1 telekom malaysia berhad ("tm") (i) proposed

Not for distribution in the United States of America

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TELEKOM MALAYSIA BERHAD ("TM") (I) PROPOSED DEMERGER OF THE TM GROUP (“PROPOSED DEMERGER”) COMPRISING

THE PROPOSED INTERNAL RESTRUCTURING AND PROPOSED DISTRIBUTION (BOTH AS DEFINED HEREIN);

(II) PROPOSED LISTING OF THE ENTIRE ISSUED AND PAID-UP ORDINARY SHARE

CAPITAL OF TM INTERNATIONAL SDN BHD (“TM INTERNATIONAL”) ON THE MAIN BOARD OF BURSA MALAYSIA SECURITIES BERHAD (“BURSA SECURITIES”) (“PROPOSED LISTING”);

(III) PROPOSED SHAREHOLDERS’ MANDATE FOR THE ISSUANCE OF UP TO 10% OF THE

ENLARGED SHARE CAPITAL OF TM INTERNATIONAL (“PROPOSED SHAREHOLDERS’ MANDATE”);

(IV) PROPOSED EMPLOYEES’ SHARE OPTION SCHEME FOR ELIGIBLE EMPLOYEES AND

EXECUTIVE DIRECTOR(S) OF THE TM GROUP (“PROPOSED OPTION SCHEME”); AND (V) SPECIAL DIVIDEND TO SHAREHOLDERS OF TM (“SPECIAL DIVIDEND”) (COLLECTIVELY REFERRED TO AS THE “PROPOSALS”) 1. INTRODUCTION

1.1 We refer to TM’s announcement dated 28 September 2007 in relation to the Proposed Demerger.

1.2 On behalf of the Board of Directors (“Board”) of TM, CIMB Investment Bank Berhad

(“CIMB”) is pleased to announce that the Board had, on 8 December 2007, approved the final terms of the Proposed Demerger.

1.3 Consequently, on 10 December 2007, TM entered into an agreement with its wholly-owned subsidiaries, Telekom Enterprise Sdn Bhd (“TESB”), TM International, Celcom (Malaysia) Berhad (“Celcom”) and Celcom Transmission (M) Sdn Bhd (“CTX”) to give effect to the Proposed Internal Restructuring (details of which are set out in Section 2.1 below).

1.4 Following the Proposed Internal Restructuring, TM proposes to distribute its entire

holdings in and rights to ordinary shares of RM1.00 each in TM International (“TM International Shares”) to the entitled shareholders of TM (“Proposed Distribution”). The Proposed Demerger is a 2-step process involving both the Proposed Internal Restructuring and Proposed Distribution.

1.5 The entire issued and paid-up ordinary share capital of TM International is proposed to

be listed on the Main Board of Bursa Securities.

1.6 In conjunction with the Proposed Demerger, the Board of TM proposes the following:

(i) proposed shareholders’ mandate for the issuance of up to 10% of the enlarged issued and paid-up share capital of TM International after the Proposed Demerger; and

(ii) proposed employees’ share option scheme for eligible employees and

Executive Director(s) of TM and its subsidiaries (“TM Group”).


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1.7 CIMB, on behalf of TM, is also pleased to announce that TM’s Board has approved a payment of a special gross dividend of 65 sen per share less tax of 27% (representing a net dividend of 47.45 sen per share or RM1,632,189,693.16) in respect of the financial year ending 31 December 2007, to the shareholders of TM.

2. DETAILS OF THE PROPOSALS

2.1 Proposed Internal Restructuring 2.1.1 On 10 December 2007, TM, TESB, TM International, Celcom and CTX

(collectively referred to in Section 2.1 of this announcement as the “Parties”) entered into an agreement to give effect to the Proposed Internal Restructuring (“Demerger Agreement”).

2.1.2 The Proposed Internal Restructuring involves the following:

(i) CTX, a wholly-owned subsidiary of Celcom, transferring its entire

holding of 38,250,000 ordinary shares of RM1.00 each in Fibrecomm Network (M) Sdn Bhd (“Fibrecomm Shares”), which represents 51% of the issued and paid-up share capital of Fibrecomm Network (M) Sdn Bhd (“Fibrecomm”), to TESB for a consideration of RM33 million;

(ii) TESB, a wholly-owned subsidiary of TM, transferring its entire

holding of 1,237,534,681 ordinary shares of RM1.00 each in Celcom (“Celcom Shares”), representing 100% of the issued and paid-up share capital of Celcom, to TM International for a consideration of RM4,677 million;

(iii) TM transferring its entire holding of 37,433,992 redeemable

convertible preference shares of USD0.01 each in SunShare Investments Ltd (“SunShare RCPS”), representing approximately 51% of the issued and paid-up share capital of SunShare Investments Ltd (“SunShare”), to TM International for a consideration of RM141 million; and

(iv) settlement of net amount owing by TM International and its

subsidiaries upon completion of the Proposed Internal Restructuring (“RegionCo”) to TM and its subsidiaries upon the completion of the Proposed Demerger (“FixedCo”) as at 30 November 2007 of RM3,041 million,

whereby the net consideration of RM7,826 million in relation to the Proposed Internal Restructuring will be satisfied as follows: (i) RM3,801 million shall be satisfied through the issuance of such

number of TM International Shares by TM International in favour of TM or its nominee(s) at an issue price to be determined such that the enlarged number of TM International Shares (after the Proposed Demerger) is the same as the number of ordinary shares of RM1.00 each in TM (“TM Shares”) in issue as at a date (to be determined and announced later) on which TM’s shareholders must be registered in TM’s Record of Depositors or Register of Members in order to participate in the Proposed Distribution (“Entitlement Date”);

(ii) RM2,925 million shall be satisfied by way of an amount owing from

TM International to TM at a finance cost of 5.90% per annum (“First Amount Owing”); and


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(iii) RM1,100 million shall be satisfied by way of an amount owing from TM International to TM at a finance cost of 6.72% per annum (“Second Amount Owing”).

In addition, subject to the approvals of the relevant regulatory authorities, TM intends to transfer the 3G Spectrum Assignment (as defined in Section 5 below) to Celcom on an ‘as is where is basis’, for a consideration of RM40.1 million to be satisfied by way of cash.

2.1.3 For illustrative purposes, based on TM’s and TM International’s issued and paid up ordinary shares as at 30 September 2007 of 3,439.8 million TM Shares and 35.7 million TM International Shares respectively and assuming the issuance of 137.6 million new TM Shares, representing 4% of TM’s existing issued and paid-up ordinary share capital, under the Proposed Option Scheme, 3,541.7 million new TM International Shares will be issued under the Proposed Internal Restructuring at an issue price of approximately RM1.07 per TM International Share.

2.1.4 The purchase consideration for the Fibrecomm Shares, Celcom Shares and

SunShare RCPS are based on the cost of investment, whilst the transfer consideration for the 3G Spectrum Assignment is based on its carrying amount, as recorded in the management accounts of the respective vendors as at 30 November 2007, bearing in mind that the transfers of securities/assets are pursuant to an internal restructuring involving wholly-owned subsidiaries of the TM Group.

2.1.5 The finance costs for the First Amount Owing and Second Amount Owing are

based on the weighted average finance cost of the Sukuk Ijarah issued by Hijrah Pertama Berhad (formerly known as Hijrah Pertama Sdn Bhd, formerly known as Malaysian Logistics Sdn Bhd), a wholly-owned subsidiary of TM (“Hijrah Bonds”) and the weighted average finance cost of FixedCo excluding the Hijrah Bonds respectively.

2.1.6 The other salient terms of the Demerger Agreement are as follows:

(i) The First Amount Owing and Second Amount Owing will be payable by TM International to TM within 12 months from the date of completion of the Proposed Internal Restructuring (“Completion Date”). Pending such payment, TM international shall also from the Completion Date, make semi-annual interest payments due on 30 June and 31 December at the prescribed finance costs as stated above until the respective outstanding amounts are fully paid, unless otherwise agreed in writing between TM and TM International;

(ii) TESB, relying on the warranties, representations and indemnity by

CTX, shall purchase Fibrecomm Shares and TM International, relying on the warranties, representations and indemnity by TESB and TM, shall purchase Celcom Shares and SunShare RCPS respectively, on an ‘as is where is basis’, free from all encumbrances and liabilities and with all rights, benefits and advantages attaching thereto, including all bonuses, rights, dividends and distributions declared, made and paid up to the Completion Date;

(iii) the Proposed Internal Restructuring is conditional upon, amongst

others, the approvals pertaining to the Proposed Demerger and Proposed Listing as set out in Section 7 being obtained by the relevant Parties (“Conditions Precedent”) within 3 months from the date of the Demerger Agreement with an automatic extension of 2 months if the conditions precedent are not met within the said first 3 months or such other extended period as the Parties may mutually agree, failing which the Demerger Agreement shall lapse and be of no further effect;


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(iv) the Parties may, subject to the extent permitted by law or the rules of

the relevant regulatory authorities, waive any of the Conditions Precedent at any time by mutual agreement in writing; and

(v) the Completion Date shall be within 60 days from the date when all

the Conditions Precedent are fulfilled or such other date as the Parties may mutually agree in writing.

2.1.7 TESB will not be assuming any liability under the Proposed Internal

Restructuring. Other than the purchase consideration as set out in Section 2.1.2 above and the guarantees which TM International may be required to assume by the lenders of RegionCo, whose approvals are required for the Proposed Demerger, there is no liability to be assumed by TM International arising from the Proposed Internal Restructuring.

2.2 Proposed Distribution

2.2.1 Following the Proposed Internal Restructuring, TM will distribute its entire holdings in and rights to TM International Shares to the shareholders of TM whose names appear in TM’s Record of Depositors or Register of Members as at the Entitlement Date (“Entitled Shareholders”) on the basis of 1 TM International Share for every 1 TM Share held as at the Entitlement Date out of TM’s retained earnings.

2.2.2 For illustrative purposes only, based on TM’s management accounts as at 30

September 2007, the Proposed Demerger will reduce TM’s retained earnings as at 30 September 2007 from RM7,605 million to RM3,710 million.

2.2.3 Upon completion of the Proposed Distribution, the Entitled Shareholders

would hold directly such number of TM International Shares in the same proportion as their holdings in TM as at the Entitlement Date and RegionCo will be demerged from the TM Group.

2.3 Framework agreement

In respect of transactions between RegionCo and FixedCo, TM, Celcom and TM International (collectively referred to in Section 2.3 of this announcement as the “Parties”) had, on 10 December 2007, entered into an agreement to govern the existing and future commercial arrangements or transactions between FixedCo and RegionCo following the Proposed Demerger (“Framework Agreement”) for a period of 3 years from completion of the Proposed Demerger or such other time as may be mutually agreed in writing. The general principles include the following: (i) any arrangements or transactions entered into between the Parties shall be

on an arm’s length commercial terms basis; (ii) the Parties shall, in good faith and in the spirit of mutual co-operation, work

towards finalisation of the terms for joint co-operation with clear and fair incentives for their respective contributions;

(iii) the Parties shall ensure that there is no disruption in the provision of service

to business customers of the other party; (iv) the Parties shall use their best endeavours to conclude any arrangements

and transactions in an expedient manner; and


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(v) the Framework Agreement is not intended to restrict the Parties but to make

it clear that FixedCo will be focusing on fixed-line business whilst RegionCo focuses on mobile business. For a period of 3 years from the completion of the Proposed Demerger, FixedCo will not engage in or make any investment in any mobile business without RegionCo’s prior consent, and RegionCo will not engage in or make any investment in any fixed-line business in Malaysia without FixedCo’s prior consent.

2.4 Proposed Listing

The entire issued and paid-up ordinary share capital of TM International (including new TM International Shares issued under the Proposed Internal Restructuring and pursuant to the Proposed Shareholders’ Mandate, if any) is proposed to be listed on the Main Board of Bursa Securities. For the avoidance of doubt, TM will remain listed on the Main Board of Bursa Securities. TM Group’s publicly listed companies, namely PT Excelcomindo Pratama Tbk (“XL”), Dialog Telekom PLC (formerly known as Dialog Telekom Limited) (“Dialog”) and VADS Berhad will also remain listed on their respective stock exchanges.

2.5 Proposed Shareholders’ Mandate

2.5.1 TM International proposes to seek a shareholders’ mandate for the issuance of up to 10% of its enlarged issued and paid-up share capital after the Proposed Demerger under Section 132D of the Companies Act, 1965 (“Act”). Whilst TM, as the only shareholder of TM International, can approve the shareholder’s mandate for TM International, TM proposes to seek its shareholders’ approval for TM to agree to the said mandate before approving the mandate in its capacity as the shareholder of TM International, in view of the fact that upon completion of the Proposed Demerger, the shareholders of TM will also be the shareholders of TM International.

2.5.2 The Proposed Shareholders’ Mandate, once in effect, shall continue in force

until:

(i) TM International’s next annual general meeting; or (ii) the expiration of the period within which TM International’s next

annual general meeting is required by law to be held,

whichever is earlier (“Mandate Period”). 2.5.3 RegionCo may require funds for capital expenditure, investments and/or

acquisitions (including the repayment of borrowings taken to make such capital expenditure, investments and/or acquisitions, if any) in RegionCo’s core growth markets (“Investments”), which include, but are not limited to India, Sri Lanka, Bangladesh, Indonesia and the Indochina region, and/or working capital.

2.5.4 The amount and timing of funds to be raised for the Investments cannot be

determined at this point in time as they are dependent on external factors such as granting of new licences or opportunities to expand into RegionCo’s core growth markets.

2.5.5 The issuance of new TM International Shares pursuant to the Proposed

Shareholders’ Mandate may be made at any point in time during Mandate Period. Any such issuance may also be made in conjunction with the Proposed Listing (“Proposed IPO”).


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2.5.6 If implemented, the Proposed IPO will involve an offering to institutional investors (“Proposed Institutional Offering”) and potentially an offering to retail investors, comprising the Malaysian public (“Proposed Retail Offering”). The final decision in respect of the Proposed Retail Offering (if any) and the terms of the Proposed IPO (including amount to be raised, uses of proceeds, minimum subscription and pricing, which is expected to be determined via a bookbuilding process) will be made and announced by TM’s Board at a later date. Nonetheless, the number of TM International Shares to be offered under both the Proposed Institutional Offering and Proposed Retail Offering (if any) shall not exceed 10% of the enlarged share capital of TM International after the Proposed Demerger.

2.5.7 In any case, the final terms of any issuance of new TM International Shares

pursuant to the Proposed Shareholders’ Mandate will be announced accordingly.

2.6 Proposed Option Scheme

In conjunction with the Proposed Demerger, TM proposes to establish an employees’ share option scheme for eligible employees and Executive Director(s) of the TM Group (other than subsidiaries that are dormant) (collectively referred to as “Eligible Employees”). The salient terms and conditions of the Proposed Option Scheme are as follows:

(i) Maximum number of TM Shares available under the Proposed Option

Scheme

The total number of TM Shares which may be offered under the Proposed Option Scheme shall not exceed 4% of the existing issued and paid-up share capital of TM. Furthermore, not more than 50% of the TM Shares made available under the Proposed Option Scheme will be allocated, in aggregate to the Executive Director(s) and senior management of the TM Group. In addition, not more than 10% of the TM Shares made available under the Proposed Option Scheme will be allocated to any Eligible Employee who, either singly or collectively through persons connected with the Eligible Employee, holds 20% or more of the issued and paid-up ordinary share capital of TM.

(ii) Eligibility

Eligibility for participation by an employee or Executive Director in the Proposed Option Scheme shall be subject to the terms and conditions contained in the Bye-Laws for the Proposed Option Scheme, which includes that the employee or Executive Director:

(a) has attained the age of 18 years; and (b) is employed on full time basis by and on the payroll of a corporation

within the TM Group.

(iii) Duration of the Proposed Option Scheme

The Proposed Option Scheme shall be in force for a period of 18 months from the date relevant approvals and/or conditions have been obtained and/or complied with, unless extended or renewed by TM’s Board for another 12 months or a shorter period as it deems fit, subject to TM shareholders’ approval.


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(iv) Option Price

The price payable by Eligible Employees for each TM Share upon exercise of an option under the Proposed Option Scheme (“Option”) may be at a discount, provided the discount shall not be more than 10% of the 5 day weighted average market price of TM Shares preceding the offer date, or at par value of TM Shares, whichever is higher.

(v) Ranking of new TM Shares

The new TM Shares to be issued under the Proposed Option Scheme shall, upon allotment and issuance, rank equally in all respects with the existing TM Shares except that they shall not entitle the holders to any dividend, right, allotment and/or other distributions in respect of which the entitlement date is before the date of issuance of such new TM Shares.

(vi) Trust arrangement

The Proposed Option Scheme will be implemented through a trust to be established by TM, whereby TM will issue new TM Shares to the trust to be satisfied by an amount owing by the trust to TM. The trust will be administered by a trustee to be appointed by TM (“Trustee”), in accordance with the trust deed to be constituted. The Trustee shall grant the Options to Eligible Employees only on the instructions of the options committee to be appointed by TM’s Board. Upon exercise of the Options, Eligible Employees will acquire the corresponding number of TM Shares (and TM International Shares, if the Options are exercised after the completion of the Proposed Demerger) at the Option exercise price, from the trust.

2.7 Special Dividend

TM’s Board has approved a payment of a special gross dividend of 65 sen per share less tax of 27% (representing a net dividend of approximately 47.45 sen per share or RM1,632,189,693.16) in respect of the financial year ending 31 December 2007, to the shareholders of TM.

The entitlement date and payment date with respect to the Special Dividend will be announced in due course.

2.8 Conditionality

The Proposed Internal Restructuring, Proposed Distribution and Proposed Listing are inter-conditional in terms of approvals. The Proposed Shareholders’ Mandate is conditional upon, in terms of approvals, the Proposed Demerger and Proposed Listing but not vice versa. In terms of implementation, the Proposed Internal Restructuring and Proposed Distribution are expected to be completed simultaneously followed by the completion of the Proposed Listing. If the issuance of new TM International Shares pursuant to the Proposed Shareholders’ Mandate is carried out in conjunction with the Proposed Demerger, it is expected to be completed simultaneously with the Proposed Demerger. The Proposed Option Scheme and Special Dividend are not conditional upon any other proposals and vice-versa.


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2.9 Ranking of new TM International Shares

The new TM International Shares to be issued under the Proposed Internal Restructuring and pursuant to the Proposed Shareholders’ Mandate, (if any) shall, upon allotment and issuance, rank equally in all respects with the existing TM International Shares except that they shall not entitle the holders to any dividend, right, allotment and/or other distributions in respect of which the entitlement date is before the date of issuance of such new TM International Shares.

2.10 Corporate structure

The corporate structure of the TM Group before and after the Proposed Demerger, based on the shareholdings of TM’s substantial shareholders as at 30 September 2007 and assuming that the Proposed Option Scheme is implemented before the Proposed Demerger, is as follows:

2.10.1 Corporate structure as at 30 September 2007 (adjusted for effects of the

Proposed Option Scheme)

TM*

Khazanah NasionalBerhad

(“Khazanah”)

Employees Provident Fund Board (“EPF”)

Skim AmanahSaham

Bumiputera(“SASB”)

Bank Negara Malaysia (“BNM”)

Other shareholders

39.3% 12.1% 8.9% 7.0% 32.7%

TESB3G Spectrum Assignment

SunShareRPS

Celcom

CTX

Fibrecomm

Malaysia Business*2

100%

100%

51%

TM Ventures*3

Other assets

Strategic business units

Companies

100% 100%

TM International

Dialog*TM International

(Bangladesh) Limited (“TMIB”)

MobileOneLtd (“M1”)*

Spice Communications

Ltd (“Spice”)*

XL*

Telekom Malaysia International

(Cambodia) Company Limited (“TMIC”)

SunShareShares

Other assets*1

TM*

Khazanah NasionalBerhad

(“Khazanah”)

Employees Provident Fund Board (“EPF”)

Skim AmanahSaham

Bumiputera(“SASB”)

Bank Negara Malaysia (“BNM”)

Other shareholders

39.3% 12.1% 8.9% 7.0% 32.7%

TESB3G Spectrum Assignment

SunShareRPS

Celcom

CTX

Fibrecomm

Malaysia Business*2

100%

100%

51%

TM Ventures*3

Other assets


Companies

100% 100%

TM International

Dialog*TM International

(Bangladesh) Limited (“TMIB”)

MobileOneLtd (“M1”)*

Spice Communications

Ltd (“Spice”)*

XL*

Telekom Malaysia International

(Cambodia) Company Limited (“TMIC”)

SunShareShares

Other assets*1


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2.10.2 Corporate structure after the Proposed Internal Restructuring

2.10.3 Corporate structure after the Proposed Distribution

Notes (applicable throughout Section 2.10): *1 Includes 49% of Mobile Telecommunications Company of Esfahan, 89% of Multinet

Pakistan (Private) Limited, 18.97% of Samart Corporation Public Company Limited* and 35.31% effective interest in Samart I-Mobile Public Company Limited*.

*2 Strategic business unit, comprising mainly of fixed line and broadband businesses. *3 Strategic business unit, comprising 65% of VADS Berhad, 54% of Fiberail Sdn Bhd,

100% of Universiti Telekom Sdn Bhd, 100% Menara Kuala Lumpur Sdn Bhd, 100% of TM Info-Media Sdn Bhd, 100% of TM Facilities Sdn Bhd and property holdings.

* Publicly listed companies.

51%

TM*

Khazanah EPF SASB BNM Other shareholders

TM International TESB

3G Spectrum Assignment

SunShareShares and

SunShare RPS

Celcom

CTX

Fibrecomm

Malaysia Business*2

Dialog*

100% 100%

100%

TMIBXL*

TM Ventures*3

100%

Other assets


CompaniesM1*Spice* TMIC Other assets*1

39.3% 12.1% 8.9% 7.0% 32.7%

51%

TM*


TM International TESB


SunShareShares and

SunShare RPS

Celcom

CTX

Fibrecomm

Malaysia Business*2

Dialog*

100% 100%

100%

TMIBXL*

TM Ventures*3

100%

Other assets


CompaniesM1*Spice* TMIC Other assets*1

39.3% 12.1% 8.9% 7.0% 32.7%

TM*


TESB

Fibrecomm

Malaysia Business*2

TM Ventures*3

Other assets


Companies

51%

100%

TM International*


SunShareShares and

SunShare RPS

Celcom

CTX

Dialog*

100%

TMIBXL*

TMIC

100%


39.3% 12.1% 8.9% 7.0% 32.7%

M1*Spice* Other assets*1

39.3% 12.1% 8.9% 7.0% 32.7%

TM*


TESB

Fibrecomm

Malaysia Business*2

TM Ventures*3

Other assets


Companies

51%

100%

TM International*


SunShareShares and

SunShare RPS

Celcom

CTX

Dialog*

100%

TMIBXL*

TMIC

100%


39.3% 12.1% 8.9% 7.0% 32.7%

M1*Spice* Other assets*1

39.3% 12.1% 8.9% 7.0% 32.7%


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3. RATIONALE FOR THE PROPOSALS

3.1 Proposed Demerger

(i) Realise governance benefits that can accelerate current growth and improvement efforts

The Proposed Demerger is expected to allow an improvement of organisational focus through more explicit management mandates and accountability for each respective business entity and tailored performance management. This is also expected to improve execution capacity in each respective business entity through better scope for talent management and human resource development. Consequently, the respective entities will be better positioned to pursue different strategies in a more focused way. The Proposed Demerger is also expected to result in greater transparency on each business entity’s performance, enabling the capital market and other stakeholders to better ascertain the merits and prospects of each entity. This would result in the development of a more focused shareholder base, which is also expected to facilitate a business-centric valuation of the separate entities and potentially unlock value to shareholders.

(ii) Capture additional demerger benefits

As a separate entity, RegionCo is expected to benefit from increased deal structuring capability with its enhanced profile as a successful and growing focused mobile operator. The proposed separate listing is also expected to provide RegionCo with greater access to equity markets and increased flexibility in funding, allowing RegionCo to be better positioned to pursue its growth strategies. The Proposed Demerger would also provide each resultant entity with the opportunity to undertake more tailored capital management initiatives and pursue specific dividend policies and investor relations strategies.

(iii) Freedom to pursue distinct aspirations and strategies

The Proposed Demerger will enable each business entity to focus on their respective core activities and pursue their different and distinct aspirations. RegionCo will be focused on becoming a leading regional mobile operator in the South/South East Asian region with an active growth strategy. FixedCo, on the other hand, will be focused on becoming Malaysia’s leading next generation communications provider embracing customer needs through innovation and execution excellence.

3.2 Proposed Listing

The Proposed Listing will allow the Entitled Shareholders the opportunity to realise part of their shareholding in TM International in the market and enhance the profile of RegionCo within the global investing community.

3.3 Proposed Shareholders’ Mandate and Proposed IPO

The Proposed Shareholders’ Mandate will provide flexibility to TM International for the issuance of new TM International Shares, subject to the relevant authorities’ approval, to fund RegionCo’s capital expenditure, investments and/or acquisitions (including the repayment of borrowings taken to make such capital expenditure, investments and/or acquisitions, if any) in RegionCo’s core growth markets, which include, but are not limited to India, Sri Lanka, Bangladesh, Indonesia and the Indochina region.


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Furthermore, the Proposed IPO, if implemented, will provide the Entitled Shareholders with better guidance on the valuation of RegionCo, immediately prior to its listing, as the Proposed IPO is expected to include a price discovery process through a bookbuilding exercise.

3.4 Proposed Option Scheme

In view of the expiry of the earlier employees’ share option scheme in September 2007, TM’s Board wishes to propose a new employees’ share option scheme. However, in view of the Proposed Demerger and Proposed Listing, the terms of the option scheme will need to be adjusted such that the Eligible Employees are able to participate in both the equity of RegionCo and FixedCo, post demerger. In addition, in recognition of the contribution of the employees to TM Group leading up to the Proposed Demerger, the Proposed Option Scheme has been structured to be facilitative to encourage higher level of participation by the employees of TM Group. This is also intended to encourage and retain Eligible Employees during the transition period of the demerger to enable RegionCo and FixedCo to continue operations with minimal disruptions.

3.5 Special Dividend

As a result of the TM Group’s review of its capital management initiatives, TM’s Board has approved the Special Dividend after taking into consideration the capital structures of FixedCo and RegionCo and their respective financial positions. The Special Dividend rewards TM’s shareholders for their continuous support of TM. After payment of the Special Dividend, TM Group’s financial position is expected to remain strong, supported by the sizeable cash and cash equivalents reserves and continued cash flow generated from its operations.

4. INFORMATION ON REGIONCO AND FIXEDCO

The Proposed Demerger will result in the creation of 2 strong telecommunication players: 4.1 RegionCo - Leading Regional Mobile Operator

RegionCo is proposed to undertake the mobile and non-Malaysian businesses of the TM Group, which is presently being carried out collectively by Celcom and the various operating subsidiaries and associated companies of TM International.


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RegionCo will be focused on becoming a leading regional mobile operator with strong exposure to high growth mobile markets. As at 30 September 2007, RegionCo (including its associated companies and investee company) has a total of approximately 35.7 million subscribers in such high growth markets. The year-on-year subscriber growth as at 30 September 2007 was approximately 34.7%. RegionCo (including its associated companies and investee companies) has a significant presence in 10 countries, 8 of which are in the provision of mobile telecommunication services, as follows:

Country Operating company

Mobile Telecommunication Services

(i) Malaysia Celcom

(ii) Indonesia XL*1

(iii) Sri Lanka Dialog*1

(iv) Bangladesh TMIB

(v) Singapore M1*1

(vi) India Spice*1

(vii) Cambodia TMIC

(viii) Iran Mobile Telecommunications Company of Esfahan

Non-Mobile Telecommunication Services

(ix) Pakistan Multinet Pakistan (Private) Limited*2

(x) Thailand - Samart Corporation Public Company Limited*1,3 - Samart I-Mobile Public Company Limited*1,3

Notes:

*1 Publicly listed companies. *2 Provision of fibre optic network services and broadband services. *3 Design, implementation and installation of telecommunication systems and distribution

of telecommunication equipment. RegionCo also has strong competitive positions in the above regional markets, with Dialog being the leading mobile services provider in Sri Lanka, TMIB and Celcom being the 2nd largest mobile services provider in their respective countries, and XL being the 3rd largest mobile services provider in Indonesia by revenue. In its aspiration to become the leading mobile operator in the region, RegionCo aims to expand its presence in the South/South East Asian region by addressing the unfulfilled communication needs of local population with affordable and innovative products and services while developing an operational excellence model to maximise growth and margins in the countries in which it operates.

Background information on TM International TM International was incorporated in Malaysia under the Act as a private limited company on 12 June 1992 under the name, Telekom Malaysia International Sdn Bhd and was activated in 2001. On 16 October 2001, it assumed its present name. As part of the Proposed Demerger, TM International will be converted to a public company. The principal activities of TM International are investment holding and provision of telecommunication and consultancy services on an international scale.


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The authorised and issued and paid-up share capital of TM International as at 30 September 2007 is as follows:

Type No. of ordinary

shares Par value Total

RM RM

Authorised 500,000,000 1.00 500,000,000 Issued and paid-up 35,693,116 1.00 35,693,116

The Directors of TM International as at 30 September 2007 are as follows:

(i) Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor (Chairman); (ii) Dato’ Sri Abdul Wahid Omar; (iii) Dato’ Lim Kheng Guan; (iv) Ganendran Sarvananthan; (v) Datuk Bazlan Osman; and (vi) Dato’ Yusof Annuar Yaacob (Chief Executive Officer).

The existing and proposed substantial shareholders of TM International are set out in Section 6.4(ii).

4.2 FixedCo – Malaysia’s Leading Next Generation Communications Provider

FixedCo will carry on the retail, domestic and global wholesale fixed-line voice, data and broadband services and other telecommunication and non-telecommunication related businesses in Malaysia and regionally. FixedCo is the leading domestic fixed-line and broadband provider, with a 95% market share in the fixed-line business and a 96% share of broadband business. As at 30 September 2007, FixedCo has 4.4 million fixed-line subscribers and 1.2 million broadband subscribers. FixedCo will be focused on becoming Malaysia’s leading next generation communications provider embracing customer needs through innovation and execution excellence. It will strive to enrich consumer lifestyle and experience by providing innovative next generation services, stimulating growth and elevating business performance of customers with high value information and communications solutions and uphold customer-driven principles towards service excellence and efficiency. FixedCo intends to lead the broadband penetration in Malaysia, which has strong growth opportunities given Malaysia’s broadband penetration of only 12.8% for the 2nd quarter of 2007 (based on statistics published by the Malaysian Communications and Multimedia Commission). As at 30 September 2007, FixedCo’s broadband subscribers grew by approximately 60.7% year-on-year. As previously announced, TM will be working in partnership with the Government of Malaysia (“Government”) to develop a high speed broadband (“HSBB”) infrastructure and service. TM is in the midst of discussions with the Government to finalise the terms of the HSBB partnership and further details will be announced in due course.


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While pursuing growth in the broadband business, FixedCo remains focused on enhancing international connectivity within the region. This would establish Malaysia as a regional Internet Protocol (IP) hub, serving as a digital gateway for South-East Asia. Other FixedCo initiatives will include capitalising on initial Performance Improvement Program (“PIP”) successes to target improved cost efficiency and productivity levels, procurement excellence and leveraging the Next Generation Network transformation for greater agility. FixedCo will also continue to dispose/monetise non-core assets and re-integrate core affiliates into FixedCo. Upon completion of the Proposed Demerger, TM’s Board envisages that FixedCo will adopt an appropriate dividend policy to enhance shareholders’ value.

5. INFORMATION ON 3G SPECTRUM ASSIGNMENT

The 3G Spectrum Assignment refers to the Spectrum Assignment No. SA/01/2003 granted to TM dated 2 April 2003 over the following frequency bands with effect from 2 April 2003 until 1 April 2018: (i) 1950 megahertz (“MHz”) - 1965 MHz; (ii) 2140 MHz - 2155 MHz; and (iii) 2020 MHz - 2025 MHz, as varied by the variations to the Spectrum Assignment No. SA/01/2003 dated 14 March 2007 and 15 November 2007.

6. EFFECTS OF THE PROPOSALS

The proforma effects of the Proposals on TM and TM International have been presented below, for illustrative purposes only, based on the following assumptions: (i) issuance of 137.6 million TM Shares, representing approximately 4% of TM’s existing

issued and paid-up share capital, under the Proposed Option Scheme, which is assumed to be completed before the Proposed Demerger, with an assumed Option exercise price of RM10.91 (based on the 5-day volume-weighted average market price of TM Shares up to 30 November 2007); and

(ii) issuance of 357.7 million TM International Shares (“Issue Shares”) pursuant to the

Proposed Shareholders’ Mandate, representing approximately 10% of TM International’s issued and paid-up share capital after the Proposed Demerger, at an illustrative issue price of RM2.23, representing the proforma net book value per TM International Share after the Proposed Demerger.

With respect to the Proposed Shareholders’ Mandate, the actual timing and number of Issue Shares to be issued (if any) will be determined at a later date. If implemented, the price per Issue Share and actual amount to be raised under the said issuance is expected to be determined after a bookbuilding process. Accordingly, this assumption is made solely for the purpose of illustrating the effects of the issuance of Issue Shares (if any) on TM International and is not an indication of RegionCo’s valuation, which would depend on the market conditions then and the outcome of the bookbuilding exercise (if any).


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The inclusion of such information should not be regarded as a representation, warranty or prediction by TM, TM International or any other person with respect to the accuracy of the underlying assumptions or that such results will be or are likely to be achieved. The Proposed Listing will not have any effect on TM’s and TM International’s issued and paid-up share capital, earnings, net assets, gearing and substantial shareholders’ shareholdings in TM and TM International. The Proposed Shareholders’ Mandate will not have any effect on TM’s issued and paid-up share capital, earnings, net assets, gearing and substantial shareholders’ shareholdings in TM while the Special Dividend will not have any effect on TM International’s issued and paid-up share capital, earnings, net assets, gearing and substantial shareholders’ shareholdings in TM International. 6.1 Issued and paid-up share capital

(i) TM

The Proposed Demerger and Special Dividend will not have any effect on the issued and paid-up share capital of TM. The effects of the Proposed Option Scheme on TM’s issued and paid-up share capital are as follows:

No. of ordinary shares of

RM1.00 each

million

Issued and paid-up ordinary share

capital

RM million

Existing issued and paid-up share capital as at 30 September 2007 3,439.8 3,439.8

To be issued under the Proposed Option Scheme 137.6 137.6

Enlarged issued and paid-up share capital 3,577.4 3,577.4

(ii) TM International

The Proposed Option Scheme will not have any direct effect on the issued and paid-up share capital of TM International as it is anticipated that under the terms of the Proposed Option Scheme, the TM Shares would be issued under the trust before the Entitlement Date for the Proposed Demerger. This, however, has an impact in terms of increasing the resultant number of TM International Shares to be issued under the Proposed Internal Restructuring such that the eventual number of TM International Shares equals the number of TM Shares entitled to the Proposed Distribution, as illustrated below. Further, the Proposed Shareholders’ Mandate will not have an immediate impact on the issued and paid-up share capital of TM International. However, there will be an increase of up to 10% of TM International’s enlarged issued and paid-up share capital if any Issue Shares are issued pursuant to the Proposed Shareholders’ Mandate.


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The effects of the Proposed Demerger and issuance of Issue Shares pursuant to the Proposed Shareholders’ Mandate on the issued and paid-up share capital of TM International are as follows:

No. of ordinary shares of

RM1.00 each

million

Issued and paid-up ordinary

share capital

RM million

Existing as at 30 September 2007 35.7 35.7

To be issued under the Proposed Demerger 3,541.7 3,541.7

Issued and paid-up share capital after the Proposed Demerger 3,577.4 3,577.4

To be issued pursuant to the Proposed Shareholders’ Mandate 357.7 357.7

Enlarged issued and paid-up share capital 3,935.1 3,935.1

6.2 Earnings

The Special Dividend will not have any material effect on the earnings of TM. Based on the audited consolidated financial statements of TM for the financial year ended 31 December 2006, the proforma revenue, earnings before interest, taxation, depreciation and amortisation (“EBITDA”), and profit after taxation and minority interests (“PATAMI”) of RegionCo and FixedCo with respect to the Proposed Demerger, assuming completion of the Proposed Demerger on 1 January 2006, are as follows:

------------------Financial year ended 31 December 2006------------------ Audited Adjusted*1 ------------------Proforma------------------ TM Group TM Group FixedCo RegionCo RM mil RM mil RM mil RM mil

Operating revenue 16,399 16,774 8,201 8,573

EBITDA 7,530 7,534 3,532 4,002

PATAMI 2,069 2,054 923 1,131

Note: *1 After adjustments for inter-company transactions between RegionCo and FixedCo as

well as proforma tax effects arising from the Proposed Demerger.

The Proposed Option Scheme is also expected to have an impact on TM’s consolidated earnings in view of the adoption of the Financial Reporting Standard 2 (“FRS2”) “Share-Based Payment”. In accordance with FRS2, the cost arising from the issuance of options under the Proposed Option Scheme (“Options”) will be measured by the fair value of the Options at the grant/offer date, thereby reducing TM’s consolidated earnings. The fair value is dependent on, amongst others, the exercise price of TM Shares at the Option grant/offer date, the tenure of the Option and volatility of share price of TM. The charge will be recognised over the vesting period. The fair value of the Options will be considered using the same valuation model applied in computing the fair value of the options granted under the TM Group’s previous employees’ share option scheme.


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Other than the cost effects pursuant to FRS2, the effects of the Proposed Option Scheme on TM’s consolidated earnings per share would depend on the utilisation of the proceeds to be received upon the exercise of the Options by the Eligible Employees.

The Proposed Option Scheme is also expected to potentially have an impact on TM International’s consolidated earnings by virtue of the cost that TM charges to its relevant subsidiaries based on the allocation of Options to the Eligible Employees of the said subsidiaries.


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6.3 Net assets and gearing (i) TM Group (FixedCo after the Proposed Demerger)

For illustrative purposes only, based on TM’s audited consolidated financial statements as at 31 December 2006 and on the assumption that the Proposals were completed on 31 December 2006, the proforma effects of the Special Dividend, Proposed Option Scheme and Proposed Demerger on TM’s consolidated net assets and gearing are set out below:

Audited as at 31

December 2006Post FY2006

adjustments*1 After the Special

DividendAfter the Proposed

Option Scheme*2After the Proposed

Demerger RM million RM million RM million RM million RM millionShare capital 3,397.6 3,439.8 3,439.8 3,577.4 3,577.4

Share premium 3,941.9 4,262.1 4,262.1 5,625.7 5,625.7 Reserves 12,571.6 12,555.6 10,923.4 10,923.4 2,948.8 Total capital and reserves attributable to TM’s equity holders / Net assets

19,911.1 20,257.5 18,625.3 20,126.5 12,151.9

No. of TM Shares in issue (mil) 3,397.6 3,439.8 3,439.8 3,577.4 3,577.4 Net assets per share (RM) 5.86 5.89 5.41 5.63 3.40 Total borrowings 12,085.9 12,085.9 12,085.9 12,085.9 7,935.8 Gearing (times) 0.61 0.60 0.65 0.60 0.65 Total borrowings net of First Amount Owing and Second Amount Owing

3,910.8

Gearing net of First Amount Owing and Second Amount Owing (times)

0.32

Notes: *1 After adjusting for options exercised under TM’s previous employees’ share option scheme from 1 January 2007 up to 30 September 2007.

*2 Assuming all the Options are fully exercised and cost effects pursuant to FRS2 have not been included.


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(ii) TM International Group (RegionCo after the Proposed Demerger)

Save for the potential charge by TM on TM International pursuant to the Proposed Option Scheme as set out in Section 6.2 above, the Proposed Option Scheme will not have any effect on TM International’s consolidated net assets and gearing.

For illustrative purposes only, based on TM International’s unaudited consolidated financial statements as at 31 December 2006 and on the assumption that the Proposals were completed on 31 December 2006, the proforma effects of the Proposed Demerger and issuance of Issue Shares pursuant to the Proposed Shareholders’ Mandate on TM International’s consolidated net assets and gearing are set out below:

Unaudited as at 31 December 2006

After the Proposed Demerger

After issuance of the Issue Shares pursuant to the

Proposed Shareholders’ Mandate

RM million RM million RM million Share capital 35.7 3,577.4 3,935.1 Share premium 58.3 317.6 702.4*1 Reserves 2,987.8 4,079.6 4,079.6 Total capital and reserves attributable to TM International’s equity holders / Net assets

3,081.8 7,974.6 8,717.1

Net assets per share (RM) 86.32 2.23 2.22 Total borrowings 3,426.1 8,175.1*2 8,175.1*2 Gearing (times) 1.11 1.03 0.94 Notes: *1 After deducting estimated expenses of RM55.2 million, based on the illustrative issue price of RM2.23 per Issue Share. *2 Includes the First Amount Owing and Second Amount Owing.


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6.4 Substantial shareholders’ shareholdings (i) TM

The Proposed Demerger and the Special Dividend will not have any effect on the shareholdings of TM’s substantial shareholders in TM. The effects of the Proposed Option Scheme, assuming all the Options are fully exercised, on the shareholdings of TM’s substantial shareholders in TM, based on TM’s Register of Substantial Shareholders as at 30 September 2007, are as follows:

----------------------------- As at 30.09.07 ------------------------------ -------------- After Proposed Option Scheme ------------------- ---------------- Direct -------------- -------------- Indirect --------- ------------ Direct --------------- ------------ Indirect ------------- No. of TM Shares

held

% No. of TM

Shares held

% No. of TM

Shares held

% No. of TM

Shares held

%

Khazanah 1,242,000,773 36.11 162,455,300*1 4.72 1,242,000,773 34.72 162,455,300*1 4.54 EPF 398,089,300 11.57 33,623,400*2 0.98 398,089,300 11.13 33,623,400*2 0.94 BNM 318,944,400 9.27 - - 318,944,400 8.92 - - SASB 251,680,000*3 7.32 - - 251,680,000*3 7.04 - -

Notes: *1 Deemed interest by virtue of TM Shares held via CIMSEC Nominees (Tempatan) Sdn Bhd under Section 6A of the Act. *2 Deemed interest by virtue of TM Shares managed by other portfolio managers on behalf of EPF under Section 6A of the Act. *3 Held via Amanah Raya Nominees (Tempatan) Sdn Bhd.


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(ii) TM International

Save for consequential changes to TM International’s issued and paid-up share capital as a result of an increase an in TM’s issued and paid- up share capital pursuant to the Proposed Option Scheme, the Proposed Option Scheme and Special Dividend will not have any effect on the shareholdings of TM International’s existing substantial shareholders and proposed substantial shareholders in TM International. The effects of the Proposed Demerger and issuance of Issue Shares pursuant to the Proposed Shareholders’ Mandate on the shareholdings of TM International’s existing substantial shareholders and proposed substantial shareholders in TM International are as follows:

----------------------As at 30.09.07*1------------------ ------------After the Proposed Demerger*2---------- After issuance of the Issue Shares pursuant

----to the Proposed Shareholders’ Mandate----- -----------Direct--------- ----------Indirect-------- ------------Direct----------- -----------Indirect--------- ------------Direct----------- -----------Indirect---------

Shareholders

No. of TMI Shares

held

%

No. of TMI Shares

held

% No. of TMI

Shares held

% No. of TMI

Shares held

% No. of TMI

Shares held

% No. of TMI

Shares held

% TM 35,693,116 100.00 - - - - - - - - - -

Khazanah - - - - 1,242,000,773 34.72 162,455,300*3 4.54 1,242,000,773 31.56 162,455,300*3 4.13

EPF - - - - 398,089,300 11.13 33,623,400*4 0.94 398,089,300 10.12 33,623,400*4 0.85

BNM - - - - 318,944,400 8.92 - - 318,944,400 8.11 - -

SASB - - - - 251,680,000*5 7.04 - - 251,680,000*5 6.40 - -

Notes: *1 Based on TM International’s Register of Members as at 30 September 2007.

*2 Based on TM’s Register of Substantial Shareholders as at 30 September 2007 after adjustments for the Proposed Option Scheme as set out in Section 6.4(i) above.

*3 Deemed interest by virtue of TM International Shares to be held via CIMSEC Nominees (Tempatan) Sdn Bhd under Section 6A of the Act. *4 Deemed interest by virtue of TM International Shares to be managed by other portfolio managers on behalf of EPF under Section 6A of the Act.

*5 To be held via Amanah Raya Nominees (Tempatan) Sdn Bhd.


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6.5 Dividends (i) TM (FixedCo)

In determining the dividend payout ratio in respect of any financial year after the Proposed Demerger, TM intends to adopt a progressive dividend policy which enables the company to provide stable and sustainable dividends to shareholders while maintaining an efficient capital structure and ensuring sufficiency of funding for future growth. Upon completion of the Proposed Demerger, TM intends to distribute dividends of RM700 million or up to 90% of its normalised profit after tax attributable to its shareholders, whichever is higher. Dividends will be paid only if approved by TM’s Board out of funds available for such distribution. The actual amount and timing of dividend payments will depend upon TM’s level of cash and retained earnings, results of operations, business prospects, monetisation of non-core assets, projected levels of capital expenditure and other investment plans, current and expected obligations and such other matters as TM’s Board may deem relevant.

(ii) TM International (RegionCo)

In determining the capital structures of FixedCo and RegionCo, TM’s Board has considered the expected dividend payment capacity of TM International, bearing in mind RegionCo’s strategy to explore regional growth opportunities and the dividend policies of comparable companies. TM’s Board expects TM International's dividend payout ratio (i.e. dividends as a proportion to normalised profit after tax attributable to its shareholders) to not exceed TM Group's payout ratio in recent years. The actual dividend policy of TM International shall be determined at a later date by TM International’s Board, leading up to the Proposed Demerger. It should be noted that dividends to shareholders in the future will depend upon a number of factors, including TM International’s level of cash and retained earnings, results of operations, business prospects, capital requirements and surplus, general financial conditions, contractual restrictions and other factors considered relevant by TM International’s Board.

7. APPROVALS REQUIRED The Proposals (save for the Special Dividend) are subject to the following:

(i) approval of the Securities Commission (“SC”) for the Proposed Demerger, Proposed Listing and issuance of the Issue Shares pursuant to the Proposed Shareholders’ Mandate;

(ii) approval of MoF Inc for the Proposed Internal Restructuring and Proposed

Distribution; (iii) approval of the SC (on behalf of the Foreign Investment Committee) for the Proposed

Demerger, Proposed Listing and issuance of the Issue Shares pursuant to the Proposed Shareholders’ Mandate;

(iv) approval of Bursa Securities for the Proposed Listing and the listing of the TM Shares

to be issued pursuant to the Proposed Option Scheme;

(v) approval of the Malaysian Communications and Multimedia Commission for the transfer of the 3G Spectrum Assignment under the Proposed Internal Restructuring;

(vi) approval of TM’s shareholders;


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(vii) approval of the TM Group’s creditor/lenders (where applicable);

(viii) approval of the TM Group’s counterparties with respect to shareholders’ agreements and joint venture agreements (where applicable); and

(ix) approvals/consents of any other relevant authorities, if required.

Application to the relevant authorities is expected to be submitted within 3 months from the date of this announcement. The Special Dividend is not subject to any approval.

8. EXPECTED IMPLEMENTATION/COMPLETION DATE

Barring any unforeseen circumstances: (i) the Proposed Demerger and Proposed Listing are expected to be completed in the

second quarter of 2008; (ii) the Proposed Shareholders’ Mandate is expected to be in force in the first quarter of

2008; (iii) the Proposed Option Scheme is expected to be implemented and be in force in the

first quarter of 2008; and (iv) the Special Dividend is expected to be paid in the first quarter of 2008.

9. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS

Dato’ Sri Abdul Wahid Omar (“DSAWO”), being an Executive Director of TM, may be allocated Options under the Proposed Option Scheme. As such, DSAWO has voluntarily abstained and will continue to abstain from deliberating and voting on the Proposed Option Scheme at the relevant Board meetings. DSAWO, together with any persons connected to him, shall also abstain from voting in respect of their direct and/or indirect shareholdings in TM on the resolutions pertaining to the Proposed Option Scheme at TM’s extraordinary general meeting to be convened. Save as disclosed above, none of the Directors and major shareholders of TM and/or persons connected to the Directors or major shareholders of TM have any direct or indirect interest in the Proposals, save for their respective entitlements as shareholders of TM, where applicable.

10. ADVISERS

CIMB and UBS AG, acting through its business group, UBS Investment Bank, have been appointed by TM as the Joint Advisers for the Proposed Demerger, Proposed Listing, Proposed Shareholders’ Mandate and Proposed Option Scheme.

11. DIRECTORS’ STATEMENT

The Directors of TM (other than DSAWO who has voluntarily abstained from deliberation for the reason set out in Section 9 above), having considered all aspects of the Proposed Option Scheme, is of the opinion that the terms of the Proposed Option Scheme are fair and reasonable and are in the best interest of TM. The Board of TM, having considered all aspects of the Proposals (other than the Proposed Option Scheme), is of the opinion that the terms of the Proposals (other than the Proposed Option Scheme) are fair and reasonable and are in the best interest of TM.


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12. COMPLIANCE WITH THE SC’S POLICIES AND GUIDELINES ON ISSUE/OFFER OF SECURITIES (“SC GUIDELINES”)

Save as disclosed below, the Proposals do not depart from the SC Guidelines.

(i) As the Proposed Listing is sought under the market capitalisation route, Paragraph

6.24 of the SC Guidelines requires that a moratorium be imposed on the disposal of TM International Shares held by its shareholders. Given the nature of the Proposed Listing i.e. via an introduction through the Proposed Distribution, TM and TM International propose that no moratorium be imposed on shareholders so as not to prejudice the shareholders of TM;

(ii) Based on TM’s Register of Substantial Shareholders as at 30 September 2007, EPF,

SASB and BNM will be the substantial shareholders of TM International upon completion of the Proposed Demerger. As these shareholders are not involved in the preparation of the submission to the SC, TM and TM International propose that these shareholders are not required to make the disclosure in respect of any circumstance that could result in conflict of interest situation as required under Paragraph 6.20 of the SC Guidelines;

(iii) If implemented, the issuance of Issue Shares pursuant to the Proposed Shareholders’

Mandate is expected to involve a bookbuilding exercise. If this is implemented as the Proposed IPO, under Paragraph 6.23 of the SC Guidelines, underwriting arrangements need to be in place before an offering of securities is made. As it is market convention that a bookbuilding, as a price discovery process, does not involve an underwriting process, TM and TM International propose that no underwriting arrangements be put in place before the said offering (if any); and

(iv) Given that TM International would comply with the National Development Policy

requirements even if all the new TM International Shares under the Proposed Shareholders’ Mandate are issued to non-Bumiputera shareholders, TM International proposes that no minimum number of TM International Shares is to be placed to Bumiputera investors under any issuance pursuant to the Proposed Shareholders’ Mandate, if implemented, as required under Paragraph 6.08 of the SC Guidelines.

In addition, as the final terms of the any issuance of TM International Shares pursuant to the Proposed Shareholders’ Mandate have not been finalised, any future departure (if any) in respect of the issuance of TM International Shares will be announced with the final terms of the said issuance.


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13. DOCUMENT AVAILABLE FOR INSPECTION

A copy of the Demerger Agreement is available for inspection at TM’s registered office at Level 51, North Wing, Menara TM, Jalan Pantai Baharu, 50672 Kuala Lumpur, Malaysia, during normal business hours from Mondays to Fridays (except for public holidays) for a period of 3 months from the date of this announcement.

This announcement is dated 10 December 2007.

This announcement is not an offer for sale of securities in any jurisdiction, including in the United States of America (“US”). Securities may not be offered or sold in the US absent registration or an exemption from registration under the US Securities Act 1933, as amended. None of TM, TM International or any seller of securities intends to register any portion of the offering in the US or to conduct a public offering of securities in the US. This announcement contains “forward-looking statements”. These forward-looking statements include statements relating to TM and TM International’s businesses, performance and prospects. These statements reflect the current views of TM and TM International with respect to future events and are subject to certain risks, uncertainties and assumptions. It is important to note that actual results could differ materially from those anticipated in these forward looking statements.

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