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.
1. INTRODUCTION

2. PROPOSED CAPITAL REPAYMENT

• • • • • (hereinafter both amounts of RM261,912,102 and RM738,087,898 totalling RM1,000,000,000 shall be collectively referred to as the “Distribution Sum”).
      Celcom proposes:
      
      (1) To reduce the issued and paid up capital of RM2,619,121,020 comprising 2,619,121,020 ordinary shares of RM1.00 each by RM261,912,102 to RM2,357,208,918 comprising 2,619,121,020 ordinary shares of 90.0 sen each representing a capital reduction of 10.0 sen for every existing ordinary share of RM1.00 each.
      
      (2) To cancel and utilise Celcom’s Share Premium Account in the sum of RM738,087,898.
      
      (3) To consolidate the issued and paid up capital of RM2,357,208,918 on the basis of every one(1) share of 90.0 sen each into one(1) ordinary share of RM1.00 each, thereby consolidating 2,619,121,020 shares of 90.0 sen each into 2,357,208,918 ordinary shares of RM1.00 each credited as fully paid up.
      
      (4) To distribute the Distribution Sum to Telekom Enterprise Sdn Bhd, a wholly owned subsidiary of TM 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 upon the granting of the Order of the High Court in respect of the Proposal.

• • • (“Proposed Capital Repayment”).
  
  
  3. RATIONALE

• • 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 proceeds from the Distribution Sum will allow TM to finance its capital requirements and/or further expansion of its investments. This exercise will allow TM to fully maximize the use of cash within the TM Group, and thus may help reduce the average borrowing cost of 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 2005.
  4. FINANCIAL EFFECTS
  

• • 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 holders of the RM1.1 billion Al-Bai’ Bithaman Ajil Bonds and lenders of the RM650 million Syndicated Term Loan, which were obtained on 15 April 2005 and 18 April 2005 respectively.
    
    
    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.
    
    The Directors of TM, after careful deliberation, are 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.
  6. DIRECTORS’ AND MAJOR/SUBSTANTIAL SHAREHOLDERS’ INTEREST
  
  
  7. DIRECTORS’ STATEMENT
  
  8. ESTIMATED TIMEFRAME FOR COMPLETION