Contents :

• On behalf of TM, Commerce International Merchant Bankers Berhad ("CIMB") is pleased to announce that TM International, Khazanah and SunShare Investments Ltd ("SunShare") have entered into a Joint Venture and Shareholders' Agreement ("JV Agreement") on 17 August 2005 with SunShare as the joint venture company for the proposed acquisition of shares in M1.

• 2.1 SunShare is a company incorporated in Labuan under the Offshore Companies Act 1990. On the date of the signing of the JV Agreement, the issued share capital of SunShare comprises 10 ordinary shares of USD1.00 each, of which TM International holds eight (8) shares while Khazanah holds the remaining two (2) shares.
  
  2.2 Under the JV Agreement, TM International and Khazanah agreed that upon receipt of the approval from the Info-Communications Development Authority of Singapore ("IDA") as set out in Section 3.3(ii)(c) below or on a date to be agreed, they shall increase the issued share capital of SunShare through the issue of ordinary shares and/or preference shares to reflect an economic interest of 51% : 49% between TM International and Khazanah in SunShare.

• • • The other salient terms and conditions of the JV Agreement are as follows:
    • (i) SunShare shall operate as a special purpose vehicle for the acquisition of M1 shares and to hold the investments of TM International and Khazanah in M1 ("Business");
      
      
      (ii) To the extent there are sufficient profits, SunShare will declare dividends to its shareholders at least annually after sufficient earnings have been set aside to satisfy the working capital requirements and capital expenditure of SunShare. Upon the increase of the issued share capital of SunShare as set out in Section 2.2 above, any declaration of dividends shall reflect the economic interest of TM International and Khazanah in SunShare of 51% : 49%;
      
      (iii) If TM International and Khazanah are unable to agree upon the resolution of any matter:
    • • • (a) they shall mutually agree that the matter shall not proceed;
          
          (b) either of them may refer the matter to arbitration in accordance with the Arbitration Act 1952; or
          
          (c) either of them may opt to serve notice on the other shareholder where each shareholder shall have the right to bid for the purchase of all of the ordinary shares and preference shares, if any, held by the other shareholder at a price to be paid in cash. The shareholder who deposits a bid with the highest price shall be bound to purchase, and the other shareholder shall be bound to sell, the ordinary shares and preference shares, if any, at the price stated in the bid ("Sell-Out"); and
    • (iv) If an event of default, more particularly set out in the JV Agreement, takes place, the shareholder which is not in default shall be entitled to invoke the Sell-Out provisions set out in paragraph (iii)(c) above.
    • The JV Agreement also sets out the relationship of TM International and Khazanah as shareholders of SunShare on matters including but not limited to transfer restrictions on the shareholdings of the parties, composition of the Board of Directors of SunShare and matters requiring the approvals of the shareholders and Board of Directors.
  2.3 Other Salient Terms of the JV Agreement
  

• 3.1 On 17 August 2005, SunShare entered into a Sale and Purchase Agreement ("SPA") with Great Eastern Telecommunications Ltd ("GET") for the acquisition by SunShare of 118,526,670 fully paid ordinary shares of Singapore Dollar ("SGD") 0.20 each in M1, ("Sale Shares"), representing approximately 12.06% of the issued and paid-up capital of M1, from GET for a consideration of SGD260.8 million (approximately RM592.0 million at an exchange rate of SGD1 : RM2.27) ("Proposed Acquisition").
  
  3.2 As at 17 August 2005, SunShare owns 48,861,000 M1 shares or approximately 4.97% of M1 shares. In addition, SunShare has acquired a further 6,597,000 M1 shares or approximately 0.67% of M1 shares on 17 August 2005. Upon the completion of the Proposed Acquisition, SunShare will hold 173,984,670 M1 shares or approximately 17.70% equity interest in M1 for a total consideration of SGD377.2 million (approximately RM856.2 million at an exchange rate of SGD1 : RM2.27).
  

• • • • • The purchase price for the Proposed Acquisition of SGD260.8 million ("Purchase Price") was determined after taking into consideration the following:
          
          (a) profit before taxation of M1 based on its audited financial statements for the year ended 31 December 2004 of SGD183.591 million;
          
          (b) audited net tangible assets ("NTA") of M1 as at 31 December 2004 of SGD304.954 million; and
          
          (c) a reasonable premium over the prevailing market price of M1 shares. M1 share price closed at SGD2.08 on 16 August 2005.The Purchase Price shall be paid in cash on the completion date of the Proposed Acquisition.
    • • • The other salient terms of the SPA are as follows:
          
          (a) SunShare shall purchase the Sale Shares together with all rights and benefits attached as at the date of the SPA, including all dividends, rights and other distributions which may be declared, paid or made by M1 on or after the date of the SPA, but excluding the dividends announced by M1 on 19 July 2005;
          
          (b) SunShare shall purchase the Sale Shares free from any claims, trust arrangement or encumbrances;
          
          (c) The completion of the Proposed Acquisition is conditional on the approval of the IDA being obtained, subject to conditions imposed by the IDA, if any, being satisfactory to SunShare ("Condition");
          
          (d) SunShare undertakes to use its best endeavours to procure the fulfillment of the Condition by 31 December 2005. If the Condition is not fulfilled by then, or such other date to be agreed, the Proposed Acquisition will not proceed; and
          
          (e) Completion of the Proposed Acquisition shall take place seven (7) business days after the Condition has been fulfilled.
  
  (i) Purchase Price
  
  (ii) Other Salient Terms of the SPA

• • • SunShare will fund the purchase price for the Proposed Acquisition of SGD260.8 million through an injection of capital by its shareholders and/or borrowings, the breakdown of which has yet to be determined.
      
    • 
      Except for the purchase price to be paid under the Proposed Acquisition, there are no liabilities to be assumed by SunShare.
      
      
  3.4 Source of Funds
  3.5 Liabilities to be Assumed

• M1 was incorporated in the Republic of Singapore as Shineberg Investments Pte Ltd on 7 November 1992. The name was changed to Steamers Telecoms Overseas in 1993 and to MobileOne Ltd in 1994. As at 30 June 2005, M1's authorised share capital is SGD600,000,000, while its issued and paid-up share capital is SGD196,630,596, comprising 983,152,980 shares of SGD0.20 each.
  
  The principal activities of the M1 group are the provision of mobile telecommunication services, international call services, mobile retail sales, after-sales support, customer services, research and development of mobile telecommunication products and services and investment holding function. M1 was listed on the Singapore Exchange on 4 December 2002.
  
  
  M1's mobile services comprise a range of voice, non-voice and value-added services provided on its nationwide dualband GSM900/1800 network enhanced with General Packet Radio Services ("GPRS") capability to support data services.
  
  M1 has been innovative in the development of its products. Among its successes are the first operator to commercially launch 3G service plans in Singapore; first video call price plan with the launch of 3G; the launch of POINT, the first music recognition service; and the launch of Singapore's first MMS service for prepaid cards.
  
  In addition, M1 recently obtained four (4) lots of Wireless Broadband Access ("WBA") spectrums in the 2.5 GHz band from the IDA.
  
  M1 has extensive distribution access to consumers and businesses in Singapore through the combination of its own network of shops, corporate sales force and dealers. As at 30 June 2005, M1 had a total of 1.239 million customers, with an overall share of Singapore mobile services market of approximately 30%. The number of customers on 3G was about 5,400.
  
  The following table sets out the financial highlights of M1 for the past four (4) financial years based on information made publicly available after its listing on the Singapore Exchange:
  

• GET was incorporated in the Cayman Islands under the Companies Law (Revised) on 7th July 1993.
  
  GET is a joint venture between Britain's Cable and Wireless plc (which holds 51% of the share capital of GET) and Hong Kong's PCCW Limited (which holds 49% of the share capital of GET). Its principal activity is to act as a holding company.
  
  

• Khazanah is the investment holding arm of the Government of Malaysia. Its role is to hold and manage the commercial assets held by the Government of Malaysia and to undertake strategic investments. Khazanah was incorporated under the Companies Act, 1965 on 3 September 1993 as a public limited company and commenced operations a year later. Save for one (1) share owned by Pesuruhjaya Tanah Persekutuan (the Federal Land Commissioner), all the share capital of Khazanah is owned by the Minister of Finance Incorporated, a corporate body incorporated pursuant to the Minister of Finance (Incorporation) Act, 1957.
  
  
  Khazanah has 11 principal subsidiaries and 16 principal associated companies. These companies are involved in various sectors such as banking, semiconductor, steel production, airport management, automobile and motorcycle manufacture, power, broadcasting, infrastructure, investment holding, port development and management, shipping, property, electronics, telecommunications, research technology and venture capital.
  
  

• The acquisition of the shares in M1 is in line with TM's regional expansion plan. It allows TM to expand its regional footprint in South East Asia, where it has already made several key strategic investments. TM replaces GET as the strategic telco shareholder in M1.
  
  Singapore is an affluent and stable mobile market. M1 represents a good investment opportunity for TM given M1's strong presence in Singapore with good customer recognition and brand positioning. It has approximately a 30% share of the Singapore mobile services market with about 1.2 million subscribers.
  
  M1 currently has regional access through the mobile operator alliance it formed, the Asia Mobility Initiative ("AMI"). TM International and Celcom recently became members of the AMI. The other members of AMI include Australia's Telstra, Philippine's Smart, Thailand's DTAC and Macau's CTM. The AMI provides subscribers with the same standards of seamless and reliable data communications they enjoy with voice calls when traveling abroad. M1's regional reach will widen with the Proposed Acquisition as it will have access to TM's regional investments, which offer greater connectivity and opportunities.
  
  M1 has a successful track record of delivering advanced wireless data products and services. With the Proposed Acquisition, both M1 and TM International would be able to explore potential areas of cooperation with M1's operational experience and product innovation, and TM International's regional presence and scale.
  
  As shown in Section 4, M1's revenue and profits after taxation have been on an upward trend, with compounded annual growth rates of 5.3% and 15.4% respectively over the past four (4) financial years. M1 recorded a revenue of SGD747.1 million and profits after taxation of SGD154.6 million for the year ended 31 December 2004. M1 is also one (1) of the highest yielding mobile assets in the South East Asia region, with a dividend yield of approximately 5.2% for the year ended 31 December 2004.
  

• • • 
      The Joint Venture and Proposed Acquisition will not have any effect on the issued and paid-up share capital and shareholdings of substantial shareholders of TM as they will be satisfied entirely in cash.
      
  The effects of the Joint Venture and Proposed Acquisition on the TM group are as follows:
  
  8.1 Share capital and shareholdings of substantial shareholders

• • • 
      The Joint Venture and Proposed Acquisition will not have any material effect on the NTA of the TM group.
      

• • • 
      The Joint Venture and Proposed Acquisition are not expected to have a material effect on the earnings of TM for the financial year ending 31 December 2005. However, the Joint Venture and Proposed Acquisition are expected to contribute positively to the future earnings of TM. TM International will be entitled to its share of any dividend which may be paid by M1 to SunShare. Since its listing on the Singapore Exchange in 2002, M1 had declared dividends ranging from SGD0.073 to SGD0.107 per share per year. For the year 2005, M1 has declared an interim tax exempt dividend of SGD0.05 per share.
      

• The Joint Venture and Proposed Acquisition are subject to the following approvals:

• (i) Bank Negara Malaysia for the Joint Venture, which was obtained on 17 August 2005; and
  
  (ii) IDA for the Proposed Acquisition.

• • • • • Singapore is a highly affluent and stable mobile market. As of 30 June 2005, total mobile phone subscriptions amount to approximately 4.1 million, representing approximately 96.2% penetration. Singapore's annual gross domestic product ("GDP") per capita (adjusted for purchasing power parity) of USD30,960, makes it one of the highest GDP per capita countries in Asia.
          
          Singapore is also one of the most advanced and developed mobile markets globally in terms of data and non-voice services. Total number of short messaging service ("SMS") messages (2G and 3G) in Singapore amounted to approximately 673.23 million messages in the month of June 2005. Singapore was also voted first in terms of Network Readiness ahead of the US, Hong Kong and the UK by the World Economic Forum's Networked Readiness Index, 2004-2005. 3G services were recently launched in Singapore.
          
          The prospects for Singapore's telecommunications industry is tied to its vision of becoming a vibrant and dynamic global information and communications technology (infocomm) capital. Infocomm 21, released in December 2000, is Singapore's five (5)-year strategic plan for harnessing infocomm technologies to boost its national competitiveness and improve the quality of life of its citizenry.
          
          Under the framework, the government had identified six (6) strategic thrusts by which Singapore was to achieve and maintain its leading status. These thrusts comprised of promoting Singapore as a premier infocomm hub, leveraging on IT to power the private sector for business, leveraging on IT to power the public sector, making IT part of its citizens' life, promoting Singapore as the capital for infocomm talent, and creating an environment which was supportive of business and consumers.
          
          
          These strategic thrusts deeply entwine the telecommunications industry with the development plans of Singapore. The IDA has stated its support in providing the necessary resources for enhancing the competitiveness of the infocomm sector; both at the firm level and industry cluster level. In the long run, the IDA intends to spur innovation among local infocomm companies by way of emphasizing the development of an infocomm-savvy society who are able to make sophisticated demands on the industry.
          
          (Sources: Infocomm Development Authority of Singapore, and Economist Intelligence Unit)
          
      (i) Prospects of the Industry
      
    • • • M1 is a strong and stable operator in a technologically advanced market. It has established a strong presence in Singapore with good customer recognition and brand positioning. Since its listing in December 2002, M1 has achieved and maintained a share of about 30% of Singapore's mobile services market. M1 also has a track record of good financial performance in addition to being renowned for its operational and technical excellence. TM believes that with these traits, M1 will continue to perform well in the future under its current management team.
          
  (ii) Prospects of M1
  10.2 Risk Factors

• • • The risk factors (which may not be exhaustive) pertaining to the Proposed Acquisition are set out below:

• • • • • M1 operates predominantly in Singapore and is subject to the standard operating risks of this market. These could include political risk, regulatory risk and foreign currency risk. TM does not believe that the risks that M1 faces in Singapore is any different from other companies in the market. TM also believes that the acquisition of a company with a strong management team will help mitigate any country risk factors.
  (i) Acquisition Risk
  

• • • • • A weakening/strengthening of the Singapore Dollar may impact the value of TM's investment in M1, or any cash inflows to be received by TM from M1 through SunShare. Hence there is no assurance that the future foreign exchange fluctuations will not adversely affect TM's investment in M1.
    • • • 
          As the acquisition of M1 is a foreign investment in Singapore, the said investment will be subject to the policies of the Government of Singapore on foreign investment.
          
          In addition, the ability of SunShare to repatriate the dividends arising from its investment in Singapore will depend largely on the relevant legislation relating to repatriation of dividends prevailing at the point of repatriation. There can be no assurance that any change to these policies will not materially affect the rights or performance of M1.
          
          However, TM has sought and will continue to seek professional advice in order to minimise such risk.
    • • • The market for mobile telecommunications services in Singapore is competitive. M1 faces competition from other mobile service providers, such as SingTel and StarHub Mobile, in its core mobile communications business. However, M1 has established itself as an innovative mobile operator and has adopted a series of differentiation strategies in order to address the competition. Among these strategies include Singapore's first video call price plan and prepaid card with free incoming calls in 2005; Singapore's first music recognition service, first wireless image search for mobile phones and first direct dial for roaming prepaid customers in 2004; and Singapore's first sports news service on MMS and first MMS service for prepaid cards in 2003.
          
    • • • The mobile telecommunications industry is characterised by rapid and significant changes in technology. Currently, M1 is viewed as a leader in Singapore for wireless data products and services. However, it is possible that future development or application of new or alternative technologies could require changes to M1's business model or necessitate new investments.
          
  (ii) Fluctuations in Exchange Rate(iii) Foreign Investment(iv) Competition
  (v) Rapid technology change
  

• Save for the following:
  
  (i) Khazanah, being a substantial shareholder of TM, holding 35.16% of the issued and paid-up share capital of TM;
  
  (ii) Dato' Azman Mokhtar who is a Director of TM nominated by Khazanah; and
  
  (iii) Dato' Haji Abd. Rahim Haji Abdul who is a Director of TM nominated by Minister of Finance Incorporated, the holding company of Khazanah, and his alternate Mohammad Zanudin Ahmad Rasidi,

• none of the Directors and/or substantial shareholders of TM and persons connected to the Directors and/or substantial shareholders of TM have any interest, direct or indirect, in the Joint Venture and Proposed Acquisitions.
  
  Dato' Azman Mokhtar, Dato' Haji Abd. Rahim Haji Abdul and Mohammad Zanudin Ahmad Rasidi (in the absence of Dato' Haji Abd. Rahim Haji Abdul) have abstained and will continue to abstain from all Board deliberations on the Joint Venture and Proposed Acquisition.

• The Joint Venture and Proposed Acquisition do not depart from the SC's Guidelines.
  

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