Total Access Communication : Financial Statement Quarter 4/2020 (Audited)

Management Discussion and Analysis

Fiscal Year 2020

Please note that all financial figures and analyses are based on the applicable accounting policy for 2019 and 2020, unless otherwise stated

Executive Summary

In FY20, the emergence of coronavirus pandemic has reshaped the world like no other events in history. With physical distancing requirement, dtac was confronted with creating and adapting to new ways of operating while meeting the commitment to connect people through essential services in a new era where customer usage behavior has changed. International travel bans and lockdown not only translated into loss of revenue from absence of tourist and reduction in number of migrants starting in Q120, ongoing macroeconomic pressure that led to customer's shrinking wallet size was also observed post-lockdown and throughout the year. Despite prolonged uncertainty, dtac embraced new challenges and focused on re-defining customer experience to quickly address unmet market needs: from high-speed connection with relevant services that offer benefits to the Thai mass market to serving worry-free solution to business customers, along with providing improved digital capabilities for enhanced customer experience.

In December 2020, dtac paid the first installment of the license for the 700 MHz of 2x10 MHz bandwidth, which was allocated to the company in June 2019. The low-band spectrum, both 4G and 5G-enabled, was turned on as it got freed up for use, starting in Bangkok, and selected locations in the North, Northeast, and South. As of Q420, approximately 2,400 nodes of 4G - 700 MHz network have been installed.

At the end of FY20, a total of approximately 20,400 nodes of 4G-2300 MHz network were installed, an addition of approximately 3,000 nodes during the year.

In February 2020, dtac participated in the multi-band spectrum auction and won a total bandwidth of 200 MHz of 26 GHz. The 15-year license was obtained after full payment made in the same month. With the mmWave band, dtac rolled out and showcased 5G in selected locations and announced several ongoing industry partnerships for 5G use case in the latter half of the year.

The swapping of 850 MHz equipment with 900 MHz equipment had been delayed from 2020 to 2021 as a result of delay in filter installation process. As such, dtac obtained permission from NBTC for the 850 MHz extension until another six months after CAT completes its filter installation or no later than the end of 2021.

Competition in postpaid was relatively stable in FY20. Prepaid acquisition remained aggressive with unlimited data allowance at a fixed speed in the main portfolio. Although the unlimited data packs were maintained at slightly higher price point in the latter half of the year, we observed intense competition with heightened level of activities at the provincial level consisting of special offerings and lower pricing from time to time.

At the end of FY20, total active subscriber base stood at 18.9 million, an increase of 173k from the end of Q320 following gradual recovery in the Thai mass segment and better churn management. The subscriber base increase consisted of prepaid at 110k and postpaid at 63k. Approximately 32.4% of total subscriber base were postpaid subscribers.

Service revenues excluding IC dropped 2.0% QoQ in Q420 and 4.6% YoY in FY20. Core service revenues (defined by bundle of voice and data service revenues) declined 2.2% YoY in FY20. Blended ARPU increased slightly at 1.0% hin FY20 despite declining trends in prepaid and postpaid from customer spending optimization. EBITDA (before other items), excluding one-time effect, was relatively flat in FY20 primarily due to lower network OPEX and SG&A despite challenging external environment. EBITDA margin for FY20 was 38.3%. However, excluding revenues from CAT lease agreements and TOT network rental, EBITDA margin stood at 43.1%. Net profit for FY20 amounted to THB 5,107 million.

Our guidance for FY21 includes a low single-digit decline for service revenue excluding IC,low single- digit decline for EBITDA, and THB 13-15 billion CAPEX.

1

Management Discussion and Analysis

Fiscal Year 2020

Operational Summary

At the end of FY2020, total subscriber base stood at 18.9 million, declining 1.8 million from the end of last year. The decline was accounted mostly by prepaid, reflecting primarily loss in tourist and migrants, and lower acquisition following the lockdown crisis and intense competition. Postpaid subscriber base stood at 6.1 million, reflecting a decline of 321k from FY19 but increasing 63k QoQ. Prepaid subscriber dropped 1.5 million YoY but increasing 110k QoQ to 12.8 million, reflecting gradual recovery following dtac's focus on Thai mass segment in the second half of the year.

Average Revenue per User excluding IC (ARPU) for FY20 was THB 252 per month, which was a slight increase of 1.9% YoY. At the end of FY2020, postpaid subscriber base accounted for approximately 32.4% of total subscriber base. Postpaid ARPU for FY2020 was THB 518 per month, showing an increase of 0.6% YoY, while prepaid ARPU was THB 128 per month, showing a decline of 6.4% YoY, driven by customer spending optimization.

Traffics on TOT's 4G-2300MHz network continued to stay at the high levels, driven by change in customer behavior as part of the new normal adaptation after the lockdown. No. of 4G-2300MHz installed base stations under the partnership with TOT reached approximately 20,400 at end of FY2020, increasing by approximately 3,000 base stations from FY2019. The number of 4G users reached 12.2 million, representing approximately 64% of total subscriber base. The number of 4G compatible device increased to 83% of total subscriber base. Smartphone penetration reached 87.5%.

Active subscribers (in thousand)	Q419	Q320	Q420	%QoQ	%YoY	FY2019	FY2020	%YoY
Postpaid	6,427	6,043	6,106	1.0%	-5.0%	6,427	6,106	-5.0%
Prepaid	14,214	12,641	12,750	0.9%	-10.3%	14,214	12,750	-10.3%
Total active subscribers	20,642	18,683	18,856	0.9%	-8.6%	20,642	18,856	-8.6%
Net additional subscribers (in thousand)	Q419	Q320	Q420	%QoQ	%YoY	FY2019	FY2020	%YoY
Postpaid	45	(34)	63	-287.8%	40.8%	357	(321)	-190.0%
Prepaid	181	(73)	110	-250.6%	39.4%	(917)	(1,464)	-59.7%
Total net additional subscribers	226	(107)	173	-262.4%	23.5%	(560)	(1,785)	-218.7%
MoU (minutes/sub/month)	Q419	Q320	Q420	%QoQ	%YoY	FY2019	FY2020	%YoY
Postpaid	216	199	199	0.1%	-8.2%	223	201	-10.1%
Prepaid	85	78	76	-2.2%	-9.8%	85	79	-6.7%
Blended MoU	123	117	116	-0.9%	-6.0%	124	118	-5.3%
Postpaid excluding Incoming minutes	150	136	137	0.5%	-9.1%	156	138	-11.9%
Prepaid excluding Incoming minutes	61	54	53	-1.9%	-12.9%	62	55	-11.2%
Blended MoU excluding Incoming minutes	87	81	80	-0.6%	-8.1%	89	82	-8.6%
ARPU (THB/sub/month) - (Post-TFRS 15)	Q419	Q320	Q420	%QoQ	%YoY	FY2019	FY2020	%YoY
Postpaid	541	531	518	-2.4%	-4.2%	533	532	-0.3%
Prepaid	144	133	131	-1.1%	-8.8%	142	132	-7.2%
Blended ARPU	263	262	256	-1.9%	-2.6%	256	259	1.0%
Postpaid excluding IC	523	517	505	-2.3%	-3.3%	515	518	0.6%
Prepaid excluding IC	138	129	128	-1.1%	-7.8%	137	128	-6.4%
Blended ARPU excluding IC	254	255	250	-1.8%	-1.6%	247	252	1.9%

2

Financial Summary

Revenues

Total revenues in FY20 amounted to THB 78,818 million, decreased at 2.9% YoY from decline in service revenue and handsets & starter kit sales. The decrease was slightly offset by higher other operating income from TOT 2300 MHz network rental. Service revenues excluding IC decreased 4.6% YoY down to THB 58,412 million.

Core service revenues (defined by bundle of voice and data service revenues) in FY20 amounted to THB 56,711 million, reducing 2.2% YoY from prolonged economic impact from COVID-19 and intense competition in prepaid.

International Roaming (IR) revenues in FY20 amounted to THB 274 million, decreasing by 67.0% YoY. The significant reduction reflected the COVID-19impact on international travel bans from Q220 throughout the rest of the year.

Other service revenues in FY20 amounted to THB 1,427 million, a reduction of 41.2% YoY from declining trend in IDD revenues.

Handset and starter kit sales in FY20 amounted to THB 6,980 million, decreasing 19.1% YoY, reflecting impact from shop closures in Q220 and lower units sold as a result of customer spending optimization.

Cost of Services

Cost of services excluding IC in FY20 amounted to THB 45,510 million, increasing 4.9% YoY from higher depreciation and amortization, and other cost related to partnership with TOT on the 2300 MHz spectrum, offsetting by lower regulatory and network cost.

Regulatory costs in FY20 amounted to THB 2,350 million, decreasing 10.8% YoY. The annual reduction reflected one-time gain during the year. Regulatory costs in FY20 accounted for 4.0% of service revenue (excluding IC), which decreased from 4.3% in FY19.

Network OPEX in FY20 amounted to THB 6,628 million, reducing 6.2% YoY primarily from network cost optimization initiatives and reduction in CAT lease expense.

Management Discussion and Analysis

Fiscal Year 2020

Other operating costs of services in FY20 amounted to THB 17,243 million, increasing 12.9% YoY, driven by roaming cost on 2300 MHz paid to TOT. TOT's 2300 MHz roaming cost, net of corresponding revenues, was approximately THB 4,966 million in FY20, reflecting a small increase of THB 99 million from FY19.

Depreciation and Amortization (D&A) of costs of services in FY20 amounted to THB 19,289 million, increasing 4.9% YoY, driven by amortization of 26 GHz and 700 MHz licenses and continuing network expansion.

Selling, General and Administrative Expenses (SG&A)

SG&A expenses in FY20 amounted to 14,409 million, decreasing 6.6% YoY. The reduction was driven by lower selling and marketing and general administrative expenses from structural efficiencies and prioritization and lower level of activities during the lockdown, and slightly offset by increase in provision for bad debt from earlier in the year.

Selling and Marketing (S&M) expenses in FY20 amounted to THB 4,108 million, decreasing 12.9% YoY from significantly lower activities in Q220 and structural optimization and spending prioritization effort throughout the year.

General administrative expenses in FY20 amounted to THB 7,063 million, decreasing 9.0% YoY from structural optimization and well-controlledspending.

Provision for bad debt in FY20 amounted to THB 1,576 million, increasing 17.5% YoY. The increase was primarily driven by the higher bad debt level in Q120, which was brought down in the following three consecutive quarters. Postpaid bad debt, which contributed to almost all of bad debt, was 3.9% of postpaid revenues in FY20, increasing from 3.4% of postpaid revenues in FY19.

Depreciation and Amortization (D&A) of SG&A in FY20 amounted to THB 1,662 million, increasing 3.3% YoY.

3

EBITDA and Net Profit

EBITDA (before other items) in FY20 amounted to THB 30,193 million. Excluding one-timeeffect in Q420, the figure was flattish YoY and reflective of soft top line development offset by well managed network OPEX and SG&A expenses. EBITDA margin (excluding revenues from CAT lease agreements and TOT network rental) was 43.1% in FY20, increasing from 38.0% in FY19.

Net profit for FY20 amounted to THB 5,107 million, decreasing 5.8% YoY.

Balance Sheet and Key Financial Information

At the end of FY20, total assets amounted to THB 174,280 million, increasing from THB 167,258 million at the end of FY19. Cash and cash equivalent amounted to THB 6,647 million, decreasing from THB 8,528 million at the end of FY19 mainly from licenses payment, slightly offset by better working capital management. Interest-bearing debt including lease liabilities increased from THB 65,029 million at the end of FY19 to THB 69,962 million. Net debt to EBITDA (including lease liabilities) was 2.3x, increasing from 2.1x the end of FY19.

CAPEX in FY20 amounted to THB 9,728 million. Operating cash flow (defined by EBITDA minus CAPEX) amounted to THB 20,465 million.

Management Discussion and Analysis

Fiscal Year 2020

Outlook 2021

In FY2021, we strive to maintain our customer-centric approach in serving products and services that matter to our customers alongside investing for network expansion for improved customer experience while maintaining efficient operations with enhanced digital capabilities and innovation.

2021 guidance:

• Service revenue excluding IC: low single-digit decline
• EBITDA: low single-digit decline
• Capital expenditure: THB 13-15 billion

We maintain our dividend policy which is to pay out dividend not less than 50% of the Company's net profits based on the separate financial statements, depending on financial position and future business plans, and aim to pay dividend semi-annually. Based on net profits of the Company for 2020, the Board has approved an annual dividend of THB 2.12 per share, subject to shareholders' approval at the Annual General Meeting 2021. The Record Date will be 15 February 2021 and the payment is scheduled to be made on 20 April 2021.

Statement of financial position	End of 2019	End of FY2019
(THB million) (Post-TFRS 15 & 16)
Cash and cash equivalent	8,528	6,647
Other current assets	14,068	15,075
Non-current assets	144,662	152,558
Total assets	167,258	174,280
Current liabilities	60,149	48,426
Non-current liabilities	82,143	101,539
Total liabilities	142,292	149,965
Total shareholders' equity	24,966	24,315
Total liabilities and equity	167,258	174,280

Cash flows statement	FY2019	FY2020
(THB million) (Post-TFRS 15 & 16)
Cash flows from operating activities	20,748	30,550
Cash paid for interest expenses and tax	(3,213)	(4,608)
Net cash flows from operating activities	17,535	25,942
Net cash flows from investing activities	(17,794)	(20,786)
Net cash receipt/(Repayment)	(2,319)	(1,165)
Dividend paid	(2,983)	(5,872)
Net cash flows from financing activities	(5,303)	(7,037)
Net change in cash	(5,562)	(1,881)

4