Contents :

• We refer to our announcement dated 12 December 2005 on the Proposed Acquisition of Business and Business Assets of Petrofibre Network (M) Sdn Bhd (“PFN”) by Fiberail Sdn Bhd (“FSB”) (hereinafter referred to as the “Proposed Acquisition”) [Ref No.: TM-051212-63695].
  
  In conjunction thereto, Telekom Malaysia Berhad (“TM”) is pleased to announce that it has on 9 February 2006, entered into the following agreements:-
  
  a) A new Joint Venture Agreement (“JVA”) with Keretapi Tanah Melayu Berhad (“KTMB”) and PFN;
  b) A Put Option Agreement with KTMB and PFN; and
  c) A Call Option Agreement with KTMB.
  
collectively referred to as “Post Acquisition Agreements”.

• TM, KTMB and PFN have entered into a JVA for the purpose of setting out their respective rights, duties and obligations and mutual covenants in and relating to FSB.
  
  The new JVA would replace the existing JVA between TM and KTMB, which was entered into on 1 March 1993.

• The equity participation of each party in the capital of FSB after the new JVA shall be as follows:

• Each party has the right to nominate director(s) to the Board of FSB; three (3) directors to be nominated by TM, two (2) directors to be nominated by KTMB and one (1) director to be nominated by PFN.

• 
  The Put Option Agreement requires TM and KTMB to purchase proportionately in the ratio of 60:40 respectively, at RM8.08 per share, all of PFN’s shareholdings (“Option Shares”) in FSB subject to the terms and conditions stipulated in the Put Option Agreement.
  
  In the event KTMB declines its right to purchase any or all of the Option Shares apportioned to it, TM shall have a right to purchase such amount of Option Shares declined by KTMB.
  
  The Put Option Exercise Period commences one (1) year from 9 February 2006 and ends on the 5th anniversary of that date or thirty (30) days from the date of receipt of notice from FSB of the engagement of the lead advisor for an Initial Public Offering (“IPO”), whichever is the earlier.
  

• Pursuant to the Call Option Agreement, TM grants to KTMB an option to require TM to sell the Option Shares to KTMB, in accordance with the terms of the Call Option Agreement.

• The Call Option may be exercised at any time during the Call Option Period, defined as follows:
  (a) In the case where FSB has appointed the lead advisor for an IPO of the shares in FSB and TM has acquired the Option Shares which have been declined by KTMB pursuant to PFN’s Put Option exercise, the period of one (1) month from the date of registration of the Option Shares in the name of TM or from the date the Put Option was exercised by PFN, whichever is later.
  (b) In any other case, the period of twelve (12) months commencing from the date of registration of the Option Shares in the name of TM.

• The purchase price for the Call Option are as follows:
  a) in the case where the Malaysian Securities Commission ("Commission") has approved the application by FSB for IPO, the IPO price as approved by the Commission; or
  b) in any other case, RM8.08 per Option Share to which is added the financing cost.
  

• Save for the assignment and/or novation of relevant contracts to FSB, which are still pending, all of the conditions to the completion of the Proposed Acquisition have been satisfied.

• The Post Acquisition Agreements will not have any effect on the issued and paid-up share capital and shareholdings of substantial shareholders of TM.

• The Post Acquisition Agreements will not have any material effect on TM Group’s earnings and NTA for the financial year ending 31 December 2006. However, in the medium to long term, the joint venture is expected to contribute positively to the earnings of FSB specifically and TM Group in general.

• The Post Acquisition Agreements are available for inspection at the registered office of TM at Level 51, North Wing, Menara TM, Jalan Pantai Baharu, 50672 Kuala Lumpur during the normal business hours from Mondays to Fridays (except public holidays) for a period of three (3) months from the date of this announcement.