TRIS Rating Affirms “BBB” Ratings for “TRUE’s” Company & Senior Secured Debts and “BBB-” Ratings for Senior Debts, with “Stable” Outlook from “Negative”

TRIS Rating Co., Ltd. has affirmed the company rating of True Corporation PLC (TRUE) and the ratings of TRUE’s senior secured debentures at “BBB”. At the same time, TRIS Rating has also affirmed the ratings of TRUE’s senior debentures at “BBB-”. The outlook has been revised to “stable” from “negative”. The ratings reflect the leading position of TRUE as the integrated telecom company; competent management team; and growth prospects of Broadband Internet, wireless technology, and pay-TV segment. These strengths are constrained by the company’s high leverage, fierce competition in core businesses, and uncertainty of telecommunication regulation. The “stable” outlook reflects a significant reduction in refinancing risks after TRUE redeemed most of its US dollar bonds and secured bank supports for 3G 850MHz capital spending. TRIS Rating does not expect TRUE’s debt to capitalization ratio to rise above 80%. TRUE’s credit ratings could be lowered if the company is expected to breach the threshold for an extended period.

TRIS Rating reported that TRUE is Thailand’s leading integrated telecom service provider. The company’s three businesses comprise wireline which is operated by TrueOnline, wireless by TrueMobile (including TrueMove, TrueMove H, and Hutch CDMA brands) and pay-television (pay-TV) by TrueVisions. In the first half of 2011, the three businesses contributed 32%, 55%, and 14% in terms of revenue. TRUE holds a strong position in the Broadband Internet market with a revenue share of 40% and a subscriber share of 36% nationwide at the end of June 2011. Strong Internet market share is underpinned by extensive fixed line network coverage in Greater Bangkok. TRUE’s strong business profile also reflects its positions as the largest pay-TV operator and the third rank mobile phone operator in Thailand. The under-penetrated pay-TV industry and wireless data services are two crucial areas that should support TRUE’s fundamental over the medium term. TRUE’s credit ratings also reflect strong supports from CP Group, the company’s largest shareholder.

TRUE plans to invest aggressively in 3G (third generation) network under its agreements with CAT Telecom PLC (CAT) over the next three years. In terms of business platform, TRUE stands in the best position to capture market appetite for 3G data services. However, it remains uncertain at the moment whether TRUE could execute its plan as expected since the National Broadcasting and Telecommunications Commission (NBTC) is still reviewing certain legal aspects of the company’s deals with CAT. TRIS Rating also notes that TRUE’s first mover advantage on 3G 850MHz is unlikely to be maximized if the auction of 3G 2100MHz licenses arrives early.

TRUE’s financial profile is weak. Its balance sheet is highly levered. Its relatively stable revenues and margins provide a good cash flow visibility. TRUE’s revenue is expected to grow solidly in 2011 due largely to Hutch consolidation. The growth is expected to slow down in 2012 as competitions in core businesses are expected to be more intense. Operating margins is expected to decline by 2%-3% in 2012 due to Hutch’s negative margins and TrueMove’s higher concession rate.

TRUE’s debt-to-capitalization ratio improved slightly after the company raised Bt13 billion from right offering. The ratio stood at 77.9% at the end of June 2011. If TRUE expands its 3G network as planned, its leverage should rise moderately and stay elevated in the medium term. To support future investments, TRUE is expected to raise new debts with an appropriate level of equity injections so as to sustain its capital structure and cash flow protection profiles. The ratings of TRUE’s senior debentures are one notch below the company rating due to a high level of secured debts compared with total assets, said TRIS Rating. -- End

Company Rating: Affirmed at BBB Issue Ratings: TRUE13NA: Bt1,100 million senior debentures due 2013 Affirmed at BBB- TRUE144A: Bt6,183 million senior secured debentures due 2014 Affirmed at BBB TRUE144B: Bt1,800 million senior debentures due 2014 Affirmed at BBB- TRUE151A: Bt7,000 million senior secured debentures due 2015 Affirmed at BBB Rating Outlook: Stable from Negative TRIS Rating Co., Ltd./www.trisrating.com Contact: [email protected], Tel: 0-2231-3011 ext 500/Silom Complex Building, 24th Floor, 191 Silom Road, Bangkok 10500, Thailand 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.