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Annual Report 2006
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01 At a Glance
04 Financial Highlights
12 Message from the Chairman
15 Message from the President and CEO
24 Segment Solutions
32 Environmental and Social Responsibility
40 Company Background and Major Developments
and Awards
44 Independent Directors
48 Corporate Governance Compliance Report
55 Revenue Breakdown by Business Group
56 Corporate Information
65 Investment Structure of True Group
66 References
67 Risk Factors
73 Shareholders
74 Dividend Policy
75 Management
108 Connected Transactions
121 Audit Fees
122 Report of the Audit Committee for the Year 2006
123 Report of the Compensation and Nominating Committee
for the Year 2006
124 Report of the Corporate Governance Committee
for the Year 2006
125 Report of the Finance Committee for the Year 2006
126 Report of the Board of Directors’ Responsibilities for
Financial Statements for the Year 2006
127 Management’s Discussion and Analysis
141 Financial Statements
True Guide
In this Annual Report 2006, “True”, “Company”, “Affi liates”, and “Subsidiaries” refer to True Corporation Public Company Limitedand/or its affi liates and/or its subsidiaries, as the case may be.
ร า ย ง า น ป ร ะ จ ํา ป 2 5 4 9 1
At a GlanceIt’s Better Together
Page Open
True is Thailand’s only integrated communications provider, offering a full range of voice, video and data services.
We are Thailand’s largest provider of dial-up and consumer broadband Internet, the largest pay-TV provider, the largest fi xed-line phone operator in the Bangkok Metropolitan Area (BMA), a leading online game provider and the country’s third-largest mobile phone operator.
Our vision is to become Thailand’s leader in convergence lifestyle. We aim to achieve this by offering our customers convenient “anytime/anywhere” access to information, knowledge and entertainment that match with their lifestyles while creating value for our organization, our employees and our shareholders.
In 2006, we made impressive progress towards realizing this vision, fulfi lling our customers’ lifestyle needs and establishing a strong base for future growth. We now offer a wide range of bundling packages for True products and services across our voice, video and data platforms, marketed under the “True” umbrella brand. This will differentiate us from our competitors, help us obtain greater market share and lower churn rates. True is now one of Thailand’s leading lifestyle brands.
2006 Highlights
• Consolidated service revenue Baht 50.4 billion (+21.7%)• Consolidated EBITDA Baht 16.9 billion (+7.8%)• True Move rebranded and added a record 3.1 million subscribers• Consumer Broadband posted record revenue and subscriber growth• TrueVisions (formerly UBC) successfully integrated into the Group• Group balance sheet strengthened with signifi cant debt repayment• True Group lifted its subscribers/households to more than 11 million, including: 7.58 million mobile phone (True Move) subscribers 1.98 million fi xed-line phone subscribers 0.85 million Internet and broadband subscribers 0.56 million pay-TV (TrueVisions) subscribers 0.35 million WE PCT subscribers
Co
nverg
ence
Convergence Lifestyle
The Leader
2 A n n u a l R e p o r t 2 0 0 6
Connect to all our services and enjoy the Convergence Life.True Move is now more than justa phone - it’s a new mobile lifestyle!Do whatever you want, whenever you want, wherever you are.Vote for your favorite show on TrueVisions UBC, download yourmusic and make your fi nancialtransactions via True Money while having fun chatting with your friends. All at once withConvergence Life by True.
Ask for it and you will get it.TrueVisions UBC is not justa box - it’s your personalizedportable TV service. Simply orderthe movie you’ve been dying to watch. Or use the alert message service so you never miss your favorite show.
hi-speed Internet by True connects you to the world with just a touch.Send messages to your friends ormake phone calls via the Internet.You can even watch your favoriteshows from TrueVisions UBCwhen you’re away from home.The simple magic of ConvergenceLife by True.
Financial transactions are nowa piece of cake with True Money.Just use your mobile phone to transfer funds between accounts, make payments, top-up yourairtime, and much more - all from just about anywhere, 24/7.
The new defi nition of lifestyle:Convergence Life by True.Connect with True’s services -True Move, TrueVisions UBC,TrueOnline, True Money.Enjoy True’s contents - TrueMusic.com,TrueSport, TrueGame, TrueMoviein TrueWorld.net and TrueLife.com -and access the world.Are you ready?
True’s service now!
Enjoy the free andeasy lifestyle of
Convergence Life by True. Apply for
3A n n u a l R e p o r t 2 0 0 6
Financial Talk
Financial Talk
4 A n n u a l R e p o r t 2 0 0 6
2006 2005 2004
50,445 41,456 30,366
51,862 44,073 32,728
16,928 15,705 12,930
(95 ) 684 1,145
(4,180 ) (3,263 ) 605
122,956 117,384 102,625
115,556 109,472 97,888
7,400 7,912 4,738
12,928 11,604 7,381
3,478 1,335 3,419
32.6% 35.6% 39.5%
-0.2% 1.6% 3.5%
42.2% 37.5% 31.9%
2.7 3.3 3.1
4.6 4.8 6.0
(1.36 ) (1.17 ) (0.03 )
1.64 1.93 1.16
6.10 10.00 8.10
4,501.5 4,094.7 4,092.5
27,459.3 40,947.5 33,149.5
(Unit: Baht millions)
FinancialHighlights
Consolidated Financial ResultsService revenues (normalized) 1/
Total revenues (normalized) 1/
EBITDA (normalized) 2/
Operating profi t 2/
Net profi t (loss)
Consolidated Balance Sheets and Cash FlowsTotal assets
Total liabilities
Total shareholders’ equity
Cash fl ow from operations
Free cash fl ow 3/
Key Financial and Effi ciency RatiosEBITDA margin
Operating profi t margin
Asset Turnover
EBITDA / Interest coverage ratio (times) 4/
Net debt / EBITDA (times) 4/
Per Share Data and OthersLoss per share (Baht) 5/
Book value per share (Baht)
Share price at year-end (Baht)
No. of outstanding shares at year-end (million shares)
Market capitalization
5A n n u a l R e p o r t 2 0 0 6
1/ Consolidated service revenues and total revenues for the year 2005 have been adjusted to exclude out-of-period
accounting adjustment of Baht 282 million for over-accrued revenues from fi xed line’s international call service in the
year 2004. FY 2004 revenues were retroactively adjusted for comparative purposes.2/ FY 2005 regulatory cost has been adjusted upwards by Baht 493 million to exclude an out-of-period adjustment for
True Move’s change in the calculation method in Q2 2005. FY 2005 revenue sharing was also adjusted upwards by
Baht 48 million to exclude the out-of-period adjustment related to remark no.1.3/ Cash fl ow from operations less capital expenditure.4/ Excluding liabilities under fi nance lease and FY 2005 debt excluding bridging loan for TrueVisions acquisition.5/ After accumulated dividends for preferred shares.6/ Proportionate consolidation of True Move up to Q3 2004, and full consolidation since Q4 2004.7/ Full consolidation of TrueVisions since Q1 2006, and equity method previously.
6 A n n u a l R e p o r t 2 0 0 6
Continued Growth in Revenue and EBITDA
Service Revenue EBITDA Cash Flows from Operations & CAPEX
+21.7%
24,2
15
27,0
01
30,3
66
41,4
56
50,4
45
2002 2003 2004 2005 2006
Service Revenue
+7.8%
9,79
8
11,6
42
12,9
30
15,7
05
16,9
28
2002 2003 2004 2005 2006
EBITDA
4,45
5
8,75
3
7,07
6
10,3
78
7,38
1
3,96
3
11,6
04
10,2
69
12,9
28
9,45
0 2002 2003 2004
2005 2006
CAPEX
+11.4%
Key Growth Drivers
22,3
09
19,5
94
8,15
8
4,45
8
1,74
3
1,336,228 1,824,9903,380,383
4,458,643
7,577,742
2002 2003 2004 2005 2006
True Move
3,708
2,04
7
3,25
8
725
23767
11,661
164,775
300,322
442,728
2002 2003 2004 2005 2006
Consumer Broadband
Cash fl ows from operations(Bt mn) (Bt mn) (Bt mn) (Bt mn)
Service Revenue (Bt mn)
Subscribers
Service Revenue (Bt mn)
Subscribers
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2002 2003 2004 2005 2006
6,56
3
7,03
7437,845 434,815 457,542
483,816
558,860
7,56
9
7,94
3
8,35
2
Note : 1/ Financial results are based on proportionate consolidation of True Move up to Q3 2004, and full consolidation from Q4 2004,
and on full consolidation of TrueVisions from Q1 2006 (equity method previously)
2/ Consumer Broadband revenues are before intersegment eliminations
TrueVisions
Transformed Revenue Profi le
FY04 FY05 FY06
Voice 89%Non-Voice 11%Bt 32,728 mn
Voice 86%Non-Voice 14%Bt 44,073 mn
Voice 69%Non-Voice 31%Bt 51,862 mn
Note : Non-Voice includes revenues from True Move’s non-voice services and TrueOnline’s Internet & Broadband and Data Services.
Improving Balance Sheets
Total Debt
TrueOnline (Bt mn) Consolidated TrueOnline
TrueOnline 67.7%
True Move30.3%
TrueOnline50.9%
True Move49.1%
True Move43.7%
TrueVisions16.2%
TrueOnline40.1%
65,406 62,707 54,227 49,609 42,080
6,899 14,03032,369
32,76731,675
11,72411,117
84,872
94,10086,59676,73672,305
6.5x
5.1x
5.9x
4.6x
6.0x
4.4x
4.8x
4.2x
4.6x
3.9x
2002 2003 2004 2005 2006 2002 2003 2004 2005 2006
Note : 1/ Total debt excludes fi nance leases and debt issuance costs 2/ TrueVisions’ debt includes all long-term loans for TrueVisions acquisition
Net Debt-to-EBITDA
Note : 1/ Net debt excludes fi nance leases and debt issuance costs 2/ 2005 net debt excludes bridging loan for TrueVisions acquisition
True Move (Bt mn) TrueVisions (Bt mn)
Service Revenue (Bt mn) Subscribers
It’s Better Together
Key Message
12 A n n u a l R e p o r t 2 0 0 6
For True, 2006 was characterized by further improve-ments in our business performance, the initial deve-lopment of our convergence lifestyle strategy _including the integration of TrueVisions (formerlyUBC) into the Group _ and our part in the reform of the telecommunications industry.
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Dhanin ChearavanontGrowing stronger, step - by - step
13A n n u a l R e p o r t 2 0 0 6
This progress occurred in the face of regulatory challenges and political instability which have impacted the whole telecommunications industry.
It was thus very pleasing that True was able to successfully implement the initial steps of its convergence lifestyle strategy. A key outcome was the record subscriber growth posted by True Move in 2006. We are now in a position to continue to prosper well into the future, based on leveraging the True brand across a wide range of products and services as thedemand for convergence services increases.
Thailand’s rate of economic growth _ around 5 percent in 2006 (measured by GDP) _ is expected to slow slightly in 2007. However, the trend in a developing market such asThailand of rising demand for key telecommunications services will continue. This will further encourage sustainable growth in our operations, as will the best-value proposition we offer to consumers.
Ownership of the industry recently changed signifi cantly. Foreign ownership of our two largest competitors has increased, leaving True as the only genuine Thai-owned privateoperator. This brings certain responsibilities for True, which we are serious about fulfi lling.
In last year’s annual report I noted that although regulatory reform was starting to take shape, the key areas of concession conversion and an interconnection (IC) regime remained unresolved.
While this is still the case for concession conversion, I am pleased to report that signifi cant progress has been made on achieving a workable IC regime, with the major mobile operators signing IC agreements and setting IC rates in line with NTC regulations introduced in May 2006. True signed an IC agreement with DTAC in November 2006, followed in early January 2007 by a similar agreement with AIS.
The “True” PhenomenonTurning vision into success
14 A n n u a l R e p o r t 2 0 0 6
Dhanin ChearavanontChairman
This achievement represents a milestone for the Thai telecommunications industry,changing the historical arrangements under which operators connect to each others’ networks, and encouraging fair and free competition _ without discrimination _ among all operators. Under the regime each operator will be able to connect their networks directly to each other, making interconnection payments based on the volume and direction of calls among them.
The implementation of the IC regime, and other regulatory reform, will also discourageineffi cient practices, and encourage operators to adopt more sensible pricing. This will ensure that Thai consumers benefi t from higher quality and greater network coverage.
True will continue to push for a fairer competitive environment for Thai telecommunications,as we believe this will eventually benefi t consumers.
The whole of Thailand joined together in 2006 to celebrate the 60th anniversary of HisMajesty King Bhumibol’s accession to the throne, and True was delighted to play its part in the celebrations with our “I Will Do” project. The project’s fi rst campaign, which demonstrated True’s convergence capabilities by using webcam booths and inviting people to pledge their good deeds in tribute to His Majesty, attracted more than 100,000 people. A new campaign has been announced for 2007 _ “12 V: 12 Good Deeds for the King” _ which will mark His Majesty’s 80th birthday during what will also be an auspicious year for Thailand.
Finally, I would like to thank True’s shareholders and investors _ both in Thailand andinternationally _ for their support. Their strong confi dence in our business strategies and our future is greatly appreciated.
Exclusive Interview
15A n n u a l R e p o r t 2 0 0 6
What were the highlights of the year for True?There were many highlights, including the successful integration of True
Visions (formerly UBC) into the business, the rebranding of True Move at the start of the year and its record subscriber growth, and the strengthening of our balance sheet with further debt repayment, an equity issue and True Move’s international bond offer.
TrueVisions’ integration completed the fi rst step in our key convergencelifestyle strategy, establishing a platform for future growth and improving customervalue. We were able to offer customers a wide range of bundling packages for True products and services, reducing the need for True to compete on price alone, and helping us obtain greater market share and lower churn rates.
Financially, True’s consolidated service revenue rose 21.7 percent to Baht 50.4 billion and EBITDA was 7.8 percent higher at Baht 16.9 billion following fullconsolidation of TrueVisions in early 2006. However, True posted a net loss of Baht 4.2 billion in 2006, an increase from 2005, due mainly to the increased costs relating to mobile and Consumer Broadband network expansion as well as costs relating to the acquisition of TrueVisions.
We repaid almost Baht 8 billion of debt as we maintained our commitment to deleveraging. As a result, our consolidated net debt-to-EBITDA ratio reduced to 4.6 times, from 4.8 times 12 months earlier.
Message from the President and CEO
“True - It’s Better Together”Supachai Chearavanont
16 A n n u a l R e p o r t 2 0 0 6
True Group’s subscribers increased to over 11 million by the end of the year.True Move posted phenomenal subscr iber growth in 2006, adding 3.1 million subscribers, a 70 percent increase from 2005, to reach 7.6 million. Consumer Broadband lifted its subscribers by 47 percent to 442,728 while TrueVisions enjoyed a 30 percent increase to 629,269, includingTrueVisions-True Move bundled packages. This subscriber growth was partlyattributed to our convergence lifestyle strategy.
Regulatory achievements included the granting of an international Internet gateway license, new fi xed line and public phone licenses, and the establish-ment of an interconnection regime for mobile operators.
At the start of 2006 you renamed your mobile business True Move. What sort of year has it been for True Move?
True Move is at the core of True’s convergence lifestyle strategy. The name change from TA Orange emphasizes this, and in a competitive market, the ability to offer True Move subscribers easy access to other products and services within the True Group is a key point of differentiation.
During the year we added a record 3.1 million subscribers, capturing almost 32 percent of the market’s net subscriber additions and fi nishing the year with an overall market share of 19.3 percent. True Move has now been successful in capturing approximately one-third of the market’s net subscriber additions every year since 2004. True Move service revenue in 2006 rose 13.9 percent to Baht 22.3 billion although EBITDA was 0.5 percent lower at Baht 5.1 billion due mainly to the impact of price competition and higher network operating expenses resulting from our network expansion.
The True name is now more widely known and we’ve expanded our mobilenetwork coverage to around 92 percent of the Thai population. We’re thenumber three player in mobile but we’re growing faster than our rivals, in part because we’re able to bundle True Move with other businesses within the True Group. As the proportion of subscribers to other True services using True Move increases, so will the incentive to remain True customers, and we expectcustomer churn rates to improve across all businesses.
Mobile penetration rates in Thailand are expected to continue to increase from 61 percent at the end of 2006 to 75 percent within the next few years and True Move is well placed to take full advantage of this.
How has TrueVisions (formerly UBC) performed as part of the True Group?
Our acquisition of TrueVisions makes True a fully integrated communica-tions solutions provider. We are now the only company in Thailand offering consumers a full range of voice (fi xed line and mobile), data and video services. Alongside its strategic value to the Group, Thailand’s only nationwide pay-TV provider lifted its service revenue in 2006 by 5.1 percent to Baht 8.4 billion while increasing its EBITDA by 2.5 percent to Baht 2.1 billion as a result of its 30percent growth in subscriber numbers.
As well as attracting customers through the quality of its content and service, TrueVisions has worked with True Move and our Internet business tooffer bundled packages offering subscribers value-for-money opportunitiesthat our competitors can’t match. We’ve also made a conscious effort toexpand TrueVisions’ mass market reach, which has been a big factor in our
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17A n n u a l R e p o r t 2 0 0 6
revenue and subscriber growth. While ARPU hasinevitably dipped as a result, TrueVisions still has one of the highest ARPUs in Asia, and the expansion ofthe pay-TV customer base bode well for the future.
How has your Consumer Broadband business performed?
Consumer Broadband continued its healthy growth, enhancing its position as the market leader, increasing both subscriber numbers and revenue by around 50 percent (to 442,728 and Baht 3.3 billion, respectively). The business is a key component of the Group’s bundled offerings and fundamental to True’s mission of helping develop a knowledge-basedsociety in Thailand.
True’s extensive fi ber-rich network allows us to provide higher speeds and better service to our customers, giving us a strong competitive advantage. In addition, we can offer high-quality content anda variety of value-added services that enable us toenjoy an advantage over our competitors.
A milestone for the overall Internet and Consumer Broadband businesses was the NTC’s decision to award True an international Internet gateway license. This will allow us to provide an even higher-quality, less costly service to our online customers.
Furthermore, at the end of the year the NTC allowed True to connect directly to international Internet gate-way operators. As a result we look forward to providing greater value to our Internet customers in 2007.
Consumer Broadband’s successes helped offset thelack of growth in fi xed-line service, another major part of our online businesses. This was no surprise, given the longstanding industry trend of fi xed-line phone usage being partially replaced by mobile phones.
One of your key strategies for growth is your con-vergence lifestyle strategy. Can you explain this?
Convergence lifestyle is a strategy we have been working on for more than a year. We want to fulfi llconsumers’ daily lifestyles of “live, learn, work andplay” and provide them with convenient access to theinformation, knowledge, data and entertainment theyrequire, whether it be via mobile phone, Internet or pay-TV.
For our customers, it’s about providing themwith as much fl exibility as possible in their choice of networks, services and content _ whether in their homes, their offi ces or on-the-go. Consumers will enjoybetter value and greater convenience from being able to use our one-stop shop customer services.
Internationally, many of the leading telecom-munications fi rms are pursuing convergence models. The industry has evolved from single to convergence products thanks to the emergenceof the Internet platform, while customer needs have become more personalized, and multiple-use devices have become common. True is in the best position among Thai companies to capture the opportunities presented by these trends.
In addition, by leveraging the True brand across different products and services, we can achieve greater effi ciencies in our marketingand sales, and economies of scale in ouroperations.
What role do True Money and TrueLife play in your convergence lifestyle strategy?
While mobile, Internet and pay-TV provide access availability for consumers, True Moneyis a digital commerce service which allowstop-up, pay-transfer and withdrawal of money from electronic wallets with a mobile phone SIM card. True Money is not only used to pay for True Group’s products and services but can also be used to pay for water supply, electricity and taxi fares, and is continually expanding its services and the convenience it offers customers by joining with various business partners. By the end of the year, True Money was being used by around 850,000 True Move subscribers.
TrueLife provides digital content and access for the digital community as well as acting as adigital multimedia communicator for consumer-to-consumer, business-to-consumer and business-to-business transactions. It offers content for bringing together people who have similar lifestyles or interests. Currently True Group can provide Internet and mobile content including music, games, sports, movies and e-Books as well as content under the copyright of TrueVisions. This helps fulfi ll the needs of each group of customers by continuing to add more content to TrueLife. The bundling of Trueproducts and services falls under the TrueLife Plus umbrella.
18 A n n u a l R e p o r t 2 0 0 6
So what progress have you made implementing True’s convergence lifestyle strategy and what are your plans for 2007?
2006 saw us complete the fi rst steps towards achieving our strategy. We have integrated True Move and TrueVisions into True Group, enabling customers to access a universal or convergenceplatform using mobile phone, Internet and/or pay-TV.
Our customers have seen greater bundling of True products and services, which for True means greater market share and lower churn rates, and faster progress to profi tability.
One example is Academy Fantasia 3. TrueVisions, True Move and True Consumer Broadband joined forces to promote the third series of the popular reality TV show Academy Fantasia, which screened on TrueVisions. Viewers were able to vote for their favorite performers using their True Move phones and also view exclusive news and information on the show through True’s Internet Broadband service. The promotion’s success was a major factor in True Move’s subscriber growth.
Our content offerings are a big part of ourconvergence lifestyle strategy as are our True Shops, which expand our brand presence and help ourcustomers experience fi rst-hand True’s range ofservices, including TrueMusic and TrueCoffee. The “True” lifestyle brand is now widely recognized throughout Thailand.
The year 2007 will herald another big step for True. We aim to provide more value to consumers with our fi ve core services _ True Move, TrueOnline(formerly Wireline), TrueVisions, True Money andTrueLife. This will help True become a real leader in convergence lifestyle.
You also talk of True’s mission to help bring Thailand fully into the Digital Age and reduce the Digital Divide in Thai society. Can youexplain these concepts further?
True has the capability to improve communica-tions on many levels among individuals, companies and communities through conveying information on our three digital technology-based platforms: mobile, Internet and television. If Thailand can develop and build a sound digital infrastructure this will help improve our social and economicsystems. It will also help reduce Thailand’s Digital Divide _ the gap between those who have access to knowledge through information technology and those who do not. Only then will Thailand be able to develop into a fully knowledge-basedsociety and close the distance between ourselves and more developed countries. Our mission is to build a knowledge-based society by improvingevery Thai household’s accessibility to knowledge, information and entertainment, enabling Thailand to better compete in the global market.
True’s offerings include an increasing range of innovative technologies. How do these fi t into the True story?
What we have been doing in Thailand with our convergence strategy mirrors a global trend. For example, the demand for making payments as convenient as possible for customers has seen us widen the scope of True Money, our digitalcommerce service, to cover more and morecustomer requirements.
In 2006 True Group launched new services with modern technology such as IPTV, whichallows customers to watch television on their computers; VoIP, which allows customers to make phone calls using their computers; and outdoor Wi-Fi, which allows customers to access theInternet outside their homes and workplaces. We introduced outdoor Wi-Fi at three areas inBangkok during 2006: Silom Road, Siam Square and Thonglor. Some of these initiatives are atan early stage of development, but we are well-positioned to take advantage of future growthopportunities. Moreover, True is the sole Thaimember of the international Fixed Mobile Convergence Alliance, a collaboration amongleading telecommunications companies worldwide.
True’s innovative approach was recognized by readers of The Wall Street Journal Asia when they voted True Thailand’s most innovative company in the way we respond to our customers.
19A n n u a l R e p o r t 2 0 0 6
You were busy in the fi nancial markets, issuing extra shares and also refi nancing your debt on international markets. What was the reasoning behind these initiatives and what difference has it made to True?
True Move needs capital to fund its ongoing growth and both these initiativeswere undertaken for this reason. Thailand’s mobile market still has signifi cant growth potential _ the nationwide mobile penetration rate is around 61 percent, and the penetration rate in provincial areas is estimated to be much lower.
In July we raised Baht 3.4 billion with a private placement of True shares to institutional investors _ of which Baht 2.5 billion was allocated to True Move _ and in December we raised USD465 million (about Baht 16.3 billion) with an issue of seven-year True Move bonds to international investors, with a bullet (one-time) payment at maturity. The proceeds of the bond issue have been used to refi nance half of True Move’s debts and free up substantial cash fl ow over the next few years for funding subscriber growth during this period of strong overall market growth.
It was particularly pleasing to see the interest from international investors in the bond issue. This was the fi rst time True Move had tried to raise money globally and we attracted offers of more than USD750 million, which indicates the extent of investor confi dence in True and True Move. The offer was the largest-ever one-tranche US-dollar bond offering by any Thai corporate.
Also, in July we completed TrueVisions’ long-term refi nancing.As highlighted earlier, by the end of the year True’s net debt-to-EBITDA ratio had
fallen to 4.6 times, from 4.8 times 12 months earlier, as a result of improvements inEBITDA and debt reduction of approximately Baht 8 billion, mostly at our Online business.
What’s the outlook for 2007?In just a few short years, True has grown from a solely fi xed-line operator to
a fully-integrated communications provider, offering a wide range of innovative products and services backed by leading-edge technologies to meet our subscribers’ communications needs and enrich their lifestyles.
As result of this we’ve had strong subscriber growth and rising uptake of our bundled services. We expectthese trends to continue in 2007. We have new promotions planned to take advantage of the bundlingopportunities within the Group, under the concept of “Better Together” which highlights to customersthe range of products and services offered under the True umbrella. Our key growth businesses _ True Move, TrueVisions and Consumer Broadband _ are all well placed to improve their performances, while True Money and TrueLife will increasingly become key components in our goal to provide the best possible value to our customers.
We continue to target one-third of market net additions for True Move, futher solid growth by Consumer Broadband, and greater penetration by TrueVisions into the mass market which should see its subscriber and revenue numbers continue to rise. All these markets offer good growth potential as their penetration rates are relatively low: 61 percent for mobile, 10 percent for pay-TV and only 3 percent for Consumer Broadband.
We expect more challenges in 2007, with keen market competition and an evolving regulatoryenvironment. However, our progress in 2006 and the strategies we have in place mean we are in good shape to overcome these challenges, while the implementation of the interconnection regime will easeprice pressures on our mobile business.
True owes a big debt to its Board, its management and staff, and to its shareholders for making 2006 such a successful year. I’m confi dent that with the knowledge and capability of our management and staff, together we can make 2007 just as rewarding as we strive to enrich our customers’ lives and help Thailand become a truly knowledge-based society.
Supachai ChearavanontPresident and CEO
Cover Story
+ Products + Services + Products + Services + Products + Services + Products + Services + Products + Services +
Services + Products + Services + Products + Services + Products + Services + Products + Services + Products + Services
+ Products + Services + Products + Services + Products +
24 A n n u a l R e p o r t 2 0 0 6
Our convergence l ifestyles t r a t e g y, b r a n d e d “ B e t t e rTogether”, is unique within the Thai market. The strategy focuses on providing customers with their preferred combinations of content and services from our full rangeof telecommunications offerings, enhancing lifestyles in line with our “live, learn, work and play” philosophy.
At the beginning of 2007,True was organized into fi ve core businesses: True Move (the oldWireless segment), TrueOnline( former ly Wire l ine segment) ,TrueVisions (formerly Pay-TV),True Money (our digital commerceserv ice) and TrueLife (whichprovides digita l content andaccess). The annual report follows this category format.
In terms of fi nancial reporting,we report in three segments: True Move, TrueOnline and TrueVisions. True Money’s contributions are considered part of TrueOnlineas it will become a key vehicle for True’s vision of becoming aconvergence l ifestyle leader.TrueL i fe ’s cont r ibut ions areincluded in TrueOnline as most TrueLife services cater for True’s broadband customers.
SegmentSolutions
True Corporation Plc is Thailand’s only inte-grated telecommunica-tions operator. We have more than 11 millionsubscribers to our services,which include the country’slargest broadband anddial-up Internet provider,Thailand’s dominant pay-TV provider, TrueVisions (formerly UBC), the largestfi xed-line phone operatorin the BMA (Bangkok Metropolitan Area), and Thailand’s third-largest mobile phone operator (True Move, our largest business by subscriber numbers and revenue).
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25A n n u a l R e p o r t 2 0 0 6
True Move has grown rapidly since it launched full commercial operationsin March 2002 and has been successful in acquiring about one-third of themarket’s net additional subscribers each year since 2004. True Move is nowThailand’s third-largest mobile operator.
In 2006, True Move contributed 43 percent of total service revenue (after inter-company transactions). TrueOnline (comprising fi xed-linetelephone, data services, Internet/broadband and WE PCT (PersonalCommunication Telephone) contributed 41 percent and TrueVisions 16 percent.
True Move True Move operates a digital mobile telecommunications network based on the Global System for Mobile Telecommunications (GSM) standard in the 1800 MHz frequency band. True Move provides prepaid and postpaid services and is unique in offering promotional packagesthat bundle True Group’s integrated products and services to providesubscribers value for money with more options to meet their needs. True Move has grown rapidly since it launched full commercialoperations in March 2002 and has been successful in acquiring aboutone-third of the market’s net additional subscribers each year since 2004. True Move is now Thailand’s third-largest mobile operator, with 7.6million subscribers, an increase of 70 percent on the 4.5 million at thestart of the year. At the end of 2006, True Move prepaid and postpaid customers accounted for 93 percent and 7 percent of our total mobilesubscribers, respectively.
Pre Pay Pre Pay is True Move’s pre-paid service. Most of True Move’srevenue is derived from sales of prepaid airtime, which do notrequire a monthly subscription fee. Subscribers purchase a SIM card with an initial credit balance and can top-up their credit balance through various means, including purchase of top-up cards, transfer of funds through ATMs, transfer of credit balances from other mobile phone accounts, and “over-the-air” top-ups. We are the fi rst telecommuni-cations operator in Thailand to use
independent non-mobile agents as “over-the-air” airtime resellers such as individuals or small shops who register with us and areeligible to transfer airtime to subscribers via SMS transfer. We used over 100,000 such resellers in 2006. True Move also provides its Pre Pay and Post Pay subscribersa mobile payment channel via True Money services which were launched in 2006 to meet new generation lifestyle needs.
Post Pay Post Pay is True Move’s postpaid service which allows customers
to choose a monthly service plan which varies from Baht 199 toBaht 1,300. Subscribers are billedmonthly for subscription fees,airtime and usage of other voice and non-voice services.
Voice Services Our prepaid and postpaidsubscribers have access to local, domestic and international long-distance dialing. In addition, we offer a variety of value-added services in different combinations according to the airtime package selected. These services include call waiting, call forwarding, call
26 A n n u a l R e p o r t 2 0 0 6
conferencing and caller identifi -cation. We also offer our voicesubscribers roaming services, which enable them to make and receive calls when outsideThailand.
Non-Voice Services True Move provides a range of non-voice services to enhance customer lifestyles. Content is delivered through various channelscovering all mobile-accessible channels and web-based servicesthrough the www.trueworld.netp o r t a l . N o n - v o i c e s e r v i c e scomprise a variety of popularcontent, including photo-basedc o m m u n i c a t i o n , f i n a n c i a linformation services, games,cartoons, screen savers and ringtones, music and sports content.Our subscribers are increasinglyusing our non-voice services, inparticular Color Rings, messagingand downloadable pictures,images and audio through GPRS.
Non-voice services contributed 9.6 percent to True Move’s totalservice revenue in 2006, compared with 7.6 percent in 2005. Service revenue from content-based services (mainly color rings), messaging and GPRS traffi c contributed approximately 57, 33 and 10 percent,respectively, of total non-voice revenue. True Move is well positioned to use content as a growth driver by leveraging the exclusive content assets of TrueMusic, TrueOnline and TrueVisions.
We currently offer the following non-voice services to our subscribers: • SMS: allows subscribers to send short text messages to other mobile users; • Voice SMS: Thailand’s fi rst voice short-messaging service allows subscribers to send audio messages to fi xed-line and mobile handsets; • VoiceMail: enables subscribers to retrieve audio message recordings; • MMS: allows subscribers to send pictures, text and sound/voice in a single-packet message; • GPRS: provides mobile data communications with GSM-based technology, including WAP-based content portals, mobile Internet, data transfer and “push” e-mail (BlackBerry); • Multimedia Content Services: allows subscribers to access content such as music, sports, news and fi nance (through TrueMusic, TrueSport, TV, Movies and others); • Mobile Chat: a WAP-based instant-messaging service that allows subscribers to engage in online and mobile chat;
27A n n u a l R e p o r t 2 0 0 6
• Mobile Web: allows subscribers with compatible mobile handsets to access the Internet, including through available Wi-Fi connections; and • Color Ring: offers personalized ring-back tones and exclusive song selections.
Mobile Handset and Accessories Sales We offer a broad range of high-quality mobilehandsets, related accessories, PDA phones andsmartphones from a number of manufacturers, such as Motorola, Samsung, Sony Ericsson, O2 and HP.
International Roaming Services We allow people whose network operators haveinternational roaming agreements with us to use ournetwork when traveling in Thailand. We also allowour subscribers to use the networks of operators with whom we have entered into international roaming agreements.
Network True Move was the last of the three major Thaimobile operators to launch commercial operations,
and as such has been able to take advantage of the latest technical developments for our GSM network rollout, which has made our network relatively more effi cient and cost-effective. During 2006 we achieved coverage of approximately 92 percent of Thailand’s population, and increased our network capacity to eight million users.
Bundled Packages True Move’s name change from TA Orange inFebruary 2006 emphasized True Move’s membership of the True Group. This was highlighted during the year by the bundling of True Move services with other Group services, including: • The Unlimited campaign, offering various optionsof free calls and Internet usage for fi xed monthly charges; • True’s Family Package promotion, bundling fi xed-line and mobile services in ways designed to
encourage communication among family members; • Academy Fantasia 3. True Move was a majorpart of the bundling promotion with TrueVisions and True Internet based on the third series of the popularTrueVisions reality music program Academy Fantasia.Only True Move voters were able to vote for theirfavored contestants. The promotion proved to be a key subscriber retention tool for True Move during the seasonally low third quarter. Weekly voting was 43percent higher than in 2005, when customers ofTrue’s competitors were also able to vote; • The TrueVisions-True Move Free View massmarket promotion (see “TrueVisions” section belowfor more details); and • The All Together Bonus, True Group’s firstbundled package which was launched in 2004,continued to attract True Move subscribers. We have consistently sought to develop andmarket innovative non-voice products and services.For example, we were the fi rst in Thailand to offer Voice SMS, remixable ringtones (through the IRemixservice), and “over-the-air” top-ups to our subscribers.We also launched EDGE (Enhanced Data rates for
GSM Evolution) services in the BMA and other multimedia content-based services in 2006 as well as expanding our wireless Internet services using Wi-Fi technology.
Other True Move initiatives during the year included: • Offering Thai-language e-mail support for BlackBerry users; • Bolstering international roaming services, including offering in-fl ight services and becoming the exclusive Thai partner for Traveling Connect, the global roaming service that allows its members to earn mileage points; • Joining with True Internet, HP and Microsoft to offer a range of Wi-Fi Internet and mobile services; and • A free missed-call alert service based on SMS (also available to True fi xed-line subscribers).
28 A n n u a l R e p o r t 2 0 0 6
TrueOnline TrueOnline comprises fi xed-linetelephone and its value-added services, Internet and Consumer Broadband, data communications services and WE PCT. Our Interneta n d C o n s u m e r B r o a d b a n dbusinesses have been growingrapidly and help to maintain overall revenue generated by TrueOnline.
Fixed-line phone service True is the largest fi xed-line telephone service provider in the BMA with an estimated 58 percentmarket share, a fi xed-line capacity of 2.6 million and almost 2 million lines in commercial use. Our services range from the basic _ such as local calling, calls to mobile, domestic and interna-tional long-distance calling, and 26,000 public payphones _ to“value-added” services that includefault reporting, dropwiring and enhanced voice services such ascall forwarding and caller IDfunctions. In 2006, True alsointroduced VoIP (Voice overInternet Protocol) services called NetTalk by True, establishing a foothold in what is a relatively new market for Thailand. However, in these initial stages the National Telecommunications Commission (NTC) allows us to provide only phone-to-PC and PC-to-PC VoIP services. At the beginning of 2007, True received a license to operate an IDD (international direct dialing) service.
Network Our core fi xed-line networkis Thailand’s most modern andfi ber-rich network, which includesmore than 170,000 kilometers offi ber-optic cables, covering 4,200square kilometers in the BMA. This enables us to minimize the use
of copper cables (averaging 3-4 kilometers) and provide high qualityvoice and data communications services.
Consumer Broadband True Group is the largest Consumer Broadband operator with around an 80 percent share of the ADSL (Asymmetric Digital Subscriber Line) market in the BMA. We provide the service using cable modem andDSL technologies at a speed of up to 10 Mbps (VDSL or Very High Speed DSL). We also launched wireless broadband using pre-WiMax andWi-Fi technology. Our Consumer Broadband business is growing rapidly.As of December 31, 2006 we had 442,728 Consumer Broadbandsubscribers, representing an increase of 47 percent from 2005. We offer customers better service quality from our modern andfi ber-rich wireline network. We also offer rich content through theTrueWorld.net portal catering for consumer lifestyles, including music, gaming, sports and e-Books, as well as a variety of value-added services,including IPTV, WhiteNet fi ltering and AntiVirus+AntiMalware+AntiSpyware. In terms of our overall Internet business, we are Thailand’s no.1Internet Service Provider (ISP) with more than one million subscribers, including Consumer Broadband subscribers and subscribers of KSC,our affi liate. We offer Internet access to both consumers and business customers, along with a range of value-added services, including anInternet Data Center, providing security services for corporatecustomers. Our Internet and Consumer Broadband services were bolstered during the year with the granting of an international Internet gateway license,allowing us to provide a better quality and less costly service to our customers. True Group started providing the service at the beginning of 2007.
Broadband initiatives introduced during 2006 included: • hi-speed Internet Junior Package, which introduced broadband to a wider market. Subscribers were offered limited Internet access at a special introductory price;
29A n n u a l R e p o r t 2 0 0 6
• Outdoor Wi-Fi zones, at Bangkok’s Siam Square, Silom Road and Thonglor Road. These zones (a fi rst for Thailand) enable customers to access content, whether via computers or Wi-Fi enabled mobile phones, without the need to be indoors to access a Wi-Fi hotspot; • Trialing Pre-WiMax broadband in the upcountry city of Korat; • An offer of environmentally-friendly solar- powered Wi-Fi routers, in conjunction with King Mongkut’s Institute of Technology Ladkrabang; • Ongoing partnerships with real estate developers to offer cyber home services; • Online shopping services with supermarket chain Villa Market through www.weloveshopping. com; • Promotions with True Move mobile and Wi-Fi services as well as several leading notebook and PC makers, to offer best value to customers; • An offer of personal Internet-based hard disk storage for subscribers and the launch of the “Play” package for dial-up customers which has proved the most popular “net kit” in the Thai market; and
• TrueCoffee discount cards for True’s hi-speed Internet subscribers. The cards entitled subscribers to a free complementary New-Year coffee and a 50 percent discount on every cup of coffee for the three months to March 31, 2007.
WE PCT WE PCT is a cordless fi xed-phone service. Asubscriber’s PCT phone number is the same as his orher fi xed-line number. Up to nine PCT handsets canbe used with one fi xed-line number, with eachhandset holder assigned an individual access code socallers to the fi xed-line number can direct their callsto a specifi c person. The WE PCT service covers 2,500square kilometers of the inner area of the BMA.
During the year WE PCT maintained a Baht 300 package and a Baht 3 per call promotion targetedat students and the young. As of December 2006WE PCT had 347,099 subscribers, 26 percent lowerthen 2005 due to the impact of price competition inthe mobile phone business.
Data Services True’s Data Services offers business customersdata-transfer technologies and an outsourced datanetwork management service. True focused ondifferentiating itself by providing customizedservices via convergence with other True Groupproducts and services and by partnering with majorapplication providers such as Cisco to provide ahigh-quality Internet Protocol (IP) based network. Thismeans we do not have to compete on pricing. True provides data transmission services usingvarious technologies including Digital Data Network (DDN) or leased line, Frame Relay, Metronet (fi ber-to-the-building) and MPLS VPN (Multiprotocol Label-Switching Virtual Private Networks), which exploit theadvantages of Internet Protocol and which cost lessthan leased line. As of December 2006 there were 12,033 circuits for True’s DDN subscribers, a 17.8percent increase from 2005.
TrueVisions TrueVisions (formerly UBC) is Thailand’s leadingnationwide pay-TV provider, offering its service viadigital direct-to-home and digital HFC (hybridfi ber-coaxial) network platforms. TrueVisions offers a variety of top local andinternational channels including movies (such as HBO,Cinemax, Star Movies, Hallmark), sports (ESPN, StarSportand TrueVisions’ own channels SuperSport, SuperSportAction and Sport+), infotainment (the History Channel,Discovery Channel, National Geographic), news (CNN,CNBC, Bloomberg, BBC World) and Series (most ofwhich are TrueVisions’ sole copyright) as well asfree TV. Customers can select four differently pricedTrueVisions’ packages: Platinum, Gold, Silver andTrue Knowledge (Bronze).
30 A n n u a l R e p o r t 2 0 0 6
• The Platinum package offers 76 channels including six free-TV channels and 15 educational channels for Baht 2,000 a month; • The Gold package provides 67 channels including six free-TV channels and 15 educational channels for Baht 1,413 a month; • The Silver package provides 56 channels including six free-TV channels and 15 educational channels plus all music channels for Baht 750 a month; and • The True Knowledge (Bronze) package provides 46 channels including six free-TV channels and 15 educational channels for Baht 340 a month.
The year 2006 brought more success for TrueVisions with thescreening of popular reality TVs h o w A c a d e m y F a n t a s i a 3which helped retain subscribersduring the low-season periodwhile generating key content for other parts of True Group. In 2006,TrueVisions also expanded intothe mass market by offering low-price packages via bundling withTrue Move (the TrueVisions-TrueMove Free View package) liftingtotal subscribers at the end of 2006 to 558,860 or 629,269(including subscribers of bundledpackages with True Move), a 30percent increase from 2005.
Initiatives during the year included: • The launch in April of the True Knowledge (Bronze) Package, offering more than 40 TrueVisions channels at a lower price than existing packages to attract lower- income users, including those outside Bangkok, who might not otherwise subscribe to pay-TV;
• The launch in July of Thailand’s fi rst prepaid TV service, TrueVisions- True Move Free View, offering free satellite dish installation for True Move customers. The promotion has been a great success, with around 26 percent of subscribers upgrading to TrueVisions’ higher-tier packages; • In December TrueVisions secured the exclusive Thai broadcast rights for the next three seasons of English Premier League (EPL) football, the most watched sporting contest on Thai television. TrueVisions currently screens EPL games through the ESPN and Star Sports channels it carries. The securing of the rights opens up opportunities to cross-promote the EPL with other True Group businesses; • The launch of TrueVisions’ own infotainment channels Explore 1, Explore 2 and Explore 3 including TrueMusic, an interactive music channel, and Thailand’s fi rst 24-hour games channel, GSquare; and • Bundling packages based on Academy Fantasia 3, with True Move, True Internet and TrueLife (see above under “True Move”).
True Money True Money has approval from the Bank of Thailand to offer anelectronic cash service and also acts as a payment agent with theapproval of the Revenue Department. Major True Money servicescomprise the True Money cash card, a payment agent service andTrue Money via True Move (a money service via mobile phone).
True Money cash card The True Money cash card allows True Move and True customers to top-up their selected True Group services, including True Move Pre Pay, WE PCT Buddy, Fund Card, Pre Pay hi-speed Internet, Internet Kit, Wi-Fi, TrueWorld, e-Book and online gaming. Top-ups are made using the cash card’s PIN code. True Money launched this service in late 2005.
Payment agent True Money launched its payment service in 2003 and has 510payment outlets able to accept payment for 15 services. Payments are processed off a bar-coded statement and can be made by cash, cheque or credit card, either in full or partial payment. Customers can alsomake payments online, without statements, for certain services. Overduepayments can also be made.
31A n n u a l R e p o r t 2 0 0 6
True Money services via True Move This service, launched at the beginning of 2006, allows True Move subscribers to perform commercial and fi nancial transactions usingtheir mobiles, anytime and anywhere, under a high-security system tointernational standards. Using True Money, True Move subscribers can: • Recharge their credit balance for many prepaid services, including True Move Pre Pay and Internet airtime; • Pay bills for True Group products and services as well as for services outside the Group, such as electricity and water supply bills, taxi fares, online purchases of movie tickets, and bowling fees. True Money also has a system to alert customers to pay electricity and water supply bills before due date; • Transfer funds from their True Money account to anotherTrue Money account, or to their bank account; and • Keep amounts of up to Baht 30,000 in each True Money account. Customers can top up their True Money account from many sources by using a True Money cash card, an approved bank account or credit card. True Money is also the payment method for subscribers to the TrueVisions-True Move Free View package, with the fee automatically deductedeach month from subscribers’ True Money accounts. Subscribers can also upgrade to higher-tier TrueVisions’ packages using True Money. True Money was being used by around 850,000 True Move subscribersat the end of 2006 and we expect further growth. True Money willbecome a key vehicle for realizing True Group’s vision of becoming aconvergence lifestyle leader.
TrueLife TrueLife provides digital content and access as well as acting as adigital multimedia communicator for consumer-to-consumer, business-to-consumer and business-to-business transactions. TrueLife has three components: Online community portals; TrueLife Shops; and TrueLife Plus (our bundling packages). Two online community portals _ TrueWorld.net and TrueLife.com _ offercontent which bring together people with similar lifestyles or interests. Trueworld.net has four main content categories _ Music, Sport, TV and Movies _ and 300,000 subscribers. TrueLife.com, launched in 2006, allowssubscribers to communicate with each other, interacting using chatrooms and instant messaging. True Group is also an online games provider through NC True, a jointventure between True and NC Soft, a world-class online game makerfrom South Korea. NC True launched “Lineage II” in 2005 and in 2006launched “Guild Wars Factions” which is Thailand’s top online gamewith the most players. In 2006 True Digital also launched a new onlinegame called “Special Force” which has quickly become extremelypopular, attracting around 1.5 million registered gamers as well as beingthe number one “casual” online game in Thailand. TrueLife Shops bring together under one roof the full range of True products and services, including TrueCoffee, TrueMusic and TrueConsumer Broadband. These shops are located in areas within the BMAfrequented by trendsetters and the younger generation. TrueLife Plus represents our bundling of True products and services,offering customers greater value through packages that suit theirlifestyles.
Highlights for TrueLife in 2006included: • The launch of full song down- loads with GMM Digital Domain Co., Ltd. (GMMD), a subsidiary of major music content provider Grammy; • True Sports’ promotion with True Move and TrueVisions a l lowing TrueWorld.net subscribers the opportunity to watch the big four English football teams via broadband as well as to win prizes using SMS; • The availability of the popular TV reality show, Academy Fantasia 3, to Trueworld.net subscribers (for more details see under “True Move”) who were able to enjoy value-added content related to the show; • The introduction of a True Visions interactive music channel, available 24 hours a day, which allows viewers to request songs via SMS. Launched in November 2006, the channel is already highly popular; • The launch of TrueVisions’ interactive gaming channel GSquare; and • The launch of several major bundling packages, includ- ing TrueVisions-True Move Free View, Unlimited 799 (True Move and TrueOnline), Family Package (True Move and TrueOnline), and AF3 (True Move and TrueVisions). These are discussed in detail under their main business segments.
About Activities
Environmentaland Social Responsibility
32 A n n u a l R e p o r t 2 0 0 6
We believe that if we can improve young people’s understanding and provide them with the resourcesthey need to enjoy a wide range of educational opportunities we will be able to stimulate their creativity, encourage their innovative thinking and help them develop and express their ideas in rational and systematic ways. We are doing this by providing education additional to their classroom teaching.
We also encourage them to better understand theirenvironment and their local community through the use ofICT and natural and environmental activities, expanding their worldview so they can become fully fl edged adults whocan add value to society as a whole. A highlight for thegeneral public has been True’s promotion of natural and environmental preservation activities through the NatureConservation Photography Contest, “Precious Wildlife and ValuedForest”, joining with the National Park, Wildlife and PlantConservation Department. This program aims to build awarenessof nature and the environment, especially forestry andwildlife, through a photography contest held annually since 1995 and now in its 12th year. The program also includes a photo-taking forum where leading photographers and nature preservation activists are invited to share their knowledge and viewpoints on photo-taking technique as well as natural and environmental preservation.
Natural and Environmental Conservation
True Group’s leaders, top executives and employees play an importantrole in many social development activities, especially in education andnatural and environmental preservation. Their various social contribution activities focus on young people in Bangkok and nationwide, as well as on underprivileged children.
33A n n u a l R e p o r t 2 0 0 6
35 mm Slide and Digital Photo Category: “Forest Conservation”
Spider
1st PrizeGolden Rays of the Forest
Free Technique Digital Photo Category:“Forest and Wildlife Conservation”
1st PrizeOriental Darter...quick asa water snake
2nd PrizeWhose is tastier?
3rd PrizePlayful
Consolation PrizesFight
True’s promotion acknowledges His Majesty’s concern for the environment andhis encouragement to use our human and natural resources wisely for the sake of theThai nation. Her Royal Highness Princess MahaChakri Sirindhorn was kind enough to present the 2006 contest winners with their awards.
2nd PrizeSunshine
Consolation PrizesNature’s Own Shadow Rain-Covered Forest
35 mm Slide and Digital Photo Category: “Wildlife Conservation”
1st PrizeThe Last Leaf to Fall
Beach Clean-Up Project at Pattaya
Beautiful River by True
Fixed-line Tidy-Up Project
34 A n n u a l R e p o r t 2 0 0 6
We are also working with the Bangkok MetropolitanAdministration on a “Bangkok Environs Improvement” projectto tidy up all fi xed-line cabling along Bangkok’s main roads tocommemorate the Auspicious Occasion of the 60th Anniversaryof His Majesty’s Accession to the Throne. We have alsoworked with Pattaya City Council to collect garbage ona three-kilometer stretch of central Pattaya beachfront.
True also introduced a program called “Beautiful River by True” in which True’s fi xed-line team is working with Bang PlatDistrict’s Environmental Offi ce to collect garbage from the Chao Phraya River and keep the river beautiful.
True’s Solar Energy Project is a joint project with King Mongkut’s Institute of TechnologyLadkrabang to encourage the use of solar energy to tackle fuel shortage problems and reduceenvironmental impacts.
We have also established a “Mobile Phone Battery Disposal Project” to fully support the Mobile Phone Battery Disposal Project initiated by the Ministry of Natural Resources and Environment to dispose of mobile phone batteries correctly and safely. True joined the project by publicizing the riskthat expired mobile phone batteries pose to the environment if incorrectly disposed of. Unwanted batteries can be left in collection boxes at all True Shops and True Move Shops nationwide.
35A n n u a l R e p o r t 2 0 0 6
As well as activities for young people and the general public, True has established various activities and programs for local communities and wider society including the Dropwire Reuse Project. This project reuses dropwire that is not in service and has become “aerial garbage”, enabling it to be reused for customers which not only increases the working effi ciency of the dropwire but also reduces the amountof aerial garbage.
We place great importance on the environment and are working withRangsit Nature Education Center and WWF Thailand to create the“Natural and Environmental Preservation for Youth” project to raiseawareness of natural and environmental preservation. This projectinvolves two activities, “Our Sea We Love” and “Life On Our Planet”, atDigital Playground by True on the third fl oor of the Bangkok shopping mega mall Siam Paragon. The aim is to encourage young people topreserve nature and the environment.
To show gratitude to our beloved King,True Group was delighted to play its part in the celebrations with our “I Will Do” project. The project’s fi rst campaign demonstrated True’sconvergence capabilities by using more than 50 webcam booths nationwide and inviting peopleto pledge their good deeds in tribute to HisMajesty. The campaign attracted many Thais of all ages.
Contribution to Education and Society
36 A n n u a l R e p o r t 2 0 0 6
Exhibition on HM the King
ICT Expo 2006
37A n n u a l R e p o r t 2 0 0 6
As one of Thailand’s leading companies, True rateshighly its corporate social responsibility role, mindful thatour business decisions will have economic, social andenvironmental impacts.
To summarize, as a responsible and upstanding memberof Thai society, True is committed to helping create anddevelop opportunities for our young people, especially in education and the environment, inside and outside theclassroom. This will encourage them to grow into capable adults with good morals and an awareness of the importanceof natural and environmental preservation, so that they can take part in protecting, balancing and maintaining the beauty of nature for generations to come.
Insight True Success
40 A n n u a l R e p o r t 2 0 0 6
True’s vision is to be the leader in convergence lifestyle. True’s mission is to allow customers to communicate with each other and access value, knowledge, information and entertainment as well as to create value for our organization, employees and shareholders.
and Major Developmentsand Awards
True Corporation Public Company Limited is the most integrated communications solutions provider in Thailand. We were incorporated in November 1990, and registered as a public limited company in 1993 under our former name TelecomAsia Corporation Public Company Limited. We began trading on the Stock Exchange of Thailand in December 1993 with the security symbol “TA”. In April 2004, we rebranded under the “True”name and adopted the security symbol “TRUE” with registered and paid up capital of Baht 45,015 billion at the end of 2006. True is now one of the strongest brands in Thailand. True’s vision is to be the leader in convergence lifestyle. True’s mission is to allow customers to communicate with each other and access value,knowledge, information and entertainment as well as to create value for our organization,employees and shareholders. Our convergence lifestyle strategy differentiates True from otheroperators by providing a full range of communicationssolutions drawing on rich content to meet every customer’s lifestyle needs. Backed by Asia’s largest agro-conglomerate, the Charoen Pokphand Group (with a shareholdingof approximately 30.4 percent, as of 31st December2006), we have expanded our business from beinga fi xed-line provider to a total communica-tions solutions provider by offering consumers, small and medium enterprises, and corporations a full range of voice, data and video solutions
customized to meet their needs. We are Thailand’s largest provider of Internet, consumer broadband Internet and pay-TV services, as well as the largestfi xed-line service provider in the BMA, a leadingonline game provider and the number threemobile phone operator in Thailand.
We operate fi ve core businesses: • Mobile phone business under True Move (formerly TA Orange); • Online business under TrueOnline (which consists of fi xed-line phone service and its value-added services, DDN services, Internet and consumer broadband Internet services and WE PCT (Personal Communication Telephone)); • Pay-TV business (under TrueVisions, formerly UBC); • Digital commerce business under True Money; • Digital content business under TrueLife.
We provide fi xed-line phone services under a build-transfer-operate (BTO) concession with TOT Public Company Limited (TOT) to build, install, jointly operate and maintain a 2.6 million-linewireline network in the BMA for a period of 25 years, ending on October 2017. We received our fi rst revenue from the operation of our wireline network in November 1992. We received additional approvals to providevalue-added, public payphone and other services,
Company Background
41A n n u a l R e p o r t 2 0 0 6
Our convergence lifestyle strategy differentiates True from other operators by providing a full range of communications solutions drawing on rich content to meet every customer’s lifestyle needs.
and launched our WE PCT service in 1999, hi-speed data transmission services including ADSL and cablemodem in 2001, and Wi-Fi services in 2003. In 2006 we were granted an international Internet gateway license. In October 2001, we acquired a 41.1 percent equity interest in Bangkok Inter Teletech Public Company Limited (“BITCO”) (the parent companyof TA Orange) expanding our business in the mobilesector. Full commercial launch of TA Orange’smobile telecommunications service in Thailand tookplace in March 2002. We gradually increased our shareholding in BITCO until currently (as of 31st
December 2006) we own 93.4 percent, fullyconsolidating the results of BITCO and TA Orangefrom the beginning of the fourth quarter of 2004. TA Orange was rebranded to “True Move” at the beginning of 2006. True Move operates a digital mobile telecom-munications network based on the GSM (Global System for Mobile telecommunications) standard in the 1800 MHz frequency under a BTO concession with CAT Telecom, which is due to end in September 2013. During 2005 and 2006 True Group receivedlicenses from the NTC to provide Internet service, Internet service via telephone or VoIP (Voice over Internet Protocol), public phone services, fi xed-line phone services and Internet gateway services. In January 2006, True purchased UBC shares from MIH and completed the tender offer for UBC shares held by the public in March 2006, allowingTrue to own 91.8 percent (effective holding) of UBC. True started to fully consolidate UBC’s results into True Group from the fi rst quarter of 2006. UBC was rebranded to “TrueVisions” at the beginning of 2007.
TrueVisions operates pay-TV services under a 25-yearconcession contract with the Mass Communications Organization of Thailand which is due to end on September 30, 2014 for services via satellite and on December 31, 2019 for services via cable. At the end of 2006, True Group had an annual turnover of more than Baht 50 billion, infrastructureinvestments of more than Baht 100 billion, andemployed more than 10,000 staff.
Major Developments in 2006January 2006 True launches “True Money Services”, a new generation online payment service allowing True Move customers to purchase goods or services and perform their fi nancial transactions via mobile phone such as prepaid True Move, We PCT Buddy, Fun Card or Internet Kit top-ups. The service was later expanded to be used to make payments for non-True products and services, such as paying for services at Major Cineplex Group and other facility services as well as day-to- day fi nancial transactions. These include transfers between True Money accounts, transfers to and from bank accounts to True Money accounts, and withdrawals from True Money accounts through the ATM network nationwide using True Money cards.
February 2006 TA Orange changes its name to True Move, allowing True to better leverage the synergies of the True brand.
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March 2006 True completes UBC’s tender offer, a signifi cant step forward in the Company’s vision to becoming a fully-integrated communications solutions provider by being a market leader in voice, data and video. True launches IPTV services for its broadband customers.
April 2006 UBC launches “UBC True Knowl- edge (Bronze) Package” for the mass market, changing its strategy after becoming a part of True Group.
True debuts Thailand’s fi rst hi-speed Internet service via wireless broadband allowing customers in Nakhon Ratchasima to enjoy hi-speed Internet access without the need to install fi xed telephone line or cables. NC True introduces to the Thai market the critically-acclaimed online game Guild Wars. True Dig i ta l Enterta inment announces its co-operation with Dragonfly Inc. to bring “Special Force (SF)”, the Military FPS (First Person Shooting) online game from South Korea, into Thailand.
May 2006 True launches “hi-speed Internet Junior Package” , a hi-speed Internet service at an affordable price for the mass market.
True launches “MPLS Data Networking Solution” via Multi- Protocol Label Switching (MPLS) technology to offer innovative and efficient communication technologies and services to meet our corporate and SME customers’ demands for converged networking solutions, with the ability to support converged services in the future.
June 2006 True launches Wi-Fi by True Move at Siam Square making it the country’s fi rst outdoor Wi-Fi zone. This offers a new wireless hi-speed lifestyle “Free Your Life” without limitations through Wi-Fi enabled devices such as mobile phones, PDAs, pocket PCs and notebooks. Further outdoor Wi-Fi zones were introduced on Silom Road and in the Thonglor area.
True Move completes phase four of its network expansion, raising its network coverage to 92% of the population, placing True Move on a par with its peers.
July 2006 True announces a strategic partnership with major content provider GMM Digital Domain Co.,Ltd. (GMMD) to launch the innovative Full Song Download serv ice , offer ing un l imi ted downloads of full-length Grammy songs.
True strengthens its balance sheet and secures funding to support the growth of subsidiary True Move by raising Baht 3.377 billion via a private placement of 402 million shares, and also completes UBC’s long-term refi nancing of USD 300 million.
True launches NetTalk by True to enable people to call to anywhere in the world with clarity and affordability on the Voice over Internet Protocol (VoIP) platform.
True introduces TrueLife Plus, a unique bundled offer to leverage customers’ lifestyles, kicking off with the launch of the “UBC True Move Free View” package that allows consumers nationwide to view free, high-quality cable TV service from UBC; receive free True Move airtime; enjoy an innovative fi nancial experience from True Money and upcoming
43A n n u a l R e p o r t 2 0 0 6
campaigns under True Group’s convergence lifestyle strategy.
UBC launches the third season of UBC Academy Fantasia (UBCAF3), providing various viewing channels and special privileges such as free airtime for True Move customers.
August 2006 True Internet Gateway (formerly Sky Offi ce), a subsidiary company of True Group, is awarded an international Internet gateway license from the National Telecom- munications Commission (NTC).
True launches the TrueLife portal (www.truelife.com), which is part of the Company’s efforts to build online communities for those who share the same lifestyles or work- styles, and also opens a new TrueLife community at Thonglor as the fi rst free hi-speed music download café in Thailand.
September 2006 All mobile phone numbers switch to the new 10-digit number system, where the fi rst “0” is replaced with “08”. October 2006 True Group launches GSquare, Thailand’s fi rst 24-hour game channel, on UBC channel 22.
December 2006 True Move successfully places USD 465 million of seven-year bonds with a bullet (one-time) payment to international investors to repay its Thai Baht debts and free up cash fl ow to support growth.
Awards received in 2006True received considerable recognition during 2006. This was a tribute to the hard work and ability of management and staff. Awards included the follow-ing:
• True was named Thailand’s Most Innovative Company, and ranked as the nation’s seventh-most admired company, by readers of The Wall Street Journal Asia in the newspaper’s annual survey of Asia’s 200 most admired
companies. Readers were asked to rank companies on fi ve attributes: reputation, quality of products and services, management’s long-term vision, innovativeness in respond- ing to customer needs, and fi nancial sound- ness. (True’s major shareholder, CP Group, was named as the Thai company with the best long-term vision.) • True was recognized as Tax Man of the Year by the Tax Research Center and Tax & Business Magazine. The award recognizes Thailand’s top corporate tax payers for outstanding business growth, contributions to society and the country’s economy, corporate governance and excellent tax payment record.
• True President and CEO Mr. Supachai Chearavanont was named Telecom Man of the Year by the Information and Communications Technology Ministry “for heading the only Thai telecommunications company with convergence services, for his vision and endeavors to develop the country’s telecommunications industry, and for his contributions in encouraging knowledge and learning among the nation’s youth”.
• Priew Magazine gave True President and CEO Mr. Supachai Chearavanont the PRIEW Award (Business & Marketing) as one of 10 distinguished individuals chosen from six professions for their exceptional personalities and good social standing.
• True was named Best Competitive Carrier for the third consecutive year in the Telecom Asia Magazine Awards. True was chosen on the basis of its fi nancial status, market leadership, technology innovat ion and corporate governance. True was the only Thai operator nominated, and remains the only Thai carrier to have won any of Telecom Asia’s category awards.
• True was recognized in the 22nd annual Good Safety & Health Company Awards from the Asia Pacifi c Occupational Safety & Health Organization (APOSHO).
• True won the Good Welfare & Labor Company Award f rom the Min i s t ry of Labor ’s Department of Labor Protection & Welfare.
Hall of Fame
44 A n n u a l R e p o r t 2 0 0 6
Education Honorary Master Degree of Economics, Thammasat University
Related training programs held by the Thai Institute ofDirectors Association (IOD) Director Accreditation Program (DAP)
Major ExperienceCompanies Listed on the Stock Exchange of Thailand1998-Present Independent Director, True Corporation Public Company LimitedPresent Vice Chairman, Vice Executive Chairman and Member of Remuneration Committee, Berli Jucker Public Company Limited Chairman, Advance Agro Public Company Limited Chairman and Chairman of Executive Board, Siam Food Products Public Company Limited Chairman and Chairman of Executive Board, Oishi Group Public Company Limited
Non-listed CompaniesPresent Vice Chairman and Vice Executive Chairman, Thai Beverage Public Company Limited Vice Chairman and Executive Chairman, Beer Thai (1991) Public Company Limited Chairman, Thai Alcohol Public Company Limited Chairman, Sura Banyeekhan Company Limited Chairman of Executive Board, Thai Beverage Can Limited Chairman, BJC Cellox Limited Chairman, Thai Glass Industries Public Company Limited Chairman, Thanakorn Vegetable Oil Products Company Limited Chairman, Prida Pramote Company Limited Chairman, Eastern Seaboard Industrial Estate (Rayong) Company Limited Executive Director, Com-link Company Limited
IndependentDirectors
Mr. Narong Srisa-anIn
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45A n n u a l R e p o r t 2 0 0 6
Education Master Degree of Laws, Harvard University, U.S.A. Master Degree of Arts, University of Cambridge, London Bachelor of Laws, University of Cambridge, London English Barrister, Gray’s Inn Association
Related training programs held by the Thai Institute of Directors Association (IOD) Director Accreditation Program (DAP) Audit Committee Program (ACP) Chairman 2000
Major ExperienceCompanies Listed on the Stock Exchange of Thailand1998-Present Independent Director and Chairman of the Audit Committee, True Corporation Public Company Limited
Non-listed Companies1998-Present Chairman, K Line (Thailand) Company Limited and its subsidiaries1991-1992 Permanent Secretary of the Ministry of Foreign Affairs1988 Ambassador Extraordinary and Plenipotentiary of the United States of America1984 Ambassador Extraordinary and Plenipotentiary of Belgium and the European Community1981 Ambassador Extraordinary and Plenipotentiary of Canada1979 Director, General of Department of Economic Affairs
Mr. Vitthya Vejjajiva
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46 A n n u a l R e p o r t 2 0 0 6
Education Doctorate of Engineering, University of London, England Bachelor of Engineering, University of London, England
Related training programs held by the Thai Institute of Directors Association (IOD) Director Accreditation Program (DAP) Director Certifi cation Program (DCP) Audit Committee Program (ACP) Chairman 2000
Major ExperienceCompanies Listed on the Stock Exchange of Thailand1999-Present Independent Director and Member of the Audit Committee, True Corporation Public Company Limited2004-Present Independent Director and Chairman of the Audit Committee, ACL Bank Public Company Limited
Non-listed Companies2001-Present Director, Mahidol Wittayanusorn School (Public Organization) 2001-2005 President, The Telecommunications Association of Thailand under Royal Patronage 2000-2001 Chairman, The Aeronautical Radio of Thailand Limited 1986-1992 Rector, King Mongkut’s Institute of Technology Ladkrabang
Dr. Kosol Petchsuwan
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47A n n u a l R e p o r t 2 0 0 6
Education Fellow of the Association of Chartered Certifi ed Accountants, England Programme for Management Development, Harvard Business School, U.S.A. Marketing Management Programme, Stanford University, Graduate School of Business, U.S.A.
Related training programs held by the Thai Institute of Directors Association (IOD) Director Accreditation Program (DAP) Chairman 2000
Major ExperienceCompanies Listed on the Stock Exchange of Thailand1999-Present Independent Director and Member of the Audit Committee, True Corporation Public Company Limited2004-2006 Chief Executive Offi cer, ACL Bank Public Company Limited2000-2001 Executive Chairman, TISCO Finance Public Company Limited1994-1997 President & CEO, Thai Wah Group of Companies1992-1994 Managing Director and Consul-General of Denmark for Bangkok, The East Asiatic (Thailand) Public Company Limited
Non-listed Companies2002-Present Director, True Move Company Limited
Mr. Joti Bhokavanij
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48
Corporate Governance Practice
True has two levels of corporate governance oversight: by the Board of Directors and by management.The Board of Directors has established the Corporate Governance Committee which comprises Mr. NarongSrisa-an, Mr. Vitthya Vejjajiva, Dr. Kosol Petchsuwan, Mr. Joti Bhokavanij, Mr. Andreas Klocke andDr. Ajva Taulananda. Corporate governance at management level is overseen by the CEO and other seniorexecutives.
Section 1Rights of Shareholders1. The Board of Directors has established a corporate governance policy that takes into account _ as
much as possible _ the rights of shareholders, without being limited to the rights specified only by law.The Board of Directors has approved and implemented the new Corporate Governance policy which has beenamended to be in line with the Principles of Good Corporate Governance for Listed Companies 2006 issued bythe Stock Exchange of Thailand and combined with the concept of Sufficiency Economy.
2. The Company held its Annual General Meeting of Shareholders for the Year 2006 on 11th April 2006taking into account the convenience of shareholders, the meeting was scheduled on a working day duringworking hours and held in Bangkok where transportation in convenient.
3. The Company will send shareholders an invitation letter to inform them of dates, times, locations,meeting agendas and the background to issues which shareholders are being asked to vote on, and rules andregulations for the meeting and its voting processes.
4. This information is provided to shareholders in the notice of meeting in accordance with the legallyrequired advance period. Information is explained in detail so a reader who has no background knowledge ofthe topic will still be able to easily understand it. Since 24th March 2005, all information regarding shareholdermeetings has been posted on the Company’s website before notice of the meetings is sent out, so thatshareholders can study all information prior to receiving the notice.
CorporateGovernance
Introduction
In 2006 the Company started to carry out its business according to thePrinciples of Good Corporate Governance for Listed Companies 2006issued by the Stock Exchange of Thailand (SET). The first guideline consistedof 15 practices issued on March 2002, then fine tuned and modified bythe SET in line with the Organization for Economic Co-operation andDevelopment (OECD) Principles of Corporate Governance 2004 and WorldBank suggestions from its corporate governance project called Reports onthe Observance of Standards and Codes (CG-ROSC). True’s good corporategovernance practices are summarized as follows:
Compliance Report
49
5. The Company’s policy prohibits any action that could be considered to violate a shareholder’s right toaccess information on the shareholder meeting. Shareholders can make advance inquiries aboutinformation they do not understand or submit advance questions to the Company’s Investor RelationsDepartment on 0-2699-2515 or to the Company Secretary Department on 0-2643-0076.
6. To encourage attendance at shareholder meetings, the Company provides free-of-chargerefreshments and snacks for shareholders before and after meetings as well as souvenirs.
The Company encourages shareholders’ participation and voting in meetings at no charge. Anyaction that could be considered to violate their right to attend meetings is prohibited.
The Company has streamlined its procedures for attending and voting at meetings.The chairman of the meeting ensures there is appropriate time set aside for discussion and
encourages shareholders to express their opinions and ask questions related to the Company’s operations.Moreover, after the meeting directors meet with shareholders in person and provide them with an opportunityto ask any questions they may not want to ask during the meeting.
Section 2Equitable Treatment of Shareholders1. The Company allows shareholders who cannot attend meetings to cast a proxy vote. Shareholders
must submit a proxy form to the Company Secretary Department before the meeting so it can be verified.2. The Company encourages the use of proxy forms on which shareholders can specify their voting
preferences. The Company provides an option for shareholders to appoint the Chairman of the AuditCommittee, who is an independent director, as their proxy.
3. The Company allows minority shareholders to propose any issues to be added to the meeting agendaas well as submitting nominations for directors before the 2007 AGM by using the form provided bythe Company and sending it by registered mail to the Company from 1st December 2006 to 31st January 2007.The Company posted the above proposals on its website and through the SET’s electronic media.
4. For the sake of transparency and historical record, the Company encourages the use of voting cards.The voting cards will be kept as evidence if there is any argument after the meeting.
5. The Company allows shareholders to vote on individual nominees.6. The Company’s code of conduct covers inside information and insider trading, as well as the use
of applicable laws to monitor and prevent the personal use of confidential Company information bymanagement and related persons. In addition, the Company prohibits directors and senior management usinginside information in violation of their responsibilities to the Company, its shareholders and its strictcompliance policy.
Material information which has not yet been disclosed is kept confidential, apart from disclosure tothe relevant senior management of the Company. Directors and senior management must report purchases,sales, transfers and assignations of securities issued by the Company to the office of Securities and ExchangeCommission (“SEC”) within three days of the transaction’s execution, and provide a copy of this report to theCompany for its records and incorporation in its regular report to the Board of Directors.
7. In 2006 no Board member or executive had conflict of interest in proposed Company transactions8. The Company has measures and procedures for approving the entering into connected transactions
in compliance with the Rules and Regulations of the Office of Securities and Exchange Commission (“SEC”)and the Stock Exchange of Thailand (“SET”) i.e. related party transactions must obtain approval from theIndependent Directors to be processed according to the internal procedure relating to related partytransactions, details of which have been stipulated by the Independent Directors. If any related partytransaction is deemed to be a connected transaction, the said transaction must be approved by the AuditCommittee, the Board of Directors and/or Shareholders Meeting _ as the case may be _ according to theRegulations of the Stock Exchange of Thailand.
50
The Company has also established an Independent Committee to take part in monitoring highly signifi-cant connected transactions. This committee comprises independent directors, creditor-nominated directorsand directors representing major shareholders. If any major shareholder has a conflict of interest, directorsnominated by this shareholder will abstain from the Independent Committee meeting to consider the case.
Section 3Role of Stakeholders1. The Board of Directors recognizes the importance of acknowledging the rights of all stakeholders and
their ability to positively influence the Company’s conduct and activities, and vice versa. Accordingly, theCompany has established a “Code of Conduct” covering employees and stakeholders which includes:
Employees- The right to privacy and the right to be protected from any violation of that privacy- The right to receive fair and equal treatment- The right to fair and equal employment rights such as the right to take leave and to receive fringe
benefits, and the opportunity to be promoted, to transfer to other work units, and to receiveperformance assessments
Customers- The right to receive fair and equal treatment- The right to receive full and efficient service from the Company’s employees- The right to receive quality goods and highly efficient service- The right to protection of confidential information
Suppliers and dealers (business partners)- The right to fair and equal treatment- The right to protection of confidential information- The right to be treated honestly and reliably- The right to information on relevant laws, regulations and policies- The right to fair competition
Creditors- The right to receive honor compliance (with all agreements in accordance with their terms and
relevant laws and regulations)- The right to receive correct and complete financial information- The right to receive payments owing, as well as safeguarding all guaranteed assets given as
security
Investors- The right to receive fair and equal treatment- The right to be treated with the best intentions of the management to operate the business with
their best knowledge, skills, and honesty- The right to be protected from the use of insider information for pursuing private interests
Government agency- The right to regulate, monitor and punish according to laws and regulation and the government
agency’s standard practice.
2. The Company’s Internal Audit Department reports directly to, and is accountable to, the AuditCommittee. The Company provides opportunities for its employees to address their concerns directly to thisdepartment or the Audit Committee.
51
3. The Company operates its business while taking into consideration environmental and social mattersand is focused on promoting a knowledge-based society as a path to sustainable development for Thailand.The Company uses modern telecommunications technology to develop educational projects which help withthe development of youth and underprivileged children in Thai society. A knowledge-based society offering abetter quality of life is an important foundation for ensuring Thailand’s future prosperity. The Company hasestablished various environmental projects and activities such as:
- Mobile Phone Battery Disposal Project: The Company fully supports the Mobile Phone BatteryDisposal Project initiated by the Ministry of Natural Resources and Environment to dispose of mobile phonebatteries correctly and safely. The Company joined the project by publicizing the risk that expired mobile phonebatteries pose to the environment if incorrectly disposed of. Unwanted batteries can be left in collection boxesat all True Shops and True Move Shops nationwide.
- Dropwire Reuse Project: A project reusing dropwire that is not in service and has become “aerialgarbage”.
- Beautiful River by True: The Company’s fixed line team is working with Bang Plat District’sEnvironmental Office to collect garbage in the Chao Phraya River.
- Solar Energy Project: The Company is working with King Mongkut’s Institute of TechnologyLadkrabang to encourage the use of solar energy to tackle fuel shortage problems and reduce environmentalimpacts. This includes offering high-speed Internet connections powered by solar cells and by using solarenergy for hi-tech home solutions.
- Bangkok Surrounding Improvement Project: A joint venture between Bangkok MetropolitanAdministration and the Company to tidy up all fixed-line cabling along Bangkok’s main roads to commemoratethe Auspicious Occasion of the Sixtieth Anniversary of His Majesty the King’s Accession to the Throne.
- Save Pattaya Beach Campaign: A joint venture between the Company and Pattaya City Councilto collect garbage on a three kilometer stretch of central Pattaya beachfront.
- Natural and Environmental Preservation for Youth: Activities to raise youth awareness ofnatural and environmental preservation are being jointly undertaken by the Company, Rangsit NatureEducation Center and WWF Thailand. The project team has arranged two activities: “Our Sea We Love” and“Life On Our Planet” at Digital Playground by True on the third floor of Bangkok’s shopping mega mall SiamParagon to encourage the younger generation to preserve nature and the environment.
- Nature Classroom Project: This project takes education outside the traditional classroom byhelping students in schools under the management of the Bangkok Metropolitan Administration’s EducationDepartment to learn more about preserving nature and the environment. The project’s activities include marinetours to Siam Ocean World at Siam Paragon.
- The Nature Conservation Photography Contest - “Precious Wildlife and Valued Forest”:This program aims to build awareness of nature and the environment, especially forest and wildlife, througha photography contest held annually since 1995 and now in its 12th year. The program also includes aphoto-taking forum where leading photographers and nature preservation activists are invited to share theirknowledge and viewpoints on photo-taking technique as well as natural and environmental preservation.In 2006 we held seven of these forums.
The Company is also considering establishing an environmental and social policy and submitting it tothe Board of Directors in 2007.
Section 4Disclosure and Transparency1. The Company discloses financial and non-financial information (as required by SET regulations)
accurately, thoroughly, and in a timely and transparent manner through various channels including theSET and the Company’s website, in Thai and English. All disclosed information is updated from time to time.The Company also posts on its website detailed information for analysts and investors such as a graphical
52
summary of financial results showing core business performance, comparative balance sheets, investornews, etc.
2. The Company provides a summary of the Corporate Governance Policy approved by its Board andcorporate governance practice through various channels such as the annual report and website.
3. The Company provides a statement of the Board’s responsibilities concerning the Company’s financialreport. This statement is presented alongside the auditor’s report in the Company’s annual report.
4. The Company discloses the roles and responsibilities of the Board of Directors and its committees, thetotal number of meetings and the number of meetings each member attends, as well as the results of tasksperformed during the year in the annual report and in shareholder meeting notices, according to SET andSEC regulations.
5. The Company paid directors remuneration in 2006 according to rates approved by shareholders atthe 2006 AGM, which are the same rates approved by the 1998 and 2002 AGMs and which have not changedfor several years.
Remuneration of directors is paid on a monthly basis as follows:Chairman Baht 300,000 per monthHonorary Chairman Baht 200,000 per monthVice Chairman Baht 150,000 per monthDirector Baht 100,000 per month
Any director being an employee of the Company shall receive the director’s remuneration in addition tohis or her salary as an employee.
Independent directors who hold a position on a committee shall receive remuneration as follows:Independent director who is also the Chairman of a committee Baht 300,000 per monthIndependent director who is also a member of a committee Baht 200,000 per monthRemuneration of independent directors who are not members of a committee, and directors who are
not independent directors, shall remain the same
6. In 2006 the Company paid senior executives remuneration according to their contributions andresponsibilities, commensurate with that paid by other companies in the same industry.
7. The Company discloses details of its remuneration, including the nature and amount of payment, inits annual report and annual registration statement (Form 56-1).
8. The Company’s Investor Relations Department communicates with external parties in a fair andprofessional manner.
Section 5Responsibilities of the Board1. Board Structure
1.1 The Board of Directors consists of four executive directors and 14 non-executive directors.Independent directors make up 22 percent of the total number.
1.2 The term of service for each director is clearly stated in the Company’s corporate governancepolicy and Articles of Association which are in accordance with legal requirements.
1.3 The Company has specified the details of independent directors’ qualifications in its annualregistration statement (Form 56-1) and the annual report.
1.4 The Company details the background and position of each member of the Board in its annualreport and annual registration statements (Form 56-1). Shareholders can download this information from theSET website at www.set.or.th or from the Company website at www.truecorp.co.th.
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1.5 Board policy specifies that directorships held in other companies by the Company’s seniorexecutives must be disclosed to their superiors.
1.6 The Chairman of the Board is a non-executive director and the CEO is not the same person as theChairman. The roles and responsibilities of the Chairman are in accordance with the law. The roles andresponsibilities of the CEO are determined by the Board of Directors.
1.7 The Company Secretary serves the Board of Directors by providing legal advice, helping organizethe Board’s activities, and monitoring compliance with the Board’s resolutions. The Company Secretary alsomeets with counterparts from other listed companies from time to time to discuss best practice.
2. Committees2.1 As well as the Audit Committee established by the Company according to SET regulations, the
Board of Directors has established the following committees to manage good corporate governance:The Compensation and Nominating Committee is responsible for making recommendations
to the Board of Directors regarding the compensation of directors and the CEO, and the nomination ofdirectors of the Company.
The Finance Committee is responsible for assisting the Board of Directors to review andmonitor the Company’s financial management.
The Corporate Governance Committee assists the Board of Directors to establish and reviewthe Company’s corporate governance policy as well as making sure that the Company has a sound andappropriate corporate governance practice.
The Independent Committee is responsible for reviewing and monitoring Companytransactions which may involve highly significant conflicts of interest.
2.2 So that the committees can perform their duties transparently, independently, and at the sametime effectively, their membership comprises independent directors, creditor-nominated directors andnon-executive directors.
3. Roles and Responsibilities of the Board3.1 The Board of Directors reviews and approves key business matters such as the vision and mission
of the Company, strategy, financial targets, risks, major plans of action and budget. The Board also monitorsthe performance of management to ensure their efficiency and effectiveness.
3.2 The Board sets and approves a written corporate governance policy for the Company andreviews the policy and its compliance regularly, at least annually. In 2006, the Board of Directors approved andimplemented the new Corporate Governance policy (which has been amended and proposed by theCorporate Governance Committee) to be in line with the Principles of Good Corporate Governance for ListedCompanies 2006 issued by the Stock Exchange of Thailand, combined with the concept of Sufficiency Economy.
3.3 The Board of Directors ensures that a written code of business conduct is in place so that alldirectors, executives and employees understand the Company’s ethical standards for doing business.Compliance with the code is closely monitored by the Board.
3.4 The Board of Directors considers transactions involving conflicts of interest thoroughly. It followsclear guidelines on approving such transactions so that they are conducted in the best interests of theCompany and all shareholders. The person who has an interest in the transaction does not participate in thedecision-making process. The Board also monitors compliance with the regulations regarding criteria,procedures and disclosure of transactions involving conflicts of interest.
3.5 The Board of Directors ensures that internal control systems are in place, including financial,compliance and policy controls, and reviews the system at least annually. The Board also assigns the AuditCommittee to monitor the independent audit and report on the system.
3.6 The Company runs a risk management system covering operational and financial risk as well asmaintaining internal auditing using a risk-based audit approach. To manage operational risk the Company hasestablished the BCP Steering Committee to develop and maintain a business continuity plan. The Company has
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also established a Crisis Management Team to support significant business operations of the Company whichmay face a crisis, by implementing and managing a crisis response. To manage financial risk, the Company hasa financial management policy to mitigate risks arising from fluctuations in currency exchange rates. This policyincludes entering into forward foreign exchange contracts, negotiating payment terms for individual foreigncurrency settlements, and negotiating with foreign suppliers to share foreign exchange exposure, etc.
4 Board Meetings4.1 The Company sets its meeting schedule in advance and notifies each director of this schedule.
However, in an emergency case the Company can also call for an additional Board meeting.4.2 In 2006 the Company held seven Board meetings which are appropriate to the obligations and
responsibilities of the Board and the nature of the Company during the year.4.3 The Chairman and/or Vice Chairman of the Board and the CEO jointly set the agenda for each
Board meeting. Moreover, each Board member is free to suggest agenda items.4.4 Meeting documents are sent to each director before the meeting. These documents are concise
but contain all relevant information. Any confidential issues are discussed during the meeting.4.5 The Chairman of the Board allocates enough time for the meeting to receive full presentations
from management and host comprehensive discussions by directors.4.6 The Board is able to access additional information, under a prearranged agreement, via the CEO,
the Company secretary and/or the executive designated as a contact person.4.7 Top executives attend Board meetings to detail the issues that they are directly responsible for.
5 Board Self Assessment5.1 The Board of Directors will start its annual Board Self Assessment in 2007
6 Remuneration6.1 Board members’ remuneration is commensurate with that of other directors in the Company’s
industry, and reflects the experience, obligations, range of work, accountability, responsibilities andcontributions of each director. Members of the Board with greater responsibilities, such as independentdirectors who also hold committee memberships, are paid more.
6.2 Remuneration of the CEO and top executives is set in accordance with Board policy, within thelimits approved by shareholders (for the types of remuneration that require such approval). Executives’salaries, bonuses and other long-term compensation reflect the Company’s performance and that of eachexecutive.
6.3 The Compensation and Nominating Committee appraises the performance of the CEO annuallyto set his compensation. The basis of the appraisal is agreed upon by the CEO ahead of the evaluation. Thecriteria are objective, including financial performance, long-term strategic performance, career developmentplan, etc. The results of the appraisal are then presented to the Board for approval. The Chairman of the Boardor a senior director communicates the evaluation results to the CEO.
7 Board and Management Training7.1 The Company encourages and facilitates training for all internal parties who have a role in
corporate governance, including directors, members of the Audit Committee, executives, the CompanySecretary, etc. Training – either internal or external – enables them to continuously improve theirperformances.
7.2 In 2006 the Company had no new directors. However, the Company has a policy stipulating thatevery time it appoints new directors, the administrator has to provide all necessary documents and informationon the nature of the business and the operations of the Company to the new directors.
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1. Wireline
Revenues 20,791 40.1% 22,143 50.6% 23,143 70.1%
2. Wireless
Revenues 22,694 43.8% 21,648 49.4% 9,867 29.9%
3. Pay - TV
Revenues 8,377 16.1%
Total Revenues 51,862 100% 43,791 100% 33,010 100%
(Restated)
Business Group / Operation by 31 December 2006 31 December 2005 31 December 2004
Baht Million % Baht Million % Baht Million %
Source: The Company
RevenuesBusiness Group
Breakdown by
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True Corporation Public Company Limited (the “Company”), with the security symbol “TRUE” on theStock Exchange of Thailand, was established on 13th November 1990 initially under the name of CPTelecommunication Co., Ltd. with authorized capital of Baht 1,000 million to undertake a majortelecommunication infrastructure project, and registered as a limited public company with registration no.0170536000081 (Formerly registration no. Bor Mor Jor 82) on 11th February 1993.
As at 31st December 2006, the Company’s authorized capital is Baht 47,134,724,910 consisting of4,014,105,645 ordinary shares with a par value of Baht 10 per share and 699,366,846 preference shares witha par value of Baht 10 per share. The Company’s paid-up capital is Baht 45,015,277,360, comprising3,802,160,890 ordinary shares with a par value of Baht 10 per share and 699,366,846 preference shares witha par value of Baht 10 per share. The Company’s head office is located at:
18 True Tower, Ratchadapisek Road,Huai Khwang, Bangkok 10310Telephone: (662) 643-1111 Fax: (662) 643-1651Website: www.truecorp.co.th
CorporateInformation
The Company’s subsidiaries, associate companies and other investments are as follows:
Company Name AddressType of
Paid-up Capital% of
Invest-Business ment
Asia DBS Public Company Limited 18 True Tower, DBS system THB 100 million divided 89.99
Ratchadapisek Road, operator into10 million ordinary
Huai Khwang, shares with a par value
Bangkok 10310 of Baht 10 each
Tel. (662) 643-1111
Fax. (662) 643-1651
Asia Infonet Company Limited 1 Fortune Tower, Internet THB 15 million divided 65.00
14th, 17th Floors, provider into 1.5 million ordinary
Ratchadapisek Road, shares with a par value
Din Dang, Bangkok 10400 of Baht 10 each
Tel. (662) 641-1800
Asia Wireless Communication Company 18 True Tower, PCT operator THB 10,441.85 million 99.99
Limited Ratchadapisek Road, divided into 1,044.18
Huai Khwang, million ordinary shares
Bangkok 10310 with a par value of Baht
Tel. (662) 643-1111 10 each
Fax. (662) 643-1651
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Company Name AddressType of
Paid-up Capital% of
Invest-Business ment
Bangkok Inter Teletech Public Company 18 True Tower, Holding THB 13,562.50 million 93.36
Limited Ratchadapisek Road, Company divided into 5,425
Huai Khwang, million ordinary shares
Bangkok 10310 with a par value of Baht
Tel. (662) 643-1111 2.50 each
Fax. (662) 643-1651
BeboydCg Company Limited 1000/6 Liberty Plaza Music THB 16.52 million 70.00
Building, 20th Floor, production divided into 1.65 million
Sukhumvit 55, ordinary shares with a
Sukhumvit Road, par value of Baht
Klongtan-nua, Wattana, 10 each
Bangkok 10110
Cineplex Company Limited 118/1 Tipco Tower, Program THB 1,283.43 million 91.79
Rama VI Road, production divided into 128.34
Samsen Nai, Phayathai, million ordinary shares
Bangkok 10400 with a par value of
Tel. (662) 615-9000 Baht 10 each
Fax. (662) 615-9900
Click TV Company Limited 118/1 Tipco Tower, Interactive THB 46 million divided 91.79
Rama VI Road, television into 4.6 million ordinary
Samsen Nai, Phayathai, business shares with a par value
Bangkok 10400 of Baht 10 each
Tel. (662) 615-9000
Fax. (662) 615-9900
IBC Symphony Company Limited 118/1 Tipco Tower, Dormant THB 30 million divided 91.79
Rama VI Road, into 3 million ordinary
Samsen Nai, Phayathai, shares with a par value
Bangkok 10400 of Baht 10 each
Tel. (662) 615-9000
Fax. (662) 615-9900
Internet KSC Company Limited 2/4 Siam Commercial Distribution THB 50,000 divided into 91.05
Samaggi Insurance tower, 20,000 ordinary shares
10th Floor, with a par value of Baht
Vibhavadee-Rangsit Road, 10 each, partial call up
Thungsonghong, Laksi, a par value of Baht
Bangkok 10210 2.50 each
Tel. (662) 979-7000
58
Company Name AddressType of
Paid-up Capital% of
Invest-Business ment
Internet Knowledge Service Center 2/4 Siam Commercial Non- THB 50 million divided 56.93
Company Limited Samaggi Insurance tower, government into 2.67 million ordinary
10th Floor, telecommunications shares with a par value
Vibhavadee-Rangsit Road, of Baht 10 each and
Thungsonghong, Laksi, 9.33 million ordinary
Bangkok 10210 share with partial call
Tel. (662) 979-7000 up a par value of Baht
2.50 each
Internet Shopping Mall Company Limited 2/4 Siam Commercial Training THB 50,000 divided into 58.10
Samaggi Insurance tower, services and 20,000 ordinary shares
10th Floor, Vibhavadee-Rangsit distribution with a par value of Baht
Road, Thungsonghong, Laksi, 10 each, partial call up
Bangkok 10210 a par value of Baht
Tel. (662) 979-7000 2.50 each
K.I.N. (Thailand) Company Limited 18 True Tower, Holding THB 352.50 million 99.99
Ratchadapisek Road, Company divided into 11.75
Huai Khwang, million ordinary shares
Bangkok 10310 with a par value of Baht
Tel. (662) 643-1111 30 each
Fax. (662) 643-1651
KSC Commercial Internet Company 2/4 Siam Commercial Internet THB 15 million divided 37.83
Limited Samaggi Insurance tower, provider into 1.5 million ordinary
10th Floor, shares with a par value
Vibhavadee-Rangsit Road, of Baht 10 each
Thungsonghong, Laksi,
Bangkok 10210
Tel. (662) 979-7000
MKSC World Dot Com Company Limited 2/4 Siam Commercial Internet THB 200,000 divided 91.08
Samaggi Insurance tower, services and into 20,000 ordinary
10th Floor, distribution shares with a par value
Vibhavadee-Rangsit Road, of Baht 10 each
Thungsonghong, Laksi,
Bangkok 10210
Tel. (662) 979-7000
N&T Communication Company Limited 18 True Tower, Telecommunications THB 1 million divided 99.94
Ratchadapisek Road, services into 10,000 ordinary
Huai Khwang, shares with a par value
Bangkok 10310 of Baht 100 each
Tel. (662) 643-1111
Fax. (662) 643-1651
59
Company Name AddressType of
Paid-up Capital% of
Invest-Business ment
Online Advertising Goldsite Company 2/4 Siam Commercial Publication THB 50,000 divided into 58.10
Limited Samaggi Insurance tower, 20,000 ordinary shares
10th Floor, with a par value of
Vibhavadee-Rangsit Road, Baht 10 each, partial
Thungsonghong, Laksi, call up a par value of
Bangkok 10210 Baht 2.50 each
Tel. (662) 979-7000
Red Media Company Limited 118/1 Tipco Tower, Dormant THB 25 million divided 91.79
Rama VI Road, into 2.5 million ordinary
Samsen Nai, Phayathai, shares with a par value
Bangkok 10400 of Baht 10 each
Tel. (662) 615-9000
Fax. (662) 615-9900
Samut Pakan Media Corporation Company 18 True Tower, Telecommunications THB 1 million divided 93.31
Limited Ratchadapisek Road, services into 10,000 ordinary
Huai Khwang, shares with a par value
Bangkok 10310 of Baht 100 each
Tel. (662) 643-1111
Fax. (662) 643-1651
Satellite Service Company Limited 118/1 Tipco Tower, Sales and rental THB 2,880 million 89.19
Rama VI Road, of equipment divided into 480 million
Samsen Nai, Phayathai, related to Pay ordinary shares with
Bangkok 10400 Television a par value of Baht
Tel. (662) 615-9000 6 each
Fax. (662) 615-9900
Song Dao Company Limited 18 True Tower, Retail services THB 1 million divided 93.30
Ratchadapisek Road into 10,000 ordinary
Huai Khwang, shares with a par value
Bangkok 10310 of Baht 100 each
Tel. (662) 643-1111
Fax. (662) 643-1651
Tele Engineering and Services Company 18 True Tower, Construction THB 25 million divided 99.99
Limited Ratchadapisek Road, and distribution into 2.5 million ordinary
Huai Khwang, shares with a par value
Bangkok 10310 of Baht 10 each
Tel. (662) 643-1111
Fax. (662) 643-1651
60
Company Name AddressType of
Paid-up Capital% of
Invest-Business ment
Telecom Equipment Manufacturing 18 True Tower, Telecom THB 24 million divided 59.99
Company Limited Ratchadapisek Road, equipment into 2.4 million ordinary
Huai Khwang, manufacturer shares with a par value
Bangkok 10310 of Baht 10 each
Tel. (662) 643-1111
Fax. (662) 643-1651
Telecom Holding Company Limited 18 True Tower, Holding THB 17,300.25 million 99.99
Ratchadapisek Road, Company divided into 1,722.52
Huai Khwang, million ordinary shares
Bangkok 10310 with a par value of Baht
Tel. (662) 643-1111 10 each and 21 million
Fax. (662) 643-1651 ordinary shares with
partial call up a par value
of Baht 3.57 each
Telecom International Company Limited 18 True Tower, Holding THB 300 million divided 99.99
Ratchadapisek Road, Company into 30 million ordinary
Huai Khwang, shares with a par value
Bangkok 10310 of Baht 10 each
Tel. (662) 643-1111
Fax. (662) 643-1651
Telecom KSC Company Limited 2/4 Siam Commercial Non- THB 250,000 divided 34.39
Samaggi Insurance tower, government into 100,000 ordinary
10th Floor, telecommunications shares with a par value
Vibhavadee-Rangsit Road, of Baht 10 each, partial
Thungsonghong, Laksi, call up a par value of
Bangkok 10210 Baht 2.50 each
Tel. (662) 979-7000
Telecom Training and Development 18 True Tower, Training THB 120 million divided 99.99
Company Limited Ratchadapisek Road, services into 5 million ordinary
Huai Khwang, shares with a par value
Bangkok 10310 of Baht 10 each and 8
Tel. (662) 643-1111 million ordinary shares
Fax. (662) 643-1651 with partial call up a par
value of Baht 8.75 each
True Digital Entertainment Company 1 Fortune Tower, Online games THB 633 million divided 99.99
Limited 25th Floor, into 63.3 million ordinary
Ratchadapisek Road, shares with a par value
Din Dang, Bangkok 10400 of Baht 10 each
Tel. (662) 641-1800
61
Company Name AddressType of
Paid-up Capital% of
Invest-Business ment
True Distribution and Sales Company 18 True Tower Retail services THB 1 million divided 93.30
Limited Ratchadapisek Road, into 10,000 ordinary
Huai Khwang, shares with a par value
Bangkok 10310 of Baht 100 each
Tel. (662) 643-1111
Fax. (662) 643-1651
True Leasing Company Limited 18 True Tower, Rental services THB 2,394.96 million 99.99
(formerly “True Fleet Management Ratchadapisek Road, divided into 65 million
Company Limited”) Huai Khwang, ordinary shares with a
Bangkok 10310 par value of Baht 10
Tel. (662) 643-1111 each and 181.20 million
Fax. (662) 643-1651 ordinary shares with
partial call up a par
value of Baht 9.63 each
True Internet Company Limited 1 Fortune Tower, Internet THB 511.2 million 99.99
14th, 27th Floors, solution divided into 23.64
Ratchadapisek Road, provider million ordinary shares
Din Dang, Bangkok 10400 with a par value of Baht
Tel. (662) 641-1800 10 each and 36.64
million ordinary shares
with partial call up a par
value of Baht 7.50 each
True Internet Gateway Company Limited 1 Fortune Tower, Telecommunications THB 26 million divided 99.99
(formerly “Sky Office Company Limited”) 15th Floors, and internet into 260,000 ordinary
Ratchadapisek Road, services shares with a par value
Din Dang, Bangkok 10400 of Baht 100 each
Tel. (662) 641-1800
True Internet Data Center Company 18 True Tower, Internet data THB 149.59 million 70.00
Limited 14th Floor, center divided into 14.96 million
Ratchadapisek Road, ordinary shares with a
Huai Khwang, par value of Baht 10
Bangkok 10310 each
Tel. (662) 643-1111
Fax. (662) 643-1651
True Lifestyle Retail Company Limited 18 True Tower, Internet cafe THB 131 million divided 99.99
Ratchadapisek Road, and related into 13.1 million
Huai Khwang, services ordinary shares with a
Bangkok 10310 par value of Baht 10
Tel. (662) 643-1111 each
Fax. (662) 643-1651
62
Company Name AddressType of
Paid-up Capital% of
Invest-Business ment
True Magic Company Limited 18 True Tower, Production THB 1 million divided 99.99
Ratchadapisek Road, and distribution into 100,000 ordinaryHuai Khwang, of movies and shares with a par valueBangkok 10310 films of Baht 10 eachTel. (662) 643-1111Fax. (662) 643-1651
True Money Company Limited 18 True Tower, Payment THB 200 million divided 99.99Ratchadapisek Road, service center into 20 million ordinaryHuai Khwang, and electronic shares with a par valueBangkok 10310 card services of Baht 10 eachTel. (662) 643-1111Fax. (662) 643-1651
True Move Company Limited 18 True Tower, Cellular THB 30,600.15 million 93.27Ratchadapisek Road, operator divided into 3,060.02Huai Khwang, million ordinary sharesBangkok 10310 with a par value of BahtTel. (662) 643-1111 10 eachFax. (662) 643-1651
True Multimedia Company Limited 18 True Tower, NON-POTS THB 6,562 million 91.08Ratchadapisek Road, and multimedia divided into 656.2Huai Khwang, services million ordinary sharesBangkok 10310 with a par value ofTel. (662) 643-1111 Baht 10 eachFax. (662) 643-1651
True Properties Company Limited 18 True Tower, Rental services THB 3,488 million 99.99Ratchadapisek Road, divided into 34.88 millionHuai Khwang, ordinary shares with aBangkok 10310 par value of Baht 100Tel. (662) 643-1111 eachFax. (662) 643-1651
True Public Communication Company 18 True Tower, Telecommunications THB 1 million divided 99.94Limited Ratchadapisek Road, services into 10,000 ordinary(formerly “Chachoengsao Sky Network Huai Khwang, shares with a par valueCompany Limited”) Bangkok 10310 of Baht 100 each
Tel. (662) 643-1111Fax. (662) 643-1651
True Touch Company Limited 18 True Tower, Call center THB 193 million divided 99.99Ratchadapisek Road, services into 1.93 million ordinaryHuai Khwang, shares with a par valueBangkok 10310 of Baht 100 eachTel. (662) 643-1111
Fax. (662) 643-1651
63
Company Name AddressType of
Paid-up Capital% of
Invest-Business ment
True Universal Convergence Company 18 True Tower, Telecommunications THB 1 million divided 99.94
Limited Ratchadapisek Road, services into 10,000 ordinary
(formerly “R&R Communication Company Huai Khwang, shares with a par value
Limited”) Bangkok 10310 of Baht 100 each
Tel. (662) 643-1111
Fax. (662) 643-1651
True Visions Cable Public Company Limited 118/1 Tipco Tower, Pay Television THB 7,608.65 million 90.89
(formerly “UBC Cable Network Public Rama VI Road, via cable divided into 760.86
Company Limited”) Samsen Nai, Phayathai, system million ordinary shares
Bangkok 10400 with a par value of Baht
Tel. (662) 615-9000 10 each
Fax. (662) 615-9900
UBC Fantasia Company Limited 118/1 Tipco Tower, Artist THB 25 million divided 46.81
Rama VI Road, management into 2.5 million ordinary
Samsen Nai, Phayathai, and related shares with a par value
Bangkok 10400 business of Baht 10 each
Tel. (662) 725-7400
Fax. (662) 725-7401
True Visions Public Company Limited 118/1 Tipco Building, Pay Television THB 2,266.72 million 91.79
(formerly “ United Broadcasting Corporation Rama 6 Road, divided into 755.57
Public Company Limited”) Phayathai,Bangkok 10400 million ordinary shares
Tel. (662) 615-9000 with a par value of Baht
Fax. (662) 615-9900 3 each
Wire & Wireless Company Limited 54 W&W Building, Construction THB 100 million divided 87.50
Pattanakarn 20, and distribution into 10 million ordinary
Suanluang, Bangkok shares with a par value
Tel. (662) 717-9000 of Baht 10 each
Fax. (662) 717-9900
NC True Company Limited 18 True Tower, Developer and THB 174.91 million 50.00
18th Floor, service provider divided into 8.57 million Share
Ratchadapisek Road, of online games ordinary shares with a holding
Huai Khwang, par value of Baht 10 but
Bangkok 10310 each and 8.92 million 40.00
Tel. (662) 643-1111 preference shares with Voting
Fax. (662) 643-1651 a par value of Baht Rights
10 each
Asia Remanufacturing Industries Company 102, 15th Floor, Modification, THB 5.6 million divided 20.00
Limited Na Ranong Road, repair and into 56,000 ordinary
Klongtoey, maintenance shares with a par value
Bangkok 10110 services of Baht 100 each
64
Company Name AddressType of
Paid-up Capital% of
Invest-Business ment
Thai Smart Card Company Limited 191 Silom Complex Central Service THB 800 million divided 15.76
Building, 27th Floor, Bureau for into 80 million ordinary
Room No. 2, Silom Road, clearing electronic shares with a par value
Bangrak, Bangkok payment of Baht 10 each
transactions
NEC Corporation (Thailand) Company 159 Sermmit Tower 2nd, Telecommunications THB 343 million divided 9.62
Limited 24th Floor, Sukumvit 21, into 343,000 ordinary
Klongtoey Nua, Wattana, equipment shares with a par value
Bangkok manufacturer of Baht 1,000 each
International Broadcasting Corporation 78 Levine Blvd. Dormant USD 1 million divided 64.25
(Cambodia) Company Limited Phnom Penh City, into 1 million ordinary
Cambodia shares with a par value
of USD 1 each
K.I.N. (Thailand) Company Limited P.O. Box 957, Holding USD 1 divided into 1 99.99
(BVI) Offshore Incorporation, Company ordinary share with a par
Road Town, Tortola, value of USD 1 each
British Virgin Island
Nilubon Company Limited P.O. Box 71, Holding USD 8,000 divided into 99.99
(BVI) Craigmuir Chambers, Company 8,000 ordinary shares
Road Town, Tortola, with a par value of USD
British Virgin Island 1 each
TA Orient Telecom Investment Company 3/F, Hing Yip Commercial Holding USD 15 million divided 99.99
Limited Centre, Company into 15 million ordinary
272 Des Voeus Road C., shares with a par value
Hong Kong of USD 1 each
Telecom Asia (China) Company Limited P.O. Box 957, Communication USD 10 divided into 10 99.99
Offshore Incorporation ordinary shares with a
Road Town, Tortola, par value of USD 1 each
British Virgin Island
Telecom International China Company P.O. Box 71, Communication USD 10 divided into 10 99.99
Limited Craigmuir Chambers, ordinary shares with a
Road Town, Tortola, par value of USD 1 each
British Virgin Island
Chongqing Communication Equipment 140 Daping Zhengjie Telecommunications RMB 292 million 38.21
Company Limited Chongqing, equipment
People’s Republic of China manufacturer
65
99.94
%
99.94
%
99.99
%
99.99
%
99.99
%
99.99
%
93.36
%
99.94
%
99.99
%
99.99
%
87.50
%
15.76
%
40.00
%
99.99
%
65.00
%
70.00
%
96.50
%
96.50
%
59.30
%
66.39
%
100.0
0%
99.99
%
99.99
%
99.99
%
99.34
%
97.17
%
51.00
%
70.00
%
99.99
%
100.0
0%
99.97
%
62.50
%
99.99
%
99.99
%
99.99
%
99.99
%99
.99%
99.99
%
99.99
%
99.99
%
99.99
%
91.08
%
89.99
%
99.99
%
99.99
%
59.99
%
9.62%
2.92%
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om H
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.
True
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perties
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less
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mun
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nCo
., Lt
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., Lt
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om T
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and
Deve
lopm
ent Co
., Lt
d.
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style
Ret
ail C
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td.
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Ltd.
Asia
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Public
Com
pany
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ited
K.I.N
. (Th
ailan
d) C
o., L
td.
(For
eign
Com
pany
)
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Tou
ch C
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td.
Telec
om E
quipm
ent
Man
ufac
turin
g Co
., Lt
d.
NEC
Corp
orat
ion
(Tha
iland
)Co
., Lt
d.
Impe
rial T
echn
olog
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Man
agem
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ervic
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Com
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ited)
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. (Th
ailan
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nCo
., Lt
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n Co
., Lt
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eign
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om In
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., Lt
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orld D
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td.
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.
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.
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com
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, Ltd
.
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Red
Med
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., Lt
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phon
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., Lt
d.
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Cable
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(For
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ly na
med
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twor
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ited)
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, Ltd
.
UBC
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Co.,
Ltd.
Inte
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l Bro
adca
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(Cam
bodia)
Co.,
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Adve
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g Golds
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., Lt
d.
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all C
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td.
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.
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ly na
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t M
anag
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., Lt
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letec
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inm
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& W
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., Lt
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Smar
t Ca
rd C
ompa
nyLim
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rue
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Ltd.
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atew
ay C
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merly
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ffice
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., Lt
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a Ce
nter
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Dao
Co.
, Ltd
.
Sam
ut P
akan
Med
iaCo
rpor
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True
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e Co
., Lt
d.
99.93
%
99.94
%
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ribut
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& Sa
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., Lt
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%
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As
of
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6
Indire
ct S
hare
holding
Dire
ct S
hare
holding
66
References
Registrar : Thailand Securities Depository Company Limited62 The Stock Exchange of Thailand Building,Rachadapisek Road, Klongtoey, Bangkok 10110Telephone: (662) 229-2888Fax: (662) 359-1259Website: http://www.tsd.co.th
Auditor : Mr. Kajornkiet Aroonpirodkul (Certified Public Accountant (Thailand) No. 3445)and/or Mrs. Nattaporn Phan-Udom (Certified Public Accountant (Thailand)No. 3430) and/or Mr. Boonmee Ngotngamwong (Certified Public Accountant(Thailand) No. 3673)PricewaterhouseCoopers ABAS Limited179/74-80 Bangkok City Tower, 15th Floor,South Sathorn Road, Sathorn, Bangkok 10120Telephone: (662) 286-9999, (662) 344-1000Fax: (662) 286-5050
Debenture Registrar/ : TMB Bank Public Company LimitedDebentureholders’ 393 Silom Road, Bangrak, Bangkok 10500Representative Telephone: (662) 230-5575, (662) 230-5487,
(662) 230-5731Fax: (662) 266-8150
67
While True sees many opportunities for growth in 2007, there are anumber of general and specific factors that could impact the company’sperformance and that of its subsidiaries.
Risks relating to our operations
We have experienced, and expect to continue to experience, increasing competition in thebusinesses in which we operate.
True and its subsidiaries, particularly True Move (formerly TA Orange) and its Internet and Broadbandbusinesses, face increasing competition.
The Thai mobile communications sector has experienced intense price competition since 2005,resulting in tariff reductions and declines in ARPU and margin. Our blended ARPU for True Move declined by10 percent in 2005 (from Baht 437 in 2004 to Baht 393) and by 26 percent in 2006 (to Baht 292). Theincrease in subscriber additions and increase in usage we experienced following this period of intense pricecompetition required us to make additional capital expenditures to alleviate congestion and expand ournetwork capacity. Our EBITDA margin in 2006 declined to 21.4 percent (from 23.4 percent in 2005).
In addition, if the National Telecommunications Commission (NTC) allows telecom operators, to launchadditional services, introduces number portability or grants telecom licenses to new operators, it may createmore competition in the market. Recent changes of ownership in our key competitors may also expose us tocompetition from foreign-owned operators with more experience in other competitive markets and greaterfinancial resources than we enjoy.
However, we believe that price competition in the mobile phone market will decline after theimplementation of the interconnection regime in 2007 because each operator will have a cost burden ofconnecting to other networks and major mobile operators with market share of higher than 25 percentcannot set their tariffs lower than their costs. This is in line with the NTC’s 2006 regulation combatingmonopolies and unfair competition in operating telecom businesses. The three major mobile operators havealready signed interconnection agreements.
In the broadband Internet market, we face competitors ranging from start-up Internet companies tomultinational companies, whose applications for ISP licenses were approved by the NTC in 2005. At thebeginning of 2006 the NTC granted a fixed-line license to TT&T Broadband Company Limited. TT&T couldprovide fixed-line and broadband Internet services nationwide, thereby intensifying competition. In addition,True’s online business will face indirect and growingcompetition from mobile phone businesses and Voiceover Internet Protocol (VoIP) services, whose tariffs are lower than those for traditional online services.
We expect competition to remain intense, but we believe True is well positioned to meet thiscompetition given our leadership position through our ability to provide fully integrated services together withthe strength of our brand. True Move has captured one-third of the subscriber additions in the Thai mobilemarket every year since 2004 and True Group still maintains its market leadership in Internet and ConsumerBroadband due to the advantages of having a modern fixed-line network suitable for providing these services.
RiskFactors
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True and its subsidiaries have applied for new licenses to take advantage of new opportunities offered byregulatory reform. At the time of writing, we have been granted an ISP license, an international Internetgateway license, a public phone license, a fixed-line license and International Direct Dialing (IDD) license.
Rapid technological change could also adversely affect the viability of True’s business andmake its current technology less competitive.
The communications industry is characterized by rapid changes in technology, evolving customer needsand new products and services. These changes are, in some cases, brought about by regulators opening upthe market. Key emerging technologies for the Thai communications industry in the near future are expectedto include third-generation (3G) mobile phones, wireless broadband (WiMax), and number portabilityservices. In order to respond successfully to emerging industry trends, we may be required to make substantialcapital expenditure given the industry’s capital-intensive nature. But if we do not invest in the newtechnology it will lower our competitiveness.
However, we believe that integrated operators, such as ourselves, with diversified services, products,revenues and customer bases, are in a better position to cope with these rapid changes than are “pure play”operators. We believe that we have a stronger ability to manage potential revenue cannibalization from newtechnologies by being able to keep services and revenues “in-house” and by being able to balance trafficacross our mobile, broadband and fixed-line services.
Our future success depends on our key personnel and the continued operations of ournetwork and services.
Our success depends on the continued contribution of our management and employees as well as thecontinued operation of our network. We have established human resource policies in order to retain anddevelop our management team and staff. Compensation is set at a competitive rate compared to the market.In addition, we have established recruitment processes to ensure that we recruit capable staff in the firstplace.
Continued unrest in the southern part of Thailand, as well as unforeseen disasters, may causetemporary disruption in certain geographical areas of our business. The southern part of Thailand has recentlyexperienced increasingly frequent incidents of violence. True Move and several other mobile operatorsrecently experienced temporary interruption of services following damage to a number of cell sites as a resultof the violence. Incidents such as these, over which we have no control, may continue to have an impact onour business.
Risks relating to regulatory environment
Thailand’s communications industry is in a state of transition and a significant degree of un-certainty exists regarding the regulatory environment.
In accordance with Thailand’s commitment to the World Trade Organization, or the WTO, to liberalizeits telecommunications sector by 2006, the Thai government embarked on a reform of the country’stelecommunications regulatory regime with the passage of two major legislative acts: the OrganizationsAllocating Frequency Waves and Supervising Radio and Television Broadcasting and TelecommunicationsBusiness Act, or the NTC Act, in March 2000; and the Telecommunications Business Operation Act, or theTBO Act, in November 2001.
In October 2004, the NTC was established as the new independent regulator of thetelecommunications industry, assuming the regulatory functions previously exercised by the TelephoneOrganization of Thailand (now known as TOT Public Company Limited), or TOT, the CommunicationsAuthority of Thailand (now known as CAT Telecom Public Company Limited), or CAT, and the Post andTelegraph Department.
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From its establishment to the end of 2006, the NTC has issued regulations prescribing, among otherthings:
(1) licensing requirements for the various defined categories of telecommunications services;(2) eligibility requirements and application procedures for the three categories of telecommunications
licenses available in Thailand;(3) interim regulations for allocating telephone numbers;(4) the change of mobile phone numbers from 9-digits to 10-digits;(5) anti-monopoly and unfair competition rules;(6) the interconnection regulation;(7) procedures for receiving and considering subscribers’ complaints;(8) standard of telecommunications service contracts; and(9) price caps and prepaid collection
The NTC is expected to issue a number of additional policies and regulations in 2007 that may havea significant impact on our business. Delays in the organization of the National Broadcasting Commission(NBC), a separate regulator for radio, television and other broadcasters, may prevent the NTC from issuinglicenses for new telecom services that require the allocation and management of radio frequency includingmobile phone business. If True Move does not get the NTC’s license before the concession contractexpires in September 2013, it will not be able to continuously pursue its business and this will stronglyimpact True Group’s financial status and performance because it is our core business (True Move’s revenueaccounted for 44 percent of True Group total revenue in the year 2006). It is also possible that policiesimposed by the NTC may adversely affect True’s operating costs and/or increase competition in the sectors inwhich we operate.
The NTC’s interim telecommunications license fee regulation sets out a lower tariff structure for newentrants that operate under the licensing regime than the tariffs that are applicable to the existingconcessionaires, such as True, that are operating their businesses under the concession agreements grantedby TOT and CAT. This could put the existing concessionaires at a disadvantage to the new entrants. Tomitigate against this, True will apply for new licenses offered by the NTC.
Apart from the above risks the Company may face some impacts from the uncertainties surroundingnew government policies after the changes on Thailand’s political front. In January 2007 the Cabinetapproved a proposal made to the Council of State to consider the legal issues regarding the Private-PublicJoint Venture Law B.E. 2535: whether the concession contracts between state-owned enterprises and privatetelecom operators are in accordance with the Law or not. There is a possibility that our concession contractsmay be amended or cancelled before we are granted NTC licenses. If the concession contracts are cancelled,True Group (and its subsidiaries) may be at risk because it could not continue its business, which could affectTrue Group’s financial status.
Also, in January 2007, the Cabinet endorsed the zero-rate excise tax and ended the 2003 resolutionthat imposed excise tax of 2 percent and 11 percent for fixed-line phone and mobile phone operators, respec-tively. The 2003 resolution allowed private telecom operators to deduct part of their concession fees to bepaid as excise tax directly to the government, before sharing the remaining fee with their concession owners.The zero-rate excise tax will allow TOT and CAT to receive full concession fees, while the total regulatory feesof the private telecom firms have remained unchanged.
True will continue to play an active role in discussions with the NTC and the ICT Ministry regarding thetelecommunication industry’s regulatory environment and to advocate free-and-fair competition on a levelplaying field.
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TOT and/or CAT may initiate legal proceedings against True Move after True Movesigned the interconnection charge agreements and ceased paying access charges to TOT. This mayresult in an increase in our expenses and True Move subscribers may experience interruptedservice when attempting to contact TOT subscribers.
True Move operates its mobile phone business under a CAT concession contract and is signatory to anaccess charge agreement resulting in True Move paying Baht 200 per subscriber per month to TOT for postpaid subscribers and paying 18 percent of its revenue to TOT for prepaid subscribers. In addition, we have tomake a revenue sharing payment of 25 percent of net revenue after the access charge payment to CAT.
In May 2006 the NTC announced its Interconnection Regulation which stipulated thattelecommunications operators who have telecommunications networks are required to allow otheroperators to access their networks in compliance with the procedure specified in the InterconnectionRegulation. The regulation sets a new interconnection system whereby interconnect charges will reflect actualnetwork usage by each operator. Under this interconnection regulation, operators are also required toenter into agreements with one another to establish interconnection charge rates, which are based oncost. On November 17, 2006 True Move signed an interconnection contract with DTAC (Total AccessCommunications) with the contract taking immediate effect. On January 16, 2007 True Move signed aninterconnection contract with AIS (Advanced Info Service) which indicated the start of interconnect chargeson February 1, 2007, or April 1, 2007 at the latest, if there is any delay as a result of a technical issue.
Following the entry into the interconnection charge agreement with DTAC, True Move ceased itspayment of access charges under the access charge agreement with CAT and TOT as it believes that,following the introduction of the interconnection regime, it is no longer bound by or legally able tomake payments under the access charge agreements.
On November 17, 2006 True Move wrote to CAT and TOT informing them that it would cease payingaccess charges on the basis that the rate and collection of access charges under the agreement were contraryto the law. True Move also asked TOT to enter an interconnection charge agreement in compliance with thelaw, or to temporarily apply the provisional rate announced by the NTC while negotiations on an agreementwith TOT proceeded.
As a result of the cessation of access charge payments by True Move, on November 23, 2006 TOT issued a letter stating that True Move was not entitled to connect its network with TOT’s network becauseit was not a telecommunications licensee, as granted by the NTC, and did not have its own telecommunica-tions network. TOT also disputed that the access charge agreement did not violate any law and that the rateand collection of access charges under the access charge agreement continued to apply.
TOT and/or CAT could also initiate legal proceedings against True Move. If we are not successful inresolving this issue in our favor, in addition to a penalty equal to 100 percent of any access charges CAT mayhave paid to TOT on our account and interest thereon, we may be required to pay both new interconnectioncharges as well as existing access charges, which will result in a material increase in our costs. If True Move isrequired to pay access charges by court order for the period from November 18, 2006 to December 31, 2006,True Group would be liable to accrue additional access charges of Baht 455.6 million, or Baht 204.3 million,net of revenue sharing paid to CAT. (See Notes to the consolidated Statements No. 22)
In addition, TOT has threatened not to integrate True Move’s 1.5 million new phone numbers,allocated by the NTC to its system, meaning that TOT subscribers would not be able to call True Movesubscribers with those 1.5 million phone numbers. True Move filed a lawsuit with the CentralAdministrative Court requesting an injunction and on January 26, 2007 the Court ordered TOT to connect itsnetwork with True Move’s new numbers so that subscribers of TOT and True Move could communicate witheach other. On January 30, 2007 TOT appealed the Court order to the upper court whose decision was stillpending at the time of writing. However, TOT connected its network with True Move’s new numbers fromMarch 2, 2007.
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We compete with our concession grantors and this has led to and could continue to lead todisputes with them, which could affect our operations.
True and its subsidiaries operate under the “Agreement for Joint Operation and Joint Investment forExpansion of Telephone Services” and/or licenses granted by TOT and CAT.
A dispute with either TOT or CAT over compliance with a concession agreement could affect the abilityof True and its subsidiaries to conduct business. Our fixed-line concession could be cancelled by TOT if Trueviolates laws relating to public or national security, is placed under receivership by a court in a bankruptcycase, or willfully and continually breaches a concession agreement in any material respect. However, TOTmust submit the case to the Arbitration Tribunal for adjudication before it can cancel the concessionagreement with True.
Under the revenue-sharing provisions of True’s fixed line concession, TOT collects all of True’s fixed-linerevenues from subscribers within True’s network and retains a portion for revenue sharing. TOT may withholdor delay payments from revenues collected for True to offset any obligations it believes it is owed (althoughthis has not occurred to date).
As well as being True’s concession grantors, TOT and CAT are also our competitors. This has and couldcontinue to lead to disputes between True and TOT and between True and CAT. Previously TOT and True havebrought some disputes to the Administrative Court and the Arbitration Tribunal for adjudication. We may notbe able to successfully resolve any of these disputes in our favor, and if we were unsuccessful, our businessand financial condition could be affected. Up to the time of writing, the courts have delivered judgments bothin favor and against cases brought to the courts by True. (See Notes to the Consolidated and CompanyFinancial Statements No. 38 related to “Litigation and Arbitration Disputes”.)
Risks relating to financial situation
Our operations are at risk due to our high debt levels and are restricted by debt and otherfinancial agreements. Exchange rate and interest rate movements may increase our interestpayments and other financial obligations.
True Group and its subsidiaries have high debt levels and may be at risk of failing to find funding eachyear to repay principal and interest. However, we would be able to negotiate with our creditors or raise newloans to repay existing loans and adjust our principal repayments to suit our cash flow.
True’s operations are limited by a number of debt and other financial agreements. These agreementscould prohibit True from exploiting good business opportunities or lead to accelerated debt repaymentif some of the debt covenants are not in line with those indicated by the financial agreements or if TOTcancels the concession agreement with True. However, TOT must seek an arbitration decision in order tocancel the concession agreement.
True is subject to exchange rate fluctuations, which could increase principal, interest payments andcapital expenditure. As of December 31, 2006 approximately 40 percent of True Group’s consolidatedliabilities were denominated in foreign currencies, most of which was denominated in US Dollars. In the year2006, True had consolidated capital expenditure of approximately Baht 9.5 billion, 31 percent of which wasin foreign currencies.
True has put in place hedging tools to reduce its exposure to exchange rate fluctuations, for 87percent of a USD 160 million loan belonging to True Move and 100 percent of a USD 200 million long-termloan for the TrueVisions (formerly UBC) acquisition as well as 100 percent of a True Move bond of USD 465million issued in December 2006. In addition, True had also entered into interest rate swaps that hedgedforeign exchange exposure on interest payments for the maturity of all US Dollar loans and reduced interestrate exposure. As a result, the US Dollar interest rates for these US Dollar loans were converted into Thai Bahtfixed rates. However, there is no hedging in place for the Japanese Yen-denominated deferred payment noteof Bt 3.4 billion, which matures from 2014 to 2017.
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As at the end of December 2006, of True’s total consolidated debt (excluding finance leases),approximately 49 percent is subject to floating interest rates, excluding a portion that has been hedgedto fix the interest rates. However, interest rates on part of True Move’s debt will reduce over time if itis able to achieve the conditions set out in its loan agreement.
We may not be able to pay a dividend to shareholders.As at the end of 2006, True reported a net loss of Baht 4.2 billion with a retained loss of Baht 44.2
billion due largely to the Thai Baht currency devaluation in 1997. In accordance with Thailand’s PublicCompany Limited Act, True is able to pay dividends to its shareholders only from profits earned, afterprovision has been made for a legal reserve, and after cumulative losses have been depleted.
Therefore, shareholders may not receive a dividend in the near future, as is stated in True’s dividendpolicy.
Risks relating to the TrueVisions (formerly UBC) acquisition
We may not realize the anticipated benefits of the integration of TrueVisions (formerly UnitedBroadcasting Corporation Public Company Limited or UBC), and we may share a number of risksassociated with the TrueVisions business.
We believe that we will accrue a number of benefits from the acquisition of TrueVisions which include,among others: improvement in our ability to drive subscriber and revenue growth through bundling andcross-selling of services; improvement in our ability to manage churn rates; and improved access to richcontent assets.
Achieving the anticipated benefits from the acquisition may depend on, among other things,commitment of time and focus by True management, the ongoing development of our existing operations,and market readiness for new products and services.
We may not be able to realize the anticipated benefits from the acquisition and we may have to sharea number of risks associated with the TrueVisions business including, among others, the following:
• TrueVisions operates under a 25-year Build-Transfer-Operate concession granted by Mass Commu-nication Organization of Thailand (MCOT). The pay-TV contract under the satellite system will expirein September 2014 and the cable-TV contract will expire in December 2019. If TrueVisions is notgranted new licenses under the new regulations before the concession contracts expire TrueVisionsmay be at risk of not being able to continue its business which may affect the financial status ofTrueVisions and True Group.
• TrueVisions relies on third-party suppliers for most of its programming. If TrueVisions is unable toobtain attractive programming or if the cost of this programming substantially increases in thefuture, its revenues would be adversely affected.
• Unauthorized access to TrueVisions’ programming signals is difficult to prevent and will adverselyaffect its results of operations, cash flow and programming arrangements.
• TrueVisions’ core pay-television business is susceptible to new competitors and indirect competitionthat could reduce its market share and cause its operations and cash flow to suffer.
• TrueVisions is subject to significant foreign exchange risk because a substantial portion of itsrevenues is denominated in Baht while a significant portion of its obligations is denominated in USDollars.
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1 Including common shares and preferred shares.2 Consisting of 1) Charoen Pokphand Group Co., Ltd. and its related persons, namely 2) Bangkok Telecom Holding Company
Limited 3) Charoen Pokphand Foods Public Company Limited 4) Bangkok Produce Merchandising Public Company Limited5) Bangkok Agro-Industrial Products Public Company Limited 6) Charoen Pokphand Northeastern Public Company Limited7) Kasetphand Industry Company Limited 8) Charoen Pokphand Enterprise Company Limited 9) Unique Network CompanyLimited 10) Wide Broad Cast Company Limited 11) C.P. Interfood (Thailand) Company Limited 12) Star Marketing CompanyLimited 13) Advance Pharma Company Limited and 14) Golden Tower Trading Limited.
3 Held shares for KfW
True Corporation Public Company LimitedMajor Shareholders
(as of 23rd February 2007)
1. CP Group 2 1,368.64 30.402. THAI TRUST FUND 3 357.99 7.953. KREDITANSTALT FUR WIEDERAUFBAU (“KfW”) 341.36 7.584. THAI NVDR COMPANY LIMITED 287.82 6.395. STATE STREET BANK AND TRUST COMPANY 161.69 3.596. MORGAN STANLEY & CO INTERNATIONAL LIMITED 155.27 3.457. CHASE C.S. CENTRAL NOMINEES LIMITED 137.83 3.068. STATE STREET BANK AND TRUST COMPANY 114.39 2.54
FOR AUSTRALIA9. SOMERS (U.K.) LIMITED 86.46 1.9210. HSBC (SINGAPORE) NOMINEES PTE LTD 84.67 1.88
NAME No.of Shares % of Total Issued(Million Shares) Shares 1
Shareholders
..
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The Company has not paid or declared any dividends on its issued shares since operation commence-ment. The Company can pay dividends only out of its profits after deducting its cumulative losses, and only ifit has set aside a legal reserve. The Company’s restructuring agreement also limits its ability to pay dividendsuntil all of its indebtedness is repaid in full.
The Company’s major shareholders have entered into a shareholders’ agreement under which theyhave agreed for the Company to declare an annual dividend equal to at least 50% of its net profits for thatyear, after statutory reserves and subject to availability of cash, the regulations of the SET, and its creditfacilities. Before dividends can be paid to holders of its ordinary shares, however, dividend payments onpreferred shares must be paid in full.
For the dividend policy of subsidiary companies, each subsidiary company’s Board of Directors willconsider the payment of dividends from the balance of cash flows taking into account the capital expenditurerequirements of the subsidiary company. Subject to the availability of cash flows at the subsidiary companyand only if it has set aside a legal reserve, the Board of Directors of each subsidiary company shall consider thepayment of dividends on a case-by-case basis.
DividendPolicy
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The Management Structure of the Company consists of:A. The Board of DirectorsB. The Committees of the Board of Directors:
1) Audit Committee2) Independent Committee3) Compensation and Nominating Committee4) Finance Committee5) Corporate Governance Committee
C. The Executive Officers
A. Board of Directors
Pursuant to the Company’s Articles of Association, it is stipulated that the Board of Directors shallconsist of not less than 5 directors and that not less than one half of all directors shall have residence in theKingdom. The qualifications of the Company’s directors shall be as prescribed by law.
As of 31st December 2006, the Company’s Board of Directors consists of 18 members as follows:1) 4 Executive Directors2) 14 Non-Executive Directors consisting of:
- 4 Independent Directors- 10 Directors from various organizations relevant to the Company’s business, including the lender
group’s representatives and the major shareholders
DefinitionsExecutive Director means
- A director who holds a management position and engages in the Company’s businessmanagement.
Non-Executive Director means- A director who does not hold a management position and does not engage in the Company’s
business management, whether or not he or she is an Independent Director.
Independent Director means a director who holds the following qualifications:- Is not engaged in the business management of the Company, or of any affiliated, associated or
related company or major shareholder of the Company, and is not an employee, staff member orconsultant receiving a salary from the Company, any affiliated, associated or related company ormajor shareholder of the Company. An Independent Director also has no power of control over theCompany, any affiliated or associated company, or any person with a conflict of interest with theCompany.
- Holds less than 5 percent of the Company’s total shares with voting rights, and holds less than5 percent of the total shares of any company affiliated, associated with or related to any person whomay have a conflict of interest with the Company as prescribed by Article 258 under the SecuritiesAct B.E. 2535.
- Is not connected or related to executives or major shareholders of the Company, or to anycompanies affiliated or associated with any person who has a conflict of interest with the Company.
- Does not represent or protect the interests of the Board of Directors, major shareholders, orshareholders who are related to the major shareholders of the Company.
- Is able to perform and provide comments on, or report on, the performance of the Board ofDirectors in an independent manner. Is not under the control of management or majorshareholders including related persons or close relatives of the said person.
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The Board of Directors of the Company (as of 31st December 2006) is as follows:
Name Position1.
1. Mr. Narong Srisa-an Independent Director
2. Mr. Vitthya Vejjajiva Independent Director and Chairman of the Audit Committee
3. Dr. Kosol Petchsuwan Independent Director and Member of the Audit Committee
4. Mr. Joti Bhokavanij Independent Director and Member of the Audit Committee
5. Mr. Dhanin Chearavanont Chairman
6. Mr. Sumet Jiaravanon Vice Chairman
7. Dr. Ajva Taulananda Vice Chairman
8. Mr. Chaleo Souvannakitti Vice Chairman
9. Mr. Athueck Asvanund Vice Chairman and Group General Counsel
10. Mr. Supachai Chearavanont Director, President and Chief Executive Officer
11. Mr. Soopakij Chearavanont Director
12. Mr. Chatchaval Jiaravanon Director and Managing Director-Group Investment
13. Mr. Vichaow Rakphongphairoj Director, Managing Director and Chief Operating Officer
14. Mr. Umroong Sanphasitvong Director
15. Mr. Heinrich Heims Director
16. Mr. Andreas Klocke Director
17. Mr. Harald Link Director
18. Dr. Lee G. Lam Director
All Director qualifications have been prescribed by law. None are prohibited persons under the laws andregulations of the Securities and Exchange Commission and the Stock Exchange of Thailand.
Authorized DirectorsMr. Supachai Chearavanont or Mr. Vichaow Rakphongphairoj jointly sign with Mr. Athueck Asvanund
or Mr. Soopakij Chearavanont or Mr. Chatchaval Jiaravanon, with the Company’s seal affixed.
Authority and Responsibilities of the Board of DirectorsThe Board of Directors is granted the authority and duty to manage the Company in compliance with
the Company’s objectives and Articles of Association, and the resolutions of shareholder meetings. Withregard to the management of the Company, the Board of Directors has the authority to make any decisionrelated to the Company’s regular operations except for matters that require the approval of the shareholdermeeting as specified by law.
In addition, the Board of Directors may grant authorization to one or more directors, or any otherperson, to perform any acts on its behalf. However, for any decision on major operations such as a majorinvestment or a major loan procurement, the management team shall propose the said transactions to theBoard of Directors for approval.
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In the year 2006, the Board of Directors held 7 meetings. Director attendance at those meetings was asfollows:
Directors Attendance / Number of Meetings* (times)
1. Mr. Narong Srisa-an 4/7
2. Mr. Vitthya Vejjajiva 5/73. Dr. Kosol Petchsuwan 7/7
4. Mr. Joti Bhokavanij 6/7
5. Mr. Dhanin Chearavanont 3/76. Mr. Sumet Jiaravanon 1/7
7. Dr. Ajva Taulananda 7/7
8. Mr. Chaleo Souvannakitti 7/79. Mr. Athueck Asvanund 7/7
10. Mr. Supachai Chearavanont 7/7
11. Mr. Soopakij Chearavanont 1/712. Mr. Chatchaval Jiaravanon 4/7
13. Mr. Vichaow Rakphongphairoj 7/7
14. Mr. Umroong Sanphasitvong 7/715. Mr. Heinrich Heims 3/7
16. Mr. Andreas Klocke 7/7
17. Mr. Harald Link 5/718. Dr. Lee G. Lam 6/7
Remark: * “Attendance / Number of Meetings” shows how many meetings in 2006 each director has attended compared to the
total number of meetings held since each director was appointed.
All directors are committed to their responsibilities as Directors. They cooperate on all director decisionsaffecting the Company, which entails major work and responsibilities. All directors attend all meetings exceptin unavoidable circumstances. Directors otherwise engaged in this way notify the Board of their absence inadvance while providing their comments on the major agenda items.
In addition, the Board of Directors supports seminars organized by the Thai Institute ofDirectors Association (“IOD”). Some of the directors are also Independent Directors who have realindependence and are not authorized signatories for the Company. All directors are properly qualified andcomply with the principles stipulated by the Securities and Exchange Commission, and the Stock Exchange ofThailand.
Election of DirectorsThe Company allows minority shareholders to submit nominations for directors before the 2007 AGM
by using the form provided by the Company and sending it by registered mail to the Company.The Compensation and Nominating Committee is responsible for appraising the qualifications of
persons proposed as directors (including Independent Directors) of the Company in light of the significantprestige and experience required to fill the role. The Committee’s deliberations are presented to the Board of
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Directors for initial consideration. The Board of Directors then presents the relevant information, togetherwith the Compensation and Nominating Committee’s opinion, to the Shareholders’ Meeting ahead of anyelection.
Directors are appointed by shareholders by majority vote. All shareholders have the rights to appointdirectors. Each shareholder is entitled to one vote for each share held and is entitled to participate in thevoting for all directors, provided that they do not split their votes among candidates.
B. Committees of the Board of Directors
1) Audit CommitteeThe Audit Committee of the Company consists of 3 persons as follows:1. Mr. Vitthya Vejjajiva Chairman of the Audit Committee
2. Dr. Kosol Petchsuwan Member of the Audit Committee3. Mr. Joti Bhokavanij Member of the Audit Committee
The scope of duty and responsibility of the Audit Committee is as follows:1. To review the Company’s financial reports to ensure accuracy and adequate information for public
disclosure;2. To ensure the appropriateness and effectiveness of internal control systems and the internal auditing
system of the Company;3. To consider and propose the appointment and remuneration of an external auditor of the Company;4. To regularly review the practices of the Company to ensure compliance with the regulations of the
Securities and Exchange Act, Rules and Regulations of the Stock Exchange of Thailand and related law andregulations;
5. To review the disclosure of information of the Company to ensure the accuracy and adequacy of saidinformation in case there is a connected transaction that may lead to a conflict of interest;
6. To prepare a report on monitoring activities of the Audit Committee to be disclosed in the annualreport of the Company; and
7. To perform any other act as required by law or as delegated by the Board of Directors.
In the year 2006, the Audit Committee held 6 meetings. The members of the committee in attendanceat those meetings were follows:
Name Attendance / Number of Meetings* (times)
1. Mr. Vitthya Vejjajiva 6/6
2. Dr. Kosol Petchsuwan 6/6
3. Mr. Joti Bhokavanij 6/6
Remark: * “Attendance / Number of Meetings” shows how many meetings in 2006 each director has attended compared to the
total number of meetings held since each director was appointed.
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2) Independent CommitteeThe Independent Committee is responsible for reviewing the entering into highly significant connected
transactions. The Committee consists of the following members:1. Mr. Narong Srisa-an Independent Director2. Mr. Joti Bhokavanij Independent Director and
Member of the Audit Committee3. Mr. Andreas Klocke KfW-nominated Director4. Mr. Supachai Chearavanont CP-nominated Director5. Mr. Athueck Asvanund CP-nominated Director
In the case of any major shareholder having a conflict of interest, directors nominated by the saidshareholder will abstain from the Independent Committee Meeting when considering such a case.
3) Compensation and Nominating CommitteeThe Compensation and Nominating Committee is responsible for making recommendation to the Board
of Directors regarding the compensation of directors and the CEO; and the nomination of directors of theCompany. The Committee consists of the following members:
1. Mr. Dhanin Chearavanont2. Mr. Heinrich Heims3. Mr. Soopakij Chearavanont4. Mr. Umroong Sanphasitvong
In 2006, the Compensation and Nominating Committee held one meeting. The members of thecommittee in attendance at that meetings were as follows:
Name Attendance / Number of Meetings* (times)
1. Mr. Dhanin Chearavanont 0/12. Mr. Heinrich Heims 1/1
3. Mr. Soopakij Chearavanont 1/1
4. Mr. Umroong Sanphasitvong 1/1
Remark: * “Attendance / Number of Meetings” shows how many meetings in 2006 each director has attended compared to the
total number of meetings held since each director was appointed.
4) Finance CommitteeThe Finance Committee assists the Board of Directors in reviewing the financial management of the
Company. The Committee consists of the following members:
1. Dr. Ajva Taulananda2. Mr. Chaleo Souvannakitti3. Mr. Heinrich Heims (alternate being Mr. Andreas Klocke)4. Mr. Umroong Sanphasitvong
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In 2006, the Finance Committee held 6 meetings. The members of the committee in attendance at thosemeetings were as follows:
Name Attendance / Number of Meetings* (times)
1. Dr. Ajva Taulananda 5/6
2. Mr. Chaleo Souvannakitti 6/63. Mr. Andreas Klocke 4/6
4. Mr. Umroong Sanphasitvong 4/6
Remark: * “Attendance / Number of Meetings” shows how many meetings in 2006 each director has attended compared to the
total number of meetings held since each director was appointed.
5) Corporate Governance CommitteeThe Corporate Governance Committee assists the Board of Directors in setting policy on the Corporate
Governance of the Company. The Committee consists of the following members:1. Mr. Narong Srisa-an2. Mr. Vitthya Vejjajiva3. Dr. Kosol Petchsuwan4. Mr. Joti Bhokavanij5. Mr. Andreas Klocke6. Dr. Ajva Taulananda
In 2006, the Corporate Governance Committee held two meetings. The members of the committee inattendance at those meetings were as follows:
Name Attendance / Number of Meetings* (times)
1. Mr. Narong Srisa-an 2/22. Mr. Vitthya Vejjajiva 1/23. Dr. Kosol Petchsuwan 2/24. Mr. Joti Bhokavanij 2/25. Mr. Andreas Klocke 1/26. Dr. Ajva Taulananda ** 0/2**
Remark: * “Attendance / Number of Meetings” shows how many meetings in 2006 each director has attended compared to the
total number of meetings held since each director was appointed.
** Dr. Ajva Taulananda was appointed as a member of the Corporate Governance Committee on 17th November 2006,
after the last Corporate Governance Committee meeting of the year.
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C. Executive Officers
As of 31st December 2006, the executive officers of the Company are as follows:1. Mr. Supachai Chearavanont Director, President and Chief Executive Officer2. Mr. Vichaow Rakphongphairoj Director, Managing Director and Chief Operating Officer3. Mr. Chatchaval Jiaravanon Director and Managing Director-Group investment4. Mr. Athueck Asvanund Vice Chairman, Group General Counsel and
Acting Company Secretary5. Mr. William Harris Chief Financial Officer6. Mr. Thiti Nantapatsiri Managing Director-Home / Consumer Solution &
Highspeed Access7. Mr. Adhiruth Thothaveesansuk Managing Director-Office / SME Solution & Wireless Access8. Mr. Songtham Phianpattanawit Managing Director-Corporate Solution, Wholesales & Data
Note: The term “Executive Officers” refers to Directors, the President and persons with managerial authoritywho are among the top four ranked individuals in the Company, after the President, and all otherpersons who occupy a position equivalent to a top four ranking.
All the Executive Officers’ qualifications have been prescribed by law and the Officers themselves arenot forbidden individuals under the laws and pronouncements of the Securities and Exchange Commissionand the Stock Exchange of Thailand.
Authority and Responsibility of the PresidentThe President has authority to supervise and carry on the Company’s day-to-day business, and if any
matter/transaction is important, the President will submit said matter/transaction to the independentdirectors and/or the relevant Committee and/or the Board of Directors, as the case may be, to approve saidmatter/transaction. In addition, the President has no authority to approve any matter or transaction proposedby the Company or its subsidiaries in which he or she may have a conflict of interest or any other form ofconflict. In such a case, the matter/transaction has to be approved by the independent directors and/or therelevant Committee and/or the Board of Directors.
Remuneration of the Company’s Directors and Executive Officers(1) Remuneration
(1.1) Remuneration of DirectorsThe 18 directors of the Company were remunerated Baht 32.4 million for the year 2006.
Remuneration per Total person (Baht/year) (Baht/year)
Group 1- Chairman (Mr. Dhanin Chearavanont) 3,600,000- Independent Director who is also the Chairman 3,600,000
of a Committee (Mr. Vitthya Vejjajiva)Total 7,200,000
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Remuneration per Total person (Baht/year) (Baht/year)
Group 2- Independent Directors who are also Committee 2,400,000
members (Mr. Narong Srisa-an, Dr. KosolPetchsuwan and Mr. Joti Bhokavanij)
Total 7,200,000
Group 3- Vice Chairmen (Mr. Sumet Jiaravanon, Dr. Ajva 1,800,000
Taulananda, Mr. Chaleo Souvannakitti andMr. Athueck Asvanund)
Total 7,200,000
Group 4- Directors (Mr. Supachai Chearavanont, Mr. Soopakij 1,200,000
Chearavanont, Mr. Chatchaval Jiaravanon,Mr. Vichaow Rakphongphairoj, Mr. UmroongSanphasitvong, Mr. Heinrich Heims, Mr. AndreasKlocke, Mr. Harald Link and Dr. Lee G. Lam)
Total 10,800,000
Grand Total 32,400,000
(1.2) Remuneration of Executive OfficersThe top eight executives received remuneration totaling Baht 109.12 million for the year 2006
(January to December), which included Baht 85.20 million for salary, Baht 19.48 million for performance payand Baht 4.44 million for provident fund.
(2) Other CompensationOther compensation received by directors and executive officers of the Company are under the
Employee Stock Option Plan 5 Project, namely:(2.1) Employee Stock Option Plan 2005(2.2) Employee Stock Option Plan 2004(2.3) Employee Stock Option Plan 2003(2.4) Employee Stock Option Plan 2002(2.5) Employee Stock Option Plan 2000In addition, the Annual General Meeting of Shareholders for the year 2006 approved a project
named ESOP 2006 and later on the Securities and Exchange Commission (“SEC”) granted the approval to issueand offer warrants under this project. The Company issued and offered the warrants on 31st January 2007.
Details of Employee Stock Option Plans(2.1) Employee Stock Option Plan 2005The Extraordinary General Meeting of Shareholders No. 1/2548 held on 15th July 2005, approved
the issuance and offering of non-transferable warrants to purchase the Company’s ordinary sharesto the directors and employees at executive level of the Company and/or its subsidiaries (“ESOP 2005 Project”).Summary details are as follows:
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Number of Warrants Issued : 18,774,429 unitsand OutstandingDate of Issuance : 28th April 2006Maturity : 5 years from the issuance dateDate of Expiry : 27th April 2011Exercise Period : Each Warrant Holder received 3 separate warrant certificates. Each
certificate represented 1/3 of the total amount of warrants allottedand is exercisable for subscribing for ordinary shares as follows:The 1st Certificate: Warrant Holders can start exercising from
13th May 2006 until expiration.The 2nd Certificate: Warrant Holders can start exercising from
13th May 2007 until expiration.The 3rd Certificate: Warrant Holders can start exercising from
13th May 2008 until expiration.Exercise Ratio : One unit of warrant entitles the holder to the purchase of one
ordinary share at Baht 9.73
(2.2) Employee Stock Option Plan 2004The Extraordinary General Meeting of Shareholders No. 2/2547 held on 10th June 2004,
approved the issuance and the offer of non-transferable warrants to purchase the Company’s ordinaryshares to certain directors and employees at executive level not exceeding 35 persons (ESOP 2004 Project).Summary details are as follows:
Number of Warrants Issued : 18,274,444 unitsand OutstandingDate of Issuance : 7th February 2005Maturity : 5 years from the issuance dateDate of Expiry : 6th February 2010Exercise Period : Each Warrant Holder received 3 separate warrant certificates.
Each certificate represented 1/3 of the total amount of warrantsallotted and is exercisable for subscribing for ordinary shares asfollows:The 1st Certificate: Warrant Holders can start exercising from
7th February 2006 until expiration.The 2nd Certificate: Warrant Holders can start exercising from
7th February 2007 until expiration.The 3rd Certificate: Warrant Holders can start exercising from
7th February 2008 until expiration.Exercise Ratio : One unit of warrant entitles the holder to the purchase of one
ordinary share at Baht 11.20
(2.3) Employee Stock Option Plan 2003The Annual General Meeting of Shareholders for the year 2003, held on 11th April 2003,
approved the issuance and the offer of non-transferable warrants to purchase the Company’s ordinaryshares to certain directors and employees at executive level not exceeding 35 persons (“ESOP 2003 Project”).Summary details are as follows:
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Number of Warrants Issued : 12,832,207 unitsand Outstanding (as of 31st December 2006)Date of Issuance : 17th June 2003Maturity : 5 years from the issuance dateDate of Expiry : 16th June 2008Exercise Period : Each Warrant Holder received 3 separate warrant certificates. Each
certificate represented 1/3 of the total amount of warrants allotted andshall be exercisable for subscribing for ordinary shares as follows:The 1st Certificate: Warrant Holders can start exercising from
17th June 2004 until expiration.The 2nd Certificate: Warrant Holders can start exercising from
17th June 2005 until expiration.The 3rd Certificate: Warrant Holders can start exercising from
17th June 2006 until expiration.Exercise Ratio : One unit of warrant entitles the holder to the purchase of one
ordinary share at Baht 5.20
(2.4) Employee Stock Option Plan 2002The Annual General Meeting of Shareholders for the year 2002 held on 12th April 2002 approved the
issuance and the offer of non-transferable warrants to purchase the Company’s ordinary shares to certaindirectors and employees at executive level not exceeding 35 persons (“ESOP 2002 Project”). Summary detailsare as follows:
Number of Warrants Issued : 37,131,597 unitsand OutstandingDate of Issuance : 14th June 2002Maturity: : 5 years from the issuance dateDate of Expiry : 13th June 2007Exercise Period: : Each Warrant Holder received 3 separate warrant certificates. Each
certificate represented 1/3 of the total amount of warrants allotted andshall be exercisable for subscribing for ordinary shares as follows:The 1st Certificate: Warrant Holders can start exercising from
14th June 2003 until expiration.The 2nd Certificate: Warrant Holders can start exercising from
14th June 2004 until expiration.The 3rd Certificate: Warrant Holders can start exercising from
14th June 2005 until expiration.Exercise Ratio: : One unit of warrant entitles the holder to the purchase of one
ordinary share at Baht 10.60
(2.5) Employee Stock Option Plan 2000The Annual General Meeting of Shareholders for the year 2000 held on 27th April 2000, approved
the issuance and offer of non-transferable warrants to purchase the Company’s ordinary shares to certaindirectors and employees at executive level totaling not exceeding 35 persons (“ESOP 2000 Project”).Summary details are as follows:
Number of Warrants Issued : 36,995,000 unitsand OutstandingDate of Issuance : 9th June 2000
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Warrants underESOP 2005
NameNo. of
warrants% of
project
Warrants underESOP 2004
No. ofwarrants
% ofproject
Warrants underESOP 2003
No. ofwarrants
% ofproject
Warrants underESOP 2002
No. ofwarrants
% ofproject
Warrants underESOP 2000
No. ofwarrants
% ofproject
1. Dr.Ajva Taulananda - - - - - - - - 2,240,000 6.06
2. Mr.Soopakij Chearavanont - - - - - - - - 4,130,000 11.16
3. Mr.Supachai Chearavanont 1,900,000 10.12 2,434,077 12.74 3,696,402 18.61 7,058,824 19.01 6,510,000 17.60
4. Mr. Vichaow Rakphongphairoj 1,000,000 5.33 1,277,890 6.69 1,617,176 8.14 3,088,235 8.32 2,800,000 7.57
5. Mr.Chatchaval Jiaravanon 350,000 1.86 1,277,890 6.69 1,940,611 9.77 3,705,882 9.98 4,130,000 11.16
6. Mr.Athueck Asvanund 1,200,000 6.39 1,331,136 6.97 2,021,470 10.18 3,860,294 10.40 5,320,000 14.38
7. Mr.William Harris 1,000,000 5.33 1,277,890 6.69 1,297,838 6.53 3,000,000 8.08 945,000 2.55
8. Mr.Adhiruth Thothaveesansuk 1,000,000 5.33 1,277,890 6.69 850,404 4.28 1,503,662 4.05 - -
9. Mr.Thiti Nantapatsiri 1,000,000 5.33 1,277,890 6.69 - - - - - -
10.Mr.Songtham Phianpattanawit 1,000,000 5.33 1,277,890 6.69 - - - - - -
Maturity : 10 years from the issuance dateDate of Expiry : 9th June 2010Exercise Period : (a) Warrant Type 1:
Each Warrant Holder received 3 separate warrant certificates. Eachcertificate represented 1/3 of the total amount of warrantsallotted and is exercisable for subscribing for ordinary sharesstarting from 30th June, 2000, 2001 and 2002 respectively.
(b) Warrant Type 2:Each Warrant Holder received 3 separate warrant certificates. Eachcertificate represented 1/3 of the total amount of warrantsallotted and is exercisable for subscribing for ordinary sharesstarting from 31st December, 2000, 2001 and 2002 respectively.
Exercise Ratio : One unit of warrant entitles the holder to the purchase of oneordinary share at Baht 10.60
Details of warrants allotted to directors and executive officers under ESOP Plans :
Insider Trading PolicyThe Board of Directors is aware of the importance of protecting the Company from personal insider
trading. The Company has a code of conduct regarding inside information and insider trading, as well as theuse of applicable laws to monitor and prevent the personal use of confidential Company information bymanagement and related persons. In addition, the Company has a policy of strict compliance to itsrequirement that directors and senior management who have gained inside information on the Company byvirtue of their positions do not use that information in any way that violates their responsibilities to theCompany and its shareholders. Material information which has not yet been disclosed is kept confidential,apart from disclosure to the relevant director and senior management of the Company. Directors and seniormanagement must report purchases, sales, transfers and assignations of the securities issued by the Companyto the Securities and Exchange Commission (“SEC”) within three days and provide a copy of this report to theCompany for its records and incorporation in its regular report to the Board of Directors. In this regard,directors and senior management are required to submit an accurate report on the securities holder withinthe required period. This will be deemed one of the material obligations which senior management of the
87
Company need to be aware of and need to meet. This gives confidence to directors and senior managementthat the business is being managed and developed in a manner which is trustworthy, clear and transparent,and which is consistent with measurements related to Good Corporate Governance Policy. It also providesshareholders, including general investors, with confidence in the Company’s senior management.
Internal ControlsAfter an assessment of the Company’s internal controls with the Audit Committee, the Board of
Directors is of the opinion that the Company’s internal controls are adequate and suitable. Moreover, theexternal auditor is of the opinion that they have not encountered any matter involving internal controls andoperation of the Company which could be considered material weaknesses that could have a material effecton the financial statements. The Board also emphasized how the ongoing development of the Company’sCorporate Governance will continue to improve the Company’s internal controls.
PersonnelAs of 31st December 2006, the total number of employees was as follows:
Work Group and Classification No. of Employees
Management 85Service Area & Network Operation 2,055Marketing & Sales 1,109Information Technology 256Customer Services 408Finance & Accounting 224Support 297 Total 4,434
Source : The Company
Remuneration for the Company’s EmployeesRemuneration
Monthly SalaryAnnual Performance Pay: between zero and 4 times the monthly salary, subject to the Company’sperformance and financial statusRetirement: the employee must be aged 60 years or can take early retirement with agreementbetween the Company and the employee. Severance pay will be paid accord to the labor law.
In 2006, the total remuneration for employees was approximately Baht 2,600.30 million consisting ofwages, salaries, social security costs, provident fund and other benefits (For details please see note 31 to thefinancial statements)
Other Compensation & Benefits- Health Plans and Employee Welfare
In-house clinicAnnual Medical Check-upNew Employees’ Medical Check-upGroup Health Insurance
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Group Accident InsuranceGroup Life InsuranceSocial Security FundProvident Fund
- Annual Leave
The employee shall be entitled to paid annual leave of 10, 12 or 15 working days per calendaryear dependent on the seniority of their position or their number of years of service as follows:
Assistant Director or equivalent level and upwards: 15 working daysBelow Assistant Director or equivalent level:- Past probation to less than 3 years 10 working days- 3 years upwards to less than 5 years 12 working days- 5 years upwards 15 working days
The employee is required to take all annual leave entitlements by 31st December of each yearother wise the unused annual leave can not be accumulated to the subsequent year.
In case of urgent work requirements which mean the employee can not get approval forannual leave, unused annual leave can be accumulated and carried over to the subsequentyear, limited to half of the entitlement, and not exceeding 5, 6 or 7 working days as appropriate. This matter is to be approved by an authorized superior and the employee is required totake the accumulated days within the first quarter of the subsequent year.
Employee Training and DevelopmentEmployee Training and Development PolicyIn order to help carry out its corporate strategy and achieve its goals, the Company encourages all
employees to develop their knowledge, skills and attitude to be able to perform their jobs more effectivelyand improve their competencies with a view to career advancement. Presently, the Company providesemployees with an ongoing series of training and development programs. The Core Competency programincludes courses such as Effective Communication, Planning to Increase Work Efficiency and Effective SelfDevelopment, etc. The Functional Competency Program includes courses such as Accounting Standards, ProjectManagement, Contract Management and Sales Planning and Management, etc. The Core Business Programincludes courses such as Datacommunication and Networking, True Products and Services, Cisco - CertifiedNetwork Associate (CCNA), Microsoft Server, etc.
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DIRECTOR’S INFORMATION (AS OF 31ST DECEMBER 2006)
Name : Mr. Narong Srisa-an
Position : Independent Director
Age : 79
True Share Ownership (31/12/06) : 10,000 shares
Family Relationship : -
Education : Honorary Master Degree of Economics,
Thammasat University
Related training programs held : Director Accreditation Program (DAP)
by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
1998-Present Independent Director, True Corporation Public Company Limited
Present Vice Chairman, Vice Executive Chairman and
Member of Remuneration Committee, Berli Jucker
Public Company Limited
Chairman, Advance Agro Public Company Limited
Chairman and Chairman of Executive Board,
Siam Food Products Public Company Limited
Chairman and Chairman of Executive Board,
Oishi Group Public Company Limited
Non-listed Companies
Present Vice Chairman and Vice Executive Chairman,
Thai Beverage Public Company Limited
Vice Chairman and Executive Chairman,
Beer Thai (1991) Public Company Limited
Chairman, Thai Alcohol Public Company Limited
Chairman, Sura Banyeekhan Company Limited
Chairman of Executive Board, Thai Beverage Can Limited
Chairman, BJC Cellox Limited
Chairman, Thai Glass Industries Public Company Limited
Chairman, Thanakorn Vegetable Oil Products Company Limited
Chairman, Prida Pramote Company Limited
Chairman, Eastern Seaboard Industrial Estate (Rayong)
Company Limited
Executive Director, Com-link Company Limited
90
Name : Mr. Vitthya Vejjajiva
Position : Independent Director and Chairman of the Audit Committee
Age : 70
True Share Ownership (31/12/06) : -
Family Relationship : -
Education : Master Degree of Laws, Harvard University, U.S.A.
Master Degree of Arts, University of Cambridge, London
Bachelor of Laws, University of Cambridge, London
English Barrister, Gray’s Inn Association
Related training programs held : Director Accreditation Program (DAP)
by the Thai Institute of Directors Audit Committee Program (ACP)
Association (IOD) Chairman 2000
Major Experience : Companies Listed on the Stock Exchange of Thailand
1998-Present Independent Director and Chairman of the Audit Committee,
True Corporation Public Company Limited
Non-listed Companies
1998-Present Chairman, K Line (Thailand) Company Limited and its subsidiaries
1991-1992 Permanent Secretary of the Ministry of Foreign Affairs
1988 Ambassador Extraordinary and Plenipotentiary of the
United States of America
1984 Ambassador Extraordinary and Plenipotentiary of Belgium
and the European Community
1981 Ambassador Extraordinary and Plenipotentiary of Canada
1979 Director, General of Department of Economic Affairs
91
Name : Dr. Kosol Petchsuwan
Position : Independent Director and Member of the Audit Committee
Age : 67
True Share Ownership (31/12/06) : -
Family Relationship : -
Education : Doctorate of Engineering, University of London, England
Bachelor of Engineering, University of London, England
Related training programs held : Director Accreditation Program (DAP)
by the Thai Institute of Directors Director Certification Program (DCP)
Association (IOD) Audit Committee Program (ACP)
Chairman 2000
Major Experience : Companies Listed on the Stock Exchange of Thailand
1999-Present Independent Director and Member of the Audit Committee,
True Corporation Public Company Limited
2004-Present Independent Director and Chairman of the Audit Committee,
ACL Bank Public Company Limited
Non-listed Companies
2001-Present Director, Mahidol Wittayanusorn School (Public Organization)
2001-2005 President, The Telecommunications Association of Thailand under
Royal Patronage
2000-2001 Chairman, The Aeronautical Radio of Thailand Limited
1986-1992 Rector, King Mongkut’s Institute of Technology Ladkrabang
Name : Mr. Joti Bhokavanij
Position : Independent Director and Member of the Audit Committee
Age : 64
True Share Ownership (31/12/06) : -
Family Relationship : -
Education : Fellow of the Association of Chartered Certified Accountants, England
Programme for Management Development, Harvard Business School, U.S.A.
Marketing Management Programme, Stanford University, Graduate School
of Business, U.S.A.
Related training programs held : Director Accreditation Program (DAP)
by the Thai Institute of Directors Chairman 2000
Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
1999-Present Independent Director and Member of the Audit Committee
True Corporation Public Company Limited
2004-2006 Chief Executive Officer
ACL Bank Public Company Limited
2000-2001 Executive Chairman, TISCO Finance Public Company Limited
1994-1997 President & CEO, Thai Wah Group of Companies
1992-1994 Managing Director and Consul-General of Denmark for Bangkok
The East Asiatic (Thailand) Public Company Limited
Non-listed Companies
2002-Present Director, True Move Company Limited
92
Name : Mr. Dhanin Chearavanont
Position : Chairman
Age : 67
True Share Ownership (31/12/06) : -
Family Relationship : Mr. Supachai’s and Mr. Soopakij’s father
Education : Commercial School, Hong Kong
Shantou Secondary School, The People’s Republic of China
The National Defence College of Thailand
Related training programs held : Director Accreditation Program (DAP)
by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
Present Chairman, True Corporation Public Company Limited
Chairman, Charoen Pokphand Foods Public Company Limited
Chairman, C.P. Seven Eleven Public Company Limited
Honorary Chairman, Siam Makro Public Company Limited
Non-listed Companies
Present Chairman, Subsidiaries of True Corporation Public Company Limited
Chairman, True Move Company Limited
Chairman and Chief Executive Officer, Charoen Pokphand Group
Company Limited and its subsidiaries
Chairman, Subsidiaries of Charoen Pokphand Foods
Public Company Limited
Chairman, Subsidiaries of C.P. Seven Eleven Public Company Limited
Name : Mr. Sumet Jiaravanon
Position : Vice Chairman
Age : 72
True Share Ownership (31/12/06) : 150,000 shares
Family Relationship : Mr. Chatchaval’s father
Education : Secondary School, Sarasitphitayalai, Ratchaburi
Related training programs held : -
by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
1993-Present Vice Chairman, True Corporation Public Company Limited
Non-listed Companies
1993-Present Executive Chairman, Charoen Pokphand Group Company Limited
Present Director, Subsidiaries of True Corporation Public Company Limited
93
Name : Dr. Ajva Taulananda
Position : Vice Chairman
Age : 69
True Share Ownership (31/12/06) : -
Family Relationship : -
Education : Honorary Doctorate of Engineering, Ramkhamhaeng University
Honorary Doctorate of Engineering, Chulalongkorn University
Doctorate of Industrial Engineering and System, Illinois Institute of Technology, U.S.A.
Master Degree of Industrial Engineering, Iowa State of University, U.S.A.
Bachelor of Industrial Engineering, Chulalongkorn University
Special Certificate: Public - Private joint defence curricum, Class 1,
The National Defence College of Thailand
Related training programs held : Director Accreditation Program (DAP)
by the Thai Institute of Directors Chairman 2000
Association (IOD) Director Certification Program (DCP)
Major Experience : Companies Listed on the Stock Exchange of Thailand
1992-Present Vice Chairman, True Corporation Public Company Limited
1993-1999 Director and President, True Corporation Public Company Limited
Non-listed Companies
1992-Present Vice Chairman, Charoen Pokphand Group Company Limited
Honorary Chairman,
The Thai Chamber of Commerce and Board of Trade of Thailand
1991-1992 Deputy Minister, Ministry of Agriculture and Cooperatives
Present Director, Subsidiaries of True Corporation Public Company Limited
Name : Mr. Chaleo Souvannakitti
Position : Vice Chairman
Age : 78
True Share Ownership (31/12/06) : 3,350,000 shares
Family Relationship : -
Education : Master Degree of Business Administration, Indiana University, U.S.A.
Bachelor of Accounting, Faculty of Commerce and Accountancy,
Chulalongkorn University
Related training programs held : -
by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
1992-Present Vice Chairman, True Corporation Public Company Limited
Non-listed Companies
1992-Present Director, Telecom Holding Company Limited
Present Director, Subsidiaries of True Corporation Public Company Limited
94
Name : Mr. Athueck Asvanund*
Position : Vice Chairman and Group General Counsel
Age : 55
True Share Ownership (31/12/06) : 1,300,046 shares
Family Relationship : -
Education : Master Degree of Laws, specialized in International Legal Studies,
New York University, U.S.A.
Bachelor of Laws (Honours), Thammasat University
Training : Capital Market Academy Leader Program
Related training programs held : Director Accreditation Program (DAP)
by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
1997-Present Vice Chairman and Group General Counsel, True Corporation
Public Company Limited
Advisor to the Board of Directors,
C.P. Seven Eleven Public Company Limited
Non-listed Companies
1997-Present Vice Chairman and Group General Counsel, Subsidiaries of True
Corporation Public Company Limited
Group General Counsel, Charoen Pokphand Group Company
Limited and its subsidiaries
Director, True Visions Public Company Limited and its subsidiaries
2002-Present Director, True Move Company Limited
Present Director, Aqua-Agri Foods International, Inc.
2001-2006 Associate Judge, Central Intellectual Property and International
Trade Court
1978-1997 Baker & McKenzie
Present Part-time Lecturer, Business Law, Faculty of Law,
Chulalongkorn University
* Authorized Signatory
95
Name : Mr. Supachai Chearavanont* Position : Director, President and Chief Executive Officer Age : 39 True Share Ownership (31/12/06) : 1,240,000 shares Family Relationship : Mr. Dhanin’s son
Mr. Supakij’s younger brother Education : Bachelor of Business Administration in Financial Management
Boston University, U.S.A. Related training programs held : - by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
1999-Present Director, President and Chief Executive OfficerTrue Corporation Public Company Limited
1992- 1999 Director and Senior Executive Vice PresidentTrue Corporation Public Company Limited
Non-listed Companies2006-Present Director and CEO, True Visions Public Company Limited2004-Present Director, CPPC Public Company Limited2001-Present Director and CEO, True Move Company Limited
Chairman of the Board, Pantavanij Company LimitedPresent Director, Subsidiaries of True Corporation Public Company Limited
Name : Mr. Soopakij Chearavanont* Position : Director Age : 43 True Share Ownership (31/12/06) : - Family Relationship : Mr. Dhanin’s son
Mr. Supachai’s elder brother Education : Bachelor of Business Administration, New York University, U.S.A. Related training programs held : - by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
Present Director, True Corporation Public Company LimitedDirector, C.P. Seven Eleven Public Company Limited
Non-listed CompaniesPresent Co-Chairman, Shanghai Kinghill Limited - Super Brand Mall
Chairman, Chia Tai Enterprises International LimitedChairman, True Visions Public Company LimitedExecutive Chairman, Telecom Holding Company LimitedChief Executive Officer, Real Estate & Land Development Business(China), Charoen Pokphand Group Company LimitedVice Chairman, Automotive industrial Products and Finance Business,Charoen Pokphand Group Company LimitedVice Chairman, Real Estate and Land Development Business (Thailand)Charoen Pokphand Group Company LimitedVice Chairman, Marketing and Distribution Business (China),Charoen Pokphand Group Company LimitedDirector, True Move Company LimitedDirector, Subsidiaries of True Corporation Public Company Limited
* Authorized Signatory
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Name : Mr. Chatchaval Jiaravanon*
Position : Director and Managing Director - Group Investment
Age : 44
True Share Ownership (31/12/06) : 1,293,740 shares
Family Relationship : Mr. Sumet’s son
Education : Bachelor of Science Business Administration
University of Southern California, U.S.A.
Related training programs held : Director Accreditation Program (DAP)
by the Thai Institute of Directors
Association (IOD)
Major Experience : Companies Listed on the Stock Exchange of Thailand
1993-Present Director and Managing Director - Group Investment,
True Corporation Public Company Limited
2001-Present Director and Member of the Audit Committee,
Ticon Industrial Connection Public Company Limited
Non-listed Companies
2000-Present President and C.E.O., Telecom Holding Company Limited
1997-Present C.E.O., True Multimedia Company Limited,
True Internet Company Limited and Asia Infonet Company Limited
2006-Present Chairman, Thai Kodama Company Limited
1992-2005 Director, Thai Kodama Company Limited
1990-Present Director, Metro Machinery Company Limited
Present Director, Subsidiaries of True Corporation Public Company Limited
* Authorized Signatory
97
Name : Mr. Vichaow Rakphongphairoj*
Position : Director, Managing Director and Chief Operating Officer
Age : 49
True Share Ownership (31/12/06) : 7,000 shares
Family Relationship : -
Education : Master Degree of Business Administration, Pepperdine University, U.S.A.
Master Degree of Electrical Engineering, University of Wisconsin, U.S.A.
Bachelor of Electrical Engineering, Arizona State University, U.S.A.
Related training programs held : Director Certification Program (DCP)
by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
2000-Present Director, Managing Director and Chief Operating Officer,
True Corporation Public Company Limited
1998-2000 E.V.P., Business & Enterprise,
True Corporation Public Company Limited
1997-1998 E.V.P., Central Operation & Information Technology,
True Corporation Public Company Limited
1996-1997 Region Director, Bangkok-Southeast Region,
True Corporation Public Company Limited
1995-1996 Region Director, Bangkok-West Region,
True Corporation Public Company Limited
Non-listed Companies
Present Director, Subsidiaries of True Corporation Public Company Limited
Name : Mr. Umroong Sanphasitvong
Position : Director
Age : 54
True Share Ownership (31/12/06) : 384,000 shares
Family Relationship : -
Education : Master Degree of Accounting, Thammasat University
Bachelor of Accounting, Thammasat University
Related training programs held : Director Certification Program (DCP)
by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
2001-Present Director, True Corporation Public Company Limited
Present Director, C.P. Seven Eleven Public Company Limited
Non-listed Companies
Present Deputy Group CFO,
Charoen Pokphand Group Company Limited
Director, Ayudhya Allianz C.P. Life Public Company Limited
Director, CPPC Public Company Limited
* Authorized Signatory
98
Name : Mr. Heinrich Heims
Position : Director
Age : 54
True Share Ownership (31/12/06) : -
Family Relationship : -
Education : Abitur at Schiller Gymnasium, Hameln.
Studies at the Freie University Berlin :
Educational Sciences.
Studies at the Freie University Berlin,
with State Examination (Graduate in Economics)
Related training programs held : -
by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
2000-Present Director, True Corporation Public Company Limited
Non-listed Companies
2002- Present Director, True Move Company Limited
2004-Present COO and Member of the Board of Managing Directors of KfW
IPEX-Bank
1998-Present Senior Vice President - Export and Project Finance, KfW
1978-1998 Export Finance, KfW
Name : Mr. Andreas Klocke
Position : Director
Age : 50
True Share Ownership (31/12/06) : 3,500 shares
Family Relationship : -
Education : M.A. International Relations, University of KANSAS, U.S.A.
DIPLOMA VOLKSWIRT, University of Hamburg, Germany
Related training programs held : -
by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
2000-Present Director, True Corporation Public Company Limited
Non-listed Companies
Present Head of KfW’s South-East Asia Regional office in Bangkok in
Charge of KfW Affairs in Thailand and South-East Asia Region
99
Name : Mr. Harald Link
Position : Director
Age : 51
True Share Ownership (31/12/06) : 50,000 shares
Family Relationship : -
Education : MBA, St. Gallen University, Switzerland
Related training programs held : -
by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
2000-Present Director, True Corporation Public Company Limited
Present Director, Siam City Cement Public Company Limited
Non-listed Companies
1987-Present Managing Partner, B. Grimm & Co. R.O.P.
Chairman, B. Grimm Group of Companies
Name : Dr. Lee G. Lam
Position : Director
Age : 47
True Share Ownership (31/12/06) : -
Family Relationship : -
Education : Doctorate of Philosophy, University of Hong Kong
Master Degree of Systems Science and MBA, University of Ottawa, Canada
Bachelor of Sciences and Mathematics, University of Ottawa, Canada
Post-graduate Diploma of Public Administration, Carleton University, Canada
Post-graduate Diploma in English and Hong Kong Law,
Manchester Metropolitan University, U.K.
LLB (Hons) in Law, Manchester Metropolitan University, U.K.
Related training programs held : -
by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
2003-Present Director, True Corporation Public Company Limited
Companies Listed on the Hong Kong Stock Exchange
2003-Sep 15, 2006 President & CEO / Vice Chairman of the Board
Chia Tai Enterprises International Limited
Non-listed Companies
2001-2003 Managing Director,
BOC International Holdings Limited (“BOCI”)
1999-2001 Executive Director,
Singapore Technologies Telemedia
1998-1999 Partner-in-charge, Heidrick & Struggles
1996-1998 President & CEO,
Millicom International Cellular Asia Pacific Operations
1993-1995 Managing Partner, A.T. Kearney, Inc.
1989-1993 General Manager, Cable & Wireless/Hongkong Telecom
1981-1989 Senior Executive, Bell Canada
100
Executive Officers’ Information (As of 31st December 2006)
Name : Mr. Supachai Chearavanont Position : Director, President and Chief Executive Officer Age : 39 True Share Ownership (31/12/06) : 1,240,000 shares Family Relationship : Mr. Dhanin’s son
Mr. Supakij’s younger brother Education : Bachelor of Business Administration in Financial Management, Boston University, U.S.A. Related training programs held : - by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
1999-Present Director, President and Chief Executive OfficerTrue Corporation Public Company Limited
1992- 1999 Director and Senior Executive Vice PresidentTrue Corporation Public Company Limited
Non-listed Companies2006-Present Director and CEO, True Visions Public Company Limited2004-Present Director, CPPC Public Company Limited2001-Present Director and CEO, True Move Company Limited
Chairman of the Board, Pantavanij Company LimitedPresent Director, Subsidiaries of True Corporation Public Company Limited
Name : Mr. Vichaow Rakphongphairoj Position : Director, Managing Director and Chief Operating Officer Age : 49 True Share Ownership (31/12/06) : 7,000 shares Family Relationship : - Education : Master Degree of Business Administration, Pepperdine University, U.S.A.
Master Degree of Electrical Engineering, University of Wisconsin, U.S.A.Bachelor of Electrical Engineering, Arizona State University, U.S.A.
Related training programs held : Director Certification Program (DCP) by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
2000-Present Director, Managing Director and Chief Operating Officer,True Corporation Public Company Limited
1998-2000 E.V.P., Business & Enterprise,True Corporation Public Company Limited
1997-1998 E.V.P., Central Operation & Information Technology,True Corporation Public Company Limited
1996-1997 Region Director, Bangkok-Southeast Region,True Corporation Public Company Limited
1995-1996 Region Director, Bangkok-West Region,True Corporation Public Company Limited
Non-listed CompaniesPresent Director, Subsidiaries of True Corporation Public Company Limited
101
Name : Mr. Chatchaval Jiaravanon
Position : Director and Managing Director - Group Investment
Age : 44
True Share Ownership (31/12/06) : 1,293,740 shares
Family Relationship : Mr. Sumet’s son
Education : Bachelor of Science Business Administration,
University of Southern California, U.S.A.
Related training programs held : Director Accreditation Program (DAP)
by the Thai Institute of Directors
Association (IOD)
Major Experience : Companies Listed on the Stock Exchange of Thailand
1993-Present Director and Managing Director-Group Investment,
True Corporation Public Company Limited
2001-Present Director and Member of the Audit Committee,
Ticon Industrial Connection Public Company Limited
Non-listed Companies
2000-Present President and C.E.O., Telecom Holding Company Limited
1997-Present C.E.O., True Multimedia Company Limited
True Internet Company Limited and Asia Infonet Company Limited
2006-Present Chairman, Thai Kodama Company Limited
1992-2005 Director, Thai Kodama Company Limited
1990-Present Director, Metro Machinery Company Limited
Present Director, Subsidiaries of True Corporation Public Company Limited
102
Name : Mr. Athueck Asvanund
Position : Vice Chairman and Group General Counsel
Age : 55
True Share Ownership (31/12/06) : 1,300,046 shares
Family Relationship : -
Education : Master Degree of Laws, specialized in International Legal Studies,
New York University, U.S.A.
Bachelor of Laws (Honours), Thammasat University
Training : Capital Market Academy Leader Program
Related training programs held : Director Accreditation Program (DAP)
by the Thai Institute of Directors
Association (IOD)
Major Experience : Companies Listed on the Stock Exchange of Thailand
1997-Present Vice Chairman and Group General Counsel, True Corporation Public
Company Limited
Advisor to the Board of Directors, C.P. Seven Eleven Public
Company Limited
Non-listed Companies
1997-Present Vice Chairman and Group General Counsel, Subsidiaries of True
Corporation Public Company Limited
Group General Counsel, Charoen Pokphand Group Company
Limited and its subsidiaries
Director, True Visions Public Company Limited and its subsidiaries
2002-Present Director, True Move Company Limited
Present Director, Aqua-Agri Foods International, Inc.
2001-2006 Associate Judge, Central Intellectual Property and International
Trade Court
1978-1997 Baker & McKenzie
Present Part-time Lecturer, Business Law, Faculty of Law, Chulalongkorn
University
103
Name : Mr. William Harris
Position : Chief Financial Officer
Age : 45
True Share Ownership (31/12/06) : 1,117,838 shares
Family Relationship : -
Education : Master Degree of Business Administration, Major in Finance and Marketing,
Wharton School of the University of Pennsylvania
Bachelor of Science in Economics, Wharton School of the University of Pennsylvania
Related training programs held : -
by the Thai Institute of Directors
Association (IOD)
Major Experience : Companies Listed on the Stock Exchange of Thailand
2001-Present Chief Financial Officer,
True Corporation Public Company Limited
1999-2000 Executive Vice President-Corporate Finance,
True Corporation Public Company Limited
Non-listed Companies
1993-1999 Director,
Credit Policy, Verizon Communications, Philadelphia
Present Director, Subsidiaries of True Corporation Public Company Limited
Name : Mr. Adhiruth Thothaveesansuk
Position : Managing Director - Office / SME Solution & Wireless Access
Age : 43
True Share Ownership (31/12/06) : 566,936 shares
Family Relationship : -
Education : Master Degree of Finance & Marketing,
Indiana University of Pennsylvania, U.S.A.
Bachelor of Industrial Management, Thammasat University
Related training programs held : Director Certification Program (DCP)
by the Thai Institute of Directors
Association (IOD)
Major Experience : Companies Listed on the Stock Exchange of Thailand
Present Managing Director - Office / SME Solution & Wireless Access,
True Corporation Public Company Limited
2001 Executive Vice President, True Corporation Public Company Limited
Non-listed Companies
Present President, Asia Wireless Communication Company Limited
President, True Money Company Limited
Director, True Visions Public Company Limited
2002 Chief Commercial Officer, True Move Company Limited
1998-2002 General Manager, Wire & Wireless Company Limited
1998-2001 President, Asia Wireless Communication Company Limited
104
Name : Mr. Songtham Phianpattanawit
Position : Managing Director - Corporate Solution, Wholesales & Data
Age : 48
True Share Ownership (31/12/06) : 700 shares
Family Relationship : -
Education : Bachelor of Science (Computer Science), University of South Alabama, U.S.A.
Related training programs held : Director Certification Program (DCP no.54)
by the Thai Institute of Directors
Association (IOD)
Major Experience : Companies Listed on the Stock Exchange of Thailand
Present Managing Director - Corporate Solution, Wholesales & Data,
True Corporation Public Company Limited
Non-listed Companies
Present Executive Director - Corporate Solution,
True Move Company Limited
Acting President, True Multimedia Company Limited
Acting President, Wire & Wireless Company Limited
President, True Internet Data Center Company Limited
Executive Committee, Pantavanij Company Limited
Director, Freewill Solution Company Limited
2006-Present Director, True Internet Gateway Company Limited
Director, Bangkok Inter Teletech Public Company Limited
2001-2003 Country General Manager / MD, IBM Thailand Company Limited
Chairman, IBM Solution Delivery Company Limited
2001-2002 Director, IBM Storage Product Thailand Company Limited
2000 Director, Sales & Marketing, IBM Thailand Company Limited
Country Manager System Sales, IBM Thailand Company Limited
1998 Country Manager Finance & Administration and CFO,
IBM Thailand Company Limited
1997 Service Business Executive, IBM Thailand Company Limited
105
Name : Mr. Thiti Nantapatsiri
Position : Managing Director - Home / Consumer Solution & Highspeed Access
Age : 52
True Share Ownership (31/12/06) : -
Family Relationship : -
Education : Bachelor Degree of Engineering (Electrical),
King Mongkut’s Institute of Technology, Ladkrabang Campus
Related training programs held : -
by the Thai Institute of Directors Association (IOD) Major Experience : Companies Listed on the Stock Exchange of Thailand
Present Managing Director - Home / Consumer Solution & Highspeed Access,
True Corporation Public Company Limited
1999-2003 Executive Vice President, Loxley Public Company Limited
1997-1999 First Senior Vice President, Loxley Public Company Limited
Non-listed Companies
2001-2002 President & CEO,
Hutchison CAT Wireless Multimedia Company Limited
1992-2000 President & CEO,
Hutchison Telecommunications (Thailand) Company LimitedPresent Director, Subsidiaries of True Corporation Public Company Limited
106
The Company Directors’ Shareholding in True’s affiliates as of 31st December 2006 are as follows :
Director Company Change Outstandingin 2006 Share(s)
Mr. Dhanin Chearavanont Telecom Holding Co., Ltd. - 1Bangkok Inter Teletech Public Company Limited - 1
Mr. Sumet Jiaravanon Bangkok Inter Teletech Public Company Limited - 1
Mr. Chaleo Souvannakitti Telecom Holding Co., Ltd. - 1Telecom International Co., Ltd. - 1Telecom Equipment Manufacturing Co., Ltd. - 1
Dr. Ajva Taulananda Telecom International Co., Ltd. - 1Telecom Training and Development Co., Ltd. - 1Telecom Equipment Manufacturing Co., Ltd. - 1True Touch Co., Ltd. - 1True Multimedia Co., Ltd. - 1Asia DBS Public Company Limited - 1Asia Infonet Co., Ltd. - 1Asia Wireless Communication Co., Ltd. - 1True Internet Co., Ltd. - 1
Mr. Chatchaval Jiaravanon Telecom International Co., Ltd. - 1Telecom Equipment Manufacturing Co., Ltd. - 1Wire & Wireless Co., Ltd. - 5True Touch Co., Ltd. - 1True Internet Co., Ltd. - 1Asia DBS Public Company Limited - 1Asia Infonet Co., Ltd. - 1Asia Wireless Communication Co., Ltd. - 1True Multimedia Co., Ltd. - 1True Lifestyle Retail Co., Ltd. - 1True Internet Data Center Co., Ltd. - 1
Mr. Soopakij Chearavanont Telecom International Co., Ltd. - 1Telecom Equipment Manufacturing Co., Ltd. - 1True Touch Co., Ltd. - 1True Internet Co., Ltd. - 1Asia DBS Public Company Limited - 1Asia Infonet Co., Ltd. - 1Asia Wireless Communication Co., Ltd. - 1True Multimedia Co., Ltd. - 1
107
Director Company Change Outstandingin 2006 Share(s)
Mr. Supachai Chearavanont Telecom Holding Co., Ltd. - 1Telecom International Co., Ltd. - 1Telecom Training and Development Co., Ltd. - 1Telecom Equipment Manufacturing Co., Ltd. - 1Wire & Wireless Co., Ltd. - 5True Touch Co., Ltd. - 1True Internet Co., Ltd. - 1Asia DBS Public Company Limited - 1Asia Infonet Co., Ltd. - 1Asia Wireless Communication Co., Ltd. - 1True Multimedia Co., Ltd. - 1True Money Co., Ltd. - 1NC True Co., Ltd. - 1True Internet Data Center Co., Ltd. - 1
Mr.Athueck Asvanund True Money Co., Ltd. - 1
Mr. Harald Link Telecom Equipment Manufacturing Co., Ltd. - 480,000
Mr. Vichaow Rakphongphairoj Telecom International Co., Ltd. - 1Telecom Equipment Manufacturing Co., Ltd. - 1True Touch Co., Ltd. - 1True Internet Co., Ltd. - 1Asia DBS Public Company Limited - 1Asia Infonet Co., Ltd. - 1Asia Wireless Communication Co., Ltd. - 1True Multimedia Co., Ltd. - 1K.I.N. (Thailand) Co., Ltd. - 1True Money Co., Ltd. - 1True Magic Co., Ltd. 1 1
108
1. Sales of good
1.1 Bangkok Inter Teletech Group
of companies (BITCO)
Sales of mobile handset 23,988 CPG is a major shareholder of the The transactions arosed
and mobile accessories Company. BITCO is the cellular in ordinary course of
to Charoen Pokphand telephone operator which the business that BITCO
Group of companies Company directly holds 78.26% and proposed to the third
(CPG) indirectly holds 15.10% of its equity party.
interest. These companies are
related through directorships.
1.2 Company
Sales of Lan Network to 5,957 CPG is a major shareholder of the The transactions arosed
Charoen Pokphand Company. in ordinary course of
Group of companies business that the
(CPG) Company proposed to the
third party.
1.3 Company
Sales of WIFI service 101 The Company indirectly holds The transactions arosed in
and modem to 65.00% in AI’s equity interest and ordinary course of business
Asia Infonet Co., Ltd. related through directorships, i.e. that the Company
(AI) Mr. Chatchaval Jiaravanon and proposed to the third
Mr. Ajva Taulananda. party.
1.4 Company and subsidiaries
Sales among related 6 The Company indirectly holds The transactions arosed
parties with the size of 70.00% in TIDC’s equity interest and in ordinary course of
which not exceeding related through directorships. business, net of discount
Baht 1 million. rate.
True Internet Data
Center Co.,Ltd. (TIDC)
During 2006, the Group carried out the transactions with subsidiaries, associates, joint ventures andrelated companies as disclosed in the financial statements for the year ended 31 December 2006 (Note 11).
The significant conected transactions of the Company and subsidiaries that carried out with associateand related companies are as follows:
i) Sales and purchases of goods and services:
31 DecemberRationale and
Details of transactions 2006 Relationship(Baht’000)
necessity
ConnectedTransactions
109
31 DecemberRationale and
Details of transactions 2006 Relationship(Baht’000)
necessity
1.5 Company and subsidiariesSales among related 94 CPG is a major shareholder of the The transactions arosedparties with the size of which not Company and related through in ordinary course ofexceeding Baht 1 million. directorships. business, net of discount rate.Charoen PokphandGroup of companies(CPG)
Total Sales of goods 30,146
2. Sales of services2.1 True Multimedia Co., Ltd. (TM)
Digital Data Network 14,708 The Company indirectly holds The transactions arosedservices to 91.08% in TM’s equity interest and in ordinary course ofAsia Infoner Co., Ltd. 65.00% in AI’s equity interest. business that TM(AI) These companies are related proposed to the third
through directorship, i.e. party.Mr. Chatchaval Jiaravanon.
2.2 True Multimedia Co., Ltd. (TM)Digital Data Network 7,589 The Company indirectly holds The transactions arosedservices to 91.08% in TM’s equity interest and in ordinary course ofKSC Commercial Internet 37.83% in KSC’s equity interest. business that TMCo., Ltd. (KSC) These companies are related proposed to the third
through directorship, i.e. party.Mr. Supachai Chearavanont andMr. Athueck Asvanund.
2.3 True Multimedia Co., Ltd. (TM)Digital Data Network 28,380 CPG is a major shareholder of the The transactions arosedservices to Company. The Company indirectly in ordinary course ofCharoen Pokphand holds 91.08% in TM’s equity business that TMGroup of companies interest. These companies are proposed to the third(CPG) related through directorships. party.
2.4 True Internet Co., Ltd. (TI)Sales of internet service 8,808 CPG is a major shareholder of the The transactions arosedto Charoen Pokphand Company. The Company directly in ordinary course ofGroup of companies holds 99.99% in TI’s equity business that TI proposed(CPG) interest. These companies are to the third party.
related through directorships.
2.5 True Internet Co., Ltd. (TI)Sales of internet service 11,448 The Company directly holds 99.99% The transactions arosedto in TI’s equity interest and indirectly in ordinary course ofKSC Commercial Internet holds 37.83% in KSC’s equity business that TI proposedCo., Ltd. (KSC) interest. These companies are to the third party.
related through directorships, i.e.
Mr. Supachai Chearavanont.
110
31 DecemberRationale and
Details of transactions 2006 Relationship(Baht’000)
necessity
2.6 True Properties Co., Ltd. (TP)
Office rental and related 9,149 CPG is a major shareholder of the The transactions arosed
services to Company. The Company indirectly in ordinary course of
Charoen Pokphand holds 99.99% in TP’s equity business at the rate of
Group of companies interest. These companies are Baht 455 per square
(CPG) related through directorships. metre. The maturity are
normally in 3 years and
are allowed to be
renewed.
2.7 True Properties Co., Ltd. (TP)
Office rental and related 6,145 The Company holds 40.00% in NC The transactions arosed
services to True’s equity interest and indirectly in ordinary course of
NC True Co., Ltd. holds 99.99% in TP’s equity interest. business at the rate of
(NC True) Baht 455 per square
metre. The maturity are
normally in one year and
are allowed to be renewed.
2.8 True Properties Co., Ltd. (TP)
Office rental and related 3,279 The Company indirectly holds The transactions arosed
services to 99.99% in TP’s equity interest and in ordinary course of
True Internet Data 70.00% in TIDC’s equity interest. business at the rate of
Center Co., Ltd. (TIDC) These companies are related Baht 455 per square
through directorships, i.e. metre. The maturity are
Mr. Chatchaval Jiaravanon. normally in one year and
are allowed to be
renewed.
2.9 True Leasing Co., Ltd. (TLS)
Car rental and related 607,525 CPG is a major shareholder of the The transactions arosed in
service to Company. The Company directly ordinary course of business
Charoen Pokphand holds 99.99% in TLS’s equity at the rate of Baht 15,000
Group of companies interest. per unit per month. The
(CPG) maturity are normally in 3
years basis.
2.10 True Internet Data Center
Co., Ltd. (TIDC)
Rental server to 3,069 The Company holds 40.00% in NC The transactions arosed
NC True Co., Ltd. True’s equity interest and indirectly in ordinary course of
(NC True) holds 70.00% in TIDC’s equity business at the rate of
interest. Baht 54,000 per unit per
month. The maturity are
normally in 1 years basis.
111
31 DecemberRationale and
Details of transactions 2006 Relationship(Baht’000)
necessity
2.11 True Visions Group of companies(True Visions)Cable TV services to 17,470 CPG is a major shareholder of the The transations arosedCharoen Pokphand Company. The Company indirectly in ordinary course ofGroup of companies holds 91.79% in True Visions’s business that True Visions(CPG) equity interest. proposed to the third party.
2.12 Bangkok Inter Teletech Group ofcompanies (BITCO)Sales of scratch card to 6,674,047 Same as 1.1 The transactions arosedCharoen Pokphand in ordinary course ofGroup of companies business that BITCO(CPG) proposed to the third party.
2.13 CompanyConsult to 2,001 Same as 1.3 The transactions arosed inAsia Infonet Co., Ltd. ordinary course of business(AI) that the Company proposed
to the third party.
2.14 CompanyEngineering and 243 The Company indirectly holds The transactions arosedmanagement service in 9.62% in NEC’s equity interest and in ordinary course ofassociate with DDN to related through directorship by business, net of discountNEC Corporation Mr.Chatchaval Jiaravanon. rate.(Thailand) Co., Ltd.(NEC)
2.15 CompanyCoin distribution services 2,399 Same as 1.2 The transactions arosedand service other to in ordinary course ofCharoen Pokphand business, net of discountGroup of companies rate.(CPG)
2.16 Company and subsidiariesSelling among related 1,102 The Company indirectly holds The transactions arosedparties with the size of 65.00% in AI’s equity interest and in ordinary course ofwhich not exceeding related through directorships. business, net of discountBaht 1 million. rate.Asia Infonet Co., Ltd.(AI)
2.17 Company and subsidiariesSelling among related 535 Same as 1.4 The transactions arosedparties with the size of in ordinary course ofwhich not exceeding business, net of discountBaht 1 million. rate.True Internet Data
Center Co., Ltd. (TIDC)
112
31 DecemberRationale and
Details of transactions 2006 Relationship(Baht’000)
necessity
2.18 Company and subsidiaries
Selling among related 538 The Company holds 40.00% in The transactions arosed
parties with the size of NC True’s equity interest. These in ordinary course of
which not exceeding companies are related through business, net of discount
Baht 1 million directorships. rate.
NC True Co., Ltd.
(NC True)
2.19 Company and subsidiaries
Selling among related 1,026 Same as 1.5 The transactions arosed
parties with the size of in ordinary course of
which not exceeding business, net of discount
Baht 1 million. rate.
Charoen Pokphand
Group of companies
(CPG)
Total sales of services 7,399,461
3. Purchase of services
3.1 Asia Infonet Co., Ltd. (AI)
Office rental and related 4,063 CPG is an investor in major The transactions arosed in
services from shareholder of the Company. ordinary course of business
Charoen Pokphand The Company indirectly holds at the rate of Baht
Group of companies 65.00% in AI’s equity interest. 358,750.55 per month.
(CPG) These companies are related through The maturity are normally
directorships in the year and are allowed
to be renewed.
3.2 Asia Wireless Communication
Co., Ltd. (AWC)
Repair and maintenance 16,110 The Company indirectly holds 9.62% The transactions arosed
services from in NEC’s equity interest and 99.99% in ordinary course of
NEC Corporation in AWC’s equity interest. business.
(Thailand) Co., Ltd.
(NEC)
3.3 True Internet Co., Ltd. (TI)
Office rental and related 6,307 Same as 2.4 The transactions arosed
services from in ordinary course of
Charoen Pokphand business at rate of Baht
Group of companies 149,688 per month. The
(CPG) maturity are normally in
the year and are allowed
to be renewed.
113
31 DecemberRationale and
Details of transactions 2006 Relationship(Baht’000)
necessity
3.4 True Internet co., Ltd. (TI)
Corporate internet 318,123 The Company directly holds 99.99% The transactions arosed
services from in TI’s equity interest and indirectly in ordinary course of
Asia Infonet Co., Ltd. holds 65.00% in AI’s equity interest. business.
(AI) These companies are related
through directorships.
3.5 True Internet Co., Ltd. (TI)
Cost of revenue sharing 7,667 The Company directly holds 99.99% The transactions arosed
from in TI’s equity interest and indirectly in ordinary course of
True Internet Data holds 70.00% in TIDC’s equity business.
Center Co., Ltd. (TIDC) interest. These companies are
related through directorships, i.e.
Mr. Noppadol Dej-Udom.
3.6 True Internet Co., Ltd. (TI)
Rental network from 2,034 Same as 2.5 The transactions arosed
KSC Commercial Internet in ordinary course of
Co., Ltd. (KSC) business.
3.7 True Digital Entertainment
Co., Ltd. (TDE)
Office rental and related 5,034 CPG is a major shareholder of the The transactions arosed
Services from Company. The Company directly in ordinary course of
Charoen Pokphand holds 88.39% and indirectly holds business.
Group of companies 11.61% in TDE’s equity interest.
(CPG) These companies are related
through directorships.
3.8 True Digital Entertainment
Co., Ltd. (TDE)
Rental of internet server 1,720 The Company indirectly holds The transactions arosed
from 70.00% in TIDC’s equity interest and in ordinary course of
True Internet Data directly holds 88.39% and indirectly business.
Center Co., Ltd. (TIDC) holds 11.61% in TDE’s equity
interest. These companies are
related through directorships.
3.9 True Touch Co., Ltd. (TT)
Office rental and related 9,288 CPG is a major shareholder of the The transactions arosed
services from Company. The Company indirectly in ordinary course of
Charoen Pokphand holds 99.99% in TT’s equity interest. business.
Group of companies These companies are related
(CPG) through directorships.
114
31 DecemberRationale and
Details of transactions 2006 Relationship(Baht’000)
necessity
3.10 Wire and Wireless Co., Ltd. (WW)
Insurance from 2,670 CPG is a major shareholder of the The transactions arosed
Charoen Pokphand Company. The Company directly in ordinary course of
Group of companies holds 87.50% in WW’s equity business.
(CPG) interest. These companies are
related through directorships.
3.11 True Money Co., Ltd. (TMN)
Commission from 7,768 CPG is a major shareholder of the The transactions arosed
Charoen Pokphand Company. The Company directly in ordinary course of
Group of companies hold 49.00% and indirectly holds business.
(CPG) 51.00% in TMN’s equity
interest. These companies are
related through directorships.
3.12 True Visions Group of companies
(True Visions)
Other service from 5,149 Same as 2.11 The transactions arosed
Charoen Pokphand in ordinary course of
Group of companies business.
(CPG)
3.13 Bangkok Inter Teletech Group of
companies (BITCO)
Office rental and related 461,651 Same as 1.1 The transactions arosed
services from in ordinary course of
Charoen Pokphand business at the rate of
Group of companies Baht 816,988 per month.
(CPG) The maturity are normally
in 3 year and are allowed
to renewed.
3.14 Company
Rental of internet server 8,621 The Company indirectly holds The transactions arosed
from True Internet Data 70.00% in TIDC’s equity interest in ordinary course of
Center Co., Ltd. (TIDC) and related through directorships, business at the rate of
i.e. Mr. Chatchaval Jiaravanon. Baht 810,536.60 per
month. The maturity are
normally in the year and
are allowed to be renewed.
3.15 Company
Repair and maintenance 2,094 Same as 2.14 The transactions arosed
services from in ordinary course of
NEC Corporation business.
(Thailand) Co., Ltd.
(NEC)
115
31 DecemberRationale and
Details of transactions 2006 Relationship(Baht’000)
necessity
3.16 CompanyCommission from 22,072 Same as 1.2 The transactions arosedCharoen Pokphand in ordinary course ofGroup of companies business at rate 5-10% of(CPG) connected revenues.
3.17 CompanyOffice rental and related 34,014 Same as 1.2 The transactions arosedservices from in ordinary course ofCharoen Pokphand business at the rate ofGroup of companies Baht 200-220 per square(CPG) metre per month for
rental and Baht 220-520per square metre per monthfor service. The maturity arenormally in the year and areallowed to be renewed.
3.18 CompanyDevelopment purchasing 41,427 Same as 1.2 The transactions arosedsystem from in ordinary course ofCharoen Pokphand business.Group of Companies(CPG)
3.19 Company and subsidiariesSelling among related 271 Same as 2.16 The transactions arosedparties with the size of in ordinary course ofwhich not exceeding business, net of discountBaht 1 million. rate.Asia Infonet co., Ltd.(AI)
3.20 Company and subsidiariesSelling among related 1,089 Same as 1.4 The transactions arosedparties with the size of in ordinary course ofwhich not exceeding business, net of discountBaht 1 million. rate.True Internet DataCenter Co., Ltd (TIDC)
3.21 Company and subsidiariesSelling among related 25 The Company indirectly holds 9.62% The transactions arosedparties with the size of in NEC’s equity interest and related in ordinary course ofwhich not exceeding through directorship business, net of discountBaht 1 million. rate.NEC Corporation(Thailand) Co., Ltd.
(NEC)
116
31 DecemberRationale and
Details of transactions 2006 Relationship(Baht’000)
necessity
3.22 Company and subsidiaries
Selling among related 2,286 Same as 1.5 The transactions arosed
parties with the size of in ordinary course of
which not exceeding business, net of discount
Baht 1 million. rate.
Charoen Pokphand
Group of companies
(CPG)
Total purchase of services 959,483
4. Purchase of goods
4.1 True Internet Co., Ltd. (TI)
Purchase office supply 2,228 Same as 3.4 The transactions arosed
from in ordinary course of
Asia Infonet Co., Ltd. business.
(AI)
4.2 True Internet Co., Ltd. (TI)
Computer software from 1,263 Same as 2.4 The transactions arosed
Charoen Pokphand in ordinary course of
Group of companies business.
(CPG)
4.3 True Internet Co., Ltd. (TI)
Purchase office supply 1,131 Same as 3.5 The transactions arosed
from in ordinary course of
True Internet Data business.
Center Co., Ltd. (TIDC)
4.4 True Multimedia Co., Ltd. (TM)
Computer software from 1,875 Same as 2.3 The transactions arosed
Charoen Pokphand in ordinary course of
Group of companies business.
(CPG)
4.5 True Lifestyle Retail Co., Ltd. (TLR)
Computer software from 5,067 CPG is a major shareholder of the The transactions arosed
Charoen Pokphand Company. The Company indirectly in ordinary course of
Group of companies holds 99.99 TLR’s equity interest. business.
(CPG) These companies are related
through directorships.
117
31 DecemberRationale and
Details of transactions 2006 Relationship(Baht’000)
necessity
4.6 True Digital Entertainment
Co.,Ltd. (TDE)
Computer software from 3,081 Same as 3.7 The transactions arosed
Charoen Pokphand in ordinary course of
Group of companies business.
(CPG)
4.7 Bangkok Inter Teletech Group of
companies (BITCO)
Purchase of good from 5,839 The Company holds 40.00% in NC The transactions arosed
NC True Co., Ltd. True’s equity interest. BITCO is the in ordinary course of
(NC TRUE) cellular telephone operator which business.
the Company directly holds 78.26%
and indirectly holds 15.10% of its
equity interest. These companies are
related through directorships.
4.8 Bangkok Inter Teletech Group of
companies (BITCO)
Computer software from 14,397 Same as 1.1 The transactions arosed
Charoen Pokphand in ordinary course of
Group of companies business.
(CPG)
4.9 Company
Purchase network 1,721 Same as 2.14 The transactions arosed
equipment from in ordinary course of
NEC Corporation business.
(Thailand) Co.,Ltd.
(NEC)
4.10 Company
Computer software from 64,047 Same as 1.2 The transactions arosed
Charoen Pokphand in ordinary course of
Group of companies business.
(CPG)
4.11 Company and subsidiaries
Selling among related 179 Same as 2.18 The transactions arosed
parties with the size of in ordinary course of
which not exceeding business, net of discount
Baht 1 million. rate.
NC True Co., Ltd.
(NC True)
118
31 DecemberRationale and
Details of transactions 2006 Relationship(Baht’000)
necessity
4.12 Company and subsidiaries
Selling among related 11 The Company indirectly holds The transactions arosed
parties with the size of 37.83% in KSC’s equity interest. in ordinary course of
which not exceeding These companies are related through business, net of discount
Baht 1 million. directorships. rate.
KSC Commercial Internet
Co., Ltd. (KSC)
4.13 Company and subsidiaries
Selling among related 250 Same as 2.16 The transactions arosed
parties with the size of in ordinary course of
which not exceeding business, net of discount
Baht 1 million. rate.
Asia Infonet Co., Ltd.
(AI)
4.14 Company and subsidiaries
Selling among related 720 Same as 1.5 The transactions arosed
parties with the size of in ordinary course of
which not exceeding business, net of discount
Baht 1 million. rate.
Charoen Pokphand
Group of companies
(CPG)
Total purchase of goods 101,809
ii) Outstanding balances arising from sales of goods and services:
Joint ventures, associates and related companies Amount Baht’000
Asia Infonet Co., Ltd. 14,973True Internet Data Center Co., Ltd. 827KSC Commercial Internet Co., Ltd. 57,100NC True Co., Ltd. 6,024NEC Corporation (Thailand) Co., Ltd. 24CP Group of companies 850,867
Total 929,815
119
iii) Outstanding balances arising from purchases of goods and services:
Joint ventures, associates and related companies Amount Baht’000
Asia Infonet Co., Ltd. 26,585True Internet Data Center Co., Ltd. 5,205KSC Commercial Internet Co., Ltd. 7,214NC True Co., Ltd. 1,045CP Group of companies 50,653NEC Corporation (Thailand) Co., Ltd. 3,622
Total 94,324
iv) Loans to related partyOutstanding balance and movement of loans to related party:
Related companies Amount Baht’000
KSC Commercial Internet Co., Ltd. 25,880True Internet Data Center Co., Ltd. 12,000
Total 37,880
The Company indirectly holds 37.83% in KSC’s equity interest.
v) Loans from a related party
Related companies Amount Baht’000
Kreditanstalt fur Wiederaufbau (KfW) 5,579,378
KfW is the only preference shareholder of the Company and holds 15.54% of issued and paid-up share capital.Loan are denominated in US Dollar amounting to USD 160.65 million. The loans rank pari passu with other
secured lenders and carry interest at LIBOR plus a fixed percentage per annum. The loans are secured against variouscategories of assets. The first repayment will be due in September 2006 and the final maturity date will be on31 December 2011.
The related interest expenses were Baht 423.14 million for the year ended 31 December 2006.
..
120
vi) CommitmentsThe Company has carried the commitment to support a certain subsidiary pertaining to loans agreements
entered into by the subsidiary with its creditors. The financial supports are set as follows:1. Regulatory sponsor support to governmental authorities arising out the mobile phone concession: ,where the
subsidiary experience cash shortfalls for its normal operation due to regulatory cost, the sponsors shall provide financialsupport for the amount of the shortfall caused by the excess regulatory costs.
2. General cash deficiency sponsor support: where the cash flows of the subsidiary are insufficient for its normaloperations or debt repayments pursuant to the terms of the financing documents with its lenders, the Company willprovide financial support to the subsidiary in a total amount no exceeding Baht 7,000.00 million
Under the terms and conditions of the agreements, the Company and concerned parties must comply with certainconditions as stipulated in the agreements. The sponsor support funds must be injected into the subsidiary in the form asspecified in the agreements.
Measures and Procedures for Approving the Entering into of Connected TransactionsThe Company has measures and procedures for approving the entering into of connected transactions in
compliance with the Rules and Regulations of the Office of the Securities and Exchange Commission (“SEC”) and theStock Exchange of Thailand (“SET”) i.e. related party transactions must be approved by the Independent Directors andprocessed according to established internal procedures for related party transactions, details of which have been stipu-lated by the Independent Directors. If any related party transaction is deemed to be a connected transaction, the saidtransaction must be approved by the Audit Committee, the Board of Directors and / or the Shareholders Meeting as thecase may be, according to the regulations of the Stock Exchange of Thailand. Moreover, the Company must comply withthe terms and conditions of the Shareholders’ Agreement executed with Kreditanstalt fur Wiedderaufbau dated22nd December 1999 which specifies that the Company must disclose if its major sharholders of affiliates enter into anyconnected transactions.
Policy for Future Connected TransactionsIn addition, in order to strictly comply with the rules and regulations of the SEC and the SET, the Company has
applied said rules and regulations in implementing internal guidelines for connected transactions by undertakinga comparative study of the connected transactions guidelines of various foreign institutions to enhance transparencyand create parallel understanding with foreign analysts and investors. With regard to future connected transactions, theCompany anticipates that there will be connected transactions in the ordinary course of business of the Company withits affiliates and that the Company shall proceed with such transactions in a transparent manner pursuant to the goodcorporate governance policy of the Company as well as all relevant regulations.
..
121
AuditFees
1. Audit fees
The audit fees and related expenses occurred during the year 2006 was Baht 21.46 million. TheCompany and subsidiaries paid during the year amount of Baht 13.32 million to the appointed auditing firm.The remaining fees of Baht 8.14 million will be paid in the following year.
2. Other non-audit fees
During the year 2006, the appointed auditing firm provided other non-audit services, i.e. agree-uponprocedures, tax consulting service and other to the Company and subsidiaries. The fees were Baht 29.88million and Baht 28.66 million was paid during the year. The remaining fees of Baht 1.22 million will be paidin the following year upon the completion of work.
122
The Audit Committee, comprised of Mr. Vitthya Vejjajiva, Dr. Kosol Petchsuwan and Mr. Joti Bhokavanij,was reappointed by the Board of Directors Meeting No. 2/2549 on 23 February 2006 to perform dutiesand discharge responsibilities under the charter for the Audit Committee. During the year 2006, the AuditCommittee held 6 meetings to discharge its functions as assigned by the Board of Directors as summarizedbelow:
1. Recommended the reappointment of external auditors to the Company and its subsidiaries;2. Oversaw the performance of the external auditors including the scope of their audit and
recommended appropriate remuneration to the Board;3. Discussed with the external auditors the scope of their audits before they commenced and
reviewed the results and considered their Management Letter;4. Acknowledged the audit plan and external auditor’s findings and provided recommendations;5. Reviewed the annual and quarterly financial reports of the Company and its subsidiaries to ensure
correctness, reliability and adequacy of information disclosed;6. Regularly reviewed the Company’s and its subsidiaries’ practices relating to connected transactions
to ensure compliance with the regulation of the Stock Exchange of Thailand;7. Reviewed internal audit and its relationship with the external auditors, including plans and
performance;8. Provided advices to Internal Audit Department;9. Considered the internal audit plan under risk-based approach and the monthly, quarterly and
annual results as well as submitted suggestions on actions to be taken by the management, andalso on following up the progress of these actions;
10. Closely monitored the work progress of Internal Audit Department in order to enhance effective-ness of the internal audit function; and
11. Ensured the improvement of internal controls system of the Company to enhance efficiency andeffectiveness and ensure appropriate compliance with applicable regulatory requirements.
The Audit Committee has independence in performing the duties as assigned. In this regard, the AuditCommittee has received good collaboration from the management, met and discussed with the independentauditors to be informed on the auditor’s comments on the financial statements and internal controls system.The independent auditors, internal auditors, and management of the Company have not brought any matterto the attention of the Audit Committee that would indicate material weaknesses in the internal controlssystem or legal non-compliance.
signed by Mr. Vitthya VejjajivaChairman of the Audit Committee
of the Audit CommitteeReport
for the Year 2006
123
By virtue of the resolution of the Board of Directors of the Company passed at its meeting No. 8/2543held on 16th November 2001, the Compensation and Nominating Committee (the “Committee”) wasappointed to perform and discharge certain responsibilities. During the year 2006, the Committee carried outthe following tasks:
1. Held one meeting in order to discharge its functions as assigned by the Board of Directors;2. Considered and proposed recommendation to the Board of Directors regarding the reappointment
of the Audit Committee and the appointment of the Secretary to the Audit Committee;3. Considered the Employee Stock Option Plan for the Year 2006 (the “ESOP 2006 Project”) and
proposed recommendation to the Board of Directors and the Shareholders Meetings for furtherconsideration and approval respectively;
4. Considered and approved variable payout to the CEO/President for the Year 2005 (payout in 2006);and
5. Considered and approved the Executives Variable Pay Plan for the Year 2006 (payout in 2007).
signed by Mr. Umroong SanphasitvongRepresentative of the Compensationand Nominating Committee
Reportof the Compensation and Nominating Committee
for the Year 2006
124
By virtue of a resolution of the Board of Directors of the Company passed at its meeting No. 3/2549held on 24th March 2006, the Corporate Governance Committee was appointed to perform duties anddischarge responsibilities. During the year 2006, the Corporate Governance Committee proceeded asfollows:
1. held two meetings in order to discharge its functions as assigned by the Board of Directors;2. met with representatives from the Stock Exchange of Thailand (“SET”) to discuss and exchange
opinions with the SET regarding the new Principles of Corporate Governance, which will be appliedto the information of the Year 2007 that will be disclosed in the Year 2008;
3. reviewed the existing Policy on Corporate Governance of the Company and proposed someadditional contents in order to comply with the new Principle recommended by the SET, combinedwith the concept of Sufficiency Economy, to the Board of Directors for consideration andapproval;
4. considered the criteria to screen the issues proposed by minority shareholders to include in theAGM agenda and proposed to the Board of Directors for consideration and approval;
5. considered the Report on Corporate Governance Practice of True for disclosure in the AnnualReport for the Year 2006 and proposed to the Board of Director for consideration and approval;
6. considered the self-assessment form of the Board of Directors and proposed to the Board ofDirectors for concurrence for further action; and
7. considered the Corporate Governance Assessment Report 2006 of the Company assessed by theThai Institute of Directors Association and proposed to the Board of Directors with recommendations for further improving the Corporate Governance of the Company.
signed by Mr. Narong Srisa-anChairmanof the Corporate Governance Committee
Reportof the Corporate Governance Committee
for the Year 2006
125
By virtue of a resolution of the Board of Directors of the Company passed at its meeting No. 8/2544held on 16th November 2001, the Finance Committee was appointed to perform and discharge certainresponsibilities. During the Year 2006, the Finance Committee has carried out the following tasks:
1. held six meetings in order to discharge its functions as assigned by the Board of Directors;2. considered the 2006 financial targets and proposed recommendation to the Board of Directors
for approval;3. considered the revision of authorized bank signatories with respect to certain bank accounts and
proposed recommendation to the Board of Directors for approval;4. considered various investment projects and proposed recommendation to the Board of Directors
for approval;5. considered the quarterly and annual financial results of the Company and its subsidiaries;6. acknowledged the refinancing status and plan of certain subsidiaries;7. considered the capital increase of certain subsidiaries of the Company and proposed recommendation
to the Board of Directors for approval;8. considered the Annual Hedging Plan of the Year 2007 together with the Policy on the Use of
Derivative Securities in Financial Transactions and proposed recommendation to the Board ofDirectors for approval; and
9. considered the preliminary overview of the 2007 financial target and proposed to the Board ofDirectors for preliminary information.
signed by Dr. Ajva TaulanandaChairman of the Finance Committee
Reportof the Finance Committee
for the Year 2006
126
The Board of Directors is responsible for the financial statements of the Company and itssubsidiaries. The aforementioned financial statements have been prepared in accordance with GenerallyAccepted Accounting Principles, using appropriate accounting policy consistently employed by the Companyas well as applying careful judgment and best estimation. Important information is adequately disclosed in thenotes to financial statements.
The Board of Directors has provided and maintained an efficient internal controls system to ensure thataccounting records are accurate, complete and adequate to protect its assets.
To accomplish this task, the Board of Directors has appointed an Audit Committee, which consists ofIndependent Directors responsible for the quality of financial statements and internal controls system, whosecomments on these issues are readily included in the Audit Committee Report in this Annual Report.
The Board of Directors is of the opinion that the Company’s overall internal controls system isadequate and suitable and has rendered credibility and reliability to the financial statements of the Companyand its subsidiaries for the year ended 31st December 2006.
signed by Mr. Dhanin ChearavanontChairman of the Board
Report of the Boardof Directors’ Responsibilities for Financial Statements
for the Year 2006
127
Management’sDiscussion
and Analysis
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The accompanying notes on pages 149 to 213 are an integral part of these financial statements.
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The accompanying notes on pages 149 to 213 are an integral part of these financial statements.
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The accompanying notes on pages 149 to 213 are an integral part of these financial statements.
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The accompanying notes on pages 149 to 213 are an integral part of these financial statements.
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The accompanying notes on pages 149 to 213 are an integral part of these financial statements.
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