ADVANCED INFO SERVICE PLC.
2010 Management Discussion and Analysis

OVERVIEW
2011 guidance is available on page 6

Data services and economic recovery boosted AIS performance in 2010. Strong momentum of mobile internet usage as well as consumer adoption to smartphone have been the key contributor to 31% data growth. Demand of mobile internet continued to rise due to limited fixed-line infrastructure and trend of social networking. AIS continued to push toward data-bundling smart gadgets with lower price and richer features that drove higher penetration to Thai consumers. Also, both domestic voice usage and international revenue reflected the solid economic recovery throughout 2010 despite of a political hiccup during 2Q10. Domestic voice revenues picked up 3.5%YoY while rising international tourist arrival supported recovery in international roaming and IDD. Mild competition and highly efficient operation enlarged the operating margin through a low OPEX and CAPEX. Telecom market remained in stable contest due to saturation in voice market and mild competition. Cost efficiency programs were implemented since 2008 indicated by improved EBITDA margin three years in a row. In 2010, cash OPEX climbed down 4.9%YoY supported by lower marketing and network-related expenses. CAPEX was Bt5.2bn, an extraordinary low level due to expectation of 2.1GHz license auction in 2010. As a result, AIS built up Bt53bn operating cash flow, a 12.4% YoY growth, and free cash flow surged to Bt46.8bn, a 30% YoY growth.

Reinforcing development of “EcoSystem” into 2011. With the long-term vision of “EcoSystem” announced in 2010, AIS will focus more on rising data market in 2011 by implementing “Quality DNAs”, quality in all dimensions of services. More smart devices will be delivered to customers in all segments with exclusive packages from AIS. Network on 900 MHz will be upgraded to