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INTRODUCTION :-

We are pleased to announce that Telekom Malaysia Berhad ("TM") has entered into a Joint Venture Agreement with Pernec Corporation Berhad ("Pernec"), Heitech Padu Sdn Bhd ("Heitech"), and Bank Islam Malaysia Berhad ("BIMB") on 12 May 2000 [hereafter referred to as "the shareholders"] to regulate the relationship of the shareholders and provide the details for the management of the joint venture company known as Perkhidmatan Sistem Elektronik Bersepadu Sdn Bhd ("PSEB").

PSEB undertakes the provision of the following services, namely, the Electronic Delivery of Driver and Vehicle Registration Licensing and Summons Services, Utility Bill Payment, limited to payment of electricity and telephone bills, and Ministry of Health On-Line Information and may include any other or future projects which are similar in nature or otherwise with other ministries or government agency or the private sector.

CORPORATE INFORMATION OF PERKHIDMATAN SISTEM ELEKTRONIK BERSEPADU SDN BHD ("PSEB")

The shareholding structure of PSEB are as follows :-

Shareholders Shareholdings Number of shares of RM1.00 each

TM 15% 150,000
Pernec 51% 510,000
Heitech 15% 150,000
BIMB 19% 190,000
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Total 100% 1,000,000
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The initial authorised share capital of PSEB shall be RM10 Million divided into 10,000,000 ordinary shares of RM1.00 each whilst its issued and paid-up capital shall be RM1,000,000 divided into 1,000,000 ordinary shares of RM1.00 each.

The total number of seven (7) Directors of PSEB shall consist of 4 representatives from Pernec and 1 Director each from TMB, Heitech and BIMB.

RATIONALE FOR THE JOINT VENTURE

Pursuant to Sections 335, 341 and 393 of the Main Board Listing Requirements and Practice Note No 1/2000 on disclosure in relation to internet-related business of e-commerce activities, we wish to inform the Exchange that TM has entered into the Joint Venture Agreement with its partners to participate in the Government's E-Services initiative and further details of information required are as follows:

a) PSEB has been awarded by the Government to act as its Service Provider for electronic transaction, payments and enquiry. A Service Agreement between the Government and PSEB is scheduled to be executed on 23 May 2000. This Joint Venture initiative is expected to leverage and complement other services of TM, particularly in internet and E-commerce activities which has now become the main growth area of the business.

b) The E-Service's project which was initiated by the Government under its EG-MSC Flagship initiative, will initially focus on the electronic delivery of driver and vehicle registration, licensing and summons services, utility bill payments and the Ministry of Health On-Line information. Once the project is proven successful, it will include other services that involve workflow and electronic transactions. To generate more revenue, PSEB will also venture into value-added services related to E-commerce activities.

c) TM's involvement in the E-Sevices through PSEB will benefit all relevant sectors and it will help realise the vision of electronic Government especially in citizen-Government electronic interaction. It also aims to provide various electronic services in an effective, efficient and economic value added manner.

d) PSEB's authorised capital of RM10 million is expected to be fully subscribed by the year 2003 and it has projected a healthy return which is expected to break even in the fourth year of operation. The payback period of this project is seven (7) years and its internal rate of return is expected to be 27%. To ensure continuous growth, PSEB has adopted a gearing policy in the ratio of 70% equity and 30% loan.

e) The source of revenue of PSEB will be derived from transactions and convenience fees, internet advertising, promotion and other value added services in E-commerce, multimedia business, and others. The services provided by PSEB will target the Malaysian public in general and the combined use of internet PC, E-kiosks and interactive voice response (IVR) facilities will adequately cater for the disabled, the elderly and the IT disadvantaged.

f) The contribution of TM in PSEB will mainly be in network and infrastructure provisioning, security and internet access. Pernec on the other hand will contribute towards provisioning of hardware, software & application, peripherals, delivery channel devices and operation and maintenance centres. Heitech will focus on change management, BPR and training, whilst BIMB will act as fund manager and as the acquiring bank.

FINANCIAL EFFECTS

The investment in PSEB is not expected to have any material impact on the consolidated earnings of TM for the current financial year ending 31 December 2000. The said investment is expected to improve TM's Group earnings in the long term.

DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTEREST

In so far as the Directors of TM are aware, none of the Directors nor the substantial shareholders of TM have any interest, whether direct or indirect, in PSEB.