Contents :

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  Telekom Malaysia Berhad (“TM” or “the Company”) is pleased to announce the following proposals:
  
  a) Listing of MTN Networks (Pvt.) Limited, a wholly owned subsidiary of TM, on Colombo Stock Exchange (“Proposed Listing of MTN Networks”);
  b) Amendments to the existing Bye-Laws of TM’s Employees Share Option Scheme (“Proposed Bye-Laws Amendments”); and
  c) Amendments to TM’s Articles of Association (“Proposed Articles Amendments”)
  
  (collectively referred to as the "Proposals")

• • • The Board has approved the proposed listing of MTN Networks, its wholly owned subsidiary, on the Colombo Stock Exchange, Sri Lanka, subject to the approvals of relevant authorities and shareholders.
      
      MTN Networks is a wholly owned subsidiary of TM International (L) Ltd, (“TMIL”). The company was incorporated in Sri Lanka pursuant to a joint venture agreement dated 27 August 1993, entered into between TM International Sdn Bhd (“TMI”), a wholly owned subsidiary of TM, and a Sri Lanka company, Sunpower Systems (Pvt) Ltd. MTN Networks was established to operate a cellular mobile telephone network in Sri Lanka. In 1996, MTN Networks became a wholly owned subsidiary of TMI. Following an internal restructuring of TM Group, TMI’s 36,999,999 ordinary shares in MTN Networks were transferred to TMIL on 27 October 2004.
      
      Currently, the authorised share capital of MTN Networks is Rs6,000,000,000 comprising 469,442,124 ordinary shares of Rs10 each and 21,759,646 preference shares of Rs60 each, out of which Rs1,638,978,760 comprising 37,000,000 ordinary shares of Rs10 each and 21,149,646 preference shares of Rs60 each have been issued and fully paid-up.
      
      MTN Networks operates Sri Lanka’s largest mobile phone network under the brand name of Dialog GSM with a market share in excess of 55%. The company is also a key player in the Internet Service Provision Market through its state of the art internet service provider (“ISP”), Dialog Internet, and also operates Dialog SAT, Sri Lanka's pioneer Mobile Satellite Service Provider. Having made an aggressive entry into the International Services Market, MTN Networks has established itself as a premier provider of International Services in Sri Lanka.
    • For the year ended 31 December 2004 MTN Networks recorded a Profit After Tax of Rs4,100 million (RM157 million based on the exchange rate of RM1.00 = Rs26.10 as at 22 March 2005) and shareholders’ funds of Rs8,712 million (RM334 Million) based on its accounts as audited by a member firm of PricewaterhouseCoopers in accordance with Sri Lanka Accounting Standards.
    • 
      The rationale for the Proposed Listing of MTN Networks are as follows:
      
      (a) to enable MTN Networks to achieve a broader scale of public ownership and project a strong image of itself;
      (b) TMIL/TMI would realise a part of their returns through capital gains upon the partial divestiture of existing shares;
      (c) to provide opportunity to existing employees to participate in MTN Networks’ continuing growth via an employee share option scheme; and
      (d) A quotation on the Colombo Stock Exchange shall provide MTN Networks access to the capital market of Sri Lanka and thereby enabling MTN Networks to raise equity funds for future expansions and growth.
  2.1 Details of the Proposed Listing of MTN Networks 2.2 Rationale for the Proposed Listing of MTN Networks

3.0 PROPOSED BYE-LAWS AMENDMENTS

3.1 Details of the Proposed Bye-Laws Amendments

• • • Pursuant to the new requirements of the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities LR”), the Directors recommend that the Bye-Laws should be amended to ensure consistency and compliance with the new requirements of Bursa Securities LR and other regulatory provisions.

• • • The Proposed Bye-Laws Amendments are designed to have the following salient effects:
      
      (i) Inclusion of a new provision which enables TM’s Options Committee to nominate fixed term employees in the category of Senior Management and above to be eligible to participate in the Scheme. This is mitigated by the qualification which states that a Grantee who resigns before the expiry of the first year of his contract, shall be liable to compensate for gains made;
      
      (ii) Inclusion of a new provision which states an employee of either the Company or a subsidiary of the Company, who has accepted Options and subsequently is transferred to a company which is not a member of the Group shall only be entitled to continue to exercise his remaining Options (subject to the provisions relating to termination of Options);
      
      (iii) Amendment to allow eligible employees of TM to participate in an ESOS of another company within TM Group on the condition that TM’s Options Committee may vary the Maximum Allowable Allocation as it deems fit. In addition, a new clause is included to ensure clarity that an eligible subsidiary’s employees may participate in TM’s ESOS as well as the ESOS established by the said subsidiary but not vice versa;
      
      (iv) Amendment to allow exercise of Options in multiples of 100 TM Shares instead of 1,000 TM Shares;
      
      (v) Amendment in percentage of options exercisable to be evenly distributed over the unexpired years of TM’s ESOS. This is only applicable for Options offered after the amendment of this Bye-Laws becomes effective;
      
      (vi) Addition of a new clause to allow employee who has accepted Offer of Options and subsequently transferred outside TM Group to exercise the Options previously granted;
      
      (vii) Amendment to permit TM’s Options Committee the flexibility of extending for any period prescribed, and not necessarily for the entire unexpired duration of the Option Period;
      
      (viii) Amendment to specify that the Offer shall lapse upon effective date of resignation of the employee and not upon employee giving notice of resignation from employment;
      
      (ix) Amendments to the adjustments to the exercise price or number of shares to be issued under TM’s ESOS as required under Bursa Securities LR;
      
      (x) Inclusion of a new provision specifying exact matters, which cannot be altered to the advantage of the Grantee without TM’s shareholders’ prior approval, as required under Bursa Securities LR;
      
      (xi) The references to the Securities Commission (SC) and SC Guidelines have been deleted to reflect change in applicable regulatory provisions from SC Guidelines to Bursa Securities LR;
      
      (xii) Change of reference from “KLSE” to “Bursa Securities”; and
      
      (xiii) Inclusion of new provisions that sets out the ways and methods Notice are given to employee to reflect TM’s current practices.

• • • The Proposed Bye-Laws Amendments will ensure consistency and compliance with new requirements of Bursa Securities LR and other regulatory provisions. It also addresses other administrative issues that TM has faced from past experiences in relation to exercise of options by employees.

• • • The Board of Directors has proposed the following amendments to TM’s Articles of Association:
      
      (i) All references to “Kuala Lumpur Stock Exchange” and “Malaysian Central Depository Sdn Bhd” in TM’s Articles of Association to be amended to reflect the new names, “Bursa Malaysia Securities Berhad” and “Bursa Malaysia Depository Sdn Bhd”, respectively, following the demutualisation of the Kuala Lumpur Stock Exchange on 20 April 2004;
      
      (ii) To dispense with the requirement for TM’s Articles of Association to be amended with prior written approval from Bursa Securities. This is in line with Practice Note No. 18/2005 issued by Bursa Securities, which took effect on 3 January 2005; and
      
      (iii) To allow payment of dividend to shareholders by electronic transfer.
      

• • • The Proposed Articles Amendments will ensure consistency and compliance with new requirements of Bursa Securities LR and other regulatory provisions. The said amendments would also allow the payment of dividend directly into the shareholders' accounts opened and maintained with a financial institution acceptable to the Company for purposes of electronic transfer to improve efficiency of the Company in paying dividend.
      
      

• • • 
      The Proposals will not have any effect on TM’s issued and paid-up share capital and shareholdings of the substantial shareholders.
      
    • The Proposed Bye-Laws Amendments and Proposed Articles Amendments will not have any effect on the earnings and NTA of TM Group. Save for the dilution impact to the extent of the size of the Initial Public Offer (IPO), to be finalized, the proposed listing of MTN Networks is not expected to have a material impact on the consolidated earnings and NTA of TM Group for the financial year ended 31 December 2005.
      
  The effects of the Proposals are as follows:
  
  5.1 Issued and paid-up share capital and shareholdings of substantial shareholders5.2 Earnings and NTA
  

6.0. APPROVALS REQUIRED

• The Proposals are subject to the approvals of the following:
  

• • • (vi) the shareholders of TM at an Extraordinary General Meeting (EGM) to be convened.
      
  6.2 The Proposed Bye-Laws Amendments

• 6.3 The Proposed Articles Amendments
  

• 
  Dato’ Abdul Wahid Omar, the Group Chief Executive Officer will be entitled to the ESOS Options and therefore he is deemed interested in the Proposed Bye-Laws Amendments and has abstained and will continue to abstain from all Board deliberations in respect of the Proposed Bye-Laws Amendments.
  
  Apart from the above, none of the Directors, substantial shareholders and persons connected to TM Directors and substantial shareholders has any interest, direct or indirect, in the Proposals.
  
  In addition, as part of the Proposed Listing exercise of MTN Networks, the Directors of TM who are nominees on the Board of MTN Networks, namely, Tan Sri Dato’ Ir Muhammad Radzi Mansor, Dato’ Dr Abdul Rahim Hj Daud and Ir Prabahar NK Singam, may be allocated shares in MTN Networks upon listing, subject to relevant shareholders’ and regulatory approvals.
  
  

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  The Board (save and except for Dato’ Abdul Wahid bin Omar who has abstained from expressing an opinion) having considered all aspects of the Proposed Bye-Laws Amendments is of the opinion that the Proposed Bye-Laws Amendments is fair and reasonable and in the best interest of TM.
  
  The Board of Directors has considered all aspects of the Proposed Listing of MTN Networks and the Proposed Articles Amendments and is of the opinion that the Proposed Listing of MTN Networks, and the Proposed Articles Amendments are fair and reasonable and in the best interest of TM.
  
  

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  Zain & Co. has been appointed as the adviser for the Proposed Bye-Laws Amendments and Proposed Articles Amendments.