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:

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 Gerald Sin, you wrote:

How come the stock price does not move up north for years? Is there any hidden reason/s preventing it from moving up?

Stock prices are determined in the marketplace, where demand meets supply. In a perfect market, the stock price will be a reflection of the market's perception of the stock's future earnings and the confidence investors have that those earnings will be achieved. In reality, however, stock prices may also be affected by other market forces and overall market sentiment, which may be subjective and is typically difficult to gauge.

We are not aware of any hidden reason/s preventing the price of our shares from rising or falling.

Dear Pravin Aggarwal, you wrote:

We are thankful to the management for the excellent performance of the company during the difficult times. There has been considerable improvement in the overall economic conditions in Singapore and globally and this should possibly result in better working for the company in year 2010 provided this optimism is maintained. As things are only expected to improve in the near term based on the current indications, why reduce the dividend from 2 cents to 1.75 cents?

We are encouraged by our steadily improving performance. We believe we have turned the corner, having weathered through the most difficult period of the downturn. Although the strength of economic growth for 2010 remains uncertain, the recovery in 4Q2009 is expected to continue into 1Q2010.

Given the expected steadily improving economic conditions, we will adopt a more expansive business approach. Our strong cash position will enable us to pursue growth opportunities both locally and regionally which may include potential acquisitions, joint ventures or other corporate transactions which will enhance shareholder value. We are mindful that shareholders would like to see immediate returns in the form of dividends. However, we need to balance the desire to reward shareholders with that of investing in growth opportunities. The dividend proposed, in our view, achieves this balance. It takes into consideration factors such as our cash balance and retained earnings, forecasted working capital requirements, expected capital expenditure and future investment needs.

How about company declaring dividends quarterly or at least half yearly as many other companies do so that we have more regular cash flows as shareholders and may also add some value to the market capitalisation of the company with more regular news about the company.

Thanks and regards
Pravin Aggarwal

Thank you for your suggestion.

Since FY04, our Board of Directors has set a benchmark dividend policy to declare and pay annual dividends of at least 30% of our annual net profit after tax, subject to the Group's earnings, cash flow, and capital requirements. Our proposed dividend of 1.75 cents per share for FY2009 is 70% of PATMI with an 8% dividend yield.

We recognise that more frequent dividend payments annually can bring cash flow benefits to shareholders. However, we need to balance this against the cash needs of the business.

We do not wait for dividend announcements to give updates on the company's performance. We regularly update analysts on the developments in the company and we also share significant developments with our investors through press releases and announcements which are posted on our corporate website.

Dear Jayster, you wrote:

What business opportunities are TeleChoice eyeing from the rollout of the Next Generation National Broadband Network in Singapore?

TeleChoice's 3 main business units are working on various opportunities presented by the NGNBN rollout. It would be premature and commercially sensitive to mention any of them at this time.

Dear Corrinne Cheong, you wrote:

The penetration rate of mobile handset in Singapore and in Asia is growing rapidly. I notice that Planet Telecoms don't carry much mobile phone accessories. In fact even most of the shops that sell mobile phone carry little accessories. Usually it is the street vendors that carry the most variety of accessories like pouches, headset and batteries. Sales people are also not bothered to up-sell to handset buyers with offer of accessories bundle.

I believe the margin for mobile phone accessories is high and is a potential catalyst for Planet Telecoms' earnings growth. Most resellers of handset like Planet Telecoms are focused on selling Telco's services and recently handset without contract which has limited growth potential.

I would quote the example of Qian Hu selling fish accessories to complement its core business of selling ornamental fishes. Would Planet Telecoms consider expanding the range of accessories offered?

Thank you for your suggestion of adding handset accessories to our product portfolio. We have and will continue to expand the range of accessories for sale in the Planet Telecoms outlets. Our sales persons have also been trained to up-sell and we will continue to improve on this.

According to ¹ABI Research, the mobile handset accessories market is set to reach US$80 billion by 2012 and we are interested to increase our share of this market. TeleChoice is constantly on the lookout for new, user-friendly, high quality products to complement our range of mobile handsets. We are pleased to inform you that this year, we obtained the master distributorship in 16 countries for Xtreme-DSP Global Pte Ltd's advanced consumer electronic products. The first product to be distributed under this licence is the Vantage VX1, a very high performance Bluetooth headset with dynamic noise cancellation capabilities. We intend to augment our range of handset accessories with high quality, innovative products that will add value to our customers.

Dear Kelvin Sim, you wrote:

I've noticed TeleChoice has a good relationship with StarHub, would this affect relationship with the other 2 telco in Singapore?

We maintain good relationships with the 3 Singapore telcos. While some of our business arrangements with StarHub prevent us from making similar arrangements with the other 2 telcos, we do deal with them on other opportunities.

Emerging Markets like India and Nigeria are tendering out telco licences, has TeleChoice ever considered becoming a telco in these markets considering its experience in servicing local telcos?

While our focus is on regional opportunities, we are always on the lookout for new opportunities even further afield. For all investments, we must ensure that they provide adequate returns and add to shareholder value.

Dear Susan Tan, you wrote:

Rather then paying out generous dividend to shareholders, has the company considered investing in properties or form an investment arm to buy shares of telecom companies that have high dividend yield?

We are always on the lookout for opportunities which will leverage on our existing capabilities and strengthen our Group overall. Having said that, TeleChoice is a regional diversified provider and enabler of innovative communications. Our three divisons offer end-to-end integrated solutions for almost every segment of the telecommunications market. Hence, our core competencies lie in these areas, not in property or in investing. We will, however, continue to work to ensure that shareholder value is enhanced, through growing each of our businesses and seeking out opportunities to achieve this growth.

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

¹ABI Research's Mobile Accessories Market Data, November 10, 2009