Contents :

• Telekom Malaysia Berhad ("TM") wishes to announce that its wholly-owned subsidiary, Celcom (Malaysia) Berhad ("Celcom"), had presented a petition for the proposed capital repayment pursuant to Sections 60, 62 and 64 of the Companies Act 1965.

• Celcom proposes:
  
  (1) To reduce the issued and paid up capital of RM2,357,208,918 comprising 2,357,208,918 ordinary shares of RM1.00 each by RM589,302,230 to RM1,767,906,688 comprising 2,357,208,918 ordinary shares of 75.0 sen each representing a capital reduction of 25.0 sen for every existing ordinary share of RM1.00 each. In effecting the said reduction, the fractional sum of 50.0 sen of the paid-up capital shall be disregarded.
  
  (2) To cancel and utilise Celcom's Share Premium Account in the sum of RM110,697,770.
  
  (hereinafter both amounts of RM589,302,230 and RM110,697,770 totalling RM700,000,000 shall be collectively referred to as the "Distribution Sum").
  
  (3) To consolidate the issued and paid up capital of RM1,767,906,688 on the basis of every one(1) share of 75.0 sen each into one(1) ordinary share of RM1.00 each, thereby consolidating 2,357,208,918 shares of 75.0 sen each into 1,767,906,688 ordinary shares of RM1.00 each credited as fully paid up.
  
  (4) To distribute the Distribution Sum to Telekom Enterprise Sdn Bhd (“TESB”) whose name appear in the Record of Depositors as the sole registered shareholder of Celcom at the date of book closure, which date shall be determined by the Company Secretary. ("Proposed Capital Repayment").

• After taking into account the future operating requirements and financial obligations of Celcom, the Board of Directors is of the view that Celcom has a capital base that is in excess of future operating requirements and financial obligations of Celcom. Accordingly, the Board of Directors believes that Celcom is in a position to return part of the shareholder's investment in Celcom, having taken into consideration the best interest of TM Group going forward.
  
  The Distribution Sum will allow TM to finance its capital requirements and/or future expansion of its investments, and thus allow TM to fully maximize the use of cash within the TM Group.
  

• The Proposed Capital Repayment is not expected to have any material effect on the earnings and net tangible assets of TM Group for the year ending 31 December 2006.

• The Proposed Capital Repayment is subject to the approvals of:

• (a) the High Court, pursuant to Sections 60 and 64 of the Companies Act, 1965; and

• (b) the lenders of the RM650 million Syndicated Term Loan and holders of the RM1.1 billion Al-Bai' Bithaman Ajil Bonds, which were obtained on 13 July 2006 and 25 July 2006 respectively.

  Two (2) major creditors namely our wholly owned subsidiaries held via Celcom, Celcom Mobile Sdn Bhd and Celcom Transmission (M) Sdn Bhd, have given their written consent to the Proposed Capital Repayment on 17 August 2006.

• None of the Directors and Substantial Shareholders of TM or persons connected with them has any interest, direct or indirect, in the Proposed Capital Repayment.

• On behalf of the Board of Directors of TM, TM’s Group Chief Executive Officer, after careful deliberation, is of the opinion that the Proposed Capital Repayment is in the best interest of TM Group.
  

• Barring unforeseen circumstances, the Proposed Capital Repayment is expected to be completed within three (3) months from the date of this announcement.