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Disposal Of Telekom Malaysia Berhad's Entire Equity Interest In Societe Des Telecommunications De Guinee S.a ("SOTELGUI")

11 August 2008

Type Announcement
Subject DISPOSAL OF TELEKOM MALAYSIA BERHAD’S ENTIRE EQUITY INTEREST IN SOCIETE DES TELECOMMUNICATIONS DE GUINEE S.A (“SOTELGUI”)
Contents
INTRODUCTION

Telekom Malaysia Berhad (“TM”) wishes to announce that it has today entered into a Settlement and Transfer Agreement and other ancillary agreements (collectively the “STA”) with the Government of the Republic of Guinea (“GoG”), Sotelgui and TM International Berhad (“TMI”) for the disposal of TM’s entire shareholding of 4,500,000 category B ordinary shares of US$10.00 each, representing 60% of the share capital of Sotelgui (“Sale Shares”) to GoG. The GoG is the registered holder of the remaining 40% of the share capital of Sotelgui.
TM first invested in Sotelgui in 1995. Sotelgui operates a fixed line and cellular, GSM service in the Republic of Guinea ("Guinea"). In 2005, TM announced that it had initiated exit plans from Guinea, as part of a broader review of its international investment strategy to focus on geographic regions closer to home.

    All operational and managerial control of Sotelgui reverted to the GoG in 2005. This coincided with TM's decision to divest all its African investments. Nevertheless, TM will continue to have Board representation in Sotelgui until the completion of the STA which is expected to be on 1 September 2008 in ensuring that all other exit-related issues including equity transfer are finalized smoothly.
SALIENT POINTS OF THE STA
    The salient points of the STA are as follows:-

    a. On completion and subject to satisfaction of the conditions precedent (or any waiver thereof), TM shall transfer the Sale Shares and the GoG shall purchase the Sale Shares for the price of US$1.00 free from any option, charge, lien, equity, encumbrance, rights to pre-emption or any other third party rights.

    b. Payment of US$ 2,041,201.30 to TM for the full and final settlement of all debts owing to it relating to or in connection with TM's shareholding in Sotelgui, the Articles of Association of Sotelgui dated 23 April 2003, the Joint Venture Agreement dated 23 December 1995 and all related agreements. Sotelgui has made full payment of the said amount on 23 June 2008.
    The completion of the STA is conditional upon receipt by TM of:
    i) certified copy of an auditors' report from Sotelgui's auditors in respect of the ancillary agreements to the STA; and
    ii) certified copy of the notice of a shareholders' meeting of Sotelgui together with a directors' report and the auditors' report referred to above given by the Sotelgui Board to Sotelgui’s shareholders.

    TM will cease to have any interest in Sotelgui upon completion of the transfer of the Sale Shares as abovementioned.

    FINANCIAL EFFECT

    The value of investment in Sotelgui has been written down to RM1.00 when TM initiated the exit plan in December 2005.

    However, TM will realize approximately RM82 million foreign exchange loss arising from the translation of net investment in Sotelgui prior to deconsolidation which was reflected as foreign exchange reserve previously upon completion of the transfer of the Sale Shares as mentioned above.

The above foreign exchange loss has no impact to the cash flow of TM Group.

    • DIRECTORS' AND SUBSTANTIAL SHAREHOLDER'S INTEREST In so far as the Directors of TM are aware, none of the Directors nor the major shareholders of TM and/or persons connected to them have any interest, whether direct or indirect, in the STA.

Announcement Info

Company Name TELEKOM MALAYSIA BERHAD
Stock Name TM
Date Announced 11 Aug 2008
Category General Announcement
Reference No TM-080811-62721