Management Discussion and Analysis of Financial Results of Operations

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1 2017 Management Outlook and Guidance Revenue from sales and rendering of services Share of profit of associates Share of profit of joint ventures CAPEX for Venture Capital investments Dividend payout policy Expected to be 10%-12% decline YoY 40.45% of AIS results Investment portion in LTC and High Shopping Not more than 200 million baht per year Pass-through dividends received from associates and subsidiaries after the deduction of operating expenses Revenue from sales and rendering of services: The consolidated financial statements are prepared in accordance with Thai Accounting Standards, and include the financial statements of the companies controlled by INTOUCH. Therefore, the sales and service revenue from THAICOM Group is included in the consolidated revenue. The revenue in was 7,329 million baht, a drop of 18% from 9M16 due to lower revenue from Thaicom 4 in Australia and Thailand, along with a slowdown in the broadcasting industry that reduced the utilization rate. Thus, the net profit dropped 69% to 540 million baht, while the revenue forecast for the whole year is a decline of 10 to 12 percent from last year. THAICOM currently operates four conventional satellites (Thaicom 5, 6, 7 & 8), with a total leasing capacity of 111 transponders, and one broadband satellite (Thaicom 4). Share of profit of associates: Under the basis of consolidation in the Thai Accounting Standards, the entities in which INTOUCH has significant influence are accounted for in the consolidated financial statements using the equity method. The major contribution of the share of net profit is currently from AIS Group, in which INTOUCH holds 40.45%. AIS s guidance in 2017 will remain as follows: AIS estimates service revenue (excluding IC) to increase 4-5% YoY, following a strategy that focuses on qualified postpaid subscribers who have high mobile data usage per month, along with the new service on fixed-broadband internet that has improved 5.5% YoY. The CAPEX is expected to be billion baht, for improving 4G capacity & quality along with fixed broadband. In, the accumulated CAPEX was 33.8 billion baht. The consolidated EBITDA margin is expected to improve to 42-44%, from higher revenue and lower handset subsidies besides regulatory fee. As a result, the EBITDA margin grew from 41.2% in 9M16 to 44.7% in. Dividend policy is to pay a minimum of 70% of net profit: preserving cash flow to ensure the financial flexibility to lead, compete, and pursue future growth prospects. Share of profit of joint ventures: The contribution of the share of net profit of joint ventures is from Lao Telecommunications Co., Ltd. (LTC) and High Shopping Co., Ltd. (High Shopping). LTC, an indirect joint venture of THAICOM, has seen its revenue and operational results grow, especially data services and internet SIM, due to an increase in the number of subscribers. LTC is the market leader, with a subscriber share of 56.9% at the end of 3Q17, a rise from 53.8% in 3Q16. The share of the net result was 150 million baht in, a slight drop from 154 million baht in the same period last year. High Shopping began operations in January 2016 by broadcasting its home shopping business on the satellite television, along with AIS PLAYBOX, as well as advertising through its website ( and the mobile application HIGH SHOPPING. In 1Q17, High Shopping expanded its e-commerce platform by offering its products through the 11street and Lazada websites. In, the net profit was in line with guidance, while average sales per day were 1.77 million baht, a rise of 33% from 9M16. The revenue forecast for 2017 remains at 750 million baht, supported by the strategies of product differentiation, channel expansion and partnership building. High Shopping is expected to be one of the top-three TV Home shopping operators in

2 Venture capital: INTOUCH has made investments under the Invent project since The main purpose of this project is to provide funding for and promote high-potential start-up companies in the Telecommunications, Media and Technology (TMT) sector, as well as other related areas. This will enable them to improve their products and services, which will enhance growth within INTOUCH Group. Up to 200 million baht is available in the investment budget for In September 2017, INTOUCH invested in Event Pop Holdings Pte. Ltd. ( Event Pop ) which provides technology development and other services in connection with event management. The Company has made twelve venture capital investments to date, two of them were in 2017, although Computerlogy and ShopSpot have already been monetized. The Company s standalone performance: In, INTOUCH had a share of the net result from subsidiaries and associates of 9,170 million baht, a decrease of 12% YoY. The administrative expenses were 285 million baht, while the forecast for the whole year is between million baht, the same as last year, part of which will have been spent on staff costs and exploring new investment opportunities. Dividend payout: INTOUCH has a policy of paying dividends from the separate financial statements. These are mainly dividends passed through from associates and subsidiaries after the deduction of operating expenses, assuming there are no extraordinary circumstances or items of concern in which the payment of a dividend would have a material impact on the Company s operations. In, INTOUCH has announced two interim dividends totaling 2.86 baht per share. Possible key and influential factors affecting the Company s future operations or financial position INTOUCH conducts business as a holding company that has investments in other companies. Therefore, the financial position or operational results of these companies could have a material impact on INTOUCH. The performance of these investments has been disclosed in the Management Discussion & Analysis of Financial Results for ADVANC and THCOM. Significant events Execution of the Share Tender Agreement to dispose of ordinary share in CSL On 6 October 2017, DTV Service Company Limited ( DTV ), a subsidiary of THAICOM, executed the Shares Tender Agreement for the sale of all ordinary shares that it holds in CS Loxinfo Plc. ( CSL ) to Advanced Wireless Network Co., Ltd. ( AWN ), a subsidiary of AIS. This transaction comprises 250,099,990 shares, equivalent to 42.07% of the total paid-up capital, at the offering price of 7.80 baht per share, totaling 1, million baht. The sale of CSL s ordinary shares will commence with a conditional voluntary tender offer. Dispute over the Thaicom 7 & 8 satellites under the Operating Agreement on Domestic Communication Satellites On 5 October 2017, INTOUCH and THAICOM received letters from the Ministry of Digital Economy and Society (the Ministry ) stating that Thaicom 7 & 8 satellites were the satellites under the Operating Agreement on Domestic Communication Satellite dated 11 September 1991 between INTOUCH and the Ministry (formerly known as the Ministry of Information and Communication Technology (MICT)) (the Agreement ), which INTOUCH established THAICOM to operate works under the Agreement. In this regard, the letter from the Ministry stated a request for the full compliance with the Agreement on an urgent basis; e.g. transfer of ownership and delivery of assets, procurement of the backup satellite(s), payment of overdue revenue sharing, and property insurance. The Board of Directors Meeting of INTOUCH and THAICOM on the 18th and 24th of October 2017, respectively, considered such letter and consulted with legal advisor, then opined that the Thaicom 7 & 8 satellites were not the satellites under the Agreement as the procedures of the Thaicom 7 & 8 satellites fell under the scope of license received from the National Broadcasting and Telecommunications Commission. Moreover, both INTOUCH and THAICOM have fully complied with the terms and conditions of the Agreement, and have not proceeded with any operations against or violating the Agreement. Therefore, INTOUCH and THAICOM had a different opinion from the Ministry on the Thaicom 7 & 8 satellites. Accordingly, the Meetings resolved that INTOUCH and THAICOM submitted the dispute to an arbitrator, resulting from the terms of and compliance with the Agreement and that the parties thereto have not been able to resolve it, for further 2

3 settlement. This is in accordance with Clause 45.1 of the Agreement. INTOUCH and THAICOM have submitted the dispute to the Arbitration Institute on 25 October 2017, as appeared in the Black Case No. 97/2560. INTOUCH and THAICOM do not have any duties to comply with any of the foregoing requests made by the Ministry until an award is rendered, pursuant to Clause 45.6 of the Agreement, stating that in the event where there is a dispute pending arbitration proceedings, the parties shall still be obligated to comply with terms of the Agreement until an award is rendered. Change in accounting policy From 1 January 2017, INTOUCH Group has adopted TAS 27 (revised 2016): Separate Financial Statements, which includes the equity method as an accounting option in addition to the cost method or the fair-value method, as the latter has not been effective. The group elected to change its accounting policy related to investments in subsidiaries, joint ventures and associates presented in the separate financial statements from the cost to the equity method, which has been applied retrospectively so it can be compared to the current period. There has been no impact on the consolidated financial statements. (For more details, please see Note 3 to the financial statements for the three- and the nine-month periods ended 30 September 2017.) Local wireless telecommunication business In the mobile business, the market continued to grow following customer demand for more mobile data, while 4G penetration increased. Handset subsidies remain a key strategy for operators to acquire and retain subscribers, although the overall scale of subsidized campaigns has been controlled. The pricing environment has been stable, while the high-end segment has improved slightly after the ARPU of unlimited price plans rose. In 3Q17, AIS continued to focus on the postpaid segment, which resulted in a net addition of 235k subscribers with data volume of usage (VoU) of 7.5GB/data sub/month, up from 6.7GB in 2Q17. The prepaid segment saw a net loss of 523k subscribers due to prepaid-to-postpaid migration and the lowest subsidies for this segment. Nevertheless, prepaid subscribers also continued to consume more data with VoU rising to 5.4GB, up from 4.1GB in 2Q17. As a result, the total subscriber base was 40.2 million with blended ARPU of 254 baht, improving 1.2% QoQ, while voice usage continued to decline to 181 minutes over the whole quarter. At the end of May 2017, the NBTC announced a USO rate reduction from 3.75% of revenue down to 2.5%. In 3Q17, the full-quarter impact of the rate reduction was recognized. The regulatory fees now comprise the followings: 1) 1.5% of revenue as license fee 2) 2.5% of revenue as USO fee, and 3) 2 baht/mobile number/month of numbering fee. In the fixed-broadband market, the operators continued to expand their markets while customers have been offered more choices from subscriptions to pure broadband to broadband plus other services. New areas have been penetrated and subscribers urged to replace their old ADSL technology with FTTH. In 3Q17, the total number of AIS fibre subscribers was 481,500, an increase of 35,600 QoQ. However, the net addition was softened by new measures to acquire valued customers, such as the collection of a 650 baht entrance fee, although the fixed-broadband ARPU of existing fibre users reached 637 baht, up from 600 baht in 2Q17, due to more subscriptions for high-speed packages. Satellite business During Q3/2017, THAICOM continued to sign new contracts to provide integrated satellite communications services in both the Greater Mekong Subregion and Africa. These included a transponder leasing agreement for Ku-band capacity on the Thaicom 8 Satellite with MV International Co., Ltd. ( MVI ), a leading Thai broadcaster and DTH platform operator, to establish a pay TV platform in Lao PDR. In addition, THAICOM was able to close a deal with isat Africa Ltd FZC. ( isat ), a leading African telecom company, to provide fullymanaged satellite telecommunications services to isat s key customers in East Africa, including satellite backup of its fiber network. 3

4 Internet & media businesses Internet Data Center (IDC) services have continued to grow, and the subscriber base at the end of 3Q17 had increased by 18% from 3Q16. Furthermore, the number of subscribers to Condominium Broadband had increased significantly to 19,413 from 3,079 at the end of 3Q16. CSL decided to focus on and develop an online platform for media & advertising in the Yellow Pages business, operated by its subsidiary, via and ceased operating its print platform in April Telecommunications services in Lao PDR At the end of 3Q17, LTC s subscriber base had grown to 2,004,738. LTC was ranked the top mobile service provider in Lao PDR with a market share of 57%, up from 54% in 3Q16. The data revenue, especially from Internet SIM, has also continued to increase. Overview of consolidated operational results Share of profit (loss) by business segment (in million baht) 3Q16 2Q17 3Q17 %YoY %QoQ %YoY The Company (83) -3% (93) -3% (75) -3% -10% -19% (234) -2% (259) -3% 11% Local Wireless Telecommunication Business 2,590 97% 2, % 2, % 15% 3% 9,750 70% 8, % -8% Satellite & International Businesses 178 7% 90 3% 27 1% -85% -70% 710 5% 222 2% -69% Other Businesses (23) -1% (12) 0% (6) 0% -74% -50% 3,607* 26% (18) 0% -100% Adjustment / Elimination - 0% - 0% - 0% n/a n/a 4 0% - 0% -100% Net Profit 2, % 2, % 2, % 10% 2% 13, % 8, % -36% Normalised Net Profit 2, % 2, % 2, % 10% 2% 10,146 73% 8, % -12% * Included a reversal of provision for interest of unpaid operating fee of ITV The consolidated financial statements for 3Q17 showed consolidated profit of 2,928 million baht, 10% increase from 3Q16 and a slight increase from 2Q17. This was mainly due to higher profit contribution from the local wireless communications business, operated by AIS Group, although this was partially offset by a lower contribution from the satellite & international businesses, operated by THAICOM. The net profit for dropped 36% from 9M16 due to the reversal of provision for interest on ITV s unpaid operating fees of 3,691 million baht (net of non-controlling interest) booked in 2Q16. However, if this reversal is excluded, the consolidated profit would have dropped by 12%, mainly due to lower profits contribution from both local wireless communications business and satellite & international businesses. Key operational results The Company (in million baht) 3Q16 2Q17 3Q17 %YoY %QoQ %YoY Expenses (94) (102) (85) -10% -17% (291) (285) -2% Others % 11% % Net expenses (83) (93) (75) -10% -19% (234) (259) 11% Net expenses in 3Q17 were 75 million baht, a decrease of 10% from 3Q16 and 19% from 2Q17 due to lower staff costs. When compared to 9M16, there was an increase of 11%, mainly due to the gain from monetization of a venture capital investment recorded in that period. However, the expenses dropped from 9M16 due to lower staff costs, although this was partially offset by an increase in the cost of CSR activities. 4

5 Local wireless telecommunications (in million baht) 3Q16 2Q17 3Q17 %YoY %QoQ %YoY Share of net result from investment in AIS Group using equity method 2,590 2,886 2,982 15% 3% 9,750 8,974-8% The share of the net results from AIS Group, in 3Q17, the net profit of AIS Group was 7,469 million baht, a rise of 14% YoY from 6,529 million baht in 3Q16 and a slight increase QoQ. This was due to a decent growth in revenue with a softer handset subsidy, despite higher network operating costs, depreciation & amortization and finance costs. Compared to 9M16, the net profit dropped 8% from 24,198 million baht to 22,377 million baht, mainly due to higher depreciation & amortization and finance costs following 4G investment and spectrum license acquisition. Overall 3Q17 revenue in AIS Group increased YoY but stable QoQ as follows: Non-voice service revenue rose 18% YoY and increased slightly QoQ, driven by higher consumption of video streaming, worry-free data packages and 4G-user penetration. Fixed-broadband revenue rose 282% YoY and 20% QoQ. At the end of 3Q17, there were 481,500 subscribers, a net addition of 286,500 from 3Q16 and 35,600 from 2Q17, while ARPU improved from 498 baht in 3Q16 to 600 in 2Q17 and 637 in 3Q17. However, these items were partially offset by: Voice service revenue dropped 14% YoY and decreased slightly QoQ, due to data substitution. SIM card & device sales revenue dropped slightly YoY and 14% QoQ, partly reflecting competitive handsets subsidy campaigns. However, the margin improved YoY, when aggressive handset campaigns were deployed to promote 2G migration. The revenue in improved 5% from 9M16 due to an increase in both services and sales. Service revenue increased 6%, underpinned by non-voice services and fixed-broadband. Mobile service revenue grew from increasing popularity of video streaming and expanding postpaid segment, while fixed-broadband revenue grew 353% following the larger subscriber base and increased ARPU as the discount campaigns wear off. Overall 3Q17 costs in AIS Group increase slightly YoY but dropped a little QoQ, mainly from: Depreciation & Amortization rose 24% YoY with a slight quarterly increase from 4G network investment. Network operating costs rose 23% YoY, mainly from payments to TOT to utilize the spectrum and equipment late last year. Excluding this payment, the network operating costs would be relatively flat, although there was a slight drop from 2Q17. However, these items were partially offset by: Regulatory fees dropped 15% YoY and decreased slightly QoQ. On 30 May 2017, the NBTC reduced the USO fee, thus the overall regulatory fees dropped to 4% of net revenue from the previous rate of 5.25%. Cost of sales dropped 10% YoY and 12% QoQ, following SIM card and device sales revenue. In, overall costs rose 24% from 9M16, mainly due to 4G network and spectrum investments; however, this was partially offset by lower regulatory fees. 5

6 SG&A in AIS Group decreased slightly YoY and QoQ, due to lower marketing expenses as the handset campaigns were targeted towards gaining the mid- to high-end postpaid segment and serving customer migration from prepaid to postpaid. However, this was partially offset by higher broadband costs due to business expansion and bad debt in the larger postpaid segment, although the quarterly increase was mainly from higher obsolete handset provision. D&A rose 13% YoY and increased slightly QoQ due to shop expansion and renovation. In, SG&A decreased 14% due to the lower cost for handset subsidies, partially offset by higher admin expenses and bad debt. Finance Costs rose slightly YoY, QoQ and 36% compared to 9M16, due to higher loans for new spectrum acquisitions and network expansion. Satellite & International Businesses (in million baht) 3Q16 2Q17 3Q17 %YoY %QoQ %YoY Sales and service revenue 2,791 2,286 2,312-17% 1% 8,903 7,329-18% Sales and service costs (1,508) (1,509) (1,468) -3% -3% (4,503) (4,582) 2% Operating agreement fees (249) (249) (231) -7% -7% (782) (746) -5% SG&A (525) (426) (484) -8% 14% (1,579) (1,453) -8% Share of profit of investments in joint ventures % -12% % Other income * 69 82% -71% * 177% Net foreign exchange gain % 52% % Finance cost and income tax expense (209) (168) (176) -16% 5% (664) (524) -21% Net Profit % -56% 1, % Contributed to INTOUCH Group % -70% % * Included early termination fee received from NBN THAICOM s net profit dropped 76% YoY and 64% compared to 9M16 due to lower sales and service revenue, and 56% QoQ due to an early termination fee received from the National Broadband Network ( NBN ) which was recognized as other income. Sales and service revenue in 3Q17 dropped 17% YoY and 18% compared to 9M16, but increased slightly QoQ, mainly due to the following reasons: Thaicom 4 (IPSTAR): Revenue decreased YoY and compared to 9M16 due to lower broadband services, especially in Australia after NBN terminated its contract. Moreover, the service contract with TOT ended in 2Q17, although this was partially offset by an increase in revenue from retail subscribers in Australia and the occasional sales of satellite broadband equipment, based on customer demand. When compared to 2Q17, the revenue increased slightly. The conventional satellite: Revenue decreased YoY, QoQ and compared to 9M16, mainly due to the value-added services, following a slowdown in the broadcasting industry in Thailand. However, when compared to YoY and 9M16, this was partially offset by an increase in revenue from new clients, mostly in the Greater Mekong Subregion, and the occasional sales of satellite equipment based on customer demand. Internet services: Revenue dropped YoY and compared to 9M16, mainly due to less advertising in the Yellow Pages and a slowdown in the Voice Info Services & Mobile Content businesses, although this was partially offset by an increase in revenue from the ICT business. However, when compared to 2Q17, the revenue from the ICT businesses rose. Media business in Cambodia: Revenue rose YoY and compared to 9M16, but drop slightly QoQ, mainly due to the sales of satellite receiver sets. 6

7 Sales and service costs in 3Q17 decreased slightly YoY and QoQ, but increased a little compared to 9M16, mainly due to the following reasons: Thaicom 4 (IPSTAR): Costs dropped YoY and compared to 9M16, as a result of assets becoming fully depreciated, even though the cost of sales of satellite broadband equipment increased following revenue, including retail revenue in Australia. However, this cost dropped from 2Q17, in line with revenue. Internet: Costs dropped YoY and compared to 9M16, following lower revenue from advertising in Yellow Pages and Voice Info Services & Media Content businesses, even though ICT costs increased. However, this cost rose slightly from 2Q17, in line with revenue. However, this item was partially offset by: The conventional satellites: Costs remained about the same YoY and QoQ; although the cost of satellite equipment rose, it was offset by a decrease in other operating costs due to efficient cost management. However, costs rose compared to 9M16, mainly from depreciation and in-orbit insurance on Thaicom 8, which began operating in 3Q16, and the cost of satellite equipment following revenue. Media business in Cambodia: Costs rose YoY and compared to 9M16, but dropped QoQ in line with revenue. Operating agreement fees: drop slightly YoY, QoQ and compared to 9M16 following a decrease in overall bandwidth usage. SG&A in THAICOM Group dropped YoY and compared to 9M16, mainly due to lower marketing and staff expenses in the satellite and internet businesses, while in 9M16, the overall provision for doubtful debts in the satellite business also decreased. The SG&A in 3Q17 increased due to the rise in provision for doubtful debts and higher marketing expenses in the satellite business. Share of profit from investments in joint ventures rose YoY, mainly from the growth of data revenue, especially Internet SIM of LTC. The share of profit dropped from 2Q17, mostly due to higher maintenance costs and depreciation recorded for the expanded network. Compared to 9M16, the share of profit dropped, mainly due to an unclaimed withholding tax expense incurred during that period from a dividend received by SHEN, a joint venture of THAICOM, and a one-time adjustment for unearned income from LTC s prepaid service revenue. However, this was partially offset by LTC s better operational results. Foreign exchange gain was mainly due to the appreciation of the Thai baht against the US dollar, resulting in a gain from the currency translation of USD loans. In 3Q17, there was a gain of 32 million baht, a decrease of 56 million baht YoY but a rise of 52% QoQ. In, there was a gain of 148 million baht, a drop from 207 million baht in 9M16. Finance cost and income tax expense dropped 16% YoY and 21% compared to 9M16, due to lower income tax following less operational profit; however, this was partially offset by higher interest expense for Thaicom 8, which was commercialized in 3Q16, even though THAICOM had repaid all its short-term loans in 2Q17 and the portion of long-term loans that was due in this period. When compared to 2Q17, expenses increased slightly. 7

8 Other Businesses (in million baht) 3Q16 2Q17 3Q17 %YoY %QoQ %YoY Service revenue % 11% % Service costs (29) (29) (32) 10% 10% (86) (90) 5% Reversal of loss on provision for interest of unpaid operating agreement fees n/a n/a 3, % SG&A (6) (7) (5) -17% -29% (18) (17) -6% Share of loss of investments (28) (17) (12) -57% -29% (89) (40) -55% Other income % -22% % Finance cost and income tax expense (1) (2) (2) 100% 0% (5) (6) 20% Net Profit (Loss) (21) (10) (4) -81% -60% 3,796 (12) -100% Contributed to INTOUCH Group (23) (12) (6) -74% -50% 3,607 (18) -100% Normalised Contributed to INTOUCH Group * (23) (12) (6) -74% -50% (84) (18) -79% * Excluded a reversal of provision for interest of unpaid operating fee of ITV Other businesses include media & advertising, information technology, and investments under the InVent project. The net loss from other businesses was mainly the share of net loss from joint ventures and associates. However, during 9M16, there was a reversal of loss on provision for interest on unpaid operating agreement fees, amounting to 3,866 million baht. Financial Position Summary Key financial position data As at 31 December 2016 As at 30 September 2017 Change Consolidated Financial Position million baht % million baht % million baht % Assets Cash & cash equivalents 3,065 6% 2,879 6% (186) -6% Current investments 6,095 11% 5,497 11% (598) -10% Trade receivables 2,120 4% 1,991 4% (129) -6% Current portion of long-term loans to related parties - 0% 250 0% % Inventories 324 1% 155 0% (169) -52% Other current assets 554 1% 533 1% (21) -4% Long-term loans to related parties 2,146 4% 1,748 3% (398) -19% Investment in associates and joint ventures 19,897 36% 19,565 39% (332) -2% Property & equipment, net 9,441 17% 8,957 18% (484) -5% Intangible assets under operating agreements, net 9,205 17% 7,692 15% (1,513) -16% Other non-current assets 1,760 3% 1,540 3% (220) -13% Total Assets 54, % 50, % (3,800) -7% Liabilities and Equity Short-term borrowings from financial institutions 230 0% 250 0% 20 9% Current portion of long-term borrowings 729 1% 683 1% (46) -6% Provision for unpaid operating fees and interest 2,890 5% 2,890 6% - 0% Other current liabilities 2,759 5% 1,980 4% (779) -28% Long-term borrowings 9,209 17% 6,807 13% (2,402) -26% Other liabilities 1,115 2% 1,082 2% (33) -3% Total Liabilities 16,932 31% 13,692 27% (3,240) -19% Total Equity 37,675 69% 37,115 73% (560) -1% Total Liabilities and Equity 54, % 50, % (3,800) -7% Total consolidated assets dropped 7% from the end of 2016, mainly due to a decrease in net intangible assets under operating agreements and property & equipment as a result of the amortization and depreciation in. In addition, there was a decrease in cash & cash equivalents and current investment due to the partial repayment of long-term loans in the satellite business. 8

9 Total consolidated liabilities and equity: Total liabilities decreased 19% from the end of 2016 due to the partial repayment of long-term loans in the satellite business and other current liabilities, mainly from a decrease in advance receipts from customers after the service contracts with NBN and TOT ended. Liquidity and cash flow: At the end of 3Q17, the current ratio rose to 1.9 from 1.8 at the end of 3Q16, mainly due to the decrease in advance receipts from customers and lower trade & other payables in the satellite business. INTOUCH Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by the management to finance its operations as well as secure short-term credit facilities from various banks as financial backup. The consolidated cash dropped by 186 million baht from the end of 2016 (excluding the impact from foreign currency fluctuation), mainly due to the repayment of loans and the payment of pass-through dividends. However, this was offset by the cash inflow from dividend received from associate and operating activities in. Accounts receivable: INTOUCH Group has policies in place to ensure that the sales of products and rendering of services are made to customers after credit checks have been made. At the end of, the group had accounts receivable equivalent to 4% of total assets, the same percentage as the end of INTOUCH Group has reserved an appropriate allowance for bad debt. Inventory: At the end of, INTOUCH Group s inventory dropped from year-end The group assesses the allowance for obsolete inventories on a regular basis to ensure that it is sufficient. Inventories are reported at cost or their net realizable value, whichever is lower. The net realizable value is the estimated selling price in the ordinary course of business less the estimated costs to complete the sale. Profitability ratio: INTOUCH Group s net profit margin was 52%, a decrease from 9M16, while the return on equity was 33%, lower than 9M16 due to the reversal of ITV s provision in 2Q16, which had an impact on the statement of income. If this reversal were excluded, INTOUCH Group s net profit margin would have been stable comparing to the same period last year. The return on equity decreased 8% as a result of the contributions from AIS Group and THAICOM Group. Debt-to-equity ratio: At the end of, the group had a debt-to-equity ratio of 0.3 times, the same as 9M16, due to the repayment of long-term loans. INTOUCH Group has the ability to repay both short- and longterm loans without violating the conditions of its loan agreements with respect to maintaining stipulated financial ratios. The group s commitments, including those off the balance sheet, have been disclosed in the notes to the interim financial statements, namely Commitments, Bank Guarantees, Significant Events, and Disputes & Litigation. The external auditor s review The external auditor s report has been summarized below: The external auditor concluded that nothing significant had come to his attention which would lead him to believe that the interim consolidated and separate financial statements for the three- and nine-month periods ended 30 September 2017 had not been presented in accordance with TAS 34: Interim Financial Reporting. However, the auditor emphasized that the Company and its subsidiaries had elected to change their accounting policy relating to investments in subsidiaries, joint ventures and associates from the cost method to the equity method in the separate financial statements for the periods beginning on or after 1 January Consequently, the Company had restated the separate statements of its financial position as at 31 December 2016 and the separate interim financial statements for the three- and nine-month periods ended 30 September 2016, which have been presented as comparative information, to be consistent with the revised TFRS. 9

10 Additional Financial Data and Key Ratios As at 31 December 2016 As at 30 September 2017 Change Separated Financial Position million baht % million baht % million baht % Assets Cash & cash equivalents and current investments 1,751 6% 2,224 8% % Investment in subsidiaries and associates 26,340 93% 25,823 92% (517) -2% Other assets 98 0% 101 0% 3 3% Total Assets 28, % 28, % (41) 0% Libilities and Equity Other liabilities 136 0% 414 1% % Total Equity 28, % 27,734 99% (319) -1% Total Libilities and Equity 28, % 28, % (41) 0% Separate Statements of Income (in million baht) 3Q16 2Q17 3Q17 %YoY %QoQ %YoY Share of net results from investments in:- Subsidiaries % -75% % Associates 2,585 2,885 2,982 15% 3% 9,735 8,974-8% Other income % 10% % Total revenue 2,755 2,972 3,012 9% 1% 10,441 9,199-12% Administrative expenses (74) (81) (71) -4% -12% (225) (231) 3% Management benefit expenses (20) (21) (14) -30% -33% (66) (54) -18% Total expenses (94) (102) (85) -10% -17% (291) (285) -2% Profit before finance costs 2,661 2,870 2,927 10% 2% 10,150 8,914-12% Finance costs (1) (1) (1) 0% 0% (2) (3) 50% Net Profit 2,660 2,869 2,926 10% 2% 10,148 8,911-12% Consolidated Statements of Income (in million baht) 3Q16 2Q17 3Q17 %YoY %QoQ %YoY Sales and service revenue 2,823 2,319 2,349-17% 1% 8,997 7,436-17% Share of profit of investments in joint ventures % -8% % Share of profit of investments in associates 2,585 2,885 2,982 15% 3% 9,735 8,974-8% Net foreign exchange gain % 52% % Other income % -67% % Total revenue 5,582 5,530 5,495-2% -1% 19,235 17,073-11% Sales and service costs (1,537) (1,538) (1,500) -2% -2% (4,589) (4,672) 2% Operating agreement fee (249) (249) (231) -7% -7% (782) (746) -5% Reversal of loss on provision for interest of unpaid operating agreement fees n/a n/a 3, % Selling expenses (70) (53) (51) -27% -4% (230) (175) -24% Administrative expenses (506) (437) (480) -5% 10% (1,502) (1,447) -4% Management benefit expenses (47) (42) (40) -15% -5% (148) (124) -16% Total expenses (2,409) (2,319) (2,302) -4% -1% (3,385) (7,164) 112% Profit before finance costs & income tax expense 3,173 3,211 3,193 1% -1% 15,850 9,909-37% Finance costs (108) (104) (102) -6% -2% (251) (311) 24% Profit before income tax expenses 3,065 3,107 3,091 1% -1% 15,599 9,598-38% Income tax expense (102) (66) (75) -26% 14% (419) (218) -48% Net profit 2,963 3,041 3,016 2% -1% 15,180 9,380-38% Attributable to: Owners of the Parent 2,662 2,871 2,928 10% 2% 13,837 8,919-36% Non-controlling interests % -48% 1, % Net profit 2,963 3,041 3,016 2% -1% 15,180 9,380-38% 10

11 Consolidated source and use of Cash Flows * 2017 million baht Source of funds Use of funds Dividends received 9,381 Dividend paid 9,771 Operating Cash Flow 2,296 Loan repayments 2,466 Decrease in current investments 519 Purchase of CAPEX & Fixed assets 262 Decrease in loans and advances to related parties 71 Additional investment in associates and other 112 Proceed from loan 480 Interest paid 333 Disposal of Fixed assets 11 Cash decreased 186 Total 12,944 12,944 * Consolidated cash flow s consisted of cash and cash equivalents Material financial ratios (based on consolidated financial statements) Changed Net profit margin 71.9 % 52.2 % (19.7) % Current ratio (times) Return on equity attributed to owners of the parent 55.3 % 33.0 % (22.3) % Return on assets 25.3 % 16.9 % (8.4) % Debt to equity attributed to owners of the parent (times) (0.2) Interest bearing debt to equity attributed to owners of the parent (times) (0.2) Basic earnings per share (baht) (1.54) Book value per share (baht) Dividend per share (baht) (1.74) 1) 1) Comprised of 1.61 baht/share, based on the separate financial statements - cost method which was approved by the 2017 AGM on 31 M arch 2017 and 1.25 baht/share, based on equity method which was approved by the BoD's meeting on 7 August Disclaimer Some statements made in this material are forward-looking statements with the relevant assumptions, which are subject to various risks and uncertainties. These include statements with respect to our corporate plans, strategies and beliefs and other statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as may, will, expect, anticipate, intend, estimate, continue plan or other similar words. The statements are based on our management s assumptions and beliefs in light of the information currently available to us. These assumptions involve risks and uncertainties which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Please note that the company and executives/staff do not control and cannot guarantee the relevance, timeliness, or accuracy of these statements. 11