TRUE : FORM 56-1 For the Year 2006

(Translation)

Annual Registration Statement (Report form 56-1) For the Year 2006

True Corporation Public Company Limited

ContentsPage

Part I Executive Summary 1

Part II The Listed Company 3

1. Risk Factors 4 2. Nature of Business 11 3. Details of each Business Line 19

3.1 Products and Services 19 3.2 Marketing Strategy 33 3.3 Distribution and sales 33 3.4 Procurement of Products and Services 33 3.5 Thai Telecom Industry 34 4. Research and Development 47 5. Operating Assets 48 6. Future Projects 50 7. Legal Disputes 52 8. Capital Structure 56 8.1 Company’s Securities 56 8.2 Shareholders 67 8.3 Dividend Policy 68 8.4 Liabilities Structure 68 9. Management 84 9.1 Management Structure 84 9.2 Remuneration for the Company’s Directors and the Executive Officers 94 9.3 Corporate Governance Report 96 9.4 Insider Trading Policy 107 9.5 Personnel 108 10. Internal Controls 111 11. Connected Transactions 112 12. Financial Status and Performance 124 12.1 Company’s Auditors and Significant Accounting Policies 124 12.2 Summary of Financial Statements 125 12.3 Financial Ratios 128

12.4 Management’s Discussion and Analysis 129 12.5 Audit Fees 141

13. Other Related Information 142 Appendix 1: Information of Directors and Executive Officers 143 Appendix 2: Information of Director of Subsidiaries 156

Part III Acknowledgement of the correctness of the information 162

True Corporation Public Company Limited Annual Registration Statements (Report Form 56-1)

TRUETB: Executive Summary 1

PPAARRTT IIEEXXEECCUUTTIIVVEE SSUUMMMMAARRYY

True Corporation Public Company Limited, (“TRUE” or the “Company”) and its affiliates, provide telecommunications services under the Agreement for Joint Operation and Joint Investment for Expansion of Telephone Services (“Agreement for Joint Operation and Joint Investment”) awarded by the Telephone Organization of Thailand (currently is TOT Public Company Limited or “TOT”) and True’s subsidiary made the Agreement to Operate and to Provide Cellular System Radio Telecommunication Services of Digital PCN (Personal Communication Network) 1800 (“Agreement to Operate and to Provide Cellular System Radio Telecommunication Services”) with the Communications Authority of Thailand (currently is CAT Telecom Public Company Limited or “CAT”).

True is 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 fixed-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 lifestyle while creating value for our organization, our employees and our shareholders.

In 2006, we made impressive progress towards realizing this vision, fulfilling 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 ourselves apart 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 Bt 50.4 billion (+21.7%) Consolidated EBITDA Bt 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 significant 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 fixed-line phone subscribers 0.85 million Internet and broadband subscribers 0.56 million pay-TV (True Visions) subscribers 0.35 million WE PCT subscribers

While the True group saw many opportunities for growth in 2007, there were a number of general and specific factors that could impact the Company’s performance and that of its subsidiaries. Please see details in “Risk Factors” in Part II


TRUETB: Executive Summary 2

The True group’s products and services could be classified into 3 major categories as follows:

1) Wireline (Fixed line and Value Added Services) 2) Wireless (PCT and Mobile Phone) 3) Pay - TV

Consolidated and Company Balance Sheets and Financial Highlights as at 31st December 2006 are as follows:

- Total assets Baht 122,956 million - Total liabilities Baht 115,556 million - Total shareholders’ equity Baht 7,400 million - Net profit (loss) Baht (4,180) million

More details could be found in Part II of this report which is corporate information.

In this Form 56-1, “TRUE”, “Company”, “Affiliates”, and “Subsidiaries” refer to TrueCorporation Public Company Limited and/or its affiliates and/or its subsidiaries. In caseof uncertainty of which company is responsible or execute and of which businessesappeared in the Form 56-1, you may send your questions to

IR Office True Corporation Public Company Limited 18 True Tower, Ratchadaphisek Road, Huai Khwang, Bangkok 10310 Telephone 66 (0) 2699-2515 Fax 66 (0) 2643-0515 E-mail: [email protected]


TRUETC: The Listed Company 3

PPAARRTT IIIITTHHEE LLIISSTTEEDD CCOOMMPPAANNYY

True Corporation Public Company Limited, Type of Business: Telecommunication

Head Office: 18 True Tower, Ratchadaphisek Road, Huai Khwang, Bangkok 10310

Public Company Registration No. 0107536000081 Home Page: www.truecorp.co.th (Formerly registration no. Bor Mor Jor 82)

Telephone: 66(0) 2643-1111 Fax: 66(0) 2643-1651


TRUETD: Risk Factors 4

11.. RRIISSKK FFAACCTTOORRSS

While True sees many opportunities for growth in 2007, there are a number of general and specific factors that could impact the company’s performance and that of its subsidiaries.

Risks relating to our operations

We have experienced, and expect to continue to experience, increasing competition in the businesses in which we operate.

True and its subsidiaries, particularly True Move (formerly TA Orange) and its Internet and Broadband businesses, 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 by 10 percent in 2005 (from Baht 437 in 2004 to Baht 393) and by 26 percent in 2006 (to Baht 292). The increase in subscriber additions and increase in usage we experienced following this period of intense price competition required us to make additional capital expenditures to alleviate congestion and expand our network capacity. Our EBITDA margin in 2006 declined to 21.4 percent (from 23.4 percent in 2005).

In addition, if the National Telecommunication Commission (NTC) allows telecom operators to launch additional services, introduces number portability or grants telecom licenses to new operators it may create more competition in the market. Recent changes of ownership in our key competitors may also expose us to competition from foreign-owned operators with more experience in other competitive markets and greater financial resources than we enjoy.

However, we believe that price competition in the mobile phone market will decline after the implementation of the interconnection regime in 2007 because each operator will have a cost burden of connecting to other networks and major mobile operators with market share of higher than 25 percent cannot set their tariffs lower than their costs. This is in line with the NTC’s 2006 regulation combating monopolies and unfair competition in operating telecom businesses. The three major mobile operators have already signed interconnection agreements.

In the broadband Internet market, we face competitors ranging from start-up Internet companies to multinational companies, whose applications for ISP licenses were approved by the National Telecommunication Commission (NTC) in 2005. At the beginning of 2006 the NTC granted a fixed-line license to TT&T Broadband Company Limited. TT&T could provide fixed line and broadband Internet services nationwide, thereby intensifying competition. In addition, True’s wireline business will face indirect and growing competition from mobile phone businesses and Voice over Internet Protocol (VoIP) services, whose tariffs are lower than those for traditional wireline services.

We expect competition to remain intense, but we believe True is well positioned to meet this competition given our leadership position through our ability to provide fully integrated services together with the strength of our brand. True Move has captured one third of the subscriber additions in the Thai mobile market every year since 2004 and True Group still maintains its market leadership in Internet and Consumer Broadband



due to the advantages of having a modern fixed-line network suitable for providing these services. True and its subsidiaries have applied for new licenses to take advantage of new opportunities offered by regulatory reform. At the time of writing, we have been granted an ISP license, an international Internet gateway 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 and make its current technology less competitive.

The communications industry is characterized by rapid changes in technology, evolving customer needs and new products and services. These changes are, in some cases, brought about by regulators opening up the market. Key emerging technologies for the Thai communications industry in the near future are expected to include third generation (3G) mobile phones, wireless broadband (WiMax), and number portability services. In order to respond successfully to emerging industry trends, we may be required to make substantial capital expenditure given the industry’s capital intensive nature. But if we do not invest in the new technology 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 new technologies by being able to keep services and revenues ‘in-house’ and by being able to balance traffic across our mobile, broadband and fixed-line services.

Our future success depends on our key personnel and the continued operations of our network and services.

Our success depends on the continued contribution of our management and employees as well as the continued operation of our network. We have established human resource policies in order to retain and develop 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 first place.

Continued unrest in the southern part of Thailand, as well as unforeseen disasters, may cause temporary disruption in certain geographical areas of our business. The southern part of Thailand has recently experienced increasingly frequent incidents of violence. True Move and several other cellular operators recently experienced temporary interruption of services following damage to a number of cell sites as a result of the violence. Incidents such as these, over which we have no control, may continue to have an impact on our business.

Risks relating to regulatory environment

Thailand’s communications industry is in a state of transition and a significant degree of uncertainty exists regarding the regulatory environment.

In accordance with Thailand’s commitment to the World Trade Organization, or the WTO, to liberalize its telecommunications sector by 2006, the Thai government embarked on a reform of the country’s telecommunications regulatory regime with the passage of two major legislative acts: the Organizations Allocating Frequency Waves and Supervising Radio and Television Broadcasting and Telecommunications Business Act, or



the NTC Act, in March 2000; and the Telecommunications Business Operation Act, or the TBO Act, in November 2001.

In October 2004, the National Telecommunication Commission, or the NTC, was established as the new independent regulator of the telecommunications industry, assuming the regulatory functions previously exercised by the Telephone Organization of Thailand (now known as TOT Public Company Limited), or the TOT, the Communications Authority of Thailand (now known as CAT Telecom Public Company Limited), or CAT, and the Post and Telegraph Department.

From its establishment to the end of 2006, the NTC has issued regulations prescribing, among other things: (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 have a 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 issuing licenses for new telecom services that require the allocation and management of radio frequency including mobile phone business. If True Move does not get the NTC’s license before the concession contract expires in September 2013, the company will not be able to continuously pursue its business and this will strongly impact True Group’s financial status and performance because it is our core business (True Move’s revenue accounted for 44 percent of True Group total revenue in the year 2006). It is also possible that policies imposed by the NTC may adversely affect True’s operating costs and/or increase competition in the sectors in which we operate.

The NTC’s interim telecommunications license fee regulation sets out a lower tariff structure for new entrants that operate under the licensing regime than the tariffs that are applicable to the existing concessionaires, such as True, that are operating their businesses under the concession agreements granted by TOT and CAT. This could put the existing concessionaires at a disadvantage to the new entrants. To mitigate 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 surrounding new government policies after the changes on Thailand’s political front. In January 2007 the Cabinet approved a proposal made to the Council of State to consider the legal issues regarding the Private-Public Joint Venture Law B.E. 2535: whether the concession contracts between state-owned enterprises and private telecom operators are in accordance with the Law or not. There is a possibility that our concession contracts may be amended or cancelled before we are granted relevant 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 affect True Group’s financial status.

Also, in January 2007, the Cabinet endorsed the zero rate excise tax and ended the 2003 resolution that imposed excise tax of 2 percent and 11 percent for fixed-line phone and mobile phone operators, respectively. The 2003 resolution allowed private telecom operators to deduct part of their concession fees to be paid 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 fees of 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 the telecommunication industry’s regulatory environment and to advocate free-and-fair competition on a level playing field.

TOT and/or CAT may initiate legal proceedings against True Move after True Move signing the interconnection charge agreements and ceasing to pay access charges to TOT. This may result in an increase in our expenses and True Move subscribers may experience interrupted service when attempting to contact TOT subscribers.

True Move operates its mobile phone business under a CAT concession contract and is signatory to an access charge agreement resulting in True Move paying Baht 200 per subscriber per month to TOT for post paid subscribers and paying 18 percent of its revenue to TOT for prepaid subscribers. In addition, we have to make 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 that telecommunications operators who have telecommunication networks are required to allow other operators to access their networks in compliance with the procedure specified in the Interconnection Regulation. The regulation sets a new interconnection system whereby interconnect charges will reflect actual network usage by each operator. Under this interconnection regulation, operators are also required to enter into agreements with one another to establish interconnection charge rates, which are based on cost. On November 17, 2006 True Move signed an interconnection contract with DTAC (Total Access Communications) with the contract taking immediate effect. On January 16, 2007 True Move signed an interconnection contract with AIS (Advanced Info Service) which indicated the start of interconnect charges on 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 its payment 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 to make payments under the access charge agreements.

On 17 November 2006 True Move wrote to CAT and TOT informing them that it would cease paying access charges on the basis that the rate and collection of access charges under the agreement were contrary to the law. True Move also asked TOT to enter an interconnection charge agreement in compliance with the law, or to temporarily apply the provisional rate announced by the NTC while negotiations on an agreement with TOT proceeded.



As a result of the cessation of access charge payments by True Move, on 23 November 2006 TOT issued a letter stating that True Move was not entitled to connect its network with TOT’s network because it was not a telecommunications licensee, as granted by the NTC, and did not have its own telecommunications network. TOT also disputed that the Access Charge Agreement did not violate any law and that the rate and collection of access charge 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 in resolving this issue in our favor, in addition to a penalty equal to 100 percent of any access charges CAT may have paid to TOT on our account and interest thereon, we may be required to pay both new interconnection charges as well as existing access charges, which will result in a material increase in our costs. If True Move is required to pay access charges by court order for the period from 18 November 2006 to 31 December 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 Note 22 to the Consolidated Financial Statements.)

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 Move subscribers with those 1.5 million phone numbers. True Move filed a lawsuit with the Central Administrative Court requesting an injunction and on January 26, 2007 the Court ordered TOT to connect its network with True Move’s new numbers so that subscribers of TOT and True Move could communicate with each other. On January 30, 2007 TOT appealed the Court order to the upper court whose decision was still pending at the time of writing. However, TOT connected its network with True Move new numbers from March 2, 2007.

We compete with our concession grantors and this has led to and could continue to lead to disputes with them, which could affect our operations.

True and its subsidiaries operate under the “Agreement for Joint Operation and Joint Investment for Expansion 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 ability of True and its subsidiaries to conduct business. Our fixed line concession could be cancelled by TOT if True violates laws relating to public or national security, is placed under receivership by a court in a bankruptcy case, or willfully and continually breaches a concession agreement in any material respect. However, TOT must submit the case to the Arbitration Tribunal for adjudication before it can cancel the concession agreement with True.

Under the revenue sharing provisions of True’s fixed line concession, TOT collects all of True’s fixed line revenues from subscribers within True’s network and retains a portion for revenue sharing. TOT may withhold or delay payments from revenues collected for True to offset any obligations it believes it is owed (although this has not occurred to date).

As well as being True’s concession grantors, TOT and CAT are also our competitors. This has and could continue to lead to disputes between True and TOT and between True and CAT. Previously TOT and True have brought some disputes to the Administrative Court and the Arbitration Tribunal for adjudication. We may not be able to successfully



resolve any of these disputes in our favor, and if we were unsuccessful, our business and financial condition could be affected. Up to the time of writing, the courts have delivered judgments both in favor and against cases brought to the courts by True. (See Notes to the Consolidated and Company Financial 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 other financial agreements. Exchange rate and interest rate movements may increase our interest payments and other financial obligations.

True Group and its subsidiaries have high debt levels and may be at risk of failing to find funding each year to repay principal and interest. However, we would be able to negotiate with our creditors or raise new loans to repay existing loans and adjust our principal repayments to suit our cash flow.

True’s operation is limited by a number of debt and other financial agreements. These agreements could prohibit True from exploiting good business opportunities or lead to accelerated debt repayment if some of the debt covenants are not in line with those indicated by the financial agreements or if TOT cancels the concession agreement with True. However, TOT must seek an arbitration decision in order to cancel the concession agreement.

True is subject to exchange rate fluctuations, which could increase principal, interest payments and capital expenditure. As of December 31, 2006 approximately 40 percent of True Group’s consolidated liabilities were denominated in foreign currencies, most of which was denominated in US Dollars. In the year 2006, True had consolidated capital expenditure of approximately Bt 9.5 billion, 31 percent of which was in foreign currencies.

True has put in place hedging tools to reduce its exposure to exchange rate fluctuations, for 87 percent of a USD 160 million loan belonging to True Move and 100 percent of a USD 200 million long-term loan for the TrueVisions (formerly UBC) acquisition as well as 100 percent of a True Move bond of USD 465 million issued in December 2006. In addition, True had also entered into interest rate swap that hedged foreign exchange exposure on interest payments for the maturity of all US Dollar loans and reduced interest rate exposure. As a result, the US Dollar interest rates for these US Dollar loans were converted into Thai Baht fixed rates. However, there is no hedging in place for the Japanese Yen-denominated deferred payment note of Bt 3.4 billion, which matures from 2014 to 2017.

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 hedged to fix the interest rates. However, interest rates on part of True Move’s debt will reduce over time if it is able to achieve the conditions set out in its loan agreement.



We may not be able to pay a dividend to shareholders in the near future.

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 Public Company Limited Act, True is able to pay dividends to its shareholders only from profits earned, after provision 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 dividend policy.

Risks relating to the TrueVisions (formerly UBC) acquisition.

We may not realize the anticipated benefits of the integration of TrueVisions (formerly United Broadcasting Corporation Public Company Limited or UBC), and we may share a number of risks associated 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 and cross-selling of services; improvement in our ability to manage churn rates; and improved access to rich content 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 share a 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 Communication Organization of Thailand (MCOT). The pay-TV contract under the satellite system will expire in September 2014 and the cable-TV contract will expire in December 2019. If TrueVisions is not granted new licenses under the new regulations before the concession contracts expire TrueVisions may be at risk of not being able to continue its business which may affect the financial status of TrueVisions and True Group.

TrueVisions relies on third-party suppliers for most of its programming. If TrueVisions is unable to obtain attractive programming or if the cost of this programming substantially increases in the future, its revenues would be adversely affected.

Unauthorized access to TrueVisions’ programming signals is difficult to prevent and will adversely affect its results of operations, cash flow and programming arrangements.

TrueVisions’ core pay-television business is susceptible to new competitors and indirect competition that 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 its revenues is denominated in Baht while a significant portion of its obligations is denominated in U.S. dollars.


TRUETE: Nature of Business 11

22.. NNAATTUURREE OOFF BBUUSSIINNEESSSS

Company Background and Major Developments

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 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 other operators by providing a full range of communications solutions drawing on rich content to meet every customer’s lifestyle needs.

Backed by Asia’s largest agro-conglomerate, the Charoen Pokphand Group (with a shareholding of approximately 30.4 percent, as of 31st December 2006), we have expanded our business from being a fixed-line provider to a total communications solutions provider by offering consumers, small and medium enterprises, and corporations a full range of voice, data and multimedia 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 largest fixed-line service provider in BMA, a leading online game provider and the number three mobile phone operator in Thailand.

We operate five core businesses: Mobile phone business under True Move (formerly TA Orange) Online business under True Online (which consists of fixed-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 TrueVisons, formerly UBC) Digital commerce business under True Money Digital content business under True Life

We provide fixed-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-line wireline network in the BMA for a period of 25 years, ending on October 2017. We received our first revenue from the operation of our wireline network in November 1992.

We received additional approvals to provide value-added, public payphone and other services, and launched our WE PCT service in 1999, hi-speed data transmission services including ADSL and cable modem 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 of equity interest in Bangkok Inter Teletech Public Company Limited (“BITCO”) (the parent company of TA Orange) expanding our business in Mobile Sector. Full commercial launch of TA Orange’s mobile telecommunications service in Thailand took place in March 2002. We gradually increased our shareholding in BITCO until currently (as of 31st December 2006), we increased our shareholding in BITCO to 93.4 percent and began to fully consolidate the results of BITCO and TA Orange from 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 telecommunications 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 received licenses from the NTC to provide Internet service, Internet service via telephone or VoIP (Voice over Internet Protocol), public phone services, fixed-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, allowing True to own 91.8 percent (Effective Holding) of UBC. True started to fully consolidate UBC’s results into True Group from the first quarter of 2006. UBC was rebranded to “TrueVisions” at the beginning of 2007.

TrueVisions operates pay-TV services under a 25-year concession 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, infrastructure investments of more than Baht 100 billion, and employed more than 10,000 staff.

Major Developments in 2006 January 2006 True launches “True Money Services”, a new generation online

payment service allowing True Move customers to purchase goods or services and perform their financial 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 financial 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



March 2006 True completes UBC’s tender offer, a significant 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 Knowledge (Bronze) Package” for the mass market, changing its strategy after becoming a part of True Group

True debuts Thailand’s first hi-speed Internet service via wireless broadband allowing customers in Nakhon Ratchasima to enjoy hi-speed Internet access without the need to install fixed telephone line or cables

NC True introduces to the Thai market the critically-acclaimed online game Guild Wars

True Digital Entertainment 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 “True Knowledge Package”, a high-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 first 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 service, offering unlimited downloads of full-length Grammy songs

True strengthens its balance sheet and secures funding to support the growth of subsidiary True Move by raising Bt 3.4 billion via a private placement of 402 million shares, and also completes UBC’s long-term refinancing of USD 300 million



True launches TrueNetTalk to enable people to call 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 financial experience from True Money and upcoming campaigns under True’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 Office), a subsidiary company of True Group, is awarded an International Internet Gateway license from the National Telecommunications Commission (“NTC”)

True launches the True Life portal (www.truelife.com), which is part of the Company’s efforts to build online communities for those who share the same lifestyles or workstyles, and also opens a new TrueLife community at Thonglor as the first free hi-speed music download café in Thailand

September 2006 All mobile phone numbers switch to the new 10-digit number system, where the first “0” is replaced with “08”

October 2006 True Group launches G-SQUARE, Thailand’s first 24-hour game

channel, on UBC channel 55

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 flow to support growth

Awards received in 2006

True received considerable recognition during 2006. This was a tribute to the hard work and ability of management and staff. Awards included the following:

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 five attributes: reputation, quality of products and services, management’s long-term vision, innovativeness in responding to customer needs, and financial soundness. (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 taxpayers 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 TelecomMan 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 financial status, market leadership, technology innovation 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 Pacific Occupational Safety & Health Organization (APOSHO).

True won the Good Welfare & Labor Company Award from the Ministry of Labor’s Department of Labor Protection & Welfare.

Business Profile of the Company, Subsidiaries and Associated Companies

Currently, the Company’s products and services can be classified into major categories as follows:

1) Wireline (Fixed line and Value Added Services) 2) Wireless (PCT and Mobile Phone) 3) Pay - TV

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nual

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ly n

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ex C

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lic

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OLD

ING

As

of

31 D

ecem

ber

2006




TRUETF: Details of each business line 19

33.. DDEETTAAIILLSS OOFF EEAACCHH BBUUSSIINNEESSSS LLIINNEE

3.1 Products and Services

True Corporation Public Company Limited is Thailand’s only integrated telecommunications operator. We have more than 11 million subscribers to our services, which include the country’s largest broadband and dial-up Internet provider, Thailand’s dominant pay-TV provider TrueVisions (formerly UBC), the largest fixed-line phone operator in the BMA (Bangkok Metropolitan Area), and Thailand’s third-largest mobile phone operator (True Move – our largest business by subscriber numbers and revenue).

Our convergence lifestyle strategy, branded “Better Together”, is unique within the Thai market. The strategy focuses on providing customers with their preferred combinations of content and services from our full range of telecommunications offerings, enhancing lifestyles in line with our “live, learn, work and play” philosophy.

At the beginning of 2007, True was organized into five core businesses: True Move (the old Wireless segment), True Online (formerly Wireline segment), TrueVisions (formerly Pay TV), True Money (our digital commerce service) and TrueLife (which provides digital content and access). This document follows this category format.

In terms of financial reporting, we report in three segments: True Move, True Online and TrueVisions. True Money’s contributions are considered part of True Online as it will become a key vehicle for True’s vision of becoming a convergence lifestyle leader. TrueLife’s contributions are included in True Online as most TrueLife services cater for True’s broadband customers.

In 2006, True Move contributed 43 percent of total service revenue (after inter-company transactions). True Online (comprising fixed-line telephone, data services, Internet/broadband and WE PCT (Personal Communication Telephone)) contributed 41 percent and TrueVisions 16 percent.

1. True Move

The Company operates a mobile telecommunications business under the Agreement to Operate and to Provide Cellular System Radio Telecommunication Service of Digital PCT 1800, granted by CAT and expiring in September 2013. The Company operates this business through its subsidiary, True Move, in which the Company indirectly holds an equity interest of 93.3 percent. Under said agreement, True Move is required to pay revenue sharing to CAT of 25% of net revenue after the access charge, increasing from 20% as of September 16, 2006, and remaining at this rate until September 15, 2011 before increasing to 30% until the end of the concession.

True Move is the third-largest mobile telecommunications service provider in Thailand by number of subscribers with a market share of approximately 19.3% as of December 31, 2006. We operate a digital network based on the Global System for Mobile Telecommunications, or GSM, standard, which operates on the 1800 MHz frequency band.

True Move provides both prepaid and postpaid services and is unique in offering promotional packages that bundle True Group’s integrated products and services to provide subscribers value for money with more options to meet their needs.



Subscribers

True Move has grown rapidly since it launched full commercial operations in March 2002 and has been successful in acquiring about one-third of the market’s net additional subscribers each year since 2004. True Move is now Thailand’s third-largest mobile operator, with 7.6 million subscribers, an increase of 70% on the 4.5 million at the start of the year. At the end of 2006, True Move prepaid and postpaid customers accounted for 93% and 7% of our total mobile subscribers, respectively.

The following table sets forth certain information with respect to our mobile business during the periods indicated:

As of December 31, True Move 2003 2004 2005 2006

Subscribers - Prepaid 1,539,735 2,927,818 4,009,470 7,031,289 - Postpaid 285,255 452,565 449,173 546,453Total Subscribers 1,824,990 3,380,383 4,458,643 7,577,742Subscriber Growth 36.6% 85.2% 31.9% 69.9%Blended ARPU 508 437 393 292 - Prepaid ARPU 368 348 321 250 - Postpaid ARPU 1,016 1,030 911 772

True Move services

Pre Pay

Pre Pay is True Move’s prepaid service. Most of True Move’s revenue is derived from sales of prepaid airtime, which do not require 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 first telecommunications operator in Thailand to use independent non-mobile agents – “over the air” airtime resellers such as individuals or small shops who register with us and are eligible 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 subscribers a 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 Bt 199 to Bt 1,300. Subscribers are billed monthly for subscription fees, airtime and usage of other voice and non-voice services.



Voice Services

Our prepaid and postpaid subscribers 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 conferencing and caller identification. We also offer our voice subscribers roaming services, which enable them to make and receive calls when outside Thailand.

Non-Voice Services

True Move provides a range of non-voice services to enhance customer lifestyles. Content is delivered through various channels covering all mobile-accessible channels and web-based services through the www.trueworld.net portal. Non-voice services comprise a variety of popular content, including photo-based communication, financial information services, games, cartoons, screen savers and ring tones, music and sports content. Our subscribers are increasingly using our non-voice services, in particular ring-back tones, messaging and downloadable pictures, images and audio through GPRS.

Non-voice services contributed 9.6 percent to True Move’s total service revenue in 2006, compared with 7.6 percent in 2005. Service revenue from content-based services (mainly Color Ring), messaging and GPRS traffic 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 True Music, True Online 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;

VoiceSMS: Thailand’s first voice short-messaging service allows subscribers to send audio messages to fixed-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 finance (through True Music, True Sport, TV, Movies and others);

Mobile Chat: a WAP-based instant-messaging service that allows subscribers to engage in online and mobile chat;

Mobile Web: allows subscribers with compatible mobile handsets to access the Internet, including through available Wi-Fi connections; and

Ring-back Tone: offers personalized ring-back tones and exclusive song selections.

Mobile Handset and Accessories Sales

We offer a broad range of high-quality mobile handsets, related accessories, PDA phones and smartphones from a number of manufacturers, such as Motorola, Samsung, Sony Ericsson, O2 and HP.



International Roaming Services

We allow people whose network operators have international roaming agreements with us to use our network when traveling in Thailand. We also allow our 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 Thai mobile 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 efficient and cost-effective. During 2006 we achieved coverage of approximately 92% of Thailand’s population, and increased our network capacity to eight million users.

Bundled Packages

True Move’s name change from TA Orange in February 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 options of free calls and Internet usage for fixed monthly charges;

True’s Family Package promotion, bundling fixed-line and mobile services in ways designed to encourage communication among family members;

Academy Fantasia 3. True Move was a major part of the bundling promotion with TrueVisions and True Internet based on the third series of the popular TrueVisions reality music program Academy Fantasia. Only True Move voters were able to vote for their favored contestants. The promotion proved to be a key subscriber retention tool for True Move during the seasonally low third quarter. Weekly voting was 43% higher than in 2005, when customers of True’s competitors were also able to vote;

True Move also joined with TrueVisions for the TrueVisions-True Move Free View mass market promotion (see “TrueVisions” section below for more details); and

The All Together Bonus, True Group’s first bundled package which was launched in 2004, continued to attract True Move subscribers.

We have consistently sought to develop and market innovative non-voice products and services. For example, we were the first in Thailand to offer voice SMS, remixable ringtones (through the IRemix service), 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 email support for BlackBerry users;

Bolstering international roaming services, including offering in-flight 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 fixed-line subscribers).

2. True Online

True Online comprises fixed-line telephone and its value-added services, Internet and Consumer Broadband, data communications services and WE PCT. Our Internet and Consumer Broadband businesses have been growing rapidly and help to maintain overall revenue generated by True Online.

2.1 Fixed-line phone services

True is the largest fixed-line telephone service provider in the BMA with an estimated 58% market share, a fixed-line capacity of 2.6 million and almost 2 million lines in commercial use.

In August 1991, True was awarded a 25-year term of Agreement for Joint Operation and Joint Investment under a Build Transfer Operate (BTO) term to construct, install, maintain and jointly operate a two million-line wireline network in the BMA. We were subsequently granted the right to operate an additional 600,000 lines. We transferred our fixed-line network to TOT which collects service charges from customers and then sends back a proportion of revenue to the Company.

Under the said agreements, our revenue sharing is based on gross revenue before the deduction of related expenses, at the rate of 84 percent for 2 million lines and 79 percent for 600,000 lines. The Company has 82 percent revenue sharing from each value-added service and 76.5 percent from the public phone service. As at the time of writing, True Group had been granted VoIP (excluding phone-to-phone), fixed-line, public phone and International Direct Dialing (IDD) licenses from the National Telecommunications Commission (NTC).

As at December 31, 2006 True had 1,976,965 fixed line subscribers, consisting of 1,353,331 residential lines and 623,634 business lines. While ARPU has been declining due to continued migration of traffic to mobile service, subscriber numbers have basically been stable.

The following table shows the number of fixed-line subscribers and ARPU for the periods indicated:

As of December 31, Fixed Line 2003 2004 2005 2006

Subscribers 1,962,074 1,944,521 1,989,664 1,976,965 ARPU (Blended) 542 538 493 414



Value-Added Services

In addition to fixed-line or wireline services, the Company offers a range of value-added services to meet customers’ needs, including:

• A public phone service in the BMA, provided since 1997, with 20,000 telephone units. In April 2002, the Company gained approval to install an additional 6,000 telephone units, bringing the total number of units to 26,000.

• Voice Mailbox, Call Waiting, Conference Calling, Call Forwarding, Hot Line, Abbreviated Dialing, Automatic Call Repetition and Outgoing Call Barring.

• Caller ID displays incoming call number on Call ID phones.

The Company also provides services for corporate customers requiring a large number of telephone lines and provides a range of valued-added services including:

Direct Inward Dialing (DID), which automatically directs incoming calls to a specified party.

Hunting Lines service, which bundles two or more telephone lines at one location into a single number.

Integrated Service Digital Network (ISDN), which enables a telephone network to handle all forms of voice, data and image communications simultaneously on the same telephone line.

Televoting, a special service for companies with peak periods of short message traffic. It enables companies to perform many marketing activities without investing in infrastructure. Voting results are available in as little as five seconds.

Free Phone 1-800, allowing businesses to provide their customers with a free contact call service. The cost of customer Free Phone calls are automatically billed to the business. Customers can call from any telephone by dialing 1-800 followed by six digits.

Voice conferencing, a service that enables customers to participate in conferences via telephone lines from wherever they are at any time.

VoIP (voice over Internet protocol) services, called NetTalk by True, which were introduced in 2006, establishing a foothold in what is a relatively new market for Thailand. However, in these initial stages the NTC allows us to provide only phone-to-PC and PC-to-PC calling services.

Network

Our core fixed-line network is Thailand’s most modern and fiber-rich, including more than 170,000 kilometers of fiber-optic cables, covering 4200 square kilometers in the BMA. This enables us to minimize the use of copper cables (averaging 3-4 kilometers) and provide high-quality voice and data communications services.

2.2 Consumer Broadband and Internet

True Group is Thailand’s largest consumer broadband operator with around an 80% share of the ADSL (Asymmetric Digital Subscriber Line) market in the BMA. We provide the service using cable modem and DSL technologies at speeds of up to 10 (VDSL or Very High Speed DSL) Mbps. We also launched wireless broadband using pre-WiMax and Wi-Fi technology.



True Multimedia, our 90.5%-owned subsidiary, provides broadband network access using DSL and cable modem technologies to ISPs including our subsidiaries, True Internet and Asia Infonet, which in turn provide Internet services to end users, including corporate clients. Under the terms of our multimedia service agreement, which we refer to as the Non-POTS license, TOT has granted us the non-exclusive right to provide analog and digital high-speed transmission services, excluding voice communication services, throughout Thailand until October 20, 2017.

True’s Consumer Broadband business is growing rapidly. As of December 31, 2006 we had 442,728 subscribers, representing an increase of 47% from 2005.

The following table shows the number of Broadband subscriber and ARPU for the periods indicated:

As of December 31, Broadband2003 2004 2005 2006

Subscribers 11,611 164,775 300,322 442,728 ARPU 3,334 1,051 739 721

ADSL is an always-on, high-speed Internet service providing speeds of up to 4 Mbps. Customers can surf the Internet and talk on the phone at the same time.

Our most modern fixed line network allows us to provide a faster, more stable broadband service and to realize lower installation, operating and maintenance costs. The network not only provides ADSL, but also ADSL2+, G.SHDSL and Gigabit Ethernet, and is well positioned for eventual evolution into an IP-based Next Generation Network (NGN).

We also offer rich content through the Trueworld.net portal catering for consumer lifestyles, including music, gaming, sports and e-books, as well as a variety of value-added services, including IPTV, White Net filtering and Norton Anti-Virus.

In 2003, The Company and certain other service providers, such as MKSC, started offering wireless broadband services or Wi-Fi (Wireless Fidelity). As of December 31, 2006, we had over 3,000 Wi-Fi hot spots in locations such as coffee shops, restaurants, hotels, hospitals, department stores, movie theaters, convention centers and office buildings.

In March 2005, True Group launched VDSL (Very High-Speed Digital Subscriber Line) technology that provides high-speed Internet data transmission at rates of 6 Mbps - 10 Mbps to its business customers. The VDSL service is available in two special packages that enable enterprises and SMEs to run their businesses more efficiently and smoothly.

In April 2005, we also launched Thailand’s first prepay high-speed Internet service. “Pre Pay hi-speed Internet” delivers speeds up to four times faster than an ordinary dial-up modem, at a rate of only 0.24 Baht per minute charged on actual usage and with no monthly fee. The new service provides an alternative for high-speed Internet customers seeking value-for-money and convenience.



Broadband initiatives introduced during 2006 included:

The True Knowledge Junior Package, which introduced broadband to a wider market. Subscribers were offered limited Internet access at a special introductory price;

Outdoor Wi-Fi zones, at Bangkok’s Siam Square, Silom Road and Thonglor Road. These zones (a first 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 environment-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

True Coffee discount cards for True’s hi-speed Internet subscribers. The cards entitled subscribers to a free complementary New-Year coffee and a 50% discount on every cup of coffee for the three months to March 31, 2007.

Internet

The Company provides Internet (including content and applications) services through:

(i) Asia Infonet, in which the Company has a 65.0% equity interest, under a concession whereby CAT granted a non-exclusive right to provide commercial Internet services to users throughout Thailand until 2006 over facilities leased from CAT or any entity approved by CAT; and

(ii) True Internet, in which the Company has a 99.99% equity interest. In September 2005, True Internet received approval from the NTC for a Type One, one-year term ISP license due in August 18, 2006. The license was extended to August 18, 2007. Asia Infonet has also received an ISP license from the NTC which expires in February 2008.

In terms of our overall Internet business, we are Thailand’s no.1 Internet Service Provider (ISP) with more than one million subscribers, including Consumer Broadband subscribers and subscribers of KSC, an affiliated company. We offer Internet access to both consumers and business customers, along with a range of value-added services, including an Internet Data Center, providing security services for corporate customers.

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.



The following table shows the number of certain Internet subscribers, during the periods indicated:

As of December 31, Internet Users1/

2003 2004 2005 2006Internet subscribers

652,726 1,231,344 716,7032/ 849,007

1/ Excluding KSC 2/ The decline in the year 2005 was due to the transfer of dial-up users to broadband and a change in the calculation method for dial-up users.

2.3 Data Transmission Services

True’s Data Services offers business customers data transfer technologies and an outsourced data network management service. True focused on differentiating itself by providing customized services via convergence with other True Group products and services and by partnering with major application providers such as Cisco to provide a high-quality Internet Protocol (IP) based network. This means we do not have to compete solely on pricing.

True Group is one of the major players in the data transmission business. As of December 2006 there were 12,033 circuits for Digital Data Network (DDN) subscribers, a 17.8 percent increase from 2005.

The following table shows the number of DDN circuits and ARPU for the periods indicated:

As of December 31, DDN2003 2004 2005 2006

Circuits 7,835 9,001 10,216 12,033ARPU 16,591 11,014 10,411 11,106

True provides data transmission services using various technologies including:

Digital Data Network (DDN) or Leased –Line, a private network that facilitates voice, data and image transmission between two different points at a stable speed. This service is especially suited to customers such as banks and financial institutions which rely upon continuous transmission of accurate data or information, often in large volumes. The Company can provide a wide range of DDN speeds to suit customer needs, ranging from 64 kbps to more than 140 Mbps with guaranteed service quality. True Group offers DDN service in the BMA and upcountry areas.

IP Access Service (IPAS), offered under the name Megaport, which provides a total remote dial access solution for customers who require an external access port. These include Internet service providers, Web information providers and business groups which require a Virtual Private Network Service but do not want to bear the additional cost of equipment and management of the access port.

Trunking access, an Internet connection circuit which connects to access servers to receive 30 lines (or multiples of 30 lines) dialing concurrently from a nationwide telephone system, with a single easy-to-remember number.



Metronet, a fiber-to-the-building technology that enables high-speed data transmission through fiber-optic cable, with reliable ring network architecture. It is designed to provide a simple network configuration, with wider bandwidth capacity for business customers. Metronet offers a range of data transmissions speeds from 512 Kbps to 1 Gbps.

Network Manager, an outsourced network management service that can advise on a range of functions, from infrastructure investment to network design and implementation. The service also provides network system monitoring, performance reporting and planning for future network expansion.

Mail Fax, which enables customers to send via a traditional fax and recipients to receive it via their e-mail.

MPLS VPN (Multiprotocol Label-Switching Virtual Private Networks), a virtual private network which operates by generating secure channels within a shared network, maintaining the privacy and security of an organization’s communications and data. MPLS VPN exploits the advantages of IP (Internet Protocol) which are its extensibility, scalability and low cost compared with leased-line communications, together with the benefits of Frame Relay, which offers stability and improved information management (Quality of Service). The service is suitable for organizations which have branches in different regions and wish to connect them in the most cost-effective way.

2.4 WE PCT (Personal Communication Telephone)

WE PCT is a cordless fixed-phone service. A subscriber’s PCT phone number is the same as his or her fixed-line number. Up to nine PCT handsets can be used with one fixed-line number, with each handset holder assigned an individual access code so callers to the fixed line number can direct their calls to a specific person.

The Company operates WE PCT through its subsidiary, AWC, in which it holds a 99.99 percent equity interest. Together with AWC, the Company officially launched its PCT service in November 1999 as a value-added service of its wireline network under its wireline agreement. The Company is entitled to 82.0 percent of the revenue generated from such service and AWC is entitled to approximately 70 percent of this amount. The PCT service is also available to TOT subscribers. TOT shares with True approximately 80 percent of revenue received from its subscribers as a PCT network rental fee.

The WE PCT service covers 2,500 square kilometers of the inner area of the BMA. In September 2004, the PCT brand was repositioned as “WE PCT” to reflect the strategy of building communities and bringing together people via free calls within the PCT network. As of 31 December 2006 WE PCT had 347,099 subscribers, 26 percent lower then 2005 due to the impact of price competition in the mobile phone business.

The following table shows the number of PCT subscribers and ARPU for the periods indicated:

As of December 31, WE PCT 2003 2004 2005 2006

Subscribers 549,295 472,846 469,125 347,099ARPU 1/ 282 268 318 257

1/ including PCT Buddy (prepaid service)



3. TrueVisions

TrueVisions (formerly UBC) is Thailand’s leading nationwide pay-TV provider, offering its service via digital direct-to-home and digital HFC (hybrid fiber-coaxial) network platforms.

TrueVisions was formed in 1998 by a merger of UBC (formerly IBC) and UBC Cable (formerly UTV). TrueVisions operates pay-TV services under a 25-year concession 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.

TrueVisions provides its DStv (digital direct to home satellite) service using Ku-band transmission and MPEGII video compression. This enables TrueVisions to increase the number of channels, improve sound and picture quality, control access to its signal, and distribute its service everywhere in Thailand. This service is now transmitted via the Thaicom 5 satellite. In addition, TrueVisions has also provided satellite services via MMDS technology using the Thaicom 1 satellite.

TrueVisions provides its cable TV services, both digital and analogue, in the BMA using the HFC network of True Multimedia (a True subsidiary) which passes approximately 800,000 homes.

At the beginning of the year, True successfully integrated TrueVisions into the Group following the acquisition of TrueVisions shares which increased True’s effective shareholding to 91.8%. TrueVisions has since shifted its marketing strategy to penetrate the mass market. As a result, subscriber growth accelerated in the year 2006 to 558,860, or 629,269 (a 30% increase) if subscribers to bundled packages with True Move are included.

The following table sets forth certain pay-TV subscribers and ARPU during the periods indicated:

As of December 31, TrueVisions 2003 2004 2005 2006

Subscribers - Cable TV 138,212 140,998 133,055 133,977 - DSTV 296,603 316,544 350,761 424,883Total Subscribers 434,815 457,542 483,816 558,860Blended ARPU 1,254 1,301 1,291 1,217

TrueVisions offers a variety of top local and international channels including movies (such as HBO, Cinemax, Star Movies, Hallmark), sports (ESPN, Star Sport and TrueVisions’ own channels SuperSport, SuperSport Action and Sport+), infotainment (the History Channel, Discovery Channel, National Geographic), news (CNN, CNBC, Bloomberg, BBC World) and Series (most of which are TrueVisions’ sole copyright) as well as free TV.



Customers can select four differently priced True Visions’ packages: Platinum, Gold, Silver and True Knowledge (Bronze).

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 providing 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 the screening of popular reality TV show Academy Fantasia Season 3 which helped retain subscribers during the low-season period while generating key content for other parts of True Group. In 2006, TrueVisions also expanded into the mass market, offering low-price packages via bundling with True Move which accelerated subscriber growth.

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 first 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;

The securing in December of exclusive Thai broadcast rights for the next three seasons to English Premier League 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 True Music, an interactive music channel, and Thailand’s first 24-hour games channel, G2; and

Bundling packages based on Academy Fantasia 3, with True Move, True Internet and TrueLife (see above under “True Move”).

4. True Money

True Money has received approval from the Bank of Thailand to offer an electronic cash service and also acts as a payment agent with the approval of the Revenue Department. Major True Money services comprise the True Money cash card, a payment agent service and True 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, Fun Card, Pre Pay hi-speed Internet, Internet Kit, Wi-Fi, True World, True 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 510 payment 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 also make payments online, without statements, for certain services. Overdue payments can also be made.

True Money services via True Move

This service, launched at the beginning of 2006, allows True Move subscribers to perform commercial and financial transactions using their mobile phone, anytime and anywhere, under a high-security system to international 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 before due date;

Transfer funds from their True Money account to another True 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 deducted each 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 subscribers at the end of 2006 and we expect further growth. True Money will become a key vehicle in realizing True Group’s vision of becoming a convergence lifestyle leader.



5. TrueLife

TrueLife provides digital content and access as well as acting as a digital 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 – offer content which brings 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, allows subscribers to communicate with each other, interacting using chatrooms and instant messaging.

True Group is also an online games provider through NC True, a joint-venture between True and NC Soft, a world-class online games maker from South Korea. NC True launched “Lineage II” in 2005 and in 2006 launched “Guild Wars” which is Thailand’s top online game with the most players. In 2006 True Digital also launched a new online game called “Special Force” which has quickly become extremely popular, attracting around 1.5 million registered gamers as well as being the number one “casual” online game in Thailand.

TrueLife Shops bring together under one roof the full range of True products and services, including True Coffee, True Music and True Consumer Broadband. We had TrueLife Shops, located in areas within the BMA frequented by trendsetters and the younger generation.

TrueLife Plus represents our bundling of True products and services, offering customers greater value through packages that suit their lifestyles.

Highlights for TrueLife in 2006 included:

The launch of full song downloads with GMM Digital Domain Co Ltd (GMMD), a subsidiary of major music content provider Grammy;

True Sports’ promotion with True Move and TrueVisions allowing 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 who were able to enjoy value-added content concerning the show (for more details see under “True Move”);

The introduction of a TrueVisions 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; and

The launch of TrueVisions’ interactive gaming channel G2.

In addition, 2006 saw the launch of several major bundling packages, including TrueVisions-True Move Free View, Unlimited 799 (True Move and True Online), Family Package (True Move and True Online), and AF3 (True Move and True Visions). These are discussed in detail under their main business segments.



3.2 Marketing Strategy

The Company aims to provide customers with tailored solutions and a range of bundled telecommunications services across our voice, video and data platforms that match with all customer lifestyles. It believes that demand has been shifting towards convergence services that can fulfill all lifestyle needs including “work, live, learn and play”. All True products and services are marketed under the “True” umbrella brand. These marketing strategies 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.

Retention marketing is also a key strategy, especially in the mobile business where competition is intense.

3.3 Distribution and sales

Our sales efforts are divided into three major segments: consumer, SME and corporate segments. To reach the consumer segment, the Company offers all of our services through our Shops in the BMA and the provinces. Each of these outlets is staffed by our personnel and is equipped for “one-stop” shopping, offering a range of wireline and wireless communications services and handsets, accessories, ADSL modems and other telecommunications equipment, as well as, in the case of the larger True stores, Internet access service. The Company also sells our products and services throughout Thailand through accredited dealer shops and independent distributors and dealers who work on a commission basis. The Company has tele-ordering centers to allow customers to order or purchase our products and services over the telephone.

The Company has an account executive dedicated to each of the SME and corporate segments, and sales managers and sales executives servicing the various SME and corporate subscribers. The Company also employs a direct sales force to market our services to SME and corporate subscribers.

For True Move prepaid service, we allow subscribers to top up their prepaid SIM cards through other channels, including bank automated teller machines (“ATMs”), and buy purchasing airtime “over the air’ through mobile payment services provided by True Money Company Limited (“True Money”), a subsidiary of True, or from authorized airtime resellers. We estimate that we have more than 100,000 such resellers as at the end of 2006.

TrueVisions’ primary sales channels include telesales, direct door-to-door sales, an Internet website and a nationwide agency network.

3.4 Procurement of Products and Services

Network Capacity for Services

The Company believes that its extensive fiber-optic wireline network covering over the whole of the BMA gives it a key competitive advantage. Voice and data travel through the fiber-optic cable network at a higher speed than through copper wire or via radio waves. In addition, the network architecture can eliminate call failures due to accidental interruption or any other causes. The network has a spider web design covering all of the service area, which enables True to utilize other routes when one breaks down.



True Move has been able to take advantage of the latest technological developments as it has built its network later than the two other major operators. This means its network is relatively more efficient and cost effective. As at the end of 2006, True Move’s network covered 92% of the Thai population with a subscriber capacity of 8 million.

Network Acquisition

The Company primarily imports network equipment directly from leading telecommunications technology suppliers from around the world, including Siemens, Alcatel, Lucent, NEC and Huawei. The Company has also employed a number of suppliers to assist in network acquisition and installation to expand its service coverage, and is not dependent upon any specific distributor or supplier.

Technical and Management Support

The Company and its subsidiaries have acquired technical and management support from strategic partners: Verizon Communications, Inc for True, Orange SA for True Move and MIH for TrueVisions. No further support has been provided since our strategic partners sold or reduced their shareholdings. All these strategic partners had transferred substantial telecommunications expertise to True Group during the time when they were our shareholders. Our management team is capable of operating without these supports.

3.5 Thai Telecom Industry

Mobile Business

The Thailand mobile market has experienced significant growth in recent years. According to estimates from the International Telecommunications Union (ITU), the Thailand mobile market has grown from approximately 7.9 million subscribers in 2001 to approximately 40 million subscribers by the end of 2006. Excluding the operators Thai Mobile and Hutch, the mobile market in Thailand added 9.8 million subscribers in 2006, and reached a penetration rate of 60 percent at year-end (45.5 percent at year-end 2005).

However, compared to other countries in the region, the rate of mobile penetration in Thailand is still low as the following table shows:

As of 2005Country Mobile Penetration

Hong Kong 118.5% Singapore 96.3% South Korea 79.9% Malaysia 76.3% Thailand 46.9% Philippines 48.5% China 30.2% Indonesia 22.0%

Source: BMI Research “Thailand Telecommunications Report Q2 2006”

The following operators offer mobile services in Thailand: Advanced Info Service Public Company Limited, or AIS, and its majority-owned subsidiary, Digital Phone Company, or DPC; Total Access Communication Public Company Limited, or DTAC; our majority-owned subsidiary, True Move; Hutchison-CAT Wireless Multimedia Co. (CAT's marketing service provider under the “Hutch” brand name); TOT and Thai Mobile (an



unincorporated joint venture between CAT and TOT). Our two largest competitors, AIS (together with its majority-owned subsidiary, DPC) and DTAC hold approximately a 49.6 percent and 31.1 percent market share, respectively, as of December 31, 2006. We were the third largest mobile provider with a market share of approximately 19.3 percent, which had increased from 15.1 percent at the end of 2005.

The following table shows the breakdown of mobile subscribers over the past four years:

As of December 31, 2003 2004 2005 2006

AIS 13,239,200 15,184,000 16,408,900 19,521,500DTAC 6,550,496 7,786,165 8,676,940 12,225,498True Move 1,824,990 3,380,383 4,458,643 7,577,742Total Subscribers 1/ 21,614,686 26,350,548 29,544,483 39,324,740True Move market share 8.4% 12.8% 15.1% 19.3%

Source: Company filings of respective mobile operators

Remark: 1/ Excluding Hutch and Thai Mobile

The mobile industry in Thailand has experienced high levels of competition. Mobile service providers have been competing for market share through promotional activities and by providing prepaid plans that offer competitive pricing to attract low-income subscribers and that are easily refillable at various places such as convenience stores and gas stations. This has been one of the reasons for a significant increase in the number of prepaid subscribers during the period from 2002 to 2005. Mobile service providers are also focusing on the growth in non-voice services, which has been facilitated by the launch of new feature-rich handset models with an expanding range of services.

During 2005 to 2006, the Thai mobile sector experienced intense price competition with True Move and its competitors significantly reducing tariffs, resulting in a decline in our ARPUs by 10 percent in 2005 and by 26 percent in 2006.

Despite significant competition in the Thailand mobile market, True Move was able to increase its market share from 12.8 percent in 2004 to 15.1 percent in 2005 and 19.3 percent in 2006. In addition, we have been successful in obtaining about one-third of the market’s net subscriber additions each year since 2004. This is partly due to our competitive advantage in being able to offer mobile services together with other products and services from within the True Group, allowing True Move to compete on value, and not purely on price.

As at December 31, 2005 True Move had 7,577,742 subscribers, an increase of 70% over 2005.

Fixed line Telephone BusinessAt the end of 2005, Thailand's wireline penetration rate was approximately 10 percent. According to estimates from TOT, telephone lines in Thailand have grown from approximately 5.9 million lines in 2001 to approximately 6.7 million lines by the end of 2005, representing a compound annual growth rate of approximately 3 percent. In the year 2006, True fixed line subscribers decreased slightly by 12,699 to 1,989,664.



Table: Number of fixed line subscribers as of December 31, 2005

As of December 31, 2005 Fixed-line operator BMA Provinces Total

TOT 1/ 1,441,922 2,002,283 3,444,205TRUE 2/ 1,989,664 - 1,989,664TT&T 3/ - 1,236,899 1,236,899Total 4/ 3,431,586 3,239,182 6,670,768

Source: 1/ Estimated data by the Company 2/ Data from the Company 3/ Data from TT&T Annual Report 2005 4/ Data from TOT Annual Report 2005

The wireline market in Thailand is currently serviced by three companies. TOT, the state enterprise that formerly regulated the provision of wireline telephone services, is still the only nationwide provider of local and domestic long-distance wireline telephone services in Thailand. There are two other providers of wireline telephone services in Thailand, both operating under concessions granted by TOT. We provide wireline telephone services in the BMA and TT&T Public Company Limited, or TT&T, provides wireline telephone services in certain provinces of Thailand. As of December 31, 2005, we believe we had approximately 58% of the wireline market in the Bangkok Metropolitan Area (BMA) based on the number of subscribers.

Our wireline telephone business has been affected in recent years by the increasing availability of alternative services, in particular, mobile telephone services. Consumers are increasingly substituting wireline telephone services with mobile phone services as a result of the convenience offered by mobile services, value-added features of mobile phones, improvements in the quality of mobile phone calls, cheap handsets and the setting of mobile tariffs below wireline tariffs.

In addition, our wireline telephone business is expected to face growing competition from VoIP services whose tariffs are lower than that for traditional wireline operators. Rising Internet usage and the growing availability of personal computers (PCs) are also expected to be factors driving the increasing use of PCs by Thai consumers for making VoIP calls. Also, the NTC has granted fixed-line licenses, which means we may face competition from newcomers.

Since September 1, 2003, wireline operators have been permitted to launch reduced-tariff promotions for domestic long-distance calls and calls to mobile phones. In early 2004, wireline operators were permitted to launch six-month promotions under a flexible tariff structure, with the pre-existing tariff rates as the ceiling rates. The flexible tariff was available until the end of 2006. In addition, wireline telephone operators have also been offering value-added services, such as caller ID services, to better serve customers' needs. All these measures have made wireline services more competitive although wireline operators continue to be adversely affected by mobile substitution. The liberalization of the telecommunications sector may also result in new entrants to the wireline telephone business, creating even further competition.



Digital Data Network (DDN) Business

The DDN market in Thailand continues to grow at about 15-20 percent a year due to the popularity of on-line data transmission and an increase in Internet users. There is high competition between the large number of DDN operators and suppliers of alternatives, such as ADSL providers. The major players in the data communications market in Thailand currently include TOT, CAT, United Information Highway Co., Ltd. and United Broadband Technology Co., Ltd. (collectively, “UCOM”), Advanced Datanetwork Communications Co., Ltd. (“ADC”) under the Shin Corporation Group, TT&T and True Corporation. All these carriers provide leased line, frame relay and MPLS services. Our principal competitors are TOT (which has the widest coverage throughout Thailand) and UCOM (which has broader coverage outside of the BMA than we do).

The Company has a competitive advantage in having the most modern network. In addition, it seeks to differentiate itself from competitors through a focus on service quality. In 2003, the Company launched the Managed Data Network service, which combines three network operation services including network performance management, fault management and configuration management. In 2004, True launched data network solutions to suit the different needs of customers. In 2005, True launched MPLS VPN – a virtual private network which operates by generating secure channels within a shared network, maintaining the privacy and security of an organization’s communications and data. The service is suitable for organizations which have branches in different regions and wish to connect them together in the most cost-effective way. In 2006 we partnered with major application providers such as Cisco to provide a high-quality Internet Protocol (IP) based network. This means we do not have to compete solely on pricing.

Broadband Business

The broadband subscriber base in Thailand is relatively small with a household penetration rate of approximately 3 percent, compared to rates in other countries in the region such as South Korea (74 percent), and Singapore (51 percent) (Source: ITU World Telecommunication Indicators Database, 2005).

There are several operators in the Thailand broadband market, including United Broadband Technology Co., Ltd., or UBT, under the UCOM group; Lenso DataCom Co., Ltd. (under Q-Net service); Samart; CS Loxinfo; TOT; TT&T; ADC and True. Only TOT and True own a wireline network in the BMA, which gives both companies a competitive advantage in providing broadband services in this area.

The Company has experienced significant growth in its broadband subscriber base, from 3,708 subscribers as of December 31, 2002 to 442,728 as of December 31, 2005. True Group believes it is one of the largest providers of broadband services in Thailand based on the number of subscribers, and has an approximately 80 percent market share in the BMA.

There are several reasons for the rapid increase in the number of broadband subscribers, including the decrease in the cost of modems, the increased popularity of online content, such as games, and the decrease in broadband monthly fees as broadband service providers increase the size of their customer bases. In addition, the Thai government has also reduced international Internet gateway fees, lowering costs for service providers.



Internet Services

The Thailand Internet market has experienced significant growth in recent years. According to estimates by CAT, the market has grown to approximately 10 million subscribers by the end of 2006, representing a penetration rate of approximately 15 percent, still relatively low when compared with other countries in the region.

As of 2005Country Internet Penetration

South Korea 71.0% Singapore 62.2% Taiwan 70.0% Japan 64.1% Hong Kong 55.0% Thailand 15.9%

Source: BMI Research “Thailand Telecommunications Report Q2 2006”

Starting in June 2005, the NTC awarded licenses for the provision of Internet services to several ISPs, including True subsidiaries True Internet Company Limited and Asia Infonet.

Competition within the Internet/Broadband market was intense in 2006 due to the large number of ISPs and we expect to face increasing competition from telecommunications companies entering the ISP market. In addition, the NTC has granted new nationwide fixed-line licenses, which would result in higher competition in both the fixed-line and broadband market in the BMA, our key business area. Despite the intense competition, service charges remained relatively stable at approximately Baht 7-9 per hour for dial-up Internet service and a minimum of Baht 500 per month for broadband service.

True’s key competitive advantage is derived from its network. Our core fixed-line network is Thailand’s most modern and fiber-rich, including more than 170,000 kilometers of fiber-optic cables and covering 4200 square kilometers of the BMA. This enables us to minimize the use of copper cables (averaging 3-4 kilometers) and provide high-quality voice and data communications services.

The Company provides Internet services through its subsidiaries, Asia Infonet Co., Ltd. (AI), and True Internet, which has been Thailand’s largest ISP by subscriber numbers since 2004 as a result of its leadership position in the broadband market. As at the end of 2006, True Group had more than 1 million Internet subscribers, including Consumer Broadband and subscribers of KSC, our affiliate (of which the Company acquired a 40 percent shareholding in January 2006). Other major operators include CS Loxinfo and Internet Thailand.

Pay-TV Business

Thailand has approximately 2 million pay-TV subscribers as at the end of 2006, representing 12 percent household penetration. This is relatively low when compared with other Asian countries; Malaysia 31 percent, Singapore 40 percent, Hong Kong 48 percent, and Japan 52 percent. This presents high growth potential.

TrueVisions is currently the only nationwide pay-TV provider. However, our position as the principal provider is not secured by regulation and we continue to face the threat of



new entrants. The Mass Communications Organization of Thailand (MCOT) granted pay-television licenses to two other companies in 1996, but those companies have not launched their services. The Public Relations Department of Thailand grants annual operating licenses, and has licensed several regional cable pay-TV operators, of which an estimated 78 firms are presently operating.

In addition, there are more than 450 cable operators in the provinces offering services without the necessary licenses. Subscribers to these operators are estimated at around 1.5-2 million. However, the provincial cable systems have come under increased scrutiny from copyright owners. Over the last couple of years, TrueVisions has worked closely with its content partners to roll out initiatives aimed at protecting the intellectual property rights relating to content deployed on TrueVisions’ platforms. We are now seeing a significant decline in the systematic playout of channels included in our platform. Our focus now is on the playout of content such as DVD movies which is otherwise carried by channels on our platform such as HBO. As a result, sales in 2005 peaked.

We also believe that the investment in infrastructure necessary to provide a high-quality pay-TV service is significant. Start-up costs include investments to secure transmission platforms, encryption technology, decoder hardware to allow subscribers to receive the encrypted service, and customer service and support systems.

We also compete indirectly with the national free-to-air television stations in Thailand, as well as cinemas, video, music and other entertainment options. We believe that our unique programming, including popular first-run movies, knowledge content and sporting events, give us a distinct advantage over these indirect competitors. The national free-to-air television stations are uplinked to the same satellite used by us and consequently form part of the bouquet available to our subscribers.

TrueVisions continues to invest in exclusive premium content, to constantly expand its platform, and to provide new offerings including those for the mass market. These actions will maintain our leadership position in the market.

Regulatory Update

The regulatory regime for Thailand's telecommunications industry is transitioning from one where state enterprises act as the regulators of the telecommunications market and as telecommunications service providers, to one where the telecommunications market is privatized and liberalized.

In accordance with Thailand’s commitment to the World Trade Organization (WTO) to liberalize its telecommunications sector by 2006, the Thai Government embarked on a reform of the country’s telecommunications regulatory regime with the passage of two major legislative acts: the Act on Organizations Allocated Frequency Waves and Supervision of the Radio and Television Broadcasting and Telecommunications Business, or the NTC Act, in March 2000; and the Telecommunications Business Operations Act, or the TBO Act, in November 2001.

In October 2004, the National Telecommunication Commission, or the NTC, was established as the new independent regulator of the telecommunications industry, assuming the regulatory functions previously exercised by the Telephone Organization of Thailand (now known as TOT Public Company Limited), the Communications Authority of



Thailand (now known as CAT Telecom Public Company Limited), and the Post and Telegraph Department. A further regulatory body, the National Broadcasting Commission, or the NBC, has its role in overseeing the radio and television broadcasting industry. However, commissioners for the NBC have yet to be appointed and, as such, the NBC has yet to commence work.

The NTC commissioners are appointed to hold office for a single term of six years. After completing the third year of the initial six-year term, three commissioners will be required to leave office.

From its establishment until the end of the year 2006, the NTC has issued regulations prescribing, among other things:

(i) licensing requirements for the various defined categories of telecommunications services;

(ii) eligibility requirements and application procedures for the three categories of telecommunications licenses available in Thailand;

(iii) interim measures for allocating telephone numbers; (iv) the change of mobile phone numbers from 9-digits to 10-digits; (v) anti-monopoly and unfair competition rules; (vi) the interconnect regulation; (vii) procedures for receiving and considering subscribers’ complaints; (viii) standards of telecommunications service contracts; and (ix) price caps and prepaid collection.

Licensing Regime All telecommunications service providers, other than service providers operating within the scope and term of the concessions which existed on the date that the TBO Act came into force, must obtain one of the following categories of licenses from the NTC:

Type One Licenses: the first category of licenses applies to telecommunications service providers which intend to operate a telecommunications business in Thailand without having their own networks, and whose telecommunications businesses are, in the opinion of the NTC, in an area which should be liberalized in Thailand. The NTC is required to grant a license to any applicant qualified to carry out a telecommunications business falling within this category. Under a regulation issued by the NTC, licenses for providing Internet services, or ISP licenses, fall within this category.

Type Two Licenses: the second category of licenses applies to telecommunications service providers which intend to supply telecommunications services only to a certain group, or to telecommunications businesses which, in the opinion of the NTC, would not have a major impact on free and fair competition or would not have an adverse effect on the interests of the general public or consumers. Applicants in this category may or may not have their own network. The NTC is required to grant a license to applicants in this category if they fulfill the criteria that the NTC has set forth in advance.

Type Three Licenses: the third category of licenses applies to telecommunications service providers which have their own networks and whose telecommunications business provides services to the public as a whole or, in the opinion of the NTC, may have a major impact on free and fair competition or the public interest or where, in the opinion of the NTC, there is a special need to protect consumers. The NTC has discretion whether to grant licenses to applicants in this category.



In addition, if the telecommunications services require the use of radio frequencies, applicants must also obtain a license for the use of radio frequencies.

In early August 2005, the NTC issued a licensing fee structure for telecommunications services as follows:

Type one license; registration fee of Baht 5,000 and annual fee of Baht 20,000.

Type two license (without network); registration fee of Baht 10,000 and annual fee of Baht 25,000.

Type two license (with network); registration fee of Baht 25,000 and annual fee of Baht 250,000.

Type three license; registration fee of Baht 500,000, annual fee of 3 percent of operating revenue, and extension fee of Baht 500,000 per year.

The NTC has already started to grant licenses. Apart from the licenses granted to TOT and CAT, in June 2005 and in September 2005 respectively, the NTC awarded several ISP licenses in 2005, including one to True Internet Company Limited, our consolidated subsidiary. Moreover, in 2006 the NTC also granted various types of licenses to True Group including international Internet exchange and public phone licenses. At the beginning of 2007 the NTC also granted International Direct Dialing (IDD) and fixed-line phone licenses to True Group and its subsidiaries.

New Numbering Plan

In 2006, the NTC issued its numbering plan as well as regulations concerning telecommunications numbering. These regulations indicate that operators who wish to be allocated telecommunications numbers are required to submit to the NTC an application and those who have been allocated a telecommunications number are required to pay monthly fees and charges.

The following are the fees and charges for an allocated mobile phone number as prescribed under the regulations:

Baht 12 per number per year (for a new mobile phone service operator); Baht 24 per number per year (for an existing mobile phone service operator who wished to request additional numbers); and Baht 120 per number per year for unused numbers within at least 120 days in a year.

The regulations require that the 9-digit format for mobile phone numbers be changed to a 10-digit format as of September 1, 2006. The regulations also stipulate that the telecommunications numbers that were allocated prior to September 1, 2006 are considered as numbers allocated by the NTC.

Universal Service Obligations

Under the new regulatory regime, telecommunications business licenses may be required to provide universal services which may encompass, among other things, the provision of telecommunications services to low income groups, the disabled and people in rural areas which have insufficient telecommunications services. If a licensee is unable to



provide these services, it may be required to allocate 4 percent of its gross revenue to the Telecommunications Development Fund for Public Interest.

The responsibilities of undertaking universal service are imposed on Type Two licensees which have their own networks and Type Three licensees.

Network Interconnection and Network Access Arrangements

In May, 2006, the NTC issued a regulation concerning network interconnection and network access which prescribes that licensees having their own networks must prepare and submit to the NTC for consideration within 15 days from the effective date of the regulation (which is May 17, 2006) the RIOs (in accordance with the requirements in the regulation) together with information regarding the calculation method of fees on their network access and network interconnection and also the cost of the unbundled telecommunications network service. The fees for access and interconnection must be calculated on ‘‘a cost-oriented basis.’’ In this regard, the NTC has approved long-run incremental cost as a calculation method.

Upon receipt of intention letter requesting for network interconnection, telecommunications service providers will be required to hold bilateral negotiations to finalize the interconnection rates within 90 days. Therefore we entered into an interconnection charge agreement with DTAC on November 17, 2006 and with AIS on January 16, 2007.

The NTC also indicated that the operation of a telecommunications business by those who obtain a license, concession or contract under Section 80 of the TBO Act shall be subject to the rules and conditions set forth in the regulation.

Fair Competition

In September 2006, the NTC announced a regulation concerning measures for the prevention of monopolistic acts or unfair trade practice in telecommunications businesses. The regulation prescribes specific rules for telecommunications businesses in addition to the general rules relating to the prevention of monopolistic acts and unfair trade practices set by laws of Trade Competition (antitrust) to which all licensees are subject.

The regulation prohibits licensees from cross-subsidization which includes direct or indirect support of the same services or other types of services which would give rise to a monopoly or a reduction or restriction of competition; cross-holding in the same category of service which includes directly or indirectly occupying business by holding shares of more than 10 percent in a company providing the same service; abuse of a dominant position which includes any acts of a licensee having market share of more than 25 percent for each type of service;, the use of significant market power to restrict competition or cause unfair competition such as setting service fees or product prices below cost; or providing bundled services and products to another licensee in a discriminatory manner,etc.

Tariff settings and Price Control

In November 2006, the NTC issued a regulation regarding the setting of maximum tariffs and fees for telecommunications services and prepaid collection. Operators are offered



two alternatives in setting maximum tariffs including one based on rate of return and the price cap method. Under this regulation, the price caps are currently set the prices set by the operators prior to the effective date of this regulation, but the NTC will announce new price caps pursuant to the regulation in the future.

Any changes to service fees and tariffs must be approved by the NTC, with the exception of operators who use the price cap method. All licenses are prohibited from collecting fees higher than the maximum tariffs. Licenses must obtain prior approval from the NTC to collect prepaid service fees.

Consumer Protection

In 2006 the NTC issued many procedures to protect the rights of consumer including procedures for receiving complaints from subscribers, standards for telecommunication service contracts and measures for protecting rights of privacy and the right of people to communicate by means of telecommunications as well as standards of telecommunications service contracts.

Subscriber Complaints

In August 2006, the NTC issued a regulation concerning procedures for receiving and considering subscribers’ complaints. It prescribes the rights of a subscriber and the steps and procedures to be employed by both a telecommunications operator and the NTC for receiving and considering a complaint.

Under the regulation, a telecommunications operator is required, among other things, to provide to a subscriber a written acknowledgement of receipt within 7 days of receipt of the complaint.

The telecommunications operator is required to resolve the complaint within 30 days of receipt of the complaint and to keep the subscriber apprised of further developments every 10 days. If the telecommunications operator sees that a complaint is groundless or not rational, it must inform the complainant of its opinion in writing in 14 days, and the complainant may forward the opinion to the NTC if the complainant still thinks the complaint is rational. If the complaint cannot be resolved, either in full or in part, the telecommunications operator is required to present the complaint to the NTC, together with the memorandum and the report, within 3 days from the final date of negotiation. A complaint can be filed with the NTC by a telecommunications operator (as mentioned previously) or directly by the subscriber without initially filing a complaint with the telecommunications operator. The telecommunications operators have a duty to establish a department directly responsible for receiving and resolving complaints as well as making a summary report listing all complaints and resolutions and submitting this to the NTC to review.

Standards of Telecommunications Service Contracts

In September 2006, the NTC issued a regulation concerning the standards of telecommunications service contracts between operators and their subscribers. It prescribes rules on the characteristics of and processes for implementing telecommunications service contracts between an operator and its subscriber, the rights and obligations of an operator and its subscriber, the right and obligations for the collection and payment of service fees, provision of telecommunications service and the



cessation of service, the termination of telecommunications service and complaints and methods for resolving complaints. An operator is required to submit a draft contract for the NTC’s consideration at least 60 days before its use. Any amendment of an approved contract that may affect the rights, obligations, or benefits of a subscriber must be submitted for the NTC’s prior approval at least 30 days before its use.

Any existing contract between a provider and a subscriber before the effective date of this regulation must be revised to be in accordance with the regulation. The revised contract must be submitted for the NTC’s approval within 60 days of the effective date of the regulation. The revised contract must later be sent to the subscriber for consideration of whether he/she wishes to accept the amended terms and conditions or terminate such a contract.

Except for getting NTC approvals, there should be no conditions to force customers to use the prepaid fees within a specific timeframe. In approving, the NTC might set conditions regarding the transfer of remaining fees, refundable unused fees, etc. In addition, in the case that operators sell their equipment at lower than market prices, operators could not use this to collect fees in case subscribers disconnect before the contract expires.

Privacy

In August 2006, the NTC issued a regulation on measures to protect telecommunications subscribers, data privacy, privacy rights and freedom of communications that established specific rules requiring telecommunications operators to collect, process and maintain the personal data of their subscribers. Under the regulation, personal data includes information such as a subscriber’s name, birth date, facts and any details relating to a subscriber which can or may identify the subscriber whether directly or indirectly, telecommunications numbers, and how the subscriber uses telecommunications services. The regulation prescribes that personal data of telecommunications subscribers must be obtained with permission from the subscribers and should be for the sake of operating a telecommunications business only. Exceptions are disclosure to the government or the authorities in accordance with national security laws or for the protection of the good morals of the Thai people, or to prevent or put to an end any hazard to the lives, physical well-being or health of telecommunications subscribers.

Telecommunications operators also have duties to establish rules to protect personal data, privacy rights and freedom of communications for subscribers. For example, there are requirements to change security passwords at least once every 3 months to protect access to personal data, and to implement systems to prevent unauthorized capture or inspection of telecommunications signals. Exceptions are disclosure to the government or the authorities in accordance with national security laws or for the protection of the good morals of the Thai people.

Foreign Ownership Restrictions

The Foreign Business Act requires that ‘‘foreigners’’ that want to provide services, including telecommunications services, in Thailand obtain a license from the Ministry of Commerce if ‘‘foreigners,’’ as defined in that Act, own more than 50% of the business. Under the Foreign Business Act, ‘‘foreigner’’ means the following:

(i) an individual who does not have Thai nationality; (ii) a legal entity not registered in Thailand;



(iii) a legal entity registered in Thailand which has half or more of its share capital held by a person or persons described in paragraph (i) or (ii) above, or in which a person or persons described in paragraphs (i) or (ii) above provides half or more of the total capital; or which is a limited or registered ordinary partnership where an individual described in paragraph (i) above serves as managing partner or manager; and

(iv) a legal entity registered in Thailand having half or more of its share capital held by a person or persons described in paragraph (i), (ii) or (iii) above, or in which a person or persons described in paragraph (i), (ii) or (iii) above provides half or more of the total capital.

According to the Foreign Business Act, foreign persons are prohibited from operating these businesses:

Category 1: the businesses for which foreign persons are not allowed to operate on specific reasons (agricultural, property, etc)

Category 2: the businesses relating to national safety or security; and Category 3: the businesses which Thai nationals are not yet ready to compete with

foreigners.

In addition, the TBO Act requires that service providers holding a Type Two or Type Three license not be a company that is a ‘‘foreigner’’ within the meaning of the Foreign Business Act. However, the NTC may require the applicant for a license to undertake business of a certain nature or categories to prescribe the prohibition of any act which has the nature of a business takeover by a foreigner, which we will refer to as a ‘‘foreign takeover of a business.’’

Moreover, if the NTC deems that a licensee is in violation of or in breach of any regulation, such a licensee would be included in the NTC’s watch list or priority watch list. If the NTC considers that such a licensee does not follow the regulations on disclosure of measures to resolve, the NTC may revoke the license due to a lack of the required qualification pursuant to the law.

In January 2007, the Cabinet approved in principle the amending of the FBA including the definition of ‘foreign’ person to include ‘foreign juridical person’ who has voting rights of more than 50 percent.

All foreign persons, based on this new definition, who want to continue their businesses within the country are required to inform the relevant government agency and request certification within one year, and if classified as category 1 and 2 such persons can continue their business for 2 years or forever in the case of category 3. Operators need to inform the relevant government agency within 90 days and resolve within 1 year if they are against this new law.

It is unclear which category telecommunications services should be under.

Radio Frequency Allocation

The NTC and the NBC are jointly required to manage radio frequency allocations. This Joint Commission has the power, among other things, to prescribe policies for the allocation of radio frequencies, allocate radio frequencies between the



telecommunications business and the radio and television business, and establish criteria for the efficient use of radio frequencies. However, as the NBC has yet to be appointed, the Joint Commission is not yet in existence. In August 2006 the Council of State issued an advisory opinion stating that the NTC could proceed with the allocation provided that the NTC first complete a master plan for managing frequencies in compliance with the 1997 Constitution and the relevant ITU (International Telecommunication Union) standard. However, the 1997 Constitution has recently been abrogated due to the military coup in Thailand in September 2006. Therefore, it is uncertain when new radio frequencies will be allocated.

Conversion of Concessions

True Group was granted agreements by TOT to provide wireline communications and multimedia (Non-POTS) services, and by CAT to provide mobile communications and Internet services, prior to the adoption of the TBO Act, True Group has the right to conduct its existing telecommunications businesses in accordance with the scope of the current concessions, without having to apply for licenses from the NTC, until the expiry of their respective terms. True Group is also able, subject to the agreement of TOT or CAT, as applicable, to convert such concessions to licenses under the TBO Act. True Group believes that, as a result of the protection afforded by the TBO Act, any attempt to amend its concessions would require the consent of both parties to the arrangements. In such cases, the NTC must issue a license with the same scope and duration as the concession (together with any conditions the NTC might include for the benefit of the existing subscribers, for the development for better quality and more efficient services, or for enabling the objectives of the TBO Act) to such parties, if such a license is not contrary to, or inconsistent with, the TBO Act. No provision of the TBO Act authorizes the NTC or any other governmental authority to convert existing concessions into other forms of arrangement.

Privatization of the Telephone Organization of Thailand (TOT) and the Communications Authority of Thailand (CAT)

As a step towards privatization, TOT and CAT were reorganized as public companies on July 31, 2002 and August 14, 2003, respectively. As a result, TOT and CAT received all the substantial telecommunications and related assets and liabilities of their respective predecessors. TOT and CAT have been granted licenses to operate their telecommunications businesses from the NTC. They are now solely telecommunications service providers and not regulatory agencies.


TRUETG: Research and Development 47

44.. RREESSEEAARRCCHH AANNDD DDEEVVEELLOOPPMMEENNTT

The Group did not invest any on Research and Development (R&D) activities for the technology or communication apparatuses as technology network and equipments that the Group used in providing the services to the customers. The Group decided to purchase the ready-made communication networks and equipments from the various suppliers which the Group has an opinion that those products are efficient, high-technological and appropriate to the Group’s activities. Therefore, it was unnecessary for the Group to invest on the R&D to create and build its own network and communication equipments.

However, most of its R&D Budget is contributed to the marketing which the Group strongly developed and intended to improve on its service to meet the growing demands and the customers’ needs. The Budget was divided into three main areas, R&D in Marketing, New Services and Service System. During the last three years, the total expenses for R&D are as follows:

YEAR Thai Baht (thousand)

2006 126,066.84

2005 25,010.33

2004 29,900.71


TRUETH: Operating Assets 48

55.. OOPPEERRAATTIINNGG AASSSSEETTSS

5.1 Property, plant and equipment

Network equipment and non-network equipment are included in property, plant and equipment. Under the Joint Operation and Joint Investment for Expansion of Telephone Services Agreement of 2.6 million lines, PCT, Mobile phone, Internet services and Pay TV, the assets pertaining to these agreements must be transferred to TOT, CAT and MCOT.

As at 31st December 2006, the Group's assets are listed below:

Network equipment Net book value (Baht Million) Consolidated Company

Land and land improvement 1,848 1,848 Building and construction 859 859 Telephone network equipment 16, 051 14,254 Mobile phone network equipment 42,922 1,055 Public Phone 434 383 Multimedia network equipment 2,453 - Power supply and computer 149 148 Pay - TV 6,034 - Work in progress 937 39

Total 71,687 18,586

Network equipment in the consolidated financial statements at net book value of Baht 19,536 million as transferred to TOT, CAT and MCOT under the various agreements, and Baht 15,809 million of the Company was transferred to TOT under the Agreement for Joint Operation and Joint Investment. According to the agreements, the Group has the right to operate and maintain these assets over the agreements periods. The Company assigns the right to operate network equipment which transfer to TOT (according to the conditional assignment over the Agreement for Joint Operation and Joint Investment) to secure of the Thai Baht borrowings. Non-network assets are the right of the Group to operated, utilised and disposal those assets.

As at 31st December 2006, the Group's assets are listed below:

Non-network equipment Net book value (Baht Million) Consolidated CompanyLand and land improvement 548 - Leasehold right & improvement 1,129 69 Furniture, fixture and equipment 1,098 200 Vehicle 1,841 - Power Supply & computer 1,307 330 Work in progress 306 19

Total 6,229 618


TRUETH: Operating Assets 49

5.2 Intangible assets

GoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiary at the date of acquisition. At 31 December 2006 net book value was Baht 13,107 million. Goodwill from acquisition of True Visions Public Company Limited (“True Visions”) at the amount of Baht 12,065 million, Bangkok Inter Teletech Public Company Limited (“BITCO”) amount of Baht 690 million and MKSC World Dot Com Co., Ltd. (“MKSC”) amount of Baht 352 million.

Computer software development cost Computer software development cost which enhances or extends the performance of computer software programmers beyond their original specifications is recognised as a capital improvement and added to the original cost of the software. At 31 December 2006 net book value was Baht 2,297 million.

CopyrightCopyright represent the consideration paid by a subsidiary to related party. To grant that related party the right to provide song and/or video clip downloading through the subsidiary’s website. At 31 December 2006 net book value was Baht 52 million.

Flim and program rightsFlim and program right represent the rights acquired and obligation incurred under license agreements of True Visions Public Company Limited, The cost of each program and the program material are accepted and it is available for the first showing. At 31 December 2006 net book value was Baht 344 million.

The right to operate NON-POTS and to hang dropwire The right to operate NON-POTS services represents fair value of TOT’s interest in the nationwide NON-POTS concession of which a subsidiary issued share in exchange. At 31 December 2006 net book value was Baht 344 million.

Customer list Customer list represents the fair value of mobile subscribers list arising from the acquisition in BITCO. At 31 December 2006 net book value was Baht 220 million.

Investment in subsidiaries and associates policyInvestment in subsidiaries and associates of the Company has been done through Telecom Holding Co., Ltd. (“TH”) and Bangkok Inter Teletech Company Limited. (“BITCO”), which the Company holds 99.99% of TH shares and 93.36 of BITCO shares accordingly. TH was established as a holding company to invest in telecommunication projects and related business. The Company has policy to invest in provisions that it will be the major shareholder of subsidiaries or associates and/or will be the operator or manage the invested project on its own, except when conditions in the market does not allow the Company to do so. BITCO was established as a holding company to invest in the mobile telecommunication business and related business.

For operation policy in subsidiaries and associates, the Company will appoint a representative to be the director of subsidiaries or associates as per the percentage of shareholding to closely monitor the management of such subsidiaries or associates.


TRUETI: Future Projects 50

66.. FFUUTTUURREE PPRROOJJEECCTTSS

True Group and its subsidiaries plan to invest around Baht 10 billion in 2007. This is nearly the same amount as last year. The major investments are:

1. Mobile Phone Business (by True Move) In 2007 True Group subsidiary True Move has a project to expand its network capacity to cover more than 8 million subscribers. True Move’s network population coverage at the end of 2006 was around 92 percent. In 2007 True Move aims to capture one-third of market net adds and also plans to increase its non-voice service capability to cope with market growth. So True Move’s Capex for 2007 is expected to be around Baht 5-6 billion.

True Move also plans to expand its retail distribution centers, investing around Baht 150 million.

2. Online Business We expect to spend around Baht 2-3 billion on our Online (formerly Wireline) business in 2007 which is similar to 2006. Most of the investment will involve Broadband business expansion, investment on the Digital Data Network (DDN) business and the expansion of our retail distribution centers. There will also be investment in new businesses following the NTC’s granting of new licenses to the Company and its subsidiaries as follows:

2.1 Investment in Fixed Line Business In December 2006, True Group subsidiary True Universal Convergence Company Limited (formerly R & R Communication Company Limited) was granted a Type 2 Fixed Line license by the NTC allowing R&R to provide fixed line phone and additional services nationwide. The company expects to invest a small amount in the first year.

2.2 Increasing the Capability of the Broadband Business True Group’s subsidiaries have a project to increase the capacity of Broadband services from 600,000 subscribers at the end of 2006 to 800,000 subscribers in 2007, with estimated investment per subscriber of around Baht 5,000.

2.3 True Money True Group plans to invest around Baht 200 million to improve True Money service capability because there are more and more True Move customers using True Money.

2.4 International Internet Gateway and Internet Exchange Services True Internet Gateway (TIG) (formerly Sky Office Company Limited), a subsidiary of True Group, plans to provide international Internet gateway and Internet exchange services after receiving an international Internet gateway Type 2 license from the NTC in August 2005. In January 2007 the NTC gave approval to TIG to directly connect with the overseas international Internet gateway providers. This approval will allow the company to provide services to other Internet providers as well as improving the quality of customer service. TIG plans to invest around Baht 2-300 million in 2007.


TRUETI: Future Projects 51

2.5 International Direct Dialing (IDD) Business In January 2007, the NTC approved in principle the granting of an International Direct Dialing - Type 3 license to N&T Communication Company Limited, a True Group subsidiary. The company plans to invest around Baht 2-300 million on the IDD business in 2007.

2.6 Product Bundling True Group has launched many promotions and campaigns that bundle our products and services. This has required investment in new equipment for promotions such as the one between TrueVisions and True Move called “TrueVisions UBC True Move Free View” which cost around Baht 3,000 per subscriber. The Company also plans to add new service centers to express its convergence lifestyle strategy as well as leveraging the True brand to consumers. This may increase the number of subscribers to each service while at the same time saving on the Company’s advertising expenses.

3. Pay TV Businesses (by TrueVisions) TrueVisions (formerly United Broadcasting Corporation Limited or UBC), a True Group subsidiary, plans to invest in new channels and digital video recorders so subscribers can select services on demand. In addition, the company has to invest in equipment for new subscribers, expected to be around Baht 3,000 per subscriber. TrueVisions’ total investment for 2007 is expected to be around Baht 8-900 million.


TRUETJ: Legal Disputes 52

77.. LLEEGGAALL DDIISSPPUUTTEESS

Here is the summary of the legal disputes that may adversely affect the Company’s assets, which exceed 5% of its total shareholders’ equity, according to the latest consolidated financial statements as of 31st December 2006.

Litigations outstanding, Administrative Court

1) Litigation case files by the Company against TOT

1.1) Dispute in relation to the call tariff reduction campaign “Y-Tel 1234” On 11 October 2001, the Company filed a lawsuit against TOT with the Central Administrative Court claimed damages totalling Baht 1,197.63 million in relation to call tariff reduction campaign, “Y-Tel 1234”. The Company claimed the reduction of call tariffs was a breach of the wireline concession that required tariffs under TOT’s network to be set at the same rate as those under our wireline network. The Central Administrative Court rendered its judgment to dismiss the case on 28 October 2005. On 28 November 2005, the Company filed an appeal to the Supreme Administrative Court. The lawsuit is currently in the judicial process of the Supreme Administrative Court.

1.2) Dispute in relation to 43 Million Baht Public Payphone’s Revenue Sharing On 22 August 2003, the Company filed an arbitration claim relating to revenue sharing from the provision of public payphone services over the wireline network. The Company claimed that TOT failed to pay to the Company for the Company’s revenue sharing that TOT collected for public payphone services during certain period amounting to Baht 43.94 million plus interest. On 8 April 2005, the arbitral tribunal granted an award in the Company’s favour. On 18 January 2006, the Company submitted to enforce the payment (according to the arbitral award).

But The Court gave an order to combine this case with the case that TOT filed a motion in the Central Administrative Court for an order to withdraw the arbitral award.The lawsuit is currently in the judicial process of the Central Administrative Court.

1.3) Dispute in relation to the use of True logo on public payphone booths. On 23 July 2004, TOT filed an arbitration claim against the Company alleging that the Company failed to comply with TOT’s requirements for the public payphone booths. TOT claimed damages for the use of the Company’s logo on the public payphone booths amounting to Baht 433.85 million. On 12 July 2006, the arbitral tribunal awarded the Company have to pay damages to TOT for Baht 155 million including interest rate at 7.5 per annum since the filing date and the Company has obligation to pay damages for Baht 90 per month for each telephone booth since the filing date until the Company stop using True logo on booths and replace them with TOT logo. The Company filed a lawsuit in order to withdraw the arbitral award at Central Administrative Court on 6 November 2006. The lawsuit is currently in the judicial process of the Central Administrative Court.

2) Litigation case files by TOT against the Company

2.1) Dispute in relation to 43 Million Baht Public Payphone’s Revenue SharingOn 22 August 2003, the Company filed an arbitration claim relating to revenue sharing from the provision of public payphone services over the wireline network. The Company claimed that TOT failed to pay to the Company for the Company’s revenue sharing that



TOT collected for public payphone services during certain period amounting to Baht 43.94 million plus interest. On 8 April 2005, the arbitral tribunal granted an award in the Company’s favour. However, TOT filed a motion in the Central Administrative Court on 14 July 2005 for an order to withdraw the arbitral award. The lawsuit is currently in the judicial process of the Central Administrative Court.

2.2) Dispute in relation to the access charge. On 21 August 2002, the Company filed an arbitration claim regarding a dispute arising from the wireline concession between the Company and TOT. The terms of the wireline concession provided that the Company is entitled to additional consideration from TOT if TOT provides or allows any third parties to provide “special services” over the network. TOT allowed CAT and other mobile telecommunications service providers to use this network for mobile telecommunications services and obtained access charges from CAT and the other mobile telecommunications service providers. The arbitral tribunal granted an award on 17 January 2006 as follows:

1. The Company is entitled to benefits derived from TOT’s provisions of special services on the Company’s network or from TOT’s permission for others to provided special services on the Company’s network.

2. With respect to benefits from the beginning until 22 August 2002, TOT must pay the Company the sum of Baht 9,175.82 million plus interest at the rate of 7.5% per annum from 22 August 2002. The payment must be made within 60 days from the receipt of the arbitral award.

3. As from 23 August 2002, TOT must pay to the Company 50% of the benefit derived by TOT from the portion accessing to the Company’s network.

The Company is taking steps to enforce the payment (according to the arbitral award).

On 20 April 2006 TOT filed a motion in the Central Administrative Court for an order to withdraw the arbitral award. Currently, the Company prepares to submit the statement of objection to TOT’S motion in the Central Administrative Court.

The ultimate outcomes of the aforementioned lawsuits are presently unable to determine, accordingly, no provision for possible liability has been made in the Company’s financial statements.

Arbitration disputes outstanding, Thai Arbitration Institute

1) Arbitration cases filed by the Company against TOT

1.1) Dispute in relation to revenue sharing collected from international call services. On 28 January 2005, the Company filed an arbitration claim against TOT regarding the calculation of revenue sharing from international calls under the wireline concession. The Company claimed damages in the amount of Baht 5,000.00 million for the failure to obtain the actual number of international incoming calls, and damages of Baht 3,407.68 million for the incorrect calculation. The case is currently pending for 6 months since October 2006 as both parties is waiting for the result of negotiation that due on March 2007.



1.2) Dispute in relation to the Concession Article 38 On 15 May 2006 the Company filed an arbitration claim against TOT asking TOT to discontinue using its power over the concession as well as to discontinue using its power over the contract from the day its status has changed. The power to regulate shall be transferred The Ministry of Transport or The Ministry of Information and Communication Technology. This case has no claimed amount. TOT submitted the objection statement on 17 June 2006. On 8 November 2006, the Company filed an arbitration claim against the authorize power of TOT on the Concession Article 38 as another case. Both cases are currently pending for 6 months since October 2006 as both parties is waiting for the result of negotiation that due on March 2007.

2) Arbitration cases filed by TOT against the Company

2.1) Dispute in relation to the use of True’s name and logo on invoices/receipts.On 13 December 2004, TOT filed an arbitration claim against the Company, claiming the advertisement compensation for the unauthorised publication of True’s name and logo on TOT’s invoices/receipts to customers at the rate of Baht 4 per invoice/receipt from August 2001 until August 2004 for the total of Baht 785.64 million plus interest. However, on 11 March 2005, TOT claimed another damages amounting to Baht 106.80 million and Baht 1,030.50 million for changing of invoices pattern to A4 size. The Company submitted the statement of objection on 25 November 2005. The case is currently pending for 6 months since October 2006 as both parties is waiting for the result of negotiation that due on March 2007.

2.2) Dispute in relation to TA1234 campaign On 30 June 2005, TOT filed an arbitration claim alleging that it suffered damages from the loss of revenue sharing from 16 November 2000 to March 2005 of Baht 15,804.18 million as a result of the Company’s invoices of domestic long distance call services at reduced tariff rates under the Company’s “TA 1234” campaign. TOT also sought an order compelling the Company to collect domestic long distance call tariffs at the rates agreed in the wireline concession. The Company submitted the statement of objection on 4 January 2006. On 24 March 2006 the parties nominate their respective arbitrators and schedule to commence on 8 June 2006. The case is on the process of negotiation that due on March 2007.

2.3) Dispute in relation to high-speed Internet (ADSL) service. On 28 October 2005, TOT filed the arbitration claim against the Company, claiming that the Company was in breach of the wireline concession by allowing other parties to provide high-speed Internet service (ADSL). TOT claimed for the amount of Baht 2,010.21 million plus interest. In addition, TOT has claimed continuous damages from July 2005 at the rate of Baht 180.00 million per month, plus interest. TOT also requested an order prohibiting the Company from providing ADSL service or allowing any other parties to provide ADSL service. The Company submitted the statement of objection on 21 February 2006. On 24 March 2006 both sides appoint the compromiser. The case is currently pending for 6 months since October 2006 as both parties is waiting for the result of negotiation that due on March 2007.

2.4) Dispute in relation to the lease of telephone conduits. On 31 May 2005, TOT filed an arbitration claim against the Company seeking an order to pay rent for the lease of telephone conduits from May 2004 to April 2005 in the amount of Baht 6.72 million plus interest and onwards. The Company submitted the statement of objection on 19



September 2005. The arbitration proceeding is scheduled to hear the compromise on 7 July 2006. The case is currently pending for 6 months since October 2006 as both parties is waiting for the result of negotiation that due on March 2007.

Other Disputes

1) Dispute between the Company and the Bangkok Area 3 Excise tax office in relation to daily account and monthly budget making (duties of excise tax payer). On 29 September 2006, the Company filed a lawsuit against the Bangkok Area 3 Excise tax office at Central Administrative Court for withdrawing the administrative order that True has duties to make daily account and monthly budget. On 13 November 2006, The Court dismissed the case. The Company filed an appeal to the Supreme Administrative Court on 15 November 2006. The case is on the process of the Supreme Administrative Court.

2) Dispute between the Company and Bang Bua Thong Municipal office at Central Taxation Court in relation to the illegal assessment of property tax from public telephone booth and requesting for tax refund. On 2 March 2006, the Company filed a lawsuit. On 11 October 2006, the Court withdrew the illegal assessment. Bang Bua Thong Municipal office is appealing the case.

3) The Customs Department has investigated the import and export of the Company and has notified that the importation of Alcatel’s products under the name of the Company is invalid for the case of engineering services stated in the Bill of Quantity (BOQ) in Digital GSM 1800 Project, which should be considered as a part of customs values. This case is currently under investigating by the Customs Officers.

The ultimate outcomes of the aforementioned arbitration are presently unable to determine, accordingly, no provision for possible liability has been made in the Company’s financial statements.

The Management, however, believes that the Company’s defence is solid and that the Company stands a good chance of winning all those cases.


TRUETK: Capital Structure 56

88.. CCAAPPIITTAALL SSTTRRUUCCTTUURREE

8.1 Company’s Securities

(a) Authorized Capital

As at 31st December 2006, the company’s authorized capital is Baht 47,134,724,910 consisting of 4,014,105,645 ordinary shares with a par value of Baht 10 per share and 699,366,846 preference shares with a par value of Baht 10 per share. The Company’s paid-up capital is Baht 45,015,277,360 comprising of 3,802,160,890 ordinary shares with a par value of Baht 10 per share and 699,366,846 preference shares with a par value of Baht 10 per share.

Secondary Market of ordinary shares in the PresentPresently, ordinary shares of the Company are now available on the Stock Exchange of Thailand (“SET”)

(b) Preferred shares

The Extraordinary General Meeting of the Shareholders No. 1/2543 held on February 14, 2000 has resolved to approve the allocation of 702,000,000 news preferred shares to offer for sale to KfW and/or wholly owned subsidiaries of KfW and/or the Thai Trust Fund with the total offering price of USD 150 Million.

On March 30, 2000 the Company allocated 343.98 million preferred shares or 49% to KfW and 358.02 million preferred shares or 51% to Thai Trust Fund, the details of preferred shares’ rights, as summarized below:

1. During the period between the date of the issuance of the Preferred Shares to and including the 8th anniversary of the issuance of the said Preferred Shares, the rights conferred to the holders of Preferred Shares shall be as follows: (1) The holders of Preferred Shares shall be entitled to receive dividends in priority

to the holders of the ordinary shares at the rate of THB 1 per share per fiscal year (except for the first fiscal year in which the Preferred Shares have been issued and for the last fiscal year of the said 8-year period).

(2) The right of the holders of the Preferred Shares to receive dividends at the rate specified in Clause 1 (1) above is the right to receive cumulative dividends for any fiscal year in which the payment of such dividends has not been at all declared or not been declared in full (the “Cumulative Dividends in Arrears”).

The holders of the Preferred Shares shall first receive the dividends before the holders of ordinary shares.

After the Preferred Shareholders have received the foregoing dividends in full, any remaining profits shall be divided in equal amount per share and paid to the Preferred Shareholders and the ordinary shareholders.

(3) Upon liquidation or dissolution of the Company, any assets remaining after payment of all amounts payable in respect of indebtedness and other obligations of the Company shall be paid to the holders of the Preferred Shares in priority to the holders of the ordinary shares, in the amount equivalent to the par value of Preferred Share per each share held by such holder of the Preferred Shares plus any Cumulative Dividends in Arrears.



If there remains proceed of liquidation of the assets of the Company, they shall be divided and paid to the holders of the ordinary shares.

And if there still remains proceeds of liquidation of the assets of the Company, they shall be divided and paid in equal amount to the holders of the preferred shares and the holders of the ordinary shares.

(4) The Preferred Shares may be converted into ordinary shares at any time.

(5) Each Preferred Share shall carry the right to one vote at any meeting of the shareholders of the Company.

2. After the 8th anniversary of the issuance of the Preferred Shares and onwards, the rights conferred to the Preferred Shares shall be as follows:

(1) The holders of the Preferred Shares shall be entitled to receive dividends in priority to the holders of the ordinary shares at a rate of THB 0.01 per share per fiscal year (plus any Cumulative Dividends in Arrears). In case there are remaining profits which are to be paid as dividends in any fiscal year after the foregoing dividends have been paid in full, such remaining profits shall be divided in equal amount per share and paid to the holders of the Preferred Shares and the holders of the ordinary shares.

(2) The Preferred Shares under Clause 2 (1) above, the right of the holders of the Preferred Shares to receive dividends at the rate of THB 0.01 per share per fiscal year is not the right to receive dividends on a cumulative basis for any fiscal year.

(3) The holders of the Preferred Shares shall also have the rights as specified in Clause 2 (3), (4) and (5).

Provided always that ordinary shares resulting from conversion shall have no right to receive any Cumulative Dividends in Arrears during the time they were Preference Shares.

However, KfW issued Purchase Rights to all shareholders of the Company. The Purchase Rights entitle holders to be able to buy back those preferred shares from KfW at the ratio of 1 Purchase Rights to 1 preferred share. The Purchase Rights Holders can exercise their rights on the second anniversary of Purchase Rights Issuance as the first time and semiannually from year 3 to year 8. The exercise price on the second anniversary date will be equal to KfW’s cost plus 20% per annum. The exercise prices for other periods will be in different formulas, which factor in share price changes.

As at 31st December 2006, the Company have 699.36 million preferred shares, 357.99 million preferred shares is held by Thai Trust Fund (held shares for KfW) and 341.37 million preferred shares is held by KfW.

(c) NVDR (Non-Voting Depository Receipt)

An NVDR or is a Non-Voting Depository Receipt trading instrument issued by the Thai NVDR Company Limited, a subsidiary wholly owned by The Stock Exchange of Thailand (SET). The NVDR is a security as specified by the SEC and is automatically regarded as a listed security in the SET. By investing in NVDRs, investor will receive all financial benefit, as if they had invested in a company’s ordinary shares. The only difference between investing in the NVDR and the company’s ordinary shares is NVDR holders have no right to vote.



As at 23rd February 2007, Thai NVDR Company Limited invested in a company’s ordinary shares in the amount of 287,823,157 shares, which represents 6.39% of the total shares to be issued and paid-up of said company.

(d) Warrant1) Warrants under the Employee Stock Option Plan Year 2000 (“ESOP 2000”) 2) Warrants under the Employee Stock Option Plan Year 2002 (“ESOP 2002”) 3) Warrants under the Employee Stock Option Plan Year 2003 (“ESOP 2003”) 4) Warrants under the Employee Stock Option Plan Year 2004 (“ESOP 2004”) 5) Warrants under the Employee Stock Option Plan Year 2005 (“ESOP 2005”) 6) Warrants under the Employee Stock Option Plan Year 2006 (“ESOP 2006”)

DETAILS OF EMPLOYEE STOCK OPTION PLAN

1) Employee Stock Option Plan 2000

The Annual General Meeting of the Shareholders of the Company for the year 2000 held on 27th April 2000 has approved the issuance and offer of non-transferable warrants to purchase the Company’s ordinary shares to certain Directors and employees at executive level totaling not exceeding 35 persons. Summary details are as follows:

Number of Warrants Issued and Outstanding

: 36,995,000 units

Date of Issuance : 9th June 2000

Maturity : 10 years from the issuance date

Date of Expiry : 9th June 2010

Exercise Period : (a) Warrant Type 1:

Each Warrant Holder received 3 separate warrant certificates. Each certificate represented 1/3 of the whole amount of warrants allotted and is exercisable for subscribing ordinary shares starting from 30th June 2000, 2001 and 2002 respectively.

(b) Warrant Type 2:

Each Warrant Holder received 3 separate warrant certificates. Each certificate represented 1/3 of the whole amount of warrants allotted and is exercisable for subscribing ordinary shares starting from 31st December 2000, 2001 and 2002 respectively.

Exercise Ratio : One unit of warrants entitles to purchase one ordinary share at Baht 10.60




The Annual General Meeting of the Shareholders of the Company for the year 2002 held on 12th April 2002 has approved the issuance and the offer of non-transferable warrants to purchase the Company’s ordinary shares to certain Directors and employees at executive level totaling not exceeding 35 persons. Summary details are as follows:


: 37,131,597 units


Maturity: : 5 years from the issuance date


Exercise Period: : Each Warrant Holder received 3 separate warrant certificates. Each certificate represented 1/3 of the whole amount of warrants allotted and shall be exercisable for subscribing ordinary shares as follow:

The 1st Certificate: Warrant Holders shall be starting exercising from 14th June 2003 until its expiration.

The 2nd Certificate: Warrant Holders shall be starting exercising from 14th June 2004 until its expiration.

The 3rd Certificate: Warrant Holders shall be starting exercising from 14th June 2005 until its expiration.

Exercise Ratio: : One unit of warrants entitles to purchase one ordinary share at Baht 10.60




The Annual General Meeting of the Shareholders of the Company for the year 2003 held on 11th April 2003 has approved the issuance and the offer of non-transferable warrants to purchase the Company’s ordinary shares to certain Directors and employees at executive level totaling not exceeding 35 persons. Summary details are as follows:


: 12,832,207 units (as of 31st December 2006)




Exercise Period : Each Warrant Holder received 3 separate warrant certificates. Each certificate represented 1/3 of the whole amount of warrants allotted and shall be exercisable for subscribing ordinary shares as follow:

The 1st Certificate: Warrant Holders shall be starting exercising from 17th June 2004 until its expiration.

The 2nd Certificate: Warrant Holders shall be starting exercising from 17th June 2005 until its expiration.

The 3rd Certificate: Warrant Holders shall be starting exercising from 17th June 2006 until its expiration.





The Extraordinary General Meeting of the Shareholders No. 2/2547 of the Company held on 10th June 2004 has approved the issuance and the offer of non-transferable warrants to purchase the Company’s ordinary shares to certain Directors and employees at executive level totaling not exceeding 35 persons. Summary details are as follows:


: 18,274,444 units

Date of Issuance : 7th February 2005


Date of Expiry : 6th February 2010


The 1st Certificate: Warrant Holders shall be starting exercising from 7th February 2006until its expiration.

The 2nd Certificate: Warrant Holders shall be starting exercising from 7th February 2007until its expiration.

The 3rd Certificate: Warrant Holders shall be starting exercising from 7th February 2008 until its expiration.





The Extraordinary General Meeting of the Shareholders No. 1/2548 of the Company held on 15th July 2005 has approved the issuance and the offer of non-transferable warrants to purchase the Company’s ordinary shares to certain Directors and employees at executive level. Summary details are as follows:


: 18,774,429 units

Date of Issuance : 28th April 2006


Date of Expiry : 27th April 2011


The 1st Certificate: Warrant Holders shall be starting exercising from 13th May 2006until its expiration.

The 2nd Certificate: Warrant Holders shall be starting exercising from 13th May 2007until its expiration.

The 3rd Certificate: Warrant Holders shall be starting exercising from 13th May 2008 until its expiration.





The Annual General Meeting of the Shareholders of the Company for the year 2006 held on 11th April 2006 has approved the issuance and the offer of non-transferable warrants to purchase the Company’s ordinary shares to certain Directors and employees at executive level. Summary details are as follows:


: 36,051,007 units

Date of Issuance : 31st January 2007


Date of Expiry : 30th January 2012


The 1st Certificate: Warrant Holders shall be starting exercising from the last business day of April 2007 until its expiration.

The 2nd Certificate: Warrant Holders shall be starting exercising from the last business day of April 2008 until its expiration.

The 3rd Certificate: Warrant Holders shall be starting exercising from the last business day of April 2009 until its expiration.




(e) Shareholders AgreementThe Shareholders Agreement dated December 22, 1999

Kreditanstalt für Wiederaufbau ("KfW"), Nynex Network Systems (Thailand) Company (“Verizon”), and the CP Group (comprising of Charoen Pokphand Feedmill Public Company Limited, Bangkok Produce Merchandising Public Company Limited, Charoen Pokphand Group Company Limited and Bangkok Telecom Holding Company Limited) entered into a Shareholders Agreement dated December 22, 1999. Terms and conditions specified therein shall be summarized as follows:

1. In addition to the right of KfW under the Debt Restructuring Agreement, KfW is entitled to nominate its representatives to the Company's Board of Directors in proportion to the percentage of its shareholding as against the total number of the directors representing the parties to the Shareholders Agreement. However, in any case, KfW is entitled to appoint at least one director and said right shall exist as long as KfW holds shares in the Company, directly or indirectly, not less than 5% of total shares of the Company.

2. During the first three years from the date of KfW's subscription of the shares in the Company and so long as KfW holds shares in the Company, directly or indirectly, at least 5% of the paid-up shares, the parties to the Shareholders Agreement will vote against each of the following actions unless KfW agrees to such action: (1) any amendment to the Memorandum and Articles of Association and

amendments to rights attached to shares; (2) any increase or reduction in the authorized share capital of the Company or any

issuance of new shares or the private placement of shares or a proposed public offering;

(3) any voluntary liquidation, dissolution, cease of the business, recapitalization or reorganization of the Company or any merger, consolidation, amalgamation or other business combination of the Company with or into another person or any sale of all or a substantial part of the assets of the Company or any of its material subsidiaries;

(4) any change in the number of directors or the quorum for meetings of the Board of directors;

(5) delisting of the shares in the Stock Exchange of Thailand; and (6) carry on any business other than Authorized Businesses (as defined in the Debt

Restructuring Agreement).

3. Subject to any other conditions binding on KfW with regard to the right granted to the Company's shareholders, KfW may sell or enter into an agreement to sell for a cash selling price all of its shares or not less than 25% of its shareholding, at any time after the expiration of the first three years from the date KfW was allotted the shares in the Company. The foregoing does not prohibit KfW from selling its shares when its shareholding is illegal or restricted by the applicable law.

4. During the first three years from the date of KfW’s subscription of shares, the parties to the Shareholder Agreement (other than KfW) agree to refrain from transferring more than 10% of the shares so held by each party as specified in the Shareholders Agreement.

5. The parties agree to refrain from amending or modifying the Verizon Shareholders Agreement dated June 23, 1992 except obtaining prior written consent from KfW.



6. Each party shall disclose to the other party any conflict of interest or related transactions which the party, or any of its subsidiaries, has entered into or will enter into with the Company.

7. In each fiscal year, subject to availability of cash flow (without incurring additional indebtedness), other legal requirements, the SET regulations and restrictions imposed by the Debt Restructuring Agreements or any other agreements, the parties agree to cause the Company to pay dividends at least 50% of the net profit of the Company after statutory reserves have been established to its shareholders.

Obligation in stock issuance in the future

1. For Convertible Preferred SharesIn the successful debt restructuring process, Kreditanstalt fur Wiederaufbau (“KfW”) has an equity injection of USD 150 million in the Company and the Company issued 702 million convertibles preferred shares to KfW and Thai Trust Fund. Due to the terms specified that the preferred shares are set to be converted into ordinary shares before distributed to Purchase Rights Holders who exercise their rights, as described above. Currently, there are 699.36 million convertible preferred shares which are still outstanding. Therefore, the Company is obliged to issue the ordinary shares to replace the preferred shares as per the amount of the exercised Purchase Rights on each exercise date.

2. For Exercise of Warrants under the Employee Stock Option Plan (ESOP 2000)The Annual General Meeting of the Shareholders of the Company for the year 2000 held on 27th April 2000 has resolved to approve the Company’s Employee Stock Option Plan 2000. The warrants of 58,150,000 units were issued and offered to certain Directors and employees at executive level, not exceeding 35 persons. In this regard, the Shareholders Meeting has resolved to approve the allocation of 58,150,000 new ordinary shares to be reserved for exercise of the warrants rights according to such plan.

3. For Exercise of Warrants under the Employee Stock Option Plan (ESOP 2002)The Annual General Meeting of the Shareholders of the Company for the year 2002 held on 12th April 2002 has approved the issuance and the offer of non-transferable warrants to certain Directors and Employees at executive level, not exceeding 35 persons in the total of 37,131,597 units (“ESOP 2002”). In this regard, the Shareholders Meeting has resolved to approve the allocation of 37,131,597 new ordinary shares to be reserved for exercise of the warrants rights according to such plan.

4. For Exercise of Warrants under the Employee Stock Option Plan (ESOP 2003)The Annual General Meeting of the Shareholders of the Company for the year 2003 held on 11th April 2003 has approved the issuance and the offer of non-transferable warrants to certain Directors and Employees at executive level, not exceeding 35 persons in the total of 19,862,729 units (“ESOP 2003”). In this regard, the Shareholders Meeting has resolved to approve the allocation of 19,862,729 new ordinary shares to be reserved for exercise of the warrants rights according to such plan.

5. For Exercise of Warrants under the Employee Stock Option Plan (ESOP 2004)The Extraordinary General Meeting of the Shareholders No. 3/2547 of the Company held on 23rd

September 2004 has approved the issuance and the offer of non-transferable warrants to



certain Directors and Employees at executive level, not exceeding 35 persons in the total of 19,111,159 units (“ESOP 2004”). In this regard, the Shareholders Meeting has resolved to approve the allocation of 19,111,159 new ordinary shares to be reserved for exercise of the warrants right according to such plan. (This resolution is merely to replace the former resolution of the Extraordinary General Meeting of the Shareholders No. 2/2547 of the Company held on 10th June 2004)

6. For Exercise of Warrants under the Employee Stock Option Plan (ESOP 2005)The Extraordinary General Meeting of the Shareholders No. 1/2548 of the Company held on 15th July 2005 has approved the issuance and the offer of non-transferable warrants to certain Directors and Employees at executive level in the total of 18,774,429 units (“ESOP 2005”). In this regard, the Shareholders Meeting has resolved to approve the allocation of 18,774,429 new ordinary shares to be reserved for exercise of the warrants right according to such plan.

7. For Exercise of Warrants under the Employee Stock Option Plan (ESOP 2006)The Annual General Meeting of the Shareholders of the Company for the year 2006 held on 11th April 2006 has approved the issuance and the offer of non-transferable warrants to certain Directors and Employees at executive level in the total of 36,051,007 units (“ESOP 2006”). In this regard, the Shareholders Meeting has resolved to approve the allocation of 36,051,007 new ordinary shares to be reserved for exercise of the warrants right according to such plan.

8. For the capital increase to reserve for IFCThe Annual General Meeting of the Shareholders of the Company for the year 2006 (is made in order to replace the past resolution of the Extraordinary General Meeting of the Shareholders No. 1/2548) approve the offering and sale of the 29,894,356 shares to the International Finance Corporation (“IFC”) pursuant to the agreement between the Company and IFC which is a financial institution providing a partial guarantee to the Company’s debentures. The Company also allocated part of these increasing shares to reserve for IFC under the C Loan Agreement.



8.2 SHAREHOLDERS

True Corporation Public Company Limited Major Shareholders 1

(as of 23rd February 2007)

NAME No. of Shares(Million Shares)

% of Total Issued

Shares 2

1. CP Group 3 1,368.64 30.40 2. THAI TRUST FUND 4 357.99 7.95 3. KREDITANSTALT FÜR WIEDERAUFBAU (“KfW”) 5 341.37 7.58 4. THAI NVDR COMPANY LIMITED 6 287.82 6.39 5. STATE STREET BANK AND TRUST COMPANY 7 161.69 3.59 6. MORGAN STANLEY & CO INTERNATIONAL LIMITED 8 155.27 3.45 7. CHASE C.S. CENTRAL NOMINEES LIMITED 8 137.83 3.06 8. STATE STREET BANK AND TRUST COMPANY

FOR AUSTRALIA 9114.39 2.54

9. SOMERS (U.K.) LIMITED 8 86.46 1.92 10 HSBC (SINGAPORE) NOMINEES PTE LTD 10 84.67 1.88

1 There is no cross-shareholding between the Company and its major shareholders 2 Including common shares and preferred shares. 3 Consisting of 1) Charoen Pokphand Group Co., Ltd. 2) Bangkok Telecom Holding Company Limited (99.99% held by

Charoen Pokphand Group Co., Ltd. (“CPG”)) 3) Charoen Pokphand Foods Public Company Limited (35.28% held by CPG and connected person(s) of CPG pursuant to the section 258 of the Securities and Exchange Act) 4) Bangkok Produce Merchandising Public Company Limited (99.44% held by Charoen Pokphand Foods Public Company Limited) 5) Bangkok Agro-Industr ial Products Publ ic Company Limited (99.90% held by Charoen Pokphand Foods Public Company Limited) 6) Charoen Pokphand Northeastern Public Company Limited (99.61% held by Charoen Pokphand Foods Public Company Limited) 7) Kasetphand Industry Company Limited (99.99% held by CPG) 8) Charoen Pokphand IN-EX Company Limited (99.99% held by CPG) 9) Unique Network Company Limited (29.00% held by Bangkok Telecom Holding Company Limited and 58.94% held by connected person(s) of CPG pursuant to the section 258 of the Securities and Exchange Act) 10) Wide Broad Cast Company Limited (29.00% held by Bangkok Telecom Holding Company Limited and 41.45% held by connected person(s) of CPG pursuant to the section 258 of the Securities and Exchange Act) 11) C.P. Interfood (Thailand) Company Limited (99.99% held by CPG) 12) Star Marketing Company Limited (99.99% held by CPG) 13) Advance Pharma Company Limited (99.99% held by CPG) and 14) Golden Tower Trading Limited (held by an outsider having no relation to CPG but reported as in the same group because Golden Tower Trading Limited might vote in the same direction as CPG at the True shareholders meetings)

4 Thai Trust Fund managed by the Thai Trust Fund Management Co., Ltd., established by the Stock Exchange of Thailand (“SET”). The Thai Trust Fund has Thai nationality. Its purpose is to provide an alternative portfolio investment vehicle for foreign investors in the SET. As of 23rd February 2007, Thai Trust Fund held shares for KfW 7.95 percent of the Company’s paid-up capital.

5 A financial institution for development, 100% of its share is held by the government of the Federal Republic of Germany. 6 A subsidiary wholly owned by the SET. The NVDR is a security as specified by the SET and is automatically regarded as a listed

security on the SET. By investing in NVDRs, the investor will receive all financial benefits, as if they invest in a company’s ordinary shares. The only difference between investing in the NVDR and the company’s ordinary shares is that NVDR holders have no rights to vote.

7 The company is registered in U.S.A and invested in the SET without disclosing that the investment is neither for itself nor for others. True has no authority to request that company for the afore-mentioned disclosure.

8 The company is registered in England and invested in the SET without disclosing that the investment is neither for itself nor for others. True has no authority to request that company for the afore-mentioned disclosure.

9 The company is registered in Australia and invested in the SET without disclosing that the investment is neither for itself nor for others. True has no authority to request that company for the afore-mentioned disclosure.

10 The company is registered in Singapore and invested in the SET without disclosing that the investment is neither for itself nor for others. True has no authority to request that company for the afore-mentioned disclosure.



8.3 Dividend Policy

The Company has not paid or declared any dividends on its issued shares since operation commencement. The Company can pay dividends only out of its profits after deducting its cumulative losses, and only if it has set aside a legal reserve. The Company’srestructuring agreement also limits its ability to pay dividends until all of its indebtedness is repaid in full.

The Company’s major shareholders have entered into a shareholders’ agreement under which they agreed the Company to declare an annual dividend equal to at least 50% of its net profits for that year, after statutory reserves and subject to availability of cash, the regulations of SET, and its credit facilities. Before dividends can be paid to holders of its ordinary shares, however, dividend payments on preferred shares must be paid in full.

For the dividend policy of subsidiary companies, each subsidiary company’s Board of Directors will consider the payment of dividends from the balance of cash flows taking into account the capital expenditure requirements of the subsidiary company. Subject to the availability of cash flows at the subsidiary company and only if it has set aside a legal reserve, the Board of Directors of each subsidiary company shall consider the payment of dividends on a case-by-case basis.

8.4 Liabilities Structure

As of December 31, 2006, the total liabilities of the Company and its subsidiaries according to the consolidated financial statements is Baht 113,367 million. The details are as follows:

(Unit:million Baht)

Liabilities of the Company on consolidated basis AmountCurrent liabilitiesShort-term borrowings 776 Trade account payable 11,775 Current portion of long-term borrowings 8,838 Unearned income 2,608 Accrued expenses 5,724 Other current liabilities 2,512 Total current liabilities 32,233

Non-current liabilitiesLong-term borrowings 80,108 Long-term trade account payable 184 Other non-current liabilities 842 Total non-current liabilities 81,134 Total liabilities 113,367

As of December 31, 2006, the total borrowings including the total long-term trade account payable (which is consisting of both current portion and long-time portion) of the Company and its subsidiaries was Baht 89,906 million. This consisted of the borrowings and long-term trade account payable that were denominated in Baht currency of Baht



52,839 million; denominated in US Dollar currency of Baht 33,636 million (or USD 928 million); and denominated in Yen currency of Baht 3,431 million (or Yen 11,219 million).

Since the debt restructuring on December 22, 1999 until December 31, 2006, the Company has always made repayment of its secured loan on due date. And it had made prepayment to its Secured Creditor by the Company’s excess cash in the amount of approximately Baht 2,000 million to decrease its interest payment obligation and to reduce its foreign currency exposure.

In the past, the Company had large amount of US Dollar loan. It has had policy to reduce fluctuation from foreign currency exchange, and has successfully reduced US dollar loan through the following measures:

February 2001 The Company used its excess cash to partially prepay its secured loan in the amount of approximately Baht 532 million.

June 2001 As of June 28, 2001, the Extraordinary Shareholder Meeting No. 1/2001 had a resolution to approve the Company to issue and offer debentures to the public in the amount not exceeding Baht 36,000 million with the term that is not longer than 20 years to prepay the Company’s existing foreign debt.

July 2001 The Company used its excess cash to partially prepay its secured loan in the amount of approximately Baht 368 million.

September 2001 The Company entered into the currency swap transaction with KfW, its major foreign creditor, in the amount of approximately USD 97 million or around Baht 4,483 million.

December 2001 The Company borrowed New Baht Loan in the amount of 5,000 million Baht, and used the proceeds from the new loan to partially prepay its US Dollar loan

March 2002 The Company and its subsidiaries repaid its loan in the amount of approximately Baht 948 million.

July 2002 The Company used its excess cash to partially prepay its secured loan in the amount of approximately Baht 345 million.

As of July 31, 2002, the Company entered into several financing agreements with the former Secured Creditors, IFC as the lender of C Loan and the guarantor of the debentures No. 2/2002, and the trustee of the debentures No. 1/2002 to set up a mechanism for collateral sharing between the new Secured Creditors and the former Secured Creditors.

October 2002 As of October 15, 2002, the Company issued 2 tranches of Baht debentures, i.e., the debentures No.1/2002 and the debentures No.2/2002. The aggregate amount of proceeds received from both tranches of the debentures was Baht 18,465 million. And the Company borrowed Baht loan from IFC (C Loan) in the amount of Baht 1,125 million as of October 17, 2002. The Company used the proceeds from the debentures and IFC loan to prepay US Dollar loan in the amount of USD 452 million. The



holders of both tranches of the debentures have participated in collateral sharing with the former Secured Creditors after the issuance of the debentures.

December 2002 The Company used its internal cash flow to repurchase the deferred payment notes denominated in Yen currency in the amount of approximately Yen 10.1 billion or around Baht 3.6 billion.

February 2003 As of 18 February 2003, the Company issued Baht debentures No. 1/2546 which is the third tranche in the amount of Baht 3,319 million. The company used the proceeds received from the debentures to prepay remaining US Dollar loan in the amount of USD 78 million.

October 2003 The company signed a loan agreement with a group of local commercial banks and financial institutions in the amount of Baht 21,419 million to refinance Baht loan in equal amount. The new Baht loan bear lower interest rate resulting in reduction of the Company’s interest expense.

February 2004 The Company used its internal cash flow to repurchase the deferred payment notes denominated in Yen currency in the amount of approximately Yen 331 million or around Baht 120 million.

June 2004 As of 25 June 2004, the Company issued Baht debentures No. 1/2547 which is the fourth tranche in the amount of Baht 2,413 million. The company used the proceeds received from the debentures to prepay all remaining US Dollar loan that the Company already swapped in the amount of USD 51 million.

October 2004 The Company used its internal cash flow to repurchase the deferred payment notes denominated in Yen currency in the amount of approximately Yen 190 million or around Baht 74 million.

February 2005

July 2006

The Company used its internal cash flow to repurchase the deferred payment notes denominated in Yen currency in the amount of approximately Yen 1,336 million or around Baht 491 million.

The company prepaid Secured Debenture with Periodic Payments No. 1/2545 in partially amount Baht 1,787 million

When the Company prepaid the secured loan by its excess cash, the proceeds of prepayment was applied to the repayment schedule by Inverse Chronological Order and was pro-rated per the outstanding of each Secured Creditor.

After the implementation of all measures as described above to reduce the foreign currency exchange fluctuation, the Company has decreased the portion of the foreign debt from 68.3% at the end of 2000 to 41.2% as of December 31, 2006.



Chart : Loan Structure Movement

Debentures

The Extraordinary General Meeting of the Shareholders No. 1/2544 held on June 28, 2002 has approved the issuance and offer to sell various types of debentures in order to repay existing foreign debt. The principal amount of debentures will not exceed Baht 36,000 million and maturity is not exceeding 20 years. Therefore, the Company offered the Thai Baht Debenture as follows:

1) Early Redeemable Secured Debenture with Periodic Payments No. 1/2545, Due 2008 amount 11,715,400 units, valuing in the amount of Baht 11,715,400,000 (eleven billion seven hundred fifteen million and four hundred thousand Baht) Par value per unit 1,000 Baht

2) Partially Guaranteed Early Redeemable Secured Debenture with Periodic Payments No. 2/2545, Due 2011 amount 6,750,000 units, valuing in the amount of Baht 6,750,000,000 (six billion seven hundred fifty million Baht) Par value per unit 1,000 Baht

3) Secured Debenture with Periodic Payments No. 1/2546, Due 2007 amount 3,319,000 units, valuing in the amount of Baht 3,319,000,000 (three billion three hundred and nineteen million Baht) Par value per unit 1,000 Baht

4) Secured Debenture with Periodic Payments No. 1/2547, Due 2011 amount 2,413,000 units, valuing in the amount of Baht 2,413,000,000 (two billion four hundred and thirteen million Baht) Par value per unit 1,000 Baht

38,252

23,826

32,152

56,379

84,190

52,839

37,65732,253

35,13425,242

6,664

33,636

8,205

16,091

11,581

4,010

3,431

32,271

74,651

62,453

3,153

5,624

7,000

11,37616,239

4,729

6,591

0

20,000

40,000

60,000

80,000

100,000

1998 1999 2000 2001 2002 2003 2004 2005 2006

Unit: million Baht

Baht loan US$ Loan Yen Loan

73,634 73,379

78,710 75,051

76,520 77,187

86,044

89,90695,200



Secondary Market of DebenturesCurrently, Debentures of the Company can be traded and invested on the Thai Bond Market Association.

DETAILS OF DEBENTURES OF THE COMPANY

1. Early Redeemable Secured Debenture with Periodic Payments No. 1/2545, Due 2008

1) Name of the debentures : Early Redeemable Secured Debenture with Periodic Payments of True Corporation Public Company Limited No. 1/2545, due 2008

2) Type of the debentures : Early Redeemable Secured Debenture with Periodic Payments in registered form, unsubordinated, with a debentureholders’ representative

3) Amount and value of the debentures

: 11,715,400 units, valuing in the amount of Baht 11,715,400,000 (eleven billion seven hundred fifteen million and four hundred thousand Baht)

4) Par value per unit : 1,000 Baht (one thousand Baht)

5) Offering price per unit : 1,000 Baht (one thousand Baht)

6) Issuing Date : 15th October 2002

7) Maturity Date : 7th July 2008

8) Status of the debentures : The debentures are indebtedness of the Company, which rank equally among themselves and have no less favorable status than other current and future secured indebtedness of the Company throughout the duration of the debentures

9) Principal Repayment : The Company shall repay principal by installment on every interest payment date commencing on 7th January 2003 onwards. The last principal repayment date will occur on the date of redemption.



Table of Principal repayment

(unit : Baht) Installment Date Principal repayment per unit

7th January 2003 5.00 7th April 2003 8.00 7th July 2003 8.00 7th October 2003 10.00 7th January 2004 10.00 7th April 2004 16.00 7th July 2004 16.00 7th October 2004 19.00 7th January 2005 19.00 7th April 2005 19.00 7th July 2005 45.00 7th October 2005 45.00 7th January 2006 55.00 7th April 2006 55.00 7th July 2006 60.00 7th October 2006 60.00 7th January 2007 70.00 7th April 2007 70.00 7th July 2007 70.00 7th October 2007 70.00 7th January 2008 90.00 7th April 2008 90.00 7th July 2008 90.00

10) Interest Rate and Interest Payment

: The Company shall pay interest of the debentures at the rate of 6.1% p.a. during every three (3)-month period on 7th January, 7th April, 7th July and 7th October of each year commencing on 7th

January 2003. The amount of interest on the debentures during each interest period shall be calculated on the unpaid principal amount multiplied by the actual number of days elapsed of the relevant debenture interest period, multiplied by the interest rate as specified above and divided by three hundred and sixty five (365) days.

11) Redemption of the debentures

: The redemption of the debentures will be made by paying the last installment of unpaid principal amount including the last interest payment then due in whole to the debentureholders per one (1) unit of the debentures.



12) Repurchase of the debentures

: Subject to the Inter-Creditor Agreement, the Company is entitled to purchase the Debentures No. 1/2545 in the secondary market or anywhere and at any time. When the Company has purchased the Debentures No. 1/2545, indebtedness under the Debentures No. 1/2545 shall be deemed extinguished. The Company must notify the Registrar to immediately terminate the purchased Debentures No. 1/2545

13) Early Redemption : Subject to the Inter-Creditor Agreement the Company is entitled to call for an early redemption of the Debentures No. 1/2545 under the following conditions: The Call Option Date is on any Interest Payment Date after the third anniversary of the Issuing Date; The redemption prices (excluding unpaid interest) must be the Unpaid Principal; The Company must pay the Debentureholders a fee at the rate of one half of one percent. (0.50%) of the Unpaid Principal on the Call Option Date; And in relation to a partial early redemption of the Debentures No. 1/2545 the Company shall redeem not less than Twenty Five percent. (25%) of the unredeemed Debentures No. 2/2545 at that time and the redemption of the Debentures No. 1/2545 held by each Debentureholder is pro-rated against the number of Debentures No. 1/2545 held by each of them.

14) Collateral : Throughout the duration of the Debentures No. 1/2545, the Company will provide and maintain security for being collateral of the debenture, such as, Conditional Assignment of Concession, Conditional Assignment of Debenture Payment Account and etc. According to the Security Documents and the Debenture Collateral Documents, upon fully repayment of the debt of the Original Secured Creditors, some security would cease to be operative.

Except the Assignment of Insurances, in respect of which the Company will cause security contemplated therein to be perfected no later than Sixty (60) days after the Issuing Date, within Seven (7) days of the close of the offering period, unless the Company provides and maintains security for payments, both interest and principal,under the Terms & Conditions, Lead Underwriter



or Underwriter (as the case may be) would return the subscription proceeds with accrued interest (if any) to the subscribers who subscribed for purchasing of the debenture through such Lead Underwriter or Underwriter within Fourteen (14) days after the Issuing Date.

15) Credit Rating : The Company will cause the Debentures No. 1/2545 to be rated by TRIS Rating Co., Ltd. (or other credit rating companies approved by the SEC) throughout the duration of the Debentures No. 1/2545. The Debentures No. 1/2545 are rated by TRIS Rating Co., Ltd. at “BBB” on 25th May 2006. The rating is subject to change from time to time under credit review performed by TRIS Co., Ltd.

2. Partially Guaranteed Early Redeemable Secured Debenture with Periodic Payments No. 2/2545, Due 2011

1) Name of the debentures : Partially Guaranteed Early Redeemable Secured Debenture with Periodic Payments of True Corporation Public Company Limited No. 2/2545, due 2011

2) Type of the debentures : Partially Guaranteed Early Redeemable Secured Debenture with Periodic Payments in registered form, unsubordinated, with a debentureholders’ representative


: 6,750,000 units, valuing in the amount of Baht 6,750,000,000 (six billion seven hundred fifty million Baht)



6) Issuing Date : 15th October 2002

7) Maturity Date : 3rd February 2011




9) Principal Repayment : The Company shall repay principal by installment on every interest payment date commencing on 3 November 2009 onwards. The last principal repayment date will occur on the date of redemption.

Table of Principal repayment (unit : Baht) Installment Date Principal repayment per unit

3rd November 2009 160.00 3rd February 2010 160.00 3rd May 2010 160.00 3rd August 2010 160.00 3rd November 2010 180.00 3rd February 2011 180.00


: The Company shall pay interest of the debentures at the rate of MLR p.a. during every three (3)-month period on 3rd February, 3rd May, 3rd August and 3rd November of each year commencing on 3rd February 2003. The amount of interest on the debentures during each interest period shall be calculated on the unpaid principal amount multiplied by the actual number of days elapsed of the relevant debenture interest period, multiplied by the interest rate as specified above and divided by three hundred and sixty five (365) days.

MLR or Minimum Lending Rate means in respect of any debenture interest period, the average of the reference rates quoted by Bangkok Bank Public Company Limited, The Siam Commercial Bank Public Company Limited, Krung Thai Bank Public Company Limited and Thai Farmers Bank Public Company Limited as of the third Thai Business Day before the beginning of the relevant debenture interest period. If on such date there are less than four (4) above captioned banks offering the reference rated for any reason, the calculation of the average interest rate will be based upon the remaining reference rates, as determined in Terms and Conditions.






: Subject to the Inter-Creditor Agreement, the Company is entitled to purchase the Debentures No. 2/2545 in the secondary market or anywhere and at any time. When the Company has purchased the Debentures No. 2/2545, indebtedness under the Debentures No. 2/2545 shall be deemed extinguished. The Company must notify the Registrar to immediately terminate the purchased Debentures No. 2/2545.

13) Early Redemption : Subject to the Inter-Creditor Agreement the Company is entitled to call for an early redemption of the Debentures No. 2/2545 under the following conditions: The Call Option Date is on any Interest Payment Date after the third anniversary of the Issuing Date; The redemption prices (excluding unpaid interest) must be the Unpaid Principal; The Company must pay the Debentureholders a fee at the rate of one half of one per cent. (0.50%) of the Unpaid Principal on the Call Option Date; And in relation to a partial early redemption of the Debentures No. 2/2545 the Company shall redeem not less than Twenty Five percent. (25%) of the unredeemed Debentures No. 2/2545 at that time and the redemption of the Debentures No. 2/2545 held by each Debentureholder is pro-rated against the number of Debentures No. 2/2545 held by each of them.

14) Collateral : Throughout the duration of the Debentures No. 2/2545, the Company will provide and maintain security for being collateral of the debenture, such as, Conditional Assignment of Concession, Conditional Assignment of Debenture Payment Account and etc. According to the Security Documents and the Debenture Collateral Documents, upon fully repayment of the debt of the Original Secured Creditors, some security would cease to be operative. In addition, the Debenture No. 2/2545 has been partially guaranteed by International Finance Corporation (“IFC”), who is a guarantor for the payment of principal and interest of the debentures, not exceeding Fifty (50) percent of Debentures

Except the Assignment of Insurances, in respect of which the Company will cause security contemplated therein to be perfected no later than Sixty (60) days after the Issuing Date, within



Seven (7) days of the close of the offering period, unless the Company provides and maintains security for payments, both interest and principal, under the Terms & Conditions, Lead Underwriter or Underwriter (as the case may be) would return the subscription proceeds with accrued interest (if any) to the subscribers who subscribed for purchasing of the debenture through such Lead Underwriter or Underwriter within Fourteen (14) days after the Issuing Date.

15) Credit Rating : The Company will cause the Debentures No. 2/2545 to be rated by TRIS Rating Co., Ltd. (or other credit rating companies approved by the SEC) throughout the duration of the Debentures No. 2/2545. The Debentures No. 2/2545 are rated by TRIS Rating Co., Ltd. at “A” on 25th May 2006. The rating is subject to change from time to time under credit review performed by TRIS Co., Ltd.

3. Secured Debenture with Periodic Payments No. 1/2546, Due 2007

1) Name of the debentures : Secured Debenture with Periodic Payments of True Corporation Public Company Limited No. 1/2546, due 2007

2) Type of the debentures : Secured Debenture with Periodic Payments with the particulars of the holders, have a trustee.


: 3,319,000 units, valuing in the amount of Baht 3,319,000,000 (three billion three hundred and nineteen million Baht)



6) Issuing Date : 18th February 2003

7) Maturity Date : 7th October 2007




9) Principal Repayment : The Company shall repay principal by installment on every interest payment date commencing on 7th January 2005 onwards. The last principal repayment date will occur on the date of redemption.

Table of Principal repayment (unit : Baht)

Installment Date Principal repayment per unit 7th January 2005 12.50 7th April 2005 12.50 7th July 2005 97.50 7th October 2005 97.50 7th January 2006 97.50 7th April 2006 97.50 7th July 2006 97.50 7th October 2006 97.50 7th January 2007 97.50 7th April 2007 97.50 7th July 2007 97.50 7th October 2007 97.50

10) Interest Rate and

Interest Payment

: The Company shall pay interest of the debentures at the rate of fixed at 5.8% during every three (3)-month period on 7th January, 7th

April, 7th July and 7th October of each year commencing on 7th April 2003. The amount of interest on the debentures during each interest period shall be calculated on the unpaid principal amount multiplied by the actual number of days elapsed of the relevant debenture interest period, multiplied by the interest rate as specified above and divided by three hundred and sixty five (365) days.








Within Seven (7) days of the close of the offering period, unless the Company provides and maintains security for payments, both interest and principal, under the Terms & Conditions, Lead Underwriter or Underwriter (as the case may be) would return the subscription proceeds

with accrued interest (if any) to the subscribers who subscribed for purchasing of the debenture through such Lead Underwriter or Underwriter within Fourteen (14) days after the IssuingDate.

14) Credit Rating : The Company will cause the Debentures No. 1/2546 to be rated by TRIS Rating Co., Ltd. (or other credit rating companies approved by the SEC) throughout the duration of the Debentures No. 1/2546. The Debentures No. 1/2546 are rated by TRIS Rating Co., Ltd. at “BBB” on 25th

May 2006. The rating is subject to change from time to time under credit review performed by TRIS Co., Ltd.



4. Secured Debenture with Periodic Payments No. 1/2547, Due 2011

1) Name of the debentures : Secured Debenture with Periodic Payments of True Corporation Public Company Limited No. 1/2547, due 2011

2) Type of the debentures : Secured Debenture with Periodic Payments with the particulars of the holders, have a trustee.

3) Amount and value of the

debentures

: 2,413,000 units, valuing in the amount of Baht 2,413,000,000 (two billion four hundred and thirteen million Baht)



6) Issuing Date : 25th June 2004

7) Maturity Date : 7th July 2011


9) Principal Repayment : The Company shall repay principal by installment on every interest payment date commencing on 7th October 2008 onwards. The last principal repayment date will occur on the date of redemption.



Table of Principal repayment (unit : Baht)

Installment Date Principal repayment per unit 7th October 2008 83.33 7th January 2009 83.33 7th April 2009 83.33 7th July 2009 83.33 7th October 2009 83.33 7th January 2010 83.33 7th April 2010 83.33 7th July 2010 83.33 7th October 2010 83.33 7th January 2011 83.33 7th April 2011 83.33 7th July 2011 83.37


: The Company shall pay interest of the debentures at the rate of fixed at 6.80% during every three (3)-month period on 7th January, 7th April, 7th July and 7th October of each year commencing on 7th

October 2004. The amount of interest on the debentures during each interest period shall be calculated on the unpaid principal amount multiplied by the actual number of days elapsed of the relevant debenture interest period, multiplied by the interest rate as specified above and divided by three hundred and sixty five (365) days.








Within Seven (7) days of the close of the offering period, unless the Company provides and maintains security for payments, both interest and principal, under the Terms & Conditions, Lead Underwriter or Underwriter (as the case may be) would return the subscription proceeds with accrued interest (if any) to the subscribers who subscribed for purchasing of the debenture through such Lead Underwriter or Underwriter within Fourteen (14) days after the Issuing Date.

14) Credit Rating : The Company will cause the Debentures No. 1/2547 to be rated by TRIS Rating Co., Ltd. (or other credit rating companies approved by the SEC) throughout the duration of the Debentures No. 1/2547. The Debentures No. 1/2547 are rated by TRIS Rating Co., Ltd. at “BBB” on 25th May 2006. The rating is subject to change from time to time under credit review performed by TRIS Co., Ltd.

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TRUETL: Management 85

The Management Structure of the Company consists of:

A. The Board of Directors

B. The Committees of the Board of Directors:

1) Audit Committee

2) Independent Committee

3) Compensation and Nominating Committee

4) Finance Committee

5) Corporate Governance Committee

C. The Executive Officers

A. The Board of Directors

Pursuant to the Company’s Articles of Association, it is stipulated that the Board of

Directors shall consist of not less than 5 directors and that not less than one half of all

directors shall have residence in the Kingdom. 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 Directors

2) 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

Definitions

Executive Director means

- A director who holds a management position and engages in the Company’s

business management.

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 or consultant receiving a salary from the

Company, any affiliated, associated or related company or major shareholder of

the Company. An Independent Director also has no power of control over the

Company, any affiliated or associated company, or any person with a conflict of

interest with the Company.

- Holds less than 5 percent of the Company’s total shares with voting rights, and

holds less than 5 percent of the total shares of any company affiliated,

associated with or related to any person who may have a conflict of interest

with the Company as prescribed by Article 258 under the Securities Act B.E.

2535.

- Is not connected or related to executives or major shareholders of the

Company, or to any companies 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, or shareholders 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 of Directors in an independent manner. Is not under the control of

management or major shareholders including related persons or close relatives

of the said person.

The Board of Directors of the Company (as of 31st December 2006) is as

follows:

Name Position

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



Name Position

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 and regulations of the Securities and Exchange Commission and the Stock

Exchange of Thailand.

Authorized Directors

Mr. 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 Directors

The 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. With regard to the management of the Company,

the Board of Directors has the authority to make any decision related to the Company’s

regular operations except for matters that require the approval of the shareholder

meeting as specified by law.

In addition, the Board of Directors may grant authorization to one or more directors, or

any other person, to perform any acts on its behalf. However, for any decision on major

operations such as a major investment or a major loan procurement, the management

team shall propose the said transactions to the Board of Directors for approval.



In the year 2006, the Board of Directors held 7 meetings. Director attendance at those

meetings was as follows:

Directors Attendance / Number of Meetings*

(times)

1. Mr. Narong Srisa-an 4/7

2. Mr. Vitthya Vejjajiva 5/7

3. Dr. Kosol Petchsuwan 7/7

4. Mr. Joti Bhokavanij 6/7

5. Mr. Dhanin Chearavanont 3/7

6. Mr. Sumet Jiaravanon 1/7

7. Dr. Ajva Taulananda 7/7

8. Mr. Chaleo Souvannakitti 7/7

9. Mr. Athueck Asvanund 7/7

10. Mr. Supachai Chearavanont 7/7

11. Mr. Soopakij Chearavanont 1/7

12. Mr. Chatchaval Jiaravanon 4/7

13. Mr. Vichaow Rakphongphairoj 7/7

14. Mr. Umroong Sanphasitvong 7/7

15. Mr. Heinrich Heims 3/7

16. Mr. Andreas Klocke 7/7

17. Mr. Harald Link 5/7

18. 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 decisions affecting the Company, which entails major work and responsibilities.

All directors attend all meetings except in unavoidable circumstances. Directors

otherwise engaged in this way notify the Board of their absence in advance while

providing their comments on the major agenda items.

In addition, the Board of Directors supports seminars organized by the Thai Institute of

Directors Association (“IOD”). Some of the Directors have also been the Independent

Director who has the real independence and have not been the authorized signatory

binding the Company. All Directors are properly qualified and comply with the principles

stipulated by the Securities and Exchange Commission, and the Stock Exchange of

Thailand.

Election of Directors

The 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 significant prestige and experience required to fill the role. The

Committee’s deliberations are presented to the Board of Directors for initial

consideration. The Board of Directors then presents the relevant information, together

with the Compensation and Nominating Committee’s opinion, to the Shareholders’

Meeting ahead of any election.

Directors are appointed by shareholders by majority vote. All shareholders have the

rights to appoint directors. Each shareholder is entitled to one vote for each share held and

is entitled to participate in the voting for all directors, provided that they do not split their

votes among candidates.

B. The Committees of the Board of Directors

1) Audit Committee

The 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 Committee

3. 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 and regulations;

5. To review the disclosure of information of the Company to ensure the accuracy and

adequacy of said information in case that 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 annual report 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 member of the committee

in attendance at those meetings was as follows:

Name Attendance / Number of Meetings* (times)




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.

2) Independent Committee

The 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 Director

2. Mr. Joti Bhokavanij Independent Director

and Member of the Audit Committee

3. Mr. Andreas Klocke KfW-nominated Director



4. Mr. Supachai Chearavanont CP-nominated Director

5. Mr. Athueck Asvanund CP-nominated Director

In the case of any major shareholder having a conflict of interest, Directors nominated

by the said shareholder will abstain from the Independent Committee Meeting when

considering such a case.

3) Compensation and Nominating Committee

The Compensation and Nominating Committee is responsible for making

recommendation to the Board of Director regarding the compensation of directors and

CEO; and the nomination of directors of the Company. The Committee consists of the

following members:

1. Mr. Dhanin Chearavanont

2. Mr. Heinrich Heims

3. Mr. Soopakij Chearavanont

4. Mr. Umroong Sanphasitvong

In 2006, the Compensation and Nominating Committee held one meeting. The member

of the committee in attendance at that meetings was as follows:


1. Mr. Dhanin Chearavanont 0/12. Mr. Heinrich Heims 1/13. Mr. Soopakij Chearavanont 1/14. Mr. Umroong Sanphasitvong 1/1




4) Finance Committee

The 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 Taulananda

2. Mr. Chaleo Souvannakitti

3. Mr. Heinrich Heims (alternates being Mr. Andreas Klocke)

4. Mr. Umroong Sanphasitvong



In 2006, the Finance Committee held 6 meetings. The member of the committee in

attendance at those meetings was as follows:


1. Dr. Ajva Taulananda 5/6

2. Mr. Chaleo Souvannakitti 6/6


4. Mr. Umroong Sanphasitvong 4/6




5) Corporate Governance Committee

The 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-an

2. Mr. Vitthya Vejjajiva

3. Dr. Kosol Petchsuwan

4. Mr. Joti Bhokavanij

5. Mr. Andreas Klocke

6. Dr. Ajva Taulananda

In 2006, the Corporate Governance Committee held two meetings. The member of the committee in attendance at those meetings was as follows:


1. Mr. Narong Srisa-an 2/2





6. 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.



C. The Executive Officers

As of 31st December 2006, the executive officers of the Company are as follows:

Name Position

1. Mr. Supachai Chearavanont Director, President and Chief Executive Officer

2. Mr. Vichaow Rakphongphairoj Director, Managing Director and

Chief Operating Officer

3. Mr. Chatchaval Jiaravanon Director and Managing Director - Group

Investment

4. Mr. Athueck Asvanund Vice Chairman, Group General Counsel and

Acting Company Secretary

5. Mr. William Harris Chief Financial Officer

6. Mr. Thiti Nantapatsiri Managing Director - Home / Consumer Solution

& Highspeed Access

7. Mr. Adhiruth Thothaveesansuk Managing Director - Office / SME Solution &

Wireless Access

8. Mr. Songtham Phianpattanawit Managing Director - Corporate Solution,

Wholesales & Data

Note: The term “Executive Officers” refers to Directors, the President and persons

with managerial authority who are among the top four ranked individuals in

the Company, after the President, and all other persons who occupy a position

equivalent to a top four ranking.

All the Executive Officers’ qualifications have been prescribed by law and the Officers themselves are not forbidden individuals under the laws and pronouncements of the Securities and Exchange Commission and the Stock Exchange of Thailand.

Authority and Responsibility of the President

The 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 independent directors and/or the relevant Committee and/or

the Board of Directors, as the case may be, to approve said matter/transaction. In

addition, the President has no authority to approve any matter or transaction proposed

by the Company or its subsidiaries in which he or she may have a conflict of interest or

any other form of conflict. In such a case, the matter/transaction has to be approved by

the independent directors and/or the relevant Committee and/or the Board of Directors.



9.2 Remuneration of the Company’s Directors and Executive Officers

(1) Remuneration

(1.1) Remuneration of Directors

The 18 directors of the Company were remunerated Baht 32.4 million for the year 2006.

Remuneration

per person

(Baht/year)

Total

(Baht/year)

Group 1

- Chairman

(Mr. Dhanin Chearavanont)

- Independent Director who is also the Chairman of the Committee

(Mr. Vitthya Vejjajiva)

3,600,000

3,600,000

Total 7,200,000

Group 2

- Independent Directors who are also Committee members

(Mr. Narong Srisa-an, Dr. Kosol Petchsuwan and

Mr. Joti Bhokavanij)

2,400,000

Total 7,200,000

Group 3

- Vice Chairmen

(Mr. Sumet Jiaravanon, Dr. Ajva Taulananda,

Mr. Chaleo Souvannakitti and Mr. Athueck Asvanund)

1,800,000

Total 7,200,000

Group 4

- Directors

(Mr. Supachai Chearavanont, Mr. Soopakij Chearavanont,

Mr. Chatchaval Jiaravanon, Mr. Vichaow Rakphongphairoj,

Mr. Umroong Sanphasitvong, Mr. Heinrich Heims,

Mr. Andreas Klocke, Mr. Harald Link and Dr. Lee G. Lam)

1,200,000

Total 10,800,000

Grand Total 32,400,000



(1.2) Remuneration of Executive Officers

The 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 pay and Baht 4.44 million for provident fund.

(2) Other Compensation

Other 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





In addition, the Annual General Meeting of the Shareholders for the year 2006 approved

a project named ESOP 2006 and later on the Securities and Exchange Commission

(“SEC”) granted the approval of the issuance and offering of the warrant under this

project. The Company issues and offers the warrants on 31st January 2007.

The Company has disclosed the detail of said 5 ESOP Projects in “Capital Structure”

(Warrant and Obligation in stock issuance in the future)

Details of warrants allotted to Directors and Executive Officers under ESOP Plan Warrants under

ESOP 2005

Warrants under

ESOP 2004

Warrants under

ESOP 2003

Warrants under

ESOP 2002

Warrants under

ESOP 2000 Name

No. of

warrants

% of

project

No. of

warrants

% of

project

No. of

warrants

% of

project

No. of

warrants

% of

project

No. of

warrants

% of

project

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 - - - - - -



9.3 Corporate Governance Report

In 2006 the Company started to carry out its business according to the Principles of

Good Corporate Governance for Listed Companies 2006 issued by the Stock Exchange of

Thailand (SET). The first guideline consisted of 15 practices issued on March 2002, then

fine tuned and modified by the SET in line with the Organization for Economic Co-

operation and Development (OECD) Principles of Corporate Governance 2004 and World

Bank suggestions from its corporate governance project called Reports on the

Observance of Standards and Codes (CG-ROSC). True’s good corporate governance

practices are summarized as follows:

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. Narong Srisa-an, Mr. Vitthya Vejjajiva, Dr. Kosol

Petchsuwan, Mr. Joti Bhokavanij, Mr Andreas Klocke and Dr. Ajva Taulananda. Corporate

governance at management level is overseen by the CEO and other senior executives.

Section 1

Rights of Shareholders

1. 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 been amended to be in line with the Principles of Good Corporate Governance for Listed Companies 2006 issued by the 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 April 11, 2006 by taking into account of convenience of shareholders, the meeting was scheduled on a working day during working hours and held in Bangkok where transportation is 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 and regulations for the meeting and its voting processes.

4. This information is provided to shareholders in the notice of meeting in accordance with the legally required advance period. Information is explained in detail so a reader who has no background knowledge of the topic will still be able to easily



understand it. Since March 24, 2005, all information regarding shareholder meetings

has been posted on the Company’s website before notice of the meetings is sent

out, so that shareholders can study all information prior to receiving the notice.

5. The Company’s policy prohibits any action that could be considered to violate a

shareholder’s right to access information on the shareholder meeting. Shareholders

can make advance inquiries about information they do not understand or submit

advance questions to the Company’s Investor Relations Department 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-

charge refreshments and snacks for shareholders before and after meetings as well

as souvenirs.

The Company encourages shareholders’ participation and voting in meetings at no

charge. Any action 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 opportunity to ask any

questions they may not want to ask during the meeting.

Section 2

Equitable Treatment of Shareholders

1. 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 Audit Committee, who is an independent director, as

their proxy.

3. The Company allows minority shareholders to propose any issues to be added to the

meeting agenda as well as submitting nominations for directors before the 2007

AGM by using the form provided by the Company and sending it by registered mail

to the Company from December 1, 2006 to January 31, 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 by management and related persons. In addition,

the Company prohibits directors and senior management using inside information in

violation of their responsibilities to the Company, its shareholders and its strict

compliance policy.

Material information which has not yet been disclosed is kept confidential, apart from

disclosure to the 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 Securities and Exchange Commission (SEC) within

three days of the transaction’s execution, and provide a copy of this report to the

Company for its records and incorporation in its regular report to the Board of

Directors.

7. In 2006 there is no Board members or executives having a conflict of interest in

proposed Company transactions

8. 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 the Independent

Directors to be processed according to the internal procedure relating to related

party transactions, details of which have been stipulated by the Independent

Directors. If any related party transaction is deemed to be a connected transaction,

the said transaction must be approved by the Audit Committee, the Board of

Directors and/or Shareholders Meeting – as the case may be – according to the

Regulations of the Stock Exchange of Thailand.

The Company has also established an Independent Committee to take part in

monitoring highly significant connected transactions. This committee comprises

independent directors, creditor-nominated directors and directors representing major

shareholders. If any major shareholder has a conflict of interest, directors nominated

by this shareholder will abstain from the Independent Committee meeting to

consider the case.



Section 3

Role of Stakeholders

1. 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, the Company 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 receive performance assessments

Customers


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 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 Audit Committee. The Company provides opportunities for its employees to

address their concerns directly to this department or the Audit Committee.

3. The Company operates its business while taking into consideration environmental

and social matters and 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

with the development of youth and underprivileged children in Thai society. A

knowledge-based society offering a better quality of life is an important foundation

for ensuring Thailand’s future prosperity. The Company has established various

environmental projects and activities such as:

Mobile Phone Battery Disposal Project: The Company fully supports the

Mobile Phone Battery Disposal Project initiated by the Ministry of Natural

Resources and Environment to dispose of mobile phone batteries correctly and

safely. The Company joined the project by promoting the risk that 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.

Dropwire Reuse Project: A project reusing dropwire that is not in service and

has become “aerial garbage”.

Beautiful River by True: The Company’s fixed line team is working with Bang

Plat District’s Environmental Office to collect garbage in the Chao Phraya River.

Solar Energy Project: The Company is working with King Mongkut’s Institute

of Technology Ladkrabang to encourage the use of solar energy to tackle fuel

shortage problems and reduce environmental impacts. This includes offering high



speed Internet connections powered by solar cells and by using solar energy for

hi-tech home solutions.

Bangkok Surrounding Improvement Project: A joint venture between

Bangkok Metropolitan Administration and the Company to tidy up all fixed line

cabling along Bangkok’s main roads to commemorate the 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 Council to collect garbage on a three kilometer stretch of central

Pattaya beachfront.

Natural and Environmental Preservation for Youth: Activities to raise

youth awareness of natural and environmental preservation are being jointly

undertaken by the Company, Rangsit Nature Education 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 Siam Paragon to encourage the younger generation to

preserve nature and the environment.

Nature Classroom Project: This project takes education outside the traditional

classroom by helping students in schools under the management of the Bangkok

Metropolitan Administration’s Education Department to learn more about

preserving nature and the environment. The project’s activities include marine

tours 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, 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. So far this year we have held

seven of these forums.

The Company is also considering establishing an environmental and social policy and

submitting it to the Board of Directors in 2007.



Section 4 Disclosure and Transparency

1. 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 the SET 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

summary of financial results showing core business performance, comparative

balance sheets, investor news, etc.

2. The Company provides a summary of the Corporate Governance Policy approved by

its Board and corporate 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 financial report. 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, the total number of meetings and the number of meetings each

member attends, as well as the results of tasks performed during the year in the

annual report and in shareholder meeting notices, according to SET and the SEC

regulations.

5. The Company paid Directors remuneration in 2006 according to rates approved by

shareholders at the 2006 AGM, which are the same rates approved by the 1998 and

2002 AGMs and which have not changed for several years.

Remuneration of Directors is paid on a monthly basis as follows:

Chairman Baht 300,000 per month

Honorary Chairman Baht 200,000 per month

Vice Chairman Baht 150,000 per month

Director Baht 100,000 per month

Any Director being an employee of the Company shall receive the Director’s

remuneration in addition to his or her salary as an employee.



Independent Directors who hold a position on a Committee shall receive

remuneration as follows:

Independent Directors who is also the Chairman of a Committee Baht 300,000 per month

Independent Directors who is also member of a Committee Baht 200,000 per month

Remuneration 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 and responsibilities, 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, in its annual report and annual registration statement (Form 56-1).

8. The Company’s Investor Relations Department communicates with external parties

in a fair and professional manner.

Section 5

Responsibilities of the Board

1. 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 governance policy 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 annual registration 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 annual report and annual registration statements (Form 56-1).

Shareholders can download this information from the SET website at

www.set.or.th or from the Company website at www.truecorp.co.th.

1.5 Board policy specifies that directorships held in other companies by the

Company’s senior executives 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 the Chairman. The roles and responsibilities of the Chairman



are in accordance with the law. The roles and responsibilities 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 organize the Board’s activities, and monitoring compliance with

the Board’s resolutions. The Company Secretary also meets with counterparts

from other listed companies from time to time to discuss best practice.

2. Committees

2.1 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

recommendation to the Board of Director regarding the compensation of

directors and CEO; and the nomination of directors of the Company.

The Finance Committee is responsible for assisting the Board of Directors to

review and monitor the Company’s financial management.

The Corporate Governance Committee assists the Board of Directors to

establish and review the Company’s corporate governance policy as well as

making sure that the Company has a sound and appropriate corporate

governance practice.

The Independent Committee is responsible for reviewing and monitoring

Company transactions which may involve highly significant conflicts of interest.

2.2 So that the committees can perform their duties transparently, independently,

and at the same time effectively, their membership comprises independent

directors, creditor-nominated directors and non-executive directors.

3. Roles and Responsibilities of the Board

3.1 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 monitors the performance of

management to ensure their efficiency and effectiveness.

3.2 The Board sets and approves a written corporate governance policy for the

Company and reviews the policy and its compliance regularly, at least annually.



In 2006, the Board of Directors approved and implemented the new Corporate

Governance policy (which has been amended and proposed by the Corporate

Governance Committee) to be in line with the Principles of Good Corporate

Governance for Listed Companies 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 all directors, 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 follows clear guidelines on approving such transactions so that

they are conducted in the best interests of the Company and all shareholders.

The person who has an interest in the transaction does not participate in the

decision-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 Audit Committee 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 as maintaining internal auditing using a risk-based audit

approach. To manage operational risk the Company has established the BCP

Steering Committee to develop and maintain a business continuity plan. The

Company has also established a Crisis Management Team to support significant

business operations of the Company which may face a crisis, by implementing

and managing a crisis response. To manage financial risk, the Company has a

financial management policy to mitigate risks arising from fluctuations in

currency exchange rates. This policy includes entering into forward foreign

exchange contracts, negotiating payment terms for individual foreign currency

settlements, and negotiating with foreign suppliers to share foreign exchange

exposure, etc.



4. Board Meetings

4.1 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 Assessment

5.1 The Board of Directors will start its annual Board Self Assessment in 2007

6. Remuneration

6.1 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 and contributions of each director.

Members of the Board with greater responsibilities, such as independent

directors 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 the limits 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

each executive.

6.3 The Compensation and Nominating Committee appraises the performance of

the CEO annually to set his compensation. The basis of the appraisal is agreed

upon by the CEO ahead of the evaluation. The criteria are objective, including

financial performance, long-term strategic performance, career development

plan, etc. The results of the appraisal are then presented to the Board for

approval. The Chairman of the Board or a senior director communicates the

evaluation results to the CEO.

7. Board and Management Training

7.1 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 Company Secretary, etc. Training – either internal

or external – enables them to continuously improve their performances.

7.2 In 2006 the Company had no new Directors. However, the Company has a

policy stipulating that every time it appoints new directors, the administrator

has to provide all necessary documents and information on the nature of the

business and the operations of the Company to the new Directors.

9.4 Insider Trading Policy

The 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 the use of applicable laws to monitor and

prevent the personal use of confidential Company information by management and

related persons. In addition, the Company has a policy of strict compliance to its

requirement that Directors and senior management who have gained inside information

on the Company by virtue of their positions do not use that information in any way that

violates their responsibilities to the Company 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 senior

management must report purchases, sales, transfers and assignations of the securities

issued by the Company to the Securities and Exchange Commission (“SEC”) within three

days and provide a copy of this report to the Company 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 within

the required period. This will be deemed one of the material obligations which senior

management of the Company need to be aware of and need to meet. This gives

confidence to Directors and senior management that 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

provides shareholders, including general investors, with confidence in the Company’s

senior management.

9.5 Personnel

As of 31st December 2006, the total number of employees was as follows:

Work Group and Classification No. of Employees

Management 85

Service Area & Network Operation 2,055

Marketing & Sales 1,109

Information Technology 256

Customer Services 408

Finance & Accounting 224

Support 297

Total 4,434

Source : The Company

Remuneration for the Company’s Employees

Remuneration

Monthly Salary

Annual Performance Pay: between zero and 4 times the monthly salary,

subject to the Company’s performance and financial status.

Retirement: the employee must be aged 60 years or can take early

retirement with agreement between 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 of wages, salaries, Social security cost, provident fund and other

benefit (For details please see note 31 to the financial statements)



Other Compensation & Benefits

- Health Plans and Employee Welfare

In-house clinic

Annual Medical Check-up

New Employees’ Medical Check-up

Group Health Insurance

Group Accident Insurance

Group life Insurance

Social Security Fund

Provident Fund

- Annual Leave

The employee shall be entitled to paid annual leave of 10, 12 or 15

working days per calendar year dependent on the seniority of their

position or their number of years of service as follows:

o Assistant Director or equivalent level and upwards: 15 working days

o Below 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 year otherwise 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 for annual leave, unused annual leave can be accumulated

and carried over to the subsequent year, 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 to take the accumulated days within the first quarter

of the subsequent year.



Employee Training and Development

Employee Training and Development Policy

In 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 effectively and improve their competencies with a view to

career advancement. Presently, the Company provides employees with an ongoing

series of training and development programs. The Core Competency program includes

courses such as Effective Communication, Planning to Increase Work Efficiency and

Effective Self Development, etc. The Functional Competency Program includes courses

such as Accounting Standard, Project Management, Contract Management and Sales

Planning and Management, etc. The Core Business Program includes courses such as

Datacommunication and Networking, True Products and Services and Cisco Certified

Network Associate (CCNA), Microsoft Server, etc.


TRUETM: Internal Controls 111

1100.. IINNTTEERRNNAALL CCOONNTTRROOLLSS

After an assessment of the Company’s internal controls with the Audit Committee, the Board of Directors has an opinion that the Company’s internal controls are adequate and suitable. Moreover, the external auditor has an opinion that they/it did not encounter any matter involving internal controls and its operation which are considered to be material weaknesses that could have a material effect on the financial statements. The Board also emphasized the development of the Company’s Corporate Governance in order to improve the internal controls within the Company on a continuing basis.


TRUETN: Connected Transactions 112

1111.. CCOONNNNEECCTTEEDD TTRRAANNSSAACCTTIIOONNSS

During 2006, the Group carried out the transactions with subsidiaries, associates, joint ventures and related companies as disclosed in the financial statements for the year ended 31 December 2006 (Note 11).

The significant connected transactions of the Company and subsidiaries that carried out with associate and related companies are as follows:

i) Sales and purchases of goods and services:

Details of transactions 31 December

2006 (Baht'000)

Relationship Rationale and necessity

1. Sales of goods

1.1 Bangkok Inter Teletech Group of companies (BITCO)

Sales of mobile handset and mobile accessories to Charoen Pokphand Group of companies (CPG)

23,988 CPG is a major shareholder of the Company. BITCO is the cellular telephone operator which the Company directly holds 78.26% and indirectly holds 15.10% of its equity interest. These companies are related through directorships.

The transactions arosed in ordinary course of business that BITCO proposed to the third party.

1.2 Company

Sales of Lan Network to Charoen Pokphand Group of companies (CPG)

5,957 CPG is a major shareholder of the Company.

The transactions arosed in ordinary course of business that the Company proposed to the third party.

1.3 Company

Sales of WIFI service and modem toAsia Infonet Co., Ltd. (AI)

101 The Company indirectly holds 65.00% in AI’s equity interest and related through directorships, i.e.Mr. Chatchaval Jiaravanon and Mr. Ajva Taulananda.

The transactions arosed in ordinary course of businessthat the Company proposed to the third party.

1.4 Company and subsidiaries

Sales among related parties with the size of which not exceeding Baht 1 million. True Internet Data Center Co., Ltd. (TIDC)

6 The Company indirectly holds 70.00% in TIDC's equity interest and related through directorships.

The transactions arosed in ordinary course of business, net of discount rate.


Sales among related parties with the size of which not exceeding Baht 1 million. Charoen Pokphand Group of companies (CPG)

94 CPG is a major shareholder of the Company and related through directorships.


Total Sales of goods 30,146




2006 (Baht'000)


2. Sales of services

2.1 True Multimedia Co., Ltd. (TM)

Digital Data Network services to Asia Infonet Co., Ltd. (AI)

14,708 The Company indirectly holds 91.08% in TM’s equity interest and 65.00% in AI’s equity interest. These companies are related through directorship, i.e. Mr. Chatchaval Jiaravanon.

The transactions arosed in ordinary course of business that TM proposed to the third party.


Digital Data Network services toKSC Commercial Internet Co., Ltd. (KSC)

7,589 The Company indirectly holds 91.08% in TM’s equity interest and 37.83% in KSC’s equity interest. These companies are related through directorship, i.e.Mr. Supachai Chearavanont and Mr. Athueck Asvanund.



Digital Data Network services toCharoen Pokphand Group of companies (CPG)

28,380 CPG is a major shareholder of the Company. The Company indirectly holds 91.08% in TM's equity interest. These companies are related through directorships.


2.4 True Internet Co., Ltd. (TI)

Sales of internet service to Charoen Pokphand Group of companies (CPG)

8,808 CPG is a major shareholder of the Company. The Company directly holds 99.99% in TI’s equity interest. These companies are related through directorships.

The transactions arosed in ordinary course of business that TI proposed to the third party.


Sales of internet service toKSC Commercial Internet Co., Ltd. (KSC)

11,448 The Company directly holds 99.99% in TI’s equity interest and indirectly holds 37.83% in KSC’s equity interest. These companies are related through directorships, i.e.Mr. Supachai Chearavanont.

The transactions arosed in ordinary course of business that TI proposed to the third party.

2.6 True Properties Co., Ltd. (TP)

Office rental and related services toCharoen Pokphand Group of companies (CPG)

9,149 CPG is a major shareholder of the Company. The Company indirectly holds 99.99% in TP's equity interest. These companies are related through directorships.

The transactions arosed in ordinary course of business at the rate of Baht 455 per square metre. The maturity are normally in 3 years and are allowed to be renewed.




2006 (Baht'000)



Office rental and related services toNC True Co., Ltd.(NC True)

6,145 The Company holds 40.00% in NC True’s equity interest and indirectly holds 99.99% in TP’s equity interest.

The transactions arosed in ordinary course of business at the rate of Baht 455 per square metre. The maturity are normally in one year and are allowed to be renewed.


Office rental and related services toTrue Internet Data Center Co., Ltd. (TIDC)

3,279 The Company indirectly holds 99.99% in TP’s equity interest and 70.00% in TIDC’s equity interest. These companies are related through directorships, i.e. Mr. Chatchaval Jiaravanon.

The transactions arosed in ordinary course of business at the rate of Baht 455 per square metre. The maturity are normally in one year and are allowed to be renewed.

2.9 True Leasing Co., Ltd. (TLS)

Car rental and related services toCharoen Pokphand Group of companies (CPG)

607,525 CPG is a major shareholder of the Company. The Company directly holds 99.99% in TLS's equity interest.

The transactions arosed in ordinary course of businessat the rate of Baht 15,000 per unit per month. The maturity are normally in 3 years basis.

2.10 True Internet Data Center Co., Ltd. (TIDC)

Rental server to NC True Co., Ltd.(NC True)

3,069 The Company holds 40.00% in NC True’s equity interest and indirectly holds 70.00% in TIDC’s equity interest.

The transactions arosed in ordinary course of business at the rate of Baht 54,000 per unit per month. The maturity are normally in 1 years basis.

2.11 True Visions Group of companies (True Visions)

Cable TV services to Charoen Pokphand Group of companies (CPG)

17,470 CPG is a major shareholder of the Company. The Company indirectly holds 91.79% in True Visions’s equity interest.

The transactions arosed in ordinary course of business that True Visions proposed to the third party.


Sales of scratch card to Charoen Pokphand Group of companies (CPG)

6,674,047 Same as 1.1 The transactions arosed in ordinary course of business that BITCO proposed to the third party.

2.13 Company

Consult to Asia Infonet Co., Ltd. (AI)

2,001 Same as 1.3 The transactions arosed in ordinary course of businessthat the Company proposed to the third party.




2006 (Baht'000)


2.14 Company

Engineering and management service in associate with DDN to NEC Corporation (Thailand) Co., Ltd. (NEC)

243 The Company indirectly holds 9.62% in NEC's equity interest and related through directorship by Mr. Chatchaval Jiaravanon.


2.15 Company

Coin distribution services and service other to

Charoen Pokphand Group of companies (CPG)

2,399 Same as 1.2 The transactions arosed in ordinary course of business, net of discount rate.


Selling among related parties with the size of which not exceeding Baht 1 million. Asia Infonet Co., Ltd. (AI)

1,102 The Company indirectly holds 65.00% in AI’s equity interest and related through directorships.



Selling among related parties with the size of which not exceeding Baht 1 million. True Internet Data Center Co., Ltd. (TIDC)

535 Same as 1.4 The transactions arosed in ordinary course of business, net of discount rate.


Selling among related parties with the size of which not exceeding Baht 1 million. NC True Co., Ltd.(NC True)

538 The Company holds 40.00% in NC True’s equity interest. These companies are related through directorships.



Selling among related parties with the size of which not exceeding Baht 1 million. 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 services fromCharoen Pokphand Group of companies (CPG)

4,063 CPG is an investor in major shareholder of the Company. The Company indirectly holds 65.00% in AI's equity interest. These companies are related through directorships

The transactions arosed in ordinary course of businessat the rate of Baht 358,750.55 per month. The maturity are normally in the year and are allowed to be renewed.




2006 (Baht'000)


3.2 Asia Wireless Communication Co., Ltd. (AWC)

Repair and maintenance services fromNEC Corporation (Thailand) Co., Ltd. (NEC)

16,110 The Company indirectly holds 9.62% in NEC's equity interest and 99.99% in AWC’s equity interest.

The transactions arosed in ordinary course of business.



6,307 Same as 2.4 The transactions arosed in ordinary course of business at rate of Baht 149,688 per month. The maturity are normally in the year and are allowed to be renewed.


Corporate internet services fromAsia Infonet Co., Ltd. (AI)

318,123 The Company directly holds 99.99% in TI's equity interest and indirectly holds 65.00% in AI’s equity interest. These companies are related through directorships.



Cost of revenue sharing fromTrue Internet Data Center Co., Ltd. (TIDC)

7,667 The Company directly holds 99.99% in TI's equity interest and indirectly holds 70.00% in TIDC’s equity interest. These companies are related through directorships, i.e. Mr. Noppadol Dej-Udom.



Rental network from KSC Commercial Internet Co., Ltd. (KSC)

2,034 Same as 2.5 The transactions arosed in ordinary course of business.

3.7 True Digital Entertainment Co., Ltd. (TDE)

Office rental and related services from Charoen Pokphand Group of companies (CPG)

5,034 CPG is a major shareholder of the Company. The Company directly holds 88.39% and indirectly holds 11.61% in TDE’s equity interest. These companies are related through directorships.



Rental of internet server fromTrue Internet Data Center Co., Ltd. (TIDC)

1,720 The Company indirectly holds 70.00% in TIDC’s equity interest and directly holds 88.39% and indirectly 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 services from Charoen Pokphand Group of companies (CPG)

9,288 CPG is a major shareholder of the Company. The Company indirectly holds 99.99% in TT’s equity interest. These companies are related through directorships.





2006 (Baht'000)


3.10 Wire and Wireless Co., Ltd. (WW)

Insurance from Charoen Pokphand Group of companies (CPG)

2,670 CPG is a major shareholder of the Company. The Company directly holds 87.50% in WW’s equity interest. These companies are related through directorships.


3.11 True Money Co., Ltd. (TMN)

Commission from Charoen Pokphand Group of companies (CPG)

7,768 CPG is a major shareholder of the Company. The Company directly hold 49.00% and indirectly holds 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 Charoen Pokphand Group of companies (CPG)




461,651 Same as 1.1 The transactions arosed in ordinary course of business at the rate of Baht 816,988 per month. The maturity are normally in 3 year and are allowed to renewed.

3.14 Company

Rental of internet server from True Internet Data Center Co., Ltd. (TIDC)

8,621 The Company indirectly holds 70.00% in TIDC's equity interest and related through directorships, i.e. Mr. Chatchaval Jiaravanon.

The transactions arosed in ordinary course of business at the rate of 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 services fromNEC Corporation (Thailand) Co., Ltd. (NEC)


3.16 Company Commission from Charoen Pokphand Group of companies (CPG)

22,072 Same as 1.2 The transactions arosed in ordinary course of business at rate 5-10% of connected revenues .




2006 (Baht'000)


3.17 Company


34,014 Same as 1.2 The transactions arosed in ordinary course of business at the rate of Baht 200-220 per square metre per month for rental and Baht 220-520 per square metre per month for service. The maturity are normally in the year and are allowed to be renewed.

3.18 Company

Development purchasing system fromCharoen Pokphand Group of companies (CPG)






Selling among related parties with the size of which not exceeding Baht 1 million. True Internet Data Center Co., Ltd. (TIDC)



Selling among related parties with the size of which not exceeding Baht 1 million. NEC Corporation (Thailand) Co., Ltd. (NEC)

25 The Company indirectly holds 9.62% in NEC's equity interest and related through directorship.





Total purchase of services 959,483




2006 (Baht'000)


4. Purchase of goods


Purchase office supply fromAsia Infornet Co., Ltd. (AI)



Computer software fromCharoen Pokphand Group of companies (CPG)



Purchase office supply fromTrue Internet Data Center Co., Ltd. (TIDC)





4.5 True Lifestyle Retail Co., Ltd. (TLR)


5,067 CPG is a major shareholder of the Company. The Company indirectly holds 99.99 TLR’s equity interest. These companies are related through directorships.






Purchase of good from NC True Co., Ltd.(NC TRUE)

5,839 The Company holds 40.00% in NC True’s equity interest. BITCO is the cellular telephone operator which the Company directly holds 78.26% and indirectly holds 15.10% of its equity interest. These companies are related through directorships.





4.9 Company

Purchase network equipment fromNEC Corporation (Thailand) Co., Ltd. (NEC)





2006 (Baht'000)


4.10 Company




Selling among related parties with the size of which not exceeding Baht 1 million. NC True Co., Ltd.(NC True)



Selling among related parties with the size of which not exceeding Baht 1 million. KSC Commercial Internet Co., Ltd. (KSC)

11 The Company indirectly holds 37.83% in KSC’s equity interest. These companies are related through directorships.








Total purchase of goods 101,809

ii) Outstanding balances arising from sales of goods and services:

Joint ventures, associates and related companies AmountBaht’000

Asia Infonet Co., Ltd. 14,973 True Internet Data Center Co., Ltd. 827 KSC Commercial Internet Co., Ltd. 57,100 NC True Co., Ltd. 6,024 NEC Corporation (Thailand) Co., Ltd. 24 CP Group of companies 850,867 Total 929,815



iii) Outstanding balances arising from purchases of goods and services:

Joint ventures, associates and related companies AmountBaht’000

Asia Infonet Co., Ltd. 26,585 True Internet Data Center Co., Ltd. 5,205 KSC Commercial Internet Co., Ltd. 7,214 NC True Co., Ltd. 1,045 CP Group of companies 50,653 NEC Corporation (Thailand) Co., Ltd. 3,622 Total 94,324

iv) Loans to related party

Outstanding balance and movement of loans to a related party:

Related companies AmountBaht’000

KSC Commercial Internet Co., Ltd. 25,880 True 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 AmountBaht’000

Kreditanstalt fuer 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 various categories of assets. The first repayment will be due in September 2006 and the final maturity date will be on 31 December 2011.

The related interest expenses were Baht 423.14 million for the year ended 31 December 2006.



vi) Commitments

The 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 financial support 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 normal operations or debt repayments pursuant to the terms of the financing documents with its lenders, the Company will provide 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 certain conditions as stipulated in the agreements. The sponsor support funds must be injected into the subsidiary in the form as specified in the agreements.

Measures and Procedures for Approving the Entering into of Connected

Transactions

The 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 the Stock Exchange of Thailand

(“SET”) i.e. related party transactions must be approved by the Independent Directors

and processed according to established internal procedures for related party

transactions, details of which have been stipulated by the Independent Directors. If any

related party transaction is deemed to be a connected transaction, the said transaction

must be approved by the Audit Committee, the Board of Directors and/or the

Shareholders’ Meeting as the case may be, according to the regulations of the Stock

Exchange of Thailand. Moreover, the Company must comply with the terms and

conditions of the Shareholders’ Agreement executed with Kreditanstalt fÜr Wiederaufbau

dated 22nd December 1999 which specifies that the Company must disclose if its major

shareholders or affiliates enter into any connected transactions.



Policy for Future Connected Transactions

In 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 undertaking a comparative study of the

connected transactions guidelines of various foreign institutions to enhance transparency

and create parallel understanding with foreign analysts and investors. With regard to

future connected transactions, the Company anticipates that there will be connected

transactions in the ordinary course of business of the Company with its affiliates and that

the Company shall proceed with such transactions in a transparent manner pursuant to

the good corporate governance policy of the Company as well as all relevant regulations.


TRUETO: Financial Status and Performance 124

1122.. FFIINNAANNCCIIAALL SSTTAATTUUSS AANNDD PPEERRFFOORRMMAANNCCEE

12.1 Company’s Auditor and Significant Accounting Policies

The auditors appointed by the Board of Directors to be the Company’s auditor in order to perform the audit of the Company and consolidated financial statements during the past three years were as follows:

Financial statements for the year ended 31 December 2006

: PricewaterhouseCoopers ABAS Limited





According to the three (3) years’ Reports of Certified Public Accountant, the Company’s auditors had expressed his/her unqualified opinions on the financial statements as follows:

The Year Ended 31 December 2006 The auditor had expressed his/her unqualified opinion that the consolidated and Company financial statements present fairly, in all material respects, the consolidated and Company financial position as at 31 December 2006 and results of operations and cash flows for the year then ended in accordance with generally accepted accounting principles.





12.2 Summary of Financial Statements

12.312.412.512.612.712.812.912.1012.1112.1212.1312.14

True Corporation Public Company LimitedConsolidated Balance SheetAs at 31 December 2006, 2005 and 2004

(Unit: Thousand Baht)(Restated)

31 December Common 31 December Common 31 December Common2006 Size (%) 2005 Size (%) 2004 Size (%)

AssetsCurrent assetsCash and cash equivalents 3,923,739 3.19 8,274,065 7.05 4,469,146 4.36 Restricted cash 2,212,303 1.80 9,141,281 7.79 1,739,248 1.70 Short-term investments 314,628 0.26 159,367 0.14 1,357,653 1.32 Trade accounts receivable, net 6,561,502 5.34 6,635,707 5.65 6,264,259 6.10 Loan to related parties 37,880 0.03 - - - - Inventories, net 1,046,715 0.85 895,201 0.76 984,225 0.96 Income tax deducted at source 1,447,066 1.18 1,311,998 1.12 861,209 0.84 Claimable value added tax 672,565 0.55 387,371 0.33 2,569,866 2.50 Other current assets 2,087,863 1.70 1,881,657 1.60 1,557,751 1.52 Total current assets 18,304,261 14.90 28,686,647 24.44 19,803,357 19.30

Non-current assetsInvestments:

- Investments in subsidiaries, joint ventures and associates 15,670 0.01 4,693,031 4.00 3,645,417 3.56 - Other long-term investments 166,845 0.13 94,682 0.08 97,071 0.09 - Investment property 57,674 0.05 53,874 0.05 53,874 0.05

Property, plant and equipment, net 77,915,758 63.37 71,975,162 61.32 75,674,473 73.74Deferred income tax assets 9,958,064 8.10 8,938,577 7.61 - - Other assets:

- Intangible assets, net 16,100,144 13.09 2,529,379 2.15 2,947,677 2.87 - Other non-current assets 437,876 0.35 412,374 0.35 403,311 0.39

Total non-current assets 104,652,031 85.10 88,697,079 75.56 82,821,823 80.70

Total assets 122,956,292 100.00 117,383,726 100.00 102,625,180 100.00

Liabilities and shareholders' equityCurrent liabilitiesShort-term borrowings 776,461 0.63 13,120,072 11.17 217,658 0.21 Trade accounts payable 11,774,864 9.58 4,917,461 4.19 4,108,555 4.00 Current portion of long-term borrowings 8,837,648 7.19 7,153,322 6.09 4,449,677 4.34 Unearned income 2,608,346 2.12 1,130,165 0.96 1,353,122 1.32 Accrued expenses 5,723,724 4.65 3,918,407 3.34 3,902,939 3.81 Other current liabilities 2,511,892 2.04 1,955,123 1.66 2,281,706 2.22 Total current liabilities 32,232,935 26.21 32,194,550 27.41 16,313,657 15.90

Non-current liabilitiesLong-term borrowings 80,107,905 65.15 74,984,280 63.87 79,970,768 77.92Deferred income tax liabilities 2,188,517 1.78 1,990,725 1.70 - - Long-term trade account payable 184,400 0.15 - - 1,246,350 1.21 Other non-current liabilities 842,378 0.69 302,312 0.26 356,853 0.35 Total non-current liabilities 83,323,200 67.77 77,277,317 65.83 81,573,971 79.48

Total liabilities 115,556,135 93.98 109,471,867 93.24 97,887,628 95.38

Shareholders' equityShare capital

Authorised share capital Preferred shares 6,993,668 6,994,055 6,994,655 Common shares 40,141,056 39,780,160 39,588,738

Issued and fully paid-up share capital Preferred shares 6,993,668 5.69 6,994,055 5.98 6,994,655 6.82 Common shares 38,021,609 30.93 33,953,398 29.01 33,930,617 33.09

Premium on share capital Common shares 11,432,046 9.30 11,432,046 9.77 11,432,046 11.15

Discount on share capital Preferred shares (1,492,847) (1.21) (1,492,936) (1.28) (1,493,070) (1.46) Common shares (3,980,592) (3.24) (3,271,974) (2.80) (3,260,734) (3.18)

Foreign currency translation adjustment 104,344 0.08 104,344 0.09 104,344 0.10 Unrealised gain (loss) on changes of fair value on available-for-sale securities (415) - (415) - 24,623 0.02 Retained earnings (deficit) Appropriated legal reserve 34,881 0.03 34,881 0.03 34,881 0.03 Deficit (44,244,802) (35.99) (40,064,770) (34.23) (43,400,745) (42.32)Total parent's shareholders'equity 6,867,892 5.59 7,688,629 6.57 4,366,617 4.25 Minority interest in subsidiaries 532,265 0.43 223,230 0.19 370,935 0.37 Total shareholders’ equity 7,400,157 6.02 7,911,859 6.76 4,737,552 4.62

Total liabilities and shareholders' equity 122,956,292 100.00 117,383,726 100.00 102,625,180 100.00



True Corporation Public Company LimitedConsolidated Statements of Income For the year ended 31 December 2006, 2005 and 2004


31 December Common 31 December Common 31 December Common2006 Size (%) 2005 Size (%) 2004 Size (%)

RevenuesRevenues from telephone and other services 50,445,414 97.27 41,173,319 94.02 30,648,684 92.85Revenues from product sales 1,416,518 2.73 2,617,360 5.98 2,361,556 7.15Total revenues 51,861,932 100.00 43,790,679 100.00 33,010,240 #####

CostsCost of providing services 36,886,949 71.13 29,172,275 66.62 22,094,271 66.93Cost of sales 1,344,711 2.59 2,399,789 5.48 2,039,605 6.18Total costs 38,231,660 73.72 31,572,064 72.10 24,133,876 73.11

Gross profit 13,630,272 26.28 12,218,615 27.90 8,876,364 26.89Selling and administrative expenses 13,955,673 26.91 11,275,714 25.75 7,959,285 24.11Profit (loss) from sales and providing services (325,401) (0.63) 942,901 2.15 917,079 2.78Other revenues 694,815 1.34 396,743 0.91 633,058 1.92Other expenses (409,553) (0.79) (2,183,536) (4.99) (179,372) (0.54)Operating results (40,139) (0.08) (843,892) (1.93) 1,370,765 4.16Share of results in subsidiaries, joint ventures and associates (25,562) (0.05) 271,898 0.62 338,137 1.02Other non-operating income - - 370,238 0.85 156,695 0.47Profit (loss) before interest and income tax (65,701) (0.13) (201,756) (0.46) 1,865,597 5.65Interest income 171,497 0.33 103,918 0.24 41,251 0.12Interest expense (6,306,217) (12.16) (4,785,369) (10.93) (4,212,697) (12.76)Foreign exchange gain (loss) 1,903,007 3.67 (146,016) (0.33) 255,222 0.77Loss before income tax (4,297,414) (8.29) (5,029,223) (11.48) (2,050,627) (6.22)Income tax 250,986 0.48 834,155 1.90 (87,521) (0.27)Loss before extraordinary item (4,046,428) (7.81) (4,195,068) (9.58) (2,138,148) (6.49)Extraordinary item Gain from debt restructuring - - 801,001 1.83 2,726,305 8.26Profit (loss) before minority interest (4,046,428) (7.81) (3,394,067) (7.75) 588,157 1.77Profit (loss) attributable to minority interest (133,604) (0.26) 131,062 0.30 16,756 0.05Net profit (loss) for the year (4,180,032) (8.07) (3,263,005) (7.45) 604,913 1.82

Basic and diluted loss per shareLoss from ordinary activities (1.36) (1.41) (0.93) Extraordinary item Gain from debt restructuring - 0.24 0.90 Net loss for the year (1.36) (1.17) (0.03)



True Corporation Public Company LimitedConsolidated Statements of Cash Flow

For the year ended 31 December 2006, 2005 and 2004


31 December 31 December 31 December2006 2005 2004

Cash flows from operating activitiesProfit (loss) before minority interest (4,046,428) (3,394,067) 588,157 Add : Interest expense 6,306,217 4,785,369 4,212,697

Income tax (250,986) (834,155) 87,522 Profit before interest and income tax 2,008,803 557,147 4,888,376 Adjustments for:Depreciation and amortisation 18,092,136 15,020,511 12,247,349 Gain on disposals of property, plant and equipment (149,642) (186,842) (73,030) Doubtful accounts 591,538 923,460 558,421 Impairment charge of fixed assets 19,223 2,047,972 8,330 Gain from termination of lease obligation (235,614) - - Inventories written down - - 26,454 Other operating assets and liabilities written-off 1,458 63,787 22,891 Gain from sale of available-for-sale securities - (16,857) - Gain from sales of investment in other company - (961) - Unrealised gain on foreign exchange (1,852,769) (3,883) (566,826) Gain from debt restructuring - (801,001) (2,726,305) Gain on repayment of borrowings - (370,239) (156,695) Gain from forgiveness - - (165,044) Share of results in subsidiaries, joint ventures and associates 25,562 (271,898) (338,137) Changes in operating assets and liabilities

- Trade accounts receivable (161,360) (1,322,123) (851,859) - Short-term investment-trading securities 50,479 347,515 (200,856) - Inventories (128,443) (437,215) (469,247) - Other current assets (145,669) 2,137,961 1,030,723 - Other non-current assets (22,949) (22,228) 200,757 - Trade accounts payable 1,137,657 125,470 (1,100,736) - Accrued expenses and other current liabilities 857,586 (281,502) 1,353,217 - Other non-current liabilities 101,951 (25,502) (815,356)

Cash generated from operations 20,189,947 17,483,572 12,872,427 Less: Interest paid (6,253,827) (5,137,565) (4,758,224)

Income tax paid (1,008,364) (741,890) (732,831) Net cash from operating activities 12,927,756 11,604,117 7,381,372

Cash flows from investing activitiesWithdrawal (deposit) in restricted cash 6,928,977 (7,402,032) 81,037 Withdrawal (deposit) in short-term investment-time deposit (205,837) 816,353 2,401,190 Loans made to subsidiaries and joint venture (12,000) - - Acquisition of subsidiaries and joint venture, net of cash acquired (6,632,376) - - Acquisition of intangible assets (1,255,052) (101,622) (163,924) Acquisition of property, plant and equipment (9,450,121) (10,269,233) (3,962,576) Acquisition of subsidiaries, net of cash acquired - - 613,689 Additional investments in other company (72,163) - (21,500) Additional investments in subsidiaries and associate - (514,063) (64,005) Additional investment property (3,800) - - Proceeds from disposals of available-for-sale securities - 26,277 - Proceeds from disposals of investment in other company - 1,250 - Proceeds from disposals of property, plant and equipment and intangible assets 520,422 537,738 208,665 Net cash used in investing activities (10,181,950) (16,905,332) (907,424)

Cash flows from financing activitiesProceeds (repayments) from short-term borrowings 2,686,832 13,040,490 (548,263) Issue of common shares 3,359,296 11,075 2,663,450 Proceeds from borrowings, net of cash paid for debt issuance cost 27,646,006 2,029,084 10,059,584 Repayments on short-term borrowings (15,292,034) (100,898) - Proceeds from minority in share call up by a subsidiary - - 15,300 Repayments on long-term trade accounts payable (143,624) (585,662) (4,078,754) Repayments on borrowings (25,304,849) (5,234,014) (12,931,988) Net cash (used in) received from financing activities (7,048,373) 9,160,075 (4,820,671)

Net (decrease) increase in cash and cash equivalents (4,302,566) 3,858,859 1,653,277 Opening balance 8,274,065 4,469,146 2,815,869 Effects of exchange rate changes (47,761) (53,940) -

Closing balance 3,923,738 8,274,065 4,469,146



12.3 Financial Ratios



12.4 Management’s Discussion and Analysis

OVERVIEWThe year 2006 was marked by the successful integration of pay-TV operator TrueVisions (formerly known as UBC) into True Group and the implementation of our convergence lifestyle strategy. True started to bundle Group products and services across its voice, data and video platforms which led to record subscriber growth, especially at True Move and TrueVisions.

The integration of TrueVisions to the Group also allowed us to greatly increase the range and value of our offerings to customers. Total subscribers for True Group increased to more than 11 million, and are expected to grow significantly in FY07.

True Group also made significant progress in creating key vehicles for realizing its vision of becoming a convergence lifestyle leader, establishing True Money, a digital commerce service, and TrueLife, which provides content and access for the Group’s businesses.

True Money posted impressive growth in its first full year, reaching around 850,000 subscribers by year-end 2006. TrueLife launched many bundled packages and contents, achieving 300,000 subscribers for its Trueworld.net portal. TrueLife’s success was highlighted by the casual online game Special Force, which had 1.5 million registered subscribers in just 4 months after its official launch. Meanwhile, TrueLife shops showcased all True products and services and raised customer awareness of the True Brand.

True Group continued its strong growth in 2006. Consolidated service revenue increased 21.7 percent in full year 2006 to Baht 50.4 billion, due to the full consolidation of TrueVisions, and strong contributions from True Move and Consumer Broadband. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) was 7.8 percent higher at Baht 16.9 billion, due to the contribution of TrueVisions.

True Move posted record subscriber growth for the year of 3.1 million, gaining almost 32 percent of total net adds to reach 7.6 mn subscribers – a market share of 19.3 percent. True Move service revenue for FY 2006 was 13.9 percent higher at Baht 22.3 billion although higher costs related to network expansion resulted in a 0.5 percent decline in EBITDA to Baht 5.1 billion.

True Move also entered into interconnection agreements with other mobile operators. These should encourage a fairer market environment and more sensible pricing of mobile services.

Consumer Broadband growth for FY 2006 accelerated with revenue approximately 50 percent higher at Baht 3.3 billion and subscriber numbers up 47 percent to 442,728. Continued growth in overall Internet and other non-voice revenue helped to partially offset the ongoing decline in True’s fixed-line voice revenue. Overall True Online service revenue increased 4.4 percent to Baht 24.0 billion. EBITDA, however, decreased 8.1 percent to Baht 9.8 billion due mainly to increased costs related to Broadband network expansion.

During the year, the National Telecommunications Commission (NTC) granted True an international Internet gateway license, which has allowed True to offer better value high-speed packages to its Broadband customers.

TrueVisions posted service revenue of Baht 8.3 billion and EBITDA of Baht 2.1 billion for FY 2006, lifting subscriber numbers by 30% to 629,269, including TrueVisions-True Move bundled packages. Much of this gain was due to the successful implementation of TrueVisions’ mass market strategy – a key rationale for True’s acquisition of the business – which greatly increased household penetration by other True Group products and services, as well as expanding the overall pay-TV business.

True’s consolidated loss from ongoing operations increased to Baht 6.0 billion (compared to a Baht 2.9 billion loss in FY 2005) due mainly to increased costs relating to the TrueVisions acquisition (Baht 1.7 billion) and increased network operating expenses due to network expansion at True Move and Consumer



Broadband (included in True Online). True’s consolidated net loss for FY 2006 was Baht 4.2 billion (compared to a net loss of Baht 3.3 billion in FY 2005) after non-recurring items.

During the year True adopted an accounting policy on deferred taxes that increased shareholders’ equity at YE 2006 to Baht 7.4 billion. True’s balance sheet was also strengthened by approximately Baht 8.0 billion of debt repayment. In addition, True completed its long-term financing of the TrueVisions acquisition and made a Baht 3.4 billion equity placement, while True Move completed a USD 465 million international bond issue.

True remains committed to deleveraging its balance sheet, reflected by a ratio of consolidated net debt to EBITDA of 4.6 times for FY 2006, compared with 4.8 times in FY 2005 and 6.5 times four years ago.

True Group was also rated as Thailand’s most innovative company in the way it responds to its customers by readers of The Wall Street Journal Asia. The Group plans to build on this success in the years ahead.

Looking Forward

True Group enters 2007 with strong momentum at its True Move, TrueVisions and Consumer Broadband businesses as the benefits of its convergence lifestyle strategy become apparent.

True Move will continue to target one-third of the market net additional subscribers and an overall market share of more than 20 percent. True Move’s financial results are expected to improve with the likelihood of less intense price competition, in large part due to the introduction of the interconnection regime for mobile operators.

Consumer Broadband will further drive True Online’s performance. Our Internet gateway business will boost market penetration and reduce our costs. In addition, the International Direct Dialing (IDD) business will be an additional source of income for True Online after the NTC granted True an IDD license in early 2007.

TrueVisions’ mass market promotions will continue with key content such as Academy Fantasia creating new convergence opportunities with the rest of the Group.

New partnerships will boost True Money’s offerings and we expect more and more True Move subscribers to use the service. TrueLife will add further rich content to be used by the whole Group and launch more bundled packages.

These five businesses will work together, wherever possible, in 2007 to deliver greater value for our customers as part of our convergence lifestyle strategy.

This strategy should also ensure True’s long-term success. Our increasing ability to bundle different True Group products and services across our voice, data and video platforms will differentiate us from our competitors, reduce the need for us to compete on price alone and help us obtain greater market share and lower churn rates.

CONSOLIDATED RESULTS OF OPERATIONS

The results of operations are discussed on a normalized basis without non-recurring items, which are disclosed in the consolidated profit and loss statement on an adjusted basis.

In Q4, 2006, True adopted an accounting policy for deferred income taxes to give an accurate reflection of the future tax consequences of assets and liabilities. The comparative consolidated financial statements have been restated accordingly.



Deferred income taxes are calculated in full on temporary differences, using the liability method and a principal tax rate of 30 percent. The deferred taxation represents the temporary differences between carrying amounts and the tax bases of assets and liabilities.

This accounting change resulted in an increase in shareholders’ equity of Baht 7.8 billion, including a gain of Baht 822 million in FY 2006 and Baht 1.0 billion in FY 2005 (see Note 17 to the Consolidated Financial Statements relating to Deferred Income Taxes).

True Group continued its strong growth in 2006, due to contributions from True Move, Consumer Broadband, and the full consolidation of TrueVisions.

Consolidated revenue grew 21.7 percent to Baht 50.4 billion and EBITDA increased 7.8 percent to Baht 16.9 billion.

Revenue from sales decreased 46 percent to Baht 1.4 billion due mainly to True Move shifting its handset sales strategy to focus more on high-end handsets which better support True’s convergence lifestyle strategy.

EBITDA margin fell to 32.6 percent in FY 2006 (from 35.6 percent in FY 2005) due to greater contributions from lower-margin businesses and declining margins at True Move (21.4 percent in FY 2006 compared with 23.4 percent in FY 2005) and True Online (40.0 percent in FY 2006 as against 44.9 percent in FY 2005).

Total consolidated operating expenses increased 19.7 percent due mainly to the full consolidation of TrueVisions. In addition, network operating expenses increased due to network expansion at True Move and Consumer Broadband, and goodwill amortization increased due mainly to the acquisition of TrueVisions.

Total depreciation and amortization increased by Baht 2.0 billion to Baht 17.0 billion, due to the inclusion of TrueVisions’ depreciation and amortization of Baht 719 million. In addition, amortization expenses for investment in TrueVisions was higher (Baht 1 billion) and depreciation and amortization for True Move increased due to network expansion.

The FY 2006 depreciation and amortization expenses have been normalized to exclude TrueVisions’ film and program rights of Baht 839 million (reclassified to cash operating expenses) and True Move’s amortization for debt issuance cost relating to loan prepayments of Baht 231 million (reclassified to non-recurring items).

Interest expenses increased to Baht 6.3 billion (from Baht 4.8 billion in FY 2005), due mainly to long-term financing for the acquisition of TrueVisions and higher interest costs.

Net loss from continuing operations increased to Baht 6.0 billion (compared to a Baht 2.9 billion loss in 2005) due mainly to increased costs relating to the TrueVisions acquisition of Baht 1.7 billion (see “Summary of Special Items”). Excluding these special items, True posted a loss from ongoing operations of Baht 3.7 billion (compared with a Baht 2.3 billion loss in 2005) due to increased costs, mainly network operating expenses.

Net loss for FY 2006 was Baht 4.2 billion, compared with a loss of Baht 3.3 billion in FY 2005, after non-recurring items (see “Consolidated Results of Operations – Adjusted Basis”). Excluding the special items relating to the TrueVisions acquisition, net bottom line loss was Baht 1.9 billion (compared with a Baht 2.7 billion loss in 2005).



Consolidated Results of Operations - Adjusted Basis

(Unaudited) FY 2006 FY 2005 % Change

(Baht in millions unless otherwise indicated)

Revenues Revenues from telephone and other services 1/ 50,445 41,456 21.7 Revenues from product sales 1,417 2,617 (45.9)

Total revenues 1/ 51,862 44,073 17.7

Operating expensesCost of services 36,887 29,713 24.1

Revenue sharing and access charges 1/ 2/ 10,674 9,876 8.1 Network operating expenses 13,094 7,447 75.8

Depreciation and amortization 3/ 13,119 12,390 5.9Cost of sales 1,345 2,400 (44.0)

Selling and administrative expenses 3/ 13,725 11,276 21.7

Total operating expenses 2/ 3/ 4/ 51,956 43,389 19.7

EBITDA 16,928 15,705 7.8 Total depreciation and amortization 3/ (17,022) (15,021) 13.3

Operating profit (95) 684 NMInterest income 171 104 65.0Interest expense (6,306) (4,785) 31.8Tax 251 834 (69.9)

Income from continuing operations (5,978) (3,163) (89.0)Share of results in subsidiaries, joint ventures and associates (26) 272 NM

Net income (loss) from continuing operations including share of results in subsidiaries, joint ventures & associates (6,004) (2,891) (107.7)

Non recurring items 1,957 (503) NM Gain (loss) on foreign exchange 1,903 (146) NM

Downward adjustment-International call revenue (net) 1/ - (235) 100.0 Impact from change in the calculation method of - 493 (100.0)

True Move's regulatory fee 2/

Penalty fee for True Move loan prepayment (187) - NM Adjustment-Amortization of debt issuance cost due to (231) - NM

True Move loan prepayment 3/

Other (expenses) income 472 253 86.6 Gain from DPN buy-back - 370 (100.0) Loss on impairment of network assets - (2,040) 100.0 Gain from debt restructuring - 801 (100.0)Net profit (loss) before minority interest (4,046) (3,394) (19.2)(Income) loss attributable to minority interest (134) 131 NM

Net profit (loss) for the period (4,180) (3,263) (28.1)

Note :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 fixed line's international call service in the year 2004. 2/ FY 2005 regulatory cost has been adjusted upwards by Baht 493 million to exclude an out-ot-period adjustment for True Move's change in the calculation method in Q2 2005. FY 2005 revenue sharing was laso adjusted upwards by Baht 48 million to exclude the out-of-period adjustment related to remark no.1.3/ Excluding the following items: - TrueVisions amortization for film and program rights of Baht 839 million for FY 2006 (adjusted to cash operating expenses). - True Move amortization of debt issuance cost due to loan prepayment of Baht 231 million in Q4 2006 (adjusted to non-recurring item).4/ Proportionate consolidation of True Move up to Q3 2004, and full consolidation since Q4 2004.5/ Full consolidation of TrueVisions from Q1 2006 (equity method previously).

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Normalized Revenue Profile

Consolidated Revenues (Before Intersegment Eliminations)

(Unaudited) FY 2006 1/ FY 2005 1/

(Baht in millions unless otherwise indicated) Revenue% of revenue

after eliminations

Revenue% of revenue

after eliminations

% Change

True Move 23,659 21,775 8.7

- Service revenue 22,309 19,594 13.9

- Product sales 1,350 2,181 (38.1)

Intersegment elimination (965) (126) 662.5

True Move after elimination 22,694 43.8% 21,648 49.1% 4.8

True Online 24,543 23,789 3.2

- Fixed line telephone 12,601 14,725 (14.4)

- Fixed line voice 10,419 11,964 (12.9)

- VAS 2,182 2,761 (21.0)

- Public phone 1,110 1,577 (29.6)

- Fault reporting and dropwiring 723 652 10.8

- Others 350 532 (34.2)

- Data services 3,414 2,617 30.5

- DDN 2,329 1,651 41.1

- Multimedia 1,086 966 12.4

- Internet & Broadband 4,378 2,610 67.7

- Consumer broadband 3,258 2,047 59.2

- Dial up Internet 2/ 1,119 563 98.9

- PCT 1,409 2,337 (39.7)

- Service revenue 1,218 1,771 (31.3)

- Product sales 192 566 (66.1)

- Others 2,740 1,500 82.7

Intersegment elimination (3,752) (1,364) 175.1

True Online after elimination 20,791 40.1% 22,425 50.9% (7.3)

TrueVisions 8,869 - NM

- Service revenue 8,352 - NM

- Product sales 517 - NM

Intersegment elimination (491) - NM

TrueVisions after elimination 8,377 16.2% - - NM

Normalized consolidated revenues 57,070 45,563 25.3

Total intersegment elimination (5,208) (1,490) 249.5

Normalized consolidated revenues - net 51,862 100.0% 44,073 100.0% 17.7

Note : 1/ Full consolidation of TrueVisions from Q1 2006 (equity method previously).

2/ Including revenue from on-line games.



SEGMENT RESULTS

At the beginning of 2007, True was organized into five core businesses: True Move (previously the Wireless segment), True Online (previously Wireline), TrueVisions (formerly known as pay-TV), True Money (our digital commerce service) and TrueLife (providing digital content and access). The discussion below follows this category format.

In terms of financial reporting, we report in three segments: True Move, True Online and TrueVisions. The contributions of True Money and TrueLife are considered part of True Online as they are key vehicles for realizing the Group’s vision of becoming a convergence lifestyle leader.

True Move

FY 2006 service revenue increased 13.9 percent to Baht 22.3 billion due to record net subscriber additions (“net adds”) which offset a decline in ARPU.

EBITDA decreased slightly (0.5 percent) to Baht 5.1 billion due mainly to an increase in network operating expenses. This was largely the result of network expansion. In addition, regulatory costs increased (in line with increased service revenue and due partly to an increase in the revenue-sharing rate from 20 percent to 25 percent effective September 2006). EBITDA margin for FY 2006 was 21.4 percent, down from 23.4 percent in FY 2005.

Net loss from ongoing operations increased to Baht 3.5 billion in FY 2006 (from Baht 2.7 billion in FY 2005) due mainly to increases in costs, mainly network operating expenses and regulatory costs.

Non-voice revenue increased 44.2 percent to Baht 2.1 billion, with its contribution to total service revenue rising to 9.6 percent (from 7.6 percent in FY 2005), mainly from SMS and color ring services.

Subscriber growth of 3.1 million in FY 2006 lifted the subscriber base to 7.6 million. Market share was 19.3 percent, up from 15.1 percent at the end of 2005, and the share of total net adds was close to 32 percent.

True Move has now claimed around one-third of market net adds each year since 2004.

FY 2006 ARPU of Baht 292 was 25.7 percent lower than 2005 due to the impact of price competition.

TrueVisions

TrueVisions was rebranded from UBC in January 2007. At the beginning of 2006 True changed its accounting policy for recognition of TrueVisions’ results to full consolidation (from the equity method) following the acquisition of TrueVisions shares. The comparison of results between 2006 and 2005 is provided below for investors to better understand the business.

TrueVisions service revenue in FY 2006 increased 5.1 percent to Baht 8.4 billion due to subscriber increases which offset the decline in ARPU.

EBITDA increased 2.5 percent to Baht 2.1 billion but EBITDA margin decreased to 24.0 percent, from 25.7 percent in 2005, due mainly to increases in network operating expenses (principally the cost of content for new channels). As a result, net profit from ongoing operations increased to Baht 1.3 billion.



Boosted by mass market promotions, TrueVisions added 75,044 net new subscribers in FY 2006, almost three times the increase in 2005. Year-end total subscribers were 558,860 or 629,269, including subscribers to bundled packages with True Move, an increase of 30 percent from YE 2005.

During 2006, TrueVisions shifted its strategy to the mass market aiming to lift its penetration rate above 3 percent. The launch of the True Knowledge Package (in Q2) and True Move Free View (in Q3) were key parts of this strategy.

2006 was another successful year for TrueVisions’ production of the popular reality TV show Academy Fantasia 3 (AF3), a key retention tool for TrueVisions which created strong subscriber growth for True Move.

True Online

FY 2006 service revenue increased 4.4 percent to Baht 24.0 billion as strong growth in non-voice businesses, Internet, Consumer Broadband and DDN offset declining fixed line voice revenues.

EBITDA decreased 8.1 percent in 2006 to Baht 9.8 billion due mainly to increases in network operating expenses, mainly relating to expansion in the Broadband business. EBITDA margin fell to 40 percent (from 44.9 percent in 2005).

Excluding costs relating to TrueVisions acquisition (special items), True Online’s loss from ongoing operations in 2006 would have been Baht 1.4 billion, an increase from FY 2005 (a loss of Baht 317 million) due mainly to cost increases and lower gains from deferred taxes.

Fixed line telephone

FY 2006 revenue from fixed-line telephone and value-added services declined 14.4 percent to Baht 12.6 billion due mainly to declines in basic fixed-line and public-phone revenues.

FY 2006 ARPU for fixed line declined 16 percent to Baht 414 (from Baht 493 in FY 2005).

In 2007, True expects to receive a new revenue stream from the IDD business licensed by the NTC in early 2007.

Internet/Broadband

Consumer Broadband revenue increased over 50 percent in FY 2006 to Baht 3.3 billion.

Consumer Broadband subscribers increased by 142,406, or 47 percent, in 2006 to 442,728 with an expected 80 percent market share in the BMA (Bangkok Metropolitan Area).

FY 2006 ARPU was Baht 721, a 2.4 percent decline from 2005.

True continued to grow Consumer Broadband’s subscriber base while maintaining its ARPU. Key growth strategies included entering the mass market with the launch of the Junior Package; the pursuit of its convergence strategy by bundling with other True Group services, i.e. True Move, Wi-Fi and IPTV, to offer best value to customers; and offering content, mainly music and sport, that meets daily lifestyle needs in order to retain subscribers.

True maintained its status as the no. 1 Internet provider with total Internet users of over 1 million, including Consumer Broadband and subscribers of KSC, an affiliated company.



In August 2006, True Internet Gateway (TIG) was granted a Type 2 Internet Gateway license from the NTC. As a result of the late December earthquake in Taiwan, which disrupted most Internet access for Thai consumers, the NTC allowed TIG to connect directly with international gateway operators for a trial period of 3 months.

Early in February 2007, True launched “SUPER” hi-speed Internet setting a new standard speed of 1 Mbps at Baht 599 per month, 4 times faster than the previous standard rate of 256 Kbps, with a tariff only Baht 9 higher. True has received strong positive feedback from the market following the launch.

Data Services

Revenue increased 30.5 percent to Baht 3.4 billion, before intersegment eliminations. This was mainly due to a 17.8 percent growth in DDN circuits-in-service to 12,033 links, with a 6.7 percent increase in ARPU per link. The strong growth was partly due to True Move renting more circuits as it expanded its network.

True focused on differentiating itself by customization via convergence and partnering with Cisco to provide an IP-based network as well as emphasizing high-quality service, allowing it to price higher and retain customers.

WE PCT

FY 2006 service revenue fell 31.3 percent to Baht 1.2 billion due mainly to the impact of mobile competition (especially from per-call and low-commitment promotional packages).

WE PCT’s subscriber base declined 122,026 during 2006 to 347,099, compared with a loss of 3,721 during 2005.

ARPU decreased 19 percent in 2006 to Baht 257 (from Baht 318 in 2005).

True Money

True Money, True’s digital commerce service, posted impressive growth in its first full year, reaching around 850,000 subscribers by the end of 2006. Future growth will, to a greater extent, take advantage of the service’s ties with True Online, the segment to which True Money’s results are now allocated.

True Life

TrueLife provides digital content and access through three components: online community portals Trueworld.net and Truelife.com; TrueLife shops; and TrueLife Plus (True’s bundling packages). Launched in 2006, TrueLife introduced a number of products and services during the year.



FINANCIAL POSITION

True’s consolidated assets amounted to Baht 123.0 billion as at December 2006, an increase of 4.7 percent (Baht 5.6 billion) on year-end 2005, due mainly to increases in property, plant and equipment, mainly at TrueVisions and True Move, and intangible assets, mainly goodwill for acquisition of TrueVisions. Cash and restricted cash decreased due mainly to the use of cash from bridging loan to buy shares of TrueVisions.

Trade accounts receivables (net) decreased slightly at Baht 6.6 billion due partly to higher efficiency in collection (average collection days of 30 in 2006 as against 34 in 2005).

Investments in subsidiaries, joint venture and associates decreased to Baht 16 million (Baht 4.7 billion in 2005) due to a change in accounting policy for investment in TrueVisions to full consolidation (from the equity method in 2005) following the acquisition of TrueVisions.

Property, plant and equipment (net) increased to Baht 77.9 billion (from 72.0 billion in 2005) due to the inclusion of Baht 6.0 billion in TrueVisions’ property, plant and equipment (net) while the increase in property, plant and equipment (net) at True Move was offset by the decline at True Online. During the year, True recognized impairment losses for public phone equipment totaling Baht 19 million.

Deferred income tax assets increased Baht 1.0 billion in FY 2006 to Baht 10.0 billion due mainly to depreciation and tax losses carried forward during the year.

Intangible assets (net) increased to Baht 16.1 billion (from Baht 2.5 billion in 2005) due largely to goodwill from the acquisition of TrueVisions.

Consolidated Balance Sheets and Cash Flows

(Unaudited) FY 2006 FY 2005 % Change

(Baht in millions unless otherwise indicated)

Balance SheetsCash and cash equivalents including restricted cash 6,136 17,415 (64.8)Trade accounts receivable, net 6,562 6,636 (1.1)Current assets 18,304 28,687 (36.2)Investments in subsidiaries, joint ventures and associates 16 4,693 (99.7)Property, plant and equipment, net 77,916 71,975 8.3Intangible assets, net 16,100 2,529 536.5

Total assets 122,956 117,384 4.7Current liabilities 32,233 32,195 0.1Long term borrowings 80,108 74,984 6.8

Total liabilities 115,556 109,472 5.6

Total shareholder's equity 7,400 7,912 (6.5)

Cash Flows

Cash flows from operating activities 12,928 11,604 11.4

Cash flows from investing activities (10,182) (16,905) (39.8)

Cash flows from financing activities (7,048) 9,160 NM

Net (decrease) increase in cash and cash equivalents (4,303) 3,859 NM

Beginning cash balance and effects of exchange rate changes 8,226 4,415 86.3

Ending cash balance 3,924 8,274 (52.6)



True’s consolidated liabilities increased by Baht 6.1 billion to Baht 115.6 billion at YE 2006 due mainly to increase in long term borrowings. In addition, trade accounts payable increased to Baht 11.8 billion (from Baht 4.9 billion at YE 2005) due to higher payables to True Move’s suppliers of equipment and the inclusion of TrueVisions’ liabilities.

Consolidated long term borrowings (including finance leases) increased by Baht 6.8 billion to Baht 88.9 billion due mainly to long-term loans for the acquisition of TrueVisions of US Dollar 300 million (approximately Baht 11 billion). In addition, TrueVisions entered into an amendment to its transponder use agreement due to a technical issue relating to Thaicom 3, incurring a new 12-year finance lease of Baht 4.5 billion for Thaicom 5 due in November 2018 (the remaining finance lease for Thaicom 3 of Baht 1.0 billion was derecognized). These were partly offset by loan repayment of approximately Baht 8.0 billion by True and its subsidiaries, mainly at True Online businesses.

The long-term loan for the TrueVisions acquisition was completed in July 2006; two-thirds of this is in US Dollars. The loan is in 4 tranches with 5-7 year maturity with a 2-year grace period and the final payment is due on 29 June 2013. The interest rate was hedged to a fixed Thai Baht rate of approximately 7 percent and the principal payment was also fully hedged.

In December 2006, True Move issued 7-year, unsecured US Dollar notes amounting to USD 465 million to refinance the existing Baht loans. The notes carry interest at 10.75 percent and are payable semi-annually in June and December. The principal repayment is in bullet form (one-time payment) in 2013. As a result, True Move was able to postpone half of its principal repayments for 7 years and thus free up cash for its business expansion. The interest rate was hedged to a fixed Thai Baht rate and the principal payment was also fully hedged.

Shareholders’ equity decreased by Baht 0.5 billion to Baht 7.4 billion due to a net loss of Baht 4.2 billion for FY 2006, net of an increase of Baht 3.4 billion from an equity issue and Baht 175 million from revaluation of investment in TrueVisions.

In July 2006, True placed 402 million shares via a private placement at Baht 8.4 per share raising Baht 3.4 billion in total proceeds. Baht 2.5 billion of this was injected into BITCO/True Move, increasing True’s shareholding in BITCO/True Move from 82.86 percent to 93.4 percent.

The Company has made prior year adjustments to shareholders’ equity as at YE 2005 to reflect the impact of the adoption of an accounting policy on deferred income taxes, which increases equity by Baht 6.9 billion. In addition, the Company made an upward adjustment of Baht 657 million to the carrying amount of net assets for pre-acquisition investment in TrueVisions following the revaluation of its fair value of assets and liabilities.

Liquidity and capital resources

True’s primary capital resources for the year 2006 were cash flows from operations, a capital increase, and cash and cash-equivalents carried forward from 2005. Most of the proceeds from the capital increase were used for funding growth at True Move. The acquisition of TrueVisions was funded by a bridging loan, which was later replaced by a long-term loan.

Consolidated net cash flows from operations increased by Baht 1.3 billion to Baht 12.9 billion due mainly to the full consolidation of TrueVisions.

Consolidated net cash flows from investing activities were Baht 10.2 billion, compared with Baht 16.9 billion in 2005, due mainly to the withdrawal of restricted cash to acquire the shares of TrueVisions.



During 2006, True and its subsidiaries invested in capex (property, plant and equipment) of Baht 9.5 billion, of which Baht 5.2 billion was at True Move, Baht 3.3 billion at True Online and approximately Baht 900 million at TrueVisions. This represented a decline of Baht 819 million from FY 2005 due mainly to decreased True Move capex (Baht 7.2 billion in FY 2005). In 2006, True and its subsidiaries also invested in intangible assets of Baht 1.3 billion, most of which (Baht 839 million) represented TrueVisions’ film and program rights and was treated as operating expenses in our results analysis.

True and its subsidiaries also acquired TrueVisions shares valued at Baht 6.6 billion, net of cash acquired, using cash from bridging loans.

Free cash flows (cash flows from operations less capex) increased to Baht 3.5 billion (from Baht 1.3 billion in FY 2005) mainly from TrueVisions and True Move.

Cash flows from financing activities. Our net cash used from financing activities was Baht 7.0 billion due mainly to loan repayments totaling approximately Baht 8.0 billion. During the year True raised Baht 3.4 billion in proceeds from an equity issue (see “Shareholders’ Equity”)

Conclusion

True’s financial position continues to steadily improve with consolidated net debt to EBITDA reducing to 4.6 times in FY 2006, from 4.8 times in FY 2005 and 6.5 times four years ago. However, True’s consolidated EBITDA to interest coverage ratio decreased to 2.7 times (from 3.3 times in 2005) due to the higher interest expenses incurred from loan for the acquisition of TrueVisions.

True remained committed to deleveraging with a further debt repayment of approximately Baht 8 billion in FY 2006, most of which was at True Online, reducing net debt to EBITDA at our Online business to 3.9 times (from 4.2 times in FY 2005).

12.5 Audit fees

1. Audit fees The audit fees and related expenses occurred during the year 2006 was Baht 21.46 million. The Company 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-upon procedures, tax consulting service and other to the Company and subsidiaries. The fees were Baht 29.88 million and Baht 28.66 million was paid during the year. The remaining fees of Baht 1.22 million will be paid in the following year upon the completion of work.


TRUETP: Other Related Information 142

1133.. OOTTHHEERR RREELLAATTEEDD IINNFFOORRMMAATTIIOONN

a) The issuance and offering of warrants to purchase the Company’s ordinary shares granted to directors and the employees at executives level of the Company and/or its subsidiaries (“ESOP 2007 Project”)

On 23rd February 2007, the Board of Directors of the Company approved the issuance and offering of warrants to purchase the Company’s ordinary shares granted to directors and the employees at executives level of the Company and/or its subsidiaries (“ESOP 2007 Project”) in the total number not exceeding 38,000,000 units. In this regard, the Board of Directors of the Company approved the reduction of the authorized share capital from Baht 47,134,724,910 to Baht 46,835,781,350 by canceling the authorized ordinary shares which were not yet issued totaling of 29,894,356 shares in order to be in accordance with the provision of the Public Limited Company Act. Furthermore, an increase of authorized share capital from Baht 46,835,781,350 to Baht 47,515,194,180 was approved by issuing 67,941,283 new ordinary shares at a par value of Baht 10 each. The aforementioned matters shall be proposed to the Annual General Shareholders Meeting for the year 2007 further consideration and approval.

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Dire

ctor

, Mah

idol

Witt

ayan

usor

n Sc

hool

(Pu

blic

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aniz

atio

n)

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iden

t, T

he T

elec

omm

unic

atio

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ssoc

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iland

un

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rman

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io o

f Tha

iland

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or, K

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gkut

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nstit

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of T

echn

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dkra

bang

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pany

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tock

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hang

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iland

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ief Ex

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ank

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rman

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CO F

inan

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i Wah

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.S.A

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.A.

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ngin

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ate

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.S.A

.

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0

1997

-199

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1996

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7

1995

-199

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Dire

ctor

, Man

agin

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hief

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Vic

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anph

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radu

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, KfW

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. Gal

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. Grim

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the

Uni

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ong

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awa,

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nive

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.

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s) in

Law

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nive

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, the

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.

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Lee

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. Lam

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hang

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iland

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ss A

dmin

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anag

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ston

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vers

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.S.A

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Sup

acha

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hear

avan

ont

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, CPP

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the

Boar

d, P

anta

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pany

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ctor

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sidi

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rpor

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blic

Co

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pany

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hang

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iland

Mas

ter D

egre

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ines

s Ad

min

istr

atio

n Pe

pper

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Uni

vers

ity, U

.S.A

.

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ter

Deg

ree

of E

lect

rical

Eng

inee

ring

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vers

ity o

f W

isco

nsin

, U.S

.A.

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elor

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tric

al E

ngin

eerin

g Ar

izon

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ate

Uni

vers

ity, U

.S.A

.

2000

-Pre

sent

1998

-200

0

1997

-199

8

1996

-199

7

1995

-199

6

Dire

ctor

, Man

agin

g D

irect

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nd C

hief

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ratin

g O

ffic

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Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d E.

V.P.

, Bus

ines

s &

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pora

tion

Publ

ic C

ompa

ny L

imite

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V.P.

, Cen

tral

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ratio

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orm

atio

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chno

logy

Tr

ue C

orpo

ratio

n Pu

blic

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pany

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ited

Reg

ion

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ctor

, Ban

gkok

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thea

st R

egio

n Tr

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blic

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pany

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ion

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ctor

, Ban

gkok

-Wes

t Re

gion

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ted

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pany

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Vic

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imite

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Stat

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1)

Appe

ndix

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151

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Cha

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val

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nive

rsity

of

Sout

hern

Cal

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.S.A

.

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92-2

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., Te

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., Tr

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roup

Gen

eral

Cou

nsel

, Tru

e Co

rpor

atio

n Pu

blic

Com

pany

Lim

ited

Ad

viso

r to

the

Boa

rd o

f D

irect

ors,

C.P

. Sev

en E

leve

n Pu

blic

Co

mpa

ny L

imite

d

Mas

ter

Deg

ree

of L

aws,

spe

cial

ized

in I

nter

natio

nal L

egal

Stu

dies

N

ew Y

ork

Uni

vers

ity, U

.S.A

.

Bach

elor

of

Law

s (H

onou

rs),

Th

amm

asat

Uni

vers

ity

Non

Lis

ted

Com

pany

Mr.

Ath

ueck

A

svan

und

Vice

Cha

irman

an

d Gro

up G

ener

al

Coun

sel

55

1,30

0,04

6 sh

ares

-

Trai

ning

Capi

tal M

arke

t Ac

adem

y Le

ader

Pro

gram

Rela

ted

trai

ning

pro

gram

s he

ld b

y th

e Th

ai I

nstit

ute

of D

irect

ors

Asso

ciat

ion

(IO

D)

- D

irect

or A

ccre

dita

tion

Prog

ram

(D

AP)

1997

-Pre

sent

2002

-Pre

sent

Pr

esen

t 20

01-2

006

1978

-199

7 Pr

esen

t

Vice

Cha

irman

and

Gro

up G

ener

al C

ouns

el, S

ubsi

diar

ies

of

True

Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d

Gro

up G

ener

al C

ouns

el, C

haro

en P

okph

and

Gro

up

Com

pany

Lim

ited

and

its s

ubsi

diar

ies

Dire

ctor

, Tru

e Vi

sion

s Pu

blic

Com

pany

Lim

ited

and

its

subs

idia

ries

Dire

ctor

, Tru

e M

ove

Com

pany

Lim

ited

Dire

ctor

, Aqu

a-Ag

ri Fo

ods

Inte

rnat

iona

l, In

c.

Asso

ciat

e Ju

dge,

Cen

tral

Int

elle

ctua

l Pro

pert

y an

d In

tern

atio

nal T

rade

Cou

rt

Bake

r &

McK

enzi

e Pa

rt-t

ime

Lect

urer

, Bus

ines

s La

w, F

acul

ty o

f La

w,

Chul

alon

gkor

n U

nive

rsity

True

Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d

Ann

ual R

egis

trat

ion

Stat

emen

ts (

Rep

ort

Form

56-

1)

Appe

ndix

1

152

Nam

ePo

sitio

n Ag

e(y

ear)

Tr

ue S

hare

O

wne

rshi

p (3

1/12

/06)

Fam

ily

Rel

atio

nshi

p Ed

ucat

ion

Maj

or E

xper

ienc

e

Com

pany

Lis

ted

on t

he S

tock

Exc

hang

e of

Tha

iland

Mas

ter

Deg

ree

of B

usin

ess

Adm

inis

trat

ion,

Maj

or in

Fin

ance

and

Mar

ketin

g,

Wha

rton

Sch

ool o

f the

Uni

vers

ity o

f Pe

nnsy

lvan

ia

Bach

elor

of

Scie

nce

in E

cono

mic

s, W

hart

on S

choo

l of t

he U

nive

rsity

of

Penn

sylv

ania

2001

-Pre

sent

1999

-200

0

Chie

f Fi

nanc

ial O

ffic

er

True

Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d Ex

ecut

ive

Vice

Pre

side

nt -

Cor

pora

te F

inan

ce

True

Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d

Non

Lis

ted

Com

pany

Mr.

Will

iam

H

arris

Ch

ief

Fina

ncia

l O

ffic

er

45

1,11

7,83

8 s

hare

s-

Rela

ted

trai

ning

pro

gram

s he

ld b

y th

e Th

ai I

nstit

ute

of D

irect

ors

Asso

ciat

ion

(IO

D)

- N

one

-

1993

-199

9

Pres

ent

Dire

ctor

Cr

edit

Polic

y, V

eriz

on C

omm

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ns, P

hila

delp

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Dire

ctor

, Sub

sidi

arie

s of

Tru

e Co

rpor

atio

n Pu

blic

Com

pany

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mite

d

Com

pany

Lis

ted

on t

he S

tock

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hang

e of

Tha

iland

Pres

ent

2001

Man

agin

g D

irect

or -

Off

ice

/ SM

E So

lutio

n &

Wire

less

Acc

ess

True

Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d Ex

ecut

ive

Vice

Pre

side

nt, T

rue

Corp

orat

ion

Publ

ic C

ompa

ny

Lim

ited

Non

Lis

ted

Com

pany

Mas

ter

Deg

ree

of F

inan

ce &

Mar

ketin

g,

Indi

ana

Uni

vers

ity o

f Pe

nnsy

lvan

ia, U

.S.A

.

Bach

elor

of

Indu

stria

l Man

agem

ent,

Th

amm

asat

Uni

vers

ity

Mr.

Adh

iruth

Tho

thav

eesa

nsuk

Man

agin

g D

irect

or

Off

ice

/ SM

E So

lutio

n &

W

irele

ss A

cces

s

43

566,

936

shar

es

-

Rela

ted

trai

ning

pro

gram

s he

ld b

y th

e Th

ai I

nstit

ute

of D

irect

ors

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ciat

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(IO

D)

- D

irect

or C

ertif

icat

ion

Prog

ram

(D

CP)

Pres

ent

2002

1998

-200

2 19

98-2

001

Pres

iden

t, A

sia

Wire

less

Com

mun

icat

ion

Com

pany

Lim

ited

Pres

iden

t, T

rue

Mon

ey C

ompa

ny L

imite

d D

irect

or, T

rue

Visi

ons

Publ

ic C

ompa

ny L

imite

dCh

ief

Com

mer

cial

Off

icer

, Tru

e M

ove

Com

pany

Lim

ited

Gen

eral

Man

ager

, Wire

& W

irele

ss C

ompa

ny L

imite

d Pr

esid

ent,

Asi

a W

irele

ss C

omm

unic

atio

n Co

mpa

ny L

imite

d

True

Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d

Ann

ual R

egis

trat

ion

Stat

emen

ts (

Rep

ort

Form

56-

1)

Appe

ndix

1

153

Nam

ePo

sitio

n Ag

e(y

ear)

Tr

ue S

hare

O

wne

rshi

p (3

1/12

/06)

Fam

ily

Rel

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nshi

p Ed

ucat

ion

Maj

or E

xper

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e

Com

pany

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ted

on t

he S

tock

Exc

hang

e of

Tha

iland

Bach

elor

of

Scie

nce

(Com

pute

r Sc

ienc

e)

Uni

vers

ity o

f So

uth

Alab

ama,

U.S

.A.

Pres

ent

Man

agin

g D

irect

or -

Cor

pora

te S

olut

ion,

Who

lesa

les

& D

ata

True

Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d

Non

Lis

ted

Com

pany

Mr.

Son

gtha

m P

hian

patt

anaw

itM

anag

ing

Dire

ctor

Co

rpor

ate

Solu

tion,

W

hole

sale

s &

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a

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700

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res

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Rela

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trai

ning

pro

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s he

ld b

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ai I

nstit

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of D

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ciat

ion

(IO

D)

- D

irect

or C

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ion

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ram

(D

CP n

o.54

) Pr

esen

t

2006

-Pre

sent

2001

-200

3

2001

-200

2 20

00

1998

1997

Exec

utiv

e D

irect

or -

Cor

pora

te S

olut

ion

Tr

ue M

ove

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pany

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ited

Actin

g Pr

esid

ent,

Tru

e M

ultim

edia

Com

pany

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ited

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g Pr

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ent,

Wire

& W

irele

ss C

ompa

ny L

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d Pr

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ent,

Tru

e In

tern

et D

ata

Cent

er C

ompa

ny L

imite

d Ex

ecut

ive

Com

mitt

ee, P

anta

vani

j Com

pany

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Dire

ctor

, Fre

ewill

Sol

utio

n Co

mpa

ny L

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d

Dire

ctor

, Tru

e In

tern

et G

atew

ay C

ompa

ny L

imite

d D

irect

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angk

ok I

nter

Tel

etec

h Pu

blic

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pany

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Co

untr

y G

ener

al M

anag

er /

MD

, IBM

Tha

iland

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pany

Li

mite

dCh

airm

an, I

BM S

olut

ion

Del

iver

y Co

mpa

ny L

imite

d

Dire

ctor

, IBM

Sto

rage

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duct

Tha

iland

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pany

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ctor

, Sal

es &

Mar

ketin

g, I

BM T

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nd C

ompa

ny L

imite

d

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try

Man

ager

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tem

Sal

es, I

BM T

haila

nd C

ompa

ny

Lim

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try

Man

ager

Fin

ance

& A

dmin

istr

atio

n an

d CF

O

IBM

Tha

iland

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pany

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ited

Se

rvic

e Bu

sine

ss E

xecu

tive,

IBM

Tha

iland

Com

pany

Lim

ited

Com

pany

Lis

ted

on t

he S

tock

Exc

hang

e of

Tha

iland

Bach

elor

Deg

ree

of E

ngin

eerin

g (E

lect

rical

) Ki

ng M

ongk

ut’s

Ins

titut

e of

Tec

hnol

ogy,

Lad

krab

ang

Cam

pus

Pres

ent

1999

-200

3 19

97-1

999

Man

agin

g D

irect

or -

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e / C

onsu

mer

Sol

utio

n &

Hig

hspe

ed A

cces

s

True

Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d Ex

ecut

ive

Vice

Pre

side

nt, L

oxle

y Pu

blic

Com

pany

Lim

ited

Firs

t Se

nior

Vic

e Pr

esid

ent,

Lox

ley

Publ

ic C

ompa

ny L

imite

d

Non

Lis

ted

Com

pany

Mr.

Thiti

N

anta

pats

iri

Man

agin

g D

irect

or

Hom

e /

Cons

umer

So

lutio

n &

H

ighs

peed

Acc

ess

52

- -

Rela

ted

trai

ning

pro

gram

s he

ld b

y th

e Th

ai I

nstit

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of D

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one

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1992

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iden

t &

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utch

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CAT

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less

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timed

ia C

ompa

ny L

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d Pr

esid

ent

& C

EO

Hut

chis

on T

elec

omm

unic

atio

ns (

Thai

land

) Co

mpa

ny L

imite

d

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ctor

, Sub

sidi

arie

s of

Tru

e Co

rpor

atio

n Pu

blic

Com

pany

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mite

d

True

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tion

Publ

ic C

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Ann

ual R

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Stat

emen

ts (

Rep

ort

Form

56-

1)

Appe

ndix

1

154

Info

rmat

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of

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nd

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OF

31st

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ompa

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e

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TLS

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TI

K.I.N.

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True Internet

Asia DBS

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Internet KSC

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nin

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/

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Sum

et

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avan

on

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Jot

i Bh

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Mr.

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Ajv

a Ta

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Kos

ol

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avan

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Soo

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Mr.

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Ath

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Mr.

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reas

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Har

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Vic

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Mr.

Um

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Dr.

Lee

G

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m

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ark:

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Form

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ndix

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ompa

ny L

imite

d IS

M

Inte

rnet

Sho

ppin

g M

all C

o., L

td.

TMV

True

Mov

e Co

., Lt

d.

OAG

S O

nlin

e Ad

vert

isin

g G

olds

ite C

o., Lt

d.

TKSC

Te

leco

m K

SC C

o., L

td.

TVS

True

Vis

ions

Pub

lic C

ompa

ny L

imite

d (F

orm

erly

nam

ed U

nite

d Br

oadc

astin

g Co

rpor

atio

n Pu

blic

Com

pany

Lim

ited)

Be

boyd

Be

boyd

Cg C

o., L

td.

N &

T

N &

T C

omm

unic

atio

n Co

., Lt

d.

True

Mag

ic

True

Mag

ic C

o., Lt

d.

True

Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d

Annu

al R

egis

trat

ion

Stat

emen

ts (

Rep

ort

Form

56-

1)

Appe

ndix

2

156

Inform

ation

of Dir

ectors

of Su

bsidia

ries /

Assoc

iated

Comp

anies

(As of

31st De

cember

2006)

Subs

idia

ries

/ Ass

ocia

ted

Com

pani

es

Name

TH

TP

TE

TLS

TLR

TI

K.I.N.

TT&D

TEMCO

W&W

TT

TMN

True Internet

Asia DBS

AI

AWC

TM

TIDC

TDE

Nilubon <BVI>

K.I.N. <BVI>

BITCO

TMV

TVS

NTU

TSC

NEC

ARM

NC True

TDS

SD

TIG

SM

TPC

TUC

CNP

CTV

RM

IBC

TVSC

SSV

UBCF

MKSC

Internet KSC

IKSC

KSC

ISM

OAGS

TKSC

Beboyd

N & T

True Magic

1.

Mr.

Min

Ti

eanw

orn

/ /

/

2.

Mr.

Sunt

horn

A

runa

nond

chai

/

/

/ /

3.

Gen

. Suc

hind

a K

rapr

ayoo

n /

4.

Mr.

Mon

tree

Nav

ikap

ol

/

5.

Mr.

Cha

turo

ng

Cha

tupp

aris

oot

/

6.

Mr.

Kac

horn

C

hiar

avan

ont

/

/

/

/

/ /

/

/

/

/

/

/ /

/

7.M

r. A

nat

Mek

paib

oonv

atana

/

/

/

/

8.

Mr.

Sura

pol

Met

hido

l

/

9.

Mr.

Rol

f Her

man

La

us

/

10.

Maj

.Gen

.M.R

.Sup

haw

at

Kha

sem

sri

/

11.

Mr.

Will

iam

H

arris

/

/

/

/ /

/

/ /

/

/ /

/

/

/

/

/

/

/

/ /

12.

Mr.

Nop

adol

D

ej-U

dom

/

/

/ /

/

/

/

/ /

/

/

/ /

/

13.

Mr.

Than

acha

i W

ongt

hong

sri

/

/

/

14.

Mr.

Thav

orn

Nak

butr

/

15.

Pol.G

en N

opad

ol

Som

boon

sub

/

/

16.

Mr.

Was

an

Our

rat

/

17.

Mr.

Adh

iruth

Th

otha

vees

ansu

k

/

/

/

/

/

18.

Mrs

. Thi

ppaw

an

Wut

tisar

n

/

19.

Mr.

Vis

it R

akvi

sitw

ong

/

True

Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d

Annu

al R

egis

trat

ion

Stat

emen

ts (

Rep

ort

Form

56-

1)

Appe

ndix

2

157

Inform

ation

of Dir

ectors

of Su

bsidia

ries /

Assoc

iated

Comp

anies

(As of

31st De

cember

2006)

Subs

idia

ries

/ Ass

ocia

ted

Com

pani

es

Name

TH

TP

TE

TLS

TLR

TI

K.I.N.

TT&D

TEMCO

W&W

TT

TMN

True Internet

Asia DBS

AI

AWC

TM

TIDC

TDE

Nilubon <BVI>

K.I.N. <BVI>

BITCO

TMV

TVS

NTU

TSC

NEC

ARM

NC True

TDS

SD

TIG

SM

TPC

TUC

CNP

CTV

RM

IBC

TVSC

SSV

UBCF

MKSC

Internet KSC

IKSC

KSC

ISM

OAGS

TKSC

Beboyd

N & T

True Magic

20.

Mr.

Song

tham

Ph

ianp

atta

naw

it

/

/

/

/ /

/

21.

Mr.

Thiti

N

anta

pats

iri

/

/

/

/

/

/

/

/

/ /

/

/

/

/

/

/

/

/

22.

Mr.

Som

pol

Cha

npra

sert

/

23.

Mr.

Kas

hem

K

orns

eri

/

/

24.

Mr.

Taj

Bus

sade

egar

n

/

/

/

25.

Dr.

Val

lobh

V

imol

vani

ch

/

/

26.

Mr.

Han

s Rog

er

Snoo

k

/ /

27.

Mr.

Som

pan

Cha

rum

ilind

a

/

/

/ /

/

/

/

/

28.

Mr.

Fran

cois

Dav

id

Ther

on

/

/

29.

Mr.

Vis

it Ta

ntis

unth

orn

/

/

/ /

30.

Mrs

. Ara

nrat

Y

ouko

ng

/

/

31.

Mrs

. Phe

nthi

ppha

D

ulya

chin

da

/

32.

Mr.

Saha

i Su

psun

thor

nkul

/

33.

Dr.

Subi

n Pi

nkay

an

/

34.

Mr.

Dha

nadi

t Ch

aroe

nche

n

/

35.

Dr.

Dam

rong

K

asem

set

/

36M

r. Pr

asar

t Su

ebkh

a

/

True

Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d

Annu

al R

egis

trat

ion

Stat

emen

ts (

Rep

ort

Form

56-

1)

Appe

ndix

2

158

Inform

ation

of Dir

ectors

of Su

bsidia

ries /

Assoc

iated

Comp

anies

(As of

31st De

cember

2006)

Subs

idia

ries

/ Ass

ocia

ted

Com

pani

es

Name

TH

TP

TE

TLS

TLR

TI

K.I.N.

TT&D

TEMCO

W&W

TT

TMN

True Internet

Asia DBS

AI

AWC

TM

TIDC

TDE

Nilubon <BVI>

K.I.N. <BVI>

BITCO

TMV

TVS

NTU

TSC

NEC

ARM

NC True

TDS

SD

TIG

SM

TPC

TUC

CNP

CTV

RM

IBC

TVSC

SSV

UBCF

MKSC

Internet KSC

IKSC

KSC

ISM

OAGS

TKSC

Beboyd

N & T

True Magic

37.

Mr.

Kos

ak

Cha

irasa

misa

k

/

38.

Mr.

Pisi

t Pa

kkas

em

/

39.

Mrs

. Pre

epre

m

Seriw

ong

/

40.

Mr.

Wat

char

a K

anja

napu

n

/

41.

Mrs

. Ura

iwan

Se

angk

eaw

/

42.

Mrs

. Alis

a W

anna

karn

sopo

n

/

43.

Mr.

Paisi

t V

atja

napa

gorn

/

/

44.

Mr.

Yos

hihi

cha

Aut

suno

miy

a

/

45.

Mr.

Tom

onob

u Y

oshi

da

/

46.

Mr.

Jin

Ikar

achi

/

47.

Mr.

Dai

chak

u Ta

keau

chi

/

48.

Mr.

Tom

ohilo

Y

aki

/

49.

Mr.

Fum

iark

i Y

amad

a

/

50.

Mr.

Sang

uans

akB

haes

ajsa

ngua

n

/

51.

Mr.C

arl

G

oodi

er

/

52.

Dr.

Mon

tree

Chu

law

atta

nato

l

/

53.

Mr.

Taek

Jin

K

im

/

54.

Mr.

Chr

isto

pher

Don

g

Chu

ng

/

True

Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d

Annu

al R

egis

trat

ion

Stat

emen

ts (

Rep

ort

Form

56-

1)

Appe

ndix

2

159

Inform

ation

of Dir

ectors

of Su

bsidia

ries /

Assoc

iated

Comp

anies

(As of

31st De

cember

2006)

Subs

idia

ries

/ Ass

ocia

ted

Com

pani

es

Nam

e

TH

TP

TE

TLS

TLR

TI

K.I.N.

TT&D

TEMCO

W&W

TT

TMN

True Internet

Asia DBS

AI

AWC

TM

TIDC

TDE

Nilubon <BVI>

K.I.N. <BVI>

BITCO

TMV

TVS

NTU

TSC

NEC

ARM

NC True

TDS

SD

TIG

SM

TPC

TUC

CNP

CTV

RM

IBC

TVSC

SSV

UBCF

MKSC

Internet KSC

IKSC

KSC

ISM

OAGS

TKSC

Beboyd

N & T

True Magic

55.

Ms.

Su J

in

Kim

/

56.

Mr.

Vac

harin

S

uwan

wat

/

57.

Mr.

Kha

nchi

t

B

unaj

inda

/

58.

Mr.

Cho

i Byu

ng

Cha

ng

/

59.

M

r. R

im o

ng

chu

/

60.

Mr.

Vas

u

Khu

nvas

i

/

/

/

61.

Mr.

Thaw

eech

ai

Pu

reet

ip

/

62.

Mrs

. Dol

lis G

old

Vib

onsi

lp

/

63.

Mrs

. Kea

tval

ee

Li

kitn

ulak

/

64.

Col

. M.L

. Pon

gcho

mph

unuc

h

Thon

gtha

m

/

65.

Gen

. Boo

nler

t

Kae

wpr

asit

/

66.

Mr.

Terr

ence

Mic

hel

Kam

berla

nd

/

67.

Mr.

Bea

rry

Mic

hel

Smith

/

68.

Mr.

Dav

id G

eorg

e

Len

/

69.

Mr.

Sarit

Jinn

asith

/

70.

Mr.

Dae

cha

Si

ngch

insu

k

/

71.

Mr.

Supo

j

Li

msu

ansu

b

/

72.

Mr.

Wan

niw

at

Sr

ikra

ivin

/

73.

Mr.

Papo

n

R

atan

acha

ikan

ont

/

/

74.

Mr.

Saya

n

Tein

sum

ran

/

75.

Mr.

Jay

Ho

Lee

/

True

Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d

Annu

al R

egis

trat

ion

Stat

emen

ts (

Rep

ort

Form

56-

1)

Appe

ndix

2

160

Inform

ation

of Dir

ectors

of Su

bsidia

ries /

Assoc

iated

Comp

anies

(As of

31st De

cember

2006)

Subs

idia

ries

/ Ass

ocia

ted

Com

pani

es

Name

TH

TP

TE

TLS

TLR

TI

K.I.N.

TT&D

TEMCO

W&W

TT

TMN

True Internet

Asia DBS

AI

AWC

TM

TIDC

TDE

Nilubon <BVI>

K.I.N. <BVI>

BITCO

TMV

TVS

NTU

TSC

NEC

ARM

NC True

TDS

SD

TIG

SM

TPC

TUC

CNP

CTV

RM

IBC

TVSC

SSV

UBCF

MKSC

Internet KSC

IKSC

KSC

ISM

OAGS

TKSC

Beboyd

N & T

True Magic

76.

Dr.

Chi

tti

Vija

kkha

na

/

/

77.

Dr.

Jen

Sriw

atta

nath

amm

a

/

78.

Mr.

Song

pol

Supa

chal

asai

/

79.

Mr.

Thad

a

Sa

vets

ila

/

/

80.

Mr.

Polp

an

U

ttapa

p

/

81.

Mr.

Supo

j

M

ahap

an

/

82.

Dr.

Pish

nu

Su

ntha

ranu

nd

/

83.

Mr.

Ard

kit

Su

ntor

nwat

/

/

/

84.

Pol.G

en.P

orns

ak

Dur

ongk

havi

boon

/

/

/

/

/ /

/

85.

Dr.

Man

a Lo

hate

pano

nt

/

86.

Mr.

Vas

iriou

s Sa

kaul

dos

/

87

Mr.

Kiti

korn

Ph

enro

j

/

88.

Mr.

Cha

yen

Kho

mnu

an

/

89.

Mr.

Pon

Kan

laya

vina

i

/

90

Mr.

Prac

hub

Tant

inon

d

/

/

91.

Mr.

Som

boon

Pa

tcha

raso

park

/

/

92.

Mr.

Che

ewin

K

osiy

abon

g

/

93.

Mrs

. Wor

akan

ya

Kos

iyab

ong

/

94.

Mr.

Nip

on

Long

som

boon

/

95.

Mr.

Suph

akit

Vun

tana

dit

/

96.

Mr.S

omki

at

Suja

ritpa

nit

/

97.

Mr.S

ayan

Sa

ttaya

kitk

ajon

/

True

Cor

pora

tion

Publ

ic C

ompa

ny L

imite

d

Annu

al R

egis

trat

ion

Stat

emen

ts (

Rep

ort

Form

56-

1)

Appe

ndix

2

161

Rema

rk :

Abbr

evia

tion

Full

Nam

e Ab

brev

iatio

n Fu

ll N

ame

TH

Tele

com

Hol

ding

Co.

, Ltd

. TS

C Th

ai S

mar

t Ca

rd C

o., L

td.

TP

True

Pro

pert

ies

Co.,

Ltd.

N

EC

NEC

Cor

pora

tion

(Tha

iland

) Co

., Lt

d.

TE

Tele

Eng

inee

ring

and

Serv

ices

Co.

, Lt

d.

ARM

As

ia R

eman

ufac

turin

g In

dust

ries

Co.,

Ltd.

TL

S Tr

ue L

easi

ng C

o., L

td. (

Form

erly

nam

ed T

rue

Flee

t M

anag

emen

t Co

., Lt

d.)

NC

True

N

C Tr

ue C

o., L

td.

TLR

True

Life

styl

e Ret

ail C

o., Lt

d.

TDS

True

Dis

trib

utio

n an

d Sa

les

Co.,

Ltd.

TI

Te

leco

m I

nter

natio

nal C

o., L

td.

SD

Song

Dao

Co.

, Ltd

. K.

I.N

. K.

I.N

. (Th

aila

nd)

Co.,

Ltd.

TI

G

True

Int

erne

t G

atew

ay C

o., L

td. (

Form

erly

nam

ed S

ky O

ffic

e Co

., Lt

d.)

TT&

D

Tele

com

Tra

inin

g an

d D

evel

opm

ent

Co.,

Ltd.

SM

Sa

mut

pak

an M

edia

Cor

pora

tion

Co.,

Ltd.

TE

MCO

Te

leco

m E

quip

men

t M

anuf

actu

ring

Co.,

Ltd.

TP

CTr

ue P

ublic

Com

mun

icat

ion

Co.,

Ltd.

(F

orm

erly

nam

ed C

hach

oeng

sao

Sky

Net

wor

k Co

., Lt

d.)

W&

W

Wire

& W

irele

ss C

o., L

td.

TUC

True

Uni

vers

al C

onve

rgen

ce C

o.,

Ltd.

(F

orm

erly

nam

ed R

& R

Com

mun

icat

ion

Co.,

Ltd.

) TT

Tr

ue T

ouch

Co.

, Ltd

. CN

P Ci

nepl

ex C

o., L

td.

TMN

Tr

ue M

oney

Co.

, Lt

d.

CTV

Clic

k TV

Co.

, Ltd

. Tr

ue I

nter

net

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Int

erne

t Co

., Lt

d.

RM

Red

Med

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o., L

td.

Asia

DBS

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ia D

BS P

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., Lt

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SC

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mer

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etw

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unic

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., Lt

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Ser

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. TM

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ultim

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. U

BCF

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., Lt

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net

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. M

KSC

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orld

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Com

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, Ltd

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erta

inm

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In

tern

et K

SC

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KSC

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, Ltd

. N

ilubo

n <

BVI>

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n Co

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egis

terr

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t BV

I)

IKSC

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tern

et K

now

ledg

e Se

rvic

e Ce

nter

Co.

, Ltd

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I.N

. <BV

I>

K.I.

N. (

Thai

land

) Co

.,Ltd

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egis

terr

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I)

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mer

cial

Int

erne

t Co

., Lt

d.

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Bang

kok

Inte

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lete

ch P

ublic

Com

pany

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ISM

In

tern

et S

hopp

ing

Mal

l Co.

, Ltd

. TM

V Tr

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ove

Co.,

Ltd.

O

AGS

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ine

Adve

rtis

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Gol

dsite

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, Ltd

.

TVS

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ions

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lic C

ompa

ny L

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orm

erly

nam

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nite

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oadc

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g Co

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.T.U

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nd)

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ited

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yd

Bebo

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Co.

, Ltd

. Tr

ue M

agic

Tr

ue M

agic

Co.

, Ltd

. N

& T

N

& T

Com

mun

icat

ion

Co.,

Ltd.


Correct Certification of Disclosed Information 162

(Translation of the Acknowledgement Letter in Report 56-1)

PPAARRTT IIIIIIAACCKKNNOOWWLLEEDDGGEEMMEENNTT OOFF TTHHEE CCOORRRREECCTTNNEESSSS OOFF TTHHEE IINNFFOORRMMAATTIIOONN

1. Acknowledgement of the correctness of the information by the Executive Directors and Chief Financial Officer

“I have reviewed the information in this Annual Registration Statements with due care in a capacity as an Executive Director or Chief Accounting Officer of the Company and hereby certify that said information is accurate or complete, not untrue, misleading or missing such material information that otherwise should inform. In addition, I hereby certify that

(1) The financial statements and financial information as summarized in the Annual Registration Statements are complete and accurate and represent material information regarding financial position, operating results and cash flow of the Company and its subsidiaries;

(2) I am responsible for arranging for the Company to have a good information disclosure system to ensure that the Company has disclosed material information of both the Company and its subsidiaries in a complete and accurate manner and for ensuring compliance with the said system;

(3) I am responsible for arranging for the Company to have a good internal controls system and for ensuring compliance with the said system, and I have already informed the auditor and the Audit Committee of the Company the information with respect to the evaluation of the internal controls system as of 15th February 2007 which covers such defects and major changes of the internal controls system, including wrongful acts that may affect the preparation of financial reports of the Company and its subsidiaries.

To witness that all documents that I have certified are those same set of documents, I have authorized Dr. Pishnu Suntharanund, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Dr. Pishnu Suntharanund, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not certified the information contained in such documents.”



Name Title Signature

1. Mr. Supachai Chearavanont Director, President and ……………………… Chief Executive Officer

2. Mr. Vichaow Rakphongphairoj Director, Managing Director ……………………… and Chief Operating Officer

3. Mr. Chatchaval Jiaravanon Director and Managing Director ……………………… Group Investment

4. Mr. Athueck Asvanund Vice Chairman, ……………………… Group General Counsel and Acting Company Secretary

5. Mr.William Harris Chief Financial Officer ………………………

Authorized Person

Dr. Pishnu Suntharanund Director ……………………… Treasurer

Mr. Thanit Vinijsorn Director ……………………… Accounting

Mrs. Rangsinee Sujaritsunchai Deputy Company Secretary ………………………




AACCKKNNOOWWLLEEDDGGEEMMEENNTT OOFF TTHHEE CCOORRRREECCTTNNEESSSS OOFF TTHHEE IINNFFOORRMMAATTIIOONN

2. Acknowledgement of the correctness of the information by the Non-Executive Directors

“I have reviewed the information in this Annual Registration Statements with due care in my capacity as a Non-Executive Director of the Company and I have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform.

To witness that all documents that I have reviewed are those same set of documents which I have reviewed and have no reason to suspect that said information is inaccurate or incomplete, is untrue or misleading or missing such material information that otherwise should inform, I have authorized Dr. Pishnu Suntharanund, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai to initial every page of those documents. In case any of those documents does not have the initial signature of Dr. Pishnu Suntharanund, Mr. Thanit Vinijsorn and Mrs. Rangsinee Sujaritsunchai, it will be deemed that I have not reviewed the information contained in such documents.”


Mr. Narong Srisa-an Independent Director ………………………

Authorized Person












Mr. Vitthya Vejjajiva Independent Director and ……………………… Chairman of the Audit Committee

Authorized Person












Dr. Kosol Petchsuwan Independent Director and ……………………… Member of the Audit Committee

Authorized Person












Mr. Joti Bhokavanij Independent Director and ……………………… Member of the Audit Committee

Authorized Person












Mr. Dhanin Chearavanont Chairman ………………………

Authorized Person












Mr. Sumet Jiaravanon Vice Chairman ………………………

Authorized Person












Dr. Ajva Taulananda Vice Chairman ………………………

Authorized Person












Mr. Chaleo Souvannakitti Vice Chairman ………………………

Authorized Person












Mr. Soopakij Chearavanont Director ………………………

Authorized Person












Mr. Umroong Sanphasitvong Director ………………………

Authorized Person












Mr. Heinrich Heims Director ………………………

Authorized Person












Mr. Andreas Klocke Director ………………………

Authorized Person












Mr. Harald Link Director ………………………

Authorized Person












Dr. Lee G. Lam Director ………………………

Authorized Person


