dtac annual eng revise

Follow me...

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Total Access Communication Public Company Limited333/3 Moo 14 Chai Building, Vibhavadi Rangsit Road

Ladyao, Chatuchak, Bangkok 10900 ThailandTel: (66) 2202-8000 Fax: (66) 2202-8929 Website: http://www.DTAC.co.th Annual Report 2004

Dante Alighieri

“First, create followers. Then, let them become leaders.That’s how you stay ahead. That’s what allows you tosay, with conviction, ‘Follow Me’.’’

DTAC Management Team

“Follow your own star!”

2004 DTAC Annual Report 3

That’s why, once again, we’re happy to break the mould,and lead off our annual report by focusing on the beatingheart and soul of our organization: our people. Withouttheir unstinting efforts, after all, we wouldn’t have such ahappy tale to tell. Even in the face of stern regulatoryhurdles, DTAC continues to lead a revolution in the wirelesssector in Thailand: to confound our critics, out-think ourrivals, and go the extra mile for our valued customers. It’sa commitment. It’s a mission. It’s a state of mind. Of course,above all ... it’s the DTAC way.

Follow Me. Two simple words that pack a powerfulpunch, and say a lot about the journey DTAC startedin 2004. In different senses, it’s a phrase that

applies to our relationship with our customers, our staff,our stakeholders, and even our competitors. DTAC firstand foremost is a company that thrives on leading fromthe front. We encourage and reward innovation. We havenever shied from breaking new ground in products andservices. We do not fear the copycats. You might say weare natural born leaders.

4 Follow me...

Follow me...

Follow me...to the future

Contents

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People

8 Interview with the Chairman 10 Vision and Mission

12 Board of Directors 14 Executive Management

16 DTAC and the Community

Operations

20 Milestones 21 Markets and Operations

25 Wireless Services Sector and Business Outlook

26 Risk and Mitigation

28 Shareholder Structure 30 Corporate Governance

37 Interested Person Transaction

Results

42 Results and Financing 44 Director’s Report

46 Audit Committee Report 47 Financial Highlights

Financial Statements

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6 Follow me...

“Throw your heart over the fence and the rest will follow”

Norman Vincent Peale

Follow me...as I lead the way

People

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8 Follow me...

Q: How would you sum up DTAC’s 2004?

A: We were a good company, and in 2004 we provedthat we were a better company. There are manychallenges ahead and it will be a long journeyto transform DTAC from a good to great company. We arehowever confident that we have managed to establish aculture that will drive DTAC to achieve this in the future.

We did find our DTAC way in 2003 to keep our customershappy and satisfied. Our promise to customers isfocused on friendliness, innovative products andvalue-for-money services. In 2004, we continued tofocus on the same principles and I am proud to say thatlast year was another successful year.

Q: Has the company continued to grow?

A: Desp i te a s lowdownin market growth and

intensified competition,we added 1.236 millionnet new customers toour customer base in2004. This was inline with the marketand enabled us tomaintain our marketshare of customers atapproximately 29%.

More importantly, wedelivered almost 24%

year-on-year growth in

service revenues and a 73% increase in net earnings.This was accomplished despite an increase in regulatorycosts. With the commitment to improve our efficiency, ourEBITDA increased to more than 15 billion baht. Theimproved EBITDA and free operating cash flow allowedus to reduce net debt by 5.2 billion baht as well as a capitalspending of 5.3 billion baht on our network expansion.DTAC ended the year with a stronger balance sheet andthis gives us the flexibility to serve our customers evenbetter in the future.

Q: Has the competition become even fiercer thanin 2003?

A: Competition in the Thai wireless market was intensifiedby the end of the second quarter in 2004. We experienceda decrease in net additions and high churn, but we wereable to maintain our market share in the third quarter. Eventhough we lost market share of net additions in the fourthquarter due to our competitor’s continued aggressivemarketing activities, we have continued to stay focusedon our positioning in the market place. We expect theintense competitive environment to remain in 2005.

Q: How did you demonstrate your commitment toinnovation in 2004?

A: Our people have never stopped thinking aboutoffering innovative services to our existing and potentialcustomers. We have continued our role as a leader to

develop the Thai mobile market.In early 2004, we removedentry barriers in the marketplace by introducing “BabySIM” “Baby SIM” is aprepaid service that canmeet low volume users’needs by extending thee x p i r y p e r i o d o f re f i l lvouchers. Again, in early2004 we were the first operatorin the Thai market to launcha low-value refill cards (50 Baht)to make mobi le serv icesaffordable and available forcustomers. On the postpaid side,we launched “Maximize” fors o p h i s t i c a t e d h i g h - e n d

c u s t o m e r s i n M a r c hand followed up by

refreshing the “My”p a c k a g e . W e

h a v e a l s o

Mr. Boonchai Bencharongkul

Follow me...to the heart of the matter

Interview with the Chairman

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expanded and professionalized our relationship withour traditional distribution network in 2004. We also lookedbeyond the traditional way to distribute our products byteaming up with the largest distributor in Thailand,Saha Phatanapibul, so our products are available inmore than 50,000 retail stores throughout Thailand. Ourmain competitor followed and that helped fuel marketgrowth. After 6 months we had net additional customersexceeding the full-year target.

Q: What is the status of EDGE and Value-addedServices?

A: Value-added Services was another area we improved.Exciting content continued to be developed in closecooperation with our partners. We also realized that anattractive package with appropriate price is needed toencourage usage. To deliver our commitment to be thebest in the 20 largest cities in Thailand, we developed theEDGE network to complement the improved voiceservices. Our EDGE network was first commerciallylaunched in Bangkok in order to serve business clientsand individual data users. This year, we will continue toimprove our network quality and strengthen our customers’experience of the DTAC network.

Q: Is there a glimmer of light on the regulatoryhorizon?

A: Regulatory reform has been on the cards for manyyears. There was no specific progress to report in 2004.However, the establishment of National TelecommunicationCommission (“NTC”) was encouraging and both we andour customers are excited to learn about the NTC’srecommendations. DTAC will continue its support for anyregulatory reform that will make mobile services better,cheaper and equal for all Thai customers, whether theylive in Bangkok or in the very remote countryside. We areconfident that the NTC is of a similar opinion.

Q: Did you retain your focus on corporategovernance in 2004?

A: DTAC remains committed to a sound corporategovernance policy. The Corporate GovernanceCommittee was set up in 2003, and has continued its rolein assisting the Board of Directors in its pursuit of theproper governance of our company.

Q: Is there anything else you would like to add?

A: I would like to take this opportunityto thank all our employees for theirdedication and hard work. Ouremployees were the main reasonfor the successful year of 2004. AlsoI would like to thank our shareholdersfor their continued support,our business partners andsuppliers for their cooperation,and finally a humble thankyou to our customers forbeing with us.

10 Follow me...


Follow me...all the way to the top

Vision and Mission

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When we say “Follow Me”, it applies both inside and outside the company structure. On the outside, we want to lead the market in developing services.It’s difficult. Indeed, it’s a task that never ends, because some of the things

we do are copied. But that never deters us. We see ourselves as the mobile industry’sversion of “We Try Harder”.

Internally, we believe if we build a culture of innovation within the company, then thatbecomes a natural part of our daily life. And that is very difficult to copy. We want ourpeople to say what they mean, and do what they say. That applies all the way to the top.If you want your staff to do something, then your leadership must lead by example.That’s true leadership in action.

What we focused on in 2004 was to continue building the market perception of thebrand. That has become even more important as competition gets tougher. We’re notthe biggest or the smallest. So we need to find our unique place. We do that by focusingon our key values.

The first is value for money, and we certainly continue to provide just that. The cheapestprices don’t necessarily represent the best value, as many mobile users are beginningto learn. The second is innovation. That applies not just to technology, but the way we domarketing, the way we introduce new services to customers. We have been leading achange in the whole industry, to focus more on services and not only technology.

The third key word is Friendly (or Jaidee in Thai). Having a good heart. You will see thatin the brand we are building, because we think that’s another way to distinguish ourselvesfrom our competitors. We’ve turned out an organization from a vertical to a much morehorizontal organization, because we want to be more and more customer focused. Puttingthe customer in focus requires real teamwork across the different departments.So customer focus were a big part of the 2004 story, and will continue to be in 2005.’’


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Mr. Boonchai BencharongkulChairman of the Board of DirectorsWork Experience :

2002-present Chief Executive Officer and President,United Communication Industry PLC.

2000-present Chairman, Independent News Network Co.,Ltd.(I.N.N.)

2000-2002 Chief Executive Officer,Total Access Communication PLC.

1990-present Chairman of the Board of Directors,Total Access Communication PLC.

1984-2000 Chief Executive Officer,United Communication Industry PLC.

1980-1983 Managing Director, Narai International Insurance Co.,Ltd.1978-1980 Deputy Managing Director,

Narai International Insurance Co.,Ltd.Social Experience :

2001-present Chairman, Hornbill Research Foundation2001-present Chairman, Ruamduay Chuaykan Co-Operative Limited1998-present Chairman, Sam Nuek Rak Ban Kerd Foundation1996 Chairman, Thai-Finnish Chamber of CommerceRoyal Decorations :

2003 The Grand Cross (Third Class, Higher Grade) of the MostIllustrious Order of Chula Chom Klao

1997 The Knight Grand Cross (First Class) of the Admirable Orderof the Direkgunabhorn

1994 The Knight Grand Cross (First Class) of the Most Noble Orderof the Crown of Thailand

Academic Background :

Honorary Doctoral Degree in Economics Science, Ramkhamhaeng UniversityBachelor of Science in Business Administration, Northern Illinois University,

U.S.A.

Mr.Arve JohansenVice Chairman of the Board of DirectorsWork Experience :

2002-present Vice Chairman of Board of Directors,Total Access Communication PLC.

1999-present Senior Executive Vice President,Telenor Group and CEO, Telenor Mobile

2000-2002 Director,Total Access Communication PLC.1995-1998 Managing Director and CEO, Telenor

International ASAcademic Background :

M.Sc.EE Telecommunications, Norwegian Institute ofTechnology Trondhiem, Norway

Mr. Vichai BencharongkulDirector & Co-Chief Executive OfficerWork Experience :

2002-present Co-Chief Executive Officer,Total Access Communication PLC.

1993-present Director, United Communication Industry PLC.1991-present Director, Total Access Communication PLC.

Director, UCOM International Co.,Ltd.Director, UCOM Entertainment Broadcasting

Co.,Ltd.2002-present Director, United Distribution business Co.,Ltd.2000-present Director, United Broadband Technology Co.,Ltd.1989-present Director, United Communication

Subscriber Co.,Ltd.2000-2002 Chief Executive Officer, United Communication

Industry PLC.1999 President, United Communication Industry PLC.1998-2002 Director, United Telecom Sales and Services

Co.,Ltd.1996-2002 Director, United Information Highway Co.,Ltd.1996-1998 Senior Executive Vice President, United Communication Industry PLC.1993-1995 Senior Executive Vice President, United Communication Industry PLC.1988-2002 Director, United Tactical Communication Co.,Ltd.Academic Background :

Bachelor of Arts in Business Management, Northeastern Illinois University, USA

Mr. Ragnar H. KorsaethDirectorWork Experience :

Present Director, Total Access Communication PLC.2004-present COO, Telenor International Mobile2000-2004 CFO, Telenor International and

Telenor Mobile1997-2000 Controller and Finance Director,

Telenor International1995-1997 Arthur Andersen Audit ConsultingAcademic Background :

Master of Science, the Norwegian School ofEconomics and Business Administration, Norway.

Certified Financial Analyst.

Mr.Chai NasylvantaVice Chairman of the Board of DirectorsWork Experience :

Present Vice Chairman of Board of Director,Total Access Communication PLC.

2002-present Director, GMM Media PLC.1999-present Director, GMM Grammy PLC.1995-present Independent Financial Advisor1993-present Director, AON (Thailand) Ltd.1991-present Director, Marketing and Image

Advertising Co.,Ltd.1989-present Director, AON Group (Thailand) Ltd.1989-1995 Senior Vice President, International

Banking Division, Bangkok Bank PLC.Academic Background :

Master of Business Administration, University ofPennsylvania, USA

Bachelor of Engineer, Chulalongkorn University

Follow me...into the Board room

Introducing the Board of Directors

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Mr. Christian StormDirectorWork Experience :

2004-present Director, Total Access Communication PLC.2004-present Managing Director, Telenor Asia, Singapore2001-2004 Head of Project Finance,

Telenor ASA, Oslo, Norway1992-2001 Finance Director, Storebrand ASA, Oslo, NorwayAcademic Background :

Master of Business Administration (Finance), University ofWisconsin, Madison, USA

Bachelor of Science, University of Leeds, UK

Mr. Pakkaporn SathienpakiranakornDirectorWork Experience :

2001-present Director,Total Access Communication PLC.2004-present Senior Adviser, CAT Telecom PLC.2003-2004 Executive Vice President, CAT Telecom PLC.1994-2003 Executive Vice President

(Telecommunications Services),The Communication Authority of Thailand


Master of Electrical Engineering, Michigan State University, USAMaster of Business Administration, Thammasat UniversityBachelor of Electrical Engineering, Chulalongkorn University

Mrs. Tasanee ManorotDirectorWork Experience :

2001-present Director, Total Access Communication PLC.2002-present Senior Executive Vice President (Finance),TOT Corporation PLC.2000 Senior Executive Vice President, Telephone Organization of Thailand1999 Executive Vice President, Telephone Organization of Thailand1995 Vice President - Finance and Budget, Telephone Organization of Thailand


Bachelor of Accounting, Chulalongkorn University

Mr. Chulchit BunyaketuDirectorWork Experience :

2000-present Director, Total Access Communication PLC.2004-present Group Deputy Chairman, King Power International

Group Co.,Ltd.2004-present Chairman, Ekarat Engineering PLC.1998-2003 Managing Director, Thai Oil Power Co.,Ltd.1998-2003 Managing Director, Thai Oil PLC.1994-1998 Deputy Managing Director, Thai Oil PLC.Academic Background :

Master of Arts in Political Science,Kent State University, USABachelor of Laws, Chulalongkorn University

Mr. Soonthorn PokachaiyapatDirectorWork Experience :

2000-present Director,Total Access Communication PLC.1974-present Head of Chaiyapat Law OfficeAcademic Background :

Bachelor of Laws, Thammasat University, Thailand

M.R. Tongnoi TongyaiDirectorWork Experience :

2002-present Chairman of Audit Committees,Total Access Communication PLC.

2000-present Director,Total Access Communication PLC.2001-present Chief Executive Officer to His Royal Highness

Crown Prince of Thailand1986-2000 His Majesty’s Deputy Principal Private Secretary

(c.10) for Foreign and Technical Affairs,Office of His Majesty’s Principal Private Secretary.


Master of Arts, Oxford University, UKBachelor of Arts (Modern Languages), Pembroke College,

Oxford University, UK

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Dr. Pipatpong PoshyanondaGroup Director, Products & Services

Work Experience :2004-present Group Director, Products & Services,

Total Access Communication PLC.2001-2004 Chief Information Officer,

Hutchison CAT Wireless Multimedia Co.,Ltd.1996-2001 Senior Vice President, Research and Process Development

Department Head, Kasikorn Bank Plc.

Academic Background :Ph.D. in Engineering Management, University of Missouri-Rolla,

Rolla, Missouri, US AM.S. in Computer Science University of Southwestern Louisiana, Lafayette, USAB.Eng. in Computer Engineering, Chulalongkorn University,

Bangkok, Thailand

Mr. Somlak SachjapinanChief Technology Officer

Work Experience :2002-present Chief Technology Officer, Total Access Communication PLC.1993-Feb 05 Vice Chairman of Board of Directors,

Total Access Communication PLC.1989-Feb 05 Director, Total Access Communication PLC.2001-2002 Chief of Engineering Steering Committee,

Total Access Communication PLC.1999-2001 Chief Executive Officer, Total Access Communication PLC.1986-1991 Executive Vice President, The Communication

Authority of Thailand

Academic Background :Master of Science in Electrical Engineering, Georgia Institute of Technology, USA

Bachelor of Electrical Engineering, Chulalongkorn University

Mr. Sirichai LarbmahanondGroup Director, Distributor Management

Work Experience :Present Group Director - Distributor Management,

Total Access Communication PLC.2003-2004 Managing Director, United Distribution Business Co., Ltd.1995-2003 International Engineering Co., Ltd.1993-1995 Sofia Furniture Co., Ltd.1985-1993 I M International Co., Ltd.

Academic Background :Bachelor of Business Administration (Marketing),

Assumption University (ABAC)

Mr. Sunti MedhavikulBusiness Unit I Group Director

Work Experience :Present Business Unit I Group Director,

Total Access Communication PLC.2003 Postpaid Business Group Director,

Total Access Communication PLC.2001-2002 Sales Group Director, Total Access Communication PLC.2000-2001 Distribution Management Department Director,

Total Access Communication PLC.

Academic Background :Master of Business Administration, The University of the Thai Chamber of

Commerce, ThailandBachelor of Engineering, Chulalongkorn University

Mr. Michael H.J. GomesGroup Director, DTAC Shop

Work Experience :2004-Present Group Director, DTAC Shop Group,

Total Access Communication PLC.2002-2004 Managing Director, Allie Metals (Thailand) Co.,Ltd. and

Siam Stainless Steel Co.,Ltd.1999-2002 Managing Director, McDonald’s, Thailand

Academic Background :MBA, Business & Marketing, Open University, UK

Mr. Pitjapol JantanasaroAssistant Chief Executive Officer-Corporate Administration

Work Experience :2003-present Assistant Chief Executive Officer-Corporate Administration

Total Access Communication PLC.2002-2003 Assistant Chief Executive Officer - Corporate & Internal Affairs2001-2002 Assistant Chief Operating Officer - Corporate,

Total Access Communication PLC.2000-2001 Assistant Managing Director, Total Access Communication PLC.1998-2000 Senior Vice President, Planing and Control, United Communication

Industry PLC.1996-1998 Managing Director, UCOM International Co.,Ltd.

Academic Background :Bachelor of Electrical Engineering,

King Mongkut’s Institute of Technology (Ladkrabang), Thailand

Mr. Premon PinskulAssistant Chief Financial Officer & Controller

Work Experience :2003-present Assistant Chief Financial Officer & Controller,

Total Access Communication PLC.2001-2003 Assistant Chief Financial Officer- Accounting,

Total Access Communication PLC.2000-2001 Assistant Managing Director and Department Director of

Accounting, Total Access Communication PLC.1999-2000 Assistant Managing Director and Department Director of CSU,

Total Access Communication PLC.1996-1998 Department Director, CSU, Total Access Communication PLC.1994-1996 Department Director, Accounting,

Total Access Communication PLC.1992-1994 Department Director, Finance and Accounting, Phonepoint Co.,Ltd.

Academic Background :Master of Business Administration, University of Detroit, USAMaster of Arts (Economics), University of Detroit, USABachelor of Business Administration, Thammasat University, Thailand

Ms. Kulvadee KanjanaboseAssistant Chief Financial Officer & Treasurer

Work Experience :2003-present Assistant Chief Financial Officer & Treasurer,

Total Access Communication PLC.2001-2003 Assistant Chief Financial Officer, Capital Market,

Total Access Communication PLC.1996-2001 Department Director, Capital Market,

Total Access Communication PLC.1996-1998 Chief Financial Officer and Vice President,

Wireless Communication Service Co.,Ltd.1993-1996 Deputy Department Director, Finance,

Total Access Communication PLC.1986-1990 Siam Commercial Bank

Academic Background :Master of Business Administration, University of North Texas, Denton, USABachelor of Commerce and Accountancy, Chulalongkorn University

Follow me...to where experience meets wisdom

Executive Management

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Mr. Vichai BencharongkulDirector & Co-Chief Executive Officer

Work Experience :2002-present Co-Chief Executive Officer, Total Access Communication PLC.1993-present Director, United Communication Industry PLC.1991-present Director, Total Access Communication PLC.

Director, UCOM International Co.,Ltd.Director, UCOM Entertainment Broadcasting Co.,Ltd.

2002-present Director, United Distribution Business Co.,Ltd.2000-present Director, United Broadband Technology Co.,Ltd.1989-present Director, United Communication Subscriber Co.,Ltd.2000-2002 Chief Executive Officer, United Communication Industry PLC.1999 President, United Communication Industry PLC.1998-2002 Director, United Telecom Sales and Services Co.,Ltd.1996-2002 Director, United Information Highway Co.,Ltd.1996-1998 Senior Executive Vice President, United Communication Industry PLC.1993-1995 Senior Executive Vice President, United Communication Industry PLC.1988-2002 Director, United Tactical Communication Co.,Ltd.

Academic Background :Bachelor of Arts in Business Management Northeastern Illinois University, USA

Mr. Sigve BrekkeCo-Chief Executive Officer

Work Experience :Feb 05-present Co-Chief Executive Officer, Total Access Communication PLC.2002-Jan 05 Co-Chief Executive Officer, Total Access Communication PLC.2000-Jan 05 Director, Total Access Communication PLC.2000-2002 Managing Director, Telenor Asia Pte. Ltd.1999-2000 Manager, Business Development, Telenor Asia Pte. Ltd.1996-1997 Associate Research Fellow at Harvard University,

Center for science and International Affairs,J.F. Kennedy School of Government, USA

1996 Advisor, Norwegian Defense Research Establishment, Norway1993 - 1996 Deputy Minister (State Secretary) of Defence,

Ministry of Defence, Norway

Academic Background :Master Degree in Public Administration,

John F. Kennedy School of Government, Harvard University, USABachelor Degree Program in Management,

Norwegian School of Management Buskerud, NorwayBachelor Degree in Business and Administration, Telemark College, Norway

Mr. Petter-Borre FurbergChief Financial Officer

Work Experience :2004-present Chief Financial Officer, Total Access Communication PLC2001-2004 Deputy Chief Financial Officer, Total Access Communication PLC.2000-2001 VP Finance, Telenor Mobile Communications1998-1999 Business Controller, Telenor International1997-1998 Manager, DNB Corporate Banking Department1994-1997 Permanent Secretary for the standing committee on

Finance and Economics of the Norwegian Parliament

Academic Background :Master of Science, Business Administration from Norwegian School of

Economics and Business AdministrationEuropean Certified Financial Analyst

Mr. Thana ThienachariyaBusiness Unit II Group Director

Work Experience :Present Business Unit II Group Director,

Total Access Communication PLC.2003 Prepaid Business Group Director,

Total Access Communication PLC.2002 Product&Service Group Director,

Total Access Communication PLC.2001 Consumer Product Management Department

Director, Total Access Communication PLC.2000 Convergence Group Director,

Total Access Communication PLC.

Academic Background :Master of Business Administration,

Washington State University, USABachelor of Economics (2nd Honor), Chulalongkorn University

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With our long-term commitment to contribute tothe advancement of Thai society, DTAC has putsocial contribution as our fundamental business

philosophies. Just as we stay committed to delivering thebest quality, so we stand firm in our pledge to help developThai society.

Sam Nuek Rak Ban Kerd Project

I n i t i a ted by DTA C’s Cha i r man , Mr. Booncha iBencharongkul, in 1998, Sam Nuek Rak Ban Kerd(meaning “love your hometown”) project aims to supportthe country’s development at grassroots-level by providingsponsorships for junior-high school year (Matayom 1).

During their school years, many training activities areoffered to the students in order to develop their skills andencourage networking, as well as instilling in them a lovefor their hometowns. The aim is to transform youngchildren into quality adults by creating leaders who willreturn to and develop their hometowns.

As of now, 999 students from 76 provinces throughoutthe country have been awarded a scholarship from thisproject since its inception, and 91 students havegraduated. Some of the graduates have already returnedto do valuable work in their hometowns, while others havebeen working with social-service organizations. Thereare supporting projects to help farmers in the area ofmanagement, training sessions on information technology,and helpful information broadcast on Ruamduay ChuaykanCommunity Radio.

Ruamduay Chuaykan Co-operatives Project

Ruamduay Chuaykan Co-operatives project wasestablished in 2001, with the objective to support peoplein the agricultural sector. For example, savings fromco-op members are spent to buy seeds from farmers andthe rice is sold to the members and customers at areasonable price. In this case, products can be distributedwithout the involvement of wholesalers or middle-men.There is also support and education on other aspects ofrunning a farm, such as personnel, accounting, finance,technology transfer, and information technology. The

objectives are mutualbene f i t s fo r fa r mers ,c o - o p m e m b e r s a n dconsumers, in line with HisMajesty the King’s “Third-step” theory.

Recently, DTAC sponsoreda machine to improve ricequality for the NongpanRice Mill in Kalasin Province,and has organized communityactivities around the rice mill neighborhood, such asdonating computers to schools, organizing a seminar toenhance people’s knowledge and skills, and providingfunding to the co-op for the packaging of rice underthe “Ruamduay Chuaykan” brand.

Rak Ban Kerd Shop

DTAC provides our expertise on information technologyto support Rak Ban Kerd Shop’s business, a Thai-franchised convenience store. The aim is to establish acommunication network through www.Rakbankerd.com.The services include imparting knowledge onmanagement, inventory, product display, etc, to enhancethe quality and standard of Thai-franchised conveniencestores at a low cost. Moreover, mobile phones and refillcards are also available for sales in Rak Ban Kerd shops,becoming a new source of revenues in addition to thesales of consumer and local products.

Currently, there are 445 Rak Ban Kerd Shops throughoutthe country.

Rakbankerd.com Project

Rakbankerd.com is a website, sponsored by DTAC, witha main purpose to build a communication network forthe public and social-supported organizations. Theinformation on the website relates to agricultural news,lifestyles, business in the community and general newsas well as religious, social and political news to supportcommunity life and to develop community leaders andteamwork while will foster higher levels of co-operativeeconomics in the community.

Rakbankerd.com also allows users to monitor budgets,check the price of agricultural products in local andinternational markets, and improve distribution channelsfor local products to increase revenue potential for thecommunity. It also creates direct sales without the need ofa middle-man. This is a new way to do business to ensuremarket growth, resulting in sustainability and strength inthe long term. Even though there are trades amongorganizations from different regions, Thai communitiesstill need support from economic leaders.

Follow me...to generosity of spirit

DTAC and the Community

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Ruamduay Chuaykan Community Radio

DTAC has a mission to make our country a better place.We encourage people to use the local radio station in eachprovince in different regions to cooperate with each other.We have run a community radio station in 16 provinces,which helps more than 1 million people per year makingrequests through the radio station.

Hornbill Conservation Campaign

DTAC has a firm commitment to theenvironment. The Hornbill ConservationCampaign is one of many campaignsthat DTAC has supported. We raisedfunds for Mahidol University in order tohelp them research and study about thehornbill’s life. Established knowledgeon the hornbill will help preserve theirexistence. Hornbills are a vital indexused to measure the quality of a forest,which in turn is crucial in supplyingwater to rivers and creeks upon whichfarmers depend.

Tsunami Relief

DTAC has taken steps to help Tsunamivictims since the first day of thedisaster. We swiftly fixed signalproblems so victims and their familiescould communicate using their mobilephones. We also worked with Ruamduay Chuaykan radiostation and other organizations to deliver donations tovictims, and we recruited volunteers to help with corpseidentification and processing. A special RuamduayChuaykan radio station was set up in Phang Nga to providea focal point for assistance. We have also helped buildnews towers, warning towers and temporary housing,food and translation services for victims. DTAC has alsospearheaded an integrated project in Phang Nga whichinvolves the building of permanent houses, developinginfrastructure and providing training programs.

The Co-Ops for saving, fishery, etc, were also set up toencourage members helping each other. Knowledge on

eco-tourism and language training were provided tosupport foreign tourists. All of these are based on thecooperative concept to ensure that people will have anability to depend on themselves in long run.

Tourism Promotion Campaign

Tourism is vital to the nation’seconomic development. DTACis actively engaged in activitiesthat help promote Thai tourism.Through its Tourist Signboardproject, DTAC has installed anaddit ional 330 signboardsin 2004, containing usefulinformation for visitors at keytourist attractions in all provincesacross the country. Currently,there are 760 signboards intotal in Thailand.

Battery for Life Project

The Battery for Life projectpromotes environmental-friendly

disposal of expired mobile phone batteries.All mobile phone users, regardless of whichnetwork they are on, are welcome to droptheir old or unused batteries at over 350DTAC shops nationwide. The batteries willbe then disposed of in a completely safeand responsible manner by an industrialwaste-management firm.

Road Safety Campaign

The campaign produces and distributes high-qualityreflective car stickers to help improve night-time visibilityand reduce accident rates. The stickers are available forfree at DTAC shops and service halls nationwide. DTAChas also run constant awareness campaigns through trafficradio programs and sponsored the installation of trafficsigns along major roads and highways.

All of the above activities demonstrate DTAC’s strongdetermination to improve the Thai society.

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Follow me...to true happiness

Operations

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“It is better to follow even the shadow of the bestthan to remain content with the worst, and thosewho would see wonderful things must often beready to travel alone”

Henry Vandyke

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Total Access Communication Public Company Limited was founded in August 1989 to provide wirelesstelecommunication services in 800 MHz and 1800 MHz frequency bands under a concession granted by CAT TelecomPublic Company Limited.

Major events in the Company's development in subsequent year include:

1990

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OctoberListed shares on the Stock Exchange of Singapore and sold 13% to the public

NovemberReceived the concession from CAT

February Entered into an Access Charge Agreement with TOT

FebruaryRegistered as a public company

NovemberIssued 42.8 million new shares to TOT

NovemberCAT agreed to extend concession period for 5 more years until 2018

JuneSold 21.5 million shares to Telenor,accounted for 6.34% of paid-up capital.

August Sold 48.5 million shares to Telenor. As a result, Telenor holds 29.94% equity interest in the Company

MayUCOM sold 5.5 million outstanding DTAC's shares to Telenor Asia Pte., (“Telenor”) who invested in the Company as a strategic partner.

April TOT agreed to amend the basis of calculating the Access Charge for Prepaid service from THB 200 per month per number to 18% of the value of the Prepaid vouchers sold.

April Unlocked IMEI (International Mobile Equipment Identity) codes to allow all mobile handsets to use DTAC' s network

March Launched new brand "DTAC" and a radically different approach to doing business in the Thai market.

May Discontinued handset and accessories sales and distributions by transferring this business to United Distribution Business Co., Ltd.,a joint venture between the Company and UCOM with 25% and 75% equity interest, respectively.

November Launched GPRS-based data services across the entire DTAC network

April Launched "My", one of postpaid products, which offers decreasing rates for every minute used

January Introduced "Baby SIM", a new prepaid product for "light users"

February Launched Multimedia Messaging Service (MMS)

May Launched "Happy Dprompt", prepaid product, which allows customers to designate a portion of the day during which a reduced airtime rate is charged

July Launched "Jai Dee Hai Yuam" or "Jai Dee Borrowing"

February Launched a new THB 50 refillvoucher card, the lowest denominated refill card first available in Thai market

August DTAC's customer base surpassed 7.5 million customers

March - Launched a new postpaid package, called "Maximize"- Commercially launched EDGE technology

October Launched "Jai Dee Hai Laek" or "Jai Dee Exchange"

MayIntroduced "Happy-Go-Inter," prepaid international roaming services with largest roaming coverage

November Launched "Bonus One" forpostpaid and prepaidcustomers

Follow me...each step of the way

Milestones

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n 2004, the market continued its rapid growth from2003, but the competition increased. In 2003, wewere somewhat allowed to act on our own, but in

2004, when we launched new products, our competitorswere much quicker to respond. In the second part of theyear, price-based competition increased substantially. It’sbeen a tough year, but a good year, in terms of sustainingour growth, consolidating our position as a strongnumber two.

Top line growth for service revenues in 2004was roughly 24%. EBITDA grew25% from 2003 and EBITDAmargin improved sl ight lyfrom the previous year. Netearnings improved by 73%.Going forward, we willc o n t i n u e t o f o c u s ongradually improving ouroperating margins.

We saw a very goodoperational improvementon an EBITDA level,despite negative impactfrom increasing regulatorycost. If you strip off allregulatory costs, DTAC’sEBITDA margin was around 71to 72 percent, an increase of 4percentage points from 2003.Excluding the regulatory costs,Thai operators are among themost cost-efficient operatorsin the world.

The National Telecom Commission or (“NTC”) has finallybeen established. We have big expectations that we canimprove our return on investment and that Thai consumerscan get better and more equal services across the Kingdom.

When we look at the overall market, churn increased acrossthe whole industry. Every month, there are a huge numberof customers out there shopping for a new offer. The totalmarket in terms of customers that operators can acquireevery month is higher than ever, even though the marketgrowth, to some extent, is slowing down.

Starting from last year, we have focused on improving ourdistribution. We have pioneered using partners to distributeour products, and we extended that even more in 2004.We launched 50 baht refill cards, teamed up with SahaPhathanapibul, the biggest distributor to mum and popshops, and extended our distribution of SIM cards.

Retaining customers is also more important than ever.Treating the customers in a better way, that’s got to beour focus.

How do we tap into future growth?By continuing to innovate, Maximize,

a postpaid package for high usagecustomers, was our one of our

major campaigns. It’s a 1,200 bahtbundle with 600 minutes,including a personal secretarialservice. We also revamped the“My” package, another postpaidproduct, to have a sliding scale,so the more you call, the cheaperit gets, giving incentive to

people to make more calls.

Another innovation on ourprepaid products was our“Jaidee” campaigns (meaningas “kindness” in Thai). One ofthe “Jaidee” campaigns iscalled “Jaidee Borrowing”,where we offered credit to ourprepaid customers as far aswe know we are the firstoperator anywhere in theworld to do that. We allow

customers a 30 baht credit, so if your card runs out, youcan finish your call, or make a few more calls, which willthen deducted next time you top up. It’s turned out to bepopular among our prepaid customers. We continuallyhave to create excitement with the customers, and thatmeans new ways of communicating with them and newways of charging them.’’


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Follow me...from strength to strength

Markets and Operations

“

22 Follow me...

n terms of the postpaid subscriber base, we havedelivered positive growth since May 2003. Thetotal postpaid net additions for 2004 were around

109,000 customers. The biggest success in 2004 wasthe launch of our "Maximize" product, for high-endcustomers. Our competitor launched a product to counterour product, but their offer was more aimed at the nichehigh end, the Hi-So Wanna-be segment. I believe"Maximize" has a broader appeal. I believe this hasmet the need of the high end customers very well,

because we, in addition to thecall structure, also give themextensive secretarial services,as well as the "Maximize"card. The "Maximize" card

gives them a wide range of privileges frommany retailers, hotels, restaurants, golfcourses, and much more.

"My" has also continued to do well. Abouthalf of the postpaid customers are now usingthe "My" package. Prepaid market last yearwas in the middle of a price-based competition.We had to focus on the serious, long-termcustomer on the postpaid side. These peopletend to stick with our service, as they realize

they are getting real value.Last year, our bad debt figurewas about 3.5%, which is verylow compared to the past.

The competition is high, and our competitorsare using price tactics, so we have toexplain to our customers clearly aboutour service, our price. When things are

explained properly, sometimes they realize the dealsoffered by other companies aren't as good as they lookat face value.

For SMEs, we launched the Mini-Pack in the first quarterof last year. It attracts the smaller SME, and is getting

popular. The customer can choose the range of monthlycommitment, starting from 1,000 to 3,000 baht. They canadd numbers later when the company expands, atno extra charge.

Bigger SME customers can get the Big Card, similar tothe "Maximize" card but geared more to business. BigJournal, a small business magazine geared to SMEs, and

Big Seminar, a roadshow program to educate andinform our SME customers were also offered. OurSME customer base doubled last year and isbecoming a significant partof our revenues.

Our M2M Vehicle TrackingSolution, where we put

SIM card into vehicles with GPS equipment,has proved popular with businesses.If a truck is not where it's supposed to be,we can send out an alarm via our datanetwork.

This year, we're also building an enterpriseteam to focus on the corporate sector, how wecan meet their needs, to look for new business,and also to look for potential partners.In partnership with Microsoft and Metro Systems,we opened a Business Productivity Centre toshowcase the "mobile office'' concept.

This year? It will be all aboutretaining our customer base,focusing on differentiatingourselves from our competitorsby offering new experiences

from DTAC. It's a challenge, but that's what we thrive onat DTAC.''

Sunti Medhavikul, Business Unit I Group Director

Follow me...to where the sky is always blue

Postpaid Business

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"In 2004, we added slightly more than 1.1million prepaid customers, so that wasgood growth, and we maintained themarket share. I'm very happy with thesuccess of Baby SIM (a prepaidpackage tailored for light-usagecustomers), our micro refill (low

denominated prepaid refill card), and our Jaideeprograms, i.e. Jaidee Borrowing, JaideeExchange, and more to come.

Jaidee, the concept of being able to getcredit, was a really strong way to differentiateourselves from the competition. Baby SIM

was copied by ourcompetitor within 3weeks, and Micro Refillwithin one month, so it'sgetting harder to keep theadvantage, but our Jaidee

Borrowing and Exchange concepts haven'tbeen copied yet. It's now more aboutsustainable brand differentiation thantemporary monopolies. The brand's character isdeveloping and we must keep building on that,to show how we're different from the rest. Ourcompetitor may be arrogant, smart, trendy,efficient, but we are Jaidee (kind), and that'svery important for the DTAC brand.

Our Jaidee Borrowing allows our prepaid customers toborrow 30 Baht, and next time they top up, we deduct the30 Baht plus a transaction fees of 2 Baht. Our JaideeExchange allows customers to swap their unused daysfor money, and vice versa.

In terms of promotions, in 2004 we turned our attentionfrom individual entertainers to movies. We screenmovies outdoors in the provinces, it's a great

atmosphere and very popular. Last year, weorganized some 700 events, with

over 1,000 people at each one,so it's a great way to reach themass market. We have alsogone a step further, andsponsored a movie, Jaew(meaning as "Maid" in Thai).And we have launched aservice together with themovie - also called Jaew -which lets you know if youhave missed any calls when your phone has

been turned off, or is out of service.

In general, 2005 will be about refining and enhancing theJaidee concept. We have to make it even bigger. And Ihave no doubt we'll do just that.''

Thana Thienachariya, Business Unit II Group Director

"Value Added Services ("VAS") is another area we focused onin 2004. The usage and revenues from VAS has increased quitetremendously, even though we still need to do a lot more todecrease barriers and encourage more usage. We haveestablished MMS interconnection between the operators, sothe number of users of MMS has increased threefold.

In November 2004, we introduced a new campaign called"Bonus One", which is an offer to provide MMS, SMS for 1 bahtper message and GPRS for 1 baht per minute and a 10 bahtmonthly fee. The package was well received by the data-hungryyouth segment. That was only one example of activities we didlast year to confirm that we have continued to offer new servicesto meet our customers' needs. In the first half of 2004, wecommercially launched Enhance Data Rates for GSM Evolution("EDGE") capability network throughout Bangkok, and Ring4Uin May, a ring-back product. It works like this - if another personcalls you, instead of receiving a regular ring tone, they canhear a song while they're waiting for you to pick up. That'sbeen a key value added service. You can customize a groupof friends calling you to hear one song, another group of people,another song. It is a very popular service and many customershave signed up for Ring4U, and we expect that to continue togrow a lot this year.

There are two simple questions that need to be answeredbefore we can increase data uptake among mobile customers.Will it work and how much does it cost? We therefore decidedto start charging GPRS per second instead of per kilobyte.This makes it easier for the customer to understand and

removes the fear of trying the service. Customers, who aremore comfortable with charging per kilobyte or a flat monthlyfee, can also opt for that.

We can certainly claim that we have the best data network inthe country now since our GPRS is available nationwide. Thisyear, even during the busiest festivals, we were capable ofkeeping up with the SMS traffic. We now roughly have 300content partners, which is very respectable and still growing.

EDGE is built on a 2G network, which is much moreeconomically viable than investing in a new 3G network, andwe're delivering a speed of around 150 to 160 kbps, actualexperienced speed, whereas GPRS is about 30 to 40 kbps.With 3G, you could in theory get a maximum workingspeed of around 300 to 400kbps, but in countries where it'salready up and running, the effective working speed isusually somewhere around 190kbps, so the differencebetween that and EDGE is minimal.

In 2005, we plan to focus on our core value, making it easy. Sowe are trying to preset settings and provide a lot more tools tohelp customers set up their phones. We will make our productseasier to use. We're trying to integrate multi-channels to accessour products. And we're focusing much more on the customer,not just trying to be the most advanced, but to provide themost useful technology, and to make it easy to use.''


Follow me...when the going gets tough

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Prepaid Business

24 Follow me...

ast year, we concentrated on network quality,and meeting our pledge of being the best inthe 20 biggest cities, which accounts of

approximately 70% of GDP. And we have also beenswapping old equipment in the north east with newgeneration equipment to provide better dataservices and reception quality for our customers.We're looking to roll out another 1,000 new sitesaround the country in 2005 as part of ourcommitment to network quality.

We have to continue to be ahead of ourcompetitors in terms of coming up with innovativesolutions. We are the only operator with

istribution remains an important tool to acquireand retain customers. In 2004, we aimed at beingbetter in distribution by extending our network

through both traditional and non-traditionaldistribution channels. Our main focus wasto strengthen relationships and improvecommunications with dealers to assistthem to do their business more effectivelyand support them in every way, includinghelping them decorate their shops withour promotional materials, etc.

a complete EDGE network in Bangkok, and now weare focused on developing a data position, towards acomplete nationwide GPRS and EDGE capability. Alot of new equipment has been installed in Bangkok

to set up the EDGE network. In the next phase,in 2005, we will expand EDGE further. EDGE isvery exciting, with more and more handsetscoming out that are EDGE-enabled.''

Somlak Sachjapinan, Chief Technology Officer

To provide more convenience to our customers gettingour products, we also innovatively looked into non-telecommunication channels to make our products

available throughout the country. We teamedup with Nestle Ice Cream in late 2003 and

with Saha Pathanapibul, Thailand's largestdistributor of consumer products, in thebeginning of 2004. Saha Pathanapibuldistributes our prepaid refill cards to morethan 50,000 retail stores nationwide.

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Distribution Channels

Follow me...as we spread the word


Follow me...to ultimate connectivity

Network Development

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WIRELESS TELECOMMUNICATION SERVICES ANDBUSINESS OUTLOOK

To promote the development of telecommunicationservices in Thailand, the private sector was allowed toparticipate in the telecommunication market underconcessions on a Build-Transfer-Operate (“BTO”) basiswith two state enterprises, which has been corporatizedas TOT Corporation Public Company Limited (“TOT”) andCAT Telecom Public Company Limited (“CAT”).

Under the BTO arrangement, the private operators, asconcession holders, are required to build networkinfrastructure and transfer the assets to the state agenciesgranting the concessions. The operators thereafter havean exclusive right to use the assets during the term of theconcession and operate cellular network to provideservices on a revenues sharing basis with the stateagencies awarding the concessions (in our case ‘CAT’) inreturn for the exclusive right to the use of the allocatedfrequency band.

Follow me...all the way over the EDGE

Wireless Services Sector and Business Outlook

Source : Company

free-of-charge SIM card and low tariffs. As there is still nointerconnection fee in the market place, cost of goods soldremains zero even though tariffs are lowered and volumesonto other networks are increased.

We expect that the wireless market in 2005 will continueto grow, but at a slower rate. We also anticipate that thepenetration rate, in terms of subscriptions, may reach morethan 50% by year end 2006.

The company will continue to face a challenging marketin this period. To maintain our market position, a pricingrelated strategy, may be used to respond to ourcompetitors.

Despite intense competition and slower market growth,our positioning remains as the friendly providerof innovative mobile services. To defend and expandour market position we will continue to focus onvalue-for-money, an improvement of network quality,and an expansion of distribution channels. We willhowever focus on maintaining our fair share of the growth.

Prepaid customers accounted for 84% of our customerbase at the end of 2004. The growth in the postpaidmarket is flattening while the prepaid market is stillexperiencing healthy growth. As a result, the proportionof prepaid customers has been increasing substantiallyand it is likely to continue to grow. New customers enteringthe market are expected to be from rural areas.

Regulatory reform is an issue that may have an impactto the Company. The National TelecommunicationCommission (NTC) was established in August 2004and pending issues include; the introduction ofinterconnection regime, the concession conversionand the requirement of new licenses. However, theCompany is not aware of any fixed timeframe for theconclusion of these discussions and the implementationof any arrangements that may result from them. Therefore,there is currently insufficient information to estimate thepotential changes to our operating or financial position.

Source : Company

We are one of the two largest service providers in Thaimarket, operating cellular services under the DTAC brand.As of the end of December 2004, DTAC had 7,786,165customers on our network which accounted for marketshare of approximately 29%.

The wireless penetration rate in Thailand has increasedsignificantly from 5% in 2000 to 43% in 2004. Despite aslower rate of growth, wireless telecommunicationcontinues to develop.

At the end of 2004, there were approximately 27 millionmobile customers, representing a 23% increaseyear on year, compared to 119% and 26% 2002 and2003, respectively.

BUSINESS OUTLOOK:

The 2004 wireless market was growing at a lower rate thanthe previous year and the competitive environment wasintensified. The newcomers into the market have beenadopting price-based tactics such as handset subsidies,

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Risk from changes in regulation of telecommunicationsbusiness

With its entry into the WTO in 1995, Thailand committed toliberalize its telecoms industry by 2006. The corporatizationof the two major state owned telecom companies, TOTand CAT Telecom, have been completed. Both companiesare preparing for a public offering of their stocks. The timingof the public offering is uncertain.

A new regulatory regime consisting of two new legislativeacts on Organizations Allocating Frequency Waves andSupervising Radio and Television Broadcasting andTelecom Business ("NTC/NBC Act), were enacted in 2001.The act provided guidelines for industry reforms, includingindustry liberalization, facilitation of new market entrants,changes to the industry's competitive structure and overallregulation of the industry. However, this legislation has notyet been implemented. Uncertainty therefore exists regardingthe interpretation, implementation and effect of this newlegislation on the Thai telecoms industry.

According to the Act of 2001, an independent regulatorybody, namely the National Telecommunication Commission(the "NTC"), was to be set up to regulate telecom businessin Thailand. In August 2004, 7 members were selectedand NTC was established after a few years of delay. TheNTC shall draft rules, regulations and framework governingthe telecom business. This might be related to, among otherissues, licensing qualification, allocation of spectrum,interconnection, concession conversion and tariff structures.

Areas of uncertainty in regulatory reform which may affectthe Company include:

• Interconnection: Operators and the Government havebeen working toward the introduction of an equitablearrangement for charging of traffic crossing more than onenetwork. The timeframe for the implementation of such anarrangement is still uncertain.

• Concession conversion: InJanuary 2003, an excise taxlevied on telecommunicationoperators was introduced bythe Government, which in partreplaced revenue sharingobligations under concessions.The ongoing discussions ona framework for regulatoryreforms include possiblechanges to the existingconcessions and in particularthe revenue sharing arrangement.As of December 31, 2004,there is no set timeframefor the completion of thediscussion. Therefore, we

can not assess the impact, if any, on the Company,operationally or financially.

• Foreign shareholding limit: The TelecommunicationServices Act 2001 limits foreign shareholding in telecombusinesses to 25%. This may restrict the Company inobtaining a license from the NTC should this be requiredunder the framework for regulatory change. However, theAct provides the right of existing operators to continuebusinesses on the same basis as licensees. To conformto the situation that non-Thai shareholders already haveinterests in more than 25% of the operators' issued sharecapital, the Government has approved a reversal in theforeign ownership limit from 25% back to 49%. It is stilluncertain when the Government plans to present anamendment to the Act to parliament for approval.

Risk from competition

Increased competition in the market for telecoms servicesin Thailand may cause our revenues and margins to suffer.We are currently one of three wireless telecom companiesthat collectively provide wireless services to over 95% ofthe market. However, some of our competitors are notobligated to pay access fees to the TOT, make revenuesharing payments under a concession or pay interconnectionfees. Therefore, they may be able to price their servicesmore aggressively than we are or otherwise operateprofitably at lower price levels. In addition, as a result ofthe ongoing liberalization of the Thai telecoms market,certain market participants, and possible new marketentrants, may add to the level of market competitiveness.However, given the scale that we have achieved in networkcoverage and customer base, well established marketposition, widely recognized brands and sound financialposition, we believe that we will be able to maintain ourcompetitiveness and remain a leading operator in thewireless services business.

Risk from slower rate ofmarket growth

In line with general trendsin the market, our customerbase has increased from6.6 million as of 31December 2003 to 7.8million as of 31 December2004. We may not experiencethe rate of growth of newcustomers as we did in thepast. However, we believethat the market willcontinue to grow both interms of customers andrevenues, but at a slowerrate. Therefore, we will be

"In 2003, we took steps to formalize our approach to businessrisk, and in 2004 that began to come to fruition. We arerunning risk reviews of certain areas, and we are continuingwith our revenue assurance, which is an important aspect ofour risk management.

We a re mov ing towardsrevenue assurance softwaretools, which will enable us tobetter control that all callsare being charged properly.So we' re moving towardsaggregating all of that into onesystem.


Follow me...risks related to our business

Risk and Mitigation

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more reliant on an increase in the number of additionalquality customers and an increase in both existing andnew customers' usage of voice, data and other valueadded services.

Risk from change in technology

Technology in the wireless telecommunications industryis constantly developing. We currently operate on the mostadvanced GSM technology including high-speed datausing a nationwide GPRS (General Packet Radio Services)platform.

In addition, we are the only operator to have commerciallylaunched EDGE (Enhanced Data-Rates for GSM Evolution)throughout Bangkok. EDGE was launched in March 2004in areas with high demand for data services. EDGE is asmooth transitional path for GSM technology toward 3Gand permits about 3-4 times faster data rates than GPRS.Through EDGE we are able to satisfy the demand for theniche segment that requires higher wireless data speeds.

Even though third generation (or 3G) technology is nowbeing deployed in a number of advanced markets, webelieve that the demands for wireless data services inThailand can be met with current technology. It is stilluncertain what plans the Government has for 3G inThailand.

FINANCIAL RISKS

Risk from concentration of credit exposure

United Distribution Business Co., Ltd. ("UD") is the principaldistributor of DTAC Phone Kits, Starter Kits, SIM CardPackages and vouchers to wholesale and retail outlets inThailand. Most of these products are sold to UD fordistribution through our distribution network andaccordingly a large percentage of our accounts receivableare due to us from UD. As of 31 December 2004, Baht3,255 million were owed to us by UD. However, the creditterms to UD are on normal business terms, and UD earnsa certain margin as stipulated in the purchase order. Todate, UD has had a good payment record.

Risk from currency exchange

We use various financial instruments to swap foreigncurrency denominated debt into Thai Baht to hedge debtobligations against risk resulting from fluctuations of foreigncurrency exchange rates. As at 31 December 2004,approximately 38% of our total outstanding long-term debtwas denominated in foreign currencies and our principalsas well as interests were fully hedged. A substantial portionof our current capital expenditure commitments and futurecapital expenditures and a portion of our operatingexpenses are denominated in, and may be financed in,

foreign currencies. To mitigate the risk, we enter intoforward exchange contracts where deemed appropriate.In all derivative or other liability management transactions,we seek to minimize counter party risk by adopting a policyof only transacting with Financial Institutions with aminimum "A" credit rating. Moreover, we consider a numberof factors in addition to cost before entering intoagreements, such as market conditions and mechanisms,including flexibility and liquidity considerations.

Risk from Bill Collection of Telephone Services

Our customers can pay for service on a prepaid orpostpaid basis as they select prepaid or postpaid servicepackages.

Even though there should be no collection risk fromprepaid customers as they pay in advance, we may havesome financial risk from "Jai Dee Hai Yeum" (Jai DeeBorrowing) prepaid service, which was offered a creditup to 30 Baht call value first launched in July 2004.However, we do not expect any significant impact sincethe amount of call credit was small, and it would only beprovided to customers who stay in services for at least 3months. The 2 Baht charge for use of the credit serviceshould mitigate the threat of such customers not payingoff credit. In addition, we also provide a full provision fordoubtful accounts on credits offered under this promotion.

For postpaid customers, the invoices are issued monthlyto collect service fees subsequent to usage. To complywith the Telecommunication Services Act 2001 whichprohibits operators from collecting deposits for service,we stopped collecting a deposit of THB 3,000 per numberregistered on a postpaid basis. However, various measuresare used to manage the risk of bad debt, including frauddetection systems, setting up credit limits relative to thecustomers' behavior patterns, automated and personalpayment reminder procedures, automated pre-registrationscreening systems, independent debt collection, follow-up procedures for over-due amounts, appropriate debtrecovery legal action where necessary and sanctionsagainst dealers who are determined to have colluded withthe bad debt customers. We also provide incentives topay bills on time by offering points for reward programs.

As at 31 December 2004, the amount of accountsreceivable from bills 150 days overdue was THB 392million, or 17% of the accounts receivable from telephoneservices, and accounted for 2.6% of the postpaidrevenues. We also set up allowances for doubtful accountsas a certain percentage of postpaid revenue and aging ofaccount receivable on a progressive basis. All balancesoutstanding for more than 150 days are provided for infull. In 2004, the Company's provision for doubtful accountsaccounted for 4% of postpaid revenues (7% in 2003).

28 Follow me...

Follow me...to your fair share

Shareholder Structure

Total Access Communication Public Company Limited

Information on Share Capital and ShareholdingAs at 7 March 2005

Share CapitalAuthorized Share Capital : Bt 5,350,010,260Issued Share Capital : Bt 4,744,161,260Class of Share : Ordinary Shares of Bt 10 eachVoting Rights : One vote per share

Distribution of Shareholdings

Size of Shareholdings No. of Shareholders % No. of Shares %

1 - 999 20,009 99.88 24,806 0.0051,000 - 10,000 5 0.02 17,200 0.00410,001 - 1,000,000 14 0.07 2,563,350 0.541,000,001 and above 5A 0.02 471,810,770 99.45

Total 20,033 100.00 474,416,126B 100.00

A. Includes CDP (see details in the Statistics of shareholding in the CDP in Singapore, page 29)B. In accordance with SGX-ST’s Listing Rule 723 (at least 10% is required to beheld by public), 19.28% of the issued share is held as part of thepublic float

Substantial Shareholdings (Holding 5% and above)

Direct Interest Indirect Interest1

No. of Shares % No. of Shares %

United Communication Industry Plc. 197,538,593 41.64 - -Telenor Asia Pte Ltd.2 142,024,800 29.94 339,563,393 71.58TOT Corporation Plc. 42,829,050 9.03 - -

1. Unlike Singapore incorporated companies which are listed on the SGX-ST, the Company does not maintain a Register of Substantial Shareholders ora Register of Directors’ Shareholding. The shareholders of the Company are not required under the Singapore Companies Act to provide the Companywith notices of substantial shareholding or of changes in substantial shareholding. Similarly, the Directors are not required to provide the Company withnotices of changes in their respective indirect interests in the Shares. Accordingly, the information relating to indirect interests of the relevant shareholdersand Directors is based on knowledge of the Company except where the relevant indirect interest relates to Shares owned through a direct securitiesaccount which the relevant shareholder or Director has opened with CDP in which case the information will be based on the number of Shares standingto the credit of his securities account with CDP.2. Telenor is entitled to exercise 20 percent or more of the votes attached to the voting shares of UCOM. Accordingly, Telenor is deemed to have anindirect interest in the 197,538,593 Shares owned by UCOM.

Ten Largest Shareholders

No. Name No. of Shares %

1. United Communication Industry Plc. 197,538,593 41.642. Telenor Asia Pte Ltd. 142,024,800 29.943. The Central Depostitory (Pte) Limited *** 89,155,229 18.794. TOT Corporation Plc. 42,829,050 9.035. Ms. Wanna Chirakiti 1,101,126 0.236. Todano Holdings Limited 510,000 0.117. Ms. Sirikan Thongthai 500,200 0.118. CAT Telecom Public Company Limited 500,000 0.119. Ms. Netnapit Nakwatchara 171,489 0.0410. Ms. Nuengnong Jiratiwat 165,100 0.03

*** See details on the Statistics of Shareholding in the CDP in Singapore, Page 29

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Detail of the Shareholdings by the Central Depository Pte Ltd. in Singapore

As at 7 March 2005

Distribution of Shareholdings

Size of Shareholdings No. of Shareholders % No. of Shares %

1 - 999 397 22.18 141,653 0.161,000 - 10,000 1,170 65.38 4,057,110 4.5510,001 - 1,000,000 214 11.96 11,545,751 12.951,000,001 and above 9 0.50 73,410,715 82.34

Total 1,790 100.00 89,155,229 100.00

Twenty Largest Shareholders

No. Name No. of Shares %

1. HSBC (Singapore) Nominees Pte Ltd 21,983,100 24.662. Raffles Nominees Pte Ltd 14,765,713 16.563. Citibank Nominees Singapore Pte Ltd 9,556,400 10.724. DBS Nominees Pte Ltd 8,471,369 9.505. DB Nominees (S) Pte Ltd 5,869,900 6.586. Societe Generale S’pore Branch 4,732,800 5.317. Morgan Stanley Asia (Singapore) Securities Pte Ltd 4,608,000 5.178. UOB Kay Hian Pte Ltd 1,946,233 2.189. United Overseas Bank Nominees Pte Ltd 1,477,200 1.6610. Kim Eng Securities Pte. Ltd. 901,623 1.0111. OCBC Securities Private Ltd 818,800 0.9212. Merrill Lynch (Singapore) Pte Ltd 578,775 0.6513. DBS Vickers Securities (S) Pte Ltd 574,710 0.6414. G K Goh Stockbrokers Pte Ltd 533,043 0.6015. Phillip Securities Pte Ltd 509,400 0.5716. Able Wang Ziyi 460,000 0.5217. Capital Intelligence Limited 320,000 0.3618. HL Bank Nominees (S) Pte Ltd 238,000 0.2719. Ng Kim Choon 230,400 0.2620. Lam Hup Su 177,000 0.20

Total 78,752,466 88.34

UCOM-United Communication Industry Public Company Ltd.TAC-Total Access Communication Public Company Ltd.

Telenor-Telenor Asia Pte.Ltd.

Telenor

29.94% 19.28%

41.64%

24.85%

0.11%

9.03%

PublicTOT

CorporationPCL

CATTelecom

PCLUCOM

TAC

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The Director and Management of the Company arecommitted to the practice of appropriate corporategovernance to protect long-term shareholder value

through enhancing corporate performance andaccountability, whilst taking into account the interests ofall stakeholders. A Corporate Governance Committeecomprising senior executives of the Company has beenestablished to promote the Company’s adherence to theprinciples of good corporate governance in accordance withinternationally accepted practices and standardsrecognized by shareholders, investors, regulators andother stakeholders.

The following broadly outlines the Company’s corporategovernance practices and procedures. For ease of reference,these have been set out under the principles establishedin the Corporate Governance Code for companies listedon the Singapore Exchange Securities Trading Limited(“SGX-ST”).

BOARD MATTERS

Principle 1: Effective Board to lead and control theCompany

The duties and responsibilities of the Board of Directorsare set out in the Company’s Articles of Association, in theThai Public Company Limited Act and in the regulationsof SGX-ST.

The principal duties and responsibilities of the Board ofDirectors are to:• Authorize and delegate responsibility for the performanceof the Company’s business in accordance with the law, theCompany’s objectives and Articles of Association, andresolutions of shareholders’ in general meetings.• Establish the Company’s vision and strategic directionsand supervise management in the implementation of these.• Ensure that the Company has internal control systemsincluding an Office of Internal Audit and Committee of theBoard, and covering such matters as related partytransactions and reporting to the share holders and regulators.• Report accurate and sufficient financial and otherrelevant information to the shareholders and investorsgenerally.The Board of Directors defines the power and authority ofmanagement to approve different types of trans action byway of a Corporate Authority Index reviewed by AuditCommittee. This authority is divided into 3 main areas asfollow:1. Set up credit limit and authority for the twelve items asbelow

2. Set up credit limit and authority in case over-budget orwithout budgeting3. Set up authority to sign on the following documents

3.1 Purchasing order3.2 Cheque/instruments/documents related to financial

transactions 3.3 Tax applications to Revenue Department and Excise

Department

The Company’s Articles of Association also provideguidelines for transactions and matters that require boardapproval, which are generally those that are other than inthe normal course of business or are not specified in theCorporate Authority Index.

The Board of Directors meets as required but at least on aquarterly basis. During the financial year ended 31December 2004, the Board of Directors held 5meetings.The directors’ attendance at those meetings wasas follows:

1.1 Capital Expenditures1.2 Expenditures1.3 Personnel1.4 Procurement1.5 Contracting and Power

of attorney1.6 Selling

1.7 Financial transaction1.8 Accounting1.9 Disposal and write-off

1.10 Public disclosure1.11 Customer services1.12 Computer system

authorization

Number of Meeting Attended Directors Board of Audit Executive Remuneration

Directors Committee Committee Committee

Mr. Boonchai Bencharongkul 5 - 3 -

Mr. Somlak Sachjapinan3 5 - - -

Mr. Arve Johansen 3 - 4 -

Mr. Vichai Bencharongkul 5 - 5 -

Mr. Sigve Brekke1&4 5 - 5 -

Mr. Christian Storm2 - - 1 -

Mr. Per Olav Fosse2 3 - 3 -

Mr. Pakkaporn Sathienpakiranakorn 5 - - -

Mrs. Tasanee Manorot 5 - - -

M.R. Tongnoi Tongyai 5 12 - 2

Mr. Chulchit Bunyaketu 5 11 - 2

Mr. Soonthorn Pokachaiyapat 3 11 - 2

Number of Meetings Held 5 12 5 2

Note:1. Mr. Sigve Brekke resigned as Director and Co-Chief Executive Officer

with effect from 13 January 2005 and was appointed as Co-ChiefExecutive Officer with effect from 25 February 2005.

2. Mr. Christian Storm was appointed as Director at the Board of Directors’Meeting No. 5/2004 held on 12 November 2004 replacing Mr. Per OlavFosse. Mr. Storm also attended one Executive Committee meeting in 2004.

3. Mr. Chai Nasylvanta was appointed as Vice Chairman of the Board ofDirectors at the Board of Directors’ Meeting No. 1/2005 held on25 February 2005 replacing Mr. Somlak Sachjapinan.

4. Mr. Ragnar H. Korsaeth was appointed as Director at the Board ofDirectors’ Meeting No. 1/2005 held on 25 February 2005 replacingMr. Sigve Brekke.

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Corporate Governance

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As of 31 December 2004


To ensure that incoming directors are familiar with theCompany’s business, and governance practices, allrelevant information on the Company’s business is madeavailable to new directors when first appointed to the Boardand orientation program may be conducted for the newdirectors upon request.

The Company from time to time informs the directorsregarding appropriate available training courses, whichwould help them to discharge their duties as the memberof the Board.

Board Composition and Balance

Principle 2: Strong and independent element onthe Board

Currently, the Board consists of eleven directors, includingthree independent directors, three of whom are nominatedby UCOM, three nominated by Telenor, and one each byTOT and CAT. Details of their academic and professionalqualifications and other appointments are set out on page12 to 13.

Given the specific nature of these nominating procedures,they vary in some aspects from those suggested in theCode of Corporate Governance specifically with regardsto the number of independent directors making up at leastone-third of the board.

As at 31 December 2004, the members of the Board ofDirectors were:

Directors Age Date of Initial Last Appointedappointment Date

1. Mr. Boonchai Bencharongkul1 Chairman 51 29 October 1990 30 April 20042. Mr. Somlak Sachjapinan5 Vice Chairman and

Chief Technology Officer 59 27 April 1993 30 April 20043. Mr. Arve Johansen Vice Chairman 56 29 September 2000 29 April 20034. Mr. Vichai Bencharongkul2 Director and Co-CEO 44 24 July 1991 30 April 20045. Mr. Sigve Brekke4&6 Director and Co-CEO 46 29 September 2000 29 April 20036. Mr. Christian Storm3 Director 48 12 November 2004 12 November 20047. Mr. Pakkaporn Sathienpakiranakorn Director 58 22 June 2001 29 April 20038. Mrs.Tasanee Manorot Director 60 27 February 2001 30 April 20049. M.R.Tongnoi Tongyai Director 70 11 December 1998 30 April 2002

10. Mr. Chulchit Bunyaketu Director 62 6 March 2000 30 April 2002 11. Mr. Soonthorn Pokachaiyapat Director 68 6 March 2000 30 April 2002

All independent directors are non-executive and carryout the functions independently of the executive directorsand management of the Company. They are:1. M.R.Tongnoi Tongyai2. Mr. Chulchit Bunyaketu3. Mr. Soonthorn Pokachaiyapat

CHAIRMAN AND EXECUTIVE OFFICER

Principle 3: Clear division of responsibilities at thetop of the Company

The Chairman of the Board is responsible for schedu lingmeetings and setting meeting agendas, exercisingcontrol over quality, quantity and timeliness of the flow ofinformation between the management and the Board, andensuring comp liance with the Company’s guidelines oncorporate governance. The Chairman is also theChairman of Board meetings, and in the case of a tiedvote, the Chairman of the meeting has an additionalcasting vote. Each director has one vote, and a decisionat the meeting is made by a majority vote. A directorwho has any interest in any matter is not entitled to voteon such matter.

Even though Mr. Vichai Bencharongkul, one of the twoCo-Chief Executive Officers, is a brother of Mr. BoonchaiBencharongkul, the Chairman of the Board of Directors,they have a clear division of responsibilities and haveappropriate balance of power and authority.

Note:1. Mr. Boonchai Bencharongkul was Chief Executive Officer until 18 November 2002 and was succeeded by Mr. Vichai Bencharonkul

and Mr. Sigve Brekke as Co-Chief Executive Officers.2. Mr. Vichai Bencharongkul, a Director and Co-Chief Executive Officer, is the brother of Mr. Boonchai Bencharongkul, Chairman of

the Board of Directors.3. Mr. Christian Storm was appointed as Director replacing Mr. Per Olav Fosse, which his resignation letter became effective on

12 November 2004.4. Mr. Sigve Brekke resigned as Director and Co-Chief Executive Officer with effect from 13 January 2005 and was appointed as

Co-Chief Executive Officer with effect from 25 February 2005.5. Mr. Chai Nasylvanta was appointed as Vice Chairman of the Board of Directors at the Board of Directors’ Meeting No. 1/2005 held

on 25 February 2005 replacing Mr. Somlak Sachjapinan.6. Mr. Ragnar H. Korsaeth was appointed as Director at the Board of Directors’ Meeting No. 1/2005 held on 25 February 2005,

replacing Mr. Sigve Brekke.

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cannot be split between a number of nominees;(c) Nominees with the highest number of votes areappointed. Where there is a tie, the chairman of the meetinghas the casting vote.3. A board member wishing to resign from his position mustsubmit a letter of resignation to the company. A resignationtakes effect when the Company receives it.4. Shareholder’ meeting may resolve to remove anydirector before the expiration of his/her term out of officeby having votes of not less than three-fourths of the numberof shareholders attending the meeting and having therights to vote with no less than one-half of the shares heldby all the shareholders attending the meeting and havingthe right to vote.

At every Annual General Meeting (AGM) one-third of thedirectors must retire determined on the basis of the longestserving. A retiring director is eligible for re-election.

Currently, a Nominating Committee for the appointment ofnew directors and a formal assessment of the Board’sperformance has not been set up.

Access to Information

Principle 6: Board members have complete,adequate and timely information

The management recognizes its obligation to provide theBoard with complete, adequate information in a timelymanner, and the Board also has independent access tothe Company’s senior management.

As a general rule, information papers including backgroundand explanatory information relating to matters are providedto the Board members to provide a better understandingof the matter to be discussed at least 7 days prior theBoard meeting. The Board of Directors also has accessto the Company’s management for additional insight andother relevant information on any matter.

At present the Company does not have a companysecretary since it is not required to appoint one under theThai Public Limited Companies Act B.E. 2535 of theKingdom of Thailand. The duties and responsibilities,which are typically performed by a company secretary ofa company in Singapore, are performed by appropriatelyqualified and experienced staff in the Company’s LegalDepartment.

Remuneration Matters / Level and Mix ofRemuneration / Disclosure of Remuneration

Principle 7: Formal and transparent procedure forfixing remuneration packages for directors

Principle 8: Remuneration of directors should beadequate but not excessive

Principle 9: Remuneration policy, level and mix ofremuneration and procedure for settingremuneration

The Company has set up a Remuneration Committeecomprising all three following independent directors withknowledge in the field of executive compensation.

1. Mr. Chulchit Bunyaketu (as Chairman)2. M.R.Tongnoi Tongyai3. Mr. Soonthorn Pokachaiyapat

This committee shall have the responsibility to recommendto the Board a framework for the executive directors’remuneration and to administer any share option schemefor key executives. The committee also reviews theremuneration package to ensure the appropriateness toattract, retain and motivate the directors and keyexecutives to discharge their responsibilities effectively.

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

As of 31 December 2004, the Compay did not have anemployee share option schemes.

The remuneration of the directors and key executives in2003 and 2004 were:

Board Membership / Board Performance

Principle 4: Formal and transparent process forappointment of new directors

Principle 5: Formal assessment of the effectiveness ofthe Board and contribution of each director

Appointments to, and withdrawal and retirement from, theBoard of Directors are governed by the Company’s Articlesof Association that requires:1. The Board of Directors must have at least 5 membersand at least half of the directors appointed must havepermanent residence in Thailand.2. Shareholders appoint the members of the Board:(a) Voting is in proportion to the number of shares held;(b) Votes can be for one or a group of nominees but votes

Note for the year 2003:1. Based on amounts received in 2003.2. Remuneration in the form of meeting allowance paid to five directors.3. No bonus in relation to 2002 performance was paid to

Mr.Vichai Bencharongkul and Mr. Sigve Brekke since they wereappointed as Co-Chief Exective Officers on 13 November 2002. Theircontracts of employment include fixed and variable components, andthe variable component is dependant on the Company and personalperformance.

4. As of 31 December 2003, there was no other employee who isimmediate family member as defined in the Listing Manual of SGX-STof a director or the Chief Exective Officer, and whose remunerationexceeds SGD 150,000 during the year.

Directors’ Remuneration for the year 2003 1

Directors’ Remuneration by Band Meeting Base Bonus Shareallowance2 Salary options

Above SGD 500,000NilAbove SGD 250,000 to 500,000 - - - -Mr. Vichai Bencharongkul3 - 100% - -Mr. Sigve Brekke3 - 100% - -Mr. Somlak Sachjapinan - 81% 19% -Below SGD 250,000Mr. Pakkaporn Sathienpakiranakorn 100% - - -Mrs. Tasanee Manorot 100% - - -M.R. Tongnoi Tongyai 100% - - -Mr. Chulchit Bunyaketu 100% - - -


Note for the year 2004:1. Based on amounts received in 2004.2. Remuneration in the form of meeting allowance paid to eight directors.3. As of 31 December 2004, there was no other employee who is

immediate family member as defined in the Listing Manual of SGX-STof a director or the Cheif Executive Officer, and whose remunerationexceeds SGD 150,000 during the year.

Note for the year 2004:1. Based on amounts received in 2004.2. Remuneration for the key executives includes salaries, bonuses, and

car allowances3. Mr. Grant Ferguson resigned as Chief Financial Officer with effect

from 1 June 2004 and was succeeded by Mr.Petter-Borre Furberg.Bonus paid to Mr. Grant Ferguson was in relation to 2003 performance.

4. Mr. Rolf Marthinusen resigned as Deputy Chief Technology Officerwith effect from 8 May 2004. Bonus paid to Mr. Rolf Marthinusen wasin relation to 2003 performance.

5. No bonus in relation to 2003 performance was paid to Mr. SirichaiLarbmahanond because he has joined the company since 1 February 2004.

Above SGD 750,000Nil - - - -Above SGD 500,000 to 750,000Mr. Vichai Bencharongkul - 80% 20% -Mr. Sigve Brekke - 80% 20% -Above SGD 250,000 to 500,000Mr. Somlak Sachjapinan - 77% 23% -Below SGD 250,000Mr. Boonchai Bencharongkul 100% - - -Mr. Pakkaporn Sathienpakiranakorn 100% - - -Mrs. Tasanee Manorot 100% - - -M.R. Tongnoi Tongyai 100% - - -Mr. Chulchit Bunyaketu 100% - - -Mr. Soonthorn Pokachaiyapat 100% - - -Mr. Arve Johansen 100% - - -Mr. Per Olav Fosse 100% - - -

Directors’ Remuneration for the year 2004 1

Directors’ Remuneration Meeting Base Bonus Share

by Band allowance2 Salary options

Above SGD 750,000Nil - - -

Above SGD 500,000 to 750,000Mr. Grant Ferguson3 48% 52% -

Above SGD 250,000 to 500,000Mr. Petter-Borre Furberg 85% 15% -

Mr. Pitjapol Jantanasaro 77% 23% -

Mr. Sunti Medhavikul 82% 18% -

Mr. Thana Thienachariya 82% 18% -

Below SGD 250,000Mr. Rolf Marthinusen4 56% 44% -

Mr. Sirichai Larbmahanond5 100% - -

Remuneration of Key Executives(who are not directors) for the year 2004 1

Key Executives’Remuneration2 Base Bonus Shareby Band Salary options

ACCOUNTABILITY

Principle 10: Account ability of the Board andmanagement

The Board of Directors recognizes the importance ofproviding the share holders with a balanced and understandable assessment of the Company’s performance, position,and prospects on a timely basis; therefore, the Companyreports and makes public its financial statements on aquarterly basis.

The management also provides the Executive Committee,delegated by the Board of Directors to assist on handlingimportant issues of the Company’s business operations,with balanced and understandable management accountson the Company’s performance, position and prospectson a monthly basis.

To assist the directors, Board Committees have beenestablished with clear scope of work and responsibilities.Currently there are three Board Committees, namely theAudit Committee, the Remuneration Committee andExecutive Committee.

Executive Committee

Currently, the Executive Committee comprises 5 members.The members are:

1. Mr. Arve Johansen (as Chairman of the Executive Committee)2. Mr. Boonchai Bencharongkul3. Mr. Chai Nasylvanta4. Mr. Christian Storm5. Mr. Ragnar H. Korsaeth

The scope of work, responsibilities and authority of theExecutive Committee are as follows:

1. To review, consider, decide amongst themselves and ifthought appropriate, make recommendations forsubmitting to the Board of Directors on the followingmatters : (a) the strategies and policies proposed and/oradopted by/for the Company; (b) the business plans ofthe Company; (c) the annual budgets and other financematters of the Company; and (d) any other matters whichthe Board of Directors has directed the ExecutiveCommittee to consider,2. To consider, review and follow up them with managementon the progress and outcome of work in relation toinvestments, including procurement and disposal of anyassets, in line with the business plan, policy, strategy andannual budget of the Company.

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A number of committees have been established bymanagement as key elements of the Company’s internalcontrol system. These include an Investment Committeeand a Corporate Governance Committee.

Investment Committee

The Investment Committee, consisting of Co-ChiefExecutive Officer, Chief Financial Officer, Chief TechnologyOfficer, Assistant Chief Executive Officer-CorporateAdministration, and Assistant Chief Financial Officer andController, reviews and, if appropriate, approves allinvestment in the Company’s assets that is equal or overthan 2 million Baht.

Corporate Governance Committee

The Corporate Governance Committee, consisting of theCo-Chief Executive Officer, Chief Financial Officer,Assistant Chief Executive Officer-Corporate Administration,and certain Group Directors and Department Directorsthroughout the Company, has a mandate to establish andpromote good practice of corporate governance.

The Board of Directors recognize the importance of goodcorporate governance, they have formulated the corporategovernance policy to comply with the Principle of GoodCorporate Governance based on the 5 fundamentalpurpose of good corporate governance i.e. Transparency,Responsibility, Accountability, Efficiency, and Fairness.This is in the ultimate long-term interests of shareholders,within the framework of the Law and business ethics.

Audit Committee / Internal Control / Internal Audit

Principle 11: Establishment of audit committee(“AC”) with written terms of reference

Principle 12: Sound system of internal controls

Principle 13: Setting up of independent InternalAudit Function

The Audit Committee comprises the three IndependentDirectors.

Two members of the Audit Committee, M.R. TongnoiTongyai and Mr. Chulchit Bunyaketu, posses accountingor related financial management expertise or experience.M.R. Tongnoi Tongyai has served as Chief Executive Officerto His Royal Highness Crown Prince of Thailand since2001. Mr. Chulchit Bunyaketu served as Managing Directorof Thai Power Oil Company Limited during 1998 – 2003,now has served as Group Deputy Chairman of King PowerInternational Group, and Chairman of Ekarat EngineeringPublic Company Limited.

This committee’s responsibilities include:

1. Financial reporting and Auditing• Reviewing the Company’s financial statements andaccounts• Considering the matter concerning appointment and

remuneration of the auditor then submit for approval andcooperation with the auditor• Presenting the Audit Committee’s report signed by theChairman of the Audit Committee, as an integral part ofthe Company’s Annual Report

2. Monitoring and Advice• Monitoring the Company’s business to ensure that it isin accordance with the law and regulations of the SGX-STand any other relevant laws• Making available accurate information of the Companyin those instances where inappropriate transactions orconflict of interest occur• Advising the Board of Directors on matter that have animpact on the Company’s financial status and its day today operations; involve conflict of interest and/orcorruption; relate to significant errors in the internal controlsystem; are considered likely to be contrary to the lawand regulations of the SGX-ST or other laws relevant tothe Company’s business• Directing and supervising the Office of Internal Audit,comprises of Operational Audit Department, InformationTechnology Audit Department, and Corporate ProcedureDepartment, to ensure that they perform independentlyand efficiently

3. Internal Control• Reviewing the Company’s internal control and internalaudit system to ensure that they are suitable and effective.

The Company believes that the Audit Committee’sexperiences, knowledge, and talent can support the abovespecified operations very well. Besides, if necessary, theAudit Committee may consider having the Office of InternalAudit’s comments including details in financial andaccounting aspects from the auditor to reach more perfectperformance.

The Audit Committee reviews the performance, includingthe independence, of the external auditor annually inmaking its recommendation to the Board on theappointment of the external auditor. To ensure that the auditsystem is appropriate, the Audit Committee meets withthe external auditor without the presence of the Company’smanagement on an annual basis. The Audit Committeealso has full access and cooperation from the managementin case that any issue or concern may arise.

The audit partner, Sumalee Reewarabandith, from Ernstand Young Office Limited, who currently performs auditservices for the Company was first appointed at the AnnualGeneral Meeting No. 1/2003 held on 29 April 2003.Accordingly, the appointment of Sumalee Reewarabandithis in compliance with Rule 713 (1) of the Listing Manual.In the financial year ended 31 December 2004, it has nonon-audit fees paid to the auditor of the Company.

In addition, the Audit Committee reviews the non-auditingservices provided by the external audit a annually to ensurethat such non-auditing services do not affect theindependence of the auditors.


The Audit Committee meets on a monthly basis and itsattendance during the year 2004 was:

Audit Committee Number of MeetingsAttended

M.R. Tongnoi Tongyai 12Mr. Chulchit Bunyaketu 11Mr. Soonthorn Pokachaiyapat 11

The Audit Committee Report on page 46 reviews the majorareas of the Committee’s work.

The Board of Directors’ Meeting 1/2005 held on 25February 2005, at which all independent directors andMembers of the Audit Committee were in attendance,assessed the sufficiency of the Company’s internal controlsin 5 areas: organization and environment control; riskmanagement; operational control; information;communication and monitoring. The Company’s internalcontrol systems are sufficient and suitable for theCompany’s business. The external auditors also reportedno significant weaknesses in the internal control system;which are likely to have a material impact on the financialstatement.

Communication with Shareholders

Principle 14: Regular, effective and faircommunication with shareholders

Principle 15: Shareholder participation at AGMs

To ensure that the Company discloses important informationcorrectly, timely, and transparently, it has established anInvestor Relations Department to engage in regular, effectiveand fair communication with shareholders. The Companyregularly reviews its procedures for reporting informationwith a view to improving the awareness and transparencyof its business strategies, goals, and results.

Timely disclosure of material information is provided toshareholders in accordance with the Corporate DisclosurePolicy of SGX-ST, and the shareholders are also keptinformed of the Company’s developments, operationalinformation, quarterly operating results, and performancesthrough announcements and Investor Releases madepublic through SGX-ST’s SGXNET as well as the Company’swebsite and other distribution channels.

In addition, one of the primary roles of the Company’s CorporateGovernance Committee is to ensure appropriate policiesand practices are adopted for the disclosure of informationto all stakeholders.

The Company holds its Annual General Meeting within 4months from the end of each financial year. The notice ofthe meeting indicating the place, date, time, agendas, andmatters to be proposed to the meeting with appropriatedetail including the annual report is sent to the shareholdersnot less than 7 days prior to the meeting date, and it isalso published in a newspaper for 3 consecutive dayswith at least 3 days prior to the meeting date.

The Company’s articles association allows a shareholderto appoint a proxy to attend and vote on any matter at anyGeneral Meeting.

At the AGM, the shareholders are given the opportunity toprovide their views and to ask the directors andmanagement questions.

Best Practice Guide regarding dealings insecurities

In early 2004, the Company formalized policy andpractices for dealings in securities of the Company thatcomplies with the Best Practice Guide on Dealings inSecurities issued by SGX-ST. These policies include:

• The regular issuance of circulars to officers not to dealin the Company’s securities while they are in possessionof unpublished material price sensitive information or tradeat any time on short-term considerations.• The prohibition of trading in the Company’s securitiesby directors and executives from 10 days prior to the endof each quarterly accounting period and ending on thedate the financial results of the same accounting periodare made public.• The Company’s directors and executives are requiredto inform the Company’s Investor Relations Departmentabout any change of that directors’ or executives’ interestin the Company’s securities within 24 hours from the dateof change of interest.• In case of directors, Investor Relations will file a noticeto the SGX-ST via SGXNET.

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The Companies and its subsidiaries enter into business transactions with each other and with associated and related companies asshown in the Note 5 to the Financial Statements. Such transactions, which have been concluded on terms and conditions determinedby the Company and those related companies and which are in the normal course of business, are summarized below:-

Rationale for the transactions:• Prior to June 2002, UCOM was the primary distributor of the Company’ s products as one of its core businesses is distributing mobilephones and other related telecommunication products to third party telecom and non-telecom shops.• UCOM also provides services in the area of purchases of network equipment.• The operation and maintenance of transmission network is a core business of UCOM, which has managed and maintained theCompany’s network efficiently and effectively for many years. These services are in short supply in Thailand and many of the possiblealternative suppliers work for the Company’s competitors.

Rationale for the transactions:• In June 2002, the Company and UCOM transferred their sales and distribution businesses to UD, which is a subsidiary of UCOM.UD also has the exclusive right to distribute and sell the Company’s telecommunication products. The business relationship is beneficialas it allows the Company to expand its product and services reach while controlling the cost of distribution.• The Company purchases handsets and related accessories through a subsidiary, WPS, from UD for resale at its own DTAC shopsand service halls.

Principal Transactions Aggregate value of transactions during the financial year

(Million Baht)2003 2004

Sales of goods2.1 Sales of mobile handsets,SIM cards, SIM card package,refill vouchers andStarter Kits to UD. 13,858 18,080Purchase of goods2.2 Purchase of mobilehandsets from UD 259 311Dividend income – 13



Purchase of services1.1 Hire to UCOM forthe operation and maintenance 610 598of the transmission network

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Interested Person Transaction

1. Transactions with UCOM

2. Transactions with UD

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Rationale for the transactions:• TELENOR provides the Company with seconded staff with appropriate experience in relevant business areas.



Purchase of services3.1 Hire to UTEL for installationand maintenance services 1,368 840of base stations and cellsite equipment



Purchase of services4.1 Rent to UIH for high-speedleased circuit for its data 16 13communication



Purchase of services5.1 Service fees to UBT for ADSL 0.2 0.1



Purchase of services6.1 Fees to TELENOR undera service agreement. 157 44

3. Transactions with UTEL

Rationale for the transactions:• UTEL is a subsidiary of UCOM that provides fully integrated services in the areas of system design, project implementation, distribution,leasing of telecommunications equipment, consulting services and system maintenance of telecommunications, information technology,broadcasting and network equipment. Such services are provided on a project-by-project basis and are subject to tender processesalong with other unrelated third party service providers.

4. Transactions with UIH

Rationale for the transactions:• UIH, which is a subsidiary of UCOM, provides high-speed data communications service via a nationwide leased optical fiber networkto public and private organizations. UIH has one of the most extensive and high quality fiber optic networks in Thailand and has beenproviding consistent and high quality data communication services to the Company for many years.

5. Transactions with UBT

Rationale for the transactions:• UBT provides high-speed internet connection service via DSL Technology through Internet Service Providers (ISPs).

6. Transactions with TELENOR

Interested Person Transaction


Other than the related party transactions set out above, there was no material contract involving the interests of any of the Co-ChiefExecutive Officers, Directors or controlling shareholders, either still subsisting at the end of the financial year ending 31 December2004 or if not subsisting, entered into since the end of the previous year ending 31 December 2003.

According to the Annual General Shareholders’ Meeting for the year 2004, the shareholders approved the general mandate forinterested person transactions, which are recurrent transactions of revenue or trading nature or are necessary for the Company’sday-to-day operations, such as the purchase and sale of supplies and materials that may be carried out with the Interested Persons.

The Company will be seeking the shareholders’ approval for a renewal of the general mandate for interested person transactions for2005 at the upcoming Annual General Shareholders’ Meeting for the year 2005.

Further information relating to interested persons transaction pursuant to Rule 907 of the SGX-ST’ s Listing Manual isas follows:-

Notes:

TAC-Total Access Communication Public Company LimitedThe Company

UCOM-United Communication Industry Public CompanyLimitedUCOM is a controlling shareholder of TAC with 41.64% shareholding.

UD-United Distribution Business Company LimitedUD is a subsidiary of UCOM with 75% shareholding and an associateof the Company with 25% shareholding.

Name of interested person

UCOM - 598UD - 18,404UTEL - 840UIH - 13TELENOR 44 -

UTEL-United Telecom Sales and Services Company LimitedUTEL is a subsidiary of UCOM with 99.99% shareholding.

UIH-United Information Highway Company LimitedUIH is a subsidiary of UCOM with 75% shareholding.

UBT-United Broadband Technology Company LimitedUBT is a subsidiary of UCOM with 51% shareholding.

TELENOR-Telenor Asia Pte. LimitedTELENOR is a controlling shareholder of TAC with 29.94% shareholding.

Aggregate value of all interested persontransactions during the financial yearunder review (excluding transactionsless than S$100,000 and transactions

conducted under shareholders’mandate pursuant to Rule 920)

(THB’000,000)

Aggregate value of all interestedperson transactions conducted under

shareholders’ mandate pursuant toRule 920 (excluding transaction less

than S$100,000)

(THB’000,000)

Transactions Aggregate value of Rationale for the transactionstransactions during

the financial year(Million Baht)

2003 2004

Advances1. Advances to UD 4.3 2.5 The balance arose from the purchase of Happy Dprompt premium.2. Advances to other 6.2 2.0 The balance arose from minor payments made on behalf of relatedrelated companies companies shall be reimbursed.

3. Advances from TELENOR 117 124 Amounts outstanding under the service agreement (see 6.1).4. Advances from other 13 11 The balance arose from minor payments made on the Company’srelated companies behalf by related companies to be reimbursed respect

of the distribution agreement (see 2.1).

Accounts receivable-Trade1. Amounts due from UD 2,611 3,255 The amounts due arose in normal course of business.2. Others 0.03 - The balance arose from miscellaneous sales to related companies.Accounts payable-Trade1. Amounts due to UCOM 94 147 The balance arose from the hire for operation and maintenance

of the transmission network (see 1.1).2. Amounts due to UTEL 158 137 The balance arose from the hire of installation and maintenance

services (see 3.1).3. Amounts due to UIH 7 - The balance arose from the rent for high-speed leased circuits (see 4.1).Amount due from 0.7 1.2 The balance arose from miscellaneous sales to related companies.related companies

Balance outstanding of IPTs:

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Results

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As of December 31, 2004, DTAC had 7,786,165customers, 83.6% of which were prepaidcustomers. It represented an increase of 1,235,669

new customers or a 19% growth from 2003. The marketshare of customers remained at approximately 29%.

Despite intense competition, DTAC continues to focus onour friendliness, innovative services and value-for-moneypositioning. In addition we strive to improve network qualityand distribution channels with the aim to maintain ourmarket share of service revenues and increase ouroperational efficiency. In 2004, we delivered a significantimprovement in net profits and a strengthening of bothBalance Sheet and Cash Flow. This came as a result of astrong revenue growth and better cost management.

REVENUES

Service revenues, which accounted for 97.2% of totalrevenues in 2004, was THB 37,841 million. This was anincrease of 24% compared to the previous year. The growthin service revenues was driven by increase in usage andcustomer base as well as revenues from internationalroaming. Main factors are as follows:

1. DTAC added 1.236 million customers or a YoY increaseof 19%, most of which were prepaid customers. The growthin customer base was consistent with the whole market.

Customers 2003 2004 +/-

Postpaid 1,167,543 1,276,538 +9%Prepaid 5,382,953 6,509,627 +21%

TOTAL 6,550,496 7,786,165 +19%

2. Voice revenues grew 23% YoY, mainly from higher usageand an expansion in customer base.

Blended ARPU in 2004 rose by 1% from THB 410 to THB 414.• Postpaid ARPU was THB 1,160, which remainedrelatively stable YoY• Prepaid ARPU grew by 15% YoY, due to an increasein usage

ARPU 2003 2004 +/-

Postpaid 1,176 1,160 -1%Prepaid 234 270 +15%

Blended 410 414 +1%

3. Revenues from Valued Added Services (“VAS”) andInternational Roaming (“IR”) increased 38% YoY. Thecontribution to service revenues was 4% and 7% fromVAS and IR, respectively.

In 2004, revenues from the sales of handsets and starterkits contributed 2% to total revenues. This was a decreaseby 9% YoY, primarily due to a reduction in the wholesaleprice of the starter kits.

There was no revenue from retail goods due to the closureof AM/PM and Rak Ban Kerd stores in 2003.

COST

Total cost of THB 23,284 million rose by 23%. Of this, thecost of providing telephone services accounted for THB22,949 million. This was an increase of 25% YoY, as aresult of a combination of the following:

1. Regulatory costs increased by 37%, mainly due to anon-inclusion of TOT’s access charge rebate since the firstquarter of 2004. The regulatory costs were approximately33% of service revenues in 2004, compared to 30% in2003. In 2004 TAC paid approximately THB 12.5 billion inregulatory cost, up from approximately THB 9 billion paidin 2003.

DTAC’s regulatory cost consists of: revenue share payableto CAT Telecom Public Company Limited (CAT) under theconcession, Excise Tax paid to the Ministry of Finance ofThailand and Access Charges payable to TOT CorporationPublic Company Limited (TOT).

2. Amortization of deferred rights increased by 11% YoY,due to an expansion of the cellular network combined witha shorter remaining concession period;

3. Production cost or refill vouchers and sales margin paidto United Distribution (UD), increased by 20% YoY, owingto the growth in prepaid sales;

4. Roaming charges paid to CAT and roaming partnersincreased 6%. This was mainly due to an increase inrevenues from international roaming and an accrual of thecost recorded in the year; and

5. Other operating cost rose by 15%.

Breakdown of the revenues

2003 2004 %

Revenues from telephone services 30,521 96.0% 37,841 97.2%Revenues from sales of telephone 880 2.8% 799 2.0%sets and starter kits

Revenues from sales of retail goods 131 0.4% -

Other operating income 249 0.8% 303 0.8%

TOTAL REVENUES FROM SALESAND SERVICES 31,780 100% 38,943 100%

47%

4%7% 2%

39%Postpaid

Prepaid

VAS

IR

Others

Results and Financing


Results and Financing

The Company continues to use proactive liabilitymanagement operations to manage the cost, duration andrisk of the debt portfolio. As of December 31, 2004, allforeign currency denominated long-term debt and the costof servicing it had been fully hedged to mitigate the risk offluctuations in the underlying currency exchange rates.

Capital Structure

Shareholders’ equity at the end of 2004 increased to THB34 billion from THB 29 billion, increasing by THB 4 billion,mainly from the net profit for the year.

The Company’s capital structure comprised:1. Shareholders’ equity of THB 34 billion representing 41%of the total assets; and2. Total liabilities of THB 49 billion, representing 59% ofthe total assets.

Liquidity

In 2004 the Company’s net cash flows increased by THB84 million, compared to a net increase of THB 169 millionin 2003 due to the following:1. Net cash flow from operating activities amounted toTHB 11billion, an increase of 15% compared to 2003 primarilydue to an improvement in net earnings;2. Net cash payment for investing activities of THB 6 billiondecreased from THB 9 billion last year largely as a resultof lower capital expenditure on network equipment; and3. Net cash payment for financing activities wasTHB 5 billion mainly as a result of repayment of bond in 2004.

Therefore, cash and cash equivalents at end 2004increased from THB 1.67 billion to THB 1.75 billion.

As of December 31, 2004, important financial ratios wereas follows:• Current ratio decreased to 0.5 time from 0.6 time in 2003largely due to an increase in loans and bonds due within12 months and the corporate income tax payable due tonon-recognized income.• A decrease in debt to equity and debt to EBITDA ratioswere from the improvement in the Company’s net profitsand EBITDA.• Interest coverage ratio increased from 5.1 times in 2003to 6.5 times in 2004.

2003 2004

Current ratio 0.6 0.5Debt / Equity 1.5 1.1Debt / EBITDA 3.6 2.5Interest cover ratio 5.1 6.5

CREDIT RATINGS

Ratings By Rating Development Last Update

TRIS A- Affirmed Nov 04

Positive outlook Changed from

Stable Outlook

S&P BB Affirmed Dec 04

Stable outlook Remained the same

MOODY’S Ba2 Upgraded from B1 Aug 04

Stable outlook Remained the same

SELLING AND ADMINISTRATIVE EXPENSES

Selling and administrative expenses of THB 6,843 millionin 2004 increased slightly from the previous year due tothe combined results of:

1. a substantial decrease in provision for doubtful accounts,accounting for 3.5% of postpaid revenues (2003: 7%); and2. an absolute increase in selling and marketing expenses,which remained at approximately 6% of total revenues.

Earning before interest, tax, depreciation and amortization(EBITDA) in 2004 was THB 15,131 million, a 25% increaseYoY, despite a higher regulatory cost. EBITDA marginimproved from 38% in 2003 to 39% in 2004.

Financial cost fell 12% due to the debt repayment duringthe period, offset by generally increasing interest rates.

Net earnings for the year were THB 4,480 millions, up 73%YoY. Earnings per Share were THB 9.44.

ANALYSIS OF CONSOLIDATED BALANCE SHEET AS AT 31DECEMBER 2004

Assets

As of December 31, 2004, total assets amounted to THB83 billion, 1% higher than the previous year end, largelydue to a 10% increase in current assets. Current assets asof December 31, 2004 were THB 9 billion and accountedfor 10.5% of total assets (2003: 10%). This increase of totalassets was primarily due to the following:

1)Cash and cash equivalents increased by 5% to THB1,749 million mainly from a combined results of;

a. an increase in cash flows received from operatingoperations;

b.a decrease in spending on investing activities; andc. an increase in net debt repayment, amounting to THB

5 billion compared to THB 0.2 billion in 2003);2)Accounts receivable-trade increased by 22% largelydue to an increase in service revenues from postpaidsubscribers and a decrease in allowance for doubtfulaccounts;3)Accounts receivable from UD rose by 25% from theprevious year end as a result of an increase in sales ofstarter kits and refill vouchers to UD;4) Inventory of THB 119 million was 126% higher than atDecember, 31 2003 as a result of lower allowance forinventory obsolescence; and5)Deferred right to use of equipment and equipment underinstallation, which accounted for 77% of total assets,increased by 1%, due to continued expansion of cellularnetwork.

Liabilities

As of December 31, 2004, total liabilities were THB 49 billion,a reduction of 7% from 2003 mainly due to net debtrepayment in 2004.

Of total liabilities, THB 39.5 billion (or 80% of total liabilities)was long-term loans and bonds, including the portion thatwill come due within the next 12 months. A 12% decreasein long-term debt was from the repayments of bondsTHB 5 billion approximately.

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Director’s Report

The Directors present their report to the memberstogether with the audited accounts of the companyand its subsidiaries for the financial year ended 31

December 2004

1. Directors of the Company

a. The Directors of the Company in office at the date ofthis report are:

1. Mr. Boonchai Bencharongkul Chairman of theBoard of Directors

2. Mr. Chai Nasylvanta1 Vice Chairman ofBoard of Directors

3. Mr. Arve Johansen Vice Chairman ofBoard of Directors

4. Mr. Vichai Bencharongkul Director and Co-CEO

5. Mr. Ragnar H. Korsaeth2 Director6. Mr. Christian Storm Director7. Mr. Pakkaporn Sathienpakiranakorn Director8. Mrs. Tasanee Manorot Director9. M.R. Tongnoi Tongyai Director

10. Mr. Chulchit Bunyaketu Director11. Mr. Soonthorn Pokachaiyapat Director

Remark:1. Mr. Chai Nasylvanta was appointed as Director and Vice Chairman ofBoard of Directors at the Board of Directors’ Meeting No. 1/2005 held on25 February 2005 replacing Mr. Somlak Sachjapinan2. Mr. Ragnar H. Korsaeth was appointed as Dirctor at the Board ofDirectors’ Meeting No. 1/2005 held on 25 February 2005 replacing Mr.Sigve Brekke

In accordance with the Article of Association, M.R. TongnoiTongyai, Mr. Chulchit Bunyaketu, and Mr. SoonthornPokachaiyapat will retire. The Board of Directors expresstheir opinion to shareholders that the three directors wereeligible to re-election at the forthcoming annual generalmeeting.

b. The direct and indirect interests of the Directors andthe substantial shareholders (as defined in the CompaniesAct, Chapter 50 of Singapore (the “Singapore CompaniesAct”) of the Company in the ordinary shares (“Shares”) atthe par value of THB 10 each in the capital of the Companyare shown in the following table:

Directors 2 Direct Interest Indirect Interest 1

(As at 21 Jan 05) (As at 21 Jan 05) No. of Shares % No. of Shares %

Mr. Boonchai Bencharongkul 3 2 - 197,538,593 41.64Mr. Vichai Bencharongkul 4 1 - 197,538,593 41.64

1. Unlike Singapore incorporated companies which are listed on the SGX-ST, the Company does not maintain a Register of Substantial Shareholdersor a Register of Directors’ Shareholdings. The shareholders of the Companyare not required under the Singapore Companies Act to provide theCompany with notices of substantial shareholding or of changes insubstantial shareholding. Similarly, the Directors are not required to providethe Company with notices of changes in their respective indirect interestsin the Shares. Accordingly, the information relating to indirect interests ofthe relevant shareholders and Directors is based on knowledge of theCompany except where the relevant indirect interest relates to Sharesowned through a direct securities account which the relevant shareholderor Director has opened with CDP in which case the information will bebased on the number of Shares standing to the credit of his securitiesaccount with CDP.

2. Other than Mr. Boonchai Bencharongkul, Mr. Vichai Bencharongkul,and Mr. Chai Nasylvanta, none of the other Directors have any interest,whether direct or indirect in any shares.3. Mr. Boonchai Bencharongkul and his associates (as defined in theSingapore Companies Act) are entitled to exercise 20 per cent or more ofthe votes attached to the voting shares in UCOM. Accordingly, Mr. BoonchaiBencharongkul is deemed to have an indirect interest in the 197,538,593Shares in which UCOM has an interest, whether direct or indirect.4. Mr. Vichai Bencharongkul and his associates (as defined in the SingaporeCompanies Act) are entitled to exercise 20 percent. or more of the votesattached to the voting shares in UCOM. Accordingly, Mr. VichaiBencharongkul is deemed to have an indirect interest in the 197,538,593Shares in which UCOM has an interest, whether direct or indirect.5. For further detail on the substantial shareholders, please see page 28

2. Audit Committee

The Audit Committee of the Board of Directors comprisesthree independent Directors. Members of the Committeeare:1. M.R. Tongnoi Tongyai2. Mr. Chulchit Bunyaketu3. Mr. Soonthorn Pokachaiyapat

The Committee recommended to the Board of Directorsthe re-appointment of Ernst & Young Office Limited asauditors of the Company at the forthcoming annualmeeting of shareholders.

3. Principal Activity

The principal activity of the Company is to provide wirelesstelecommunication services in Thailand under aconcession granted by CAT Telecom Public CompanyLimited.

There has been no significant change in the nature of thisprinciple activity during the financial year.

On 12 November 2004, the Board of Directors MeetingNo. 5/2004 passed a resolution approving the dissolutionof TAC Investment Limited (a subsidiary company).

4. Results of the financial year (in thousands of Thai Baht)

2004 2003

Profit for the financial year(after taxation and minority interests) 4,479,675 2,586,525

In the opinion of the directors, the results of the operationsof the Company during the financial year have not beenaffected by any item, transaction or event of a materialand unusual nature.

5. Dividend

The Directors do not propose the payment of a dividend(2003, Nil).


6. Material movement in reserves and provisions

There was no material movement in reserves andprovisions during the financial year except as disclosedin the notes to the accounts.

7. Related Party Transactions

The Company and its subsidiaries enter into businesstransactions with each other and with associated andrelated companies as shown in the Note 5 to the FinancialStatements. Such transactions have been concluded onterms and conditions determined by the Company andthose related companies and are in the normal course ofbusiness. The Company will be seeking shareholders’approval for a general mandate for interested persontransactions, which are recurrent transactions of a revenueor trading nature or are necessary for the Company’s day-to-day operations, such as the purchase and sale ofsupplies and materials, that may be carried out with theInterested Persons.

8. Other statutory information

a. Before the accounts of the Company were finalized,the directors took reasonable steps to ascertain that properaction had been taken in relation to the writing off for baddebts and the making of provision for doubtful amountsreceivable and satisfied themselves that all known baddebts had been written off and that adequate provisionhad been made for doubtful accounts receivable.

At the date of this report, the directors are not aware ofany circumstances which would render (i) the amountwritten off for bad debts or the amount of the provision fordoubtful accounts receivable inadequate to anysubstantial extent; and (ii) the values attributed to currentassets misleading.

b. At the date of this report, the directors are not aware ofany circumstances not otherwise dealt with in the reportof accounts, which would render any amount stated in theaccounts of the Company, and the consolidated accountsmisleading.

c. As at the date of this report, (i) there are no charges inthe assets of the Company which have arisen since theend of the financial year to secure the liabilities of anyother person, and (ii) there are no material contingentliabilities which have arisen since the end of the financialyear.

d. In the opinion of the directors, no item, transaction orevent of a material and unusual nature has arisen in theinterval between the financial year and the date of thisreport which is likely to affect substantially the results ofthe operation of the Company and of the Group for thefinancial year in which this report is made.

9. Statutory Auditors:

Ernst & Young Office Limited, Certified Public Accountants,our auditor, have expressed their willingness to acceptre-appointment as statutory auditors of the Company.

On behalf of the Board

Mr. Boonchai Bencharongkul

Chairman of Board of Directors

10 March 2005

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To Shareholders of Total Access Communication Public Company Limited

In 2004, the Audit Committee of Total Access Communication Public Company Limited comprises threeindependent directors, M.R. Tongnoi Tongyai as chairman, Mr. Chulchit Boonyaketu and Mr. SoonthornPokachaiyapat as committee members. The Audit Committee fulfilled all its responsibilities in accordancewith the Audit Committee Charter. The Audit Committee conducted a total of twelve meetings, which canbe summarized as follows:

1.Reviewed quarterly and annual financial statements of the Company and its subsidiaries before submittingto the Board of Directors for approval. Those financial statements were presented in accordance withgenerally accepted and adequately disclosed standards.2.Conducted meetings with the Management and internal auditors, and made recommendations for thebenefits of the Company’s operations.3.Reviewed the appraisal of adequacy of internal control system.4.Approved the audit plan and considered the audit reports of the Office of Internal Audit, OperationalAudit Department, Information Technology Audit Department, and Corporate Procedure Department,in 2004 and concluded that the Company had an effective internal control system and no significant weaknessarea.5.Proposed to the Board of Directors to define the audit fees for the year 2004.6.Defined the Corporate Authorization Index guideline including the control system procedure guidelinesin accordance with the terms of good corporate governance.

In our opinion, the Company presents the financial statements in accordance with generally acceptedaccounting principles, appropriately disclose information. The Company’s operation performance presentsgood corporate governance and appropriate internal control systems and internal audit system withoutmaterial deficiency.

M.R. Tongnoi TongyaiChairman of the Audit Committee

Total Access Communication Public Company Limited

Audit Committee Report


(Unit : Thousand Baht)

2002 2003 2004

INCOME STATEMENTSREVENUES FROM SALES AND SERVICES

Revenue from telephone service 25,243,741 30,521,269 37,840,901Revenue from sales of telephone sets and starter kits 5,841,622 879,778 798,757Revenue from sales of retail goods 576,503 130,518 -Other operating income 339,005 249,048 302,943

TOTAL REVENUES FROM SALES AND SERVICES 32,000,871 31,780,612 38,942,601

COST OF SALES AND SERVICES

Cost of telephone sevices 13,560,130 18,307,544 22,948,509Cost of sales of telephone sets 5,260,993 426,912 335,665Cost of sales of retail goods 518,276 128,751 -Total cost of sales and services 19,339,399 18,863,208 23,284,174

GROSS PROFIT 12,661,472 12,917,404 15,658,427

Selling and administrative expenses (7,351,406) (6,731,720) (6,842,778)

OPERATING PROFIT 5,310,067 6,185,684 8,815,648

Interest income 407,788 22,703 20,920Other income 225,108 156,078 31,691Foreign exchange gain (loss) (32,901) 144,901 50,641

NET OPERATING PROFIT 5,910,063 6,509,366 8,918,901

Share of loss from investment in associated company 19,070 41,588 2,965Earnings (Loss) before financial cost and income tax 5,929,133 6,550,953 8,921,866Financial cost (2,870,773) (2,806,302) (2,473,433)Corporate income tax (976,301) (1,158,126) (1,968,758)

NET EARINGS (LOSS) FOR THE PERIOD 2,082,060 2,586,525 4,479,675

EARNINGS PER SHARE (BAHT) 4.39 5.45 9.44

BALANCE SHEET

Total assets 82,644,126 82,317,772 83,052,157Total long term borrowing 43,897,761 44,222,267 38,347,135Total liabilities 55,941,514 53,036,762 49,301,378Total sharerholders’ equity 26,702,613 29,281,010 33,750,779Weighted average number of shares (Share) 474,416,126 474,416,126 474,416,126

FINANCIAL RATIO

EBITDA (MM Baht) 10,496 12,143 15,131EBITDA margin 33% 38% 39%Net Debt to Equity 1.6 1.5 1.1Debt to EBITDA 4.1 3.6 2.5Interest Coverage 4.3 5.1 6.5

Financial Highlights

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Financial Statements

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Report of Independent Auditor

To the Board of Directors and Shareholders ofTotal Access Communication Public Company Limited

I have audited the accompanying consolidated balance sheets of Total Access Communication Public Company Limitedand subsidiaries as at 31 December 2004 and 2003 and the related consolidated statements of earnings, changes inshareholders’ equity and cash flows for the years then ended, and the separate financial statements of Total AccessCommunication Public Company Limited for the same periods. These financial statements are the responsibility of themanagement of the Company and subsidiaries as to their correctness and the completeness of the presentation. Myresponsibility is to express an opinion on these financial statements based on my audits.

I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimates made by management, as well asevaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position ofTotal Access Communication Public Company Limited and subsidiaries, and of Total Access Communication PublicCompany Limited as at 31 December 2004 and 2003 and the result of their operations and cash flows for the years thenended, in accordance with generally accepted accounting principles. Without qualifying my opinion on the aforementionedfinancial statements, I draw attention to the outstanding litigations and commercial disputes discussed in Note 26.1 and26.2 to the financial statements, of which the outcomes are current uncertain.

These financial statements have been prepared under accounting principles generally accepted in Thailand. Note 35 to thefinancial statements describing significant differences between accounting principles generally accepted in Thailand andInternational Accounting Standards is not a required part of the basic financial statements under accounting principlesgenerally accepted in Thailand but it is presented for the purpose of giving preliminary information only. I have applied certainlimited procedures which consisted principally of enquiries of management regarding the methods of measurement andpresentation of such information. However, I did not audit such information and do not express any audit opinion on it.

Sumalee ReewarabandithCertified Public Accountant (Thailand) No. 3970

Ernst & Young Office LimitedBangkok: 4 February 2005

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(Unit : Baht)

CONSOLIDATED COMPANY ONLY

Note 2004 2003 2004 2003

ASSETS

CURRENT ASSETS

Cash and cash equivalents 23 1,749,479,771 1,665,707,628 1,690,506,969 1,617,588,390

Accounts receivable - trade, net 4 2,329,821,907 1,913,992,338 2,329,821,907 1,913,960,550

Accounts receivable - trade : related parties

Accounts receivable - trade : subsidiary, net 5 - - - -

Accounts receivable - trade : associated company 5 3,254,801,849 2,611,563,849 3,254,801,849 2,611,563,849

Accounts receivable - trade : related companies 53,199 26,000 53,199 26,000

Advances to related parties

Advances to subsidiaries - net 5 - - 44,873,312 46,509,454

Advances to associated company 5 2,497,755 4,319,315 2,497,755 4,319,315

Advances to related companies - net 5 1,973,371 6,179,853 1,973,371 6,179,853

Inventories - net 6 118,839,464 52,529,841 118,839,464 51,974,904

Other current assets 7 1,245,672,258 1,683,897,685 1,229,030,610 1,659,711,451

TOTAL CURRENT ASSETS 8,703,139,574 7,938,216,509 8,672,398,436 7,911,833,766

NON-CURRENT ASSETS

Deposits at financial institutions 25.3 4,331,504 4,508,904 - -

Investments in subsidiaries accounted

for under equity method 8 - - 20,637,229 24,431,460

Investment in associated company accounted

for under equity method 8 101,123,039 110,658,039 101,123,039 110,658,039

Other long-term investments 9 224,968,358 234,856,971 219,648,253 229,617,099

Long-term loans to and amounts due from related parties

Long-term loan to a subsidiary - net 5 - - 521,314,087 559,420,897

Amounts due from a subsidiary 5 - - 1,442,187,545 1,501,094,041

Amounts due from related companies - net 5 1,243,923 711,863 - -

Account receivable from assignment of right - net 10 1,547,811,747 1,547,811,747 1,547,811,747 1,547,811,747

Property, plant and equipment - net 11 5,082,215,912 5,662,619,651 3,634,568,307 4,132,810,335

Deferred right to use of equipment - net 12 63,970,852,660 63,522,872,699 63,449,538,573 62,963,451,771

Equipment under installation 273,584,288 337,675,218 273,584,288 337,675,218

Deferred tax assets 22 479,126,152 - 479,126,152 -

Other non-current assets

Goodwill - net 2.2.2 210,273,361 234,497,488 210,273,361 234,497,488

Deposits and prepayment for purchase

and installation of equipment 417,247,396 416,244,819 417,247,396 416,244,819

Others 13 2,036,239,214 2,307,098,364 2,413,017,325 2,889,308,781

TOTAL NON-CURRENT ASSETS 74,349,017,554 74,379,555,763 74,730,077,302 74,947,021,695

TOTAL ASSETS 83,052,157,128 82,317,772,272 83,402,475,738 82,858,855,461

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

BALANCE SHEETSAS AT 31 DECEMBER 2004 AND 2003

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BALANCE SHEETSAS AT 31 DECEMBER 2004 AND 2003(Continued)

(Unit : Baht)


Note 2004 2003 2004 2003

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES

Short-term loans from financial institutions 14 1,200,000,000 500,000,000 1,200,000,000 500,000,000

Accounts payable - trade 15 4,003,692,607 3,667,027,881 4,003,288,462 3,663,360,161

Accounts payable - trade : related parties

Accounts payable - trade : subsidiary 5 - - 5,044,361 5,208,362

Accounts payable - trade : related companies 5 284,086,164 259,184,557 284,086,164 259,184,557

Advances from related parties

Advances from related companies 5 134,796,610 130,340,687 131,879,747 127,423,823

Current portion of long-term loan from a subsidiary 5 - - 448,524,730 429,925,332

Current portion of long-term loans 16 1,590,000,000 - 1,590,000,000 -

Current portion of bonds 17 6,000,000,000 5,875,131,786 6,000,000,000 5,875,131,786

Other current liabilities

Corporate income tax payable 1,400,359,322 198,026,751 1,399,895,932 198,026,751

Excise tax payable 367,606,345 355,189,410 367,606,345 355,189,410

Value added tax payable 6,924,133 - 6,924,133 -

Interest payable 492,764,291 403,713,116 338,044,943 246,898,791

Accrued expenses 719,751,884 835,597,958 708,461,568 823,635,552

Accounts payable - others 494,317,517 673,828,090 494,317,517 669,303,346

Unearned revenue from telephone service - prepaid system 1,481,597,682 1,360,142,481 1,481,597,682 1,360,142,481

Others 163,511,261 180,512,451 155,167,823 172,197,207

TOTAL CURRENT LIABILITIES 18,339,407,816 14,438,695,168 18,614,839,407 14,685,627,559

NON-CURRENT LIABILITIES

Long-term loan from a subsidiary - net of current portion 5 - - 13,183,458,426 13,381,364,003

Long-term loans - net of current portion 16 1,270,500,000 2,860,500,000 1,270,500,000 2,860,500,000

Bonds - net of current portion 17 29,448,700,000 35,448,700,000 16,142,600,000 22,142,600,000

Convertible bonds 18 37,935,000 37,935,000 37,935,000 37,935,000

Deferred tax liabilities 22 - 21,365,186 - 21,365,186

Other non-current liabilities 204,835,116 229,566,863 90,532,320 115,264,067

Provision for loss on investments in subsidiaries 8 - - 311,831,389 333,189,591

TOTAL NON-CURRENT LIABILITIES 30,961,970,116 38,598,067,049 31,036,857,135 38,892,217,847

TOTAL LIABILITIES 49,301,377,932 53,036,762,217 49,651,696,542 53,577,845,406


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BALANCE SHEETSAS AT 31 DECEMBER 2004 AND 2003

(Continued)

(Unit : Baht)


Note 2004 2003 2004 2003

SHAREHOLDERS’ EQUITY

Share capital

Registered

535,001,026 ordinary shares of Baht 10 each 5,350,010,260 5,350,010,260 5,350,010,260 5,350,010,260

Issued and fully paid

474,416,126 ordinary shares of Baht 10 each 4,744,161,260 4,744,161,260 4,744,161,260 4,744,161,260

Premium on ordinary shares 20,808,142,634 20,808,142,634 20,808,142,634 20,808,142,634

Shares of the Company held by a subsidiary 19 (25,400,450) (25,400,450) (25,400,450) (25,400,450)

Unrealised loss on available-for-sale securities 9 (9,906,000) - (9,906,000) -

Retained earnings

Appropriated - statutory reserve 20 535,001,026 535,001,026 535,001,026 535,001,026

Unappropriated 7,698,780,726 3,219,105,585 7,698,780,726 3,219,105,585

8,233,781,752 3,754,106,611 8,233,781,752 3,754,106,611

TOTAL SHAREHOLDERS’ EQUITY 33,750,779,196 29,281,010,055 33,750,779,196 29,281,010,055

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 83,052,157,128 82,317,772,272 83,402,475,738 82,858,855,461


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EARNINGS STATEMENTSFOT THE YEARS ENDED 31 DECEMBER 2004 AND 2003

(Unit : Baht)


Note 2004 2003 2004 2003

REVENUES FROM SALES AND SERVICES

Revenue from telephone services 37,840,901,550 30,521,269,196 37,840,901,550 30,521,269,196

Revenue from sales of telephone sets and starter kits 798,756,517 879,777,589 798,756,517 879,777,589

Revenue from sales of retail goods - 130,517,525 - -

Other operating income 302,943,027 249,047,800 302,287,506 248,195,443

TOTAL REVENUES FROM SALES AND SERVICES 38,942,601,094 31,780,612,110 38,941,945,573 31,649,242,228

COST OF SALES AND SERVICES

Cost of telephone services 22,948,509,446 18,307,544,276 22,952,735,748 18,311,770,578

Cost of sales of telephone sets and starter kits 335,664,893 426,912,280 335,664,893 429,361,372

Cost of sales of retail goods - 128,751,468 - -

TOTAL COST OF SALES AND SERVICES 23,284,174,339 18,863,208,024 23,288,400,641 18,741,131,950

GROSS PROFIT 15,658,426,755 12,917,404,086 15,653,544,932 12,908,110,278

Selling and administrative expenses (6,842,778,331) (6,731,719,860) (6,774,928,974) (6,523,213,461)

OPERATING PROFIT 8,815,648,424 6,185,684,226 8,878,615,958 6,384,896,817

Interest income 20,920,429 22,702,696 20,573,051 22,370,024

Other income 31,691,192 156,077,858 25,857,971 103,624,258

Foreign exchange gain (loss) 50,641,373 144,901,069 (32,644,053) 147,178,804

NET OPERATING PROFIT 8,918,901,418 6,509,365,849 8,892,402,927 6,658,069,903

Share of profit (loss) from investments in subsidiaries

accounted for under equity method - - 15,317,661 (169,946,883)

Share of profit from investment in associated company

accounted for under equity method 2,965,000 41,587,655 2,965,000 41,587,655

EARNINGS BEFORE FINANCIAL COSTS AND INCOME TAX 8,921,866,418 6,550,953,504 8,910,685,588 6,529,710,675

Financial costs 21 (2,473,433,646) (2,806,302,460) (2,469,513,390) (2,793,841,270)

Corporate income tax 22 (1,968,757,631) (1,158,125,567) (1,961,497,057) (1,149,343,928)

NET EARNINGS FOR THE YEAR 4,479,675,141 2,586,525,477 4,479,675,141 2,586,525,477

BASIC EARNINGS PER SHARE (BAHT)

Net earnings 9.44 5.45 9.44 5.45

DILUTED EARNINGS PER SHARE (BAHT)

Net earnings 9.44 5.45 9.44 5.45


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STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE YEARS ENDED 31 DECEMBER 2004 AND 2003

(Uni

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4,47

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44,

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STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED 31 DECEMBER 2004 AND 2003

(Unit : Baht)


Note 2004 2003 2004 2003

Cash flows from (used in) operating activities :

Net earnings 4,479,675,141 2,586,525,477 4,479,675,141 2,586,525,477

Adjustments to reconcile net earnings to net cash

provided by (used in) operating activities :-

Share of loss (profit) from investments in subsidiaries

accounted for under equity method - - (15,317,661) 169,946,883

Share of profit from investment in associated company

accounted for under equity method (2,965,000) (41,587,655) (2,965,000) (41,587,655)

Decrease in allowance for inventory obsolescence (120,146,400) (263,038,256) (120,701,337) (257,101,421)

Decrease in allowance for doubtful accounts :

accounts receivable - trade (263,785,946) (426,706,092) (263,216,489) (423,733,861)

Allowance for doubtful accounts :

advances to related companies - 5,942,273 - 5,942,273


amounts due from related companies - 4,449,539 - -


receivable from fee reduction - TOT 422,914,379 - 422,914,379 -

Increase (decrease) in provision for impairment of fixed assets (7,104,803) 13,894,200 - -

Increase in provision for impairment of other assets - 15,795,688 - -

Reverse provision for impairment of available-for-sale securities - (22,352,000) - (22,352,000)

Depreciation and amortisation 6,348,912,707 5,864,322,536 6,427,457,125 5,930,483,553

Amortisation of goodwill 24,224,127 24,157,940 24,224,127 24,157,940

Amortisation of deferred interest expense on bills of exchange :

long-term loan from a subsidiary - - 205,239,877 203,154,345

Amortisation of premium on forward contracts - - 660,610,166 660,597,207

Fixed assets written-off 3,673,992 13,839,325 3,673,992 2,993,044

Loss (gain) from sales of property, plant, and equipment (5,227,519) 492,494 (5,384,858) (3,754,504)

Increase/decrease in deferred tax assets/liabilities (500,491,338) 249,553,738 (500,491,338) 249,553,738

Unrealised exchange gain/loss : long-term loan to a subsidiary - - 39,445,986 267,807,970

Unrealised exchange gain/loss : long-term loan from a subsidiary - - (35,487,661) (289,415,383)

10,379,679,340 8,025,289,207 11,319,676,449 9,063,217,606

Decrease (increase) in operating assets

Accounts receivable - trade (152,043,623) 893,431,485 (152,644,868) 875,027,716

Accounts receivable - trade : subsidiary - - - 3,922,495

Accounts receivable - trade : associated company (643,238,000) (997,225,532) (643,238,000) (997,225,532)

Accounts receivable - trade : related companies (27,199) 6,156,265 (27,199) 6,156,265

Advances to subsidiaries - - (1,949,344) 18,921,858

Advances to associated company 1,821,560 (4,319,315) 1,821,560 (4,319,315)

Advances to related companies 4,206,482 (10,703,020) 4,206,482 (12,122,126)

Inventories 53,836,777 479,389,825 53,836,777 451,043,941

Other current assets 108,811,303 756,532,817 101,266,717 753,218,663


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STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED 31 DECEMBER 2004 AND 2003

(Continued)

(Unit : Baht)


Note 2004 2003 2004 2003

Increase (decrease) in operating liabilities

Accounts payable - trade 210,456,495 (296,997,911) 213,720,071 (267,296,079)

Accounts payable - trade : subsidiaries - - (164,001) (9,949,701)

Accounts payable - trade : associated company - (31,512,485) - -

Accounts payable - trade : related companies 24,901,607 33,397,238 24,901,607 33,397,238

Advances from associated company - (20,063,387) - (20,063,387)

Advances from related companies 4,455,924 (107,167,563) 4,455,924 (106,703,670)

Other current liabilities 1,119,822,178 1,505,591,058 1,126,622,405 1,535,175,989

Other non-current liabilities (24,731,747) (611,117,141) (24,731,747) (611,117,141)

Net cash from operating activities 11,087,951,097 9,620,681,541 12,027,752,833 10,711,284,820

Cash flows from (used in) investing activities :

Decrease in deposits with maturity of more than 3 months

or have commitment 177,400 32,396,457 - -

Dividend income from associated company 12,500,000 - 12,500,000 -

Decrease (increase) in other long-term investments (17,387) (133,423) 62,846 56,164

Decrease in amounts due from a subsidiary - - 58,906,496 59,649,097

Decrease (increase) in amounts due from related companies (532,060) 201,884 - 256,687

Acquisition of property, plant and equipment (469,187,095) (792,143,807) (469,187,095) (790,188,585)

Proceed from sales of property, plant and equipment 9,194,208 12,952,662 9,053,179 12,860,699

Acquisition of deferred right to use of equipment

and equipment under installation (4,841,692,688) (8,018,314,229) (4,841,692,688) (8,018,314,229)

Decrease (increase) in deposits and prepayment for purchase

and installation of equipment (1,002,577) 129,782,500 (1,002,577) 129,782,500

Increase in other non-current assets 538,486,969) (639,249,519) (538,674,068) (622,421,727)

Net cash used in investing activities (5,829,047,168) (9,274,507,475) (5,770,033,907) (9,228,319,394)

Cash flows from (used in) financing activities :

Increase (decrease) in short-term loans from financial institutions 700,000,000 (501,698,630) 700,000,000 (501,698,630)

Repayment of long-term loan from a subsidiary - - (1,009,668,561) (1,099,123,267)

Drawn down of long-term loans - 6,241,231,839 - 6,241,231,839

Repayment of long-term loans - (8,791,617,448) - (8,791,617,448)

Proceeds from issuance of bonds - 9,000,000,000 - 9,000,000,000

Repayment of bonds (5,875,131,786) (6,125,108,214) (5,875,131,786) (6,125,108,214)

Net cash used in financing activities (5,175,131,786) (177,192,453) (6,184,800,347) (1,276,315,720)

Net increase in cash and cash equivalents 83,772,143 168,981,613 72,918,579 206,649,706

Cash and cash equivalents at beginning of year 1,665,707,628 1,496,726,015 1,617,588,390 1,410,938,684

Cash and cash equivalents at end of year (Note 23) 1,749,479,771 1,665,707,628 1,690,506,969 1,617,588,390

- - - -

Supplemental cash flow information :-

Cash paid during the year for :-

Interest expenses 2,292,070,741 2,452,680,308 2,080,436,146 2,228,200,706

Corporate income tax 1,269,911,328 1,101,347,409 1,260,119,215 1,086,561,455


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NOTES TO FINANCIAL STATEMENTSFOR THE YEARS ENDED 31 DECEMBER 2004 AND 2003

1. BASIS OF CONSOLIDATION

The consolidated financial statements include the financial statements for the years ended 31 December 2004 and2003 of Total Access Communication Public Company Limited (“the Company”) and the following subsidiaries :-

Percentage of shareholding Nature of business2004 2003

Subsidiaries directly held by the CompanyWorldPhone Shop Company Limited 100 100 Operated franchised retail stores (ceased

operations in June 2003)TAC Property Company Limited 100 100 Asset managementTAC Investment Limited 100 100 Holding company (registered in Western

Samoa and financial statementspresented in US dollars)

TAC Service Company Limited 100 100 Provided customer services for pagingcustomers (ceased operation in 2001)

Subsidiaries held through TAC Property Company LimitedEastern Beach Company Limited 100 100 Land developmentTAC Finance Company B.V. 100 100 Finance company (registered in

Netherlands and financial statementspresented in US dollars)

Viphavadee Office Building Company Limited 100 100 Property development (office building)

Material intercompany balances and transactions are eliminated from the consolidated financial statements. The book valueof investments in subsidiaries in the Company’s financial statements and the shareholdersí equity of the subsidiaries areeliminated from the consolidated financial statements.

Assets and revenues of the Company which are included in the consolidated financial statements constitute approximately98 and 100 percent of the consolidated totals, respectively (2003 : 97 and 100 percent, respectively).

The financial statements of two subsidiaries, Viphavadee Office Building Co., Ltd. and WorldPhone Shop Co., Ltd., whichhad combined assets as at 31 December 2004 of Baht 342 million (2003 : Baht 341 million), and combined operatingrevenues and combined net earnings for the year ended 31 December 2004 of Baht 13 million (2003 : Baht 133 million) andBath 3 million (2003 : Net loss of Baht 91 million), respectively, included in the consolidated financial statements, withcombined provisions for loss on investments of Baht 335 million as at 31 December 2004 (2003 : Baht 320 million),accounted for under the equity method. The financial statement of these subsidiaries were audited by other auditors. Theamounts included for these subsidiaries in the consolidated financial statements and the Company’s financial statementsare based solely on the report of the other auditors.

2. GENERAL INFORMATION

2.1 The Company’s general informationThe Company was incorporated as a public company limited under the laws of Thailand and listed on the StockExchange of Singapore in 1995. The Company operates its business in Thailand and is principally engaged in theprovision of wireless telecommunications services and the distribution of handsets and accessories.

The Company’s registered address is 333/3 Chai Building, Vibhavadi Rangsit Road, Ladyao, Chatuchak, Bangkok.

2.2 Agreements to operate cellular telephone services2.2.1 On 14 November 1990, the Company entered into an agreement with the Communications Authority of

Thailand, now CAT Telecom Public Company Limited, (“CAT”) to provide cellular telephone services. Underthe Cellular Telephone Service Agreement with CAT (“the Concession”), the Company has an obligation totransfer operating assets to CAT free of charge. The value added tax imposed on the transfer of theseassets has been charged to CAT and recorded as “Value added tax refundable from CAT” in the balance sheet.

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The Concession originally covered a 15-year period but the agreement was amended on 23 July 1993 and22 November 1996 when the Concession period was extended to 22 years and 27 years, respectively.The service rates and fees charged to subscribers are subject to approval by CAT. The Company is obligedto comply with various conditions and pay fees in accordance with the Concession.

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

(Unit : Million Baht)Percentage of

Year revenues per annum Minimum Annual Payment1 - 4 12 22 to 154

5 25 3536 - 15 20 382 to 603

16 - 20 25 748 to 77021 - 27 30 752 to 1,200

The Company commenced commercial operations on 16 September 1991.

2.2.2 On 9 November 1995, the Company entered into an agreement with the Telephone Organizationof Thailand, now TOT Corporation Public Company Limited, (“TOT”) to allow TOT to hold ordinary sharesof the Company. The Company issued 42,829,050 new shares to TOT at a par value of Baht 10 each.TOT was not required to pay for the shares as the Company deemed the transaction to be beneficial to itsinterests and, therefore the cost of the shares was recorded as ìGoodwillî and is amortised over theconcession period.

As a result of the joint interest, TOT and CAT agreed to reduce fees payable by the Company, with thereduction being made to the fee paid by the Company to CAT (in the proportion that CAT paid to TOT)under the Concession as follows :-

(Unit : Million Baht)Year ended Annual Fee Reduction on Access Charges

15 September 1995 17315 September 1996 45515 September 1997 662

15 September 1998 to 2011 827 (per year)15 September 2012 57915 September 2013 248

This agreement provides that if TOT wishes to sell the shares within 3 years from the date of acquisition,the Company is required to find parties to acquire the shares from the TOT, at the price specified in theagreement.

On 22 September 1998, TOT instructed the Company to arrange for the sale of its shares in accordancewith the agreement. Since then the Company has and will continue to consider appropriate action tosatisfy this requirement.

2.2.3 Assignment of Airtime Provider Agreement with The International Engineering Public Company Limited.

On 10 April 1998, the Company entered into the “Airtime Provider Agreement” with The InternationalEngineering Public Company Limited (“IEC”), to assign to IEC the right to operate as an airtime provider fora cellular telephone service for a period of 17 years commencing from the date following the date of theagreement. IEC is to receive a fee based on a percentage of revenues from its telephone services.


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Under amendment No. 3 of the “Airtime Provider Agreement” dated 21 March 2002, IEC is to be responsiblefor any bad debts arising from the provision of telephone services, as per invoices issued by the Companyto customers, in proportion to the revenue received by IEC or based on the terms stipulated in the agreement.

2.2.4 Assignment of a certain portion of rights and obligations under an agreement to operate cellular telephoneservices with Digital Phone Company Limited.

On 19 November 1996, the Company, CAT and Digital Phone Company Limited (“DPC”) entered into anagreement to assign a certain portion of rights and obligations under the Agreement to Operate CellularTelephone Services. With the consent of CAT, the Company assigned and transferred to DPC a certainportion of the Companyís rights and obligations to operate a cellular telephone service (Digital PCN 1800).The Company agreed to terminate an earlier Agreement on the Appointment of Agent to provide thecellular telephone service (Digital PCN 1800) (the Service Provider Agreement) with Samart CorporationPublic Company Limited (“Samart”) prior to 16 March 1998 or on such earlier date that DPC commencedcommercial operations.

On 7 January 1997, the Company, Samart and DPC entered into a Shareholders Agreement, the Unwindthe Service Provider Agreement and other relevant agreements which include the following conditions :-

(a) The Company will receive approximately Baht 5,400 million from DPC as consideration for allowingDPC to use the Companyís network and facilities and the transfer to DPC of a certain portion the rightsand obligations to operate the cellular telephone service. The Company recognises this amount inthe earnings statement as a reduction against cost of providing service evenly over the remainingconcession period.

(b) The Company had to pay approximately Baht 1,238 million to Samart, representing the advancereceived from Samart under the Service Provider Agreement, due to the termination of that agreement.

(c) The Company received payment from Samart based on its net operating profits earned as serviceprovider until the effective termination date of the Service Provider Agreement. The Company recognisedthe amount in the earnings statements as other income in 1997 and 1998.

On 9 October 1998, the Company entered into an Amendment Agreement to the Unwind Agreement toreceive early payment of certain amounts before the repayment date in the Unwind Agreement in return fora discount on the consideration due of approximately USD 10 million and rescheduled the repayment ofthe balance of the consideration.

DPC commenced commercial operation of a cellular telephone service on 16 March 1998.

2.3 Excise taxOn 28 January 2003, the Ministry of Finance announced the introduction of an excise tax for telecommunicationbusinesses which requires excise tax to be paid on mobile telecommunication services, at a rate of 10 percent ofrevenue from telecommunications services. This tax can be deducted from fees to be paid to CAT, as described inNote 2.2.1 to the financial statements, and is payable to the Excise Department on a monthly basis.

3. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared in accordance with the Thai accounting standards pronounced by theInstitute of Certified Accountants and Auditors of Thailand and with the Accounting Act B.E. 2543.

Significant accounting policies adopted by the Company and subsidiaries are summarised below :-

3.1 Revenue recognitionRevenue from telephone services are recognised when services have been rendered. Revenues from sales are theinvoiced value of goods supplied after deducting discounts. Other service income is recognised when service hasbeen rendered. Revenue is shown excluding value added tax.


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3.2 InvestmentsInvestments in subsidiaries (in the financial statements of the Company only) are accounted for under the equitymethod. Losses in excess of costs of investments and outstanding receivable are presented as liabilities under thecaption “Provision for loss on investments in subsidiaries”.

Other long-term investments in marketable securities which the Company intends to hold as available-for-sale, arestated at fair value. Gain or loss arising from changes in the value of such investment is separately shown inshareholders’ equity under the caption “Unrealised gain/loss on changes in the value of investments in available-for-sale securities” until securities are sold, the change shall be included in determining earnings.

Other long-term investments in non-marketable equity securities, which the Company holds as other investments,are stated at cost.

Loss on impairment of other long-term investments are recognised in the earnings statements when there ispermanent diminution in value of the investments. Previously recognised impairment losses of other long-terminvestments are reversed when there is a change in the estimates used to determine the impairment loss. Thecarrying amount of the investment is increased to its recoverable amount, not exceeding the carrying amount thatwould have resulted had no impairment loss been recognised in prior years. The reversal of an impairment loss isrecognised in income immediately.

3.3 InventoriesInventories are valued at the lower of cost (moving average basis) and net realisable value.

3.4 Trade accounts receivable and allowance for doubtful accountsTrade accounts receivable are stated at their net realisable value. Allowance for doubtful accounts is provided forestimated losses that may be incurred in the collection of receivables. The allowance is based on collectionexperience and the current status of receivables outstanding at the balance sheet date.

3.5 Property, plant and equipment/depreciationProperty is stated at cost. Plant and equipment are stated at cost less accumulated depreciation. The cost of anasset comprises its purchase price and any directly attributable costs of bringing the asset to working condition forits intended use. Expenditure for additions, improvements and renewals are capitalised, while expenditures formaintenance and repairs are charged to the earnings statements. When assets are sold or retired, their cost andaccumulated depreciation are removed from the accounts and any gain or loss resulting from their disposal isincluded in the earnings statements.

Depreciation of buildings and equipment is calculated by reference to their cost on a straight-line basis over thefollowing estimated useful lives :-

Buildings 20 yearsBuilding improvement 5 - 20 yearsLeasehold right over the period of leaseEquipment for supporting Cellular

Telephone Services Concession period and 10 yearsCell site improvement 20 yearsOthers 3 years and 5 years

No depreciation is provided for land, building in progress, work in progress and equipment under installation.

3.6 AmortisationDeferred right to the use of equipment is amortised on a straight-line basis over the Concession period.

Deferred charges, which are mainly expenditures relating to transmission facilities, software fees, loan arrangementfees, bond underwriting fees and fees for extension of loan agreements are amortised on a straight-line basis overperiods of 2 to 10 years or the Concession period.


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3.7 Deferred income tax assets/liabilitiesDeferred income tax assets/liabilities are recognised for temporary differences arising between the tax bases ofassets and liabilities and their carrying amounts for financial reporting purposes as at the balance sheet date. Thiswill be realised in future periods when the income is realised, or the expenses provided for, are actually incurred andconsidered deductible for income tax purposes.

Deferred income tax assets are recognised for deductible temporary differences if it is highly probable that theCompany will generate sufficient taxable profits from its future operations to utilise these assets.

Deferred income tax liabilities are recognised for all payable temporary differences.

Deferred tax assets and liabilities are calculated based on the tax rate that are expected to apply to the periodwhen the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted orsubstantively enacted by the balance sheet date.

(This accounting policy is in accordance with the accounting standard pronounced by the Institute of CertifiedAccountants and Auditors of Thailand but not yet effective under the Accounting Act B.E. 2543.)

3.8 Unearned revenue from telephone service - prepaid systemUnearned revenue from telephone service - prepaid system represents the unused portion of the face value of soldout voucher cards for telephone services and is presented net of related deferred costs.

3.9 Foreign currenciesForeign currency transactions incurred during the year are translated into Thai Baht at exchange rates prevailing onthe transaction date. Assets and liabilities denominated in foreign currency outstanding at the balance sheet dateare translated into Thai Baht at the exchange rates prevailing on the balance sheet date, with the exception ofthose covered by forward exchange contracts which are accounted for at the contracted rates. Exchange gainsand losses are included in the earnings statements.

Discounts or premiums, the difference between the spot exchange rate and the forward exchange rate at theinception of the contract, are deferred and amortised to earnings over the contract period using the straight-linemethod.

3.10 Earnings per shareBasic earnings per share is calculated by dividing the net earnings for the year by the weighted average number ofordinary shares in issue during the year.

Diluted earnings per share is calculated by dividing net earnings for the year, after adjusting for the effect oftransactions with dilutive potential to ordinary shares, by the total sum of the weighted average number of ordinaryshares in issue during the year and the weighted average number of ordinary shares to be issued for conversion ofall dilutive potential ordinary shares into ordinary shares.

3.11 Use of accounting estimatesPreparation of financial statements in conformity with generally accepted accounting principles requiresmanagement to make estimates for certain accounting transactions, affecting amounts reported in the financialstatements and notes related thereto. Subsequent actual results may differ from these estimates.


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4. ACCOUNTS RECEIVABLE - TRADE

(Unit : Baht)Consolidated Company Only

2004 2003 2004 2003

Accounts receivable - telephone services 2,282,423,888 2,144,977,672 2,282,423,888 2,144,977,672Accounts receivable - international

telephone roaming services 545,176,343 553,245,684 545,176,343 553,245,684Accounts receivable - sales of

telephone sets and starter kits 44,351,385 33,971,134 29,909,552 19,529,301Accounts receivable - others 74,918,539 62,632,042 36,023,683 23,135,941Total 2,946,870,155 2,794,826,532 2,893,533,466 2,740,888,598Less : Allowance for doubtful accounts (617,048,248) (880,834,194) (563,711,559) (826,928,048)Accounts receivable - trade, net 2,329,821,907 1,913,992,338 2,329,821,907 1,913,960,550

Aging of accounts receivable - telephone services are as follows :-

(Unit : Thousand Baht)Consolidated/Company Only

2004 2003

Less than 1 month 1,627,473 1,565,6021 month to 3 months 143,891 101,2533 months to 5 months 119,411 87,643Over 5 months 391,649 390,480Total 2,282,424 2,144,978Less : Allowance for doubtful accounts (554,764) (816,487)Accounts receivable - telephone services, net 1,727,660 1,328,491

The Company has set up allowance for doubtful accounts based on collection experience. The Company establishesthe allowance for doubtful accounts at the period-end at a certain percentage of revenue from telephone services, toprovide against the balance of all accounts receivable - telephone services in each aging period on a progressive basis.

Aging of accounts receivable - international telephone roaming services are as follows :-


2004 2003

Less than 1 month 522,899 514,5531 month to 3 months 13,117 26,6443 months to 5 months 2,145 1,737Over 5 months 7,015 10,312Accounts receivable - international telephone roaming services 545,176 553,246


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5. RELATED PARTY TRANSACTIONS

The Company and its subsidiaries enter into business transactions with each other and with associated and relatedcompanies, principally in respect of the purchase and sales of goods, the rendering and receiving of services, cashadvances and loans. These companies are related through shareholding and directorships. Such transactions, whichhave been concluded on terms and condition determined by the Company and those related companies and which arein the normal course of business, are summarised below :-

(Unit : Million Baht)Consolidated Company Only Pricing Policy

2004 2003 2004 2003

Transactions with subsidiaries (eliminated from the consolidated financial statements)Sales of goods - - - 3 market priceService expenses - - 77 70 cost plus a certain marginInterest expense - - 207 203 Note 5.4

Transactions with associated company : United Distribution Business Co., Ltd.Sales of goods 18,080 13,858 18,080 13,858 selling price less a certain marginDividend income 13 - 13 -Purchases of goods 311 259 311 201 cost plus a certain margin

Transactions with related company : United Communication Industry Plc. ( “UCOM” )Service expenses 598 610 598 610 as per agreement

Transactions with other related companiesService expenses 13 84 13 84 as per agreementService fees for installation of cell site equipment 840 1,368 840 1,368 as per agreementManagement fee 44 157 44 157 as per agreement

The significant outstanding balances arising from the above transactions, as separately presented in the balance sheets,comprise the following :-


2004 2003 2004 2003

Accounts receivable - trade : subsidiaryWorldPhone Shop Co., Ltd. - - 199,503,476 199,503,476Less : Allowance for doubtful accounts (Note 8) - - (199,503,476) (199,503,476)Total accounts receivable - trade : subsidiary, net - - - -

Accounts receivable - trade : associated companyUnited Distribution Business Co., Ltd. (Note 5.1) 3,254,801,849 2,611,563,849 3,254,801,849 2,611,563,849Total accounts receivable - trade : associated company 3,254,801,849 2,611,563,849 3,254,801,849 2,611,563,849

Advances to subsidiariesWorldPhone Shop Co., Ltd. - - 21,656,882 17,312,492TAC Service Co., Ltd. - - 55,661,764 61,030,712Others - - 3,414,087 440,185Less : Allowance for doubtful accounts - - (108,026) (108,026)Allowance for doubtful accounts (Note 8) - - (35,751,395) (32,165,909)Total advances to subsidiaries - net - - 44,873,312 46,509,454


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Advances to associated companyUnited Distribution Business Co., Ltd. 2,497,755 4,319,315 2,497,755 4,319,315Total advances to associated company 2,497,755 4,319,315 2,497,755 4,319,315

Advances to related companiesAdvances to related companies 7,915,644 12,122,126 7,915,644 12,122,126Less : Allowance for doubtful accounts (5,942,273) (5,942,273) (5,942,273) (5,942,273)Total advances to related companies - net 1,973,371 6,179,853 1,973,371 6,179,853

Long-term loan to a subsidiaryTAC Investment Ltd. (Note 5.2) - - 965,215,653 1,004,661,639Less : Allowance for doubtful accounts (Note 8) - - (443,901,566) (445,240,742)Total long-term loan to a subsidiary - net - - 521,314,087 559,420,897

Amounts due from a subsidiaryTAC Property Co., Ltd. (Note 5.3) - - 1,442,187,545 1,501,094,041Total amounts due from a subsidiary - - 1,442,187,545 1,501,094,041

Amounts due from related companiesAmounts due from related companies 167,484,873 166,952,813 - -Less : Allowance for doubtful accounts (166,240,950) (166,240,950) - -Total amounts due from related companies - net 1,243,923 711,863 - -

Accounts payable - trade: subsidiaryTAC Property Co., Ltd. - - 5,044,361 5,208,362Total accounts payable - trade : subsidiaries - - 5,044,361 5,208,362

Accounts payable - trade: related companiesUnited Communication Industry Plc. 147,504,999 94,245,574 147,504,999 94,245,574United Telecom Sales and Services Co., Ltd. 136,581,165 157,941,625 136,581,165 157,941,625Others - 6,997,358 - 6,997,358Total accounts payable - trade :related companies 284,086,164 259,184,557 284,086,164 259,184,557

Advances from related companiesTelenor Asia Pte. Ltd. 123,735,992 116,906,660 123,735,992 116,906,660Others 11,060,618 13,434,027 8,143,755 10,517,163Total advances from related companies 134,796,610 130,340,687 131,879,747 127,423,823

Long-term loan from a subsidiaryTAC Finance Company B.V. (Note 5.4) - - 13,631,983,156 13,811,289,335Less : current portion - - (448,524,730) (429,925,332)Long-term loan from a subsidiary - net of current portion - - 13,183,458,426 13,381,364,003


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5.1 Aging of account receivable - trade : associated company are as follows :-


2004 2003

Less than 1 month 3,248,802 2,610,0021 month to 3 months - -3 months to 5 months - 1,562Over 5 months 6,000 -Account receivable - trade : associated company 3,254,802 2,611,564

5.2 The long-term loan to TAC Investment Limited (a subsidiary), amounting to USD 75 million (2003 : USD 75 million),is a loan for the purchase of the Company’s shares with interest charged at SIBOR. The amount has been shownnet of cost of treasury stock bought by the subsidiary of Baht 1,973 million.

5.3 The amount due from TAC Property Co., Ltd. (a subsidiary) comprises receivables arising from sales of equipmentto support cellular telephone services. There is no fixed term for repayment and no interest is charged.

5.4 As at 31 December 2004 and 2003, “Long-term loan from a subsidiary” represented a loan from TAC FinanceCompany B.V. (a subsidiary) in the form of bills of exchange. During 2002, the Company issued bills of exchangeamounting to JPY 42,984 million to a foreign bank at a price of JPY 39,871 million. The proceeds were used toearly-redeem the original bills of exchange with a consequent loss and recorded this as “Deferred loss as a resultof early redemption of bills of exchange” in the Company’s financial statements, as presented in Note 13 to thefinancial statements, with no effect to the net earnings of the consolidated financial statements. In December 2002,the foreign bank subsequently sold the bills to TAC Finance Company B.V.

The net value of the bills outstanding as at 31 December 2004 was JPY 38,426 million (2003 : JPY 39,181 million).These bills are to be repaid between 2005 and 2008. The Company and the subsidiary entered into variousforward exchange contracts with a foreign financial institution to hedge the exchange rate risk.

6. INVENTORIES


2004 2003 2004 2003

Inventories 314,135,406 387,073,078 312,605,241 366,442,018Less : Allowance for inventory

obsolescence (195,295,942) (334,543,237) (193,765,777) (314,467,114)Inventories - net 118,839,464 52,529,841 118,839,464 51,974,904


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7. OTHER CURRENT ASSETS


2004 2003 2004 2003

Withholding tax deducted at source 7,551,605 12,551,718 - -Value added tax refundable 79,809,910 79,630,343 71,696,453 71,533,957Value added tax refundable from CAT - 23,662,037 - 23,662,037Prepaid expenses 51,822,369 126,385,341 51,822,369 126,321,338Prepaid rental - land for cell sites 149,702,396 127,828,486 149,702,396 127,828,486Accounts receivable - Revenue Department 6,132,637 35,925,082 - 25,897,293Receivable from fee reduction - TOT, net 629,000,046 1,051,914,425 629,000,046 1,051,914,425Account receivable - CAT 237,959,748 144,459,493 237,959,748 144,459,493Others 95,412,908 93,260,121 88,849,598 88,094,422Total 1,257,391,619 1,695,617,046 1,229,030,610 1,659,711,451Less : Provision for impairment of assets (11,719,361) (11,719,361) - -Total other current assets - net 1,245,672,258 1,683,897,685 1,229,030,610 1,659,711,451

Receivable from fee reduction - TOT consists of :


2004 2003

Receivable from fee reduction on access charges for the concession periods ended :-

15 September 1997 (Note 7.1) 103,944 103,944 15 September 1998 (Note 7.1) 195,073 195,073 15 September 1999 (Note 7.1) 211,258 211,258 15 September 2000 (Note 7.1) 34,881 34,881 15 September 2003 (Note 7.2) 809,364 809,364 15 September 2004 (Note 7.2) 242,550 242,550

Receivable from fee reduction 1,597,070 1,597,070Less : Allowance for doubtful accounts (968,070) (545,156)Receivable from fee reduction - net 629,000 1,051,914

7.1 The Baht 545 million receivable from the fee reductions for the Concession periods between 1997 and 2000 hasnot yet been paid and the Company is negotiating over this amount with TOT. Full provision has been establishedfor these receivables since 2001.

7.2 In December 2003, the Company received Baht 18 million of the fee reduction on access charges paid for theConcession year ended 15 September 2003 (Note 2.2.2). The balance of Baht 809 million has not yet beenreceived from TOT. The Company received the fee reduction of only Baht 18 million due to a change in the calculationmethodology adopted by CAT of the amount of access charges it pays to TOT as a result of the introduction of theexcise tax for telecommunication businesses in 2003 (Note 2.3).


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As at 31 December 2004, the outstanding balances of fee reduction on access charges paid for the Concessionyears ended 15 September 2003 and 15 September 2004 amount to Baht 809 million and Baht 242 million,respectively (a total of Baht 1,051 million). The Company has provided an allowance of Baht 423 million againstthese fee reductions. As the matter is in dispute, since 1 January 2004 the Company has ceased recognising thefee reductions on access charges receivable in accordance with the agreement made with TOT until such time asthe Company, CAT and TOT agree upon a calculation methodology for the amount of access charge that CAT hasto pay to TOT or find the solution to settle this dispute and if the Company and TOT cannot find the solution tosettle this dispute the Company will consider to submit this dispute to the arbitration process.

8. INVESTMENTS ACCOUNTED FOR UNDER EQUITY METHOD

Company Only

Paid-up share Percentage ofcapital shareholding Investments at cost Investments at equity

2004 2003 2004 2003 2004 2003 2004 2003Million Baht Million Baht Percent Percent Baht Baht Baht Baht

Investments in subsidiaries accounted for under equity method

Subsidiaries directly held by the Company

WorldPhone Shop Co., Ltd. 450 450 100 100 449,999,650 449,999,650 (220,500,872) (221,764,830)

TAC Investment Ltd. - - 100 100 25 25 (443,901,566) (445,240,742)

TAC Service Co., Ltd. 20 20 100 100 19,998,600 19,998,600 (11,447,938) (14,521,258)

TAC Property Co., Ltd. 1 1 100 100 999,930 999,930 20,637,229 24,431,460

Subsidiaries held through TAC Property Co., Ltd.

Eastern Beach Co., Ltd. 80 80 100 100 - - (17,089,353) (17,058,134)

TAC Finance Company B.V. 0.5 0.5 100 100 - - (183,166,963) (212,952,638)

Viphavadee Office Building Co., Ltd.208.6 208.6 100 100 - - (114,881,134) (98,562,116)

Investments in subsidiaries accounted for under equity method - net 470,998,205 470,998,205 (970,350,597) (985,668,258)

Presented as - Investments in subsidiaries accounted for under equity method 20,637,229 24,431,460

- Provision for loss on investments in subsidiaries (311,831,389) (333,189,591)

- Allowance for doubtful accounts on accounts receivable - trade : subsidiary (Note 5) (199,503,476) (199,503,476)

- Allowance for doubtful accounts on advance to subsidiaries (Note 5) (35,751,395) (32,165,909)

- Allowance for doubtful accounts on long-term loan to a subsidiary (Note 5) (443,901,566) (445,240,742)

Total (970,350,597) (985,668,258)

On 12 November 2004, the Board of Directors Meeting No. 5/2004 passed a resolution approving the dissolution ofTAC Investment Limited (a subsidiary company).

Consolidated/Company Only

Percentageof shareholding Investments at cost Investments at equity

2004 2003 2004 2003 2004 2003Percent Percent Baht Baht Baht Baht

Investment in associated company accounted for under equity method

United Distribution Business Co., Ltd. 25 25 50,000,000 50,000,000 101,123,039 110,658,039

Investment in associated company accounted for under equity method 50,000,000 50,000,000 101,123,039 110,658,039


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9. OTHER LONG-TERM INVESTMENTS


2004 2003 2004 2003

Available-for-sale securitiesMarketable equity securitiesThe International Engineering Plc. 127,000,000 127,000,000 127,000,000 127,000,000Less : Provision for impairment loss (97,282,000) (97,282,000) (97,282,000) (97,282,000)Less : Unrealised loss on available-for-sale securities (9,906,000) - (9,906,000) -Available-for-sale securities - net 19,812,000 29,718,000 19,812,000 29,718,000

Debt securities 636,253 699,099 636,253 699,099

Other investmentsDigital Phone Co., Ltd. 197,600,000 197,600,000 197,600,000 197,600,000Other companies 72,653,486 72,573,253 56,933,381 56,933,381Less : Provision for impairment loss (65,733,381) (65,733,381) (55,333,381) (55,333,381)Other companies - net 6,920,105 6,839,872 1,600,000 1,600,000Total other investments 204,520,105 204,439,872 199,200,000 199,200,000Total other long-term investments 224,968,358 234,856,971 219,648,253 229,617,099

10. ASSIGNMENT OF RIGHTS AND OBLIGATIONS UNDER THE AGREEMENT TO OPERATE CELLULAR TELEPHONE SERVICES

The Baht 1,548 million balance of ìAccount receivable from assignment of right - netî represents the considerationreceivable from DPC as a result of the Companyís permitting DPC to use the Company’s network and facilities andtransferring to DPC part of the rights and obligations to operate cellular telephone services, discussed in Note 2.2.4 (a)to the financial statements, together with related accrued interest, less the balance of “Advance received - other” (whichrepresents unearned income from DPC) and less provision for loss. The consideration receivable from the assignmentof right is secured by a portion of the rights and obligations under DPCís agreement to operate cellular telephoneservices. (although if DPC defaults, the return of certain rights and obligations to the Company would have to beapproved by CAT).

As at 31 December 2004, the Company has an outstanding account receivable from the assignment of rights amountingto USD 105.4 million converted using an exchange rate based on the lower of Baht 38.57 per USD 1 or the averageprevailing exchange rate quoted by the Bank of Thailand at the date specified in the agreement. The balance is due forrepayment during 2002 to 2005, and earns interest at a rate of 9.50 percent per annum. However, the Company has notreceived the amounts due to be paid by DPC on 30 September 2002, 30 September 2003 and 30 September 2004and related accrued interest together totaling USD 69 million. As discussed in Note 26.2 (a) to the financial statements,during 2003 the Company has submitted the dispute in relation to the default payments by DPC on 30 September 2002and 30 September 2003 together totaling USD 34 million to the Arbitration Office and called for settlement of theamounts now due. The Company’s management believes that the outcome of the arbitration process is unlikely tomaterially affect the financial position of the Company. In addition, DPC again defaulted on payment of the considerationreceivable and related accrued interest amounting to USD 35 million due on 30 September 2004 and the Company isin the process of asking DPC to make payment. If DPC fails to make payment as request the Company will considersubmitting this dispute to arbitration.


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12. DEFERRED RIGHT TO USE OF EQUIPMENT

Deferred right to use of equipment represents the cost of tools and equipment for providing cellular telephone servicesthat are required to be procured by the Company and transferred to CAT under the Concession from CAT outlined inNote 2.2.1 to the financial statements. Ownership of the tools and equipment is transferred to CAT at the date ofcommencing service or when the equipment was put into use.

The cost of such tools and equipment is deferred and amortised over the Concession period.Deferred right to use of equipment consists of the following :-


2004 2003 2004 2003

Deferred right to use of equipment 88,833,706,844 83,895,215,251 88,008,266,844 83,069,775,251Less : Accumulated amortisation (24,862,854,184) (20,372,342,552) (24,558,728,271) (20,106,323,480)Net deferred right to use of equipment 63,970,852,660 63,522,872,699 63,449,538,573 62,963,451,771

Amortisation included in the earnings statements 4,490,511,632 4,138,636,675 4,452,404,791 4,100,633,953

13. OTHER NON-CURRENT ASSETS


2004 2003 2004 2003

Deferred expenses - net 913,853,814 894,347,275 900,694,074 873,326,094Deferred expenses on transmission

facilities - net 450,464,861 643,268,248 450,464,861 643,268,248Deferred loss as a result of early redemption

of bills of exchange - net (Note 5.4) - - 390,214,989 603,695,836Deferred underwriting fees for bonds

and convertible bonds - net 77,209,359 116,507,864 77,209,359 116,507,864Deferred arrangement fees for loans - net 350,543,968 486,557,751 350,543,968 486,557,751Deposits 242,396,651 162,222,440 242,123,513 161,762,202Others 1,770,561 4,194,786 1,766,561 4,190,786Total other non-current assets 2,036,239,214 2,307,098,364 2,413,017,325 2,889,308,781

Amortisation includedin the earnings statements 809,346,120 861,154,439 1,014,965,525 1,059,084,416

14. SHORT-TERM LOANS FROM FINANCIAL INSTITUTIONS

As at 31 December 2004, short-term loans from financial institutions represent loans in the form of promissory noteswhich mature in February 2005.


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15. ACCOUNTS PAYABLE - TRADE


2004 2003 2004 2003

Accounts payable for the purchase of cell site equipment 1,549,925,422 1,517,217,447 1,549,925,422 1,517,217,447Accounts payable - CAT 588,936,465 537,650,351 588,936,464 537,650,351Accounts payable - TOT 1,401,751,427 1,284,840,531 1,401,751,427 1,284,840,531Others 463,079,293 327,319,552 462,675,148 323,651,832Total accounts payable - trade 4,003,692,607 3,667,027,881 4,003,288,462 3,663,360,161

16. LONG-TERM LOANS


2004 2003

Loan from Nordic Investment Bank (Note 16.1) 1,270,500,000 1,270,500,000Bills of exchange (Note 16.2) 1,590,000,000 1,590,000,000Total 2,860,500,000 2,860,500,000Less : Current portion (1,590,000,000) -Long-term loans - net of current portion 1,270,500,000 2,860,500,000

16.1 On 27 June 2002 the Company entered into a Facility Agreement with Nordic Investment Bank.The principal terms of this facility are :

Facility : USD 30 millionInterest rate : LIBOR plus 1.15 percent per annumInterest period : every six monthsPrincipal repayment schedule : 8 equal semi-annual installments in the amounts and in the

periods stipulated in the agreement during 2006 to 2010.

In order to hedge the foreign exchange rate and interest rate risks associated with the above loan, the Companyentered into currency swap agreement with a foreign financial institution to swap the above loan to a Baht 1,270million loan, with a floating Baht interest rate as stipulated in the agreement. The possible future financial impactof this agreement is reflected in the fair value of derivative instruments estimates provided in Note 24.5 to thefinancial statements.

This agreement contains covenants relating to various matters such as the maintenance of financial ratio,restrictions on incurring indebtedness and creating or permitting the subsistence of security interest on propertyand assets, a prohibition on making loans or granting guarantees except under certain conditions, andrestrictions on the payment of dividends.

16.2 On 15 August 2003, the Company issued Baht 1,590 million bills of exchange, comprising:- Bills of exchange of Baht 1,490 million bearing interest at 2.2 percent per annum. These bills are due for

repayment in full in August 2005. The interest expenses of these bills have been covered by interest rateswap agreements that result in the Company paying a floating interest rate. The possible future financialimpact of these agreements is reflected in the fair value of derivative instruments estimates provided in Note24.5 to the financial statements.


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- Bills of exchange of Baht 100 million bearing interest at 2.0 percent per annum for the first year and interestat the “6-month THBFIX” per annum for the second year. These bills are due for repayment in full in August2005. The interest expenses of these bills have been covered by an interest rate swap agreement that resultin the Company paying a floating interest rate. The possible future financial impact of these agreements isreflected in the fair value of derivative instruments estimates provided in Note 24.5 to the financialstatements.

17. BONDS


2004 2003 2004 2003

US Dollar bonds 13,306,100,000 13,306,100,000 - -Thai Baht debentures 22,142,600,000 28,017,731,786 22,142,600,000 28,017,731,786Total 35,448,700,000 41,323,831,786 22,142,600,000 28,017,731,786Less Current portion of bonds

: Thai Baht debentures (6,000,000,000) (5,875,131,786) (6,000,000,000) (5,875,131,786)Bonds - net of current portion 29,448,700,000 35,448,700,000 16,142,600,000 22,142,600,000

17.1 US dollar bondsBonds as presented in the consolidated financial statements as at 31 December 2004 and 2003 represent USD300 million in bonds belonging to a subsidiary (TAC Finance Company B.V.) for which the Company has providedan unconditional and irrevocable guarantee of the subsidiary’s due and punctual payment to the holders. Thesebonds carry interest at 8.375 percent per annum and mature in November 2006.

In order to hedge the foreign exchange and interest rate risks associated with the above USD 300 million inbonds, the Company entered into various cross currency interest rate swap agreements to swap 300 million USdollars to Thai baht at fixed exchange rates stipulated in the agreements, and to swap the US dollar interest ratesto Baht interest rates stipulated in the agreements. In addition, the Company entered into various interest ratesswap agreements to further hedge the interest rate risk. Under interest rate swap agreements, covering USD230 million of the bonds, interest is received from the counterparty at the rates found in the agreements or lessconditioned on certain binary conditions are met at certain dates specified in the agreements. The possiblefuture financial impact of these agreements is reflected in the fair value of derivative instruments estimatesprovided in Note 24.5 to the financial statements.

For conservative purposes, when preparing of the financial statements for the year ended 31 December 2004,the Company recorded provision for interest amounting to Baht 18 million in current interest payment periodgiven expectations of increasing interest rates. This provision for additional interest is recorded as interestexpenses in the earnings statements, classified under the heading of financial costs, as discussed in Note 21 tothe financial statements.

17.2 Thai Baht debentures17.2.1 On 12 October 2000 the Company issued Baht 6,000 million (6,000,000 units of Baht 1,000 each) of

registered, unsubordinated, unsecured amortising debentures with a trustee, bearing interest at 6.5percent per annum and with a final maturity in 5 years. They are to be redeemed in 14 equal quarterlyinstallments from 12 July 2002 until their maturity date of 12 October 2005.

As at 31 December 2004 Baht 1,714 million of this debenture was outstanding (2003 : Baht 3,429million).


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17.2.2 On 4 April 2001 the Company issued Baht 15,000 million (15,000,000 units of Baht 1,000 each) ofregistered, unsubordinated, unsecured amortising debentures with a trustee, bearing interest at 5.6percent per annum and with a final maturity in 5 years. The debentures are to be redeemed in 14 equalquarterly installments from 4 January 2003 until their maturity date of 4 April 2006. The interestexpenses of these debentures have been covered by an interest rate swap agreement that swaps theinterest rate for a floating rate. Under the terms of the agreement (daily range accrual), interest isreceived from the counterparty at the rate found in the agreement or less if certain conditions are met atcertain dates specified in the agreements. The possible future financial impact of these agreements isreflected in the fair value of derivative instruments estimates provided in Note 24.5 to the financialstatements.

As at 31 December 2004 the outstanding balance of these debentures was Baht 6,428 million (2003 :Baht 10,589 million).

17.2.3 On 30 October 2002 the Company issued Baht 5,000 million (5,000,000 units of debentures of Baht1,000 each) registered, unsubordinated, unsecured debentures with a trustee, comprising:

- Debentures of Baht 4,000 million bearing interest at 5.8 percent per annum and with a finalmaturity in 7 years, which are due for repayment in full in October 2009. The interest expenses ofthese debentures for the period from 30 June 2003 to 30 October 2005 have been covered byinterest rate swap agreements that result in the Company paying floating interest rates. In thesecond quarter of 2004, the Company restructured these interest rate swap agreements andextended the coverage period for floating interest rate payment to 30 April 2006. Under the termsof the agreement (daily range accrual), interest is received from the counterparty at the rate foundin the agreement or less if certain conditions are met at certain dates specified in the agreements.The possible future financial impact of these agreements is reflected in the fair value of derivativeinstruments estimates provided in Note 24.5 to the financial statements.

- Debentures of Baht 1,000 million bearing interest at 8.3 percent minus the “6-month THBFIX” perannum for the first to third year, interest at the fixed 5.8 percent per annum for the fourth toseventh year and with a final maturity in 7 years, which are due for repayment in full in October2009. The interest expenses of these debentures for the period from 30 June 2003 to 30 October2005 have been covered by interest rate swap agreements that result in the Company paying afloating interest rate. The possible future financial impact of these interest rate swap agreementsis reflected in the fair value of derivative instruments estimates provided in Note 24.5 to the financialstatements.

17.2.4 On 25 September 2003 the Company issued Baht 9,000 million (9,000,000 units of debentures of Baht1,000 each) registered, unsubordinated, unsecured debentures with a trustee, comprising:

- Debentures of Baht 3,000 million bearing interest at “6-month THBFIX” plus the 0.95 percent perannum and with a final maturity in 5 years. These debentures are due for repayment in full inSeptember 2008. The interest expenses of these debentures have been covered by interest rateswap agreements that result in the Company paying floating interest rate. In addition theCompany has entered into a risk protection structure against increasing interest rate. The possiblefuture financial impact of these agreements is reflected in the fair value of derivative instrumentsestimates provided in Note 24.5 to the financial statements.

- Debentures of Baht 2,500 million bearing interest at 3.3 percent per annum and with a finalmaturity in 5 years. These debentures are due for repayment in full in September 2008. Theinterest expenses of these debentures have been covered by interest rate swap agreements thatresult in the Company paying floating interest rate. In addition the Company has entered into arisk protection structure against increasing interest rate. The possible future financial impact ofthese agreements is reflected in the fair value of derivative instruments estimates provided in Note24.5 to the financial statements.


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- Debentures of Baht 3,500 million bearing interest at 3.9 percent per annum and with a finalmaturity in 7 years. These debentures are due for repayment in full in September 2010. Theinterest expenses of these debentures have been covered by interest rate swap agreements andtarget redemption swap agreement that result in the Company paying floating interest rate untilthe accumulated interest received reaches a certain level, where after the Company will pay afixed interest rate. The possible future financial impact of these agreements is reflected in the fairvalue of derivative instruments estimates provided in Note 24.5 to the financial statements.

The Thai Baht debentures contain covenants relating to various matters such as the maintenance of financialratio, restrictions on creating or permitting the creation of security interest on property and assets, a prohibitionon making loans or granting guarantees except under certain conditions, and restrictions on the payment ofdividends.

On 30 April 2002, the Annual General Meeting of the Shareholders approved the issuance and offer for sale ofdebentures not exceeding Baht 20,000 million or in equivalent amount in other currencies. Up to the report date,totaling Baht 14,000 million of debentures as described in Note 17.2.3 and 17.2.4 to the financial statements havebeen issued.

18. CONVERTIBLE BONDS

As at 31 December 2004 and 2003 the outstanding convertible bonds comprise of USD 1.5 million at a fixed exchangerate of Baht 25.29 per USD 1, for which the bondholders did not exercise their put option on 31 May 2001. Theconvertible bonds, with interest at 2 percent per annum, will be due for repayment on 31 May 2006. These bonds aretherefore included in non-current liabilities on the balance sheets.

19. SHARES OF THE COMPANY HELD BY A SUBSIDIARY

As at 31 December 2004 and 2003 the Company had treasury stock of 170,100 shares which were held by asubsidiary. They are presented as a deduction in shareholders’ equity and are stated at cost.

20. STATUTORY RESERVE

Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Company is required to set aside astatutory reserve of at least 5 percent of its net earnings after deducting accumulated deficits brought forward (if any),until the reserve reaches 10 percent of the registered share capital.

21. FINANCIAL COSTS


2004 2003 2004 2003

Interest expenses 2,368,499,180 2,389,030,367 2,171,582,298 2,178,639,196Cost of unwinding currency swap and

interest rate swap agreements ** - 317,280,269 - 317,280,269Amortisation on deferred for arrangement

fee for loans and deferred expenses onearly redemption on bills of exchange 104,934,466 99,991,824 297,931,092 297,921,805

Total financial costs 2,473,433,646 2,806,302,460 2,469,513,390 2,793,841,270

(**) for long-term loans that the Company made early repayment.


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22. CORPORATE INCOME TAX

Corporate income tax expenses for the years ended 31 December 2004 and 2003 were arrived at as follows:


2004 2003 2004 2003

Income tax payable on taxable profitfor the year 2,469,248,968 908,571,829 2,461,988,394 899,790,190

Less : Net increase/decrease indeferred tax assets/liabilitieson temporary differences (500,491,337) 249,553,738 (500,491,337) 249,553,738

Income tax expenses - net 1,968,757,631 1,158,125,567 1,961,497,057 1,149,343,928

As at 31 December 2004 and 2003 the deferred tax assets/liabilities arose from the following temporary differences:


2004 2003

Allowance for doubtful accounts : accounts receivable - trade 554,764 816,487Allowance for doubtful account :

receivable from fee reduction - TOT (Note 22.1) 422,914 -Provision for loss on account receivable

from assignment of right (Note 22.1) 1,375,845 -Allowance for doubtful account :

long-term loan to a subsidiary 104,224 -Allowance for inventory obsolescence 193,766 314,467Provision for impairment loss on available-for-sale securities 97,282 97,282Accrued expenses 31,898 32,991Advance received other 18,886 -Unrealised loss on derivative instruments

for long-term loans and bonds 1,658,255 1,463,126Deferred loss as a result of early redemption of

bills of exchange - net (390,215) (603,696)Unrealised gain on derivative instruments

for loan from a subsidiary (2,469,621) (2,191,110)Other (911) (763)

1,597,087 (71,216)Deferred tax assets/liabilities (30%) 479,126 (21,365)

22.1 Deferred tax assets relate to the allowance for doubtful accounts for “Receivable from fee deduction - TOT” andprovision for loss on accounts receivable from the assignment of rights. As at the balance sheet date theCompany is in the process of recovery of those balance from these receivables through an arbitration process,as discussed in Notes 26.2 (a) and (c) to the financial statements.


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23. STATEMENTS OF CASH FLOWS

For the purposes of the statements of cash flows, cash and cash equivalents include cash and deposits at financialinstitutions with an original maturity of 3 months or less and without commitments.

Cash and cash equivalents as reflected in the statements of cash flows consist of the following :-


2004 2003 2004 2003

Cash and deposits at financial institutions 1,327,358,349 1,236,413,008 1,270,221,072 1,188,420,284Fixed deposits at financial institutions 422,121,422 429,294,620 420,285,897 429,168,106Cash and cash equivalents 1,749,479,771 1,665,707,628 1,690,506,969 1,617,588,390

24. FINANCIAL INSTRUMENTS

24.1 Financial risk management policiesThe Company and subsidiaries are exposed to risks from changes in market interest rates and in currencyexchange rates, and from nonperformance of contractual obligations by counterparties. The Company andsubsidiaries use derivative instruments, as and when they are considered appropriate, to manage such risks.Such instruments are not held or issued for speculative or trading purposes.

24.2 Interest rate riskInterest rate risk is the risk that future movement in market interest rates will effect the results of the Companyand subsidiariesí operations and their cash flows. The Company’s and subsidiaries’ exposure to interest rate riskrelate primarily to their deposits at financial institutions, short-term loan, long-term loans, bonds and convertiblebonds. Part of these financial assets and liabilities carry fixed interest rates and the Company and subsidiaries donot use derivative financial instruments to hedge such risk, while certain amounts were covered by derivativefinancial instruments as described in Note 16 and 17 to the financial statements.

As at 31 December 2004 the Company and subsidiaries are exposed to interest rate risk in relation to the followingfinancial assets and liabilities :-

(Unit : Million Baht)Consolidated

Floating FixedItems Note interest rate interest rate TotalFinancial assetsDeposits at financial institutions 1,331 - 1,331Fixed deposits at financial institutions - 422 422

Financial liabilitiesShort-term loan from financial institution 14 - 1,200 1,200Long-term loans 16 2,861 - 2,861Bonds 17 33,516 1,933 35,449Convertible bonds 18 - 38 38


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The Company and subsidiaries are exposed to interest rate risk on financial assets and liabilities, which carry fixedinterest rates can be classified by maturity as follow :-


Within OverItems Note 12 months 12 months Total Interest rate

Financial assetsFixed deposits at financial institutions 422 - 422 1.58% - 4.00%

Financial liabilitiesShort-term loan from financial institution 14 1,200 - 1,200 2.15% - 2.23%

Bonds: US Dollar bonds 17.1 - 219 219 5.35%: Thai Baht debentures 17.2 1,714 - 1,714 6.50%

Convertible bonds 18 - 38 38 2.00%

24.3 Foreign currency risk

The Company and subsidiariesí exposure to foreign currency risk relate primarily to trade accounts payable,long-term loans and bonds which are denominated in foreign currencies. The Company and subsidiariesprimarily utilise forward exchange contracts and currency swap agreements to hedge the exchange rate riskarising from these instruments (Note 16.1 and 17.1).

As at 31 December 2004 the Company and subsidiaries had the following foreign currency assets and liabilities(after the execution of forward currency and swap currency transactions for certain parts of their liabilities) whichwere not hedged against foreign exchange rate risk:-

ConsolidatedAmount Foreign currency(Million)

AssetsDeposits at financial institutions 9.4 USD

2.3 EUR0.6 GBP

LiabilitiesAccounts payable - trade * 27.0 USD

0.4 EUR6.5 NOK

Amount due to related company 0.5 USD15.7 NOK

Net assets (liabilities) (18.1) USD1.9 EUR0.6 GBP

(22.2) NOK

(*) net of the amounts of USD 8.6 million covered by forward contracts and option contracts.


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The exchange rates for translation of foreign currency assets into Baht as of 31 December 2004 wereBaht 39.0147 per USD 1, Baht 52.9333 per EUR 1 and Baht 74.7091 per GBP 1.

The exchange rates for translation of foreign currency liabilities into Baht as of 31 December 2004 wereBaht 39.2025 per USD 1, Baht 53.4818 per EUR 1 and Baht 6.4733 per NOK 1.

24.4 Credit risk

The Company is exposed to credit risk primarily with respect to trade accounts receivable. However, due to thelarge number of entities comprising the Company’s customer base, the Company does not anticipate materiallosses from debt collection and believe that the maximum exposure to credit risk is limited to the carrying amountof receivables less allowance for doubtful debts as stated in the balance sheets.

With respect to off-balance sheet derivative financial instruments, it is the Company and subsidiaries’ policy toenter into financial instruments with creditworthy counterparties. Therefore, the Company and subsidiaries donot expect any material losses to arise from the counterparties’ failure to perform their obligations under thefinancial instruments.

24.5 Fair value

Given that all financial assets are short-term, parts of financial liabilities are short-term, the Company’smanagement believes that the fair value of financial assets and short-term financial liabilities does not materiallydiffer from their carrying value.

The carrying values (original values excluded the carrying values of related forward exchange and cross currencyswap contracts) and fair values of long-term financial liabilities and the fair values of derivative instruments as at31 December 2004 are presented below :-


Carrying values Fair values

Long-term loansHedged

Loan from Nordic Investment Bank 1,176 1,185Bills of exchange 1,590 1,584

BondsHedged

Thai Baht debentures 9,000 8,590

UnhedgedUS Dollar bonds 11,761 12,592Thai Baht debentures 13,143 13,463

Derivative instrumentsUnfavourable derivative instruments - 2,437

The fair values of long-term loans have been determined based on discounted cash flow analysis, by using thediscounted rates equal to the prevailing rate of return, as of the balance sheet date, for financial instrumentshaving substantially the same terms and characteristics.

The fair values of US Dollar bonds have been determined based on the latest mid-market price quoted on theBloomberg at the close of the business on the balance sheet date.


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The fair values of Thai Baht debentures have been determined based on the latest price quoted on the Thai BondDealing Center at the close of the business on the balance sheet date.

The fair values of derivative instruments have been calculated using a quoted market rate to terminate thecontract at the balance sheet date.

25. COMMITMENTS

25.1 Lease commitments

As at 31 December 2004 the Company has the following operating lease commitments for the lease of officebuildings :-

(Unit : Million Baht)Consolidated/Company Only

2005 542006 272007 onwards 14

The Company also has operating lease obligations with regard to land for cell sites installation. Currently, theCompany pays land rental fees of approximately Baht 20 million per month.

25.2 Capital commitments

As at 31 December 2004 the Company has capital commitments of Baht 925 million (2003 : Baht 2,868 million)mainly in respect of purchase of tools and equipment for providing the cellular telephone services.

25.3 Deposits at financial institutions

As at 31 December 2004 deposits at financial institutions of a subsidiary amounting to Baht 4 million (2003 : Baht5 million) are pledged with the bank to secure facilities granted by the bank.

25.4 Bank guarantees

As at 31 December 2004 there were outstanding bank guarantees of Baht 719 million (2003 : Baht 1,462 million)issued by banks on behalf of the Company in respect of certain performance bonds required in the normalcourse of business of the Company. Bank guarantees are primarily issued to CAT to secure royalty fee paidunder the Agreement to Operate Cellular Telephone Services.

As at 31 December 2004 there were outstanding bank guarantees of Baht 11 million (2003 : Baht 5 million)issued by banks on behalf of subsidiaries and related company in respect of certain performance bonds requiredin the normal course of business of the subsidiaries and related company. These guarantees are secured bydeposits at financial institutions of the subsidiary and by the Company’s guarantee.

25.5 Agreements to install cell site equipment

As at 31 December 2004 the Company has an outstanding commitment under an agreement to install cell siteequipment made with United Telecom Sales and Services Co., Ltd., a related company, of approximately Baht306 million (2003 : Baht 205 million).


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25.6 Agreement to install and maintain transmission networks

On 1 July 2001 the Company entered into an agreement to install and maintain transmission networks withUnited Communication Industry Plc., a related company. This related company will provide transmissionengineering network design and configuration, installation and maintenance services for transmission networksfor a period of 5 years. The Company is committed to pay service fees at the rate specified in the agreement.Currently, the Company pays such service fees of approximately Baht 37 million per month.

26. LITIGATION AND COMMERCIAL DISPUTES

26.1 Outstanding litigation

In March 2003 the Company, WorldPhone Shop Company Limited (“the subsidiary”) and directors of thesubsidiary were sued by am/pm (Thailand) Company Limited which claimed damages totaling Baht 450 millionin relation to improper transfer of the license to use the am/pm trademark in Thailand, and subsequent benefit ofuse of this trademark. (On 1 January 2003 the subsidiary terminated the assignment agreement to operate am/pm shops in Thailand and stopped using the am/pm trademark since 31 December 2003.) The lawsuit iscurrently in the judicial process. The Company’s management is not able to determine the extent of losses, if any,that may arise from this case, but it is believed that any possible liability that may arise will not be material to theCompany’s financial position. Consequently, as at 31 December 2004, the Company has not provided for lossesthat may arise from this case.

26.2 Commercial disputes

(a) Dispute between the Company and Digital Phone Company Limited (DPC) regarding the default onpayments of amounts due as a result of the assignment of a certain portion of the rights and obligations tooperate a telephone service under the PCN 1800 system.

As discussed in Note 10 to the financial statements, DPC defaulted on payment of amounts due to be paidto the Company on 30 September 2002, 30 September 2003 and 30 September 2004 and relatedaccrued interest, together totaling USD 69 million. On 30 June 2003 and 28 October 2003, the Companysubmitted its dispute with regard to DPCís default on payments to the Arbitration Office for settlement andcalled for DPC to make payment of the amount due, including interest, plus interest from the default dateuntil the date that DPC makes payment to the Company. The arbitration proceedings are continuing. TheCompany’s management believes that the outcome of the arbitration process is unlikely to have a materialadverse effect on the financial position of the Company.

(b) Dispute between the Company and CAT regarding fees on amounts received from the cellular mobiletelecommunications network roaming agreement with DPC. In 2002 CAT requested the Company payfees on amounts received as a result of the provision of roaming services to DPC on its telecommunicationsnetwork. CAT subsequently submitted a letter dated 25 August 2003 requesting the Company pay feesamounting to Baht 476 million to CAT on the amounts received as a result of the provision of such roamingservices. On 31 August 2004 CAT submitted the dispute in relation to the fees on revenue received fromthe cellular mobile telecommunications network roaming to the Arbitration Office for settlement and calledfor the Company to make payment of such fee together with a penalty from the date CAT called forpayment until the date that the Company makes payment to CAT. However, the Company’s managementbelieves that the outcome of the arbitration process is unlikely to have a material adverse effect on thefinancial position of the Company because they contends that the revenue received from DPC is tocompensate the Company for the costs incurred to expand the network to accommodate the increase innetwork traffic as a result of DPC being granted such roaming, and this kind of revenue is not part of theservice revenue which forms the basis for the calculation of the fees to be paid to CAT under the agreementto operate cellular telephone services made between the Company and CAT. In addition, DPC pays fees toCAT on the revenue that it generates from its roaming on the Companyís network. Therefore as at 31December 2004 the Company has not accrued the fees requested by CAT in its financial statements.


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(c) Dispute between the Company and TOT regarding the fee reduction on access charges paid for theConcession year ended 15 September 2003, which the Company is to receive from TOT.

As described in Note 7.2 to the financial statements, as at 31 December 2004 the Company has notreceived Baht 809 million of fee reduction on access charges paid for the 2003 Concession year from TOT,due to a change in the calculation methodology adopted by CAT of the amount of access charges it paysto TOT as a result of the introduction of the excise tax for telecommunications businesses in 2003.

As at 31 December 2004, the outstanding balances of fee reduction on access charges paid for theConcession years ended 15 September 2003 and 15 September 2004 amount to Baht 809 million andBaht 242 million, respectively (a total of Baht 1,051 million). The Company has provided an allowance ofBaht 423 million against these fee reductions. As the matter is in dispute, since 1 January 2004 theCompany has ceased recognising the fee reductions on access charges receivable in accordance with theagreement made with TOT until such time as the Company, CAT and TOT agree upon a calculationmethodology for the amount of access charge that CAT has to pay to TOT or find the solution to settle thisdispute and if the Company and TOT cannot find the solution to settle this dispute the Company willconsider to submit this dispute to the arbitration process.

26.3 Concluded litigation cases

(a) In the first quarter of 2003, the Company and a group of companies in the USA negotiated a settlementwith regard to an alleged breach of a guarantee agreement the Company provided to that group ofcompanies in the context of a mobile phone development project. On 26 February 2003 the Company andthe group of companies thus entered into the Pro Tanto Settlement Agreement under which the Companyagreed to pay damages for the alleged breach of the guarantee agreement totaling USD 3 million(equivalent to Baht 127.8 million) to the group of companies. In 2003, payment was made and recorded asan expense in the earnings statement.

(b) In the first quarter of 2004, the civil court found in favor of WorldPhone Shop Company Limited (“thesubsidiary”) in the lawsuit the subsidiary had brought against PTT Mart Company Limited (PTT Mart),claiming Baht 42 million for breach of an agreement authorising the use of the am/pm trademark. TheCourt ordered PTT Mart to pay such damages to the subsidiary, plus interest at the rate of 7.5 percent perannum. In addition the countersuit under which PTT Mart had claimed damages from the subsidiaryamounting to Baht 622 million as compensation for the subsidiaryís cancellation of the use of am/pmtrademark was dismissed by the Court.

Since PTT Mart is currently in the process of liquidation, its ability to pay the damages as ordered by theCourt may be affected. Consequently, the subsidiary has not recorded such damages in the earningsstatement of the first quarter of 2004 but will record the amount when it receives the compensation fromPTT Mart.

27. CONCESSION CONVERSION

The Company operates its business under a concession agreement with CAT, as described in Note 2.2.1 to the financialstatements. The Government of Thailand has undertaken to fully liberalize the country’s telecommunication sector by2006 under obligations made to the World Trade Organization and the Telecommunications Services Act 2001(“the Act”) provides the framework for this process. Section 80 of the Act allows for existing operators, at their option,to convert concessions into licenses to be issued by a National Telecommunications Commission (“NTC”). The NTC willbe an independent entity responsible for regulating the telecommunication businesses. The NTC has been establishedin 2004. A number of frameworks to assist in the concession conversion process have been proposed for operatorsíscomment. The Company has expressed its interest in participating in this process, but the responsible agency iscurrently in the process of conducting a feasibility study to determine a suitable framework, the outcome of which hasnot yet been finalised. No time frame has been set for the completion of this study. As a result it is not possible todetermine as at the date of these financial statements the outcome of the concession conversion process and thepossible impact it may have on the Company’s operations or financial position.


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28. FINANCIAL INFORMATION BY SEGMENT

The principal operations of the Company and subsidiaries involve a single industry segment in operating wirelesstelecommunications services and distributing handsets and are carried out exclusively in Thailand. As a result, allrevenues, operating profits and assets reflected in these financial statements pertain to this industry segment andgeographic area.

29. DISCONTINUANCE OF BUSINESS

In the second quarter of 2003 WorldPhone Shop Company Limited (a subsidiary) ceased its operations namely theoperations of am/pm Mini Market and Rak Ban Kerd stores. Total revenue from the operations of am/pm Mini Marketand Rak Ban Kerd stores for the year ended 31 December 2003 amounted to Baht 133 million.

30. PROVIDENT FUND

The Company and its employees have jointly registered a provident fund scheme under the Provident Fund Act B.E.2530. The fund is contributed to by both the employees and the Company at a rate of 3 percent of their employeesísalaries depending on the number of years of service. The fund will be paid to the employees upon termination inaccordance with the rules of the fund, and is managed by Bank of Asia Public Company Limited. During the year ended31 December 2004 Baht 21 million (2003 : Baht 19 million) has been contributed to the fund by the Company.

31. EMPLOYEES AND RELATED COSTS

Consolidated Company Only2004 2003 2004 2003

Number of employees at end of year 2,947 2,650 2,947 2,650Employee costs for the year(Thousand Baht) 1,358,166 1,382,531 1,358,166 1,342,268

32. SUBSEQUENT EVENTS

Forward exchange contracts

Subsequent to 31 December 2004, the Company has entered into a number of forward exchange contracts withbanks to purchase USD 6.6 million, to cover the payment within 2005 for the purchases of cellular telephone serviceequipment.

33. PRESENTATION

The presentation of these financial statements has been made in compliance with the stipulations of the Notification ofthe Department of Business Development dated 14 September 2001, issued under the Accounting Act B.E. 2543.

Certain amounts in the financial statements for the year ended 31 December 2003 have been reclassified to conform tothe current year classifications, with no effect on previously reported net earnings or shareholders’ equity.

34. APPROVAL OF FINANCIAL STATEMENTS

These financial statements have been approved by the Company’s directors.


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35. SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED INTHAILAND AND INTERNATIONAL ACCOUNTING STANDARDS

These consolidated financial statements have been prepared in accordance with accounting principles generallyaccepted in Thailand (“Thai GAAP”), which differ in certain significant respects from International Accounting Standard(“IAS”). Certain differences (other than classification, presentation and disclosure requirements) between Thai GAAPand IAS as applicable to the consolidated financial statements of the Company and its subsidiaries are summarisedbelow. This summary should not be construed as being exhaustive nor presenting a true and fair view of the Company’sresults of operation and financial position as it is presented for the purpose of giving preliminary information only.

35.1 Accounting for new shares issued in exchange of a future benefit

As permitted under Thai GAAP, shares issued free of charge by the Company in exchange for a future benefit arerecorded at par value of the shares with a corresponding amount recorded as an asset reported as goodwill onthe balance sheet. The goodwill is amortised against earnings over the period of the related concessionagreement.

Under IAS, all transactions in which goods or services are the consideration received for the issuance of equityinstruments shall be accounted for based on the fair value of the consideration received or the fair value of theequity instruments issued, whichever is more reliably measurable. The goodwill would be recorded at the marketvalue of the shares on share issuance date.

35.2 Accounting for derivatives

Thai GAAP does not presently have any effective accounting guidance for accounting for derivatives.

Under IAS, a company has to recognise all of its derivative instruments as either assets or liabilities in the balancesheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrumentdepends on whether it has been designated and qualifies as part of a hedging relationship and further, on thetype of hedging relationship (i.e. as either a fair value hedge, cash flow hedge, or a hedge of a net investment ina foreign operation).

35.3 Amortisation of deferred right to use of equipment

Thai GAAP allows assets transferred to the government under a Built-Transferred-Operated Project to berecorded as assets (i.e. under the heading of “deferred right to use of equipment”) and subject to amortisationover the concession period as granted by government.

Under IAS, those assets would be subject to amortisation over the lesser of their economic useful lives or theconcession period.

The following table is a summary of numerical reconciliation of consolidated net earnings and consolidated totalshareholders’ equity between those shown in consolidated financial statements for the year ended 31 December2004 and 2003 prepared under Thai GAAP and IAS. This summary should not be construed as being exhaustivenor presenting a true and fair view of the Company’s results of operation and financial position as it is presentedfor the purpose of giving preliminary information only.


(Unit : Million Baht)Consolidated Consolidated totalNet earnings Shareholders’ equity

2004 2003 2004 2003

As reported in these consolidatedfinancial statements under Thai GAAP 4,480 2,587 33,751 29,281

Add (Less) : Thai GAAP /IAS differences(net of tax effect)

1. Accounting for shares issued in exchangeof a future benefit (Note 35.1) (264) (262) 2,281 2,545

2. Accounting for derivatives (Note 35.2) (844) (646) (1,422) (578)3. Amortisation of deferred right to use

of equipment (Note 35.3) (1) (941) (1,043) (8,485) (7,544)Under International Accounting Standard (IAS) 2,431 636 26,125 23,704

(1) based on estimated economic useful life of equipment of 15 years, not exceeding concession period.

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Special thanks to our DTAC’s staffs for their appearance on ourAnnual Report. They are (in alphabetical order):Ms. Atikran Boonchurd (Cover page & P.6)Ms. Chadapa Eagpaopunt (P.4 & P.40: 2nd)Ms. Chatipa Patibatsorakit (P.36: 2nd & P.40: 3rd)Ms. Chommanas Dejwichienkamkoeng (P.48-49: 3rd)Ms. Kalaya Chantaravicheain (P.2)Mr. Kitchanut Pattang (P.41)Ms. Monticha Samode (P.48-49: 4th)Mr. Nuttaporn Yupraphat (P.18)Ms. Natcha Maneeratanasak (P.36: 1st)Ms. Ornnicha Tangool (P.48-49: 1st)Ms. Paradee Thisyakorn (P.48-49: 5th)Ms. Patraporn Techapaibul (P.48-49: 2nd)Mr. Thanet Narkkeyoon (P.19 & P.40: 1st)Mr. Vasupon Thankakan (P.2)

General InformationTotal Access Communication Public Company Limited333/3 Moo 14 Chai Building, Vibhavadi Rangsit RoadLadyao, Chatuchak, Bangkok 10900 ThailandTel : (66) 2202-8000Fax : (66) 2202-8929Website : http://www.DTAC.co.th

Symbol- Singapore Exchange (SGX-ST) TAC- Bloomberg TAC SP- Reuters TACC.SI

Other Information:- Exchange Rate (as of December 30, 2004) 39.066 Bt per US$- 2004 price range 1.83 - 3.90 (US$)- Issued and Fully Paid Shares 474,416,126 Shares- Financial Year End December 31- Company’s Auditor Ernst & Young Office Limited- Audit Partner Sumalee Reewarabandith

Investor Relations Department18th Floor, 333/3 Moo 14 Chai Building,Vibhavadi Rangsit RoadLadyao, Chatuchak, Bangkok 10900Tel : (66) 2202-8000, Ext. 30890-2Fax: (66) 2202-8929E-mail : [email protected] : http://www.DTAC.co.th

Thai Register and Share Registration OfficeKASIKORNBANK PUBLIC COMPANY LIMITED1 Thai Farmers Lane, Ratburana District,Bangkok 10140 ThailandTel : (66) 2470-1981-83

Register for the Singapore Public Offeringand Singapore Share Transfer AgentLim Associates (Pte) Ltd10 Collyer Quay #19-08Ocean Building Singapore 049315

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Total Access Communication Public Company Limited333/3 Moo 14 Chai Building, Vibhavadi Rangsit Road

Ladyao, Chatuchak, Bangkok 10900 ThailandTel: (66) 2202-8000 Fax: (66) 2202-8929 Website: http://www.DTAC.co.th Annual Report 2004

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