TRIS Rating Assigns Rating to New Senior Debt of “TRUE” at “BBB-”, Affirms Company & Secured Debt Ratings at “BBB”and Current Senior Debt Rating at “BBB-”, With “Negative” Outlook

TRIS Rating has assigned the rating of “BBB-” to the proposed issue of up to Bt1,800

million in senior debentures of True Corporation PLC (TRUE). At the same time, TRIS Rating

has affirmed TRUE’s company and senior secured debentures ratings at “BBB”, and has also

affirmed TRUE’s current senior debentures rating at “BBB-”. The outlook remains “negative”.

The ratings of the senior debentures are one notch below the company rating due to the

unsecured nature. The ratings reflect the leading position of TRUE as the integrated

telecommunications company in Thailand; competent management team; and growth prospects of

Broadband Internet, wireless technology, and pay-TV segment. These strengths are constrained

by the company’s weak financial profile due to high leverage, fierce competition in core

business segments, uncertainty of the telecommunications regulation, and exposure to

refinancing risk.

The “negative” outlook reflects a heightened level of debt refinancing risk that

TRUE’s subsidiary, TrueMove, will likely be facing in 2013. The risk stems from the

significant size of the debentures approaching maturity compared with TRUE’s cash flow

generations and the uncertainty surrounding TrueMove’s business model if its concession

expires before the 3G licenses are awarded. The ratings could be downgraded over the next 6-

12 months if the company could not demonstrate material confirmations of TrueMove’s business

and financial plans. However, the outlook could be revised back to “stable” if TrueMove

could accomplish the aforementioned conditions or if the market and regulatory environments

evolve favorably in a way that supports TrueMove’s long-term business viability.

TRIS Rating reported that TRUE is Thailand’s leading integrated telecommunications

service provider. The company’s three main businesses comprise wireline which is operated by

TrueOnline, wireless by TrueMove and pay-television (pay-TV) by TrueVisions. In 2010, the

three businesses contributed 35%, 50% and 15% in terms of revenue; and 53%, 34% and 13% in

terms of EBITDA (earnings before interest, tax, depreciation and amortization),

respectively. TRUE holds a strong position in the Broadband Internet market with a revenue

share of 33% nationwide and 66% in Greater Bangkok. TRUE’s competitiveness is strong in this

segment given its fixed line network coverage in Greater Bangkok. Robust prospects of

Broadband Internet and rapid subscriber growth should be able to fully offset declining

fixed-line revenue in the medium term. TRUE’s strong business profile also reflects its

positions as the largest pay-TV operator and the third rank mobile phone operator in

Thailand with subscriber market shares of 50% and 24% nationwide, respectively. The under-

penetrated pay-TV industry and wireless data services are two crucial areas that will

continue to support TRUE’s business fundamental and its credit profile over the medium term.

TRIS Rating said, TRUE, like all other telecom operators, is facing challenges from competitive environment, particularly in the mobile phone sector where market is dynamic and subscribers are price sensitive. Fixed-line and mobile voice-services are already in their maturing stages, resulting in flat or declining revenues. The mobile sector is also negatively weighed by uncertainty in regulatory developments.

TRUE’s financial profile is weak. Its balance sheet is highly levered. However, relatively stable revenues and margins provide a good cash flow visibility in the medium term. TRUE’s revenue (excluding interconnection charge -- IC) is expected to grow at around 3%-4% for the next few years. The growth will be driven by Broadband Internet, mobile data, and pay-TV commercials, but will be partially offset by declining traditional phone and mobile voice services. TRUE’s operating margin has been stable at around 29%-32% for the past three years. The margin is expected to be under pressures from the ongoing business transformation in the online segment and from TrueMove’s higher revenue sharing rates after September 2011 from 25% to 30% of service revenues. At the end of 2010, debt-to-capitalization ratio remained very high at 85.3%. TRUE is exposed to the refinancing risk in 2013. Its debt maturities during 2011-2012 are Bt5.8-Bt5.9 billion per annum, and will jump to Bt21.9 billion in 2013, and Bt17.3 billion in 2014. The higher repayments are largely from TrueMove’s debentures.

TRUE completed the purchase of shares in the Hutchison Group in January 2011. The transaction value was Bt6.3 billion and was financed by bank loan. The deal is expected to extend TRUE’s mobile business life from 2013 to 2025. The acquisition could serve as TrueMove’s post-concession business platform and strengthen its competitiveness in terms of greater data service capacity from the addition of 10 megahertz (MHz) bandwidth in the 850 MHz spectrum. In addition, viable business model after concession could alleviate pressure on TrueMove’s needed debt refinancing in 2013-2014. However, it remains unclear how regulatory challenges surrounding the deal will impact TRUE’s 3G network-rollout spending, which is set at Bt3-Bt4 billion in 2011. TRUE’s current credit profile could not afford further sizable debt financing without a strong case of commensurate bottom-line improvement, said TRIS Rating. -- End

Company Rating: Affirmed at BBB Issue Ratings: TRUE117A: Bt2,413 million senior secured debentures due 2011 Affirmed at BBB TRUE13NA: Bt1,100 million senior debentures due 2013 Affirmed at BBB- TRUE144A: Bt6,183 million senior secured debentures due 2014 Affirmed at BBB TRUE151A: Bt7,000 million senior secured debentures due 2015 Affirmed at BBB Up to Bt1,800 million senior debentures due within 2014 BBB- Rating Outlook: Negative ? Copyright 2011, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information. All methodologies used can be found at http://www.trisrating.com/en/rating_information/rating_criteria.html.