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• Telekom Malaysia Berhad (“TM or "the Company") wishes to announce a proposed Islamic Sale and Leaseback transaction (“Proposed Transaction”) involving the issuance of up to RM1,100 million Islamic Trust Certificates (“Sukuk”) by a special purpose vehicle, details of which are set out below.

• The Proposed Transaction involves the sale of four (4) of its property assets (“Properties”) at a total value of up to RM1,100 million to Menara ABS Berhad, a special purpose vehicle with the objective of implementing the transaction. The Properties identified are known as Menara TM, Menara Celcom, Cyberjaya Complex and Wisma TM Taman Desa. Subsequent to the sale, the Properties will then be leased back to TM on a portfolio basis, under the Ijarah principle, for a lease term of up to fifteen (15) years.
  
  The Proposed Transaction will involve a true sale transaction with respect to the Properties and an operating lease treatment with respect to the lease arrangement while allowing TM and its group of companies (“TM Group”) uninterrupted occupation of its existing premises.
  
  The Proposed Transaction, which will be implemented under the Securities Commission’s Guidelines on the Offering of Asset-Backed Securities read together with the Guidelines on the Offering of Islamic Securities, will facilitate the issuance of three (3) different classes of Sukuk in tranches by Menara ABS Berhad. The funds to be raised from the issuance of such Sukuk shall be utilized by Menara ABS Berhad to pay TM for the purchase of the Properties.
  

• Two (2) of the three (3) classes of Sukuk to be issued under the Proposed Transaction are rated by Rating Agency Malaysia Berhad while the third class of Sukuk is unrated.

• TM intends to utilize the proceeds raised from the Proposed Transaction for capital management, funding of investment opportunities, capital expenditure, and any unutilised proceeds will be used for working capital.

• The Properties are valued at RM1,029 million based on the valuation conducted by Henry Butcher Malaysia Sdn Bhd.

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  The Proposed Transaction will facilitate TM’s implementation of its strategy to monetize its non-core assets with a view to further improving operating financial ratios while focusing on its core business of providing telecommunication services.

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  Throughout the lease term, TM and its group of companies (“TM Group”) will continue to have quiet enjoyment of the Properties and will be allowed to name all the Properties and affix such signage, corporate logo and/or branding directly related to or in connection with its business or in promotion of its business on the external area as well as within the Properties. Prior to expiration of the lease term, TM will have the right of first refusal to either re-purchase the Properties or continue with the lease on new terms to be negotiated and only if TM exercises neither of the options will the Properties be returned to Menara ABS Berhad. This will ensure that the TM Group will continue to be able to occupy the Properties if it so desires.
  
  The Proposed Transaction will not have any material effect on the share capital, net assets ("NA"), earnings and gearing of TM.

• 4.1 Share capital
  
  The Proposed Transaction will not have any effect on TM’s issued and paid-up share capital.

• The Proposed Transaction is not expected to have any material effect on the earnings or NA of TM for the year ending 31 December 2007.
  

• The Proposed Transaction will not have any material effect on the NA and gearing of TM for the year ending 31 December 2007.

• The Proposed Transaction is subject to the approval of the Securities Commission ("SC") pursuant to the Guidelines on the Offering of Asset-Backed Securities and Guidelines on the Offering of Islamic Securities for the Proposed Issuance of Sukuk.

• None of our Directors and/or substantial shareholders or persons connected to them has any interests, direct or indirect, in the Proposed Transaction.

• Having considered the rationale for the Proposed Transaction, the Board is of the opinion that the Proposed Transaction is in the best and long term interest of our Company and our shareholders.

• Citibank Berhad has been appointed as the Principal Adviser/Lead Arranger for the Proposed Transaction.

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  An application has been submitted to the Securities Commission for approval of the Proposed Transaction. The Proposal is expected to be completed within six (6) months from the date of the Securities Commission's approval for the Proposed Transaction.

• The Issues Guidelines is not applicable to the Proposed Transaction.