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Pursuant to Paragraph 9.04(g) of the Kuala Lumpur Stock Exchange Listing Requirements, Telekom Malaysia Berhad ("TM") wishes to announce that, Inmiss Communication Sdn. Bhd. ("Inmiss") had, through its solicitors Messrs. KM Chye & Murad, on 5 February 2001, filed a Notice for Arbitration against Mobikom Sdn. Bhd. ("Mobikom"), a wholly owned subsidiary of TM, for outstanding payment, share of message tariff revenue, interest charges and other losses in the amount of Ringgit Malaysia Twenty Nine Million (RM29,000,000.00) Only (inclusive of interest and consequential losses) (hereinafter referred to as the "Arbitration").

Background

On 10 May 1996, Mobikom signed an agreement with Inmiss for the provision of dial-up audiotext services ("Service") for a period of 5 years ("the Agreement"). Under the terms on the Agreement, Mobikom will pay to Inmiss based on the number of calls made to the Service on a revenue sharing basis of 70% to Inmiss and 30% to Mobikom.

After the commencement of the Service in October 1996 and pursuant to investigations conducted by Mobikom, it was discovered that some of the calls made to the Service were fraudulent in nature and/or cloned calls. Following the discovery, Mobikom decided to suspend the Service on 29 January 2000.

Following the suspension of the Service, Inmiss subsequently instituted the arbitration proceeding against Mobikom in 2001.

Status of the Arbitration Proceeding

In May 2002, the Arbitration hearing commenced at the Kuala Lumpur Regional Center for Arbitration ("KLRCA").

Mobikom has filed its Statement of Defence in the Arbitration proceeding indicating that Mobikom is not liable to pay the amount claimed by Inmiss since it has been established that most of the calls made in relation to the Service were fraudulent and cloned calls.

Mobikom and Inmiss were to file written submissions to the Arbitrator on 2 September 2003. However, on the said day, Mobikom's counsel requested for another date to file written submission because of a delay in obtaining the Notes of Proceeding from the KLRCA. The Arbitrator has fixed 2 October 2003 as the new date for submission by Mobikom.

Potential effect of the action to TM

Based on legal advice, TM is of the view that Mobikom has a good case of defending the claim or at least substantially reducing the amount claimed in the Arbitration. As such, the Arbitration against Mobikom will not potentially give any material adverse impact to the financial position of TM and its Group.