Bt5,029m to finance CAPEX. Effective interest rate was 5.1% per annum, dropped from 5.3% in 2007 as the new debts weighed down the borrowing cost. In January 2009, AIS issued two new tranches of total Bt7,500m unsecured debentures; a) 3.5-year debenture with a coupon of 4% p.a. for the first 2.5 year and 5% p.a. for the last year b) 5-year debenture with a coupon of 4% p.a. for the year 1-2, 5% p.a. for year 3-4, and 6% p.a. for year 5. Balance Balance Repayment(1) Unit: million 2007 2008 2009 2010 2011 2012 2013 Short term borrowing 3,492 - - - - - - Long term loan(2) 10,745 15,718 411 408 9,889 400 398 Debenture(1) 16,111 18,610 6,627 - 4,000 - 8,000 Total debt 30,348 34,328 7,038 408 13,888 400 8,398 (1) includes bond issuing cost; (2) includes swap contract Cash Flow Cash flow position in 2008 was stronger than 2007 from improved operating cash flow, lower CAPEX, and increased long-term borrowing. Solid revenue growth combined with effective cost control had supported 2008 group's performance, and reflected in a higher cash flow from operations. CAPEX in 2008 decreased to Bt12.6bn from Bt17.1bn in 2007 due to the successful off-peak tariff plans as well as the milder price competition, which helped AIS to achieve the efficient network utilization. During 2008, AIS generated operating cash flow before change in working capital of Bt47.7bn and increased long-term borrowing by Bt9bn while repaid Bt5.2bn of debts, paid dividend amounted Bt18.7bn as well as financed CAPEX of Bt12.6bn. The group had net increase in cash of Bt8.2bn for the period. Source and use of fund: FY2008 Source of Fund Use of Fund Operating CF before change in working capital 47,702 CAPEX & Fixed assets 12,586 Share capital and share Repayment of ST premium 283 borrowing 3,500 Interest received 324 Interest paid 1,580 Disposal of property and Changes in working capital 10,981 equipment 132 Dividend Payment 18,681 Proceed from L-T borrowing 9,014 Short-term investments & subsidiary 229 Cash increase 8,235 Repayment of LT borrowing 1,661 Total 57,454 Total 57,454 FY2009 MANAGEMENT OUTLOOK & STRATEGY Market subscriber forecast 5m net additions for the market Market share Maintain revenue market share Service revenue 3-4% service revenue growth Marketing expense 3% of total revenue (equivalent to 3.5% of total revenue excluding IC) Network amortization 8-10% rise (network amortization and depreciation as booked under cost of service only, exclude PPE depreciation in SGA, and amortization of operation right) EBITDA margin 41-42% (equivalent to 48-49% exclude IC) Capex Bt13-15bn cash capex (including 3G on 900MHz) Net IC revenue Bt400-700m The telecom market growth is expected to significantly slow down during 2009, following the weakness in economic growth which already shown during the last quarter of 2008 and will continue to dampen consumer demand and purchasing power. While Thailand GDP forecasts are ranging from 0-2%, AIS expect to grow its revenue at 3-4% supported by (1) continued penetration in the upcountry market where consumers are still relatively well-off from the agricultural sector; (2) benign competition with competitive focus gearing toward customer experience, retention program, and quality subscribers rather than aggressive price play; (3) outperforming non-voice service but with slower growth of 10-15% compared to 28% growth in 2008, reflecting lower consumer spending. The mobile penetration is expected to reach over 100% in 2009 with overall market net additions on the more organic growth of 5 million, unlike the hype of multiple SIMs in 2007-08 which drove net additions to 8-10 million per year. Since multiple SIMs impact is mostly prevalent in the urban area, the rural market is estimated to remain only 50-60% penetrated and therefore posts opportunity for organic subscriber growth. AIS's strength in rural network coverage, premium quality and distinctive brand presence will be the key to win in these markets and will serve the aim to maintain overall revenue market share. The interconnection regime helped bring in price rationality and stability reflected in benign price competition during the past six consecutive quarters. Since the new industry structure was in place, the industry players have been adjusting tariff structure and pricing accordingly to balance between revenue growth and the cost of interconnection. The trend is expected to continue with competition moving away from price-driven/aggressive acquisition strategy toward quality, segment-campaigns,and customer loyalty. Less irrational pricing will translate into less excessive demand on capacity and hence lower burden on capex requirement. Operating expense will also be less pressured as incentives will be toward better quality of revenue, and the right mix of marketing activities to ensure the quality growth amidst a mild-spending mentality of consumers. With AIS's large-scale advantage, the focus of operation in 2009 will be to control its cash operating expense with an aim to deliver stable margin. Mobile data service will be the key growth driver in the next 3-5 years. The higher speed of data provided in 2008 through EDGE technology was the main supporter of 28% growth. 2009 will be challenging without 3G as consumer demand will be softer, hence the data revenue is expected to grow only 10-15%. The positive side of this projected growth is that even during the heighten inflation in mid-2008 and the weak sentiment in 4Q08, non-voice revenue was still delivering outperforming growth over 20%. 3G license will be the key milestone this year as AIS is working closely on all fronts to ensure highest possibility of attaining the new license which will allow all industry players to operate at more level-playing field under a fair cost structure. Operationally, AIS has been preparing for readiness to ensure the shortest launch time for commercial service. Financially, AIS is also in well-shape to support the funding needs, partly reflected in the success of debenture issuance in Jan-09. While macro environment post a significant challenge this year, the operational large-scale advantage and solid financial strength will support AIS's flexibility to grow amidst this tough year. Disclaimer "Some statements made in this presentation are forward-looking statements, which are subject to various risks and uncertainties. These include statements with respect to our corporate plans, strategies and beliefs and other statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "may", "will", "expect", "anticipate", "intend", "estimate", "continue" "plan" or other similar words. The statements are based on our management's assumptions and beliefs in light of the information currently available to us. These assumptions involve risks and uncertainties which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. FINANCIAL SUMMARY P&L summary 4Q07 3Q08 4Q08 %y-o-y %q-o-q 2007 2008 %y-o-y Service revenue 36,642 24,623 24,077 -34.3 -2.2 94,810 99,586 5.0 Sales revenue 3,228 2,905 2,194 -32.0 -24.5 13,644 11,206 -17.9 Total revenue 39,870 27,528 26,270 -34.1 -4.6 108,454 110,792 2.2 Cost of service (20,380) (10,348) (10,145) -50.2 -2.0 (38,441) (41,484) 7.9 Revenue sharing (5,412) (4,990) (4,823) -10.9 -3.3 (19,691) (20,021) 1.7 Cost of Sales (2,960) (2,730) (2,198) -25.7 -19.5 (12,624) (10,534)-16.6 Gross Profit 11,118 9,461 9,104 -18.1 -3.8 37,697 38,753 2.8 SG&A (3,382) (2,732) (3,280) -3.0 20.1 (12,767) (11,205)-12.2 EBITDA 12,698 11,491 10,637 -16.2 -7.4 43,684 46,406 6.2 Interest Expense (427) (417) (440) 2.8 5.4 (1,721) (1,625) -5.5 EBT 7,441 6,469 2,118 -71.5 -67.3 23,804 24,846 4.4 Net Income 5,132 4,533 420 -91.8 -90.7 16,290 16,409 0.7 Breakdown - Service revenue 4Q07 3Q08 4Q08 Postpaid - voice 19.3% 18.0% 18.5% Prepaid - voice 59.5% 58.6% 57.9% Postpaid - data 4.8% 5.4% 6.3% Prepaid - data 6.9% 8.1% 8.2% International roaming 5.1% 4.4% 3.4% Others (IDD, other fees) 4.4% 5.5% 5.7% Breakdown - Sale revenue Handset 95.2% 95.9% 94.5% Simcard 4.8% 4.1% 5.5% Breakdown - Cost of service Amortisation 69.2% 68.5% 68.8% Base station 9.2% 9.4% 9.7% Maintenance 7.6% 7.6% 7.0% Others 14.0% 14.5% 14.5% Breakdown - Cost of sales Handset 97.6% 97.5% 96.2% Simcard 2.4% 2.5% 3.8% Balance Sheet summary 2007 2008 Current Assets 20,586 26,958 Fixed Assets 87,088 81,189 Total Assets 128,942 128,081 Total Liabilities 53,481 54,646 Retained Earnings 49,999 47,755 Total Equities 75,461 73,436 Key Ratios 2007 2008 EBITDA 43,684 46,406 EBITDA Margin 40.3% 41.9% Interest Coverage (x) 14.5 16.9 DSCR (x) 4.5 3.7 Net Debt / EBITDA (x) 0.50 0.39 Net Debt / Equity (%) 0.29 0.25 Total Liabilities to Equity (x) 0.71 0.74 Free cash flow to EV (%) 6.8% 10.3% ROE (%) 21.3% 22.0% OPERATIONAL DATA Subscribers 4Q07 3Q08 4Q08 GSM Advance 2,203,500 2,410,400 2,534,200 GSM 1800 82,400 78,600 77,800 Postpaid 2,285,900 2,489,000 2,612,000 Prepaid 21,819,500 24,285,600 24,698,200 Total subscribers 24,105,400 26,774,600 27,310,200 Net additions Postpaid -146,000 149,000 123,000 Prepaid 1,047,000 660,900 412,600 Total net additions 901,000 809,900 535,600 Churn rate (%) Postpaid 4.7% 1.7% 2.0% Prepaid 3.9% 5.1% 5.2% Blended 4.0% 4.8% 4.9% Subscriber market share Postpaid 41% 41% n/a Prepaid 46% 45% n/a Total 46% 45% n/a ARPU excl. IC (Bt) GSM Advance 744 711 695 GSM 1800 739 676 666 Postpaid 743 709 695 Prepaid 227 206 193 Blended 279 252 241 ARPU incl. net IC (Bt) GSM Advance 696 661 647 GSM 1800 739 657 649 Postpaid 698 661 647 Prepaid (One-2-Call!) 238 214 203 Blended 283 255 245 GSM Advance 573 550 546 GSM 1800 426 473 487 Postpaid 568 548 544 Prepaid 239 262 242 Blended 271 288 270 Traffic % outgoing to total minute 48% 49% 49% % on-net to total outgoing 70% 75% 76%