1. INTRODUCTION Pursuant to Paragraph 10.05(2) of the Bursa Malaysia Securities Berhad (“Bursa Securities”) Main Market Listing Requirements (“Main LR”), Telekom Malaysia Berhad (“TM”) wishes to announce that it had on 25 April 2011 entered into a Shareholders Agreement with twenty one (“21”) other parties specifically named in Schedule A herein, together with its two (2) subsidiaries, namely Fiberail Sdn Bhd (“Fiberail”) and Fibrecomm Network (M) Sdn Bhd (“Fibrecomm”) (“Shareholders Agreement” or “Transaction”), to form a consortium under the name of KONSORTIUM RANGKAIAN SERANTAU SDN BHD (formerly known as My Regional Network Company Sdn Bhd) (“Consortium” or the “Company”). The Consortium is formed for the purpose of implementing one of the entry points projects (“EPP”) entitled “Regional Network” which has the purpose of adding bandwidth capacity for Malaysia in anticipation of increasing demand requirements at a lower cost. This can be achieved by aggregating bandwidth capacity demand or requirements (as a form of buying power) to secure a lower price from suppliers. 2.0 SALIENT POINTS OF THE SHAREHOLDERS AGREEMENT The salient points of the Shareholders Agreement are as follows:-. 2.1 Business of the Company
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(i) the procurement of bandwidth capacity from suppliers (who may be either a shareholder or third parties) for both domestic backhaul and international segment. The bandwidth capacity is to be from cable landing stations in Malaysia to Metro Points of Presence (“PoPs”) and from Metro PoPs to other Metro PoPs only; and
(ii) the wholesale supply of bandwidth capacity at Metro PoPs, to Shareholders only.
(a) The Company shall undertake the Business in Malaysia, unless otherwise agreed by the Shareholders.
The Business of the Company can be divided into two (2) portions:
(b) The Company shall, subject to its Business Plan, feasibility study, and approvals of the Shareholders, invest in an international submarine cable system, including a cable landing station that will form part of the Company’s infrastructure.
2.2 Capital Structure
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The authorised share capital of the Company shall be Ringgit Malaysia Ten Million (RM10,000,000) divided into Ten Million (10,000,000) ordinary shares of RM1.00 each and may be increased from time to time in accordance with the Memorandum and Articles of Association of the Company.
The initial issued and paid-up share capital of the Company is Ringgit Malaysia Two Hundred and Forty Thousand (RM240,000) comprising Two Hundred and Forty Thousand (240,000) ordinary shares of RM1.00 each, of which each party holds an equivalent 10,000 shares of RM 1.00 each in the Company. The parties also have agreed to commit an additional capital contribution in cash of RM 40,000 each by subscribing to 40,000 ordinary shares of RM 1.00 each, at such a later time as may be determined by the Company’s Board of Directors.
The total subscription consideration for the Transaction, amounting to RM150,000, collectively by TM, Fiberail and Fibrecomm will be funded by internally generated funds.
3.0 RATIONALE FOR PARTICIPATING IN THE CONSORTIUM
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TM and its subsidiaries’ participation in the Consortium is in support of the Government of Malaysia’s initiative under the Economic Transformation Programme (“ETP”), which would enable additional bandwidth capacity for Malaysia in anticipation of increasing demand requirements at lower costs.
4.0 BRIEF INFORMATION ON PARTIES 4.1 TM
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TM, a public listed company duly incorporated in Malaysia on 12 October 1984, has an authorised share capital of RM5,040,003,021 divided into 5,000,000,000 ordinary shares of RM1.00 each, 1 Special Rights Redeemable Preference Share of RM1.00, 1,000 Class A Redeemable Preference Shares (“RPS”) of RM0.01 each, 1,000 Class B RPS of RM0.01 each, 2,000 Class C Non-Convertible Redeemable Preference Shares (“NCRPS”) of RM1.00 each, 1,000 Class D NCRPS of RM1.00 each and 4,000,000,000 Class E RPS of RM0.01 each. The issued and paid up share capital of the Company is RM3,577,404,906 divided into 3,577,401,980 ordinary shares of RM1.00 each, 1 Special Rights Redeemable Preference Share of RM1.00, 2,000 Class C NCRPS of RM1.00 each and 925 Class D NCRPS of RM1.00 each. The principal activity of TM is the establishment, maintenance and provision of telecommunication and related services.
4.2 Fiberail
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Fiberail was incorporated on 12 December 1989. Fiberail has an authorized share capital of RM50,000,000 comprising 50,000,000 ordinary shares of RM1.00 each and an issued and paid up capital of RM15,780,000 comprising 15,780,000 ordinary shares of RM1.00 each. The principal activity of the Fiberail is to provide network connectivity and bandwidth services in Malaysia and project management services relating to telecommunications.
4.3 Fibrecomm
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Fibrecomm was incorporated in 21 May 1992. Fibrecomm has an authorized share capital of RM75,000,000 comprising 75,000,000 ordinary shares of RM1.00 each and all have been issued and paid up capital. Fibrecomm principal activity is to provide fibre optic transmission network services.
4.4 List of other twenty one (21) shareholders is as per Schedule A.
5.0 FINANCIAL EFFECT 5.1 Share Capital The Transaction would not have any effect on the issued and paid-up share capital of TM. 5.2 Earnings and Net Assets
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The Transaction is not expected to have any material impact to the earnings and net assets of the TM Group for the financial year ending 31 December 2011.
6.0 APPROVALS REQUIRED
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The Transaction is not subject to shareholder or any government authorities’ approval.
7.0 DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS’ INTEREST
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The Consortium and/or Shareholders Agreement is a related party transaction as Khazanah Nasional Berhad (“Khazanah”), a major shareholder of TM are also major shareholders of Axiata Group Berhad (“Axiata”) and Time Dotcom Berhad (“Time”) as defined under Paragraph 10.02 of the Main LR. Celcom Axiata Berhad, a wholly-owned subsidiary of Axiata and TT dotcom Sdn. Bhd, a subsidiary of Time, are participating members in the Consortium.
Save as disclosed below, none of the Directors and other major shareholders of TM and/or persons connected to them has any interest, whether direct or indirect, in the Transaction:
(a) Tunku Dato’ Mahmood Fawzy Tunku Muhiyiddin, and his alternate Director, Dr Farid Mohamed Sani are representatives of Khazanah on the Board of TM;
(b) Dr Farid Mohamed Sani is also a Director of Axiata and Celcom Axiata Berhad: and
(c) Datuk Bazlan Osman, an Executive Director of TM and a Director of Fiberail.
8.0 DIRECTORS’ STATEMENT
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The Board of TM (save for Tunku Dato’ Mahmood Fawzy Tunku Muhiyiddin, Datuk Bazlan Osman and Dr Farid Mohamed Sani) after having considered the rationale of the transaction is of the opinion that the Transaction is in the best interest of TM.
9.0 AUDIT COMMITTEE STATEMENT
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The Board Audit Committee of TM, (save for Tunku Dato’ Mahmood Fawzy bin Tunku Muhiyiddin), having considered all aspect of the proposed Shareholders Agreement, is of the view that the Shareholders Agreement is in the best interest of TM, fair and reasonable and on normal commercial terms, and is not detrimental to the interest of the minority shareholders of TM.
10.0 DEPARTURE FROM THE SECURITIES COMMISSION’S EQUITY GUIDELINES
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The Board of TM is not aware of any departure from the Securities Commission’s Equity Guidelines in respect of the Transaction.
11.0 HIGHEST PERCENTAGE RATIO
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The highest percentage ratio pursuant to paragraph 10.02(g) of the Bursa Securities Main LR that is applicable to the Transaction is 0.002%.
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