2Q 2001 Earnings

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2Q 2001 Earnings Analyst Conference 20th August
2001
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Outline

• Highlighted Issues
• TAs sales revenue strategy/
• Market competitiveness
• Regulatory environment
• Organization strategy
• CP Orange
• Financial Results and Financial Risk
• Reduction Strategy
• Summary

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• TAs Sales Revenue Strategy/
• Market Competitiveness
• High Capacity Utilization
• Business / Data Market Leader

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High Capacity Utilization Strategy
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High Capacity Utilization Strategy
Net Additions (TA vs. TOT)
Net Additions (1H 2001 vs FY 2000)
Net Additional Lines (lines per quarter)
1H 2001 Net Additions of 138,780 Surpassing FY
2000
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High Capacity Utilization Strategy
Effect on ARPU Better Customer ARPU Ramp-Up
Compared to Last Years
Takes 4 mths to reach steady state ARPU for new
added subscribers in 2001
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High Capacity Utilization Strategy
ROIC / ARPU Wireline PCT

• ARPU (WirelinePCT) up 2.6 YoY
• ARPU (Wireline only) dropped 4.3 YoY

Baht / Customer / Month
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High Capacity Utilization Strategy
Results of Strategy

• Expanded customer base across both business and
  residential segments
• TAs net add substantially exceeds TOTs BMA net
  add
• Capacity utilization strategy has had no negative
  impact on ARPU
• Increase in churn is a natural, industry-wide
  phenomenon
• One time increase in customer acquisition cost,
  but will be recovered within a short period of
  time ( 6 months)
• The negative effects of intensified competition
  have been offset by the positive results of the
  Capacity Utilization strategy

Overall, the Capacity Utilization Strategy Has
Yielded Favorable Results
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High Capacity Utilization Strategy
For 2H 2001, our sales strategy will focus on

• differentiating TA Groups products via product
  bundling
• POTS PCT (lend PCT handsets for 3 years)
• POTS Internet access (ClickTA, TA Express, and
  affordable PCs)
• POTS CPO mobile PCT
• extending the lowered barrier to entry promotions
  

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Business / Data Market Leader
TOTs high BusinessConsumer revenue mix (gt55)
implies that TA has significant room to grow in
the Business segment
ConsumerBusiness Revenue Mix
Consumer lt45
Business gt55
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Business / Data Market Leader
Progressing Towards Business Segment Leadership

• Reorganized Business Enterprise dept. to be
  nimble by reducing layers and expanding span of
  control
• Brought in ex-GM of Dell Computers Thailand to
  head Business Enterprise
• Further segmenting the business market by
  establishing Strategic Accounts and Strategic
  Buildings sales units
• Positioning to be the first mover in the emerging
  wholesale market segment
• Developing special packages targeting the
  low-key, but potentially high ARPU SME and SOHO
  segments
• Created Biz Center dedicated to serving key
  business customers

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Business / Data Market Leader

Digital Data Network a basic and high-growth
data service
Cumulative Circuit Billed (1999-2001)
DDN Revenues (1999-2001)
Circuit
Bt Mn

• 426 net circuit billed in first half 2001, 11.5
  growth from YE 2000

• Revenues continue to grow due to focus on
  high-bandwidth customers

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Business / Data Market Leader
Leased Line or DDN Market Shares by No. of Links
in greater BKK
1997
2001
Source IDC
Source NIDA School of Applied Stats, 2001

• Focus on high bandwidth, high margin market
• Solution based consultation approach

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TA Broadband Services FY 2001 Target Customers
Business / Data Market Leader
Complete Broadband Solutions

• ADSL
• Cable Modem
• ISP Wholesale Ports
• Internet Dial-up

Other Data Internet Services
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Broadband Service Development
Business / Data Market Leader

• Access Basic Infrastructure
• Wholesale Content Infrastructure Development
  e.g. IDC
• Gigabit Ring/Internet Xchange
• e-Commerce Development
• MAP, Content Aggregation Development

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Regulatory Environment

• Telecom Business Act
• NTC
• TOT Privatization vs.
• Concession Conversion

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Regulatory Environment

• Telecom Business Act
• Draft of Telecom Business Act has passed the
  Cabinet.
• The draft Bill is now at Senates Standing
  Committee on Communications
• Assurance for TA to be awarded with License
• Mechanism to convert the Concession
• NTC
• Senate rejected the proposed NTC. The issue was
  submitted to The Juridical Council by the
  Permanent Secretary Attached to The Prime
  Minister Office.

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Regulatory Environment

• TOT Privatization and Concession Conversion
• The government is encouraging the privatization
  process to be finished by YE2001.
• State Enterprise Policy Committee has appointed
  the new Concession Conversion Sub-committee.
• The Sub-committee appointed Chulalongkorn
  University as advisor and to conduct the study on
  the Concession Conversion framework.

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Organization Strategy

• Management Level vs. Competency (De-Layering)
• Regulatory Function
• Internal Audit / Risk Management
• Innovation Profit Oriented Organization

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CP Orange
Remark CP Orange slides are excluded from this
handout.
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• Financial Results Financial Risk
• Reduction Strategy

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2Q 2001 Results
Total Revenues
Core Operating Expenses
In MB
In MB
17 Growth
11 Growth
EBITDA
Net Additions - Wireline
In MB
Subs.
5 Growth
165 Growth
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1H 2001 Results
Total Revenues
Core Operating Expenses
In MB
In MB
11 Growth
17 Growth
EBITDA
Net Additions - Wireline
In MB
Subs.
5 Growth
129 Growth
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2Q 2001 1H 2001 Results
Revenue Profile
Unit THB Million
2Q01 2Q00 1H01 1H00 Chg
Chg Core Wireline-Voice 3,831 3,648
5 7,594 7,103 7 Basic Wireline-Voice 3,331 3,25
5 2 6,596 6,362 4 Value Added
Services 500 393 27 998 741 35 Wireless 833 526
58 1,636 1,195 37 Usages 683 375
82 1,311 751 75 Handset SalesOthers 150 151
- 325 444 (27) Data Communications 101 78
29 199 151 32 Broadband/Internet 258 240
8 507 479 6 Others 66 74 (10) 134 118 14 Total 5,
089 4,566 11 10,070 9,046 11
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2Q 2001 1H 2001 Results
Operating Expense Profile
2Q01 2Q00 1H01 1H00
Chg Chg Core Opex 1,532 1,313 17
2,943 2,508 17 Personnel Expenses 550 479 15
1,084 963 13 Network Expenses 478 422 13 865
811 7 Selling Promotions 193 136 42 360 254
42 Others 311 276 12 634 480 32 Revenue
Sharing 798 696 15 1,566 1,370 14 Cost of
Sales 254 167 52 493 356 38 Cash Operating
Expenses 2,584 2,176 18 5,002 4,234 18 Depreciat
ion Amortization 1,940 1,918 1
3,870 3,795 2 Total 4,524 4,094 10
8,872 8,029 11
Unit THB Million
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2Q 2001 1H 2001 Results
EBITDA Margin
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2Q 2001 1H 2001 Results
Cash Flow Highlights
Unit THB Million
2Q01 2Q00 1H01 1H00
Chg Chg Cash flows from operations 1,459 657
122 2,540 1,371 85 Less Capital
expenditure 942 505 87 1,345 775 74 Free cash
flow 517 152 240 1,195 596 101
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2Q 2001 1H 2001 Results
Debt / EBITDA
EBITDA/ Interest Coverage
Cash Flow from Operations
Consolidated Debt Profile
In MB
85 Growth
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1H 2001 Results
Results - Actual vs. Target
2001 G 1H01(A) 1H00(A)
G (Target)

9,046 4,812 1,462 680 274 470 775 5,040
11 5 14 (3) 65 (1) 74 9
10,070 5,068 1,664 659 453 465 1,345 5,510
14-18 10-14 14-19 0-(5) gt 40 Flat 35-40 8-12
Revenue (MB) EBITDA (MB) Line billed
(thousand lines) ARPU POTS (Bt/line/mth) PCT subs
(thousand) ARPU PCT (Bt/sub/mth) CAPEX (MB)
Headcount (persons)
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Financial Risk Reduction Strategy

• Foreign exchange risk exposure will be reduced
  through
• Prepayment of loans
• Currency swap
• Local debenture
• Capex funded by internal cash flows policy
• Committed to enhance corporate governance
• International standard of disclosure via IAS

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Summary
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Summary
Revenue

• Capacity utilization
• Need to expand into new area of revenue/data
  broadband (including wholesales)
• Need to aggregate and bring customers and
  contents together in order to increase usage and,
  thus, ARPU
• Ability to offer and deliver access solutions to
  customers by segments
• Nationwide network solution capability
• BKK market
• Voice market will be very competitive. There will
  be more overlapping among wireless and wireline.
  However, the market will be expanding. What we
  need to ensure is for among the operators to
  understand and share the sense of not to destroy
  the market value

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Summary

• Lower debt (USD), Improve Debt/Equity ratio
• Expand EBITDA
• Push for formation of NTC and concession
  conversion
• Tariff rebalancing
• Successful launch / 1m. subs.
• Maximize synergistic value between TA and CPO

Financial
Regulatory
CPO
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Summary
From Product Focus to Customer Focus
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Thank You
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Safe Harbor Statement
This presentation contains statements about
expected future events and financial results that
are forward-looking and subject to risks and
uncertainties. Undue reliance should therefore
not be placed on said forward-looking statements,
which speak only as of the date hereof. Factors
which may affect future results of the Company
are discussed in our recent filings with the
Securities and Exchange Commission.