Annual Report 2008 - TOT by wangnianwu

VIEWS: 3 PAGES: 156

									Contents
           02   Message from the Chairman of the Board
           04   Message from the President
           08   Company Information
           09   Key Finance Information
           10   Key Service Information
           11   Highlight of Service and Activity in 2008
           14   Vision and Mission
           15   New Business Opportunity
           20   Business Nature
           20      ë A Summary
           25      ë Services Jointly Provided with Private Companies
           26      ë Shareholdings in Other Companies and Joint Ventures
           28      ë Competitive Trends and State of Telecommunications Industry
           29      ë Plans/Project of Futurity
           30      ë Research and Development
           33   Human Resource Management and Development
           35   Organizational Structure
           41   Board of Directors
           51   Name of Top Executives
           57   Good Corporate Governance
           62   Internal Control
           63   Inside Information
           64   Risk Management
           66   Audit Committee Report
           67   Adherence to the Official Information Act, B.E. 2540 (1997)
           70   Social Activity
           73   Universal Service Obligation (USO)
           75   Managementûs Discussion and Analysis of Financial Status and Performance
           79   Report on the Board of Directorsû Responsibilities in Respect of the
                Financial Statements
           80   Auditorûs Report
           81   Financial Statements
Message from
the Chairman of the Board




                          With the advent of changing technology,
                         the Next Generation Network is deployed.

     2008 was a difficult year as the financial crisis in major economies pushed most parts of the world
into recession, and this combined with political instability in Thailand inevitably faced TOT with some
extreme difficulties. The Board of TOT members and executives, however, do not feel discouraged in its
ability to break through this crisis, and we will stand united to create stability for advancing forward and
sustaining the Thai telecommunications business.

     Under the supervision of His Excellency the Minister of Information and Communication Technology, along with the
sole stockholder of the Ministry of Finance and the policy of the Board, TOT began its leap into business-oriented
development and the re-branding process, focusing on offering the best services available and a customer-centered
orientation.
     For the operation in 2008, we put forth hard effort to push forward and supervise the urgent and concrete policies
needed to effectively yield the realized performance of the company. This can be seen by:
     ë the acceleration and shifting of technology to the international standard by opening the newly active line of NGN
       Network Technology
     ë TOT as being the first provider in Thailand to offer 3G mobile services
     ë increasing the access speed of the 3G network
     ë improving the quality of services, resulting in enhanced customer satisfaction
     To parallel with national benefits:
     ë TOT launched an increase in universal services and IT access opportunities, such as providing 1,080,500 ports for
       broadband internet customers
     ë telecommunications services were offered for the Bangkok Chaengwattana Government Center Project
     ë technology replacement improved for subscribers in the Wireless Local Loop Project, etc.
     As far as the organizational management is concerned, we encourage TOT to be an organization which preserves and
focuses itself on the principles of good governance and economic valued management; i.e., to have a suitable and flexible
organization structure, encourage personnel development at every job level, and to create the motivation for unanimous
long-run organizational development and improvement.
                                                                                                                                  02
                                                                                                                                  03




     Moreover, the Board still has the major concerns of continued cooperation between TOT and other government
agencies for the sake of national benefit, and also we have been a participant in many social and environmental activities.
Regarding cases and controversies, we have pushed toward solving the problems of AC and tax, such as with ACT mobile,
the value added tax, etc.
     Even though the financial performance of 2008 was not outstanding, under the yearûs conditions with having a national
and global economic crisis, the results are still satisfactory. It can also be reasoned that during this year, TOT had a lot of
expenditure in investment, operations cost, and debt repayment. In accordance with government policy, TOT additionally
saw a 4% rise in employee salary. We strongly believe, however, that the financial status will improve when the customer
3G Mobile services are launched, and its associated problems solved and the resulting obstacles are cleared.
     The success mentioned can not be achieved without everyoneûs full cooperation. I am confident that with unity,
honesty and transparency, proper regulation, and the persistence to overcome whole obstacles will be the major force
required by us to foster and preserve this success. Also, TOT will be able to turn around and stand tall as the forever symbol
of Thailandûs telecommunications business.


                                                                      Professor Dr. Teravuti Boonyasopon
                                                                                      Chairman
Message from
the President




                 Third Generation Mobile Telephone (3G) project;
          the cellular mobile technology supports multi-services offerings
                  to all consumersû lifestyle in the modern society.




    In the year 2008, TOT has been impinged upon, to some degree, by the national economic
downturn. Even so, weathering the storm, the performance of the Company is still akin to that of the
preceding year, 2007. This is partly a result of the execution under the turnaround plan which focuses
on material prosperity of the broadband Internet service, and partly of the prudent expenditure and
investment.




     In the year 2009, TOT has prioritized investment in diverse projects which enhance the efficiency of services provided
to the general public, and which cohere with telecommunication technology advancement, e.g. the broadband IP expansion
project, the next generation network in place of the expired SPC exchange project, and the 3G cellular service project.
These schemes have been implemented by employing technology resources which support services for diverse lifestyles
in modern society. Additionally, for the purpose of the best quality service and greatest customer satisfaction, TOT has
enhanced its high competitiveness with 24/7 clusters of services, products, as well as VIP customers who deserve
assiduous attention.
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     TOT has thrived all through these 54 years with full support of both public and private sectors as well as the general
public and its employees who serve their customers with dedication and fidelity in response to customer demand, thereby
effectuating the Company to prosper as a core of the national development forever.




                                                                                        Mr. Varut Suvakorn
                                                                                               President
NEXT
Leading to innovative services and
technologies that meet everyday
life both business and entertainment.
Company
Information




     TOT Public Company Limited, hereinafter referred to as TOT or the Company, had been operated as
the Telephone Organization of Thailand for 48 years before being transformed into TOT Public Company
Limited on July 31, 2002, under the State Enterprise Corporatisation Act B.E. 2542 (1999). Accordingly,
all rights, entitlements, debts, obligations, assets, and staff formerly belonging to the Telephone Organization
of Thailand were transferred to TOT Public Company Limited. In this regard, TOT remains a state
enterprise of which the Ministry of Finance is a sole shareholder.

Company Name:                     TOT Public Company Limited
Short Forms:                      The Company / TOT
Registered Number:                0107545000161
Head Office Location:             89/2 Moo 3 Chaeng Wattana Road, Thungsonghong, Laksi District
                                  Bangkok 10210, Thailand
Type of Business:                 Engaged in providing telecommunications and other related services through
                                  sole operations and/or joint ventures with other entities, including investment by
                                  owning shares of other companies
Customer Relation Centre:         Telephone: +66 2240 0701
Website:                          www.tot.co.th
Issued and Paid-up Share Capital: 6,000 million baht (six thousand million baht)
Share Type:                       600 million common shares (six hundred million common shares), at a par value
                                  of 10 baht per share
Shareholder:                      100 percent owned by the Ministry of Finance
Reference:
    Auditor:                      Office of the Auditor General of Thailand
    Office:                       Rama VI Road, Phayathai, Bangkok 10400, Thailand
    Telephone:                    +66 2273 9674-91
    Facsimile:                    +66 2618 5783
Key Finance                                                                                                                        08
Information                                                                                                                         9
                                                                                                                                   09

                                                                                                        Unit : Million Baht
                                          Details                                                  2008         2007
  Financial Performance
    1. Total Revenues*                                                                            52,572.4         52,793.4
    2. Total Expenses*                                                                            45,802.1         44,766.1
    3. Adjusted Items in Account - Concession Agreements
       3.1 Amortisation of deferred income - from concession agreements                           19,588.5         18,393.2
       3.2 Depreciation - assets from concession agreements                                       17,465.5         16,493.3
    4. Operating Income before Interest Expense and Income Tax (1 - 2 + 3.1 - 3.2)                 8,893.3          9,927.2
    5. Interest Expense                                                                              662.4          1,016.2
    6. Income Tax                                                                                  2,628.1          2,678.3
    7. Net Profit (4 - 5 - 6)                                                                      5,602.8          6,232.7
  Financial Status
    Total Assets                                                                                253,794.2        266,244.0
    Total Liabilities                                                                           145,158.1        156,732.9
    Total Shareholdersû Equity                                                                  108,636.1        109,511.1
  Financial Ratios
    ë   Current Ratio (Times)                                                                          1.8              1.8
    ë   Debt to Equity Ratio (Times)                                                                   1.3              1.4
    ë   Interest Bearing Debt to Equity Ratio (Times)                                                  0.1              0.1
    ë   Net Profit Margin (%)                                                                          7.8              8.8
    ë   Rate of Return on Equity (%)                                                                   5.1              5.9
    ë   Rate of Return on Total Assets (%)                                                             2.2              2.5
    ë   Earnings per Share (Baht)                                                                      9.3             10.4
    ë   Collection Period (Days)
        - Private debtors                                                                               54               55
        - Government debtors                                                                            91              107

Note: * These numbers exclude amortisation of deferred income - from concession agreements as well as depreciation - assets from
        concession agreements. For further details, see Auditorûs report and financial statements on Page 79 - 151
Key Service
Information

                                                                                            % Increase                Fixed line telephone
                   Services                         2008           2007          2006       (Decrease)     Million
                                                                                                            lines
                                                                                            2008/2007            8
                                                                                                                 6
 Fixed line telephone                                                                                            4
 Number of lines in service (Unit : line)          6,664,754     6,708,974      6,708,339      (0.66)            2
                                                                                                                 0
 - TOT (Metropolitan & Provincial)                 3,712,391     3,683,856      3,630,805       0.77                     2008   2007    2006

 - true (Metropolitan)1/                           1,786,613     1,840,355      1,883,038      (2.92)
 - TT&T (Provincial)1/                             1,165,750     1,184,763      1,194,496      (1.60)                      Payphone
                                                                                                          Hundred
 Number of lines in service                            10.47         10.64          10.68      (1.60)    thousand
                                                                                                             lines
                                                                                                                 4
 per 100 Population2/
                                                                                                                 3
 - Metropolitan                                        37.08            38.82      39.59       (4.48)            2
 - Provincial                                           6.09             6.09       6.05        0.00             1
                                                                                                                 0
                                                                                                                         2008   2007    2006

 Payphone
 Number of lines in service (Unit : line)           312,605       325,804        365,111       (4.05)                    Mobile phone
 - TOT (Metropolitan & Provincial)                  261,605       274,804        314,111       (4.80)      Million
                                                                                                            lines
 - true (Metropolitan)1/                             26,000        26,000         26,000        0.00           40
                                                                                                               30
 - TT&T (Provincial)1/                               25,000        25,000         25,000        0.00           20
 Number of lines in service                            4.91          5.17           5.81       (5.02)          10
                                                                                                                0
 per 100 Population2/                                                                                                    2008   2007    2006

 - Metropolitan                                        10.95            12.19      12.46      (10.15)
 - Provincial                                           3.92             4.03       4.75       (2.85)        Broadband internet via DSL
                                                                                                          Hundred
                                                                                                         thousand
                                                                                                             ports
 Mobile phone                                                                                                    8
                                                                                                                 6
 Number of lines in service (Unit : line)         27,250,658 23,892,708 19,424,552             14.05             4
 - TOT (470 MHz System)                                2,569      2,966      3,488            (13.39)            2
                                                                                                                 0
 - AIS (900 MHz System)1/                         27,230,035 23,834,306 19,332,085             14.25                     2008   2007    2006

 - Thai Mobile (1900 MHz System)                      18,054     55,436     88,979            (67.43)
                                                                                                          Broadband internet via IPSTAR
                                                                                                              Ten
 Broadband Internet                                                                                      thousand
                                                                                                             ports
 Number of ports in service (Unit : port) via       701,374       444,309        286,090      67.86              4
                                                                                                                 3
 - DSL3/                                            675,557       423,606        273,179      59.48              2
 - IPSTAR Satellite                                  25,817        20,703         12,911      24.70              1
                                                                                                                 0
                                                                                                                         2008   2007    2006
 Leased Line
 Number of Circuits in service (Unit : Circuit)       42,814           38,210     34,115      12.05                       Leased line
                                                                                                               Ten
 - Analog                                             15,678           15,393     15,226       1.85      thousand
                                                                                                           circuits
 - Digital                                            27,136           22,817     18,889      18.93              5
                                                                                                                 4
                                                                                                                 3
Note : 1/ Joint invesment and joint operational companies                                                        2
       2/ Includes joint invesment and joint operational companies                                               1
                                                                                                                 0
       3/ DSL unit is adjusted from equivalent port to physical port                                                     2008   2007    2006
Highlight of Service                                                                                                         10
and Activity in 2008                                                                                                         11


     During the preceding year, TOT efficiently provided telecommunication services to satisfy user demand of diverse
categories and comprehensive coverage, thereby gaining trust from various government sectors, state enterprise agencies,
and behemoths to be their domestic and international service providers. Highlights of TOT services and activities in 2008
are summarized below.

Service
ë Mounting a one stop telecommunication system at Chamchuri Square-a huge urban complex-owned by
  Chulalongkorn University. The overall project encompassed the design and installation of Internet Protocol (IP)
  communication network, wireless Internet network, and fiber optical cable network in order to support different
  services including fixed line telephone, broadband and Wi-Fi Internet, Web Payphone, as well as leased line and circuit.
  Importantly, this telecommunication project functions as a business backup for entrepreneurs and shoppers on the
  premises to efficiently and variably communicate as they wish.
ë Investing in and operating the modification and maintenance of telephone network project for Khon Kaen University
  (KKU) and other communities in locality. For this project, the MSAN and wireless exchanges supplanted the former
  system in order to maximize the competency and quality of telephone and data communications network of the
  university. Such network supports a wide variety of service requirements, covers overall KKU area and its vicinity. KKU
  has granted the right to TOT as its sole service provider for 5 years.
ë Providing ADSL-VPN services with 512/256 Kbps+ modem speed to personnel and students of the University of
  the Thai Chamber of Commerce (UTCC) under the çUTCC@home by TOTé project. In this regard, TOT utilizes its
  communication network to connect the UTCC residences with UTCC server to fulfill diverse customer requirements,
  e.g. retrieval of research data as well as academic findings from educational institutions and organizations worldwide.
ë Offering, in collaboration with Advanced Info Service PLC. (AIS), fixed mobile convergence service with one number
  synchronized for both home-based telephone and cellular mobile phone by installing indoor Wi-Fi to support VoIP
  (Voice over IP). As a contract partner, TOT is in charge of the indoor fixed line and ADSL network. The outdoor
  network, on the other hand, is in AISûs responsibility and is charged at AISûs rate without interconnection charge.
ë Cooperating with business alliances-McDonaldûs, PTT, Major Cineplex, and Doi Tung Coffee Shop-to offer Wi-Fi
  services by ADSL expansion in 3,000 sites countrywide in response to sundry lifestyles of a new generation who
  desire freedom of ubiquitous online communication at the lowest price of only 3 Satang per minute.
ë Jointly supporting the installation of network equipment with computer set and printer by WiMAX Internet technology
  in the 2.3 GHz band at the Tele-Center for Education and Development in Rural Area in northeastern Thailand.
  This project is a prototype of social and communal development collaboration among universities, schools, local
  administrative bureaus, and communities. In this respect, Rajabhat Mahasarakham University and King Mongkutûs
  University of Technology North Bangkok are jointly the epicenter of the project.
ë Testing BWA/WiMAX technology in the 2.5 GHz band for broadband wireless Internet connection service at
  Cholburi Province by verifying the reliability and stability of the system as well as its real-time service quality.
ë Initiating TOT postpaid payment as an alternative channel of service payment for residential subscribers to TOT
  Internet. To apply for membership, log on to the website: www.totpostpaid.com.
ë Launching TOT Netcall-a VoIP telephone service over internet network-to promote public saving on their
  communications bills. The service is charged at a reasonable price in line with the royal Sufficiency Economy.
  Domestic and international calls can optionally be made by either postpaid or prepaid access.
ë Introducing TOT Netlog Access Terminal and TOT Netlog Gateway for collecting computerized traffic data for any
  service provider responsible for such duties under the Computer Related Crime Act B.E. 2550 (2007). With regard to
  this law, the authorized service provider refers to a person who provides others with access to the Internet or the
  ability to reciprocally communicate by other means through a computer system. In the year B.E. 2551 (2008), this law
  becomes effective for 1) entrepreneurs who offer access service to the Internet network in guest rooms, rented
  rooms, hotels, or restaurants and refreshment stalls; 2) corporate access service providers such as government
  agencies, companies, or educational institutions; 3) Internet service providers; and 4) online game providers.
                                                                                                                                12
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Support of International Telecommunication Organization
ë Providing telecommunications and ADSL in the 7th APEC Ministerial Meeting on Telecommunications and
  Information Industry, which ICT ministers and senior executives from 21 Asia-Pacific countries attended.
ë Offering telecommunication and traffic data collection services as well as demonstrating TOTûs capabilities and
  potentialities by participating in ITU Telecom Asia 2008 with state-of-the-art technological showcase, e.g. home-based
  IP phone, public card phone, leased line/circuit, wire-line and wireless broadband Internet, leased line Internet, services
  of TOT Academy, products and services of research and development team, etc.

Honorable Accolade
ë Winning the Readerûs Digest Trusted Brands Gold Award 2007 for the çtelecommunicationsé category in Thailand by
  Readerûs Digest and Nielsen Media Research for the third year in a row. Based upon their reliable survey, this award
  is clearly reflective of the continuous trust the consumers have in TOT image and brand.
ë As the Tales Runner online game service provider, obtaining two prizes-the Outstanding Games Service Provider and
  the Outstanding Game-for the çcasualé category awarded in the Bangkok Interactive of Thailand Game Festival 2008.
  The event displayed the potentialities of software technology industry in Thailand. In particular, Tales Runner game was
  nominated by the three Thai ministries including Ministry of Culture, Ministry of Information and Communication
  Technology, and Ministry of Public Health to be one of the top ten inventive games which promote juvenilesû
  enhancement of learning skills.
ë As the network supporter of satellite distance learning program throughout 13 years and broadcaster of the
  advertisement on çKru Tué series (screen teacher), finishing runner-up in the Best TV Commercial in the category of
  service from the 7th Best TV Commercial for Consumer Project 2007 organized by the Consumer Protection Board.
  This series was produced in celebrations on the auspicious occasion of His Majesty the King Bhumibhol Adulyadejûs
  80th birthday anniversary.
Vision
and Mission




  Vision
  çTo be a national telecommunication
  operator closely responding to the
  customer and the public demand
  economically and sociallyé



  Mission
  çTo provide telecommunication services
  with innovation corresponding to customer
  requirement under the awareness of
  national security on information, enabling
  people to have reasonable access on an
  equitable basis to information and public
  services in conformity with the prevailing
  economic and social situationé
New Business                                                                                                                    14
Opportunity                                                                                                                     15


     In 2008, to increase customer retention and income from the business with great potential for considerable growth,
TOT redirected its business to broadband Internet and multimedia extended from readily available voice services. In accord
with its Turnaround Plan B.E. 2551 - 2554 (2008 - 2011), TOT focused on the reorganization of its corporate major income
by increasing its revenue from the marked rise in the use of broadband Internet and data communication services. Such
target has been accomplished by enlarging TOTûs service areas to comprehensively cover the whole country-one of its
strengths, taking maximum advantage of competition in terms of service cost, and offering new services in a swift manner.
Moreover, TOT was strongly determined to enhance its network to become more up-to-date and more efficient in order to
support new services and bolster its customersû confidence to wholeheartedly use TOT services. Combined, these
improvements will jointly drive TOT to become a network provider and telecommunication service provider which is able to
offer comprehensive ICT solutions, thereby appropriately responding to the Companyûs tasks in terms of business as well as
the government policy. For the overview of its operation in the past year of 2008, TOT has adopted the following strategies:
     1. Becoming a network provider to guarantee the national security in aspects of ICT information
     2. Penetrating into both wired and wireless broadband Internet market and progressing to becoming the society of
         wireless communication
     3. Elevating its service quality to optimize customer satisfaction
     4. Developing businesslike management procedures
     5. Decentralizing advancement to rural areas and creating learning opportunities to villagers
     6. Stabilizing the income from fixed line and payphone

     Below are the three salient plans/projects which have driven TOT to attain its corporate goals, to correspond to
diversifying business directions of futurity, and to fulfill customer requirements. Detailed discussions of each plan/project
are followed.
     1. The Broadband Internet Expansion Plan
     2. The Broadband IP Network Extension Project
     3. The Third Generation (3G) Network Construction Project

The Broadband Internet Expansion Plan
     The ongoing trend of customer requirements, of which the usage of photograph and video information is consistently
growing, encouraged TOT to swiftly adjust and install additional equipment to enlarge its broadband Internet areas.
This plan is aimed at spreading out 3.76 million ports of both wired and wireless broadband Internet within the year 2011.
Such endeavor will not only create more Companyûs income to advance to become a leader in the broadband market, but
also promote and develop the national ICT infrastructure.
The Broadband IP Network Extension Project
     TOT has carried out the Broadband IP Network Extension Project aimed at establishing new broadband IP network to
serve the Next Generation Network (NGN) at the Transport Network level. This new network will increase the network
capability, support escalating customer requirements for multimedia services, and conform to TOTûs long-range business
directions.
     Accordingly, TOT will set up its broadband IP network by installing IP network and transmission equipment whilst
cutting over services from the former network to the new network within 2010.
     Anticipatory benefits from launching the Broadband IP Network Extension Project are as follows:
     ë Supporting a vast variety of cutting-edge services on the sole network, thereby retrenching operation cost,
          managing network more efficiently, and reducing high cost of system management and maintenance.
     ë Serving broadband services for individual groups. For this purpose, TOT will invest in the full coverage of the
          broadband Internet countrywide, creating a tremendous variety of new data communication services to fulfill
          customersû sundry lifestyles in terms of data transmission speed, device, convenience, and content.
     ë Providing full ICT solutions for enterprise customers, including setting up and escalating wholesale services,
          thereby expanding customer base and increasing income in the future.
     ë Being compatible with 3G mobile phone service and WiMAX which are two of TOTûs inaugurations, among
          many others.
     ë Satisfying customers who have demanded for the high standard on Quality of Service (QoS), thereby promoting
          immense customer satisfaction and confidence in TOT services.
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                                                                                                                                 17

The Third Generation (3G) Network Construction Project
       TOTûs 3G Network Construction Project is aimed to provide mobile phone services in terms of both voice and
non-voice data services at the high speed level, and to serve futuristic, special services. To accomplish this goal,
TOT considers deployment of 3G mobile phone technology using WCDMA system due to its high capability in providing
data communication with absolutely high speed. Its voice service is even more efficient than GSM. In addition, WCDMA is
suitable in terms of cost effectiveness, infinite variety of low-cost device, and compatibility with 2G roaming system locally
and globally.
       As aforementioned, in order to increase the potential of its corporate competitiveness and to retain its customer base,
TOT proposed its 3G Network Construction Project to the Cabinet. The Cabinet, then, adopted the resolution assenting to
this project proposal in the Cabinet meeting on September 9, 2008. This project is allocated the total budget of 29,000
million baht, by which the Ministry of Finance is the loan guarantor and provider of suitable loan sources. With this respect,
3G network construction will be started with the important metropolitan and provincial areas and then will be extended to
all provinces nationwide. To prevent investment redundancy, other service providers can rent TOT network, whereby
frequency resources are utilized in a worthwhile manner and greater wireless broadband requirements are adequately
fulfilled.
       Here are the three major benefits expected to derive from such Project.
       ë Benefits for subscribers
           The third generation mobile phone service will enable subscribers to use better ICT services. For instance,
the users can download data, photographs, and motion pictures with greater convenience, speed, and efficiency.
The 3G technology also supports multimedia services which promptly respond to behaviors and lifestyles of modern
consumers in various aspects, e.g. education, entertainment, finance, etc. Additionally, CCTV security systems can be also
provided by using video signals via real-time 3G mobile device.
       ë Benefits for the economy
           The inception of TOTûs 3G Network Construction Project will benefit the overall economic system. To explain,
such project will minimize the inequality and gap in accessing ICT service between urban and rural areas. It can also be
deployed as a tool to escalate the capability of the nationûs competitiveness in the era of electronic society, thereby
resulting in stimulation of employment in different areas while supporting telecommunication industry and related activities.
       ë Benefits for the society
           This project will raise the living standard of the Thai society and its people because of the fact that people can
equally access the information rapidly and comprehensively with better quality of services. The Internet service with
wireless 3G technology will efficiently broaden the Thai peopleûs worldview so that they can efficiently perceive swiftly
ongoing changes of education, economy, medicine, and health, thereby developing to a learning society in which
information, knowledge, and entertainment are taken to every single Thai and each household on an equitable basis.
GENERATION
 Leading to the future of wireless
  communications, convenience
  and speed could be reached
  with a touch of a finger.
Business
Nature

     TOT has long been expanding its business from, initially, a provider of fixed line service to, currently, a provider of
complete telecommunication services comprehensively covering voice, picture, and data. With its ultimate goal to
satisfy demand of all customer segments including the general public, medium-sized and small-sized enterprises, and
conglomerates, TOT is, at the present time, the largest fixed line service provider in the country. The Company also
provides customers with broadband Internet, multimedia, and mobile phone services.
     As for a summary of its business nature, TOT comprises four key telecommunication services as follows:
     1. Domestic and International Telecommunication Service
     2. Broadband and Internet Service
     3. Wireless/Mobile Service
     4. Related Business

1. Domestic and International Telecommunication Service
      1.1 Fixed Line Telephone
           TOT fixed line service, long provided via its telecommunication network scattered all
over the country, remains the service which creates the largest income to TOT at the
present time. As at December 2008, TOT had approximately 3.71 million fixed line
subscribers or equivalent to 55% market share.
           As for the fixed line services which currently operate on the Public Switched
Telephone Network (PSTN), other supplementary services, and services on Intelligent
Network (IN), TOT has provided both local and domestic long-distance telephone services on
PSTN countrywide. Furthermore, TOT has provided a rich variety of supplementary services
to facilitate customers. Some services on IN includes a toll-free call 1-800, one-number
service, IP network connection, among many others.
      1.2 Payphone
           TOT has provided its payphone services in three forms which are (1) installation and
service provided by TOT per se, (2) lease of payphone sets from a contractual partner, and
(3) joint operation with joint ventures›True Corporations and TT&T Plc. As at December 2008,
TOT had 261,605 public lines in service, or equivalent to 83% market share.
           TOTûs existing public telephones can be divided into three major types
including (1) coin payphones, (2) card/credit card payphones, and (3) payphones
operated using both coins and cards.
           Another supplementary payphone service is çTOT Web
Payphoneé which is a TOT web-based public telephone service
offered specifically to business areas such as Suvarnabhumi
Airport, large department stores, etc.
                                                                                                                                 20
                                                                                                                                 21

                                      1.3 International Telephone
                                          International telephone service is the service entirely operated by TOT itself.
                                The service can be classified into three types: 007, 008, and miscellany. First, the
                           international service via code 007 connects Thailand to 213 destinations worldwide. Second,
                       the international service via code 008 on IP network connects Thailand to 153 destinations
                   worldwide. Third, miscellaneous types of international telephone services, for instance, International
           Free-phone Service (IFS) as well as Home Country Direct Service (HCDS) to 32 destinations globally, etc.

    2. Broadband and Internet Service
           This group of service refers to different services including high-speed data communication, domestic telephone on
IP network, TOT Netcall, TOT Online, Global IP Transit, and network. As at December 2008, there were 675,557 ADSL
ports, or equivalent to 36% market share.
     2.1 Broadband Data Communication
           TOT has inexorably developed its broadband and Internet services, e.g. ADSL, Metro LAN, etc, to respond to
increasing customer demand in an efficient and qualified manner. Below are discussions of the two outstanding broadband
data communication: ADSL and Metro LAN.
           ADSL service is a broadband Internet service via fixed line which can transmit data with high speed. Customers
can simultaneously make fixed-line phone calls while accessing the Internet. ADSL can be also deployed to connect
numerous computer networks among different buildings together.
           Concerning the Metro LAN service, it supports LAN connections among several buildings/offices together via a
fiber optic cable, whereby data transmission speed can be scalable and flexible at a variety of speeds ranging from 2 Mbps
to 10 Gbps. An outstanding feature of Metro LAN is its flexibility of speed augmentation as wished, cost per speed increase
with low rate, high stability of data transmission, etc.
     2.2 Voice over IP (VoIP) Domestic Telephone
           Voice over Internet Protocol (VoIP) service is a cost-effective domestic long-distance telephone service on IP
network under the brand name çY-tel 1234.é This service is a useful alternative for TOT customers.
     2.3 TOT Netcall
           TOT Netcall is a cost-effective telephone service which employs VoIP technology in transforming analog voice
signals to digital packets via the Internet network. The voice quality of TOT Netcall is closely akin to that of the plain old
telephone service (POTS) or traditional telephony, but even more appealing due to its extra lower service charge.
Importantly, TOT Netcall can be used in calling to any fixed line and mobile phone. TOT Netcall can be connected
nationwide and worldwide wherever the Internet access is available.
                                                         2.4 TOT Online
                                                             TOT Online via 1222 is a free Internet service provided to
                                                     TOT fixed line subscribers nationwide. With unlimited number of
                                                  connections, each Internet connection time lasts for two hours and is
                                                charged at only three baht.
     2.5 Global IP Transit
          The Global IP Transit is a service which is connected to the international Internet network via international gateway
in order to appropriately support the nationûs continuous accrual of data communication requirements.
     2.6 Network
          The network service comes in the form of both service provisions by TOT per se and lease of the joint venturesû
network. TOT has offered its network with a tremendous variety of technologies, e.g. microwave, optical fiber cable,
submarine optical fiber cable (covering both the east and the west coasts of Thailand), as well as IPSTAR Satellite.
Moreover, TOT has provided its IP network service, by which TOT provides the network connection for other
telecommunication service providers. This network service provision allows all users nationwide to communicate to one
another among different networks. TOT has conducted this business in compliance with its vision and mission aimed at
becoming a major network operator in Thailand, thereby generating ample opportunities of its network lease options to
other telecommunication entrepreneurs. Other salient network services of TOT are shown below:
          ë TOT offers leased line/circuit services, including analog and digital systems, with countrywide coverage. Its
            customers consist of private businesses, government agencies, and other telecommunication service providers.
          ë High-speed data receipt/transmission on ATM network is another TOTûs network service which can support a
            rich assortment of communication providing high-speed connectivity design from 10 Mbps to 622 Mbps.
            Importantly, ATM technologies offer high-speed voice, data, and multimedia communication with a high degree
            of security.
          ë High-speed data receipt/transmission on Integrated Service Digital Network (ISDN) is another network service of
            TOTûs. This service enables users to communicate with one another in a vast variety of formats including
            ubiquitous picture, voice, and data receipt and transmission via a sole pair of telephone lines. Two options of
            this service can be sought: Basic Access Interface (BAI) and Primary Rate Interface (PRI).

3. Wireless/Mobile Service
     Wireless/Mobile service is a type of service with a high potential to create more income in place of the domestic
long-distance and international telephone service which is falling into a decline. Wireless telecommunication service has
been operated of copious business models, for instance, self-operation, joint operation and joint investment, as well as
lease of satellite channel from other entrepreneurs. Here are some high quality wireless/mobile services of TOT.
          ë GSM 1900 MHz Mobile Phone Service
            TOTûs existing GSM 1900 mobile phone network is projected to offer the third generation mobile phone
            service (3G).
                                                                                                                                22
                                                                                                                                23

         ë 470 MHz Mobile Phone Service
           TOT has employed the NMT 470 MHz mobile phone system to provide mobile phone, fixed line, and payphone
           services outside existing network areas, in order to facilitate the local populace in remote areas where
           telephone line is unreachable. As of December 2008, there were 31,310 lines in service, of which 2,569 were
           mobile phone numbers, while the other 28,741 were fixed lines and payphone numbers outside service areas.
           Furthermore, TOT has digitalized the NMT 470 MHz mobile phone network by deploying CDMA 2000-1X
           technology. Such technology supports various Internet services, offers better quality data transmission,
           enhances security, and supports an increasing number of users using the same frequency.
         ë Wi-Fi Service
           TOT has provided the two services under the names, çTOT Wi-Fié and çTOT HotSpot,é which are high-speed
           wireless internet connection services using Wi-Fi technology. As of December 2008, there were 59,125
           subscribers and 303 service stations.
         ë 900 MHz Mobile Phone Service
           Under a revenue-sharing agreement since 1990, TOT has granted a concession to Advance Info Service Public
           Company Limited to provide NMT 900 MHz and GSM 900 MHz services.
         ë Satellite Communication Service
           TOT has leased IPSTAR Satellite digital bandwidth to provide different services, e.g. leasing it out to other
           service providers, offering the Retail Multimedia Broadband (RMB) to retail customers, providing the Internet
           service via satellite, etc. In addition, such bandwidth is also deployed in providing public telephone service via
           satellite in distant areas. As of December 2008, there were 25,817 satellites for the Internet service and 4,754
           ones for the telephone service.

4. Related Business
    Businesses related to TOTûs core businesses comprise abundant supplementary services
which become new income sources to the Company.
    4.1 Phonecard
        TOT has provided both prepaid and postpaid calling cards which can be used in making
domestic and international calls.
        ë TOT Prepaid is the refilled phonecard service in which calling expenses can be controlled. This phonecard can
           also be refilled/transferred and verified by only one code via the website: www.totprepaid.com. TOT Prepaid
           service can be used with other TOT services such as educational content service, online games via the Internet,
           domestic and international phone calls, etc.
        ë TOT Postpaid is a domestic or international telephone service, by which the call is made and then paid
           afterwards. When applying for TOT postpaid membership, users can use the service via code 1888 at any TOT
           fixed lines or payphones. The total service charge will be included in TOT monthly bill.
        ë TOT Card, for both domestic and international calls, is the payphone card which uses IC Chip Card technology.
      4.2 TOT Internet Data Center (TOT IDC)
           TOT IDC offers a comprehensive range of Internet data services from computer, network, security, monitoring &
management, and customer support systems, to web hosting and co-location services. TOTûs customers, who are Internet
service providers or IDC service providers, will be connected to TOT IDC so that they can offer complete Internet services
both domestically and internationally. Accordingly, small-sized companies or behemoths can select any option based upon
their preferences.
      4.3 TOT Certificate Authority (TOT CA)
           TOT CA is a service which issues electronic certificates to assist in identifying an individual and safeguarding
data transmission via the Internet system.
      4.4 TOT Computerized Traffic Log Management
           Subsequent to the effectiveness of the Computer Related Crime Act B.E. 2550 (2007), any service providers
which provide the Internet access, e.g. educational institutions, schools, government agencies, companies, hotels,
dormitories, Internet cafés, etc, have to be able to identify the users and to save such computerized traffic log data for at
least 90 days.
           TOT offers two types of computerized log management systems for this service as follows:
           ë TOT will provide a customized system specifically to each corporate which fits an organization requiring
             firewall/server and wishes for collecting computerized traffic log data, or has its own servers and needs firewall
             to save such traffic data, etc. TOT netlog gateway can be either purchased or managed by the customers
             themselves, and log data can be sent to store the server themselves or the server at TOT IDC.
           ë As for outsourcing service, TOT netlog access terminal›which suits a corporate with nationwide branches but
             does not need to install servers at every branch and TOT netlog access terminal will send log data to store the
             server at TOT IDC.
      4.5 TOT Testing Service for Telecommunication, Terminal, Cable, and Outside Plant Equipment
           For quality assurance of equipment to be used in service provisions or in products for sale, TOT has provided
reliable testing services of telecommunication tools, terminal equipment, insulated copper cable, optical fiber cable, outside
plant equipment and electrical safety products, in technical testing/verifying laboratories, shield rooms, temperature testing
rooms, electrical appliance safety testing room.
      4.6 TOT Alignment Testing Service for Telecommunication Equipment
           TOT offers testing laboratories certified by the ISO/IEC 17025:2005 qualification in order to perform tests of
various tools, e.g. DC voltage, AC voltage, DC current, AC current, DC resistant, frequency, RF/microwave, optical
instrument, etc, both in the reparation and testing laboratories as well as in the mobile testing vehicle.
      4.7 TOT Technical Research and Support
           TOT has provided numerous solutions for technical problems of broadband Internet, technical problems of
preventive systems (e.g. lightening prevention, prevention via call center, etc), outside plant systems such as devices for
holding the optical fiber cable, and service management systems such as preparation of special billing.
      4.8 TOT Professional Training Program
           TOT Academy has continuously provided one of the most practical corporate training programs in ICT,
telecommunication technology, and management. In collaboration with leading institutions both locally and overseas,
such programs have been consistently developed and adjusted. Some programs are in-house training, while others are
tailored specifically to an individual group of participants.
      4.9 TOT Professional Training Venue and Facility
           TOT Academy has provided professional training and seminar rooms, meeting rooms, and spacious rooms
designed specifically for human resource development activities. In particular, the Academy resourcefully offers small
discussion rooms, small seminar rooms, and large seminar rooms which well serve over 500 participants. The Academy is
fully equipped with high standard facilities, e.g. computers, ICT devices, audio-visual devices, catering rooms, athletic field,
sport club, hospitable service team, and many other standard meeting facilities.
Services Jointly Provided with Private Companies                                                                                 24
    For the purpose of expanding its communication system with the cutting edge of technology and services in order to           25
cover the entire country, TOT offers private companies opportunities of participating in service provision under eight service
groups, as depicted in the following table.

              Concessionaire Group                                                     Service Name
  1. Fixed Line Telephone Service
     1.1 True Corporation Plc.                                2.6 Million fixed lines in the metropolitan area
     1.2 TT&T Plc.                                            1.5 Million fixed lines in the provincial area
  2. Mobile Phone Service
     2.1 Advanced Info Service Plc.                           900 MHz mobile phone (Analogue cellular 900 and digital GSM)
  3. Network Transmission Service
     3.1 True Multimedia Co., Ltd.                            High-speed transmission circuit via multimedia network
     3.2 Jasmine Submarine Telecommunication Co., Ltd.        Circuit in the submarine optical fiber cable network on
                                                              the east coast
  4. Data Communication Network Service
     4.1 Advanced Data Network Communications Co., Ltd. Data communication service in the Datakit Virtual Circuit Switch
                                                        System, Frame Relay, ATM, and ADSL
     4.2 Lenso Datacom Co., Ltd.                        Data communication service via local network
     4.3 Samart Communication Service Co., Ltd.         Data communication service via local network
  5. Network
     5.1 Com-Link Co., Ltd.                             Transmission system via fibre optic cable along railway routes
     5.2 Jasmine Submarine Telecommunication Co., Ltd. Submarine optical fiber cable network (East coast)
     5.3 Thai Long Distance Telecommunication Co., Ltd. Submarine optical fiber cable network (West coast)
  6. Audiotex
     6.1 Infotel Communication (Thailand) Co., Ltd.     1900 Audiotex
     6.2 Thai Audiotex Service Co., Ltd.                1900 Audiotex
     6.3 Samart Multimedia Co., Ltd.                    1900 Audiotex
     6.4 Quality Digital Lines Co., Ltd.                1900 Audiotex
     6.5 Cyber - call Co., Ltd.                         1900 Audiotex
          (The Company terminated the contract on
          September 30, 2008.)
     6.6 108 1900 Audiotex Co., Ltd.                    1900 Audiotex
          (This company terminated the contract on
          November 30, 2008.)
     6.7 M Web (Thailand) Co., Ltd.                     1900 Audiotex
     6.8 Mono Technology Co., Ltd.                      1900 Audiotex
     6.9 Tele-Info Media Plc.                           1900 Audiotex
     6.10 GMM Digitaldomain Co., Ltd.                   1900 Audiotex
     6.11 Tripple A Asset Management Co., Ltd.          1900 Audiotex
     6.12 Evolution Capital Co., Ltd.                   1900 Audiotex
          (This company terminated the contract on
          December 19, 2008.)
              Concessionaire Group                                            Service Name
 7. Payphone
    7.1 Jasmine Telecom Systems Plc.                  The metropolitan, central, northeastern, and southern regions
    7.2 Milcom Systems Co., Ltd.                      The metropolitan, eastern, central, and northern regions
    7.3 Future Telecom Co., Ltd.                      The metropolitan and northern regions
    7.4 Ung Kwang Co., Ltd.                           The metropolitan and northeastern regions
    7.5 Wire & Wireless Co., Ltd.                     The metropolitan and central regions
    7.6 Public Phone Service Co., Ltd.                The metropolitan and southern regions
    7.7 Leading Public Payphone Co., Ltd.             The metropolitan and southern regions
    7.8 Asia Public Phone Co., Ltd.                   The metropolitan and northeastern regions
    7.9 Lenso Phone Card Co., Ltd.                    Payphone Card
 8. Miscellaneous
    8.1 Thaicom Plc.                                  Leased IPSTAR bandwidth and service to operate VoIP,
                                                      Broadband, etc. TOT is the sole National Service Operator
                                                      (NSO) in Thailand.
    8.2 Internet Thailand Plc.                        Network system service via EDC (Electronic Draft Capture)
                                                      network pool
    8.3 Trade Siam Co., Ltd.                          Electronic business data exchange service
    8.4 Consortium Starcom                            Upgrading a NMT 470 MHz mobile phone network
    8.5 Milcom System Co., Ltd.                       IP (Internet Protocol) service
        (Contract expired on February 28, 2008)


Shareholdings in Other Companies and Joint Ventures
                                                                                                           Share-
                Company Name &                            Core Business                  Date of           holding
               Head Office Address                                                     Investment            (%)
 1. Thai Mobile Joint Venture 1                      1900 MHz system                 January 23, 2002       57.89
    89/2 Moo 3 Chaeng Wattana Road, Thungsonghong,   mobile phone service
    Laksi, Bangkok 10210
 2. ACT Mobile Co., Ltd. 2                           1900 MHz system                  August 7, 2000         57.57
    89/2 Moo 3 Chaeng Wattana Road, Thungsonghong,   mobile phone system leasing
    Laksi, Bangkok 10210
 3. Lenso Datacom Co., Ltd.                          Data communications service September 10, 1999          49.00
    Lenso House, 292 Srinakarin, Huamark,
    Bangkapi, Bangkok 10240
                                                                                                                                             26
                                                                                                                                             27

                                                                                                                Share-
                   Company Name &                                       Core Business                     Date of
                                                                                                                holding
                  Head Office Address                                                                   Investment(%)
 4. Advanced Datanetwork Communications Co., Ltd.                 Data communication service September 25, 1997 48.12
     408/157 Phaholyothin Place Building 38th FL.
     Phaholyothin Rd. Samsennai Phayathai
     Bangkok 10400
 5. Mobile Communication Services Co., Ltd.                       Technical and Marketing           December 12, 1997          30.00
     200 Moo 4, Jasmine International Tower,                      Service for NMT 470 MHz
     Chaengwattana Road, Pakkred, Nonthaburi 11120                mobile phone network
 6. Telcard Co., Ltd.                                             Manufacturing of chip cards       November 14, 2000          26.00
     71/22 Soi Chaeng Wattana 1, Chaeng Wattana Road,
     Bangkhen, Laksi, Bangkok 10210
 7. Thai-Amadeus Southeast Asia Co., Ltd.                         Air ticket reservation system      December 3, 1999          20.00
     34/F, The Office At Central World                            service
     999/9 Unit 3406-3412, Rama 1 Rd., Patumwan,
     Bangkok 10330
 8. Internet Thailand Public Co., Ltd.                            Internet Service Provider            May 13, 1997            16.00
     11-12/F, Thaisummit Tower,
     1768 New Petchaburi Road, Bangkapi,
     Huaykwang, Bangkok 10310
 9. Thai Long Distance Telecommunications Co., Ltd.               Submarine Fiber Optic Cable          May 13, 1996            10.00
     200 Moo 4, Jasmine International Tower,                      Network service
     Chaeng Wattana Road, Pakkred, Nonthaburi 11120
 10. True Multimedia Co., Ltd.                                    High-speed data transmission February 13, 1997                8.92
     18 Talecom Tower, Ratchadapisek Road, Huaykwang,             service
     Bangkok 10310
 11. Total Access Communication Plc.                              1800 MHz system                    November 9, 1995           5.57
     333/3 Moo 14 Chai Building, Vipawadee Road,                  mobile phone service
     Jatujak, Bangkok 10900
 12. Trade Siam Co., Ltd.                                         Electronic commercial service        May 29, 1997             3.50
     2/F EDI Building, The Customs Department,
     Klongtoei, Bangkok 10110
Remark :
   1. Thai Mobile Joint Venture: On September 12, 2008, Thai Mobile Joint Venture and TOT signed an agreement to transfer all assets,
       rights, and duties of Thai Mobile Joint Venture as of September 29, 2008 to TOT.
   2. ACT Mobile Co., Ltd.: On August 26, 2008, the Cabinet approved in principle for TOT to obtain the transfer of 50,816,987 shares from
       CAT Telecom Public Company Limited and to buy 0.20% of ACT Mobile shareholding from the Aeronautical Radio of Thailand Limited.
       The transfer of such shares is currently underway.
Competitive Trend and State of Telecommunication Industry
State of Industry and Competitiveness of Telecommunication Market in 2008
     In 2008, the rising oil price in the first half of the year aggravated by the US economic crisis in the second half led to
a continuously higher living costs and a downward trend in the Thai economy at large. Telecommunication industry was also
one of the Thai industries affected accordingly because customers tended to consensually become more frugal and paid
more attention to service rates, whereby alternative technology with lower price becomes more and more appealing.
Evidently, usage volume in traditional PSTN voice communication has immensely dropped, whereas usage volume in VoIP
services has soared up. In 2008, due to a marked rise of demand for broadband Internet from every market segment, the
broadband Internet has had the highest growth rate compared to telecommunication services of other types. As a direct
consequence, operators have experienced tougher competition in the broadband Internet market and data communication
services, especially ADSL, than that in the voice communication market. In this context, the broadband Internet service,
combined with an everlasting number of users, enabled service providers to develop and offer new value added services
and content with a wider variety of favorable, advanced features to the market.
     By and large, all service providers have devised a more sophisticated pricing strategy in order to be competitive for
both voice and data communication markets throughout the year 2008. For the voice communication market, the service
providers have used pricing strategies, such as pricing packages and product bundling, to decelerate a drop in revenue.
Concurrently, the broadband Internet providers have increasingly focused on offering their customers a higher speed of data
transmission with a marginal price increase. Moreover, new value added services and content were offered to conform to
customer preferences and usage behaviors in each market segment. This effort was generally aimed at customer base
expansion as well as customer retention.

Trends of Telecommunication Industry in 2009
      In 2009, the telecommunication industry is likely to be impinged upon by the economic downtrend continuing from the
year 2008. Nonetheless, the 3G license will play an important role in stimulating the overall telecommunication industry as
this leading-edge technology will nurture more domestic investment.
      The total market value of PSTN voice communication will continue to decline in all customer segments due to the
direct impact of price competition from cutting edge of technology, especially mobile phone. Additionally, users will become
more familiar and satisfied with services based on these promising alternative technologies.
      In regard of data communication and broadband Internet market, its highest growth rate is expected to prolong
throughout 2009. The competition will be intensified both in terms of customer base retention and customer acquisition. In
particular, service providers will focus on speed, pricing, quality of service, and total after-sales service. Further, it is
anticipated that WiMAX license, which is likely to be awarded within the year 2009, will assist in expanding the Internet
user base because limitations on service area coverage begins to diminish.
      The broadband Internet market as well as the number of Internet users tends to continuously increase, thereby
enlarging the markets of content, multimedia, as well as managed services and ICT solutions (MSIS). Accordingly, it is
predicted that a breakthrough in content and applications with more sophisticated features will be launched to the market.
The more providers, both incumbents and new entrants, who will penetrate into the content and multimedia market, the
fiercer competition both in terms of service quality and pricing plan.
                                                                                                                                 28
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     As for the mobile phone market of the year 2009, voice communication service will have reached a saturated level
especially in Bangkok metropolis and its vicinity by then. For customer retention, mobile phone providers, then, are likely to
compete in customer care as well as service rate. For customer acquisition, new demands could be derived from users in
provinces. Data communication and mobile broadband Internet access in particular is a service group to which service
providers will pay special attention as its growth has consistently continued for the past years. Especially in 2009, the
market would be ready after the 3G license is granted as service providers will be able to devise new services on 3G
platform to successfully fulfill customer requirements.

Plan/Project of Futurity
1. The NGN Replacement of the SPC Switching Network Project
      TOT has devised a plan to change the existing network with exorbitantly high maintenance cost as well
as incompatibility with upcoming ICT services. As a consequence, existing network has to be transformed into
Next Generation Network (NGN). Such initiative is not only an advancement of infrastructure which is the core of the service
provision, but a marvelous opportunity for TOT to change its telephone exchanges to gain advantage over its rivals in
relation to both technology and service provision leader. This project is aimed at removing the obsolete, former exchange
system which is serving 4.2 million lines, and, by the year 2013, completely substituting for them with NGN equipment to
support triple play services.

2. The WiMAX Plan
     TOT has planned to deploy WiMAX network in providing broadband wireless Internet services in addition to existing
ADSL technology services. Such scheme will enlarge TOTûs market segment; enable the Company to fulfill its user
requirements of multimedia using pictures, sounds and data; and serve futuristic wireless services, whereby users can
conveniently gain access to the broadband Internet as part of their sundry lifestyles in an advanced society. This plan is
projected for implementation from 2009 onwards by providing WiMAX services in Bangkok metropolis and its surroundings
including ICT Cities or provinces with high potential and demands for the Internet.

3. The Multimedia Project
     TOT has unwaveringly proposed new multimedia services in order to generate more
income and value added from its broadband Internet. Such project also allows TOT to
provide its services to the fullest potential and efficiency, thereby satisfying
customers-both resident and business/corporate-that call for communication and data
transmission in an expeditious, modern, and comprehensive manner. During the past
year, TOT has launched its latest services, e.g. TOT Netcall, TOT Prepaid, Tales
Runner Online Game, etc. In the year 2009, TOT has planned to introduce
novel online games, teleconference via the Internet, and TOT Netlog in
compliance with the Computer Related Crime Act B.E. 2550 (2007).
Research and Development
     The fierce competition in the telecommunication industry has compelled the entrepreneurs to cope with immediate
situations. Nonetheless, to gain a competitive advantage from conventional strategies, e.g. lowering prices, may not be a
good idea in the long run as the pricing is subjectively dynamic. In other words, low or high price is in relation to many
variables; todayûs low prices are not necessarily always the futureûs low prices. Research and development is, thus, a
means of creating products and services, thereby making distinction and increasing business advantage. The TOT
Innovation Institute (çthe Instituteé) is the main research and development department of TOT. The Institute is assigned to
create personnel and teamwork to be well equipped with potential for invention and creation of commercial innovation
in order to satisfy the market requirements. Such responsibilities also embrace the Universal Service Obligation (USO) for
sustainable growth of TOT business and the society at large. In addition to creating innovations, the Institute also offers
international standard calibrating rooms which have capabilities of reliable measuring instruments testing and repairing
services. Moreover, TOTûs testing and development center is capable of testing instruments particularly used in the
telecommunication business, which greatly assists in creating synergy in research and development.
     As for the definition of the word çinnovation,é TOT abides by His Majesty the Kingûs line of thought, which is:
çto introduce and invent new ideas or things or ways of doing things, which may improve or be applied from those in
existence, in order to generate new things with greater efficiency or new lines of thought.é Similarly, the operation
guideline of innovation adheres to His Majesty the Kingûs çSufficiency Economyé principle. Combined, the applications of
these royal concepts have driven TOT to accomplish its research and development tasks in innovating products and
services for internal use and for sale to outsiders. The way of creating such innovation comes from the Company per se
coupled with the transfer of knowledge and innovation from external organizations. In this respect, the Institute functions
as the R&D hub under the consistent support of TOT management.

Notable Achievements in 2008
     ë In-house Research and Development
        The Institute is TOTûs major department in research and development, patent application, providing technical
consultancy, and supporting research and development collaboration, whereby it is capable of innovating to satisfy needs of
internal work units involving customer service, retailing, maintenance, etc. Additionally, research and development fund is
allocated to promote constant achievements and inventions. The R&D inventiveness competition, whether software,
hardware, or process of working, are awarded prizes in order to encourage consistent creation and production. The event
has been regularly organized on a yearly basis since 2007. The year 2008 is, thus, the second year. Such event is aimed to
                                                                                                                               30
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encourage the knowledge exchange among TOT employees. The awarded innovation will be, then, transformed into a
prototype which generates products or services for the purposes of the Companyûs retrenchment and/or its innovative,
commercial products.
      ë Collaborative Research and Development
         - Under the TOT Multimedia Business with University (TOT MBU) Program, the Multimedia Research and
Development Funds, amounting to 500,000 baht each, are provided to universities delving into the Internet applications.
This budget allocation is mainly targeted at stimulating teachers and students to recognize the tremendous importance of
telecommunication services to the development of the country and the society. In 2008, TOT MBU Program consists of,
first, the Bangkok Virtual Reality Program, drawn up by King Mongkutûs Institute of Technology Ladkrabang, in order to
develop digital maps and web-based Geographic Information System (GIS). Second, the Data Browsing from Cellular Phone
Photography Program, by Siam University, is implemented to enable data browsing by using photography retrieved from
web-based camera phone. Last but not least, the Online Laboratory Program by King Mongkutûs University of Technology
North Bangkok is the web application capable of generating an online simulation of electrical circuits.
         - An agreement in resource share and utilization to maximize mutual benefit of the nation for research and
development in progress between the Navyûs Institute of Research and Development and the TOT Innovation Institute.
         - Educating other organizations such as the Aeronautical Radio of Thailand Ltd., TT&T Public Co., Ltd., etc. on the
protection system from lightning strike.

Notable Research and Development Accomplishments of TOT Innovation Institute
The Instituteûs attainments can be subsumed under two broad categories: services and products.
    1. Services:
        ë Calibration services of telecommunication tools and their
          accessories provided by TOTûs experienced personnel and
          with high quality and up-to-date instruments which have
          been certified by the ISO/IEC 17025:2005 qualification.
        ë Repairing services of telecommunication tools and their
          accessories provided by professional experts.
        ë Testing services of telecommunication tools and their
          accessories, e.g. telecommunication tools, terminal
          equipment, insulated copper cable, optical fiber cable,        Figure : location of installation equipment
          outside plant equipment, etc. with cutting-edge
          instruments, temp & hum chambers, anechoic chambers,
          and RF enclosure rooms.
        ë Technical research and support services, e.g. protective technical troubleshooting, outside plant system, special
          invoice system and Thai Mobile systems, training in usage of ùJust Pay Onlineû payment system, problem
          analysis of high-speed Internet service provision, joint development of malfunctioning equipment notification
          system (1177+1477), etc.
2. Products:
      ë Service Management System: traffic-related database supporting the Computer-Related Crime Act B.E. 2550 (2007),
        public utility payment, monthly fee and code sale system, billing system, mobile invoice system, etc.
      ë Testing tools for maintenance personnel: ADSL Tester›equipment used for high-speed Internet installation and
        testing, Smart Monitoring Tool for measuring signals in public phone cable pairs, Telephone Line Simulator for
        simulating signals within a telephone exchange, etc.
      ë Tools for the disadvantaged, the disabled, and the imprisoned, for instance, the teleletter and payphone for
        the hearing-impaired, public telephone for the sight-impaired, TOT e-visiting payment system for prisoners, etc.
      ë Terminal equipment: payphones which are operated using a credit card, telephone card, or coins; Public Internet
        Wi-Fi Machine and its code purchase, as well as web payphone.
      ë Grounding and Lightning Protection System and preventive devices: surge protection system for
        telecommunication devices, clamp›a tool holding optical fiber or copper cables›which can avert lightning
        without cutting the cable open for installation, protector›a device preventing electricity damaging equipment,
        e.g. computer and private branch exchange (PBX) system, remote alarm›a device notifying of cable failure,
        among many others.

     There have been numerous corporeal results of TOTûs adherence to His Majesty the Kingûs idea. For instance,
originated by R&D innovations, innovative products and services have replaced imported products and services,
thereby resulting in TOTûs cost retrenchment, a fall in unnecessary imports, an increase in self-reliance, and reduction of
electronic waste due to irreparability. Concurrently, such products and services are also available for organizations whether
in need of them or for their service provision. Anyone interested is all invited to visit our websites: www.totinnovate.com
or http://innovation.tot.co.th or phone 0-2581-2020.
Human Resource                                                                                                                         32
Management and Development                                                                                                             33
      TOT has been trusted by its customers in terms of the operation culture which focuses on satisfying, with consistent
sincerity and integrity, the customer and the public countrywide. In respect of such credibility, human resource is the foremost
factor that has driven TOT to attain its optimum goal. For that reason, the Company has continuously developed and ameliorated
its routine HR management procedures, as well as has perpetually enhancing its employeesû knowledge to suit their particular
jobs. Human resource planning can be discussed in two broad categories: human resource management and human resource
development.

Human Resource Management
     In order to equip TOT employees with their full potential to assume responsibility and mesh with changeable business
environment, which affect operation in accord with its vision and mission, TOT aims at and focuses on developing and improving
HR management system to be always rationalized. The whole idea of this endeavor is to enhance the efficiency of TOT
employeesû task performance to meet the Companyûs expectations and requirements.
     To provide a framework for developing and promoting full potential of TOT employees both in the short and long run, TOT
5-year HR plan is developed. Based upon this plan, there is a regular review of HR policy and strategy to constantly dovetail with
the Companyûs overall strategic goals. Such standard reviews elucidate HR related plans, thereby resulting in a more consistent
and efficient application of the plan.
     The Company has steadily developed its HR management systems in the following five major dimensions including
(1) work force analysis of different career paths/offices to be proportionate to the responsibility, (2) succession planning for the
top management, (3) rewarding system restructuring depending upon job value and career line, (4) career path development,
and (5) IT system development for updating HR management.
     TOT has constantly awarded scholarships to its employees whose zeal for higher education is running high. In the year
2008, TOT awarded the entirety of ten scholarships to those who pursued their graduate education›a masterûs and/or a doctoral
degree›at accredited institutions locally or abroad, in information technology and communication, technology management,
as well as business/telecommunication law.
     In addition, TOT encourages its employees to strictly adhere to the Code of Conduct in their task performance. Abiding by
such Code, TOT high-ranking executives behave themselves as role models in adjusting and promoting constructive working
values and cultures in the TOT Way.

Human Resource Development
     TOT has stipulated HR directions and strategies to well endow its employees with professional skills, thereby gearing up
for business operation, creating organizational culture which focuses on quality and satisfactory service provision, as well as
promoting the society of learning. To attain such goals, TOT Academy was established in 1964 under the collaboration between
the Thai Government and the International Telecommunication Union (ITU) in order to be the center of telecommunication
personnel development. The Academy assumes major responsibilities for preparing all TOT employees for their task
performance, promoting effective team work, and consistent professional self-development. Such attempts collectively will
enable TOT employees to cope with technological advancement, satisfy customer requirements in a timely manner, augment its
competitiveness, and reinforce its business operation.
     In educating TOT employees on the skills and knowledge in telecommunication
technology, information technology, and business administration, TOT Academy has provided
TOT employees wih numerous competences as required by the Company and as deemed
urgent by an individual work unit. Accordingly, the Academy has collaborated with leading
academic institutes both abroad and locally in providing cutting-edge information and
communication technology as well as modern business management courses. Such courses,
covering all aspects of TOT services, are delivered both in the classroom-based form and the online form via e-learning systems.
The courses are provided not only to TOT employees but also the general public from both government and private sectors. In
the year 2008, the entirety of 213 classroom-based training courses were delivered to 24,032 trainees, and 39 e-learning
courses were provided to 3,117 e-learners.
      Furthermore, TOT Academy has organized the TOT Annual Best Skills Competition. This event has played an important role
in encouraging constant self-improvement and effective teamwork; by which TOT employees have opportunities to share
knowledge, skills, experiences, and analysis about installation and service predicaments. In 2008, there were three contest
categories including TOT ADSL, TOT IP VPN, and copper cable splicing.
      TOT Academy has also provided a vast variety of tests to certify TOTûs outside plant technicians. This certification will
ensure TOT is always providing its customers good quality of services. In the year 2008, the TOT Academy issued six
certificates as follows:
      ë ADSL Installation and Troubleshooting (AIT) ë Copper Cable Testing (CCT)
      ë Copper Cable Splicing (CCS)                       ë Optical Fiber Testing (OFT)
      ë Optical Fiber Splicing (OFS)                      ë Drop Wire Installation & Troubleshooting (DIT)
      To ensure its employeesû potential in servicing, TOT accord paramount importance on developing these employeesû
capability of current technology necessary for the Companyûs operation. TOT employees are thus inspired to be certified by
outside leading companies, e.g. Cisco Systems, Microsoft Corporation, etc. In the year 2008, totally 140 TOT employees obtained
Cisco Certified Network Associate (CCNA), and 130 employees in total obtained Cisco Certified Network Professional (CCNP).
In addition to its in-house training provision, the Academy also offers various telecommunication training courses for the general
public, under the Certified Project, in order to certify technical standards. This project is a way to produce efficient telecommu-
nication technicians with high professional standards for the country as a whole.

Human Resource Development Collaboration in Asia-Pacific Region
     TOT has signed in the Memorandum of Understanding (MoU) on academic collaboration with King Mongkutûs University of
Technology North Bangkok on June 20, 2008. Under the MoU, the Academy and the University will cooperatively offer
telecommunication courses to the public nationwide in order to raise local telecommunication personnelûs capability on par with
the professional standard. In the year 2008, this joint government agency offered Fiber Optic Cable Link Testing Course from
November 6 - 7, 2008.
     Continuing the idea of regional collaboration, the Academy has been entrusted by the Ministry of Information and
Communication Technology to support the Business Management Program initiated by the Centre of Excellence (CoE) Network
Project for the Asia and Pacific Region-the Center established by the Telecommunication Development Bureau (ITU-D). In 2008,
the Academy and the Center jointly organized the çInformation Management for Chief Information Officersé Course during
November 24 - 27, 2008 at TOT Academy. The participants came from totally 24 countries in the Asia-Pacific Region, e.g.
Vietnam, the Philippines, Indonesia, and Thailand.

Transformation into Society of Sustainable Learning
     To constantly create self-development opportunity for TOT employees, TOT Academy has regularly managed TOT
organizational knowledge body in order to collect TOT Body of Knowledge, e.g. performance theories, job manuals/processes,
and Code of Conduct, to become a true society of learning, on the TOT Knowledge-based Society (TOT KBS) website. This
website serves as the Companyûs central source which supports knowledge management, by which TOT employees can
ubiquitously perform their self-study and share knowledge.
     TOT Academy, as always, realizes that the employee, who is qualified and reciprocally creates innovations, is a crucial and
invaluable asset of the Company. Thus, the Academy has tenacious determination to enable all these employees to perform
their tasks and to be ready for customer services to their fullest potential. As a consequence, TOT can become a robust
organization to achieve latent talent in initiating IT solutions, supporting government/private sectors and the general public,
as well as becoming a precious resource in developing Thailand to be economically and socially prosperous on par with other
countries at all times.
Organizational                                                                                                              34
Structure                                                                                                                   35



                                           Board of Directors




     3G Mobile Business Unit                    President




       Administrative Office*                                           Board of Director Office*

  Public Relations and Corporate                                      Regulatory Affairs Department
    Communication Department


               Legal                                                                                  Corporate Audit
                                                                                                      and Assurance



       Human                     Enterprise                 Finance               Investment                Property
      Resources                 Effectiveness                                    Management                Management




        Core                     Marketing           Universal Telecom        Metropolitan Sale           Regional Sale
       Network                  and Product               Services                  and                        and
                                Development                                   Customer Service           Customer Service


* Work unit equivalent to the department
Board of Directors
     In the year 2008, there were two sets of the Board of Directors (çthe Boardé) which made major contributions toward
the advancement of TOT.

TOT Board of Directors from January to February 2008
    From January to February 2008, the Board of Directors comprises the following members:

                     Name                                         Post                    Appointment     Resignation
 1.    General Saprang Kalayanamitra                  Chairman                             Feb 6, 2007   Feb 22, 2008
 2.    Mr. Chavalit Sethameteekul                     Vice Chairman                       Oct 12, 2007   Jan 18, 2008
 3.    Police General Charnchit Bhiraleus             Vice Chairman                       Feb 15, 2007   Feb 26, 2008
 4.    General Sujate Wattanasook                     Vice Chairman                       Aug 21, 2007   Feb 28, 2008
 5.    Miss Supa Piyajitti                            Director and Independent Director    Feb 6, 2007   Feb 28, 2008
 6.    Colonel Dr. Natee Sukonrat                     Director                             Feb 6, 2007   Feb 28, 2008
 7.    Colonel Ratanapant Rojanapirom                 Director and Independent Director    Feb 6, 2007   Feb 28, 2008
 8.    Mr. Virapon Panabut                            Director and Independent Director   Feb 26, 2007   Feb 28, 2008
 9.    Mr. Surachai Liengboonlertchai                 Director and Independent Director   Feb 15, 2007   Feb 19, 2008
 10.   M.L. Anuporn Kashemsant                        Director                            Apr 27, 2007   Feb 22, 2008
 11.   Assoc. Prof. Dr. Djitt Laowattana              Director                            Dec 26, 2007   Feb 27, 2008
 12.   Mr. Jadul Apichatabutrd                        Director                            Jan 25, 2008   Feb 29, 2008
 13.   Mr. Worapat Tiewthanom                         Director                            Jan 25, 2008   Feb 29, 2008
 14.   Mr. Pongpanu Svetarundra                       Director                             Feb 5, 2008   Feb 29, 2008
       (Substituted for Mr. Chavalit Sethameteekul)

TOT Board of Directors from March to December 2008
    From March to December 2008, the Board of Directors consists of:

                     Name                                         Post                    Appointment    Resignation
 1.    Prof. Dr. Teravuti Boonyasopon                 Chairman                            Mar 25, 2008
 2.    General Viddhavat Rajatanun                    Director                            Mar 25, 2008
 3.    Mr. Pongpanu Svetarundra                       Director                            Mar 25, 2008   Nov 14, 2008
 4.    Mrs. Sirinuj Bisonyabut                        Director                            Mar 25, 2008
 5.    Mr. Worapat Tiewthanom                         Director and Independent Director   Mar 25, 2008
 6.    Mr. Khemchai Chutiwongse                       Director and Independent Director    Apr 2, 2008
 7.    Mr. Vichai Srikwan                             Director                            Mar 25, 2008
 8.    Police General Bunyarid Ratanaporn             Director and Independent Director   Mar 25, 2008
 9.    Maj.Gen. Chawalit Kraisomsart                  Director                            Mar 25, 2008
 10.   Mr. Chanvit Amatamatucharti                    Director and Independent Director   Mar 25, 2008
 11.   Miss Narisara Chavaltanpipat                   Director                            Mar 25, 2008   Dec 19, 2008
 12.   Mr. Rathian Srimongkol                         Director                            Mar 25, 2008
 13.   Mr. Varut Suvakorn                             Director                            Aug 25, 2008
                                                                                                                              36
                                                                                                                              37
Special Issue Committees
    In adherence to TOT bylaws and the good corporate governance tenets, numerous special issue committees have
been appointed in order to assist the Board of Directors in conducting business and overseeing particular corporate issues.
The five major special issue committees follow.
    - Audit Committee
    - Good Corporate Governance Committee
    - Nomination Committee
    - Remuneration Committee
    - Risk Management Committee

Audit Committee
     Audit Committee (January - February 2008)
     1. Miss Supa Piyajitti                           Chairman
     2. Mr. Virapon Panabut                           Committee Member
     3. General Sujate Wattanasook                    Committee Member
     Audit Committee (April - December 2008)
     1. Police General Bunyarid Ratanaporn            Chairman
     2. Mr. Khemchai Chutiwongse                      Committee Member
     3. Mr. Worapat Tiewthanom                        Committee Member
     4. Mr. Chanvit Amatamatucharti                   Committee Member
     Authority and Duties
     1. Audit and confirm that the management and operations of TOT is conducted in accord with all pertinent
regulations, bylaws, the Cabinet resolutions, and the policies stipulated by the Board.
     2. Verify that TOT has reported financial statements with sufficient accuracy and complete disclosure, by closely
coordinating with the Companyûs External Auditor and top executives responsible for quarterly and annual financial
statements. During the course of internal auditing, the Audit Committee may advise the Companyûs External Auditor to
verify or audit any transaction of utmost importance and necessity.
     3. Verify that TOT has proper and effective internal control and internal audit systems by reviewing these systems in
conjunction with the Companyûs External Auditor and the Corporate Audit and Assurance as the autonomous internal audit
department.
     4. Verify that TOT has efficient risk management and control.
     5. Verify that TOT practices and operations abide by the Securities and Exchange Act, the notifications and
regulations of the Stock Exchanges of Thailand, as well as TOT stipulations.
     6. Consider, select, nominate, appoint, a certified, external public auditor for TOT, and propose the auditorûs annual
fee, in the best interests of and appropriation for the Company, based on the firmûs credibility, resources, capacity to
conduct the audit tasks, and the professional experiences of the auditor.
     7. Consider the disclosure of TOT information in terms of connected transactions or possible conflicts of interests.
     8. Complete any other assignments given by the Board of Directors and agreed upon by the Audit Committee, e.g.
reviewing the Companyûs financial policy and risk management, reviewing professional code of conduct for executives, etc.
Furthermore, the Audit Committee, in collaboration with TOT top executives, reviews significant reports, e.g. an executive
summary and analysis, etc., required to be revealed to the public under the provisions of related laws.
     9. Report on key activities of the Audit Committee in the Companyûs annual report. Such report is signed by the
Chairman of Audit Committee.

Good Corporate Governance Committee
     Good Corporate Governance Committee (April - December 2008)
     1. Miss Narisara Chavaltanpipat                  Chairman
          (Resigned from the Board of Directors effective from December 19, 2008)
     2. Mr. Chanvit Amatamatucharti                   Committee Member
     3. Maj. Gen. Chawalit Kraisomsart                Committee Member
     4. Dr. Nipon Surapongrukchareon                  Committee Member
          (Resigned from the Good Corporate Governance Committee effective from November 1, 2008)
     Authority and Duties
     1. Formulate and review the Companyûs good corporate governance to ascertain its comprehensible policies and
targets. To attain such ultimate goals, the Good Corporate Governance Committee establishes management and control
systems as the guidelines for the Board of Directors, special issue committees, executives, and staff.
     2. Monitor the operations of TOT and the performance of the Board of Directors, special issue committees,
executives, and staff to align with good corporate governance practices laid down by TOT and the regulatory body. Such
practices must be remarkably constant, entirely appropriate for TOT business, and fully compatible with universal good
corporate governance principles.
     3. Report on the results of TOTûs good corporate governance, recommend appropriate development to the Board
of Directors, and supervise the disclosure of information pertaining to good corporate governance to all stakeholders and
the general public.

Nomination Committee
    Nomination Committee (January - February 2008)
    1. Police General Charnchit Bhiraleus         Chairman
    2. Miss Supa Piyajitti                        Committee Member
    3. Mr. Virapon Panabut                        Committee Member
    Nomination Committee (April - December 2008)
    1. Mr. Rathian Srimongkol                     Chairman
    2. Mr. Chanvit Amatamatucharti                Committee Member
    3. Mr. Pongpanu Svetarundra                   Committee Member
       (Resigned from the Board of Directors effective from November 14, 2008)
                                                                                                                          38
                                                                                                                          39
    Authority and Duties
    Consider and nominate eligible candidates for directors to the shareholders.

Remuneration Committee
     Remuneration Committee (January - February 2008)
     1. Mr. Surachai Liengboonlertchai             Chairman
     2. Colonel Ratanapant Rojanapirom             Committee Member
     Remuneration Committee (April - December 2008)
     1. Mrs. Sirinuj Bisonyabut                    Chairman
     2. Mr. Worapat Tiewthanom                     Committee Member
     3. Mr. Chanvit Amatamatucharti                Committee Member
     Authority and Duties
     1. Consider and propose the remuneration scheme and benefit policy for the Board of Directors, Nomination
Committee, Remuneration Committee, Audit Committee, in conformity with TOT bylaws and other relevant regulations,
for approval at shareholdersû meetings.
     2. Consider and propose remuneration schemes and benefit policy for special issue committee members,
subcommittee members, or any individual appointed or authorized by the Board of Directors to undertake any task, to the
Board of Directors for approval.

Risk Management Committee
     Risk Management Committee (January - February 2008)
     1. Mr. Chavalit Sethameteekul                   Chairman
     2. Mr. Metha Suwansarn                          Vice Chairman
     3. Assoc. Prof. Pranom Kowinwipat               Committee Member
     4. Mr. Somchai Wiwatwattana                     Committee Member
     Risk Management Committee (April - December 2008)
     1. Mr. Pongpanu Svetarundra                     Chairman
          (Resigned from the Board of Directors effective from November 14, 2008)
     2. Maj. Gen. Chawalit Kraisomsart               Committee Member
     3. Asst. Prof. Dr. Phayung Meesut               Committee Member
     Authority and Duties
     1. Examine and recommend risk management policies as well as instituting the efficient risk management
framework and guidelines for TOT.
     2. Supervise risk management in the Company.
     3. Oversee potentiality enhancement of generating TOTûs income and value added.
     4. Support the operations of the Risk Management Department to ascertain a more effective and productive risk
analysis.
Selection of Directors and the President
     Directors: In selecting and nominating qualified candidates for vacant or additional directors, the Board of Directors will
set up a nomination committee to peruse and propose a suitable person for approval at shareholdersû meetings.
     President: To replace the vacant post of President, the Board of Directors selects a qualified candidate to fill the
vacancy. The selection is processed in compliance with the Standard Qualifications for State Enterprise Directors and
Employees Act as well as TOT bylaws.
     The most recent selection process for the President position having been vacated since August 2007 was eventually
completed with the appointment of Mr. Varut Suvakorn as the President effective from August 27, 2008 onwards.

Compensation Policy for Directors and the Management
     As for the remuneration of Directors and special issue committee members, TOT has constituted a remuneration
committee responsible for consideration, proposal, and management of remuneration schemes and benefit policy in
particular. Such executive remuneration package is to comply with the Ministry of Finance notifications on Resolution of
the 2008 Annual General Shareholdersû Meeting of TOT.
     The remuneration scheme of the President accords with the guidelines of the Ministry of Finance, the major
shareholder, whereas the remuneration package of top executives is commensurate with TOT salary structure and their
work performances as agreed upon in their Management Contracts.

Details about Any Information (either direct or indirect conflicts of interest in any contract signed by
TOT during 2008) the Directors Inform the Company under Section 88 of the Public Limited Company
Act B.E. 2535 (1992)
- None of the directors hold such vested interests.

Details about Directors who are Beneficiaries of TOT Shares, Debentures, or the Equivalents
- None of the directors gain such benefits.
Board of                                                                                                                 40
Directors                                                                                                                41




                                     Age 59
                                     Education
                                     ë Bachelor of Science (General Technology),
                                       American Technological University, Texas, U.S.A.
                                       Major: Air Conditioning and Refrigeration Technology
                                       Minor: Industrial Management
                                     ë Master of Education (Management of Vocational and Technical Education),
                                       Southwest Texas State University, Texas, U.S.A.
                                     ë Doctor of Education (Human Resources Management),
                                       Oklahoma State University, Oklahoma, U.S.A.
                                     Present Position
                                     ë President of King Mongkutûs University of Technology North Bangkok
                                     ë Expert, Inspection, and Educational Evaluation Committee, Ministry of Education
                                     ë Chairman of the Board of Directors, Vocational Education Commission
                                     Previous Position
Professor Dr. Teravuti Boonyasopon   ë Council Advisor for Academic and International Affairs,
Chairman of the Board of Directors     King Mongkutûs University of Technology North Bangkok (July 2007)
                                     ë President of King Mongkutûs University of Technology North Bangkok
                                       (July 2001 - July 2007)
                                     ë Vice President for Administrative Affairs, King Mongkutûs University of
                                       Technology North Bangkok (1998 - June 2001)
                                     ë Vice President for Planning and Development, King Mongkutûs University of
                                       Technology North Bangkok (1995 - 1998)
                                     ë Technical Expert for Columbo Plan International Organization (CPSC)
                                       in the Philippines and Singapore (1985 -1988)
                              Age 56
                              Education
                              ë Bachelor of Science, Chulachomklao Royal Military Academy
                              ë Master of Art (Political Science), Thammasat University
                              ë Diploma, Army Command and General Staff College (Class 61), Royal Thai Army
                              ë Diploma, National Defence College of Thailand (Class 48)
                              Training
                              ë Senior International Defence Resource Management,
                                Defence Resource Management Institute, U.S.A.
                              ë Financial Statements for Directors, Thai Institute of Directors (IOD)
                              ë Role of the Chairman Program, Thai Institute of Directors (IOD)
                              ë Director Certification Program, Thai Institute of Directors (IOD)
                              Present Position
                              ë Director-General, Office of Policy and Planning, Ministry of Defence
General Viddhavat Rajatanun   ë Royal Aide-de-Camp
Director                      ë Military Judge
                              Previous Position
                              ë Director-General, Defence Information and Space Technology Department,
                                Ministry of Defence
                              ë Director-General, Defence Space Technology Centre, Ministry of Defence
                              ë Deputy Director-General, Office of Policy and Planning, Ministry of Defence
                              ë Military Coordinating Officer, Office of the National Security Council
                              ë Director, Policy and Plans Division, Defence Energy Department,
                                Defence Industry and Energy Centre




                              Age 49
                              Education
                              ë Bachelor of Commerce (Economics), University of Auckland, New Zealand
                              ë Master of Art (Economics), Northwestern University, U.S.A.
                              ë Diploma, National Defence College of Thailand (2005)
                              Training
                              ë Financial Statements for Directors, Thai Institute of Directors (IOD)
                              ë Director Certification Program, Thai Institute of Directors (IOD)
                              ë Advanced Management Program, Harvard Business School, Harvard University
                              Present Position
                              ë Director-General, Public Debt Management Office
Mr. Pongpanu Svetarundra      ë Member of the Board of Directors, The Provincial Waterworks Authority
Director                      ë Member of the Board of Directors, Industrial Estate Authority of Thailand
                              Previous Position
                              ë Fiscal Policy Advisor, Ministry of Finance
                              ë Deputy Director-General, The Fiscal Policy Office
                                                                                                              42
                                                                                                              43

                                    Age 59
                                    Education
                                    ë Bachelor of Science, Chulalongkorn University
                                    ë Master of Business Administration, Thammasat University
                                    ë Diploma, National Defence College of Thailand (Class 44)
                                    ë Graduate Diploma in Public Law and Management (Class 3),
                                      King Prajadhipokûs Institute
                                    Training
                                    ë Financial Statements for Directors, Thai Institute of Directors (IOD)
                                    ë Director Certification Program, Thai Institute of Directors (IOD)
                                    Present Position
                                    ë Director-General, The Excise Department
                                    Previous Position
                                    ë Chief of Inspector-General, Ministry of Finance
Mrs. Sirinuj Bisonyabut             ë Inspector-General, Ministry of Finance
Director                            ë Deputy Director-General, The Excise Department




                                    Age 54
                                    Education
                                    ë Bachelor of Arts (Political Science), Chulalongkorn University
                                    ë Master of Public Administration, Chulalongkorn University
                                    Training
                                    ë Financial Statements for Directors, Thai Institute of Directors (IOD)
                                    ë Director Certification Program, Thai Institute of Directors (IOD)
                                    ë Civil Service Executive Program (Class 42),
                                      Executive College, Civil Service Training Institute
                                    ë E-government Program, The Republic of Korea
                                    ë Senior Executive Development Program, England
                                    Present Position
                                    ë Deputy Permanent Secretary,
Mr. Worapat Tiewthanom                Ministry of Information and Communication Technology
Director and Independent Director   Previous Position
                                    ë Inspector-General,
                                      Ministry of Information and Communication Technology
                                    Age 54
                                    Education
                                    ë Bachelor of Laws (1st Class Hons), Chulalongkorn University
                                    ë Thai Barrister-at-Law (Hons), Thai Bar Association
                                    ë Master of Laws, Harvard University, U.S.A.
                                    Training
                                    ë Director Accreditation Program, Thai Institute of Directors (IOD)
                                    ë Director Certification Program, Thai Institute of Directors (IOD)
                                    Present Position
                                    ë Director-General, Department of the State Attorney Commission,
                                      Office of the Attorney General
                                    Previous Position
                                    ë Deputy Director-General, Department of Legal Counsel,
Mr. Khemchai Chutiwongse              Office of the Attorney General
Director and Independent Director   ë Executive Director, Department of Legal Counsel, Office of the Attorney General
                                    ë Chief Public Prosecutor of Pathum Thani Province




                                    Age 59
                                    Education
                                    ë Bachelor of Arts (Political Science), Chulalongkorn University
                                    ë Master of Arts (Political Science), Thammasat University
                                    ë Curriculum of District Chief Officer (Class 27)
                                    ë Curriculum of Senior Governing Officer (Class 31)
                                    Present Position
                                    ë Deputy Permanent Secretary for Interior, Ministry of Interior
                                    Previous Position
                                    ë Director - General, Department of Provincial Administration
                                    ë Governor of Chiang Mai
                                    ë Governor of Lop Buri
                                    ë Governor of Chai Nat
Mr. Vichai Srikwan
Director
                                                                                                           44
                                                                                                           45

                                     Age 62
                                     Education
                                     ë Bachelor of Laws, Thammasat University
                                     ë Diploma in Private Law,
                                       The International Institute of Public Administration, France
                                     ë Diploma, National Defence College of Thailand (Class 39)
                                     Training
                                     ë Director Certification Program, Thai Institute of Directors (IOD)
                                     Present Position
                                     ë Member of the Board of Directors, Aeronautical Radio of
                                       Thailand Limited
                                     Previous Position
                                     ë RTP Advisor (Level 10)
Police General Bunyarid Ratanaporn   ë Assistant Commissioner General Royal Thai Police
Director and Independent Director




                                     Age 55
                                     Education
                                     ë Bachelor of Science, Chulachomklao Royal Military Academy
                                     ë Diploma, Army Command and General Staff, Royal Thai Army
                                     ë Diploma, Army War College, Royal Thai Army
                                     Training
                                     ë Director Certification Program, Thai Institute of Directors (IOD)
                                     Present Position
                                     ë Army Expert
                                     Previous Position
                                     ë Assistant to Deputy Prime Minister
                                     ë Staff Officer Attached To Commander-in-Chief, RTA
                                     ë Chief of Staff, Ratchaburi
Major General Chawalit Kraisomsart   ë First Development Battalion Commander
Director
                                    Age 52
                                    Education
                                    ë Bachelor of Economics, Chiang Mai University
                                    ë Master of Economics (Development Economics),
                                      The National Institute of Development Administration
                                    ë Diploma, National Defence College of Thailand (2007)
                                    Training
                                    ë Director Certification Program, Thai Institute of Directors (IOD)
                                    Present Position
                                    ë Senior Advisor in Policy and Plan,
                                      Office of the National Economic and Social Development Board
                                    Previous Position
                                    ë Director, Competitiveness Development Office,
                                      Office of the National Economic and Social Development Board
Mr. Chanvit Amatamatucharti         ë Director, Infrastructure Project Office,
Director and Independent Director     Office of the National Economic and Social Development Board
                                    ë Assistant to Deputy Minister of Transport (Mr. Sansern Wongcha-um)




                                    Age 40
                                    Education
                                    ë Bachelor of Education (2nd Class Hons),
                                      Srinakharinwirot University (Bangsan Campus)
                                    ë Master of Arts (Marketing), Webster University, U.S.A.
                                    Training
                                    ë Financial Statements for Directors, Thai Institute of Directors (IOD)
                                    ë Director Certification Program, Thai Institute of Directors (IOD)
                                    Present Position
                                    ë Member of the Board of Directors, Islamic Bank of Thailand
                                    ë Member of the Board of Directors, Playing Cards Factory, Excise Department
                                    Previous Position
                                    ë Advisor to the Vice President of The National Assembly of Thailand
Miss Narisara Chavaltanpipat
Director
                                                                                                         46
                                                                                                         47

                         Age 49
                         Education
                         ë Bachelor of Medical Science, Mahidol University
                         ë Medical Degree (Siriraj Hospital), Mahidol University
                         ë Master of Business Administration, Thammasat University
                         ë Certificate in Politics and Governance in Democratic Systems for
                           Executives Course (Class 9), King Prajadhipokûs Institute
                         Training
                         ë Role of the Chairman Program, Thai Institute of Directors (IOD)
                         ë Director Certification Program, Thai Institute of Directors (IOD)
                         Present Position
                         ë Senior Executive Vice President, Siam City Bank Public Company Limited
                         Previous Position
                         ë Chairman of the Board of Directors, Industrial Estate Authority of Thailand
Dr. Rathian Srimongkol   ë First Executive Vice President, Siam City Bank Public Company Limited
Director                 ë Executive Director and Acting President, Thana One Finance & Securities
                           Public Company Limited




                         Age 54
                         Education
                         ë Bachelor of Arts (Accounting), Chulalongkorn University
                         ë Certificate, Mini MBA (Class 12), Kasetsart University
                         ë Diploma, The Joint State-Private Sectors,
                           National Defence College of Thailand (Class 18)
                         Training
                         ë Role of the Chairman Program, Thai Institute of Directors (IOD)
                         ë Director Certification Program, Thai Institute of Directors (IOD)
                         Present Position
                         ë President, TOT Public Company Limited
                         Previous Position
                         ë Senior Executive Vice President (Investment Management),
Mr. Varut Suvakorn         TOT Public Company Limited
Director and President   ë Executive Vice President (Joint Venture Management),
                           TOT Public Company Limited
Self-Assessment of the Board of Directors
     TOT has constantly adjured the Board of Directors to carry out its self-assessment on a regular basis. In the year 2008,
the self-assessment form has been comprehensively developed and more appropriately reflective of the Boardûs roles and
duties abiding by the good corporate government policies. The assessment criterion is divided into five score levels as
detailed below.
          Score level 1      completely disagreed or no action taken
          Score level 2      disagreed or action slightly taken
          Score level 3      agreed or action moderately taken
          Score level 4      considerably agreed or action well taken
          Score level 5      strongly agreed or action outstandingly taken
     The findings from self-assessment are summarized as follows:
     (1) Self-assessment of the entire Board: the Board of Directors all agreed that, they overall perform each
particular duty in accord with the principles and guidelines of the good corporate governance at good-excellent level
(score level = 4.23).
     (2) Self-assessment of an individual director: the majority of the directors (80%) agreed that they perform
their duties in compliance with the good corporate governance principles at good-excellent level (score level = 4.00-4.94).
Only part of the directors viewed that their performance was at the moderate-good level (score level = 3.12-3.94).
     (3) Cross-directorial assessment: each director has been assessed that his/her performance conformed to the
good corporate governance principles at good-excellent level (score level = 4.05-4.57).
     TOT has already submitted the performance assessment report of the Board of Directors to the Ministry of Finance.
Such report was also submitted to an individual director in order to be the guideline for further performance improvements.
Directorsû Attendances at the Board Meetings and the Special Issue Committee Meetings                                                       48
(January - February 2008)                                                                                                                   49
                                                                                                                   Risk
                   Name                             Board of           Audit            Nomination Remuneration Management
                                                    Directors        Committee          Committee Committee Committee
  General Saprang Kalayanamitra                          7/7
  Mr. Chavalit Sethameteekul                             1/2
  Police General Charnchit Bhiraleus                     7/7                                  2/2
  General Sujate Wattanasook                             6/7              3/3
  Miss Supa Piyajitti                                    7/7              3/3                 2/2
  Colonel Dr. Natee Sukonrat                             7/7
  Colonel Ratanapant Rojanapirom                         7/7                                                      1/1
  Mr. Virapon Panabut                                    6/7              3/3                 2/2
  Mr. Surachai Liengboonlertchai                         5/6                                                      1/1
  M.L. Anuporn Kashemsant                                7/7
  Assoc. Prof. Dr. Djitt Laowattana                      7/7
  Mr. Jadul Apichatabutrd                                3/3
  Mr. Worapat Tiewthanom                                 1/3
  Mr. Pongpanu Svetarundra
                                                         0/2
  (Substituted for Mr. Chavalit Sethameteekul)
Note: In the table above, the figures, e.g. 1/2, represent the number of attendances out of the total number while being in office.

Directorsû Attendances at the Board Meetings and the Special Issue Committee Meetings
(March - December 2008)

                                                                         Good Corporate                            Risk
                                            Board of    Audit                           Nomination Remuneration
                 Name                                                     Governance                            Management
                                            Directors Committee                         Committee Committee
                                                                           Committee                             Committee
  Prof. Dr. Teravuti Boonyasopon                 20/20
  General Viddhavat Rajatanun                    20/20
  Mr. Pongpanu Svetarundra                       13/17                                              1/1                               3/3
  Mrs. Sirinuj Bisonyabut                        17/20                                                               1/1
  Mr. Worapat Tiewthanom                         16/20         7/7                                                   0/1
  Mr. Khemchai Chutiwongse                       15/20         6/7
  Mr. Vichai Srikwan                             13/20
  Police General Bunyarid Ratanaporn             20/20         7/7
  Maj. Gen. Chawalit Kraisomsart                 20/20                          4/4                                                   3/3
  Mr. Chanvit Amatamatucharti                    18/20         7/7              3/4                 1/1              1/1
  Miss Narisara Chavaltanpipat                   18/19                          4/4
  Mr. Rathian Srimongkol                         20/20                                              1/1
  Mr. Varut Suvakorn                              7/7
Note: In the table above, the figures, e.g. 1/2, represent the number of attendances out of the total number while being in office.
Meeting Allowances and Bonuses for the Board of Directors in 2008

                                                                 Special Issue
                                                  Board
                                                                  Committee              Cash
                  Name                           Meeting                                                   Bonus**              Total
                                                                   Meeting              Reward*
                                                Allowance
                                                                  Allowance
  January - February 2008
  General Saprang Kalayanamitra                    25,000                -               70,000           135,267.86         230,267.86
  Mr. Chavalit Sethameteekul                       11,250                -               10,000           124,926.55         146,176.55
  Police General Charnchit Bhiraleus               22,500             25,000            170,000           118,125.00         335,625.00
  General Sujate Wattanasook                       22,500             20,000             90,000            46,006.72         178,506.72
  Miss Supa Piyajitti                              20,000             50,000            210,000           114,665.90         394,665.90
  Colonel Dr. Natee Sukonrat                       20,000             25,000            210,000           108,214.29         363,214.29
  Colonel Ratanapant Rojanapirom                   20,000             20,000            100,000           108,214.29         248,214.29
  Mr. Virapon Panabut                              20,000             40,000            120,000           101,071.43         281,071.43
  Mr. Surachai Liengboonlertchai                   20,000             22,500             90,000           105,000.00         237,500.00
  M.L. Anuporn Kashemsant                          20,000             22,500            120,000            81,333.33         243,833.33
  Assoc. Prof. Dr. Djitt Laowattana                20,000             22,500            150,000            83,375.58         275,875.58
  Mr. Jadul Apichatabutrd                          10,000                -               30,000                -              40,000.00
  Mr. Worapat Tiewthanom                           10,000                -               10,000                -              20,000.00
  Mr. Pongpanu Svetarundra                            -                  -                  -                  -                  -
  March, 2008 - December, 2008
  Prof. Dr. Teravuti Boonyasopon                  112,500                -               70,000                 -               182,500
  General Viddhavat Rajatanun                      90,000            100,000            110,000                 -               300,000
  Mr. Pongpanu Svetarundra                         60,000             67,500             80,000                 -               207,500
  Mrs. Sirinuj Bisonyabut                          90,000             70,000             60,000                 -               220,000
  Mr. Worapat Tiewthanom                           90,000            120,000             70,000                 -               280,000
  Mr. Khemchai Chutiwongse                         90,000            115,000             80,000                 -               285,000
  Mr. Vichai Srikwan                               70,000             25,000             60,000                 -               155,000
  Police General Bunyarid Ratanaporn               90,000            112,500             90,000                 -               292,500
  Maj. Gen. Chawalit Kraisomsart                   90,000             97,500             90,000                 -               277,500
  Mr. Chanvit Amatamatucharti                      90,000            150,000            100,000                 -               340,000
  Miss Narisara Chavaltanpipat                     90,000             80,000            100,000                 -               270,000
  Mr. Rathian Srimongkol                           90,000             95,000            110,000                 -               295,000
  Mr. Varut Suvakorn                               40,000                -                  -                   -                40,000
Notes: * The Ministry of Finance approved of each directorûs cash reward commensurate with the times in attendance at the meetings of the
          Board and the Special Issue Committees appointed by the Board of Directors. This ministerial approval is effective from February 6,
          2007 to the 2008 Annual General Shareholdersû Meeting on June 6, 2008.
       ** The 2008 bonus paid in actuality to each director is reflective of the Company performance-related pay of the year 2007.
Name of                                                                   50
Top Executives                                                            51

1. Mr. Varut Suvakorn
    President

2. Mr. Peerapan Soonthornsaratoon
    Senior Executive Vice President - Senior Advisory Committee

3. Mr. Suvit Satayarakvit
    Senior Executive Vice President - Senior Advisory Committee

4. Mr. Sayan Tinsamran
    Senior Executive Vice President - Senior Advisory Committee

5. Mr. Weera Kongcharoen
    Senior Executive Vice President - Senior Advisory Committee




                         3                                        4
        2                                                             5

                                                     1
6. Mrs. Naengnoi Vananuvetchapong
    Senior Executive Vice President - Corporate Audit and Assurance

7. Dr. Arnon Tubtiang
    Senior Executive Vice President - Human Resources

8. Mr. Kittipong Tameyapradit
    Senior Executive Vice President - Enterprise Effectiveness

9. Mrs. Vatcharee Tupcharoen
    Senior Executive Vice President - Finance

10. Mr. Suthep Srisuwan
    Senior Executive Vice President - Investment Management




                         10                                               7
                                                                              9




                                                                      8
                                                6
                                                                                    52
                                                                                    53
11. Mr. Tharnee Sricharoen
    Senior Executive Vice President - Property Management

12. Mr. Chakree Subprawong
    Senior Executive Vice President - Core Network

13. Mr. Sujin Kodsup
    Senior Executive Vice President - Marketing and Product Development

14. Mr. Wichien Naksinual
    Senior Executive Vice President - Universal Telecom Services

15. Mr. Arsa Satayut
    Senior Executive Vice President - Metropolitan Sale and Customer Service

16. Mr. Noppanat Hutacharoen
    Senior Executive Vice President - Regional Sale and Customer Service



                     16
                                     11                             15         13




                            12
                                                              14
17. Mrs. Sarinya Chaiprasert
    Executive Vice President - Senior Assistant

18. Mr. Suthep Srisuwan
    Acting Executive Vice President - Legal Affairs

19. Dr. Thusanai Piarabutr
    Executive Vice President - Corporate Strategy: Enterprise Effectiveness

20. Dr. Nopparat Maythaveekulchai
    Executive Vice President - Quality and Business Process: Enterprise Effectiveness

21. Mrs. Preeya Danchaivijit
    Executive Vice President - Finance and Accounting: Finance

22. Dr. Kamthon Waithayakul
    Executive Vice President - Engineering: Core Network




                     18                       19                    20                  22




                          17                                                   21
                                                                                                           54
23. Mr. Chaloey Keokeas                                                                                    55
    Executive Vice President - Operations: Core Network

24. Mrs. Amporn Bunsumpun
    Executive Vice President - Marketing: Marketing and Product Development

25. Dr. Montchai Noosong
    Executive Vice President - Product Development: Marketing and Product Development

26. Miss Lekha Privijite
    Executive Vice President - Enterprise Customer Sales and Services: Marketing and Product Development

27. Mr. Yingsak Srisuksawad
    Executive Vice President - Metropolitan Sale and Service 1: Metropolitan Sale and Customer Service

28. Mr. Wisit Peonchob
    Executive Vice President - Metropolitan Sale and Service 2: Metropolitan Sale and Customer Service




                                                            25
                 23                26                                            27             28




                                                 24
29. Mr. Veerajai jaiwatana
    Executive Vice President - Metropolitan Sale and Service 3: Metropolitan Sale and Customer Service

30. Mr. Apisak Narikawit
    Executive Vice President - Metropolitan Sale and Service 4: Metropolitan Sale and Customer Service

31. Mr. Surakiat Pumpuang
    Executive Vice President - Regional Sale and Service 1: Regional Sale and Customer Service

32. Mr. Wuthipong Sriboonlue
    Executive Vice President - Regional Sale and Service 2: Regional Sale and Customer Service

33. Mr. Pichet Angchanpen
    Executive Vice President - Regional Sale and Service 3: Regional Sale and Customer Service

34. Mr. Chettar Kornrakun
    Executive Vice President - Regional Sale and Service 4: Regional Sale and Customer Service

35. Mr. Prayoon Ampapun
    Executive Vice President - Regional Sale and Service 5: Regional Sale and Customer Service



                30                    29                    31               33               34




                        35
                                                                        32
Good Corporate                                                                                                                  56
Governance                                                                                                                      57

      Realizing the importance of how to seriously and materially conduct and manage business in a righteous, transparent,
fair, verifiable, and continuous manner, TOT has founded the Good Corporate Governance Committee since 2004.
The Committee is in charge of monitoring TOTûs real operations which will raise the standard of the good corporate
governance practices of the Company, thereby creating good corporate governance culture of the same standard in the
entirety of TOT and enhancing efficiency and effectiveness of management system as a solid foundation for a sustainable
growth in business. Later, during 2005-2007, TOT established the Good Governance Management Department to
encourage effective corporate governance practices. Throughout these three years, TOT continuously undertook numerous
activities to drive the executives and employees of all levels to perform their duties in compliance with the Companyûs
corporate governance principles. Some instances of CG promotional activities included the çCG Day,é the videotaped
interviews with a number of high-ranking executives and employees, and the talk on good corporate governance with
Dr. Sumeth Tuntivetchakul, CG Website with complete information, TOT Radio Spot, banner, ambience, articles on CG in
TOT@Home monthly magazine. Additionally, other examples were Corporate Governance Exhibition to widely publicize
and disseminate TOTûs CG Project, CG Slogan Contest of which the award-winning slogan was çTOT transparency,
service focus, adherence to CG, and achievement of excellent management,é including distribution of the CG Handbook to
all executives and employees countrywide.
      In 2008, TOT focused on its compliance with the good corporate governance principles. By this means, numerous
significant developments took place, such as improvement of the Charter of the Corporate Governance Committee and
review of the Committeeûs self-assessment mechanisms toward greater meticulousness. Further, the training in çCG and
Conflict of Interesté was given to the management and employees at all levels. Such lecture was delivered by experts from
SET and different educational institutes in order to enhance CG knowledge of every employee so that CG culture is
profoundly instilled in TOT. Importantly, the performance evaluation was then carried out in order to survey the degree of
knowledge and understanding of CG, righteousness, and ethics of TOT executives as well as employees and, then, to apply
the findings to foster CG atmosphere in TOT.

Corporate Governance Policy
     TOT Board of Directors (çthe Boardé), executives, and employees are expected adherence to TOT CG Policy which has
been declared throughout the Company since 2004. TOT CG Policy comprises the following eight principles.
     1. Accountability: Responsibility for oneûs decision-making and performances and ability to explain such determinations.
     2. Responsibility: Responsibility for oneûs duty performance and assigned tasks to the best knowledge, within oneûs
fullest capability and prudence, in compliance with laws and regulations, and for TOTûs best interests.
     3. Equitability: Equal, fair, and reasonable treatment of all stakeholders.
     4. Transparency: Lucidity of business in which its operation can be verified and its information can be publicly
disclosed to all related parties.
     5. Vision to Create Long-term Value-added: Discernment in economic value-added to the business in the long run.
     6. Ethics: Ethics and Code of Conduct in business operation pursuant to rules and regulations including the highest
benefits of the Company.
     7. Good Citizenship: State of being a good citizen and accepting the responsibilities of it for the
Company and the society at large.
     8. Human Dignity: Everyone has an innate right to be treated with respect.
Corporate Governance
    In 2008, TOT fully abided by good corporate governance principles and guidelines for state enterprises under the
supervision of Ministry of Finance, and with good corporate governance principles for listed companies as recommended by
the Stock Exchange of Thailand (SET) as follows:
1. Rights of Entrepreneurs/Shareholders and Stakeholders
     1.1 Rights of Entrepreneurs/Shareholders
          TOT values and prioritizes the shareholdersû rights, which is undertaken as an important duty in its operation, and
relevant licit stipulations in order to ensure protection of the shareholdersû fundamental rights, e.g. shareholdersû Annual
General Meeting (AGM), articulation of views, provision of suggestions and mutual decision-making in critical changes,
appointment of committee members, and adequate access to TOT information, among many others.
          Further, TOT protects inside information and prevents committee members, executives, and employees
from illegal exploitation of such information, thereby bringing about injustice to entrepreneurs/shareholders. The internal
information protection policy is lucidly identified in TOT corporate governance policy, rules, and regulations as well as code
of ethics and code of conduct for TOT directors, executives and employees.
     1.2 Rights of Stakeholders
          1.2.1 The Board attaches importance to due care and accountability to all categories of stakeholders, all of whom
are vital to TOTûs sustainable business operation. The Company has compiled, in written form, its policy, laws and
regulations, and Code of Conduct Handbook which has been regularly revised for appropriateness and fairness.
The Handbook has been, then, distributed to all executives and employees as well as comprehensively publicizing via
different media, e.g. TOTûs Internet and Intranet. In accord with such Handbook, the subsequent instructions are equitably
stipulated for diverse groups of stakeholders.
          Shareholders
          TOT is firmly tenacious to perform its best operation with integrity and to make decision with equitability for the
best interests of the Company and its shareholders, by taking account of TOTûs long-range growth for a continuous and
steady rise in profits.
          Employees
          Realizing the value of its human resource, an essential driving force of the Company, TOT places crucial
importance to developing its employees to their fullest potential through diverse and continuing training plans in order to
accord with business competition. Accordingly, TOT values the due care of its employeesû rights on fair and equal
employment terms, e.g. annual leave, fringe benefits, performance evaluation, preferment, etc.
          Customers and the Public
          A customer is of the most importance to TOT business. Therefore, TOT is resolved to satisfy customer demand
with its best competence, equality, and fairness, in order to ascertain customer confidence and satisfaction. Such endeavors
include provision of products and services of the best quality and standard, retention of customersû information with
confidentiality, as well as efficient system management, through which customers and the general public can
conveniently make complaints or provide suggestions pertaining to services in order that TOT can repair faults and
improve services at its best.
          Trade Partners/Creditors/Debtors
          TOT strictly adheres to integrity upon restrictions given to its business partners, creditors, and debtors.
          Business Rivals
          TOT puts emphasis on operation business in an ethical and transparent manner under fair competition within the
scope of laws and regulations. The company will not illegitimately elicit rivalûs confidential information by any means.
           Society and Environment                                                                                                   58
           TOT fully recognizes and prioritizes the development, deployment, and protection of available resources to obtain         59
maximum benefits. Simultaneously, the Company has generously fostered the social well-being with an emphasis on
learning support. For the betterment of adolescents and the disadvantaged in the Thai society, TOT has contributed its
state-of-the-art communication technology to the launch of assorted educational and learning projects. The Company also
supports substantial activities which fulfill fundamental requisites for communication of inhabitants in faraway land and the
disadvantaged, whereby these Thai citizens have opportunities to adequately use the telephone service. The two salient
instances of TOTûs projects for the Thai society development include the Distance Learning via Satellite Project and the
Public Telephone in Distant Areas for the Sustainable Thai Society Project. These social contributions exactly correspond to
the ideals of the Companyûs inception in 1954, in which the duties and responsibilities of TOT have been stipulated in the
Royal Act of the Telephone Organization of Thailand B.E. 2497 (1954). That is, as a state enterprise, TOT çis adjured to
operate the telephone service and create its advancement for the best interests of the state and the general public.é
To date, this initial obligation has formed a vital basis for the national prosperity.
           1.2.2 Whistle-blowing or Making Complaints
                 Customers and the general public can lodge their complaints or opinions to the Company via different
channels, e.g. Call Center 1100, fax no. 0-2574-9533, www.tot.co.th by clicking on the link çCustomer Service.é
All complaints can be also submitted in person at all branches of TOT Customer Service Centers countrywide during office
hours or mailed to the following address:
                       Board of Directors TOT Public Company Limited
                       89/2 Moo 3 Chaeng Wattana Road, Thungsonghong Subdistrict, Laksi District, Bangkok 10210
                 TOTûs employees are also actively encouraged to directly apprise the Audit Line or the Audit Committee of
any illegitimate action, as well as making a complaint or providing any suggestions to the Board of Directors and the
management via the Companyûs Intranet system.

2. Disclosure of Information and Transparency
     The Board oversees the Companyûs information disclosure of both financial and non-financial information in an
accurate, complete, transparent, comprehensive, and timely manner in compliance with provisions of Ministry of Finance.
Such information was disclosed in Thai and English Annual Report 2008 and on the Companyûs website: www.tot.co.th,
thereby enabling all shareholders, customers, and interested parties to equivalently and ubiquitously gain access to TOT
information. Important information disclosed included the report on TOT Board of Directorsû Responsibilities for the Financial
Statements coupled with the Auditorûs Report, biography of each director, duties and responsibilities of the Board and
special issue committees, number of meetings and number of each directorûs attendance in the past year, policies and each
directorûs remuneration, business conduct, entrepreneurial benefits, CG policy, and business objective, among many others.
     To provide the Companyûs stakeholders and interested persons with ubiquitous, equivalent access to TOTûs important
news, services, management, and financial statement, the Investor Relation Sector and the Information Center for People
have been established to be responsible for mutually supervising dissemination of such information to related parties while
regularly posting and updating the information on the Companyûs website.
     In addition, TOT has organized several public-relation activities in order to actively promote its operation in stringent and
consistent conformity with the good corporate governance principles. A series of actions included publication of the Good
Corporate Governance Handbook, training for CG, corporate social responsibility, conflict of interest, and creation of CG
atmosphere via numerous media. Such attempts have been made in order to campaign for inculcation of a sense of
responsibility for performance in all related parties including board members, executives, employees, and different agencies.
Such drive included the exhibition on çGood Corporate Governance and TOT Code of Ethics,é dissemination of good
corporate governance information via the intranet, in-house radio broadcast, all of which gained widespread acceptance.
3. Responsibility of the Board of Directors
     3.1 The Board has carried out its duty by considering and approving critical issues pertinent to TOT operation, e.g.
vision, mission, strategy, financial target, risk management, policy, plan, budget, etc. The Board has also overseen and
controlled the managementûs efficient and effective adherence to the formulated policy and plan.
     3.2 The Board has provided TOTûs Good Corporate Governance Policy and Code of Conduct in writing, and has
regularly reviewed the Companyûs compliance with such policies.
     3.3 The Board of Directors has watched over, supervised, and managed the resolution of the conflict of interest
among the management, directors, and government agencies by formulating, in written form, Policy and Best Practice on
Conflict of Interest as guidelines in their performances. Based on these guiding principles, the Board, the management, and
all employees are to consider conflict of interest with prudence, integrity, rationale, and independence within the frame of
ethics and for the best interest of the Company.
          At every TOT Board meeting and for any agenda item, if there is a certain director who may have vested interest
or connection, that director is ineligible to express views in that agenda matter. In addition, the Board has set up a policy
requiring the Companyûs personnel at all levels to compile a yearly report on potential conflict of interest against the
Companyûs benefits, and to disclose any potential vested interest which incidentally happens during the year in a disclosure
form.
     3.4 TOT has provided the internal control system in terms of its operation, financial statements, and compliance with
rules and policies. Concerning this, the Company has assigned the Audit Committee to assume responsibility for such
system as well as reporting the performance result to the Board and the Companyûs shareholders for acknowledgement.
     3.5 TOT has adopted its risk management system which comprehensively covers throughout the entire company in
terms of both its operation and finance. Respecting this, TOT has appointed the Risk Management Committee and
Subcommittee to continuously report potential risk.

4. Board Meetings
     4.1 The Board convenes meetings at least once a month to acknowledge and pursue TOT overall operation. These
ordinary meetings are scheduled in advance for the entire year; extraordinary meetings are also allowed in the event of
necessity.
     4.2 The Board Chairman and the President collaborate in considering and selecting appropriate meeting agenda items
to be discussed in the Board meetings; in which each director is allowed to liberally propose any item to the agenda.
     4.3 TOT delivers the meeting documents to each board member prior to the meeting date. Such documents are in the
form of an executive summary with complete information of the essence.
     4.4 The Board Chairman encourages transparent consideration in each issue and allocates reasonable and adequate
time for both the board members and top managementûs elaborate presentation. In addition, the Board prudently considers
each proposed agenda item, and allows all committee members to debate critical issues, to raise queries, as well as
candidly posing their views so that they can fully perform their duty as best they can.
     4.5 The Board can gain access to supplementary, necessary information upon request from the CEO, the Board
Secretary, or other authorized executives within the scope of stipulated policy.
     4.6 The top management, who are directly related to a particular issue, shall attend the Board meeting to provide
additional details.
5. Assessment of the Board of Directorsû Performance                                                                            60
     On a yearly basis, the Board reviews and approves the committee self-assessment form to ensure its appropriateness         61
for and compliance with TOT corporate governance principles and mission, resulting in an efficient self-assessment of the
Board. Such self-assessment procedure places emphasis upon application of the outcomes for betterment of the directorsû
performances and is divided into three categories: group assessment, individual self-assessment, and individual
cross-directorial assessment. To clarify, each director is responsible for completing the self-assessment form; the scores
will be calculated and interpreted for the overall assessment. In the year 2008, the overall Boardûs performances were
evaluated as good-excellent. The Board also added a great deal of productive comment and suggestion on several critical
issues as well as stipulating directions and tasks to be further undertaken in order to enhance the efficiency of the Board.
The detailed results of the Boardûs self-assessment were already displayed under the çSelf-Assessment of the Board of
Directorsé section in this Annual Report on Page 57.

6. Remuneration of Directors and Top Executives
     6.1 The Board has appointed the Remuneration Committee to be responsible for adopting directorsû rational
compensation policy to directors and special issue committee members in compliance with the stipulations of the Ministry
of Finance, subject to approval by the Shareholdersû Annual General Meeting. Each directorûs remuneration for the year
2008 was disclosed in this Annual Report.
     6.2 The compensation scheme for the President is laid in conformity with the criteria devised by the Ministry of
Finance. Remuneration for top executives is, nevertheless, commensurate with TOT Salary Account Structure and accords
with each executiveûs performance as agreed upon in an individual performance contract.
     6.3 The Presidentûs Performance Evaluation Committee shall assess the performance results of the President in
pursuance of the management contract which explicitly provides rules of scoring and compensating in advance. The
Committee shall match such performance result to the compensation scheme and, then, submit the upshot to the Board
for approval.

7. Board and Management Development
      TOT supports and facilitates its directorsû participation in diverse training courses/activities organized by the Thai
Institute of Directors (IOD). The Company also encourages all parties in relation to TOTûs corporate governance system-e.g.
executives, Board Secretary, etc-to gain pertinent training and knowledge in order to consistently adjust their performance.
Such training and knowledge are given in both in-house and public form.
      In the year 2008, the entire Board of Directors has been newly appointed; therefore, TOT operated its policy formulated
for new directors in particular. In this respect, the Board of Directors Office prepared and handed over relevant documents
and information applicable to performance of new directors, as well as apprising them of TOT business nature and direction.
Internal
Control

     TOT expected that the Company must have the internal control system with a standard feature and in conformity with
policies and the best practice of internal control which have been notified by TOT. Under these policies, all employees
are adjured to collaboratively keep their eyes on, keep track of, and identify possible risks. By means of these practices,
TOT employees are able to suggest a suitable way to manage such risks or weaknesses of the Companyûs internal control
within an acceptable level and put the internal control plan for risk management/reduction into practice. TOT has
consistently abided by these practices in accord with the rules of the Office of the Auditor General of Thailand (OAG)
concerning the Standard of Internal Control B.E. 2544 (2001). Additionally, TOT has always reviewed its internal control
manual and self-assessment manual on a yearly basis so that these manuals are in line with changeable circumstances and
available for disseminating to the management and employees to strictly abide by. Every year, numerous activities were
also given to promote TOT employeesû awareness of key components of the internal control standard.

     In the year 2008, TOT organized an activity which supported its internal control environment by adapting the criterion
of Thailand Quality Awards (TQA) to be a tool in the Companyûs management and a mechanism in integrating its corporate
key processes. Such combination enabled TOT to systematically operate as well as to powerfully reinforcing and compelling
the material betterment of efficiency and effectiveness of TOTûs every work unit. In addition, TOT has established its
independent Audit Department (çthe Departmenté) which directly reports to the Audit Committee. The Department is in
charge of verifying the Companyûs full compliance with the rules, regulations, and bylaws including the enforcement of
existing laws. The Department arranges a systematic performance tracking system as targeted by the Company and reports
its performance to the top management and different committees appointed by TOT Board of Directors in order to trace,
accelerate, and solve problems and obstacles which may hinder targeted implementation. Further, training on internal
control is regularly undertaken for full-scale review on the understanding of internal control, self-assessment, as well as
determination of approaches and plans for internal control/risk reduction. In such training, the Department also provides,
with a pre- and post-evaluation of understanding, practical guidelines on preparation of the internal control report in accord
with OAG regulations regarding the Standard of Internal Control B.E. 2544 (2001). The combination of all these undertakings
ensures that TOT possesses the internal control system which is firm and efficient enough to be a tool enabling the
operations of the Company to attain its objectives in a sustainable and consistent manner.
Inside                                                                                                                          62
Information                                                                                                                     63


     TOT accords vital importance to prevent abuse of inside information as well as dissemination of TOT information to
outsiders for personal interest. For that reason, TOT expressly stipulated policies and regulations with respect to treatment
of confidentiality and utilization of inside information by compiling a handbook of good corporate governance in conformity
with TOT rules and regulations. Furthermore, the Company has distributed, via different accessible channels›Intranet, Voice
through Lines, etc›such policies and guidelines of practices for the managementûs and employeesû regular acknowledgement.
The inside information policies can be summarized as follows:

    ë Inside information refers to secret information which shall be vigilantly treated and not publicly released. Use of
      inside information is restricted solely to those assigned certain duties and responsibilities.
    ë The board members, top executives, and employees shall not exploit the inside information obtained while being
      in office to seek any advantage and/or to run any business which may cause a conflict of interests against TOT and
      its related businesses.
    ë Dissemination of inside information to the public shall be approved by TOT Board of Directors or the CEO only.

     For the year 2008, the Companyûs emphasis on the real practice of such policies generated some significant
developments. For instance, the management and employees at all levels trained to realize, perceive, and bring the inside
policy into real practice. An after-training survey of knowledge and understanding of good corporate governance, ethics,
including morality of TOT management and employees was also provided as a follow-up measure. Combined, these
practices help to develop and ceaselessly inculcate good corporate governance culture in TOT.
Risk
Management

Risk Management Policy
     TOT has laid great emphasis upon risk management and instilled it into part of the Companyûs culture which leads
to generate corporate value added by:

    1. Focusing on revenue enhancement from ADSL services.
    2. Decelerating the revenue downfall from fixed line telephone and public payphone services.
    3. Seeking new business opportunities to compensate for concession fees which showed a propensity for
       decline and lack of revenues from Access Charge (AC).
    4. Enhancing the efficiency of investment and asset utilization.
    5. Forming business alliances for stabilizing TOTûs operation.
    6. Putting TOTûs turnaround plan into efficient action.



Significant Risk
Strategy Development and Utilization
    TOT prioritizes strategy development and utilization for productive practices to consistently augment its capabilities of
competitiveness and business operation. The risk management encompasses the procedures of defining and reviewing
implementation plans in a clear and timely manner for effectiveness and efficiency in line with the Companyûs targets.

Service Quality
     TOT values the maximization of customer satisfaction by improving network quality for a ceaseless 24/7 service
provision, as well as initiating skills and service mind in its employees.

Procurement
     Procurement is a major process of obtaining equipment for customer service as scheduled and targeted.
The procurement and decentralization procedures shall be regularly improved for promoting agility as well as accelerating
the procurement proceedings.
                                                                                                                                 64
                                                                                                                                 65


Corporate Culture
      Working culture is a key factor in driving a company to be able to compete in the market. TOT prioritizes the
adjustment of its corporate culture to become increasingly businesslike by developing and inculcating the service-mindedness
in its employees, strengthening the employeesû competency in line with business competition, and collaborating with
everybody in inaugurating a working style of value chain effectiveness.

Taxation
     Tax law is convoluted and ambiguous in interpretation, whereby it is difficult to entirely abide by it and, often ends up
with tax assessment›an enormous burden/expenditure. In other words, the licit complication of taxation culminated in the
Companyûs increasing expenses as well as lack of financial liquidity. For this reason, TOT has prepared and developed its
personnel to be well equipped with professional competence in tax, whilst seeking expert consultants on tax law.

Telecommunication Dispute
      The equivocation of terms and conditions in the joint operation and joint investment contract has adversely resulted in
contract partnersû claim for a large sum of money, whereby the Companyûs capital, finance, and operation in the future are
afflicted. TOT has dealt with this by employing negotiation strategies in parallel with legal proceedings in order to assuage
the negative impact that may arise.

National Telecommunication Commission of Thailand (NTC)
     NTC notifications and regulations, e.g. network usage and interconnections, fees, service quality standards, and
Universal Service Obligation (USO), have caused encumbrances to the Companyûs operation as well as escalating its
expenses. TOT has managed this risk by negotiating with NTC to seek the certainty in practical guidelines and expense
retrenchment. For flexibility in competition and diminution in license fee, subsidiaries, as telecommunication service
providers, are established independently of their parent company, a network provider.
Audit Committee
Report

     The Audit Committee, by the resolution of the Board of Directors of TOT Public Company Limited in its 3/2009
Board meeting held on 23rd February 2009, consists of:
     1. Mr. Chavalit         Saleepol
     2. Mr. Phairach         Pornsomboonsiri
     3. Mr. Worapat          Tiewthanom
     4. Mr. Chanvit          Amatamatucharti
     The Audit Committee has performed its obligations under scopes and responsibilities assigned by the Board of
Directors approved by the Board of Directors of TOT Public Company Limited, which are summarized as follows:
     1. Review of all quarterly and annual financial statements of the year 2008 by the joint meeting with the auditor;
Office of the Auditor General of Thailand on financial statements assertions to ensure the financial statements of the
Company the accurate preparation in its subject matters and reliability under adequate disclosure of material information in
compliance with generally accepted accounting principles.
     2. Review of management practices as required by relevant laws related to the business of the Company; providing
consistent opinions, recommendations as well as monitoring significant issues for effective performances in compliance
with pertinent laws and regulations.
     3. Supervision and enhancement of the proceedings under the good corporate governance of Finance Ministry and
International Standards for the Professional Practice of Internal Auditing by issuing the corporate governance manual of the
Company for the transparent performance and the disclosure of the conflict of interest.
     4. Review of the business risk management practice and control of the Company, including advice on significant risk
management for the performance achievement in accordance with the Companyûs targets and objectives.
     5. Review of effectiveness of internal control systems by assessing the adequacy and risk of such system as
stipulated by the Internal Control Standards of the Auditor General of Thailand.
     6. Supervision of the performance of the internal audit by ratification of the long term audit plan and the 2009 annual
audit plan for the effectiveness and efficiency, as well as being acknowledged the audit outcomes, comments and
recommendations, consistent pursuit and adjustment of significant issues.
     7. Self-assessment for 2008 Audit Committeeûs performances of which the results achieved the good-excellent
level. Such result was subsequently reported to the Board of Directors.
     8. Proposal for the appointment of the Office of the Auditor General (OAG) for the Companyûs 2009 External Auditor
under the Constitution Act on State Audit B.E. 2542. (1999)
     The Audit Committee considers that, the 2008 financial statements were adequately and accurately disclosed.
The risk management and internal control, including the compliance with the relevant laws, rules and regulations of current
conditions in business performances ensure that the Company would perpetually sustain its good corporate governance
and quality development.



                                                                                 (Mr. Chavalit Saleepol)
                                                                                Chairman of Audit Committee
                                                                                        7 April 2009
Adherence to the Official Information                                                                                              66
Act B.E. 2540 (1997)                                                                                                               67

      In conformity with the Official Information Act B.E. 2540 (çthe Acté), all government agencies are mandated to disclose
its information to the general public. Accordingly, TOT, as a state enterprise is adjured to publish its official information in
the Government Gazette under Section 7 of the Act. In this regard, TOTûs Public Relations Department has also established,
on May 19, 1998, its Public Information Center located on the first floor of Building 1, TOT Headquarters, 89/2 Moo 3
Chaeng Wattana Road, Thungsonghong, Laksi, Bangkok 10210 Tel. 0-2505-1218, open on official days from 08.30 a.m. to
04.30 p.m.

Information Availability at the Public Information Center
    TOTûs official information in compliance with the Act includes:
    ë Organizational structure and management
    ë A list of TOT executives
    ë Concession contracts, joint operation and joint investment contracts, as well as contracts worth over
        50 million baht
    ë Bid/tender and purchase/procurement document, as well as monthly procurement summary report
    ë Annual report and periodicals published on special occasions
    In addition to the aforementioned information, the Center has collected information on its products and services,
assorted brochures, and so on available for the general public interest. Different types of information services are also
accessible on TOT website: www.tot.co.th in the form of hard copy, the Internet, and CDs, which are systematically
indexed and easily searched.

Information Service to the Public
      In 2008, TOT delivered its information services at the Center to 1,353 visitors and 2,536 phone inquirers in total.
The request mostly involved bidding and procurement. This year, there were no citizens enforcing their rights to complain
or appeal under the Act.
      The operation of TOTûs Public Information Center has been constantly improved. For transparency, equality, and
fairness, TOTûs services and information system management are conducted in a well-organized, expedite, efficient, and
licit manner in conformity with the legislative intent of the Act.

Amendment of TOT Rules to Conform to the Spirit of the Act
     To comply with the intendment of the Act, in the year 2008, TOT amended its Order on çInformationé with regard to
its most recently transformed organizational structure, whereby the Order can be efficiently implemented. Moreover, TOT
collected the up-to-date information on its organizational structure, a chain of command, authority and duties, as well as
contact address, and put them in a form of TOT Announcement. The Announcement was further submitted to the
Secretariat of the Cabinet for publication in the Gazette for the public acknowledgement. In addition, TOT appointed TOT
Information Commission which is chaired by the Executive Vice President for Legal Affairs and to which the Vice President
of the President Office acted as the secretary. The Commission is authorized numerous important tasks, e.g. indicating
which information to be retained in the Public Information Center, arbitrating in any dispute between work units arising from
acting according to the Act, considering and ordering enumeration of non-disclosure information, among many others.
NETWORKlearning system,
 Leading to the new
 people connections are made possible
 anytime and anywhere with our national
 fully-connected networks.
69
Social
Activity

    TOT is a state-owned telecommunication service provider which conducts business not only for
its maximum benefits, but also takes account of social commitments through its business policy
aimed at carrying on business whilst reciprocating the society with numerous worthwhile projects
as follows:




TOT Satellite Distance Learning Project
      At His Majesty the King Bhumibhol Adulyadejûs disposal, TOT
has consistently carried out çThe Satellite Distance Learning Project,é
since its inception in 1995, in order to alleviate the problems about
a great scarcity of teachers and about educational upgrade in the
far-reaching sites. From the very beginning up until now, TOT has
provided, in great pride and heartfelt appreciation of His Majestyûs
graciousness, its network to foster the comprehensive spread of
knowledge, which assists in steadily augmenting educational
opportunities to the Thai juveniles in distant areas.
      With strong determination in constantly operating such the
valuable distance learning project via satellite for over 13 years,
the Company has prided itself on winning numerous corporate
excellence awards in 2008 as follows:
      ë Runner-up in the 7th Outstanding Television Advertisement
         for the Consumer 2007, from TOTûs series çKru Tué (Screen
         Teacher), awarded by Office of the Consumer Protection
         Board.
      ë The Popular Advertising Award of the year 2007 in
         promotion of the Thai monarchy and family institution;
         TOT was awarded the 16th out of 100 Best Creative Choice
         Advertisement, under çM*AD: Love Dadé category, hosted
         by the Marketeer.
      ë Thailand Award Winner (Gold) under the çtelecom-
         munication industryé category from Trusted Bands Awards
         Ceremony 2008 according to the survey on reliable brand
         undertaken by the Readerûs Digest.
                                                                                                                                   70
                                                                                                                                   71

TOT IT School Project
     To express its strong determination to contribute its network
to the national education development, TOT encourages all students
and teachers at every level of the secondary school in TOT IT
School Project as well as people in the locality to regularly utilize
classrooms and facilities under the Project. As an information source
for the general public without any discrimination, such TOT IT
schools should be places which can be equally accessible, thereby
upgrading life quality toward the society of learning at schools, in
the immediate vicinity, and in nearby villages. In the year 2008,
TOT IT School Project targeted at 45 schools in 43 provinces.
     Inside the classrooms of TOT IT schools, TOT has arranged IT
textbooks, computers, innovative technology, educational
multimedia, e-commerce, etc. The Company also has adjusted
the classroom structure and decorated in the interior, as well as
installing 10 LCD computers with ADSL modem wireless routers
and learning facilities.


                                                           TOT Young Club Project
                                                                 TOT jointly instills in the juveniles the sense of care and
                                                           conservation of environment, whereby these young adults become
                                                           aware of global warming situations through the following two-level
                                                           activities.
                                                           ë TOT Young Club Project at the University Level: Numerous
                                                               activities were organized to exhibit insight into and recovery
                                                               from global warming. There was also a suggestive
                                                               demonstration of reusable things at çDo It Yourself (DIY)é booth.
                                                               In addition, 20 university students were selected to join the
                                                               camp at Wang Ka Ja School, Chachoengsao Province and to
                                                               help coach the younger grow vegetables, which was deemed
                                                               a constructive way to help diminish global warming.
                                                           ë TOT Young Club at the School Level: Abundant activities
                                                               were organized to emphasize useful IT along with precious
                                                               environment, to make adolescents at this age to realize the
                                                               importance of forest resource, to stimulate their active interest
                                                               in environmental problems, global warming, and to learn to
                                                               solve the environmental problems, whereby the knowledge
                                                               gained can be widely spread out.
çGiveaway Seté Project
     TOT has initiated the çGiveaway Seté project for educational support by awarding scholarships and school supplies
for deprived students. The project initiation in 2007 was a great success and thus was succeeded by another continuing
project in 2008, under which the two subsequent activities were organized.
     The first activity involved the provisions of school supplies worth 1,100,000 million baht to the entire 55 schools
nationwide in both metropolis and provincial areas.
     As for the second activity, not only school supplies but also scholarships were awarded to destitute students.
Such support also included the donation of 500,000 baht to 13 schools in the central region on the occasion of the 2008
Royal Kathina (Robe-Offering) ceremony at Wat Mahathat Worawihan, Ratchaburi Province. TOT was enormously proud
to present itself as a state-owned corporate genuinely committed to social responsibility, particularly the educational
patronage for children and the youth who will turn out to be powerful force for national development of futurity.

Blood Donation Project
    TOT has consistently carried out voluntary blood donation project for the Thai Red Cross. In the year 2008, this project
was held in commemoration of His Majestyûs graciousness, by which TOT employees heartily express their loyalty to His
Majestyûs the King with blood donation under the project of çTOTûs Good Deed in Honor of His Majestyûs Every Birthdayé.
The safe blood is then distributed to various hospitals for use to help save patientsû lives.




Pro Bono Provision of Signal Connection for Live TV Broadcast of the Royal Cremation
Ceremony of HRH Princess Galyani Vadhana Kromma Luang Narathiwat Ratchanakharin
     TOT wholeheartedly expresses its condolences on the occasion of the decease of Her Royal Highness Princess Galyani
Vadhana Kromma Luang Narathiwat Ratchanakharin, to its fullest potential, by reciprocally designing the transmission
system in TV signal connection on TOTûs state-of-the-art network and by its competent professionals. In accomplishing this
honorable and beneficent mission, TOT deployed the optical fiber cable to link TV signals for broadcasting the royal
crematorium live for the Public Relations Department and TV Pool. More specifically, TOT connected free-of-charge TV
signals from live broadcast vehicles of all TV channels of which the hub was at the Government Lottery Office (GLO), to the
reserve network in case of emergency and all TV channels so that both Thais and foreigners could simultaneously view the
live broadcast of such extraordinarily royal crematorium during November 14 - 19, 2008.
Universal Service Obligation                                                                                 72
(USO)                                                                                                        73



    Since 2007, TOT has provided its fundamental telecommunication services throughout the country,
which is known as a practice of Universal Service Obligation (USO) in compliance with the notification
dated August 2, 2005 of the National Telecommunications Commission (NTC) on rules, procedures, and
conditions concerning the provision of USO.
    In May 2008, NTC passed its resolutions for TOT to deliver its complimentary phonecards to
504,954 disabled persons, 195,046 low-income elders, making a total number of 700,000 persons in
conformity with NTC’s notification 2.3. As for its notification 2.6, NTC regarded the Border Police Patrol
School as a public works agency requiring telecommunication support, thereby adjuring TOT to install
139 fixed lines and payphones in 70 Border Police Patrol Schools.



Performance in 2008
      TOT Innovation Institute in collaboration with Universal Telecom Services Sector
has developed a payphone for the vision impaired (the blind) with more special
features than an ordinary set. For instance, when lifting the handset, the interactive
voice response will advise the user to insert the card. If the caller presses 1, the voice
instruction will be announced. Voice alert will then indicate the card or number
insertion by mistake. Respecting the payphone for hearing impaired (deaf), the user
can type and send SMS through the telephone lines, whereby the hearing impaired
can establish interpersonal communication via such payphones. Additionally, for the
hearing impaired, a tele-letter set has been developed as a peripheral connecting to a
fixed-line phone set at home. This tele-letter enables callers to type and mail message
by means of the telephone lines to the payphone for the hearing impaired. This
initiative enables the home-based guardians or family members to effectively contact
their hearing impaired at school. Currently, such phone set has not been widely
manufactured, thereby enormously capturing interest of the guardians of the hearing
impaired. TOT is tremendously proud to distribute such masterwork to numerous
agencies such as Thungmahamek School for the Deaf.
                                                   In May 2008, TOT in association with NTC held a USO Opening
                                              Ceremony at Pang Phraratchathan village, Mae Fah Luang District, Chiang Rai
                                              Province. In this regard, TOT provided Pang Phraratchathan community with
                                              the payphones, phonecards, a sport field together with facilities for health, and
                                              renovated public toilets of the village.




      In November 2008, TOT in cooperation with NTC and Chiang Rai Province
jointly organized a ceremony to deliver the 21,600 phonecards valued at 100
baht each with a 100-baht refill for 29 months, totaling 64,800,000 baht (sixty
four million eight hundred thousand baht) to the disabled and low-income
elders who have been registered with the Ministry of Social Development and
Human Security at Chiang Rai as a pilot province.

2008 USO highlight
      Notification No.2.1
      At least two payphones, one with and the other without a caretaker, shall be allocated to each village. There are totally
4,327 villages in number, making a sum of 8,654 lines, of which 7,501 lines have already been installed.
      Notification No.2.2
      At least one fixed line and one payphone, totaling two numbers, shall be allocated to each of educational institutions,
religious places, medical centers and other public works agencies. There are altogether 2,702 sites in conformity with this
notification, making a sum of 5,404 lines, all of which have already been installed.
      Notification No.2.3
      The phone cards shall be allocated to the disabled, the low-income elders and the low-income individuals, who were
registered at the Ministry of Social Development and Human Security. In 2008, 21,600 cards were distributed.
      Notification No.2.4
      At least 1 payphone shall be allocated within 100 metersû distance from a low-income community comprising no less
than 100 households, to which assented by the National Telecommunications Commission (NTC). In 2008, 848 lines have
been installed.
      Notification No.2.5
      Payphones and facilities shall be allocated to the disabled in compliance with the regulations of the Committee for
Rehabilitation of Disabled Persons on Provision of Equipment and Accommodation for the Disabled. To date, 6,434 lines
have been installed for the disabled, as detailed below.
      Motion impaired (wheelchair)                       500 lines
      Vision impaired                                    478 lines
      Hearing impaired                                   456 lines
      Hearing impaired (hearing aid users)             5,000 lines
      Notification No.2.6
      A certain type of feature or characteristic of telecommunication services shall be allocated to social devotees or public
works agencies. TOT was adjured to install, in 70 Border Police Patrol Schools, a scattering of 139 lines, of which 87 lines
have been completely installed.
Managementûs Discussion and Analysis of                                                                                         74
Financial Status and Performance                                                                                                75

Operating Results: A Comparison Between 2008 and 2007
                                                                                                          Unit : Million Baht
                                                                                                    Increase (Decrease)
                    Details                                 2008        %        2007        %
                                                                                                     Amount %
 1.  Income from telecommunication services               27,117.7    37.6     28,638.3     40.2     (1,520.6)        (5.3)
 2.  Income from concession agreements                     3,545.2     4.9      4,034.5      5.7       (489.3)      (12.1)
 3.  Income from revenue sharing agreements               19,463.0    27.0     17,365.3     24.4      2,097.7        12.1
 4.  Amortisation of deferred income - from               19,588.5    27.1     18,393.2     25.8      1,195.3          6.5
     concession agreements
 5. Other service income                                     511.9  0.7     574.1  0.8                   (62.2)     (10.8)
 6. Other income                                           1,934.6  2.7   2,181.3  3.1                 (246.7)      (11.3)
 7. Total Revenues                                       72,160.9 100.0 71,186.7 100.0                 974.2          1.4
 8. Cost of services                                      21,006.3 29.1 23,001.6 32.3                (1,995.3)        (8.7)
 9. Depreciation - assets from concession agreements      17,465.5 24.2 16,493.3 23.2                   972.2          5.9
 10. Selling and administrative expenses                  24,742.0 34.3 21,448.1 30.1                 3,293.9        15.4
 11. Directorsû remuneration                                   7.0  0.0      15.4  0.0                    (8.4)     (54.5)
 12. Share of loss of investments - equity method             46.8  0.1     301.1  0.4                 (254.3)      (84.5)
 13. Total Expenses                                      63,267.6 87.7 61,259.5 86.1                 2,008.1          3.3
 14. Operating income before interest expense              8,893.3 12.3   9,927.2 13.9               (1,033.9)      (10.4)
     and income tax (7 - 13)
 15. Interest expense                                        662.4     0.9      1,016.2      1.4       (353.8) (34.8)
 16. Operating income before income tax (14 - 15)          8,230.9    11.4      8,911.0     12.5       (680.1) (7.6)
 17. Income tax                                            2,628.1     3.6      2,678.3      3.8         (50.2) (1.9)
 18. Net Profit (16 - 17)                                 5,602.8      7.8     6,232.7       8.8      (629.9) (10.1)

      From the table above, TOT financial status can be discussed in further details as follows:
      Total Revenues: TOTûs total revenues increased 1.4% to 72,160.9 million baht for the year 2008, compared to
71,186.7 million baht last year. This increase was primarily attributable to income from revenue sharing agreements and
amortisation of deferred income from concession agreements.
      Income from telecommunication services decreased 5.3% to 27,117.7 million baht in 2008, compared to 28,638.3
million baht during the same period of the year 2007 as a result of the decline in income from telecommunication services
operated by TOT and in the revenue from access charge.
      Income from concession agreements decreased 12.1% to 3,545.2 million baht in 2008, compared to 4,034.5 million
baht in 2007 primarily because of a decrease in revenue gained from TRUE and TT&T.
      Income from revenue sharing agreements increased 12.1% to 19,463.0 million baht in 2008, compared to 17,365.3
million baht in the same period last year as a result of an increase in revenue sharing gained from AIS.
      Amortisation of deferred income - from concession agreements increased 6.5% to 19,588.5 million baht in 2008 from
18,393.2 million baht in 2007.
      Other service income dwindled 10.8% to 511.9 million baht in 2008 from 574.1 million baht last year mostly due to
a drop in revenue from non-telecommunication services and revenue from computer and electronics services.
      Other income decreased 11.3% to 1,934.6 million baht in 2008 from 2,181.3 million baht in 2007. This decrease was
primarily attributable to a cut in interest on bank deposits and gain from exchange rate.
      Total Expenses: TOTûs expenses (excluding interest expense and income tax) increased 3.3% to 63,267.6 million
baht in 2008 from 61,259.5 million baht in 2007. This increase was primarily attributable to a rise in depreciation of assets
from concession agreements coupled with incremental selling and administrative expenses.
      Cost of services decreased 8.7% to 21,006.3 million baht in 2008 from 23,001.6 million baht in 2007 primarily as a
consequence of a decrease in maintenance expenses for assets under financial lease agreements, public phone rental
payment, equipment rental payment for provision and maintenance of fixed line outside plant or WLL, as well as
telecommunication licence fee. Moreoever, depreciation costs also decreased due to the expiration of assets.
      Depreciation - assets from concession agreements increased 5.9% to 17,465.5 million baht in 2008 from 16,493.3
million baht in 2007.
      Selling and administrative expenses increased 15.4% to 24,742.0 million baht in 2008 from 21,448.1 million baht in
2007 primarily because of an increase in advertising and public relations expenses, value added tax expenses, and loss on
exchange rate. Salary and staff expenses increased due to, firstly, an annual salary increase together with an extra 4%
salary increase for all staff members in compliance with the Cabinetûs resolution on June 5, 2007, and, secondly, the early
retirement pension scheme.
      Directorsû remuneration decreased 54.5% to 7.0 million baht in 2008 from 15.4 million baht in 2007.
      Share of loss of investments - equity method decreased 84.5% to 46.8 million baht in 2008 from 301.1 million baht
in 2007.
      Interest expense decreased 34.8% to 662.4 million baht in 2008 from 1,016.2 million baht in 2007.
      Income tax decreased 1.9% to 2,628.1 million baht in 2008 from 2,678.3 million baht last year.
      Net Profit: TOTûs net profit after deduction of interest expense and income tax paid decreased 10.1% to 5,602.8
million baht in 2008 from 6,232.7 million baht in 2007. This decline was caused by the increased expenses over increased
revenues as aforementioned.
                                                                                                                             76
                                                                                                                             77

Financial Status
                                                                                                       Unit : Million Baht
                                                                                        Increase (Decrease)
                      Details                             2008         %        2007        %
                                                                                         Amount %
      Total Assets                                      253,794.2 100.0 266,244.0 100.0 (12,449.8) (4.7)
      Total Liabilities                                 145,158.1 57.2 156,732.9 58.9 (11,574.8) (7.4)
      Total Shareholdersû Equity                        108,636.1 42.8 109,511.1 41.1       (875.0) (0.8)

ë As at December 31, 2008, TOTûs total assets decreased 4.7% to 253,794.2 million baht, compared to 266,244.0 million
baht as at December 31, 2007. This decline was primarily caused by the reduction of TOTûs net current assets, property,
plant, and equipment, including those under the concession agreements.
ë The Companyûs total liabilities decreased 7.4% to 145,158.1 million baht or 57.2 % of its total assets, compared to
156,732.9 million baht as at December 31, 2007. This reduction was mainly caused by a decrease in deferred income and
financial lease liabilities. Long-term borrowings decreased likewise because of TOTûs early repayment of annual debt and
loan.
ë The Companyûs total shareholdersû equity amounted to 108,636.1 million baht or 42.8% of its total assets. This number
decreased 0.8% compared to 109,511.1 million baht as at December 31, 2007 as a direct consequence of, first, a dividend
payment of 5,511.0 million baht in June, 2008 and, second, the Companyûs net profit for the year 2008 as previously
mentioned.

Financial Ratios
                                                                                                   Jan. - Dec.
                                            Item
                                                                                                2008        2007
  ë   Current Ratio (Times)                                                                      1.8         1.8
  ë   Debt to Equity Ratio (Times)                                                               1.3         1.4
  ë   Interest Bearing Debt to Equity Ratio (Times)                                              0.1         0.1
  ë   Net Profit Margin (%)                                                                      7.8         8.8
  ë   Rate of Return on Equity (%)                                                               5.1         5.9
  ë   Rate of Return on Total Assets (%)                                                         2.2         2.5
  ë   Earnings per share (Baht)                                                                  9.3        10.4
  ë   Collection Period (Days)
      - Private debtors                                                                           54            55
      - Government debtors                                                                        91           107
    ë Liquidity Ratio
         TOT could maintain its liquidity position as Current Ratio remained constant at 1.8 times which was exactly
equivalent to that at the end of 2007.

    ë Leverage Ratio
         TOT had ability to generate higher debt as its Debt to Equity Ratio at 1.3 times at the end of 2008 was lower
compared to that at the end of 2007. Interest Bearing Debt to Equity Ratio was 0.1 times at the end of 2008, remaining
constant compared to the previous year.

    ë Profitability Ratio
         At the end of 2008, our profitability declined from the prior year. Net profit margin decreased to 7.8% from 8.8%
at the end of 2007, Rate of Return on Equity decreased to 5.1% from 5.9% and Rate of Return on Assets decreased to
2.2% from 2.5%.
Report on the Board of Directorsû responsibilities                                                                           78
in respect of the financial statements                                                                                       79

     The Board of Directors is responsible for TOT Public Company Limitedûs financial statements and TOT Public Company
Limited and its subsidiariesû consolidated financial statements. The aforementioned financial statements have been
prepared in accordance with Generally Accepted Accounting Principles, using appropriate accounting policies which have
been consistently adopted by the Company and applying careful judgment and their best estimation. Important information
is adequately disclosed in the notes to the financial statements.

     The Board of Directors has established and maintained a risk management system and appropriate and efficient
internal controls to ensure that accounting records are accurate and adequate to protect the Companyûs assets and uncover
weaknesses in order to prevent fraud or materially irregular operations.

     To accomplish this task, the Board of Directors has appointed an Audit Committee, which consists of independent
directors responsible for the quality of the financial statements and the internal control system, whose comments on these
issues are included in the Audit Committee Report in this Annual Report.

    The financial statements of the Company have been audited by the Companyûs auditor, the Office of the Auditor
General. For the purpose of these audits and in order to enable the auditor to express an opinion in accordance with
Generally Accepted Auditing Standards, the Company provided all of its records and related data. The auditorûs opinion is
presented in the auditorûs reports as part of this Annual Report.

     The Board of Directors believes that the Companyûs overall internal control system has performed satisfactorily and
rendered credibility and reliability to TOT Public Company Limitedûs financial statements and TOT Public Company Limited
and its subsidiariesû consolidated financial statements for the year ended December 31, 2008, which have been prepared
in accordance with Generally Accepted Accounting Principles and related regulations.




                                                                       (Professor Dr. Teravuti Boonyasopon)
                                                                                      Chairman
Auditorûs
Report

To: The Shareholders of TOT Public Company Limited
     The Office of the Auditor General of Thailand has audited the accompanying consolidated and the Company balance
sheets as at December 31, 2008, the related consolidated and the Company statements of income, changes in shareholdersû
equity, and cash flows for the years then ended of TOT Public Company Limited and its subsidiary and of TOT Public
Company Limited, respectively, and accompanying balance sheets in which equity method is applied and separate balance
sheets as at December 31, 2007, the related statements of income in which equity method is applied and separate
statements of income, changes in shareholdersû equity in which equity method is applied and separate changes in
shareholdersû equity and cash flows in which equity method is applied and separate cash flows for the years then ended
of TOT Public Company Limited. These financial statements are the responsibility of the Companyûs management as to
their correctness and completeness of the presentation. The responsibility of the Office of the Auditor General of Thailand
is to express an opinion on these financial statements based on the audits.
     The Office of the Auditor General of Thailand conducted the audits in accordance with generally accepted auditing
standards. Those standards require that the Office of the Auditor General of Thailand plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statements presentation. The Office of the Auditor General of Thailand believes that the audits provide
a reasonable basis for the opinion.
     In the opinion of the Office of the Auditor General of Thailand, the consolidated and the Company financial statements
referred to above present fairly, in all material respects, the consolidated and the Company financial position as at
December 31, 2008 and the consolidated and the Company results of operations, changes in shareholdersû equity and cash
flows for the years then ended of TOT Public Company Limited and its subsidiary and the financial position in which equity
method is applied and separate financial position as at December 31, 2007 and the results of operations in which equity
method is applied and separate results of operations, the changes in shareholdersû equity in which equity method is applied
and separate changes in shareholdersû equity and the cash flows in which equity method is applied and separate cash flows
for the years then ended of TOT Public Company Limited in accordance with generally accepted accounting principles.
     Without qualifying the opinion, the Office of the Auditor General of Thailand draws attention to the following Notes to
the financial statements.
     1. Note 38.1 to the financial statements which indicate that the Company is the defendant in contract cases
amounting to Baht 58,044.84 million.
     2. Note 38.2.1 to the financial statements regarding contingent liabilities arising from corporate income tax from
unrecognised revenue.
     3. Note 38.2.2 to the financial statements regarding the penalty and surcharge liabilities arising from the submitted
value added tax based on the revenue sharing after excise tax deductions of Baht 2,937.77 million.
     4. Note 41 to the financial statements regarding a disputed interconnection charge with private operators.

                (Signed) Duangta Juntong                                        (Signed) Gadmanee Kitwannee
                  (Duangta Juntong)                                               (Gadmanee Kitwannee)
                 Deputy Auditor General                                             Director of Audit Office
Office of the Auditor General
April 7, 2009
TOT Public Company Limited and Subsidiary
Balance Sheets                                                                                                                       80
As at December 31, 2008 and 2007                                                                                                     81

                                                                                                                       Unit : Baht
                                                                                      Financial
                                                                                   statements
                                                                                       in which
                                                                                equity method
                                                                   Consolidated      is applied           The Company
                                                       Note                2008            2007            2008            2007

     ASSETS
Current Assets
Cash and cash equivalents                               8         11,525,089,201 17,427,148,181 11,519,748,680 17,427,148,181
Short-term investments                                  9          3,180,453,061 1,350,385,807 3,180,453,061 1,350,385,807
Current portion of funds for redemption                 10        14,825,631,906 14,285,982,448 14,825,631,906 14,285,982,448
   of long-term liabilities
Trade accounts receivable - net                         11        14,295,466,904 14,340,420,083 14,295,466,904 14,340,420,083
Other receivables - net                                               51,709,760     77,097,398     51,709,760     77,097,398
Current portion of loans to employees                    16          125,174,524    165,037,787    125,174,524    165,037,787
Advance payment to related parties                      39.3                   - 2,466,356,508               - 2,466,356,508
Inventories and supplies - net                           12        2,299,835,507 2,597,458,017 2,299,835,507 2,597,458,017
Other current assets - net                               13        1,704,889,472 1,823,330,475 1,565,443,146 1,823,330,475
   Total Current Assets                                           48,008,250,335 54,533,216,704 47,863,463,488 54,533,216,704

Non-current Assets
Investments in subsidiary and associates                14           653,564,286 1,122,930,892 1,740,605,335 1,408,605,425
Other long-term investments                             15         4,780,850,008 6,102,311,735 4,780,850,008 6,102,311,735
Loans to employees                                      16         1,088,604,323 1,239,449,164 1,088,604,323 1,239,449,164
Funds for redemption of long-term liabilities           10         3,623,440,708 3,273,296,161 3,623,440,708 3,273,296,161
Property, plant and equipment - net                     17        77,098,474,312 78,651,716,263 76,749,305,083 78,651,716,263
Property, plant and equipment from
   concession agreements - net                          18       114,240,020,594 120,827,189,554 114,240,020,594 120,827,189,554
Intangible assets                                       19         4,300,947,792     493,924,410 4,300,947,792       493,924,410
   Total Non-current Assets                                      205,785,902,023 211,710,818,179 206,523,773,843 211,996,492,712

Total Assets                                                    253,794,152,358 266,244,034,883 254,387,237,331 266,529,709,416

The accompanying notes are an integral part of these financial statements.
TOT Public Company Limited and Subsidiary
Balance Sheets
As at December 31, 2008 and 2007


                                                                                                                       Unit : Baht
                                                                                      Financial
                                                                                   statements
                                                                                       in which
                                                                                equity method
                                                                   Consolidated      is applied           The Company
                                                       Note                2008            2007            2008            2007

     LIABILITIES AND SHAREHOLDERSû EQUITY
Current Liabilities
Trade accounts payable                                  20         2,930,174,201 3,433,674,484 2,664,658,122 3,433,674,484
Payables to private operators                           21        13,137,000,902 11,894,483,957 13,137,000,902 11,894,483,957
Other payables                                                       461,360,011    487,695,518    461,360,011    487,695,518
Current portion of amount due to related company        39.4         480,000,000               -   480,000,000               -
Current portion of long-term borrowings                  27          666,778,238    704,648,121    666,778,238    704,648,121
Current portion of financial lease liabilities           28          972,479,988 1,161,167,859 1,697,720,153 1,161,167,859
Accrued expenses                                         22        4,566,273,522 6,167,128,839 4,567,087,868 6,167,128,839
Accrued income tax                                                   439,551,972    426,744,472    445,260,279    426,744,472
Subscriber deposits                                     23         1,870,826,366 2,003,169,604 1,870,829,093 2,003,169,604
Current portion of deferred income                      26        19,083,339,411 18,239,592,224 19,083,339,411 18,239,592,224
Provision for liabilities                               24                     - 2,921,642,999               -    623,028,091
Other current liabilities                               25         1,790,309,768 1,550,388,279 1,742,800,047 1,550,388,279
   Total Current Liabilities                                      46,398,094,379 48,990,336,356 46,816,834,124 46,691,721,448

Non-current Liabilities
Deferred income                                          26       88,910,654,011 97,742,538,698 88,910,654,011 97,742,538,698
Amount due to related company                           39.4       1,581,013,965                - 1,581,013,965                -
Long-term borrowings                                     27        6,268,635,523 7,107,175,762 6,268,635,523 7,107,175,762
Financial lease liabilities                              28        1,644,963,695 2,542,773,053 1,644,963,695 2,542,773,053
Employee benefit obligation                              29          354,723,606     350,094,017    354,723,606     350,094,017
   Total Non-current Liabilities                                  98,759,990,800 107,742,581,530 98,759,990,800 107,742,581,530

Total Liabilities                                                145,158,085,179 156,732,917,886 145,576,824,924 154,434,302,978

The accompanying notes are an integral part of these financial statements.
TOT Public Company Limited and Subsidiary
Balance Sheets                                                                                                                         82
As at December 31, 2008 and 2007                                                                                                       83

                                                                                                                         Unit : Baht
                                                                                      Financial
                                                                                   statements
                                                                                       in which
                                                                                equity method
                                                                   Consolidated      is applied            The Company
                                                       Note                2008            2007             2008             2007

     Liabilities and Shareholdersû Equity
Shareholdersû equity
Share capital
  Authorised share capital
     600 million ordinary shares of Bath 10 each                   6,000,000,000    6,000,000,000   6,000,000,000     6,000,000,000
  Issued and paid-up share capital
     600 million ordinary shares of Bath 10 each                   6,000,000,000    6,000,000,000   6,000,000,000     6,000,000,000

Retained earnings
  Appropriated                                          30         2,118,110,793 2,118,110,793 2,118,110,793 2,118,110,793
  Unappropriated                                                  99,847,238,241 99,755,426,891 100,045,975,364 102,339,716,332
Unrealised gain on changes in fair value
  of available-for-sale investments                     32           646,326,250 1,637,579,313       646,326,250 1,637,579,313
Total parentûs shareholdersû equity                              108,611,675,284 109,511,116,997 108,810,412,407 112,095,406,438
Minority interest                                       33            24,391,895               -                -              -
Total Shareholdersû Equity                                       108,636,067,179 109,511,116,997 108,810,412,407 112,095,406,438

Total Liabilities and Shareholdersû Equity                       253,794,152,358 266,244,034,883 254,387,237,331 266,529,709,416

The accompanying notes are an integral part of these financial statements.




          (Professor Dr. Teravuti Boonyasopon)                                             (Mr. Varut Suvakorn)
              Chairman of the Board of Directors                                                  President
                 TOT Public Company Limited                                              TOT Public Company Limited
TOT Public Company Limited and Subsidiary
Statements of Income
For the years ended December 31, 2008 and 2007


                                                                                                                            Unit : Baht
                                                                                      Financial
                                                                                   statements
                                                                                       in which
                                                                                equity method
                                                                   Consolidated      is applied               The Company
                                                       Note                2008            2007                2008              2007

REVENUES
Income from telecommunication services                           27,117,717,214 28,638,281,124 27,117,717,452 28,638,281,124
Income from concession agreements                                 3,545,163,502 4,034,485,167 3,545,163,502 4,034,485,167
Income from revenue sharing agreements                           19,462,999,856 17,365,270,620 19,462,999,856 17,365,270,620
Amortisation of deferred income - from
   concession agreements                                26       19,588,530,684 18,393,193,213 19,588,530,684 18,393,193,213
Other service income                                                511,881,153    574,083,382    511,881,153    574,083,382
Other income                                                      1,934,657,034 2,181,362,706 1,930,199,743 2,181,362,706
   Total Revenues                                                72,160,949,443 71,186,676,212 72,156,492,390 71,186,676,212
EXPENSES
Cost of services                                                 21,006,276,396     23,001,525,437   21,006,809,579    23,001,525,437
Depreciation - assets from concession agreements       18, 35    17,465,538,665     16,493,321,917   17,465,538,665    16,493,321,917
Selling and administrative expenses                              24,741,946,585     21,448,109,991   27,169,372,208    22,150,460,601
Directorsû remuneration                                 40            7,028,960         15,411,976        6,975,710        15,411,976
Share of loss of investments - equity method            14           46,752,139        301,115,002                 -                 -
   Total Expenses                                                63,267,542,745     61,259,484,323   65,648,696,162    61,660,719,931
Operating income before interest expense
   and income tax                                                  8,893,406,698 9,927,191,889 6,507,796,228 9,525,956,281
Interest expense                                        34          (662,417,310) (1,016,203,047) (662,417,310) (1,016,203,047)
Operating income before income tax                                 8,230,989,388 8,910,988,842 5,845,378,918 8,509,753,234
Income tax                                                        (2,628,119,886) (2,678,329,486) (2,628,119,886) (2,678,329,486)
Profit before minority interest                                    5,602,869,502 6,232,659,356 3,217,259,032 5,831,423,748
Minority interest                                       33               (58,152)              -                -              -
Net profit for the period                                          5,602,811,350 6,232,659,356 3,217,259,032 5,831,423,748

Basic earnings per share
Net profit for the period                               36                   9.34           10.39              5.36              9.72

The accompanying notes are an integral part of these financial statements.
TOT Public Company Limited and Subsidiary
Statement of Changes in Shareholdersû Equity
For the year ended December 31, 2008


                                                                                                                                                                      Unit : Baht
                                                                                                              Consolidated
                                                                                                                         Unrealised gain
                                                                                                                            on change in
                                                                               Issued and    Appropriated Unappropriated     fair value of
                                                                                  paid-up        retained       retained available for-sale        Minority
                                                        Note                 share capital       earnings       earnings     investments           interest              Total

Balance as at January 1, 2008                                                6,000,000,000    2,118,110,793   99,755,426,891     1,637,579,313              -   109,511,116,997
Net profit for the period                                                                -                -     5,602,811,350                -              -     5,602,811,350
Dividend paid                                             31                             -                -    (5,511,000,000)                -             -    (5,511,000,000)
Movement during the period                                32                             -                -                 -     (991,253,063)             -      (991,253,063)
Increase in minority interest during the period           33                             -                -                 -                -    24,391,895         24,391,895

Balance as at December 31, 2008                                              6,000,000,000    2,118,110,793   99,847,238,241      646,326,250     24,391,895    108,636,067,179

The accompanying notes are an integral part of these financial statements.
                                                                                                                                                                          85
                                                                                                                                                                          84
TOT Public Company Limited
Statement of Changes in Shareholdersû Equity
For the year ended December 31, 2007


                                                                                                                                                                 Unit : Baht
                                                                                        Financial statements in which equity method is applied
                                                                                                                                     Unrealised gain
                                                                                                                                           on change
                                                                                      Issued and Appropriated Unappropriated in fair value of
                                                                                          paid-up         retained          retained available-for-sale
                                                                             Note   share capital         earnings         earnings      investments                 Total

Balance as at January 1, 2007                                                       6,000,000,000      2,118,110,793   94,524,767,535       543,473,671    103,186,351,999
Net profit for the period                                                                       -                  -    6,232,659,356                 -       6,232,659,356
Dividend paid                                                                 31                -                  -   (1,002,000,000)                 -     (1,002,000,000)
Movement during the period                                                    32                -                  -                -     1,094,105,642       1,094,105,642

Balance as at December 31, 2007                                                     6,000,000,000      2,118,110,793   99,755,426,891     1,637,579,313    109,511,116,997

The accompanying notes are an integral part of these financial statements.
TOT Public Company Limited
Statement of Changes in Shareholdersû Equity
For the year ended December 31, 2008 and 2007


                                                                                                                                                               Unit : Baht
                                                                                                    The Company
                                                                                                                                Unrealised gain
                                                                                                                                      on change
                                                                                      Issued and    Appropriated Unappropriated in fair value of
                                                                                         paid-up        retained       retained available-for-sale
                                                                             Note   share capital       earnings       earnings     investments                    Total

Balance as at January 1, 2007                                                       6,000,000,000    2,118,110,793    97,510,292,584      543,473,671    106,171,877,048
Net profit for the period                                                                       -                -     5,831,423,748                -       5,831,423,748
Dividend paid                                                                 31                -                -    (1,002,000,000)                -     (1,002,000,000)
Movement during the period                                                    32                -                -                 -    1,094,105,642       1,094,105,642

Balance as at December 31, 2007                                                     6,000,000,000    2,118,110,793   102,339,716,332    1,637,579,313    112,095,406,438

Balance as at January 1, 2008                                                       6,000,000,000    2,118,110,793   102,339,716,332    1,637,579,313    112,095,406,438
Net profit for the period                                                                       -                -     3,217,259,032                -      3,217,259,032
Dividend paid                                                                 31                -                -    (5,511,000,000)               -     (5,511,000,000)
Movement during the period                                                    32                -                -                  -    (991,253,063)      (991,253,063)

Balance as at December 31, 2008                                                     6,000,000,000    2,118,110,793   100,045,975,364     646,326,250     108,810,412,407

The accompanying notes are an integral part of these financial statements.
                                                                                                                                                                    87
                                                                                                                                                                    86
TOT Public Company Limited and Subsidiary
Statements of Cash Flows
For the years ended December 31, 2008 and 2007

                                                                                                                                        Unit : Baht
                                                                                                 Financial
                                                                                              statements
                                                                                                  in which
                                                                                           equity method
                                                                              Consolidated      is applied              The Company
                                                                Note                  2008            2007              2008               2007
Cash flows from operating activities
Net profit before income tax                                                 8,230,931,236      8,910,988,842    5,845,378,918    8,509,753,234
Reconciliation of net profit before income tax to
 cash flows from operating activities:
  Depreciation/amortisation                                    17, 18, 19    29,283,139,850 29,755,737,715 29,283,139,850         29,755,737,715
  Allowance for doubtful accounts                                               335,546,183      483,016,611 1,968,675,599            483,016,611
  Allowance for stock obsolescence                                               23,628,679       21,143,602       23,628,679          21,143,602
  Provision for liabilities in associates                                                 -                  -    274,021,960         623,028,092
  Value added tax expense                                                       322,804,481                  -    322,804,481                    -
  Share of loss of investments - equity method                     14            46,752,139      301,115,002                -                    -
  Loss from impairment of investment                                                      -       26,014,170       49,127,493         105,336,688
  Loss from impairment of assets                                                127,546,898      193,801,038      127,546,898         193,801,038
  Loss from liabilities transferred from joint venture Thai Mobile               87,092,212                  -    556,545,119                    -
  Amortisation of deferred income                                  26       (19,588,530,684) (18,393,193,213) (19,588,530,684)   (18,393,193,213)
  Unrealised loss on exchange rate                                              710,753,980         9,851,295     710,753,980           9,851,295
  Realised loss (gain) on exchange rate - borrowings                             51,160,731     (179,498,152)      51,160,731        (179,498,152)
  Loss on disposal of property, plant and equipment                             699,195,652      776,556,772      699,195,652         776,556,772
  Income from received donation assets                                           (3,550,186)       (2,143,889)     (3,550,186)         (2,143,889)
  Interest income                                                            (1,095,187,547) (1,226,640,379) (1,095,187,547)       (1,226,640,379)
  Dividend income                                                              (125,230,983)       (5,975,750) (125,230,983)           (5,975,750)
  Interest expense                                                              664,655,267 1,014,737,587         664,655,267       1,014,737,587
  Minority interest                                                33                58,152                  -              -                    -
  Others                                                                         23,267,219         9,479,865      27,722,133           9,479,865
Operating profit before changes in
 operating assets and liabilities                                           19,794,033,279     21,694,991,116 19,791,857,360     21,694,991,116
Changes in operating assets and liabilities
  (Increase) decrease in operating assets
  - trade accounts receivable                                                 (927,236,203)      (866,415,265)   (927,236,203)      (866,415,265)
  - other receivables                                                          (39,301,300)       (22,191,450)    (39,301,300)       (22,191,450)
  - loan to employees                                                          190,708,104        210,853,885     190,708,104        210,853,885
  - inventories and supplies                                                   280,187,519        430,292,119     280,187,519        430,292,119
  - other current assets                                                      (307,382,477)        55,414,082    (308,254,784)        55,414,082
  Increase (decrease) in operating liabilities
  - trade accounts payable                                                  (1,867,582,047)   (446,051,108) (1,766,974,716)        (446,051,108)
  - payables to private operators                                            1,585,829,460 1,125,720,742 1,585,829,460            1,125,720,742
  - other payables                                                             (26,342,982)   (242,882,613)    (26,335,507)        (242,882,613)
  - accrued expenses                                                        (1,653,235,877) 1,283,040,032 (1,652,396,603)         1,283,040,032
  - subscriber deposits                                                       (132,343,238)   (305,714,380) (132,340,510)          (305,714,380)
  - other current liabilities                                                  197,720,744    (162,036,934) 203,955,039            (162,036,934)
  - employee benefit obligations                                                 4,629,588      (1,163,951)      4,629,588           (1,163,951)
  Cash generated from operating activities                                  17,099,684,570 22,753,856,275 17,204,327,447         22,753,856,275
  Interest received                                                          1,127,259,711 1,191,101,464 1,127,259,711            1,191,101,464
  Dividend received                                                            125,230,983      26,975,750     125,230,983           26,975,750
  Interest paid                                                               (668,429,704) (1,216,954,047) (668,429,704)        (1,216,954,047)
  Income tax paid                                                           (2,609,653,839) (3,673,597,280) (2,609,604,079)      (3,673,597,280)
Net cash generated from operating activities                                15,074,091,721 19,081,382,162 15,178,784,358         19,081,382,162
The accompanying notes are an integral part of these financial statements.
TOT Public Company Limited and Subsidiary
Statements of Cash Flows                                                                                                                          88
For the years ended December 31, 2008 and 2007                                                                                                    89

                                                                                                                                   Unit : Baht
                                                                                          Financial
                                                                                       statements
                                                                                           in which
                                                                                    equity method
                                                                       Consolidated      is applied                The Company
                                                            Note               2008            2007                2008                2007
Cash flows from investing activities
  Increase in short-term investments                        9         (2,988,024,233) (1,822,658,643) (2,988,024,233)         (1,822,658,643)
  Decrease in short-term investments                        9          1,789,514,079 4,367,317,678 1,789,514,079               4,367,317,678
  Increase in funds for redemption of long-term liabilities 10        (8,895,738,377) (33,418,644,252) (8,895,738,377)      (33,418,644,252)
  Decrease in fund for redemption of long-term liabilities 10          8,028,352,467 34,788,296,009 8,028,352,467            34,788,296,009
  Increase in advance payment to related parties                         (77,308,718)      (84,175,997)   (77,308,718)            (84,175,997)
  Cash received from advance payment                                      31,908,983                 -     31,908,983                       -
  Cash paid for purchase of investment in subsidiary and
     associates                                                                    -        (5,206,540)               -           (5,206,540)
  Acquisition of ACT Mobile, net of cash acquired                          4,446,144                  -               -                     -
  Cash paid for purchase of other long-term investment 15               (300,948,921)     (395,820,240) (300,948,921)           (395,820,240)
  Cash paid in advance for purchase of equipment                        (674,789,323)     (196,135,491) (674,789,323)           (196,135,491)
  Proceeds from disposal of property, plant and equipment                 60,559,225        60,679,818       60,559,225           60,679,818
  Cash paid for purchase of property, plant and equipment             (9,675,678,242)   (6,795,881,368) (9,675,678,242)       (6,795,881,368)
  Cash paid for purchase of intangible assets                            (43,448,333)     (109,115,992)     (43,448,333)        (109,115,992)
Net cash used in investing activities                                (12,741,155,249)   (3,611,345,018) (12,745,601,393)      (3,611,345,018)
Cash flows from financing activities
  Payments of long-term borrowings                                    (1,639,513,085)   (5,748,438,806)   (1,639,513,085)     (5,748,438,806)
  Payments of financial lease obligation                     28       (1,086,497,229)   (1,698,856,151)   (1,192,084,243)     (1,698,856,151)
  Dividend payment                                           31       (5,511,000,000)   (1,002,000,000)   (5,511,000,000)     (1,002,000,000)
Net cash used in financing activities                                 (8,237,010,314)   (8,449,294,957)   (8,342,597,328)     (8,449,294,957)
Net increase (decrease) in cash and cash equivalents                 (5,904,073,842) 7,020,742,187 (5,909,414,363)            7,020,742,187
Opening balance of cash and cash equivalents                         17,427,148,181 10,448,093,476 17,427,148,181            10,448,093,476
Effects of exchange rate changes                                          2,014,862    (41,687,482)     2,014,862                (41,687,482)
Closing balance of cash and cash equivalents      8                  11,525,089,201 17,427,148,181 11,519,748,680            17,427,148,181

Non-cash transaction
                                                                                                                            Unit : Million Baht
Acquisition of financial lease assets                                              -            62.17                  -                62.17
Acquisition of donated assets                                17                 3.55             2.14               3.55                 2.14
Acquisition of assets transferred under
  concession agreements                                     18, 26        12,495.19         45,662.29         12,495.19           45,662.29
Acquisition of property, plant and equipment not yet paid                  2,646.34          4,498.23          2,646.34            4,498.23
Acquisition of rights to use the frequency not yet paid     6, 19          3,925.21                  -         3,925.21                    -
Acquisition of investment in
  ACT Mobile Company Limited not yet paid                   6,14                   -                 -           381.13                     -

The accompanying notes are an integral part of these financial statements.
TOT Public Company Limited and Subsidiary
Notes to the financial statements
For the years ended December 31, 2008 and 2007


1 General information
      1.1 Company establishment
           TOT Public Company Limited (the çCompanyé) was incorporated as a public limited company in Thailand. The address
of its registered office is:
           89/2 Moo 3, Chaengwattana Road, Toong-song-hong District, Laksi, Bangkok, Thailand.

     1.2 Business activities
           The Company, its subsidiary and its associates (the çGroupé) are principally engaged in telecommunication activities,
such as providing fixed line telephone services, card and coin operated public telephones, personal identification number phones
(pin phones), integrated services digital network (ISDN), wireless telephone services, pager phones, data transmission, video
texts, leased lines and leased circuit interference, internet, and other related and similar communications businesses. Services
are provided to both local and overseas customers.
           The Company has issued various concessions to private operators to encourage development in the fixed line
telephone and related telecommunication services provided to the public. Under these concessions, certain private operators
must pay compensation fees to the Company based on certain percentages of service income or based on certain percentage
of service income or at the minimum payment specified in the individual agreements, whichever is higher. In addition, the
certain operators, in accordance with their concession agreements, are required to procure property and equipment for their
operations, and have to transfer the ownership of such property and equipment to the Company within the periods specified in
the concession agreements. Under most concession agreements the legal title to the assets is transferred to the Company
upon completion of construction and installation, when they are ready to be used; however, the operator retains the right to use
the assets to generate revenue over the concession period. The revenue recognition policy and the recognition of assets
received from private operators are mentioned in Note 2.11.
           At December 31, 2008 and 2007 the principal concession arrangements with private operators are as follows:
           1.2.1 Arrangements under which private operators are required to transfer the ownership of
property and equipment to the Company

                      Operator                                         Service provided                 Concession period
1. True Corporation Public Company Limited             Telephone services
                                                       - 2.6 million fixed lines in                    25 years from
                                                         Bangkok metropolitan area                     October 29, 1992
                                                       - Coin operated public telephones in            January 15, 1997 to
                                                         Bangkok metropolitan area                     October 29, 2017
                                                       - Value added services: DID,                    May 13, 1996 to
                                                         leased line services, etc.                    October 29, 2017
                                                       - Personal communication telephone              August 15, 1996 to
                                                         services                                      October 29, 2017
2. TT&T Public Company Limited                         Telephone services
                                                       - 1.5 million fixed lines in provincial areas   25 years from
                                                                                                       October 25, 1993
                                                       - Coin operated public telephones in            August 20, 1997 to
                                                         provincial areas                              October 25, 2018
                                                       - Value added services: DID,                    February 14, 2001 to
                                                         leased line services, etc.                    October 25, 2018
                      Operator                                        Service provided                   Concession period   90
3. Advance Datanetwork Communications                 Data transmission service using                   25 years from
    Company Limited                                   Datakit Virtual Circuit Switches                  September 25, 1997
                                                                                                                             91
4. Advanced Info Service Public Company Limited       Mobile phone network - Cellular 900 NMT           25 years from
                                                      and GSM                                           October 1, 1990
5. Com-link Company Limited                           Transmission system via fiber optic cable         20 years from
                                                      along railway routes                              April 1, 1991
6. Jasmine Submarine Telecommunication                Submarine optical fiber cable network             20 years from
     Company Limited                                  (east coast)                                      October 4, 1991
7. Thai Long-Distance Telecommunication               Submarine optical fiber cable network             15 years from
     Company Limited                                  (west coast)                                      May 13, 1996
8. Lenso Datacom Company Limited                      Information media service via local copper wire   25 years from
                                                                                                        September 10, 1999
9. True Multi-Media Company Limited                   Leased high-speed signal transmission system      20 years from
                                                      via multi-media network                           October 20, 1997

          1.2.2 Arrangements under which private operators are not required to transfer the ownership
of property and equipment to the Company

                      Operator                                       Service provided                    Concession period
1. Infotel Communication (Thailand) Company Limited   Audiotext for special 1900 telephone number       15 years from
                                                                                                        April 29, 1999
2. Thai Audiotext Service Company Limited             Audiotext for special 1900 telephone number       15 years from
                                                                                                         August 18, 1999
3. Samart Multimedia Company Limited                  Audiotext for special 1900 telephone number       15 years from
                                                                                                        September 29, 1999
4. Quality Digital Lines Company Limited              Audiotext for special 1900 telephone number       15 years from
                                                                                                        January 21, 2002
5. Cyber-call Company Limited                         Audiotext for special 1900 telephone number       15 years from
                                                                                                        February 28, 2002
6. 108 1900 Audiotext Company Limited                 Audiotext for special 1900 telephone number       15 years from
                                                                                                        March 20, 2002
7. MWap (Thailand) Company Limited                    Audiotext for special 1900 telephone number       15 years from
                                                                                                        October 14, 2002
8. Mono Technology Company Limited                    Audiotext for special 1900 telephone number       15 years from
                                                                                                        September 11, 2003
9. Tele-Info Media Company Limited                    Audiotext for special 1900 telephone number       15 years from
                                                                                                        September 29, 2004
10. GMM Digitaldomain Company Limited                 Audiotext for special 1900 telephone number       15 years from
                                                                                                        November 9, 2004
11. Tripple A Asset Management Company Limited        Audiotext for special 1900 telephone number       15 years from
                                                                                                        August 18, 2005
12. Siam2U Public Company Limited                     Audiotext for special 1900 telephone number       15 years from
                                                                                                        January 5, 2006
           1.2.3 Granting of Telecommunication Licence
                 On August 4, 2005, the Company received three licences from the National Telecommunication Commission
(çNTCé), as follows:
                 1. Telecom licence Type I, which allows the Company to provide audiotext services and phone card services.
The Company should pay the licensing fee to renew the licence for one year validity within August 3 of every year.
                 2. Telecom licence Type III, which allows the Company to provide fixed line services, mobile services
(470 MHz. and 900 MHz.), radio services for special groups, leased line services and international call services, which the licence
will expire on August 3, 2025.
                 3. Internet licence Type I, the Company should pay the licensing fee to renew the licence for one year validity
within August 3 of every year.
                 As the Company is granting the telecommunication licences, the Company shall strictly comply with the
conditions stated in the licenses.

2 Accounting policies and basis of preparation
      As the Company received shares from ACT Mobile Company Limited (çACTé), as discussed in Note 6, the Company has
the power to control ACT. The Company classified ACT as the subsidiary and presented the consolidated financial statement
for the first time for the year ended December 31, 2008. In spite of the fact that the Company already has another subsidiary
çFINN - THAI TECHNOLOGY FUND A KYé, it did not prepare consolidated financial statements because the fund has not
continued to invest, and the Company recorded impairment at the full amount and terminated the fund on May 19, 2008.
      The principal accounting policies adopted in the preparation of the consolidated and company financial statements are set
out below.

       2.1 Basis of preparation
             The consolidated and company financial statements have been prepared in accordance with Thai generally accepted
accounting principles under the Accounting Act B.E. 2543, being those Thai Accounting Standards issued under the Accounting
Profession Act B.E. 2547 and new approved accounting standards, and the financial reporting requirements of the Securities and
Exchange Commission under the Securities and Exchange Act B.E. 2535.
             The preparation of consolidated and company financial statements in conformity with Thai generally accepted
accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues
and expenses in the reported periods. Although these estimates are based on managementûs best knowledge of current events
and actions, actual results may differ from these estimates
             An English version of the consolidated and company financial statements have been prepared from the statutory
financial statements that are in Thai language. In the event of a conflict or a difference in interpretation between the two
languages, the Thai statutory financial statements shall prevail.
             The consolidated and company financial statements have been prepared under the historical cost convention, except
as disclosed in the accounting policies below.

     2.2 Foreign currency translation
           Items included in the financial statements of each entity in the Group are measured using Thai Baht. The consolidated
financial statements are presented in Thai Baht.
           Foreign currency transactions are translated into Thai Baht using the exchange rates prevailing at the date of the
transaction. Monetary assets and liabilities denominated in foreign currency are translated to Thai Baht at the exchange rate
prevailing at the balance sheet date. Gains and losses resulting from the settlement of foreign currency transactions and from
the translation of monetary assets and liabilities denominated in foreign currencies, are recognised in the statement of income.
     2.3 Cash and cash equivalents                                                                                                       92
         Cash and cash equivalents comprise cash on hand, deposits held at call with banks and other short-term highly liquid
investments with original maturities of three months or less.
                                                                                                                                         93
    2.4 Short-term investment
         Short-term investments are fixed deposits, bills of exchange, bonds, and promissory notes with original maturity of
more than 3 months, but less than 12 months and the current portion of debentures.

      2.5 Trade receivables
          Trade accounts receivable and other accounts receivable are carried at original invoice amount and are subsequently
measured at the remaining amount less allowance for doubtful receivables based on a review of all outstanding amounts at the
year end. The amount of the allowance is the difference between the carrying amount of the trade accounts receivable and
other accounts receivable and the amount expected to be collectible. Bad debts are recognised in the income statement as
selling and administrative expense.

      2.6 Inventories and supplies
           Inventories and supplies are stated at the lower of cost or net realisable value. Cost of inventories and supplies are
determined using the weighted average method. The cost of purchase comprises both the purchase price and costs directly
attributable to the acquisition of the inventories and supplies, such as import duties and transportation charges, less all
attributable discounts, allowances or rebates. Net realisable value is the estimate of the selling price in the ordinary course of
business, less the costs of completion and selling expenses. During the year, the Group recorded allowance for obsolete,
slow-moving and defective inventories and supplies.

     2.7 Investments in subsidiary and associates
           2.7.1 Investment in subsidiary
                   Subsidiary are all entities (including special purpose entities) over which the Group has the power to govern the
financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence
and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the
Group controls another entity. Subsidiary are consolidated from the date on which control is transferred to the Group and are no
longer consolidated from the date that control ceases.
                   The purchase method of accounting is used to account for the acquisition of subsidiary by the Group. The cost
of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed
at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and
contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date,
irrespective of the extent of any minority interest.
                   The excess of the cost of acquisition over the fair value of the Groupûs share of the identifiable net assets
acquired is recorded as goodwill.
                   If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference
is recognised directly in the income statement.
                   Intercompany transactions, balances and unrealised gains on transactions between group companies are
eliminated; except realised losses that provide evidence of an impairment of the asset. Where necessary, accounting policies of
subsidiary have been changed to ensure consistency with the policies adopted by the Company.
                   In the Companyûs separate financial statements, investments in subsidiaries are reported using the cost
method. Impairment loss of investment in subsidiaries is recognised as provision for impairment loss of investment.
                   A list of the Groupûs principal subsidiary is set out in note to the financial statement No.14
          2.7.2 Investment in associates
                  Associates are all entities over which the Group has significant influence but not control. Investments in
associates are initially recognised at cost and are accounted for using the equity method of accounting in consolidated financial
statements and are reported using the cost method in Companyûs separate financial statements. The Groupûs share of its
associatesû post-acquisition profits or losses is recognised in the income statement, the cumulative post-acquisition movements
are adjusted against the carrying amount of the investment. When the Groupûs share of losses in an associate equals or
exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made
payments on behalf of the associate.
                  Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the
Companyûs interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure
consistency with the policies adopted by the Group.
                  Details of investments in associates are set out in note to the financial statement No.14

     2.8 Investments from exchange of right to operate under concession agreement
          Investments transferred from concession operators from exchanges of the right to operate under concession
agreements are recorded at fair value at the date of inception. In the event that the Company does not have further obligations
in terms of settling future costs to the concession operators, or the transferred investments are not for future service
settlement, the Company will recognise a corresponding entry as income in the statement of income. The Company has
recorded the investments from exchange of right to operate under concession agreement in the investment in associates or
other long-term investments, if appropriate.

     2.9 Other long-term investments
           The Group classifies marketable investments intended to be held for an indefinite period of time, which may be sold
in response to liquidity needs or changes in interest rates, as available-for-sale. These are included in non-current assets, unless
management has expressed the intention of holding the investment for less than 12 months from the balance sheet date or
they will need to be sold to raise operating capital, in which case they are included in current assets. Management determines
the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis.
           The available-for-sale investments are carried at fair valued which consist of investments in marketable equity
securities. For investments traded in an active market, fair value is determined by reference to the quoted bid price of the Stock
Exchange of Thailand or the Stock Exchange of the countries in which such investments are registered. The unrealised gains
and losses from available-for-sale investments are recognised in equity.
           Investments with fixed maturity that management has the intention and ability to hold to maturity are classified as
held-to-maturity and are included in non-current assets, except for those with maturities within 12 months from the balance
sheet date, which are classified as current assets.
           Held-to-maturity investments are carried at amortised cost using the effective yield method.
           Investments in non-marketable equity securities are classified as general investments and are carried at cost in
balance sheet less impairment.
           A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If the
carrying value of the investment is higher than its recoverable amount, impairment loss is charged to the statement of income.
           On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged
or credited to the statement of income.
           When disposing of part of the Groupûs holding of a particular investment in debt or equity securities, the carrying
amount of the disposed of part is determined by the weighted average carrying amount of the total holding of the investment.
      2.10 Property, plant and equipment                                                                                               94
             Property, plant and equipment are stated at historical cost. All property, plant and equipment (except for land)
presented in the balance sheets at historical cost less accumulated depreciation. The Group calculates depreciation by using the
                                                                                                                                       95
straight-line method to write off the cost of each asset, except for land, which is considered to have an indefinite life, over its
estimated useful life, as follows:
                                                                                      Years
             Land improvement                                                         3 - 10
             Buildings and facilities                                                 2 - 35
             Network equipment                                                        2 - 35
             Furniture and fixtures, tools and equipment                              2 - 15
             Computers and equipment                                                   2-6
             Vehicles                                                                  5-8

             Residual value and the estimated useful life of the assets are revised in every reporting balance sheet date.
             Fixed assets from donations are recognised at cost as other income in the year in which they are received.
             Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount.
             Expenditure incurred for addition, renewal or betterment, which results in a substantial increase in an assetûs current
replacement value, is capitalised. Repair and maintenance costs are recognised as an expense when incurred.
             Gains and losses on disposals are determined by comparing proceeds with the carrying amount and are included in
operating profit.
             Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised as part of
the cost of the asset during the period of time required to complete and prepare the property for its intended use. The
borrowing costs include interest on short-term and long-term borrowings, and related taxes.
             The capitalisation rate used to determine the amount of borrowing costs to be capitalised is the weighted average
interest rate applicable to the outstanding borrowings during the year. Where funds are borrowed specifically for the acquisition,
construction or production of property, plant or equipment, the amount of borrowing costs eligible for capitalisation on that asset
is determined from the actual borrowing costs incurred on that borrowing during the period less any investment income on the
temporary investment of those borrowings.

     2.11 Property, plant and equipment from concession agreements
             The Company recorded the assets from concession agreements at the cost notified by the concession operators on
the date on which concession operators transfer the ownership to the Company with a corresponding entry for deferred income,
which is presented as a liability.
             The Company amortise deferred income as revenue in the statements of income according to the shorter of the
useful life of the transferred assets or the term of the concession agreement.
             Depreciation of transferred assets is calculated over its estimated useful life and recognised as expenses in
statement of income, as follows:
                                                                                   Years
             Buildings and facilities                                              5 - 35
             Network equipment                                                     5 - 35
             Furniture and fixtures, tools and equipment                           5 - 15
             Computers and equipment                                               3 - 10

           Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount.
     2.12 Impairment of assets
            Property, plant and equipment and other non-current assets, except for financial assets, including intangible assets,
must be reviewed impairment whenever circumstances indicate that the carrying amount of an asset is less than its recoverable
amount to consider impairment loss. An impairment loss is recognised when the carrying amount of an asset exceeds its
recoverable amount, which is the higher of an assetûs net selling price and its value in use. Assets are grouped at the lowest
level for which there are separately identifiable cash flows for the purposes of measuring impairment. At the balance sheet date
the Group should reverse the impairment loss recognised in prior years if the assessment of the recoverable amount has
changed since the in since theperiod in which the Group recognised the impairment loss.

      2.13 Intangible assets
            Computer software
            Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use
the specific software. These costs are amortised over the estimated useful lives of three to six years.
            Right to use Crown Property land
            The right to use Crown Property land represents the right to lease the land on Chaeng-wattana Road. The Post and
Telegraph Department, or PTD, returned the leased land to Crown Property to enable the Company to lease it for its head office
in exchange for a building constructed by the Company. The Company recognises this right at an amount equal to the
construction cost of the building. The right is amortised over the useful life of the building, which is 35 years.
            Right - educational software programs
            Right - educational software programs represents the right granted solely to the Company according to the joint
operating contract of educational software programs with another private company under which the Company shall render
services or distribute the software throughout the country for a period of not less than ten years. The Company amortises the
right over the contract period.
            Right to use the frequency
            The right to use the frequency is the right to hold and use the 1900 MHz frequency which arise from the
Memorandum of Understanding (çMOUé) on the transfer of the exclusive rights and obligation relating to the frequency, the
termination of the joint venture agreement, and asset management under the 1900 MHz mobile phone services project
between the Company and CAT Telecom Public Company Limited (çCATé). The amortisation is calculated using the straight-line
method over the useful life of 17 years, according to the period of Telecom licence Type III.

     2.14 Accounting for leases - where the Company is the lessee
            Leases of property, plant and equipment which substantially transfer all the risks and rewards of ownership are
classified as financial leases. Financial leases are capitalised at the inception of the lease at the lower of the fair value of the
leased property or the present value of the minimum lease payments. Each lease payment is allocated to both the principal and
the finance charges so as to achieve a constant rate on the balance outstanding. The outstanding rental obligations, net of
finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the statement
of income over the lease period. The property, plant and equipment acquired under financial leases is depreciated over the
shorter of the useful life of the asset or the lease term.
            Leases not transferring a significant portion of the risks and rewards of ownership to the lessee are classified as
operating leases. Payments made under operating leases are charged to the statement of income on a straight-line basis over
the period of the lease.
            When an operating lease is terminated before the lease period has expired, any payment required to be made to the
lessor by the way of penalty is recognised as an expense in the period in which the termination takes place.
     2.15 Accounting for leases - where the Company is the lessor                                                                      96
            Operating lease
            Assets leased out under operating leases are included in property, plant and equipment in the balance sheet. They
                                                                                                                                       97
are depreciated over their expected useful lives on a basis consistent with other similar property, plant and equipment. Rental
income is recognised on a straight-line basis over the lease term.

      2.16 Provisions
              Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events,
it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be
made. Such provisions do not include the provision for employee benefit obligations. Where the Group expects a provision to
be reimbursed, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain.

      2.17 Revenue recognition
               - Revenue from domestic fixed line phone, domestic mobile phones and international long-distance calls is recognised
based on call time at the tariffs set by the Company. The Group estimates the revenues not yet billed based on historical usage.
Telephone usage revenue earned but not billed is presented as accrued income and included in the balance sheets in accounts
receivable.
               - Inbound and outbound international long-distance calls provided by CAT Telecom Public Company Limited (çCATé)
are recognised as revenue at the specific tariffs when services are rendered according to the customer usage report from CAT.
               - Revenue derived from the installation of fixed lines is recognised upon completion of installation services.
               - Revenue from public telephone services is recognised when services are provided following the collection of the
revenue.
               - Revenue from the leasing of circuit and transmission systems is recognised over the service period at the rate
prescribed by the Company.
               - Revenue from the leasing of equipment is recognised over the lease period at the rate specified in the agreement.
               - Revenue from network connection (access charge) is recognised when the network is connected at the rate
specified in the agreement.
               - Sales of equipment are recognised on delivery and customer acceptance.
               - Revenue from sales of telephone cards and internet cards is recognised when the Company sells the products
to the customer.
               - Revenue from revenue sharing arrangements under concession agreements is recognised as follows: minimum
shared revenue and revenue sharing in excess of the minimum shared revenue are recognised on an accrual basis based on the
statement of revenue provided by concession operators. If the Company is responsible for collection from end customers, it
presents trade receivables at the gross amount and revenue sharing income according to its share as stipulated in the agreement;
it presents revenue sharing payables net of allowance for doubtful debts which the private operators are responsible for.
               - Revenue from assets transferred from concession agreements is discussed in note 2.11.
               - Revenue from investments received from an exchange of right to operate under concession agreements is
discussed in note 2.8.
               - Interest income is recognised on a time proportion basis, taking account of the principal outstanding and the
effective rate over the period to maturity, when it is determined that such income will accrue to the Company, unless the
collectibility is in doubt.
               All revenues have been presented net of sales tax and discounts.

     2.18 Related parties
             Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled
by, or are under common control with, the company, including holding companies, subsidiary and fellow subsidiary, are related
parties of the Group. Associates and individuals owning, directly or indirectly, an interest in the voting power of the company
that gives them significant influence over the enterprise, key management personnel, including directors and officers of the
company and close members of the family of these individuals and companies associated with these individuals also constitute
related parties.
             In considering each possible related party relationship, attention is directed to the substance of the relationship, and
not merely the legal form.

     2.19 Employee benefits
              2.19.1 Employee benefit fund
                     The Company established its employee benefit fund following the Telephone Organisation of Thailand Act
B.E. 2497 in order to provide money to employees who resign from the Company and for employees who want to borrow
money with a security or personal guarantee. The Company contributes an amount equal to 10% of its employeesû salaries into
the fund on a monthly basis. At the balance sheet date, the Company contributes an additional amount to the fund, up to a
maximum of the obligation as at the balance sheet date. As at December 31, 2004, the contribution amount was calculated
based on the latest salary rate of each employee multiplied by their length of service in accordance with the previous policy in
respect of the employee benefit fund. Subsequently, on August 26, 2005, the Company changed the policy according to the
resolution of the Board of Directorsû Meeting dated August 8, 2005, which had an effective date of October 1, 2005. At
December 31, 2005 and 2006, the calculation method for the retirement benefit plan is divided into two parts, firstly the
calculation is based on salary rate at September 30, 2005 and applied it for the service period from the effective employment
date to September 30, 2005, and secondly the calculation is based on salary rate at the balance sheet date and applied it for the
service period from October 1, 2005 to the balance sheet date. Income earned from fund assets is recognised as income.
Contributions to the employee benefit fund are charged as expenses to the income statement as incurred. Assets of the fund
are included in the Companyûs balance sheet, and comprise cash and cash at banks, loans to employees and accrued interest
income.
              2.19.2 Provident fund
                     The Company established a provident fund, çthe registered provident fund of the Telephone Organisation
of Thailandé on September 29, 1997. According to the corporatisation under the State Enterprise Capital Act B.E. 2542, the
name of the fund was changed to çthe registered provident fund of TOT Corporation Public Company Limitedé on November
14, 2002 and the name of the fund was changed once again to çthe registered provident fund of TOT Public Company Limitedé
on September 7, 2005. All employees joining the Company on or after September 29, 1997 are required to be members of the
provident fund. Employees joining prior to September 29, 1997 were able to elect to be members of the provident fund or the
employee benefit fund. The Company contributed at the rate of 10% per month of salary/wage for employees who had been
working with the Company for more than 20 years and at the rate of 9% per month for employees who had been working with
the Company for less than 20 years. In January 1, 2006, the Company changed the contribution rate to 13% and 12% for
employees who have been working with the Company for more than 20 years and less than 20 years respectively. The
contributions to the provident fund are charged as expenses to the income statement as incurred. Assets of the fund are held
in a separate account which is managed by a fund management company.
              2.19.3 Severance benefits
                     Under the labour laws applicable to state enterprises, all employees are entitled to severance pay on
termination of service, including forced termination or retrenchment, or in the event that the employee reaches the retirement
age of 60. The Company has not provided for this severance liability in these financial statements.
              2.19.4 Share-based compensation
                     The Company initiated a share-based award plan for its employees from the privatisation from TOT to TOT
Corporation Public Company Limited in July 2002 by granting the right to employees to purchase shares at par value equivalent
to six times of each employeeûs salary and receive free shares (based on par value) equivalent to two times of each employeeûs         98
salary. The employees can exercise this right on the date of the Companyûs initial public offering. The total share allocation under
this option plan shall not exceed 6.5% of the registered share capital on the completion of the Initial Public Offering. The
                                                                                                                                       99
Company does not recognise a compensation charge until the date of issuing shares under this option scheme.
             2.19.5 Early retirement benefit
                     The Group recognises early retirement benefit obligations for employees who retire early or employees
who accept voluntary redundancy in exchange for this benefit. The Group has recognised liabilities and expenses upon approval
of the termination of service of employees who take voluntary redundancy.

     2.20 Research and development expenditure
          Research and development expenditure is expensed in the period as incurred.

     2.21 Income taxes
            The Group calculates income tax in accordance with the Revenue Code and records income tax on an accrual basis.
The Company does not recognise deferred income tax in respect of temporary differences arising from difference between the
tax bases of assets and liabilities and their carrying amounts in the financial statements.

3 New accounting standard and amendments to accounting standards
   During the years 2007 and 2008, the Federation of Accounting Profession (çFAPé) has announced new standard and
amendments to Thai Accounting Standard (çTASé) as follows:
   Revised standards
   TAS 25         Cash Flow Statements
   TAS 29         Leases
   TAS 31         Inventories
   TAS 33         Borrowing Cost
   TAS 35         Presentation of Financial Statements
   TAS 39         Accounting Policies, Changes in Accounting Estimates and Errors
   TAS 41         Interim Financial Reporting
   TAS 43         Business Combination
   TAS 49         Construction Contracts

     New standard
     TAS 51          Intangible Assets
     The amendments to accounting standards and the new accounting standard are effective for the period beginning on or
after January 1, 2008 except TAS 29 which is effective for the lease contract started on or after January 1, 2008.
     The Companyûs management has determined that the revised standards and new standard will not significantly impact the
financial statements being presented except; TAS 35 which has affected the presentation of other disclosures as mentioned in
Note 5.

     The amendments to accounting standards which are effective for the period beginning on or after January 1, 2009 and have
not early adopted by the Company are as follows:
     TAS 36         Impairment of Assets
     TAS 54         Non-current assets held for sale and Discontinued operations
     The Companyûs management considered those two standards will not have a material impact on the financial statements.
4 Financial risk management
     4.1 Financial risk factors
           The Groupûs activities expose it to a variety of financial risks: market risk (the effects of changes in foreign currency
exchange rates and interest rates), credit risk and liquidity risk. The Groupûs overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group
especially the effect of changes in foreign currency exchange rates and interest rates. The Group uses derivative financial
instruments, such as cross currency swaps focusing on spreading risk from one currency to another currency, and prepayment
used to reduce foreign currency exchange rate risk and foreign currency obligations. Risk management is carried out by the
Treasury Department in accordance with policies approved by the Board of Directors.
           4.1.1 Market risk
                   (1) Foreign currency exchange rate risk
                       The Group has foreign currency liabilities, which comprise borrowings, trade accounts payable and other
payables in US dollar and Japanese yen currencies. Therefore, the Group is exposed to foreign exchange rate risk arising from
the US dollar and Japanese yen currencies. For assets, the Group has deposits denominated in US dollars with a local bank,
which are used for repayment of foreign currency liabilities. In addition, there is foreign exchange rate risk arising from
borrowings, commercial transactions, assets and liabilities which will be incurred in the future.
                       In order to manage the risks arising from fluctuations in currency exchange rates, the Group has taken the
following measures:
                       - entering into cross currency swaps
                       - maintaining deposits in foreign currencies to settle foreign currency liabilities (Natural Hedging)
                       - early repayment of borrowings (Prepayment)
                       The Group uses derivative financial instruments to manage foreign exchange rate risk for some Japanese
yen borrowing agreements but cannot cover all borrowing agreements; therefore, the Group is still exposed to foreign exchange
rate risk for the remaining Japanese yen borrowings and some US dollar borrowings, as well as other commercial transactions,
such as the purchase of network equipment and the settlement of supplier liabilities. The Group does not use derivative financial
instruments for these transactions.
                   (2) Interest rate risk
                       The Group earns interest on cash and cash equivalents, which exposes it to volatility as market interest
rates fluctuate. The Group manages this interest rate risk by selecting to deposit for various maturities and various interest rate
terms according to the interest rates available in the market and anticipated future cash flow requirements. The Group is also
exposed to risk from fixed interest rates at the inception date for the financial leases under which the Group is the lessee,
long-term borrowings, and investment in government debt securities, promissory notes and bonds.
           4.1.2 Credit risk
                   The Group has deposits with a state owned bank and other commercial banks (Notes 8, 9 and 10), both local
banks and Thai branches of foreign banks, which it has selected based on their quality and reputation. For investment in debt
securities, the Group selects low risk securities, which comprise government debt securities and bonds issued by banks
classified the reputation in A level up. The Group has policies in place to ensure that sells of goods and services are provided
to customers with an appropriate credit history.
           4.1.3 Liquidity risk
                   The Group manages liquidity risk by maintaining sufficient cash and marketable securities.
     4.2 Accounting for derivative financial instruments and hedging activities                                                     100
          Cross Currency Swaps                                                                                                      101
          The Company and certain counterparties enter into currency swaps of the same value in different foreign currencies
at the contract date. On maturity, the Company will repay debts in the new foreign currency as agreed. This foreign currency
swap contracts are taken out in respect of borrowings. Borrowings are presented in the new currency from inception of the
cross currency swap. Differences between the original and new currency are recognised in the statement of income in the
period as incurred. Borrowings in foreign currencies as at the balance sheet date are translated into Baht at the exchange rate
at the balance sheet date. Gain (loss) from translation is recognised in the statement of income. The Company is also a party
to prepayment contracts, which are intended to reduce exposure to fluctuations in foreign currency exchange rates and reduce
foreign borrowings at the balance sheet date. Gains or losses from prepayment contracts are recognised as income or expenses
in the statement of income in the period as incurred.
          Disclosures with respect to derivative financial instruments to which the Company is a party are provided in Note 37.

5 Critical accounting estimates, assumption and judgments
     Estimates, assumption and judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
     1. Impairment of receivable
           The Company maintains an allowance for doubtful accounts to reflect impairment of trade receivables relating to
estimated losses resulting from the inability of customers to make required payments. The allowance for doubtful accounts is
significantly impacted by the Companyûs assessment of future cash flows, such assessment being based on consideration of
historical collection experience, known and identified instances of default and consideration of market trends.

      2. Property, plant and equipment and intangible assets
           Management determines the estimated useful lives and residual values for the Companyûs property, plant and
equipment and intangible assets. Management will revise the depreciation charge where useful lives and residual values are
different to previously estimated, or it will write off or write down technically obsolete or assets that have been abandoned or
sold.

6 The transfer of the rights and obligation relating to the frequency, the termination of joint venture
  agreement, and asset management under the 1900 MHz mobile phone services project.
     On July 10, 2008, the Company and CAT entered into the Memorandum of Understanding (çMOUé) to transfer of the
exclusive rights and obligations relating to the frequency, the termination of joint venture agreement, and assets management
under the 1900 MHz mobile phone services project. This MOU would be in effective subject to a Cabinet resolution which the
Cabinet has issued the resolution on August 26, 2008. The main points of the MOU are summarised as followed:
     1. The Company and CAT have agreed to terminate the joint venture agreement on the 1900 MHz mobile phone services
project from September 30, 2008.
     2. All assets, including rights, and responsibility for all obligations of the joint venture Thai Mobile as at September 30,
2008 were transferred to the Company. Moreover, the Company has the exclusive right to operate the 1900 MHz mobile phone
services from September 30, 2008.
     3. The exclusive rights and obligations relating to the frequency to provide the 1900 MHz mobile phone services and the
3G mobile phone (IMT 2000) services were transferred to the Company. CAT agreed that during the period before approval for
the transfer of frequency is obtained from the NTC, the Company is to be the exclusive user of the frequency.
       4. The Company is received all shares in ACT held by CAT (50,816,987 shares).
       5. The Company shall pay compensation to CAT of Baht 2,400 million in five annual installments of Baht 480.00 million.
The Company will pay the first installment within seven days after the Company receives the official notification letter from the
NTC on the transfer of frequency. For the second to fifth installments, the Company will pay the annual installments from 1 to
4 years after the Company receives the official notification letter from the NTC on the transfer of frequency.
       6. The Company is obliged to pay any tax, related expenses and fees in respect of the MOU with the exception of
CATûs corporate income tax liability.
       Under the aforementioned Memorandum of Understanding, the joint venture Thai Mobile was terminated as at September
30, 2008, and all of the assets of joint venture Thai Mobile at the fair value at this date amounting to Baht 87.38 million were
transferred to settle the liabilities to the Company. The fair value of the outstanding liabilities has been accepted by both
venturers based on the proportion of their investment. The liabilities allocated to CAT are to be settled by offsetting them
against the cost of the right to use the frequency. With respect to the liabilities of joint venture Thai Mobile to third parties, the
Company received all the liabilities of the joint venture Thai Mobile at the fair value of Baht 2,510.96 million, of which the
liabilities amounting to Baht 1,057.37 million were allocated to CAT and would be settled by offsetting them against the cost of
the right to use the frequency. Meanwhile, the Company, as the other venturer, will accept the remaining liabilities amounting
to Baht 1,453.59 million. On November 26, 2008, the Company entered into a share transfer agreement with CAT to receive all
of the shares in ACT held by CAT totalling 50,816,987 shares at 7.50 Baht per share based on ACTûs book value as at December
31, 2007 for an amount of Baht 381.13 million.
       The Company recorded this transaction as below:
       1) Identifiable assets acquired and liabilities assumed from a joint venture Thai Mobile were recorded in the financial
statements at their fair value as follows:
                                                                                                                  Unit : Million Baht
       Assets acquired for settlement of liabilities
       Cash and cash equivalents                                                                                            31.91
       Trade accounts receivable                                                                                            26.24
       Inventories and supplies - net                                                                                         5.22
       Other current assets                                                                                                   9.83
       Equipment and furniture and fixtures - net (Note 17)                                                                 11.10
       Intangible assets (Note 19)                                                                                            0.02
       Other non-current assets                                                                                               3.06
               Total                                                                                                        87.38

                                                                                                                  Unit : Million Baht
     Liabilities assumed
     Trade accounts payable                                                                                              1,615.31
     Current portion of financial lease liabilities (Note 28)                                                              830.83
     Accrued expenses                                                                                                       56.13
     Other current liabilities                                                                                               8.69
              Total                                                                                                      2,510.96
     Liabilities assumed based on the proportion of joint venture                                                        1,453.59
      Liabilities assumed based on the proportion of joint venture stated above, the Company has recorded a portion of provision    102
for liabilities as detailed below:
                                                                                                              Unit : Million Baht   103
                                                                                               Consolidated The Company
      Liabilities assumed based on the proportion of joint venture                                   1,453.59         1,453.59
      Provision for liabilities was already recorded (Note 24)                                      (1,366.50)          (897.05)
      Loss from liabilities transferred from joint venture Thai Mobile                                  87.09             556.54

      2) ACTûs shares are recorded as investment in subsidiary at the book value as at November 26, 2008 because the shares
have no market price stated and the Companyûs management expected the book value would not materially differ from its fair value.
      3) The right to use the 1900 MHz frequency has been recorded as an intangible asset. As no market price is available for
this right, the Company calculated the fair value based on the following:
                                                                                                           Unit : Million Baht
      Consideration paid to CAT
      Present value of cash to be paid (Note 39.4)                                                                   2,061.01
      Acquired ACT shares (Note 14)                                                                                    (381.13)
      Present value of cash to be paid - net                                                                         1,679.88
      Liabilities in joint venture Thai Mobile based on portion of CATûs responsibilities                            1,057.37
      Write off accounts receivable - Thai Mobile based on portion of CATûs responsibility                           1,187.96
      Intangible asset - Right to use frequency                                                                      3,925.21

      The present value of cash to be paid of Baht 2,061.01 million is calculated based on the total amount payable under the
agreement amounting to Baht 2,400.00 million discounted at the rate of 8.25%, being the current MLR+1 of commercial banks,
based on the term of the agreement. The Company presented the deferred interest expense amounting to Baht 338.99 million
net of the amount due to related company (Note 39.4). On March 19, 2009, the Company received the official approval
notification letter from the NTC regarding the transfer of the licence to use the frequency for the 1900 MHz mobile phone
services from CAT. The fee for the licence to use the frequency amounts to Baht 262.00 million and is payable within 30 days
from the NTCûs approval of the transfer of the licence. The Companyûs rights and obligations relating to the frequency shall be
effective immediately when the NTC passes the resolution on the transfer of the frequency.

7 Comparative figures
    Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year.

8 Cash and cash equivalents as at December 31, 2008 and 2007 comprise:
                                                                                                              Unit : Million Baht
                                                                             Financial
                                                                          statements
                                                                             in which
                                                                        equity method
                                                           Consolidated is applied                    The Company
                                                                   2008           2007                 2008        2007
    Cash                                                          23.52           28.03                23.50       28.03
    Deposits held at call with bank                            6,289.28        5,169.92             6,283.96    5,169.92
    Fixed deposits at bank                                     5,212.29      12,229.20              5,212.29   12,229.20
                                                              11,525.09      17,427.15             11,519.75   17,427.15
     The weighted average effective interest rate of deposits held at call with bank and fixed deposits at bank as at December
31, 2008 was 2.04% per annum (At December 31, 2007 : 2.49% per annum).
     Cash and cash equivalents as at December 31, 2008 include current accounts, savings account and fixed deposits with a
maturity of three months in respect of the employee benefit fund amounting to Baht 32.09 million (At December 31, 2007 : Baht
181.28 million) and deposits in US dollar currency amounting to Baht 28.49 million (At December 31, 2007 : Baht 74.03 million)
in order to reduce the risk of exposure to fluctuations in exchange rate in respect of the settlement of US dollar liabilities.

9 Short-term investments
                                                                                                            Unit : Million Baht
                                                                           Financial
                                                                        statements
                                                                           in which
                                                                      equity method
                                                        Consolidated is applied                       The Company
                                                                2008             2007                 2008          2007
    Opening balance - net                                   1,350.39         3,507.74              1,350.39     3,507.74
    Increase during the year                                2,988.02         1,822.66              2,988.02     1,822.66
    Decrease during the year                               (1,789.52)       (4,367.32)            (1,789.52)   (4,367.32)
    Amortised discount on debt securities                        1.30             0.96                 1.30          0.96
    Changes in foreign currency translation                         -           (30.41)                   -        (30.41)
    Reclassification from long-term investments (Note 15)     630.26           416.76                630.26       416.76
    Closing balance - net                                   3,180.45         1,350.39              3,180.45     1,350.39

     Short-term investments as at December 31, 2008 comprise fixed deposits at banks with original maturity over 3 months
but less than 12 months including investment in promissory notes, treasury bill, government bonds and current portion of
debentures. The weighted average effective interest rate was 3.49% per annum (At December 31, 2007 : 3.65% per annum).

    At 31 December 2008 and 2007, short-term investments are as follows:
                                                                                                            Unit : Million Baht
                                                                                Financial
                                                                             statements
                                                                                in which
                                                                           equity method
                                                          Consolidated        is applied             The Company
                                                                  2008               2007            2008        2007
    Deposits at bank                                          2,236.21              681.19        2,236.21      681.19
    Held-to-maturity investment                                 944.24              669.20          944.24      669.20
                                                              3,180.45            1,350.39        3,180.45    1,350.39
10 Funds for redemption of long-term liabilities                                                                                    104
                                                                                                              Unit : Million Baht   105
                                                                              Financial
                                                                           statements
                                                                               in which
                                                                         equity method
                                                           Consolidated is applied                    The Company
                                                                   2008            2007                2008        2007
    Opening balance - net                                     17,559.28        18,878.86          17,559.28    18,878.86
    Increase during the year                                   8,895.73        33,418.64           8,895.73    33,418.64
    Decrease during the year                                  (8,028.35)      (34,788.29)         (8,028.35)  (34,788.29)
    Amortised discount on debt securities                         22.41            50.07              22.41        50.07
    Closing balance - net                                     18,449.07        17,559.28          18,449.07    17,559.28

     Funds for redemption of long-term liabilities as at December 31, 2008 comprise time deposits at banks with a maturity
period within 24 months including investment in promissory notes, treasury bill, government bonds and debentures. The
Company contributes to the funds on an annual basis for the purpose of redeeming long-term liabilities. The Company can
withdraw the funds to settle liabilities as necessary, subject to the approval of the management of the finance function at vice
managing director level up by reporting to the managing director. The weighted average effective interest rate as at December
31, 2008 was 3.83% per annum (At December 31, 2007 : 3.63% per annum).

    As at December 31, 2008 and 2007 funds for redemption of long-term liabilities are as follows:
                                                                                                              Unit : Million Baht
                                                                             Financial
                                                                          statements
                                                                             in which
                                                                        equity method
                                                           Consolidated is applied                    The Company
                                                                   2008           2007                2008         2007
    Funds for redemption of long-term liabilities             14,825.63       14,285.98           14,825.63    14,285.98
     - within 1 year
    Funds for redemption of long-term liabilities                3,623.44          3,273.30        3,623.44           3,273.30
     - over 1 year
                                                               18,449.07          17,559.28       18,449.07          17,559.28
11 Trade accounts receivable - net
    Trade accounts receivable as at December 31, 2008 and 2007 are as follows:
                                                                                                             Unit : Million Baht
                                                                            Financial
                                                                         statements
                                                                            in which
                                                                       equity method
                                                          Consolidated is applied                     The Company
                                                                  2008          2007                  2008        2007
    Trade accounts receivable -
      telecommunication services - net                          8,200.80          8,175.37        8,200.80           8,175.37
    Trade accounts receivable -
      customers under concession agreements - net               2,772.63          2,756.86        2,772.63           2,756.86
    Trade accounts receivable - revenue sharing - net           3,322.04          3,408.19        3,322.04           3,408.19
    Total trade accounts receivable - net                      14,295.47         14,340.42       14,295.47          14,340.42

    11.1 Trade accounts receivable - telecommunication services - net
                                                                                                             Unit : Million Baht
                                                                            Financial
                                                                         statements
                                                                            in which
                                                                       equity method
                                                          Consolidated is applied                     The Company
                                                                  2008          2007                  2008        2007
    Trade accounts receivable - billed
    - Third parties                                             3,680.95          3,510.81        3,680.95           3,510.81
    - Related parties                                           1,372.28          1,463.79        1,372.28           1,463.79
    Accrued income
    - Third parties                                             3,238.80          2,972.85        3,238.80           2,972.85
    - Related parties                                           1,546.30          1,813.39        1,546.30           1,813.39
    Total trade accounts receivable -
      telecommunication service                                 9,838.33           9,760.84        9,838.33           9,760.84
    Less Allowance for doubtful accounts                       (1,637.53)         (1,585.47)      (1,637.53)         (1,585.47)
    Total trade accounts receivable -
      telecommunication service - net                           8,200.80          8,175.37        8,200.80           8,175.37

     Trade accounts receivable - telecommunication services comprise receivables in respect of services provided by the Company
using its own network, such as fixed line phones, leased cable conduits, leased circuit interference, and access charge.
     Trade accounts receivable - billed include government and state enterprise receivables as at December 31, 2008 of Baht
1,348.71 million (At December 31, 2007 : Baht 1,227.44 million).
     The above trade accounts receivable include the accounts receivable from CAT amounting to Baht 1,557.52 million, which
include revenue sharing from international calls for the period of January to June 2004 amounting to Baht 983.85 million, for
which the revenue was recorded using the rate agreed in the previous agreement, but CAT argued that the revenue sharing for
such period should be calculated at the new rate. Under the consideration of the Arbitrary Committee to conclude the civil suit
of Government and related department, this case should be submitted to the Ministry of Information and Communication
Technology to make the judgment. During a meeting between the Ministry of Information and Communication Technology, the
Company and CAT, made a resolution to request that the Arbitrary Committee consider sending the case back to the Arbitrary
Committee to conclude the civil suit of Government and the related department, which is currently under consideration.              106
However, the management of the Company expects the full amount to be collected under the previous agreement, so no
allowance for doubtful accounts is provided in these financial statements.                                                          107
      CAT entered into an agreement with the Company regarding the mobile network connection of the three concession
operators who provide CATûs wireless cellular services; Total Access Communication Public Company Limited (çDTACé), True
Move Company Limited (çTrue Moveé) and Digital Phone Company Limited (çDPCé) which there are three parties, being the
Company, CAT and the operators, in this agreement. This agreement is related to the connection and the use of the network
of the Company and the concession operators. Then on November 17, 2001, the Telecommunication Act became effective
which in section 2 of Telecom Act was mentioned about the use and interconnection of the telecom network. In 2006, National
Telecommunication Commission (çNTCé) has announced about the use and interconnection of network; therefore, it caused
two concession operators of CAT, DTAC and True Move, requested to stop payment of the access charge and requested to
make an agreement regarding the use and interconnection of the network and interconnection charge rate (IC). The concession
operator will pay the access charge until November 17, 2006. During the negotiation period, the concession operators will pay
IC from November 18, 2006 onward at the agreed rate or temporary rate set by NTC.
      However, the Company believes that although NTC has announced the interconnection charge, every agreement on the
access charge is still effective; therefore, concession operators have no right to stop paying the access charge. The Board of
Directorsû Meeting on November 20, 2006 passed a resolution to inform the two concession operators to pay the access charge
according to the existing agreement and the Companyûs management will pursue legal action till the end. On August 31, 2007,
the Company filed a lawsuit against NTC at the Central Administrative Court of Thailand to request an order to revoke the
announcement which mentioned the use and interconnection of the telecommunication network B.E. 2549. On November 16,
2007, the Company filed a lawsuit against CAT and the two concession operators at the Civil Court for the default in the contract
and penalty payment which the Court received the request for consideration. On November 3, 2008, the Civil Court dismissed
the case between the Company, CAT, and DTAC from its content, which it should be under the Administrative Courtûs content.
The Companyûs management, therefore, passed a resolution to submit the case to the Office of the Attorney General, and it is
now under consideration by the Office of the Attorney General. Due to cessation of paying the access charge, the two
concession operators also did not follow the agreement regarding the submission of information relating to the access charge
to the Company. The Company did not record revenue from the access charge of these two operators from January 1, 2007 up
to the present.
      Furthermore, since the fourth quarter of 2007, CAT has defaulted on the access charge payment relating to its operation
from October 2007 onwards. The Company received the access charge information from CAT for the period up to October 2007.
Therefore, the Company recorded revenue amount of Baht 84.02 million for October 2007 and did not record this revenue since
November 1, 2007. Moreover, CAT defaulted on the payment of half of its DPC revenue sharing to be paid in addition to the
minimum revenue sharing payment to the Company for the period from September 16, 2006 to September 15, 2007 in the total
amount of Baht 345.50 million, and the revenue sharing payment for the period from October 1, 2007 to December 31, 2007
in the total amount of Baht 130.12 million which the payments were due on the first quarter of 2008 and be pursued for
payment by CAT. However, although the Company received the half of DPC revenue sharing from CAT until June 2008, the
Company received a notification letter from CAT in March 2008 stating that it would make a payment if the Court issued a final
judgment due to the Company filing a lawsuit against CAT and concession operators DTAC and True Move at the Civil Court for
the access charge payment. Therefore, the Company stopped recognising this revenue since the first quarter of 2008. However,
the Companyûs management expects to be able to collect the full amount of the access charge payment and half of the DPC
revenue sharing with CAT that presented in the accounts receivable - telecommunication services. Therefore, no allowance for
this doubtful accounts has been recorded in the financial statements.
      Since 2007, the Company has not recorded the corporate income tax expense from the disputed access charge revenue
which the Company has not recognised as revenue in these financial statements (Note 38.2.1).
      Concentrations of credit risk with respect to trade accounts receivable are limited due to the Companyûs large number of
customers who are end users of telephone services, covering business, government and state enterprises and residential
customers. The Companyûs experience in the collection of accounts receivable indicates that the allowance provided will be
sufficient. Due to these factors, management believes that no additional credit risk beyond the amounts provided for collection
losses is inherent in its trade accounts receivable.
     11.2 Trade accounts receivable - customers under concession agreements - net
                                                                                                                 Unit : Million Baht
                                                                              Financial
                                                                           statements
                                                                              in which
                                                                         equity method
                                                            Consolidated is applied                      The Company
                                                                    2008          2007                   2008        2007
     Trade accounts receivable -
       customers under concession agreements - billed
     - Third parties                                              4,278.51           3,908.79         4,278.51           3,908.79
     Accrued income
     - Third parties                                                435.60             501.94           435.60             501.94
     Total trade accounts receivable -
       customers under concession agreements                      4,714.11           4,410.73         4,714.11            4,410.73
     Less Allowance for doubtful accounts                        (1,941.48)         (1,653.87)       (1,941.48)          (1,653.87)
     Total trade accounts receivable -
       customers under concession agreements - net                2,772.63           2,756.86         2,772.63           2,756.86

             Trade accounts receivable - customers under concession agreements comprise fixed line phone receivables for
services provided by True Corporation Public Company Limited (çTrueé) and TT&T Public Company Limited (çTT&Té). The
Company is responsible for billing and collection. The Company then shares the revenue with the service providers upon
collection based on the rates specified in the relevant agreements. The accounting policy for this transaction is discussed in note
2.17. As at December 31, 2008, trade accounts receivable - customers under concession agreements include government and
state enterprise receivables amounting to Baht 347.81 million (At December 31, 2007 : Baht 309.39 million).

     11.3 Trade accounts receivable - revenue sharing - net
                                                                                                                 Unit : Million Baht
                                                                              Financial
                                                                           statements
                                                                              in which
                                                                         equity method
                                                            Consolidated is applied                      The Company
                                                                    2008          2007                   2008        2007
     Trade accounts receivable - revenue sharing
     - Third parties                                                793.84             788.03           793.84             788.03
     Accrued income
     - Third parties                                              2,927.24           3,019.15         2,927.24           3,019.15
     - Related parties (Note 39.3)                                    0.66               0.71             0.66               0.71
     Total trade accounts receivable - revenue sharing            3,721.74           3,807.89         3,721.74           3,807.89
     Less Allowance for doubtful accounts                          (399.70)           (399.70)         (399.70)           (399.70)
     Total trade accounts receivable - revenue sharing - net      3,322.04           3,408.19         3,322.04           3,408.19
                                                                                                                                 108
            Trade accounts receivable - revenue sharing comprises receivables from minimum shared revenue or a certain           109
percentages of service income before expense, whichever is higher as specified in the relevant agreements. Such receivables
comprise receivables from mobile phone services, public phones, telephone directories, videotexts and phone cards.
            Trade accounts receivable - revenue sharing included accrued income from Advanced Info Service Public Company
Limited (çAISé) amounting to Baht 681.04 million which is the excise tax that was deducted from revenue sharing during
January 23, 2007 - February 26, 2007. AIS has already submitted such excise tax to Excise Department and refused to pay the
Company. On February 26, 2007 the Ministry of Commerce announced a reduction of excise tax rate for telecommunication
services to zero percent but the opinion of the Companyûs management is that AIS has no right to deduct excise tax from
revenue sharing according to the resolution of the Cabinet on January 23, 2007. Therefore the Company recorded this excise tax
as accrued income. The Company believed that the full amount will be collected, thus no allowance for doubtful accounts is
provided in these financial statements.

    11.4 Aging analysis
           Trade accounts receivable - billed - telecommunication services and customers under concession agreements can
be aged as follows:

                                                                                                           Unit : Million Baht
                                                                                 Consolidated
                                                             Accounts receivable -        Accounts receivable -
                         Items                                 telecommunication             customers under
                                                                     services            concession agreements
                                                            Dec. 31, 08 Dec. 31, 07 Dec. 31, 08 Dec. 31, 07
    Not later than 6 months                                  2,769.04        2,871.38     1,827.90      1,907.09
    Later than 6 months but not later than 1 year              459.68          287.43       484.58        403.43
    Later than 1 year but not later than 2 years               341.49          374.40       496.04        550.91
    Later than 2 years                                       1,483.02        1,441.39     1,469.99      1,047.36
                                                             5,053.23        4,974.60     4,278.51      3,908.79


                                                                                                           Unit : Million Baht
                                                                                 The Company
                                                             Accounts receivable -       Accounts receivable -
                         Items                                 telecommunication            customers under
                                                                     services           concession agreements
                                                            Dec. 31, 08 Dec. 31, 07 Dec. 31, 08 Dec. 31, 07
    Not later than 6 months                                  2,769.04        2,871.38    1,827.90      1,907.09
    Later than 6 months but not later than 1 year              459.68          287.43      484.58        403.43
    Later than 1 year but not later than 2 years               341.49          374.40      496.04        550.91
    Later than 2 years                                       1,483.02        1,441.39    1,469.99      1,047.36
                                                             5,053.23        4,974.60    4,278.51      3,908.79
12 Inventories and supplies - net as at December 31, 2008 and 2007 are as follows:
                                                                                                              Unit : Million Baht
                                                                             Financial
                                                                          statements
                                                                             in which
                                                                        equity method
                                                           Consolidated is applied                     The Company
                                                                   2008          2007                  2008        2007
    Finished goods                                                78.87          75.03                 78.87       75.03
    Supplies for telephone services, expansion,
         and repair and maintenance                              2,394.23           2,671.25        2,394.23          2,671.25
    Office supplies                                                 11.74              12.56           11.74             12.56
                                                                 2,484.84           2,758.84        2,484.84          2,758.84
    Less Allowance for net realisable value                         (1.17)              (1.17)         (1.17)             (1.17)
          Allowances for obsolescence and defects                 (183.84)           (160.21)        (183.84)          (160.21)
    Inventories and supplies - net                               2,299.83           2,597.46        2,299.83          2,597.46

13 Other current assets as at December 31, 2008 and 2007 are as follows.
                                                                                                              Unit : Million Baht
                                                                             Financial
                                                                          statements
                                                                             in which
                                                                        equity method
                                                           Consolidated is applied                     The Company
                                                                   2008           2007                 2008        2007
    Interest receivable                                          250.39          305.27               250.39      305.27
    Value added tax receivable                                   410.67           38.21               363.13       38.21
    Prepayment                                                   154.45           53.22                62.54       53.22
    Undue input value added tax                                  483.55          501.65               483.55      501.65
    Advance payment for equipment                                680.30          881.62               680.30      881.62
    Other current assets                                          48.33           43.36                48.33       43.36
    Total other current assets                                 2,027.69        1,823.33             1,888.24    1,823.33
    Less Allowance for value added tax receivable (Note 24.2) (322.80)                -              (322.80)          -
    Total other current assets - net                           1,704.89        1,823.33             1,565.44    1,823.33

    According to Note 24.2 to financial statements, the Company received an assessment for additional value added tax,
penalty and surcharge in the totalling of Baht 5,354.43 million, which related to the submission of value added tax on the mobile
phone concession agreement revenue sharing after excise tax deductions. The Revenue Department has offset certain value
added tax, penalty and surcharge amounting to Baht 322.80 million against the input value added tax receivable. Therefore, the
Company recorded an allowance for value added tax receivable in these financial statements.
                                                                                                                                   110
14 Investments in subsidiary and associated companies as at December 31, 2008 and 2007                                             111
   are as follows:
                                                                                                             Unit : Million Baht
                                                                            Financial
                                                                         statements
                                                                            in which
                                                                       equity method
                                                          Consolidated is applied                    The Company
                                                                  2008          2007                 2008        2007
    Investments in subsidiary and associated companies
    - Investments in subsidiary                                        -              24.26       1,040.89                24.26
    Less Provision for impairment of investment                        -             (24.26)       (165.41)              (24.26)
                                                                       -                  -         875.48                    -
    - Investments in associated companies                         653.57          1,122.93        1,305.58            2,544.25
    Less Provision for impairment of investment                        -                  -        (440.46)          (1,135.65)
                                                                  653.57          1,122.93          865.12            1,408.60
                                                                  653.57          1,122.93        1,740.60            1,408.60

    Changes in investments in subsidiary and associated companies are as follows:
                                                                                                             Unit : Million Baht
                                                                             Financial
                                                                          statements
                                                                             in which
                                                                        equity method
                                                          Consolidated is applied                    The Company
                                                                  2008             2007              2008        2007
    Opening balance - net                                     1,122.93         1,234.22           1,408.60    1,506.99
    Acquisition of subsidiary (Note 6)                          381.13              5.20            381.13        5.20
    Share of loss in investment under equity method             (46.75)         (301.11)                 -            -
    Loss from impairment of investment                               -            (24.26)           (49.13)    (103.59)
    Provision for liabilities (Note 24)                          77.99           208.88                  -            -
                                                              1,535.30         1,122.93           1,740.60    1,408.60
    Classify investment in ACT Mobile Company Limited
      from associated company to subsidiary                      (881.73)                -               -                  -
    Closing balance - net                                         653.57          1,122.93        1,740.60           1,408.60

      As at October 14, 2005 the Company entered into the FINN-THAI TECHNOLOGY FUND A KY agreement with an entity
registered in Finland according to the resolution of the Cabinet held on December 28, 2004 and October 4, 2005 and the
resolution of the Board of Directorsû Meeting held on October 12, 2005, which approved the Company to invest in this fund
value of Baht 510.00 million or EURO 10 million on behalf of ACT which is an associated company. This fund has a maturity of
eight years and can be extended for not greater than two further years. Such fund will invest in common shares in technology
companies, both in Finland and Thailand. The fund was registered as a limited partnership on December 14, 2005 in Finland and
the Company holds 100% of the investment proportion. The Company paid for investment of Baht 24.26 million to be used by
the fund as set up cost and management fee. As at March 30, 2007, the Board of Directors passed a resolution to terminate
this investment and propose to the Cabinet for consideration. On January 2, 2008, the Cabinet passed a resolution to terminate
the fund. The Company paid the cost relating to termination and liquidation of Baht 1.86 million and the fund manager has
already terminated the fund on May 19, 2008. The Company received the proceeds from the liquidation process amounting to
Baht 0.14 million, therefore, the Company has terminated the fund during 2008.
Details of subsidiary and associated companies as at December 31, 2008 are as follows:

                                                                                  Consolidated
                                                                                                                                                   Accumulated
                                                                                                                                                    share of net
                                                                                                              Paid up    Investment                gain (loss) of
                                                                                                         share capital       portion          Cost investment               Equity
  Company                              Business                                  Country Relationship (Million Baht)             (%) (Million Baht)   (Million Baht) (Million Baht)
Associates
Tel-card Company Limited               Producing plastic chip cards                 Thai   Shareholder          50.00         26.00          13.00          (13.00)             -
Advanced Data Network                  Providing information media services         Thai   Shareholder         957.52         48.12         460.76         (248.18)        212.58
  Communication Company Limited          via telephone lines
True Multi-Media Company Limited       Leasing high-speed signal transmission       Thai   Shareholder       6,562.00          8.92         585.25         (234.43)        350.82
                                         system via multimedia network
Lenso Datacom Company Limited          Providing information media services         Thai   Shareholder         136.47         49.00         108.29          (49.13)          59.16
                                         via telephone lines
United Broadband Technology            Providing information media services         Thai   Shareholder         221.00         49.00         108.29         (108.29)               -
  Company Limited                        via telephone lines
Mobile Communication Services          Operating network and providing related      Thai   Shareholder          97.44         30.00          30.00            1.01           31.01
  Company Limited                        network services
                                                                                                                                           1,305.59          (652.02)      653.57
Details of subsidiary and associated companies as at December 31, 2008 are as follows:

                                                                                 The Company
                                                                                                                                                     Provision for
                                                                                                                                                      impairment
                                                                                                                Paid up     Investment                     loss of
                                                                                                           share capital        portion         Cost investment           Cost - net
  Company                              Business                                  Country Relationship (Million Baht)               (%) (Million Baht)   (Million Baht) (Million Baht)
Subsidiary
ACT Mobile Company Limited             Telecommunication                            Thai   Shareholder           1,200.00        97.33      1,040.88         (165.40)        875.48
Associates
Tel-card Company Limited               Producing plastic chip cards                 Thai   Shareholder             50.00         26.00         13.00          (13.00)             -
Advanced Data Network                  Providing information media services         Thai   Shareholder            957.52         48.12        460.76         (270.05)        190.71
  Communication Company Limited          via telephone lines
True Multi-Media Company Limited       Leasing high-speed signal transmission       Thai   Shareholder           6,562.00         8.92        585.25                -        585.25
                                         system via multimedia network
Lenso Datacom Company Limited          Providing information media services         Thai   Shareholder            136.47         49.00        108.29          (49.13)          59.16
                                         via telephone lines
United Broadband Technology            Providing information media services         Thai   Shareholder            221.00         49.00        108.29         (108.29)               -
  Company Limited                        via telephone lines
Mobile Communication Services          Operating network and providing related      Thai   Shareholder             97.44         30.00         30.00                -          30.00
  Company Limited                        network services
                                                                                                                                                1,305.59       (440.47) 865.12
                                                                                                         Total                                  2,346.47       (605.87) 1,740.60
                                                                                                                                                                            113
                                                                                                                                                                            112
Details of subsidiary and associated companies as at December 31, 2007 are as follows:
                                                            Financial statements in which equity method is applied
                                                                                                                                      Accumulated
                                                                                                                                          share of             Provision for
                                                                                                                                          net gain              impairment
                                                                                                       Paid up                            (loss) of                  loss of       Equity -
                                                                                                  share capital Investment       Cost investment        Equity investment               net
                                                                                                       (Million     portion   (Million (Million        (Million (Million           (Million
             Company                            Business                     Country Relationship        Baht)          (%)     Baht)        Baht)       Baht)         Baht)         Baht)
Subsidiary
FINN-THAI TECHNOLOGY FUND A KY        Investment in common shares             Finland     Limited        24.26      100.00      24.26             -      24.26        (24.26)            -
                                         of Technology Companies                          Partner
                                         in Finland and Thailand
Associates
ACT Mobile Company Limited            Telecommunication                          Thai Shareholder     1,200.00       54.98     659.76      (165.41)     494.35                 -   494.35
Joint venture Thai Mobile             Operating and administering                Thai Shareholder     1,000.00       57.89     578.90      (578.90)           -                -         -
                                        mobile phone network 1900 MHz
Tel-card Company Limited              Producing plastic chip cards               Thai Shareholder        50.00       26.00      13.00       (13.00)           -                -         -
Advanced Data Network                 Providing information media services       Thai Shareholder       957.52       48.12     460.76      (270.05)     190.71                 -   190.71
   Communication Company Limited        via telephone lines
True Multi-Media Company Limited      Leasing high-speed signal                  Thai Shareholder     6,562.00         8.92    585.25      (242.01)     343.24                 -   343.24
                                        transmission system via
                                        multimedia network
Lenso Datacom Company Limited         Providing information media services       Thai Shareholder       136.47       49.00     108.29        (44.52)     63.77                 -     63.77
                                        via telephone lines
United Broadband Technology           Providing information media services       Thai Shareholder       221.00       49.00     108.29      (108.29)           -                -         -
  Company Limited                       via telephone lines
Mobile Communication Services         Operating network and providing            Thai Shareholder        95.72       30.00      30.00         0.86       30.86                 -     30.86
  Company Limited                       related network services
                                                                                                                              2,544.25    (1,421.32)   1,122.93             - 1,122.93
                                                                                            Total                             2,568.51    (1,421.32)   1,147.19       (24.26) 1,122.93
Details of subsidiary and associated companies as at December 31, 2007 are as follows:

                                                                                The Company
                                                                                                                                                 Provision for
                                                                                                                                                  impairment
                                                                                                             Paid up    Investment                     loss of
                                                                                                        share capital       portion         Cost investment           Cost - net
  Company                              Business                                 Country Relationship (Million Baht)            (%) (Million Baht)   (Million Baht) (Million Baht)
Subsidiary
FINN-THAI TECHNOLOGY FUND A KY Invest in common shares of               Finland               Limited          24.26        100.00         24.26          (24.26)               -
                                   technology companies in                                    Partner
                                   Finland and Thailand
Associates
ACT Mobile Company Limited       Telecommunication                         Thai           Shareholder       1,200.00         54.98        659.76         (165.41)        494.35
Joint venture Thai Mobile        Operating and administering               Thai           Shareholder       1,000.00         57.89        578.90         (578.90)             -
                                 mobile phone network 1900 MHz
Tel-card Company Limited         Producing plastic chip cards              Thai           Shareholder          50.00         26.00         13.00          (13.00)             -
Advanced Data Network            Providing information media service       Thai           Shareholder         957.52         48.12        460.76         (270.05)        190.71
  Communication Company Limited via telephone lines
True Multi-Media Company Limited Leasing high-speed signal transmission    Thai           Shareholder       6,562.00          8.92        585.25                -        585.25
                                   system via multimedia network
Lenso Datacom Company Limited    Providing information media service       Thai           Shareholder         136.47         49.00        108.29                -        108.29
                                   via telephone lines
United Broadband Technology      Providing information media service       Thai           Shareholder         221.00         49.00        108.29         (108.29)               -
  Company Limited                  via telephone lines
Mobile Communication Services    Operating networks and providing          Thai           Shareholder          95.72         30.00         30.00                -          30.00
  Company Limited                  related network services
                                                                                                                                        2,544.25       (1,135.65)      1,408.60
                                                                                                Total                                   2,568.51       (1,159.91)      1,408.60
                                                                                                                                                                        115
                                                                                                                                                                        114
      As at 31 December 2007, the Company accounted for its investment in Thai Mobile and ACT using the equity method
without issuing consolidated financial statements or proportionate consolidated financial statements (in the case of the Joint
Venture), even though its interests in these entities are above 50%, as they are associates and the Company has significant
influence, but cannot control financial and operating policy and has no joint control with CAT, another shareholder. The reasons
are as follows:

    - Thai Mobile - the operations of Thai Mobile are conducted by the Joint Venture Steering Committee (çSteering Committeeé),
      which was appointed by the Ministry of Information and Communication Technology. The Steering Committee consists
      of six members, of which the Company is able to nominate three members. A resolution of the Steering Committee
      requires a simple majority of those present and proxy of more than 50% or equal to 4 votes. The Chairman, who is
      appointed by the Ministry of Information and Communication Technology, has the casting vote.
    - ACT - the operations of ACT are conducted by a Board of Directors which consists of eleven people. The Company can
      nominate five of these. The Chairman of the Board of Directors is appointed by the Shareholdersû Meeting and will be
      nominated by the Company and the other shareholders on a rotational basis every two years. Certain specified matters
      also require at least eight votes for approval. Furthermore, the quorum of every Shareholdersû Meeting is not less than
      60%, and every resolution requires a majority of more than 60% of the votes.

     However, as discussed in Note 6, the Company and CAT agreed to terminate the joint venture agreement and any verbal
or written agreements relating to the agreement on September 30, 2008 which resulted in the dissolution of Thai Mobile. In this
regard, the Company is required to absorb all liabilities arising from Thai Mobile at fair value. On November 26, 2008, the
Company received all shares in ACT held by CAT, totalling of 50,816,987 shares. Therefore, the Company classifies ACT as
subsidiary and prepares the consolidated financial statements for the current year.
     The Company accounted for its investment in True Multi-Media Company Limited as investment in an associated company,
even though the Company has a shareholding of less than 20%, because the Company can appoint not less than one member
of the total eleven members according to its investment portion. The Company currently has two directors in the Board of
Directors from a total of nine members. The Company considers that it has significant influence because it has proxies in the
Board of Directors for which the voting rights are more than 20% of total voting rights.
     On January 24, 2006, the Board of Directors approved the resolution to terminate the concession agreement and
shareholder agreement with United Broadband Technology Company Limited from January 1, 2006. The customers of United
Broadband Technology Company Limited were transferred to the Company. United Broadband Technology Company Limited
registered its dissolution with the Ministry of Commerce on February 28, 2006 and it is currently in the process of liquidation.
15 Other long-term investments as at December 31, 2008 and 2007 are as follows:                                            116
                                                                                                     Unit : Million Baht
                                                                           Financial                                       117
                                                                        statements
                                                                           in which
                                                                      equity method
                                                       Consolidated is applied                The Company
                                                               2008             2007          2008        2007
   Opening balance - net                                   6,102.31          5,031.35      6,102.31    5,031.35
   Increase in long-term investment                          300.95            395.82        300.95      395.82
   Amortised premium                                           (0.90)            (0.45)       (0.90)       (0.45)
   Transfer of long-term investment to
      short-term investment (Note 9)                         (630.26)          (416.76)     (630.26)           (416.76)
   Impairment loss of investment                                   -              (1.75)          -               (1.75)
   Change in fair value of available-for-sale
      investments (Note 32)                                  (991.25)         1,094.10      (991.25)         1,094.10
   Closing balance - net                                    4,780.85          6,102.31     4,780.85          6,102.31

   Other long-term investments as at December 31, 2008 are as follows:
                                                                                                     Unit : Million Baht
                                                                              Consolidated
                                                          Available-       Held-to-
                                                                                        General
                                                           for-sale        maturity                        Total
                                                                                      investment
                                                         investment      investment
   Debt securities
   Debenture of Siam Cement Public Company Limited            -             30.99            -               30.99
   Debenture of PTT Exploration and
      Production Public Company Limited                       -             30.39            -               30.39
   Debenture of Bank of Ayudhya Public
      Company Limited                                         -            100.41            -              100.41
   Bond of Asian Development Bank                             -             70.21            -               70.21
   Bond of Bank of Thailand                                   -            100.19            -              100.19
   Bond of State-Owned Enterprises                            -             60.51            -               60.51
   Promissory notes                                           -            100.00            -              100.00
      Total debt securities                                   -            492.70            -              492.70
   Equity securities
   Thai Long-distance Telecommunications
      Company Limited                                         -                -           30.90             30.90
   Thai-Amadeus South East Asia Company Limited               -                -             3.00              3.00
   Trade Siam Company Limited                                 -                -             1.75              1.75
   Total Access Communication Public Company Limited      3,567.92             -              -           3,567.92
   Internet Thailand Public Company Limited                  40.00             -              -              40.00
                                                          3,607.92             -           35.65          3,643.57
   Less Provision for impairment of investment                -                -            (1.75)            (1.75)
   Add Unrealised gain on increase in value of
     available-for- sale investments (Note 32)              646.33            -              -              646.33
     Total equity securities                              4,254.25            -            33.90          4,288.15
   Total                                                  4,254.25         492.70          33.90          4,780.85
Other long-term investments as at December 31, 2007 are as follows:
                                                                                            Unit : Million Baht
                                                    Financial statements in which equity method is applied
                                                     Available-     Held-to-
                                                                                   General
                                                      for-sale      maturity                       Total
                                                                                 investment
                                                    investment investment

Debt securities
Debenture of Siam Cement Public Company Limited           -            31.40            -             31.40
Debenture of PTT Exploration and
  Production Public Company Limited                       -            30.74            -             30.74
Bond of Asian Development Bank                            -            70.34            -             70.34
Government bonds                                          -            98.05            -             98.05
Bond of Bank of Thailand                                  -           101.16            -            101.16
Bond of State-Owned Enterprises                           -           161.22            -            161.22
Promissory notes                                          -           330.00            -            330.00
  Total debt securities                                   -           822.91            -            822.91

Equity securities
Thai Long-distance Telecommunications
   Company Limited                                        -             -            30.90            30.90
Thai-Amadeus South East Asia Company Limited              -             -             3.00             3.00
Trade Siam Company Limited                                -             -             1.75             1.75
Total Access Communication Public
   Company Limited                                    3,567.92          -               -          3,567.92
Internet Thailand Public Company Limited                 40.00          -               -             40.00
                                                      3,607.92          -            35.65         3,643.57
Less Provsion for impairment of investment                -             -             (1.75)           (1.75)
Add Unrealised gain on increase in value of
  available-for-sale investments (Note 32)            1,637.58           -             -           1,637.58
  Total equity securities                             5,245.50           -           33.90         5,279.40
Total                                                 5,245.50        822.91         33.90         6,102.31
    Other long-term investments as at December 31, 2008 and 2007 are as follows:                                                 118
                                                                                                           Unit : Million Baht   119
                                                                                The Company
                                                  Available-for-      Held-to-maturity     General
                                                                                                               Total
                                                 sale investment        investment       investment
                                                  2008      2007       2008 2007 2008 2007                2008         2007
Debt securities
Debenture of Siam Cement Public Company Limited     -          -       30.99    31.40    -         -        30.99       31.40
Debenture of PTT Exploration and Production
   Public Company Limited                           -          -       30.39    30.74    -         -        30.39       30.74
Debenture of Bank of Ayudhya Public
   Company Limited                                  -          -      100.41             -         -       100.41        -
Bond of Asian Development Bank                      -          -       70.21    70.34    -         -        70.21       70.34
Government bonds                                    -          -         -      98.05    -         -         -          98.05
Bond of Bank of Thailand                            -          -      100.19   101.16    -         -       100.19      101.16
Bond of State-Owned Enterprises                     -          -       60.51   161.22    -         -        60.51      161.22
Promissory notes                                    -          -      100.00   330.00    -         -       100.00      330.00
   Total debt securities                            -          -      492.70   822.91    -         -       492.70      822.91
Equity securities
Thai Long-distance Telecommunications
   Company Limited                                  -          -        -        -      30.90     30.90     30.90       30.90
Thai-Amadeus South East Asia Company Limited        -          -        -        -       3.00      3.00      3.00        3.00
Trade Siam Company Limited                          -          -        -        -       1.75      1.75      1.75        1.75
Total Access Communication Public
   Company Limited                              3,567.92   3,567.92     -        -       -         -    3,567.92 3,567.92
Internet Thailand Public Company Limited           40.00      40.00     -        -       -         -       40.00 40.00
                                                3,607.92   3,607.92     -        -      35.65     35.65 3,643.57 3,643.57
Less Provision for impairment of investment         -          -        -        -      (1.75)    (1.75) (1.75) (1.75)
Add Unrealised gain on increase in value of
   available-for-sale investments (Note 32)       646.33   1,637.58      -       -        -        -      646.33 1,637.58
   Total equity securities                      4,254.25   5,245.50      -       -      33.90     33.90 4,288.15 5,279.40
Total                                           4,254.25   5,245.50   492.70   822.91   33.90     33.90 4,780.85 6,102.31

     As at December 31, 2008, debt securities amounting to Baht 492.70 million are classified as held-to-maturity
investment with a maturity of 1.08 to 2.42 years. The weighted average effective interest rate during the year was 3.87% per
annum (during the year 2007 was 4.69% per annum)
16 Loans to employees as at December 31, 2008 and 2007 are detailed as follows:
                                                                                                             Unit : Million Baht
                                                                               Financial
                                                                            statements
                                                                               in which
                                                                          equity method
                                                           Consolidated is applied                    The Company
                                                                   2008             2007              2008        2007
    Loans to employees                                         1,219.48          1,410.19          1,219.48    1,410.19
    Less Current portion of loans to employees                  (125.17)          (165.03)          (125.17)    (165.03)
                                                               1,094.31          1,245.16          1,094.31    1,245.16
    Less Allowance for doubtful accounts                           (5.71)            (5.71)           (5.71)       (5.71)
                                                               1,088.60          1,239.45          1,088.60    1,239.45

     As at December 31, 2008, the outstanding balance of loans to employees above represented receivable in respect of the
employee benefit fund amounting to Baht 157.93 million (At December 31, 2007 : Baht 159.38 million) (which is included in the
financial statements of the Company, as explained in Note 2.19.1) and receivable in respect of the Company amounting to Baht
1,061.55 million (At December 31, 2007 : Baht 1,250.81 million). The interest rate charged is not less than the interest rate on
a 12-month fixed deposit with a bank. These loans are fully supported by collateral security or guaranteed by individuals
depending on the type of loan. The Company will deduct loan repayments from the employeesû basic salary on a monthly basis.
On May 30, 2005, the Board of Directorsû Meeting approved the resolution to transfer receivables in respect of the employee
benefit fund to receivables of the Company in the event that the particular employees transfer to join the provident fund.
17 Property, plant and equipment as at December 31, 2008 is as follows:
                                                                   Consolidated
                                                                                        Furniture and
                                                       Land         Building                 fixtures, Computers                           Construction
                                                    and land              and Network tools and             and                                       in
                                                improvement         facilities equipment equipment equipment                       Vehicles progress                  Total
                                                   Million Baht    Million Baht    Million Baht   Million Baht    Million Baht    Million Baht    Million Baht   Million Baht
At December 31, 2007
Cost                                                  4,784.21      16,920.90 204,279.44             4,586.64        4,664.54          746.67        4,167.26     240,149.66
Less Accumulated depreciation                        (1,478.28)     (8,149.35) (139,865.78)         (3,629.17)      (3,503.41)        (647.99)               -   (157,273.98)
      Provision for impairment of assets                 (0.60)         (18.64)  (4,180.25)             (17.54)          (6.39)          (0.54)              -     (4,223.96)
Opening net book amount                               3,305.33       8,752.91    60,233.41             939.93        1,154.74           98.14        4,167.26      78,651.72
For the year ended December 31, 2008
Opening net book amount                               3,305.33        8,752.91      60,233.41          939.93        1,154.74           98.14        4,167.26      78,651.72
Additions                                                  0.36            0.49          62.13          87.11           25.03           20.96        9,682.72       9,878.80
Assets transfer from Thai-mobile (Note 6)                     -            0.10           9.25            1.16            0.59                -              -          11.10
Assets increase from consolidation                            -               -               -              -               -                -        349.17         349.17
Transfers                                                  7.75         361.13       8,938.85           40.84          105.42             5.42      (9,456.91)           2.50
Donations                                                  1.41            0.10           1.97            0.02            0.05                -              -           3.55
Disposals                                                 (0.33)          (4.64)        (94.44)          (4.13)          (0.20)          (0.30)              -       (104.04)
Impairment charge (Note 35)                               (0.02)          (7.88)        (32.21)           1.66           (0.46)           0.52               -         (38.39)
Depreciation charge                                      (37.83)       (678.50)     (9,943.12)        (385.29)        (570.57)         (40.63)               -    (11,655.94)
Closing net book amount                               3,276.67        8,423.71      59,175.84          681.30          714.60           84.11        4,742.24      77,098.47
At December 31, 2008
Cost                                                  4,788.43      17,244.66 210,913.50             4,572.23        4,693.09          733.35        4,742.24     247,687.50
Less Accumulated depreciation                        (1,511.18)     (8,797.84) (147,713.43)         (3,884.16)      (3,971.72)        (649.23)               -   (166,527.56)
      Provision for impairment of assets                 (0.58)         (23.11)  (4,024.23)              (6.77)          (6.77)          (0.01)              -     (4,061.47)
Net book amount                                       3,276.67       8,423.71    59,175.84             681.30          714.60           84.11        4,742.24      77,098.47
                                                                                                                                                                    121
                                                                                                                                                                    120
Property, plant and equipment as at December 31, 2008 is as follows:

                                                                                     The Company
                                                                                                          Furniture and
                                                                     Land             Building                 fixtures, Computers                           Construction
                                                                  and land                  and Network tools and             and                                       in
                                                              improvement             facilities equipment equipment equipment                       Vehicles progress                  Total
                                                                  Million Baht       Million Baht    Million Baht   Million Baht    Million Baht    Million Baht    Million Baht   Million Baht
At December 31, 2007
Cost                                                                    4,784.21      16,920.90 204,279.44             4,586.64        4,664.54          746.67        4,167.26     240,149.66
Less Accumulated depreciation                                          (1,478.28)     (8,149.35) (139,865.78)         (3,629.17)      (3,503.41)        (647.99)               -   (157,273.98)
      Provision for impairment of assets                                    (0.60)        (18.64)  (4,180.25)             (17.54)          (6.39)          (0.54)              -     (4,223.96)
Opening net book amount                                                 3,305.33       8,752.91    60,233.41             939.93        1,154.74           98.14        4,167.26      78,651.72
For the year ended December 31, 2008
Opening net book amount                                                3,305.33         8,752.91      60,233.41          939.93        1,154.74           98.14        4,167.26      78,651.72
Additions                                                                    0.36            0.49          62.13          87.11           25.03           20.96        9,682.72       9,878.80
Assets transfer from Thai-mobile (Note 6)                                       -            0.10           9.25            1.16            0.59                -              -          11.10
Transfers                                                                    7.75         361.13       8,938.85           40.84          105.42             5.42      (9,456.91)           2.50
Donations                                                                    1.41            0.10           1.97            0.02            0.05                -              -           3.55
Disposals                                                                   (0.33)          (4.64)        (94.44)          (4.13)          (0.20)          (0.30)              -       (104.04)
Impairment charge (Note 35)                                                 (0.02)          (7.88)        (32.21)           1.66           (0.46)           0.52               -         (38.39)
Depreciation charge                                                       (37.83)        (678.50)     (9,943.12)        (385.29)        (570.57)         (40.63)               -    (11,655.94)
Closing net book amount                                                3,276.67         8,423.71      59,175.84          681.30          714.60           84.11        4,393.07      76,749.30
At December 31, 2008
Cost                                                                    4,788.43      17,244.66 210,913.50             4,569.26        4,693.09          733.35        4,393.07     247,335.36
Less Accumulated depreciation                                          (1,511.18)     (8,797.84) (147,713.43)         (3,881.19)      (3,971.72)        (649.23)               -   (166,524.59)
      Provision for impairment of assets                                    (0.58)        (23.11)  (4,024.23)              (6.77)          (6.77)          (0.01)              -     (4,061.47)
Net book amount                                                         3,276.67       8,423.71    59,175.84             681.30          714.60           84.11        4,393.07      76,749.30
Property, plant and equipment as at December 31, 2007 is as follows:

                                                 Financial statements in which equity method is applied and The Company
                                                                                                     Furniture and
                                                                     Land       Building                  fixtures, Computers                                  Construction
                                                                  and land            and Network tools and              and                                              in
                                                              improvement       facilities equipment equipment equipment                               Vehicles progress                    Total
                                                                  Million Baht       Million Baht     Million Baht    Million Baht    Million Baht    Million Baht     Million Baht   Million Baht
At December 31, 2006
Cost                                                                    4,767.07      15,877.20 201,948.41               4,581.23        4,558.81          899.75         5,756.23     238,388.70
Less Accumulated depreciation                                          (1,265.79)     (7,390.02) (133,228.69)           (3,339.51)      (2,941.25)        (761.65)                -   (148,926.91)
      Provision for impairment of assets                                   (0.31)         (18.54) (4,407.13)                (20.22)          (7.98)          (0.03)               -     (4,454.21)
Opening net book amount                                                 3,500.97       8,468.64 64,312.59                1,221.50        1,609.58          138.07         5,756.23      85,007.58
For the year ended December 31, 2007
Opening net book amount                                                3,500.97         8,468.64       64,312.59         1,221.50        1,609.58          138.07         5,756.23      85,007.58
Additions                                                                  0.52               6.80         110.50           87.41          202.04              3.39       8,257.18        8,667.84
Transfers                                                                 20.80         1,086.01         8,612.51           71.37            66.24             0.03      (9,846.15)          10.81
Donations                                                                  0.80               0.06            1.25               -            0.03                 -              -            2.14
Disposals                                                                 (3.58)           (19.89)        (151.30)           (6.99)         (10.82)           (0.06)              -        (192.64)
Adjustment of assets devaluation                                               -                 -      (1,715.20)               -                -                -              -      (1,715.20)
Impairment charge (Note 35)                                               (0.29)             (2.63)          (1.19)          (0.23)           1.47            (0.50)              -           (3.37)
Depreciation charge                                                     (213.89)         (786.08)     (10,935.75)         (433.13)        (713.80)          (42.79)               -    (13,125.44)
Closing net book amount                                                3,305.33         8,752.91       60,233.41           939.93        1,154.74            98.14        4,167.26      78,651.72
At December 31, 2007
Cost                                                                    4,784.21      16,920.89 204,279.44               4,586.64        4,664.54          746.67         4,167.26     240,149.65
Less Accumulated depreciation                                          (1,478.28)     (8,149.35) (139,865.78)           (3,629.17)      (3,503.41)        (647.99)                -   (157,273.98)
      Provision for impairment of assets                                    (0.60)        (18.63) (4,180.25)                (17.54)          (6.39)          (0.54)               -     (4,223.95)
Net book amount                                                          3,305.33      8,752.91     60,233.41              939.93        1,154.74           98.14         4,167.26      78,651.72
                                                                                                                                                                                         123
                                                                                                                                                                                         122
      Depreciation charge for the year ended December 31, 2008 amounting to Baht 11,655.94 million (2007 : Baht 13,125.44
million) was recorded as an expense in the statements of income.

    During 2008, the Company registered land value at Baht 2,951.67 million as a guarantee for the penalty and surcharge
payment as discussed in Note 24.2.

      The adjustment of assets devaluation in 2007 occurred from the Company reviewed and changed the accounting treatment
for the public phone contracts from financial lease to operating lease because the Company has considered that the substantial
risk did not transfer to the Company by recording the effect in 2007 without retroactive because it is immaterial to be restated
in prior year financial statements.

     Leased assets under financial leases where the Company is the lessee comprise network equipment and computer
equipment as at December 31, 2008 and 2007, as detailed below:
                                                                                                   Unit : Million Baht
                                                                           Financial
                                                                        statements
                                                                            in which
                                                                      equity method
                                                      Consolidated is applied               The Company
                                                               2008              2007        2008               2007
     Cost of assets leased under financial leases          21,122.61        21,996.34   21,122.61          21,996.34
     Less Accumulated depreciation                        (17,848.60)      (17,979.22) (17,848.60)        (17,979.22)
           Provision for impairment                                -         (1,897.28)          -          (1,897.28)
     Net book amount                                        3,274.01          2,119.84   3,274.01            2,119.84
18 Property, plant and equipment under concession agreements as at December 31, 2008 is detailed below:
                                                              Consolidated
                                                                                                          Furniture
                                                                             Building                  and fixtures,        Computers
                                                                                   and         Network    tools and               and
                                                                  Land       facilities      equipment equipment            equipment            Total
                                                            Million Baht    Million Baht     Million Baht    Million Baht   Million Baht   Million Baht
As at December 31, 2007
Cost                                                           2,333.09        4,864.54       256,533.90           91.92       5,686.74     269,510.19
Less Accumulated depreciation                                          -      (2,111.26)     (137,421.86)         (89.02)     (5,648.63)   (145,270.77)
      Provision for impairment of assets                              -           (5.99)       (3,368.32)              -         (37.92)      (3,412.23)
Opening net book amount                                        2,333.09        2,747.29       115,743.72            2.90           0.19     120,827.19
For the year ended December 31, 2008
Opening net book amount                                        2,333.09        2,747.29       115,743.72            2.90           0.19    120,827.19
Transfers in from concession operators (Note 26)                    1.76           44.08       12,449.15               -           0.20     12,495.19
Transfers                                                              -          (19.63)          17.72               -               -         (1.91)
Disposals                                                          (2.93)           (2.28)       (685.61)              -               -      (690.82)
Devaluation of assets                                              (0.03)           (1.47)       (919.51)              -               -      (921.01)
Impairment charge                                                      -                -           (3.08)             -               -         (3.08)
Depreciation charge (Note 35)                                          -        (256.34)      (17,206.52)          (2.56)         (0.12)   (17,465.54)
Closing net book amount                                        2,331.89        2,511.65       109,395.87            0.34           0.27    114,240.02
As at December 31, 2008
Cost                                                           2,331.89        4,874.04       265,733.23           91.92       5,685.83     278,716.91
Less Accumulated depreciation                                          -      (2,356.76)     (153,481.58)         (91.58)     (5,647.65)   (161,577.57)
      Provision for impairment of assets                              -           (5.63)       (2,855.78)              -         (37.91)      (2,899.32)
Net book amount                                                2,331.89        2,511.65       109,395.87            0.34           0.27     114,240.02
                                                                                                                                               125
                                                                                                                                               124
Property, plant and equipment under concession agreements as at December 31, 2008 is detailed below:

                                                                               The Company
                                                                                                                           Furniture
                                                                                               Building                 and fixtures,          Computers
                                                                                                     and        Network    tools and                 and
                                                                                   Land        facilities     equipment equipment              equipment                 Total
                                                                             Million Baht    Million Baht      Million Baht    Million Baht     Million Baht       Million Baht
As at December 31, 2007
Cost                                                                            2,333.09         4,864.54       256,533.90            91.92         5,686.74        269,510.19
Less Accumulated depreciation                                                           -       (2,111.26)     (137,421.86)          (89.02)       (5,648.63)      (145,270.77)
      Provision for impairment of assets                                               -             (5.99)      (3,368.32)               -           (37.92)         (3,412.23)
Opening net book amount                                                         2,333.09         2,747.29       115,743.72             2.90             0.19        120,827.19
For the year ended December 31, 2008
Opening net book amount                                                         2,333.09        2,747.29       115,743.72              2.90             0.19       120,827.19
Transfers in from concession operators (Note 26)                                     1.76           44.08       12,449.15                 -             0.20         12,495.19
Transfers out                                                                           -          (19.63)          17.72                 -                 -             (1.91)
Disposals                                                                           (2.93)           (2.28)       (685.61)                -                 -          (690.82)
Devaluation of assets                                                               (0.03)           (1.47)       (919.51)                -                 -          (921.01)
Impairment charge                                                                       -                -           (3.08)               -                 -             (3.08)
Depreciation charge (Note 35)                                                           -        (256.34)      (17,206.52)            (2.56)           (0.12)       (17,465.54)
Closing net book amount                                                         2,331.89        2,511.65       109,395.87              0.34             0.27       114,240.02
As at December 31, 2008
Cost                                                                            2,331.89         4,874.04       265,733.23            91.92         5,685.83        278,716.91
Less Accumulated depreciation                                                           -       (2,356.76)     (153,481.58)          (91.58)       (5,647.65)      (161,577.57)
      Provision for impairment of assets                                               -            (5.63)       (2,855.78)               -           (37.91)         (2,899.32)
Net book amount                                                                 2,331.89         2,511.65       109,395.87             0.34             0.27        114,240.02

    At December 31, 2008, the impairment charge of assets transferred under concession agreements of Baht 3.08 million was for damaged asset and retired assets.
Property, plant and equipment under concession agreements as at December 31, 2007 is detailed below:

                                              Financial statements in which equity method is applied and The Company
                                                                                                                    Furniture
                                                                                         Building                and fixtures,                 Computers
                                                                                               and      Network     tools and                        and
                                                                              Land       facilities equipment equipment                        equipment                Total
                                                                             Million Baht     Million Baht     Million Baht     Million Baht    Million Baht      Million Baht
As at December 31, 2006
Cost                                                                            2,333.09         4,638.43       215,730.11            91.96         5,679.95       228,473.54
Less Accumulated depreciation                                                           -       (1,855.24)     (123,542.96)          (81.89)       (5,648.39)     (131,128.48)
      Provision for impairment of assets                                               -             (6.01)      (4,173.08)               -           (31.13)        (4,210.22)
Opening net book amount                                                         2,333.09         2,777.18        88,014.07            10.07             0.43        93,134.84
For the year ended December 31, 2007
Opening net book amount                                                         2,333.09         2,777.18        88,014.07            10.07             0.43       93,134.84
Transfers in from concession operators (Note 26)                                       -           260.52        45,394.98                -             6.79       45,662.29
Transfers                                                                              -            (22.00)           11.35               -                 -          (10.65)
Disposals                                                                              -             (0.58)        (739.07)               -                 -        (739.65)
Devaluation of assets                                                                  -              (0.38)       (667.63)               -                 -        (668.01)
Impairment charge                                                                      -                  -          (51.52)              -            (6.79)          (58.31)
Depreciation charge (Note 35)                                                          -          (267.45)      (16,218.46)           (7.17)           (0.24)     (16,493.32)
Closing net book amount                                                         2,333.09         2,747.29       115,743.72             2.90             0.19      120,827.19
As at December 31, 2007
Cost                                                                            2,333.09         4,864.54       256,533.90            91.92         5,686.74       269,510.19
Less Accumulated depreciation                                                           -       (2,111.26)     (137,421.86)          (89.02)       (5,648.63)     (145,270.77)
      Provision for impairment of assets                                               -            (5.99)       (3,368.32)               -           (37.92)        (3,412.23)
Net book amount                                                                 2,333.09         2,747.29       115,743.72             2.90             0.19       120,827.19

    Depreciation charge for the year ended December 31, 2008 amounting to Baht 17,465.53 million (2007 : Baht 16,493.32 million) was recorded as an expense in the statement of
income.
                                                                                                                                                                      127
                                                                                                                                                                      126
19 Intangible Assets as at December 31, 2008 is detailed below:
                                             Consolidated
                                           Right -               Right to
                                       educational       Right use Crown                Right to
                                         software       to use   Property                use the
                                         program software            land             frequency           Total
                                        Million Baht   Million Baht    Million Baht   Million Baht   Million Baht
At December 31, 2007
Cost                                           8.74         893.25          346.59               -      1,248.58
Less Accumulated amortisation                 (2.43)       (637.21)        (115.02)              -       (754.66)
Opening net book amount                        6.31         256.04          231.57               -        493.92
For the year ended December 31, 2008
Opening net book amount                        6.31         256.04          231.57              -         493.92
Increase during the year                          -          43.45               -       3,925.21       3,968.66
Acquired assets from joint venture
     Thai-Mobile (Note 6)                          -           0.02               -             -           0.02
Amortisation charge (Note 35)                 (0.88)         (96.22)        (10.50)        (54.05)       (161.65)
Closing net book amount                        5.43         203.29          221.07       3,871.16       4,300.95
At December 31, 2008
Cost                                           8.74         954.97          346.59       3,925.21       5,235.51
Less Accumulated amortisation                 (3.31)       (751.68)        (125.52)        (54.05)       (934.56)
Net book amount                                5.43         203.29          221.07       3,871.16       4,300.95

                                            The Company
                                           Right -             Right to
                                       educational     Right use Crown                  Right to
                                         software     to use   Property                  use the
                                         program software          land               frequency           Total
                                        Million Baht   Million Baht    Million Baht   Million Baht   Million Baht
At December 31, 2007
Cost                                           8.74         893.25          346.59               -      1,248.58
Less Accumulated amortisation                 (2.43)       (637.21)        (115.02)              -       (754.66)
Opening net book amount                        6.31         256.04          231.57               -        493.92
For the year ended December 31, 2008
Opening net book amount                        6.31         256.04          231.57              -         493.92
Increase during the year                          -          43.45               -       3,925.21       3,968.66
Acquired assets from joint venture
     Thai-Mobile (Note 6)                          -           0.02               -             -           0.02
Amortisation charge (Note 35)                 (0.88)         (96.22)        (10.50)        (54.05)       (161.65)
Closing net book amount                        5.43         203.29          221.07       3,871.16       4,300.95
At December 31, 2008
Cost                                           8.74         954.97          346.59       3,925.21       5,235.51
Less Accumulated amortisation                 (3.31)       (751.68)        (125.52)        (54.05)       (934.56)
Net book amount                                5.43         203.29          221.07       3,871.16       4,300.95
    Intangible Assets as at December 31, 2007 is detailed below:                                                                128
                                                                                                                                129
                  Financial statements in which equity method is applied and The Company
                                                           Right -                 Right to
                                                       educational        Right use Crown
                                                         software        to use Property
                                                         program software             land                          Total
                                                               Million Baht    Million Baht    Million Baht    Million Baht
At December 31, 2006
Cost                                                                   8.74         877.63          346.59        1,232.96
Less Accumulated amortisation                                         (1.56)       (605.04)        (104.52)        (711.12)
Opening net book amount                                                7.18         272.59          242.07          521.84
For the year ended December 31, 2007
Opening net book amount                                                7.18         272.59          242.07          521.84
Increase during the year                                                   -        109.12                -         109.12
Decrease during the year                                                  -           (0.07)              -           (0.07)
Amortisation charge (Note 35)                                         (0.87)       (125.60)          (10.50)       (136.97)
Closing net book amount                                                6.31         256.04          231.57          493.92
At December 31, 2007
Cost                                                                   8.74         893.25          346.59        1,248.58
Less Accumulated amortisation                                         (2.43)       (637.21)        (115.02)        (754.66)
Net book amount                                                        6.31         256.04          231.57          493.92

    Amortisation charge for the year ended December 31, 2008 amounting to Baht 161.65 million (2007 : Baht 136.97 million)
was recorded as an expense in the statement of income.

20 Trade accounts payable as at December 31, 2008 and 2007 are as follows:
                                                                                                          Unit : Million Baht
                                                                              Financial
                                                                           statements
                                                                              in which
                                                                         equity method
                                                        Consolidated        is applied             The Company
                                                                2008               2007            2008        2007
Trade accounts payable                                      2,875.21            3,381.15        2,609.70    3,381.15
Long distance call payables                                    54.96               52.52           54.96       52.52
                                                            2,930.17            3,433.67        2,664.66    3,433.67
21 Payables to private operators
     Payables to private operators represent payables in respect of which the Company has to share revenue according to
concession agreements. As at December 31, 2008 and 2007 these payables are as follows:
                                                                                                      Unit : Million Baht
                                                                              Financial
                                                                            statements
                                                                               in which
                                                                         equity method
                                                         Consolidated is applied                The Company
                                                                   2008             2007         2008              2007
Payables to private operators for which the Company
     is responsible for collection
Fixed line phone services                                      4,535.02          4,383.01    4,535.02          4,383.01
Public telephone services                                         64.50             69.50       64.50              69.50
Data transmission via satellite                                   28.46             28.55       28.46              28.55
                                                               4,627.98          4,481.06    4,627.98          4,481.06
Less Allowance for doubtful accounts for trade accounts
       receivable which are the responsibility of
       private operators                                      (1,538.96)        (1,289.23)  (1,538.96)        (1,289.23)
Payables to private operators for which the Company
     is responsible for collection - net                       3,089.02          3,191.83    3,089.02          3,191.83
Fiber-optic cable connection, along railway lines              9,618.03          8,157.56    9,618.03          8,157.56
Submarine cable connection services                               17.38             25.81       17.38              25.81
International call services                                      267.95            376.50      267.95             376.50
Information via telephone line through special 1900 Number       104.95            107.07      104.95             107.07
Others                                                            39.67             35.71       39.67              35.71
                                                             13,137.00         11,894.48    13,137.00        11,894.48

      Payables to private operators in respect of the fiber-optic cable connections - along railway lines represent amounts payable
to the State Railway of Thailand as specified in the agreement between the Company, the State Railway of Thailand (çSRTé) and
a private operator. Under an agreement effective for 20 years from April 1, 1991 and a memorandum between the Company and
SRT, the Company agreed to share certain revenues after deducting expenses paid to a private operator with the State Railway
of Thailand as a consideration for the installation of certain of the Companyûs fiber-optic cables and equipment on land and
railroads owned by the SRT and allowing the Company to use equipment and buildings of SRT. With effect from July 2001,
the Company agreed with the SRT that only 50% of the revenue sharing would be paid on monthly basis, and the remaining
balance will be settled in the future. As the Company is continuing to negotiate with the SRT in respect of this revenue sharing
arrangement there is no fixed date for settlement of this outstanding balance so the Company carries this liability as a
current liability.
22 Accrued expense as at December 31, 2008 and 2007 are as follows:                                                                  130
                                                                                                               Unit : Million Baht
                                                                                 Financial
                                                                                                                                     131
                                                                              statements
                                                                                 in which
                                                                            equity method
                                                           Consolidated        is applied             The Company
                                                                   2008               2007            2008        2007
Accrued interest payable to subscribers bonds                     95.83               98.59           95.83       98.59
Accrued interest payable on borrowings                           192.46              196.23          192.46      196.23
Satellite rental                                                  29.93               59.27           29.93       59.27
Accrued service fee for fault notification and maintenance       255.48              704.70          255.48      704.70
Accrued bonus                                                    963.41            1,564.36          963.41    1,564.36
Accrued telecommunication licence fee and excise tax           1,392.12            2,327.31        1,392.12    2,327.31
Accrued maintenance for assets under financial lease              87.14               76.99           87.14       76.99
Equipment rental for provision of fixed line outside plant
     including maintenance                                            -               89.11               -               89.11
Other accrued expenses                                         1,549.90            1,050.57        1,550.72            1,050.57
                                                               4,566.27            6,167.13        4,567.09            6,167.13

23 Subscriber deposits
       The Telecommunication Act B.E. 2544 effective on November 17, 2001, states that telecommunication operators shall no
longer collect deposits or other types of advance payments from subscribers. The Companyûs Board of Directors passed a
resolution on December 13, 2001 to cease the collection of all types of deposits from both services which the Company
provides itself and services provided by concession operators. The Company determined a variety of methods for refunding
these amounts. The refund process commenced in May 2002, therefore, the Company classified subscriber deposits as current
liabilities.

24 Provision for liabilities
     The provision for liabilities for the years ended December 31, 2008 is as follows:
                                                                                                             Unit : Million Baht
                                                                                              Consolidated
                                                                           Provision for        Provision
                                                                            liabilities in      for value
                                                                              associated       added tax
                                                                               company          liabilities             Total
Opening balance - net                                                            2,921.64                  -         2,921.64
Share of loss in excess of investment cost (Note 14)                                 77.99                 -             77.99
Provision for value added tax liabilities                                                 -        2,093.86          2,093.86
Payment to Revenue Department                                                             -       (2,093.86)        (2,093.86)
Adjust to provision for liabilities offset with doubtful debts of
     receivables and advance payment to associated company                       (1,633.13)                -         (1,633.13)
Reverse from dissolution of joint venture Thai Mobile (Note 6)                   (1,366.50)                -         (1,366.50)
Closing balance - net                                                                    -                 -                  -
                                                                                                                Unit : Million Baht
                                                                                                 The Company
                                                                             Provision for         Provision
                                                                              liabilities in       for value
                                                                                associated        added tax
                                                                                 company           liabilities             Total
Opening balance - net                                                                 623.03                  -           623.03
Provision for value added tax liabilities                                                   -         2,093.86          2,093.86
Payment to Revenue Department                                                               -        (2,093.86)        (2,093.86)
Provision for liabilities from legal claim                                            274.02                  -           274.02
Reverse from dissolution of joint venture Thai Mobile (Note 6)                       (897.05)                 -          (897.05)
Closing balance - net                                                                       -                 -                 -

     The provision for liabilities for the years ended December 31, 2007 is as follows:
                                                                                                                  Unit : Million Baht
                                                                                                   Financial
                                                                                                statements
                                                                                                    in which
                                                                                             equity method                 The
                                                                                                  is applied          Company
Opening balance - net                                                                                 2,712.76                 -
Provision for liabilities from legal claim                                                                    -          623.03
Share of loss in excess of investment cost (Note 14)                                                    208.88                 -
Closing balance - net                                                                                 2,921.64           623.03

       24.1 Provision for liabilities in associated company
               The provision for liabilities in associated company in the financial statements in which equity method is applied was
recorded because the Company has agreed to absorb the loss in the joint venture Thai Mobile based on its investment
proportion under the joint venture agreement. This provision is being the excess loss over cost of investment offseting with the
reversal of excess loss which the Company has already recorded as allowance for doubtful accounts and advance payments to
the associate based on its investment proportion. The provision for liabilities in associated company in the Companyûs financial
statements was recorded because the Company incurred liabilities in relation to legal claims against joint venture Thai Mobile
from third parties based on its investment proportion. In this period, the Company reversed this provision to each catagory of
liabilities because the Company entered into the Memorandum of Understanding with CAT on July 10, 2008, which resulted in
the dissolution of the joint venture Thai Mobile on September 30, 2008, and the Company had to assume all liabilities of joint
venture Thai Mobile.

     24.2 Provision for value added tax liabilities arises from mobile phone concession agreement revenue sharing
after excise tax deductions
            On February 11, 2003, the Cabinet agreed that excise tax would be deducted from the concession operatorsû
revenue sharing payable to the counterparty according to proposal of Ministry of Information and Communication Technology.
Therefore, AIS paid the Company the revenue sharing of mobile phone concession agreement after excise tax deductions and
the Company calculated the value added tax payment based on the actual revenue sharing after excise tax deduction basis
which was the procedure that the Company discussed and agreed with the Revenue Department at that time. During 2007, the
Revenue Department has challenged the Company stating that it should pay the additional value added tax on the excise tax
deducted from the revenue sharing for the period from February 2003 to November 2007 amounting of Baht 2,202.38 million
together with a penalty and surcharge until date of payment value added tax of Baht 3,152.05 million. The Revenue Department
offset certain amounts totalling Baht 322.80 million, comprising value added tax of Baht 108.52 million, and penalty and        132
surcharge of Baht 214.28 million, against the Companyûs input value added tax receivable. On July 26, 2008, the Companyûs
management passed a resolution to pay a portion of the remaining value added tax of Baht 2,093.86 million to cut down on        133
further related surcharges and also requested the Company to appeal to the Revenue Department and registered land value at
Baht 2,951.67 million under the mortgage agreement as a guarantee for the penalty and surcharge payment. The Company paid
the value added tax in September 2008 and obtained approval for the suspense penalty and surcharge payment on October 1,
2008. Although, the Companyûs management had an opinion that the Company acted in accordance with the Cabinet resolution
and the Company has no obligation to pay value added tax to the Revenue Department, it was uncertain whether the Company
would receive a refund of the value added tax. Therefore, the Company recorded this tax payment of Baht 2,416.66 million in
selling and administrative expenses (Note 35) by recording allowance for value added tax receivable of Baht 322.80 million
presented in other current assets (Note 13). However, the Company did not record the liabilities relating to the penalty and
surcharge which only disclosed this item in the note to the financial statements Note 38.2.2.

25 Other current liabilities as at December 31, 2008 and 2007 are as follows:
                                                                                                          Unit : Million Baht
                                                                                Financial
                                                                             statements
                                                                                in which
                                                                           equity method
                                                         Consolidated         is applied           The Company
                                                                 2008                2007          2008        2007
Subscriber bonds                                                76.28                78.49         76.28       78.49
Advance received for telephone services                        388.37               378.11        388.37      378.11
Undue output value added tax                                   575.12               511.19        575.12      511.19
Output value added tax - net                                   152.46                85.91        104.95       85.91
Other current liabilities                                      598.08               496.69        598.08      496.69
                                                             1,790.31             1,550.39      1,742.80    1,550.39

26 Deferred income from assets under concession agreements as at
   December 31, 2008 and 2007 are as follows:
                                                                                                          Unit : Million Baht
                                                                           Financial
                                                                        statements
                                                                           in which
                                                                      equity method
                                                         Consolidated is applied                   The Company
                                                                 2008           2007                2008        2007
Opening balance - net                                      115,982.13       89,378.95         115,982.13    89,378.95
Add Additional assets transferred in during the period
      (Note 18)                                              12,495.19           45,662.29     12,495.19          45,662.29
Less Realised as income during the year                     (19,588.53)         (18,393.19)   (19,588.53)        (18,393.19)
      Devaluation of assets                                    (894.80)            (665.92)      (894.80)           (665.92)
Closing net book amount                                     107,993.99         115,982.13     107,993.99        115,982.13
Less Current portion - to be realised as income within
      one year                                               (19,083.34)       (18,239.59)    (19,083.34)       (18,239.59)
Long-term liabilities                                         88,910.65         97,742.54      88,910.65         97,742.54
27 Borrowings as at December 31, 2008 and 2007 are as follows:
                                                                                                            Unit : Million Baht
                                                                         Financial
                                                                      statements
                                                                         in which
                                                                    equity method
                                                       Consolidated is applied                     The Company
                                                               2008          2007                  2008        2007
Bank borrowings
Current portion of long-term borrowings                        666.78           704.65            666.78              704.65
Long-term borrowings                                         6,268.63         7,107.17          6,268.63            7,107.17
Total borrowings                                             6,935.41         7,811.82          6,935.41            7,811.82

    The interest rate risk on the borrowings as at December 31, 2008 and 2007 are as follows:
                                                                                                            Unit : Million Baht
                                                                         Financial
                                                                      statements
                                                                         in which
                                                                    equity method
                                                       Consolidated is applied                     The Company
                                                               2008          2007                  2008        2007
Total borrowings:
- at fixed rates                                             6,935.41         7,811.82          6,935.41            7,811.82

    The weighted average effective interest rates as at December 31, 2008 and 2007 are as follows:
                                                                                                            Unit : Percentage
                                                                         Financial
                                                                      statements
                                                                         in which
                                                                    equity method
                                                       Consolidated is applied                     The Company
                                                               2008          2007                  2008        2007
Total borrowings
- Borrowings from banks                                           4.55             4.55              4.55                4.55

    All borrowings from banks were guaranteed by a related party - the Ministry of Finance.
    Borrowings from banks as at December 31, 2008 amounting to Baht 3,855.00 million (At December 31, 2007 : Baht
4,260.79 million) were covered by a cross currency swap agreement (Note 37).
    The maturity of long-term borrowings as at December 31, 2008 and 2007 are as follows:                                        134
                                                                                                           Unit : Million Baht   135
                                                                               Financial
                                                                            statements
                                                                               in which
                                                                          equity method
                                                         Consolidated        is applied            The Company
                                                                 2008               2007           2008        2007
Due within 1 year                                              666.78              704.65         666.78      704.65
Later than 1 year but not later than 2 years                   666.78              704.65         666.78      704.65
Later than 2 years but not later than 5 years                2,000.33            2,113.94       2,000.33    2,113.94
Later than 5 years                                           3,601.52            4,288.58       3,601.52    4,288.58
                                                             6,935.41            7,811.82       6,935.41    7,811.82

    The carrying amount and the fair value of long-term borrowings as at December 31, 2008 and 2007 are as follows:
                                                                                                      Unit : Million Baht
                                                                                       Financial statements in which
                                                                 Consolidated             equity method is applied
                                                                      2008                           2007
                                                             Carrying           Fair       Carrying               Fair
                                                              amount          value         amount              value

Borrowings from banks                                          6,268.63        6,898.67        7,107.17          7,335.52

                                                                                                           Unit : Million Baht
                                                                                  The Company
                                                                     2008                                 2007
                                                             Carrying             Fair        Carrying               Fair
                                                              amount             value         amount               value

Borrowings from banks                                          6,268.63        6,898.67        7,107.17          7,335.52

     The fair values of long-term borrowings have been calculated based on the present value of future cash flows discounted
with the interest rate on borrowings that the Company would expect to pay at the balance sheet date.
28 Financial lease obligations as at December 31, 2008 and 2007 are as follows:
                                                                                                       Unit : Million Baht
                                                                           Financial
                                                                        statements
                                                                           in which
                                                                      equity method
                                                        Consolidated is applied                  The Company
                                                                2008            2007             2008         2007
Financial lease obligation                                  3,703.94         7,310.62         3,703.94     7,310.62
Add Increase during the year (Note 6)                              -            62.17           830.83        62.17
Less Payment during the year                               (1,086.50)       (1,698.86)       (1,192.09)   (1,698.86)
      Adjustment of assets devaluation                             -        (1,969.99)               -    (1,969.99)
                                                            2,617.44         3,703.94         3,342.68     3,703.94
Less Current portion                                         (972.48)       (1,161.17)       (1,697.72)   (1,161.17)
Long-term financial lease obligation                        1,644.96         2,542.77         1,644.96     2,542.77

     The adjustment of assets devaluation mainly occurred from adjustment of public phone rental agreement from financial
lease agreement to operating lease agreement (detail as mentioned in Note 17).
                                                                                                        Unit : Percentage
                                                                              Financial
                                                                           statements
                                                                               in which
                                                                        equity method
                                                         Consolidated is applied                  The Company
                                                                 2008              2007           2008             2007
Weighted average effective interest rate:                          9.56             9.30           7.48             9.30

     The minimum lease payments under financial leases as at December 31, 2008 and 2007 are as follows:
                                                                                                     Unit : Million Baht
                                                                            Financial
                                                                         statements
                                                                            in which
                                                                       equity method
                                                       Consolidated is applied                 The Company
                                                                 2008            2007           2008              2007
Not later than 1 year                                        1,222.63         1,505.78     1,947.87          1,505.78
Later than 1 year but not later than 5 years                 1,976.46         3,040.64     1,976.46          3,040.64
                                                             3,199.09         4,546.42     3,924.33          4,546.42
Less Future finance charges on financial leases               (581.65)         (842.48)      (581.65)          (842.48)
Present value of financial lease liabilities                 2,617.44         3,703.94     3,342.68          3,703.94
    The present value of financial lease liabilities as at December 31, 2008 and 2007 are as follows:                               136
                                                                                                              Unit : Million Baht   137
                                                                               Financial
                                                                            statements
                                                                               in which
                                                                          equity method
                                                         Consolidated        is applied             The Company
                                                                 2008               2007            2008        2007
Not later than 1 year                                          972.48            1,161.17        1,697.72    1,161.17
Later than 1 year but not later than 5 years                 1,644.96            2,542.77        1,644.96    2,542.77
Total                                                        2,617.44            3,703.94        3,342.68    3,703.94

29 Employee benefit obligations as at December 31, 2008 and 2007 are as follows:
                                                                                                              Unit : Million Baht
                                                                            Financial
                                                                         statements
                                                                            in which
                                                                       equity method
                                                         Consolidated is applied                    The Company
                                                                 2008            2007               2008         2007
Opening balance                                                350.09          351.26              350.09      351.26
Contribution during the year (Note 35)                          31.73            33.13              31.73        33.13
Payments for staff resignations                                (27.10)          (34.30)            (27.10)      (34.30)
Closing balance                                                354.72          350.09              354.72      350.09

     The Company contributes an amount equivalent to 10% of its employeesû salaries to the fund on a monthly basis, together
with additional contributions up to a maximum of the obligation as at the balance sheet date.
     At December 31, 2008, the fund has 450 members (2007 : 473 members).

30 Appropriated retained earnings as at December 31, 2008 and 2007 are as follows:
                                                                                                   Unit : Million Baht
                                                                                        Consolidated
                                                                            Reserve for        Legal
                                                                             expansion      reserve           Total
At December 31, 2008
Opening net book amount                                                          1,518.11               600.00       2,118.11
Increase during the year                                                                 -                    -              -
Closing net book amount                                                          1,518.11               600.00       2,118.11
                                                                                                          Unit : Million Baht
                                                                                     Financial statements in which
                                                                                       equity method is applied
                                                                                Reserve for          Legal
                                                                                 expansion         reserve           Total
At December 31, 2007
Opening net book amount                                                              1,518.11             600.00        2,118.11
Increase during the year                                                                     -                 -               -
Closing net book amount                                                              1,518.11             600.00        2,118.11

                                                                                                        Unit : Million Baht
                                                                                            The Company
                                                                                Reserve for        Legal
                                                                                 expansion       reserve           Total
At December 31, 2008
Opening net book amount                                                              1,518.11             600.00        2,118.11
Increase during the year                                                                     -                 -               -
Closing net book amount                                                              1,518.11             600.00        2,118.11
At December 31, 2007
Opening net book amount                                                              1,518.11             600.00        2,118.11
Increase during the year                                                                     -                 -               -
Closing net book amount                                                              1,518.11             600.00        2,118.11

    Reserve for expansion
    The reserve for expansion is appropriated at a certain percentage of the previous yearûs profit and is subject to approval by
the Ministry of Finance. The reserve for expansion is not a legally restricted reserve.

     Legal reserve
     Under the Public Companies Act B.E. 2535, the Company is required to set aside as a statutory reserve at least 5% of its
annual profit after deducting opening deficit (if any) until the reserve is not less than 10% of the registered capital. The reserve
is not available for dividend distribution.

31 Dividend payment
     The Annual Ordinary General Meeting on June 6, 2008 passed a resolution on the payment of dividends for 600 million
shares of Baht 9.185 per share, totaling Baht 5,511.00 million. The Company paid the dividends in full to shareholders on
June 25, 2008.
     The Annual Ordinary General Meeting on April 27, 2007 passed a resolution on the payment of dividends for 600 million
shares of Baht 1.67 per share, totalling Baht 1,002.00 million. The Company paid the dividends in full to shareholders on
May 15, 2007.
32 Unrealised gain on changes in fair value of available-for-sale investments                                                        138
      Changes in unrealised gain on changes in fair value of available-for-sale investments as at December 31, 2008 and 2007 are     139
as follows:
                                                                                                               Unit : Million Baht
                                                                                      Financial
                                                                                   statements
                                                                                      in which
                                                                                 equity method
                                                             Consolidated is applied                     The Company
                                                                        2008               2007          2008               2007
Opening balance                                                     1,637.58              543.48      1,637.58             543.48
Movement during the period
- Fair value adjustment (Note 15)                                    (991.25)           1,094.10       (991.25)        1,094.10
Closing balance (Note 15)                                             646.33            1,637.58        646.33         1,637.58


33 Minority interest for the years ended December 31, 2008 and 2007 are as follows:
                                                                                                               Unit : Million Baht
                                                                                                        Consolidated
                                                                                                         2008               2007
Opening balance                                                                                              -                  -
Acquisition of business                                                                                 24.33                   -
Share of net profit of investments in subsidiary                                                          0.06                  -
Closing balance                                                                                         24.39                   -


34 Interest expenses for the years ended December 31, 2008 and 2007 are as follows:
                                                                                                               Unit : Million Baht
                                                                                  Financial
                                                                               statements
                                                                                  in which
                                                                             equity method
                                                            Consolidated        is applied              The Company
                                                                    2008               2007             2008        2007
Interest costs on borrowings                                      319.38              479.76           319.38      479.76
Interest costs on financial leases                                343.04              536.44           343.04      536.44
                                                                  662.42            1,016.20           662.42    1,016.20
35 Operating profit
    The following expenditure items, classified by nature, have been charged in arriving at operating profit for the years ended
December 31, 2008 and 2007:
                                                                                                              Unit : Million Baht
                                                                                Financial
                                                                             statements
                                                                                in which
                                                                          equity method
                                                           Consolidated is applied                     The Company
                                                                    2008              2007             2008                2007
Loss (gain) on foreign exchange rate - net                         760.24            (173.76)         762.17            (173.76)
Depreciation on property, plant and equipment
- The Companyûs assets                                          10,971.46         12,221.06        10,971.46         12,221.06
- Financial lease assets                                           684.48            904.38           684.48            904.38
- Assets under concession agreements (Note 18)                  17,465.54         16,493.32        17,465.54         16,493.32
Loss on impairment of property, plant and
  equipment (Note 17)                                               38.39               3.37           38.39              3.37
Amortisation of intangible assets (Note 19)                        161.65             136.97          161.65            136.97
Audit fee                                                            1.20               1.30            1.20              1.30
Value added tax expenses (Note 24.2)                             2,416.66                  -        2,416.66                 -
Operating lease rentals
- Machinery and equipment                                        2,068.69           2,708.97        2,068.69          2,708.97
- Property and plant                                               234.98             244.83          234.98            244.83
Staff costs
- Salaries, wages and bonus                                     11,119.99         11,772.48        11,119.99         11,772.48
- Contributions to provident fund                                1,135.33          1,088.87         1,135.33          1,088.87
- Contributions to employee benefit fund (Note 29)                  31.73             33.13            31.73             33.13
- Compensation for early retirement of staff                     1,512.60                 -         1,512.60                 -
Doubtful debt                                                      335.55            483.02         1,968.68            483.02

     Early retirement project
     On February 8, 2008, the Board of Directors passed a resolution to conduct an early retirement project as per the
stipulation in 2008 - 2009. This project was implemented from February 15, 2008 to March 14, 2008 and was completed in
March 2008. There were 456 applicants for the early retirement project.
36 Basic earnings per share                                                                                                 140
   Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the weighted average   141
number of paid-up ordinary shares in issue during the years ended December 31, 2008 and 2007, as follows:

                                                                                  Financial
                                                                               statements
                                                                                  in which
                                                                             equity method
                                                                Consolidated is applied          The Company
                                                                        2008          2007       2008        2007
Net profit attributable to shareholders (Unit : Million Baht)       5,602.81       6,232.66   3,217.26         5,831.42
Weighted average number of ordinary shares in issue
     during the period (Unit: Million shares)                           600             600       600               600
Basic earnings per share (Unit: Baht)                                   9.34          10.39       5.36             9.72

     At December 31, 2008 and 2007, there were no potential dilutive ordinary shares.


37 Financial instruments
     Cross currency swap agreements
     The conditions and principal of foreign currency swap agreements as at December 31, 2008 and 2007 are as follows:
                                                                                                      Unit : Million Baht
                                                                              Financial
                                                                            statements
                                                                               in which
                                                                         equity method
                                                          Consolidated is applied                The Company
                                                                  2008             2007          2008              2007
Not later than 1 year                                                 405.79         405.79     405.79           405.79
Later than 1 year but not later than 2 years                          405.79         405.79     405.79           405.79
Later than 2 year but not later than 5 years                        1,217.37       1,217.37   1,217.37         1,217.37
Over 5 years                                                        1,826.05       2,231.84   1,826.05         2,231.84
                                                                    3,855.00       4,260.79   3,855.00         4,260.79
     Fair Value - net
     The fair value of financial instruments at the balance sheet date is as follows:
                                                                                                                Unit : Million Baht
                                                                               Financial
                                                                            statements
                                                                               in which
                                                                          equity method
                                                             Consolidated is applied                     The Company
                                                                     2008           2007                 2008        2007
Cross currency swap liabilities                                    352.36        1,453.24               352.36    1,453.24

      The fair values of cross currency swap agreements have been calculated using rates quoted by the Companyûs counterparty
as if it terminates the contracts at the balance sheet date.

     Contingent liabilities from cross currency swap agreements
     The Company entered into a cross currency swap agreement (Cross Currency Swap: FX Option with Contingent Payment)
in the year 2006 to swap Yen currency borrowings to Baht with the obligation that if the reference exchange rate (the Yen to
US Dollar exchange rate) as at two days before the repayment date of each period is below 72.50, the Company has to pay the
additional amount according to the swap agreement together with the normal repayment.

38 Contingent liabilities
    38.1 Contractual arrangements
           The Company is the defendant in contract cases and misconduct cases as at December 31, 2008 amounting to Baht
58,044.84 million (2007 : Baht 55,859.34 million), of which the significant cases amount of Baht 54,096.46 million are as follows:

             The significant lawsuits with True are as follows:
             - Trueûs claims to the Central Administrative Court of Thailand relate to the damage arising from the Company
reducing the service charge for local long distance calls according to providing long distance service in economic price (Y-Tel
1234) amounting to Baht 622.40 million. In this case, the Central Administrative Court of Thailand ruled to withdraw the claim,
but True submitted an objection to this ruling on November 28, 2005 and the Company submitted to revise the appeal on
February 15, 2006 which is under the consideration of the Supreme Administrative Court of Thailand.
             - Trueûs claims to the arbitrator included a claim requesting the Company to pay the revenue sharing generated
from the Companyûs provision of special services using Trueûs network (Access Charges) amounting to Baht 14,000 million. The
case was concluded by the arbitrator on February 17, 2006. The Company has to pay the revenue sharing from the beginning
to August 22, 2002 of Baht 9,175.82 million with interest charged from August 22, 2002 to the payment date at the rate of 7.5%
per annum. For the revenue sharing from August 22, 2002 onwards, the Company has to share with True 50% of the actual
benefits that the Company receives from the services that use Trueûs networks according to the concession agreement.
However, the Companyûs legal department submitted an objection to the case to the Administrative Court of Thailand, which
the Administrative Court of Thailand acknowledged on May 16, 2006. True subsequently submitted objection to the case, but
the Company submitted an objection to Trueûs objection on January 9, 2007 and True submitted a further objection on May 8,
2007. The case is currently under consideration by the Administrative Court of Thailand. The Companyûs legal department and
its legal advisor believe that the Company has sufficient justification to make a claim to the Court in order to reject the decision
of the arbitrator under the Arbitration Act, B.E. 2545. The Companyûs management believes that there is sufficient justification        142
for the refusal of the decision of the arbitrator through the court and as a result the Company will not have to pay this revenue       143
sharing to True.
             - Trueûs claims to the arbitrator included a claim requesting for damages and revenue sharing from international
incoming calls on the basis that the Company allegedly made a miscalculation amounting to Baht 8,407.68 million. At the
present, the court has not yet examined the witnesses as it is in the process of submission the dispute to consideration
process.
             - Trueûs claims filed with the arbitrator include a claim relating to the revenue sharing from the service charge for
international calls that the Company received from CAT. True claims that the method and data used by the Company to calculate
the revenue sharing to True were incorrect. The total claim is for Baht 1,968.70 million. The Company submitted an objection
on April 29, 2008, which is currently under consideration by the arbitrator.

              The significant lawsuits with TT&T are as follows:
              - TT&Tûs claims to the arbitrator relate to the access charges of Baht 28,000 million for the Company allowing
other operators to provide special services on TT&Tûs network. Currently, TT&T change the total claim to Baht 23,777.99 million.
On 31 March 2008, the arbitrator awarded the Company to pay the access charge to TT&T from year 1993 to March 2005 of
Baht 23,777.99 million and benefit from special service from April 1, 2005 until the end of agreement with interest charge at
MLR of average rate of commercial bank + 1% from April 8, 2005 to the payment date. On May 7, 2008, TT&T filed a petition
with the Civil Court to enforce the above ruling from the arbitrator. However, the Companyûs legal department and its prosecutor
filed a petition to dismiss the ruling with the Central Administrative Court of Thailand on July 1, 2008. The case is currently under
consideration by the courts.
              - TT&Tûs claims to the arbitrator relate to the damages and revenue sharing from international calls and the charge
for fault notification and maintenance services for the distribution point on the basis that the Company allegedly did not follow
the concession agreement, the agreement on marketing surveys for local long distance call usage, and the appendix in the
agreement regarding fault notification and maintenance services between distribution point and protector. Moreover, TT&T
claims that the Company had agreed with CAT to reduce the service charge for international calls, without the agreement of
TT&T. Overall, TT&T claims that they have lost a benefit of Baht 753.48 million. Currently, TT&T change the total claim to Baht
2,539.63 million. The Company has filed an objection in order to fight this case. At this stage, it is in process of examination the
witnesses.

           The lawsuits with Thai Electric Corporation Company Limited (çThai Electricé)
           - During the fourth quarter of 2007, Thai Electric filed a civil case against the Company for alleged violation of the
public phone rental contract because of non-assignment of usable numbers since the service start (Contract assigned 10,000
number for 10 years, but provided only 4,217 numbers with 3,269 usable numbers). The monetary claim is Baht 2,780.06 million
comprising damage fee, loss opportunities fee and public phone rental payment and interest. It is under the court consideration
at the present.

           In terms of other contractual arrangements, the Companyûs legal department has fully examined all oral and
documentary witnesses and believes that the Company should not be in a losing position, rather the outcome will depend on
the consideration of the judges. Therefore, the Company believes that these claims will not give rise to any significant loss to
the Company, and therefore provision for liabilities has not been additional recorded in the financial statements.
       38.2 Contingent liabilities arises in Corporate income tax and value added tax
               38.2.1 The corporate income tax from revenue of the access charge that did not record in the financial statement.
                      From note to financial statement no. 11.1, the Company did not record the income tax expense from
revenue of the access charge from the dispute with CAT and CATûs concession operators which were not recognised as
revenue in the financial statements. The Company received the notification from the State Enterprise Policy Office, Ministry of
Finance and the Revenue Department that if the Company provide mobile phone connection services with the concession
operators according to the connection services contract, the Company should have right to claim services income although the
Company did not receive payment of the access charge which under dispute with the concession operators. The Company shall
include the revenue of the access charge into the Companyûs revenue according to the Revenue Code section 65 paragraph 2
and No. 2 of the Revenue Department Announcement TP 1/2528: çThe usage of accrual basis to calculate revenue and expense
for the company and partnershipé on August 28, 1985. The Companyûs management has an opinion that the Company should
not recognise the corporate income tax obligations arising from revenue of the access charge until it is certain that the Company
will receive such access charges. However, the Company realised that the non-complying to the Revenue Department
announcement has risk arising from penalty and surcharge.
               38.2.2 The value added tax arises from mobile phone concession agreement revenue sharing after excise tax
deductions.
                      According to the notes to the financial statements No. 24.2, the Company received an assessment for
additional value added tax which calculated based on the revenue sharing after excise tax deductions of Baht 2,202.38 million
and penalty and surcharge of Baht 3,152.05 million. For the value added tax expense, the Company has offset the assessed
value added tax expense against the input value added tax receivable and fully paid for the remaining amount. The penalty and
surcharge were offset against the input value added tax receivable of Baht 214.28 million and the Company recorded allowance
for value added tax receivable for the penalty and surcharge amount. However, the Company has a remaining penalty and
surcharge of Baht 2,937.77 million. The Companyûs management has an opinion that the Company should have no further
liabilities to the Revenue Department because it has complied with the Revenue Code in respect of the payment and obligation
not to pay the value added tax. Therefore, the Company did not record liabilities for remaining penalty and surcharge in these
financial statements.

     38.3 Commitments
            38.3.1 Capital commitments
                    Capital expenditure contracted for at the balance sheet date, but not recognised in the financial statements
as at December 31, 2008 and 2007 are as follows:
                                                                                                              Unit : Million Baht
                                                                                  Financial
                                                                               statements
                                                                                  in which
                                                                            equity method
                                                            Consolidated is applied                     The Company
                                                                      2008             2007             2008               2007
Property, plant and equipment                                     7,891.20          9,486.52       7,891.20            9,486.52
            38.3.2 Operating lease commitments - where the Company is the lessee                                                          144
                   The future minimum lease payments under non-cancelable operating leases as at December 31, 2008 and                    145
2007, are as follows:
                                                                                                      Unit : Million Baht
                                                                           Financial
                                                                         statements
                                                                            in which
                                                                      equity method
                                                      Consolidated is applied                    The Company
                                                               2008              2007            2008              2007
Not later than 1 year                                       1,223.65          2,583.03       1,223.65         2,583.03
Later than 1 year but not later than 5 years                2,696.85          4,147.37       2,696.85         4,147.37
                                                            3,920.50          6,730.40       3,920.50         6,730.40


39 Related party transactions
     The Company is wholly owned by the Ministry of Finance. The Company conducts business with Thai departments and
state-owned enterprises, which are either directly or indirectly owned or controlled by the Royal Thai Government (çDepartments
and State-Owned Enterprisesé). The Departments and State-Owned Enterprise are significant customers of the Company and
transactions are carried out in the normal course of business. The Company presents the aggregate revenue and receivables
from the Departments and State-Owned Enterprises except for transactions with CAT, which are presented separately because
CAT is under common control and operates in a related business.
     The purchases of goods and services from the Departments and State-Owned Enterprises relate to the supply of electricity,
water, travel (air, rail and bus), fuel, postal services and land and building rental, etc. These transactions are in the normal course
of business. The Company also acts as an agent to collect taxes, including personal income tax, value added taxes and
withholding tax for the Thai Government without any remuneration. The details of purchases of goods and service from CAT are
presented separately, but the Company cannot disclose the expenses and payables with the Departments and State-Owned
Enterprises separately in these financial statements because it cannot collect such information.
     The Company has cash, bank deposits and promissory notes with government controlled bank such as Krung Thai Bank,
Government Housing Bank, Government Saving Bank and Bank for Agriculture and Agricultural Cooperatives. Furthermore, the
Company has investment in treasury bills and government bonds - Bank of Thailand. As at December 31, 2008, cash and cash
equivalents (Note 8), short-term investment (Note 9) and fund for redemption for long-term liabilities (Note 10) with government
controlled banks amount to Baht 16,146.72 million (At December 31, 2007 : Baht 17,538.76 million).
     The Company did not disclose transactions with employees and management of the Departments and State-Owned
Enterprises and close members of the family of these individuals as related party transaction because the Company cannot
collect this information as the transactions are large and varied. However, these transactions are carried out in the normal course
of business.
     The Company assured that the disclosure of the transaction with related parties are sufficient in consideration.
     The following are transactions with related parties, only via the Companyûs own networks:
    39.1 Sales of services for the years ended December 31, 2008 and 2007 are detailed below:
                                                                                             Unit : Million Baht
                                                                      Financial
                                                                   statements
                                                                      in which
                                                                 equity method
                                                   Consolidated is applied             The Company
                                                            2008          2007          2008              2007

Revenue from telephone services
- Ministry of Finance                                       48.10          56.57          48.10           56.57
- Associated companies                                       6.38          57.48           6.38           57.48
- Other related parties
    CAT                                                   257.72           348.36        257.72          348.36
    Other departments and stated-owned Enterprises      1,933.38         1,748.85      1,933.38        1,748.85
                                                        2,245.58         2,211.26      2,245.58        2,211.26

Revenue from network connection services
- Associated companies                                       1.00          95.20           1.00           95.20
- Other related parties
    CAT                                                         -        1,318.30             -        1,318.30
                                                             1.00        1,413.50          1.00        1,413.50

Other telecommunication services
- Ministry of Finance                                       20.77          56.46          20.77          56.46
- Associated companies                                      44.41         195.00          44.41         195.00
- Other related parties
    CAT                                                     2.43             2.13          2.43            2.13
    Other departments and stated-owned enterprises      2,219.53         2,684.43      2,219.53        2,684.43
                                                        2,287.14         2,938.02      2,287.14        2,938.02
    39.2 Purchases of services                                                                                             146
                                                                                                     Unit : Million Baht   147
                                                                        Financial
                                                                     statements
                                                                        in which
                                                                   equity method
                                                      Consolidated is applied                The Company
                                                              2008          2007             2008        2007

Telecommunication services
- Ministry of Finance                                        44.35            84.86         44.35               84.86
- Subsidiary                                                     -                -          0.52                   -
- Other related parties
     CAT                                                    467.90          370.88         467.90              370.88
                                                            512.25          455.74         512.77              455.74


     39.3 Outstanding balances arising from sales/purchases of services as at December 31, 2008 and 2007 are
as follows:
                                                                                                Unit : Million Baht
                                                                         Financial
                                                                      statements
                                                                         in which
                                                                    equity method
                                                    Consolidated is applied                The Company
                                                             2008            2007          2008              2007

Receivables from related parties:
Telecommunication receivables:
- Ministry of Finance                                        23.65           29.02          23.65               29.02
- Associated companies                                       23.57          336.90          23.57              336.90
- Other related parties
     CAT                                                  1,557.52         1,723.94      1,557.52            1,723.94
     Other departments and stated-owned Enterprises       1,313.84         1,187.32      1,313.84            1,187.32
                                                          2,918.58         3,277.18      2,918.58            3,277.18
Less Allowance for doubtful accounts                        (11.50)         (278.55)       (11.50)            (278.55)
                                                          2,907.08         2,998.63      2,907.08            2,998.63

Revenue sharing receivables:
- Other related parties (Note 11.3)
    CAT                                                        0.66            0.71           0.66                0.71
                                                                                                             Unit : Million Baht
                                                                           Financial
                                                                        statements
                                                                           in which
                                                                      equity method
                                                         Consolidated is applied                    The Company
                                                                 2008          2007                 2008        2007

Advance payment for Crown Property land rental
- Ministry of Finance                                              0.90              2.16            0.90                 2.16

Trade accounts payable
- Ministry of Finance                                              1.76              2.15            1.76                 2.15
- Subsidiary                                                          -              4.14            0.92                 4.14
- Other related parties
    CAT                                                            0.05            30.23             0.05               30.23
                                                                   1.81            36.52             2.73               36.52

Other accounts payable
- Ministry of Finance                                                  -             1.80                -                1.80
- Other related parties
    CAT                                                           92.53            76.73           92.53                76.73
                                                                  92.53            78.53           92.53                78.53

Financial lease liabilities to related parties
- Subsidiary                                                           -                -         725.24                      -

Advance to related party
- Associated company                                                   -        2,466.36                 -           2,466.36

     The advance to associated company comprises an advance to joint venture Thai Mobile for the lease of a network for the
operation of 1900 MHz mobile phones. The Company paid this advance to another associated company which is the lessor of
this network. During the quarter 2/2551, the Company recorded the allowance for doubtful accounts of this advance to related
party based on the Companyûs investment proportion because the Company does not expect to receive payment for this
balance. The Company recorded the allowance for doubtful accounts presented in selling and administrative expenses in the
Companyûs financial statements of Baht 1,421.94 million. The consolidated financial statement was offset this balance with
provision for liabilities in associated company. For the remaining amount based on the investment proportion of CAT, the
Company expects to be able to collect the payment. As a result, no allowance for doubtful accounts was recorded. On
September 30, 2008, CAT transferred the exclusive right to hold and use the 1900 MHz frequency to the Company according
to the Memorandum of Understanding between the Company and CAT. Therefore, the Company has calculated and included
the portion of debt in respect of CAT in the cost of the right to hold and use the frequency, as discussed in Note 6. The
Company has reversed the remaining of the advance payment and allowance for doubtful account balances.
     The movement of borrowings from the Ministry of Finance for the years ended December 31, 2008 and 2007 can be               148
analysed as follows:                                                                                                             149
                                                                                                  Unit : Million Baht
                                                                           Financial
                                                                        statements
                                                                           in which
                                                                      equity method
                                                      Consolidated is applied                The Company
                                                               2008            2007          2008              2007
Opening balance                                                          -        5,217.24                 -         5,217.24
Repayment                                                                -       (5,217.24)                -        (5,217.24)
Closing balance                                                          -                -                -                -


    39.4 Amount due to related company
                                                                                                           Unit : Million Baht
                                                                                                                         The
                                                                                              Consolidated Company
                                                                                                      2008              2008
Cash to be paid to CAT (Note 6)                                                                     2,400.00        2,400.00
Less Deferred interest expenses (Note 6)                                                             (338.99)        (338.99)
Present value of cash to be paid (Note 6)                                                           2,061.01        2,061.01
Less Current portion                                                                                 (480.00)        (480.00)
Amount due to related company - long term portion                                                   1,581.01        1,581.01

    According to the Memorandum of Understanding between the Company and CAT in the Note 6 to financial statements, the
Company will make the five annual installment of Baht 480.00 million. For the first installment, the Company will pay within
seven days after receiving the official notification letter from NTC for the transferring of frequency. On March 19, 2009, the
Company received the official notification letter from NTC. The Company has classified the current portion of instalment
amounting to Baht 480.00 million without calculating the deferred interest on this balance because of insignificant.

40 Directorsû remuneration
      Directorsû remuneration in the financial statements for the year ended December 31, 2008 amounting to Baht 7.03 million
(2007 : Baht 15.41 million) comprised meeting fees, bonus and gratuities as approved by the shareholders of the Company in
their Ordinary General Meeting of Shareholders according to the basis set by the Ministry of Finance.
41 Dispute of interconnection charge with Total Access Communication Public Company Limited
   (çDTACé) and True Move Company Limited (çTrue Moveé)

     41.1 Dispute of interconnection charge with Total Access Communication Public Company Limited (çDTACé)
            On January 17, 2007, DTAC, which is concession operator of CAT under the wireless cellular service agreement,
made a claim in the Central Administrative Court of Thailand to request the Company to act in compliance with the law by
allowing the 1,500,000 new subscribers of DTAC allocated from NTC to be able to use and access the Companyûs network and
to not request collection of access charge but to collect only the interconnection charge at the specific rate used for all operators
as approved by NTC. DTAC also requested the Company to compensate for the loss incurred from being unable to connect to
the Companyûs network, which is a monthly numbering fee paid to NTC of Baht 3 million per month starting from mid
December 2006, the opportunity cost from loss of new subscribers amounting to Baht 15 million per day from the claim date,
and damage to DTACûs reputation amounting to Baht 70 million etc. On January 19, 2007, the Central Administration Court of
Thailand set a temporary ruling in order to resolve the current situation before the final judgement is delivered by requesting the
Company to make a connection of the telecom network in order to allow subscribers of DTAC allocated from NTC to have active
numbering of the Company until the case is finalised or another decision is made by the Court. However, the Company
requested to abate and appeal the judgement of the Central Administrative Court of Thailand to the Supreme Administration of
Court on January 30, 2007. It is under the Court consideration at the present.
            On June 18, 2007, the NTC issued an award in respect of interconnection charges with DTAC No. 1/2550 stating
that the Company was required to negotiate the interconnection charge agreement with DTAC within seven days of
acknowledging the award, and that the agreement shall be finalised within 30 days from the first day of negotiations. Failure by
the Company to perform according to the requirements for this award would be considered a violation of section 25 of the
Telecommunication Business Act B.E.2544 and NTC may enforce the code section 66 of the Telecommunication Act B.E.2544.
The Company continuously defended its own position in all legal issues as indicated in the financial statements for the year
ended December 31, 2007. On April 22, 2008, the NTC instructed the Company that it is required to pay a penalty of
60,000 Baht per day starting from February 1, 2008 until the Company has fully complied with the award and negotiated the
interconnection charge agreement with DTAC. On May 8, 2008, the Company sent a notification letter to DTAC for the
negotiation of the interconnection charge agreement and paid the penalty from February 1, 2008 to May 7, 2008 to the NTC.
However, the Company has not finalised the negotiations with DTAC. On June 16, 2008, DTAC sent a letter to the NTC
requesting that it consider the conditions which were not agreed in the negotiation. One of the conditions was that the NTC
would consider imposing a penalty of 60,000 Baht a day until the Company has complied with the order (if any). The Company
is appealing this letter.
      41.2 Dispute of interconnection charge with True Move Company Limited (çTrue Moveé)                                         150
             On January 25, 2007, True Move, which is a concession operator of CAT under the wireless cellular service            151
agreement, made a claim in the Central Administrative Court of Thailand to request the Company to act in compliance with the
law by allowing the 1,500,000 new subscribers of True Move allocated from NTC to be able to use and access the Companyûs
network and to not request collection of access charge but to collect only the interconnection charge at the specific rate used
for all operators as approved by NTC. True Move also requested the Company to compensate for the loss incurred from being
unable to connect to the Companyûs network, which is a monthly numbering fee paid to NTC of Baht 3 million per month
starting from mid October 2006, the opportunity cost from loss of new subscribers amounting to Baht 14 million per day from
the claim date, and damage to True Moveûs reputation amounting to Baht 70 million etc. On January 26, 2007, the Central
Administration Court of Thailand set a temporary ruling in order to resolve the current situation before the final judgement is
delivered by requesting the Company to make a connection of the telecom network in order to allow subscribers of True Move
allocated from NTC to have active numbering of the Company until the case is finalized or another decision is made by the
Court. However, the Company requested to abate and appeal the judgement of the Central Administrative Court of Thailand to
the Supreme Administration of Court on January 30, 2007. It is under the Court consideration at the present.
             On November 28, 2007, NTC has an award of interconnection charge with True Move No. 2/550 by asking the
Company to negotiate about the interconnection charge with True Move within 7 days of acknowledging the award, and the
agreement has to be finalised within 30 days from the first day of negotations. It is under the negotiation at the present.

42 Subsequent events
    The financial statements have been approved for issue by the Board of Directors on April 7, 2009.
Designed by Heûs Company Limited
                T. 0 2948 8165-66
TOT Public Company Limited
89/2 Moo 3 Chaeng Wattana Road, Thungsonghong, Laksi District, Bangkok 10210, Thailand
www.tot.co.th

								
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