Telechoice has exercised the put option under the agreement dated 4 September 2007 between the company and Fortune to exit the Joint Venture ("JV") by selling to Fortune its 16 million shares in the capital of TeleFortune, which represents 40% of the issued shares in the capital of TeleFortune. The option price payable by Fortune to Telechoice is theaggregate of:

1. HK$49.0 million (after taking into account the option exercise fee of HK$1.0 million payable to Fortune); and

2. 40% of the JV profits for the period from 4 September 2007, the date of completion of the JV, to 31 December 2008, the date on which completion of the Disposal is currently scheduled to take place. The profits can be made as at the date hereof is approximately S$0.901 million (forex RMB/S$ = 4.283).

To-date, the Nokia Fulfillment Agreement ("NFA") has not been novated by Fortune Shanghai to Shanghai TeleFortune and no agreements similar to the NFA have been entered into between Shanghai TeleFortune and Nokia China or its associates, which are conditions to the exercise of the put option. It is not expected that such novation will occur or such agreements will be entered into before the expiry of the exercise period of the put option on 31 December 2008. In view of the foregoing and impending expiry of the put option period, Telechoice has exercised the option to exit the JV.

There is no significant gain or loss is expected from the disposal, neither the change in NTA per share.

1. 4Q results may be exceptionally weaker: While in the past 4Q is the strongest quarter for Telechoice, this trend may no longer be valid for year 2008 given the drastic change in economy that has much affected consumption behavior. The bleak outlook has been deteriorating as the three telcos have cut back the promotion in 4Q after incurring heavy marketing cost since the implementation of mobile number portability (MNP) kicked off in June 2008. As such, we revised down sales in FY08-10 by 5-10%.

2. No profit contribution from the JV FY09 onwards: We trimmed down the contribution of Associate in FY09-10 by approximately S$1-1.7 mil stemming form the termination.

3. Lower profit margin due to higher cost arising from second flagship Starhub store located at Sembawang MRT Station: The new flagship store is not expected to breakeven in near term, thereby putting pressure on its margin. We adjusted down the gross profit margin by about 0.5 ppt in FY08-10.

Potentially lower dividend per share (DPS) this year: The unprecedented change in business environment may warrant the management to rethink their dividend payout this year. While Telechoice has long committed to pay at least 30% of earnings to shareholders, it has historically paid more than 50% since year 2004. Nevertheless, we feel that there are high odds that Telechoice will reduce its payout ratio this year to preserve more cash to weather the current storm. We cut DPS estimates by 0.5-1.0 Sg cts in FY08-13.