Bangkok--30 Sep--Fitch Ratings Fitch Ratings has today upgraded Total Access Communication Public Company Limited’s (DTAC) Long-term foreign currency Issuer Default Rating (IDR) to ‘BBB-’ (BBB minus) from ‘BB+’, its National Long-term rating to ‘A+(tha)’ from ‘A(tha)’ and its senior unsecured debenture rating to ‘A+(tha)’ from ‘A(tha)’. At the same time, the agency has affirmed DTAC’s National Short-term rating at ‘F1(tha)’. The rating Outlook on the company is Stable. The rating upgrades reflect DTAC’s further strengthened financial profile and, according to Fitch’s parent-subsidiary methodology, the moderate support linkage to its parent, Telenor of Norway (rated ‘BBB+’/Stable).. DTAC’s EBITDAR grew 17.6% yoy to THB11.6bn in H108, boosted by strong subscriber additions (1.7 mn) and the reduction in regulatory related costs from the implementation of its interconnection (IC) framework. DTAC’s EBITDAR margins also improved to 33.6% in H108 from 30.5% in H107, while adjusted net debt to EBITDAR sharply improved to 1.1x at end-H108 from 1.7x at end-2007 and 2.4x at end-2006. DTAC is Telenor’s largest acquisition in Asia with a current economic interest of 65.5% representing Telenor’s third-largest EBITDA contribution (9.3%) outside Norway in 2007. Telenor also has a high level of board and management control of DTAC with both the chief executive officer and chief financial officer seconded from Telenor. Telenor’s support is generally determined on a case by case basis and there is technically no legal recourse to Telenor. However Fitch’s parent-subsidiary methodology also takes into consideration strategic and operational ties, and the agency views that a moderate level of rating support linkage between Telenor and DTAC does exist, and accordingly the revised ratings on DTAC now factor in a full one-notch uplift. DTAC’s ratings also reflect its strong brand name and market position as Thailand’s second-largest cellular operator. The company improved its nationwide network coverage and defended its market share despite higher tariff competition over the past three years. Meanwhile, the implementation of the IC framework by the Thailand’s National Telecommunication Commission (NTC) since late 2006 has also helped improve the company’s competitive advantage given the reduction in regulatory related costs. Nonetheless, the ratings are constrained by DTAC’s planned high level of capital expenditure to increase its network coverage in provincial areas given ongoing strong demand growth, as well as its planned technology upgrade to 3G platforms which could weaken the company’s financial leverage over the next two to three years. The company intends to roll-out 3G technology based on its existing 850MHz frequency band starting in 2008. In addition, providing it obtains a license, DTAC plans to launch a 2.1GHz based 3G platform in 2009, and hence Fitch’s ratings take into consideration the likely license fee payment of USD100m and network investment costs during 2009-2010. Other principal concerns include ongoing price competition in the cellular market and regulatory uncertainty. The Stable Outlook reflects the agency’s expectation that DTAC should continue to generate solid earnings, as well as maintain its market share and financial leverage consistent with the current credit metrics, despite its large network investments plans for the next 2-3 years. Positive rating triggers include an improvement in EBITDAR margins and a reduction in net debt and financial leverage on a sustained basis. Conversely, negative rating triggers include an unfavourable change in the regulatory structure, a weaker linkage between the company and its parent, and higher than expected investment spending resulting in a significant deterioration in financial leverage on sustained basis. Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable. Contacts: Obboon Thirachit, Bangkok, +662 655 4757; Wasant Polcharoen, Bangkok, +662 655 4763; Matt Jamieson, Seoul, + 82 2 3278 8355; Vincent Milton, Bangkok, +662 655 4759. Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site. Tassanee Mongkolrat Executive Secretary Administration Tel: 662 655 4755 Fax: 662 655 4939 www.fitchratings.com