FINANCIAL STATEMENTS AND ACCOUNTANTS' REVIEW REPORT ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARY SECOND QUARTER ENDED JUNE 30, 1998 AND 1997 Accountants' Review Report To the Shareholders Advanced Info Service Public Company Limited: We have made a review of the consolidated balance sheet of Advanced Info Service Public Company Limited and subsidiary as at June 30, 1998, and the related consolidated statements of income, changes in shareholders' equity and retained earnings for the three-month and six- month periods then ended, and the separate financial statements of Advanced Info Service Public Company Limited for the same periods, in accordance with standards established by the Institute of Certified Accountants and Auditors of Thailand. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, applying analytical review procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an examination in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. The consolidated financial statements of Advanced Info Service Public Company Limited and subsidiary and the separate financial statements of Advanced Info Service Public Company Limited for the three- month and six-month periods ended June 30, 1997 were reviewed by other auditors of the same Firm whose report dated July 31, 1997 stated that they were not aware of any material modifications that should be made to those statements in order for them to be in conformity with generally accepted accounting principles. We draw attention to Note 1 to the financial statements. The operations of Advanced Info Service Public Company Limited and its subsidiary since July 1997 have been affected and may continue to be influenced for the foreseeable future by the economic conditions in Thailand and the Asia Pacific Region in general. The ultimate effect that these uncertainties will have on stated values or classifications of assets and liabilities at the balance sheet date cannot presently be determined. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. Nirand Lilamethwat Certified Public Accountant Peat Marwick Suthee Limited Bangkok, July 31, 1998 ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARY BALANCE SHEETS AS AT JUNE 30, 1998 AND 1997 (UNAUDITED) (Amounts in thousand Baht) Consolidated Company's Separate Balance Sheets Balance Sheets 1998 1997 1998 1997 ASSETS CURRENT ASSETS Cash in hand and at banks 808,553 794,027 781,469 743,802 Short-term investments (Note 6) 3,670,913 415,000 2,997,322 250,000 Accounts and notes receivable - net (Notes 3, 4 & 7) 3,428,905 2,411,962 3,311,147 2,212,113 Short-term loan and advances to related parties - net (Note 3) 91,000 364,434 72,427 243,385 Inventories - net (Note 4) 55,328 116,219 - - Other current assets (Note 8) 837,427 513,811 812,807 463,629 Total Current Assets 8,892,126 4,615,453 7,975,172 3,912,929 INVESTMENTS (Notes 4 & 9) Related Parties 62,366 62,366 878,754 770,604 Others - - - - Total Investments 62,366 62,366 878,754 770,604 PROPERTY AND EQUIPMENT - net (Notes 4 & 10) 1,805,988 1,105,134 1,676,737 993,111 OTHER ASSETS Costs of mobile phone and pager service networks under concession agreements - net (Notes 2, 3 & 4) 27,592,783 18,819,297 26,783,570 17,932,245 Deferred charges - net (Note 4) 355,463 100,871 355,297 100,763 Goodwill - net (Note 4) 311,090 347,689 - - Others 164,275 75,235 145,404 55,423 Total Other Assets 28,423,611 19,343,092 27,284,271 18,088,431 Total Assets 39,184,091 25,126,045 37,814,934 23,765,075 See notes to financial statements ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARY BALANCE SHEETS AS AT JUNE 30, 1998 AND 1997 (UNAUDITED) (Amounts in thousand Baht) Consolidated Company's Separate Balance Sheets Balance Sheets 1998 1997 1998 1997 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Loans from banks - 491,680 - 491,680 Accounts payable and accrued expenses (Notes 3 & 12) 8,536,218 5,075,936 8,371,753 4,846,299 Current portion of long-term liabilities (Notes 11 & 14) 3,136,612 704,675 2,473,611 704,675 Advances from related parties (Note 3) 23,819 17,350 3,010 9,572 Short-term bonds (Note 3) 20,000 - 20,000 - Other current liabilities (Note 13)1,047,169 1,014,548 954,370 935,122 Total Current Liabilities 12,763,818 7,304,189 11,822,744 6,987,348 LONG-TERM BONDS (Note 3) 3,000,000 - 3,000,000 - LONG-TERM LIABILITIES - net (Notes 11 & 14) 6,589,713 2,641,283 6,589,713 1,978,283 DEPOSITS RECEIVED FROM CUSTOMERS (Note 3) 3,351,527 3,258,570 3,260,310 3,117,807 Total Liabilities 25,705,058 13,204,042 24,672,767 12,083,438 MINORITY INTERESTS IN SUBSIDIARY 336,866 240,366 - - SHAREHOLDERS' EQUITY Share capital Authorized 500,000,000 common shares, Baht 10 par value 5,000,000 5,000,000 5,000,000 5,000,000 Issued 234,000,000 common shares, fully paid 2,340,000 2,340,000 2,340,000 2,340,000 Premium on share capital 2,295,000 2,295,000 2,295,000 2,295,000 See notes to financial statements Retained earnings Appropriated to legal reserve (Note 21) 500,000 484,700 500,000 484,700 Unappropriated 8,007,167 6,561,937 8,007,167 6,561,937 Total Shareholders' Equity 13,142,167 11,681,637 13,142,167 11,681,637 Total Liabilities and Shareholders' Equity 39,184,091 25,126,045 37,814,934 23,765,075 See notes to financial statements ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARY STATEMENTS OF INCOME FOR THE THREE-MONTH PERIODS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) (Amounts in thousand Baht Consolidated Company's Separate except earnings (loss) per share) Statements of income Statements of income 1998 1997 1998 1997 REVENUES Revenues from services and equipment rental (Note 4) 3,782,088 3,589,738 3,427,292 3,224,190 Sales (Note 4) 56,423 83,021 - - Net result of investment in subsidiary (Note 4) - - 21,998 20,744 Gain on exchange - 7,881 - 12,428 Other income (Note 15) 125,669 56,536 97,474 38,661 Total Revenues 3,964,180 3,737,176 3,546,764 3,296,023 EXPENSES Costs of services and equipment rental (Note 4) 1,963,267 1,368,833 1,893,751 1,295,714 Cost of sales (Note 4) 67,329 79,773 - - Selling and administrative expenses 838,741 801,382 649,200 596,124 Interest expense 273,147 82,890 255,024 65,206 Loss on exchange 702,926 - 705,206 - Directors' remuneration (Note 16) 1,590 855 1,570 840 Other expenses (Note 17) 19,987 13,950 - 1,500 Total Expenses 3,866,987 2,347,683 3,504,751 1,959,384 Net income before considering income tax and minority interests in subsidiary 97,193 1,389,493 42,013 1,336,639 Income tax (84,355) (441,593) (49,940) (408,667) Net income before considering minority interests in subsidiary 12,838 947,900 (7,927) 927,972 Less Share of net income of subsidiary to minority interests 20,765 19,928 - - Net income (loss) (7,927) 927,972 (7,927) 927,972 Earnings (loss) per share (Baht) (Note 4) (0.03) 3.97 (0.03) 3.97 See notes to financial statements ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARY STATEMENTS OF INCOME FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) (Amounts in thousand Baht Consolidated Company's Separate except earnings per share) Statements of income Statements of income 1998 1997 1998 1997 REVENUES Revenues from services and equipment rental (Note 4) 7,922,643 6,987,109 7,209,002 6,250,681 Sales (Note 4) 116,160 83,021 - - Net result of investment in subsidiary (Note 4) - - 52,966 32,650 Gain on exchange 733,650 7,881 732,722 12,428 Other income (Note 15) 296,934 118,826 249,759 82,779 Total Revenues 9,069,387 7,196,837 8,244,449 6,378,538 EXPENSES Costs of services and equipment rental (Note 4) 3,881,473 2,662,134 3,742,056 2,505,466 Cost of sales (Note 4) 127,103 79,773 - - Selling and administrative expenses 1,749,261 1,540,585 1,378,719 1,099,479 Interest expense 599,816 135,583 563,494 102,961 Directors' remuneration (Note 16) 2,595 2,230 2,560 2,200 Other expenses (Note 17) 31,101 28,191 1,964 6,592 Total Expenses 6,391,349 4,448,496 5,688,793 3,716,698 Net income before considering income tax and minority interests in subsidiary 2,678,038 2,748,341 2,555,656 2,661,840 Income tax (897,325) (878,024) (822,453) (825,489) Net income before considering minority interests in subsidiary 1,780,713 1,870,317 1,733,203 1,836,351 Less Share of net income of subsidiary to minority interests 47,510 33,966 - - Net income 1,733,203 1,836,351 1,733,203 1,836,351 Earnings per share (Baht) (Note 4) 7.41 7.85 7.41 7.85 See notes to financial statements ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARY STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) (Amounts in thousand Baht) Three Months Six Months Ended June 30 Ended June 30 1998 1997 1998 1997 Share capital Common shares Balance at beginning of period 2,340,000 2,340,000 2,340,000 2,340,000 Increase during the period - - - - Decrease during the period - - - - Balance at end of period 2,340,000 2,340,000 2,340,000 2,340,000 Premium on share capital Balance at beginning of period 2,295,000 2,295,000 2,295,000 2,295,000 Increase during the period - - - - Decrease during the period - - - - Balance at end of period 2,295,000 2,295,000 2,295,000 2,295,000 Retained earnings Appropriated to legal reserve Balance at beginning of period 500,000 484,700 500,000 484,700 Increase during the period - - - - Decrease during the period - - - - Balance at end of period 500,000 484,700 500,000 484,700 Unappropriated Balance at beginning of period 8,272,494 6,335,965 6,531,364 5,427,586 Increase during the period - 927,972 1,733,203 1,836,351 Decrease during the period 265,327 702,000 257,400 702,000 Balance at end of period 8,007,167 6,561,937 8,007,167 6,561,937 Total Shareholders' Equity 13,142,167 11,681,637 13,142,167 11,681,637 See notes to financial statements ADVANCED INFO SERVICE PUBLIC COMPANY LIMITED AND SUBSIDIARY STATEMENTS OF RETAINED EARNINGS (UNAUDITED) (Amounts in thousand Baht) Three Months Six Months Ended June 30 Ended June 30 1998 1997 1998 1997 Unappropriated retained earnings Balance at beginning of period 8,272,494 6,335,965 6,531,364 5,427,586 Appropriation of retained earnings in prior period Dividend (Note 20) (257,400) (702,000) (257,400) (702,000) Net income (loss) for the period (7,927) 927,972 1,733,203 1,836,351 Balance at end of period 8,007,167 6,561,937 8,007,167 6,561,937 Appropriated retained earnings Legal reserve (Note 21) 500,000 484,700 500,000 484,700 Total Retained Earnings 8,507,167 7,046,637 8,507,167 7,046,637 See notes to financial statements