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Online Q&A

About TeleChoice International Limited (Regn No. 199802072R)

TeleChoice International Limited ("TeleChoice") is a regional diversified provider and enabler of innovative communications. Incorporated in Singapore on 28 April 1998 and listed on the Main-Board 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, whichoperates in the Asia Pacific, the Americas and Europe.

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

Personal Communications Solutions Services division provides distribution, fulfillment and supply chain management services relating to mobile handsets and accessories. It also manages retail distribution through its Planet Telecoms subsidiary.

Telecommunications Services division provides innovative and value-added voice and data services for consumers and enterprises under the 'SunPage' brand, including iDD, Budget MobileCall, Super Saver Mobile Call, Budget Roaming, Budget CallHome, Internet Call, CallBack Services, international Short Messaging Service, Conference bridge, SMS Broadcast, PushMail Services, Paging Location Tracking and Mobile Data Network Services. Enterprise Communication solutions extend to design, implementation and maintenance of PBX, IP Telephony, Unified Communication and Call Centre solutions as well as secured Wireless Local or Wide Area Networks.

Network Engineering Services division offers planning, implementation, optimisation and enhancement of telecommunication networks as well as providing managed outsourcing services for regional telecommunication operators and supplying and distributing specialised telecommunication equipment.

Some of TeleChoice's major customers and principals include StarHub Ltd and PT Indosat Tbk; and Avaya, Aruba, Ericsson, L.G, Motorola, Nokia, Samsung and Sony Ericsson respectively.

Dear Olivia Le Horovitz, you wrote:

I would like to send an e mail to Mr Jackson Tang Yew Kay and was wondering if you could provide me with his e mail address.

We are sorry but we are unable to divulge the personal contact details of our Board members.

Dear Jayster, you wrote:

1. TeleChoice has reduced its final dividend from 2.5 cents for the past 3 years to 2 cents for FY08 despite having a record cash hoard of $43M. Why is this so?

The final dividend recommendation of 2 cents for FY08 by the Board was reached after careful deliberations on the need to balance cash conservation with giving tangible and immediate returns to shareholders. Although we have built healthy cash reserves, the Board is mindful of the need to conserve and to carefully manage the Group's cash resources given the impact of the global credit crunch and the likely prolonged economic crisis. We also recognise that attractively-valued investment opportunities may avail themselves during this period and we should be ready to take advantage of them.

2. What lessons has the management learnt from the failed joint venture in China?

The decision to invest in the joint venture ('JV') in Hong Kong for the China market in 3Q2007 was based on sound financial justification given the market conditions and bullish outlook at that time. Unfortunately, market conditions have unexpectedly changed dramatically since that time. In 4Q2008, we made the decision to terminate our JV agreement with Fortune Telecom Holdings Limited (now known as China Fortune Holdings Limited) ('Fortune') by exercising our Put Option to sell our interest in the JV to Fortune. The decision was prompted by the delay in the fulfilment of a key term of the JV agreement, the novation of the Nokia Fulfilment Agreement, and also by the unexpected prevailing global mobile handset market uncertainty. Our decision enabled us to mitigate operational risks in order to safeguard the Company's and shareholders' longer-term interests. It has also further boosted our cash reserves at a time where a strong cash position is imperative in light of tightening credit lines and the hazy economic horizon.

While we are disappointed that we had to terminate this JV, we believe that it was the prudent and correct action to take. The JV was thus not a failure or mistake in and of itself.

3. Will TeleChoice continue to explore the highly competitive China market or look elsewhere in Asia like Vietnam or Cambodia?

We will continue to be on the lookout for good opportunities particularly during this time when there may be attractive investments to be made. We have not ruled out any country for possible investment opportunities.

Dear Serene Lim, you wrote:

1. Will TeleChoice benefit from the government's wage subsidy and loan guarantee schemes announced during the budget?

We, like other companies, will be entitled to receive a 12% cash grant on the first $2,500 of each month's wages for each employee on our CPF payroll. As for the loan guarantee schemes, TeleChoice does not need access to these schemes at the moment because of our healthy cash position and sufficient bank credit lines. We will review the situation at a later date should circumstances necessitate it.

2. What measures has TeleChoice taken to reduce operating cost given the prolonged recession?

TeleChoice has always exercised thrift in managing our operating expenses. This has enabled us to minimise cost cutting measures to align our expenses with the downturn in the market. Nonetheless, we have taken some measures including a freeze on salaries and new hires, enforced leave, and cutting back on travel and other discretionary expenses. We are also negotiating for reduced rentals for our retail spaces. Additional measures will be taken as and when they become necessary.

Dear Terence Tee, you wrote:

Can the company shed light on how the economic downturn has affected the following:

• Trade Receivables Turnover days
• Inventory Turnover days
• Pricing Power (eg. Customers asking for discount)

The company has a system of controls and policies in place to review and monitor our receivables and inventory to ensure that the turnover days are maintained at an acceptable level. These systems and policies are regularly reviewed to reflect changes in economic and market conditions, changes in customer profile and inventory holding.

The company can expect margins to be squeezed during the economic downturn. As such, we will be taking the necessary measures to manage our costs.

Dear Marcus Ho, you wrote:

1. I've been thinking of buying your company's share due to the attractive dividend yield of about 10% but I am worried about the illiquidity of the counter. What's the company's view on this plaguing issue?

Our company's fundamentals are strong and we have a track record of profitability since inception. Our dividend policy of paying at least 30% of annual net profit after tax makes us an attractive investment. Investors have to decide for themselves the type of returns they are looking for, whether it is capital gains or dividends or both. The volume of our shares traded is not high but share volume is not necessarily indicative of the soundness of an investment.

2. Will the company consider delisting as the company hasn't tapped into the equity market to raise funds since it was listed in 2004? I believe many companies is considering this option as the listing fees far exceeds any benefits derived from a listed status.

We do not see the need to and have no plans to delist.

Dear Sangita P. Aggarwal, you wrote:

Please give us a brief on the prospects of the company and impact of current problems on its business segments. Expectations regarding profitability and some details regarding the performance during the first two and half months of the current year.

The weakened economy is expected to adversely impact our PCS and Telecommunications Services businesses in Singapore which are sensitive to consumer demand. For Network Engineering Services, although our current project order book remains firm, telecommunication operators are expected to reduce their capex and operational spending by scaling down or postponing the execution of planned projects which will likely impact our project pipeline. Nevertheless, the long term prospects for our company are good, given that there are attractive opportunities for growth in the fast changing telecommunications industry. On the consumer front, there will be demand for newer voice and data services while in the enterprise space, there will be an increasing move towards unified communications. There will also be ongoing upgrading of mobile networks in the region and migration to newer transmission networks. All these augur well for the Group.

We are unable to provide a forecast statement on profitability for the upcoming months due to SGX regulations. Nevertheless, as we have previously stated in our FY08 results announcement, based on the prevailing weak global economic conditions and bleak prospects for recovery in 2009, the Group expects 1Q09 operating performance to be weaker than for the same period last year and for FY09 overall to be a difficult year.

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