Annual Report Samart i-Mobile 2010

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Samart I-Mobile Public Company Limited Industry and Competitive Analysis As year 2010 began on the cautious note, Thai economy was prepared for turnaround in early 2010. The optimism was based mainly on two important assumptions of export growth and tourism. Governmentûs çThai Khemkhangé stimulus did help certain businesses in short term. The long term impact of this stimulus in construction and services sector shall be seen in 2011-2012. To the surprise of most, political stalemate in Bangkok in the first and the second quarter went beyond anybodyûs expectations and confidence in Thai political system was once again in the lime light. The long protests eroded tourist arrivals and business closure affected overall economy. It was expected that these protests would cause slower GDP growth. With immediate settlement on the issues, government was quick to issue financial support package to the affected businesses. As economy entered third quarter, the GDP growth estimates were above everybodyûs expectations. Thai economic growth was at its highest in 15 years and Thai Baht appreciated to the new high since 1997 crisis. The euphoria led to concern on exports due to appreciating currency. As usual, the exports and services sector were key drivers of economic growth. Consumer confidence however remained subdued. Worst flooding in fourth quarter together with lingering political uncertainties did not helped to boost consumer confidence. As the year 2010 is coming to an end, overall economic situation remains healthy with exception of strong fund inflows and fear of asset bubble, Thai economy is poised for moderate growth of 4%-5% in 2011. Global economic situation remained divided. BRIC (Brazil, Russia, India and China) and ASEAN were at the forefront of growth spectrum while US and EU economies were still struggling. The surprise of 2010 was Euro crisis which began with Greek economy and later spread to Spain, Portugal, and Ireland. These so called çPIGSé economies suffered from widening budget deficits and needed massive bailouts. So far in 2010, Greeks and Irish were the recipient of bailouts. Spanish and Portuguese struggled to raised funds at much higher spread over German bund, but, so far have avoided need to bail out. Economic situation in UK was not that different. As a result of economic difficulties, weaker British pound and Euro are here to stay for at least couple of years. A high level effort to set up monetary fund for Europe is underway. US on the other hand struggled with high unemployment rate. QE II and recent tax breaks of $0.9 tn will prove effective only in the short term. The key to US recovery lies in stimulating consumer demand and use weak dollar to boost US exports. With fedûs easing of monetary policy, it is expected that hot money will flow into emerging markets creating asset bubble. On the other hand, weak dollar is main cause of concern to countries with sizable dollar reserves. With Chinese and Indian Central banks buying up gold, prices reached $1400/Oz in 2010. Weaker dollar also promoted rally in commodities such as oil, copper and iron ore, but it will be short lived as demand sustainability is still not visible from here. Japanese economic engine struggled as weak dollar eventually let Yen reaching the levels of 80s not seen in decades. Japanese central bank is trying hard to keep struggling Yen at 83 plus level. Domestic demand, capital expenditure, private investment all were below expectations. With appreciating property prices in China, government used tools to curb property lending and has increased RRR recently. Weaker Yuan became the target of criticisms during G20 summit and as a result China expanded trading band of Yuan. China is playing key role in world economic landscape and with recent instability in Korean peninsula, Chinaûs importance have increased beyond its economic role. In ASEAN however, the economic growth was staler. Indonesia, Vietnam, Malaysia and Singapore reported decent economic growth. As a result of influx of hot money, currencies were on uptrend and became a challenging task for central banks in few countries. In order to reduce exposure to USD, ASEAN member countries have agreed to trade in currencies such as Yuan. Learning from the example of EU zone crisis, ASEAN for the time being had postponed the common currency idea. Region is also keen on boosting up its intra ASEAN trade and trade with China and India. In conclusion, outcome of next years election, socio political harmony, measures to stimulate weaker consumer demand and consistency in investment policies shall be the key barometer for measuring economic stability in 2011. Telecommunication Industry: Services Perspective Thailand with its SIM card penetration of 100% was prepared to auction off 2.1GHz spectrum. However, a legal glitch not only resulted in the cancellation of such auction but, as time window on National Telecom Commission (çNTCé) came to an end, 3G in Thailand now can only happen with the setting up of National Broadcasting and Telecom Commission (çNBTCé). Telephone Organization of Thailand (çTOTé) which earlier launched its first 3G service in December 2009, had limited success mainly due to network constraints. The existing network covers only Bangkok region and TOT currently acts as network provider, 16 Annual Report 2010
letting private operators to acquire subscribers for TOT. This arrangement is called Mobile Virtual Network Operator (çMVNOé) and TOT have currently five MVNO and a subscriber base of 180,000. Mobile operators were focused on non voice applications to enhance their Average Revenue Per User (çARPUé). Latest estimates state that blended ARUP excluding interconnection fees but including the data was around Baht 220 which is at par with the 2009 levels. The data consumption has gone up from previous years as more and more affluent customers are using BlackBerry, iPhone and iPad. Decision by Communication Authority of Thailand (çCATé) to buy Hutch was delayed due to political reasons and fate of Hutch as the operators remains uncertain. As concessions granted by TOT and CAT to existing operators coming to an end soon, new regulator have a dominant task of creating a level playing field, sort out concession related issues and most importantly, allow efficient Mobile Number Portability (çMNPé). With approval from the cabinet, TOT has embarked upon a network rollout plan where by 5,200 base stations shall be deployed nationwide within mid 2012. This will raise the hopes for Thai consumer to finally avail high speed wireless broadband access. Telecommunication Industry: Handset Perspective Demand for mobile handsets in Thailand is likely to be in the neighborhood of 10.5 million for year 2010. Major demand thrust is still coming from low to mid low segment where consumers are changing their older handsets for a new one at lower costs. Feature wise nothing new was added though, on the contrary newer handsets are increasingly similar in looks and features to that of premium segment and are available at the fraction of the costs. Only trade off is the brand name and perhaps after sales services. At the low end of the spectrum, cheapest handset is available for Baht 700- Baht 900 while, high end premium phones could be bought around Baht 25,000. The political stand off in Bangkok was bonanza for handsets with TV tuners and many enjoy watching live events on their handsets cause house brands, Chinese brands and brands from South Korea were successful in stepping up their presence. Wider acceptance of Android based handsets among Thai consumers is encouraging as this OS has proved superior for user friendliness and content usage. Apple iPhone and BlackBerry continued to catch attention as social networking is causing people to stay on line and in touch with their friends. Similarly, with the launch of iPad, a tablet revolution is just around the corner. However, limited 3G coverage is a big hindrance in penetrating these products. It is expected that by end 2011, there will be a boom in handhelds which will take industry to the new level. New Handhelds is perhaps the last nail in the coffin for smart phones! The tablet revolution is here and once Thailand is ready for 3G, it will act as new driving force for the handheld market. TOTûs 3G network shall be the pilot for such devices. Though its off take shall be limited in the initial period, itûs only upon the nationwide 3G rollout by all the operators, handheld industry shall take key role in handset industry. Entertainment and Media Industry The road towards convergence of media, entertainment and telecom industry stalled when 3G auction were put off due to legal issues. Despite the set back, the marriage of media and telecom industry continue to flourish thru increased deployment in broad band usage, more wi-fi spots, etc. The real convergence on a large scale is far from commercial success in Thailand. However, as a first step, Apple iTune platform has been officially launched and consumers can download applications on pay per use basis. Other traditional applications such as video streaming, mobile movie preview, etc. are widely available from traditional mobile operators. A big jump in the content usage is expected as more and more users avail content on wireless networks. User generated content such as You Tube is non existent in Thailand on a wider scale. çEé Books was another application that was launched in Thailand and its acceptance is growing gradually. With launch of Mobile Virtual Network Operators in 2010, these MVNOûs are offering data plans and not the killer content. The current form of online entertainment is linked to fortune telling and information etc. It is expected that killer application on 3G is still non-existent, that day is not far when Thai consumers shall able to enjoy real benefits of convergence between telecom and media industry. Annual Report 2010 17
Page 7 and 8: Contents Message from the Board of
Page 9 and 10: Message from the Executive Committe
Page 11 and 12: 6 7 8 9 6. Mr. Charoenrath Vilailuc
Page 13 and 14: (MB.) 15,000 10,000 11,398 Total Re
Page 15 and 16: young footballers the opportunity t
Page 17 and 18: ➤ Business Structure Samart I-Mob
Page 19 and 20: Information of Subsidiary Companies
Page 21: Changes During the Year The main bu
Page 25 and 26: drinking, and travelling informatio
Page 27 and 28: Shareholders As of December 30, 201
Page 29 and 30: Board of Directors as of December 3
Page 31 and 32: Audit Committee as of December 31,
Page 33 and 34: 5. Act on behalf or in the name of
Page 35 and 36: the Board of Directors of the Compa
Page 37 and 38: sets as policy that all employees s
Page 39 and 40: Summary of Training to management a
Page 41 and 42: Report of the Risk Management Commi
Page 43 and 44: Corporate Governance The Board of D
Page 45 and 46: ë Profit Sharing The Company will
Page 47 and 48: Societies: Environment: The Company
Page 49 and 50: significant error. The Board of Dir
Page 51 and 52: Directors Term of Directorship Numb
Page 53 and 54: 5.7) Internal Control and Internal
Page 55 and 56: 3. Risk management and internal con
Page 57 and 58: Nature of Connected Transactions Re
Page 59 and 60: Transactions of Goods and Services
Page 61 and 62: Financial Analysis and Results of O
Page 63 and 64: Other Current Assets As of December
Page 65 and 66: Report of the Audit Committee To Sh
Page 67 and 68: Financial Statements Samart I-Mobil
Page 69 and 70: Samart I-Mobile Public Company Limi
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Samart I-Mobile Public Company Limi
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Indirect subsidiaries held by the C
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TAS 19 Employee Benefits This accou
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An item of equipment is derecognise
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Allowance for doubtful accounts In
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Movement of the short-term investme
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(Unit: Million Baht) Consolidated f
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(Unit: Baht) Consolidated financial
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(Unit: Baht) Consolidated financial
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14. Investments in subsidiaries Det
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(Unit: Baht) Separate financial sta
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As a result, Samart Multimedia Co.,
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(Unit: Baht) Separate financial sta
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26. Other expenses Details of other
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30. Dividends 2009 Final dividend f
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33. Provident fund The Company, sub
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34.3 Commitments in uncalled portio
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Consolidated financial statements F
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Forward exchange contracts The Comp
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Audit Fee 1. Audit Fee In 2010, the
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Annual Report 2010 111 Name-Surname
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Annual Report 2010 113 Name-Surname
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Annual Report 2010 115 The Position
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General Information Name : Samart I
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