Online Q&A

About TeleChoice International Limited (Regn No. 199802072R)

TeleChoice International Limited ("TeleChoice") is a regional diversified provider and enabler of innovative info-communications products and services. Incorporated in Singapore on 28 April 1998 and listed on the Mainboard of the Singapore Exchange Securities Trading Limited ("SGX-ST") on 25 June 2004, TeleChoice is a subsidiary of leading info-communications group, Singapore Technologies Telemedia Pte Ltd, which operates in the Asia Pacific, the Americas and Europe.

TeleChoice's three business divisions collectively offer a comprehensive suite of services and solutions for the info-communications industry:

Consumer Business Group

Personal Communications Solutions Services ("PCS")

Personal Communications Solutions Services ("PCS") division is a regional provider of fulfilment and managed services. It is in the business of distribution and supply chain management services relating to mobile communication devices, wearables and accessories. In Singapore, it operates a retail chain through two of its subsidiaries, Planet Telecoms (S) Pte Ltd and Planet Managed Services Pte. Ltd. Besides being the only StarHub Ltd ("StarHub") Exclusive Partner to manage five StarHub Platinum shops, it also manages concept stores for major mobile device manufacturers. In addition, it is the appointed master distributor of StarHub's prepaid business. Through its Malaysian subsidiary, it provides retail management, fulfilment and supply chain services to U Mobile Sdn Bhd, Malaysia's fastest growing full-fledged mobile operator that offers data, voice and messaging services. PCS also operates an e-commerce site, www.eplanetworld.com, which boasts of the latest mobile phones and tablets as well as accessories for online shoppers.

Enterprise Business Group

Info-Communications Technology Services ("ICT")

Info-Communications Technology Services ("ICT") division is a leading regional integrated info-communications solutions provider. Its extensive offerings include enterprise IT infrastructure, business solutions and integration services, managed and hosted services, fixed and wireless networking solutions, as well as contact centre and unified communications solutions. It also provides consultancy and managed services to help companies adopt cloud, big data, analytics, IoT (Internet of Things) and smart learning solutions to transform their businesses. ICT also has a unit that offers distribution services for networking and security products. In addition, under the SunPage brand, ICT has a Service Based Operator (SBO) licence that offers IDD, SMS broadcast as well as mobility solutions and services for the consumer and enterprise markets.

Enterprise Business Group

Network Engineering Services ("Engineering")

Network Engineering Services ("Engineering") division is a regional provider of network engineering services and supplier of specialised telecommunications products. It designs, builds and manages telecommunications networks and provides a comprehensive suite of specialised products and cost-effective solutions to address the network infrastructure needs of fixed and mobile operators in the Asia-Pacific. Its services encompass radio network planning and optimisation, transmission network planning, network implementation, maintenance and project management. It also offers an extensive range of innovative and cost-effective products for telecommunications access and coverage needs, as well as for power supply and power backup requirements.

Some of TeleChoice's major customers and partners include StarHub, U Mobile, Indosat, Telkomsel, Maxis, DiGi, IBM, Oracle, HP, SUN, SAP, Avaya, Aruba, Ericsson, L.G, Motorola, Nokia, Samsung, Sony Ericsson, Huawei and NSN.

For more information, please visit our website at www.telechoice.com.sg

Dear DT, you wrote:

Q1.1) For the past few years, company has been declaring good dividend. Will the company continue its dividend policy given the fact that the business trading environment is much tougher than before?

Since FY04, our Board of Directors has set a benchmark dividend policy to declare and pay annual dividends of up to 25-30% of our annual net profit after tax, subject to the Group's earnings, cash flow, and capital requirement. We are proud that TeleChoice has consistently managed to outperform this benchmark.

For FY04, we declared dividends amounting to 51% of our net profit after tax. For FY05, we declared dividends amounting to 63% of our net profit after tax. For FY06, we expect to declare and pay dividends amounting to approximately 66% of our net profit after tax. In 3Q06, we paid an interim dividend of 1.25 cents per share (one-tier tax exempt) amounting to S$5.6M. The Board has recommended a second and final dividend of 1.25 cents per share (one tier tax exempt) for FY06. This proposed final dividend, if approved at the Company's Annual General Meeting to be held on 27 April 2007, will be paid on 21 May 2007.

Going forward, management will continue to seek to maximize value and returns for all shareholders.

Q1.2) May I know what is the company strategy for the long term as well?

We believe there is room to further strengthen Distribution Services which will continue to contribute significantly to our overall operations. We will also be on the lookout for opportunities arising from the convergence of Voice and Data services, and from the regional markets. We intend to leverage fully on the tremendous opportunities offered through the internet, as we bring on-stream more innovative and highly cost-effective services and solutions for our Telecommunications Services and Network Engineering Services customers in Singapore and the region.

Please also see response to Q3.2

Dear Tan Boon Geap, you wrote:

Q2.1) Management plans to distribute 20-30% of their profit as dividend based on FY006, how much dividend are we able to receive for FY2007?

Please see response to Q1.1

Dear Andrew Chia, you wrote:

Q3.1) Telechoice has provided shareholders with a sustainable and excellent dividend yield since it has been listed. A big thank you to the management of Telechoice!

Out of 10, how would you rate Telechoice, as a company deriving your revenue from the 3 different telecommunication business segments, in terms of a future competitive advantage in the growingly competitive telecommunications sector in the next 5 years?

Thank you for your support!

While we believe we occupy leading market positions in our various businesses, our continued success depends on our ability to continually sharpen our competitive edge to stay ahead of the competition, and to exploit new business opportunities.

In FY06, we focused on strengthening our core businesses and taking a disciplined approach to rationalise our regional businesses. We believe TeleChoice is now in a better position to take advantage of opportunities as we forge new platforms for growth.

Distribution Services will continue to contribute significantly to our overall operations and we will be on the lookout for opportunities arising from the convergence of Voice and Data services, and from the regional markets. We also intend to leverage fully on the tremendous opportunities offered through the internet as we bring on-stream more innovative services and solutions for our Telecommunications Services and Network Engineering Services customers in Singapore and the region.

By putting these growth strategies in place, we have laid a strong foundation for our future growth. While some of these strategies and initiatives may not necessarily bear immediate fruits, we believe that over the longer term, they better position TeleChoice to maximise returns for our shareholders.

Q3.2) What are your plans to sharpen your competitive advantage in the three different business segments from now on?

Distribution Services will continue to focus on higher margin opportunities such as the provision of integrated fulfilment and retail management services. We will continue to strengthen our relationships with our principals, vendors, corporate customers and retail customers.

Telecommunications Services is poised to take advantage of opportunities afforded by the convergence of Voice and Data services, and from the regional markets, as we position ourselves to be a major provider of IP solutions and convergence technologies. In FY06, we launched innovative services such as Super Saver Mobile Call, SunPage Budget Roaming, SunPage Budget CallHome, SunPage Internet Call, In October 2006, we expanded into Malaysia with the offering of long distance call and international calling card services through our subsidiary, N-wave Telecoms (Malaysia) Sdn Bhd. We plan to roll-out other innovative telecommunications services in Singapore and around the region.

Network Engineering Services is expected to benefit from growth in Singapore and the region as mobile operators continue to enhance their current 2G networks and to roll out 3G networks. In Dec 2006, we announced our partnership with ip.access to distribute their innovative nanoGSM® products throughout the Asia Pacific region, This is in line with our continuous focus to enhance our product and service offerings and better position us as a valued partner of choice to our customers.

Dear P C Aggarwal, you wrote:

Q4.1) Company reported lower profits during the year 2006 as compared to 2005 but continues to be positive for 2007 - any guidance possible?

TeleChoice crossed the finish line for FY06 with a 3.8% improvement in PBT to S$22.3 million as compared to S$21.5 million in FY05. This was a result of our continued emphasis on re-positioning the Group for higher margin opportunities around the region. The Group's GP and PBT margins increased to 9% and 4.9% respectively. The decrease in FY06 PAT is due to higher tax rates, as compared to FY05.

As disclosed in our FY06 results announcement, and barring unforeseen circumstances, the business outlook for the Group remains positive and we expect to maintain our operating performance for FY07.

Q4.2) Whether the company will face any big threats with expected slowdown in growth in the developed economies and overall global economy?

The outlook for our industry remains bright as technological advances challenge the telecommunications industry and necessitate continued innovations which result in new business opportunities. As disclosed in our FY06 results announcement, and barring unforeseen circumstances, the business outlook for the Group remains positive and we expect to maintain our operating performance for FY07.

Q4.3) How the company is placed for its operations in Singapore and other markets?

Our Group's businesses span different areas of the telecommunications sector, ranging from Distribution Services, Network Engineering Services and Telecommunications Services. We compete with players in all of these segments. Our competitors include both local and international communications products and services providers, covering different segments of the telecommunications industry. We are not aware of any similar competitor, in the markets we operate in, that provides the same range of products and services as we do.

We believe we have consistently performed well, and will continue to sharpen our competitive edge and maintain leading market positions in all our business areas.

Singapore will continue to be an important market for our Group and we expect growth for our three business segments due to opportunities arising from the convergence of Voice and Data services. The implementation of the Wireless@SG WiFi initiative by the Infocomm Development Authority of Singapore is one example where we can leverage on the internet to launch our VoIP services for our Telecommunications Services. The launch of mobile number portability and implementation of 3G networks present good opportunities for our Distribution Services (for mobile handset retail) and Network Engineering Services (for projects awarded by mobile operators for 3G roll-outs).

The outlook for the Malaysia telecommunications sector appears upbeat with the Malaysian government's recent announcement to implement mobile number portability and to issue 4 WiMAX licences in 2007. We started telecommunications services in Malaysia in October 2006, with the offering of long distance call and international calling card services through our subsidiary, N-wave Telecoms (Malaysia) Sdn Bhd. We plan to launch more innovative, value-added telecommunications services.

We will continue to seek new distributorships and fulfillment opportunities for our Distribution Services around the region. For Network Engineering Services, we will continue to expand our customer base in Indonesia, and penetrate new regional markets.

Q5.1) Does Telechoice has a structured way of paying dividends? I noticed that dividend paid does vary a fair bit from 10% to 5%. Are dividends determined and paid solely based on profit and earnings that particular year?

Since FY04, the Board has set a benchmark dividend policy to declare and pay annual dividends of up to 25-30% of our annual net profit after tax, subject to the Group's earnings, cash flow, and capital requirements. We are proud to say that we have consistently managed to outperform this benchmark.

For FY04, we declared dividends amounting to 51% of our net profit after tax. For FY05, we declared dividends amounting to 63% of our net profit after tax.

In 2Q06, we paid the final and special dividend of 2.5 cents per share (one-tier tax exempt) amounting to S$11.2M (declared for FY05). Including the FY06 interim dividend of 1.25 cents per share (one-tier tax exempt) amounting to S$5.6M paid in 3Q06, our total dividend yield for 2006 was 15%*.
* based on closing price of $0.255 per share on 29 December 2006.

Going forward, management will continue to seek to maximize value and returns for all shareholders.

Dear Marcus, you wrote:

Q6.1) For the past two financial years, Telechoice has declared attractive dividend payouts of at least 2.5 cents per share (excl. special dividends). This works out to around $11m each year, which is about 65% of NPAT. The Company has disclosed in its full year announcement that moving forward, it expects to pay out dividends of between 25-30% of NPAT. Is there any reason for the significant change in dividend policy?

[see response to Q.5.1]

Dear David Pooi,, you wrote:

Q7.1) You have commented that the Company expects to declare and pay annual dividend of up to 25-30% of the annual net profit after tax for the foreseeable future. The Company has consistently paying out dividend of more than 50% of net profit after tax for number of years. Are you telling the shareholders that future dividend pay-out will be substantially lower?

Please see response to Q5.1

Dear Investors,

Thank you for all your questions and your interest in TeleChoice International Limited. We have come to the end of this On-Line Q&A session.

We have enjoyed the session and have learnt form your questions. We hope that through the Online Q&A, you have gained better insights to our Company and our operations.

Regards,
The Management Team
TeleChoice International Limited