12. Financial Position and Operating Performance

1.  Financial Statement

  12.1.1 Auditor’s report

  Auditor’s Reports were stated that the consolidated and company
  financial statements presented fairly, in all material respects, the
  consolidated and company financial position as at 31 December 2007,
  2006, and 2005, and the consolidated and company results of
  operations, and cash flows for the years then ended of Advanced Info
  Service Public Company Limited and its subsidiaries, and of Advanced
  Info Service Public Company Limited, respectively, in accordance with
  legally defined accounting principles.

  12.1.2 The Consolidated Financial Statement

+-----------------------+---------+-----+-------+-----+-------+-----+
| Advanced Info Service |         |     |       |     |       |     |
| Public Company        |         |     |       |     |       |     |
| Limited               |         |     |       |     |       |     |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Consolidated -        |         |     |       |     |       |     |
| Balance Sheet         |         |     |       |     |       |     |
+-----------------------+---------+-----+-------+-----+-------+-----+
| As at 31 December     |         |     |       |     |       |     |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Unit : Thousand Baht  |         |     |       |     |       |     |
+-----------------------+---------+-----+-------+-----+-------+-----+
|                       | 2005-R  |     | 2006  |     | 2007  |     |
|                       | estated |     |       |     |       |     |
+-----------------------+---------+-----+-------+-----+-------+-----+
|                       | Amount  | %   | A     | %   | A     | %   |
|                       |         |     | mount |     | mount |     |
+-----------------------+---------+-----+-------+-----+-------+-----+
| ASSETS                |         |     |       |     |       |     |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Current Assets        |         |     |       |     |       |     |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Cash and cash         | 11,     | 8.  | 12,74 | 9.  | 8,31  | 6.  |
| equivalents           | 456,373 | 95% | 2,218 | 49% | 6,666 | 45% |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Short-term            | 298,840 | 0.  | 11    | 0.  | 12    | 0.  |
| investments           |         | 23% | 8,187 | 09% | 3,443 | 10% |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Trade accounts        | 4,      | 3.  | 4,89  | 3.  | 8,05  | 6.  |
| receivable, net       | 526,264 | 54% | 8,182 | 65% | 4,187 | 25% |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Amounts due from      | 3,017   | 0.  | 2,973 | 0.  | 770   | 0.  |
| related parties       |         | 00% |       | 00% |       | 00% |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Receivable for cash   | 1,      | 0.  | 62    | 0.  | 59    | 0.  |
| card                  | 266,494 | 99% | 0,505 | 46% | 9,542 | 46% |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Value added tax       | 214,746 | 0.  | 46    | 0.  | 13    | 0.  |
| receivables - third   |         | 17% | 3,557 | 35% | 6,763 | 11% |
| party                 |         |     |       |     |       |     |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Inventories and spare | 1,      | 1.  | 2,05  | 1.  | 1,23  | 0.  |
| part inventories for  | 347,141 | 05% | 5,466 | 53% | 6,246 | 96% |
| mobile phone network  |         |     |       |     |       |     |
| maintenance, net      |         |     |       |     |       |     |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Other current assets  | 1,      | 0.  | 1,99  | 1.  | 2,11  | 1.  |
|                       | 233,709 | 96% | 1,808 | 48% | 7,998 | 64% |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Total Current Assets  | 20,     | 15. | 22,89 | 17. | 20,58 | 15. |
|                       | 346,584 | 90% | 2,896 | 05% | 5,615 | 97% |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Non-Current Assets    |         |     |       |     |       |     |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Investments in other  | -       | 0.  | -     | 0.  | 9     | 0.  |
| company               |         | 00% |       | 00% | 2,761 | 07% |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Property, plant and   | 8,      | 6.  | 7,79  | 5.  | 8,56  | 6.  |
| equipment, net        | 259,476 | 45% | 7,323 | 81% | 0,947 | 64% |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Assets under          | 75,     | 59. | 81,09 | 60. | 78,52 | 60. |
| concession            | 842,690 | 27% | 5,903 | 38% | 7,309 | 90% |
| agreements, net       |         |     |       |     |       |     |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Intangible assets     |         |     |       |     |       |     |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Computer software     | 1,      | 1.  | 1,30  | 0.  | 1,32  | 1.  |
|                       | 440,357 | 13% | 8,759 | 97% | 6,737 | 03% |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Goodwill, net         | 9,      | 7.  | 7,83  | 5.  | 6,67  | 5.  |
|                       | 003,947 | 04% | 7,043 | 84% | 0,139 | 17% |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Concession rights,    | 3,      | 2.  | 3,05  | 2.  | 2,59  | 2.  |
| net                   | 505,927 | 74% | 1,104 | 27% | 6,275 | 01% |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Deferred tax assets   | 8,      | 6.  | 9,76  | 7.  | 10,03 | 7.  |
|                       | 945,615 | 99% | 2,601 | 27% | 1,066 | 78% |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Other assets, net     | 614,908 | 0.  | 55    | 0.  | 55    | 0.  |
|                       |         | 48% | 5,145 | 41% | 0,803 | 43% |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Total Non-Current     | 107,    | 84. | 1     | 82. | 1     | 84. |
| Assets                | 612,920 | 10% | 11,40 | 95% | 08,35 | 03% |
|                       |         |     | 7,878 |     | 6,037 |     |
+-----------------------+---------+-----+-------+-----+-------+-----+
| Total Assets          | 127,    | 1   | 1     | 1   | 1     | 1   |
|                       | 959,504 | 00. | 34,30 | 00. | 28,94 | 00. |
|                       |         | 00% | 0,774 | 00% | 1,652 | 00% |
+-----------------------+---------+-----+-------+-----+-------+-----+

[TABLE]

+------------------------------------+----------+----------+----------+
| Advanced Info Service Public       |          |          |          |
| Company Limited                    |          |          |          |
+------------------------------------+----------+----------+----------+
| Consolidated - Statement of Cash   |          |          |          |
| Flow (Continued)                   |          |          |          |
+------------------------------------+----------+----------+----------+
| For the years ended 31 December    |          |          |          |
+------------------------------------+----------+----------+----------+
| Unit : Thousand Baht               |          |          |          |
+------------------------------------+----------+----------+----------+
| Consolidated - Cash flow           | 2005-    | 2006     | 2007     |
|                                    | Restated |          |          |
+------------------------------------+----------+----------+----------+
| Cash flows from operating          |          |          |          |
| activities:                        |          |          |          |
+------------------------------------+----------+----------+----------+
| Net profit                         | 18       | 16       | 16       |
|                                    | ,725,188 | ,256,015 | ,290,467 |
+------------------------------------+----------+----------+----------+
| Adjusted by:                       |          |          |          |
+------------------------------------+----------+----------+----------+
| Depreciation                       | 4        | 3        | 3        |
|                                    | ,782,698 | ,706,373 | ,174,151 |
+------------------------------------+----------+----------+----------+
| Amortization - Computer Software   | 511,198  | 500,780  | 437,796  |
+------------------------------------+----------+----------+----------+
| Amortisation of assets under       | 12       | 12       | 13       |
| concession agreements              | ,902,767 | ,334,343 | ,520,587 |
+------------------------------------+----------+----------+----------+
| Amortisation of goodwill           | 1        | 1        | 1        |
|                                    | ,166,904 | ,166,904 | ,166,904 |
+------------------------------------+----------+----------+----------+
| Amortisation of concession right   | 454,823  | 454,823  | 454,829  |
+------------------------------------+----------+----------+----------+
| (Reversal) allowance for           | -        | 69,000   | (69,000) |
| impairment                         |          |          |          |
+------------------------------------+----------+----------+----------+
| Amortisation of deferred charges   | 152,136  | 106,373  | 77,854   |
+------------------------------------+----------+----------+----------+
| Doubtful accounts and bad debts    | 508,304  | 339,465  | 1        |
|                                    |          |          | ,347,188 |
+------------------------------------+----------+----------+----------+
|   Loss (reversal) on obsolete      | (37,465) | 57,487   | (14,493) |
|   inventories & diminution in      |          |          |          |
|   value of finished goods          |          |          |          |
+------------------------------------+----------+----------+----------+
| Amortisation of forward and swap   | 29,006   | 14,247   | 1,077    |
| premium                            |          |          |          |
+------------------------------------+----------+----------+----------+
|   (Gain)/Loss on disposal of       | 18,673   | (9,021)  | (14,255) |
|   property, plant and equipment    |          |          |          |
+------------------------------------+----------+----------+----------+
| Loss on write-off intangible       | 5,496    | 2,619    | 146      |
| assets/deferred charges            |          |          |          |
+------------------------------------+----------+----------+----------+
| (Gain) loss on write-off property, | 6,466    | 5,259    | 88       |
| plant and equipment                |          |          |          |
+------------------------------------+----------+----------+----------+
|   Loss (reversal) on write-off     | (        | 122,528  | 14,322   |
|   obsolete spare parts for mobile  | 107,932) |          |          |
|   phone network maintenance        |          |          |          |
+------------------------------------+----------+----------+----------+
| Unrealised loss / (gain) on        | 40,422   | (22,236) | 39,115   |
| foreign exchange rate              |          |          |          |
+------------------------------------+----------+----------+----------+
| Realised unearned income           | (38,091) | (59,533) | (8,336)  |
+------------------------------------+----------+----------+----------+
| Amortisation of discounted bill of | -        | -        | 124,507  |
| exchange                           |          |          |          |
+------------------------------------+----------+----------+----------+
| Amortisation of bond issuing cost  | 24,150   | 20,227   | 8,927    |
+------------------------------------+----------+----------+----------+
| (Decrease)/Increase Deferred Tax   | 183,516  | (        | (        |
| Expenses                           |          | 901,597) | 268,465) |
+------------------------------------+----------+----------+----------+
|   Share of net profit (loss) from  | (4,791)  | (        | (48,420) |
|   subsidiaries to minorities       |          | 147,852) |          |
|   interest                         |          |          |          |
+------------------------------------+----------+----------+----------+
| Net profit before changes in       | 39       | 34       | 36       |
| operating assets & liabilities     | ,323,468 | ,016,204 | ,234,989 |
+------------------------------------+----------+----------+----------+
| Changes in operating assets and    |          |          |          |
| liabilities                        |          |          |          |
+------------------------------------+----------+----------+----------+
| Restricted bank deposit            | (4,      | 3        | 149,847  |
|                                    | 698,890) | ,054,461 |          |
+------------------------------------+----------+----------+----------+
| Trade accounts receivable          | 724,587  | (        | (4,      |
|                                    |          | 737,743) | 522,007) |
+------------------------------------+----------+----------+----------+
| Amounts due from related parties   | (2,572)  | 44       | 2,203    |
+------------------------------------+----------+----------+----------+
| Receivable for Cash card           | (1,      | 645,989  | 20,963   |
|                                    | 266,494) |          |          |
+------------------------------------+----------+----------+----------+
| Value added tax receivables -      | 231,592  | (        | 326,795  |
| third party                        |          | 248,812) |          |
+------------------------------------+----------+----------+----------+
| Inventories                        | (81,681) | (        | 857,375  |
|                                    |          | 843,158) |          |
+------------------------------------+----------+----------+----------+
| Spare part inventories for mobile  | 162,133  | (45,183) | (37,983) |
| network maintenance                |          |          |          |
+------------------------------------+----------+----------+----------+
| Other current assets               | 671,146  | (        | (        |
|                                    |          | 772,294) | 127,266) |
+------------------------------------+----------+----------+----------+
| Trade accounts payable             | (        | 116,461  | 303,670  |
|                                    | 575,719) |          |          |
+------------------------------------+----------+----------+----------+
| Amounts due to related parties     | (53,992) | 158,080  | (        |
|                                    |          |          | 161,968) |
+------------------------------------+----------+----------+----------+
| Forward and swap contracts payable | 17,030   | -        | 60,717   |
+------------------------------------+----------+----------+----------+
|   Concession right payable,        | 336,779  | (        | 1        |
|   accrued concession fee and       |          | 198,893) | ,217,886 |
|                                    |          |          |          |
|   excise tax                       |          |          |          |
+------------------------------------+----------+----------+----------+
| Unearned Income-mobile phone       | (2,      | 1        | (        |
| service                            | 413,968) | ,460,370 | 189,901) |
+------------------------------------+----------+----------+----------+
| Advance received from customer     | 3        | (2,      | (76,629) |
|                                    | ,315,128 | 224,149) |          |
+------------------------------------+----------+----------+----------+
| Income tax payable                 | (1,      | (28,742) | 268,993  |
|                                    | 421,664) |          |          |
+------------------------------------+----------+----------+----------+

+------------------------------------+----------+----------+----------+
| Advanced Info Service Public       |          |          |          |
| Company Limited                    |          |          |          |
+------------------------------------+----------+----------+----------+
| Consolidated - Statement of Cash   |          |          |          |
| Flow                               |          |          |          |
+------------------------------------+----------+----------+----------+
| For the years ended 31 December    |          |          |          |
+------------------------------------+----------+----------+----------+
| Unit : Thousand Baht               |          |          |          |
+------------------------------------+----------+----------+----------+
| Consolidated - Cash flow           | 2005-    | 2006     | 2007     |
|                                    | Restated |          |          |
+------------------------------------+----------+----------+----------+
| Other Liabilities                  | 69       | (826)    | (243)    |
+------------------------------------+----------+----------+----------+
| Other assets                       | (        | (49,229) | (73,658) |
|                                    | 130,015) |          |          |
+------------------------------------+----------+----------+----------+
| Other current liabilities          | (        | 724,022  | 71,451   |
|                                    | 546,121) |          |          |
+------------------------------------+----------+----------+----------+
| Net cash receipts (payments) from  | 33       | 35       | 34       |
| operating activities               | ,590,815 | ,026,604 | ,325,232 |
+------------------------------------+----------+----------+----------+
| Cash flows from investing          |          |          |          |
| activities:                        |          |          |          |
+------------------------------------+----------+----------+----------+
| Net changes in short-term          | (        | 155,411  | (5,257)  |
| investments                        | 101,658) |          |          |
+------------------------------------+----------+----------+----------+
| Net changes in advances to         | 56,965   | -        | -        |
| suppliers                          |          |          |          |
+------------------------------------+----------+----------+----------+
| Proceeds from disposals of         | 11,410   | 22,121   | 27,115   |
| property and equipment             |          |          |          |
+------------------------------------+----------+----------+----------+
| Cash invested in general           | -        | -        | (92,761) |
| investment                         |          |          |          |
+------------------------------------+----------+----------+----------+
| Purchases of property, plant and   | (3,      | (3,      | (4,      |
| equipment                          | 399,908) | 189,263) | 474,941) |
+------------------------------------+----------+----------+----------+
| Purchases of assets under          | (12,     | (16,     | (12,     |
| concession                         | 830,442) | 907,465) | 630,490) |
+------------------------------------+----------+----------+----------+
| Net cash payments for investing    | (16,     | (19,     | (17,     |
| activities                         | 263,633) | 919,195) | 176,333) |
+------------------------------------+----------+----------+----------+
| Cash flows from financing          |          |          |          |
| activities:                        |          |          |          |
+------------------------------------+----------+----------+----------+
| Proceeds from short-term loans     | (1,      | 5        | 7        |
| from financial institutions        | 500,000) | ,850,000 | ,367,734 |
+------------------------------------+----------+----------+----------+
| Repayments of short-term loans     | 1        | (4,      | (5,      |
| from financial institutions        | ,500,000 | 850,000) | 000,000) |
+------------------------------------+----------+----------+----------+
| Proceeds from long-term debentures | -        | 11       | -        |
|                                    |          | ,410,173 |          |
+------------------------------------+----------+----------+----------+
| Repayments of long-term debentures | (4,      | (14,     | (6,      |
|                                    | 000,000) | 250,000) | 500,000) |
+------------------------------------+----------+----------+----------+
| Proceed from long-term borrowings  | -        | 9        | 1        |
|                                    |          | ,485,312 | ,132,647 |
+------------------------------------+----------+----------+----------+
| Repayments of finance lease        | (        | (16,495) | (22,872) |
| principal                          | 102,624) |          |          |
+------------------------------------+----------+----------+----------+
| Net proceeds from capital increase | 5,199    | 4,956    | 4,243    |
+------------------------------------+----------+----------+----------+
| Net proceeds from share premium    | 248,610  | 223,865  | 258,230  |
+------------------------------------+----------+----------+----------+
| Cash received for share            | 25,257   | 14,504   | 15,377   |
| subscription                       |          |          |          |
+------------------------------------+----------+----------+----------+
|   Cash received in advance for     | 315,000  | -        | -        |
|   additional share from a          |          |          |          |
|   Subsidiary                       |          |          |          |
+------------------------------------+----------+----------+----------+
| Payments of dividend               | (16,     | (18,     | (18,     |
|                                    | 491,618) | 592,833) | 621,967) |
+------------------------------------+----------+----------+----------+
| Payments of dividend to minorities | (23,384) | (76,528) | (36,138) |
+------------------------------------+----------+----------+----------+
| Net cash receipts (payments) from  | (20,     | (10,     | (21,     |
| financing activities               | 023,560) | 797,047) | 402,746) |
+------------------------------------+----------+----------+----------+
| Net increase (decrease) in cash    | (2,      | 4        | (4,      |
| and cash equivalents               | 696,377) | ,310,362 | 253,848) |
+------------------------------------+----------+----------+----------+
| Cash and cash equivalents at the   | 9        | 6        | 11       |
| beginning of the year              | ,449,330 | ,757,483 | ,097,790 |
+------------------------------------+----------+----------+----------+
|   Unrealised gain (loss) on        | 4,530    | 29,945   | (21,858) |
|   exchange rate of cash and cash   |          |          |          |
|   equivalents                      |          |          |          |
+------------------------------------+----------+----------+----------+
| Cash and cash equivalents at the   | 6        | 11       | 6        |
| end of the year                    | ,757,483 | ,097,790 | ,822,085 |
+------------------------------------+----------+----------+----------+
|                                    |          |          |          |
+------------------------------------+----------+----------+----------+
|                                    |          |          |          |
+------------------------------------+----------+----------+----------+
| Interest paid                      | 1        | 1        | 1        |
|                                    | ,425,327 | ,336,961 | ,646,584 |
+------------------------------------+----------+----------+----------+
| Income tax paid                    | 9        | 8        | 7        |
|                                    | ,857,457 | ,505,138 | ,560,059 |
+------------------------------------+----------+----------+----------+

  ---------------------------------- --------------- ------------ -----------
  Advanced Info Service Public                                    
  Company Limited                                                 

  Consolidated - Financial ratio                                  

  For the years ended 31 December                                 

                                                                  

  Consolidated financial statements  2005-Restated   2006         2007

  Liquidity Ratio                                                  

  Current Ratio (time)               0.55            0.74         0.73

  Quick Ratio (time)                 0.44            0.57         0.59

  Operating cash flow to current     0.91            1.13         1.22
  liability (time)                                                

  A/R turnover (time)                15.60           17.46        15.68

  Collection period (day)            23              21           23

  Inventory turnover (time)          9.83            9.08         8.30

  Day sales period (day)             37              40           43

  A/P turnover (time)                7.51            7.24         10.24

  Payment period (day)               48              50           35

  Cash Cycle (day)                   12              11           31

  Profitability Ratio                                              

  Gross profit margin ratio (%)      41.42%          38.80%       34.76%

  Operation income ratio (%)         30.54%          26.31%       22.99%

  Other operating income ratio (%)   0.67%           1.16%        0.61%

  Free cash flow to EBIT (%)         118.90%         145.63%      137.69%

  Net profit margin (%)              20.24%          17.78%       15.02%

  Return to Equity (%) Average       23.84%          20.64%       21.29%

  Return to Equity (%) as at end     23.43%          20.95%       21.59%

  Efficiency Ratio                                                 

  Return on total assets (%)         14.51%          12.40%       12.38%

  Return on fixed assets (%)         42.73%          37.32%       37.42%

  Total assets turnover (time)       0.72            0.70         0.82

  Financial Policy Ratio                                           

  Debt to equity ratio (time)        0.60            0.73         0.71

  Interest coverage ratio (time)     31.48           33.56        26.44

  Debt service ratio (Cash Basis)    0.91            0.59         0.70
  (time)                                                          

  Dividend payout ratio (%)          99.21%          114.45%      114.32%

  Data on per Share Capital                                        

  Net book value per share (Baht)    27.14           26.28        25.53

  Net Profit per share (Baht)        6.36            5.50         5.51

  Dividend per share (Baht)          6.30            6.30         6.30

  Percentage Growth on                                             

  Total Assets (%)                   -1.73%          4.96%        -3.99%

  Total Liabilities (%)              -9.52%          18.07%       -5.68%

  Revenue from service & sales (%)   -4.07%          -1.18%       18.62%

  Selling & admin. expense (%)       -8.71%          13.45%       11.79%

  Net Profit (%)                     -11.53%         -13.19%      0.21%
  ---------------------------------- --------------- ------------ -----------

2.  Management’s Discussion and Analysis

Operational Highlights

■ Subscribers reached 24.1m in FY07 or 23% y-o-y growth (4.6m net
additions)

■ ARPU continued to fall due to multi-SIM and new users coming at lower
ARPU

■ q-o-q growth on ARPU in 4Q07 showed a sign of slower ARPU decline

Subscriber As at end of 2007, AIS and its subsidiaries (“AIS”) reported
total subscribers of 24.1m, or 23% growth from last year. Of total
subscriber, postpaid subscribers were 2.3m and prepaid subscribers were
21.8m.

Net additions were 4.6m in FY07. Strong net additions was driven by
aggressive subscriber acquisitions to maintain the market share since
3Q06, as well as an expansion into the low penetrated areas such as in
north and northeast regions.

Postpaid market During 1H07, postpaid market competed aggressively on
new subscriber acquisitions through aggressive SIM distribution and
attractive low-end price plan. AIS postpaid subscriber base in the first
half increased 18%, as well as the rising percentage of bad debt
provision reflecting lower quality of postpaid subscribers. In 3Q07, to
regain subscriber quality, AIS improved its acquisition strategy and
introduced a stringent credit screening policy in acquiring new
subscribers. As a result, postpaid subscribers declined in the second
half, reflected in higher churn, while bad debt provision also improved
in 3Q-4Q07.

Prepaid market AIS foresees that there are potential growth areas for
prepaid market, especially in remote areas such as in the north and
northeast regions, where penetration remains low at 30s. In Bangkok and
major cities, where penetration might have already reached 80-100%, AIS
targets to penetrate to pre-teen and teen markets, the high revenue
growth potentials.

ARPU excl. IC continued to fall in FY07 due to increasing numbers of
consumers owning multiple-SIM and additional subscribers from upcountry
areas contributing lower ARPU. The q-o-q increase on both postpaid and
prepaid ARPU was due to seasonal impact while rise in MOU was due to
higher off-peak usage driven by off-peak promotions.

Significant Events

Recognition of interconnection revenue and cost in FY07

In compliance to the National Telecommunications Commission’s (NTC)
interconnection regulation, AIS entered into interconnection (IC)
agreement with TAC on November 30, 2006 and True Move on January 15,
2007; the IC agreements have been approved by NTC. However, during the
1Q07 to 3Q07, AIS did neither invoice the IC charges to both parties nor
record any transactions related to the IC charges on the financial
statements. The IC recognition was pending upon the consideration
between the Company and TOT, the grantor of concession.

On 31 August 2007, TOT filed a case against NTC to the Administrative
Court to revoke NTC’s IC regulation. TOT also informed AIS that TOT
shall not recognize the company’s related actions and that the company
must be responsible for such actions, should the company undertake the
IC agreements before the final ruling by the Administrative Court.

The company’s management has the opinion that non-compliance to the IC
agreements could be in violation to the NTC’s regulation. Therefore AIS
has decided to record all transactions related to the IC charges under
the IC Agreements in the financial statements for the year ended 31
December 2007. The company has recorded the IC revenue of Baht 16,530
million, IC cost of Baht 14,054 million and also recorded the revenue
sharing calculated from the Net IC revenue after deducting IC cost to
the financial statements for the year ended 31 December 2007.

Financial Results

■ Recognition of net interconnection revenue of Bt2.5bn

■ 2.9% y-o-y service revenue growth in FY07

■ Pricing has stabilized after sharp decline during 2005-2006

■ Bad debt improved substantially in 4Q07 and expects to be 4-5%in FY08

■ Achieved 16.7% y-o-y net profit growth in 4Q07

Service revenue excluding interconnection revenue grew 2.9% y-o-y to
Bt78,280m in FY07 from Bt76,053m in FY06 driven primarily by prepaid
growth of 1.7% y-o-y and 72% higher international call (IDD) revenue.
Prepaid growth was driven by the strong and good-quality net additions
while pricing for new subscription was also improved. The growth of IDD
was contributed by the launch of AIN GlobalComm Co., Ltd, a wholly owned
subsidiary of AIS, offering the international call service through its
own 005 dialing prefix.

Pricing in FY07 has stabilized after a sharp decline during 2005-2006.
Since the beginning of the year, tariffs for new subscription have
continued to increase focusing on raising first and second minute tariff
rate and imposing limit on minute per call to discourage excessive long
call or buffet call, offered during 2005-2006. However, revenue per
minute in FY07 continued to decline driven primarily by higher usage
during the usually under-utilized off-peak hours. The off-peak tariff
plans resulted in higher utilization of network capacity and thus
generated additional revenue.

Interconnection (IC) revenue and cost for FY07 recorded IC revenue (from
incoming minutes) of Bt16,530m, and IC cost (from outgoing minutes) of
Bt14,054m, representing a net IC revenue of Bt2.48bn before revenue
share. The amount was in accordance with the interconnection agreements
with TAC and True Move, on which traffic settlement started from Feb-07
with TAC and Apr-07 with True Move. In 4Q07, of the total consumed
minutes, AIS had 48% outgoing minute, of which 70% is on-net traffic.
(See statistics of traffic on page 7)

Non-voice revenue grew 16.9% y-o-y to Bt8,628m, represented 11.0% of
service revenue (excl. IC) in FY07, increased from 9.7% or Bt7,382m in
FY06. Key growth areas were from data browsing and MMS which grew 42%
y-o-y as a result of higher usage after network upgrade to EDGE
capability. SMS remained the majority part of non-voice revenue,
accounted for 4.6% of service revenues and grew 9.4% y-o-y in FY07.

Sales revenues declined 11.3% y-o-y to Bt13,644m in FY07 from Bt15,375m
in FY06. Despite of 9.4% y-o-y growth of handset units sales, most
handsets sold were less expensive low-end models. Handset margin
slightly improved to 4.3% in FY07 from 4.0% in FY06. Handset business
has thin margin and does not have material impact to the consolidated
net profit. The launch of house-brand “Phone One” earlier in the year
has not yet contributed significant impact to the revenue.

Cost of service increased 66% y-o-y to Bt38,441m in FY07 from Bt23,139m
in FY06 due to recognition of IC cost of Bt14,054m. Excluding IC cost,
cost of service increased 5.4% y-o-y mainly as a result of higher
utility cost and network amortization. Amortization rose 3.6% y-o-y from
a significant network investment in late 2006 and the shorter
amortization period according to concession life.

Concession fee was Bt19,691m in FY07, increased 5% y-o-y from Bt18,754m
in FY06. The amount in FY07 also includes the revenue share calculated
from net IC (IC revenue deducted by IC cost).

SG&A expense increased 11.8% y-o-y to Bt12,767m in FY07 from Bt11,421m
in FY06 due to higher provision of bad debt, which represented 6.5% of
postpaid revenue in FY07. This significant increase of bad debt
provision compared to the level of lower than 2% during 2005-2006 was a
result of aggressive postpaid subscriber acquisition during 1H07 to
maintain the postpaid dominant position. However, the situation has
improved since 3Q07 after AIS introduced stringent credit screening
policy for new subscriber acquisition. In 4Q07, bad debt provision
improved to 4.1% of postpaid revenues. Going forward, AIS expects the
bad debt provision to be in a range of 4-5% of postpaid revenue in FY08.
Marketing expenses for FY07 were 3.8% of total revenues (excl. IC),
relatively stable from that of FY06.

Other income for FY07 declined to Bt662m from Bt1,015m in FY06 primarily
from lower interest income as the company has kept lower cash on hand as
well as lower market deposit interest rate.

EBITDA margin was 40.3% in FY07, declined from 46.2% in FY06 due to
recognition of IC. Excluding IC impact, EBITDA margin was 45.3%, dropped
from 46.2% in FY06 due to higher bad debt provision.

Net profit was Bt16,290m in FY07, relatively flat compared to Bt16,256m
in FY06. Excluding IC impact, net profit was Bt14,879m in FY07, declined
8.5% y-o-y due to higher network amortization, SGA and interest expense.
In 4Q07, excluding IC impact, AIS achieved a net profit growth of 16.7%
y-o-y and 5.9% q-o-q after stabilized market share since 3Q06.

Balance Sheet Structure

Liquidity Current ratio slightly declined to 73% in FY07 from 74% in
FY06 due to less cash outstanding and lower inventories for mobile
handsets.

Capital structure was strong with low financial leverage, which
supported company’s ability to continue high dividend payout. In FY07,
total liabilities to equity improved to 71%, from 73% in FY06 due to a
partially repayment of debentures. Shareholders’ equity was Bt75,461m in
FY07, dropped 2.8% y-o-y from Bt77,599m in FY06 as company paid dividend
over 100% of its net income. AIS continued to pay high dividend,
supported from profitable operations and strong balance sheet structure.
In FY07, the Company paid a cash dividend of total Bt18,658m, implying a
dividend per share of Bt6.30. The unappropriated retained earnings at
the ending period were Bt49,999m.

Benchmarking with regional telecom operators, AIS’s capital structure
remained sound with its debt to equity is among the lowest among the
telecom peers by the comparable credit rating.

[]

* Source: latest figures of each operator from Reuters as of January
2008

Net debt to equity slightly increased to 29% in FY07 from 26% in FY06
due to lower amount of cash and cash equivalents.

Debentures and Loans As at end of 2007, AIS had total debentures and
borrowings of Bt30,349m, slightly decreased from Bt33,149m in 2006. Of
the total outstanding debt, 14% remained exposed to floating interest
rate, the rest was either fixed rate or engaged into fixed interest swap
contract. Effective interest rate was 5.31% per annum.

  --------------- --------- --------- ---------- -------------- ------- ------ -------- ------ -------
                  Balance   Balance   Interest   Repayment⁽¹⁾                                  

  Unit: million   2006      2007      rate       2008           2009    2010   2011     2012   2013

  Short term      1,000     3,492     3.98%      3,500          -       -      -        -      -
  borrowing                                                                                    

  Long term       9,485     10,681    5.07%      28             57      57     9,542    57     57
  loan⁽²⁾                                                                                      

  Debenture       22,602    16,111    5.74%      1,500          6,627   -      4,000    -      4,000

  Financial lease 62        64        9.23%      22.6           16.2    12.4   8.6      4.4    -

  Total debt      33,149    30,349    5.31%      5,028          6,684   57     13,542   57     4,057
  --------------- --------- --------- ---------- -------------- ------- ------ -------- ------ -------

(1) Includes bond issuing cost; (2) includes swap contract

Cash Flow

Cash flow position remained strong to support capex and dividend
payment. For FY07, AIS generated cash flow from operations (after
interest and tax) of Bt36,235m and had net increase in total borrowing
of Bt8,501m. Of this amount, the group spent Bt17,105m on capital
expenditures, repaid Bt11,523m of debts, and paid Bt18,658m in dividend.
As a result, the group had net decrease in cash of Bt4,254m for the
period.

Source and use of fund: FY2007

  ------------------------- --------- -- --------------------------- ---------
  Source of Fund            Bt           Use of Fund                 Bt
                            million                                  million

  Operating CF before       36,235       CAPEX & Fixed assets        17,105
  changes in working                                                 
  capital                                                            

  Share capital and share   278          Short-term investments      98
  premium                                                            

  Disposal of property and  27           Repayment of LT borrowing & 6,523
  equipment                              financial lease             

  Short term borrowing      7,368        Repayment of ST borrowing   5,000

  Long term borrowing       1,133        Dividend payment            18,658

  Cash decrease             4,254        Change in working capital   1,910

  Total                     49,294       Total                       49,294
  ------------------------- --------- -- --------------------------- ---------

FY2008 Management Outlook & Strategy

  --------------------- -------------------------------------------------
  Market subscriber     8-10m net additions for the market
  forecast              

  Market share          50% revenue market share

  Service revenue       5-7% service revenue growth excluding IC

  Marketing expense     4% of total revenue

  Network amortization  10-12% rise in FY08 (network amortization and
                        depreciation as booked under cost of service
                        only, excluding PPE depreciation in SGA,
                        goodwill, and amortization of concession right)

  EBITDA margin         45-46% excluding IC

  Capex                 Bt16-17bn cash capex for FY08 (no 3G)
  --------------------- -------------------------------------------------

For FY08, AIS expect industry subscribers to grow 15-20% y-o-y or a
total net addition of 8-10 millions. SIM penetration could potentially
get close to 95% while human penetration is expected to be around 25-30%
lower given multi-SIM phenomena will remain significant in Thai mobile
industry. Pricing environment will continue to be stable or have slight
improvement given each operator tends to set tariff to reflect the cost
of interconnection as well as to better utilize the network between peak
and off-peak hours.

AIS is aiming to maintain its revenue market share at 50%, and to
deliver 5-7% service revenue growth in 2008, as well as continue to
deliver EBITDA growth, as it had in the past two quarters. The key
growth drivers to the revenue and EBITDA are (1) higher penetration in
upcountry areas (2) continued improving voice revenue from stable
pricing environment (3) strong 15-20% growth in non-voice services and
(4) higher contribution from IDD business. In 2007, the launch of IDD
business contributed additional 1.3% of service revenue, and is expected
to growth 40-50% y-o-y in FY08.

For the 2G capex budget of Bt16-17bn in 2008, AIS targets its network
expansion to reach 14,500 base stations focusing on (1) continued
expansion into rural area to differentiate coverage gap with competitors
(2) transportation route such as new roads, expressway, Bangkok transit
system, (3) new residential areas, business and industrial areas, and
tourist attractions. Amortization in 2008 is expected to rise 10-12%
y-o-y as the network asset is amortized over the shorter remaining
period of concession life which expired in 2015.

Net interconnection revenue in FY08 is expected to decline significantly
from FY07 and become insignificant to the net profit in the near term as
the incoming and outgoing traffic across networks are balancing off.

Financial Summary

Consolidated income statement

  ---------------- ---------- ---------- ---------- -------- ------- ---------- ---------- --------
  Unit: Bt.        4Q07       4Q06       3Q07       % y-o-y  % q-o-q 2007       2006       % y-o-y
  million                                                                                  

  Service revenue  20,112     18,317     19,079     9.8      5.4     78,280     76,053     2.9
  excl. IC                                                                                 

  IC revenue       16,530     n/a        n/a        n/a      n/a     16,530     n/a        n/a

  Service revenue  36,642     18,317     19,079     100.0    92.1    94,810     76,053     24.7

  Sales revenue    3,228      4,011      3,328      -19.5    -3.0    13,644     15,375     -11.3

  Total revenue    39,870     22,328     22,407     78.6     77.9    108,454    91,428     18.6

  Cost of service  (6,326)    (5,675)    (6,239)    11.5     1.4     (24,387)   (23,139)   5.4
  excl. IC                                                                                 

  IC cost          (14,054)   n/a        n/a        n/a      n/a     (14,054)   n/a        n/a

  Cost of service  (20,380)   (5,675)    (6,239)    259.1    226.6   (38,441)   (23,139)   66.1

  Concession &     (5,412)    (4,550)    (4,627)    18.9     17.0    (19,691)   (18,754)   5.0
  excise tax                                                                               

  Cost of sales    (2,960)    (3,764)    (3,118)    -21.4    -5.1    (12,624)   (14,063)   -10.2

  Total cost       (28,752)   (13,989)   (13,984)   105.5    105.6   (70,757)   (55,956)   26.5

  Gross profit     11,118     8,340      8,423      33.3     32.0    37,697     35,473     6.3

  SG&A             (3,382)    (3,424)    (2,959)    -1.2     14.3    (12,767)   (11,421)   11.8

  Directors'       (4)        (2)        (2)        99.6     108.1   (10)       (8)        37.2
  remuneration                                                                             

  Operating profit 7,733      4,914      5,463      57.4     41.6    24,920     24,044     3.6

  Interest expense (427)      (511)      (428)      -16.4    -0.2    (1,721)    (1,538)    11.9

  Other income     163        230        142        -29.1    14.8    662        1,015      -34.8

  Exchange         (28)       16         (12)       -278.0   136.9   (56)       48         -218.0
  gain/(Loss)                                                                              

  EBT              7,441      4,648      5,165      60.1     44.1    23,804     23,568     1.0

  Minority         22         32         8          -33.1    155.4   48         148        -67.3
  interest                                                                                 

  Corporate tax    (2,330)    (1,493)    (1,661)    56.1     40.3    (7,562)    (7,460)    1.4

  Net income       5,132      3,187      3,512      61.0     46.1    16,290     16,256     0.2
  ---------------- ---------- ---------- ---------- -------- ------- ---------- ---------- --------

Revenue and cost breakdown

  -------------------- -------- -------- -------- -------- -------- -------- -------- --------
  Service revenue      1Q06     2Q06     3Q06     4Q06     1Q07     2Q07     3Q07     4Q07
  excl. IC                                                                            

  Basic voice                                                                          

  GSM Advance          23.4%    22.6%    21.0%    21.3%    22.5%    22.5%    20.6%    18.5%

  GSM 1800             1.6%     1.5%     1.3%     1.3%     1.0%     1.0%     0.9%     0.8%

  Postpaid             25.0%    24.1%    22.3%    22.6%    23.5%    23.5%    21.5%    19.3%

  Prepaid              59.7%    59.1%    60.4%    58.4%    56.3%    57.6%    59.1%    59.5%

  Non-voice                                                                           

  Postpaid             3.4%     3.7%     3.8%     4.2%     4.6%     4.3%     4.5%     4.8%

  Prepaid              5.2%     6.2%     6.3%     6.2%     6.3%     6.2%     6.6%     6.9%

  International        4.4%     4.2%     4.2%     5.1%     5.2%     4.2%     4.4%     5.1%
  roaming                                                                             

  Others (IDD, other   2.3%     2.7%     3.0%     3.5%     4.1%     4.2%     3.9%     4.4%
  fees)                                                                               

                       100.0%   100.0%   100.0%   100.0%   100.0%   100.0%   100.0%   100.0%

                                                                                       

  Sales revenue        1Q06     2Q06     3Q06     4Q06     1Q07     2Q07     3Q07     4Q07

  Handset              92.4%    92.1%    95.8%    93.0%    93.7%    93.4%    94.7%    95.2%

  SIM                  7.6%     7.9%     4.2%     7.0%     6.3%     6.6%     5.3%     4.8%

                       100.0%   100.0%   100.0%   100.0%   100.0%   100.0%   100.0%   100.0%

                                                                                       

  Cost of service      1Q06     2Q06     3Q06     4Q06     1Q07     2Q07     3Q07     4Q07
  excl. IC                                                                            

  Amortization         71.5%    71.2%    67.4%    68.3%    67.3%    68.4%    68.7%    69.2%

  Base station         7.9%     9.1%     9.1%     9.6%     9.6%     9.8%     9.3%     9.2%

  Maintenance          8.6%     7.7%     8.8%     8.3%     8.0%     7.3%     7.8%     7.6%

  Others               12.0%    12.0%    14.7%    13.8%    15.1%    14.5%    14.2%    14.0%

                       100.0%   100.0%   100.0%   100.0%   100.0%   100.0%   100.0%   100.0%

                                                                                       

  Cost of sales        1Q06     2Q06     3Q06     4Q06     1Q07     2Q07     3Q07     4Q07

  Handsets             98.1%    97.7%    98.5%    97.6%    97.6%    97.1%    96.9%    97.6%

  SIM                  1.9%     2.3%     1.5%     2.4%     2.4%     2.9%     3.1%     2.4%

                       100.0%   100.0%   100.0%   100.0%   100.0%   100.0%   100.0%   100.0%
  -------------------- -------- -------- -------- -------- -------- -------- -------- --------

Consolidated balance sheet

  ---------------------------------------- --------------- ---------------
  Bt. million                              2007            2006

  Current Assets                           20,586          22,893

  Property and Equipment                   8,561           7,797

  Networks under Concession                78,527          81,096

  Intangible asset                         10,593          12,197

  Defer tax asset                          10,031          9,763

  Others                                   644             555

  Total Assets                             128,942         134,301

  ST loan from financial institution       3,492           1,000

  Account Payable-trade                    4,218           5,760

  Current Portion of LT Debt               1,545           6,507

  Current Portion of Concession            8,373           7,155

  Long-term Debt                           25,312          25,642

  Other Liabilities                        10,541          10,637

  Total Liabilities                        53,481          56,702

  Total Equity                             75,461          77,599
  ---------------------------------------- --------------- ---------------

Key ratios

  --------------------------- -------- -------- -------- -------- --------
                              4Q07     4Q06     3Q07     2007     2006

  EBITDA (Bt. million)        12,698   9,305    10,199   43,684   42,284

  EBITDA margin               31.8%    41.7%    45.5%    40.3%    46.2%

  Interest coverage (x)       18.1     9.6      12.8     14.5     15.6

  DSCR (x)                    5.3      2.7      2.6      4.5      3.3

  Net debt / EBITDA (x)       0.43     0.55     0.64     0.50     0.48

  Net debt / Equity (%)       29%      26%      37%      29%      26%

  Interest-bearing debt to    0.40     0.43     0.48     0.40     0.43
  Equity (x)                                                      

  Total liabilities to Equity 0.71     0.73     0.80     0.71     0.73
  (x)                                                             

  Free cash flow to EV (%)    8.9%     0.3%     6.6%     6.8%     4.8%
  --------------------------- -------- -------- -------- -------- --------

Operational Data

+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Subscribers   | 1   | 2   | 3   | 4   | 1   | 2   | 3   | 4   |
|               | Q06 | Q06 | Q06 | Q06 | Q07 | Q07 | Q07 | Q07 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| GSM Advance   | 1,7 | 1,7 | 1,8 | 2,1 | 2,5 | 2,5 | 2,3 | 2,2 |
|               | 90, | 97, | 68, | 43, | 34, | 66, | 49, | 03, |
|               | 700 | 100 | 200 | 700 | 700 | 300 | 300 | 500 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| GSM 1800      | 1   | 1   | 1   | 98, | 92, | 86, | 82, | 82, |
|               | 27, | 14, | 05, | 700 | 000 | 800 | 600 | 400 |
|               | 300 | 800 | 400 |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Postpaid      | 1,9 | 1,9 | 1,9 | 2,2 | 2,6 | 2,6 | 2,4 | 2,2 |
|               | 18, | 11, | 73, | 42, | 26, | 53, | 31, | 85, |
|               | 000 | 900 | 600 | 400 | 700 | 100 | 900 | 900 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Prepaid       | 1   | 1   | 1   | 1   | 1   | 2   | 2   | 2   |
|               | 4,7 | 5,4 | 5,7 | 7,2 | 8,4 | 0,0 | 0,7 | 1,8 |
|               | 15, | 06, | 49, | 79, | 62, | 38, | 72, | 19, |
|               | 900 | 000 | 500 | 100 | 600 | 300 | 500 | 500 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Total         | 1   | 1   | 1   | 1   | 2   | 2   | 2   | 2   |
| subscribers   | 6,6 | 7,3 | 7,7 | 9,5 | 1,0 | 2,6 | 3,2 | 4,1 |
|               | 33, | 17, | 23, | 21, | 89, | 91, | 04, | 05, |
|               | 900 | 900 | 100 | 500 | 300 | 400 | 400 | 400 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
|               |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Net additions | 1   | 2   | 3   | 4   | 1   | 2   | 3   | 4   |
|               | Q06 | Q06 | Q06 | Q06 | Q07 | Q07 | Q07 | Q07 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Postpaid      | -   | -6, | 61, | 2   | 3   | 26, | -2  | -1  |
|               | 81, | 100 | 700 | 68, | 84, | 400 | 21, | 46, |
|               | 700 |     |     | 800 | 300 |     | 200 | 000 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Prepaid       | 3   | 6   | 3   | 1,5 | 1,1 | 1,5 | 7   | 1,0 |
|               | 06, | 90, | 43, | 29, | 83, | 75, | 34, | 47, |
|               | 700 | 100 | 500 | 600 | 500 | 700 | 200 | 000 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Total net     | 2   | 6   | 4   | 1,7 | 1,5 | 1,6 | 5   | 9   |
| additions     | 25, | 84, | 05, | 98, | 67, | 02, | 13, | 01, |
|               | 000 | 000 | 200 | 400 | 800 | 100 | 000 | 000 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
|               |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Churn rate    | 1   | 2   | 3   | 4   | 1   | 2   | 3   | 4   |
| (%)           | Q06 | Q06 | Q06 | Q06 | Q07 | Q07 | Q07 | Q07 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Postpaid      | 1   | 1   | 0   | 1   | 2   | 3   | 4   | 4   |
|               | .1% | .1% | .9% | .0% | .5% | .9% | .8% | .7% |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Prepaid       | 2   | 2   | 3   | 2   | 2   | 2   | 3   | 3   |
|               | .8% | .8% | .2% | .7% | .9% | .7% | .9% | .9% |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Blended       | 2   | 2   | 2   | 2   | 2   | 2   | 4   | 4   |
|               | .6% | .6% | .9% | .5% | .9% | .9% | .0% | .0% |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
|               |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Subscriber    | 1   | 2   | 3   | 4   | 1   | 2   | 3   | 4   |
| market share  | Q06 | Q06 | Q06 | Q06 | Q07 | Q07 | Q07 | Q07 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Postpaid      | 43% | 41% | 41% | 43% | 44% | 44% | 42% | n/a |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Prepaid       | 53% | 52% | 50% | 50% | 50% | 49% | 47% | n/a |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Total         | 52% | 51% | 48% | 49% | 49% | 48% | 46% | n/a |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
|               |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Disclosure of |     |     |     |     |     |     |     |     |
| this          |     |     |     |     |     |     |     |     |
| definition of |     |     |     |     |     |     |     |     |
| ARPU will be  |     |     |     |     |     |     |     |     |
| discontinued  |     |     |     |     |     |     |     |     |
| from 1Q08     |     |     |     |     |     |     |     |     |
| onward        |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| *ARPU (Bt:    | 1   | 2   | 3   | 4   | 1   | 2   | 3   | 4   |
| net voice +   | Q06 | Q06 | Q06 | Q06 | Q07 | Q07 | Q07 | Q07 |
| vas)          |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Postpaid      | 1,  | 892 | 809 | 776 | 751 | 689 | 650 | 685 |
|               | 028 |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Prepaid       | 316 | 266 | 258 | 239 | 227 | 217 | 205 | 209 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Blended       | 400 | 337 | 319 | 300 | 290 | 274 | 254 | 256 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
|               |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| *new ARPU     | 1   | 2   | 3   | 4   | 1   | 2   | 3   | 4   |
| excl. IC      | Q06 | Q06 | Q06 | Q06 | Q07 | Q07 | Q07 | Q07 |
|               |     |     |     |     |     |     |     |     |
| (Bt: net      |     |     |     |     |     |     |     |     |
| all-in)       |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| GSM Advance   | 1,  | 964 | 876 | 845 | 811 | 741 | 696 | 744 |
|               | 104 |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| GSM 1800      | 907 | 815 | 805 | 806 | 781 | 773 | 760 | 739 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Postpaid      | 1,  | 955 | 872 | 843 | 809 | 742 | 698 | 743 |
|               | 091 |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Prepaid       | 340 | 286 | 277 | 262 | 249 | 234 | 222 | 227 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Blended       | 429 | 362 | 343 | 328 | 317 | 295 | 274 | 279 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
|               |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| *new ARPU     | 1   | 2   | 3   | 4   | 1   | 2   | 3   | 4   |
| incl. net IC  | Q06 | Q06 | Q06 | Q06 | Q07 | Q07 | Q07 | Q07 |
|               |     |     |     |     |     |     |     |     |
| (Bt: net      |     |     |     |     |     |     |     |     |
| all-in)       |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| GSM Advance   | n/a | n/a | n/a | n/a | 788 | 708 | 665 | 696 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| GSM 1800      | n/a | n/a | n/a | n/a | 781 | 773 | 760 | 739 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Postpaid      | n/a | n/a | n/a | n/a | 787 | 710 | 668 | 698 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Prepaid       | n/a | n/a | n/a | n/a | 263 | 258 | 233 | 238 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Blended       | n/a | n/a | n/a | n/a | 326 | 312 | 282 | 283 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
|               |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| MOU (minutes: | 1   | 2   | 3   | 4   | 1   | 2   | 3   | 4   |
| outgoing      | Q06 | Q06 | Q06 | Q06 | Q07 | Q07 | Q07 | Q07 |
| only)         |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| GSM Advance   | 476 | 521 | 559 | 550 | 587 | 504 | 511 | 573 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| GSM 1800      | 495 | 418 | 418 | 426 | 412 | 416 | 422 | 426 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Postpaid      | 477 | 515 | 551 | 544 | 580 | 501 | 507 | 568 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Prepaid       | 203 | 303 | 229 | 214 | 228 | 218 | 224 | 239 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Blended       | 235 | 327 | 265 | 251 | 270 | 252 | 256 | 271 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
|               |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| Traffic       | 1   | 2   | 3   | 4   | 1   | 2   | 3   | 4   |
|               | Q06 | Q06 | Q06 | Q06 | Q07 | Q07 | Q07 | Q07 |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| % outgoing to | n/a | n/a | n/a | n/a | 46% | 47% | 48% | 48% |
| total minute  |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+
| % on-net to   | n/a | n/a | n/a | n/a | 56% | 63% | 68% | 70% |
| total         |     |     |     |     |     |     |     |     |
| outgoing      |     |     |     |     |     |     |     |     |
| minute        |     |     |     |     |     |     |     |     |
+---------------+-----+-----+-----+-----+-----+-----+-----+-----+

* From 1Q08 onward, disclosure of ARPU will be based on new definition
(net all-in) only. Disclosure of “ARPU net voice + value-added service”
will be discontinued.

Change of Definition

In accordance with the international practice, we have adjusted ARPU
disclosure to better reflect all revenues generated from the mobile
network. We believe the new definition should provide a more transparent
representation of our reported service revenue and maintain the
conservative approach of recognizing revenue on the net basis. The
revenue items included in the calculation of ARPU figures are based on
consolidated revenue according to the Thai accounting standard. The
changes of ARPU definition are outlined accordingly.

ARPU

+---------+-----------------------------+-----------------------------+
|         | Old ARPU (voice +           | New ARPU (All-in)           |
|         | value-added service)        |                             |
+---------+-----------------------------+-----------------------------+
| Def     | Consolidated revenue from   | Consolidated service        |
| inition | voice and value-added       | revenue excluding           |
|         | services divided by average | international call revenue  |
|         | of subscribers at the       | from AIN divided by average |
|         | beginning and ending        | of subscribers at the       |
|         | period.                     | beginning and ending        |
|         |                             | period.                     |
|         | = Voice revenue + VAS       |                             |
|         | revenue                     | = Service revenue excluding |
|         |                             | AIN revenue                 |
|         | (beg.sub + end.sub) / 2     |                             |
|         |                             | (beg.sub + end.sub) / 2     |
+---------+-----------------------------+-----------------------------+
| Revenue |  Voice                     |  Voice                     |
| comp    |                             |                             |
| osition |  Value-added service (call |  Value-added service (call |
|         | management, SMS, MMS, data) | management, SMS, MMS, data) |
|         |                             |                             |
|         |  International roaming     |  International roaming     |
|         |                             |                             |
|         |  International call via    |  International call via    |
|         | CAT, TOT                    | CAT, TOT                    |
|         |                             |                             |
|         |  International call via    |  Others                    |
|         | AIN (AIS subsidiary)        |                             |
|         |                             |  International call via    |
|         |  Others                    | AIN (AIS subsidiary)        |
|         |                             |                             |
|         | All categories are net of   | All categories are net of   |
|         | third-party sharing and     | third-party sharing and     |
|         | commission                  | commission                  |
+---------+-----------------------------+-----------------------------+

From 1Q08 onward, disclosure of ARPU will be based on new definition
(net all-in) only. Disclosure of “ARPU net voice + value-added service”
will be discontinued.

12.3 Audit and non-audit fees

In 2007, the Company and its subsidiaries (“The Group”) had the audit
fee of total Baht 10.54 million, of which Baht 6.94 million was an audit
fee of Advanced Info Service Public Company Limited. This amount already
included the out of pocket.

The Group had a non-audit fee of total Baht 159,000, which included the
fee for assessment of revenues and observation of inventory management.