Contents :

• 
  Telekom Malaysia Berhad (“TM”) wishes to announce that its wholly owned subsidiary, Celcom (Malaysia) Berhad (“Celcom”), through CT Paging Sdn Bhd (“CTP”) had, on 16 January 2007 entered into a joint venture agreement (“JVA”) with I-Mobile International Co. Ltd (“I-Mobile”) and C-Mobile Sdn Bhd ("C-Mobile”). C-Mobile was incorporated as the vehicle to operate the joint venture business namely, to set up a distribution network of dealers and concept retail stores based on intellectual property rights owned by Celcom (“Concept Stores”), within Malaysia (“Business”). These Concept Stores will market, distribute and offer for retail sale, inter alia:
  
  a) the products and services of Celcom Mobile Sdn Bhd (“CMSB’s Products”); and
  
  b) mobile communication, terminal devices, including mobile handsets, accessories, data cards and content of Samart i-Mobile (Malaysia) Sdn. Bhd.
  (“Samart’s Products”),
  
  (hereinafter collectively referred to as the “Products”).
  
  CMSB is a wholly-owned subsidiary of Celcom and Samart is a wholly owned subsidiary of I-Mobile.
  
  Subsequent to the JVA, the parties will negotiate and enter into agreements to operationalise the joint venture including but not limited to distributorship, licensing and dealership agreements.

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  The authorised share capital of CTP as at 16 January 2007 is RM500,000.00 comprising 500,000 ordinary shares of RM1.00 each of which 500,000 ordinary shares of RM1.00 each have been issued and paid-up. Prior to entering into the JVA, CTP was inactive.

• 
  The authorised share capital of I-Mobile as at 16 January 2007 is Bhat200,000,000.00 comprising 20,000,000 ordinary shares of Bhat10.00 each of which 10,000,000 ordinary shares of Bhat10.00 each have been issued and paid-up.
  
  I-Mobile is a company incorporated under the laws of Thailand and a wholly owned subsidiary of Samart I-Mobile Public Company Limited (“Samart I-Mobile PLC”), a company listed on the Stock Exchange of Thailand (“SET”). Samart I-Mobile PLC is a 56.35% subsidiary of Samart Corporation Public Company Limited (“Samart Corporation PLC”). Samart Corporation PLC is also listed on the SET. A wholly owned subsidiary of TM, TM International Sdn Bhd (“TMI”) as at 16 January 2007 holds 18.98% in Samart Corporation PLC and 24.42% in Samart I-Mobile PLC.
  
  I-Mobile is principally involved in the global expansion of its three (3) core business i.e mobile phone distribution, provider for mobile content and applications and retail business. It has the necessary experience and expertise in establishing and managing a distribution network of dealers and retail stores where it has successfully developed its own-branded stores in Thailand.
  

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  Through the joint collaborative effort, it is anticipated that C-Mobile will improve Celcom’s distribution channel and brand visibility.

• • Name of Shareholder	No. of Shares	% held
    CTP	2,450,000	49
    I-Mobile	2,550,000	51
    Total	5,000,000	100

  
  The authorised share capital of C-Mobile is RM10,000,000.00 divided into 10,000,000 ordinary shares of RM1.00 each while its issued and paid-up share capital is RM2.00 divided into 2 ordinary shares of RM1.00 each. The issued and paid up capital shall be increased to RM5,000,000.00 divided into 5,000,000 ordinary shares of RM1.00 each within 30 days from the signing of the JVA to reflect the following shareholding structure:-
  The cost of the investment at the initial stage is estimated to be RM5,000,000.00.

• 
  The subscription by CTP of 2,450,000 ordinary shares of RM1.00 each in the sum of RM2,450,000.00 in C-Mobile will be funded through funds generated internally.

• 
  Objectives of C-Mobile
  
  C-Mobile is to operate and generate return from its business by inter alia:
  a) establishing and managing the Concept Stores as a distribution network for the Products in Malaysia;
  b) leveraging on the goodwill in Celcom’s Brand; and
  c) protecting the interest of, and enhancing, Celcom’s Brand.
  
  Together, CTP and I-Mobile intend to enhance their respective existing distribution network and at the same time boost the sales of the Products.
  
  C-Mobile’s role
  
  The role of C-Mobile includes:
  a) identifying prime strategic locations for the establishment of each Concept Store in accordance with the terms and conditions of the JVA;
  b) recruiting and appointing dealers to operate the Concept Stores and sell the Products; and
  c) managing the dealers appointed by C-Mobile.
  
  Call option
  
  CTP has a call option of up to 11% on I-Mobile’s shareholding in C-Mobile. CTP’s call option is exercisable within each 3 calendar months from the date of C-Mobile’s published audited accounts for each financial year commencing from the 3rd, 4th, 5th and 6th financial year respectively. Depending on the circumstances, the option price is to be determined based either on the Price Earning Multiple of 10 times or 2.5 times net tangible asset of each relevant financial year.
  
  Exclusivity
  
  All Concept Stores shall only carry Celcom’s brand. Subject to C-Mobile meeting all pre-determined targets set by CTP, C-Mobile’s right to establish the Concept Stores, using the Celcom brand, will be exclusive for a period of 3 years, commencing from the effective date of the JVA. The exclusive rights will be revoked if C-Mobile does not meet the pre-determined targets set by CTP.
  
  Celcom Brand and Intellectual Property Rights
  
  All intellectual property rights in and arising from the Concept Stores are to be solely owned by Celcom. Celcom will grant C-Mobile the necessary licenses to use the intellectual property rights in and arising from the Celcom brand for the purposes of creating the Concept Stores.
  
  Celcom has the sole right to determine and control the look and feel, get-up and other operational matters of all Concept Stores.

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  Celcom has conducted internal feasibility studies, and based on the studies conducted, the joint venture is expected to be economically viable. In a long run, the joint venture is expected to contribute to the future earnings of TM and increase the share value for TM shareholders.
  
  The main risk factors relating to this joint venture are generally business risks inherent to the distribution channel business which include foreign exchange risk and inventory management.

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  C-Mobile was incorporated on 9 January 2007 and is expected to commence operations within 30 days from the signing of the JVA. There is no limitation on the duration of the joint venture.
  

• 
  The JVA is not subject to the approvals of the shareholders of TM and the relevant governmental authorities.
  

• 
  The JVA and/or joint venture is not expected to have any material effect on the earnings and net tangible assets of TM Group for the year ending 31 December 2007.

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  None of the Directors and major shareholders of TM and/or persons connected to them have any interest direct or indirect in the joint venture save for the following common Director and persons connected to the parties to the JVA:-

• (i) Dato’ Lim Kheng Guan who is a director of TM, TMI and Samart I-Mobile PLC.
  (ii) Ir. Prabahar N.K Singam who is a director of TM and Samart I-Mobile PLC.

• Persons Connected by virtue of being an officer of TM
  
  (i) Encik Yusof Annuar Yaacob who is the Chief Executive Officer of TMI and a director of Samart I- Mobile PLC.

• The Board of Directors of TM is of the opinion that the JVA and/or joint venture is in the best interest of TM Group.

• The JVA is available for inspection at the registered office of TM at Level 51, North Wing, Menara TM, Jalan Pantai Baharu, 50672 Kuala Lumpur during normal office hours from Mondays to Fridays for a period of 3 months from the date of this announcement.