-Translation- AIS 086/2002 February 28, 2002 Subject: Submission of the Audited Financial Statements for the Year 2001 To: The President Stock Exchange of Thailand Enclosure: A copy of the Audited Financial Statements for the Year 2001 Advanced Info Service Public Company Limited (the "Company") would like to submit a copy of audited financial statements for the year 2001 together with an explanation of changes in operating results. The Company's net profit (after tax), excluding non-recurring items and foreign exchange gain (details as attached) (Net Profit from Normal Operations), increased by Baht 3,496 million or 65% from Baht 5,387 million in 2000 to Baht 8,882 million in 2001. However, including non-recurring items and foreign exchange gain, the Company's net profit decreased by Baht 2,748 million, or 42%, from Baht 6,599 million in 2000 to Baht 3,851 million in 2001.The main reasons are: 1. Net Profit from Normal Operations increased by Baht 3,496 million or 65%, since; - The Company's revenue from services and equipment rentals increased from Baht 24,638 million in 2000 to Baht 39,170 million in 2001 or a 59% increase. The increase was mainly due to the strong growth in subscriber base from approximately 1,977,300 subscribers in 2000 to approximately 4,812,800 subscribers in 2001. - The Company's cost of services and equipment rentals increased from Baht 14,184 million in 2000 to Baht 18,711 million in 2001 or an increase of Baht 4,527 million or 32%. This increase was primarily from the increase in revenue sharing paid to TOT due mainly to the growth of revenue from mobile services coupled with the increase in revenue sharing percentage from 20% to 25% in October 2000. However, the ratio of total cost of services to total revenue from services decreased form 58% in 2000 to 48% in 2001, resulting from the faster growth of revenues than the costs. - The increase in the Company's selling and administrative expenses from Baht 2,987 million in 2000 to Baht 7,111 million in 2001 or a 138% increase, was mainly due to an increase in marketing expense and provision for doubtful accounts, in absence of customer deposit. - The Company's interest expenses increased from Baht 733 million in 2000 to Baht 1,330 million in 2001, resulting from an increase in the Company's interest-baring debt. - The share of net profit in subsidiaries decreased from Baht 977 million in 2000 to Baht 673 million in 2001 or a 31% decrease, as a result of the Company's investment in Shin Digital Company Limited (SDT) and Digital Phone Company Limited (DPC). SDT and DPC contributed a loss of Baht 1,372 million from September to December 2001 to the Company. The details of share of net profit in subsidiaries are as follow: Share of net profit in 2001 2000 Advanced Wireless Marketing Co.,Ltd. 2,625 1,267 Advanced Paging Co.,Ltd.* (543) (274) SDT + DPC** (1,372) - Other (37) (16) Total share of net profit in subsidiaries 673 977 * In 2001, the company provided Baht 294 million for impairment in the carrying value of the cost of paging networks (Non-cash item) ** Including amortization of goodwill of Baht 569 million 2. Net profit, including non-recurring items and foreign exchange gain, decreased by Baht 2,748 million or 42% from the year 2000, due mainly to; - In 2001, the Company provided an impairment in the carrying value of the cost of mobile phone networks in analog system (NMT) for the year 2001 of Baht 3,970 million (non-taxable expense) as the resolution of the Company's Board of Directors' meeting no. 1/ 2002 held on February 1, 2002. However, this expense was a non-cash item. - In 2001, the Company has changed the economic useful life of mobile phone networks of NMT system from not exceeding year 2005 to not exceeding June 2003.This change increased the amortization charge by Baht 1,063 million (non-taxable expense) - In 2000, the Company recorded a compensation income from value added tax from the Telephone Organization of Thailand in an amount of Baht 1,032 million (Baht 722 million net after tax). - Foreign exchange gain decreased from Baht 700 million (Baht 490 million net after tax) in 2000 to Baht 3 million (Baht 2 million net after tax) in 2001. Please be informed accordingly. Yours faithfully, Mr. Somprasong Boonyachai Director Advanced Info Service Public Company Limited Attachment 2001 2000 Income Statement Amount % % Amount % (Baht Common Change (Baht Common Million) Size Million) Size Revenues from services and equipment rentals 39,170 100 59 24,638 100 Cost of services and equipment rentals 18,711 48 32 14,184 58 Gross Profit 20,459 52 96 10,454 42 Selling and administrative expenses 7,111 18 138 2,987 12 Directors' remuneration 3 0 71 2 0 EBIT 13,345 34 79 7,465 30 Interest income 567 1 70 335 1 Interest expense (1,330) -3 81 (733) -3 Other income (expense) 625 2 59 392 2 Gain (Loss) on exchange 3 0 -100 700 3 Income before non-recurring items, share of net profit in subsidiaries, and tax 13,210 34 62 8,159 33 Non recurring items - Compensation income from TOT - 0 -100 1,032 4 - Effect from the change in the economic useful life of NMT network (1,063) -3 N/A - 0 - Impairment in the carrying value of the cost of NMT mobile phone networks (3,970) -10 N/A - 0 Income before share of net profit in subsidiaries 8,177 21 -11 9,191 37 Share of net profit in subsidiaries 673 2 -31 977 4 Income before tax 8,850 23 -13 10,168 41 Income Tax 4,999 13 40 3,569 14 Net Income 3,851 10 -42 6,599 27 Net income excluding non-recurring items and gain or loss on exchange 8,882 23 65 5,387 22