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The headline KPIs represent the main corporate targets set by TM for the year and should not be construed as being forecasts. In this respect please note the following:

1. These headline KPIs are targets or aspirations set by the company as a transparent performance management practice. These headlines shall not be construed as either forecasts, projections or estimates of the company or representations of any future performance, occurrence or matter as the headlines are merely a set of targets/aspirations of future performance aligned to the company's strategy and which have been derived on the assumption that the Group shall operate under the current business environment.

Major challenges will include the continued intense competition in the cellular segment typified by price wars, change in consumer behaviour affecting the fixed line business and exposure to political, economic and regulatory changes in the various countries we operate.

2007 will see greater expansion in our international mobile operations to meet the demand of high growth markets we operate in, with particular emphasis on expanding network coverage and capacity in Indonesia, Bangladesh, Sri Lanka and India.

We expect lower pricing and stiff competition from existing players and new entrants in the domestic market which includes fixed, mobile and broadband services.

FY 2007



Headline KPIs	FY 2006 Actual	FY 2007 KPI
1. Revenue	16.4 billion	18.1 billion
2. Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) Margin	45.9%	44.5%
3. Return on Equity (ROE)*	10.6%	9.8%


*ROE is computed as PATAMI / Average Capital & Reserves Attributable to Equity Holders of the Company

• • Revenue growth in 2007 will be largely driven from the international operations in Indonesia, Sri Lanka, Bangladesh and the domestic mobile operations.
  • A lower EBITDA margin is expected in 2007 mainly due to the absence of foreign exchange gains obtained in 2006 and higher cost of operations. This is contributed by higher operating costs at the domestic fixed line operations with efforts to improve network and service quality as well as the international mobile operations operating in high growth markets. Excluding the foreign exchange gains in 2006, 2007 would see an increase of 0.3% of EBITDA margins to 44.5% as compared to a normalised margin of 44.2% in 2006.
  • In investing for future growth, a Return on Equity of 9.8% against normalised 9.5% (after adjusting for foreign exchange gains) is expected after taking into account the following items:
  i. Higher depreciation and finance cost expected from the increased capital expenditure (“capex”) and financing for coverage and capacity expansion in the international mobile operations. The international mobile operations total planned capex for 2007 is about RM4.9 billion as compared to RM2.8 billion capex spent in 2006. The capex will be funded by internal generated funds and external borrowings by the respective subsidiary companies.
  ii. Additional depreciation from the domestic mobile operation in 2007 of approximately RM100 million due to accelerated depreciation in aligning with the Group’s depreciation policy from 15 to 10 years for certain network equipment.
  iii. Lower expected earnings from the domestic fixed line operation due to impact of lower tariffs and substitution to mobile and VoIP. The lower traditional fixed line revenue is expected to be mitigated by growth in broadband revenue.
  • Revenue Growth 2007 – 2009 at a Compounded Annual Growth Rate (CAGR) of 13.8%.
  • EBITDA Margin of 45.7% in 2009
  • Return on Equity of 13.8% in 2009
  • Improve domestic fixed business by driving deployment of Broadband aggressively with expanding choices over fixed and wireless
  • Mitigate decline in fixed voice through further sales stimulation and re-positioning the fixed line business in the market
  • Strengthen position in the enterprise market with data solutions through IPLC, IP-VPN and DSL solutions.
  • Secure pockets of new growth in wholesale and global business
  • Improve revenue share of the mobile market through greater focus on customer service, improved distribution channels, strengthen enterprise sales and tap further the growing mobile data segment
  • Cost and Capital Management focus through synergistic approach

Medium term

The medium term KPIs driven by increasing revenue and returns in the growth markets are expected to be as follows:

Our 3 years broad strategies

The most important is to ensure continuity in implementing the plan that we have set out to do. The plan for TM in the next 3 years is to become a strong regional player with a firm business on the home front. We will continue to drive our business towards fixed and mobile related revenues whereby acquisitions in 'closer to home' markets will be based on appropriate opportunities. These will be done through our planned Performance Improvement Programme (PIP) that focuses on the Fixed Line, Mobile, Regional Expansion, Cost Management and Increasing our Execution capability. Increasingly we will offer services that will maximise related offerings to enrich our customers.

For domestic market:

For international operations:

• • Greater focus on execution of strategies and deliverables with greater expected competition
  • Adopt opportunistic approach in investment opportunities.
  • Explore further efforts in harnessing synergies within the portfolio of investments

We further wish to reiterate our commitment to our shareholders as reflected in our dividend payout policy of 40% to 60% of Profit After Tax and Minority Interest (“PATAMI”). We had over the past 2 years paid out in excess of 50% of PATAMI and will continue to ensure improving shareholders’ returns while executing the strategies set out above.