1. Risk Factors

The telecommunications industry today is experiencing a time of telecom
liberalization both in domestic and global markets. It is necessary,
therefore, for the Company to provide a management tool to strengthen
itself in order to compete and preserve its position as a leader in the
Thai mobile phone market.

Running a telecoms business in Thailand in 2007 was greatly affected by
a number of factors, namely consumer behaviour, political instability,
and laws and regulations of the telecoms industry. AIS, as a corporation
having the majority market share in Thailand, has always emphasised
enterprise risk management. Its Risk Management Committee, presided over
by the Chairman of the Company, the Chief Executive Officer and
executive management, is composed of twelve committees. The Risk
Management Committee arranges regular quarterly meetings to identify
risks, manage and control risk at an acceptable level, and more
importantly, enable the Company to accomplish its goals and create value
for all stakeholders. In addition, the Company provides training in Risk
Management in the form of e-learning which has been designed for
managers and employees across the board to be used as Risk Management
guidelines in operational activities.

Consequently, each quarter, the Risk Management Committee submits
details of Risk Management performance to the Audit Committee, the Board
of Directors, and the Executive Committee in order to ensure that risks
are thoroughly overseen, that risk levels are at an acceptable level,
and that the Company achieves its goal. The risk factors are summarised
as follows:

1. Regulatory and Government Policy Risk

1.1 Regulatory Body supervising Radio / Television Broadcast and
Telecommunication business

Pursuant to Section 47 of the Constitution of Thailand 2007, it has been
stipulated that there shall be a free regulatory body of the State to
allocate frequency for and supervise the operating of radio broadcast,
television and telecommunication business, but Section 305(1) of the
Constitution has further stipulated that Section 47 shall not be
enforceable until an enactment for the establishment of the said free
regulating body under Section 47, which shall not be later than 180 days
after the announcement of government’s policy to the parliament.
Therefore, there shall be only one free regulatory body to control and
regulate the telecommunication business and it will be set up after the
new government has announced the policy to the parliament. In addition,
the details of composition, the function and the selection of personnel
of the said free regulatory body have not yet been stipulated in the
Constitution which shall cause the setting up of this free regulatory
body to take time. Thus, the direction of radio/television broadcast and
telecommunication business in the future remains unclear.

Notwithstanding the foregoing, the current regulatory body i.e. The
National Telecommunication Commission (NTC) shall still be active and
Section 305(1) also states that the Act so enacted shall not affect the
permissions, concessions or legally contracts which have been done
before an announcement of this Constitution until the expiration of such
permissions, concessions or contracts. Therefore, the Company
anticipates that it should not have material impact to the existing
scope of AIS’s business.

1.2The Agreement between state enterprise and private sector as stated
in the Act Permitting the Private Sector to Jointly Undertake Work or to
Operate the Work of State Enterprises, B.E. 2535 (A.D. 1992)

  1.2.1 The amendments of the Agreement between Advanced Info Service
  Public Co., Ltd. (AIS) and TOT Public Co. Ltd. (TOT)

According to the opinion of the Council of State regarding the
enforcement of the Act Permitting the Private Sector to Jointly
Undertake Work or to Operate Enterprises of the State, B.E. 2535 (the
case between the TOT and AIS no. 291/2550):

“…the permission granted for the provision of Cellular Mobile Telephone
is a project which has already been executed before the Act Permitting
the Private Sector to Jointly Undertake Work or to Operate the Work of
State Enterprises (the Act) is in force which Section 25 of the said Act
stated that any project or any of its procedures which has been done
before the said Act is in force shall be deemed valid but the subsequent
procedures shall comply with this Act, therefore it shall remain only
the supervision and monitoring procedures. In the event that there is an
amendment of conditions of the signed project or agreement, it has to
comply with the Act whereby the project owner shall submit such
amendment to the Coordinating Committee according to Section 22 for
consideration. If the said Committee agrees with the amendment, then,
the Committee shall report to the minister-in-charge and if the
amendment is of the material nature of the project or relating to
State’s benefit, the minister-in-charge shall further submit to the
Cabinet for approval. Upon approval by the Cabinet, the project owner
shall then be able to carry out such amendment. The 2nd – 7th Amendments
have not been submitted to the Coordinating Committee according to
Section 22 for consideration and to the Cabinet for approval in case of
material changes, such amendments are, therefore, not correct pursuant
to the Act. TOT has entered into the Agreement by acting on behalf of
the State and by virtue of the authority empowered by the law on
Telephone Organization of Thailand, the executed Agreement thus
represents the agreement between the State and the private sector in
order to authorize the private sector to provide public services to the
public on behalf of the State. The State, therefore, is obligated to
comply with the terms and conditions of the said Agreement.

Since the amendments to the Agreement relevant to which consultation is
being sought were not legitimately carried out according to the Act
Permitting the Private Sector to Jointly Undertake the Work or Operate
the Work of State Enterprises which was in force at the time of those
amendments due to the lack of the submission of those amendments to the
Coordinating Committee for consideration according to Section 22 and to
the Cabinet as an authority in charge for approval of such amendments to
the Agreement pursuant to the Act as above-concluded, the amendments
made to the Agreement with the TOT as the contracting party were,
therefore, carried out without legal authority. However, the amendment
procedures of the Agreement which represent administrative juristic acts
are capable of being separated from the amendments to the Agreement and
those amendments to the Agreement are still in force so long as they are
not rescinded or extinguished by virtue of time clause or by other
causes. If the Cabinet as a lawful authority, after having considered
the causes for the rescission, the impact and the appropriateness on the
basis of the State's and the public interest, is of the opinion that the
illegitimate procedures have caused considerable damage, the Cabinet can
rescinding such amendments to the Agreement. But if the Cabinet
considers on justification and in the light of the State's or the public
interest and the continuity of providing public services, the Cabinet
may exercise its discretion to grant approval to re-proceed the
amendment procedures, as appropriate, by the project owner and the
Coordinating Committee pursuant to Clause 22 being the parties to submit
the facts, justifications and opinions for the consideration of the
Cabinet.”

Presently, the process according to the Council of State’s opinion is
pending on the consideration of the Coordinating Committee pursuant to
section 22, which the ICT Minister has given his policy that the
appropriateness, the benefit of the State and public and the continuity
of public service should be taken into account.

AIS firmly believes in the principle and the grounds of the amendments
of the Agreement and the Company’s compliance with the Act and the
Agreement. AIS has continuously shared the revenue received to TOT which
is the state enterprise. Besides, the benefit gained from the amendment
of the Agreement has also returned to the subscribers by way of lower
tariff, for example: before the amendment of revenue sharing for prepaid
service in 2001, there are only 1 million prepaid subscribers in the
market. After an amendment and the revenue sharing rate for prepaid has
been fixed at 20%, which is lower than the postpaid, resulting in
significantly increasing of competition that at present, there are more
than 40 million subscribers in prepaid market. In addition, the
amendments had provided conditions which are beneficial to the
subscribers whereby AIS had to decrease at least 5-10% of normal tariff,
at that time of Baht 6-12 per minute to currently Baht 1-3 per minute.
Furthermore, the benefit gained by TOT from the revenue sharing has also
been significantly increased from approximately Baht 10,000 million in
2001 up to approximately Baht 18,000 million in 2007. AIS believes that
the above said grounds will ease off this risk and there should be no
material change which should have an impact on AIS. However, should the
amendments of AIS’s contracts are invalidated by the Cabinet; it may
result in a shorter concession life, or a higher prepaid revenue share,
for instance.

  1.2.2 The amendment of the Agreement between Digital Phone Co., Ltd.
  (DPC) , a subsidiary company of AIS, and CAT Telecom Public Company
  Limited (CAT)

According to the opinion of the Council of State regarding the
enforcement of the Act Permitting the Private Sector to Jointly
Undertake Work or to Operate the Work of State Enterprises, B.E. 2535
(the case between the CAT and DPC no. 294/2550) that

“…the assignment of the rights and duties by Total Access Communication
Public Company Limited to DPC and the entering into an agreement between
DPC and CAT dated November 19 B.E. 2539 are considered as the permission
of CAT granted to a private sector to provide cellular mobile phone
service whereby DPC shall be under the supervision and regulation of CAT
and pay remuneration to CAT. DPC shall, therefore, have to comply with
the said Act. Since CAT has already specified the scope of the project
and the private sector to provide the service, besides, the project has
already been carried out. Therefore, there is no need to invite private
sector to submit any proposal according to Chapter 3. However, Chapter 3
shall be applied in so far as it is not contrary to the fact whereby CAT
has to set up the Coordinating Committee in accordance with Section 13
to proceed according to Section 21 of the said Act.”

Presently, the Coordinating Committee has already been set up according
to Section 13 of the Act and the procedures are pending and DPC believes
that this risk will ease off in such a way that DPC and CAT should
remain oblige to fulfil the said agreement.

1.3 The laws regarding Interconnection Charge

Pursuant to the issuance by NTC of principles and guidelines: Guidelines
for the Use and Interconnect of Telecommunication Network B.E. 2549 and
has been in force since 17 May 2006 and Section 126 of which stipulates
that all operators having been granted license, concession or contract
under the supervision of NTC have to comply with the Guidelines on the
basis of fair competition. After the issuance of the said Guidelines,
the Company has negotiated and entered into the Interconnection
Agreements with other operators i.e. Total Access Communication Plc.
(DTAC) on 30 November 2006 and True Move Co., Ltd. on 16 January 2007
respectively. Up to now the Interconnection Charge has not yet been
collected among the operators due to the objection made by TOT Public
Company Limited (TOT) to NTC requesting NTC to inspect and issue an
order to prohibit the Company and other operators to enter into the
Interconnection Agreement until the final adjudication from
administrative court.

However, the Company has been received supporting reason for the
compliance with the said laws from Telecom Consumer-Protection
Institute’s response to TOT’s letter that NTC has been of the opinion
that the entering into the agreement or business among private sectors
is in accordance with the principle of freedom of contract of private
autonomy by which the parties have to be bound and NTC has no authority
to prohibit the entering into the said agreement of the parties.

Notwithstanding the foregoing, should the administration court give a
judgment according to TOT request prohibiting AIS and other operators to
enter into the Interconnection Agreement; the result shall be that AIS
shall not be forced to comply with the said laws. But if the
administrative court dismiss TOT request, AIS shall have to comply with
the said laws. The main feature of this law shall enable each operator
to directly interconnect and pay an interconnection charge according to
actual traffic use among its network. The interconnection charge of each
operator shall reflect its actual cost which arising from the traffic
usage between the networks of each operator and result in a free and
fair competition which shall benefit to the economic and society as a
whole. For AIS’s opinion, this law shall prevent other operators from
further starting the price competition which shall encourage the
subscribers to consider the quality of the network instead of only the
price whenever making selection of mobile phone service.

  1.4 Significant Commercial Dispute due to Excise Tax

  1.4.1 AIS and TOT Public Company Limited

On 22 January 2008, TOT Public Company Limited (“TOT”) submitted a
dispute no. black 9/2551 to the Arbitration Institute, Dispute
Reconciliation Office, Justice Court Office demanding the Company to pay
additional payment of revenue sharing amounting to Baht 31,462.51
million under the Cellular Mobile Phone Contract plus interest at the
rate of 1.25 percent per month computing from the default date on 10 Jan
2007 until the full payment is made.

At present, the said dispute is pending on the Company’s preparation of
the opposition according to arbitration procedures and the proceedings
of which shall take for several years. However, the Company’s management
believes that the rulings of the Arbitration Panel should be in the
Company’s favour because the Company’s management understands that this
amount is the same as an excise tax that the Company had submitted to
Excise Department during 28 January 2003 to 26 February 2007 and
deducted it from revenue sharing according to the resolution of the
cabinet dated 11 February 2003. Thus, the Company has fully complied
with the cabinet’s resolution dated 11 February 2003 and this practice
is the same as other operators in mobile phone or cellular radio
telecommunication industries according to the resolution of the cabinet.
Moreover, TOT had sent letter no. Tor Sor Tor. Bor Yor./843 dated 10
March 2003 stating that the Company has fully complied with the
cabinet’s resolution and the Company’s burden remains at the same
percentage rate as specified in the contract and the submission of the
said excise tax return shall not affect the terms of the contract.

2.  DPC and CAT Telecom Public Company Limited (CAT)

On 9 January 2008, CAT Telecom Public Company Limited (CAT) submitted a
dispute no. black 3/2551 to the Arbitration Institute and the Dispute
Reconciliation Office, Justice Court Office demanding DPC, a subsidiary,
to pay additional payment of revenue sharing amounting to Baht 2,449.09
million under the Digital Personal Communication Network Contract plus
penalty at the rate of 1.25 percent per month of the unpaid amount of
each year computing from the default date until the full payment is made
which total penalty calculated up to December 2007 is Baht 1,500.06
million, totalling Baht 3,949.15 million.

At present, the said dispute is pending on DPC’s preparation of the
opposition according to arbitration procedures and the proceedings of
which shall take for several years. However, the management believes
that the rulings of the Arbitration Panel should be in the DPC’s favour
because this amount is the same as an excise tax that DPC submitted to
Excise Department during 16 September 2003 to 15 September 2007 and
deducted it from revenue sharing according to the resolution of the
cabinet dated 11 February 2003. Thus, DPC has fully complied with the
cabinet’s resolution dated 11 February 2003 and this practice is the
same as other operators in mobile phone or cellular radio
telecommunication industries according to the resolution of the cabinet.

2. Market and Competition Risk

  2.1 Price Competition

Thai mobile industry has been closing to a saturation point. As at the
end of 2007, the penetration rate was 80 percent implying that consumer
growth started to slow down. As a result, price competition appeared to
be the major factor in determining an operator’s market position and
financial situation. As the leader of the wireless telecoms industry in
Thailand, AIS is always recognised as being a complete service provider
both in terms of network quality and network coverage throughout the
country. Together with value for money tariff plans, a wide-variety of
services, and continuous relationship building with customers, the
Company has readily prepared itself to deal with the rapidly changing
market situation. This can be seen with innovative promotional packages
which target and suit the behaviour of specific customer groups,
particularly those who tend to switch to new number for cheaper
promotion (replacement SIM package), or customers who holding more than
one SIM (multiple SIM users).

Those two customer groups are increasing rapidly so that AIS has
launched a package to capture the customers that enjoy the “on-net
traffic” and expand the Company’s share of the market. Moreover, AIS has
also designed and launched a series of new service rates as well as
create a feeling of “Community” with an “Emotional Marketing” campaign
to cover the Teen segment which is the target group of every service
provider as it contains a high usage rate and has the potential to
become a long-term customer base in the future.

To serve those customers who living upcountry, most of which are
considered to be the first time users, AIS has differentiated itself
from other service providers by putting greater emphasis on network
quality, wider coverage in remote areas, and call-out availability, and
by offering special rates to customers living in the same area.
Partnerships, alliances, and subsidiaries have also been formed offering
customers who live in remote areas a valuable opportunity to own a
mobile phone through a limited fund. This offer and promoting of strong
family relationships allows customers to contact much-loved family
members anytime, anywhere even when they are far away from each other.

Furthermore, AIS has also been strengthening its main distribution
channels, Telewiz, dealers, and smaller distributors (sub dealers), and
has established an alliance with corporations of many different
industries to help distribute products and services to every customer
segment more efficiently.

As a result of such price competition, especially during the period of a
saturated market, it is evident that continuing to use this strategy
would not be advantageous for either industry growth or positive yield
rate. Instead, operators have tended to focus on customer relationship
building to form long-lasting partnerships. AIS has for a long time
placed great emphasis on Customer Relationship Management (CRM) with the
intention of avoiding fierce price competition as well as maintaining
customer engagement by improving network quality and service standards
and introducing new innovation in services. This can be seen through the
many customer privileges such as the AIS Plus and the AIS Serenade
programs, or through Serenade Personal Assistant, an impressive personal
assistant service for each Serenade customer with direct line contact
24-7, which is perceived as total brand differentiation from
competitors. Consequently, these strategies have given the Company an
advantage under such difficult circumstances.

AIS is always determined to develop and generate new creative ideas
depending on the changing situation. This also includes promoting a
strong corporate culture so that all services are of the highest quality
and satisfy customers’ needs the most.

  2.2 Economic Recession

The Thai economy in 2008 is predicted to expand slightly compared with
2007, which saw a growth rate of approximately 4.5% (reference: National
Economic and Social Development Assembly). After the election period, it
is likely that investment will increase for both private and public
sectors; in particular, the government is planning to increase
investment for mega projects which they believe will stimulate positive
performance in manufacturing and increase the employment rate in related
businesses. In the private sector, there will be long-anticipated
investment in projects which have been on hold for the last two years
due to political disruption. This period should bring new and distinct
policies with financial support after the government increases public
sector spending. However, the rapidly increasing price of oil, predicted
to continue to rise further next year, could be an important risk factor
and could have a great impact on the country trying to recover from a
recession, especially with the additional risk of a global economic
slowdown next year.

The above information illustrates that economic conditions next year are
going to remain sluggish but will improve slightly on the current year.
This will result in greater consumer confidence and higher consumer
spending, particularly in the mobile phone industry. AIS is expected to
feel the impact only slightly as mobile phone services have already
become a large part of customers’ lifestyles. In addition, AIS has
launched many campaigns which stimulate usage through various promotions
presenting different tariff rates which suit different usage behaviours.
For instance, GSM advance and One-2-Call! are suitable for medium-high
usage, and Sawasdee, an intensive call-receiving program whose promotion
period was lengthened for one year, is suitable for people who rarely
make outgoing calls. With the rising of oil price, the mobile phone
could be seen as a low-cost alternative for the business traveller in
that effective communication through a conference call can eliminate the
need for personal contact.

AIS therefore believes that even in such a difficult competitive
environment, the Company will be able to operate smoothly and deliver
the most valuable products and services to customers.

  2.3 Number Portability

According to the Telecommunications Service Operation Act B.E. 2544,
Section 12, a new Number Portability ruling has been designated which
requires customers to use a single set of mobile numbers throughout all
networks. It is also intended to reduce the amount of mobile numbers in
use by making every number available for registration with any operator
as well as providing opportunities for consumers to protect their rights
and benefits as service users, thus creating additional value to mobile
number utility.

On 31 August 2007, the National Telecommunications Commission (NTC)
announced regulation code 37/2550 associated with the establishment of a
committee for the feasibility and preparation of mobile number
portability operations. Its aim is to establish a managerial structure
and organisational guidelines to enable consumers to use the same single
mobile number with any operator. This includes designing the technical
structure and a central database system, and investing in equipment that
can enable operations to run efficiently. In accordance with this, NTC
has also given service operators a chance to coordinate with them in the
research process and proposal making stage, and through various methods
of development. Such activities are currently in progress and four
meetings have already taken place.

This announcement will stimulate competition amongst mobile phone
operators because Number Portability provides the opportunity for
customers to move their services across operators independently,
especially if a service operator has not put enough effort in to improve
its network quality or create value for money for its customers.
However, this is a macro risk for the telecommunications industry as
service operators cannot anticipate the unpredictable behaviour of
customers after Number Portability is launched.

AIS believes that it is now ready to take immediate action and is
prepared especially based on its strong financial structure and in terms
of its network readiness as it is the leader in terms of network
coverage and quality. This also includes brand strengthening, one of
AIS’s strategies, by analysing consumer behaviour, designing various new
products and services to meet customers’ demands, and managing each
customer segment including existing and prospective customers, and those
who may churn. Additionally, with emphasis on CRM, which was implemented
in 2000 and is still ongoing, the Company can expect customers to be
completely satisfied and feel confident with its services, which in turn
will enable the Company to expand its customer base.

3. Operational Risk

Having established an extensive network covering the entire country and
with a large operational task force dedicated to service quality at all
times, customers of the AIS network are able to connect to each other
without difficulty as the Company has a complete and reliable control
system. AIS has recognized the risks that may arise when dealing with
application and operation equipment or devices, especially if the
service is not appropriate. The Company has drawn up guidelines for
efficient network performance administration and management, and a
Network Operation Center (NOC) has been set up to be responsible for
monitoring and assuring the quality of the AIS network meets standards
and functions properly at all times. Moreover, if an error occurs at a
switching center or during transmission, it can be detected immediately
and reported to the job owner for immediate corrective action. Another
department, Operations and Maintenance (O&M), is responsible for
maintaining Base Transceiver Stations and transmission following
standards in suppliers’ instruction manual. In addition, the Network
Quality Management (NQM) department operates as a network quality
administrator that monitors the performance nationwide and report to top
management. Performance results can then be used as a guideline for
creating a continuously improving network development plan.

Moreover, the Company has launched guidelines to be used for handling
business risk, and provides a Business Continuity Plan to support the
performance of operations, especially for critical functions. AIS also
believes that as it is being operated and managed by professional and
experienced staff who specialize in running such a large network, the
quality of services will be constantly first class.

4. Technology Risk

The rapid change in technology has become a key factor in competition in
the telecommunications industry. To hesitate and fail to adapt to new
technology may cause an operator delay in sustaining long-term
performance. AIS anticipates that the third generation (3G) mobile
technology and the high-speed Internet technology through WiMAX will be
readily available in the future and further increase competition. At
present, NTC has not granted 3G and WiMAX licenses to any operator yet.
The timeframe of 3G and WiMAX licensing is uncertain to the Company.
However, AIS continues to focus on 3G readiness, staff development,
technology simulation, strategic planning, and budgeting in order to be
ready to offer quality services when such licenses are granted.
Furthermore, during this time of unclear policy from NTC regarding new
licenses, AIS has already invested in EDGE technology to add value to
the potential of existing technology, to increase the speed of data
transfer in the network, and to pave consumer readiness towards 3G
technology.

Acquiring new technology and being able to respond to the various
demands of customers are essential for every operator. As equipment is
not manufactured in Thailand, competition is based only on application
development approach to ensure customer satisfaction. AIS is constantly
in close touch with its customers developing a wide variety of
applications to create long lasting impressions. Recently, Super
Broadband Network Company Limited (SBN), a subsidiary of AIS, has
started a pilot VoIP project called “AIS Net Call” through a WiFi
network installed at the University of the Thai Chamber of Commerce
available to students to make calls via the Internet to the AIS network
free of charge. This is one project developed under a strategic
marketing concept which aims to retain satisfied customers of trial
services to become long-term AIS customers in the future.

5. Financial Risk

Interest Rates

The Company’s revenue, loans, and expenditure are predominantly in Thai
baht. However, there is still risk arising from fluctuating currency
exchange rates because of the need to import supplies such as network
equipment and operation equipment from abroad. In 2007, the Thai baht
was appreciated against the US dollar, and at the same time financial
institutions both inside and outside the country increased their
awareness when lending credit. In times of economic recession, AIS has
always made careful financial decisions. At the end of 2007, AIS had a
long term loan amount of 26,474 million Thai baht, which included 33.54
million US dollars and 30,568 million Japanese yen. In order to prevent
risk from fluctuating exchange rates and interest rates of foreign
currencies, the Company has enter into the SWAP contracts to turn debt
from foreign currencies into Thai baht, also including interest rates
swap. When considering a SWAP contract, the Company will take into
account the current situation in each market, a fixed interest rate
being priority, so as to reduce the impact from fluctuating exchange
rates and interest rates. At the end of 2007, the Company held a float
rate loan amount of 14 percent of the total loan amount and hedged the
exchange rate of the entire loan.

6. Human Resources Risk

Risk from employee readiness to replace top management positions

AIS has always realized the value of human resources and its benefit to
the Company. Thus, when the time comes for key positions to be filled,
the Company will always be able to provide a quality replacement so that
each unit will be able to function continuously with good performance.
For such a large organizational structure, the Company could face high
risk related to the readiness of the next generation of employees to
work at higher levels within the organization.

Accordingly, AIS has implemented a successor plan for next generation
managers and has established a team composed of top management from
every department to design guidelines for the selection process, the
staff preparation stage, and other necessary stages involved in
promoting key staff. This includes the creation of individual
development plans, started in 2006 and still ongoing, which incorporates
an evaluation step for selected employees who are considered valuable to
the Company, and which assesses their readiness and reports their
progress to the Succession Planning working team.

7. Risk if we are deemed to be a “foreigner” under the Foreign Business
Act

The Foreign Business Act B.E.2542 (the “FBA”) is an act to stipulate the
qualification of Thai company and the level of permitted foreign
shareholdings in Thai companies. A definition of “foreigner” defined in
the FBA also applies in the Telecommunications Business Act B.E.2544
(the “TBA”) as regards qualifications of applicants for licenses under
type 2 and 3. There is a provision under FBA prohibiting Thais to act as
nominees for foreigner carrying on businesses which require permission.

In 2006, the Ministry of Commerce investigated shareholding on behalf of
foreigners in companies including major shareholders in Kularb Kaew Co.,
Ltd. (“Kularb Kaew”), a Thai company holding shares in Cedar Holding
Co., Ltd. (“Cedar”), which is a major shareholder of Shin Corporation
Public Co., Ltd. The issue is whether a major Thai shareholder of Kularb
Kaew holds shares on behalf of foreigner. The Ministry of Commerce has
summarized the case and referred to the public officer. The case is
under the process by competent official.

If Kularb Kaew is found under a final adjudication to be a “foreigner,”
then Cedar could be deemed to be a “foreigner” and Shin Corporation
Public Co., Ltd., the Company and DPC could also each be deemed to be a
“foreigner”. In addition to FBA, the court has power to order those
holding shares on behalf of foreigner to discontinue holding shares.
However, the Company and DPC believe they have not committed any
offence. As a result, the Company and DPC may find new shareholders to
replace those alleged to have held shared on behalf of foreigner.
Failure to replace the shareholders might affect qualifications of the
Company and DPC to apply for new licenses.

The concession agreement granted to the Company does not contain a
clause of shareholding limitation by foreigner.

We cannot assure that the case will not impact the concession agreement
and licenses of the Company and DPC.

8. Risk on litigation to which we are not a direct party

On March 20, 2006, Mr. Satra To-Orn submitted a complaint to the Central
Administrative Court (the “CAC”) against the Ministry of Information and
Communications Technology (the “ICT Ministry”), the Ministry of
Transportation (the “Transport Ministry”) and the Prime Minister’s
Office (the “PRIME MINISTER’S OFFICE”) as the defendants, requesting the
court to (i) order the defendants to terminate the concession agreement
entered into with AIS; and (ii) grant a temporary injunction preventing
new shareholders from taking any action or receiving any benefit under
such concession.

Mr. Satra claimed that the defendants should have terminated the
concession agreement following the transfer of the Company shares to new
shareholders which resulted in a material change in shareholding
structure and in control of operations of the Company that carries on
businesses based on Thai national resources. The CAC ruled that Mr.
Satra had no right to claim because he had not been a party to the
concession agreement. However, Mr. Satra appealed to the Supreme
Administrative Court which later ruled that Mr. Satra could claim citing
his public interest on the ground that if the Company’s businesses were
under control of a foreigner, it would cause damage or result in
national security and unavoidably affected Mr. Satra. Accordingly the
Supreme Administrative Court ordered the CAC to accept and try the
complaint which is now in the process of hearing.

The Company should not be affected that shareholders of the Company are
under control of the foreigner. In addition, whether or not the
concession agreement could be revoked shall be considered under the
terms and conditions of the concession agreement.

9. Risk of not getting contract extended for operating cellular service
ending in 2015

The Company cannot guarantee that it will get the new license to operate
cellular service from the NTC or an extension of the contract from TOT
or a right to operate cellular service beyond the end of contract life
by 2015, at the favorable terms and conditions to shareholders.