Contents :

• Telekom Malaysia Berhad (“TM”) wishes to announce that it has on 19 October 2006 entered into a:-
  
  a) Build Lease and Transfer Agreement (“BLTA”);
  b) Principal Lease Agreement (“PLA); and
  c) Sub-Lease Agreement (“SLA”) [collectively known as “the Agreements”)
  with Kumpulan Melaka Berhad (“KMB”) to develop TM’s leasehold land held under HS(M) 3845 PT No. 5485 Mukim Bukit Baru, Daerah Melaka Tengah, Negeri Melaka measuring approximately 18,292 square metres (“the Project Land), to build TM’s Regional Office at the Malacca International and Convention Centre (including a common basement carpark to accommodate for future second tower block) and other lettable/usable area (“TMRO Building”) to be designed, constructed, completed together with all equipment, in accordance with the specifications and approved drawings (“the Project”).

• KMB is a public company limited by shares incorporated in Malaysia under the Companies Act 1965 with its registered address at Aras 3, Menara MITC, Jalan Konvensyen, Kompleks MITC, 75450 Ayer Keroh, Melaka.

  KMB is the investment arm of Melaka State Government and is wholly owned by the Melaka Chief Minister Incorporated. KMB is involved in the construction, property development, engineering, energy, agriculture, tourism and manufacturing business. The authorised capital of KMB is RM200 million and its issued and fully paid up capital is RM16 Million..

• • • TM agreed to appoint KMB to carry out the works of the Project on a “Build-Lease-Transfer” basis subject to the terms and conditions of the BLTA.
    • i) Ensure that the Project is carried out in accordance with the approved drawings, in compliance with any requirement and condition imposed by the appropriate authorities;
      
      ii) Solely liable for all funding requirements of the Project, including but not limited, to securing the necessary financing for the Project, the requisite funding to defray the building costs save and except for any quit rents and rates payable in respect of the Project Land which shall be borne by TM; and
      
      iii) Ensure completion of the whole of the Project within 36 months from the date of approval of the relevant building plans subject to any extension of time that KMB may be entitled to under the terms of the BLTA.
      
      In consideration thereto, TM shall provide principal lease for the Project Land and TMRO Building to KMB for a period of 15 years, in accordance with terms as set out in the PLA and SLA.
    • The cost of construction of the TMRO Building shall be not more than RM54,360,000.00 (based on RM200.00 per square foot calculated on the Gross Floor Area to be constructed together with a ten percent (10%) total project consultancy fees) subject only to adjustments for variations to be agreed upon in accordance with the terms of the BLTA.
  
  KMB shall be responsible for the following:-
  
  3.2 Principal Lease Agreement (“PLA”)

• • • In consideration of the performance of KMB of its obligations under the BLTA, TM shall grant and KMB shall accept the lease of the Project Land with the TMRO Building commencing from the date of issuance of the Certificate of Completion for a period of 15 years (“Lease Period”), in accordance with terms as set out in the PLA.
      
      The rent payable by KMB for the lease shall be in the sum of RM10.00 for the entire Lease Period.

• • • KMB shall sub-lease the Project Land and TMRO Building to TM for a period of 15 years at a rental of RM595,000 per month based on usable area (at the rate of RM3.50 per square foot), subject to the terms of the SLA.
  3.3 Sub-Lease Agreement (“SLA”)
  

• The entry into the Agreements is not subject to any approval of the shareholders of the Company nor any government authorities.

• TMRO Building will be occupied mainly by TM and its subsidiaries and associated companies (“the TM Group”), which are currently dispersed throughout Melaka. This would lead to reduction of rental expenses for TM Group and enable consolidation of TM Group operational business units in Melaka.

• The transaction will not have any material adverse effect on the earnings and Net Assets of TM Group for the financial year ending 31 December 2006.

• In so far as the Directors of TM are aware, none of the Directors nor the major shareholders of TM and/or persons connected to them have any interest, whether direct or indirect, in the Agreements.
  

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