(Translation)

Independent Financial Advisor's Opinion Report on the Amalgamation

Appropriateness of the Exchange Ratio for the Amalgamation

4.1. The Overview of Methodologies Conducted to Evaluate the Appropriate Exchange Ratio

The IFA has conducted the valuation of the Company and DTAC based on the current situation ( As- is or Standalone) and does not incorporate into the projection and valuation any potential synergies that the Company and DTAC may realize from the Amalgamation, using six methodologies as follows:

  1. Discounted Cash Flows Approach (DCF)
  2. Trading Comparable Approach
  3. Precedent Transaction Comparable Approach
  4. Book Value Approach
  5. Volume Weighted Average Price
  6. Research Analysts Consensus

The IFA has considered the appropriateness of each valuation methodology and concluded that DCF is the most appropriate methodology. For each valuation methodology, the IFA has relied on the financial projections of the Company and DTAC to estimate the valuation of each entity and the appropriate range of Exchange Ratio. The details of each methodology with its advantages, disadvantages and limitations are as follows.

  1. Discounted Cash Flows Approach (DCF)
    The DCF approach is an approach used to estimate the enterprise value ( " EV" ) and equity value based upon a company's fundamentals. The EV of a company is obtained by discounting expected cash flows to the firm and equity value can be calculated by subtracting the company' s net interest- bearing debts and non- controlling interests. It is generally used for valuation of a company, whose cash flows is currently positive and can be estimated with some reliability for future periods and where a proxy for risk that can be used to obtain discount rates is available. Since it can incorporate the company' s capabilities in operating its business and various factors such as the business expansion plan, new service development, and operational efficiency improvement, it will reflect the company' s unique business model and management's strategies and visions. Therefore, the DCF approach is an appropriate method for assessing the appropriate Exchange Ratio for the Amalgamation. It is anticipated that there would be no significant change in the Company's and DTAC's business model during the projection. Therefore, DCF can provide intrinsic value based on business fundamental and future earnings capabilities.
  2. Trading Comparable Approach
    The trading comparable approach assumes that the price of each companies' securities reflects the fair value of the company in accordance with market mechanism. In this regard, the valuation of the Company

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Independent Financial Advisor's Opinion Report on the Amalgamation

and DTAC will be based on the comparison of relevant multiples of companies with the same or similar businesses being traded on the SET and other stock exchanges. There are many publicly traded telecommunications companies on the SET and other stock exchanges. Nevertheless, trading multiples of comparable companies' securities may be affected by different market conditions and investor perceptions, and the comparable companies are different in many aspects; for example, different business environment of each company, impacts of macroeconomic factors, size and development of the stock market, or trends of telecommunications business in each country. As a result, none of trading companies can be said to be a perfect comparable. Therefore, the trading comparable approach may not be an appropriate method for assessing the appropriate Exchange Ratio for the Amalgamation.

  1. Precedent Transaction Comparable Approach
    The precedent transaction comparable approach is used to value a company by comparing the Amalgamation to precedent comparable transactions in the telecommunications industry. However, the valuation of each transaction is driven by various factors which are specific to each company and each transaction, such as proportion of shares purchased, ability to obtain controlling stake, negotiation between each party and expected synergies. Moreover, most of the precedent transactions are acquisitions, not amalgamations, which are not directly comparable. Therefore, the precedent transaction comparable approach may not be an appropriate method for assessing the appropriate Exchange Ratio for the Amalgamation.
  2. Book Value Approach
    The book value approach is a valuation methodology which is based on the book value (equity attributable to owners of the parent) as reported on the financial statement. However, this method considers the accounting value of a company' s equity at a certain point in time with the lack of consideration for future business performance, economic condition, industry trends, as well as the fair value of assets and liabilities. Therefore, the book value approach may not be an appropriate method for assessing the appropriate Exchange Ratio for the Amalgamation.
  3. Volume Weighted Average Price

The trading price in the secondary market reflects the demand and supply of a company' s shares in the market. The IFA has considered the Volume Weighted Average Price ( " VWAP" ) of the Company as of November 19, 2021, which is the last trading day prior to the publication of the Company's Board of Directors' resolutions regarding the potential Amalgamation between the Company and DTAC, using previous 1-day,15-day,30-day,60-day,90-day,180-day, and 365-day intervals. However, trading prices in the market may be affected by market conditions and investor perceptions. Thus, the market value may not reflect the fair value of a company. Therefore, the VWAP approach may not be an appropriate method for assessing the appropriate Exchange Ratio for the Amalgamation.

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(Translation)

Independent Financial Advisor's Opinion Report on the Amalgamation

4.1.6 Research Analysts Consensus

The IFA has considered the fair value estimations from various research analysts in evaluating the fair price of the Company and DTAC, which are derived from collating several public research analysts' target prices for the Company and DTAC, published shortly before the publication of the Company's Board of Directors' resolutions regarding the potential amalgamation between the Company and DTAC ( October 1 to November 19, 2021) . However, each research analysts may have differents target price determination process and an inability to completely reflect the Company and DTAC' s future business plan. Therefore, the comparison of values of the target stock assessed by research analysts may not be an appropriate method for assessing the appropriate Exchange Ratio for the Amalgamation.

4.2. Financial Projections of the Company

4.2.1 Revenue by Segments of the Company

IFA has conducted an analysis on the Company' s business plan and the past performance of each segments, as well as other telecommunications companies' business plans, operating results, and important operating figures, such as the number of subscribers and ARPU. The revenue forecast by segments are as follows:

  1. Revenue from Mobile Phone Services of the Company

CAGR

CAGR

Unit: THB bn.

19A

20A

21A

22F

23F

24F

25F

26F

30F

(22F-

(26F-

26F)

30F)

Mobile phone

73.0

75.8

75.4

80.8

86.5

89.1

91.8

94.6

106.6

4.0%

3.0%

services revenue

Growth rate

6.3%

3.8%

(0.5%)

7.1%

7.1%

3.0%

3.0%

3.0%

3.0%

n.a.

n.a.

Revenue from mobile phone services is affected by two major factors, namely ( 1) number of subscribers and (2) ARPU

Number of Subscribers

Unit: mm

CAGR

CAGR

19A

20A

21A

22F

23F

24F

25F

26F

30F

(22F-

(26F-

subscribers

26F)

30F)

Subscribers(1)

29.1

29.4

30.4

31.0

31.6

32.2

32.9

33.5

36.3

2.0%

2.0%

Growth rate

5.8%

0.9%

3.4%

2.0%

2.0%

2.0%

2.0%

2.0%

2.0%

n.a.

n.a.

Remark: (1) historical mobile phone subscribers is calculated by dividing revenue from the mobile phone service business, in voice service and nonvoice service segments, by reported ARPU for the period, where ARPU is the average of both prepaid and postpaid subscribers

The IFA forecasts net mobile phone subscribers growth rate of 2.0% p.a. during 2022 - 2030, based on the average growth rate of Thailand' s mobile phone subscribers assessed by World Cellular Information Series (WCIS), which is in line with the Company's management's estimates.

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Independent Financial Advisor's Opinion Report on the Amalgamation

ARPU

CAGR

CAGR

Unit: THB / month

19A

20A

21A

22F

23F

24F

25F

26F

30F

(22F-

(26F-

26F)

30F)

ARPU

209.0

215.0

207.0

217.4

228.2

230.5

232.8

235.1

244.7

2.0%

1.0%

Growth rate

0.5%

2.9%

(3.7%)

5.0%

5.0%

1.0%

1.0%

1.0%

1.0%

n.a.

n.a.

In 2022 and 2023, the IFA forecasts ARPU growth rate of 5.0% p.a. after the Company has fully launched and ramped up its 5G service in 2022, as more subscribers will migrate to the 5G network.

After 2023, ARPU growth rate is expected to decrease to 1.0% p.a., as no new network technologies for mobile phone service are anticipated to be launched during the projection period, based on Thailand' s projected ARPU growth according to FitchSolutions.

  1. Revenue from Broadband Internet Services

CAGR

CAGR

Unit: THB bn.

19A

20A

21A

22F

23F

24F

25F

26F

30F

(22F-

(26F-

26F)

30F)

Broadband internet

25.9

27.1

29.5

32.1

35.0

38.1

41.1

43.9

52.2

8.1%

4.4%

services revenue

Growth rate

0.7%

4.6%

8.9%

8.9%

8.9%

8.9%

7.9%

6.9%

2.9%

n.a.

n.a.

During 2022 to 2024, the IFA forecasts revenue from broadband internet services growth rate of 8.9% p.a., based on the Thailand's projected broadband internet industry growth by GlobalData.

After 2024, the growth rate is expected to slow by 1.0% p.a., reaching 2.9% in 2030, which is in line with Thailand's long-term GDP growth rate of approximately 3.0% from the International Monetary Fund ("IMF").

  1. Revenue from True Visions Services

CAGR

CAGR

Unit: THB bn.

19A

20A

21A

22F

23F

24F

25F

26F

30F

(22F-

(26F-

26F)

30F)

Subscription and

installation

7.6

7.0

5.8

5.5

5.2

4.9

4.7

4.5

3.6

(5.1%)

(5.1%)

revenue

Growth rate

(4.8%)

(8.8%)

(17.0%)

(5.1%)

(5.1%)

(5.1%)

(5.1%)

(5.1%)

(5.1%)

n.a.

n.a.

Others services

4.4

3.7

4.1

4.1

4.2

4.3

4.4

4.5

4.8

2.0%

2.0%

revenue(1)

Growth rate

(16.6%)

(15.6%)

9.9%

2.0%

2.0%

2.0%

2.0%

2.0%

2.0%

n.a.

n.a.

Remarks: (1) Others services revenue comprises of entertainment, sponsorship, advertising and other revenues

Revenue from True Visions Services comprises of (1) subscription and installation revenue and (2) others services revenue.

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Independent Financial Advisor's Opinion Report on the Amalgamation

Based on changing consumer behavior towards viewing more contents via the internet ( or over- the- top platform) , which is in line with the Company' s management' s view, the IFA forecasts revenue from subscription and installation to have a negative growth rate of (5.1)% p.a. during 2022 - 2030, which is based on the Company's historical average growth rate during 2018 - 2020.

Nonetheless, revenue from other services has been positively affected by the increasing number of partners and high- quality content aggregated from exclusive content licensing and in- house production that match with changing consumers' behavior; and the resuming of entertainment and event activities after the impact from the Covid- 19 pandemic has been alleviated. The IFA forecasts revenue from other services growth rate of 2.0% p.a during 2022 - 2030, which is based on Thailand's historical inflation according to the IMF and is in line with the Company's management's view.

4.2.2

Other Operating Revenue of the Company

CAGR

CAGR

Unit: THB bn.

19A

20A

21A

22F

23F

24F

25F

26F

30F

(22F-

(26F-

26F)

30F)

Other operating

52.1

47.6

49.1

50.0

51.0

52.1

53.1

54.2

58.6

2.0%

2.0%

revenue

Growth rate

(40.9%)

(8.6%)

3.0%

2.0%

2.0%

2.0%

2.0%

2.0%

2.0%

n.a.

n.a.

Other operating revenue of the Company includes revenue from sales of products, such as mobile phone

and other electronic devices, interconnection revenue, and network rental revenue etc. The IFA forecasts

other operating revenue growth rate of 2. 0%

p. a.

during 2022 - 2030, which is in line with Thailand' s

historical inflation according to the IMF.

4.2.3

EBITDA of the Company

Cost of Providing Services and Cost of Sales ( " COGS" ) ( Before Depreciation and Amortization)

to Total

Operating Revenue Ratio

COGS of the Company includes cost of providing services, cost of sales, regulatory cost and

interconnection cost, etc.

Unit: %

19A

20A

21A

22F

23F

24F

25F

26F

30F

COGS to Total

Operating Revenue

(59.4%)

(47.4%)

(46.4%)

(45.4%)

(45.0%)

(44.9%)

(44.7%)

(44.6%)

(44.2%)

ratio(1)

Remark (1) COGS before depreciation and amortization

Historically, COGS to Total Operating Revenue ratio of the Company continuously decline due to cost optimization measures and increased productivity of the Company, as well as decreased lease expense from the adoption of new accounting standard, TFRS 16, since 2020. As a result, cost of providing services and interconnection cost of the Company has decreased continuously during 2019 - 2021.

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True Corporation pcl published this content on 18 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 March 2022 12:22:04 UTC.