Contents :

INTRODUCTION

We refer to our announcement dated 11 November 2004, on the proposed disposal of Telekom Malaysia Berhad’s ("TM") remaining stake in Telkom SA Limited ("Telkom") in conjunction with Thintana Communications LLC ("Thintana"), to the South African Black Economic Empowerment (BEE) consortium, known as the Elephant Consortium, led by Mr Andile Ngaba and Women Investment Portfolio Holdings Ltd through the company, Newshelf 763 (Proprietary) Limited ("Newshelf"). We wish to announce the successful transaction upon fulfillment of conditions to the sale on 15 November 2004.

Details of the sale are as follows:

1. Thintana disposed of in total 84,111,804 ordinary shares of South African Rand ("ZAR")10 each representing approximately 15.1% of the issued and paid up capital of Telkom at ZAR78.74. per share and one (1) "B" class share to Newshelf. Newshelf was funded by the Public Investment Commissioners of South Africa. Total sale consideration was ZAR6,623 million (equivalent to US$1,068 million based on the exchange rate of ZAR6.20 per USD).

2. TM’s portion of the above sale was 33,644,722 ordinary shares (approximately 6%) of Telkom amounting to ZAR2,649 million (equivalent to US$427 million).

3. SBC Communications Inc’s ("SBC") corresponding portion of the sale was 50,467,082 ordinary shares (approximately 9%) of Telkom.

4. Settlement of the sale took place on 15 November, 2004.

5. The sale price of ZAR78.74 per share represents a discount of 8.5% to the closing price of Telkom shares on the JSE Securities Exchange ("JSE") of ZAR86.10 per share, on 8 November 2004 upon the signing of the Purchase Agreement between Thintana and Newshelf. The price was based on a willing buyer and willing seller basis.

Pursuant to an announcement to the Exchange by TM on 18 June 2004 regarding the partial disposal of approximately 6% of TM¹s stake in Telkom through Thintana, it was mentioned that Thintana has entered into a lockup agreement with customary terms, covering Thintana¹s remaining 15.1% holding in Telkom and that the lockup agreement will terminate upon release of Telkom¹s interim financial results for the period ended September 30, 2004 which was scheduled to take place on November 22, 2004. TM wishes to clarify that that the said release of Telkom¹s interim financial results was brought forward to 15 November 2004, being the new date of termination of the lockup period. Prior to this, in order to allow the signing of the sale agreement on 8 November 2004, Thintana obtained a waiver of the lockup from all of the various banks who were parties to the original Placing Agreement in June 2004.

This disposal by TM marks an exit from its investment in Telkom SA.


INFORMATION ON THINTANA

In May 1997, SBC and TM acquired a 30% stake in Telkom through a joint-venture vehicle called Thintana, a Delaware incorporated limited liability company. SBC through SBC International Transatlantic LLC owns 60% of Thintana whilst the remaining 40% is owned by TM through its wholly owned subsidiary, TM International (L) Limited. Pursuant to its investment in Telkom, Thintana entered into a shareholders’ agreement with the Government of South Africa to become a strategic equity partner, which among others, gave Thintana the right to appoint five directors to the Telkom Board. In addition, Thintana also entered into a strategic services agreement ("SSA") with Telkom, whereby Thintana provides management services and personnel to Telkom till May 2007 or when its shareholding in Telkom falls below 15%, whichever is the earlier.

INFORMATION ON TELKOM SA

Telkom SA is South Africa’s leading integrated communications operator with over 4.8 million fixed lines, while Vodacom (50% owned by Telkom) has 9.7 million mobile phone subscribers. Telkom has also extended its mobile phone services to other African countries.

In March 2003, Telkom was listed on the JSE and the New York Stock Exchange through American Depository Receipts. Telkom’s present registered share capital is ZAR10,000 million consisting of 1,000,000,000 authorized of ZAR10 each, and its paid-up share capital is ZAR5,570 million consisting of 557,031,819 issued shares of ZAR10 each. Telkom has a market capitalization of ZAR47,960 million as at 8 November 2004 (approximately US$7,736 million).

For the six months period ended 30 September 2004, Telkom SA reported net profit of ZAR2,768 million whilst its shareholders funds stood at ZAR22,622 million.

RATIONALE FOR THE PROPOSED DIVESTMENT

The said disposal is in line with TM’s move to consolidate its strategic investment overseas and focus on markets closer to Malaysia. The current market conditions in South Africa have provided TM with the opportunity to dispose of its investment in Telkom at a reasonable price.

FINANCIAL IMPACT

Based on the exchange rates of ZAR6.20 per USD and RM3.80 per USD, the said disposal would result in TM generating an exceptional gain of approximately RM860 million for the current financial year ending 31 December 2004. TM’s initial cost of investment for the stake that was disposed was approximately RM645 million. This is expected to improve TM’s basic earnings per share by 25.9 sen (based on rated average of shares as at 30 September 2004) and net tangible assets per share by 25.6 sen (based on number of shares as at 30 September 2004), for the year ending 31 December 2004.

The gross proceeds of approximately RM1,624 million will be used, inter-alia, to reduce the group’s borrowings, for possible reinvestments and general financing requirements.


DIRECTORS’ AND SUBSTANTIAL SHAREHOLDERS’ INTEREST

In so far as the Directors of TM are aware, none of the Directors nor the substantial shareholders of TM and/or persons connected to them have any interest, whether directly or indirectly in Telkom SA.

STATEMENT BY THE DIRECTORS

The Board is of the opinion that the proposed divestment of equity in Telkom is in the best interest of TM.