Committee TelecomAsia Corporation Public Company Limited Director and member of Nomination and Remuneration Committee Bangkok Bank Public Company Limited Executive Chairman TISCO Finance Public Company Limited Executive Chairman Thai Wah Group of Companies Managing Director The East Asiatic (Thailand) Public Company Limited Consult-General of Denmark for Bangkok

Independent Director and member of the Audit Committee TelecomAsia Corporation Public Company Limited President The Telecommunications Association of Thailand Chairman The Aeronautical Radio of Thailand Limited Director The Press Council of Thailand Independent Director and Member of the Audit Committee PTT Exploration and Production Public Company Limited

Experience

Appendix 1


Position

Vice Chairman

Vice Chairman

Vice Chairman

Name

Mr. Sumet Jiaravanon

Dr. Ajva Taulananda

Mr. Chaleo Souvannakitti

75

66

69

Age (year)

3,500,000 shares

-

150,000 shares

TA Share Ownership (31/12/03)

-

-

Mr. Chatchaval’s father

Family Relationship

Bachelor of Accounting The faculty of Commerce and Accountancy, Chulalongkorn University

Master Degree of Business Administration Indiana University, U.S.A.

Special Certificate: Public – Private joint defence curricum, Class 1 The National Defence College of Thailand

Bachelor of Industrial Engineering, Chulalongkorn University

Master Degree of Industrial Engineering, Iowa State of University, U.S.A.

Doctorate of Industrial Engineering and System, Illinois Institute of Technology, U.S.A.

Honorary Doctorate of Engineering Chulalongkorn University

Honorary Doctorate of Engineering Ramkhamhaeng University

Secondary School Sarasitphitayalai, Ratchaburi

Education

1992-Present

1991-1992

1993-1999

1992-Present

1993-Present

Vice Chairman TelecomAsia Corporation Public Company Limited Director Telecom Holding Company Limited

Vice Chairman TelecomAsia Corporation Public Company Limited Vice Chairman Charoen Pokphand Group Company Limited Chairman The Thai Chamber of Commerce and Board of Trade of Thailand Director and President TelecomAsia Corporation Public Company Limited Deputy Minister, Ministry of Agriculture and Cooperatives

Vice Chairman TelecomAsia Corporation Public Company Limited Executive Chairman Charoen Pokphand Group Company Limited

Experience

Appendix 1


Vice Chairman and Group General Counsel

Director, President and Chief Executive Officer

Director

Mr. Athueck Asvanund*

Mr. Supachai Chearavanont*

Mr. Soopakij Chearavanont*

* Authorized Signatory

Position

Name

39

36

52

Age (year)

-

1,240,000 shares

-

TA Share Ownership (31/12/03)

-

-

-

Family Relationship

Bachelor of Business Administration New York University, U.S.A.

Bachelor of Business Administration in Financial Management Boston University, U.S.A.

Bachelor of Laws (Honours) Thammasat University

Master Degree of Laws specialized in International Legal Studies New York University, U.S.A.

Education

1991-Present

1998-Present

2000-Present

1992-Present

1992- 1999

1999-Present

1978-1997

1997-Present

Director TelecomAsia Corporation Public Company Limited Executive Chairman Telecom Holding Company Limited Chairman United Broadcasting Corporation Public Company Limited Chairman AT&T Network Technology (Thailand) Company Limited

Director, President and Chief Executive Officer TelecomAsia Corporation Public Company Limited Director and Senior Executive Vice President TelecomAsia Corporation Public Company Limited

Vice Chairman and Group General Counsel TelecomAsia Corporation Public Company Limited Director Telecom Holding Company Limited Director Asia Multimedia Company Limited Group General Counsel Charoen Pokphand Group Company Limited Director CP Seven Eleven Corporation Public Company Limited Director United Broadcasting Corporation Public Company Limited Baker & McKenzie

Experience

Appendix 1


Director and Managing Director Group Investment

Director Managing Director and Chief Operating Officer

Mr. Chatchaval Jiaravanon*

Mr. Vichaow Rakphongphairoj*

* Authorized Signatory

Position

Name

46

41

Age (year)

-

-

TA Share Ownership (31/12/03)

-

-

Family Relationship

Bachelor of Electrical Engineering Arizona State University, U.S.A.

Master Degree of Electrical Engineering University of Wisconsin, U.S.A.

Master Degree of Business Administration Pepperdine University, U.S.A.

Bachelor of Science Business Administration University of Southern California, U.S.A.

Education

Director, Managing Director and Chief Operating Officer TelecomAsia Corporation Public Company Limited E.V.P., Business & Enterprise TelecomAsia Corporation Public Company Limited E.V.P., Central Operation & Information Technology TelecomAsia Corporation Public Company Limited Region Director, Bangkok-Southeast Region TelecomAsia Corporation Public Company Limited Region Director, Bangkok-West Region TelecomAsia Corporation Public Company Limited

2000-Present

1995-1996

1996-1997

1997-1998

1998-2000

1990-Present

1992-Present

1997-Present

1998-Present

2000-Present

2001-Present

Director and Managing Director-Group Investment TelecomAsia Corporation Public Company Limited Director and member of Audit Committee Ticon Industrial Connection Public Company Limited President and C.E.O. Telecom Holding Company Limited Independent Director Cal-Comp Electronics (Thailand) Public Company Limited Executive Chairman Cambodia Mobile Telephone Company Limited C.E.O. Asia Multimedia Company Limited Asianet Corporation Company Limited Asia Infonet Company Limited Director Thai Kodama Company Limited Director Metro Machinery Public Company Limited 1993-Present

Experience

Appendix 1


Position

Director

Director

Director

Director

Name

Mr. Umroong Sanphasitvong

Mr. Heinrich Heims

Mr. Klaus Tuengeler

Mr. Claus Stadler

46

62

52

50

Age (year)

-

-

-

384,000 shares

TA Share Ownership (31/12/03)

-

-

-

-

Family Relationship

Law School of the University of Bielefeld, Germany

Degree:dipl. rer. pol.(techn)

Graduated as Technischer Diplombetriebswirt from Karlsruhe University

Commercial apprenticeship at Metallgesellschaft AG

Abitur (leaving examination) Liebig Gymnasium,Frankfurt/M

State Examination.(Graduate in Economics)

Educational Sciences. Studies at the Freie University Berlin, with

Abitur at Schiller Gymnasium, Hameln Studies at the Freie University Berlin

Bachelor of Accounting, Thammasat University

Master Degree of Accounting, Thammasat University

Education

Present

2000-Present

Present

2000-Present

1978-1998

1998-Present

2000-Present

Present

2001-Present

Director TelecomAsia Corporation Public Company Limited Deputy General Counsel, Head of the Legal Department (Frankfurt) Kreditanstalt f端r Wiederaufbau

Director TelecomAsia Corporation Public Company Limited First Vice President-Export and Project Finance Telecommunications, Natural Resources Kreditanstalt f端r Wiederaufbau

Director TelecomAsia Corporation Public Company Limited Senior Vice President - Export and Project Finance Kreditanstalt f端r Wiederaufbau Export Finance Kreditanstalt f端r Wiederaufbau

Director TelecomAsia Corporation Public Company Limited Deputy Group CFO Charoen Pokphand Group Company Limited Director C.P. Seven Eleven Public Company Limited Director Vinythai Public Company Limited

Experience

Appendix 1


Director

Director

Director

Mr. Harald Link

Dr. Lee G. Lam

Position

Mr. Andreas Klocke

Name

44

45

47

Age (year)

-

50,000 shares

3,500 shares

TA Share Ownership (31/12/03)

-

-

-

Family Relationship

1997-Present

2000-Present

Present

2000-Present

1981-1989

1989-1993

1993-1995

Post-graduate Diploma of Public Administration 1998-1999 from Carlton University, Canada 1996-1998

Master Degree of Systems Science and MBA from the University of Ottawa, Canada 2001-2003 Bachelor of Sciences and Mathematics from 1999-2001 the University of Ottawa, Canada

Doctorate of Philosophy from the University of 2003-Present Hong Kong

MBA, University of St. Gallen

DIPLOMA VOLKSWIRT University of Hamburg, Germany

M.A. International Relations, University of KANSAS, U.S.A.

Education

Director TelecomAsia Corporation Public Company Limited Vice Chairman / President & CEO Chia Tai Enterprises International Limited Managing Director BOC International Holdings Limited (“BOCI”) Executive Director Singapore Technologies Telemedia Partner-in-charge Heidrick & Struggles President & CEO Millicom International Cellular Asia Pacific Operations Managing Partner A.T. Kearney, Inc. General Manager Cable & Wireless/Hongkong Telecom Senior Executive Bell Canada

Director TelecomAsia Corporation Public Company Limited Managing Partner, B. Grimm & Co. R.O.P.

Director TelecomAsia Corporation Public Company Limited Head of KfW’s South-East Asia Regional office in Bangkok in Charge of KfW Affairs in Thailand and South- East Asia Region

Experience

Appendix 1


Position

Director, President and Chief Executive Officer

Director Managing Director and Chief Operating Officer

Director and Managing Director Group Investment

Name

Mr. Supachai Chearavanont

Mr. Vichaow Rakphongphairoj

Mr. Chatchaval Jiaravanon

41

46

36

Age (year)

-

-

1,240,000 shares

TA Share Ownership (31/12/03)

-

-

-

Family Relationship

EXECUTIVE OFFICERS’ INFORMATION (AS OF 31ST DECEMBER 2003)

Bachelor of Science Business Administration University of Southern California, U.S.A.

Bachelor of Electrical Engineering Arizona State University, U.S.A.

Master Degree of Electrical Engineering University of Wisconsin, U.S.A.

Master Degree of Business Administration Pepperdine University, U.S.A.

Bachelor of Business Administration in Financial Management Boston University U.S.A.

Education

Director, Managing Director and Chief Operating Officer TelecomAsia Corporation Public Company Limited E.V.P., Business & Enterprise TelecomAsia Corporation Public Company Limited E.V.P., Central Operation & Information Technology TelecomAsia Corporation Public Company Limited Region Director, Bangkok-Southeast Region TelecomAsia Corporation Public Company Limited Region Director, Bangkok-West Region TelecomAsia Corporation Public Company Limited Director and Managing Director-Group Investment TelecomAsia Corporation Public Company Limited Director and member of Audit Committee Ticon Industrial Connection Public Company Limited President and C.E.O. Telecom Holding Company Limited Independent Director Cal-Comp Electronics (Thailand) Public Company Limited Executive Chairman Cambodia Mobile Telephone Company Limited C.E.O. Asia Multimedia Company Limited Asianet Corporation Company Limited Asia Infonet Company Limited Director Thai Kodama Company Limited Director Metro Machinery Public Company Limited

2000-Present

1993-Present

1990-Present

1992-Present

1997-Present

1998-Present

2000-Present

2001-Present

1995-1996

1996-1997

1997-1998

1998-2000

1992- 1999

Director, President and Chief Executive Officer TelecomAsia Corporation Public Company Limited Director and Senior Executive Vice President TelecomAsia Corporation Public Company Limited

1999-Present

Experience

Appendix 1


Mr. Adhiruth Thothaveesansuk

Managing Director Office / SME Solution & Wireless Access

Chief Financial Officer

Vice Chairman and Group General Counsel

Mr. Athueck Asvanund

Mr. William E. Harris

Position

Name

41

42

52

Age (year)

-

100,000 shares

-

TA Share Ownership (31/12/03)

-

-

-

Family Relationship

1978-1997

1997-Present

Bachelor of Industrial Management, Thammasat University

Master Degree of Finance & Marketing, Indiana University of Pennsylvania, U.S.A.

Bachelor of Science in Economics, Wharton School of the University of Pennsylvania

1998-2001

1998-2002

2001

2002

2003-Present

1993-1998

Master Degree of Business Administration, 2001-Present Major in Finance and Marketing, Wharton School of the University of Pennsylvania 1998-2000

Bachelor of Laws (Honours), Thammasat University

Master Degree of Laws specialized in International Legal Studies New York University, U.S.A.

Education

Managing Director, Office / SME Solution & Wireless Access TelecomAsia Corporation Public Company Limited Acting President Asia Wireless Communication Company Limited Chief Commercial Officer TA Orange Company Limited Executive Vice President TelecomAsia Corporation Public Company Limited General Manager Wire & Wireless Company Limited President Asia Wireless Communication

Chief Financial Officer TelecomAsia Corporation Public Company Limited Executive Vice President - Corporate Finance TelecomAsia Corporation Public Company Limited Director Credit Policy, Verizon Communications, Philadelphia

Vice Chairman and Group General counsel TelecomAsia Corporation Public Company Limited Director Telecom Holding Company Limited Director Asia Multimedia Company Limited Group General Counsel Charoen Pokphand Group Company Limited Director CP Seven Eleven Corporation Public Company Limited Director United Broadcasting Corporation Public Company Limited Baker & McKenzie

Experience

Appendix 1


50

Managing Director Home / Consumer Solution & Highspeed Access

Mr. Chitchai Nantapat

Age (year)

46

Position

Mr. Songtham Phianpattanawit Managing Director Corporate Solution, Wholesales & Data

Name

-

-

TA Share Ownership (31/12/03)

-

-

Family Relationship

Bachelor Degree of Engineering (Electrical) King Mongkut’s Institute of Technology, Ladkrabang Campus

Bachelor of Science (Computer Science) University of South Alabama, U.S.A.

Education

1997-1999

1992-2000

2001-2002

1999-2003

Present

1997

1998

2000

2001-2002

2003-2001

Present

Managing Director - Home / Consumer Solution & Highspeed Access TelecomAsia Corporation Public Company Limited Executive Vice President Loxley Public Company Limited President & CEO Hutchison CAT Wireless Multimedia Company Limited President & CEO Hutchison Telecommunications (Thailand) Company Limited First Senior Vice President Loxley Public Company Limited

Managing Director - Corporate Solution ,Wholesales & Data TelecomAsia Corporation Public Company Limited Country General Manager / MD IBM Thailand Company Limited Chairman IBM Solution Delivery Company Limited Director IBM Storage Product Thailand Company Limited Director, Sales & Marketing IBM Thailand Company Limited Country Manager, System Sales IBM Thailand Company Limited Country Manager Finance & Administration and CFO IBM Thailand Company Limited Service Business Executive IBM Thailand Company Limited

Experience

Appendix 1


Link

Rakphongphairoj

Sanphasitvong

G. Lam

17. Mr. Harald

18. Mr. Vichaow

19. Mr. Umroong

20. Mr. Lee

/

/

/

/

/

/

/

/

X

/

/

/

/

/

/

X

X

/

X

XX

TA

XX = Chairman

Klocke

16. Mr. Andreas

* = External Director

Stadler

15. Mr. Claus

Remark :

Tuengeler

Chearavanont

14. Mr. Klaus

Mr. Supachai

9.

Chearavanont

Heims

Mr. Soopakij

8.

Jiaravanon

13. Mr. Heinrich

Mr. Chatchaval

7.

Petchsuwan *

Asvanund

Dr. Kosol

6.

Taulanda

12. Mr. Athueck

Dr. Ajva

5.

Souvannakitti

Vejjajiva *

Mr. Chaleo

4.

Bhokavanij*

11. Mr. Vitthya

Mr. Joti

3.

Jiaravanon

Srisa-an *

Mr. Sumet

2.

Chearavanont

10. Mr. Narong

Mr. Dhanin

1.

Name

TH

Nilubon

/

/

/

/

/

TE

/

W7

/

/

/

/

/

Yaikaew

X = Vice Chairman / = Director

/

/

X

/

/

/

X

/

/

/

TI

/

/

/

/

/

K.I.N.

/

/

TT&D

/

/

/

/

TEMCO

/

/

W&W

/

/

XX

/

/

U-NET

/

/

/

/

/

ANC

/

/

/

/

Asia DBS

/

/

/

/

/

AI

/

/

/

/

/

/

XX

/

/

AWC

Subsidiaries/Associated Companies

/

/

/

/

/

AM

Information of Directors and Executive Officers (As of December 31,2003)

/

/

True-IDC

True digital

/

/

/

/

T-Pay

/

/

/

/

Nilubon (BVI) K.I.N. (BVI)

/

/

/

BITCO

/

/

/

/

/

/

TAO

/

/

/

/

/

/

UBC

/

/

XX

/

Appendix 1

NTU

/

TSC

/

/

/

NEC

/

ARM


Remark :

Telecom Training and Development Co., Ltd.

Telecom Equipment Manufacturing Co., Ltd.

Wire & Wireless Co., Ltd.

U-Net Co., Ltd.

Asianet Corporation Limited (Formerly named Interactive Media Services Co., Ltd.)

TT&D

TEMCO

W&W

U-NET

ANC

AI

Asia Infonet Co., Ltd.

Asia DBS PLC.

K.I.N. (Thailand) Co., Ltd.

K.I.N.

Asia DBS

Telecom International Co., Ltd.

TI

Yai Kaew Co., Ltd.

W7 Rental Services Co., Ltd.

W7

Yaikaew

Tele Engineering and Services Co., Ltd.

TE

Nilubon Co., Ltd.

Telecom Holding Co., Ltd.

TH

Nilubon

TelecomAsia Corporation PLC.

Full Name

TA

Abbreviation

-

ARM

NEC

TSC

NTU

UBC

TAO

BITCO

K.I.N. (BVI)

Nilubon (BVI)

T-Pay

True digital

True-IDC

AM

AWC

Abbreviation

-

Asia Remanufacturing Industries Co., Ltd.

NEC Corporation (Thailand) Co., Ltd. (Formerly named NEC Communication Systems Co., Ltd.)

Thai Smart Card Co., Ltd.

N.T.U. (Thailand) Limited

United Broadcasting Corporation PLC.

TA Co., Ltd.

Bangkok Inter Teletech Co., Ltd.

K.I.N. (Thailand) Co.,Ltd. (Registerred at BVI)

Nilubon Co.,Ltd. (Registerred at BVI)

T Pay Co.,Ltd.

True Digital Entertainment Co., Ltd.

True Internet Data Center Co., Ltd. (Formerly named TA Internet Data Center Co., Ltd.)

Asia Multimedia Co., Ltd.

Asia Wireless Communication Co., Ltd. (Formerly named Multimedia Network Co., Ltd.)

Full Name

Appendix 1


1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21.

Mr. Min Mr. Sunthorn Gen. Suchinda Mr. Montree Mr. Chaturong Mr. Khachorn Mr. Anat Mr. Somchai Mr. Phattarapong Mr. Surapol Mr. Rolf Herman Maj.Gen.M.R.Suphawat Mr. Frank Darel Mr. William E. Mr. Noppadol Mr. Thanachai Mr. Thavorn Mr. Pakkaporn Mr. Manit Mr. Adhiruth Mr. Samran

Name

Tieanworn Arunanondchai Kraprayoon Navikapol Chatupparisoot Chiarawanont Mekpaiboonvatana Putthipornset Phansiri Methidol Laus Khasemsri Mercer Harris Dejudom Wongthongsri Nakbutr Sathiconpakiranakorn Saikraw Thothaveesansuk Pongprayoon

TH

/ / / / /

Nilubon /

/

TE /

/

W7 /

Yaikaew / /

TT&D / /

TEMCO / /

W&W / / /

/

/ / / /

Asia DBS

K.I.N.

TI

Subsidiaries

/ /

/

AI

Information of Directors of Subsidiaries (As of December 31,2003)

/

/

AWC AM /

/

True-IDC / /

True digital / /

/

T-Pay /

Nilubon (BVI) /

/

BITCO /

/

TAO /

/

UBC /

Appendix 2

/

ARM NEC TSC

NTU

K.I.N. (BVI)

ANC

U-NET


22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42.

Mrs. Thippawan Wuttisarn Mr. Visit Rakvisitwong Mr. Songtham Phianpattanawit Mr. Sung Kil Park Mr. Jin Sok Kim Mr. Chitchai Nantapat Mr. Ong-ard Prapakamol Mr. Kashem Kornseri Mr. Taj Singusaha Mr. Ngampol Wichagonrakul Mr. Vallobh vimolvanich Mr. Hans Roger Snook Mr. Wilfree A. Verstrat Mrs. Bridget Marie Castagné Bourgouen Mr. Richard Frank Mote Mr. Macial Antoine Marcel Carrati Mr. Pierre Marie Jacques Delmont-Bébet Mr. David Jeremy Holiday Mr. James M. Heywood Mr. Young Tik Chi Mr. Bunsong Lujananont

Name AI

K.I.N.

TI

Yaikaew

W7

TE

Nilubon

TH

Subsidiaries AWC

Information of Directors of Subsidiaries (As of December 31,2003)

/ / /

AM

True-IDC / /

True digital / /

T-Pay / / /

BITCO / / / / / / / / / /

TAO / / / / / / / / / / /

Appendix 2

ARM NEC TSC

NTU

UBC

K.I.N. (BVI)

Nilubon (BVI)

Asia DBS

ANC

U-NET

W&W

TEMCO

TT&D


43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63.

Mr. Apirak Mr. Eben Mr. Antonie Andries Mr. John James Mr. Visit Mrs. Aranrat Mrs. Phenthippha Mr. Sahai Ms. Elizabeth Mr. Subin Mr. Songrit Mr. Pairat Mrs. Doris Gold Mr. Damrong Mr. Thavee Mr. Veerasak Mr. Kosak Mr. Pisit Mrs. Preeprem Mr. Surat Mr. Wirot

Name

Kosayodhin Greyling Roux Volkwyn Tantisunthorn Youkong Dulyachinda Supsunthornkul Wang Pinkayan Kusumarasananant Thachayaphong Wibulsin Kasemset Lerdpanyawit Hunmekhawit Chairasamisak Pakkasem Seriwong Palalikit Suphaphiphat

AI

TT&D

K.I.N.

TI

Yaikaew

W7

TE

Nilubon

TH

Subsidiaries AWC

Information of Directors of Subsidiaries (As of December 31,2003)

AM

UBC / / / / / / / / /

NTU / / / / / / /

Appendix 2

TSC / / / / /

ARM NEC TAO

BITCO

K.I.N. (BVI)

Nilubon (BVI)

T-Pay

True digital

True-IDC

Asia DBS

ANC

U-NET

W&W

TEMCO


64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80.

Mr. Yongyuth Mrs. Urairat Mr. Ri-eki Mr. Kuji Mr. Jin Mr. Akihisa Mr. Takeo Mr. Kiyofumi Mr. Terrence Michael Mr. Barry Michael Mr. David George Mr. Sarit Mr. Decha Mr. Supoj Mr. Wanniwat Col.M.L.Pongchompunut Gen. Boonlert

Name

Tariyo Bun-akad Tanaka Hidenori Ikarachi Arika Chimada Kusaka Cumberland Smith Lane Jinnasit Singchinsuk Limsuansub Srikraiwin Thongtham Kaewprasit

AI

TT&D

K.I.N.

TI

Yaikaew

W7

TE

Nilubon

TH

Subsidiaries AWC

Information of Directors of Subsidiaries (As of December 31,2003)

AM

Appendix 2

TSC / /

NEC / / / / / /

/ / / / / / / / /

ARM NTU

UBC TAO

BITCO

K.I.N. (BVI)

Nilubon (BVI)

T-Pay

True digital

True-IDC

Asia DBS

ANC

U-NET

W&W

TEMCO


Telecom Training and Development Co., Ltd.

Telecom Equipment Manufacturing Co., Ltd.

Wire & Wireless Co., Ltd.

U-Net Co., Ltd.

Asianet Corporation Limited (Formerly named Interactive Media Services Co., Ltd.)

TT&D

TEMCO

W&W

U-NET

ANC

AI

Asia Infonet Co., Ltd.

Asia DBS PLC.

K.I.N. (Thailand) Co., Ltd.

K.I.N.

Asia DBS

Telecom International Co., Ltd.

TI

Yai Kaew Co., Ltd.

W7 Rental Services Co., Ltd.

W7

Yaikaew

Tele Engineering and Services Co., Ltd.

TE

Nilubon Co., Ltd.

Telecom Holding Co., Ltd.

TH

Nilubon

TelecomAsia Corporation PLC.

Full Name

TA

Abbreviation

Remark :

-

ARM

NEC

TSC

NTU

UBC

TAO

BITCO

K.I.N. (BVI)

Nilubon (BVI)

T-Pay

True digital

True-IDC

AM

AWC

Abbreviation

-

Asia Remanufacturing Industries Co., Ltd.

NEC Corporation (Thailand) Co., Ltd. (Formerly named NEC Communication Systems Co., Ltd.)

Thai Smart Card Co., Ltd.

N.T.U. (Thailand) Limited

United Broadcasting Corporation PLC.

TA Co., Ltd.

Bangkok Inter Teletech Co., Ltd.

K.I.N. (Thailand) Co.,Ltd. (Registerred at BVI)

Nilubon Co.,Ltd. (Registerred at BVI)

T Pay Co.,Ltd.

True Digital Entertainment Co., Ltd.

True Internet Data Center Co., Ltd. (Formerly named TA Internet Data Center Co., Ltd.)

Asia Multimedia Co., Ltd.

Asia Wireless Communication Co., Ltd. (Formerly named Multimedia Network Co., Ltd.)

Full Name

Appendix 2


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

PART III CORRECT CERTIFICATION OF DISCLOSED INFORMATION 1.

Correct Certification of Disclosed Information by Executive Directors or Chief Financial Officer of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as an Executive Director or Chief Financial Officer of the Company and hereby certify that said information is accurate or complete, not untrue, misleading or missing such material information that otherwise should inform. In addition, I hereby certify that (1)

The financial statements and financial information as summarized in the Annual Registration Statements are complete and accurate and represent material information regarding financial position, operating results and cash flow of the Company and its subsidiary;

(2)

I am responsible for arranging for the Company to have a good information disclosure system to ensure that the Company has disclosed material information of both the Company and its subsidiary in a complete and accurate manner and for ensuring compliance with the said system;

(3)

I am responsible for arranging for the Company to have a good internal control system and for ensuring compliance with the said system, and I have already informed the auditor and the audit committee of the Company the information with respect to an evaluation of an internal control system as of 17th February 2004 which covers such defect and major changes of the internal control system, including wrongful acts that may affect the preparation of financial reports of the Company and its subsidiary.

To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document." Correct Certification of Disclosed Information

150


TelecomAsia Public Company Limited

Name

Annual Registration Statements (Report Form 56-1)

Title

Signature

1. Mr. Supachai

Chearavanont

Director, President and Chief Executive Officer

……………………………………

2. Mr. Vichaow

Rakphongphairoj

Director, Managing Director and Chief Operating Officer

……………………………………

3.

Mr. Chatchaval

Jiaravanon

Director and Managing Director-Group Investment

……………………………………

4.

Mr. Athueck

Asvanund

Vice Chairman, Group General Counsel and Acting Company Secretary

……………………………………

Harris

Chief Financial Officer

……………………………………

5. Mr. William

E.

Appointee

Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Correct Certification of Disclosed Information

151


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

CORRECT CERTIFICATION OF DISCLOSED INFORMATION 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document."

Name

Mr. Narong

Title

Srisa-an

Independent Director

Signature

……………………………………

Appointee

Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Correct Certification of Disclosed Information

152


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

CORRECT CERTIFICATION OF DISCLOSED INFORMATION 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document."

Name

Mr. Vitthya

Title

Vejjajiva

Signature

Independent Director and …………………………………… Chairman of the Audit Committee

Appointee Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Correct Certification of Disclosed Information

153


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

CORRECT CERTIFICATION OF DISCLOSED INFORMATION 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document."

Name

Dr. Kosol

Title

Petchsuwan

Independent Director and Member of the Audit Committee

Signature

……………………………………

Appointee Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Correct Certification of Disclosed Information

154


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

CORRECT CERTIFICATION OF DISCLOSED INFORMATION 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document."

Name

Mr. Joti

Title

Bhokavanij

Signature

Independent Director and …………………………………… Member of the Audit Committee

Appointee

Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Correct Certification of Disclosed Information

155


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

CORRECT CERTIFICATION OF DISCLOSED INFORMATION 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document."

Name

Mr. Dhanin

Title

Chearavanont

Signature

Chairman

……………………………………

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Appointee Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Correct Certification of Disclosed Information

156


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

CORRECT CERTIFICATION OF DISCLOSED INFORMATION 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document."

Name

Mr. Sumet

Title

Jiaravanon

Vice Chairman

Signature

……………………………………

Appointee Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Correct Certification of Disclosed Information

157


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

CORRECT CERTIFICATION OF DISCLOSED INFORMATION 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document."

Name

Dr. Ajva

Title

Taulananda

Signature

Vice Chairman

……………………………………

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Appiontee Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Correct Certification of Disclosed Information

158


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Correct Certification of Disclosed Information 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document." Name

Mr. Chaleo

Title

Souvannakitti

Vice Chairman

Signature

……………………………………

Appointee

Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Correct Certification of Disclosed Information

159


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

CORRECT CERTIFICATION OF DISCLOSED INFORMATION 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document."

Name

Mr. Soopakij

Title

Chearavanont

Director

Signature

……………………………………

Appointee Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

Correct Certification of Disclosed Information

……………………………………

160


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

CORRECT CERTIFICATION OF DISCLOSED INFORMATION 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document."

Name

Mr. Umroong

Title

Sanphasitvong

Director

Signature

……………………………………

Appointee

Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Correct Certification of Disclosed Information

161


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

CORRECT CERTIFICATION OF DISCLOSED INFORMATION 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document."

Name

Mr. Heinrich

Title

Heims

Signature

Director

……………………………………

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Appointee Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Correct Certification of Disclosed Information

162


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

CORRECT CERTIFICATION OF DISCLOSED INFORMATION 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document."

Name

Mr. Klaus

Title

Tuengeler

Director

Signature

……………………………………

Appointee Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Correct Certification of Disclosed Information

163


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

Correct Certification of Disclosed Information 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document."

Name

Mr. Claus

Title

Stadler

Director

Name

Mr. William

Mr. Thanit

Title

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Chief Financial Officer

Deputy Director, Head of General & Payable Accounting

Deputy Company Secretary

Correct Certification of Disclosed Information

Signature

……………………………………

Signature

……………………………………

……………………………………

……………………………………

164


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

CORRECT CERTIFICATION OF DISCLOSED INFORMATION 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document." Name

Mr. Andreas

Title

Klocke

Director

Signature

……………………………………

Appointee

Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Correct Certification of Disclosed Information

165


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

CORRECT CERTIFICATION OF DISCLOSED INFORMATION 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document."

Name

Mr. Harald

Title

Link

Director

Signature

……………………………………

Appointee Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Chief Financial Officer

……………………………………

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Correct Certification of Disclosed Information

166


TelecomAsia Public Company Limited

Annual Registration Statements (Report Form 56-1)

CORRECT CERTIFICATION OF DISCLOSED INFORMATION 2.

Correct Certification of Disclosed Information by other Directors of the Company

"I have reviewed the information in this Annual Registration Statements with due care in a capacity as a Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform. To witness that all documents that I have certified are those same set of documents, I have authorized Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Mr. William E. Harris, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such document." Name

Dr. Lee

G.

Title

Lam

Signature

Director

……………………………………

Chief Financial Officer

……………………………………

Appointee Mr. William

Mr. Thanit

E. Harris

Vinijsorn

Mrs. Rangsinee Sujaritsunchai

Deputy Director, Head of General & Payable Accounting

……………………………………

Deputy Company Secretary

……………………………………

Correct Certification of Disclosed Information

167

TRUE : FORM 56-1 For the Year 2003  

FORM 56-1 For the Year 2003

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