TELEKOM MALAYSIA BERHAD (128740-P) · TELEKOM MALAYSIA BERHAD (128740-P) 2004 ANNUAL REPORT GROUP...

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GROUP CORPORATE COMMUNICATIONS

Telekom Malaysia Berhad

Level 8 (South Wing), Menara TM

Jalan Pantai Baharu, 50672 Kuala Lumpur

www.tm.com.my

OPENING UP POSSIBILITIES

ANNUAL REPORT04

TELEKOM MALAYSIA BERHADAnnual Report 2004

OUR VISION

Our vision is to be the CommunicationsCompany of choice – focused on deliveringExceptional Value to our customers and otherstakeholders.

OUR MISSION

To achieve our vision, we are determined todo the following:

• Be the recognised leader in all markets weserve

• Be a customer-focused organisation thatprovides one-stop total solution

• Build enduring relationships based on trustwith our customers and partners

• Generate shareholder value by seizingopportunities in Asia Pacific and otherselected regional markets

• Be the employer of choice that inspiresperformance excellence

TM, the new brand identity for Telekom Malaysiawas launched on 14 April 2005 by the Prime Minister

of Malaysia, Yang Amat Berhormat Dato’ SeriAbdullah Haji Ahmad Badawi.

This new brand is not a mere cosmetic change. Itencompasses a real change to the way TM provides itsservices. The main emphasis of this transformation isto instill a customer service oriented culture amongst

employees and will be reinforced with improvement inthe quality of customer service provided.

Three main reasons behind the re-branding exercise:• This year marks the 15th year of listing for TM on the Main Board of Bursa Securities and it is timely for the

Company to ‘renew’ its image and refresh its brand identity. This is also the first time after 15 years that theCompany undertakes a re-branding exercise;

• To re-inforce the change efforts that are currently taking place at TM; and• There is a need for a new brand identity that is global and universal, thus positioning

TM to compete against key players in the telecommunication industry in the international arena.

The bold typeface in ‘TM’, created especially for this logo and its italicised font style signifies forward looking and pro-activeness. The 3 corporate colours composed in the logo are the integration of its

original corporate blue, the orange of TM Net’s boomerang and the red of Celcom’s wing. Combined and positioned above the letter ‘M’, the TM Net’s orange boomerang and Celcom’s red wing

form the shape of a pair of flapped open wings termed as ‘WINGZ’. The ‘WINGZ’symbolises the new brand positioning of facilitating and liberating all by opening up

possibilities. The bright orange and red in the ‘WINGZ’ reflect the new brandpersonality of bold and vibrant, while the blue colour of the typeface means

passionate and emphatic.

This is supported by the new brand values which seek TM employees to be proactive,knowledgeable, innovative and refreshing.

Change at TM is a continuous effort. The new brand identity will give TM immenseopportunity to continue improving itself in its journey to scale greater heights.

T M – T H E N E W B R A N D I D E N T I T Y



Page 2

CONTENTS

Financial Calendar 3

Notice of Annual General Meeting 4

Statement Accompanying the Notice of Annual General Meeting 8

Five-Year Group Financial Highlights 10

Group Segmental Analysis 12

Business & Other Statistics 13

Group Financial Performance 15

Group Structure 22

Corporate Information 24

Board of Directors 26

Profile of the Board of Directors 28

Group Senior Management 38

Corporate Governance Statement 40

Risk Management 53

Code of Business Ethics 60

Additional Compliance Information 62

Audit Committee Report 64

Statement on Internal Control 73

Chairman’s Statement 78

Group Chief Executive Officer’s Statement 86

Operations Review

• Wholesale 98

• Retail 104

• Mobile 112– Celcom (Malaysia) Berhad

• Multimedia Services 128– TM Net Sdn Bhd

• International Operations 140– TM International Sdn Bhd

• Facilities Management 152– TM Facilities Sdn Bhd

Other Subsidiaries 160

Educational Excellence 176

Human Resources 186

Research and Development 190

Caring for The Environment 194

Corporate Social Responsibilities 200

Awards & Recognition 206

Corporate Events 2004 208

Financials 216

Shareholding Statistics 318

List of Top 30 Shareholders 319

Shareholders and Investor Information 321

Net Book Value of Land & Buildings 322

Usage of Properties 323

Group Directory 324

Proxy Form •


Page 3

18 May 200419th Annual General Meeting (AGM) of the Company.

26 May 2004Announcement of the unaudited consolidated 1st quarterresults for the three months ended 31 March 2004.

26-27 May 2004Book Closure for determining the entitlement of the finaldividend of 10 sen per share (less 28% Malaysian IncomeTax) and special dividend of 10 sen per share (less 28% Malaysian Income Tax) for the financial year ended 31 December 2003.

21 June 2004Date of payment of the final and special dividend for thefinancial year ended 31 December 2003.

24 August 2004Announcement of the unaudited consolidated 2nd quarterresults for the six months ended 30 June 2004 and theDeclaration of a tax exempt Interim Dividend of 10 sen pershare for the financial year ended 31 December 2004.

21-22 September 2004Book Closure for determining the entitlement of the interimdividend for the financial year ended 31 December 2004.

18 October 2004Date of payment of the Interim Dividend for the financialyear ended 31 December 2004.

30 November 2004Announcement of the unaudited consolidated 3rd quarterresults for the nine months ended 30 September 2004.

24 February 2005Announcement of the audited consolidated results and the proposed tax exempt final dividend of 20 sen pershare for the financial year ended 31 December 2004.

25 April 2005Issuance of Notice of the 20th AGM, Notice of BookClosure for Payment of Dividend and Annual Report forthe financial year ended 31 December 2004.

17 May 200520th AGM of the Company.

25-26 May 2005Book Closure for determining the entitlement of the finaldividend for the financial year ended 31 December 2004.

20 June 2005Date of payment of the final dividend for the financialyear ended 31 December 2004.

FINANCIAL CALENDAR


Page 4

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Twentieth Annual General Meeting of the Company

will be held at 10:00 a.m., on Tuesday, 17 May 2005 at the Dewan Merdeka, Level 4,

Putra World Trade Centre, 41 Jalan Tun Ismail, 50480 Kuala Lumpur, for the following

purposes:-

1. To receive the Audited Financial Statements for the financial year ended 31 December 2004

together with the Reports of the Directors and Auditors thereon. (Ordinary Resolution 1)

2. To declare a tax exempt final dividend of 20 sen per share in respect of the financial year

ended 31 December 2004. (Ordinary Resolution 2)

3. To re-elect the following Directors who were appointed to the Board during the year and

retire in accordance with Article 98(2) of the Company’s Articles of Association:-

(i) YB. Datuk Nur Jazlan Tan Sri Mohamed (Ordinary Resolution 3)

(ii) Dato’ Azman Mokhtar (Ordinary Resolution 4)

(iii) Dato’ Abdul Wahid Omar (Ordinary Resolution 5)

(iv) Dato’ Haji Abd. Rahim Haji Abdul (Ordinary Resolution 6)

4. To re-elect Dato’ Dr. Abdul Rahim Haji Daud, the Director who retires by rotation in

accordance with Article 103 of the Company’s Articles of Association. (Ordinary Resolution 7)

5. To approve the payment of Directors’ fees for the financial year ended 31 December 2004.

(Ordinary Resolution 8)

6. To re-appoint Messrs. PricewaterhouseCoopers as Auditors of the Company and to authorise

the Directors to fix their remuneration. (Ordinary Resolution 9)


Page 5

Notice of Annual General Meeting continued

7. As SPECIAL BUSINESS

To consider and if thought fit, to pass the following Ordinary Resolution:-

Authority to Allot and Issue Shares

“THAT subject to the Companies Act, 1965 (the Act), the Articles of Association of the

Company, approval from the Bursa Malaysia Securities Berhad (Bursa Securities) and other

Government or regulatory bodies, where such approval is necessary, full authority be and is

hereby given to the Board of Directors pursuant to Section 132D of the Act, to issue shares

in the capital of the Company at any time upon such terms and conditions and for such

purposes as the Directors may in their discretion deem fit provided always that the aggregate

number of shares to be issued, shall not exceed 10% of the issued share capital of the

Company.” (Ordinary Resolution 10)

8. To transact any other business of the Company of which due notice has been received.

FURTHER NOTICE IS HEREBY GIVEN THAT a Depositor shall be eligible to attend this meeting only

in respect of:-

(a) Shares deposited into the Depositor’s Securities Account before 12:30 p.m. on 5 May 2005

(in respect of shares which are exempted from Mandatory Deposit);

(b) Shares transferred into the Depositor’s Securities Account before 4:00 p.m. on 5 May 2005

(in respect of Ordinary Transfer); and

(c) Shares bought on the Bursa Securities on a cum entitlement basis according to the Rules of

the Bursa Securities.

Shareholders are reminded that pursuant to the Securities Industry (Central Depositories)

(Amendment No. 2) Act, 1998 (SICDA) which came into force on 1 November 1998, all shares not

deposited with Bursa Malaysia Depository Sdn Bhd (Bursa Depository) by 12:30 p.m. on

1 December 1998 and not exempted from Mandatory Deposit, have been transferred to the

Minister of Finance (MOF). Accordingly, the eligibility to attend this Meeting for such undeposited

shares will be the MOF.



Page 6

NOTICE OF BOOK CLOSURE FOR PAYMENT OF DIVIDEND

NOTICE IS ALSO HEREBY GIVEN THAT the Register of Members will be closed from 25 May 2005

to 26 May 2005 (both dates inclusive) to determine the Shareholders’ entitlement to the dividend

payment. The dividend, if approved by the shareholders at the Company’s Twentieth Annual

General Meeting, will be paid on 20 June 2005 to shareholders whose names appear in the

Register of Depositors on 24 May 2005.

FURTHER NOTICE IS HEREBY GIVEN THAT a Depositor shall qualify for dividend entitlement only in

respect of:-

(a) Shares deposited into the Depositor’s Securities Account before 12:30 p.m. on 19 May 2005

(in respect of shares which are exempted from Mandatory Deposit);

(b) Shares transferred into the Depositor’s Securities Account before 4:00 p.m. on 24 May 2005

(in respect of Ordinary Transfers); and

(c) Shares bought on the Bursa Securities on a cum entitlement basis according to the Rules of

the Bursa Securities.

Shareholders are reminded that pursuant to SICDA, all shares not deposited with Bursa Depository

by 12:30 p.m. on 1 December 1998 and not exempted from Mandatory Deposit, have been

transferred to the MOF. Accordingly, the dividend for such undeposited shares will be paid to MOF.

By Order of the Board

Wang Cheng Yong (MAICSA 0777702)

Zaiton Ahmad (MAICSA 7011681)

Secretaries

Kuala Lumpur

25 April 2005


Page 7


Notes:1. A member entitled to attend and vote at the

above Meeting is entitled to appoint a proxy toattend and vote in his stead. A Proxy need notbe a member of the Company and the provisionsof Section 149(1)(b) of the Act shall not apply tothe Company.

2. A member shall not be entitled to appoint morethan two (2) proxies to attend and vote at thesame meeting provided that where a member ofthe Company is an authorised nominee as definedin accordance with the provisions of the SecuritiesIndustry (Central Depositories) Act, 1991, it mayappoint at least one (1) proxy in respect of eachsecurities account it holds with ordinary shares ofthe Company standing to the credit of the saidsecurities account.

3. Where a member appoints two (2) proxies, theappointments shall be invalid unless theproportion of the holding to be represented byeach proxy is specified.

4. This instrument appointing a proxy shall be inwriting under the hand of the appointer or hisattorney duly appointed under a power ofattorney or if such appointee is a corporation,either under its common seal or under the handof an officer or attorney duly appointed under apower of attorney.

5. A corporation which is a member, may byresolution of its Directors or other governingbody authorise such person as it thinks fit to actas its representative at the Meeting, inaccordance with Article 92 of the Company'sArticles of Association.

6. This instrument appointing the proxy togetherwith the duly registered power of attorneyreferred to in Note 4 above if any, must bedeposited at the office of the Share Registrar,Tenaga Koperat Sdn Bhd, 20th Floor, PlazaPermata, Jalan Kampar, Off Jalan Tun Razak,50400 Kuala Lumpur, Malaysia not less than 48hours before the time appointed for holding theMeeting or any adjournment thereof.

7. Explanatory Note for Ordinary Resolution No. 10In line with the Company's plan for expansion/diversification, the Company is actively lookinginto prospective areas so as to broaden itsoperating base and earnings potential. As theexpansion/diversification may involve the issuanceof new shares, the Directors, under presentcircumstances would be required to convene ageneral meeting to approve the issuance of newshares even though the number involved is lessthan 10% of the issued share capital. In order toavoid any delay and cost involved in convening ageneral meeting to approve such issue of shares,it is considered appropriate that the Directors benow empowered to issue shares in the Companyup to an amount not exceeding in total, 10% ofthe issued share capital of the Company for thetime being, for such purposes as they considerwould be in the interest of the Company. Thisauthority unless revoked or varied at a generalmeeting will expire at the next Annual GeneralMeeting of the Company.


Page 8

DIRECTORS RANKING FOR RETIREMENT AND RE-ELECTION AT THE 20TH ANNUAL GENERAL MEETING

The Directors retiring due to casual vacancy and by rotation and are seeking re-election respectively, pursuant to the

Company’s Articles of Association are as follows:-

Article 98(2): Retirement due to casual vacancy

1. YB. Datuk Nur Jazlan Tan Sri Mohamed

2. Dato’ Azman Mokhtar

3. Dato’ Abdul Wahid Omar

4. Dato’ Haji Abd. Rahim Haji Abdul

Article 103: Retirement by rotation

1. Dato’ Dr. Abdul Rahim Haji Daud

The respective profiles of the above Directors are set out in the Profile of the Board of Directors on pages 28 to 37

inclusive, of this Annual Report. Their securities holdings in the Company and its subsidiaries are set in the Analysis of

Shareholdings on page 320 of this Annual Report.

LIST OF GENERAL MEETINGS FROM 1 JANUARY 2004 TO 31 DECEMBER 2004

TYPE OF MEETING DATE TIME VENUE

19th Annual General Meeting 18 May 2004 10:00 a.m. Grand Ballroom

9th Floor, The Legend Hotel,

100 Jalan Putra,

50350 Kuala Lumpur.

STATEMENT ACCOMPANYING THE NOTICE OF ANNUAL GENERAL MEETING


Page 9

Statement Accompanying the Notice of Annual General Meeting continued

ATTENDANCE OF DIRECTORS AT THE BOARD OF DIRECTORS’ MEETING

The Board of Directors met sixteen (16) times during the financial year ended 31 December 2004. Details of theDirectors’ attendance are as follows:

NAME DATE OF APPOINTMENT/ PERCENTAGERESIGNATION ATTENDANCE OF

DURING THE YEAR ATTENDANCE

Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor — 16/16 100%

Dato’ Dr. Abdul Rahim Haji Daud — 15/16 94%

Dato’ Lim Kheng Guan — 15/16 94%

Ir. Prabahar N.K. Singam — 16/16 100%

Rosli Man — 16/16 100%

Dato’ Azman Mokhtar Appointed on 1 June 2004 8/9 89%

YB. Datuk Nur Jazlan Tan Sri Mohamed Appointed on 1 June 2004 6/9 67%

Dato’ Abdul Wahid Omar Appointed on 1 July 2004 9/9 100%

Dato’ Haji Abd. Rahim Haji Abdul Appointed on 23 November 2004 1/2 50%

YB. Dato’ Joseph Salang Gandum Resigned on 1 April 2004 2/3 67%

YB. Dato’ Ir. Mohd Zin Mohamed Resigned on 1 April 2004 2/3 67%

Datuk Dr. Halim Shafie Retired on 18 May 2004 3/6 50%

Dato’ Dr. Mohd Munir Abdul Majid Resigned on 1 June 2004 7/7 100%

Tan Poh Keat Resigned on 1 June 2004 7/7 100%

Dato’ Dr. Md Khir Abdul Rahman Resigned on 1 July 2004 7/7 100%

Dato’ Abdul Majid Haji Hussein Resigned on 2 October 2004 9/12 75%

Dato’ Suriah Abdul Rahman Ceased on 18 May 2004 3/6 50%(Alternate Director to Datuk Dr. Halim Shafie)

Mohammad Zanudin Ahmad Rasidi(Alternate Director to Dato’ Abdul Majid Ceased on 2 October 2004 3/12 25%Haji Hussein)(Alternate Director to Dato’ Haji Abd. Rahim Appointed on 23 November 2004 1/2 50%Haji Abdul)


Page 10

FIVE-YEAR GROUP FINANCIAL HIGHLIGHTS

In RM Million 2000 2001 2002 2003 2004

1. Operating revenue 8,815.7 9,673.2 9,834.1 11,796.4 13,250.92. Profit before taxation ^ 1,250.8 2,443.6 1,530.4 1,810.5 3,172.83. Profit after taxation ^ 578.7 1,775.1 870.7 1,444.2 2,676.54. Profit attributable to shareholders ^ 586.1 1,751.2 844.3 1,390.4 2,613.55. Total shareholders’ fund * ^ 12,345.1 13,805.8 14,919.6 16,782.4 19,453.36. Total assets ^ ~ 27,311.9 27,395.1 28,935.4 36,040.3 37,675.27. Total borrowings ~ 8,481.0 7,081.7 7,676.5 11,708.4 10,784.7

GROWTH RATES OVER PREVIOUS YEARS1. Operating revenue 12.5% 9.7% 1.7% 20.0% 12.3%2. Profit before taxation ^ 23.0% 95.4% -37.4% 18.3% 75.2%3. Total shareholders’ fund * ^ 6.7% 11.8% 8.1% 12.5% 15.9%4. Total assets ^ ~ 6.6% 0.3% 5.6% 24.6% 4.5%5. Total borrowings ~ 5.2% -16.5% 8.4% 52.5% -7.9%

SHARE INFORMATION1. Per share

Earnings ^– Basic 19.1 sen 56.6 sen 26.8 sen 43.6 sen 78.2 sen

Gross dividend 10.0 sen 15.0 sen 10.0 sen 20.0 sen 30.0 senNet tangible assets * ^ 399.9 sen 444.8 sen 433.0 sen 391.0 sen 454.7 sen

2. Share price informationHigh RM17.70 RM12.60 RM10.20 RM9.20 RM12.10Low RM9.65 RM7.50 RM6.90 RM7.15 RM8.25

FINANCIAL RATIO1. Return on shareholders’ fund * ^ 4.7% 12.7% 5.7% 8.3% 13.4%2. Return on total assets ^ 2.1% 6.5% 3.0% 4.0% 7.1%3. Debt equity ratio ^ 0.7 0.5 0.5 0.7 0.64. Dividend cover ^ 1.9 3.8 2.7 2.1 2.6

* Comparative figures for 2000-2001 are restated to conform with the change in accounting policy in year 2002 on the recognitionof liabilities with respect to dividend proposed.

^ Comparative figures for 2000-2002 are restated to conform with the change in accounting policy in year 2003 with respect to therecognition of deferred tax and goodwill.

~ Comparative figures for 2000-2002 are restated to conform with the change in presentation as explained in 2003 financial statements.


Page 11

2004: 13,250.9

2003: 11,796.4

2002: 9,834.1

2001: 9,673.2

2000: 8,815.7

OPERATING REVENUE (RM Million)

RM13,250.9 million

2004: 2,613.5

2003: 1,390.4

2002: 844.3

2001: 1,751.2

2000: 586.1

PROFIT ATTRIBUTABLE TO SHAREHOLDERS (RM Million)

RM2,613.5 million

2004: 19,453.3

2003: 16,782.4

2002: 14,919.6

2001: 13,805.8

2000: 12,345.1

TOTAL SHAREHOLDERS' FUND (RM Million)

RM19,453.3 million

2004: 37,675.2

2003: 36,040.3

2002: 28,935.4

2001: 27,395.1

2000: 27,311.9

TOTAL ASSETS (RM Million)

RM37,675.2 million

2004: 10,784.7

2003: 11,708.4

2002: 7,676.5

2001: 7,081.7

2000: 8,481.0

TOTAL BORROWINGS (RM Million)

RM10,784.7 million

2004: 13.4

2003: 8.3

2002: 5.7

2001: 12.7

2000: 4.7

RETURN ON SHAREHOLDERS' FUND (%)

13.4%

2004: 7.1

2003: 4.0

2002: 3.0

2001: 6.5

2000: 2.1

RETURN ON TOTAL ASSETS (%)

7.1%

2004: 0.6

2003: 0.7

2002: 0.5

2001: 0.5

2000: 0.7

DEBT EQUITY RATIO

0.6

Five-Year Group Financial Highlights continued


Page 12

GROUP SEGMENTAL ANALYSIS

SEGMENT RESULTSfor the year ended 31 December 2004 (%)

Fixed Line, Data, Internet and Multimedia : 63.8%

By Business

Cellular : 34.8%

Others : 1.4%

By Geographical Location

Malaysia : 87.4%

Overseas : 12.6%

SEGMENT OPERATING REVENUE for the year ended 31 December 2004 (%)


Cellular : 37.4%

Others : 1.7%

Malaysia : 91.0%

Overseas : 9.0%

By Business


SEGMENT ASSETSas at 31 December 2004 (%)


By Business

Cellular : 34.7%

Others : 4.1%


Malaysia : 93.9%

Overseas : 6.1%


Page 13

BUSINESS & OTHER STATISTICS

Year ended 31 December 2000 2001 2002 2003 2004

CUSTOMER BASETM Wholesale1. Leased Circuits Customers — — — — 4,960

2. ISDN 34,512 52,202 64,976 63,587 58,469

TM Retail1. Residential telephone 3,258,044 3,405,744 3,406,655 3,328,456 3,236,457

2. Business telephone 1,228,601 1,252,352 1,264,844 1,295,185 1,429,675

3. Public Payphones 156,600 120,528 79,479 79,613 73,498

4. Leased Circuits Customers — — — — 49,773

5. Other services 5,592 5,022 4,671 4,488 3,889

6. Toll Free (1-300 and 1-800) 1,573 1,658 1,703 2,195 3,156

7. Total access lines 4,634,345 4,659,007 4,593,300 4,623,641 4,666,132

8. Total access lines per 100 population 20.9 20.0 18.8 18.1 17.2

Celcom (Malaysia) Berhad1. Postpaid — — — 1,176,860 1,104,419

2. Prepaid — — — 3,160,065 4,230,998

TM Net Sdn Bhd1. Access Services 855,495 1,271,038 1,480,327 1,741,108 2,178,406

2. Application Services 1,6101 621 7,937 9,158 9,685

3. Content Services — 253,413 380,884 480,290 636,491

NETWORK CAPACITY (’000)TM Wholesale1. Kilometers cable pair 30,404 30,724 30,850 31,040 31,644

2. Fibre kilometers 245 295 326 472 637

3. Exchange lines 7,970 8,528 8,656 8,679 8,684

4. International gateway exchange 34.5 40.3 45.7 45.7 45.7

Celcom (Malaysia) Berhad1. No. of BTS — — — 5,322 3,749

2. Network Switching System (NSS) capacity (’000) — — — 5,046,517 5,680

3. Coverage populated area (%) — — — 95 96


Page 14

Year ended 31 December 2000 2001 2002 2003 2004

PRODUCTIVITYTM Wholesale1. Number of employee — — — — 11,690

TM Retail1. Number of employee — — — — 5,496

2. Number of access lines per employee — — — — 804

Celcom (Malaysia) Berhad1. Number of employees — — — 4,264 4,019

2. Revenue per employee (RM’000) — — — 858 1,063

3. Customer per employee — — — 1,017 1,328

TM Net Sdn Bhd

1. Number of employees 2542 406 424 510 660

2. Revenue per employee (RM) 828,590 743,936 872,641 433,333 841,006

3. Customer per employee — — — — 3,315

QUALITY OF SERVICETM Wholesale1. Total faults report per line 0.4 0.4 0.4 0.3 0.28

2. Total complaints per 1,000 lines 8.3 5.6 5.2 4.2 0.23

3. Leased circuits fault restoration (within 24 hours – %) 100.0 85.1 96.7 97.5 93.7

Celcom (Malaysia) Berhad

1. 013/019– Overall Network Availability (%) — — — — 99.37

TM Net Sdn Bhd3

1. Complaints of bills issued (%) — — — 0.22 0.07

2. Number of complaints per 1,000 customers — — — 31 28

1 In year 2000, Netmyne offered a one-year free subscription for the service and 1,610 subscribers signed up. However, in 2001, a significantnumber of those subscribers terminated the service when the free subscription period ended.

2 Significant drop in the number of employees in 2000 as more than half at the non-executives from Internet Data Center (IDC) weretransferred to COINS.

3 Based on the Mandatory standards for Quality of Service required by Malaysian Communication and Multimedia Commission.

Business & Other Statistics continued


Page 15

GROUP FINANCIAL PERFORMANCE

OPERATING REVENUE

For the financial year ended 31 December 2004, the

Group registered encouraging growth of 12.3%

(RM1,454.5 million) in operating revenue from

RM11,796.4 million recorded in 2003 to RM13,250.9

million in 2004. The increase in revenue was largely

attributed to growth in cellular, Internet and multimedia

as well as other telecommunication services.

Fixed line business and residential continued to be the

major contributors to the Group revenue, followed by

cellular, data services, Internet and multimedia. While

fixed line continued to be the main cash generator, the

contribution from the cellular segment to the overall

revenue continued to grow, in line with current global

trends. Cellular segment contributed 37.4% of Group

revenue in 2004 as compared to 30.6% in 2003.

Contribution from fixed-line segment was however

reduced to 45.7% from 53.1% recorded in 2003.

Contribution from data services, Internet and multimedia

services and other telecommunication related services

maintained at about the same level as 2003 i.e. 7.0%

(2003: 8.0%), 3.9% (2003: 3.4%) and 4.3% (2003: 2.8%)

respectively. Non-telecommunication related services

contributed the remaining 1.7% (2003: 2.1%) of Group

operating revenue.

Fixed line services comprise business telephony (which

also includes ISDN, payphone, interconnect, international

in-payment) and residential telephony. This segment

recorded 3.4% (RM214.8 million) decrease in revenue

from RM6,267.2 million recorded in 2003 to RM6,052.4

OPERATING REVENUE (RM Million)

: 932.6: 942.0

: 576.5: 334.1

: 515.4: 396.5

Data Services

: 2,652.9: 2,816.3

Fixed Line-Residential

: 224.1: 250.3

Non-Telecommunication Related Services

Other Telecommunication Related Services

Internet and Multimedia

: 3,399.5: 3,450.9

Fixed Line-Business

Cellular: 4,949.9: 3,606.3

2004 2003


Page 16

Group Financial Performance continued

million in 2004 resultant from lower call revenue and

higher discounts due to call plans introduced since May

2004. In addition, the revised interconnection rate

effected in July 2003 further reduced the revenue from

fixed line segment, as there was a 12 months impact in

2004 as compared to only a 6 months impact in 2003.

Revenue from Cellular segment comprises rental, calls

charges, short message services and interconnect charges

terminating at mobile, registered significant growth of

37.3% (RM1,343.6 million) from RM3,606.3 million

recorded in 2003 to RM4,949.9 million in 2004. Celcom

(Malaysia) Berhad (Celcom) contributed approximately

70.0% of the increase due to consolidation of full year

results in 2004 as compared to only 8.5 months in 2003.

Celcom also recorded net addition in subscribers of

almost 1.0 million in 2004. Overseas subsidiaries namely

MTN Networks (Pvt) Limited (MTN) and TM International

(Bangladesh) Limited (TMIB) recorded robust revenue

growth of 52.6% and 107.8% respectively following

increase in subscribers, expansion of network and wider

network of roaming operators.

Revenue from data services, which mainly comprise leased

services, COINS and frame relay recorded marginal

contraction of 1.0% mainly due to adjustments of

RM124.6 million primarily for discounts granted and

resolution of disputed bills in favour of major clients.

Revenue from Internet and multimedia services comprise

mainly revenue from Internet and other multimedia

services, publication and advertisement charges. Internet

services especially broadband, continued to record strong

growth in 2004, bringing the customer base to 1.9

million for dial up services while broadband customers

increased to 258,000 as compared to 101,000 in the

preceding year. As a result, the revenue from this

segment registered commendable growth of 30.0%

(RM118.9 million) primarily contributed by TM Net Sdn

Bhd (TM Net).

Other telecommunication related services comprise mainly

recoverable works order (RWO), maintenance,

broadcasting, restoration of submarine cable, managed

network services and enhanced value added

telecommunication services. Recognition of an additional

Universal Services Obligation contribution of RM90.0

million received during the year and higher progress

billings for RWO projects were the main contributing

factors to the 72.6% (RM242.4 million) growth in revenue

from this segment as compared to the preceding year.

GITN Sdn Bhd, a 100% owned subsidiary, contributed

RM70.0 million to the increase following aggressive

implementation of Esyariah, PMS, ELX application and

new Schoolnet Project.

Non-telecommunication related services comprise mainly

services from subsidiaries with core business in

consultancy, property management, education, trading in

consumers premises equipment and etc. This segment

recorded 10.5% (RM26.2 million) reduction in revenue

mainly due to lower contribution from trading in

consumers premises equipment.


Page 17


OPERATING COSTS

For the financial year ended 31 December 2004, Group

operating costs rose by 15.0% (RM1,505.5 million) from

RM10,018.2 million recorded in 2003 to RM11,523.7

million in 2004. The increase in costs was largely

attributed to significant impairment loss and depreciation

charge of property, plant and equipment (PPE), higher

staff costs, maintenance, marketing, advertising and

promotion as well as diminution in value of quoted

investments, which have jointly accounted for 78.8%

(RM1,186.7 million) of the total increase in operating

costs.

The Group recorded significant impairment loss of PPE of

RM633.3 million in 2004 as compared to only RM99.2

million in 2003. Celcom incurred impairment loss of

RM320.7 million arising from the integration of network

with TM Cellular. The Company and an overseas

subsidiary also incurred substantial impairment loss of PPE

amounting to RM220.4 million and RM76.0 million

respectively following impairment assessment performed

on specific assets during the year.

OPERATING COSTS (RM Million)

: 604.0: 473.8

: 390.7: 351.9

: 376.6: 445.8

Maintenance

: 627.9: 536.5

Marketing, Advertising and Promotion

: 2,194.1: 1,743.6

Other Operating Costs

Supplies and Inventories

Bad and Doubtful Debts

: 633.3: 99.2

Impairment

Domestic and International Outpayment: 1,489.8: 1,464.8

Staff Costs : 1,534.3: 1,351.3

Depreciation: 3,673.0: 3,551.3

2004 2003


Page 18


Depreciation charge increased by 3.4% (RM121.7 million)

to RM3,673.0 million as compared to RM3,551.3 million

recorded in 2003 primarily attributed to accelerated

depreciation incurred by the Company and Celcom.

During the year, the Company and Celcom had

respectively reviewed the estimated economic useful life

of submarine cables and specific telecommunication

network equipment. Arising from the review, the

estimated useful life of submarine cables was reduced

from 15 years to 10 years whereas the economic useful

life of the specific telecommunication network equipment

was reduced from 6 years to less than 1 year. These

changes in estimates resulted in accelerated depreciation

charge of RM98.7 million and RM229.4 million

respectively. Net increase in depreciation charge of

RM121.7 million was however lower than the accelerated

depreciation mentioned above due to reduction in

normal depreciation charge on remaining depreciable

assets.

The Group also registered significant increase in domestic

interconnect outpayment of RM249.4 million mainly

attributed to full year effect of the new interconnect

tariff in 2004 as compared to only 6 months in 2003 as

the new rates was effected in July 2003. Full year

consolidation of Celcom’s results in 2004 as compared to

8.5 months in 2003 also contributed to higher

interconnect outpayment. International outpayment was

however significantly lower than 2003 by RM224.4 million

primarily due to 2003 included backdated adjustments for

volume and traffic discrepancies. Hence, on combine

basis, there was only marginal increase of RM25.0 million

in domestic and international outpayment.

Celcom had embarked on aggressive marketing efforts in

securing and retaining customers to combat the intense

market condition and stiff competition, with focus on

product branding that include events, promotions and

etc. This had resulted in higher advertisement and

promotion cost. TM Net, MTN and TMIB also incurred

higher advertisement and promotion cost arising from

sponsorship for Malaysian Idol programme and extensive

branding activities respectively. In line with aggressive

customer acquisition activities, these companies also

incurred higher dealer commission. Consequent from the

above, the Group’s marketing, advertisement and

promotion costs rose from RM536.5 million in 2003 to

RM627.9 million in 2004.

The Group staff cost rose by 13.5% (RM183.0 million)

primarily attributed to higher cost recorded by TM, TM

Net, MTN and TMIB. TM registered 15.8% (RM139.5

million) increase in staff cost following higher percentage

of annual increment in 2004 as compared to 2003

coupled with increase in number of senior management.

TM Net, MTN and TMIB also recorded higher staff cost of

RM10.9 million, RM3.8 million and RM5.3 million

respectively due to increase in number of employees in

line with business expansion. Full year consolidation of

Celcom’s results in 2004 contributed RM24.0 million to

higher Group staff cost.

Depreciation charge remained the biggest cost

component and constituted 31.9% of Group operating

costs followed by staff cost (13.3%), domestic and

international outpayments (12.9%), impairment loss of

PPE (5.5%), marketing, advertisement and promotion

(5.4%), maintenance (5.2%), supplies and inventories

(3.4%), allowance for bad and doubtful debt (3.3%).


Page 19


CONTRIBUTION FROM ASSOCIATES

During the year, the Group disposed its entire interest in

an associate, Telkom SA Limited (TSA) in 2 tranches i.e.

on 18 June 2004 and 15 November 2004 respectively. The

disposals resulted in a one off gain of RM1,515.2 million.

Celcom group also registered a one off gain on disposal

of Sheba Telecom (Pvt) Ltd of RM23.6 million.

Hence, total gain on disposal of associates was

RM1,538.8 million.

Following the disposal of TSA, the Group ceased to apply

equity accounting on TSA’s results. As a consequence, the

share of profit less losses of associates for current year of

RM163.7 million was much lower than RM375.2 million

recorded in 2003.

PROFITABILITY

The Group recorded significant growth of 75.2%

(RM1,362.3 million) in profit before taxation (PBT) from

RM1,810.5 million in 2003 to RM3,172.8 million in 2004.

Significant gain on disposal of associates as explained

earlier was the main contributor to higher PBT.

Despite 75.2% increase in PBT, the increase in taxation

expense for 2004 was lesser at 35.5% (RM130.0 million)

primarily due to the fact that gain on disposal of

associates is non-taxable. In addition, the recognition of

deferred tax income in respect of previously unrecognised

temporary differences of RM69.1 million by Celcom group

also helped to reduce the net increase in taxation

expense. Following smaller increase in taxation, profit

after taxation increased by 85.3% (RM1,232.3 million)

over the preceding year.

PROFIT BEFORE TAXATION (RM Million)

: 2,443.6: 1,395.5

: 1,250.8: 600.1

2000

2001

Group Company

: 1,530.4: 73.5

2002

: 1,810.5: 893.0

2003

: 3,172.8: 867.3

2004



Page 20

Consequent from significantly higher profit after taxation,

profit attributable to shareholders rose by 88.0%

(RM1,223.1 million) to RM2,613.5 million.

ASSETS

Total assets for the group increased from RM36,040.3

million in 2003 to RM37,675.2 million in 2004 mainly due

to increase in cash and bank balances after netting off

decrease in property, plant and equipment (PPE),

associates and trade and other receivables.

As explained earlier, the Group disposed its entire

interest in an associate, TSA during the year. This disposal

resulted in an increase of RM3,003.2 million in cash

balances. There was also surplus cash flow from

operating activities after netting off cash outflow for

capital expenditure and purchase of PPE. Resulting from

the above, the Group’s cash and bank balances increased

by 163.0% (RM5,455.5 million) from RM3,346.1 million in

2003 to RM8,801.6 million in 2004.

PPE decreased by 8.6% (RM1,866.7 million) from

RM21,605.9 million in 2003 to RM19,739.2 million in 2004

due to higher impairment losses and depreciation charges

compared to capital expenditure incurred during the year.

Following the disposal of TSA and Sheba Telecom (Pvt)

Ltd, the balance of associates reduced significantly from

RM1,499.6 million as at 31/12/2003 to RM105.7 million as

at 31/12/2004.

Resulting from higher profit after taxation, the return on

total assets improved from 4.0% in 2003 to 7.1% in 2004

TOTAL ASSETS 2004

Property, Plant and Equipment : 52.4%

: 23.4%

: 10.8%

: 8.9%

: 1.7%

: 1.0%

: 1.8%

Cash and Bank Balances

Intangible Assets

Trade and Other Receivables

Long Term Receivables

Investments

Other Assets


Page 21


SHAREHOLDERS' FUND

: 56.6: 12.7

: 19.1: 4.7

2000

2001

EPS (sen) ROSHF (%)

: 26.8: 5.7

2002

: 43.6: 8.3

2003

: 78.2: 13.4

2004

SHAREHOLDERS’ FUND

The Group shareholders’ fund increased from RM16,782.4

million in 2003 to RM19,453.3 million in 2004. The

increase was jointly attributed to issuance of new shares

under the Employees’ Share Options Scheme and net

profit attributable to shareholders after netting off

dividend paid during the year.

Consequent from significantly higher net profit

attributable to shareholders as mentioned earlier, return

on shareholders’ fund increased significantly from 8.3% in

2003 to 13.4% in 2004. Likewise, basic earnings per share

(EPS) also increased from 43.6 sen in 2003 to 78.2 sen in

2004.

In line with improved performance in 2004, total

dividend for current financial year comprised proposed

final tax-exempt dividend of 20.0 sen and interim tax-

exempt dividend of 10.0 sen was higher as compared to

final gross dividend of 10.0 sen less tax at 28% and

special gross dividend of 10.0 sen less tax at 28% in

2003. Consequent from greater increase in earnings per

share than in dividend per share, dividend cover

improved from 2.1 in 2003 to 2.6 in 2004.


Page 22

GROUP STRUCTURE AS AT 31 MARCH 2005

TM WHOLESALE*

• 100%TELEKOM MALAYSIA (HONG KONG)LIMITED

• 100%TELEKOM MALAYSIA (UK) LIMITED

• 100%TELEKOM MALAYSIA (USA) INC

• 100%TELEKOM MALAYSIA (S) PTE LTD

• 60%FIBERAIL SDN BHD

TM RETAIL*

• 69.52%VADS BERHAD

100%VADS e-SERVICES SDN BHD

100%VADS SOLUTIONS SDN BHD

100%VADS PROFESSIONAL SERVICESSDN BHD

• 100%TELEKOM SALES & SERVICES SDN BHD

• 100%GITN SDN BERHAD

• 100%TM PAYPHONE SDN BHD (formerly known as Citifon Sdn Bhd)

• 70%MEGANET COMMUNICATIONS SDN BHD

• 100%CELCOM (MALAYSIA) BERHAD

100%CELCOM MOBILE SDN BHD(formerly known as TM Cellular Sdn Bhd)

100%CELCOM TRANSMISSION (M) SDN BHD

41%FIBRECOMM NETWORK (M) SDN BHD

100%CELCOM TECHNOLOGY (M) SDN BHD

27.15%CELCOM TIMUR (SARAWAK) SDN BHD

60%CELCOM TIMUR (SABAH) SDN BHD

100%TECHNOLOGY RESOURCESINDUSTRIES BERHAD

49%MOBILE TELECOMMUNICATIONSCOMPANY OF ESFAHAN (J.V.-P.J.S.)

100%ALPHA CANGGIH SDN BHD

• 100%MOBIKOM SDN BHD

RETAILWHOLESALE MOBILE

Note: Depicting Major Subsidiaries /Associated Companies only* Strategic Business Unit (SBU) within Telekom Malaysia Berhad


Page 23

Group Structure continued

• 100%TM INTERNATIONAL SDN BHD

100%TMI MAURITIUS LIMITED100%TM INTERNATIONAL (L) LIMITED

100%INDOCEL HOLDING SDN(formerly known as NynexIndocel Holding Sdn)

23.10%PT EXCELCOMINDOPRATAMA

100%MTN NETWORKS (PRIVATE)LIMITED100%TM INTERNATIONAL LANKA(PRIVATE) LIMITED70%TM INTERNATIONAL(BANGLADESH) LIMITED40%THINTANA COMMUNICATIONSLLC

85%G-COM LTD

30%GHANATELECOMMUNICATIONS LTD

51%CAMBODIA SAMARTCOMMUNICATION CO LTD19.43%SAMART CORPORATION PUBLICCOMPANY LIMITED100%TELEKOM MANAGEMENT SERVICES SDN BHD

• 60%SOTELGUI S.A. (Societe DesTelecommunications De Guinee)

• 60%TELEKOM NETWORKS MALAWI LIMITED

• 100%TM NET SDN BHD

• 100%TELEKOM MULTI-MEDIA SDN BHD

51%TELEKOM SMART SCHOOL SDN BHD

49%MAHIRNET SDN BHD

30%MUTIARA.COM SDN BHD

• 100%TELEKOM PUBLICATIONS SDN BHD

• 100%TELEKOM APPLIED BUSINESS SDN BHD

• 100%TM FACILITIES SDN BHD

100%TM LAND SDN BHD(formerly known as Telekom LandSdn Bhd)

• 100%MENARA KUALA LUMPUR SDN BHD

INTERNATIONALOPERATIONS

MULTIMEDIAFACILITIESMANAGEMENT

• 100%UNIVERSITI TELEKOM SDN BHD

100%UNITELE MULTIMEDIA SDN BHD

• 100%TELEKOM RESEARCH & DEVELOPMENTSDN BHD

OTHERS


Page 24

CORPORATE INFORMATION

BOARD OF DIRECTORS

Tan Sri Dato’ Ir. Muhammad Radzi Haji MansorChairman(Non-Independent Non-Executive Director)

Dato’ Abdul Wahid OmarGroup Chief Executive Officer(Non-Independent Executive Director)

Dato’ Dr. Abdul Rahim Haji Daud(Non-Independent Non-Executive Director)

Dato’ Haji Abd. Rahim Haji Abdul(Non-Independent Non-Executive Director)

Dato’ Azman Mokhtar(Non-Independent Non-Executive Director)

Dato’ Lim Kheng Guan(Senior Independent Non-Executive Director)

YB. Datuk Nur Jazlan Tan Sri Mohamed(Independent Non-Executive Director)

Ir. Prabahar N.K. Singam(Independent Non-Executive Director)

Rosli Man(Independent Non-Executive Director)

Mohammad Zanudin Ahmad Rasidi(Alternate Director to Dato’ Haji Abd. RahimHaji Abdul)(Non-Independent Non-Executive Director)


Page 25

Corporate Information continued

SECRETARIES • Wang Cheng Yong (MAICSA 0777702)• Zaiton Ahmad (MAICSA 7011681)

REGISTERED OFFICE Level 51, North WingMenara TMJalan Pantai Baharu50672 Kuala LumpurTel No. : 03-2240 1211/1221/1225Fax No. : 03-2283 2415/2284 8039

REGISTRAR Tenaga Koperat Sdn Bhd20th Floor, Plaza PermataJalan KamparOff Jalan Tun Razak50400 Kuala LumpurTel No. : 03-4041 6522Fax No. : 03-4042 6352

AUDITORS PricewaterhouseCoopers(Chartered Accountants)11th Floor, Wisma Sime DarbyJalan Raja Laut50706 Kuala LumpurTel No. : 03-2693 1077Fax No. : 03-2693 0997

PRINCIPAL BANKERS • Bumiputra-Commerce Bank Berhad• Malayan Banking Berhad• Affin Bank Berhad

PRINCIPAL SOLICITORS • Zul Rafique & Partners• Nik Saghir & Ismail

STOCK EXCHANGE LISTING Bursa Malaysia Securities Berhad

BOARD OFDIRECTORS

From Left to Right:

ROSLI MAN (Director)

YB. DATUK NUR JAZLAN TAN SRI MOHAMED (Director)

DATO’ HAJI ABD. RAHIM HAJI ABDUL (Director)

DATO’ AZMAN MOKHTAR (Director)

Ir. PRABAHAR N.K. SINGAM (Director)

TAN SRI DATO’ Ir. MUHAMMAD RADZI HAJI MANSOR (Chairman)

DATO’ ABDUL WAHID OMAR (Group Chief Executive Officer)

DATO’ DR. ABDUL RAHIM HAJI DAUD (Director)

DATO’ LIM KHENG GUAN (Director)

MOHAMMAD ZANUDIN AHMAD RASIDI (Alternate Director)

WANG CHENG YONG (Company Secretary)

ZAITON AHMAD (Joint Secretary)


Page 28

PROFILE OF THE BOARD OF DIRECTORS

(63 years of age – Malaysian)

Tan Sri Dato’ Ir. Muhammad Radzi wasappointed Chairman and Director of TM on 12 July 1999. He graduated with a Diploma inElectrical Engineering in 1962 from FaradayHouse Engineering College, London and aMasters in Science (Technological Economics)from the University of Stirling, Scotland in 1975.

A Chartered Professional Engineer registeredwith the Board of Engineers, Malaysia andEngineering Council, United Kingdom; he is acorporate member of the Institution ofEngineers, Malaysia, the Institution of ElectricalEngineers, United Kingdom and the Institute ofManagement, United Kingdom. He wasappointed Board Member, Board of EngineersMalaysia, effective from 23 August 2002.

He served in various engineering andmanagement capacities in the former JabatanTelekom Malaysia (JTM) over a twenty-two yearperiod, including a three-year secondment asTechnical Adviser to the Ministry of Energy,Telecommunications and Post.

Tan Sri Radzi retired as Director General ofTelecommunications upon corporatisation ofJTM on 1 January 1987 and was subsequently

appointed as Director of Operations of TM. He served as Director of Marketing andCustomer Services from 1989 to 1995. He wasthen appointed as Director of RegulatoryManagement and External Affairs, and retiredin July 1996.

From 1997 to 1999, he was retained as aConsultant/Adviser on multimedia flagshipapplication projects for the MultimediaDevelopment Corporation Sdn Bhd (MDC), acompany established by the MalaysianGovernment to oversee the development andimplementation of multimedia projects.

Tan Sri Radzi is also the Chairman of Celcom(Malaysia) Berhad.

Tan Sri Radzi currently serves as Chairman ofthe Board Nominating and RemunerationCommittee and Board Employees’ Share OptionScheme Committee. He is also a Board Memberof a number of subsidiaries and associatecompanies of TM. He is a Non-ExecutiveDirector nominated by the Minister of Finance(Inc), the Special Shareholder of TM and hasnever been charged for any offence. He has nofamily relationship with any Director or majorshareholder of the Company nor any conflict ofinterest with the Company.

TAN SRI DATO’ Ir. MUHAMMAD RADZI HAJI MANSOR Chairman • Non-Independent Non-Executive Director

1

1 2


Page 29

Profile of the Board of Directors continued


Dato’ Abdul Wahid Omar was appointed Group

Chief Executive Officer (Group CEO) of TM on

1 July 2004. He was formerly the Managing

Director/Chief Executive Officer of United

Engineers (Malaysia) Berhad and UEM World

Berhad. He was also the Executive Vice

Chairman of PLUS Expressways Berhad.

Prior to his stint at UEM Group, Dato’ Abdul

Wahid had served TM as the Chief Financial

Officer from March to September 2001.

A qualified accountant by training, Dato’ Abdul

Wahid is a Fellow of the Association of

Chartered Certified Accountants (ACCA), United

Kingdom and a member of the Malaysian

Institute of Accountants. He previously served

as a Director of Group Corporate Services cum

Divisional Director, Capital Market & Securities

of Amanah Capital Partners Berhad, Chairman

of Amanah Short Deposits Berhad and the

Association of Discount Houses in Malaysia as

well as a Director of Amanah Merchant Bank

Berhad and several other companies in the

financial services sector.

He is also currently a Director of Bursa

Malaysia Berhad and member of the Financial

Reporting Foundation of Malaysia and the

Investment Panel of Lembaga Tabung Haji.

As the Group CEO, Dato’ Abdul Wahid sits on

various Board committees including the Board

Tender Committee and Board Employees’ Share

Option Scheme Committee. He is also the

Chairman of TM Net Sdn Bhd, Deputy

Chairman of Celcom (Malaysia) Berhad and

Director of VADS Berhad and several companies

in the TM’s Group.

He is an Executive Director nominated by the

Minister of Finance (Inc), the Special

Shareholder of TM and has never been charged

for any offence. He has no family relationship

with any Director or major shareholder of the

Company nor any conflict of interest with the

Company.

DATO’ ABDUL WAHID OMAR Group Chief Executive Officer • Non-Independent Executive Director

2


Page 30



Dato’ Dr. Abdul Rahim Haji Daud wasappointed to the Board of TM on 7 July 1998.He obtained a Bachelor of Engineering (Hons.)in Electronics from the University of Liverpool,United Kingdom, Masters in Science(Telecommunications Engineering) fromUniversity of Birmingham, United Kingdom andDoctorate in Engineering (Telecommunication)from the University of Bath, United Kingdom.He also obtained a Masters in BusinessAdministration from University of Ohio, USA.He has attended the Harvard Business School’sAdvanced Management Program (AMP) and theSenior Executive Development Program at theWharton School of Business, University ofPennsylvania, USA. He is a Member of theBoard of Engineers, Malaysia and a Fellow ofthe Institution of Engineers, Malaysia.

He joined JTM as a TelecommunicationsEngineer in 1973. He has wide experience inmanaging business operations in relation toTelecommunications and InformationTechnology. In 1988, he was appointed GeneralManager, Information Systems and became theSenior General Manager, National NetworkOperations in 1993. In July 1995, he was madeSenior Vice President, Network Services before

his appointment to head TM’s TelCo as itsChief Operating Officer in 1996. Upon hisappointment as Executive Director in July 1998,he remained as the Chief Operating OfficerTelCo until 1 February 2001 when he assumedthe position of Executive Director, CorporateStrategy and Development. He was thenappointed as the Deputy ChiefExecutive/Executive Director of TM from 29May 2001 until his retirement on 30 June 2004.Effective 1 July 2004, Dato’ Abdul Rahimremains as the Non-Independent and Non-Executive Director of TM.

He was the first Malaysian to be elected asChairman of CommonwealthTelecommunications Organisation (CTO)comprising 35 countries for three terms fromSeptember 1999 to November 2002.

Dato’ Dr. Abdul Rahim serves as a Member ofthe Board Audit Committee, Board Employees’Share Option Scheme Committee, Board TenderCommittee and also a Board Member of anumber of subsidiaries of TM. He has neverbeen charged for any offence and has nofamily relationship with any Director or majorshareholder of the Company nor any conflict ofinterest with the Company.

DATO’ DR. ABDUL RAHIM HAJI DAUD Non-Independent Non-Executive Director

3

3 4


Page 31



Dato’ Haji Abd. Rahim was first appointed to

the board as a Non-Independent Non-Executive

Director on 23 November 2004.

Upon graduating from University of Malaya

with a Bachelor of Arts (Hons) in 1972,

Dato’ Haji Abd. Rahim began his career in the

Malaysian civil service as an Assistant Secretary

(Supply & Contract) in the Federal Treasury.

He continued serving the Treasury for 14 years

throughout his career, holding various

positions.

In 1983, he obtained his Master of Public

Administration from Pennsylvania State

University and LL.B. (Hons) from University of

London in 1993. He continued serving the

Treasury until 1987 before joining the Ministry

of Youth and Sports as Principal Assistant

Secretary, Administration and Finance Unit.

Thereafter, he served various government

departments namely the Prime Minister’s

Department, National Registration Department,

Institute of Islamic Understanding Malaysia,

State Financial Officer for Perlis and Pahang

and State Secretary of Pahang prior to being

appointed in his present capacity as Deputy

Secretary General Treasury (Operations) in the

Ministry of Finance on 2 October 2004.

Dato’ Haji Abd. Rahim serves as Chairman of

Board Tender Committee, a Member of the

Board Audit Committee and Board Employees’

Share Option Scheme Committee. He is a

Non-Executive Director nominated by the

Minister of Finance (Inc), the Special

Shareholder of TM and has never been charged

for any offence. He has no family relationship



Company.

DATO’ HAJI ABD. RAHIM HAJI ABDUL Non-Independent Non-Executive Director

4


Dato’ Azman was appointed Director of TM on

1 June 2004.

Dato’ Azman is the Managing Director of

Khazanah Nasional Berhad (Khazanah) with

effect from 1 June 2004. Until May 2004, he

was the Managing Director of BinaFikir Sdn

Bhd. Prior to that, he was the Director, Head

of Country Research, Salomon Smith Barney

(SSB) Malaysia and Director, Head of Research

of the Union Bank of Switzerland, Malaysia.

Prior to that, he was with the then National

Electricity Board (NEB) and Tenaga Nasional

Berhad (TNB).

He obtained his Master in Philosophy

Development Studies, from Darwin College,

Cambridge University as a British Chevening

Scholar. Dato’ Azman is a Fellow of the

Association of Chartered Certified Accountants

(ACCA) and a Chartered Financial Analyst (CFA)

of the Association of Investment Management

and Research (AIMR).

Dato’ Azman is also a Director of United

Engineers (Malaysia) Berhad, UEM World

Berhad and TNB. He is also the Chairman of

Valuecap Sdn Bhd.

He is a Non-Executive Director nominated by

the Company’s Substantial Shareholder,

Khazanah and has never been charged for any

offence and has no family relationship with

any Director or major shareholder of the


Company.

DATO’ AZMAN MOKHTAR Non-Independent Non-Executive Director

5


Page 32


5 6


Dato’ Lim Kheng Guan was appointed to the

Board of TM on 23 June 2000.

He is a Chartered Accountant by profession

and an Associate Member of the Malaysian

Institute of Accountants, Associate of the

Malaysian Institute of Certified Public

Accountants, Fellow of Australian Society of

Certified Practicing Accountants, Associate of

the Australian Institute of Bankers and a

Member of the Malaysian Institute of

Management. He has also attended Advanced

Management Programs at Manchester Business

School, INSEAD and London Business School.

DATO’ LIM KHENG GUAN Senior Independent Non-Executive Director

6


Page 33


He has more than 30 years of experience in

accounting, management consulting and senior

managerial positions in local and multinational

public listed companies. Currently, he is the

Executive Director of Malaysian Management

Consultants Sdn Bhd.

Dato’ Lim Kheng Guan currently serves as an

Independent Non-Executive Chairman of the

Board Commercial Dispute Resolution

Committee, a Member of the Nominating and

Remuneration Committee and Board Audit

Committee of TM. He is also a Board Member

of a number of subsidiaries and associate

companies of TM. He has never been charged

for any offence and has no family relationship



Company.


Page 34



YB. Datuk Nur Jazlan was appointed to the

Board of TM on 1 June 2004. He is a Fellow of

the Association of Chartered Certified

Accountants (ACCA), United Kingdom, Council

Member and Chairman of Public Relations

Committee of Malaysian Institute of

Accountants. YB. Datuk Nur Jazlan is also a

Council Member of the Asean Federation of

Accountants.

In addition to his corporate experience in the

financial arena, YB. Datuk Nur Jazlan is also

active in politics. He is the Head of UMNO

Pulai, Johor and also Chairman of Barisan

Nasional for the division. He was an Exco

Member of UMNO Youth from 1996 until 2004.

He was elected in the last General Election, as

Member of Parliament for Pulai parliamentary

constituency, Johor.

YB. DATUK NUR JAZLAN TAN SRI MOHAMED Independent Non-Executive Director

7

7 8

YB. Datuk Nur Jazlan is also a Director of

United Malayan Land Berhad, Prinsiptek

Corporation Berhad and Penang Port Sdn Bhd.

YB. Datuk Nur Jazlan is the Chairman of TM’s

Board Audit Committee and a Member of

Board Tender Committee. He is also a Member

of Board of Commissioners of PT Excelcomindo

Pratama, Indonesia, an associate company of

TM. He has never been charged for any

offence and has no family relationship with

any Director or major shareholder of the


Company.


Page 35



Ir. Prabahar was appointed Director of TM on

23 June 2000. He is an engineer by profession

and has a Bachelor of Science (Civil

Engineering) Degree from Portsmouth

Polytechnic, United Kingdom in 1985.

A member of the Board of Engineers Malaysia

and the Institute of Engineers Malaysia, he is a

professional engineer who has wide experience

in the civil engineering sector, especially in the

areas of consultancy, contracting, project

management and project financing.

Ir. Prabahar currently serves as a Member of

the Board Nominating and Remuneration

Committee and Board Tender Committee.

He is also a Board Member of a number of

subsidiaries and associate companies of TM.

He has never been charged for any offence

and has no family relationship with any

Director or major shareholder of the Company

nor any conflict of interest with the Company.

Ir. PRABAHAR N.K. SINGAM Independent Non-Executive Director

8


Rosli Man was appointed to the Board of TM

on 15 July 2000. He has more than 26 years of

experience in the telecommunications industry.

Rosli holds a Bachelor in Science in Electrical

and Electronic Engineering (Electrical Design

and Instrumentation) from University of

Glasgow, United Kingdom and a Diploma in

Electrical and Electronic Engineering

(Communications) from Technical College, Kuala

Lumpur.

He joined JTM in 1976 as Assistant Controller

where he gained wide exposure in

telecommunication services including the task

to implement the country’s first mobile

telecommunication service i.e. ATUR 450. In

1985, he made a career move to the private

sector by joining the Fleet group as its Group

Manager, Technical Services where he was part

of the team responsible in overseeing the roll-

out and operations of the nation’s first

privately operated terrestrial television station

namely Sistem Televisyen Malaysia Berhad

(TV3). From 1988 to 1996, he was instrumental

in setting up the first privately owned

ROSLI MAN Independent Non-Executive Director

9



Page 36

9 10

telecommunication company in Malaysia i.e.

Celcom (M) Sdn Bhd, catering for the cellular

mobile telecommunication business. He left

Celcom (M) Sdn Bhd as its President in 1996 to

join Prismanet Sdn Bhd as Managing Director

and held the position until November 1998. In

July 2000, he joined Natrindo Telpon Sellular

(NTS), the GSM 1800 cellular operator in East

Java, Indonesia. As the Chief Operating Officer,

he was responsible for the planning,

development, successful roll-out of the network

and the day-to-day operations of the business.

He was then appointed as Deputy Chief

Operating Officer of Lippo Telecom to oversee

NTS planning, roll-out and operation of NTS

National Cellular Operation. He left NTS in

January 2002.

He currently serves as a Member of Board

Audit Committee, Board Tender Committee and

Board Commercial Dispute Resolution

Committee. He is also a Board Member of a

number of subsidiaries of TM. He has never

been charged for any offence and has no

family relationship with any Director or major

shareholder of the Company nor any conflict of

interest with the Company.


Page 37


Mohammad Zanudin was appointed as

Alternate Director to Dato’ Haji Abd. Rahim

Haji Abdul on 23 November 2004. He has a

Bachelor of Economics from Universiti

Kebangsaan Malaysia and a Master Degree in

Public Management from Carnegie-Mellon

University, USA. He also completed the Harvard

International Tax Program at the Harvard

University in 1992.

He began his career with the Treasury in 1984

as Assistant Secretary in the Economic and

International Division. After four years, he was

assigned to the Tax Analysis Division where he

was directly involved in formulating policies

and strategies for budget proposals. He was

then promoted to be Principal Assistant

Secretary in 1998. Subsequently, he was

transferred to the Public Enterprises,

Privatisation and Minister of Finance

Incorporated Coordination Division as Principal

Assistant Secretary in November 2000, a

position he holds until today.

Mohammad Zanudin is also the Alternate

Member/Director to Dato’ Haji Abd. Rahim on

the Board Employees’ Share Option Scheme

Committee and Board Tender Committee,

where Dato’ Haji Abd. Rahim has been

appointed as a member. He has never been

charged for any offence and has no family

relationship with any Director or major

shareholder of the Company nor any conflict of

interest with the Company.

MOHAMMAD ZANUDIN AHMAD RASIDI Alternate Director to Dato’ Haji Abd. Rahim Haji Abdul • Non-Independent Non-Executive Director

10



Page 38

DATO’ ABDULWAHID OMARGroup ChiefExecutive Officer, TM

DATO’ DR. IR. MOHDKHIR HARUNChief Group BusinessRestructuring &Coordination, TM

DATO’ DR. IDRIS IBRAHIMChief Operating Officer, TM Wholesale

DATUK HAMZAH YACOBChief Executive Officer, TM Facilities Sdn Bhd

JAFFA SANY ARIFFINGroup Chief FinancialOfficer, TM

KAIRUL ANNUAR MOHAMED ZAMZAMGeneral Manager, Corporate Affairs, TM

AHMAD AZHAR YAHYAChief Information Officer,TM

ISMAIL NORDINVice President, Change ManagementOffice, TM

MARIAM BEVI BATCHAGeneral Manager, Group CorporateCommunications

DATO’ ADNAN ROFIEEChief Operating Officer, TM Retail

GROUP SENIOR MANAGEMENT


Page 39

Group Senior Management continued

DATO’ MOHAMEDYUNUS RAMLI ABBASGroup Chief ExecutiveOfficer, Celcom(Malaysia) Berhad

DATO’ BAHARUM SALLEHChief Executive Officer, TM Net Sdn Bhd

CHRISTIAN DE FARIAChief Executive Officer, TM International Sdn Bhd

RANBIR SINGH NANRASenior Vice President,Group Marketing, TM

AHMAD SOBRI HJ.ISMAILGeneral Manager,QIBE, TM

ABDUL AZIZ ABU BAKARSenior Vice President, Group Human Resource, TM

HASHIM MOHAMMEDGroup Chief Auditor, TM

MOHD ZAKRI HASSANGeneral Manager, Corporate Regulatory, TM

NASSER ABU BAKARGeneral Manager, Group Business Planning,TM

ABDUL MAJID ABDULLAHVice President, Corporate Strategy &Planning, TM


Page 40

CORPORATE GOVERNANCE STATEMENT


Page 41

Corporate Governance Statement continued

Your Company recognises that corporate governance

guidelines and best practices have evolved over a period

of time and your Board of Directors is committed to

pursue best practices with a view in building and

maintaining public trust. Your Company’s high standards

of corporate governance and the effective application of

the principles and best practices as set out in the

Malaysian Code on Corporate Governance (the Code)

throughout its Group did not go unnoticed, winning us

the “Best Company for Corporate Governance in

Malaysia” from the Asiamoney’s third Corporate

Governance Poll in 2004.

The Board will continue to play an active role in

improving governance practices to ensure that best

interests of shareholders and other stakeholders are

served by transparent disclosure policies.

The Board considers that the Company has fully complied

with Part I and Part II of the Code. This Statement,

together with other statements, such as the Statement on

Internal Control, sets out the manner in which the

Company has applied the principles and best practices of

the Code.

BOARD OF DIRECTORS

An experienced Board consisting of members with a wide

range of business, financial, technical and public service

background leads and controls the Group. This brings

depth and diversity in expertise and perspectives to the

leadership of a highly regulated telecommunication

business. Directors’ biographies, appearing on pages

28 and 37 illustrates an impressive spectrum of

experiences vital to the direction and management of a

telecommunication company.

“The objective of good corporate governance is to promotestrong, viable and competitive corporations. Boards of directorsare stewards of the corporation’s assets and their behaviourshould be focused on adding value to those assets by workingwith management to build a successful corporation and enhanceshareowners value.”

– The Joint Committee on Corporate Governance 2001

(The Canadian Institute of Chartered Accountants, the Canadian Venture Exchange and the Toronto Stock Exchange)


Page 42


During the year 2004, sixteen (16) Board Meetings were

held and the attendance of the current Directors are

recorded in the Statement accompanying the Notice of

the Annual General Meeting (AGM) on page 9.

Board Composition and Balance

A total of ten (10) Directors of the Board consist of a

Non-Executive Chairman, an Executive Director designated

as the Group Chief Executive Officer (Group CEO) and

four (4) Independent Non-Executive Directors representing

more than one third of the Board. The Board believes

that the current size is appropriate based on the

Company’s circumstances and according to the guidelines

for Government Linked Companies, where smaller Boards

are encouraged.

The roles of the Non-Executive Chairman, Tan Sri Dato’ Ir.

Muhammad Radzi Haji Mansor and the Group CEO, Dato’

Abdul Wahid Omar, are separate with clear distinction of

responsibilities between them. Dato’ Lim Kheng Guan is

the Senior Independent Non-Executive Director, called for

in the Code and to whom concerns pertaining to the

Group may be conveyed by shareholders and the public.

The Board’s principal focus is the overall strategic

direction, development and control of the Group. In

support of this focus, the Board approves the Group’s

strategic plan and its annual budget and throughout the

year, reviews the performance of the operating

subsidiaries against their budgets and targets. The

Group’s CEO is responsible for the implementation of

broad policies approved by the Board and he is obliged

to report and discuss at board meetings all material

matters currently or potentially affecting the Group and

its performance, including all strategic projects and

regulatory developments. The Chairman is responsible in

ensuring the integrity and effectiveness of the

relationship between the Non-Executive and Executive

Director(s). His interactions with various institutions, such

as his active participation as a member of the Board of

Engineers helps to bring about the benefits of the

engineering profession to the Group and the society.

The Non-Executive Directors provide considerable depth

of knowledge collectively gained from experiences in a

variety of public and private companies. YB. Datuk Nur

Jazlan Tan Sri Mohamed the Independent Non-Executive

Chairman of the Company’s Audit Committee is a Council

Member of the Malaysian Institute of Accountants (MIA).

The Independent Non-Executive Directors are independent

of management and free from any business or other

relationship, which could materially interfere with the

exercise of their independent judgement as defined

under paragraph 1.01 of the Listing Requirements of

Bursa Malaysia Securities Berhad (Bursa Securities).

They provide unbiased and independent views in

ensuring that the strategies proposed by the management

are fully deliberated and examined, in the interest of

shareholders, employees, customers, and the many

communities in which the Group conducts its business.

Independence and Conflict of Interest

The Independence of the Non-Executive Directors is under

constant review against best practices and regulatory

provisions. The Directors have a continuing responsibility

to determine whether they have a potential or actual


Page 43


conflict of interest in relation to any matter, which comes

before the Board. The Company and Group has adopted

a process whereby each Director is required to make

written declarations whether they have any interest in

transactions tabled at regular board meetings of the

Group.

Code of Business Ethics

In February 2004, your Company officially launched its

Code of Business Ethics in support of the Company’s

vision and core values, designed to instil, internalise and

uphold the value of “uncompromising integrity” among

the behaviour and conduct of the Board of Directors,

Management, Employees and all stakeholders of the

Company. The Group CEO, Management and all

employees are required to declare their assets and

interest according to the Code of Business Ethics. The

Board of Directors including all employees of the

Company are obliged to submit their certification of

compliance to the Company’s Code of Business Ethics.

Board Appointment Process

The Company has in place formal and transparent

procedures for the appointment of new Directors. These

procedures ensure that all nominees to the Board, are

first considered by the Board Nominating and

Remuneration Committee taking into account the

required mix of skills and experience and other qualities,

before making a recommendation to the Board and its

major shareholders.

Board Appraisal Process

In July 2004, your Board of Directors has adopted a

formal Performance Evaluation Framework (the

Framework) recommended by PwC Consulting Sdn Bhd.

The Framework comprises a Board Effectiveness

Assessment and the Board of Directors’ Self/Peer

Assessment. The Framework has been carefully designed

to maintain cohesiveness of the Board and at the same

time serves to improve the Board’s effectiveness. In order

to ensure integrity and independence of the appraisal

process, the external auditor, PricewaterhouseCoopers has

been engaged to tabulate and report to the Chairman,

the results of the evaluation process. Every board

member is provided with the results of the self-

evaluation marked against the peer evaluation to allow

for comparison.

Re-Election

In accordance with the Listing Requirements of Bursa

Securities and the Company’s Articles of Association, all

Directors are subject to re-election by rotation once in at

least every three (3) years and a re-election of Directors

shall take place at each AGM. Executive Directors also

rank for re-election by rotation.

The re-election of Directors ensures that shareholders

have a regular opportunity to reassess the composition of

the Board. Particulars of Directors submitted to

shareholders for re-election are enumerated in the

Statement Accompanying the Notice of AGM.



Page 44

Directors’ Training

The Board acknowledged the importance of continuous

education and training to enable effective discharge of

their responsibilities. All the Directors have successfully

completed the Mandatory Accreditation Programme

(MAP) during the year 2004, safe for Dato’ Haji Abd.

Rahim Haji Abdul who completed the MAP on 2 February

2005.

On 1 July 2004, an induction briefing was organised for

newly appointed Board of Directors, namely, the Group

CEO, Dato’ Azman Mokhtar and YB. Datuk Nur Jazlan

Tan Sri Mohamed. The said briefing included information

on the corporate profile and activities of the Group as

well as business plan targets and group performance.

During the year, the Directors have also attended various

seminars and international conventions to gain insight

into the state of the economy as well as latest regulatory

and technological developments in relation to the

Group’s business. Following the introduction of the

mandatory Continuing Education Programme (CEP) by

Bursa Securities in July 2003, the Directors actively

pursued relevant courses and seminars recognised under

the CEP.

In September 2004, Bursa Securities repealed of the

Practice Note No. 15/2003 (PN 15), being guidelines on

the CEP requirements, effective from 1 January 2005.

Following the repeal of PN 15, the board of directors of

each listed that the issuer must evaluate and determine

the training needs of its Directors on a continuous basis.

The training must be one that aids the Director in the

discharge of his duties as a Director.

Your Board of Directors has duly adopted a set of

guidelines for the Company’s Board Training Programme

effective from 1 January 2005, to address training needs

of the Directors in the absence of the Bursa Securities’

CEP requirements. A report on the status of Directors’

training activities would be compiled and tabled at

regular meetings of the Board Nominating &

Remuneration Committee to keep track and monitor the

progress of Directors’ training. The training status of

Directors will be reported in the Company’s next annual

report.

Directors’ Remuneration

The Board Nominating and Remuneration Committee has

recommended to the Board a framework for the

remuneration of the Executive and Non-Executive

Directors.

The Executive Directors’ remuneration comprises a salary,

allowances, bonuses and other customary benefits as

appropriate. Salary reviews take into account market

rates and the performance of the individual and the

Group. Remuneration of Non-Executive Directors is based

on a standard fixed fee. Additional allowances are also

paid in accordance with the number of meetings

attended during the year.


Page 45


Details of the remuneration of each Director of the Company, categorised into appropriate components for the

financial year ended 31 December 2004, are as follows:

FEES & BENEFITNAME OF DIRECTORS SALARY ALLOWANCES BONUS EX-GRATIA IN KIND TOTAL

(RM) (RM) (RM) (RM) (RM) (RM)

Non-Independent and Executive Directors:Dato’ Dr. Md Khir Abdul Rahman(Resigned on 1/7/2004) *429,846 64,550 59,400 200,000 9,788 763,584

Dato’ Abdul Wahid Omar(Appointed on 1/7/2004) 300,000 42,200 — — 7,921 350,121

Dato’ Dr. Abdul Rahim Haji Daud(Redesignation from Executive Director to Non-Executive Director on 1/7/2004) **310,538 119,595 70,400 — 58,989 559,522

Non-Executive Directors:Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor — 208,312 — — 19,002 227,314

Datuk Dr. Halim Shafie(Retired on 18/5/2004) — 26,400 — — 625 27,025

Dato’ Abdul Majid Haji Hussein(Resigned on 2/10/2004) — 30,900 — — 1,250 32,150

YB. Dato’ Joseph Salang Gandum(Resigned on 1/4/2004) — 43,056 — — 57,304 100,361

YB. Dato’ Ir. Haji Mohd Zin Mohamed(Resigned on 1/4/2004) — 35,912 — — 33,994 69,906



Page 46

FEES & BENEFITNAME OF DIRECTORS SALARY ALLOWANCES BONUS EX-GRATIA IN KIND TOTAL

(RM) (RM) (RM) (RM) (RM) (RM)

Non-Executive Directors:

Dato’ Dr. Mohd Munir Abdul Majid(Resigned on 1/6/2004 also as Chairman of Celcom) — 116,150 — — 134,824 250,974

Ir. Prabahar N.K. Singam — 137,705 — — 35,103 172,808

Dato’ Lim Kheng Guan — 135,494 — — 70,895 206,389

Rosli Man — 77,700 — — 2,033 79,733

Tan Poh Keat(Resigned on 1/6/2004) — 95,450 — — 2,014 97,464

YB. Datuk Nur Jazlan Mohamed(Appointed on 1/6/2004) — 16,700 — — 875 17,575

Dato’ Azman Mokhtar(Appointed on 1/6/2004) — #14,600 — — 875 15,475

Dato’ Haji Abd. Rahim Haji Abdul(Appointed on 23/11/2004) — 1,600 — — 125 1,725

Alternate Directors:Mohammad Zanudin Ahmad Rasidi(Ceased as Alternate Director to Dato’ Abdul Majid and appointed as Alternate to Dato’ Haji Abd. Rahim Haji Abdul on 23/11/2004) — 5,400 — — 1,500 6,900

Dato’ Suriah Abd Rahman(Ceased as Alternate Director to Datuk Dr. Halim Shafie on 18/5/2004) — 5,700 — — 625 6,325

TOTAL AMOUNT 1,040,384 1,177,424 129,800 200,000 437,743 2,985,351

Notes:* Inclusive of compensation of RM286,000 upon resignation** Inclusive of gratuity of RM132,000# Paid directly to Khazanah Nasional Berhad (Khazanah) since Dato’ Azman Mokhtar is a nominee Director from

Khazanah.


Page 47


ACCESS TO INFORMATION

The Board and its Committees are supplied with an

agenda and relevant up-to-date information for review in

good time prior to each meeting to enable them to

make informed decisions. The process of Board papers

approval, compilation and dissemination is expedited via

an efficient and securely encrypted electronic Board

Document Management System to facilitate an informed

decision-making process within the Group.

The Board has full and timely access to all relevant

information to discharge its duties effectively. All

Directors have access to the advice and services of the

Company Secretary. The Board is constantly advised and

updated on statutory and regulatory requirements

pertaining to their duties and responsibilities. Procedures

are in place for Directors and board committees to seek

independent professional advice in the course of fulfilling

their responsibilities, at the Company’s expense.

BOARD COMMITTEES

The Board delegates certain responsibilities to Board

Committees, namely, the Audit Committee, Nominating

and Remuneration Committee, Tender Committee,

Employee Share Option Scheme Committee, 3G

Implementation Committee and Commercial Dispute

Resolution Committee. All committees have written terms

of reference and the Board receives reports of their

proceedings and deliberations. Where committees have

no authority to make decisions on matters reserved for

the Board, recommendations would be highlighted for

the Board of Directors’ approval. The Chairmen of the

various committees report the outcome of the committee

meetings to the Board and relevant decisions are

incorporated in the minutes of the Board of Directors’

meetings.

Audit Committee

A full Audit Committee report enumerating its

membership, its role and its activities during the year is

set out on pages 64 to 72.

Nominating and Remuneration Committee

Membership:

Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor

(Chairman – Non-Independent Non-Executive)

Ir. Prabahar N.K. Singam

(Independent Non-Executive)

Dato’ Lim Kheng Guan


Objectives:

The main objectives of the Nominating and Remuneration

Committee are:

• to ensure that the Directors of the Board bring

characteristics to the Board, which provide a required

mix of responsibilities, skills and experience;


Page 48


• Advise the Board on the performance of the Executive

Director(s) and an assessment of their entitlement to

performance related pay and advise the Executive

Director(s) on the remuneration terms and conditions

of senior management; and

• Establish and recommend a formal and transparent

procedure for developing a policy on the

remuneration of the Non-Executive Chairman, Non-

Executive Directors and Board Committees, which

recommendation shall be decided by the Board of

Directors as a whole.

During the year, the Nominating and Remuneration

Committee has been assigned the role to monitor and

facilitate the administration and conduct of the Board

appraisal/evaluation process and in ensuring the integrity

and independence of the appraisal process.

The Nominating and Remuneration Committee has the

authority to examine a particular issue and report back

to the Board with recommendations. The determination

of remuneration packages of Directors is a matter for the

Board as a whole and individuals are required to abstain

from discussion on their own remuneration. The

Committee met eight (8) times during the year.

• to set the policy framework and to make

recommendations to the Board on all elements of the

remuneration, terms of employment, reward structure

and fringe benefits for Executive Director(s) and other

top selected management positions with the aim to

attract, retain and motivate individuals of the highest

quality.

Principal Duties and Responsibilities:

• Recommend to the Board, candidates for directorship

on the Board of the Company and its Group as well

as membership of all other Board Committees. In

making its recommendations, the Committee considers

candidates from the Management for directorship in

its Group of companies as proposed by the Group

CEO;

• Examine the size of the Board with a view to

determine the number of Directors on the Board in

relation to its effectiveness and review its required

mix of skills and experience and other qualities;

• Recommend suitable orientation, educational and

training programmes to continuously train and equip

existing and new Directors;

• Set, review, recommend and advise the policy

framework on all elements of the remuneration such

as reward structure, fringe benefits and other terms

of employment of the Executive Director(s) having

regard to the overall Group policy guidelines and

framework;


Page 49


Tender Committee

Membership:

Dato’ Haji Abd. Rahim Haji Abdul


Dato’ Abdul Wahid Omar

(Group CEO – Non-Independent Executive Director)

Dato’ Dr. Abdul Rahim Haji Daud

(Non-Independent Non-Executive)

YB. Datuk Nur Jazlan Tan Sri Mohamed


Rosli Man


Ir. Prabahar N.K. Singam


Mohammad Zanudin Ahmad Rasidi

(Alternate to Dato’ Haji Abd. Rahim Haji Abdul)


The principal duties and responsibilities of the Tender

Committee are to ensure that the procurement process

complies with the relevant policies and requirements and

to consider, evaluate and approve or recommend awards

which are beneficial to the Company taking into

consideration various factors such as price, usage of

product and services, its quantity, duration of service and

other relevant factors. The Committee met eight (8) times

during the year.

Employee Share Option Scheme (ESOS) Committee

Membership:




(Group CEO – Non-Independent Executive Director)





Mohammad Zanudin Ahmad Rasidi

(Alternate to Dato’ Haji Abd. Rahim Haji Abdul)


The principal duties and responsibilities of the ESOS

Committee are to construe and interpret the ESOS and

options granted under it, to define the terms therein and

to recommend to the Board to establish, amend and

resolve rules and regulations relating to the scheme and

its administration. The Committee only meets as and

when required.

Ad-Hoc Committees

Apart from the above, specific and ad-hoc Board

Committees, such as the Commercial Dispute Resolution

Committee and 3G Implementation Committee were

established on need basis to deliberate and expedite

decision-making processes on specific aspects of the

business and corporate exercises.



Page 50

To ensure easy and convenient access to the Group’s

financial information by shareholders and investors, press

releases, annual reports and other corporate information,

a website is maintained at http://www.tm.com.my. The

Bursa Securities also provides for the Company to

electronically publish all its announcements including its

quarterly results and Annual Report through Bursa

Securities’ Internet website at

http://www.announcements.bursamalaysia.com

INVESTOR RELATIONS

In line with good corporate governance practices, the

Company’s Investor Relations (IR) unit proactively and

actively disseminates relevant information about the

Group to the investment community, specifically the

institutional fund managers and analysts.

Your Company is one of the most actively covered

companies in the Kuala Lumpur Composite Index with

regular tracking by more than 18 research brokers, 3

rating agencies and over 200 domestic and foreign

institutional investors, both in the equity and debt

markets. The IR unit maintains very close contact with

them, to ensure that the Group’s strategies, operational

activities and financial performance are well understood

and that such information is made available to them in a

timely manner.

RELATIONSHIP AND COMMUNICATION WITH

SHAREHOLDERS/INVESTORS

The Company is committed to regular and proactive

communication with investors and shareholders. Formal

channels of communication are used to give an account

to shareholders on the performance of the Group.

In addition to quarterly financial reports, the Company

communicates with shareholders and investors through its

annual report, with comprehensive and sufficient details

about financial results and activities of the Group. The

annual report published in English language, is

despatched to shareholders who are also given the

option to receive the annual reports in Bahasa Malaysia

(the national language) upon request. Established

procedures are in place to ensure the timely public

release of share price sensitive information.

The AGM provides an open forum at which shareholders

and investors are informed of current developments and

where ample time is allowed for questions to be raised

to Board members and Committees’ Chairman. The

Company supports the Code’s principle to encourage

shareholder participation. The Company’s Articles of

Association allow a member entitled to attend and vote

to appoint a proxy to attend and vote instead of the

member and also provide that a proxy need not be a

member of the Company. A press conference is held

immediately after the AGM where the Chairman,

Executive Directors and Group Chief Financial Officer are

present to clarify and explain issues raised by the media.


Page 51


Regular contacts to provide accurate and timely

information are established through road shows, company

visits, and one on one meetings, teleconferences and e-

mails. Your Company participated actively in more than

10 local and overseas investor conferences in Los Angeles,

London, Hong Kong, Japan and Singapore, in the year

2004 including the Bursa Malaysia’s Investor Week 2004.

Your Company is one of the few corporations in Malaysia

that conducts teleconferences every quarter to brief

analysts on its quarterly results. At these sessions, analysts

are not only given a comprehensive review of the

Group’s financial performance but are also given the

opportunity to clarify whatever queries they may have in

question and answer sessions. The content of these

briefings is posted on the Company’s website

http://www.tm.com.my.

The senior management mainly, the Group CEO and the

Group Chief Financial Officer, are actively involved in IR

activities, meeting fund managers and analysts regularly.

Information that is disseminated to the investment

community conforms to Bursa Securities disclosure rules

and regulations. Care has been taken to ensure that no

market sensitive information such as corporate proposals,

financial results and other material information is

disseminated to any party without first making an official

announcement to the Bursa Securities for public release.

ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board aims to provide and present a balanced and

meaningful assessment of the Group’s financial

performance and prospects at the end of each financial

year, primarily through annual financial statements,

quarterly and half yearly announcement of results to

shareholders as well as the Chairman’s Statement and the

Group CEO’s review of operations in the annual report.

The Board is assisted by the Audit Committee to oversee

the Group’s financial reporting processes and the quality

of its financial reporting.

Directors’ Responsibility Statement

The Directors are required by the Companies Act, 1965 to

ensure that financial statements prepared for each

financial year give a true and fair view of the state of

affairs of the Company and the Group as at the end of

the financial year and of the results and cash flow of the

Group for the financial year. The Directors consider that

in presenting these financial statements, the Group has

used appropriate accounting policies, consistently applied

and supported by reasonable and prudent judgements

and estimates.


Page 52

The Directors have a general responsibility for ensuring

that the Company and the Group keep accounting

records and financial statements, which disclose with

reasonable accuracy the financial position of the

Company and the Group. Due care and reasonable steps

are taken by the Directors to ensure that such financial

statements comply with the Companies Act, 1965,

approved accounting standards in Malaysia and other

regulatory provisions.

Internal controls

The Board acknowledges its overall responsibility for

maintaining a sound system of internal controls to

safeguard shareholders’ investment and Group’s assets.

The Statement on Internal Control is set out on pages 73

to 75 of the annual report providing an overview of the

state of internal controls within the Group.

Relationship with Auditors

An appropriate relationship is maintained with the

Company’s Auditors through the Audit Committee. The

Audit Committee has been explicitly accorded the power

to communicate directly with both the external Auditors

and internal Auditors.

The role of the Audit Committee in relation to the

Auditors is set out in the Terms of Reference on pages

70 to 72.

Audit Committee

The Audit Committee also conducts review of the Internal

Audit Function in terms of its authority, resources and

scope as defined in the Internal Audit Charter.

Furthermore, it ensures the independence of the internal

auditors and unrestricted access to information and

people in the Group. Highlights of activities conducted by

the Committee are detailed in the Audit Committee

Report on pages 67 to 68 inclusive.

Signed on behalf of the Board of Directors pursuant to a

resolution dated 24 February 2005.

TAN SRI DATO’ Ir. MUHAMMAD RADZI HAJI MANSOR

Chairman



Page 53

RISK MANAGEMENT


Page 54

Risk Management continued

INTRODUCTION

The TM Group recognises that an effective risk management programme is critical to ensure that it

continues to provide unsurpassed services to its customers and, at the same time, enhance

shareholder value through consistent profitability.

As such, the Board continues to

acknowledge its responsibility in

maintaining a sound system of internal

control to safeguard shareholders’

investment and the Group’s assets and

for reviewing the effectiveness,

adequacy and integrity of these systems.

The Board also recognises that such

internal control systems are designed to

manage, rather than eliminate, the risk

of failure to the achievement of

business objectives. Therefore, such

systems can provide only reasonable but

not absolute assurance against possible

losses originated from within the

organisation or due to external factors

that sometimes go beyond the Group’s

control.

TM has put in place the processes for

identifying, evaluating and managing

the significant risks faced by the Group

using the integrated Enterprise Risk

Management (ERM) framework. These

processes have been in place for the

whole of the 2004 financial year and

have assisted the Group in formalising a

process to identify, measure, respond,

monitor and review the group-wide risk

exposures. The adopted ERM framework

has seven phases namely:

TM GROUP DEFINITION OF

RISKS & RISK

MANAGEMENT

Risk is any event or

uncertainty that may

enhance or impede the

Group’s ability to achieve

its current or future

business objectives.

Risk Management is the

systematic, proactive

identification of threats to

resources and the

development of

appropriate strategies

which will minimise risks.1. Establish Context2. Define Objectives3. Identify Risks

5. Assess Risks

4. Analyse Risks6. Respond to Risk

Monitor Monitor and and

ReviewReview


Page 55


KEY RISK MANAGEMENT DEVELOPMENTS IN 2004

The Group’s profitability depends on its ability to keep the risk management

process alive and embedded in all key business decision-making processes. In that

respect, the following key initiatives have been carried out to further strengthen

the risk management implementation:

a. Risk Identification and Assessment Program

To ensure that the risk identification and assessment programme works

continuously, a total of 48 ERM workshops have been carried out covering

almost all major business units and operating companies within the TM

Group, both local and overseas operations, using the “AIR” concept:

i. Awareness – continually educating all levels of management, starting

with senior management, on the standard and structured risk

management processes adopted by the TM Group. This will ensure

standardisation of risk management processes and reporting within the

Group.

ii. Implementation – in the same workshop, a strategic risk identification

and assessment will be held where senior management will be required

to apply the structured risk management processes that they have

learnt to arrive at the list of principal risks and the control plans for

their respective business operations. At this stage, the trained risk

facilitators will closely guide the participants to complete the risk

management value chain using the Group’s standard risk identification

and assessment template.

iii. Review – the 2003 risk profiles will be reviewed to determine the risk

status, control effectiveness status as well as identification and

assessment of newly recognised risks. The Group risk profiles will be

updated accordingly upon completion of the workshop.

ESTABLISH CONTEXT

• Determine businessenvironment, strategicdirection and culture.

DEFINE OBJECTIVES

• Understand Group businessobjectives.

• Understand whatexpectations has been set.

• Understand what must bedelivered.

IDENTIFY RISKS

• Identify and describe anevent that might impact onbusiness objective.

• Develop comprehensive listof possible loss scenarios.

• Review various sources ofrisks.

• Categorise the risks –Strategic, Compliance,Systems, Operational &Financial.

ANALYSE RISKS

• Determine the likelihoodthat the event will happen.

• Determine the severityshould the risk happen.

• Determine level of riskacceptability.



Page 56

b. Embedding ERM into Balanced Score Card

Structured identification and assessment of risks during the business

planning process will further strengthen the Group’s commitment towards

ensuring that risk management starts at the very early stage of setting the

annual business direction. On this score, the team from the Risk

Management Unit and the Corporate Strategy Division is in the process of

modifying the risk identification and assessment module in the Balanced

Score Card programme to utilise the structured ERM framework towards

standardising the risk management approach. Once completed, the business

performance review will be more objective, especially in managing non-

performance where control failure can be easily identified from the

documented risk response plan.

c. ERM Guidelines

As a reference tool, the ERM Guidelines Booklet has been updated to

further strengthen the ERM awareness programme. The updated guidelines

will not only guide the management team to understand the overall risk

management framework, process and value chain but also illustrate how

they can implement enterprise risk management within their organisation.

The guidelines also provide clear definition of the risk management role for

the following levels of management:

i. Board of Directors – The Board has responsibility for determining the

strategic direction of the Company and for creating the environment

and structure for risk management to operate effectively.

ii. Management Team – The Group Chief Executive Officer (GCEO) is

accountable to the stakeholders for the implementation of a risk

management framework and practices throughout the organisation.

All line managers must support the GCEO in ensuring that the

risk-based approach is fully adopted and embedded in all business

processes.

ASSESS RISKS

• Determine the risk ratingusing the TM Group RiskMatrix.

• Assess current controleffectiveness.

• Prioritise the risks.

RISK RESPONSE

• Identify all possible optionsto reduce the likelihood orlower the risk impact.

• Evaluate best possible andcost effective options.

• Develop 4Ts risk responseplan – Take, Treat, Transferand/or Terminate.

MONITOR & REVIEW

• Register risks and responseplans into Risk InformationManagement System (RiMS).

• Monitor progress on riskresponse planimplementation.

• Review effectiveness ofcurrent response planagainst adjusted riskscenario.

• Re-evaluate risk andresponse plan priority.

• Quarterly report to GroupRisk ManagementCommittee, Board AuditCommittee & SeniorManagement.


Page 57


iii. Group Risk Management Committee (GRMC) – The GRMC is responsible

for overseeing the ERM implementation, regularly updating the Board

on the group risk profiles and improving the implementation

methodology.

iv. Group Risk Management Unit (GRMU) – The GRMU is responsible for

recommending and reviewing Group risk management strategies. It also

acts as the ERM champion within the Group, assists operating

companies and business units to carry out risk identification and

assessment programmes. The unit also carries out periodical risk

management awareness sessions for the Group.

v. Group Internal Audit (GIA) – The GIA is responsible for providing

independent assessment of the adequacy and reliability of the risk

management programme.

vi. Risk Coordinators at Business Unit or Operating Company – These

coordinators are responsible for implementing risk management policies

and procedures in their day-to-day business processes.

BUSINESS RISKS CATEGORISATION

Considering the diverse business operations of the TM Group, both local and

international, the Group is exposed to a wide range of risks. To streamline the

risk profiling, the TM Group has reviewed and adopted the following five broad

risks categories:

a. Strategic risk

b. Compliance risk

c. System risk

d. Operational risk

e. Financial risk

TM GROUP RISK

MANAGEMENT AND INTERNAL

CONTROL POLICY STATEMENT

TM Group is committed to a

risk-based system of internal

controls designed to provide

reasonable assurance of

achieving the Group business

objectives, safeguarding and

enhancing shareholder’s

investment and the Company

assets.

The risk management

approach will be conducted

through the implementation of

an integrated risk

management framework and

programme throughout the

Group. Risk Management is a

systematic, proactive

identification of threats to

resources and the development

of appropriate strategies,

which will minimise risks.



Page 58

Apart from standardising the classification of risk categories, the Group has also

recognised the importance of splitting the drivers of key risks into two sections:

a. Internally driven key drivers

b. Externally driven key drivers

This move will enable the Group to further focus and prioritise the review and

implementation of its control measures.

The Group’s business is affected by a number of factors, not all of which are

wholly within its control. Although many of the factors influencing the Group’s

performance are macro economic and likely to affect the business performance

generally, some aspects of the Group’s business make it particularly sensitive to

certain areas of business risk.

RISK PORTFOLIO MONITORING AND TRACKING

The process owner of each of the above risk categories has put in place

reasonable control measures to minimise the impact of the risk or reduce the

likelihood of it happening. Each control measure is being closely tracked through

the integrated Risk Information Management System (RiMS) and the overall risks

portfolio will be subject to review at six-months intervals. The review process will

involve the following:

a. Alignment of risk description with the existing and additional control

measures.

b. Follow-up on the implementation progress of control measures.

c. Review the risk rating and re-prioritise the control measures implementation

considering the changes to the factors affecting the likelihood and the

extent of impact, together with factors that affect the suitability or cost of

the various risk response.

d. Identification of newly emerged risks arising from changes to the business

operation and processes.

TM GROUP RISKMANAGEMENT AND INTERNALCONTROL POLICY STATEMENT

(cont’d.)

The responsibility andaccountability for embeddingrisk management are asfollows:

1. The Group Chief ExecutiveOfficer is accountable tothe stakeholders for theimplementation of riskmanagement frameworkand practices.

2. The Chief Operating Officerand Chief Executive Officerof operating companieswithin the Group areresponsible andaccountable for thefollowing:

• establish clear businessobjectives, identify,analyse, assess significantrisks and formulate riskstrategies


Page 59


Triggered risks or near misses will be escalated to the Board through the Group

Risk Management Committee and Board Audit Committee meetings.

CONCLUSION

Risk Management initiatives within the TM Group continue to be strengthened

from time to time in response to the constantly evolving business and

operational conditions. Management control through policies and guidelines are

being constantly reviewed and updated to close the operational gaps between

existing and new business processes. Control Self-Assessments performed at

operational and day-to-day business levels are actively performed to complement

ERM that manages high level and strategic business risks. This ensures the

robustness of the Group’s overall risk management initiatives.

TM GROUP RISK

MANAGEMENT AND INTERNAL

CONTROL POLICY STATEMENT

(cont’d.)

• develop risk management

standards and practices in

the areas for which they

are accountable;

• ensure that these

practices are fully

communicated to and

have active support of all

employees;

• ensure systematic, regular

identification and analysis

of loss exposures;

• design, operate and

monitor a sound system

of internal control; and

• ensure risk-based

approach is adopted to

internal controls and

embedded in all business

processes.


Page 60

CODE OF BUSINESS ETHICS

The objective of TM Group’s Code of Business Ethics (CBE) is to support its vision and core values

of “KRISTAL” by informing the Board of Directors, Managers, Employees and all representatives of

TM of the acceptable and unacceptable business conducts. The CBE was designed to be in line

with the Group’s initiative to instill, internalise and uphold the value of “Uncompromising

Integrity” in the behaviour and conduct of all stakeholders of the Group.

The CBE clearly outlines the responsibilities of the Directors, Management and employees. All

Directors, Management, employees and other representatives are responsible for complying with

all the applicable laws, regulations and with the CBE. Violation of the laws or the CBE could

result in disciplinary action, including termination or dismissal.

The CBE applies to the Group’s management of company assets and dealings with stakeholders

including employees, customers, suppliers and business partners, shareholders, competition,

communities and government.

The CBE also guides the Group with regard to potential Conflict of Interest situations. It clearly

states that we operate and make business decisions based on the best interest of the Group.

Business decisions and actions are not motivated by personal interest, consideration or

relationship. Relationships with prospective or existing suppliers, contractors, customers,

competitors or regulators do not affect our independent and sound judgements on behalf of the

Group. All employees are required to declare their assets and conflict of interest (if any) to their

supervisors and the Group Human Resource Management, as requested by the Management or

when the need arises.

The Board and the Management are committed to an internal whistle-blowing programme by

introducing a safe and acceptable platform for employees to channel concerns about illegal,

unethical and improper business conduct affecting the Group. Through this programme, employees

are encouraged to discreetly and anonymously disclose concerns about any impropriety within the

Group. The aim of this policy is for the employees to raise the matters in an independent and

unbiased manner. The Board gives assurances that employees will not be at risk of any form of

victimisation, retribution or retaliation from their superiors or the Management.


Page 61

Code of Business Ethics continued

All employees are reminded to be alert and

sensitive to situations that could result in

actions by themselves, or others, which might

violate the CBE. Where employees are

uncertain what is the proper conduct in a

particular situation, it is the employee’s

obligation to contact his or her immediate

superior or appropriate personnel from the

Legal, Human Resources, Internal Audit or

Change Management Office.

The CBE was approved by the Board on

26 February 2004 and was launched in October

2004. The CBE awareness road shows were

conducted for employees on the need to be

more transparent in all their daily business

transactions. By the end of April 2005, all

employees are required to declare their assets,

conflict of interests (if any) and compliance

with CBE. To ensure the objectives of CBE are

fully understood and practised in our daily

activities, training programmes on CBE and

related activities have been planned and will

be executed in 2005. TM’s contractors and

other major business partners shall also be

included in the Group’s CBE programmes in

April 2005 onwards.

The Government, under the National Integrity

Plan (NIP), has recommended the role of a

Chief Ethics Officer as a focal point to promote

and effectively implement ethics programme

for a more ethical corporate environment. TM’s

perspective is that the role and objectives of a

Chief Ethics Officer are to provide independent

assurance that there are ethical practices and

that all TM Group employees maintain values

of uncompromising integrity. These objectives

are accomplished by conducting preventive

measures through intelligence on information

brokering, carrying out investigations on

internal control incidents and allegations of

employees misconducts. These roles are

assigned to a newly set up Special Affairs Unit

headed by an experienced General Manager.


Page 62

ADDITIONAL COMPLIANCE INFORMATION

The following information is provided in compliance with the Listing Requirements of

Bursa Malaysia Securities Berhad (Bursa Securities) for the financial year ended 31 December 2004:

1. SHARE BUYBACKS

The Company did not enter into any share buyback transactions during the financial year.

2. AMERICAN DEPOSITORY RECEIPT (ADR) OR GLOBAL DEPOSITORY RECEIPT (GDR) PROGRAMME

The Company did not sponsor any ADR or GDR programme during the financial year.

3. IMPOSITION OF SANCTIONS/PENALTIES

There were no public sanctions and/or penalties imposed on the Company and its subsidiaries,

directors or management by the relevant regulatory bodies during the financial year.

4. NON-AUDIT FEES

The amount of non-audit and other non-statutory audit fees paid and payable to the

external auditors and their affiliated companies by the Group for the financial year ended

31 December 2004 are as follows:

RM

a) PricewaterhouseCoopers, Malaysia 1,475,500

b) PricewaterhouseCoopers Taxation Services Sdn Bhd 1,187,060

c) Overseas Firm affiliated to PricewaterhouseCoopers, Malaysia 82,217

Total 2,744,777


Page 63

Additional Compliance Information continued

5. UTILISATION OF PROCEEDS FROM

ISSUANCE OF BONDS

The Company, via its wholly-owned

subsidiary, TM Global Incorporated, a

company incorporated in the Federal

Territory of Labuan under the Offshore

Companies Act, 1990, issued a 10-year

USD500.0 million Guaranteed Notes on

22 September 2004, carrying an interest

rate of 5.25% per annum payable

semi-annually in arrears on 22 March and

September commencing in March 2005.

The Notes will mature on 22 September

2014. Proceeds from the Bonds will be

utilised to refinance TM’s maturing debt

and for general working capital purposes.

The Notes are unconditional and

irrevocably guaranteed by the Company.

6. VARIATION IN RESULTS

There was no profit estimation, forecast or

projection made or released by the

Company during the financial year under

review.

7. PROFIT GUARANTEE

There was no profit guarantees given by

the Company during the financial year

under review.

8. MATERIAL CONTRACTS INVOLVING

DIRECTORS’ AND MAJOR SHAREHOLDERS’

INTERESTS

There were no material contracts entered

into by the Company and/or its

subsidiaries involving Directors and major

shareholders’ interests either subsisting as

at 31 December 2004 or entered into since

the end of the previous financial year

ended 31 December 2003.

9. RECURRENT RELATED PARTY

TRANSACTIONS OF A REVENUE OR

TRADING NATURE (RRPTS)

There were no RRPTs entered into by the

Company and/or its subsidiaries involving

Directors and major shareholders either

subsisting as at 31 December 2004 or

entered into since the end of the previous

financial year ended 31 December 2003.


Page 64

AUDIT COMMITTEE REPORT

MEMBERSHIP

The Audit Committee comprises three

Independent Non-Executive Directors and two

Non-Independent Non-Executive Directors of

the Board as follows:-


(appointed 1 July 2004) (Chairman)

Independent Non-Executive Director


Senior Independent Non-Executive Director


(appointed 1 July 2004)

Non-Independent Non-Executive Director

Rosli Man (appointed 1 July 2004)



(appointed on 30 November 2004)


Dato’ Dr. Mohd Munir Abdul Majid

(resigned 1 June 2004) (Chairman)

Senior Independent Non-Executive Director

YB. Dato’ Joseph Salang Gandum

(resigned 1 April 2004)


Dato’ Abdul Majid Haji Hussein

(resigned 1 July 2004)


YB. Datuk Nur Jazlan Tan Sri Mohamed(Chairman)Independent Non-Executive Director

Dato’ Lim Kheng GuanSenior Independent Non-Executive Director

Dato’ Dr. Abdul Rahim Haji DaudNon-Independent Non-Executive Director

Rosli ManIndependent Non-Executive Director


Page 65

Audit Committee Report continued

Dato’ Haji Abd. Rahim Haji AbdulNon-Independent Non-Executive Director

Hashim MohammedGroup Chief Auditor/Secretary to the AuditCommittee

Ir. Prabahar N.K. Singam (resigned 1 July 2004)


Hashim Mohammed

Group Chief Auditor/Secretary to the Audit Committee

Members of the Audit Committee shall not have a relationship which in the opinion of the Board

of Directors, would interfere with the exercise of independent judgement in carrying out the

functions of the Audit Committee. Members of the Audit Committee shall possess wisdom, sound

judgement, objectivity, independent attitude, management experience and knowledge of the

industry.

YB. Datuk Nur Jazlan Mohamed, the Chairman of the Audit Committee and Dato’ Lim Kheng

Guan, both, independent non-executive directors are members of the Malaysian Institute of

Accountants (MIA).


Page 66


MEETINGS

The Audit Committee had five (5) meetings in the financial year 2004. The meeting attendance of the Committee

members is as follows:

ATTENDANCE

YB. Datuk Nur Jazlan Tan Sri Mohamed 2/2

Dato’ Lim Kheng Guan 5/5

Dato’ Dr. Abdul Rahim Haji Daud 2/2

Rosli Man 2/2

Dato’ Haji Abd. Rahim Haji Abdul N/A

Dato’ Dr. Mohd Munir Abdul Majid 2/3

Dato’ Abdul Majid Haji Hussein 1/3

YB. Dato’ Joseph Salang Gandum 1/1

Ir. Prabahar N.K. Singam 3/3

Note: Dato’ Dr. Abdul Rahim Haji Daud had also attended 2 Audit Committee meetings on invitation as Management

representative prior to his appointment as Audit Committee member.

Group Chief Financial Officer, other Senior Management members and the External Auditors attended these meetings

upon invitation to brief the Committee on specific issues. Prior to the meetings, the Group Chief Auditor and the

External Auditors separately met with the Chairman of the Audit Committee in private without the Management’s

presence.

Minutes of meetings of the Audit Committee were circulated to all members of the Board and significant issues were

discussed at Board Meetings.


Page 67


SUMMARY OF ACTIVITIES IN THIS FINANCIAL YEAR

The Audit Committee carried out its duties as set out in

the terms of reference as on pages 70 to 72.

Apart from its duties as set out in its terms of reference,

the Audit Committee also reviewed and deliberated on

reports and updates as provided by:

(a) The Task Force for Best Practices which was

established by the Audit Committee in the year 2001

mainly to support them on the following:-

• New updates and developments of best business

practices and exposure drafts, principally on

Corporate Governance, statutory and regulatory

requirements, compliance to accounting standards

and other business guidelines. The Task Force

consistently submitted their reports at every

Audit Committee meeting.

• The planning, implementation and progress

report of enterprise-wide risk management

programmes that were identified and

implemented at various major divisions and

subsidiaries of the Group to institute risk

management, control and governance practices

by the Management to achieve business

excellence and support overall Group objectives.

• Receive and review report on the adequacy,

effectiveness and reliability of the system of

internal controls based on control self assessment

performed annually by the CEO/COO of the

Operating Companies/Subsidiaries through the

Annual Internal Control Assurance Letter

reporting and Internal Control Incidents

submitted to the Group Chief Executive Officer

and the Group Chief Auditor.

• Receive and review reports on the status of

financial control based on self-assessment

conducted quarterly by CEO/CFO of the

Operating Companies/Subsidiaries through the

Financial Controls Compliance and Assurance

Letter submitted to Group CFO.

• Review and recommend the Risk and Internal

Control Policy for Audit Committee’s approval.

• Review and deliberate on new policy updates,

revisions or enhancements of the Business Process

Manual and Subsidiary Policy as recommended by

the Management to ascertain that the

improvements made are aligned with business

best practices and effective internal control

processes.

• Monitoring and coordinating reviews on the

effectiveness of the Group’s system of internal

controls, through reports furnished by the Group

Internal Audit, the External Auditor and the

Management.

• The implementation of the Enhanced Telekom

Operation Maps (eTOM) as the

telecommunications industry business framework

and best practices to be used for reference by

Management and internal auditors to benchmark

against the industry standards.



Page 68

(b) The Management Audit Issues Action Committee

which was established by the Audit Committee in

year 2002 to update the Audit Committee on

progress of:

• Management actions to resolve significant

internal controls and accounting issues as

highlighted by the Internal and External auditors.

• Any other recommendations made by the Audit

Committee for Management actions.

(c) The Internal Control Incident Committee which was

established in year 2003, deliberates alleged major

control incidents or failures based on reports

submitted from Management or special

investigation/audit conducted and to propose next

cause of actions. The reports are summarised by the

Group Chief Auditor and updated to the Audit

Committee on quarterly basis describing the

following:-

• the nature and root causes of control failures

which have financial impact and/or affecting

image and reputation of the Group.

• lateral learning to prevent recurrence of similar

incident within the Group.

• status of actions taken by Management to

remedy the control weaknesses and appropriate

disciplinary actions.

During the year, the Audit Committee reviewed its

Terms of Reference and the Internal Audit Charter

and these were approved by the Board. The

revisions were made to adopt the latest best

practices in corporate governance.

INTERNAL AUDIT

The Audit Committee is strongly supported by a well-

established Group Internal Audit function which reports

to the Audit Committee on its activities based on the

approved annual Internal Audit Plan. Group Internal

Audit’s main focus is to evaluate and report on the

adequacy, integrity and effectiveness of the Group’s

overall system of internal control and governance for

assurance.

The risk based internal audit plan is developed to cover

key compliance, financial, operational and strategic

matters that are significant to the overall performance of

the Group. The audit activities include:

• Governance and Management Control Reviews

• Reviews of strategic plans and business processes

• Information Technology and Systems Reviews

• Revenue Assurance Audits

• Audits on Financial Reporting and Controls, Technical

and Network, Human Resource Management,

Marketing and Sales, Legal and Compliance

• Facilitations of Enterprise Risk Management (ERM) and

Control Self Assessment (CSA) Workshops and

subsequent post implementation reviews

• Special reviews as requested either by the Board,

Audit Committee or Management

• Consultancy services such as due diligences and the

drafting of code of ethics.


Page 69


PROFESSIONALS

CATEGORY NO

Masters of Business Administration

(MBA) and others 11

Certified Practising Accountants (CPA)/

Chartered Accountants (CA) 7

Certified Internal Auditors (CIA) 5

CIA Internships 5

CPA/CA/ACCA Internships 3

MBA/Masters studentship 3

Certified Information Systems Auditor (CISA) 1

STATEMENT ON EMPLOYEES’ SHARE OPTION SCHEME

(ESOS)

The Audit Committee hereby verify that during the

financial year under review, the allocation of option

shares pursuant to the ESOS 3 of TM (Scheme) to eligible

employees had been made in accordance with the criteria

of allocation of options shares as set out in the By-Laws

and guidelines governing the Scheme.

The Audit Committee receives regular and timely reports

from the Group Chief Auditor on audit work and

activities. In 2004, Group Internal Audit undertook 202

audit assignments covering locations at Corporate

Headquarters, local and overseas operating subsidiaries

and strategic business units. The Group Chief Auditor

receives periodic reports from subsidiaries with internal

audit functions such as Celcom (Malaysia) Berhad, VADS

Berhad, MTN Networks (Pvt) Ltd and TM International

(Bangladesh) Ltd and escalates key strategic and control

issues noted to the Audit Committee. Group Internal

Audit also coordinates the follow-up reviews on the

resolutions of both internal and external audit and

control issues and reports the status to the Audit

Committee accordingly.

The Audit Committee reviews and approves the Group

Internal Audit’s annual budget and Human Resource

requirements to ensure that the function is adequately

resourced with competent and proficient internal

auditors. As at 31 December 2004, Group Internal Audit

has 42 auditors of various mix of expertise and

experiences as tabulated below:

EXPERTISE POOL WITHIN GROUP INTERNAL AUDIT

CATEGORY NO %

Finance 20 48%

IT/MIS 8 19%

Network/Engineering 8 19%

Marketing 5 12%

General 1 2%

Total 42 100%



Page 70

TERMS OF REFERENCE OF THE AUDITCOMMITTEE1. COMPOSITION

The Audit Committee (AC) Members and Chairman

shall be appointed by the Board of Directors

(“Board”) or its Nominating and Remuneration

Committee. No alternate director shall be appointed

as a member of the AC.

The AC must compose of no fewer than (3) three

members and the majority shall be Independent

Non-Executive Directors. All members of the AC,

including the Chairman, will hold office only so long

as they serve as Directors of the Company.

The composition of the AC shall meet the

independence and experience requirements of the

Listing Requirements of Bursa Malaysia and other

rules and regulations of the Securities Commission.

The Board must review the term of office and

performance of the AC and each of its members at

least once every three years to determine whether

the AC has carried out its duties in accordance with

its terms of reference.

2. MEETINGS

The AC shall meet at least four (4) times a year and

such additional meetings as the Chairman shall

decide. In order to form a quorum, the majority of

the members must be present and that the majority

of those present must be Independent Non-Executive

Directors. Meeting agendas and briefing materials

will be prepared and provided in advance to

members. Meeting minutes will be prepared.

3. AUTHORITY

The AC has full, free and unrestricted access to

information, records, properties and personnel of the

Group. It also has direct communication channels

with the external and internal auditors. The AC is

also authorised by the Board to obtain external

independent professional advice as necessary and to

invite outsiders with relevant experience to attend

the AC meetings (if required) and to brief the AC

thereof.

4. DUTIES AND RESPONSIBILITIES

The following are the main duties and

responsibilities of the AC collectively, (and shall

review and report the same to the Board):

4.01 To approve the Internal Audit Charter, which

defines the independent purpose, authority,

scope and responsibility of the internal audit

function in the Company and Group;

4.02 Consider the appointment of a suitable

accounting firm to act as External Auditors

and amongst the factors to be considered for

the appointment are the adequacy of the

experiences and resources of the firm and the

persons assigned to the audit, to consider any

question of resignation (including any letter

of resignation) or removal and whether there

is a reason (supported by grounds) to believe

that the External Auditors are not suitable for

re-appointment and to recommend the audit

fee payable thereof;


Page 71


4.03 Discuss with the External Auditors before the

audit commences, the audit plan, nature,

approach and scope of the audit and ensure

co-ordination where more than one audit

firm is involved;

4.04 Review the quarterly interim results, half-year

and annual financial statements of the

Company and the Group, focusing particularly

on:

a) Any changes in accounting policies and

practices;

b) Significant adjustments arising from the

audit;

c) The going concern assumption;

d) Compliance with accounting standards

and other legal requirements.

4.05 Review with the External Auditors the

financial statements for the purpose of

approval before the audited financial

statements are presented to the Board for

adoption including:

a) Whether the auditors’ report contained

any qualifications which must be properly

discussed and acted upon for purposes of

resolving the contentious point of

disputes in the current audits and to

remove the cause of the auditors’

concern in the conduct of future audits.

b) Significant changes and adjustments in

the presentation of financial statements.

c) Compliance with laws, local and

international accounting standards.

d) Material fluctuations in balances in the

financial statements.

e) Significant variations in audit scope and

approach.

f) Significant commitments or contingent

liabilities.

4.06 Discuss problems and reservations arising from

the interim and final audits and any matter

the auditor may wish to discuss in the

absence of the Management where necessary;

4.07 Review the follow-up actions by Management

on the weaknesses of internal accounting

procedures and controls as highlighted by the

External and Internal Auditors as per

management letters;

4.08 Review the assistance and co-operation given

by the Management to the External and

Internal Auditors;

4.09 Review the Internal Audit Plan and results of

the internal audit process and where

necessary to ensure:

a) That appropriate action is taken on the

recommendations of the internal audit

function;

b) That Group Internal Audit has adequate

and competent resources and that it has

the necessary authority to carry out its

work;

c) That the goals and objectives of Group

Internal Audit commensurate with

corporate goals.


Page 72

4.10 a) Review and appraise the performance

and remuneration of the Group Chief

Auditor and senior staff members of

Group Internal Audit;

b) Approve the appointment or termination

of the Group Chief Auditor and senior

staff members of Group Internal Audit;

c) Inform itself of resignations of the Group

Chief Auditor and senior staff members

of the Group Internal Audit and provide

the resigning staff member an

opportunity to submit his reasons for

resigning;

d) The AC must be informed, referred to

and agree on the initiation,

commencement and mechanism of any

disciplinary proceedings/ investigations,

including the nature and reasons for the

said disciplinary proceedings/

investigations, as well as the subsequent

findings and proposed disciplinary actions

against the Group Chief Auditor and the

senior staff members of Group Internal

Audit. As employees of TM, the Group

Chief Auditor and senior staff members

of Group Internal Audit are subject to

TM’s human resource policies and

guidelines, including disciplinary

proceedings/ investigations and actions.

4.11 Review the adequacy and the integrity of the

Group’s internal control systems and

management information systems, including

systems for compliance with applicable laws,

rules, directives and guidelines;

4.12 Propose best practices on disclosure in

financial results and annual reports of the

Company in line with the principles set out in

the Malaysian Code of Corporate Governance,

other applicable laws, rules, directives and

guidelines;

4.13 Propose an adequate system of risk

management for Management to safeguard

the Group’s assets;

4.14 Consider and review any significant

transactions which are not within the normal

course of business and any related party

transactions and conflict of interest situation

that may arise within the Company and the

Group including any transaction, procedure or

course of conduct that raises questions of

Management integrity;

4.15 To report to Bursa Securities, if the AC views

that a matter resulting in a breach of the

Bursa Securities Listing Requirements reported

by the AC to the Board has not been

satisfactorily resolved by the Board; and

4.16 Consider other topics as defined by the

Board.

4.17 The internal audit function should be

independent of the activities they audit and

should be performed with impartiality,

proficiency and due professional care. The

Board or the AC should determine the remit

of the internal audit function.



Page 73

STATEMENT ON INTERNAL CONTROL

RESPONSIBILITY

The Board of Directors (“Board”) is committed to its

responsibility in maintaining a sound system of internal

control to safeguard shareholders’ investments and the

Group’s assets and for reviewing the effectiveness,

adequacy and integrity of those systems. The system of

internal control covers, inter alia, governance, risk

management, financial, organisational, operational and

compliance control. However, the Board recognises that

this system is designed to manage, rather than eliminate

the risk of non-achievement of the Group’s objectives. It

therefore provides reasonable assurance, and not absolute

assurance, against the occurrence of any material

misstatement or loss.

This Statement of Internal Control has been prepared in

compliance with the Listing Requirements of Bursa

Securities.

ENTERPRISE RISK MANAGEMENT

The Board recognises the dynamism of risks affecting the

day-to-day operations of the Group. Enterprise Risk

Management (ERM) framework had been formalised and

is being implemented organisation-wide on a progressive

basis. For the financial year ended 31 December 2004,

48 ERM workshops have been conducted covering major

divisions, local and overseas subsidiaries. Post

Implementation Reviews of ERM Workshops were

conducted by Group Internal Audit to independently

review the risk profiles, risk management strategies and

adequacy and effectiveness of the controls identified in

response to the identified risks.

During the year, the Group Risk Management Committee

(GRMC) was established. The GRMC is responsible for

steering the ERM implementation, identification and

communication to the Board, the Group’s present and

potential critical risks, changes in the risk profiles and the

Management action plans to manage the risks.

Initiatives are continually rolled out to encourage

members of the staff to inculcate a risk- based culture

within the Group. ERM Guidelines Booklets have been

distributed to further enhance awareness and create a

common language on risk management. ERM is also in

the midst of being embedded in Balanced Score Cards to

strengthen risk management focus.

CONTROL SELF-ASSESSMENT

Central to the Group’s Internal Control and ERM systems

is the Control Self-Assessment (CSA) process facilitated by

the Group Internal Auditors. CSA is a process which

internal control effectiveness is examined and assessed at

operational levels to identify risks that prevent the

achievement of their business objectives. The objectives of

CSA are to create increased appreciation of risks and

controls and their linkages to business objectives.

Employees are then encouraged to take on full

ownership and accountability of the individual control

mechanisms within their respective areas of work. During

2004, 41 CSA workshops were conducted involving more

than 1,200 staff members in various operating units

within the Group.

Statement on Internal Control continued


Page 74

• Annual self-assessments and disclosures by the

Group’s Operating Companies’ Chief Executive Officers

(CEO)/Chief Operating Officers (COO) and Chief

Financial Officers on the effectiveness, reliability and

adequacy of their respective companies’ system of

internal controls and financial controls respectively.

• The Management’s tools for enhancing self-assurance

includes providers such as the Risk Management Unit,

Compliance Unit, Corporate Regulatory Unit and

Quality Improvement and Business Excellence Unit.

• Internal Control Incident (ICI) Reporting procedure

with clear reporting guidelines. Lateral learnings from

reported ICI are captured and disseminated to

CEO/COO of operating companies to prevent potential

recurrence in these companies.

• Special Affairs Unit responsible to review and monitor

the ethical conducts and practices of all employees

including Senior Management and Board. Investigation

of ICI cases is also undertaken by the Unit (where

applicable) and tabled to the ICI Committee and to

the Board vide the Audit Committee. Appropriate

actions are then taken based on the strengths and

merits of the findings.

• Audit Committee, comprising a majority of

independent non-executive directors was maintained

throughout the financial year. The composition of the

Audit Committee brings with them a wide ranging

deep experience, knowledge and expertise. They

continue to meet, have full and unimpeded access to

both the internal and external auditors during the

financial year.

OTHER KEY ELEMENTS OF THE SYSTEM OF INTERNAL

CONTROL

In addition to the above, the other key elements of the

Group’s internal control system reviewed by the Board

are as follows:

• An organisation structure, with clearly defined lines

of responsibility and accountability aligned to business

and operations requirements.

• Integrated business planning and budgeting processes

driven by commercial objectives, vetted and approved

by the Board and cascaded throughout the

organisation to ensure effective execution and

followed through. Periodic reviews performed on

achievement of business objectives/ targets and

financial performance.

• Structured review of all material capital and

investment acquisitions by Management Executive

Committees and respective Boards of major operating

companies prior to approval by the main Board.

• Clear definition of limits of authority and

responsibilities through the Group’s Business Process

Manual and Subsidiaries Policies that has been

approved by the Board and subject to regular reviews

and enhancements.

• Procedures with embedded internal controls

documented in a series of policies, procedures and

guidelines including those relating to Financial

Controls, Procurement, Network Operations,

Management Information Systems, Information

Technology, Marketing, Human Resources,

Occupational, Health and Safety, etc.


Page 75

Statement on Internal Control continued

• Task Force of Best Practices is a Management

Committee that reports to the Audit Committee. It

provides updates and developments of best practices

and exposure drafts on corporate governance,

statutory and regulatory requirements set by all

statutory bodies/relevant authorities, compliance to

accounting standards and other business guidelines

and issues all requisite reminders and updates through

its secretariat, the Compliance Unit.

• Group Internal Audit, reports to the Audit Committee,

performs systematic reviews of key processes relating

to high-risk areas and assesses the effectiveness of

internal controls, including compliance.

Recommendations for improvements are highlighted

to Senior Management and the Audit Committee,

with periodic follow up review of actions plans.

Group Internal Audit’s practices and conduct are

governed by the Internal Audit Charter and are

aligned to the Standards of Professional Practices

Framework of Internal Auditing.

• Management Audit Issues Action Committee,

comprising members of Senior Management and

CEO/COOs of major Operating Companies regularly

monitors major internal and external audit issues to

ensure they are promptly addressed and resolved.

• Internalisation of TM Group’s Core Values of “Total

Commitment to Customers”, “Uncompromising

Integrity” and “Respect and Care” sets the guiding

principles of the Group’s culture.

• The Group’s Code of Business Ethics, endorsed during

the year, documents formally the manner in which

employees should conduct themselves in all business

matters. Booklets of the Code are distributed to all

employees and road shows are underway to reach all

employees on the Code’s implementation. All

employees are also required to sign the “Compliance

Statement”.

The Board considers the system of internal control

described in this statement to be adequate and the risks

are considered to be at an acceptable level within the

context of the Group’s business environment. The Board

and Management continue to take measures to

strengthen the control environment.

For the financial year under review, the Board is satisfied

that the system of internal control was satisfactory and

has not resulted in any material losses, contingencies or

uncertainties.

TM’s internal control system does not apply to its

associated companies, which fall within the control of

their majority shareholders. Nonetheless, the interests of

TM is served through representation on the Board of

Directors and Senior Management posting(s) of the

associated companies and through the review of

management accounts received. These provide the Board

with performance-related information to enable informed

and timely decision making to the Group’s investments in

such companies.

REVIEW OF THE STATEMENT BY EXTERNAL AUDITORS

The external auditors have reviewed and affirmed this

Statement on Internal Control for inclusion in the annual

report of the Company for the financial year ended

31 December 2004.

Our world

does not exist

in isolation.

Our lives

are meant to be

lived with interaction and

communication.

At TM,

we are committed

to breaking barriers and

bridging digital divides.

Bridging divideso p e n i n g u p p o s s i b i l i t i e s

CHAIRMAN’S STATEMENT


Page 78


Page 79

Chairman’s Statement continued

This year, Telekom Malaysia Berhad (TM) entered its 15th year of

listing on the Main Board of Bursa Malaysia Securities Berhad

(Bursa Securities). It also marks my 5th year as Chairman of the

Company and 40th year in the telecommunications industry. It

gives me a great sense of satisfaction to witness the tremendous

progress TM has gone through over the years and a pleasure to

present you the Company’s Annual Report and Accounts for the

financial year ended 31 December 2004.

The financial year 2004 (FY 2004) saw TM registering a

record Profit After Tax and Minority Interest (PATAMI) of

RM2,613.5 million, a significant increase of 88% as

compared to RM1,390.4 million in 2003. The good

performance was driven by the gain on divestment of

our effective 12.0% equity interest in Telkom SA Ltd

(Telkom SA) totaling RM1,515.2 million but moderated by

several provisions and asset impairment charges totalling

RM928.3 million.

Total Group shareholders funds increased from

RM16,782.4 million as at December 2003 to RM19,453.3

million as at December 2004 while the Group’s cash

position stood at RM8,801.6 million and debt position

stood at RM10,784.7 million.

TM’s performance over the last 15 years since our listing

is testimony of Malaysia’s own steady progress and the

success of the Government’s Privatisation Policy. Revenue

has grown at a Compound Annual Growth Rate (CAGR)

of 12.4% per annum whilst Profit After Tax (PAT) has

grown at a CAGR of 11.7% per annum. In recognition of

the faith our investors have put in us, the dividend

payout has increased sixfold or a CAGR of 13.6% per

annum over the same period.

On that note, I am pleased to announce that the Board

is proposing a tax exempt final dividend of 20 sen per

share for FY 2004, subject to shareholders approval. TM

earlier made a tax exempt interim dividend payment of

10 sen per share on 18 October 2004. This represents a

total dividend payout for FY 2004 of RM1,013.3 million

or a dividend payout ratio of 38.8% on our PATAMI

which is well within our dividend payout policy of

between 20% to 50% of PATAMI. As articulated

previously, we will continue to strive to achieve a payout

ratio at the upper end of the range. With this dividend

strategy, the onus is on us to match dividend with

corresponding performance. It also adds a measure of

predictability to shareholder expectations.


Page 80


The Malaysian economy continues to provide an

encouraging landscape for TM to grow. In terms of GDP,

Malaysia is expecting 6.0% growth in 2005, compared to

a 7.1% growth for 2004. This means we as a nation are

on track towards achieving Vision 2020.

For TM Group the growth opportunities are immense; in

all aspects of our operations be it wireline or wireless.

We will focus on new revenue generation especially in

data, cellular and on the international fronts. The key

concepts going forward are customer centricity, enterprise

solutions, mobility and broadband; all within the

convergence framework. TM will also put in place

initiatives to increase asset and human resources

productivity as well as make prudent investments where

required. We are committed to performance and growth.

2004 also saw TM redefining its focus. This involved

further rationalization of domestic operations and the

strategic migration of selected overseas ventures to

emerging markets nearer home. In pursuing our

international expansion, we cannot afford to ignore the

economic relevance of this part of the world. ASEAN or

the wider Asia Pacific region, is home to over half the

world’s population – 75% if you include India. As

reported by International Monetary Fund (IMF) in its

World Economic Outlook for 2004, with an average age

of 23 compared with 37 in ageing Developed Nations, we

can expect the emerging market’s per capita income

growth to be boosted by the increase in the share of this

working-age population. This demographic transition will

see that the world’s economic centre of gravity moving

inexorably from West to East.

TM Group - Revenue, PAT & Dividend 1990-2004

0

7

14

21

28

35

0

3,000

6,000

9,000

12,000

15,000

RM(million) (sen)

Revenue PAT Dividends (sen)

12.5

5

15 15 15 1517.5

1210 10 10

15

10

20

30

19911990 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

3,36

8

3,88

1

6,00

0

7,16

6

7,83

3

7,98

0

8,81

6

9,67

3

9,83

4

13,2

51

11,7

96

563

923

1,20

9

1,39

6

1,57

4

1,89

4

1,84

6

890

1,01

7

579

1,77

5

871

2,67

7

1,44

4

2,98

71,

080

4,42

0

5,12

7

2,57

4


Page 81


exciting developments was the technical trials of the 3G

cellular service. We are still conducting system and

network trials, and expect the commercial launch of the

service by middle 2005. With the completion of network

integration in October 2004, Celcom will be able to

aggressively focus its effort to enhance its market share

and position itself for the roll-out of 3G services.

We expect increasing pressure in the future for local loop

unbundling. Notwithstanding that, our long term goal is

to give the best service to our customers and to increase

TM’s revenue, and the last mile component can be a

commodity that enables broadband services to be

provided to all of our customers.

Meanwhile, TM remains committed to support the

National Broadband Plan to connect 50% of Malaysia’s

households to high-speed internet connection by 2008.

TM, via its wholly owned subsidiary, TM Net Sdn Bhd is

already expediting the roll-out of broadband in areas

where distance between the exchange and the home is

less than 6km.

At the same time, in providing our services and

conducting our business, may I assure all our stakeholders

that TM practices the highest standards of corporate

governance in order to protect and enhance shareholders

value.

Whilst 2004 has been an exceptional year for TM, we

never expected that it would end with the devastating

tsunami that claimed more than 230,000 lives across the

region. It came to my mind that 2004 was the year of

the Monkey in the lunar calendar. We can only suppose

that the most mischievous of animals, symbolically

associated with natural disasters, played its last trick.

True to this strategy, we divested our stake in Telkom SA

and made our foray into the Indonesian and Indian

markets with the acquisition of PT Excelcomindo Pratama

(Excelcomindo) and Idea Cellular respectively. TM

International Sdn Bhd (TMI), TM’s subsidiary which

oversees its international ventures will play an active role

in coordinating our global outreach. Our investment

telescope will also be trained on the Middle East.

On the domestic front, we continue to upgrade the

quality and capacity of our network. To date, TM has the

most extensive network infrastructure that has enabled us

to provide end-to-end communications solutions to our

customers. In the year 2004, we also saw intense

competition in the fast paced mobile sector given the

phenomenal increase in mobile usage. One of the most



Page 82

Malaysia was relatively spared, thanks to God and the

geographic shield of Sumatra. The disaster touched

everyone’s lives and united humanity in compassion.

I am happy to report that TM played a special role in

relief operations during the catastrophe. Thanks to the

robustness of our systems and networks, the integrity of

our regional operations in Sri Lanka and Indonesia

remain intact and we were able to help and carry on. In

Sri Lanka where we are the biggest player in the mobile

market; TM, its subsidiaries and associated companies

played its part by contributing both funds and manpower

in disaster relief and reconstruction. I would like to pay

tribute to TM’s staff in our regional operations, who

rallied so promptly and effectively in response to the

disaster relief and later the reconstruction required.

Our associate PT Excelmomindo in Indonesia similarly

played their part in relief and reconstruction efforts in

Acheh. In total TM Group contributed about RM6.7

million towards this cause.

Closer to home in Malaysia where we were least

affected, TM contributed more than RM500,000 to

various Tsunami relief funds. All connectivity to the

disaster affected areas have been restored.

On that note, TM is committed to bridge the digital

divide. We bring people together. We strive to reach all

corners of the land. Testimony to this is our rural

penetration, less profitable but bringing a social gain.

We are the main service provider in the rural areas,

which aligns us with the current national agenda that

puts strong emphasis on rural development. TM also

champions various causes that contribute to the positive

developments of the community.

Now we are ready to go forward. The future looks

exciting. The Monkey is gone. We have entered the Year

of the Rooster – the bird of dawning. It heralds a fresh

start to the day – a time of renewal. I recall it was a

Rooster year, 1957, that we gained our Independence

and a fresh start for our country. The year of the Rooster

2005 promises to be a declared time of renewal for TM.

As the industry continues to evolve, we can expect TM to

also evolve to adapt to the changing environment. Being

one of the Government-linked Companies (GLCs), TM’s

evolution received an additional boost with the

Government’s call for a GLC revamp. The consolidation

made in 2004 has opened the way for further smart

investments – for more serial innovations, for more

interactions with our customers and our interfaces with

society. We will continue to enhance our efficiency and

competitiveness in key areas and forge smart partnerships

where necessary to enrich our experiences and improve

product and service offerings.


Page 83


We are already positioning ourselves for an era of

growth. An imminent milestone in the Company’s history

is the re-branding exercise that was launched by YAB

Dato’ Seri Abdullah Haji Ahmad Badawi, the Prime

Minister of Malaysia on 14 April 2005 with a new brand

identity, based on service quality and the customer

experience. Renewal is our pledge to all our faithful

stakeholders – our customers, shareholders, our

professional brethrens out there, and most of all our

loyal and valued staff.

To drive this journey of renewal is none other than our

staff. Hence, staff development and welfare remain one

of the Company’s top priorities. A particularly popular

move in 2004 was to introduce a 5-day working week

which is more in line with private sector practice,

allowing more quality time with family and healthy

recreational pursuits for a balanced life style. The bonus

was an increase in productivity and work ethics on the

job. We reaffirmed our performance culture by giving

staff at all levels a chance to excel, assisted by company-

wide schemes for continuous improvements to meet the

demands of the Knowledge Age. In a total quality

culture there is no finishing line.

On behalf of the Board and Management, I sincerely

acknowledge the loyalty and hard work of the staff last

year and look forward to an even more rewarding one

in 2005.

I would like to take this opportunity to thank our former

Directors; Datuk Dr. Halim Shafie who retired at the last

Annual General Meeting, Dato’ Dr. Mohd Munir Majid

and Mr. Tan Poh Keat who both resigned as Directors of

the Company with effect from 1 June 2004 and Dato’

Abdul Majid Haji Hussein who resigned with effect from

2 October 2004. I would therefore like to acknowledge

their valuable contributions. We also welcome back

Dato’ Abdul Wahid Omar, our new Group Chief Executive

Officer who joined us on 1 July 2004 and our new Board

members namely Dato’ Azman Mokhtar and YB. Datuk

Nur Jazlan Tan Sri Mohamed who joined us on 1 June

2004 and Dato’ Haji Abd. Rahim Haji Abdul, appointed

with effect from 23 November 2004.

At the same time, on behalf of the Board, Management

and staff of TM, I would like to thank Dato’ Dr. Md. Khir

Abdul Rahman, our former Chief Executive who resigned

on 30 June 2004. His dedication and contributions are

invaluable and we wish him continued success in his

future undertakings.

We also take the opportunity to thank Dato’ Dr. Mohd

Munir Majid, our first Chairman of the new Celcom – the

merged TM Cellular-Celcom, for his contribution and the

active role he played during the merger process. We

congratulate him on his appointment to the Chair of

Malaysia Airlines Berhad.

Finally, let me thank all our shareholders, the

Government and regulators, business associates and other

stakeholders for your continued support over the years.

After being in the industry for 40 years, I am proud to

say that our telecommunication industry has achieved

tremendous progress, and more importantly, how TM has

always played a vital part in contributing towards that

progress.

Till then I take my leave of you.

Tan Sri Dato’ Ir. Muhammad Radzi bin Haji Mansor

Chairman

We no longer

need to wait years to

receive a message.

Communication is faster.

It is certainly easier.

But, we are still

not satisfied.

At TM,

we will never rest

on our laurels,

to ensure the best in

service and products.

Operational efficiencyo p e n i n g u p p o s s i b i l i t i e s

GROUP CHIEF EXECUTIVE OFFICER’S STATEMENT



Group Chief Executive Officer’s Statement continued

Telekom Malaysia (TM) continued to grow and evolve in the year

under review and several exciting milestones were achieved.

For me, personally, it has been exciting – having joined the Group

only 10 months ago, I am delighted to have been a part of this

growth and to have been able to build on the contributions of my

predecessor, Dato’ Dr. Md Khir Abdul Rahman.

TM is now taking larger steps towards achieving its vision of becoming the communications

company of choice, focused on delivering customer service quality, innovations and exceptional

values to all stakeholders. This renewed vigour is timely and in line with the new aspirations of

the Government for all GLCs or government-linked companies as initiated last May.

All of us in the Group are collectively directing our efforts towards improved performance, value-

add and enhanced services – with a view to growing our competitiveness in a rapidly-globalising

economy. Over the last 16 months, we have introduced and put in place a number of measures to

enhance our efficiency and productivity and to increase our revenue streams. Some of these

initiatives will bear fruit only in the current year but it is important to note that we are driven by

continuous improvements in financial performance and shareholder returns.

2004 GROUP PERFORMANCE

It has been a challenging year, and change has been the order of the day – change that builds

on previous achievements but that is conscious of the need to adapt to developments in the

global economy and local environment. Change has driven the management to new levels of

achievement, particularly in strengthening our financial position and enhancing service

competitiveness.

Let’s take a look at some of the key corporate, operational and organisational developments in

2004.



On the corporate front, some of the notable

achievements included the successful conclusion of our

USD500 million bond issue and the divestment of our

12% equity interest in Telkom SA Ltd (Telkom SA).

We also strengthened our regional presence through the

acquisition of a 23.1% equity interest in Excelcomindo of

Indonesia and the proposed acquisition of a 47.7% equity

interest in Idea Cellular via a joint venture with ST

Telemedia of Singapore, thereby establishing our presence

in India. These milestones will position us strongly to

become a leading regional information and

communications group. To get there, we are revisiting

and internalising our mission. Measures include a

conscious realignment to a more private-sector work

culture, the launch of our own Code of Business Ethics

and the establishment of our five-pronged broad-based

strategic thrusts.

On the organisational front, the restructuring of TM

Telco into two strategic business units, TM Wholesale and

TM Retail, has given us a much clearer vision and

business focus. We believe the time is ripe to reap the

full prospects for our core telco business with these two

units firmly in place. We are optimistic that this exercise

will ensure a strong and stable cash flow generation

from the fixed-line business as well as increased revenue

streams by capitalising on our extensive network capacity

and infrastructure to enhance wholesale product

offerings.

With the completion of the network and systems

integration in October, Celcom is aggressively addressing

its market share in the local cellular market. Celcom

recorded 35% growth in net customer addition of 1

million during the year, the highest since the 2003

merger. This brings Celcom's total customer base to 5.34

million subscribers at the end of 2004.

The Global & Regional Environment

The feel-good factor of an improved outlook for the

global economy for 2004 was somewhat thwarted by

concerns over rising oil prices. Nevertheless, global

institutions like the IMF and World Bank have indicated

that rising oil prices may slow down and should not

dampen the encouraging economic forecast expected for

the next few years.

Against this backdrop, total revenue in the global

telecommunications market grew by 8.1% in 2003 to

reach USD1.3 trillion, comprising more than half the total

information and communications technologies (ICT)

market. For 2004, the growth is expected to be 8.8% to

reach USD1.4 trillion. The telecom services segment as a

whole grew in all regions, but the fixed voice services

sub-sector in North America was down slightly (and

nearly flat in Eastern Europe and Latin America). In Asia

Pacific alone, the ICT industry grew a healthy 11.8% in

2004 against developed regions, which only showed

single digit growth.



International telecommunications carriers continued to

make improvements in their backbone network

infrastructure in Asia Pacific in 2004 to enable better

delivery of services to organizations running pan-regional

networks. The suite of service offerings remains the same,

that is leased line, frame relay, ATM, remote access,

Internet access and IP VPN (which is fast-gaining traction

in the market, especially in the SME segment). This puts

pressure on domestic players to beef up our own

network and service quality to compete.

On the services side, the trends for 2004 centred around

getting the balance right between existing and new

offerings in face of fierce competitions. Some trends

worth noting include:

• Voice, the main profit generator for most telcos, still

had significant downside. This has meant that costs

needed to be reduced speedily, to protect margins.

Fixed to mobile and VoIP substitution increased,

calling for efforts to revitalise the fixed services

market either via promotions of broadband services or

moving towards fixed-mobile functionality and

convergence bundling.

• While the future belongs to mobile, the challenge has

been to increase mobile data usage as well as to

reduce dependency on voice as call plan packages

competed fiercely. In 2004, for the first time, wireless

revenue contributed to more than half of telecom

services revenue in Asia/Pacific.

• Winning data services meant getting deeper into the

enterprise segment.

• Wireless broadband technologies continued to

complicate the impending 3G landscape.

• The combination of IP telephony and broadband

accelerated migration away from legacy voice.

• There were new challenges posed by convergence

services e.g. fixed-mobile, triple-play, mobile-IP, and

the phased development of IP networks.

• New services only partly compensated for margins

squeezed on commoditized voice services. Thus, full

service carriers needed to focus on bundling to

counter niche players.

One of the buzzwords for the year 2004 has been

convergence – of voice and data, as well as wireless and

wireline. Bundled and converged solutions were seen by

service providers as a way to lock-in customers with

minimum enhancements to current networks. To combat

growing commodisation, service providers were looking

to differentiate themselves in the area of customer

service.



upgrade facilities and install new capacity in response to

both domestic and external demand. The robust

economy, highly-diversified economic structure and sound

fundamentals are expected to increase Malaysia’s

potential to absorb and respond to the challenges of the

external environment.

The domestic telecommunications market in 2004 was

valued at over RM18 billion, of which over 60% of

revenues came from the mobile sector. This is testament

of the phenomenal growth of mobile usage in the

country. The mobile subscriber base in 2004 grew close to

19% from the preceding year, to reach the 13.3 million

mark, and achieving a mobile penetration of just over

50%. The mobile market in the past 12 months witnessed

some exciting developments: the introduction of General

Packet Radio Service (GPRS), multimedia message service

(MMS), and 3G services. Telekom Malaysia and MAXIS

commenced their 3G pilots while DiGi continued to

promote its EDGE services to the marketplace.

The telecommunications network services market

continued to be dominated by revenue derived from

voice services, despite the high-profile and high-growth

rate of data services. Voice accounted for roughly 80%,

and data 20%, of the total segment revenues in 2004.

Meanwhile, regulatory issues continued to afflict the

global market. Key issues involved local loop unbundling,

namely developing pricing structures to encourage

competition while compensating local providers

adequately for their infrastructure investment. Another

key topic centred around how to regulate VoIP services.

Europe had the additional challenge of trying to

harmonise its regulatory framework among EU member

countries.

The Domestic Environment

Recent developments – particularly the ‘three dilemmas’

of the slowdown in China, the US interest rate hike, and

surging oil prices – have caused considerable concerns

among the investing community including private and

government institutions, investors, and fund managers

alike. Some, however, believe that Malaysia is well

insulated and comfortably cushioned from the effects of

these three factors.

The statistics show that Malaysia was on track to register

GDP growth of 7.1% for 2004. According to Bank Negara

Malaysia, the economy going forward will continue to be

well supported by both domestic and external demand.

The strength of domestic demand, in particular, private

expenditures, together with sustained exports, is expected

to continue to support growth in 2005. This will be

reinforced by economic fundamentals as well as strong

corporate and financial sectors. Private investment is

likely to remain on an upward trend as companies



The broadband access service market in Malaysia also took an upward turn in terms of new

subscribers, numbering around 300,000 at end 2004, or 10% of total internet subscribers in

Malaysia. Driving this positive movement is the reduction in broadband access prices of up to

30%, first announced in the 2004 Budget. TM is currently developing and executing its own

strategic response to support the National Broadband Plan, especially given the backdrop of

expanding broadband wireless technologies and the advent of 3G services in Malaysia.

From 2004 onwards, the regulatory outlook appears to be focused on four main issues – tariff,

access/interconnection, universal services and licensing. These issues are interconnected and

hence any policy or approach to deal with them must take into account their inter-

relationship. The implication or impact of one element of policy must take into account the

other aspects. Furthermore, we expect that the regulatory outlook for the Communications and

Multimedia industry will also, to a large extent, be shaped, influenced and guided by the

Framework for Industry Development (2002-2006) issued by the Malaysian Communications and

Multimedia Commission (MCMC).

Our Performance

We are encouraged by the 12.3% growth in operating revenue of RM13,250.9 million for the

financial year 2004 compared to the RM11,796.4 million registered for the corresponding

period in 2003.

The Group registered a Profit After Tax and Minority Interest (PATAMI) of RM2,613.5 million

for the financial year 2004, a significant increase of 88% as compared to the RM1,390.4 million

achieved in 2003. This was mainly generated by an Exceptional Gain of RM1,515.2 million from

the sale of its interest in Telkom SA mitigated by one-off changes and impairment of network

related assets totalling RM928.3 million.

The increase in revenue is largely attributed to the growth in our core businesses of Mobile,

Leased lines, Internet and Multimedia as well as improved performance of our overseas

operations. Fixed Line (Business and Residential) continued to be the major contributor to the

Group’s revenue. For 2004, our Mobile business registered 37.2% growth whilst our Leased-line

services showed a 20% growth. Our Internet and Multimedia businesses recorded significant

growth of 30%. Meanwhile, our overseas investments contributed 41.4% to the Group’s

PATAMI, excluding exceptional items.



While Fixed Line continued to be the main generator of cash, the contribution from Mobile to

overall revenue continued to grow, in line with current global trends. Celcom posted a Profit

After Tax of RM853 million before impairment losses and accelerated depreciation, a 56%

increase from 2003, mainly driven by a healthy subscriber base. Celcom added on more than a

million new customers by the end of the year, bringing its customer base to 5.34 million,

a growth of 35%. Prepaid customers accounted for 79% of the total customer base and with

the recent introduction of the new X-Pax plan, the momentum for new subscriber uptake is

expected to continue.

Internet services especially broadband, continued to record strong growth in 2004, bringing the

customer base to 1.91 million for dial up customers while broadband customers increased to

258,000 from 101,000 in the previous year. With the increased number of ports to cater to

more than 500,000 lines, Telekom Malaysia is geared towards supporting the Government’s

National Broadband Plan for at least 50 per cent of Malaysia’s households population hence,

to have high-speed Internet connectivity by 2008.

As for data, value-added services and broadband business, Celcom, in collaboration with TM

Net recently launched Celcom WiFi which allows customers to enjoy wireless broadband

internet access via Short-Messaging-Service (SMS). We also saw the increase to 1MB bandwidth

for home Streamyx users without additional rise in tariffs. These moves are in line with the

Group’s efforts in accelerating the rollout of broadband using both fixed and wireless access to

achieve the targets under the National Broadband Plan.



The Group is also looking at investment opportunities in

other emerging markets especially in selected parts of

Asia, having just added two strategically important

acquisitions to the stable, which are Excelcomindo in

Indonesia and Idea Cellular in India. The Board continues

to review its international strategy to focus on

geographic regions closer to home. The first part of that

strategy was amply illustrated by the sale of our

investment in Telkom SA Ltd (Telkom SA) in the second

half of 2004 and a subsequent decision was taken to

divest all of our interests in Africa, including Guinea.

On the social and community front, we can proudly say

that TM continued to discharge its corporate social

responsibility (CSR) obligations in 2004. Among the

notable projects which we supported were the Road

Safety Campaign during Malaysian festivals, the continued

sponsorship of Le Tour de Langkawi, the promotion and

development of Sepak Takraw, a grassroots sports, our

involvement in the SchoolNet project, Kem Matematik,

Syoknya Raya and our collaboration with RTM to bring

the Athens Olympics to Malaysian homes. All these are of

course on top of the Group’s continuous effort to bridge

the digital divide and extend the reach of ICT via

provisioning of infrastructure as well as promoting

greater usage among Malaysians.

As for our Overseas Investments, the year under review

saw an improved contribution of approximately RM419.1

million to the Group’s profit after tax, compared to

RM399.8 million in 2003. Sri Lanka continued to record

strong profits of RM154.1 million, an increase of 43%,

while Bangladesh recorded a RM153.4 million profit after

tax, an increase of 109%. As the number one mobile

operator in Sri Lanka, MTN Networks (Pvt) Limited has a

subscriber base of 1.35 million while TM International

(Bangladesh) Limited is the number two mobile operator

with a customer base of 1 million.

Key Initiatives

The journey to make TM into one of Malaysia’s largest

public-listed companies and a leading regional

information and communications group, continues. Today,

we offer a comprehensive range of communication

services and solutions in fixed-line, mobile, data and

broadband. With an operating revenue of over RM13

billion in 2004, we will continue to prioritise the delivery

of value to our stakeholders in a highly competitive

environment. We recognise the need to differentiate our

service quality from that of our competitors, hence we

are placing renewed emphasis on continuing customer

service quality enhancements and innovations. Currently,

with investments and operations in 12 countries around

Asia and globally, Telekom Malaysia is focused on

sustainable growth in both the local and international

markets.



• Working towards achieving a world class service

provider in the long-term by delivering value to all

our stakeholders.

At the Group level, we have just launched our

rebranding exercise in April 2005. This marks another

milestone in the evolution of the Company, and enhance

the significance of our 15th anniversary as a public listed

company. Inherent in the rebranding will be a renewed

commitment to service quality and culture change,

against the backdrop of our strategic directions. We have

formulated a five-pronged strategic plan to chart the

next steps to be taken towards achieving the Group’s

vision and to meet the expectations of the government

for GLCs. These initiatives are aimed at putting the

Group on a stronger footing for future growth and to be

more resilient and competitive in a globalising

environment. At the corporate level, initiatives being

undertaken include a Customer Relationship Management

programme, the implementation of Shared Services

Organisation, the Enterprise Resource Planning, Business

Procurement improvements and many others.

A key growth area is in broadband. We will expedite the

roll-out of broadband using both fixed and wireless

access. At TM Net, the mantra will be ‘broadband’, as we

strive to more than double the 258,000 TMnet streamyx

customers as at 31 December 2004. Broadband awareness

among the general population will be increased through

public relations and education campaigns.

PROSPECTS

We can expect an even more challenging year in 2005.

On the broader economic front, the Malaysian

Government is confident of realizing a modest GDP

growth of about 5.7% in 2005, compared to a 7.1%

growth for 2004. The 5.7% growth is still respectable

compared to IMF’s global economic growth forecast of

4.3% in 2005. The telecommunications industry will

continue to grow in tandem with economic growth. It is

expected that the spending for communication services in

Malaysia will grow from the current RM18 billion to

RM22 billion in 2005 and to RM34 billion in 2010.

Telecommunications revenue is estimated to contribute

3.2% to the GDP.

We plan to leverage on the opportunities presented to

create value via revenue growth, to increase our

productivity and identify opportunities for smart

investment and smart partnerships.

Barring unforeseen circumstances, we expect to see a

healthy double-digit increase in operating revenues, led

by our data, cellular, broadband and international

initiatives. Despite the expected higher revenue, we

expect our earnings in 2005 to be lower than in 2004 in

the absence of exceptional gain and share of profit from

our investment in Telkom SA, upfront costs relating to

the Voluntary Separation Scheme and the marginally

dilutive impact of our investments in PT Excelcomindo

and Idea Cellular in 2005. These two new investments,

however, are expected to contribute positively to the

Group’s earnings from 2006 onwards. Three key areas will

guide the broad framework for us going forward:

• Becoming a customer centric organisation

• Practising prudent financial management



In all our endeavours, we aim to be the communications

company of choice in all markets we serve, benchmarking

ourselves against world-class standards in customer service

and delivery, network infrastructure as well as innovative

communications solutions to meet the increasingly-

sophisticated demands of our customer base. We take

this job very seriously indeed.

On behalf of the group, let me thank our Shareholders,

the Board of Directors, Staff, our Customers, Partners and

various stakeholders for their invaluable support through

all of our endeavours in 2004. We would also like to

extend our sincere appreciation to the Ministry of Energy,

Water and Communications and the Malaysian

Communications and Multimedia Commission for their

support over the years. We look forward to their

continuing guidance and support in 2005 and beyond.

At the operational level, following the completion of the

integration of our mobile business under Celcom, we are

now ready to address the market, while at the same time

ensure the successful rollout of 3G services later this year.

At TM International’s level, the main focus will be to

leverage on the new and existing investments to

maximise returns while focusing on opportunities closer

to home.

At TM Retail, emphasis will be growing the data and

VoIP segments, to compensate for the decline of

traditional fixed line voice service. TM Wholesale, on the

other hand, will work with other operators to maximise

network utilisation. On support services, TM Facilities will

intensify its effort to develop some of the attractive

landbanks owned by the Group.

Dato’ Abdul Wahid bin Omar

Group Chief Executive Officer

Imagine what we

can do with the power

of communications today?

We can hear and

see across the globe.

We can share,

laugh and conduct

our business.

At TM,

we’ve been helping

Malaysians of all ages

to stay in touch.

Connecting you to your worldo p e n i n g u p p o s s i b i l i t i e s


Page 98

WHOLESALE operations review

OPERATIONSTM Wholesale (TMW) operates Malaysia’s most extensive wired and wireless infrastructure. It offers

a host of infrastructure and network services to meet domestic and global demands.

Complementing this infrastructure is a vast network of submarine fibre optic cables, which provide

highly efficient and reliable global connectivity.

TMW offers internationally recognised performance driven products, which include Access, Traffic

Minutes, Bandwidth and Co-Location Services.

ACCESS

Broadband Access

This is an ideal platform for various applications such as audio and video

streaming, portal applications, net-meeting and e-commerce services.

Customers will have immediate nationwide and international reach to the

potentially lucrative broadband market. The Broadband Network architecture

is based on xDSL technology, running on Internet Protocol (IP), Asynchronous

Transfer Mode (ATM), Synchronous Digital Hierarchy (SDH) and Frame Relay

platforms. For Internet connectivity, TMW offers Internet Protocol to the core

network infrastructure with an aggregated 10Gbps backbone capacity. In

addition, its Broadband Network is supported by an extensive telephony

infrastructure for last mile access.

Dato’ Dr. Idris IbrahimChief Operating Officer • TM WHOLESALE


Page 99

Wholesale operations reviewcontinued


Page 100


TRAFFIC MINUTES

VoIP (Voice Over Internet Protocol)

As a total VoIP solution provider,

TMW offers wholesale VoIP minutes

trading and a complete wholesale

pre-paid solution, thus significantly

reducing market entry cost and

allowing faster time-to-market for

new and existing VoIP businesses. In

addition, the TMW platform provides

a unique Web Trading Interface that

provides customers with real-time

and transparent access to key billing

and service information. To

guarantee the highest levels of

service and interoperability, TMW

continues to forge winning

partnerships with global carriers and

application service providers.

International Minutes

Presently, TMW provides international

minutes termination services to more

than 200 international destinations

where its customers do not have to

establish, negotiate and maintain

global agreements with individual

carriers. All bilateral agreements are

handled by TMW. To guarantee

service commitments, TMW continues

to make substantial network

investments to ensure Quality of

Service (QoS) performance

parameters are reliable and are

achieved consistently.

BANDWIDTH SERVICES

This service is delivered over TM’s

extensive domestic and international

network infrastructure. It includes a

combination of satellite, terrestrial

and submarine fibre optic cable

systems that provide automatic

re-routing capabilities, if required.

Domestic Bandwidth Services

• This service rides on a Managed

Leased Circuit Network (MLCN)

and a Digital Data Network

(DDN), with narrowband access

speeds of 64Kbps up to 2Mbps.

• Broadband services are delivered

over a DDN platform with

connection speeds ranging from

4Mbps, 6Mbps, 8Mbps, 34Mbps,

45Mbps to 155Mbps.

• Optical bandwidth utilises Dense

Wave Division Multiplex (DWDM)

and allows relatively higher

speeds that can range from

200Mbps to 10Gbps.

International Bandwidth Services

• This service provides connectivity

between Malaysia and other

countries worldwide. Its features

include One-Stop Shopping and

Full Channel Services with TMW’s

global partners.

• Bandwidth Backhaul Services

provide dedicated connectivity

with any one of TMW’s cable

landing stations in Malaysia.

• Bandwidth Transit Services enable

end-to-end connectivity for

originating and terminating

traffic between two foreign

countries, with Malaysia as the

transit point.

• Bandwidth Interconnection

Services provide bandwidth

connections between cable

systems at any one of TMW’s

Cable Landing Stations within

Malaysia.

• Indefeasible Right of Use (IRU) is

a long-term lease, of not less

than 15 years, for bandwidth in a

cable system.


Page 101

CO-LOCATION SERVICES

This service provides equipment

hosting facility at TM’s Point of

Interconnect (POI) locations for

licensed operators as required under

the Mandatory Standard of Access

(MSA) set out by the Malaysian

Communications & Multimedia

Commission (MCMC). The licensed

operators may co-locate their

equipment for purpose of

interconnecting with TM’s network

only. This service is available starting

April 2005 to all operators who has

signed the Access Agreement (AA)

with TM.

PROSPECTSINTERNATIONAL MARKET

TMW is a competent partner, capable

of managing the complex global and

domestic wholesale service that is

built on the framework of the

Enhanced Telecommunications

Operations Map (eTOM) Model.

It has a 24/7 Customer Service

Centre, which is available as and

when the customer needs it, and is

manned by experienced service

engineers and technicians. With a

fibre optics-based international

network, TMW is capable of

delivering high capacity and quality

global connections for Internet and

other broadband services.

TMW’s new international submarine

cable system, Dumai – Melaka Cable

System (DMCS), is a mega project

between TM and PT Telekom of

Indonesia. It was launched on

17 February 2005. The USD11 million

(RM41.8 million) project will be the

main gateway to link both countries.

The 150 km system spans across the

Straits of Melaka, connecting Dumai,

in Indonesia and Melaka, in Malaysia.

The system is designed to carry a

maximum capacity of 320 Gbps,

which is equivalent to 3,870,720

simultaneous phone calls made

between Malaysia and Indonesia. The

initial capacity of DMCS is 40 Gbps,

which is equivalent to 483,840

simultaneous phone calls made

between both countries.

LOCAL MARKET

TMW is committed to its objective of

turning Malaysia into a regional

telecommunications hub by

continuously developing and

expanding its hubbing business. The

Company plans to introduce a Next

Generation Network (NGN), which

involves migrating towards packet-

based networks. NGN is capable of

handling data, voice and video

communications simultaneously and

can also offer flexible value-added

services.

Hi-Tech Digital NetworkInfrastructure



Page 102

Next Generation Network (NGN)

NGN is developed on IP-based switching systems and the network is an

asset as it enables TM to be more competitive in providing services in the

future. The economy and technology are key factors in the successful

implementation of NGN.

As at December 2004, Phase 1, which involves the setting up of a media

gateway with connection to the selected Digital Local Switch (DLS), has

been completed in four regions, namely Central, Northern, Southern and

Sarawak.

For Phase 2, work on the connection of the remaining DLSs to the

gateway will continue and is expected to be completed by February 2005.

Multiservice Access Node (MSAN)

MSAN is a technology migration for CAN (Customer Access Network)

equipment to provide narrowband and broadband services from a single

integrated access node. Currently, narrowband services are provided by

DLC (Digital Line Concentrator), broadband services via RDSLAM/DSLAM

(Remote Digital subscriber Line Access Multiplexer/Digital Subscriber Line

Multiplexer), and MLCN (Managed Leased Circuit Network) services,

provided by Digital Data Network equipment.

MSAN is the next generation DLC to provide ATM and IP services. It will

also be used to replace existing local switches. The service was rolled out

at Bukit Merah, Taiping in October 2004.

Wholesale Tenancy

To address the growing concern on domestic mobile coverage by the

Minister of Energy, Water and Communications, TMW is offering wholesale

tenancy service to enable mobile operators to expand their network

coverage and presence in a cost effective and timely manner. Other

retailers requiring nation-wide telecommunications equipment space can

also benefit from this services as it provides one-stop shopping



Page 103

convenience including having

immediate domestic and global

connectivity via TM’s extensive

network. This service is available

since February 2005.

Other Infrastructure and Services

To support the National Broadband

Plan, TMW is aggressively rolling out

DLS infrastructure to speed up the

penetration of broadband service.

An alternative solution via

Broadband Fixed Wireless Access

(BFWA) is also being developed to

penetrate those areas that cannot be

deployed via a fixed network.

With the proliferation of Internet

Protocol Virtual Private Network

(IPVPN) worldwide, TMW is also

working to provide a wholesale IP

MPLS (Internet Protocol Multi

Protocol Label Switching) transport

package for retailers in their IPVPN

deployments. The sharing of common

infrastructure will help to reduce the

cost of providing the service and

thus, spur the growth of IPVPN

networks in Malaysia.

Technology Testing/Trials

In line with TM’s objective of

migrating towards next generation

telecommunications and becoming a

low-cost infrastructure provider,

continuous research is being

conducted to enable the provisioning

of a robust platform for high-value

products and services with Internet

capabilities and web-based

technology.

HR TM WHOLESALE

With the restructuring of TM Telco in

July 2004, HR TMW has to ensure

that excellent service is provided to

both staff and customers. It has the

responsibility to equip employees

with knowledge in the fast changing

new technology, to develop their

skills in the telecommunications

industry and to deliver world-class

service to its customers.

Communication has been identified

as a key tool in achieving this and to

ensure the effectiveness of HR

practices.

ORGANISATIONAL LEARNING

AND GROWTH

TMW has adopted the use of key

performance indicators to drive its

business. A Balance Score Card (BSC)

approach was introduced in the

middle of 2003 to enhance business

planning and development process.

The BSC process focused on four

areas in its appraisal – Finance,

Customers, Operations and Learning

and Growth. A strategy map has

been developed for the next two

years. From this, objectives will be

measured and key initiatives aligned

to TMW’s overall strategic direction.

24-hr Network Control Centre



Page 104

RETAIL operations review

The transformation of TM Telco into TM Retail and TM Wholesale in 2004 is a strategic move to

position TM as the preferred telecommunications provider in the country. TM Retail, which began

operations in July 2004, is geared towards addressing the fixed line and data businesses. To

achieve its role as a retail organisation, new divisions such as Marketing Management and

Research, Customer Service and Revenue Assurance were formed.

Since its inception, the major challenges were toward improving customer services and meeting

the rigorous Malaysian Communications and Multimedia Commission’s (MCMC) mandatory quality

standard requirements. Internal processes were aligned to make the organisation more effective

and efficient. Initiatives such as touch point was launched to call at least 3 customers by each

staff daily to address customer satisfaction.

TM Retail’s performance for the 2nd half of 2004 was satisfactory as it

managed to surpass its initial revenue forecast by 0.8 per cent.

It achieved the half year revenue of RM3.252 billion compared to forecast of

RM3.225 billion. Voice is still the major contributor (77.5 per cent), followed

by data (18.6 per cent) and other services (3.9 per cent).

Total cost was kept at RM2.771 billion, as compared to budget of RM2.830

billion. 80 per cent of the cost was attributed to buying network and

facilities services.

EBITDA margin stood at 14.8 per cent and the half year PBIT was RM421.5

million.

Dato’ Adnan RofieeChief Operating Officer • TM RETAIL


Page 105

PRODUCT MARKETINGIn 2004, the new product direction

was toward higher speed and higher

mobility broadband by leveraging

the IP technologies and development

of bundled products. TM IPVPN

network products and solutions were

introduced, aiming at market

segments such as the Government’s

GITN and SchoolNet projects,

Corporate/MNC and SMI/SME. New

Voice Products enhancement were

the TM Home Prepaid Multi Account

and Mass Call Televoting service.

TM Retail has also offered Product

Bundle, consisting of fixed, Internet

and mobile services for SMI/SME and

business segments. To date, Product

Bundle has successfully generated

RM68 million in sales. A more

attractive bundle for the residential

segment is being planned for 2005.

Card Services, in particular iTalk and

Ring Ring Card platform has

undergone a major capacity upgrade,

in a move to offer cheaper voice

services to targeted market. TM

Retail’s card business is worth RM120

million and is growing significantly.

Self Service Portal is a Web-based

application introduced to make it

more convenient for customers to

receive and pay their bills. This

service is still in the introductory

stage and will be aggressively

promoted in 2005.

SALES DIVISIONThe Sales division consists of seven

major sections to target the seven

different segments of the market.

The Business segment has been

consolidated into one segment

targeting SMI/SMEs. The Consumer

segment is solely focused on

managing the residential segment.

The rest are Corporate, Multi

National Companies, Government,

Broadcast and Special Network

Services.

After the merger of TM Touch and

Celcom, Celcom’s fixed line

operations have been transferred to

the operation of TM Retail. This

includes 4,621 subscribers and 203

payphones, giving TM Retail a total

of 4,416,135 subscribers and 73,460

Payphones.

Some of the initiatives of Sales

Division include:

a. IDD promotion to 85 major

towns in 39 countries – the

promotion is available until

August 2005.

b. Talk Around the Clock

promotion – this promotion

offers subscription of unlimited

calls to any fixed line number

for a fixed price.

c. TM Home Prepaid accounts –

the service was targeted at

normal line subscribers who

would like a prepaid

arrangement as opposed to

post-paid.

Retail operations reviewcontinued


Page 106

d. Data services – initiatives were

centred on promoting IPVPN

circuits, speeding upgrades for

traditional leased line customers,

offering incentives on volume

plan, and promoting

International Private Leased

Circuit to multinational

customers. With that aggressive

stance, the Data sector’s revenue

has grown 17 per cent.

e. A touch point initiative has also

been introduced, where a sales

person is required to call 3

customers per day. The feedback

received has been very

encouraging and this has further

enhanced TM Retail’s

relationship with its customers.

A new system called Sales Force

Automation was deployed to manage

and track sales activities. The new

methodology of prospecting and

selling was also introduced hand in

hand with the system to improve

sales.

CUSTOMER SERVICEThe initial and immediate focus of

the division in post-transformation

2004 was to ensure continuity and

stability of the operational processes.

This is especially important in

relation to customer service

fulfilment and complaint handling.

For 2005, the focus will be on

introducing new improvement in the

operational process and style to

create better and enhanced customer

service deliverables.

Effective 1 July 2004, all call centres

were put under TM Retail’s Contact

Centre Management. This

consolidation provides opportunities

for improvement through more

focused management and strategies.

The ultimate aim is to have one

central contact number by the year

2006.

The 103 directory service will be

further improved with the

implementation of a new system in

2005 to replace the outdated system.

TM Retail’s Telemarketing centre and

1050 are also being enhanced with

the incorporation of CRM

methodologies and systems.

To improve customer service, TM

Retail has also initiated Touch Point

Initiatives, whereby customers will be

called to get feedback on their

satisfaction levels regarding

installation or fault clearance. This

initiative has been successful in

getting inputs for future

improvement and has now become

part of the everyday routine for the

staff. Customer satisfaction for TM

Handling all yourcommunication needs atTMpoint



Page 107

Retail is still above the industry standard of around 58 per cent

compared to the European standard of 51 per cent in year 2004

(MCMC survey).

The Service Delivery & Complaint Resolution Division is a new unit

established in 2004 with the primary focus of improving and

providing excellent customer service. This is to ensure that all

services are delivered as per customer requirements and all

complaints are resolved effectively.

BILLING COMPLAINT RESOLUTION

Up to December 2004, TM has achieved a performance of 97.3

per cent in terms of customer complaints resolution within 15 days;

beyond the mandatory requirement of the MCMC. The performance

of Service Installation Complaints and Fault Restoration Complaints,

however, still fall short of the internal targets. Various measures

have been initiated to address this and improvements are expected

in the near future.

Performance Achieved for Complaint Resolution from July to

December 2004

Measures Target Actual

1. MQoS Billing Complaint

Resolution 90% < 15 days 97.3%

2. Non-MQoS Complaint Resolution

(Svc Installation) 80% < 4 days 61.4%

3. Non-MQoS Complaint Resolution

(Svc Restoration) 80% < 4 days 74.8%

4. MQoS Total Billing

Complaints/Total DEL =<5% 0.62%

Connectivity from wherever you are



Page 108

MARKETING MANAGEMENT AND RESEARCH (MMR)MMR focuses on strategising the marketing-mix towards achieving TM Retail’s objective to be a

customer-centric organisation.

Relationship Marketing Management unit is the main pulse of MMR in that it manages

customer relationships for TM Retail. MMR analyses customer values, develops customer

profiling and segmentation, examines customer usage and churn while strategising channels,

campaigns and retention programmes.

To equip MMR with market intelligence, Market Analysis Unit works in line with the

organisation’s defined objectives by systematically capturing, managing, reviewing, distributing,

publishing, storing and preserving business intelligence contents. It also plays a critical role in

creating a knowledge sharing culture within TM, as business and competitive intelligence are

key success factors in organisational planning, marketing, pricing and product development

activities.

Similarly, Market and Product Research unit (MPR) is critical as it functions as a one stop

research centre. The role of MPR is to manage and implement marketing research activities to

acquire strategic information on customer and market needs, product acceptance, customer

satisfaction as well as industry and technology trends with a view of developing differentiated,

innovative and competitive products and services to generate revenue growth and profitability

for TM.

At the head of the value chain, Brand & PR Unit’s main responsibility is to effectively deliver

an integrated marketing campaign to increase brand equity for TM Retail’s voice and data

products.

Since its inception, MMR has managed to prepare the foundation to support the CRM rollout

for TM Retail with extensive customer data acquisition from internal and external sources to

build customer intimacy. A number of customer profiling projects and retention programmes

have been successfully conducted. A customer satisfaction survey has been completed to

uncover gaps in meeting customer satisfaction to serve the customers of TM Retail.



Page 109

HUMAN RESOURCE (HR)TM Retail HR acknowledges that its

strategic role is to achieve a more

agile, vibrant and dynamic

workforce. In year 2004, linking

reward to performance management

has been the main focus of HR

initiatives. As business strategies are

becoming more focused on customer

satisfaction, TM Retail HR has

strategically used reward programmes

such as flexi-benefits and customised

reward programmes that are directly

linked to business results. New

incentive schemes have also been

introduced, particularly for new

recruits.

One of the changes in 2004 was that

contracts of employment were given

to General Managers (GM) and

above posts. Currently, all TM Retail

GMs and above are being contracted

for 3 years.

MOVING FORWARD IN 2005

AND BEYOND

TM Retail has seen many traditional

telcos suffered losses due to

competition and new technology.

However, TM Retail’s confidence in

improving its business is

substantiated by its positive

performance. With careful planning

of its future direction and through

the implementation of the Balance

Score Card, TM Retail is well

positioned to improve further.

TM Retail is investing in broadband

capability to provide solutions to the

SMI/SME segments and consumers.

New products and enhancements are

in the pipeline in the form of

Broadband Voice, Televoting, Fixed

SMS, Metro-E, and Blue Phone and

these will be introduced within the

next 2-year time frame. VPN – based

services are already in the market

and will be enhanced further to give

customers state-of-the-art tools to

help improve their businesses.

In marketing, customer profiles are

being built to ensure the success of

CRM implementation to provide

customers with more delightful

solutions in meeting their needs.

To improve sales in Card services,

more card distributors are to be

appointed locally and internationally.

TM Retail is also planning to provide

more attractive bundles of services to

its valued customers. On capital

expenditure (capex), a total

investment of RM36 million is being

planned to rationalise and upgrade

the services of Kedai Telekom.

Operational support systems within

TM Retail are also undergoing a

major upgrade. Capital expenditure

of RM325 million is being planned in

2005-2007 to enhance their capability

and effectiveness. Once done, TM

Retail should be able to ease some

of the manual processes with respect

to planning and performance

tracking of fulfilment, restoration

and billings.

TM Retail is confident of supporting

TM’s vision to be the communication

company of choice.


Did you have a mobile

phone 10 years ago?

Can you imagine life

without one today?

At TM,

we aim to make things

even better for you.

Pioneering mobile solutionso p e n i n g u p p o s s i b i l i t i e s


Page 112

MOBILE operations review

Dato’ Mohamed Yunus Ramli AbbasGroup Chief Executive Officer • CELCOM (MALAYSIA) BERHAD

After undergoing the largest and most complex integration exercise in the corporate history of

the country, Celcom (Malaysia) Berhad is now ready to go full steam ahead in its quest to

becoming the finest enterprise in the country – from the viewpoint of customers, stakeholders,

shareholders, employees, industry, the government and nation.

Celcom Group registered a pre-tax profit before one-off adjustments of RM951 million for the

financial year ended 2004, recording an impressive growth of 119 per cent from RM434 million in

the previous financial year. The one-off adjustments relate to provision for impairment losses and

accelerated depreciation amounting to RM550 million during the year compared to RM58 million

in the previous year. This resulted in a pre-tax profit of RM401 million in 2004 against RM376

million in the previous financial year, representing a 7 per cent increase.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose from

RM1,558 million in 2003 to RM1,924 million, recording a healthy growth of

23 per cent for the financial year ended 31 December 2004. Despite increasing

competitive pressures, customer growth remained strong with a net addition of

998,492 subscribers during the year or a growth of 23 per cent.

The year 2004 saw the completion of the integration activities between Celcom and

TM Cellular Sdn Bhd. Although much of the focus was on the complex integration

activities, Celcom’s revenue for the year managed to grow by 17 per cent from

RM3,598 million in 2003 to RM4,199 million, due primarily to the strong demand in

the prepaid sector. This was reflected in the growth in prepaid customers from

3.2 million to 4.2 million at the end of 2004.

Revenue from the prepaid segment continued to show steady growth of 24 per cent

despite the ever competitive prepaid offerings in the market. This was made possible

as a result of the success of aggressive marketing activities and introduction of new

and innovative product offerings during the year. These included the setting of a

more competitive Short Message Service (SMS) tariff, lowering the price of a prepaid

starter pack and the introduction of prepaid roaming, Multimedia Message Service

(MMS), Call Me Tones, and other value-added services.


Page 113

Mobile operations reviewcontinued


Page 114

Postpaid revenue recorded a

moderate growth of six per cent

during the year. Although the

postpaid market is not as buoyant as

the prepaid segment, average

revenue per customer (ARPU) grew

by two per cent to RM132 due to

the company’s focus on corporate

and high-end customers. Mobility

Solutions contributed about 15 per

cent of the revenue and continued

to chalk up a strong growth of 38

per cent during the year.

Moving forward, Celcom will

continue to give value to customers

with up-to-date mobile technology.

The recently launched Celcom

Integrated Business Solutions (CIBS) is

also expected to contribute

significantly to ARPU and the profit

margin in the coming year.

Continued efforts on cost control

measures since pre-merger have

resulted in Celcom’s EBITDA margin

improving to 46 per cent from

43 per cent in 2003. The profit

before tax margin, however,

experienced a slight decrease from

10 per cent to nine per cent in 2004

mainly attributable to the provision

for impairment losses and accelerated

depreciation amounting to RM550

million.

The write down of assets was

provided in view of the completion

of network integration and

technological obsolescence of certain

equipment. Excluding the one-off

adjustments, Celcom recorded a

higher pre-tax profit margin of

22 per cent during the year as

compared to 12 per cent in 2003.

Key financial ratios also continued to

improve as a result of Celcom’s

enhanced cash position and reduced

borrowings. Celcom ended the year

with RM2,028 million of cash and

cash equivalent, thereby improving

the current ratio by 51 per cent from

1.00 to 1.51, whilst Debt-to-EBITDA

improved from 1.44 to 0.77.

Capital expenditure (Capex) incurred

during the year was RM632 million

which included Capex spending on

integration and TIME1 network

expansion. For the year ended

December 2004, Capex savings

resulting from the merger synergy

amounted to approximately RM358

million.

Menara Celcom, Jalan Semarak



Page 115

OPERATIONSAs a larger entity, Celcom is now

able to offer a wider selection of

customer-focused products and services,

superior network quality and capacity

as well as wider geographical network

coverage, locally and internationally.

Celcom has greater coverage than its

competitors, where it has increased

an additional 13 per cent in overall

network coverge after the network

integration.

The integration has allowed Celcom

to have a broader view to come up

with more integrated plans to suit

the various needs of its customers.

Celcom is now more targeted in its

marketing programmes and is

confident that both its postpaid and

prepaid services are segmented well

enough to cover the market.

Celcom’s vision is to become the

finest enterprise in the country. It is

about balancing profitability and

reasonably high margins and the

linkage with all stakeholders by

continuing to delight customers,

making money for our investors,

being the best company for its

employees to work in and being a

good corporate citizen to the public,

as well as a profitable business

partner for vendors.

In business, competition is the game.

As is the norm when the market

hots up, pricing strategies come to

the fore. To encounter this, Celcom

has come up with the most effective

game plan. Its reduction on SMS

charges and starter pack pricing

strategy took the market by storm

and won the war – for both the

customers and Celcom as well as

stakeholders. Competitors in the

industry are now deploying reaction

tactics to counter this.

The reduction of the SMS charges

from 15 sen to 5 sen to 2 sen and

the reduction of our prepaid starter

pack from RM48 to RM38 to RM20

have contributed significantly to the

increase in prepaid sales. In

November 2004, following the

aggressive promotions and

streamlining of our distributors, our

prepaid activation reached 340,000

customers, the highest number of

activation in Celcom’s history.

As a pioneer in the mobile industry,

Celcom constantly introduced new

products and value added services to

enhance the communication lifestyle

of its customers. It was the first

mobile operator in Malaysia to launch

the sophisticated 128K SIM Browser,

known as the Celcom smart SIM. This

new SIM card offers customers a

simpler mode of access to a full range

of dynamic content and a larger

portfolio of value-added services.

It also introduced an innovative new

service called M-Vouchers. The service

enables customers to receive

vouchers and coupons for selected

stores through their mobile phones.

Through this service, they will be

able to enjoy discounts on clothes,

hotel rooms, amusement park tickets

and a wide range of other privileges,

easily accessible via their handphones.

Innovative ProductDevelopment at Celcom



Page 116

New services are constantly being introduced in the fast-paced world of mobile

technology, especially in the high growth prepaid market. Despite the price war in the

market especially in the 2nd Half of 2004, Celcom firmly believes that offering more

value to customers through innovation and product enhancements should be the basis

of competing in the market. It was time for the Company to look into attracting

customers with service enhancements instead of lowering messaging service (SMS) and

call charges to grow its margin. Celcom combined competitive pricing with innovation

while, at the same time, driving higher revenue streams and keeping its costs low.

Industry competitors, however, have continued to catch up. Instead of being part of the

price war, Celcom changed its tactics and is now focusing on streamlining the

management of its existing customers to anticipate their needs.

In December, Celcom harmonised the prepaid services of 013 and 019 by consolidating

its five packages (Touch Advance, Intm, Xcel, Xceed and Xplore) into one new prepaid

brand name called Xpax. The new Xpax features some of the most advanced

technologies and value added services while at the same time seamlessly upgrading the

current Celcom 013 & 019 prepaid customers to enjoy greater heights of convenience

and flexibility. Celcom prepaid customers are also allowed to migrate between the plans

according to their preference and communication patterns.

Xpax comes in three plans to meet the needs of the prepaid market segments. Xpax

Lite Plan caters for those customers whose current usage averages less than RM75

monthly; Xpax Mid plan is ideal for customers whose monthly usage ranges between

RM75 and RM150; and Xpax Max Plan is suitable for users whose current usage

averages more than RM150.

The new Xpax has four unique features, plus other existing value-added services –

SIMcard Rescue, Easy GPRS, Airtime Share and Call Me Tones (CMT).

Celcom’s commitment to CSR initiatives



Page 117

Celcom is the first mobile company

in Malaysia and in the region to

offer Easy GPRS to its customers.

Easy GPRS is an automatic and

seamless activation of GPRS settings

with just one simple SMS. Another

first is the SIMcard Rescue, a service

that enables customers to back up

their contacts in the SIMcard without

worrying about losing their valuable

contacts during cases of

phone/SIMcard damage, handset lost,

etc.

Airtime Share allows customers to

share airtime credit with their friends

and families. Customers can transfer

between RM3 and RM25 worth of

airtime to one another’s mobile

phones via SMS. CMT is one of the

most popular services as it enables

the calling party to listen to selected

music or tones while waiting for the

phone to be picked up by the

receiving party. Launched in October

2004, Call Me Tones received

overwhelming response. Within a

month of its launch, we beat the

projected forecast and the number

of customers subscribing to the

service continues to grow rapidly.

Besides the support from our valued

business partners, Celcom’s growth

was also largely driven by our

customer focused offering as well as

our aggressive marketing activities

such as the introduction of a new

monthly access fee, new competitive

call tariffs, rebates and bonuses for

selected packages via phone rebates

and trade in programmes to

encourage customers to upgrade

their phones to enjoy the more

advanced services available. The

programme also enables Celcom to

reward its current postpaid customers

who have been loyal to Celcom

throughout the years. A stronger

approach was also implemented to

promote the supplementary package.

Celcom together with its key dealers

has brought the Company one step

forward. Their, commitment,

confidence and support towards

Celcom has contributed to the

Company’s sales and revenue.

Through their strong contribution,

Celcom experienced a significant

increase in total Key Dealer

registration in the second half of

2004, as compared to the usual

monthly average.

Innovative packages fromCelcom



Page 118

ENTERPRISE SOLUTIONSSince mobile telecommunications is

growing beyond voice and data,

Celcom has created a host of

business offerings to cater to the

needs of its enterprise customers.

There is now greater demand for

issues related to wireless mobility,

workforce automation and wireless

marketing, which are already

changing the way businesses operate.

Celcom and business consumers have

benefited greatly from the

deployment of a variety of wireless

marketing initiatives. Reaching out to

customers has become a key task on

a daily, if not hourly basis. SMS

promotions help business consumers

reach a targeted group using a

medium than most people have a

strong familiarity with. SMS

broadcasts allow the enterprise to

customise its approach to reach

customers who only fit in to a

certain predefined value structure,

such as earning power, spending

patterns, residential location, gender

and age.

Mobile technology also allows for

dynamic workforce mobility. For

example, sales force automation

solutions provide a company’s sales

team with the necessary wireless

commands to not only make and sign

orders but also to monitor added

intelligence like sales patterns, product

turnover and the purchase cycles.

Celcom has recently launched its new

business unit aimed at providing

mobility-based solutions to increase

enterprise efficiency.

Celcom Integrated Business Solutions

(CIBS) primarily aims to help business

owners harness Celcom’s mobile data

infrastructure to gain a variety of

process advantages geared towards

maximising return-on-investment

made on their existing IT systems.

CIBS will adopt the mobility solutions

in three phases. The first phase is by

using the Applications-on-Tap, the

second phase will have the business

to integrate their internal back-end

systems which can be seen within a

6-12 month period. The third phase

i.e. within 12-24 months the business

will embrace the Value Chain

Collaboration (VCC) whereby a total

B2B will be taking place.

CIBS offers unique business solutions

across many industries. Consumer

Insight™ for example, is an extensive

suite of mobile Customer

Relationship Management products

used in lead generation, campaign

management and retail promotion.

Command Cash™ is a totally wireless

solution that helps companies

manage their cash collection

processes more effectively.

Celcom has also introduced the first

Wireless Permission-Based Marketing

Solution called Get MAd, with the

intention of rewarding its customers

for receiving promotional

advertisements via Short Messaging

System (SMS), Enhanced Messaging

Services (EMS) and/or Multimedia

Messaging Services (MMS). Get MAd

customers will be rewarded for

participating in permission-based

wireless advertising programmes.

Breaking barriers, domestically, regionally andglobally



Page 119

Customers who subscribe to Get MAd

will be given a RealRewards card,

and points collected via this

programme will be credited into the

customer’s RealRewards account.

In December 2004, Celcom, with the

association of world-class solutions

provider Microsoft, presented EMAIL

and BEYOND services to its

customers. This was the first time a

telecommunications services provider

has teamed up with Microsoft in

Malaysia. EMAIL and BEYOND is a

service that enables Celcom mobile

customers to access email anytime,

anywhere via Microsoft Windows

Mobile device and WAP/GPRS-

enabled phones.

Aside from EMAIL AND BEYOND,

Celcom in its first collaboration with

a member of the Telekom Malaysia

corporate family – TM Net, launched

Celcom WiFi. This service allows

customers to enjoy wireless

broadband internet access via SMS.

The move is in line with the Group’s

effort in accelerating the rollout of

broadband using both fixed and

wireless access to achieve the target

set in the Government National

Broadband Plan.

SMS/MMS Services

SMS is the way of the future and

will continue to grow as a simple

mode of wireless communication

throughout the world. It is becoming

more popular not only among the

youth but across various

demographic groups who rely on

SMS to do business, send a greeting

or confirm a movie booking on a

regular basis.

MMS services via GPRS phones are

also receiving encouraging response

from postpaid and prepaid

customers. With the current GPRS

customer base of more than 350,000

in the financial year ended 2004,

Celcom is confident the number will

continue to increase as it aims to

further delight its customers with

various innovative services and on-

going promotions.

Celcom believes that adopting the

3G technology is the next major

technological evolution to support

future data services. To explore the

market potential in 3G, it will

continue to expand and enhance its

mobile data services. This includes

evolving from simple text messaging

to a wider range of richer graphic-

based and video based messaging,

contents and applications while on

the move.

Other Value Added Services

Celcom EPL MMS downloads – This

service, a joint collaboration with

ASTRO, allows our customers and EPL

fans to see and hear the action via

MMS or video. With MMS, customers

receive full text pictures of the

action but with video, the action

comes to life on their mobile

phones. Once subscribed, they will

receive Weekly Previews, Goal Alerts,

Match Roundups and Weekend

Roundups every week, which are

either delivered to their mobile

phones or accessed via WAP. As

Celcom customers, they will receive

privilege rates when they subscribe

to the service.

E-Islamic Portal – This is offered via

SMS, MMS and GPRS applications.

Our Muslim customers can participate

by typing ISLAMIC and send to

23600. Among the downloadable

Islamic services via Celcom WAP

menu are M-Hijrah, M-Zakat, M-Zikir,

M-Solat, M-Du’a, M-Niat Solat and

many more.

Building customerrelationships with Celcom



Page 120

Mail2Phone – This innovative service

allows customers to receive, compose,

delete and reply email through their

mobile phones using SMS. With no

additional software installed, the

mobile phone will act as a new

email client. This service also alerts

customers on in-coming e-mail.

Moodswinger – Moodswinger enables

Celcom customers to download their

favourite ringtones, picture messages,

icons and other SMS services to their

mobile phones. This service offers

over 1,000 favourite songs and logos

to choose from. With this service,

customers can also dedicate a

ringtone, picture message or logo to

other Celcom customers.

Celcom Mobile Greeting – With

Celcom Mobile Greeting, customers

will be able to enjoy changing their

voice mail greeting and select new

voice greetings by foreign and local

celebrities, hot themes, funny themes

and many more.

Moving into 2005, Celcom will

continue to be aggressive in the

introduction of new products and

services. A number of amazing, fun

and advanced business mobile

communications solutions and

products are already in the pipeline.

CELCOM ADVANTAGEIn line with the company moving

towards a more customer-centric

organisation, our Customer Service

Division has implemented various

improvements such as consolidated

customer care services through a

single customers hotline, enhanced

Interactive Voice Response to ease

customers’ transaction and

segmented customers to offer

differentiated and personalised

services to high- value customers.

Celcom Advantage, which was

launched on 5 July 2004, is a

platform to reward customers for

their loyalty through customised

activities. Among those activities are

‘Jom Pancing’ for fishing lovers, a

self-defence workshop for women in

an effort to help women protect

themselves; PMR/SPM workshops to

help customers’ children prepare for

their exams; Thundercat Racing,

which is the first of its kind in

Malaysia to specially cater to our

young customers from higher

learning institutions; and family

entertainment such as “Sesame Street

Live” targeted at Celcom customers

and their family members.

In addition to rewards and benefits,

Celcom Advantage activities also

provide an opportunity for Celcom to

interact with its customers. This will

foster better understanding of their

needs and expectations with regard to

the company’s products and services.

BRAND COMMUNICATIONSCelcom In-Play

Celcom In-Play is Celcom’s branding

umbrella for football sponsorships. It

is aimed at cultivating the passion of

football among the Malaysians

through various ongoing

sponsorships. The feedback has been

positive and Celcom has received

overwhelming response from all

quarters, who have benefited and

requested for more football-related

activities. Due to popular demand,

Celcom has taken its Celcom In-Play

Futsal Fiesta roadshow to major cities

nationwide.



Page 121

Community Outreach with Celcom

Under our Celcom In-Play banner, the

Company has sponsored a university

football championship, the

UniLeague, which is an annual

programme organised by the Majlis

Sukan Universiti-universiti Malaysia

(MASUM) in collaboration with the

Football Association of Malaysia,

National Sports Council and the

Ministry of Education.

Following the successful launch of

the UniLeague, Celcom sponsored the

inaugural Piala Celcom tournament,

which saw the participation of

19 teams from both public and

private universities. Celcom’s

involvement comes as an effort to

revive the glory days of Malaysian

football, while nurturing the

development of outstanding

undergraduates who will one day be

the country’s leaders.

Every aspect of Celcom’s programmes

has received tremendous support and

gained much popularity, both within

its customer base and non-customers.

Celcom In-Showbiz

Celcom In-Showbiz is our

promotional umbrella branding for

entertainment-based programmes.

Our commitment is to continuously

delight our customers and one of

the areas to do that is to woo and

entertain them.

Celcom In-Showbiz also aims to

provide meaningful products and

services through our advanced

mobile communications solutions.

It has been specially designed to

cater to our customers from all walks

of life who enjoy finding out the

latest updates and also the challenge

to test their knowledge on any topic

within the entertainment, music, TV

and arts industries.

Celcom has also brought in many

international artists to Malaysia under

the Celcom In-Showbiz banner, such as

Maksim, Gareth Gates and Bellefire.

Multiple call plans and packages from Celcom



Page 122

CORPORATE SOCIALRESPONSIBILITY (CSR)The aspiration to be a good

corporate citizen is one of the core

values of our vision to become the

finest enterprise in Malaysia. That is

why Celcom has established a

Corporate Social Responsibility (CSR)

programme that is very near and

dear to our hearts.

One of our most successful CSR

initiatives is the Celcom Youth

Ambassador programme. This

programme links the company to the

youth community, in particular

secondary school students. The main

objective of the programme is to

inspire the students to achieve their

dreams and make a difference in

their community and also their life.

Approximately 900 students from 45

schools in Selangor and the Klang

Valley area have participated in the

workshop for the year 2004. The

programme also entails educating the

students about cellular telecommunications,

the technology behind it and the

corporate role of being the premier

mobility solutions provider.

During the one-day workshop,

students are given an hour to come

up with a project that will benefit

their school or community. Once the

project is endorsed, they will be

given six weeks to complete it and

RM300 as start-up capital. Their

project will then be contested in a

competition and judged based on

five criteria: teamwork, creativity,

originality, practicality and timeliness.

In addition, the company under the

Celcom Advantage banner has also

organised the “We’ve Got Your

Back” – Self Defence for Women

workshop which taught women how

to defend themselves in the event of

an attack. The programme serves to

help women master self-defence

strategies, such as Aikido, thus

enabling them to keep themselves

physically and emotionally safe in the

face of hostility. The programme is

extended to our female customers as

well as our female employees.

In an effort to put an end to

violence against women, Celcom

sponsored the ‘White Ribbon

Campaign 2004’. As a corporate

citizen who cares about the welfare

of the public, we aim to create

awareness of women’s issues and

play an active role in preventing

further violence against women.

In view of the recent Tsunami

Disaster, which affected not only

Malaysia but other major Asian

countries, namely Indonesia and

India, Celcom launched the RM5 SMS

donation campaign to raise support

for the Malaysian Tsunami Disaster

Fund organised by the NST, BH, TV3



Page 123

and 8TV. This proactive effort is

aimed at helping the tsunami victims

in Malaysia. In addition, Celcom

employees organised a donation

drive to collect uniforms, school

books, school suppliers and canned

foods for all the school children who

have lost their personal belongings

due to the tsunami disaster. All the

items collected were distributed by

Celcom officials and personally

delivered to the victims in the

affected areas.

CELCOM WINS BESTRADIO COMMERCIALCelcom was awarded with the

‘Anugerah Citra Iklan Radio’ during

the ‘Anugerah Citra Wangsa Malaysia

Sektor Swasta ke-8’ which took place

at the Palace of the Golden Horses

Hotel. The award winning

commercial was for the SALAM

Campaign which featured the voices

of renowned local actors Rosyam Nor

and Jalaluddin Hassan.

Sponsored by Dewan Bahasa dan

Pustaka (DBP), the award was

introduced as an initiative to

enhance the quality and proper

usage of Bahasa Malaysia among

various sectors, most importantly, the

private sector. The winners received

RM3,000, a trophy and several books

published by DBP.

The commercial was judged based on

the proper usage and accuracy of

Bahasa Malaysia as well as the

overall effectiveness of the

presentation and sound.

Youth Development with Celcom

Sharing moments throughCelcom



Page 124

CELCOM WINS THE ‘ANUGERAH KAUNTERPERKHIDMATAN PELANGGAN CEMERLANG 2004’FROM THE MINISTRY OF ENERGY, WATER ANDCOMMUNICATIONSIn 2004, Celcom (Malaysia) Berhad’s Bandar Baru Klang branch won

national recognition and became the proud recipient of the coveted

‘Anugerah Kaunter Perkhidmatan Pelanggan Cemerlang 2004’ award by

the Ministry of Energy, Water and Communications for its excellent

customer service and exceptional counter staff practices.

Celcom’s Bandar Baru Klang (BBK) branch was among the 28 nominees

from 11 various organisations in the Energy, Water and

Communications industry to have been assessed by the Ministry.

Entrants were measured on six criteria which were customer facilities,

readiness to serve customers, exceptional practices of counter staff,

management support, staff involvement and anticipation of customer

needs and expectations.

One of the aspects that helped BBK win the award was its focus on

service delivery – it introduced the ‘early bird’ and ‘late bird’ services

for customers who came before and after working hours. Apart from

that, BBK also internalised the teamwork approach by involving

counter staff in its continuous improvement initiatives. One of the

major initiatives undertaken last year was the ‘customer portfolio

analysis’, which was conducted to assess customer needs and

expectations with regard to excellence in counter service.



Page 125

ii) Providing compelling mobility value-

added solutions supported by

technological advancements that

offer innovative products in personal

and business wireless technology.

iii) Keeping a relentless focus on

surpassing customers’

expectations by effectively

enhancing the base of quality

customers through strong

leadership in key customer

segment and improve quality

and customer satisfaction.

iv) Developing diverse, skilled and

motivated people through

organisational development and

inculcating performance culture

and core values to gain

competitive advantage.

The company will continue to focus

on customer acquisitions, on

developing its human capital and

building a performance- based

culture. In addition, the new and

growing business means more value-

added products and mobility

solutions through GPRS and the

latest 3G services which are

beginning to take off.

The award programme was

conceptualised by the Ministry to

give formal recognition to

organisations that have achieved

excellence in service quality, mainly

concentrating on over-the-counter

customer service excellence.

In pursuit of excellence, Celcom has

always strived to be at the forefront of

the industry. This award is a reflection

of the Company’s undying commitment

to provide top-notch customer service

and offer customers the value-added

services that they deserve.

PROSPECTSIn the year ahead, Celcom will

continue to focus on the following

key areas:

i) Building our brand position

through the power of true

connection to be targeted to

the consumer, business and

corporate mobility segments and

localised with globalised flavour.

School Outreach with Celcom


The world has no barriers.

Not anymore.

We can now reach

every corner of the

globe with ease.

At TM,

we are at the

forefront of this

broadband revolution.

Broadening horizonso p e n i n g u p p o s s i b i l i t i e s


Page 128

MULTIMEDIA SERVICES operations review

Dato’ Baharum SallehChief Operating Officer • TM NET SDN BHD

PERFORMANCEIn 2004, TM Net continued to sustain its market share with a stronger foothold in the Malaysian

Internet market, particularly in the broadband sector. As Malaysia’s leading Internet Service

Provider, TM Net currently serves 2.2 million subscribers and provides nationwide Internet access,

content, commerce and application services, effecting a seamless, information superhighway with

leading-edge technology.

With gross revenue growing 21 per cent to RM417.9 million and prudent cost measures, TM Net

achieved a profit before tax of RM32.2 million and profit after tax of RM26.1 million in 2004.

Business growth was focused on the three main products of Internet access service – application,

e-Commerce services and content aggregation. Of this, broadband remains the key with a physical

subscriber growth of 167 per cent.

With the lifestyle changes brought about by the rapid adoption of the

Internet, TM Net will further intensify the availability and offering of

broadband applications that will enrich information and bring content alive.

Since introducing the broadband Internet service to customers in 2002 and

the addition of more broadband content, the Company’s position has been

strengthened as the leading broadband provider in the country.


Page 129

Multimedia Services operations reviewcontinued


Page 130

OPERATIONSThrough the years, TM Net has

evolved to become a progressive,

dynamic, innovative and spirited

company to spearhead the nation’s

drive in enhancing the new economy.

The year 2004 saw the company

realigning its organisation and

building a strong dedicated team to

serve its customers better.

TM Net’s broadband services have

grown since its inception in 2002 and

it continues to be the market leader.

By end 2004, TM Net had acquired

430,000 ports from its Network

Facilities Provider (NFP) with over 658

exchanges, and is serving 258,000

subscribers nationwide, including

Sabah and Sarawak. To date, TM Net

has the capacity to continue serving

customers’ demand for this service.

Strategically, TM Net has continued

to define the market through better

surfing experience and Internet

speed offerings. The year 2004 saw a

new range of broadband speeds

from 512kbps up to 2Mbps, from its

previous offering of 384kbps.

Through consistent advertising and

promotions activities and Quality of

Service initiatives, TM Net has

achieved up to 4.5 per cent on

household penetration with 258,000

subscribers in 2004. As part of its

strategy to build its subscriber base,

narrowband still remains the first

level of service to new customers

with TM achieving 1.9 million

subscribers in 2004.

With the rapid growth of broadband

services, there is now an increasing

demand in hosting services.

Physically, TM Net has expanded its

data centres from five in 2003 to

nine in 2004 with maximum

connectivity of 1Gbps. Out of the

nine centres, five are located in the

Klang Valley and the others in

Penang, Johor Bahru, Ipoh and

Labuan respectively. To date, TM Net

serves more than 2,000 customers

under this service and the number is

still growing.

To meet international connectivity

demands and as the nation’s leading

ISP, TM Net had 8Gbps of

international transit and peering

capacity by end 2004. Currently, TM

Net is peering with 20 partners in 10

countries. As for the local traffic,

2004 saw growth on the domestic

traffic via Malaysian Internet

Exchange with plans to further cater

for domestic traffic demand.



Page 131

Being driven towards quality service,

the Internet Quality Management

System was installed in mid-2004.

This allows both subscribers and TM

Net to check the end-to-end network

performance of the system.

Our experienced ‘flying squad’,

a team of technical experts, have

helped to resolve service related

issues from hardware maintenance to

faulty equipment. This squad will

continue to enhance the quality of

service through a high level of

management.

As further encouragement to our

customers, TM Net has made it easier

to apply for a connection online via

TM Net Online Services and has also

improved the call centre for better

service. TM Net’s call centres have

been outsourced since April 2004. By

July 2004, the number of calls

abandoned after 40 seconds was

reduced to 0.48 per cent from

6 per cent in June 2004.

The introduction of new broadband

prices in November 2003 saw even

more Malaysians enjoying broadband

speed, thus encouraging people to

adopt broadband and have Internet

access in more households. Currently,

258,000 customers are on broadband,

which is more than double the

number from end December 2003.

In defining the broadband market,

TM Net has increased its offering of

faster speeds at no change in prices.

In line with the leadership effort to

continuously excite customers,

effective 1 November 2004, TM Net

has upgraded the Internet

connection speed of its tmnet

streamyx basic package to 512kbps

from 384kbps, and from 512kbps to

a blistering 1.0Mbps at no extra cost.

This allows subscribers to run more

broadband applications on the

Internet with improved audio-visual

quality such as video and movie

download, teleconferencing,

e-commerce and more.

With the new speed, TM Net

continues to be ranked among the

cheapest broadband providers in the

world. It will also make broadband

Internet more attractive and

affordable to Malaysians.

Through its portal

www.Bluehyppo.com, TM Net

continues to offer a variety of

programmes. The year 2004 saw

Bluehyppo.com offering 24 channels

and more than 600,000 content listed

as well as a membership of 637,000.

It has received more than 380 million

hits and recorded more than 72

million page views for the year.

Bluehyppo.com is the only portal

that offers trilingual content –

English, Malay and Mandarin. The

portal continues to offer

narrowband, broadband and now

provides subscribed premium content

via its Video-on-Demand service in

Bluehyppo.com. It has also

collaborated with TV3 and 8TV to

make Bluehyppo.com the site to go

for local users.

Complementing the growth in

broadband, Bluehyppo.com has

enriched its services by making it

easier to add graphics or video

content to phone calls or email.

Cross-media capabilities enable users

to listen to email over the phone,

check voice messages from the

Internet, and forward faxes wherever

they may be. This is all now possible

over Bluehyppo.com if one has

broadband.

Lifestyle challenges withBlueHyppo



Page 132

In line with its corporate philosophy

and to reach a wider audience through

its online platform, tmnet e-browse

was introduced as an online

newspaper reading facility via TM

Net’s Bluehyppo.com portal. Tmnet e-

browse does not only work on

personal computers, but also on

other platforms such as high

definition televisions and wireless

devices like PDAs, laptops and

interactive phones that give users

greater accessibility to the service

wherever they are. This technology is

not limited to newspapers, but can

be applied to magazines. To date, it

has 1,400 customers on tmnet e-browse.

This application is also applicable to

annual reports, books, catalogues,

maps and other print publications.

Through this latest effort, TM Net

provides a greater reason for users

to be on broadband.

For those on the move, TM Net has

extended its tmnet hotspot, first

introduced in February 2003. By end

2004, the service was made available

at 500 locations nationwide, plus

it includes a roaming facility if one is

overseas. To ensure that its subscribers

enjoy reliable, high-quality wireless

Internet service at every tmnet

hotspot location, the company is

constantly upgrading and improving

its tmnet hotspot service, the latest

being the Network Monitoring

System for proactive monitoring.

Intel Electronics (M) Sdn Bhd through

the Intel Wireless Verification

Programme certifies the tmnet

hotspot service, which is a leading

edge Intel programme. To date, Intel

has already verified more than

40,000 hotspots worldwide and TM

Net is the first Malaysian Internet

Service Provider to join the ranks of

more than 115 service providers

worldwide whose networks have

been verified.

To capitalise on today’s mobile

communications technology, TM Net

has collaborated with Celcom to

allow subscribers to surf the net,

send e-mail and conduct other online

activities at any tmnet hotspot

location. As TM Net is the largest

Wi-Fi service operator in the country,

the collaboration with Celcom will

yield synergies in the service offering

to Celcom’s customers whereby

Celcom customers can subscribe to

the tmnet hotspot service via Celcom.

This in turn channels higher traffic to

the hotspot service.

Given today’s complex enterprise

environment, basic security is

insufficient to support high value

transactions and the exchange of

sensitive data through the Internet.

To meet the security requirements of

each corporate customer, TM Net has

launched tmnet e-secure, offering

optimal protection of mission-critical

assets. This managed security service

provides the organisation with peace

of mind on the network security

infrastructure, which is fully monitored

and managed on a 24 x 7 basis.

SERVING BUSINESSES AND

ORGANISATIONS

TM Net has also enhanced the

current solutions for manufacturers

on tmnet e-suppychain, to address

the specific needs of the industry.

Using the RosettaNet standard, it

provides companies with the critical

solutions to automate supply chain

processes, enable faster access to

more accurate forecast data and

eliminate routine manual

administrative functions.

Internet Pre-paid withtmnet



Page 133

TM Net’s innovative supply chain

management solution will enable

businesses to evolve from an

enterprise-centric model to

enterprise-to-enterprise model that

leverages on the strengths and

capabilities of their business partners.

Today's communication technologies

have changed telephone services

significantly. One of the broadband

applications which allow users to

make phone calls using the Internet

is the Voice Over Broadband

application. Voice Over Broadband

allows customers to place and receive

calls over broadband networks using

standard telephones. TM Net’s latest

service, tmnet e-voice premium,

allows customers to make calls to

branch offices for free, or make

international telephone calls at a

fraction of the cost or even get free

phone calls from tmnet e-voice

premium customers nationwide. An

organisation with branches

nationwide and regionally can

subscribe to the service for more

cost-efficient communications

between regional offices and the

head office.

Introduced on 1 December 2004,

‘tmnet e-mall’ is an achievement on

the Internet online shopping front.

This new product is positioned to be

the leading and largest retail

e-commerce/B2C website in Malaysia.

Its website is www.tmnetmall.com.my.

It is a one-stop centre for online

catalogue shopping with flexible

payment options, via credit card,

online banking with RHB or

Malaysian Exchange Payment System

(MEPS), Financial Payment Exchange

(FPX) or via a tmnet prepaid and

micro payment.

Launch of TM Net’s PrepaidOne Internet service



Page 134

PREPAID SERVICES

TM Net has recently introduced its

latest series of tmnet prepaid ONE

start-up and reload cards featuring

new designs. The newly designed

tmnet prepaid ONE start-up card

comes with a single Internet account

of tmnet prepaid ONE, 30 minutes

bonus time for account registration

and RM35 worth of credit.

These services include tmnet 1515

and 1525 dial-up Internet service,

tmnet hotspot wireless broadband

service, HyppTalk VOIP service, Value

Added Services such as powerSurf

and e-mail with Virus Shield and

Anti-Spamming as well as

micropayment service for online

purchases such as tmnet messenger

and MMS.

The tmnet prepaid ONE start-up and

reload cards are available for RM35

each at any tmnet clickers outlets,

tmnet clickers authorised service

outlets (CASO), Kedai Telekom or

tmnet prepaid Authorised Resellers.

The card removes the need to carry

separate cards for the different

prepaid services.

The latest tmnet prepaid CD was

reintroduced to customers in October

2004, where TM Net launched its

special edition of the tmnet prepaid

ONE CD as a tribute to former Prime

Minister, Tun Dr Mahathir Mohamad.

The fourth edition of this CD

features the biography of Tun Dr.

Mahathir. The prepaid CD also allows

customers to experience TM Net’s

own creative multimedia effort.

REACH

In addition to its first tmnet clickers

outlet in Kelana Jaya, Selangor, TM

Net has spread its wings to the East

Coast with the opening of its fifth

tmnet clickers outlet in Kuantan on

22 November 2004, to ensure

Malaysians continue to enjoy the

best of what TM Net has to offer.

There are now five tmnet clickers

nationwide, one outlet each in the

Klang Valley, Pulau Pinang, Johor

Bahru, Kuching and Kuantan. Besides

tmnet clickers, we have also

established regional offices in every

state in the country.

Apart from the five tmnet clickers

outlet nationwide, TM Net has also

expanded its reach through

collaboration with its authorised

resellers with the opening of tmnet

clickers authorised service outlets

(CASO) in Seri Petaling and Wangsa

Maju in Kuala Lumpur, Menara

Northam in Pulau Pinang, Subang

Jaya and Damansara Utama in

Selangor and the latest being in

Taman Connought, Cheras in Kuala

Lumpur. These outlets allow

customers to register for services and

enquire about TM Net’s products and

services in a convenient and

comfortable environment. CASO is

TM Net's alternative one-stop

Internet centre to obtain consultation

and sales of tmnet products or

services including Internet-related

products and services.



Page 135

By end of December 2004, TM Net

had appointed 166 tmnet streamyx

resellers, 50 tmnet e-voice resellers

and 12 tmnet prepaid resellers to

assist in the sales of both the tmnet

prepaid and post-paid products. Sales

have increased tremendously in 2004.

One of the main initiatives taken by

TM Net is to provide better service

for its customers. In line with this,

online registration for broadband

and narrowband services is no longer

limited to the tmnet streamyx basic

package but open for all packages,

including tmnet streamyx Enterprise

and Corporate ADSL packages. To

date, 22,508 customers have

successfully applied for tmnet

streamyx via online registration.

TM Net has also collaborated with

TV3 for the Sure Heboh Carnival and

8TV’s Malaysian Idol programme to

develop local content with its

branding and promotional activities.

The TV3 Sure Heboh Carnival was

brought to 11 locations across the

country and TM Net leveraged on

the carnival to create better

awareness for public to experience

broadband in its efforts to support

the government’s call to bridge the

digital divide. Along with the

carnival, TM Net organised the “Kuiz

SMS TM Net Sure Heboh” contest

and “Let’s Be A Star” contest where

it provided ‘live’ web streaming of

the event to viewers at home via

Bluehyppo.com – TM Net’s very own

lifestyle portal. With this, TM Net has

managed to reach out to more than

two million visitors and provided first

hand information and demonstration

on its products and services.

The collaboration with 8TV for

Malaysian Idol marks another

milestone in TM Net’s efforts to offer

added value and excitement to the

local ICT and entertainment industry.

Through its participation of the

inaugural Malaysian Idol contest, TM

Net went to greater lengths to create

fusion and synergy between the

entertainment and ICT industries with

the bundling of its products and

services with entertainment elements.

This created brand recognition in all

parts of the country.

Enhancing Internet connectivity through prepaid services



Page 136

SOCIAL RESPONSIBILITY AND

CONTRIBUTIONS

At TM Net, we realise that the

children of today will be the leaders

of tomorrow. TM Net’s CyberSchool

Community Project, the latest

community initiative undertaken by

TM Net, aims to create greater

awareness among students especially

in rural areas about broadband

Internet connection and tmnet

streamyx. It also provides a means

for TM Net to assist in developing

IT-related skills at the adopted

schools. TM Net provides the

hardware, software and expertise

needed to achieve e-learning up to a

period of three years. During this

time, training, maintenance and

services will be conducted free. TM

Net has contributed more than 50

personal computers (PCs) to 18

selected schools in 2004 and this is

expected to increase in 2005. The

first schools that received TM Net’s

contributions were Sekolah

Menengah Kebangsaan Bahau,

Negeri Sembilan, Sekolah Menengah

Tinggi St David, Bukit Baru Melaka,

Sekolah Menengah Kebangsaan Ulu

Tiram, Johor, Sekolah Menengah

Telipok, Tuaran Sabah and SMK USJ4

Subang Jaya. The recipients were

selected with assistance from the

Ministry of Education.

Such contributions are focused on

helping to spur the students’ interest

in exploring the benefits of the

Internet world which is laden with

information. The IT infrastructure

provided to the recipient schools will

create a launch pad for educational,

social and economic development for

the country. As such, TM Net trusts

that the students will use this facility

wisely as an opportunity to learn

and eventually master IT, which is

the cornerstone of the K-economy.

Wireless connectivity at any location



Page 137

In addition, TM Net has collaborated

with the Malaysian Council for

Rehabilitation to help develop an

e-learning portal for ‘GROW’ –

Growing Rehabilitation Opportunities

via Web. This is a pilot community-

based project initiated to help bridge

the information gap on disability

management between tertiary and

community levels, using information

and communication technology as the

primary medium. The project aims to

provide access to rehabilitation

information and facilities to members

of the Community Based

Rehabilitation (CBR) centers as the

ultimate users of the facility,

involving more than 60 disabled

children from the Gombak District.

In addition, TM Net has also

participated in projects initiated by

the Ministry of Energy, Water and

Communications, such as the Pusat

Internet Desa and “One Home One

PC” projects, to assist in achieving

the country’s goal of building an ICT-

enabled and knowledge society.

Throughout the year, TM Net has

shown high commitment in driving

the content industry. TM Net is a

council member of the Content

Forum and was involved in the

development of the Content Code,

which was launched in November

2004. Meanwhile, TM Net has also

been appointed by the Consumer

Forum to take the lead in drafting

the Internet Access Service Provider

(IASP) sub-code, which was submitted

to the Malaysian Communications and

Multimedia Commission for approval

at the end of December 2004.

PROSPECTSFor 2005, TM Net is targeting to

draw in more than 400,000 new

broadband subscribers. This is in line

with the National Broadband Plan,

which is to achieve 693,000

broadband subscribers by end of

2005. Though broadband is the main

focus, TM Net will continue to place

greater efforts on increasing its

narrowband subscriber base, as this is

the easiest entry point to the Internet.

TM Net has a proven track record in

delivering a wide range of e-business

processes to small businesses, SMEs

and large organisations every month

through one of the most diversified

and expanded portfolios of managed

hosting and value-added services in

the industry. TM Net is confident

that it will continue to grow and

become a leader in providing hosting

and commerce application services.

Let BlueHyppo.com enhanceyour lifestyle


There are times

when you need to expand

your horizons.

To seek greener pastures.

And to explore the limits

of your own potential.

At TM,

we’re constantly moving

ahead. By exploring the

opportunities to be found in

countries far and wide.

Beyond boundarieso p e n i n g u p p o s s i b i l i t i e s


Page 140

INTERNATIONAL OPERATIONS operations review

Christian De FariaChief Executive Officer • TM INTERNATIONAL SDN BHD

Recognising that overseas investment is no longer an option but essential to TM’s future, the

Company had the foresight to activate an investment holding company, TM International Sdn Bhd

in 2001. Previously the international ventures division, TM International has today made the

successful transition from an operating division to a wholly-owned subsidiary. TM International’s

authorised share capital stands at RM500 million and paid-up capital is RM30.5 million.

By the end of 2004, TM International had made significant progress in completing the migration

process. The migration was to move some of TM’s subsidiaries to TM International (L) Limited.

The move was a consequence of TM’s internal restructuring to facilitate the future increase in

authorised capital of companies as well as to improve tax efficiency and effectiveness. At year-end,

MTN Networks (Pvt) Limited, TM International (Bangladesh) Limited and TM International Lanka

(Pvt) Limited were successfully migrated to TM International (L) Limited.

In the financial year ended 31 December 2004, TM’s overseas investments

contributed an operational profit after tax of RM419.1 million, compared to

RM399.8 million the previous year. With cellular services serving as the

cornerstone of its investments, TM International’s presence in Sri Lanka,

Bangladesh, Cambodia, Malawi and Guinea provided access to a combined

cellular subscriber base of some 2.8 million as at end 2004.

TM International set out in 2004 with a target to add new core investments

as well as strengthen its presence closer to home. In 2004, the Company

successfully made two new investments, namely its acquisitions of PT

Excelcomindo Pratama (Excelcomindo) in Indonesia and Idea Cellular in India,

thereby establishing a strong regional presence.

Excelcomindo was established in 1995 and operates on both GSM 900 and

1,800. With a subscriber base of 3.8 million, it has a market share of

approximately 16 per cent as at end December 2004. It has 2,400 base

stations covering the islands of Java, Sumatra, Kalimantan, Sulawesi and Bali,

which has an addressable market of 200 million people. On 9 December 2004,

TM International reached an agreement with the Rajawali Group to acquire


Page 141

International Operations operations reviewcontinued


Page 142

Excelcomindo. The transaction was

structured as an initial acquisition of

a 23.1 per cent interest, together

with transfer of majority

management and board control to

TM. The transaction was completed

on 11 January 2005.

The investment in Idea Cellular was a

milestone as the investment was

made together in consortia with

Singapore Technologies Telemedia

(ST Telemedia). Idea Cellular

commenced operations in 1997 and

has become a significant operator in

India providing services to

approximately 4.4 million subscribers.

On 11 December 2004, TM

International and ST Telemedia

entered into definitive agreements to

acquire a 47.7 per cent stake in Idea

Cellular. Upon completion of the

transaction, the Consortium will

become the single largest

shareholder of Idea Cellular with the

47.7 per cent stake. The transaction

is subject to government approvals

and other conditions. It is anticipated

to be completed in the first half of

2005.

In line with its move to realise a

stronger and more viable regional

presence, TM International publicly

made known in 2004 its desire to

exit the African market, a strategy

that commenced with the sale of its

12 per cent stake in Telkom SA Ltd

(Telkom SA).

TM International first started the

disposal of its stake in Telkom SA on

18 June 2004 when it sold its six

per cent stake through a private

placement to institutional investors.

On 15 November 2004, TM

International sold its remaining six

per cent stake in Telkom SA to the

South African Black Empowerment

Consortium. The disposal resulted in

an exceptional gain of RM1,515.2

million for the financial year ended

31 December 2004. The disposal of

Telkom SA is in line with TM

International’s move to consolidate

its strategic investment overseas and

focus on markets closer to home.

The year 2004 ended rather

unexpectedly with the earthquake

tragedy off Indonesia, which caused

tsunamis in major Asian coastlines,

including those of countries where

the Company operates. TM

International instantaneously turned

its attention to aid the relief and

reconstruction efforts in Sri Lanka,

Indonesia, India and Thailand. A

contribution totalling approximately

RM2.4 million was promptly collected

as Tsunami relief funds from TM

International and its subsidiaries,

namely, MTN Networks (Pvt) Limited

(MTN), TM International (Bangladesh)

Limited (TMIB) and Excelcomindo.

TM International itself contributed

RM1 million in total to the tsunami

disaster relief funds in Sri Lanka and

Indonesia while MTN contributed

US$250,000, TMIB contributed

US$17,300 and Excelcomindo, via the

Rajawali Group, contributed one

billion rupiah towards relief funds in

their respective countries.

In addition to the relief funds, MTN

also pledged USD1 million towards

the Tsunami reconstruction fund in

Sri Lanka.

Moving ahead, TM International’s

investment strategy remains focused

on emerging markets closer to home

particularly those with high growth

potential, thereby strengthening its

regional presence. While this will

primarily relate to investments in

cellular mobile, the company will

also be open to new areas of

investments such as in VoIP, ISP and

its related businesses. Its existing core

businesses especially those in

Bangladesh, Sri Lanka, India and

Indonesia will be further

strengthened.

Exchanging of documentsbetween TM and IdeaCellular witnessed by PrimeMinister, YAB Dato’ SeriAbdullah Ahmad Badawi inDelhi



Page 143

Much of TM International’s efforts in

2005 will focus on the

implementation of synergies within

the TM Group and raising the

Group’s profile internationally. From

an operational perspective, the

adoption of global procurement

practices, brand rebuilding and

positioning, consolidation of IT

systems and joint efforts in revenue

assurance are in the pipeline.

OPERATIONSMTN Networks (Private) Limited (MTN)

As TM’s pioneer international

investment, MTN was initially set up

in Sri Lanka in 1995 to provide GSM

cellular service on the 900 Mhz

frequency band, under an 18-year

licence valid until 2013.

MTN, Sri Lanka’s flagship

telecommunications company, is 100

per cent owned by TM International.

It operates Dialog GSM, the country's

largest mobile phone network.

Dialog GSM is also a key player in

the Internet Service Provision Market

with its state-of-the-art ISP – Dialog

Internet, and also operates Dialog

SAT, Sri Lanka’s pioneer Mobile

Satellite Service Provider. Having

made an aggressive entry into the

International Services Market, Dialog

Global has now established itself as a

premier provider of International

Services in Sri Lanka.

Dialog GSM spearheaded the mobile

industry in Sri Lanka since the late

1990's propelling it to a level of

technology on par with the

developed world. The company

operates on a 2.5G GSM network,

supporting the very latest in

multimedia and mobile Internet

services, and also provides

International Roaming facilities in

over 182 countries.

For the year under review, the total

revenue stood at US$112.9 million

(RM428.9 million) while the net

profit after tax, as at end December

2004, was US$40.5 million (RM154.1

million).

Year 2004 was a significant one for

Dialog GSM as it saw the company

reaching the one million-subscriber

mark by mid-year, consolidating its

position as an undisputed market

leader. As at end 2004, Dialog GSM

was Sri Lanka’s largest cellular

network, providing services to over

1.4 million customers across all nine

provinces of Sri Lanka – accounting

for approximately 60 per cent share

of the country’s mobile sector and

40 per cent of total telecommunications

subscribers.

Aptly, Dialog started off 2004 with a

record – the receipt of a US$50

million International Finance

Corporation (IFC) investment. IFC is

the World Bank’s private sector arm.

The funding, the largest ever made

by IFC in Sri Lanka, was to support

the accelerated expansion of the

Dialog GSM network. The success in

securing the facility indicated Dialog’s

coming of age and a resounding

vote of confidence since it was

obtained on a stand-alone basis

without parental support.

The relentless pursuit of excellence in

business practices earned MTN the

distinction of the National Business

Excellence Gold Award, awarded by

the National Chamber of Commerce

of Sri Lanka in November 2004.

At the same event, MTN beat tough

competition to bag awards for

Excellent Corporate of the Year

Award (Extra Large Category), Award

for the Best Tech Savvy Company,

and the Award for the Best Capacity

Builder.

In August 2004, Dialog entered into

an agreement with the University of

Moratuwa and its industrial research

arm, Uni-Consultancy Services (UNIC)

to establish the country’s first

Research Laboratory for Mobile

Technology. The landmark initiative,



Page 144

Dialog GSM takes pride in its

customer service infrastructure which

is unrivalled by any other service

provider in the country. In 2004, the

Company enhanced its service levels

by broad-basing the bill payment

infrastructure through third party

retail networks, thus enhancing Call

Centre infrastructure to meet

subscriber demand and by extending

its IVR and SMS based self-help

services and Automated service

registration/activation using SMS and

IVR.

The Company also put in place an

enhanced operational infrastructure

with the establishment of an

Enterprise Risk Management unit,

Internal Audit Division and Business

Control unit.

Against a backdrop of increasing

competition, falling equipment costs

and deregulation, Dialog sees a

further deepening of its incumbent

strengths 2005. As such, MTN’s

business plan going forward will

focus on aggressive growth in terms

of subscribers, network coverage and

capacity, relentless excellence in

service, operational consolidation,

cost rationalisation and competency-

based human resource development.

Dialog GSM has always meshed itself

within the communities in which it

operates and expects this to be

further strengthened. Dialog’s

charitable arm, the Change Trust

Fund spearheads its activities in the

community. Dialog GSM announced

the donation of a Rs25 Million

Audiology Laboratory for the hearing

and speech impaired to the Deaf and

Blind School. The first of its kind in

the country, the gift was to mark

the achievement of obtaining a

million subscribers by mid-year.

Other community projects in 2004

included the donation of equipment

to the ear mould laboratory at

Ceylon School for the deaf and

blind; donation to the Cancer

Hospital’s children’s ward, donation

of artificial limbs to Jaipur Foot

Foundation and the setting of the

Dialog Merit Scholarship programme.

TM International (Bangladesh)

Limited (TMIB)

TMIB was established in 1997 as a

joint venture company between AK

Khan & Company Limited (a leading

Bangladesh business group) and TM.

TM holds a 70 per cent stake in the

venture while AK Khan holds the

remaining 30 per cent. The Company

operates an expansive nationwide

billed to be the most significant

co-operation between the University

and the technology sector to-date,

will signal a new era for

telecommunications research and

development in the country. The

Dialog-University of Moratuwa

Mobile Communications Research

Laboratory will specialise in applied

research in mobile telecommunication

technologies and Internet

applications.

As espoused in its signature, “The

Future Today”, the company prides

itself in its commitment to and

achievement in research,

development and new technology

introduction. In keeping with its

pioneering spirit, the company

launched a non-commercial 3G trial

in March 2004, becoming the first

telecommunication company in Sri

Lanka and in South Asia to launch

3G. Enhancing its value added service

provision, Dialog also introduced

Enhanced Pre-paid Services: Dual SIM

(Pre-paid and Post-paid), EDGE

services, Fixed SMS (Send and receive

SMS from fixed phones), Video

streaming and Zero77 Live – a text

streaming service in 2004.



Page 145

GSM cellular service on the 900 Mhz

frequency band, under the brand

name Aktel.

As at December 2004, revenue stood

at US$108.1 million (RM410.7 million)

while the profit after tax was

US$57.7 million (RM219.2 million).

In 2004, TMIB embarked on its most

aggressive expansion plan since the

commencement of its operations.

Commencing the year with 401,680

subscribers, the company ended 2004

hitting the one million-subscriber

mark, a growth of 149 per cent on

the previous year, bringing its market

share to 29 per cent.

The aggressive investment channelled

to extending network coverage and

improving call quality, mirrored the

company’s commitment to provide

subscribers with the best possible

mobile service across the country.

Aktel will cover 275 upazillas (an

administrative region lower than the

district level) by 2004, and all

remaining (allowed) upazillas by

2005. Making a significant

contribution to the economy of

Bangladesh, Aktel’s investment in

Bangladesh currently stands at

US$300 million.

Aktel has end-to-end network

coverage from the northern (Tetulia)

to the southern tip (Teknaf) of

Bangladesh, encompassing 61 districts

with more than a million customers

as at the end of 2004.

TMIB has also recently launched the

international roaming service, AIRS,

with over 317 operators across more

than 170 countries. This has made

the Company the widest roaming

operator in the country.

The launch of the Intelligent

Network (IN) platform was another

key development in 2004, with

Aktel’s GSM service now being based

on a robust network architecture and

cutting edge technology. The IN

platform provides for voice clarity,

wider nationwide network coverage,

numerous international roaming

global partners, popular value-added

services (VAS), quality and easy to

access customer care centres, round-

the-clock call centre operations,

digital network security and

competitive tariff plans.

TMIB’s call centre operations took off

in 2004 in a dramatic way. In

addition to competitive products, the

Company is determined to be highly

accessible to all its customers,

addressing their concerns on product

packages, billing and SIM

replacements. In addition to the call

centres being accessible 24 hours,

seven days a week from any phone

nationwide, Aktel has also

undertaken the initiative of setting

up four full service online Customer

Care Centres in all the major cities

countrywide.



Page 146

TMIB’s presence is felt throughout

the community not only in the

commercial sense, but also through

its Corporate Citizenship Programmes

in the form of donations,

sponsorships and charitable deeds. It

is also involved in local government

programmes to develop and beautify

many of the capital’s major

thoroughfares.

Moving forward, the Company plans

to continue making critical

investments, targeting three million

subscribers by year-end of 2005. To

facilitate this, TMIB intends to

increase more than double the

number of its base stations. The

Company’s current combined

manpower strength surpassed 600

and is expected to grow to 1,200

employees by the end of 2005.

Cambodia Samart Communication

Co. Ltd. (Casacom)

Casacom started commercial

operations in 1999 and provides

services on the GSM 900 and NMT

900 Mhz frequency bands in

Cambodia. TM holds a 51 per cent

stake in the venture while Samart

Corp holds the remaining 49 per cent.

Casacom operates under a 35-year

cellular concession commencing 1996

from the Ministry of Posts and

Telecommunications. It is currently

the second largest cellular operator

in Cambodia. As at the end 2004,

the subscriber base of Casacom stood

at 105,900 subscribers.

For the year under review, total


(RM56.1 million), a growth of 28 per

cent from the previous year. The

bulk of the growth can be attributed

to the completion of the fourth

phase of network expansion,

migration to the IN that increased

coverage and capacity, and more

innovative marketing campaigns with

more creative tariff packages and

product innovations. In total, the

Company performed favourably,

generating a net profit after tax of

US$1.3 million (RM4.8 million) in 2004.

For the past several years, Casacom

has been carrying out aggressive

network expansion in phases

according to approved business plans.

In 2004, network expansion costing

US$7.5 million (RM28.5 million) was

carried out.

The Company installed and

commissioned a new Prepaid Service

System with a licensed capacity for

120,000 subscribers. A new

Multimedia Message server and Short

Message Service Centre with

increased capacity and features were

added to the network. The expanded

network elements include the Mobile

Switching Center (MSC), Base Station

Controller (BSC), Base Transceiver

Station (BTS), new BTS sites and

transmission links. The capacity of

the MSC was increased from 110,000

to 140,000 subscribers.

In addition to that, the Company

installed a new BSC and upgraded

the capacity of existing BSCs. 32 new

BTS sites were added to the

network, bringing the total to 150

sites nationwide. Casacom also

increased the radio capacity in 67

existing BTS sites. The radio network

has an estimated radio channel

capacity of about 170,000 subscribers.

Additional transmission links were

also introduced to increase traffic

channel capacity between Casacom’s

network and other mobile network

operators and to improve the inter-

network call termination rate.

Growing by leaps andbounds in Bangladesh



Page 147

Dialog received US$50 million from

International FinanceCorporation (IFC)

investment in 2004

Casacom’s reach currently covers five

per cent of the nation’s geographical

area and 43 per cent of the

population. Besides the increase to

the physical capacity of the network,

Casacom successfully launched new

network-based value-added services

such as General Packet Radio Service

(GPRS) with Coding Scheme 3 and 4,

which would enable data speed up

to 40 kbps and GPRS international

roaming service with 12 networks.

Global Short Message Service (SMS)

was also launched, enabling

subscribers to send SMS to other

GSM subscribers in the world.

Furthermore, there was an increase

in the number of International

Roaming partners to 128 networks

from 57 countries. The International

Roaming services continue to

contribute significantly to the

revenue stream of the Company.

Going forward, Casacom notes that

further network expansion is

necessary in view of the growth

expected and to meet customer

demand for coverage. The long-term

objective of the network is to have

coverage over 80 per cent of the

population or 15 per cent of the

country’s geographical area.

Samart Corporation Public Company

Ltd. (Samart)

Public-listed Samart, in which TM has

a 19.4 per cent stake as at end 2004,

provides a wide range of value-

added telecommunications services.

Samart Corp reported revenues of

14.2 billion Thai baht (RM1.3 billion)

for the year ending 31 December

2004, an increase of 16 per cent

from the same period in 2003

(12.2 billion Thai baht/RM1.1 billion).

Samart I-Mobile, a 70 per cent

subsidiary of Samart, underwent a

successful IPO exercise in December

2003, listing on the Thailand Stock

Exchange. A handset-retailer and

mobile content provider, Samart

I-Mobile as at end of the third

quarter of 2004 posted 3.343 billion

baht (RM314.51 million) in revenues,

up by 49.9 per cent, and net profit

of 134 million baht (RM12.60

million), up by 90.4 per cent.



Page 148

Yet another subsidiary of Samart

Corp is Samart Telcoms Public

Company Limited (Samtel), a 55 per

cent subsidiary. Samtel is involved in

telecommunications infrastructure

including rural telephony.

Samart Corp also plays a role in the

community and social responsibility

through various activities and

donations via the Samart Foundation.

The Company contributed one

million baht (approximately

RM100,000) towards the Thai

Government tsunami fund.

Telekom Networks Malawi Limited

(TNM)

TNM was established in 1996 as a

joint venture between TM and

Malawi Telecommunications Ltd

(MTL), with TM holding 60 per cent

equity and MTL the remaining

40 per cent.

The initial paid-up capital of the

company is MK65 million (RM3.9

million) when it commenced

operations on 15 December 1995.

The company currently has a paid-up

capital of MK350 million (RM23.5

million).

At end 2004, the subscriber base of

TNM stood at 97,717 subscribers. The

Company has its head office in the

commercial city of Blantyre.

TNM mainly operates as a GSM

service under a licence valid until

2014. The main product is voice

telephony; offering both post-paid

and prepaid services. TNM also offers

a variety of value added services

such as SMS, voicemail, call

conferencing and call holding. In

2004, TNM introduced Wireless

Application Protocol (WAP), a

standard for accessing the Internet

with wireless devices. The company

also introduced coverage to over

18 new areas, including the two

furthest tips of Malawi (Chitipa in

the North and Nsanje in the South).

TNM’s challenge for the coming year

would be to regain its leadership

position. While the management of

TNM is aware of shareholders’

expectations, they are determined to

fully utilise the available resources to

take the Company to greater heights.Prudent overseas investmentswith TMI



Page 149

In order to win customers, TNM will

reposition itself and attach

international value to its brand.

Furthermore, it will continue

expanding its coverage to be more

competitive. TNM plans to increase

the number of base transceiver

stations by 65 per cent, from 90 to

150 in 2005, and to focus on

improving the network service

quality and increasing product

accessibility and reachability.

TNM forecasts that the telephone

penetration rate in Malawi will be

around 2.76 per cent in 2005 and

this will increase to 4 per cent by

2007. The total number of telephone

users is expected to be about

360,000 in 2005 and approximately

587,000 by 2007.

Societe Des Telecommunications De

Guinee (Sotelgui s.a.)

Sotelgui s.a. was formed out of a

strategic partnership with the

Government of the Republic of

Guinea. TM holds a 60 per cent

stake while the Guinea Government

owns the remaining 40 per cent.

Sotelgui operates both fixed lines

and mobile. At end 2004, the

subscriber base of Sotelgui stood at

142,903.

For the year under review, total


(RM166.3 million). Meanwhile, net

loss after tax as at December 2004

stood at US$11.9 million (RM45.5

million).

In 2004, Sotelgui gave its strategic

priority to the development of the

competitive capacity of its various

business units, continuous innovation,

cost-cuts and stronger cash flow,

with the aim of ensuring the

creation of value for its stakeholders.

A short-term, concerted plan aimed

at building market competitiveness

called ‘Operation 36’ was launched in

2004. Focusing on three selective

areas – Network Development,

Revenue Assurance and Human

Resource Improvement – ‘Operation

36’ also identified specific goals and

actions to improve service quality

and enhance Sotelgui as the

operator of choice in the Republic of

Guinea.

In 2004, Sotelgui managed to

introduce 7,100 new telephone lines

in the national network and

rehabilitated an additional 1,800

lines nation-wide. In the GSM (Global

System for Mobile Communications)

network, the Company successfully

offered 50,000 additional lines to the

public. With these achievements,

Sotelgui managed to attain a

subscriber base of approximately

150,000, which affirmed the

effectiveness of ‘Operation 36’.

Efforts made in 2004 generated very

positive results and will therefore

encourage the Company to continue

enthusiastically along this path to

ensure future growth and

improvement.

In 2005, a 19 per cent growth in

penetration rate is expected.

Through network coverage and

availability expansion, Sotelgui is

expected to have better subscriber

growth for the coming year. The

target is for a 100,000 expansion in

the GSM subscriber base in 2005, as

well as an additional 20,000 fixed

subscribers utilising CDMA

technology.


In an era

where change

is the only constant,

and new technologies are

superceding older ones

with alarming pace,

the ability to be

flexible and adapt to

market and consumer

demands is more

important than ever.

At TM, your needs

will always be met,

when your requirements

change with time.

Evolving with changeo p e n i n g u p p o s s i b i l i t i e s


Page 152

FACILITIES MANAGEMENT operations review

Datuk Hamzah YacobChief Executive Officer • TM FACILITIES SDN BHD

The role of providing and managing ‘total facilities management’ services for the Group has been

a challenge for TM Facilities Sdn Bhd (TM Facilities). Entering its third year (based on the

Management Agreement signed between TM and TM Facilities) of managing the Strategic Business

Units (SBUs), TM Facilities has successfully achieved revenue growth and cost containment whilst

maintaining service quality at the highest level with prudent procurements. Overall, the SBUs,

namely Property Development, Fleet Management, Malaysian Logistics, Malaysian Security and

Facilities Management & Infrastructure Development have continued to record very encouraging

results for 2004.

For the year ended 31 December 2004, TM Facilities Management achieved

revenue of RM527.3 million which is a significant increase of 46.2 per cent as

compared to 2003. For the second year in a row, costs have been well

managed and contained. In 2004, TM Facilities Management achieved a PBIT

of RM164.4 million, a significant increase compared to RM3.0 million in the

previous year. The exceptional performance was due to contributions from

land-related activities, including the sale of land from TM to TM Facilities

Sdn Bhd for RM117.3 million at fair market price.

OPERATIONSPROPERTY DEVELOPMENT

The Property Development (PD) unit is responsible for identifying, developing

and unlocking the potential of land belonging to TM. Several activities have

been undertaken with selected potential partners for the purpose of joint

ventures, joint-developments or outright disposals. Besides TM’s land bank, PD

is also responsible for the development of newly transferred land from TM to

TM Facilities. Other functions of PD include managing the infrastructure

projects, for example, the development of submarine cable station, property

management and land administration of all TM’s assets. PD also plays a

significant role in the liaison with land offices and the local authorities.

PD recorded an outstanding performance in 2004. It registered RM118.2

million in revenue, mainly contributed by the land-related activities.


Page 153

Facilities Management operations reviewcontinued


Page 154

FLEET MANAGEMENT

The Fleet Management (FM) Unit

oversees the Group’s fleet of 6,500

vehicles. The number of vehicles has

been reduced due to the

rationalisation exercise, which

emphasised the optimum usage of

vehicles with respect to availability,

utilisation and replacement of

vehicles. Other functions of FM

include vehicle maintenance and

repair, licensing and permits,

insurance claims as well as the

purchase of new vehicles and sale of

used vehicles.

For the year under review, FM has

succeeded in containing and

managing its cost. This was a result

of the rationalisation exercise, which

had great impact on costs in relation

to maintenance and material used.

FM has also managed to secure

RM8.6 million in proceeds from the

sale of used vehicles.

MALAYSIAN LOGISTICS

The Malaysian Logistics (ML) Unit is

responsible for the management and

provision of total logistics services to

the Group. Other major activities

include transportation, warehousing,

scrap management, contract

management and liaison with the

Customs Department. With a

network of 28 warehouses located

nationwide, ML has the capability

and economies of scale to provide

for TM’s entire logistics requirements

as well as for external customers

while, at the same time, offer

competitive pricing for its products.

Logistics and support for TM’s operations



Page 155

Cash income from renting out warehouses to external customers amounted to RM7.2 million in

2004. Among established customers that have dealings with ML are Shapadu Linfox and Shell

Gas. Again ML managed to contain its cost in the year under review. This was due to the

rationalisation of warehouse activities in 2004. Due to ML’s nature of business as well as its

operations that complement Procurement – Shared Service Operation (SSO), the top

management has recently agreed to amalgamate ML’s functions with Procurement – SSO to

provide better supply chain management to TM.

MALAYSIAN SECURITY

The key responsibility of the Malaysian Security (MS) Unit is to safeguard TM’s assets, resources

and personnel of TM. This role has assumed greater importance considering the ever increasing

challenges in security, especially the threat of terrorist activities. The main activity of MS is to

provide armed and unarmed security guards for high-risk areas such as exchanges, premium

commercial buildings, earth satellite stations, submarine cables stations, hill stations, office

buildings, business centres and government-gazetted key telecommunications installations that

fall under Arahan Tetap Sasaran Penting Negara.

Other functions of MS include providing security for cash-in-transit, crime prevention patrol,

night vaulting, patrolling of optical fibre routes, overhead and underground cables as well as

transmission towers and masts.

For the year under review, its performance was below expectations, due to late

implementation of the new security rates, which was only implemented in July instead of

January 2004.



Page 156

FACILITIES MANAGEMENT AND INFRASTRUCTURE DEVELOPMENT

The operations and maintenance of all TM assets, such as buildings, telecommunications

facilities and installations, come entirely under the jurisdiction of the Facilities Management

and Infrastructure Development (FMID) unit. FMID also provides AC/DC services, mechanical and

civil engineering services, and manages the outsourcing companies and the maintenance of the

Group’s commercial buildings.

With its commitment to provide value-added services, FMID has embarked on several

benchmarking activities to enhance its services to the highest possible standard. Hence,

meetings and visits have been conducted with reputable facilities management companies, such

as Jones Lang Wootton, Rahim & Co, CH William and KLCC Urusharta. To reinforce FMID’s

position, a due diligence study was conducted by an international ‘facilities management’

Surau at Menara Telekom



Page 157

company where FMID played host to

a one-month study, which

commenced 1 September 2004 at the

Shah Alam office.

FMID will continue to improve its

customer service quality by

enhancing its Customer Service

Management System and Telekom

Assets Management System. It plans

to embark on total preventive

maintenance initiatives for all TM

equipment, committing power

availability to 99.99 per cent at

various Exchanges and

documentation of information with

regard to its application for

ISO 2001 certification.

PROSPECTSThe future of facilities management

services looks very promising. In that

respect, TM Facilities has explored

various plans as well as business

models and benchmarking studies to

enhance the SBUs’ business

profitability. In line with its new

direction, which emphasises value

enhancement and quick turnaround

by unlocking the businesses of the

SBUs, the management of TM

Facilities is exploring new approaches

to fulfil its aspiration.

Modern ammenities and facilities for staff at Menara TM


Our customers,

from large multinationals

to individuals, are always

looking for one thing.

They seek solutions.

At TM,

we believe that

any problem can be

solved eventually.

But we are determined

to solve it faster and

more efficiently than

anyone else.

One problem = Many solutionso p e n i n g u p p o s s i b i l i t i e s

InnovativeManagedNetworkingServices byVADSBerhad


Page 160

OTHER SUBSIDIARIES

VADS BERHADVADS Berhad began operations in 1991 as a joint venture

between TM and IBM World Trade Corporation. In 1997,

VADS became a wholly owned subsidiary of TM. On

7 August 2002, VADS was listed on the Second Board of

Bursa Malaysia. The three core business segments of VADS

are Managed Network Services (MNS), System Integration

Services (SIS) and Contact Centre Services (CCS).

In 2004, VADS registered a turnover of RM194.3 million,

which was 28 per cent higher against the RM151.3

million posted in the previous year. The company’s pre-

tax profit increased to RM16.3 million compared to

RM14.7 million in 2003. The MNS business continued to

be the major contributor with a revenue of RM156.6

million for the year ended 31 December 2004, an

increase of 21 per cent from the RM129.1 million

recorded in 2003. Earnings per share grew to 30.3 sen in

2004 from 26.4 sen in 2003.

At an Extraordinary General Meeting of VADS held on

28 January 2005, its shareholders have approved the

proposed one-for-two bonus issue of 20 million new

ordinary shares of RM1 each. The exercise raised its

issued and paid-up capital to RM60 million, in line with

the capital requirements for a Main Board listed

company. The Company was duly transfered to the Main

Board of Bursa Securities on 10 March 2005.

MANAGED NETWORK SERVICES

On the international front, VADS has been appointed by

MCI Inc. as its managed service partner in Malaysia to

deliver a portfolio of global managed networking services.

NASDAQ-listed MCI is a leading global communications

provider, delivering innovative, cost-effective and

advanced communications connectivity to businesses,

governments and consumers.

Domestically, VADS started developments to be a

Managed Security Service Provider (MSSP). The service

branded as VADS SecurePro is an innovative suite of

information security management services to help

medium and large corporations secure and manage their

IT environment and mission critical assets. VADS

SecurePro comprises SecurePro InfoSec Management,

SecurePro InfoSec Surveillance and SecurePro InfoSec

Assessment. The products offer real-time security

monitoring, management and response to protect

companies from intrusions, hacking, viruses and other

security threats.


Page 161

VADS SOLUTIONS SDN BHDVADS Solutions provides systems integration and e-

infrastructure in areas such as hardware (including

servers, PCs and maintenance services), software licences

and maintenance services, performance monitoring

services and financial e-application services.

In December 2004, VADS Solutions sealed a supply and

delivery agreement with iScalar Technology Sdn Bhd to

provide systems integration services. iScalar specialises in

mobile application services. VADS Solutions is also an

appointed partner of Microsoft, Oracle, IBM and HP. The

partnership helps deliver value to its businesses in system

integration.

VADS e-SERVICES SDN BHDVADS e-Services started its contact centre services in 2004.

It now handles over 100,000 calls a month while the

number of seats has expanded to 200 from 60 initially.

In the months ahead, the company plans to market the

contact centre services primarily to medium and large-scale

enterprises for clients seeking to improve customer service.

PROSPECTS

For 2005, VADS is confident of maintaining its track

record of 14 years of growth. It will continue to focus on

its business operations in Managed Network Services,

System Integration Services and Contact Centre Services in

synergy with the TM Group.

VADS 13 Years of Growth

0

50

100

150

200

Rev

enu

e (R

M M

illio

n)

92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04

1 2 4 9 14 22

32

54

80

124

149

151

194

Year

Other Subsidiaries continued


Page 162

FIBERAIL SDN BHDFiberail Sdn Bhd (Fiberail) was formed in 1992 as a joint

venture between TM and Keretapi Tanah Melayu Berhad

(KTMB) to provide telecommunications network related

services utilising fibre optics along the railway corridor.

Fiberail’s 1,600km fibre optics cables along the KTMB

railway corridor ensures broadband connectivity to all the

major towns in Peninsular Malaysia.

Fiberail’s core products and services include flexible leased

fibre optics packages, broadband services and total

business solutions. The Company also offers ancillary

services such as telecommunications tower space and

equipment cabin space. Consultancy services and

co-location services have also been introduced to cater to

customer demand in various industries.

Its latest service-featured product, the Helpdesk, was

successfully launched in the third quarter of 2004 to

complement all other services and products offered by

Fiberail. Alongside the Helpdesk, the customer-interface

Operational Control Centre coordinates all responses

according to customers’ needs and requests, thus

enabling streamlined customer service and enhancing the

image of Fiberail. The Operational Control Centre also

functions as a co-hosting site for customers.

Fiberail has embarked on a restructuring programme to

achieve business excellence and to sustain a competitive

edge while facing the challenges of globalisation. Its

successful migration to ISO9001:2001 has motivated the

company to expand its services and to venture to new

locations such as Menara Ansar (Johor Bahru), Pusat

Bandar Seberang Jaya (Pulau Pinang), CP Tower, Wisma

IBM Taman Tun Dr. Ismail, Menara Aik Hua and Cordoda

Data Center (Technology Park Malaysia).

Maintaining its leadership position in the digital

telecommunications business, Fiberail has completed the

installation of a 22-station microwave link network for

Celcom and will complete the installation of a second fibre

cable system by March 2005. This system will serve as a

back-up to the existing cables to ensure network stability.

Fiber optic cable laying



Page 163

The Company recorded a pre-tax profit of RM15.03

million in 2004 compared to RM17.39 million in 2003.

At the same time, the Company has maintained a

commendable financial standing with net tangible assets

improving from RM8.56 per share in 2003 to RM8.58 per

share during the year under review.

In 2004, Fiberail focused on business planning

realignment and marketing strategies in its attempt to

realise its corporate goals and objectives. Year 2005 will

see Fiberail emerging as an energised, customer-driven

organisation with all its employees embracing this new

culture as part of their professional environment.

MEGANET COMMUNICATIONS SDN BHDMeganet Communications Sdn Bhd (Meganet), a

subsidiary of TM, began as a joint-venture between TM

and Nippon Telephone & Telegraph (NTT) Corporation of

Japan. TM holds 70 per cent equity while NTT Japan

holds the remaining 30 per cent.

Meganet was specifically set up to venture into the area

of Intelligent Building System (IBS), Intelligent Building

Management System (IBMS) and its components. Meganet

offers high quality, cost-effective IT solutions that enable

enterprises to meet their business goals. A core objective

of IBS and IBMS is to improve the provision of

information to facilitate processes for more effective and

efficient management of a building. It also provides the

integration platform for all the services under its function.

Meganet also caters for the services which fall under the

IBS sub-components, namely Network and Office

Automation Systems, Structured Cabling and IT

Infrastructure, Security Management System which consists

of Card Access Systems, Closed Circuit TV (CCTV) and

Alarm Systems. Value-added services provided by Meganet

include Network Management Systems, Network Security,

Building Automation Systems, Application Development,

Multimedia AV Systems and IT Migration and Operation

& Maintenance Support services.

One of the benefits of the rapid evolution of information

technology has been the development of systems that

can measure, evaluate and respond to change. An

enhanced ability to control change has sparked

developments in the way we design our physical

environment, in particular, the buildings in which we

work. As a result, we are witnessing significant growth in

the area of ‘Intelligent Buildings’, buildings that

incorporate information technology and communication

systems, thus making them more comfortable, secure,

productive and cost-effective.

As an expert in the Intelligent Building industry, Meganet

completed more than RM300 million IBS-related projects

since its commencement in 1997.



Page 164

In July 2004, Meganet achieved another milestone with

the successful handover of the National Operations

Center in Cyberjaya, to TM. The project, costing RM68

million, will be fully equipped with Integrated Network

Management System and Graphic Display Wall Systems by

July 2005.

Outside the Group, Meganet bid and won the contract

for the Supply and Installation of the IT Network (ATM

LAN) in Parcel 2G3 (Kementerian Perdagangan Dalam

Negeri) and 2G4 (Jabatan Imigresen) at Putrajaya. The

project was successfully completed in August 2004.

In 2004, Meganet recorded a revenue of RM33.7 million,

a slight increase from RM33.3 million in the previous year.

With a team of dedicated and skilled employees from

various backgrounds and in-depth technical skills,

Meganet is clearly in a strong position to assist customers

to realise their goals. Meganet strongly believes that

continuous investments in enhancing its customer services

will in turn create and strengthen relationships with all

its customers in the future.

One of the sub-components under IBS is Security

Management Systems (SMS), which comprises several

elements such as Access Control, Intrusion Detection,

Integrated Surveillance and Time Attendance

Management. This has been one of Meganet’s core areas

of expertise since commencing its business in 1997. For

the Card Access System, Meganet is the local distributor

for Cardax New Zealand. Currently, Meganet is working

on several new SMS projects for TM at Sistem Kabel

Dasar Laut, Melaka, the new TM administration building

in Alor Setar, Kedah and on going maintenance at

Menara Kuala Lumpur.

Office Automation atMenara TM



Page 165

TELEKOM SALES & SERVICES SDN BHDTelekom Sales & Services Sdn Bhd (TSSSB) is a customer

service organisation which provides a one-stop solution

for the Group’s products and services. With the vision,

“To be the best one-stop centre for customer service and

communication solutions in Malaysia,” TSSSB is

consistently working towards providing excellent customer

service and quality products that exceed customer

expectations.

Currently TSSSB has 96 ISO-certified TMpoint outlets

nationwide. These serve as the primary channels in

providing TM’s services such as service provisioning, bill

payments and enquiries. TSSSB also markets a wide range

of telecommunications as well as IT related products and

accessories.

For the year 2004, the business focus of TSSSB was on

enhancing and improving customer service quality.

Working together with the Customer Relationship

Management (CRM) group and Change Management

Office (CMO), the Company has taken various initiatives

towards achieving excellent Customer Service. Among

these initiatives are:

• Mesra Pelanggan, a 3-month programme to improve

customer service.

• Call Centre, a centre where customers can make

enquiries and complaints about the products and

services provided at TMpoint.

• Online Info. Grabber, an online tool to provide front

liners with up-to-date information on the products

and services offered at TMpoint.

• Standard People Practice (SPP), training for front liners

nationwide on improvements in customer service.

• Performance Assessment System, a system that

evaluates front liners’ performance.

• Customer Feedback Card, a card for customers to

provide feedback and comments on the products and

services offered at TMpoint.

In its bid to strive for the best, TSSSB participated in the

“Anugerah Kualiti YB. Menteri Tenaga, Air dan

Komunikasi 2004”, whereby TMpoint Kuantan (Pahang)

and TMpoint Pelangi (Johor) were shortlisted. TMpoint

Pelangi reached the Finals.

Winner, ‘2004 Quality Award’ Ministry of Energy, Water andCommunications – TMpoint Pelangi, Johor Bahru



Page 166

TSSSB works very closely with the Group’s product marketing division, TM Net

Sdn Bhd, Celcom (Malaysia) Bhd, vendors, suppliers and business partners to

provide prepaid calling cards, TM Net services, mobile prepaid cards and

Customer Premises Equipment to TM’s customers. In 2004, retail sales for

TSSSB amounted to RM51.0 million.

Through its Corporate Sales division, TSSSB provides ICT sales and solutions to

meet the needs of its customers, namely TM subsidiaries, corporate,

government, major businesses as well as small and medium businesses. Among

the projects undertaken by the Corporate Sales division is the supply of PABX

systems including installation of structured cabling for the Ministry of

Defence’s camps in Labuan and Lok Kawi. The largest project undertaken

during the year was the Universal Service Provisioning Project for the Ministry

of Energy, Water and Communications for the supply of telecommunications

infrastructure and equipment to rural areas.

For the financial year ended 31 December 2004, the Company recorded a

revenue of RM158.6 million, an increase from RM155.3 million in the

previous year.

To ensure that the Company achieves its goals in 2005, effective and

continuous initiatives are already in progress. Among them is the WOW

project, which is a continuance of the Mesra Pelanggan project, which will be

launched in January 2005. To provide better service to its customers, TMpoint

will be undergoing a rationalisation where some outlets will be relocated to

more strategic locations and transformed with a new look and feel. TSSSB is

also upgrading its Payment Collection system and will be sending its front

liners for further training to meet new challenges.

In achieving the Company’s Vision and Mission, TSSSB will continue striving

towards providing excellent customer service and quality products as it looks

forward to future growth in the coming years.



Page 167

TELEKOM APPLIED BUSINESS SDN BHDTelekom Applied Business Sdn Bhd (TAB) is an MSC status

ICT solutions provider focused on the development and

marketing of Telco-based ICT solutions.

In 2004, TAB’s efforts were geared towards penetrating

the global market. TAB participated in several exhibitions

such as ITU TELECOM AFRICA 2004, and Langkawi

International Dialogue (LID), organised by the Ministry of

Science, Technology and Innovation in Langkawi, Kedah.

The Company also participated in trade matching sessions

organised by MATRADE and the Multimedia Development

Corporation (MDC). Through these leads, TAB has made

encouraging progress in countries such as Bangladesh,

Sudan, Swaziland, Pakistan and Vietnam.

On the home front, TAB’s product, the Ezeephone,

garnered the PIKOM 2004 ICT Product of the Year award

through our CPE partner, Alif Manufacturing Sdn Bhd.

This award is an affirmation of Ezeephone as a solution

to address issues faced by fixed-line telcos.

Throughout 2004, TAB made concerted efforts to improve

the quality of its products and services by embarking on

various quality initiatives, namely the Capability Maturity

Matrix (CMM) and Object Oriented Application

Development (OOAD).

In the year under review, TAB’s revenue declined 38.85

per cent to RM9.762 million compared to RM18.023

million in the previous year due mainly to delays in

project completion. TAB recorded a net profit of

RM579,784, down by 81 per cent as compared to

RM3.037 million in 2003. Immediate measures were taken

to address the decrease in revenue, in particular the close

monitoring of operating expenses in 2004. The EBITDA

margin was stable with a slightly improved figure of

27.48 per cent as compared to 23 per cent in 2003.

Nevertheless, TAB has continued to generate substantial cash

from operations and remains in a strong financial position.

In 2005, TAB will be diversifying its product mix to

ensure a balance between product-based revenue and

project-based revenue. TAB will also be lessening its

dependency on TM as a source of revenue by increasing

its revenue mix from other sources, mainly other

corporate customers and global telcos.

With this view, several contacts have been established

with overseas partners and TAB will continue to focus on

expanding its global market reach in 2005. To ensure a

higher chance of success in penetrating global markets,

other business models will continually be assessed and

adopted, if viable.

Penetrating global markets through strategic international partnerships



Page 168

TELEKOM PUBLICATIONS SDN BHDTelekom Publications Sdn Bhd (TPSB) was incorporated as

a wholly owned subsidiary of Telekom Malaysia Bhd. (TM)

in August 1989, with the main responsibility of ensuring

the timely publication and delivery of telephone

directories in the country. TPSB has been granted the

exclusive right to produce and print TM’s subscribers

listings and is the official publisher of the Malaysian

Telephone Directories (Yellow Pages and White Pages) for

both the print and multimedia formats.

Currently, TPSB is in the midst of establishing print and

online directories by maintaining a database. The

database consists of raw data obtained from TM and this

forms the basis of listings, which include subscriber

information from TM and other telcos. This data is

further updated with information obtained by TPSB’s

sales and customer service employees.

The directory industry worldwide is undergoing rapid

changes in view of the new opportunities brought about

by the Internet as witnessed in the developed markets

where print products have reached maturity and continue

to enjoy market leadership. As such, the Yellow Pages will

continue to be important in mature markets despite stiff

competition from other media due to its strong market

and product positioning. The Yellow Pages market is quite

vibrant and is expected to grow gradually over time.

In addition, TAB will also consider other flexible business

arrangements such as revenue sharing with other telcos.

This arrangement is advantageous to TAB as it takes a

shorter time to market and will provide the Company

with recurring revenue while capitalising on its brand

and existing customer base.

TAB’s competitive advantage has always been based on

innovation. Thus, year 2005 will see TAB developing many

innovative new products. TAB will also be enhancing its

current core products including Ezeephone and netSMS to

ensure that it is constantly up-to-date with current trends

and technologies.

TAB’s product, netSMS, complemented by its derivative

value added services, such as netSMS Customer

Relationship Management, netSMS Voting and netSMS

Servwatch, is expected to be a killer application for fixed

line telcos to capture a share of the corporate messaging

market.



Page 169

TPSB’s overall strategic objectives are to grow its

advertiser base, increase yields from its existing advertiser

base, maximise margins, expand the range of channels

that connect buyers and sellers and expand the

geographical markets.

TPSB’s core products, the Yellow Pages and White Pages,

are a series of annual regional classified directories that

list the names, addresses and telephone numbers of

almost all business telephone subscribers in Malaysia. The

listings are currently organised into over 3,000

classifications, with more than one classification

potentially applicable to a business. This is to enhance

the opportunity of an advertiser to further specify their

nature of business.

The Yellow Pages offers a complete guide for users to

browse through a comprehensive list of products and

services. The listings are based on classifications that are

convenient to use and ensure a fast and easy reference

to the desired telephone numbers of the listed products

and services.

In 2004 TPSB renewed its agreement with a US based

company, namely Verison Information Service (VIS) to

have the sole rights and license to use the ubiquitous

“Walking Finger” logo in Malaysia. In addition, TPSB is

also a member of the Yellow Pages Association (YPA),

which serves to update members on industry trend,

market analysis, product development and benchmarking

of Yellow Pages from other publishers and countries.

Other than the core products, Yellow Pages and White

Pages, there are five other niche directories. They are:

i. Malaysia Tourist Pages, which is designed to assist

foreign tourists and locals alike in finding

information about Malaysia and the businesses that

supports tourism and other tourism-related

businesses.

ii. Malaysia Oil & Gas Directory, which is targeted at

the oil industry’s executives, providing them with

information on opportunities, current trends and

other interests.

iii. Halal Pages, which focuses on information and

listings related to the Halal industry.


TPSB’s range of publications


Page 170

MENARA KUALA LUMPUR SDN BHDMenara Kuala Lumpur, the fourth tallest tower in the

world, plays an important role in broadcasting and

telecommunications. As the only tower in the world to

be surrounded by a century-old forest, Menara Kuala

Lumpur offers a deep and incomparable experience of

viewing, dining, shopping and events for its visitors.

While tourist arrivals were slow in 2003 due to the

regional SARS outbreak, 2004 showed a 14 per cent

increase in visitor arrivals to the Tower. Menara Kuala

Lumpur was able to develop its presence further in the

South East Asian region and Europe, which contributed

towards the total of 860,305 visitor arrivals last year.

The top ten countries contributing to the growth in

tourist arrivals were India, followed by the United

Kingdom, Indonesia, Japan, Hong Kong, Australia,

Saudi Arabia, Singapore, China and Taiwan.

Creative marketing strategies to draw tourists from these

top ten markets were emphasised and carefully

implemented in 2004 to achieve higher arrivals. Menara

Kuala Lumpur was able to penetrate into the Indian and

Chinese markets through more active participation in

regional trade shows. A facelift of the food and

beverage facilities was also undertaken at the Tower to

cater to the various markets. More dining outlets were

added such as the D’Tandoor Northern Indian Cuisine

Restaurant to cater to the Indian and Middle Eastern

markets, and Modesto’s for Western dining. These new

outlets offer more dining options to visitors in addition

to the existing Seri Angkasa Revolving Restaurant and

White Knight Tower Deli.

iv. Corporate Agriculture Directory, which is a source of

information, concerning the Agricultural sector and

related agencies, the manufacturers, distributors,

retailers and other supporting industries.

v. Malaysia Chinese Yellow Pages, which caters to the

Chinese speaking community.

Yellow Pages and White Pages is also accessible via the

Internet at www.yellowpages.com.my and through the

short messaging system (SMS). The SMS Yellow Pages will

be a business collaboration with all mobile operators in

Malaysia. Strategic alliances with other companies will be

developed for the SMS/MMS Yellow Pages services, in

order to share expertise and experience as well as the

infrastructure.

As a member of the Asian Directory Publishers

Association Inc. (ADPAI), the company has embarked on a

cross-selling arrangement with other members of ADPAI.

TPSB has also been awarded the ISO: 9001:2000

certification by SIRIM for its management systems,

reflecting a high standard of business processes as well as

quality products and services.



Page 171

The year 2004 also saw various product enhancements in

providing convenience and value-added services to all

visitors. Several new tenants were introduced to enhance

the shopping experience for tourists. These included

Batek Malaysia, Indah Craft, Mavel Creations and De

Tower Duty Free Shop. These new shopping outlets,

together with the current tenants, offer visitors a range

of products and services such as souvenirs, local crafts

and handiwork, computerised photography services,

watches and confectionery delights. In addition to these,

there is also the Weekend Bazaar which offers more local

products and delicacies at the Tower terrace.

To boost visitor arrivals at the Tower, Menara Kuala

Lumpur has also initiated a complimentary shuttle bus

service. Working with 18 hotels in the Golden Triangle,

this synergised marketing effort was introduced to increase

walk-in visitors from the hotels. The Tower intends to

extend this shuttle service to other hotels in the Klang

Valley with the support of the related industry players.

Apart from the value-added shuttle service, the Tower is

also exploring the possibility of expanding into other

areas such as adventure products. Products such as

Reverse Bungee, Skywalk, Flying Fox and Sky Jump have

been initiated and are expected to take off in 2005.

For nature lovers, the Tower will introduce the Boardwalk

as well as Day and Night Tours where visitors will get a

chance to get to know the flora and fauna of the Bukit

Nanas Forest Reserve – the oldest gazetted forest reserve

in the country.

To capture the interest of the international market,

Menara Kuala Lumpur will soon introduce the ‘Colours of

Malaysia Wedding’ package. Marketed internationally, this

package is aimed at couples who want something

different in celebrating the memorable moment of their

union in marriage.

The Tower has continued to be dynamic in organising a

multitude of ground activities to increase local visits and

prolong foreign stays. These include local and

international cultural performances, school holiday

activities, singing competitions and sports events such as

the BASE Jump, Mountain Bike Race, Formula 1

promotions, National Cancer Council Day and National

Day. Open-stage parties were introduced at the Tower

Terrace to promote use of the terrace area and to create

night traffic at the Tower.

Among many tourist attractions at Menara KL

A resplendent Menara KL at night



Page 172

Last year also saw the arrival of Menara Kuala Lumpur’s

seven millionth visitor. The ‘Karnival 7 Juta’ was held to

celebrate this achievement. The lucky visitor received two

return air tickets to Shanghai plus a visit to the Shanghai

Oriental Tower – the third tallest tower in the world and a

member of the World Federation of Great Towers (WFGT).

Menara Kuala Lumpur also played a key role in the

WFGT when its proposal to create a World Tower Day for

Peace and World Tower Kids Privilege Card was accepted

and endorsed at the WFGT conference in 2004.

With strong support from key industry players, solid

endorsement and a strong partnership with the Tourism

Ministry and City Hall, Menara Kuala Lumpur is set to

maintain its position as a ‘must visit’ attraction for both

domestic and foreign visitors.

GITN SDN BHDThe Government Integrated Telecommunications Network

(GITN) was set up by the Government in October 1995 to

ensure that the vision of an e-Government became a

reality. The implementation of the Electronic Government

Flagship applications in the Multimedia Super Corridor

(MSC) began in 1998. The Government appointed GITN

Sdn Bhd (GSB) to provide an exclusive secured network

for the purpose of facilitating efficient and effective flow

of electronic information, processes and services within

and between Government agencies and departments.

As a network provider, GSB plays an important role in

providing a reliable and efficient communication network.

GSB provides managed network connectivity and

managed security services to all Government agencies

that implement e-Government applications nationwide.

It also provides integrated network connectivity for

Intranet, Extranet and Internet access that enables

Government agencies to communicate with one another

and access EG*Net using a single connection to the

nearest GITN node. The network has built-in connectivity

to the Internet gateway provider, enabling electronic

communications networks for government-to-government,

government-to-business and government-to-citizens.

The vision of GSB is “To be a Preferred Information &

Communication Technology provider, creating the growth

engine for Malaysian K-Economy by 2006”, while its

mission is “GSB is committed to deliver state-of-the-art

technology through highly skilled personnel in meeting

total customer satisfaction.”

In 2004, GSB achieved gross sales of RM124.9 million,

a commendable growth of 140.0 per cent as compared to

2003. The Company’s revenue was generated by Managed

Network Services, EG*Net, Value Added Services and

SchoolNet. EG*Net’s contribution increased tremendously

with the signing of a RM88.7 million service provisioning

agreement with the Government of Malaysia. It

contributed 52.9 per cent of the Company’s total revenue

of RM124.9 million in 2004. In addition, the appointment

of GSB by the Government to implement the SchoolNet

Project, which provides 10,000 schools nationwide with

Internet Broadband access, also contributed RM33.8

million or 27.0 per cent of total revenue for 2004.



Page 173

At the same time, expenses increased by 100 per cent to

RM114.4 million. This was used to support customer

requirements and company expansion. A total of 70 per

cent of the costs were on telecommunications services,

mostly with TM.

The higher revenue growth contributed to better profit

after tax, which amounted to RM10.8 million for the year

ended 31 December 2004. This represented a growth of

299 per cent as compared to the loss after tax of RM5.4

million in 2003. GSB’s net worth improved from a

negative RM36.9 million to a positive of RM3.9 million

with the increase in fixed assets, current assets and

profit.

Moving forward, GSB anticipates a more positive market

outlook in the Government market, especially with

aggressive efforts in the implementation of EG*Net and

SchoolNet projects. A total of 1,800 sites will be installed

with EG*Net and Managed Network Services in 2005 and

this is expected to contribute 52.5 per cent to revenue

growth for the year 2005. EG*Net is expected to reach

saturation point by 2007, while the SchoolNet project

should be completed by March 2005.

GSB expects Intranet to experience steady growth in

anticipation of an expanding customer base with the

implementation of more ICT initiatives by the

Government, while value-added services are expected to

grow three times, thus making a significant contribution

to overall Company revenue.

Realising the government’se-government vision at GITN


The only limits

that exist are those that we

set for ourselves.

When we view things

in a positive light,

anything is possible.

At TM,

we live to meet

challenges head on.

Because only those

who dare, win.

Realising potentialo p e n i n g u p p o s s i b i l i t i e s


Page 176

EDUCATIONAL EXCELLENCE

DATUK PROF. GHAUTH JASMON

President

UNIVERSITI TELEKOM SDN BHD

DR. NAS TAMIMI IBRAHIM

Acting Chief Executive Officer

TELEKOM SMART SCHOOL SDN BHD

DATUK IR. AHMAD ZAINI MOHD AMIN

Chief Executive Officer

TELEKOM TRAINING COLLEGE

UNIVERSITI TELEKOM SDN BHDMultimedia University

Universiti Telekom Sdn Bhd was established in June 1997 to

manage Multimedia University (MMU). In 2004, MMU continued

its theme of growth and development, which it has adopted

since its establishment as the country’s first private university.

Its presence in the home market is secure as undergraduate

entry applications for 2004 were six times the capacity of

admission.

MMU is positioning itself to capture a bigger share of the

international market. It has opened an offshore office in Tehran

and Jeddah in 2004, while another will be opened in

Bangladesh in 2005. These offices are managed by MMU

personnel to ensure that the interests of the University as well

as those of its parent company are prioritised.

To date, these offshore offices and the recently established

Centre for International Student Recruitment (CISR) have been

very effective. CISR was set up to expand MMU’s reach to

international students. It is responsible for providing various

services and support to meet MMU’s targeted number of

international students, which is 30 per cent by 2014. This is in

line with the Malaysian Government’s aspiration to raise the

number of foreign students in Malaysia to about 50,000 by 2005

and 100,000 by 2010. In December 2004, there were 1,541

international students from 72 countries studying in MMU’s

campuses in Cyberjaya and Melaka.


Page 177

Educational Excellence continued


Page 178


During the year 2004, MMU continued to expand and

introduced new courses. Three ground-breaking

programmes were proposed and approved by the

Ministry of Education. The new programmes are the

Master of Engineering Systems, Bachelor of IT (Hons)

Security Technology and Master of IT (Information

Systems) and are scheduled to be launched in the third

quarter of 2005.

Existing courses were also given continuous focus. During

the year, approvals for 18 courses were renewed while six

others were given accreditation.

In 2004, MMU generated a profit before tax of RM4.3

million on the back of a revenue of RM142 million

(In 2003 profit before tax was RM5.8 million and revenue

RM135 million). This is reflective of the increase in the

University’s output of graduates. During the year, 2,585

students graduated from MMU. Of these, 247 were

Diploma holders, 2,218 were Bachelor degree holders,

113 received Masters while the remaining seven received

their PhDs.

As in previous years, an annual budget of RM10.5 million

was allocated internally as seed funding for young

researchers and academic staff members. MMU continues

to secure more research grants from collaborations with

local and international companies, as well as from

research funding agencies, such as the Intensification of

Research in Priority Areas (IRPA) grant, the Multimedia

R&D Grant Scheme under the Ministry of Science,

Technology and Innovation, as well as the Malaysian

Toray Science and Technology Foundation.

MMU has also attracted additional research funds from

new industrial sources, such as Agilent Technologies,

Komag and Finisar. The University focuses on research

collaborations with international companies, such as IBM,

Intel, NTT, Alcatel, Ericsson, Microsoft, Nokia, the National

Institute of Information and Communications Technologies

of Japan, and Fujitsu. In total, MMU received RM11

million from external research grants in 2004, reflecting

the quality of R&D activities at the University.

MMU-Cyberjaya Campus


Page 179


Research and development activities at MMU have also

produced good results. A proactive move has been made

to disseminate new scientific knowledge through

publications in international journals and international

conferences of high standing. For the period under

review, on average international journal papers published

per academic staff has increased to 0.47 per cent.

Some of the research results have earned awards, locally

and internationally. The innovation, “Paddy Monitoring

and Yield Prediction System using Remote Sensing and

GIS Technologies” where MMU collaborated with the

Malaysian Centre for Remote Sensing, won a Gold Medal

at the 2003 Malaysian. Science and Technology Expo, and

a Gold Medal at the 32nd International Exhibition of

Inventions in Geneva in 2004. A staff member from the

Centre for Applied Electromagnetics also won the 2004

Young Engineer Award from the Institute of Engineers

Malaysia for his research contribution to the development

of microwave remote sensors.

Similarly, the R&D work of final year students have been

recognised for their excellent quality. For instance, a final

year student from the Faculty of Engineering won the

Best of Tertiary Project Category under the Asia Pacific

ICT Awards (APICTA) in Hong Kong for his R&D project

on “Wireless Mobile Java Home Automation System”.

MMU students have continued to do their University

proud. One of the most notable achievements was World

Debate 2004, an event sponsored by TM, which attracted

933 participants from 30 countries where MMU was the

convenor and organiser. MMU students also bagged

several awards at prestigious events such as the IEE Inter-

varsity Project Competition, Robofest 2004, and APICTA,

to name a few.

The University is also expanding physically. As at

December 2004, Parcel One of the Second Phase at

Cyberjaya was 35 per cent completed, while Parcel Two

stood at 5 per cent completion. In the Melaka campus,

the Third Phase has been fully completed, while the

Centre for Foundation Studies and Foundation Education

now has its own building.

MMU is pleased that it has been able to successfully

expand into all critical areas as this is a winning formula

for a world-class educational institution. This will

continue to be the university’s plans in moving forward

into 2005.

For the future, especially in the next 10 years, MMU will

among others further elevate its achievements in R&D by

the establishment of Research institutes in certain niche

areas of strength. New courses relevant to the K-era will

be introduced at all levels. MMU will also expand its

international networking by establishing relations with

more universities and organisations worldwide. All in all,

these plans will see MMU grow into a truly international

university that stands at par with other top world-class

institutions. This is crucial in contributing towards making

Malaysia the new hub for educational excellence.



Page 180

TELEKOM SMART SCHOOL SDN BHDTelekom Smart School Sdn Bhd (TSS) was established in 1999 to realise the Malaysian Smart

School Project, one of the country’s Multimedia Super Corridor (MSC) flagship applications.

Through this project, TSS will help transform the Malaysian education system into a highly

advanced technology-based system, where ICT will be used to create a generation of

knowledge workers for the country. With the Ministry of Education leading the project, TSS

has successfully completed the three-year National Smart School Pilot Project contract which

involved 88 schools throughout the country.

In line with its vision to become a leading total e-education solution provider by 2008 and its

mission of accelerating the creation of a Knowledge Society through e-education, TSS has

continued to focus on the development of e-education solutions in terms of products, services,

processes, expertise and resources in 2004.

The company has embarked on several projects, including the following, some of which have

been completed:

• Science and Maths Translation Project

The development and translation of 543 titles of Science and Mathematics courseware for

Years 1, 2 & 3 as well as Forms 1, 2 & 3 from Bahasa Malaysia to English; and the

deployment of the courseware to all government schools, as well as the compilation of

Year 3 and Form 3 English courseware. The Year 1 Form 1 Project commenced in

September 2002 and was completed in October 2003, whereas the Year 2 Form 2 Project

commenced in October 2003 and was completed in September 2004. The Year 3 and

Form 3 Project commenced in August 2004 and is expected to be completed by the end of

February 2005.

• Form 4 Biology Project

The development of Form 4 Smart School Biology courseware for the Ministry of Education,

which is currently ongoing and expected to be completed by the end of March 2005.


Page 181


• 21 Penang Schools Project

The deployment of the Smart School courseware,

integrated with the open source technology and Web-

based Courseware Management System (SMA*RT), to

21 secondary schools in Penang. The project was

completed in September 2004.

• Syrian Project

In line with its goal to expand into the international

market, TSS has developed the Arabic Web-based

School Management System, Mathematics and English

Secondary courseware which were implemented at

two Syrian schools. The project was completed in

November 2004.

• The Web-Based School Management System and Learning

Content Management System Development Project

The enhancement of the next-generation web and

open source technology-based Smart School solution,

which is the Web-Based School Management System

(WSMS) and Learning Content Management System

(LCMS). The industry standard Shareable Content

Object Reference Model based LCMS is an

infrastructure that can be used to create, modify and

manage content delivery for a wide range of learning

needs. WSMS is the total solution that can be used to

manage school administration functions, information

and processes.

Both solutions are being test-bedded at one of the Smart

Schools of the Ministry of Education as part of the

Company’s commitment to ensure that the current Smart

School Integrated Solution is being utilised in the most

optimal way, and henceforth to determine the best

possible means for the solution to be rolled out to the

rest of schools in the country.

During the year, TSS continued to mass-market its brand

of Government-endorsed Smart School multimedia

courseware, namely the BestariEd series. The Bahasa

Melayu, English, Mathematics and Science courseware for

Year 1 to Form 5 are available in different packaging

modes; namely through Portable Hard Disk, On-line

Content and Stand-alone CD Courseware.

Smart School session in progress



Page 182

TSS is also collaborating with Utusan Melayu (M) Bhd (Utusan) to promote

BestariEd series through www.tutor.com.my; Utusan’s Internet education

portal; and the education section of the Utusan Malaysia daily.

While growing its business, TSS has not forgotten its Corporate Social

Responsibility, especially to students in remote areas who have no access

to Personal Computers or the Internet. Hence, TSS has embarked on

several corporate social responsibility projects, the notable one being the

PC Gemilang “One Home, One PC” Campaign in collaboration with the

then Ministry of Energy, Telecommunications and Multimedia (now

Ministry of Energy, Water and Communications) and the Association of the

Computer and Multimedia Industry, Malaysia (PIKOM). This project involved

the packaging of 10 titles of the Smart School courseware into each PC

Gemilang Unit. Another noteworthy project was the “Perpustakaan Desa”

Project whereby TSS enabled a total of 176 village libraries to download

the Smart School courseware via the Internet.

TSS has also initiated an Adopted School Programme 2004-05, whereby TSS

and the Education Technology Division (BTP) of the Ministry of Education

“adopted” SMK Bandar Baru Bangi, a Level B Smart School. Through the

Programme, the school’s academic and administrative staff and students

were groomed to become expert users of the teaching and learning

materials and the Smart School applications. In addition, the school served

as a test bed for further Smart School application enhancements and

developments. As a result, optimal usage of the solutions was achieved.

Throughout 2004, TSS participated in various exhibitions and outreach

programmes on its own and under the banner of its parent company TM,

the Ministry of Education or the Multimedia Development Corporation to

promote the smart school project. TSS also received foreign visitors from

the academic fraternity as well as foreign Education Ministry officials who

were interested in the Smart School development programme.

Realising the nation’s IT agenda through SmartSchools


Page 183


The 2004 financial year was another challenging year for

TSS as the company continues its effort to secure the

National Roll-Out project. The evolution of the project

implementation model rendered better understanding for

both TSS and the Ministry of Education to implement the

project in the most economical, practical and steadfast

manner.

The main revenue contribution in 2004 came from the

translation and development work for Year 2 and 3 and

Form 2 and 3, which contributed more than 80 per cent

of the total revenue of about RM20 million. Other

contributions to the company’s revenue included the

COINS services and the JPM Penang projects.

This resulted in a higher profit after tax of approximately

RM3.3 million for TSS in 2004 compared to RM2.0 million

achieved in 2003. Gross profit and net profit margins

were higher at 46 per cent and 17 per cent respectively

and were in fact the best margins ever achieved since

the company’s inception.

Of the 49 employees in TSS, 27 are permanent staff, 13 are

contract staff while 9 staff are on short-term service contracts.

Mindful of the value of human capital in the organisation,

TSS has taken steps to develop a Core Competency and

Professional Certification Programme for its staff. This is

part of its continuing efforts to upgrade the core

competencies and skills of its workforce.

For 2005, TSS will continue to strive towards its vision of

becoming the leading total e-education solutions provider

by 2008. The company needs to prove that it has the

ability to offer total e-education solutions in terms of

products, services, processes, expertise and resources.

Towards this end, it has adopted the Balance Scorecard

Approach, to re-align its strategic direction towards

achieving its vision and mission.

TELEKOM TRAINING COLLEGE (TTC)Telekom Training College (TTC) is the premier national

provider of telecommunications training in Malaysia.

Established in 1948, the college was initially

responsible for providing training to the staff of

the Telecommunications Department. A new

telecommunications training centre was set up in 1961,

as a result of a joint venture between the United Nations

and the Malaysian Government.

In 1980, five regional training schools or branch campuses

were established in Taiping, Kuala Terengganu, Melaka,

Kuching and Kota Kinabalu to facilitate training need for

the increasing number of staff. The year itself also saw

the appointment of TTC as a training provider for other

Commonwealth countries through the Commonwealth

Telecommunications Organisation (CTO).



Page 184

In 1998, TTC was awarded the ISO 9002 certification by

SIRIM in recognition of its consistent conduct of high

quality training programmes. It was also appointed the

sole Certifying Agency for the Malaysian

telecommunications industry by the Malaysian

Communications & Multimedia Commission in 2002.

TTC offers educational programmes at diploma level,

which meets the exact requirements of the K-economy.

The wide selection of courses offered include the

Diploma in Multimedia (Business & Computing), Diploma

in Multimedia Technology, Diploma in Technology

(Telecommunications Engineering), Diploma in Computer

Science, Diploma in Marketing with Multimedia and

Diploma in Management with Multimedia. During TTC’s

9th convocation ceremony held on 2 October 2004, a total

of 73 graduates received their Diploma in Multimedia

Technology while 20 graduated with Diploma in

Multimedia Business Computing. As at today, 942 students

have graduated from various TTC Diploma Programmes.

Since 2000, TTC has been operating as a Private

Institution of Higher Learning that is on par with the

best educational and technical colleges in the country.

This is further proven by the growing number of trainees

from all over the world who have benefited from the

various courses provided by TTC.

TTC also manages the training and development needs of

top-ranking employees in TM via its Management &

Leadership Institute (MLI). Among the courses conducted

are the Top Management Programme, Senior

Management Development Programme, Management

Leadership Development Programme and the

Management Trainee Programme.

During the year, TTC organised the Malaysian Technical

Cooperation Programme (MTCP) to train and encourage

knowledge sharing especially in the telecommunications

and ICT industries. A total of 45 participants were

enrolled in the June session and another 61 participants

in the August session. Most participants were from

Mauritius, Malawi, Indonesia, Bosnia Herzegovina, Laos,

Vietnam and Gambia.

TTC also organised a Training Coordinators Workshop in

August 2004 to reach out to its customers, especially the

Training Coordinators, and to update them on the

company’s latest training courses and programmes.

A total of 120 coordinators participated in this one-day

workshop.


Page 185


On 10 August 2004, TTC signed an agreement to provide

training programmes for Perbadanan Hal Ehwal Angkatan

Tentera (PERHEBAT). This was the first collaboration

between PERHEBAT and TTC, and TTC will provide

training in the “Kursus Pengkabelan Kontraktor

Komunikasi” for pensioned officers from Angkatan

Tentera Malaysia for six months. Once they complete the

programme, they will be awarded with a certification

from the Certifying Agency.

On 15 September 2004, a delegation from Botswana

Telecommunications visited the company with the

objective of benchmarking TTC’s business operations as a

training and education organisation, and its expertise in

Telecommunications and ICT. TTC, in conjunction with the

Information Technology Shared Services (ITSS) division,

also organised the IT Seminar and Exhibition 2004 on

“Realising Shared Services with IT Intelligently”. The

seminar focused on ways of improving the ICT services of

TM in line with industry demands and on maximising

customer satisfaction at minimal cost. It was attended by

200 participations from all units and divisions under TM.

The year 2004 was also TTC’s 55th Anniversary and a

dinner was held to commemorate its history and

achievements. Themed “Down Memory Lane”, the dinner

was attended by around 500 guests, clients and staff.

For the 2004 financial year, TTC registered revenue of

RM61.5 million and profit before tax of RM0.434 million.

In 2005, TTC plans to expand its operations and be more

competitive as a reputable Learning Organisation.

It is no secret that ‘Learning Organisations’ have a better

chance to compete and survive. It is also true that

successful organisations engage in vigorous programmes

of training and developing their human resource to

equip them with the changing needs of the business.

Henceforth, TTC hopes to achieve the vision of the TM

Group Chief Executive Officer towards achieving ‘World

Class Standards of Operation, Performance and

Productivity’.

A Learning Environment at TTC


Page 186

HUMAN RESOURCES


Page 187

Human Resources continued

TM recognises that as the industry becomes more

knowledge- and information-intensive, there is more

reliance on its workforce as human capital is one of the

key ingredients for success. In this context, industry

competitiveness means that a great deal of attention

must be paid to managing human capital exceptionally

well in order to be successful. As such, nurturing and

developing talent within the company becomes essential.

In 2004, the talent management process was further

enhanced and formalised. Talent nomination activities to

scout for young talents were conducted whereby all

heads of divisions from TM operating companies,

subsidiaries and corporate centres identified potential

executives to be part of the talent pool for future career

development and the Group’s succession planning process.

TM has also established processes Group-wide to support

talent management and to groom future leaders. As at

the end of 2004, the number of talents in TM was 200.

TM’s commitment to continuously promote learning

throughout its employees’ career is reflected in the

participation of its senior management in top

management and leadership programmes such as those

conducted by the Harvard Business School and the

Michigan Business School. To fulfil functional learning

requirements, TM has also worked closely with

organisations such as the Telecommunications Executive

Management Institute of Canada (TEMIC), which has

sponsored programmes for selected top management

personnel.

The main challenge in a rapidly changing world is to

maintain and enhance professionalism through constant

improvement and continuous learning. The life cycles of

knowledge, skills and lead-times are becoming shorter.

People have to identify and respond to challenges faster.

These challenges have necessitated a review of TM’s

existing HR development framework, that is the TM

Competency Model and Structured Training and

Development. The revised Competency Model is

developed and derived from the Group’s critical success

factors and translated into critical capabilities. It

comprises five critical competency areas which are linked

to TM’s six job levels (from executive to senior and top

management) and serves as a roadmap for training and

development programmes as well as the basis for its

executives’ career path and progression.

The success of the revised competency-based model is

monitored and measured through the Competency Index

(CI) as a continuous learning initiative. For the first time

in 2004, the CI has been incorporated as one of the

divisional-shared Key Performance Indicators (KPIs) to

measure organisational learning. The platform for

measuring the CI is the enhanced 360-degree feedback

assessment. The objective of this 360-degree assessment is

to gauge each individual‘s competency level as well as

each Division’s Competency Index. The Divisional

Competency Index is then used as the CI for each

General Manager's KPI. The Individual Competency Index,

meanwhile, is also used to identify the appropriate

development and training programme for each individual.



Page 188

At present, 53 senior managers have successfully

completed the Senior Management Development

Programme (SMDP), conducted jointly with institutions of

higher learning such as Strachclyde University, Glasgow,

United Kingdom. In 2004, approximately RM5 million has

been invested in this programme and 27 senior managers

have enrolled in it. Apart from the SMDP, 722 executives

have also attended Structured Training Programmes to

enhance their managerial and leadership competencies.

During the year under review, the company spent a total

of RM14.7 million on programmes conducted by the

Telekom Training College to improve functional and

technical skills for both executive and non-executive staff.

Each employee has clocked in an average of 40 hours of

training a year. Meanwhile, a total of 2,256 executives

have participated in training programmes for functional

or strategic competencies.

TM’s commitment to providing development opportunities

extends to the Malaysian public through its scholarships

and education loans. The Group, through Yayasan

Telekom Malaysia (YTM), has allocated RM33 million for

scholarships and education loans. A total of 1,267

undergraduate and postgraduate students as well as

1,679 students between the ages of 13 to 17, studying in

Form One to Form Five, have received sponsorship from

the fund. To-date, about 1,071 employees and 3,788

external students have been provided with financial

assistance to pursue their undergraduate and

postgraduate studies, both locally and abroad.

TM has also embarked on a Corporate Culture

Transformation initiative which has a three-year road

map. The alignment of Corporate Culture Transformation

is central to all Business Transformation Programmes at

TM. The TM Corporate Culture Transformation

Programme addresses the human factor to support the

Leadership and “Workforce Engine” required for the

overall transformation at TM. The overall Culture

Transformation programme involves the five areas

described below:

i) Culture Alignment and Development – To ensure the

desired culture of competence (Leadership &

Workforce) and the implementation of the

vehicles/channels for interventions.

ii) Leadership Interventions and Development – To

enable leaders to inspire others while embedding

KRISTAL values and the desired culture in an

employee’s daily behaviour.

iii) Change Agents Network Development Team – To

develop an internal collaborative infrastructure

network of change management capabilities.

iv) Communications Development Team – To facilitate

communications across all stakeholder groups and

work streams, vertically and horizontally.

v) HR Practices Alignment Team – To streamline the

existing HR infrastructure to support the desired

culture and workforce of the future.

On 1 July 2004, the business transformation of the Telco

organisation into a wholesale and retail business set-up

was rolled out. The objectives of the transformation were

to achieve growth in profits and revenue, delivery of


Page 189


quality products and services, cost leadership, customer

satisfaction as well as to develop a workforce that is

committed to quality. As part of this transformation

initiative, HR’s major involvement was to ensure that the

newly transformed entities (TM Wholesale and TM Retail)

were provided with the right skills, the right culture and

the right talent mix.

Year 2004 marked another milestone in TM’s Industrial

Relations management. The Group successfully concluded

collective bargaining with all the three in-house unions

namely, National Union of Telekom Employees (NUTE),

Sabah Union of Telekom Employees (SUTE) and Union of

Telecoms Employees Sarawak (UTES) resulting in the

signing of the respective Collective Agreement. As a

result of the new agreements, non-executive employees

now enjoy better terms and conditions of service for the

period 2004 – 2006.

In response to the Government’s initiative to improve the

performance, value and services of Government-linked

Companies (GLCs), TM has taken steps, through GHRM, to

offer contract employment to officers in senior and top

management. The main objective of this initiative is to

inculcate a performance-based culture and to motivate

the officers in senior and top management to be

performance-driven within their respective business units.

The offer was well received by these officers, whereby

about 90 per cent of the officers in senior and top

management accepted the offer for contract employment.

The shift from permanent to contract employment

schemes will ultimately create a high performance

corporate culture, with greater emphasis on business

urgency and achieving business objectives.

Several HR strategies and plans have been formulated

moving forward to support the business. TM is continuously

improving employee productivity through right-sizing

strategies and workforce adjustment to ensure it achieves

an optimum workforce. For 2005, employee productivity

is expected to be above RM700,000 revenue per employee,

with a projected workforce of about 27,000 employees

Group-wide. To complement the right-sizing strategy, TM

is currently focusing on establishing a lean organisation

that will facilitate the construction of teams and the

improvement of responsibility towards customers. It will

also help to minimise layering and achieve full delegation

of authority to the appropriate level of action.

Along with the right-sizing strategy, there is also an

urgent need to enhance the capabilities of existing staff

through right-skilling (multi-skilling, cross-skilling and re-

skilling) as this will ensure that a quality, competent and

motivated workforce is available to plan, manage and

operate the current and future business. TM is investing

heavily into the development of strategic skills or “new

age” skills required by business, leadership and

management through structured training programmes

and competency-based development and assessment.

To drive the development of a high performance culture,

there is a need to shift the “old entitlement culture” to

a culture that focuses on individual and team accountability

for results. Efforts are ongoing to align the performance

of individuals and teams with business results and rewards

will be tied to business performance. TM recognises that

effective human capital is critical to an organisation’s

success. To ensure the successful implementation of these

HR strategies, TM is currently reconfiguring its current HR

practices to be more strategic and transforming them

into “Business Smart HR”.


Page 190

RESEARCH AND DEVELOPMENT


Page 191

Research and Development continued

TELEKOM RESEARCH ANDDEVELOPMENT SDN BHDTelekom Research & Development Sdn Bhd (TMR&D), a

wholly-owned subsidiary of TM, commenced operations

on 1 January 2001. An ISO9001:2000 certified company,

TMR&D conducts R&D in ICT for the TM Group of

companies and plays a vital role in providing customised

solutions through leading-edge designs, fabrication and

state-of-the art technologies.

Besides the TM Group, the Company’s customer base

includes local and multinational companies, corporate

organisations, universities and other players in the ICT

industry. Its main activities are to:

1. Identify and undertake R&D in ICT;

2. Develop, enhance and upgrade all aspects of the

related technology of new and/or existing products,

systems and services;

3. Conduct studies, consultations, advisory, testing and

management services in its area of expertise; and

4. Use the knowledge and understanding gained from

research towards production of useful materials,

devices, systems and methods including design and

development of prototypes and processes.

R&D management is unique due to the unpredictable

market demand for state-of-the-art product and services.

With rapid changes in technology, risks need to be

mitigated and the needs of a talented workforce met to

ensure that TMR&D succeeds. Thus, to remain agile and

competitive, the Company has adopted the Balanced

Scorecard methodology to identify key initiatives that will

drive the organisation’s vision.

TMR&D has also introduced several Knowledge

Management initiatives as a framework to manage and

utilise the wealth of intellectual capital within the

organisation.

The Company will continue to support TM on its vision

of becoming “the communications company of choice

and delivering exceptional value to customers and

stakeholders”. The development of R&D products

encompass will consider two critical factors, namely

market-driven products and products that can be

commercialised. Research in general is carried out on

niche technology to serve a specific market.

TMR&D has also aligned its research activities to the

National Broadband Plan, which is to provide broadband

wired and wireless network infrastructure, applications

and services to the local and global marketplace. With

the inevitable integration of the wired and wireless

network infrastructure into the Next Generation Network

(NGN) in the near future, TMR&D is embarking on

research in the field of 3G, IPV6, Mobile, Data, Voice and

Multimedia communications.



Page 192

The company’s research activities have been streamlined

to support the strategic theme of the organisation. Five

research programmes have been identified covering the

various areas of technological focus. Each research

programme will chart technology trends as well as the

business requirements for present and future market

conditions. These research programmes are in the areas

of software application and multimedia, mobile and

wireless, wired network technology, enabling technology,

automation and intelligence.

For 2004, TMR&D’s total revenue fell by 9 per cent to

RM61.28 million from RM61.94 million in 2003. The

company’s total expenditure also increased by 44 per cent

in 2004 to RM56.13 million from RM54.38 million in 2003.

A total of 49 research projects were planned and

executed in 2004, of which 20 research projects were

successfully completed in 2004 according to schedule.

The balance of the research projects are scheduled for

completion in 2005 and beyond.

TMR&D has thus far filed for 23 patents, 17 industrial

designs, 30 copyrights and five layout designs for

Integrated Circuits through the Perbadanan Harta Intelek

Malaysia.

In 2004, TMR&D also successfully handed over 12

products to TM’s Commercialisation Unit, making a total

of 52 viable products handed over since 2002.

To-date, TMR&D has published seven Research Journal

volumes, based on papers submitted by its researchers.

These efforts are paramount for TMR&D to achieve its

vision of becoming the leading ICT R&D company in

South East Asia by 2008.

The Publication Committee was established in 2002 to

help the organisation achieve its key performance targets.

In 2004, the Publication Committee conducted a series of

internal seminars entitled “Some Hints to Improve Your

Technical Writing Skill” which received overwhelming

response from the researchers. As a result, 39 per cent of

the 30 research papers submitted in 2004 were accepted

for publication at several prestigious international

conferences.

Having realised the importance of time-to-market,

TMR&D has encouraged its researchers to initiate research

collaborations with external parties to speed up project

completion. It has signed Memorandums of

Understanding with most of the leading universities in

the country and other organisations such as Sirim,

Malaysian Institute for Nuclear Technology Research,

AIC Corporation, Korea Electronics Technology Institute,

Australian Telecommunication Consulting & Marconi (M)

Sdn Bhd as a stepping stone towards opening up new

avenues for smart-partnerships.


Page 193


The Skim Ijazah Lanjutan was introduced in 2002 to help

upgrade researchers’ skills and knowledge and to improve

knowledge on management of support staff. Under the

scheme, TMR&D’s employees are given the opportunity to

pursue higher degrees or post graduate diplomas on a

part-time basis

To date, 43 researchers have registered under the scheme

– three are pursuing PhD degrees and the rest, Masters

degrees. In 2004, 27 have registered for Masters

programmes and one for a PhD.

The Information Resource Centre (IRC) was established in

2002 to support research activities in terms of reading

materials and references. Currently, IRC has 52 titles of

journals, 2,634 titles of books, 444 titles of reports and

45 titles of CD-ROM related to ICT.

Application of new technologies through Research & Development


Page 194

CARING FOR THE ENVIRONMENT

Safety in the workplace is of utmost importance and

remains a key focus of TM. The Group is committed to

achieving the highest standards of safety and health

throughout the organisation.

As part of our continuing efforts to improve overall

safety standards, TM has come up with a comprehensive

Operational Safety and Health (OSH) Manual which

contains guidelines on safety at work. The manual is

divided into sections and provides safety guidelines not

only for TM’s employees but also for its suppliers and

contractors.

TM’s continuing emphasis on safety is reflected in its

Safety and Health Policy Statement which reads: “TM is

committed to safeguarding and improving its safety and

health performance by conducting its business activities in

an organised and responsible manner. We will endeavour

to see that our activities, services and products do not

harm employees, customers and members of the public

who may be affected by our activities.”

To achieve high safety standards, it is imperative that

TM’s suppliers and contractors play their role too in

rendering quality service and work to the Company in a

safe manner. In this regard, TM has drawn up safety

training programmes for its contractors’ personnel.

Various occupational and health initiatives were also

taken during the year to further improve the Group’s

safety and health performance.

TM has always been a caring corporate citizen and its

efforts to create a safer and healthier work environment

is another manifestation of its civic consciousness towards

the well-being of its workforce.

A major area of concern for TM’s Safety and Health

Committee was the exposure of its workers at hill

stations throughout Malaysia to non-ionizing radiation,

namely microwave and radio frequency radiation. In this

regard, the company has worked with a team of

specialists from the Malaysian Institute of Nuclear

Technology to conduct a study on non-ionizing radiation

exposure at a few hill stations.

Based on these findings, TM is of the view that the

presence of the communications and broadcast antennas

at hill stations do not cause any dangerous increase in

the level of radio frequency or microwave radiation, and

pose no danger to the health of workers at these sites.

This opinion is based on current knowledge and available

scientific evidence, which suggest that such low radiation

levels do not cause any adverse health effects.

Over the years, TM has placed emphasis on helping to

create awareness and protect the environment. The

Group’s commitment to environmental conservation is

seen in the continuing efforts taken by TM Negeri

Sembilan to maintain the environment in Gunung Telapa

Burok where TM is operating a strategic

telecommunications station.


Page 195

Caring for The Environment continued



Page 196

A major landslide had occurred in

December 2002 by the side of the

access road to the hill station as a

result of a heavy downpour. A slope

30’ wide and 110’ long was damaged

by the heavy rain. There were also

signs of cracks on the road. The

landslide caused damage to the

natural environment and also

exposed the 11KV electrical cable

providing power to the station.

Efforts were undertaken by TM

Facilities Management and

Infrastructure Development to repair

the damage and to restore the

affected environment at Gunung

Telapa Burok in Jelebu, Negeri

Sembilan. The repair work cost

RM180,000 and was completed in

June 2004.

Gunung Telapa Burok’s strategic

location, coupled with TM’s station

height of 3,918’, makes it the choice

of most mobile operators and

broadcasters, such as RTM (radio &

TV) and other private radio and

television stations to locate their

transmitters. The station is

categorised as a “Sasaran Penting

Negara” and is situated in a forest

reserve area.

TM’s contribution to creating

environmental awareness is also seen

in Menara Kuala Lumpur. Being the

only tower in the world that is

uniquely nestled within a century old

forest in the city, Menara Kuala

Lumpur is committed to work with

the Wilayah Persekutuan Forestry

Department in promoting eco-

tourism. For nature lovers, the Tower

is targeting to introduce the

Boardwalk as well as Day and Night

Tours where visitors will be able to

see the 11.05 hectares of flora and

fauna found in the Bukit Nanas

Forest Reserve – the oldest gazetted

tropical forest reserve in the country.

The Boardwalk is a 1 km long

platform extension above the ground

connecting the Tower’s upper ground

floor to the forest. With the

Boardwalk, visitors will enjoy a closer

view of the RM450,000 preservation

project undertaken on the 100-year

old Jelutong tree during the

construction of the Tower in 1996.

Similarly, with the ‘Forest in the City’

package, visitors will have the

opportunity to be closer to nature

and enjoy the sights and sounds of

the colourful butterflies, insects,

monkeys, squirrels and exotic birds in

their natural habitat. The forest is

classified as Lowland Dipterocarp

Forest and contains some dominant

tree species and other indigenous

plants.

To help create environmental

awareness in the community, TM

MSC organised a ‘gotong royong’

with the villagers of Kampung Baru

Lanjut, Salak Tinggi on 25 April 2004

which was officiated by YB. Dato’

Liew Chee Kong, ADUN Sungai Pelek.

The ‘gotong royong’ was aimed at

enhancing the relationship between

TM and the local citizens and

authorities as well as promoting a

cleaner environment at Kampung

Baru Lanjut. During the event, an

aerobics session and a friendly

football match were also conducted

and a service counter was opened

for applications, complaints and sales

of prepaid cards.

Eco-tourism – Bukit Nanas Forest Reserve


Page 197


At Celcom, TM’s mobile telecommunications arm, the

safety of its employees is of utmost importance and the

company is committed to providing a safer and healthier

work environment to minimise the risk of work-related

injuries and illnesses.

As such, Celcom conducts its business in a manner

designed to protect the safety and health of not only its

employees but also its customers. The promotion of

safety and occupational health is a vital part of the

company’s culture and is fundamental to the attainment

of its corporate vision, values and principles.

As a telecommunications company, there will be instances

where some of its employees are called to do fieldwork

that will require them to enter ‘hazardous’ areas.

Therefore, Celcom has implemented safety measures and

established guidelines based on international safety

standards to ensure its employees’ safety at all times.

These measures include providing protective head gear,

safety harness/belt, proper shoes and safety jackets to

those who work in potentially hazardous areas.

One of the major issues that Celcom has to deal with is

cellular radiation and its effects on the public. The

radiation safety issue has generated controversy and has

caused some parties to question whether electromagnetic

emissions from telecommunications structures pose a

health risk to the public.

However, exhaustive studies conducted locally and

internationally have shown that there is no evidence

linking telecommunications structures with radiation-

related ailments. It has been found conclusively that all

mobile communications structures emit a low level of

radiation and do not endanger public health.

As with all service providers in Malaysia, Celcom is

operating under internationally-acceptable guidelines and

best practices on the installation of telecommunications

structures and is subject to a number of stringent

guidelines and regulatory approvals. To reassure the

public that there is nothing to fear, Celcom has

embarked on various public education and awareness

programmes to educate the community that cellular

radiation poses no serious threat to health.

Preserving the 100 years oldJelutong tree

Every new generation

sees more, experiences

more and knows more

than the last.

We believe that people,

not technology,

is the greatest

resource we have.

At TM,

we will always invest in

developing minds and

nurturing talents.

Nurturing growtho p e n i n g u p p o s s i b i l i t i e s


Page 200

CORPORATE SOCIAL RESPONSIBILITIES

Corporate and Social Responsibilities

Sports

Education and ICT

Community and International

Corporate Social Responsibility

Corporate Social Responsibility (CSR) is very important

to TM. It is embedded into our core values and

principles and integrated into the way we run our

business. As one of the largest government-linked

companies, we strive to add value and enrich lives

through our contributions to society and the nation.

In the early days of the country’s development, the

Group’s core business of telecommunications fulfilled

an essential social function in improving

communication and accessibility.

Today, with telecommunications progressing at a rapid

pace, TM is no longer confined to providing just the

basic facilities. Technological developments have

necessitated change and innovation, resulting in

different needs and expectations. While the Group

continues to play a key role in spurring development

in many parts of the country by making

communication affordable and accessible, it also

supports and enhances the efficiency and quality of

telecommunications for trade and commerce as

Malaysia moves into the globalised era.

Over the years, TM has remained committed to

community programmes and has promoted excellence

in many fields. In 2004, the Group was actively

involved in various CSR initiatives, especially in events

related to Sports, Education, Information and

Communication Technology (ICT), Health and Social

Services, and the Environment.

SPORTS

TM recognises the importance of sports in helping to

build the nation and it has continued to support both

national and international sporting events through

cash, other forms of assistance or the provision of

communication facilities. We believe our sponsorship

of sports events will help to develop and inculcate a

spirit of excellence in Malaysian youths, whilst

promoting healthy minds and bodies. International

sports events will also help to develop the local

tourism industry and to highlight Malaysia’s capacity

and capability to stage world-class sporting events

successfully.


Page 201

Langkawi International Nature Challenge

One of the international sports-related events sponsored

by TM in 2004 was the Langkawi International Nature

Challenge. About 30 teams participated in the race,

which was held from 12 to 25 August 2004. The race was

divided into four stages with 12 disciplines which

included running, jungle trekking, sea kayaking,

mountain biking, caving, abseiling, obstacle course, night

orienteering, bamboo rafting, swimming and traditional

boat rowing. TM was the main communications service

provider for this event.

Formula One

The Petronas Malaysian Grand Prix has successfully

enhanced the image of Malaysia during the past few

years. Since 2002, TM has been sponsoring free tickets to

the Formula 1 race at the Sepang International Circuit.

Around 1,000 students in the Klang Valley, Selangor,

Pahang, Perak and Negeri Sembilan benefited from TM’s

sponsorship. Tickets were also given to TM’s corporate

customers.

Sarawak Regatta 2004

For the third consecutive year, TM was one of the

sponsors for the Sarawak Regatta. The Sarawak Regatta

is an annual event held at the Kuching Waterfront. The

event is witnessed by thousands of people from all walks

of life. The Sarawak Regatta comprises traditional

Sarawak water sports, including boat races of traditional

longboats and dragon boats, catching ducks in the

Sarawak River and pillow fights.

The event was held from 3 to 5 September 2004.

Asian Youth Football Championship 2004

In October 2004, TM sponsored the Football Association

of Malaysia (FAM) in hosting the Asian Youth Football

Championship. The Asian Youth Football championship is

an international competition, involving more than 400

athletes and officers as well as 700 media representatives.

Corporate Social Responsibilities continued

F1 ticket sponsorship for students

Formula One –Sepang


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There were a total of 16 teams consisting of players

below the age of 20. The competition attracted

participants from countries such as China, Japan, South

Korea, Thailand, Indonesia and Vietnam.

11th Asian Youth Athletics Championship

To encourage sports among Malaysian youth, TM

provided sponsorship for the 11th Asian Youth Athletics

Championship. The event was organised by the Perak

Government and the Malaysian Athletics Amateur

Association.

The international level competition involved more than

500 athletes, officials, supporters and media

representatives from some 44 Asian countries.

Sukan Malaysia (SUKMA X)

This national level sports event was organised by the

State Sports Council, Malaysian Sports Council and the

Police Sports Council.

SUKMA is a multi-sport competition held bi-annually,

using the mini Malaysia Olympics theme. For last year’s

competition, there were 15 contingents participated in

the event from the 13 Malaysian states, Polis DiRaja

Malaysia and Brunei. TM was the main

telecommunications provider for the event.

EDUCATION AND ICT

Education is crucial to a country’s development and TM

remains committed to CSR programmes in this area. In

line with the Government’s move to promote and

encourage higher education, TM has invested in higher

education facilities such as the Multimedia University,

Telekom Training College and Yayasan Telekom Malaysia.

The establishment of these institutions is testimony to the

Group’s continuing commitment to encourage excellence

in education. The Group has also made it a point to

contribute as much as it can to improve training facilities

and to raise awareness of ICT. As a leading Telco, it fully

supports the initiatives taken by the Government to

promote and develop ICT in Malaysia.

During the year, TM contributed to several CSR initiatives

to educate and promote excellence in various educational

and ICT- related fields.

Akademi NUTE

The Telekom Malaysia Workers Association (NUTE)’s move

to set up the NUTE Academy at Wisma NUTE will

enhance skills and knowledge in the telecommunications

industry. As a caring and responsible employer, TM

contributed RM60,000 to the infrastructure development

of this academy. The objective of this academy is to

provide training to TM’s workforce in all fields related

to ICT.

10th SUKMA sponsorship


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TM – PERSAMA Mathematics Camp

Several mathematics camps were conducted nationwide in

conjunction with the TM – PERSAMA Mathematics Camp.

The camps were organised to raise awareness of the

importance of Mathematics among children and to

encourage them to excel in the subject.

In 2004, Mathematics camps were conducted in Negeri

Sembilan, Kedah and Terengganu. Each session was

conducted over a three-day period and was attended by

more than 100 school children from rural schools. The

camps were conducted between May and September

2004 to coincide with the university semester holidays as

the volunteers from PERSAMA (the Malaysian

Mathematics and Science Association) were mainly from

the teaching faculty at local universities.

MSC-APICTA

TM made a cash contribution of RM60,000 to the Prime

Minister’s Best of the Best Award at the MSC-Asia Pacific

ICT Awards (APICTA) 2004.

PERSAMA Mathematics Camp

APICTA was initiated by the Multimedia Development

Corporation with the Prime Minister of Malaysia as its

Patron. The aim is to provide a platform for ICT

innovators and entrepreneurs in the region to benchmark

their products. This is expected to stimulate economic

and trade relations, technology transfer, and business

matching opportunities.

National Telethon for Education

TM contributed RM150,000 to the national telethon for

education. This was a fund-raising telethon for the

education fund of ANSARA (the Maktab Rendah Sains

Mara Former Students Association of Malaysia).

The campaign started on 10 February 2004, culminating

in the grand telethon event on 21 February 2004.

Launch of APICTA-MSC



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World Universities Debating Championship (WUDC)

WUDC is one of the largest non-sporting student events

during the year. For the first time, the Championship was

hosted by Multimedia University. There were over 800

participants from all over the world. TM was the main

sponsor of the Championship.

COMMUNITY & INTERNATIONAL

In line with its philosophy of being a responsible

corporate citizen, TM has been a regular sponsor to

community projects that contribute to the well-being of

society and the nation. It has also sponsored events

which help to promote Malaysia’s standing in the

international business arena.

Langkawi International Dialogue

TM was the main sponsor for the 7th Langkawi

International Dialogue (LID) 2004 which was held from

29 to 31 July 2004. TM has been a sponsor of LID since

1995 and the main sponsor since 1997.

LID, which was first organised in 1995, has become an

important global event for Malaysia in helping to

promote and strengthen interactive networking through

smart partnerships between Malaysia and the

international business community.

WUDC Debating Championship organised by MMU

LID – Promoting strong interactive networking throughsmart partnerships


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Invest Malaysia

Bursa Malaysia held its inaugural Invest Malaysia event inAugust 2004 at the Putra World Trade Centre. Theexposition comprised an exhibition that aimed toshowcase Malaysia’s finest companies, including a seriesof educational seminars and workshops on investmentsand financial markets.

As one of the largest companies listed on Bursa Malaysia,TM was the main sponsor for this exhibition.

8th International Advisory Panel (IAP) Meeting &Multimedia Super Corridor (MSC) Expo

TM sponsored the communication facilities for the 8thIAP Meeting & MSC Expo, amounting to RM160,000.

The IAP is a forum for leading Chief Executive Officers,international experts and local businessmen to share theirviews on shaping Malaysia’s Multimedia Super Corridorfor the future.

Talun Merdeka

TM made a sponsorship to the Talun Merdeka at MenaraKuala Lumpur. The event was held in conjunction withthe 47th Merdeka celebrations organised together withMenara Alor Setar. A total of 47 drummers from various

ethnic groups performed at the open deck of MenaraKuala Lumpur. This was the first Merdeka celebrationevent of this nature representing the youths of thenation.

Malaysia Consumer’s Day

The Consumers Association (FOMCA) plays an importantrole in protecting and educating consumers. DuringConsumer Week from 26 July to 1 August, FOMCAorganised several programmes which included a colouringcontest, a consumerism rights essay, drawing competitionand a consumerism elocution contest for centres ofhigher education. TM contributed in terms of cash forthis event.

First Malaysia Radio Industry Awards (AIR)

The Malaysian Association of Commercial Radio Operatorsconceived the idea of recognising and awardingexceptionally good creative radio commercials at the FirstMalaysia Radio Industry Awards (AIR). TM made asponsorship to this event which will help to encourageexcellence in radio commercials.

Tsunami Disaster

2004 ended with a devastating tsunami which hit coastalareas across the region. It caused fatal destruction andclaimed more than 230,000 lives.

The TM Group has stepped forward to assist the tsunamidevastated areas including Sri Lanka, India, Thailand,Indonesia as well as Malaysia. In total TM Groupcontributed more than RM6.7 million in terms of fundsand manpower towards the disaster relief andreconstruction efforts.

Invest Malaysia, Putra World Trade Centre


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AWARDS & RECOGNITION

• On 16 February 2004, TM wasawarded the KLSE CorporateSectoral Award 2003 forTrading/Services in recognition of itsexemplary corporate conduct. Theaward is designed specifically forpublic listed companies and isawarded to those companies, whichhave demonstrated high standardsof corporate governance, disclosureand transparency together withproactive investor relations’ efforts.

• TM received an award from theChina Press and the Nan YangSiang Pau for its Corporate ChineseNew Year Advertisement –“Moved” in February 2004.

• On 29 March 2005, TM wasawarded with the Commendationfor Social Reporting in AnnualReport at the ACCA MalaysiaEnvironmental and Social ReportingAwards 2004. TM was selected outof 36 entries based on itstransparency and disclosure onenvironmental, social as well as fullsustainability information.

• TM was voted by the readers ofthe Reader’s Digest as one of theSuperbrands of 2004 (Gold). Theaward was received in May 2004.

• On 5 May 2004, TM received theGold Award for being one of thetelecommunications industrySuperbrands of the year. The awardwas given by the SuperbrandsMalaysia Magazine based on TM’smarket dominance, longevity,goodwill, customer loyalty as wellas overall market acceptance.

• VADS Bhd, a subsidiary of TM, wasawarded a Silver Certification byCisco Systems in recognition of itsexpertise in designing,implementing as well as supportingCisco’s Network Solutions.

• TM won Second Place in theCorporate Award organised by TheInstitute of Internal AuditorsMalaysia (IIA Malaysia) on 28September 2004. The award is inrecognition of the Company’s highcommitment towards the ‘CertifiedInternal Auditor Programme (CIA).


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• TM’s 2003 Annual Report won theIndustry Excellence Award – Trading& Services for the eighth time andthe Best Designed Annual Reportfor the second time at the NationalAnnual Corporate Report Awards(NACRA) 2004 on 30 November2004.

• TM Net’s Broadband serviceStreamyx won the CorporateBroadband Service “Reader’s ChoiceAward 2004” on December 2004given by Computerworld magazine.

• Celcom (Malaysia) Berhad won theAnugerah Citra Iklan Radioorganised by the Dewan Bahasa &Pustaka on 7 January 2005.

• TM Net Sdn Bhd won the BestInternet Service Provider 2004award on 10 January 2005 given byPC.com magazine.

• On 21 February 2005 KedaiTelekom Pelangi, Johor Bahru, wonHadiah Utama Anugerah Kualiti YB. Menteri Tenaga, Air danKomunikasi Tahun 2004. Awards forthe Excellent Customer ServiceCounter were received by Celcom’sBandar Baru Klang Branch and thetmnet clickers counter in KelanaJaya Park View, Selangor.

• On 9 Mac 2005, TM was awardedwith “Asian Deals of the Year2005” as well as Asia’s BestManaged Companies 2005 byEuromoney Magazine.

• TM won four awards in theAsiamoney Annual AwardsCeremony – Malaysia’s Best, heldon 22 February 2005, hosted byAsiamoney, a leading capitalmarket publication in Asia. TelekomMalaysia won the Overall BestCorporate Governance Award,Award for Most ImprovedManagement Practices and Awardfor Most Improved InvestorRelations. Additionally, theCompany also received an awardfor Regional Deals of the Year forits USD500 million bond issue inSeptember 2004.


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CORPORATE EVENTS2004

TM Kuala Lumpur Club treated itsemployees to a Family Daygathering in Kuala Lumpur. Some9,000 staff and their families fromall over Klang Valley attended thegathering which was aimed atenhancing relationships betweenmanagement, employees and theirfamilies. The guests were entertainedby well-known comedian, SallehYaacob and TM Cultural Unit.Present at the event with theirrespective families were Tan SriDato’ Ir. Md. Radzi Mansor,Chairman of TM, Dato’ Dr. Md KhirAbdul Rahman, Chief Executive ofTM and Dato’ Dr. Abdul Rahim Hj.Daud, Deputy Chief Executive andPresident of the TM Club.

Women and Family DevelopmentMinister, YB. Dato’ Seri ShahrizatAbdul Jalil flagged off the BlueRide 2004 in a ceremony at MenaraTelekom. Present at the ceremonywas TM’s Chairman Tan Sri Dato’ Ir.Md. Radzi Mansor. Organised inconjunction with the TelekomMalaysia Le Tour de Langkawi 2004,the Blue Ride saw hundreds ofcyclists, escorted by police outridersmaking their way around the city,Petaling Jaya and finishing atMenara Telekom. A Treasure Huntwas also flagged off the samemorning by the Chairman of TM.

18 January 2004 18 January 2004


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Corporate Events 2004 continued

TM registered a revenue of RM11.8billion for the year ended 31 December 2003, a significantincrease of 20 per cent from theprevious year. Net operating profitof the Group climbed to RM1.39billion for the year, representing arobust growth of 59.7 per cent.

The increase in revenue was duelargely to the robust growth inmobile and data services earnings.Cellular earnings contributed 30.6per cent to the total revenue,meeting the target envisaged bythe Group. The telephony businesscontinued to be the main source ofrevenue contributing 53.1 per centof the operating revenue. TM’soverseas investments also showedsignificant improvements,contributing approximately 26 percent to the Group’s profit after tax.

TM signed an agreement with theMelaka State Government for thepurchase of a 4.52 acre tract ofland, costing RM4.73 million locatedat the Melaka International TradeCentre (MITC), Mukim Bukit Baru.MITC has been selected as the newsite for TM Melaka’s Managementand Business Office as it is in astrategic location and has excellentgrowth potential.

26 February 2004 15 March 2004

In conjunction with TM Le Tour deLangkawi 2004, Cavalcade vehicleswere flagged off from MenaraKuala Lumpur. The unique andcolourfully decorated vehicles are apermanent feature for the event.Other events held included a BicycleClinic, Chinese Acrobatic Act, Clownand Fire Eater Appearance as wellas a Milo Tarik competition.

The former Minister of Energy,Communications & Multimedia, YB. Datuk Amar Leo Moggieflagged off the Stage 9 TM Le Tourde Langkawi, which started atMenara Telekom and ended inGenting Highlands. As the TitleSponsor, TM was given the honourof being one of the ‘Host Venues’for Stage 9 of the race. Inconjunction with the event, manyinteresting activities were held,including an Exhibition and SalesCarnival, Karaoke Competition,Drawing Competitions, Lucky Drawsand many others.

25 January 2004 14 February 2004

As a caring corporate organisation,TM contributed 1,000 Formula OnePetronas Malaysia Grand Prix 2004tickets, costing RM100 each to morethan 1,000 selected students from25 schools all over Perak, Pahang,Negeri Sembilan, Selangor andWilayah Persekutuan. This is thethird year that the Company ishanding out the tickets to thestudents.

16 March 2004

YB. Dato’ Seri Dr. Lim Keng Yaik,the newly appointed Minister ofEnergy, Water and Communicationspaid his first Official Visit to TMHeadquarters in Menara Telekom.He was accompanied by his deputy,YB. Dato’ Shaziman Abu Mansorand other Senior Officers of theMinistry. The delegates were briefedon TM’s operations by the seniormanagement.

TM held a farewell dinner inhonour of YBhg. Dato’ Amar LeoMoggie, former Minister of Energy,Communications & Multimedia, whowas retiring after 21 years ofservice. Aptly themed, “Leading theWay Our Nation Communicates”,the dinner was TM’s way ofshowing its appreciation to theindustry icon who has helped shapeMalaysia’s telecommunicationssector for the last two decades.

9 April 2004 12 April 2004


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A special Excellence AwardPresentation Night was held inrecognition of the contribution andexcellent performance of TM’s staffand divisions in 2003. The Companypresented 95 awards to recipientswho were selected based on theirexcellent performance, adherence tothe Company’s core values as wellas their contributions towardsmaking the workplace a moreconducive environment.

Some 1,500 employees of TM from14 state contingents gathered atUniversiti Teknologi Malaysia SportsComplex, Skudai in Johor toparticipate in the Company’s SixthNational Sports Championship(SUTMA), held on 5 to 8 May 2004.The bi-annual championshipfeatured ten sporting eventscomprising golf, netball, hockey,bowling, sepak takraw, volleyball,badminton, ping pong, tennis andfootball. Themed “Sukan PenerajuKecemerlangan”, the sports meetwas aimed at providing employeeswith the opportunity to worktogether and to strengthen theirrelationships as well as toencourage better rapport amongstemployees from the different states.

30 April 2004 6 May 2004


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Together with the Ministry ofEnergy, Water & Communications,TM launched the “Sekolah Angkat”project for Sekolah MenengahKebangsaan Ayer Lanas (SMKAL) inJeli, Kelantan. Under theprogramme, the IT facilities andtelecommunications infrastructure inSMKAL were upgraded withadditional new computers, ascanner, a printer, computersoftware as well as Internetservices.

Under the “Jasamu Dikenang”programme, TM treated 340 retiredemployees to a dinner reception inappreciation for their service,dedication and commitment inmaking TM one of the leadingcommunication companies inMalaysia. The dinner was thehighlight of the three-day eventconsisting of tours and shoppingsprees.

20 June 2004 21 June 2004

In conjunction with Father’s &Mother’s Day celebrations,TIARANITA (Persatuan Isteri-Isteridan Anggota Wanita TM) held adinner reception with the theme“Semakin Hari Semakin Sayang”.During the night, parents of TMwere honoured and shownappreciation.

As an organisation that is focusedon growing interest in Mathematicsamong students, TM conducted its‘Kem Matematik TM – PERSAMA2004’ project in Kedah. The mainobjective of the Camp is to increaseMathematics literacy amongstudents in rural and sub-urbanareas as well as inculcating themthe realisation of the importanceand value of Mathematics in theirlives. Approximately 100 studentstook part in the Camp. Two otherstates, namely Negeri Sembilan andTerengganu, also conducted thecamps in 2004.

22 May 2004 19 June 2004

For the sixth time, TM was themain sponsor for the LangkawiInternational Dialogue (LID 2004),with sponsorship valued at RM2.0million. LID 2004 was attended byapproximately 800 participantscomprising some of the world’sHeads of State and Governments,senior officials, corporate andlabour leaders as well as seniorprofessionals from the academia,media and other key interestgroups. TM also participated in athree-day exhibition during the LIDevent where it showcased theCompany’s innovative products andservices, themed “Opening upPossibilities – Bridging the DigitalDivide”.

27 July 2004


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TM participated in the BangkokInternational ICT Expo 2004, whichwas held in conjunction with the4th ASEAN Telecommunications andInformation Technology MinistersMeeting (TELMIN) in Bangkok,Thailand. Adopting the theme“Opening Up Possibilities…Connecting Communities”, TMexhibited its innovative productsand services through two sections –Real Techno Hub and VirtualTechno Hub – to promote itspotential business ventures in theAsian region whilst showcasing thelatest ICT offerings at theexhibition.

In conjunction with the MerdekaDay celebrations, TM participated inthe “Perbarisan Hari Kebangsaan”in Pahang, the official host for thecelebration for the year 2004. Thisis in line with the Company’saspiration to promote patriotismamong its employees as well asMalaysians at all levels.

4 August 2004 31 August 2004

TM, together with the Government,launched a new package known as“Pakej Pesara Kerajaan” whichoffers residential fixed line servicesto Government retirees as well asarmy retirees aged 55 years old andabove. This is one of the Company’scontributions to retirees, in linewith the Government’s efforts toimprove their quality of life,through the provision oftelecommunications services.

TM participated in the SmallMedium Industry Exhibition(SMIDEX 2004), held from 9 to 11 September 2004. During theevent, TM disseminated informationon its TM EntrepreneurshipProgramme, an initiative by theGroup to help Bumiputeraentrepreneurs to be more proactive,progressive and competitive, thussupporting the Government’saspiration in cultivating acommercial and industrialBumiputera community. Theexhibition also showcased productsand services by the entrepreneursto potential customers.

2 September 2004 8 September 2004


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TM Wholesale, one of TM’sStrategic Business Units feted itscustomers at a dinner with thetheme “A Nite With TM Wholesale’sCustomers”. The dinner receptionwas hosted by its Chief OperatingOfficer, Dato’ Dr. Idris Ibrahim. Theobjective of the dinner receptionwas to forge a closer relationshipbetween the Company and itscustomers as well as promote TMWholesale and its wholesalebusiness principles to companieswith NFP (Network FacilitiesProvider), NSP (Network ServicesProvider) and ASP (ApplicationServices Provider) licenses inMalaysia. Also present at the dinnerwere Dato’ Jamaludin Ibrahim,Chief Executive Officer of Maxis;Mr. Hiomitsu Honda, Chief ExecutiveOfficer of NTT MSC; and Mr. TanSee Yin, Managing Director of TimedotCom.

TM’s Group Chief Executive Officer,Dato’ Abdul Wahid Omar waspresented with the completed 3Danimated “doa” from DatukProfessor Ghauth Jasmon, Presidentof Multimedia University (MMU), atthe official launching ceremony ofthe software held at MMU. Inconjunction with the holy month ofRamadhan, TM and the Faculty ofCreative Multimedia jointlyproduced a 3D animated series onprayers in an effort to teach youngchildren to recite the commonprayers or “doa” through a moreinnovative and interesting method.

6 October 2004 12 October 2004

TM was awarded the FIABCIProperty Award of Distinction 2004(Malaysian Chapter) under theOffice Development Category for itsheadquarters, Menara Telekom.With a towering height of 310m,equivalent to 77 storeys, MenaraTelekom is the latest landmark inthe Kuala Lumpur skyline. In hisspeech at the Gala Dinner, Chairman,Tan Sri Dato’ Ir. Md Radzi Mansorconveyed the Company’s appreciationand honour in receiving such adistinguished award. The buildinghas been recognised not only as anarchitectural landmark but also forits conducive work environment.Apart from TM, the building alsohouses several well-known tenants,namely Daimler Chrysler, Hapag-Lloyd, Unilever, Henkel Malaysia,Penerbangan Malaysia Berhad,Takaful and the IT Department ofTenaga Nasional.

TM participated in the InternationalConference on ICT Business 2004 inMelaka. At the conference, GroupChief Executive Officer of TM, Dato’Abdul Wahid Omar, presented apaper on IT Development inMalaysia and TM’s role insupporting the progress of ICT inMelaka. TM’s products and serviceswere also exhibited. The showcaseincluded Corporate InformationSuperhighway, Wireless VideoConferencing, Tele-SurveillanceSystem as well as TM AutomaticVehicle Location.

24 September 2004 5 October 2004

Group Chief Executive Officer ofTM, Dato’ Abdul Wahid Omarconducted a Media Briefing tounveil the strategic directions andplans of the Company. Hepresented TM’s five broad strategiesand priorities, that is Growing CashFlow and Increasing AssetUtilisation, Capitalising onSustainable Growth in Cellular,Focus on Data, Broadband andValue Added Services, Developing acustomer and service driven cultureas well as Prudent InternationalExpansion.

13 October 2004

Corporate Events continued


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TM treated members of the mediato a Majlis Berbuka Puasa at itsheadquarters at Menara Telekom.Over 100 representatives from thelocal media and TM’s topmanagement were present. Theevent was held to strengthen TM’srelationship with the media.

For the sixth consecutive year, TMsponsored the “KempenKeselamatan Jalan Raya di MusimPerayaan dan Cuti Persekolahan”,aimed at increasing publicawareness on road safety. Throughthe campaign, the Companycomplemented the Malaysian policeforce through its INFOLINE and Toll-Free Services where the publiccould gain access to information ontraffic offences as well as trafficmishaps.

18 October 2004 8 November 2004

TM signed a Memorandum ofUnderstanding (MoU) withMalaysian Airlines (MAS), one thelargest government-linkedcompanies, to collaborate andsynergise business arrangementstowards establishing a smartbusiness partnership. With theagreement, both parties will enjoyspecial rates for products andservices as well as opportunities toleverage businesses through theirrespective channels.

TM feted some 50 orphans fromAsrama Anak Yatim Damai, Kuang,Selangor in conjunction with TM’sHari Raya Aidilfitri and Deepavalicelebrations for its employeeswithin the Klang Valley. During theevent, each orphan received RM50as “duit raya” while the orphanagereceived three computers and aprinter from the Company. Some5,000 employees attended the eventwhich was aimed at fostering closerrapport among the managementand employees of TM.

23 November 2004 26 November 2004


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The Pahang State Governmentsigned up for TM’s Bulk PaymentSystem, specially designed for largeorganisations with multipletelephone number accounts anddifferent dated bills. With the newsystem, all billings and payments,either by cheque or bank draft, willbe processed on a particular date.

24 December 2004

TM held a Majlis Hari Raya “JalinanKemesraan Aidilfitri” with itscorporate customers at MenaraTelekom. Present were 3,000 guestscomprising corporate customers aswell as top management from TM.The event was held in the sharingspirit of Aidilfitri.

TM, through its wholly-ownedinternational investment arm, TMInternational (L) Ltd, reached anagreement with the RajawaliGroup, the principal shareholders ofPT Excelcomindo Pratama (XL), thussuccessfully acquiring 27.3 per centin the Indonesia’s third largestmobile operator. The investment inXL complements TM’s existingregional mobile investments in SriLanka, Bangladesh and Cambodiaand the combined group will havea total of 11.3 million mobilesubscribers.

27 November 2004 9 December 2004

Notes to the Financial Statements continued

FINANCIALS

CONTENTSDirectors’ Report 217

Significant Accounting Policies 224

Income Statements 234

Balance Sheets 235

Consolidated Statement of Changes in Equity 236

Company Statement of Changes in Equity 237

Cash Flow Statements 238

Notes to the Financial Statements 239

Statement by Directors 315

Statutory Declaration 315

Report of the Auditors 316

General Information 317


Page 217

1. The Directors have pleasure in submitting their annual report and the audited financial statements of the Groupand of the Company for the year ended 31 December 2004.

PRINCIPAL ACTIVITIES

2. The principal activities of the Company during the year are the establishment, maintenance and provision oftelecommunication and related services under the licence issued by the Ministry of Energy, Water andCommunications. The principal activities of the subsidiaries are set out in note 41 to the financial statements. Therewas no significant change in the nature of these activities during the year.

RESULTS

3. The results of the operations of the Group and of the Company for the year were as follows:

The Group The CompanyRM million RM million

Profit after taxation 2,676.5 549.8Minority interests (63.0) —

Profit attributable to shareholders 2,613.5 549.8

4. In the opinion of the Directors, the results of the operations of the Group and of the Company during the yearwere not substantially affected by any item, transaction or event of a material and unusual nature.

DIVIDENDS

5. Since the end of the previous year, the dividends paid, declared or proposed on ordinary shares by the Companyare as follows:

RM million

(a) In respect of the year ended 31 December 2003, a final gross dividend of 10.0 sen per share less tax of 28% and a special gross dividend of 10.0 sen per share less tax of 28% were paid on 21 June 2004 481.2

(b) In respect of the year ended 31 December 2004, an interim tax-exempt dividend of 10.0 sen per share was paid on 18 October 2004. 336.8

DIRECTORS’ REPORT FOR THE YEAR ENDED 31 DECEMBER 2004


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Directors’ Report continued

DIVIDENDS (continued)

(c) In respect of the year ended 31 December 2004, the Directors recommend a final tax-exempt dividend of 20.0sen per share (2003: final gross dividend of 10.0 sen per share less tax of 28% and a special gross dividend of10.0 sen per share less tax of 28%) subject to the shareholders’ approval at the forthcoming Annual GeneralMeeting of the Company.

EMPLOYEES’ SHARE OPTION SCHEME

6. The existing Employees’ Share Option Scheme 3 (ESOS 3) was approved by the shareholders at an Extraordinary

General Meeting held on 21 May 2002. On 1 August 2002, options to subscribe for 259,014,000 ordinary shares of

RM1 each under ESOS 3 were granted to eligible Executives and Non-Executives of the Company and its subsidiaries

at an exercise price of RM7.09 per share.

On 20 May 2004, additional options to subscribe for 48,000 ordinary shares of RM1 each were granted to eligible

Non-Executives of the Company at an exercise price of RM8.02 per share.

The principal features of ESOS 3 are as disclosed in note 10(d) to the financial statements.

As at 31 December 2004, options to subscribe for 37,675,000 and 23,000 ordinary shares of RM1 each at the option

price of RM7.09 per share and RM8.02 per share respectively under ESOS 3 remained unexercised. These options

remain in force until 31 July 2007. These options granted do not confer any right to participate in any share issue

of any other company.

The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the

list of option holders and their holdings pursuant to Section 169(11) of the Companies Act, 1965, except for

information of employees who were granted options of above 100,000 shares each.

Other than the Directors’ options disclosed in paragraph 18 below, the list of employees of the Company and its

subsidiaries who were granted more than 100,000 options each under ESOS 3 are as follows:

No. of options No. of options

Name Designation granted exercised

Dato’ Dr. Ir. Mohamad Chief, Group Business Restructuring

Khir Harun and Coordination, TM 120,000 72,000

Dato’ Dr. Idris Ibrahim Chief Operating Officer, TM Wholesale 120,000 20,000

Mohd Yahaya Mohd Shariff Senior Vice President, Network Services,

TM Wholesale 120,000 72,000


Page 219


EMPLOYEES’ SHARE OPTION SCHEME (continued)

No. of options No. of options

Name Designation granted exercised

Towfek Elias Project Director, Shared Services Operation 120,000 44,000

Tan Chian Khai Special Project Manager,

TM International Sdn Bhd* 120,000 25,000

Hj. Hamis Hasan Vice President, Finance TM Retail 120,000 25,000

Dato’ Adnan Rofiee Chief Operating Officer, TM Retail 108,000 66,000

Abdul Majid Abdullah Vice President,

Corporate Strategy & Planning, TM 108,000 66,000

Dato’ Baharum Salleh Chief Executive Officer,

TM Net Sdn Bhd* 108,000 30,000

Datuk Hamzah Yacob Chief Executive Officer,

TM Facilities Sdn Bhd* 108,000 66,000

TM Telekom Malaysia Berhad

* Employees of TM, seconded to respective subsidiaries.

SHARE CAPITAL

7. During the year, the issued and fully paid-up share capital of the Company was increased by the issuance of

131,683,000 and 25,000 ordinary shares of RM1 each at the option price of RM7.09 per share and RM8.02 per share

respectively for cash under ESOS 3. These shares rank pari-passu in all respects with the existing issued ordinary

shares of the Company.

GUARANTEED NOTES

8. On 22 September 2004, the Company’s wholly owned subsidiary, TM Global Incorporated, a company incorporated

in the Federal Territory of Labuan, under the Offshore Companies Act, 1990, issued a 10-year USD500.0 million

Guaranteed Notes. The Notes carry an interest rate of 5.25% per annum payable semi-annually in arrears on

22 March and September commencing in March 2005. The Notes will mature on 22 September 2014. Proceeds from

the transaction are being utilised to refinance TM’s maturing debt and general working capital. The Notes are

unconditional and irrevocably guaranteed by the Company.


Page 220


MOVEMENTS ON RESERVES AND PROVISIONS

9. All material transfers to or from reserves or provisions during the year have been disclosed in the financial statements.

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

10. Before the financial statements of the Group and of the Company were prepared, the Directors took reasonable

steps to:

(a) ascertain that actions had been taken in relation to the writing off of bad debts and the making of allowance

for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate

allowance had been made for doubtful debts; and

(b) ensure that any current assets which were unlikely to be realised at their book value in the ordinary course of

business had been written down to their expected realisable values.

11. At the date of this report, the Directors are not aware of any circumstances which:

(a) would render the amounts written off for bad debts or the amount of allowance for doubtful debts in the

financial statements of the Group and of the Company inadequate to any substantial extent or the values

attributed to current assets in the financial statements of the Group and of the Company misleading; and

(b) have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group

and of the Company misleading or inappropriate.

12. In the interval between the end of the year and the date of this report:

(a) no items, transactions or other events of material and unusual nature has arisen which, in the opinion of the

Directors, would substantially affect the results of the operations of the Group and of the Company for the

year in which this report is made; and

(b) no charge has arisen on the assets of any company in the Group which secures the liability of any other person

nor has any contingent liability arisen in any company in the Group.

13. No contingent or other liability of any company in the Group has become enforceable or is likely to become

enforceable within the period of twelve months after the end of the year which, in the opinion of the Directors,

will or may affect the ability of the Group or of the Company to meet their obligations when they fall due.

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (continued)

14. At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this reportor the financial statements of the Group and of the Company, which would render any amount stated in thefinancial statements misleading.

DIRECTORS

15. The Directors in office since the date of the last report are as follows:

Directors Alternate Directors


Dato’ Abdul Wahid Omar(appointed with effect from 1 July 2004)


Dato’ Haji Abd. Rahim Hj. Abdul Mohammad Zanudin Ahmad Rasidi(appointed with effect from 23 November 2004) (appointed with effect from 23 November 2004)

Dato’ Azman Mokhtar(appointed with effect from 1 June 2004)

YB. Datuk Nur Jazlan Tan Sri Mohamed(appointed with effect from 1 June 2004)

Ir. Prabahar N. K. Singam


Rosli Man

Dato’ Abdul Majid Haji Hussein Mohammad Zanudin Ahmad Rasidi(resigned with effect from 2 October 2004) (ceased with effect from 2 October 2004)

Dato’ Dr. Md Khir Abdul Rahman(resigned with effect from 1 July 2004)

Dato’ Dr. Mohd Munir Abdul Majid(resigned with effect from 1 June 2004)

Tan Poh Keat (resigned with effect from 1 June 2004)

Datuk Dr. Halim Shafie Dato’ Suriah Abd Rahman(retired with effect from 18 May 2004) (ceased with effect from 18 May 2004)

YB. Dato’ Joseph Salang Gandum (resigned with effect from 1 April 2004)

YB. Dato’ Ir. Haji Mohd Zin Mohamed(resigned with effect from 1 April 2004)


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DIRECTORS (continued)

16. In accordance with Article 98(2) of the Company’s Articles of Association, the following Directors are retiring from

the Board at the Twentieth Annual General Meeting and being eligible, will offer themselves for re-election:


Dato’ Azman Mokhtar


Dato’ Haji Abd. Rahim Hj. Abdul

17. In accordance with Article 103 of the Company’s Articles of Association, Dato’ Dr. Abdul Rahim Haji Daud is retiring from

the Board at the Company’s Twentieth Annual General Meeting and being eligible, will offer himself for re-election.

DIRECTORS’ INTEREST

18. In accordance with the Register of Directors’ Shareholdings, the Directors who held office at the end of the year

and have interest in shares and options over shares in the Company and subsidiaries are as follows:

Number of ordinary shares of RM1 each

Balance at Balance at

Interest in the Company 1.1.2004 Bought Sold 31.12.2004

Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor 123,500 — — 123,500

Dato’ Dr. Abdul Rahim Haji Daud 165,000 103,000* 123,000 145,000

* Options exercised during the year

Number of options over ordinary shares of RM1 each


Interest in the Company 1.1.2004 Granted Exercised 31.12.2004

Dato’ Dr. Abdul Rahim Haji Daud 103,000 — 103,000 Nil

Number of ordinary shares of RM1 each


Interest in VADS Berhad 1.1.2004 Bought Sold 31.12.2004

Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor 11,000 — 1,000 10,000

Dato’ Dr. Abdul Rahim Haji Daud 10,000 — — 10,000

Dato’ Lim Kheng Guan 10,000 — 10,000 Nil


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DIRECTORS’ INTEREST (continued)

19. In accordance with the Register of Directors’ Shareholdings, none of the other Directors who held office at the end of

the year have any direct or indirect interests in the shares in the Company and its related corporations during the year.

DIRECTORS’ BENEFITS

20. Since the end of the previous year, none of the Directors have received or become entitled to receive any benefit

(except for the Directors’ fees, remuneration and other emoluments as disclosed in note 4 to the financial

statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm

of which he is a member or with a company in which he has a substantial financial interest and any benefit that

may deemed to have been received by certain Director.

21. Neither during nor at the end of the year was the Company or any of its related corporations, a party to any

arrangement with the object(s) of enabling the Directors to acquire benefits by means of the acquisition of shares

in, or debentures of the Company or any other body corporate, other than options granted to the Directors

pursuant to ESOS 3.

AUDITORS

22. The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.

In accordance with a resolution of the Board of Directors dated 24 February 2005.

TAN SRI DATO’ Ir. MUHAMMAD RADZI HAJI MANSOR

Chairman

DATO’ ABDUL WAHID OMAR

Group Chief Executive Officer


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The following accounting policies have been used consistently in dealing with items which are considered material in

relation to the financial statements, unless otherwise stated.

1. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Group and of the Company have been prepared under the historical cost convention

except as disclosed in the Significant Accounting Policies below.

The financial statements comply with the applicable approved accounting standards in Malaysia and the provisions

of the Companies Act, 1965. The new applicable approved accounting standards considered in these financial

statements are as follows:

– MASB 31 “Accounting for Government Grants and Disclosure of Government Assistance”

– MASB 32 “Property Development Activities”

MASB 31 and MASB 32 does not have a material impact on net profit and shareholders’ equity.

The preparation of financial statements in conformity with the applicable approved accounting standards in Malaysia

and the provisions of the Companies Act, 1965 requires the use of estimates and assumptions that affect the

reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the

financial statements, and the reported amounts of revenue and expenses during the reported period. Although

these estimates are based on the Directors’ best knowledge of current events and actions, actual results could differ

from those estimates.

2. BASIS OF CONSOLIDATION

The consolidated financial statements include the financial statements of the Company and all its subsidiaries made

up to the end of the year. Subsidiaries are those corporations or other entities (including special purpose entities)

in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits

from their activities.

Subsidiaries are consolidated using the acquisition method of accounting whereby the results of the subsidiaries

acquired or disposed during the year are included in the Consolidated Income Statement from the date of their

acquisition up to the date of their disposal. The cost of acquisition is the amount of cash paid and the fair value

of other purchase consideration at the date of acquisition given by the acquirer, together with directly attributable

expenses of the acquisition. At the date of acquisition, the fair value of the subsidiary’s net assets is determined

and these values are reflected in the consolidated financial statements. The difference between the cost of

acquisition over the Group’s share of the fair value of identifiable net assets of the subsidiary acquired at the date

of acquisition is reflected as goodwill.

SIGNIFICANT ACCOUNTING POLICIES FOR THE YEAR ENDED 31 DECEMBER 2004


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Significant Accounting Policies continued

2. BASIS OF CONSOLIDATION (continued)

Minority interest is measured at the minorities’ share of the post acquisition fair values of the identifiable assets

and liabilities of the acquiree. Separate disclosure is made of minority interest.

Inter-company transactions, balances and unrealised gains on transactions are eliminated; unrealised losses are also

eliminated unless cost cannot be recovered. Where necessary, adjustments are made to the financial statements of

subsidiaries to ensure consistency with the Group’s accounting policies.

The gain or loss on disposal of a subsidiary is the difference between the net disposal proceeds and the Group’s

share of its net assets together with any balance of goodwill on acquisition occurring on or after 1 January 2002

and exchange differences which were not previously recognised in the Consolidated Income Statement. Goodwill

occurring prior to 1 January 2002 which has been charged in full to shareholders’ equity is also deducted when

determining the gain or loss on disposal of a subsidiary.

3. ASSOCIATES

Associates are corporations or other entities in which the Group exercises significant influence but which it does not

control. Significant influence is the power to participate in the financial and operating policy decisions of the

associates but not control over those policies. Investments in associates are accounted for in the consolidated

financial statements by the equity method of accounting.

Equity accounting involves recognising the Group’s share of post acquisition results of the associates in the

Consolidated Income Statement and its share of post acquisition movements within reserves in reserves of the Group.

The cumulative post acquisition movements are adjusted against the cost of investment and include goodwill on

acquisition. Equity accounting is discontinued when the carrying amount of the investment in an associate reaches

zero, unless the Group has incurred or made payments on behalf of the associate.

Where necessary, in applying the equity method, appropriate adjustments are made to the associates’ financial

statements to ensure consistency with the Group’s accounting policies.


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4. INTANGIBLE ASSETS

(i) Goodwill

Goodwill represents the excess of the cost of acquisition over the Group’s share of the fair value of the

identifiable net assets of subsidiaries and associates at the date of acquisition. Goodwill on acquisition occurring

on or after 1 January 2002 in respect of a subsidiary is included in the Consolidated Balance Sheet as intangible

asset or, if arising in respect of an associate, is included in the cost of investment in associates.

Capitalised goodwill is tested for impairment at least annually, or if events or circumstances occur indicating

that an impairment may exist. Impairment of goodwill is charged to Consolidated Income Statement as and

when it arises. Impairment of goodwill should not be reversed unless its reversal is due to the effect of a

specific external event of an exceptional nature.

Goodwill on acquisitions occurred prior to 1 January 2002 was written off against reserves in the year of

acquisition. Such goodwill has not been retrospectively capitalised and subjected to impairment test as it was

impractical to reinstate.

(ii) Other Intangible Assets

The total licence fee payable with respect to acquisition of 3G Spectrum licence is capitalised and amortised

over the defined period, from the effective date of commercialisation of services, subject to impairment, to the

end of the assignment period on a straight line basis, not exceeding a period of 15 years. Intangible assets are

not revalued.

5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.

(i) Cost

Cost of telecommunication network comprises expenditure up to and including the last distribution point before

customers’ premises and includes contractors’ charges, materials, direct labour and related overheads. The cost

of other property, plant and equipment comprises their purchase cost and any incidental cost of acquisition.


Page 227


5. PROPERTY, PLANT AND EQUIPMENT (continued)

(ii) Depreciation

Freehold land is not depreciated as it has an infinite life. Leasehold land is amortised in equal instalments over

the periods of the respective leases. Long term leasehold land has an unexpired lease period of 50 years and

above. Other property, plant and equipment are depreciated on a straight line basis to write off the cost of

the assets to their residual values over their estimated useful lives.

During the year, the Company reviewed the estimated economic useful life of submarine cables. Arising from

this review, the estimated useful life of submarine cables was reduced from 15 years to 10 years. In addition,

Celcom (Malaysia) Berhad (Celcom), a wholly owned subsidiary had also reviewed the estimated economic useful

life of specific telecommunication network equipment. Arising from this review, the estimated useful life of

those equipment was reduced from 6 years to less than 1 year.

The estimated useful lives in years assigned to other property, plant and equipment are as follows:

Telecommunication network 3 – 20

Movable plant and equipment 5 – 8

Computer support systems 3 – 5

Buildings 5 – 40

Depreciation on property, plant and equipment under construction commences when the property, plant and

equipment are ready for their intended use.

(iii) Impairment

Where an indication of impairment exists, the carrying amount of property, plant and equipment are assessed

and written down immediately to its recoverable amount. See Significant Accounting Policies note 7 on

Impairment of Assets.

(iv) Gains or Losses on Disposal

Gains or losses on disposal are determined by comparing the proceeds with the carrying amount of the related

asset and are included in the Income Statement.

(v) Repairs and Maintenance

Repairs and maintenance are charged to the Income Statement during the period in which they are incurred.

The cost of major renovations is included in the carrying amount of the asset when it is probable that future

economic benefits in excess of the originally assessed standard of performance of the existing asset will flow

to the Group. This cost is depreciated over the remaining useful life of the related asset.


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6. INVESTMENTS

Investments in subsidiaries and associates are stated at cost. Where an indication of impairment exists, the carrying

amount of the investment is assessed and written down immediately to its recoverable amount.

Investments in International Satellite Organisations, quoted shares within non-current assets and other unquoted

shares are stated at cost. Allowance for permanent diminution in value is made where, in the opinion of the

Directors, there is a decline other than temporary in the value of such investments. Such allowances for permanent

diminution in value is recognised as an expense in the period in which the diminution is identified.

Investments in quoted shares within current assets are carried at the lower of cost and market value, determined on

an aggregate portfolio basis by category of investment. Cost is derived at on the weighted average basis. Market

value is calculated by reference to stock exchange quoted selling prices at the close of business on the balance sheet

date. Increase/decrease in the carrying amount of marketable securities are credited/charged to the Income Statement.

7. IMPAIRMENT OF ASSETS

Property, plant and equipment and other non-current assets, including intangible assets, are reviewed for

impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be

recoverable. Impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its

recoverable amount. The recoverable amount is the higher of an asset’s net selling price and value in use. For the

purpose of assessing impairment, assets are grouped at the lowest level for which there is separately identifiable

cash flows. The impairment loss is charged to the Income Statement.

8. GOVERNMENT GRANTS

As a Universal Service Provider (USP), the Group is entitled to claim certain qualified expenses from the relevant

authorities in relation to USP projects. The claim qualifies as a government grant and is recognised at fair value where

there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions.

Government grants relating to costs are recognised in the Income Statement over the financial period necessary to

match them with the costs they are intended to compensate.

Government grants relating to the purchase of assets are included in non-current liabilities as deferred income and

are credited to the Income Statement on the straight line basis over the estimated useful lives of the related assets.


Page 229


9. INVENTORIES

Inventories are stated at lower of cost and net realisable value. Cost is determined on a weighted average basis.

Net realisable value represents the estimated selling price less all estimated costs to completion. In arriving at the

net realisable value, due allowance is made for all obsolete and slow moving items.

10. TRADE RECEIVABLES

Trade receivables are carried at anticipated realisable value. Bad debts are written off and specific allowances are

made for trade receivables considered to be doubtful of collection. In addition, a general allowance based on a

percentage of trade receivables is made to cover possible losses which are not specifically identified.

11. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise cash in hand, bank balances, demand deposits and bank overdrafts. Cash

equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and

which are subject to insignificant risk of change in value.

12. BONDS, NOTES AND DEBENTURES

Bonds, notes and debentures, issued by the Company and special purpose entities are stated at the net proceeds

received on issue. The finance costs which represent the difference between the net proceeds and the total amount

of the payments of these borrowings are allocated to periods over the term of the borrowings at a constant rate

on the carrying amount and are charged to the Income Statement.

Interest, dividends, losses and gains relating to a financial instrument, or a component part, classified as a liability

is reported within finance cost in the Income Statement.

13. DIVIDENDS TO SHAREHOLDERS OF THE COMPANY

Dividends on ordinary shares are recognised as liabilities when proposed or declared before the balance sheet date.

A dividend proposed or declared after the balance sheet date, but before the financial statements are authorised

for issue, is not recognised as a liability at the balance sheet date but as an appropriation from retained profits.

Upon the dividend becoming payable, it will be accounted for as liability.


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14. OPERATING LEASES

Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are

classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor)

are charged to the Income Statement on the straight line basis over the lease period.

When an operating lease is terminated before the lease period has expired, any payment required to be made to

the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

15. INCOME TAXES

Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and

include all taxes based upon the taxable profits, including withholding taxes payable by a foreign subsidiary or

associate on distributions of retained earnings to companies in the Group, and real property gains taxes payable on

disposal of properties.

Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts

attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements.

Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which

the deductible temporary differences or unutilised tax losses can be utilised.

Tax rates enacted or substantively enacted by the balance sheet date are used to determine deferred tax.

16. CONTINGENT LIABILITIES AND CONTINGENT ASSETS

The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent

liability is a possible obligation that arises from past events whose existence will be confirmed by uncertain future

events beyond the control of the Group or a present obligation that is not recognised because it is not probable that

an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely

rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by uncertain

future events beyond the control of the Group. The Group does not recognise contingent assets but discloses its

existence where inflows of economic benefits are probable, but not virtually certain.


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17. REVENUE RECOGNITION

Operating revenue represents revenue earned from the sale of products and rendering of services net of returns,

duties, sales discounts and sales taxes paid, after eliminating revenue within the Group. Operating revenue is

recognised or accrued at the time of the provision of the products or services.

Dividend income from investment in subsidiaries, associates and other investments is recognised when a right to

receive payment is established.

Finance income includes income from deposits with licensed banks, finance companies, other financial institutions

and staff loans, is recognised on an accrual basis.

18. EMPLOYEE BENEFITS

(i) Short Term Employee Benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the period

in which the associated services are rendered by employees of the Group.

(ii) Contribution to Employees Provident Fund (EPF)

The Group’s contributions to EPF are charged to the Income Statement in the period to which they relate. Once

the contributions have been paid, the Group has no further payment obligations.

(iii) Termination Benefits

Termination benefits are payable whenever an employee’s employment is terminated before the normal

retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The

Group recognises termination benefits when it is demonstrably committed to either terminate the employment

of current employees according to a detailed formal plan without possibility of withdrawal or to provide

termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more

than 12 months after the balance sheet date are discounted to present value.

(iv) Equity Compensation Benefits

Details of the Company’s Employees’ Share Option Scheme are set out in note 10(d) to the financial statements.

The Company does not make a charge to the Income Statement in connection with options granted over the

ordinary shares of the Company. When share options are exercised, proceeds received net of any transaction

costs, are credited to share capital and share premium.

19. FINANCE COST

Cost incurred in connection with financing the construction and installation of property, plant and equipment is

capitalised until the property, plant and equipment are ready for their intended use. All other finance cost is

charged to the Income Statement.


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20. FOREIGN CURRENCY

(i) Foreign EntitiesIncome Statement of foreign subsidiaries/associates are translated into Ringgit Malaysia at average exchangerates for the period and the balance sheets are translated at the closing rate of exchange prevailing at thebalance sheet date. Exchange differences arising from the translation of the foreign subsidiaries/associatesfinancial statements are reflected in the Currency Translation Differences in the shareholders’ equity. Ondisposal of the foreign subsidiaries/associates, such translation differences are recognised in the ConsolidatedIncome Statement as part of the gain or loss on disposal.

Goodwill and fair value adjustments arising on the acquisition of foreign subsidiaries/associates are translatedat the exchange rate prevailing at the date of transaction.

(ii) Foreign Currency Transactions and BalancesForeign currency transactions are accounted for at exchange rates prevailing at the transaction dates. Foreigncurrency monetary assets and liabilities are translated at exchange rates prevailing at the balance sheet date.Exchange differences arising from the settlement of foreign currency transactions and from the translation offoreign currency monetary assets and liabilities are included in the Income Statement.

All other exchange gains or losses are dealt with through the Income Statement.

(iii) Closing RatesThe principal closing rates (units of Malaysian Ringgit per foreign currency) used in translating significantbalances at year end are as follows:

Foreign Currency 31.12.2004 31.12.2003 Foreign Currency 31.12.2004 31.12.2003

US Dollar RM3.80000 RM3.80000 Sri Lanka Rupee RM0.03640 RM0.03946Japanese Yen RM0.03709 RM0.03539 South African Rand RM0.67375 RM0.56929Guinea Franc RM0.00136 RM0.00191 Special Drawing Rights RM5.90140 RM5.64670Bangladesh Taka RM0.06369 RM0.06501 Gold Franc Currency RM1.92793 RM1.84470

21. FINANCIAL INSTRUMENTS

(i) DescriptionA financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financialliability or equity instrument of another enterprise.

A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset fromanother enterprise, a contractual right to exchange financial instruments with another enterprise underconditions that are potentially favourable, or an equity instrument of another enterprise.


Page 233


21. FINANCIAL INSTRUMENTS (continued)

(i) Description (continued)A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset toanother enterprise, or to exchange financial instruments with another enterprise under conditions that arepotentially unfavourable.

(ii) Financial Instruments Recognised on the Balance SheetThe particular recognition and measurement method for financial instruments recognised on the balance sheetis disclosed in the individual significant accounting policy statements associated with each item.

(iii) Financial Instruments Not Recognised on the Balance SheetFinancial derivative hedging instruments are used in the Group’s risk management of foreign currency andinterest rate exposures of its financial liabilities. Hedge accounting principles are applied for the accounting ofthe underlying exposures and their hedge instruments. These hedge instruments are not recognised in thefinancial statements on inception. The underlying foreign currency liabilities are translated at their respectivehedged exchange rate, and differential interest receipts and payments arising from interest rate derivativeinstruments are accrued, so as to match the net differential with the related expenses on the hedged liabilities.

Exchange gains and losses relating to hedge instruments are recognised as a component of finance costs in theIncome Statement in the same period as the exchange differences on the underlying hedged items. No amountsare recognised in respect of future periods.

(iv) Fair Value Estimation for Disclosure PurposesThe fair value of publicly traded financial instruments is based on quoted market prices at the balance sheet date.

In assessing the fair value of non-traded financial instruments, the Group uses a variety of methods and makesassumptions that are based on market conditions existing at each balance sheet date. Quoted market prices areused if available or other techniques, such as estimated discounted value of future cash flows, are used todetermine fair value. In particular, the fair value of financial liabilities is estimated by discounting the futurecontractual cash flows at the current market interest rate available to the Group for similar financial instruments.

The carrying values for financial assets and liabilities with a maturity of less than one year are assumed toapproximate their fair value.

These accounting policies form an integral part of the financial statements set out on pages 234 to 314.


Page 234

THE GROUP THE COMPANYAll amounts are in millions unless Note 2004 2003 2004 2003otherwise stated RM RM RM RM

OPERATING REVENUE 3 13,250.9 11,796.4 7,683.6 7,943.7

OPERATING COSTS 4 (11,523.7) (10,018.2) (7,163.1) (6,916.8)

OPERATING PROFIT 1,727.2 1,778.2 520.5 1,026.9

OTHER OPERATING INCOME 5 156.5 87.1 454.7 289.0

OPERATING PROFIT BEFORE FINANCE COST 1,883.7 1,865.3 975.2 1,315.9

NET FINANCE COST 6 (413.4) (430.0) (107.9) (422.9)

ASSOCIATES– share of profits less losses 163.7 375.2 — —– profit on disposal 1,538.8 — — —

PROFIT BEFORE TAXATION 3,172.8 1,810.5 867.3 893.0

TAXATION– the Company and subsidiaries 7 (473.4) (253.7) (317.5) (364.0)– share of taxation of associates 7 (22.9) (112.6) — —

PROFIT AFTER TAXATION 2,676.5 1,444.2 549.8 529.0

MINORITY INTERESTS (63.0) (53.8) — —

PROFIT ATTRIBUTABLE TO SHAREHOLDERS 2,613.5 1,390.4 549.8 529.0

EARNINGS PER SHARE (sen)– basic 8 78.2 43.6– diluted 8 77.7 43.2

DIVIDENDS PER SHARE (sen)– interim 9 10.0 —– final 9 20.0 10.0– special 9 — 10.0

The above Income Statements are to be read in conjunction with the Significant Accounting Policies on pages 224 to 233and the Notes to the Financial Statements on pages 239 to 314.

Report of the Auditors – Page 316.

INCOME STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004


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THE GROUP THE COMPANYAll amounts are in millions unless Note 2004 2003 2004 2003otherwise stated RM RM RM RM

SHARE CAPITAL 10 3,382.4 3,250.7 3,382.4 3,250.7SHARE PREMIUM 3,848.5 3,046.4 3,848.5 3,046.4RESERVES 11 12,222.4 10,485.3 9,626.3 9,894.5

TOTAL CAPITAL AND RESERVES 19,453.3 16,782.4 16,857.2 16,191.6MINORITY INTERESTS 287.8 245.1 — —

Borrowings 12 9,599.9 10,830.6 3,210.1 6,432.1Payable to subsidiaries 13 — — 4,883.5 2,983.5Customer deposits 15 616.7 626.9 609.2 614.9Deferred tax liabilities 16 2,124.7 2,031.5 1,636.3 1,694.6

DEFERRED AND LONG TERM LIABILITIES 12,341.3 13,489.0 10,339.1 11,725.1

32,082.4 30,516.5 27,196.3 27,916.7

INTANGIBLE ASSETS 17 4,072.7 4,072.7 50.0 50.0PROPERTY, PLANT AND EQUIPMENT 18 19,739.2 21,605.9 13,208.1 14,569.4SUBSIDIARIES 19 — — 9,610.2 10,926.2ASSOCIATES 20 105.7 1,499.6 1.5 1.5INVESTMENTS 21 373.6 384.7 326.2 338.1LONG TERM RECEIVABLES 22 632.8 668.9 632.7 668.8DEFERRED TAX ASSETS 16 229.5 160.4 — —

Inventories 23 195.3 203.6 126.0 103.3Trade and other receivables 24 3,374.6 3,835.0 2,775.3 3,104.5Short term investments 25 150.2 263.4 148.6 260.3Cash and bank balances 26 8,801.6 3,346.1 5,440.4 852.0

CURRENT ASSETS 12,521.7 7,648.1 8,490.3 4,320.1

Trade and other payables 27 4,127.7 4,522.0 4,118.6 2,863.1Borrowings 12 1,184.8 877.8 796.3 2.9Taxation 280.3 124.0 207.8 91.4

CURRENT LIABILITIES 5,592.8 5,523.8 5,122.7 2,957.4

NET CURRENT ASSETS 6,928.9 2,124.3 3,367.6 1,362.7

32,082.4 30,516.5 27,196.3 27,916.7

The above Balance Sheets are to be read in conjunction with the Significant Accounting Policies on pages 224 to 233and the Notes to the Financial Statements on pages 239 to 314.


BALANCE SHEETS AS AT 31 DECEMBER 2004


Page 236

Issued and FullyPaid of RM1 each Non-distributable Distributable

Special Share*/Ordinary Shares

CurrencyShare Share Translation Retained

All amounts are in millions Note Capital Premium Differences Profits Totalunless otherwise stated RM RM RM RM RM

At 1 January 2004 3,250.7 3,046.4 (199.9) 10,685.2 16,782.4

Currency translation differencesarising during the year — — (58.4) — (58.4)

Net loss not recognisedin the Income Statement — — (58.4) — (58.4)

Profit for the year — — — 2,613.5 2,613.5

Dividends paid for year ended– 31.12.2003 9 — — — (481.2) (481.2)

Interim dividendspaid for year ended

– 31.12.2004 9 — — — (336.8) (336.8)

Issue of shares– exercise of share options 131.7 802.1 — — 933.8

At 31 December 2004 3,382.4 3,848.5 (258.3) 12,480.7 19,453.3

At 1 January 2003 3,167.0 2,536.5 (307.1) 9,523.2 14,919.6

Currency translation differencesarising during the year — — 107.2 — 107.2

Net gain not recognisedin the Income Statement — — 107.2 — 107.2

Profit for the year — — — 1,390.4 1,390.4

Dividends paid for year ended– 31.12.2002 — — — (228.4) (228.4)

Issue of shares– exercise of share options 83.7 509.9 — — 593.6

At 31 December 2003 3,250.7 3,046.4 (199.9) 10,685.2 16,782.4

* Issued and fully paid shares include the Special Rights Redeemable Preference Share (Special Share) of RM1. Refer to note 10to the financial statements for details of the terms and rights attached to Special Share.

The above Consolidated Statement of Changes in Equity are to be read in conjunction with the Significant Accounting Policieson pages 224 to 233 and the Notes to the Financial Statements on pages 239 to 314.


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2004


Page 237

Issued and Fully Non-

Paid of RM1 each distributable Distributable

Special Share*/

Ordinary Shares

Share Share Retained

All amounts are in millions Note Capital Premium Profits Total

unless otherwise stated RM RM RM RM

At 1 January 2004 3,250.7 3,046.4 9,894.5 16,191.6

Profit for the year — — 549.8 549.8

Dividends paid for year ended

– 31.12.2003 9 — — (481.2) (481.2)

Interim dividends paid for year ended

– 31.12.2004 9 — — (336.8) (336.8)

Issue of shares

– exercise of share options 131.7 802.1 — 933.8

At 31 December 2004 3,382.4 3,848.5 9,626.3 16,857.2

At 1 January 2003 3,167.0 2,536.5 9,593.9 15,297.4

Profit for the year — — 529.0 529.0

Dividends paid for year ended

– 31.12.2002 — — (228.4) (228.4)

Issue of shares

– exercise of share options 83.7 509.9 — 593.6

At 31 December 2003 3,250.7 3,046.4 9,894.5 16,191.6

* Issued and fully paid shares include the Special Rights Redeemable Preference Share (Special Share) of RM1. Refer to

note 10 to the financial statements for details of the terms and rights attached to Special Share.

The above Company Statement of Changes in Equity are to be read in conjunction with the Significant Accounting

Policies on pages 224 to 233 and the Notes to the Financial Statements on pages 239 to 314.


COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2004


Page 238

THE GROUP THE COMPANY

All amounts are in millions unless Note 2004 2003 2004 2003

otherwise stated RM RM RM RM

CASH FLOWS FROM OPERATING ACTIVITIES 28 5,037.1 4,662.8 2,412.9 2,937.8

CASH FLOWS FROM/(USED IN)

INVESTING ACTIVITIES 29 679.6 (5,618.4) 3,479.0 (5,639.4)

CASH FLOWS (USED IN)/FROM

FINANCING ACTIVITIES 30 (195.5) 2,427.3 (1,303.5) 2,415.4

NET INCREASE/(DECREASE) IN CASH

AND CASH EQUIVALENTS 5,521.2 1,471.7 4,588.4 (286.2)

EFFECT OF EXCHANGE RATE CHANGES (9.4) (13.4) — —

CASH AND CASH EQUIVALENTS

AT BEGINNING OF THE YEAR 3,279.3 1,821.0 852.0 1,138.2

CASH AND CASH EQUIVALENTS

AT END OF THE YEAR 26 8,791.1 3,279.3 5,440.4 852.0

The above Cash Flow Statements are to be read in conjunction with the Significant Accounting Policies on pages 224 to

233 and the Notes to the Financial Statements on pages 239 to 314.


CASH FLOW STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004


Page 239

All amounts are in millions unless otherwise stated

1. PRINCIPAL ACTIVITIES

The principal activities of the Company during the year are the establishment, maintenance and provision of

telecommunication and related services under the licence issued by the Ministry of Energy, Water and

Communications. The principal activities of the subsidiaries are set out in note 41 to the financial statements. There

was no significant change in the nature of these activities during the year.

2. SIGNIFICANT ACQUISITION

In the previous financial year, the Group acquired the remaining equity interest in a 31.25% associate, Celcom (Malaysia)

Berhad (Celcom), through a series of transactions as summarised below, making Celcom a 100% owned subsidiary.

● On 17 April 2003, the Group acquired additional equity interest of 16.68% in Celcom for RM1,684.0 million by way

of share swap. This involved the disposal of the Company’s 100% interest in TM Cellular Sdn Bhd to Celcom for

RM1,684.0 million which was satisfied by the issuance of 635,471,698 new Celcom ordinary shares of RM1.00 each

at RM2.65 per share to Telekom Enterprise Sdn Bhd (TESB), a wholly owned subsidiary of the Company. As a result,

Celcom became a subsidiary of the Group with a total shareholding of 47.93%.

● On 22 April 2003, TESB acquired an additional 55,000,000 Celcom ordinary shares of RM1.00 each from open market

at RM2.715 per share for a total cash consideration amounting to RM149.5 million being 2.1% equity interest.

● On 23 May 2003, the Company (via TESB) undertook a Mandatory General Offer (MGO) for the remaining

1,280,136,722 Celcom ordinary shares of RM1.00 each at RM2.75 per share (Offer Shares) not held by TESB and

persons acting in concert with TESB (PAC). As at the close of the MGO on 27 June 2003, TESB and PAC held

98.54% of the issued and paid-up share capital of Celcom. During the same period, the PAC disposed its

28,616,100 Celcom ordinary shares of RM1.00 each at RM2.75 per share to TESB. Total cash consideration for the

above was RM3,494.5 million.

● On 29 September 2003, the Group acquired the remaining 38,035,820 Celcom shares for RM104.7 million upon

completion of compulsory acquisition.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2004


Page 240


2. SIGNIFICANT ACQUISITION (continued)

The effect of this acquisition on the financial results of the Group during the previous financial year was shownbelow. For ease of comparability, the Group’s share of results of Celcom during the period it was an associate, wasalso disclosed.

2003 2002As an As a As an

associate subsidiary Total associateRM RM RM RM

Operating revenue — 1,862.6 1,862.6 —Operating costs — (1,614.1) (1,614.1) —

Operating profit — 248.5 248.5 —Other operating income — 13.9 13.9 —

Operating profit before finance cost — 262.4 262.4 —Net finance cost — (67.3) (67.3) —Share of results of associate 44.2 8.0 52.2 (15.6)

Profit before taxation 44.2 203.1 247.3 (15.6)Taxation — (60.6) (60.6) —

Profit after taxation 44.2 142.5 186.7 (15.6)Minority interests — (24.9) (24.9) —Less: Group’s share of net profit had the Group

not acquired the additional 68.75% interest (44.2) (44.5) (88.7) —

Profit/(loss) attributable to shareholders — 73.1 73.1 (15.6)

The effect of this acquisition on the Group’s financial position at the previous year end was as follows:

2003RM

Non-current assets (including goodwill on acquisition of Celcom) 5,658.4Current assets 1,809.6Non-current liabilities (1,852.4)Current liabilities (1,160.0)

Group’s share of net assets 4,455.6Less: Amount accounted for as an associate at 16 April 2003 (475.4)Less: Group’s share of profit had the Group not acquired the additional 68.75% interest (44.5)

Increase in Group net assets 3,935.7


Page 241


2. SIGNIFICANT ACQUISITION (continued)

Details of net assets acquired, goodwill and cash flow arising from the acquisition were as follows:

At date ofacquisition

RM

Property, plant and equipment 3,084.8Investment in associates 103.5Inventories 8.7Trade and other receivables 286.3Short term investments 2.1Cash and bank balances (inclusive fixed deposit pledged of RM60.7 million) 890.4Trade and other payables (588.0)Current tax liabilities (34.2)Deferred tax liabilities (238.3)Customer deposits (107.1)Borrowings (1,954.4)

Fair value of total net assets as at 16 April 2003 1,453.8Minority interests at 52.07% (757.0)Less: Amount accounted for as an associate as at 16 April 2003 (475.4)

Fair value of net assets acquired as at 17 April 2003 221.4Fair value of additional net assets acquired from 17 April to 27 June 2003 (50.61%) 735.8Fair value of additional net assets acquired on completion of Compulsory Acquisition (1.46%) 21.2

978.4Goodwill 2,814.8

Cost of acquisition (comprising purchase consideration and expenses directly attributableto the acquisition) 3,793.2

Purchase consideration discharged by cash 3,748.7Expenses directly attributable to the acquisition, paid by cash 44.5Less: Cash and cash equivalents of subsidiary acquired (829.7)

Cash outflow of the Group on acquisition 2,963.5

Cash advance of the Company to a subsidiary company for the acquisition 3,793.2

The fair value of the net assets acquired at 17 April 2003 was provisional as at 31 December 2003 as the fair valuedetermination of Celcom’s telecommunication plant and equipment was in progress and the taxation liabilities ofCelcom had not been agreed with the appropriate tax authorities for many years. The Directors have now concludedthat the fair value of the net assets acquired approximates the provisional fair value calculated as at 17 April 2003.


Page 242


3. OPERATING REVENUE

THE GROUP THE COMPANY2004 2003 2004 2003

RM RM RM RM

RentalsBusiness 710.2 727.5 704.4 726.0Residential 825.3 854.1 823.9 849.9

Sub-total 1,535.5 1,581.6 1,528.3 1,575.9

Calls/UsageBusiness 2,610.8 2,652.7 2,591.0 2,825.9Residential 1,759.3 1,888.7 1,747.0 1,873.7

Sub-total 4,370.1 4,541.4 4,338.0 4,699.6

OthersBusiness 78.5 70.7 77.8 68.1Residential 68.3 73.5 68.3 73.1

Sub-total 146.8 144.2 146.1 141.2

TotalBusiness 3,399.5 3,450.9 3,373.2 3,620.0Residential 2,652.9 2,816.3 2,639.2 2,796.7

Total fixed line 6,052.4 6,267.2 6,012.4 6,416.7

Data services 932.6 942.0 1,263.6 1,225.6Internet and multimedia 515.4 396.5 69.5 68.7Other telecommunication related services 576.5 334.1 309.9 193.7

Total fixed line, data, Internet and multimedia and other telecommunication related services 8,076.9 7,939.8 7,655.4 7,904.7

Cellular 4,949.9 3,606.3 28.2 39.0Non-telecommunication related services 224.1 250.3 — —

TOTAL OPERATING REVENUE 13,250.9 11,796.4 7,683.6 7,943.7


Page 243


4. OPERATING COSTS


RM RM RM RM

Allowance for bad and doubtful debts(net of bad debt recoveries) 376.6 445.8 234.4 189.2

Allowance for diminution in valueof long term investments — — — 10.3

Allowance for diminution in value of subsidiaries — — 150.5 —Allowance/(Reversal) for diminution in value

of quoted investments 76.6 (49.7) 77.1 (47.9)Allowance for amount owing by subsidiaries — — 98.0 105.0Charges and agencies commissions 95.8 74.3 120.4 114.6Depreciation of property,

plant and equipment (PPE) 3,673.0 3,551.3 2,305.3 2,490.9Domestic and international outpayment 1,489.8 1,464.8 1,220.8 1,419.5Impairment of PPE 633.3 99.2 220.4 —Maintenance 604.0 473.8 334.0 286.5Marketing, advertising and promotion 627.9 536.5 91.0 124.9Net loss/(gain) on foreign exchange – realised 5.3 14.7 (9.3) 14.4Net loss/(gain) on foreign exchange – unrealised 29.7 105.9 (9.4) 78.5Rental – land and buildings 181.1 151.2 95.0 95.1Rental – equipment 24.6 12.1 28.8 27.5Rental – others 32.6 45.1 — 1.6Research and development — — 58.3 50.0Staff costs 1,591.2 1,411.6 1,079.6 943.4Staff costs capitalised in PPE (56.9) (60.3) (56.9) (60.2)Supplies and inventories 390.7 351.9 214.9 215.0Transportation and travelling 106.9 79.9 48.5 47.7Universal Service Provision (USP) 265.1 238.7 108.8 187.2Universal Service Obligation (USO)

– in respect of prior year — 26.5 — 26.5Utilities 210.7 200.5 153.2 151.1Write down of investment in a subsidiary — — 3.0 9.1Write off of PPE 60.5 5.8 60.4 4.8Other operating costs 1,105.2 838.6 536.3 432.1

TOTAL OPERATING COSTS 11,523.7 10,018.2 7,163.1 6,916.8

Staff costs include:– Salaries, allowances, overtime and bonus 1,305.0 1,155.9 878.1 766.4– Contribution to Employees Provident Fund (EPF) 190.0 167.3 142.7 120.6– Other employee benefits 93.5 86.4 56.6 55.0– Remuneration of Directors of the Company

– fees 0.6 0.8 0.2 0.3– salaries, allowances and bonus 1.4 1.0 1.3 0.9– ex-gratia payment 0.2 0.1 0.2 0.1– termination benefit 0.3 — 0.3 —– contribution to EPF 0.2 0.1 0.2 0.1


Page 244


4. OPERATING COSTS (continued)


RM RM RM RM

Other operating costs include:– Audit fees

– PricewaterhouseCoopers Malaysia – current year 1.8 1.5 0.6 0.5– in respect of prior year 0.1 — — —

– Others 0.3 0.4 — —

(a) Estimated money value of benefits of Directors amounted to RM55,268 (2003: RM128,289) for the Company andRM437,743 (2003: RM401,364) for the Group.

5. OTHER OPERATING INCOME


RM RM RM RM

Dividend income from subsidiaries — — 121.1 107.2Dividend income from quoted shares 5.1 5.7 4.9 5.5Dividend income from unquoted shares 0.8 0.7 0.8 0.7Income from subsidiaries – interest — — 36.6 54.3

– others — — 2.1 3.4Penalty on breach of contract 21.2 6.1 31.8 6.0Profit on disposal of long term investments 13.3 — 13.3 —Profit on disposal of short term investments 8.6 5.3 8.6 5.3Profit on disposal of investment in an

International Satellite Organisation — 9.7 — 9.7Profit on disposal of a subsidiary — — 34.3 —Profit on disposal of property, plant and equipment 22.3 1.5 100.7 1.3Rental income from buildings 11.9 2.9 50.3 44.2Rental income from vehicles — — 2.7 3.0Revenue from training and related activities 13.3 8.8 14.2 9.3Sale of scrap stores 4.6 3.2 4.6 3.1Others 55.4 43.2 28.7 36.0

TOTAL OTHER OPERATING INCOME 156.5 87.1 454.7 289.0


Page 245


6. NET FINANCE COST

2004 2003

Islamic Islamic

Foreign Domestic Principles Total Foreign Domestic Principles Total

THE GROUP RM RM RM RM RM RM RM RM

Finance cost in respect of:

Borrowings 297.2 207.3 123.0 627.5 263.1 123.2 98.4 484.7

Convertible Bonds — — — — 32.4 — — 32.4

Total finance cost 297.2 207.3 123.0 627.5 295.5 123.2 98.4 517.1

Finance income (13.2) (110.3) (40.5) (164.0) (6.7) (53.2) (27.2) (87.1)

Amortisation of fair value

adjustment on borrowings — (50.1) — (50.1) — — — —

NET FINANCE COST 284.0 46.9 82.5 413.4 288.8 70.0 71.2 430.0

THE COMPANY

Finance cost in respect of:

Borrowings 282.0 217.4 34.0 533.4 253.0 148.5 33.8 435.3

Convertible Bonds — — — — 32.4 — — 32.4

Total finance cost 282.0 217.4 34.0 533.4 285.4 148.5 33.8 467.7

Finance income — (67.5) (20.4) (87.9) — (28.2) (16.6) (44.8)

Gain on termination

of finance facility — (337.6) — (337.6) — — — —

NET FINANCE COST 282.0 (187.7) 13.6 107.9 285.4 120.3 17.2 422.9


Page 246


7. TAXATION


2004 2003 2004 2003

RM RM RM RM

The taxation charge for the Group

and the Company comprise:

Malaysia

Current year taxation 466.2 307.9 413.4 292.9

In respect of prior year (36.9) (93.7) (37.6) (89.9)

Deferred taxation – net 24.1 59.8 (58.3) 161.0

453.4 274.0 317.5 364.0

Overseas

Current year taxation 2.4 1.6 — —

In respect of prior year 17.6 (4.5) — —

Deferred taxation – net — (17.4) — —

20.0 (20.3) — —

473.4 253.7 317.5 364.0

Share of taxation of associates 22.9 112.6 — —

TOTAL TAXATION 496.3 366.3 317.5 364.0

Current taxation:

Current year 491.5 422.1 413.4 292.9

Over accrual in prior years (net) (19.3) (98.2) (37.6) (89.9)

Deferred taxation:

Origination and reversal of

temporary differences 93.2 202.8 (58.3) 161.0

Benefit from previously unrecognised deductible

temporary differences and tax losses (69.1) (160.4) — —

496.3 366.3 317.5 364.0


Page 247


7. TAXATION (continued)

The explanation of the relationship between taxation expense and profit before taxation is as follows:


2004 2003 2004 2003

RM RM RM RM

Profit Before Taxation 3,172.8 1,810.5 867.3 893.0

Taxation calculated at the applicable

Malaysian taxation rate of 28% 888.4 506.9 242.8 250.0

Tax effects of:

– Different taxation rates in other countries 33.4 6.0 — —

– Expenses not deductible for taxation purposes 350.7 273.2 307.9 239.1

– Income not subject to taxation (690.2) (132.7) (184.3) (24.1)

– Expenses allowed for double deduction (11.3) (11.1) (11.3) (11.1)

– Previously unrecognised tax deductible

temporary differences (69.1) (160.4) — —

– Current year tax benefits not recognised 13.7 — — —

– Reversal of previously over

recognised temporary differences — (17.4) — —

Over accrual in prior years (net) (19.3) (98.2) (37.6) (89.9)

TOTAL TAXATION 496.3 366.3 317.5 364.0


Page 248


8. EARNINGS PER SHARE

(a) Basic earnings per share

Basic earnings per share of the Group is calculated by dividing the net profit attributable to shareholders by

the weighted average number of ordinary shares of the Company in issue during the year.

THE GROUP

2004 2003

Net profit attributable to shareholders (RM million) 2,613.5 1,390.4

Weighted average number of ordinary shares in issue (million) 3,340.2 3,188.3

Basic earnings per share (sen) 78.2 43.6

(b) Diluted earnings per share

For the diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to

assume conversion of all dilutive potential ordinary shares.

For ESOS 3 offered since 2002, a calculation is done to determine the number of shares that could have been

acquired at market price (determined as the average annual share price of the Company’s shares) based on the

monetary value of the subscription rights attached to outstanding share options. This calculation serves to

determine the unexercised shares to be added to the ordinary shares outstanding for the purpose of computing

the dilution. No adjustment is made to net profit attributable to shareholders for the share options calculation.

For details of the Employees’ Share Option Scheme, please refer to note 10(d) to the financial statements.

THE GROUP

2004 2003

Net profit attributable to shareholders (RM million) 2,613.5 1,390.4

Weighted average number of ordinary shares in issue (million) 3,340.2 3,188.3

Adjustment for ESOS 3 (million) 24.5 31.0

Weighted average number of ordinary shares for computation

of diluted earnings per share (million) 3,364.7 3,219.3

Diluted earnings per share (sen) 77.7 43.2


Page 249


9. DIVIDENDS IN RESPECT OF ORDINARY SHARES

Dividends proposed/paid in respect of ordinary shares of the Group and Company for the year are as follows:

THE GROUP AND COMPANY

2004 2003

Gross Amount of Gross Amount of

dividend dividend, dividend dividend, net

per share tax-exempt per share of 28% tax

Sen RM Sen RM

Interim dividends 10.0 336.8 — —

Final dividends:

– proposed final dividend 20.0 676.5 10.0 234.1

– proposed special dividend — — 10.0 234.1

– increase due to exercise of share options — — — 13.0

TOTAL DIVIDENDS PROPOSED/PAID 30.0 1,013.3 20.0 481.2

For the financial year ended 31 December 2004, the Board on 24 August 2004 declared an interim tax-exempt

dividend of 10.0 sen per share (2003: Nil). The dividend was paid on 18 October 2004 to shareholders whose names

appear in the Register of Members and Record of Depositors on 20 September 2004.

At the forthcoming Annual General Meeting on 17 May 2005, a final tax-exempt dividend of 20.0 sen per share

amounting to RM676.5 million will be proposed for shareholders’ approval. These financial statements do not reflect

this final dividend which will only be accrued as a liability when approved by shareholders.


Page 250


10. SHARE CAPITAL

THE GROUP AND COMPANY2004 2003

Number Numberof shares RM of shares RM

Authorised:Ordinary shares of RM1 each 5,000.0 5,000.0 5,000.0 5,000.0Special share of RM1 (sub-note a) — — — —Class A Redeemable Preference

Shares of RM0.01 each (sub-note b) — — — —Class B Redeemable Preference

Shares of RM0.01 each (sub-note b) — — — —

Issued and fully paid:Ordinary shares of RM1 each

At 1 January 3,250.7 3,250.7 3,167.0 3,167.0Exercise of share options 131.7 131.7 83.7 83.7

At 31 December 3,382.4 3,382.4 3,250.7 3,250.7

Special share of RM1 (sub-note a)At 1 January and 31 December — — — —

TOTAL ISSUED AND FULLY PAID-UP SHARE CAPITAL 3,382.4 3,382.4 3,250.7 3,250.7

(a) The Special Rights Redeemable Preference Share (Special Share) of RM1 would enable the Government throughthe Minister of Finance to ensure that certain major decisions affecting the operations of the Company areconsistent with the Government’s policy. The Special Shareholder, which may only be the Government or anyrepresentative or person acting on its behalf, is entitled to receive notices of meetings but does not carry anyright to vote at such meetings of the Company. However, the Special Shareholder is entitled to attend andspeak at such meetings.

Certain matters, in particular, the alteration of the Articles of Association of the Company relating to the rightsof the Special Shareholder, the dissolution of the Company, any substantial acquisitions and disposal of assets,amalgamation, merger and takeover, require the prior consent of the Special Shareholder.

The Special Shareholder has the right to require the Company to redeem the Special Share at par at any time.In a distribution of capital in a winding up of the Company, the Special Shareholder is entitled to therepayment of the capital paid-up on the Special Share in priority to any repayment of capital to any othermember. The Special Share does not confer any right to participate in the capital or profits of the Company.


Page 251


10. SHARE CAPITAL (continued)

(b) These comprise 1,000 Class A Redeemable Preference Shares (RPS) (TM RPS A) of RM0.01 each and 1,000

Class B RPS (TM RPS B) of RM0.01 each, which were issued to Rebung Utama Sdn Bhd, a special purpose entity

of the Company, at a premium of RM0.99 each over the par value of RM0.01 each.

TM RPS A and TM RPS B rank pari-passu amongst themselves but below the Special Share and ahead of the

ordinary shares of the Company in a distribution of capital in the event of the winding up or liquidation of

the Company. TM RPS A and TM RPS B have been classified as liabilities.

The details of TM RPS A and TM RPS B are set out in note 13(a) to the financial statements.

(c) During the year, the issued and fully paid-up share capital of the Company was increased by the issuance of

131,683,000 and 25,000 ordinary shares of RM1 each at the option price of RM7.09 per share and RM8.02 per

share respectively for cash under ESOS 3. These shares rank pari-passu in all respects with the existing issued

ordinary shares of the Company.

(d) Employees’ Share Option Scheme

The existing Employees’ Share Option Scheme 3 (ESOS 3) was approved by the shareholders at an Extraordinary

General Meeting held on 21 May 2002. On 1 August 2002, options to subscribe for 259,014,000 ordinary shares

of RM1 each under ESOS 3 were granted to eligible Executives and Non-Executives of the Company and its

subsidiaries at an exercise price of RM7.09 per share. On 20 May 2004, additional options to subscribe for

48,000 ordinary shares of RM1 each were granted to eligible Non-Executives of the Company at an exercise

price of RM8.02 per share.

The principal features of ESOS 3 are as follows:

(i) The eligibility for participation in ESOS is at the discretion of the Option Committee appointed by the

Board of Directors.

(ii) The total number of shares to be offered shall not exceed 10% of the total issued and paid-up shares of

the Company.

(iii) No option shall be granted for less than 1,000 shares nor more than 550,000 shares unless so adjusted

pursuant to item (vi) below.

(iv) The subscription price of each RM1 share shall be the average of the middle market quotation of the

shares as shown in the daily official list issued by the Bursa Malaysia Securities Berhad for the five (5)

trading days preceding the date of offer with a 10% discount.


Page 252



(d) Employees’ Share Option Scheme (continued)(v) Subject to item (vi) below, an employee may exercise his options subject to the following limits:

Number of options granted Percentage of options exercisable (%)

Year 1 Year 2 Year 3 Year 4 Year 5

Below 20,000 100 — — — —20,000 – 99,999 *40 30 **30 — —100,000 and above 20 20 20 20 20

* 40% or 20,000 options, whichever is higher** 30% or the remaining number of options unexercised

(vi) In the event of any alteration in capital structure of the Company during the option period which expireson 31 July 2007, such corresponding alterations shall be made in:

(i) the number of new shares in relation to ESOS so far as unexercised;

(ii) and/or the subscription price.

The movement during the year in the number of options over the ordinary shares of RM1 each of the Companyare as follows:

2004 2003RM8.02 RM7.09 RM7.09

The CompanyAt 1 January — 170,456,000 254,208,000Offered 48,000 — —Adjustment — 20,000 28,000Exercised (25,000) (131,683,000) (83,725,000)Lapsed — (1,118,000) (55,000)

At 31 December 23,000 37,675,000 170,456,000

At 31 December 2004, options to subscribe for 37,675,000 and 23,000 ordinary shares of RM1 each at the optionprice of RM7.09 per share and RM8.02 per share respectively under ESOS 3 remained unexercised. These optionsremain in force until 31 July 2007. These options granted do not confer any right to participate in any shareissue of any other company.


Page 253



(d) Employees’ Share Option Scheme (continued)

Details relating to options exercised during the year are as follows:

Fair value of shares Number of

Exercise date at share issue date Exercise price shares issued

RM/share RM/share 2004 2003

Million Million

January to May 2003 7.30-7.85 7.09 — 4.8

June to July 2003 7.95-8.05 7.09 — 19.9

August to September 2003 7.70-7.75 7.09 — 9.2

October to December 2003 8.25-8.60 7.09 — 49.8

January 2004 8.85 7.09 18.4 —

February to March 2004 9.95-10.15 7.09 61.8 —

April to May 2004 9.40-9.95 7.09 11.1 —

June to August 2004 10.20-10.45 7.09 19.7 —

July 2004 10.45 8.02 — # —

September to October 2004 11.15-11.20 7.09 14.4 —

September to October 2004 11.15-11.20 8.02 — # —

November to December 2004 11.90-12.05 7.09 6.3 —

November to December 2004 11.90-12.05 8.02 — # —

131.7 83.7

Ordinary share capital

– at par (RM million) 131.7 83.7

Share premium (RM million) 802.1 509.9

Proceeds received on exercise

of share options (RM million) 933.8 593.6

Fair value at exercise date

of shares issued (RM million) 1,333.6 688.2

# Less than 0.1 million

The fair value of shares issued on the exercise of options is the mean market price at which the Company’s

share were traded on the Bursa Malaysia Securities Berhad on the day prior to the exercise of the options.


Page 254


11. RESERVES


RM RM RM RM

Retained Profits 12,480.7 10,685.2 9,626.3 9,894.5Currency translation differences arising from

translation of foreign subsidiaries/associates (258.3) (199.9) — —

TOTAL RESERVES 12,222.4 10,485.3 9,626.3 9,894.5

Subject to agreement with the Inland Revenue Board, the Company has sufficient tax credit under Section 108 of theIncome Tax Act, 1967 and tax-exempt income under Section 8 of the Income Tax (Amendment) Act, 1999 at 31 December 2004 to frank the payment of net dividends of approximately RM9,351.2 million (2003: RM9,764.8 million)out of total distributable reserves of RM9,626.3 million (2003: RM9,894.5 million) without incurring additional taxation.

12. BORROWINGS

2004 2003Weighted Weighted

Average Long Short Average Long ShortRate of Term Term Total Rate of Term Term Total

THE GROUP Finance RM RM RM Finance RM RM RM

DOMESTICSecured– Cagamas Loans (sub-note a) 6.35% — 35.4 35.4 6.61% 84.7 1.6 86.3– Borrowings from financial

institutions (sub-note b) 5.28% 227.5 97.5 325.0 5.55% 325.0 227.5 552.5– Borrowings under Islamic

Banking facilities (sub-note b) 7.69% 989.3 215.0 1,204.3 7.62% 1,254.4 35.0 1,289.4

7.16% 1,216.8 347.9 1,564.7 6.98% 1,664.1 264.1 1,928.2

Unsecured– Redeemable Bonds (note 13(c)

to the financial statements) 5.79% 3,000.0 — 3,000.0 5.88% 3,000.0 — 3,000.0– Borrowings from financial

institutions (sub-note c) 6.75% 6.3 — 6.3 3.85% 553.9 518.7 1,072.6– Borrowings under Islamic

Banking facilities 5.17% 689.0 7.1 696.1 5.16% 689.0 12.8 701.8– Bank overdrafts (sub-note d) 6.50% — 3.0 3.0 6.50% — 3.0 3.0

5.68% 3,695.3 10.1 3,705.4 5.32% 4,242.9 534.5 4,777.4

Total Domestic 6.12% 4,912.1 358.0 5,270.1 5.80% 5,907.0 798.6 6,705.6


Page 255


12. BORROWINGS (continued)



THE GROUP Finance RM RM RM Finance RM RM RM

FOREIGNSecured– Borrowings from financial

institutions (sub-note e) 4.49% 85.8 36.8 122.6 5.04% 106.4 36.6 143.0– Other borrowings — — — — 2.61% — 2.4 2.4

4.49% 85.8 36.8 122.6 5.00% 106.4 39.0 145.4

Unsecured– Notes and Debentures (sub-note f) 6.66% 3,781.7 759.5 4,541.2 6.87% 2,665.0 — 2,665.0– Borrowings from financial

institutions 3.30% 769.8 25.8 795.6 2.05% 2,096.7 32.2 2,128.9– Other borrowings 4.38% 50.5 4.7 55.2 4.44% 55.5 4.9 60.4– Bank overdrafts — — — — 10.00% — 3.1 3.1

6.14% 4,602.0 790.0 5,392.0 4.73% 4,817.2 40.2 4,857.4

Total Foreign 6.11% 4,687.8 826.8 5,514.6 4.74% 4,923.6 79.2 5,002.8

TOTAL BORROWINGS 6.11% 9,599.9 1,184.8 10,784.7 5.35% 10,830.6 877.8 11,708.4

2004 2003Domestic Foreign Total Domestic Foreign Total

RM RM RM RM RM RM

The Group’s long term borrowingsare repayable as follows:

After one year and up to five years 1,912.1 808.9 2,721.0 2,383.2 2,919.9 5,303.1After five years and up to ten years 2,000.0 3,120.5 5,120.5 2,000.0 1,240.2 3,240.2After ten years and up to fifteen years 1,000.0 14.3 1,014.3 1,000.0 19.8 1,019.8After fifteen years (sub-note c) — 744.1 744.1 523.8 743.7 1,267.5

4,912.1 4,687.8 9,599.9 5,907.0 4,923.6 10,830.6


Page 256





THE COMPANY Finance RM RM RM Finance RM RM RM

DOMESTICSecured– Cagamas Loans (sub-note a) 6.35% — 35.4 35.4 6.61% 84.7 1.6 86.3

6.35% — 35.4 35.4 6.61% 84.7 1.6 86.3

Unsecured– Borrowings from financial

institutions (sub-note c) — — — — 8.00% 1,000.0 — 1,000.0– Borrowings under Islamic

Banking facilities 5.19% 689.0 — 689.0 5.19% 689.0 — 689.0

5.19% 689.0 — 689.0 6.86% 1,689.0 — 1,689.0

Total Domestic 5.25% 689.0 35.4 724.4 6.84% 1,773.7 1.6 1,775.3

FOREIGNUnsecured– Notes and Debentures (sub-note g) 7.68% 1,881.7 759.5 2,641.2 6.87% 2,665.0 — 2,665.0– Borrowings from financial

institutions 2.13% 627.2 — 627.2 1.71% 1,980.8 — 1,980.8– Other borrowings 1.38% 12.2 1.4 13.6 1.40% 12.6 1.3 13.9

Total Foreign 6.59% 2,521.1 760.9 3,282.0 4.66% 4,658.4 1.3 4,659.7

TOTAL BORROWINGS 6.35% 3,210.1 796.3 4,006.4 5.26% 6,432.1 2.9 6,435.0

2004 2003Domestic Foreign Total Domestic Foreign Total

RM RM RM RM RM RM

The Company’s long term borrowingsare repayable as follows:

After one year and up to five years 689.0 632.4 1,321.4 773.7 2,769.6 3,543.3After five years and up to ten years — 1,143.6 1,143.6 — 1,143.9 1,143.9After ten years and up to fifteen years — 1.0 1.0 — 1.2 1.2After fifteen years (sub-note c) — 744.1 744.1 1,000.0 743.7 1,743.7

689.0 2,521.1 3,210.1 1,773.7 4,658.4 6,432.1


Page 257



The currency exposure profile of borrowings is as follows:


RM RM RM RM

– Ringgit Malaysia 5,270.1 6,705.6 724.4 1,775.3– US Dollar 4,734.5 4,021.6 2,641.2 3,817.5– Japanese Yen 627.2 828.4 627.2 828.4– Other currencies 152.9 152.8 13.6 13.8

10,784.7 11,708.4 4,006.4 6,435.0

(a) Borrowings from Cagamas Berhad secured by way of assignment of the titles of properties relating to staffhousing loans.

(b) Syndicated term loan facilities and Islamic Private Debt securities issued by Celcom, a wholly owned subsidiary.The borrowings are secured by deed of assignment over Celcom’s key bank collection accounts and designatedbank accounts which requires Celcom to deposit a proportion of its cash flows into designated bank accountsfrom which funds can be utilised only for interest and principal repayments on these borrowings.

Under the respective debt covenants, Celcom is required to comply with certain conditions which includes notto be in breach of certain agreed financial ratios summarised as follows:

– debt equity ratio of not more than 1.25;– debt over EBITDA ratio of not more than 2.5;– EBITDA over finance cost ratio of more than 5; and– finance service coverage ratio of more than 1.2.

(c) The Group and the Company exercised the option to prepay the total domestic loan outstanding of RM523.8million and RM1,000.0 million respectively in 2004.

(d) The bank overdrafts were unsecured and interests were payable at rates which varied according to the lenders’prevailing base lending rates. Interest rate during the year was 6.5% per annum (2003: ranged from 6.5% to 6.9%).

(e) Secured by way of fixed charge on property, plant and equipment of a subsidiary (note 18 to the financialstatements).

(f) Consists of USD200.0 million 7.125% Notes due 2005, USD300.0 million 7.875% Debentures due 2025, USD300.0million 8.0% Guaranteed Notes due 2010 and USD500.0 million 5.25% Guaranteed Notes due 2014.

(g) Consists of USD200.0 million 7.125% Notes due 2005, USD300.0 million 7.875% Debentures due 2025 andUSD300.0 million 8.0% Guaranteed Notes due 2010.


Page 258


13. PAYABLE TO SUBSIDIARIES

(i) On 12 December 2003, the Company issued for cash 1,000 Class A Redeemable Preference Shares (RPS) (TM RPS

A) and 1,000 Class B RPS (TM RPS B) to Rebung Utama Sdn Bhd (RUSB), a special purpose entity of the

Company, at a premium of RM0.99 each over the par value of RM0.01 each.

Subsequently, on 30 December 2003, the Company issued RM1,983.5 million nominal value 10-year redeemable

unsecured bonds due 2013 (Tranche 1) and RM1,000.0 million nominal value 15-year redeemable unsecured

bonds due 2018 (Tranche 2) (collectively referred to as TM bonds) to RUSB.

As part of an overall cost efficient funding structure, the funds for the subscription of the Company’s RPS and

bonds were raised by RUSB vide the issuance of RM2,987.0 million RPS (RUSB RPS) to Tekad Mercu Berhad

(Tekad Mercu), another special purpose entity of the Company.

Tekad Mercu had, in turn, issued RM2,000.0 million nominal value 10-year redeemable unsecured bonds due

2013 (Tranche 1) and RM1,000.0 million nominal value 15-year redeemable unsecured bonds due 2018 (Tranche

2) (collectively referred to as Tekad Mercu bonds) to investors on 30 December 2003 to finance the subscription

of the RUSB RPS (sub-note c).

(ii) On 22 September 2004, the Company’s wholly owned subsidiary, TM Global Incorporated, a company

incorporated in the Federal Territory of Labuan, under the Offshore Companies Act, 1990, issued a 10-year

USD500.0 million Guaranteed Notes. The Notes carry an interest rate of 5.25% per annum payable semi-

annually in arrears on 22 March and September commencing in March 2005. The Notes will mature on

22 September 2014. Proceeds from the transaction are being utilised to refinance TM’s maturing debt and

general working capital. The Notes are unconditional and irrevocably guaranteed by the Company.

Listed below are the effects of the transactions to the Company:

2004 2003

THE COMPANY RM RM

(i) Payable to a subsidiary company, RUSB

TM RPS A of RM1,000 (sub-note a) — —

TM RPS B of RM1,000 (sub-note a) — —

10-year redeemable unsecured bonds due 2013 (Tranche 1) (sub-note b) 1,983.5 1,983.5

15-year redeemable unsecured bonds due 2018 (Tranche 2) (sub-note b) 1,000.0 1,000.0

(ii) Payable to a subsidiary company, TM Global Incorporated 1,900.0 —

4,883.5 2,983.5


Page 259


13. PAYABLE TO SUBSIDIARIES (continued)

(a) TM RPS A and TM RPS BTM RPS A and TM RPS B issued by the Company to RUSB have been classified as liabilities and accordingly,dividends on these preference shares are recognised in the Income Statement as interest expense.

The salient terms of the RPS are as follows:

(i) The preference shares, 1,000 RPS A and 1,000 RPS B are both issued at RM0.01 par value and a premiumof RM0.99 each.

(ii) TM RPS A and TM RPS B rank pari-passu amongst themselves but below the Special Share and ahead ofthe ordinary shares of the Company in a distribution of capital in the event of the winding up orliquidation of the Company.

(iii) The non-cumulative dividends, when declared by the Board of Directors of the Company, are payable inarrears at the end of every six (6) month period commencing from the date of issue of the RPS of 12 December 2003, the amount which will be at the discretion of the Directors.

(iv) The RPS is not convertible and shall not confer on the holder thereof any right to participate on a returnin excess of capital on liquidation, winding up or otherwise of the Company, other than on redemption,up to the redemption price of RM1.00 for each RPS A and RPS B.

(v) Both RPS A and RPS B do not have fixed maturity dates and may be redeemed in cash at the option ofthe Company at any time, at a redemption price of RM1 per share.

(b) TM BondsThe principal features of the bonds issued by the Company to RUSB are as follows:

(i) Unless previously redeemed, purchased and cancelled, the bonds are redeemable by the Company on 30 December 2013 and 28 December 2018 respectively at nominal amount together with accrued andunpaid interest. The bonds may also be redeemed by the Company at any time after the issue date byprivate arrangement with RUSB.

(ii) Payment of coupon on the bonds may either be:

(a) – interest of 6.25% per annum payable semi-annually in arrears on the Tranche 1 bonds, and– interest of 5.25% per annum payable semi-annually in arrears on the Tranche 2 bonds, with the

option to reset these rates after the fifth year; or

(b) – net dividends on both TM RPS A and TM RPS B, which shall be equal to the interest on Tranche 1and Tranche 2 of the bonds less any amounts in the Designated Accounts, being accountsdesignated to capture all collections of dividends and tax refunds by the authorities, and

– a nominal interest of 0.01% per annum payable semi-annually.

(iii) The bonds will constitute direct, unconditional and unsecured obligations of the Company and will at alltimes rank pari-passu, without discrimination, preference or priority amongst themselves and at least pari-passu with all other present and future unsecured and unsubordinated obligations of the Company, subjectto those preferred by law or the transaction documents.

(iv) The bonds are not convertible, not transferable and not tradeable.


Page 260


13. PAYABLE TO SUBSIDIARIES (continued)

(c) Tekad Mercu BondsThe principle features of the bonds issued by Tekad Mercu are as follows:

(i) Unless previously redeemed, purchased and cancelled, the bonds are redeemable by Tekad Mercu on 30 December 2013 and 28 December 2018 respectively at nominal amount together with accrued andunpaid interest.

(ii) In respect of Tranche 2 only,

(a) Tekad Mercu has the right to redeem all of the outstanding Tekad Mercu bonds (Tranche 2) on the10th and the 20th coupon payment date (’Optional Redemption Date’) with advance notice to thebondholders at nominal amount together with accrued and unpaid interest (up to but excluding therelevant Optional Redemption Date) in respect thereof.

(b) If on the day falling 20 business days prior to any Optional Redemption Date, the rating of the TekadMercu bonds (Tranche 2) shall be below AAA or its equivalent as confirmed by the Calculation Agent,then Tekad Mercu shall be obliged to redeem all outstanding Tekad Mercu bonds (Tranche 2) on therelevant Optional Redemption Date. Redemption of the Tekad Mercu bonds (Tranche 2) shall be attheir nominal value together with all accrued interest (up to but excluding the relevant OptionalRedemption Date) in respect thereof.

(iii) The bonds may also be purchased, in whole or in part, by the Company, at any time at any price in theopen market or by private treaty.

(iv) Payment of coupon on the bondsInterest rate of 6.20% per annum payable semi-annually in arrears on the Tranche 1 bonds and interestrate of 5.25% per annum payable semi-annually in arrears on the Tranche 2 bonds with the option ofreset these rates after the fifth year.

(v) The bonds will constitute direct, unconditional and unsecured obligations of Tekad Mercu and will at alltimes rank pari-passu without discrimination, preference or priority amongst themselves and at least pari-passu with all other present and future unsecured and unsubordinated obligations of Tekad Mercu, subjectto those preferred by law or the transaction documents.

(vi) The bonds are not convertible but transferable, subject to certain selling restrictions.

(vii) The Company has granted a Put Option in favour of the security trustee of the bonds for the benefit ofthe holders of the bonds. The Put Option will allow the holders of the bonds to have direct recourse onthe Company for the following circumstances:

(a) on a pre-agreed time frame, there is insufficient amounts in the relevant Designated Account to meetcoupon payments and/or principal redemption of the bonds on the relevant due date for payment;

(b) an event of default has been declared under the bonds; and

(c) an event of default has been declared under the Put Option.

None of the TM RPS, TM bonds, Tekad Mercu bonds and TM Global Incorporated Notes have been redeemed,purchased or cancelled during the financial year.


Page 261


14. HEDGING TRANSACTIONS

(a) Long Dated Swap

Underlying LiabilityUSD300.0 million 7.875% Debentures Due 2025In 1998, the Company entered into a long dated swap, which will mature on 1 August 2025.

Hedging InstrumentThe Company made a payment of USD5.0 million and is obliged to pay fixed amounts of JPY209.9 million semi-annually on each 1 February and 1 August, up to and including 1 August 2025.

Prior to 1 February 2004, the counter-party is not obliged to agree to any request by the Company to terminatethe transaction. Commencing from 1 February 2004, the Company has the right to terminate the transaction ata rate mutually agreed with the counter-party. However, the Company intends to hold the contract to maturity.

On 1 August 2025, the Company will receive RM750.0 million from the counter-party. These proceeds will beswapped for USD300.0 million at a pre-determined exchange rate of RM2.5 to USD1.0, which will be used forthe repayment of the USD300.0 million 7.875% redeemable unsecured Debentures. The effect of thistransaction is to effectively build up a sinking fund with an assured value of USD300.0 million on 1 August2025 for the repayment of the Debentures.

(b) Cross-currency Interest Rate Swap (CCIRS)

Underlying LiabilityUSD200.0 million 7.125% Notes Due 2005In 1995, the Company issued USD200.0 million 7.125% Notes due 2005. The Notes are redeemable in full on 1 August 2005.

Hedging InstrumentIn 1999, the Company entered into a CCIRS, on a USD50.0 million tranche of the above Notes, for the periodfrom 5 March 1999 to 1 August 2005. The effect of the transaction is to convert USD50.0 million of the fixedrate Notes to a fixed rate JPY liability of 1.25% per annum with a premium on redemption. The premium onthe redemption of the JPY leg is dependent on the USD/JPY exchange rate on the date of maturity,nevertheless the final redemption amount is range bound between a minimum of JPY6,080.0 million pluscoupon repayment of maximum JPY1,520.0 million.

The Company had been recognising the maximum coupon repayment based on a constant rate of return over thelife of the instrument with the assumption of the final redemption amount being the maximum amount payable.

On 17 November 2004, the Company terminated the CCIRS transaction before its maturity on 1 August 2005.USD25.0 million was terminated at the exchange rate of USD/JPY 104.63 resulting in a mark-to-market loss ofUSD7.9 million and the balance of USD25.0 million was terminated at the exchange rate of USD/JPY of 104.00resulting in a mark-to-market loss of USD8.3 million. In total, the Company paid USD16.2 million (equivalent toRM61.6 million) to terminate the CCIRS transaction. This termination has no material impact to the Group profitafter taxation as the amount was provided in the Consolidated Income Statement over the period of the swap.


Page 262


14. HEDGING TRANSACTIONS (continued)

(c) Cross-currency Interest Rate Swap (CCIRS)

Underlying LiabilityUSD150.0 million Unsecured Syndicated Term LoanOn 29 June 2000, the Company refinanced its USD350.0 million syndicated term loan into two tranchescomprising USD200.0 million due on 30 June 2003 and USD150.0 million due on 29 June 2007. The first trancheof USD200.0 million has been fully paid in 2003.

Hedging InstrumentOn 26 July 2001, the Company entered into a USD150.0 million CCIRS. The swap has the following new termswhereby, the Company will receive USD150.0 million in return for the payment of JPY17,324.0 million onmaturity of the USD150.0 million tranche of the syndicated term loan on 29 June 2007. The swap entitles theCompany to receive floating interest at 6-month USD Libor, and obliges it to pay interest at 6-month USD Liborless 1.504% per annum. The net effect of the CCIRS is to convert the Company’s USD150.0 million debtobligation into JPY at the principal exchange rate of JPY115.4933 at the maturity date of 29 June 2007.

On 2 April 2004, the Company restructured its existing USD150.0 million CCIRS. Following the restructuring ofthe CCIRS the Company will now receive USD150.0 million in return for payment of JPY17,134.5 million onmaturity of the underlying syndicated term loan on 29 June 2007. The restructured swap entitles the Companyto receive a floating interest rate of 6-month USD Libor per annum and obliges it to pay interest at a floatingrate of 6-month USD Libor-in-arrears minus 1.504%.

The objective of this transaction is effectively to convert the principal loan amount from USD liability into JPYliability, thereby reducing the interest payable on the USD150.0 million outstanding syndicated term loan.

(d) Interest Rate Swap (IRS)

Underlying LiabilityUSD300.0 million 8.0% Guaranteed Notes Due 2010In 2000, the Company issued USD300.0 million 8.0% Guaranteed Notes due 2010. The Notes are redeemable infull on 7 December 2010.

Hedging InstrumentOn 29 October 2003, the Company entered into an IRS agreement with notional principal of USD150.0 millionthat entitles it to receive interest at fixed rate of 8.0% per annum and obliges it to pay interest at floatingrate of 6-month USD Libor plus 5.10%. The swap will mature on 7 December 2005.

Subsequently, on 1 April 2004, the Company entered into another IRS agreement with a notional principal ofUSD150.0 million that entitles it to receive interest at a fixed rate of 8.0% per annum and obliges it to pay interestat a floating rate of 6-month USD Libor-in-arrears plus 5.255%. The swap will mature on 7 December 2006.


Page 263


14. HEDGING TRANSACTIONS (continued)

(e) Interest Rate Swap (IRS)

Underlying LiabilityUSD300.0 million 7.875% Debentures Due 2025In 1998, the Company issued USD300.0 million 7.875% Debentures due 2025.

Hedging InstrumentOn 2 April 2004, the Company entered into an IRS agreement with a notional principal of USD150.0 million thatentitles it to receive interest at a fixed rate of 7.875% per annum and obliges it to pay interest at a floatingrate of 6-month USD Libor-in-arrears plus 5.05%. The swap will mature on 1 August 2006.

(f) Interest Rate Swap (IRS)

Underlying LiabilityRM1,000.0 million 5.25% Bond Due 2018In 2003, the Company issued RM1,000.0 million 5.25% Bond due 2018.

Hedging InstrumentOn 2 April 2004, the Company entered into an IRS agreement with a notional principal of RM200.0 million thatentitles it to receive interest at a fixed rate of 5.25% per annum and obliges it to pay interest at a floating rateof 6-month USD Klibor-in-arrears plus 1.78%. The swap will mature on 13 June 2006.

Subsequently, on 22 April 2004, the Company entered into another IRS agreement with a notional principal ofRM200.0 million that entitles it to receive interest at a fixed rate of 5.25% per annum and obliges it to payinterest at a floating rate of 6-month USD Klibor-in-arrears plus 1.62%. The swap will mature on 13 June 2006.

15. CUSTOMER DEPOSITS


RM RM RM RM

Telephones 583.3 592.2 575.8 580.2Cellular services 144.2 156.7 — —Data services 31.4 32.4 31.4 32.4Others 2.0 2.3 2.0 2.3

760.9 783.6 609.2 614.9Amount included under other payables (144.2) (156.7) — —

TOTAL CUSTOMER DEPOSITS 616.7 626.9 609.2 614.9

Telephone customer deposits are subjected to rebate at 5% per annum in accordance with Telephone Regulations, 1996.


Page 264


16. DEFERRED TAX

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assetsagainst current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts,determined after appropriate offsetting, are shown in the balance sheet:


RM RM RM RM

Deferred tax assets 229.5 160.4 — —Deferred tax liabilities:

Subject to income tax 2,124.7 2,031.5 1,636.3 1,694.6

TOTAL DEFERRED TAX 1,895.2 1,871.1 1,636.3 1,694.6

(a) Deferred Tax AssetsAt 1 January 160.4 — — —Current year credited/(charged) to

Income Statement arising from:– property, plant and equipment 90.0 65.1 — —– tax losses (20.9) 46.5 — —– others — 48.8 — —

Total credited to Income Statement 69.1 160.4 — —

At 31 December 229.5 160.4 — —

(b) Deferred Tax LiabilitiesAt 1 January 2,031.5 1,590.3 1,694.6 1,533.6Current year charged/(credited) to

Income Statement arising from:– property, plant and equipment 110.2 179.5 (58.3) 154.8– intangible assets — 14.0 — 14.0– others (17.0) 9.3 — (7.8)

Total charged/(credited) to Income Statement 93.2 202.8 (58.3) 161.0

Current year charged directly toequity arising from:– acquisition of a subsidiary — 238.3 — —

Total charged directly to equity — 238.3 — —

Currency translation differences — 0.1 — —

At 31 December 2,124.7 2,031.5 1,636.3 1,694.6


Page 265


16. DEFERRED TAX (continued)

The tax effect of deductible temporary differences and unutilised tax losses of subsidiaries for which no deferredtax asset is recognised in the balance sheet are as follows:

THE GROUP2004 2003

RM RM

Deductible temporary differences 450.9 508.4Tax losses 327.6 325.5

778.5 833.9

Breakdown of cumulative balances by each type of temporary difference:


RM RM RM RM

(a) Deferred Tax AssetsProperty, plant and equipment 491.2 751.8 — —Tax losses 25.6 46.5 — —Others 219.3 171.2 159.8 122.5

736.1 969.5 159.8 122.5Offsetting (506.6) (809.1) (159.8) (122.5)

Total Deferred Tax Assets After Offsetting 229.5 160.4 — —

(b) Deferred Tax LiabilitiesProperty, plant and equipment 2,617.3 2,809.6 1,782.1 1,803.1Other intangible assets 14.0 14.0 14.0 14.0Others — 17.0 — —

2,631.3 2,840.6 1,796.1 1,817.1Offsetting (506.6) (809.1) (159.8) (122.5)

Total Deferred Tax Liabilities After Offsetting 2,124.7 2,031.5 1,636.3 1,694.6


Page 266


17. INTANGIBLE ASSETS

OtherIntangible

THE GROUP Goodwill Assets TotalRM RM RM

Net Book ValueAt 1.1.2004 4,022.7 50.0 4,072.7Acquisition of remaining equity interests in subsidiaries 5.0 — 5.0Impairment (5.0) — (5.0)

At 31.12.2004 4,022.7 50.0 4,072.7

At 1.1.2003 — — —Transferred from associates 1,207.9 — 1,207.9Acquisition of a subsidiary 2,814.8 — 2,814.8Acquisition of 3G spectrum licence — 50.0 50.0

At 31.12.2003 4,022.7 50.0 4,072.7

At 31 December 2004Cost 4,067.4 50.0 4,117.4Accumulated impairment (44.7) — (44.7)

Net Book Value 4,022.7 50.0 4,072.7

At 31 December 2003Cost 4,062.4 50.0 4,112.4Accumulated impairment (39.7) — (39.7)

Net Book Value 4,022.7 50.0 4,072.7


Page 267


17. INTANGIBLE ASSETS (continued)

OtherIntangible

THE COMPANY Goodwill Assets TotalRM RM RM

Net Book Value

At 1.1.2004 and 31.12.2004 — 50.0 50.0

At 1.1.2003 — — —Acquisition of 3G spectrum licence — 50.0 50.0

At 31.12.2003 — 50.0 50.0

At 31 December 2004Cost — 50.0 50.0

Net Book Value — 50.0 50.0

At 31 December 2003Cost — 50.0 50.0

Net Book Value — 50.0 50.0


Page 268


18. PROPERTY, PLANT AND EQUIPMENT

Capital Work- TotalMovable Computer In-Progress, Property,

Telecommunication Plant and Support Land at Cost Plant andNetwork Equipment Systems (sub-note e) Buildings (sub-note b) Equipment

THE GROUP RM RM RM RM RM RM RM

Net Book ValueAt 1.1.2004 14,809.3 407.0 1,012.7 563.7 3,177.6 1,635.6 21,605.9Assetisation 1,424.9 31.6 202.0 49.1 160.2 (1,867.8) —Additions 559.7 104.7 94.6 1.1 53.0 1,725.8 2,538.9Transfer from inventories

(note 23 to thefinancial statements) 47.2 — — — — — 47.2

Disposals (1.3) (1.0) (0.1) (6.3) (1.6) — (10.3)Write off (54.6) (1.2) (0.5) — (4.2) — (60.5)Depreciation (2,944.1) (138.1) (442.1) (2.1) (146.6) — (3,673.0)Impairment (609.3) (0.8) (19.8) — (3.4) — (633.3)Currency translation differences (60.1) (3.3) (5.5) (2.7) (4.1) — (75.7)Reclassification 11.3 — 1.1 0.2 (0.2) (12.4) —

At 31.12.2004 13,183.0 398.9 842.4 603.0 3,230.7 1,481.2 19,739.2

At 31 December 2004Cost 35,060.7 1,452.4 3,957.5 611.2 4,609.6 1,493.6 47,185.0Accumulated depreciation (20,801.0) (1,048.7) (3,091.8) (8.2) (1,375.6) — (26,325.3)Accumulated impairment (1,076.7) (4.8) (23.3) — (3.3) (12.4) (1,120.5)

Net Book Value 13,183.0 398.9 842.4 603.0 3,230.7 1,481.2 19,739.2

At 1.1.2003 12,156.7 278.2 771.7 455.5 2,971.5 2,932.9 19,566.5Acquisition of a subsidiary 2,583.0 70.1 143.1 31.9 75.2 181.5 3,084.8Assetisation 2,438.2 76.9 764.5 72.8 236.3 (3,588.7) —Additions 355.8 118.3 72.1 6.0 16.6 2,109.9 2,678.7Transfer to inventories

(note 23 to thefinancial statements) (47.2) — — — — — (47.2)

Disposals (5.4) (2.5) (0.1) (2.0) (0.6) — (10.6)Write off (5.6) (0.2) — — — — (5.8)Depreciation (2,565.5) (129.6) (733.4) (1.1) (121.7) — (3,551.3)Impairment (90.2) (4.0) (5.0) — — — (99.2)Currency translation differences (10.5) (0.2) (0.2) 0.6 0.3 — (10.0)

At 31.12.2003 14,809.3 407.0 1,012.7 563.7 3,177.6 1,635.6 21,605.9

At 31 December 2003Cost 35,075.4 1,465.3 3,726.9 570.7 4,389.8 1,635.6 46,863.7Accumulated depreciation (19,787.6) (1,054.3) (2,709.2) (7.0) (1,212.2) — (24,770.3)Accumulated impairment (478.5) (4.0) (5.0) — — — (487.5)

Net Book Value 14,809.3 407.0 1,012.7 563.7 3,177.6 1,635.6 21,605.9


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Net book value of property, plant and equipment of certain subsidiaries pledged as security for borrowings (note12(e) to the financial statements):

2004 2003RM RM

Telecommunication network 439.9 383.2Movable plant and equipment 6.5 5.5Computer support systems 1.8 1.8Land 2.0 1.1Buildings 1.2 1.8

451.4 393.4

TotalMovable Computer Capital Work- Property,

Telecommunication Plant and Support Land In-Progress, Plant andNetwork Equipment Systems (sub-note e) Buildings at Cost Equipment

THE COMPANY RM RM RM RM RM RM RM

Net Book ValueAt 1.1.2004 9,692.5 235.0 633.2 364.6 2,302.4 1,341.7 14,569.4Assetisation 1,071.9 20.2 143.5 49.1 153.7 (1,438.4) —Additions 20.0 79.6 3.7 — 7.1 1,253.9 1,364.3Disposals (1.3) (0.2) — (138.0) — — (139.5)#Write off (54.5) (1.2) (0.5) — (4.2) — (60.4)Depreciation (1,804.2) (84.2) (309.7) (0.7) (106.5) — (2,305.3)Impairment (220.4) — — — — — (220.4)

At 31.12.2004 8,704.0 249.2 470.2 275.0 2,352.5 1,157.2 13,208.1

At 31 December 2004Cost 28,176.1 1,072.5 2,915.7 281.5 3,503.0 1,157.2 37,106.0Accumulated depreciation (19,251.7) (823.3) (2,445.5) (6.5) (1,150.5) — (23,677.5)Accumulated impairment (220.4) — — — — — (220.4)

Net Book Value 8,704.0 249.2 470.2 275.0 2,352.5 1,157.2 13,208.1


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TotalMovable Computer Capital Work- Property,

Telecommunication Plant and Support Land In-Progress, Plant andNetwork Equipment Systems (sub-note e) Buildings at Cost Equipment

THE COMPANY RM RM RM RM RM RM RM

At 1.1.2003 9,719.1 172.4 503.7 292.3 2,169.4 2,394.1 15,251.0Assetisation 1,683.6 66.7 691.0 72.8 236.2 (2,750.3) —Additions 56.0 66.1 — — — 1,697.9 1,820.0Disposals (5.7) — (0.2) — — — (5.9)#Write off (4.6) (0.2) — — — — (4.8)Depreciation (1,755.9) (70.0) (561.3) (0.5) (103.2) — (2,490.9)

At 31.12.2003 9,692.5 235.0 633.2 364.6 2,302.4 1,341.7 14,569.4

At 31 December 2003Cost 27,789.7 1,047.4 2,807.0 370.7 3,361.7 1,341.7 36,718.2Accumulated depreciation (18,097.2) (812.4) (2,173.8) (6.1) (1,059.3) — (22,148.8)

Net Book Value 9,692.5 235.0 633.2 364.6 2,302.4 1,341.7 14,569.4

# Included in disposals was RM135.6 million (2003: RM0.6 million) being land transferred to a subsidiary

(a) Included in property, plant and equipment of the Group and of the Company are fully depreciated assets whichare still in use costing RM4,375.8 million (2003: RM4,013.6 million) and RM1,672.0 million (2003: RM1,730.9million) respectively.

(b) Included in the capital work-in-progress is finance cost capitalised for the year amounting to RM5.2 million(2003: RM5.7 million) for the Group.

(c) During the year, the Company and a wholly owned subsidiary reviewed the estimated economic useful life ofsubmarine cables and specific telecommunication network equipment. This revision resulted in an accelerateddepreciation of RM98.7 million and RM229.4 million respectively.

(d) During the year, the Group incurred impairment losses of RM633.3 million following impairment assessmentsperformed on specific assets by the Company and its subsidiaries.

The allowance for impairment losses for the Company relates to the write down of submarine cables torecoverable amounts based on a current assessment of their value in use. The value in use is assessed based onfuture net cash flows to be derived from the continuing use of these submarine cables and their ultimatedisposal, discounted at the current market interest rate on borrowings available to the Group.

The allowance for impairment losses for a wholly owned subsidiary relates to the write down of certain classesof plant and equipment after the completion of the integration exercise to their recoverable amount based ona current assessment of the value in use of the mobile networks. The value in use is assessed to be of a nominalamount due to the technological obsolescence of the mobile network equipment.


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(d) The allowance for impairment losses for another subsidiary relates to the write down of certain classes of plantand equipment based on current assessment of the estimated disposal value of these plant and equipment.

(e) Details of land are as follows:

Long term Short termFreehold leasehold leasehold Other Total

THE GROUP RM RM RM RM RM

Net Book ValueAt 1.1.2004 265.9 199.2 5.0 93.6 563.7Assetisation 42.2 5.1 — 1.8 49.1Additions 1.1 — — — 1.1Disposal (3.9) (1.3) (1.1) — (6.3)Depreciation — (1.7) (0.1) (0.3) (2.1)Currency translation differences (2.7) — — — (2.7)Reclassification 8.7 0.3 0.4 (9.2) 0.2

At 31.12.2004 311.3 201.6 4.2 85.9 603.0

At 31 December 2004Cost 311.3 207.4 5.9 86.6 611.2Accumulated depreciation — (5.8) (1.7) (0.7) (8.2)

Net Book Value 311.3 201.6 4.2 85.9 603.0

At 1.1.2003 252.6 128.6 1.4 72.9 455.5Acquisition of a subsidiary 8.9 23.0 — — 31.9Assetisation — 52.3 — 20.5 72.8Additions 5.8 — — 0.2 6.0Disposal (2.0) — — — (2.0)Depreciation — (0.9) (0.2) — (1.1)Currency translation differences 0.6 — — — 0.6Reclassification — (3.8) 3.8 — —

At 31.12.2003 265.9 199.2 5.0 93.6 563.7


Net Book Value 265.9 199.2 5.0 93.6 563.7


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(e) Details of land are as follows: (continued)

Long term Short termFreehold leasehold leasehold Other Total

THE COMPANY RM RM RM RM RM

Net Book ValueAt 1.1.2004 102.1 164.2 5.0 93.3 364.6Assetisation 42.2 5.1 — 1.8 49.1Disposal (56.0) (79.9) (1.1) (1.0) (138.0)Depreciation — (0.3) (0.1) (0.3) (0.7)Reclassification 7.1 1.4 0.4 (8.9) —

At 31.12.2004 95.4 90.5 4.2 84.9 275.0


Net Book Value 95.4 90.5 4.2 84.9 275.0

At 1.1.2003 102.1 116.0 1.4 72.8 292.3Assetisation — 52.3 — 20.5 72.8Depreciation — (0.3) (0.2) — (0.5)Reclassification — (3.8) 3.8 — —

At 31.12.2003 102.1 164.2 5.0 93.3 364.6


Net Book Value 102.1 164.2 5.0 93.3 364.6

The title deeds pertaining to other land have not yet been registered in the name of the Company and asubsidiary. Pending finalisation with the relevant authorities, these land have not been classified according totheir tenure.


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19. SUBSIDIARIES

2004 2003Malaysia Overseas Total Malaysia Overseas Total

THE COMPANY RM RM RM RM RM RM

Investments, at cost:– quoted 19.5 — 19.5 19.5 — 19.5– unquoted 548.3 165.4 713.7 462.4 179.2 641.6

Allowance for diminution in value (9.0) (141.5) (150.5) — — —

558.8 23.9 582.7 481.9 179.2 661.1Investments, at written down value:

– unquoted (sub-note a) — — — — — —

Net investments 558.8 23.9 582.7 481.9 179.2 661.1

Amount owing by subsidiaries(sub-note b) 9,272.9 363.7 9,636.6 10,396.5 379.7 10,776.2

Allowance for loans and advances (540.9) (68.2) (609.1) (511.1) — (511.1)

Amount owing by subsidiariesafter allowance 8,732.0 295.5 9,027.5 9,885.4 379.7 10,265.1

TOTAL INTEREST IN SUBSIDIARIES 9,290.8 319.4 9,610.2 10,367.3 558.9 10,926.2

Market value of quoted investment 120.1 — 120.1 66.7 — 66.7

(a) Investments in certain subsidiaries have been written down to recoverable amount of RM1 each.

(b) The amount owing by subsidiaries represents shareholder loans and advances for working capital purposes. These loans and advances are unsecured and bear interest ranging from 0% to 6.28% (2003: 0% to 4.72%) andare principally with no fixed repayment terms. However, the Company has indicated that it will not demandsubstantial repayment within the next twelve months. Shareholder loans and advances provided to overseassubsidiaries are in US Dollar.

(c) During the year, the Company disposed its entire 70% equity interest in an overseas subsidiary to a localinvestment holding subsidiary at a consideration of RM56.9 million satisfied by issuance of shares. The gain ondisposal to the Company amounts to RM34.3 million (note 5 to the financial statements).

The Group’s equity interest in the subsidiaries, their respective principal activities and countries of incorporation arelisted in note 41 to the financial statements.


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20. ASSOCIATES

2004 2003Malaysia Overseas Total Malaysia Overseas Total

THE GROUP RM RM RM RM RM RM

(i) QuotedShare of net assets other

than goodwill of associates– on acquisition — 59.8 59.8 — 869.2 869.2– post acquisition — (29.4) (29.4) — 520.8 520.8

— 30.4 30.4 — 1,390.0 1,390.0(ii) Unquoted

Share of net assets otherthan goodwill of associates– on acquisition 77.2 — 77.2 77.2 29.2 106.4– post acquisition (1.9) — (1.9) (0.5) 3.7 3.2

75.3 — 75.3 76.7 32.9 109.6

Total 75.3 30.4 105.7 76.7 1,422.9 1,499.6

Market value of quoted investments — 133.2 133.2 — 2,808.9 2,808.9

THE COMPANYUnquoted investments, at cost 1.5 — 1.5 1.5 — 1.5

Total 1.5 — 1.5 1.5 — 1.5

(a) During the year, the Group through its wholly owned subsidiary, TM International (L) Limited, held via TM International Sdn Bhd, disposed its entire shareholding in Telkom SA Limited. The disposal was made in twotranches on 18 June 2004 and 15 November 2004 for a total consideration of RM3,003.2 million, realising again on disposal of RM1,515.2 million for the financial year ended 31 December 2004.

(b) During the year, the Group through its wholly owned subsidiary, Technology Resources Industries Berhad,disposed its entire shareholding in Sheba Telecom (Pvt) Ltd (Sheba) to Integrated Services Ltd, an existingshareholder of Sheba, for a consideration of RM57.0 million pursuant to a settlement agreement and asupplemental agreement entered into between the parties on 15 June 2004 and 27 August 2004, respectively.The disposal resulted in a gain on disposal of RM23.6 million for the financial year ended 31 December 2004.


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20. ASSOCIATES (continued)

(c) The Group has excluded the amount that would otherwise have been accounted for in respect of the currentand cumulative financial year share of profits/(losses) after taxation of associates amounting to RM3.2 million(2003: RM6.8 million) and (RM3.6 million) (2003: (RM6.8 million)) respectively from the financial statements asthe carrying amount of these investments have been fully eroded. The Group has no obligation to finance anyfurther losses.

The Group’s equity interest in the associates, their respective principal activities and countries of incorporation arelisted in note 42 to the financial statements.

21. INVESTMENTS


RM RM RM RM

Investments in International SatelliteOrganisations, at cost 107.0 107.3 106.3 106.3

Investments in quoted shares, at cost 252.9 264.8 252.9 264.8Investments in unquoted shares, at cost 111.0 109.9 64.3 64.3Allowance for permanent diminution in value (97.3) (97.3) (97.3) (97.3)

373.6 384.7 326.2 338.1Investments in unquoted shares,

at written down value (sub-note a) — — — —

TOTAL INVESTMENTS AFTER ALLOWANCE 373.6 384.7 326.2 338.1

Market value of quoted investments 150.7 267.4 150.7 267.4

(a) The following corporations in which Celcom Group owned more than one half of the voting power, which, dueto permanent loss of control or significant influence have been accounted as investments and written down torecoverable amount of RM1 each.

– TRI Telecommunication Tanzania Limited– TRI Cellular Communications Cambodia Company– TRI Telecommunication Zanzibar Limited– Tripoly Communication Technology Corporation Ltd


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22. LONG TERM RECEIVABLES


RM RM RM RM

Staff loans under Islamic principles 470.0 475.5 470.0 475.5Staff loans 195.2 262.0 194.6 261.5

Total staff loans (sub-note a & b) 665.2 737.5 664.6 737.0Other long term receivables (sub-note c) 49.0 31.7 49.0 31.7

714.2 769.2 713.6 768.7Staff loans receivable within twelve months

included under other receivables (81.4) (100.3) (80.9) (99.9)

TOTAL LONG TERM RECEIVABLES 632.8 668.9 632.7 668.8

(a) Staff loans comprise housing, vehicle, computer and club membership loans offered to employees withfinancing cost of 4.0% per annum on a reducing balance basis except for club membership loans which arefree of financing cost. There is no single significant exposure as the amount is mainly receivable fromindividuals. Staff loans inclusive of financing cost are repayable in equal monthly instalments as follows:

(i) Housing loans – 25 years or upon employees attaining 55 years of age, whichever is earlier(ii) Vehicle loans – maximum of 8 years for new cars and 6 years for second hand cars(iii) Computer loans – 3 years

(b) Staff loans amounting to RM34.3 million (2003: RM82.7 million) have been assigned to secure the Company’sborrowings from Cagamas Berhad.

(c) Other long term receivables of the Company are in respect of education loans provided to undergraduates andare convertible to scholarships if certain performance criteria are met. The loans are interest free and if notconverted to scholarship will be repayable over a period of not more than 8 years.

23. INVENTORIES


RM RM RM RM

At cost:Cables and wires 46.2 30.2 46.2 30.2Network materials 56.1 32.4 42.7 32.4Telecommunication equipment 21.5 18.5 19.7 17.1Spares and others 29.9 40.0 17.4 23.6

153.7 121.1 126.0 103.3


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23. INVENTORIES (continued)


RM RM RM RM

At net realisable value:Telecommunication equipment transferred

from property, plant and equipment(note 18 to the financial statements) — 47.2 — —

Spares and others 41.6 35.3 — —

41.6 82.5 — —

TOTAL INVENTORIES 195.3 203.6 126.0 103.3

24. TRADE AND OTHER RECEIVABLES


RM RM RM RM

Receivables from telephone customers 2,644.3 2,552.1 1,382.7 1,351.7Receivables from non-telephone customers 1,700.7 1,754.6 1,226.1 1,284.0Receivables from subsidiaries — — 573.7 392.6

4,345.0 4,306.7 3,182.5 3,028.3Advance rental billings (297.1) (412.2) (306.1) (448.9)

4,047.9 3,894.5 2,876.4 2,579.4Allowance for doubtful debts (1,622.9) (1,443.5) (772.3) (648.7)

Total trade receivables after allowance 2,425.0 2,451.0 2,104.1 1,930.7

Deposit for additional investment(refer to note 34(a) to the financial statements) 190.0 190.0 190.0 190.0

Prepayments 59.3 590.3 11.0 540.1Staff loans 81.4 100.3 80.9 99.9Other receivables from subsidiaries — — 73.0 52.3Other receivables from associates 24.4 31.2 0.5 3.4Other receivables 653.0 496.1 351.4 296.7Allowance for doubtful debts (58.5) (23.9) (35.6) (8.6)

Total other receivables after allowance 949.6 1,384.0 671.2 1,173.8

TOTAL TRADE AND OTHER RECEIVABLESAFTER ALLOWANCE 3,374.6 3,835.0 2,775.3 3,104.5


Page 278


24. TRADE AND OTHER RECEIVABLES (continued)


RM RM RM RM

The currency exposure profile of trade andother receivables after allowance is as follows:– Ringgit Malaysia 2,229.4 2,870.2 2,066.3 2,506.4– US Dollar 579.1 560.0 462.2 426.6– Special Drawing Rights 280.5 121.5 220.6 96.0– Gold Franc Currency 26.2 75.5 26.2 75.5– Guinea Franc 92.5 94.4 — —– Other currencies 166.9 113.4 — —

3,374.6 3,835.0 2,775.3 3,104.5

The following table represents credit riskexposure of trade receivables, net ofallowances for doubtful debts and withouttaking into account any collateral taken:

Business 1,744.9 1,562.4 1,211.9 1,075.4Residential 680.1 888.6 318.5 462.7Subsidiaries — — 573.7 392.6

2,425.0 2,451.0 2,104.1 1,930.7

The Group and the Company are not exposed to major concentrations of credit risk due to the diversed customerbase. In addition, credit risk is mitigated to a certain extent by cash deposits and bankers’ guarantee obtained fromcustomers. The Group and the Company consider the allowance for doubtful debts at balance sheet date to beadequate to cover the potential financial loss.

Credit terms of trade receivables range from payment in advance to 90 days in year 2004 and 2003.

Other receivables from subsidiaries and associates are unsecured and interest free with no fixed repayment terms.

25. SHORT TERM INVESTMENTS


RM RM RM RM

Shares quoted on the Bursa Malaysia Securities Berhad 150.2 263.4 148.6 260.3

TOTAL SHORT TERM INVESTMENTS 150.2 263.4 148.6 260.3

Market value of quoted shares 150.2 263.4 148.6 260.3


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26. CASH AND BANK BALANCES


RM RM RM RM

Deposits with:Licensed banks 5,795.4 1,161.6 4,809.6 —Licensed finance companies 171.1 2.4 90.0 —Other financial institutions 1,047.5 1,047.6 135.1 679.2

Deposits under Islamic principles 1,291.3 600.5 347.8 139.0

Total Deposits 8,305.3 2,812.1 5,382.5 818.2Cash and bank balances 470.7 412.0 57.9 33.8Cash and bank balances under Islamic principles 25.6 122.0 — —

TOTAL CASH AND BANK BALANCES 8,801.6 3,346.1 5,440.4 852.0Less:

Bank overdraft(note 12(d) to the financial statements) (3.0) (6.1) — —

Deposits pledged (7.5) (60.7) — —

TOTAL CASH AND CASH EQUIVALENTSAT END OF THE YEAR 8,791.1 3,279.3 5,440.4 852.0

The currency exposure profile of cashand bank balances is as follows:

– Ringgit Malaysia 4,211.8 2,451.7 1,250.4 249.8– US Dollar 4,289.6 807.0 4,190.0 602.2– Other currencies 300.2 87.4 — —

8,801.6 3,346.1 5,440.4 852.0

Deposits of the Group included RM264.9 million (2003: RM191.2 million) being funds earmarked for principal andinterest repayments under terms of borrowings of Celcom as mentioned in note 12(b) to the financial statements.

The deposits are placed mainly with a number of creditworthy financial institutions. There is no major concentrationof deposits in any single financial institution. Deposits have maturity ranged from overnight to 365 days (2003: fromovernight to 365 days) and from overnight to 184 days (2003: from overnight to 90 days) for the Group and theCompany respectively. Bank balances are deposits held at call with banks.

The weighted average interest rate of deposits (excluding deposits under Islamic principles) as at 31 December 2004is 2.67% (2003: 2.38%) and 2.43% (2003: 1.62%) for the Group and the Company respectively.


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27. TRADE AND OTHER PAYABLES


RM RM RM RM

Trade payables 2,319.2 2,795.1 1,432.6 1,906.4Accruals for USP 211.3 280.5 135.3 213.2Deferred revenue 158.4 205.7 — —Customer deposits 144.2 156.7 — —Finance cost payable 137.6 132.5 110.3 103.4Duties and other taxes payable 109.2 129.0 39.0 70.4Deposits and trust monies 48.7 61.7 32.5 33.0Other payables to subsidiaries — — 1,892.6 49.9Other payables to associates 16.1 13.5 — —Other payables 983.0 747.3 476.3 486.8

TOTAL TRADE AND OTHER PAYABLES 4,127.7 4,522.0 4,118.6 2,863.1

The currency exposure profile of tradeand other payables is as follows:

– Ringgit Malaysia 3,278.2 3,768.1 2,114.6 2,390.6– US Dollar 340.2 300.2 1,925.6 233.7– Special Drawing Rights 102.8 120.1 71.7 120.1– Gold Franc Currency 6.0 72.7 6.0 72.7– Bangladesh Taka 206.4 85.6 — —– Other currencies 194.1 175.3 0.7 46.0

4,127.7 4,522.0 4,118.6 2,863.1

Credit terms of trade and other payables vary from 30 to 90 days in year 2004 and 2003 depending on the termsof the contracts.

Other payables to subsidiaries and associates are unsecured, interest free and have no fixed terms of repayment.

28. CASH FLOWS FROM OPERATING ACTIVITIES


RM RM RM RM

Receipts from customers 12,839.3 11,289.7 7,325.6 7,424.9Payments to suppliers and employees (6,867.1) (5,707.1) (4,128.0) (3,686.5)Payment of finance cost (645.7) (575.6) (526.4) (484.0)Payment of income taxes (289.4) (344.2) (258.3) (316.6)

TOTAL CASH FLOWS FROM OPERATING ACTIVITIES 5,037.1 4,662.8 2,412.9 2,937.8


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29. CASH FLOWS FROM/(USED IN) INVESTING ACTIVITIES


RM RM RM RM

Disposal of property, plant and equipment 32.6 12.1 21.7 7.2Purchase of property, plant and equipment (2,672.1) (2,566.2) (1,656.9) (1,764.9)Payment of intangible asset (3G Spectrum Licence) (8.0) (10.0) (8.0) (10.0)Disposal of long term investments 25.4 18.4 25.4 18.4Purchase of long term investments — (254.4) — (250.0)Disposal of short term investments 134.8 57.3 134.8 57.3Purchase of short term investments (91.5) (66.7) (91.5) (66.7)Acquisition of a subsidiary — (2,963.5) — —Advances to a subsidiary for acquisition

of another subsidiary — — — (3,793.2)Additional investment in subsidiaries (2.0) — (2.0) (0.1)Disposal of associates 3,060.2 — — —Payment to subsidiaries — — (17.7) —Repayments from subsidiaries — — 1,347.4 73.4Advances to subsidiaries — — (56.8) (96.0)Advances from subsidiaries — — 3,558.5 —Repayments of loans by employees 116.7 123.8 116.7 123.8Loans to employees (103.0) (97.3) (103.0) (96.8)Interest received 158.0 87.5 83.6 44.9Dividend received 28.5 40.6 126.8 113.3

TOTAL CASH FLOWS FROM/(USED IN)INVESTING ACTIVITIES 679.6 (5,618.4) 3,479.0 (5,639.4)

30. CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES


RM RM RM RM

Issue of share capital 933.8 593.6 933.8 593.6Issue of share capital to minority interests 2.6 — — —Proceeds from borrowings 2,009.9 8,836.9 — 8,384.1Repayments of borrowings (2,317.8) (6,766.5) (1,419.3) (6,333.9)Dividends paid to shareholders (818.0) (228.4) (818.0) (228.4)Dividends paid to minority interests (6.0) (8.3) — —

TOTAL CASH FLOWS (USED IN)/FROM FINANCING ACTIVITIES (195.5) 2,427.3 (1,303.5) 2,415.4


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31. SIGNIFICANT NON-CASH TRANSACTIONS

Significant non-cash transactions during the year are as follows:

THE COMPANY

2004 2003

RM RM

(a) Disposal of investment in an overseas subsidiary to a local investment

holding subsidiary at a consideration satisfied by issuance of shares 56.9 —

(b) Capitalisation of trade receivables and amount owing into paid-up capital

of subsidiaries 38.8 —

(c) Contra settlements with subsidiaries between trade receivables and payables 120.7 177.6

(d) Contra settlements with a subsidiary between trade receivables

and other payables 29.2 86.2


Page 283


32. CAPITAL AND OTHER COMMITMENTS


2004 2003 2004 2003

RM RM RM RM

(a) Property, plant and equipment

Commitments in respect of expenditure

approved and contracted for 2,646.5 2,544.0 2,238.4 2,259.3

Commitments in respect of expenditure

approved but not contracted for 144.9 126.2 — —

(b) Donation to Yayasan Telekom

Amount approved and committed 123.8 104.4 123.8 104.4

THE COMPANY

2004 2003

Future Future

minimum minimum

lease lease

payments payments

RM RM

(c) Non-cancellable operating lease commitments

Not later than one year 52.4 52.4

Later than one year and not later than five years 209.7 209.7

Later than five years — 52.4

262.1 314.5

The above lease payments relate to the non-cancellable operating lease of a telecommunication tower from a

wholly owned subsidiary.


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33. CONTINGENT LIABILITIES (Unsecured)

(a) At 31 December 2004, the Company had contingent liabilities in respect of:

(i) Guarantees issued to banks amounting to USD26.0 million (RM98.8 million) (2003: USD26.0 million (RM98.8million)) for banking facilities extended to overseas subsidiaries.

(ii) A corporate guarantee was granted to a financial institution in respect of the USD21.0 million (RM79.8million) (2003: USD21.0 million (RM79.8 million)) financing facility obtained by a wholly owned subsidiary,MTN Networks (Private) Limited. The guarantee was executed on 6 May 2002 and will expire in March 2010.

(iii) Guarantee of a series of Promissory Notes totalling approximately USD6.7 million (RM25.4 million) (2003: USD6.7million (RM25.4 million)) issued by Sotelgui S.A., a subsidiary, in favour of an equipment supplier on 18 April2002. The Promissory Notes are payable during the period between November 2003 to December 2005.

(iv) A corporate guarantee was granted to a financial institution in respect of the USD25.0 million (RM95.0 million)(2003: USD25.0 million (RM95.0 million)) financing facility obtained by a wholly owned subsidiary, MTNNetworks (Private) Limited. The guarantee was executed in November 2003 and will expire in November 2005.

(b) On 11 August 2003, TM jointly with Telekom Publications Sdn Bhd (TPSB), a wholly owned subsidiary of TM,instituted legal proceedings against Buying Guide (M) Sdn Bhd (BGSB) relating to the infringement of TM’s andTPSB’s copyright and passing off.

BGSB filed their Defence and Counterclaim on 15 October 2003 for RM114.3 million being their special damagesfor suspension of BGSB’s Corporate Exercise. BGSB also claimed for the general, aggravated and exemplarydamages, interest and cost against TPSB. It was agreed that TM and TPSB will file a Reply and Defence afterBGSB and their shareholders confirm that they will not be amending their Defence and Counterclaim.

On 27 July 2004, BGSB filed their Notice of Appeal against the Assistant Registrar’s decision in dismissing BGSB’sapplication for Further and Better Particulars against TM with costs. The next hearing date was fixed on 8 April 2005.

Based on legal advice, TM and TPSB has a reasonably good chance of winning and defending the said claimand counterclaim. Based on TM’s and TPSB’s assessment, the said legal action will not give rise to a materialimpact on the financial position of TM and TPSB.

(c) Inmiss Communications Sdn Bhd (Inmiss) filed a Notice for Arbitration against Mobikom Sdn Bhd (Mobikom) foroutstanding payment on Inmiss’s share of message tariff revenue including interest charges and other lossesamounting to RM29.0 million.

On 25 November 2004, the Arbitrator indicated that he shall deliver his decision in respect of Mobikom’sapplication to amend its Points of Defence and adduce further evidence within three (3) months from theabove mentioned date.

Based on legal advice, the Directors are of the view that Mobikom has a good case of defending the said claimor at least substantially reducing the amount claimed in the Arbitration. As such, the Arbitration againstMobikom will not potentially give any material adverse impact to TM.


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33. CONTINGENT LIABILITIES (Unsecured) (continued)

(d) Kabel Pantai Timur Sdn Bhd (KPT) had suspended the remedial work contracted resulting in termination of theirservice under the “Perlaksanaan Projek Rangkaian Tempatan secara JKH for Pahang, Terengganu & Kelantan”.TM had called for the Performance Bond in the form of a Bank Guarantee in view of KPT’s failure to rectifythe works in accordance with the required specifications. TM also demanded KPT to return the materialsupplied. KPT challenged the above action taken by TM by initiating arbitration proceedings (Arbitration) inaccordance to contracts executed for RM10.4 million (pleaded) (RM41.1 million – unquantified costs). TM hadalso filed its counterclaim for RM19.1 million.

Pursuant to the progress meeting held on 14 January 2005, various dates were fixed from April to September2005 for the continued hearing of the Arbitration.

Based on TM’s assessment and on the legal advice, TM has a good defence or at least a strong chance insubstantially reducing the amount claimed in the Arbitration. As such, the Arbitration against TM will not giveany material adverse impact to TM.

(e) Bukit Lenang Development Sdn Bhd (BLDSB) had instituted legal proceeding against TM, Tenaga NasionalBerhad and SAJ Holdings Sdn Bhd (collectively referred to the “Parties and/or Defendants”) by way of a Writof Summons dated 27 November 2004 and Statement of Claim dated 15 December 2004 in the High Court ofMalaya at Kuala Lumpur.

BLDSB is seeking special damages for the sum of RM29.4 million and other damages and reliefs from the Parties for:

(i) wrongfully conspiring with the occupants on Mukim Plentong, Daerah Johor Bahru, Johor Darul Takzim(the “Land”) by facilitating the occupants with telecommunications, electricity and water services andillegally assisting the occupants in their occupation with the obvious and foreseeable consequence ofadversely affecting and seriously prejudicing BLDSB;

(ii) joint tortfeasor with the occupants in the commission of the wrongs committed by the occupants;

(iii) jointly and independently trespassing and continue to trespass the Land by reason of emplacement of thetelecommunication, electricity and water equipments to the occupants;

(iv) wrongfully and/or unconscionably derived and still deriving pecuniary benefits from its wrongful actionsand the wrongful use of the Land and that the same amount to unjust enrichment of the law; and

(v) loss of opportunity in that the Plaintiff has been wrongfully prevented from developing the Land and assuch has not had the benefit of the full potential of the development and the advantageous economiccircumstances in the period immediately following the acquisition of the Land.

The Court had fixed 11 April 2005 as the date for hearing.

On 26 January 2005, TM had also filed an application to strike out BLDSB’s summons on the ground, inter alia,that BLDSB has failed to provide the further and better particulars of the pleadings. The Court has yet to fixthe hearing date for this application.

Based on TM’s assessments, the legal action will not give rise to a material adverse impact to TM.


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(f) By a Joint Venture Agreement (JVA) dated 13 September 1993, TRI and VIP Engineering and Marketing Limited(VIPEM) agreed to establish TRI Telecommunications Tanzania Limited (Tritel) as a joint venture company, toprovide telecommunications services in Tanzania. The shareholding structure was 60% TRI and 40% VIPEM.

On 10 December 2001, vide Civil Case No. 427 of 2001 (the Suit) VIPEM filed a suit against TRI claiming a sumof USD18.6 million as its share of loss of profits for mismanagement of Tritel. VIPEM asked for an order to bemade on an ex-parte basis. Tritel and TRI’s lawyers asserted that the Court has no jurisdiction to entertain theChamber Application because of the arbitration clause in the JVA and applied for a stay of proceedings. TheCourt declined to grant the ex-parte order and TRI filed petition to stay the proceedings pending reference ofthe dispute to arbitration. The petition has yet to be heard. Pending determination of the Suit, VIPEM appliedto the Tanzania High Court for the appointment of receiver/manager to take conduct over the running of Tritel.

Tanzania Communications Commission (TCC) revoked Tritel’s licence as of 31 January 2003. On 14 January 2003,Citibank of Tanzania (Citibank) appointed Receivers and Managers by virtue of a debenture issued by Tritel asa loan security to Citibank.

Subsequently, on 12 June 2003, the Commercial Division of the High Court of Tanzania had endorsed a petitionby three creditors of Tritel, namely TCC, Tanzania Telecommunications Company Limited and Tanzania RevenueAuthority to wind up Tritel in Commercial Case No. 6 of 2003. VIPEM had filed an affidavit in support of thesaid petition. As a result thereof, the High Court has admitted VIPEM as a joint creditor of Tritel.

Consequently, Tritel is under liquidation and the Court ordered the joint Receivers and Managers, who wereappointed by Citibank to handover statements and accounts of Tritel’s affairs to the newly court appointedliquidator. In the light of the appointment of the liquidator, the Court had on 17 July 2003 adjourned sine diethe Suit.

Subsequently, Citibank had independently filed an application to challenge the Commercial Court ruling in theCourt of Appeal in Tanzania on the grounds that it was not a party to the original hearing and any ordermade by the Court in its absence is a nullity. On 7 October 2003 the Court struck out Citibank’s application onthe ground that the application was incompetent, as it had not mentioned a specific subsection under whichthe application was made. On 17 October 2003 the lawyers for Citibank filed an application before the sameCourt seeking extension of time to refile the amended application quoting the correct subsection. The Courtof Appeal has granted Citibank’s application for extension of time to file another Revision application within30 days from date of the ruling, which was made on 31 October 2003. The Revision application was heardbefore the Court of Appeal on 27 February 2004 and was dismissed because the Court held that Citibank shouldhave filed an appeal after obtaining leave and not come to the Court of Appeal by way of Revision. Thisproceeding is still on-going.

In the light of the winding up order made against Tritel, on 22 July 2003, TRI filed its claim of RM123.4 millionto the liquidator of Tritel. The Directors, based on legal opinion received are of the view that on the allegationsof mismanagement, unless more evidence can be produced, the allegations are rhetorical and unsubstantiated.In view of the winding up proceedings, there is also a possibility that VIPEM will not pursue its claim. Hence,no provision has been made in the financial statements for the claim made by VIPEM.


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(g) On 10 March 2003, Celcom received a letter from DeTeAsia Holding GmbH (DTAH) informing Celcom that it hadinitiated an arbitration by way of a Request for Arbitration dated 7 March 2003 (Request) which was filed on 10 March 2003 with the Secretariat of the International Court of Arbitration of the International Chamber ofCommerce in Paris (ICC) pursuant to Clause 8.6 of the Amended and Restated Supplemental Agreement dated 4 April 2002 between TRI, DTAH, Celcom and TR International Limited (TRIL) (the Amended and Restated Agreement).

DTAH is essentially claiming damages for breach of the Amended and Restated Agreement. DTAH’s contentionis that by entering into the Sale and Purchase Agreement with Telekom Malaysia Berhad for the acquisition ofthe whole of the issued and paid-up capital of TM Cellular Sdn Bhd (TM Cellular) and the subsequent acquisitionof TM Cellular without the consent of DTAH, Celcom has acted in breach of the Amended and RestatedAgreement. DTAH is seeking damages in an amount to be calculated by reference to the provisions of Schedule1 of the Amended and Restated Agreement, together with interest at eight percent (8%) per annum from 16 October 2002 and costs. Celcom’s contention is essentially that the consent of DTAH was not required for theacquisition of TM Cellular and that such provisions in the Amended and Restated Agreement on which DTAHrelies on are either not enforceable or that DTAH is precluded from asserting the validity of the same.

Subsequent to the filing of the Request, DTAH has also raised further allegations of breaches against Celcomin the Summary of Case filed by DTAH with the ICC on 1 August 2003. A three-member arbitral tribunal hasbeen constituted and the hearing date has been fixed from 12 July 2004 to 23 July 2004 for the hearing ofthe arbitration.

By a letter dated 20 August 2004 to the Tribunal, DTAH has quantified its principal claim as USD177.2 million(amounting after currency conversion to RM673.5 million). Subsequently, DTAH in its Post Hearing Brief dated29 November 2004 claimed interest in the sum of USD16.3 million (amounting after currency conversion toRM61.8 million) for the period between 16 October 2002 to 27 June 2003, and interest at the rate of 8% perannum on USD177.2 million from 28 June 2003 until full settlement.

The evidential hearing was held from 12 July 2004 to 16 July 2004 in Geneva. The Post Hearing Briefs weresubmitted by the parties on 29 November 2004.

The parties submitted their oral submissions in London on 7 and 8 January 2005. Upon the close of thesubmissions, the Tribunal has directed the parties to simultaneously exchange written submissions on the issueof costs by 1 March 2005. Submissions in reply are also to be simultaneously exchanged by 15 March 2005. Theparties have since then mutually agreed that the submission be filed on 21 March 2005 and the replies on 4 April 2005. The Tribunal will notify the parties once it is ready to hand down its award. Celcom has beenadvised by its solicitors that the prospect of successfully defending the proceeding is reasonable.

Apart from the above, the Directors are not aware of any other proceedings pending against the Company and/orits subsidiaries or of any facts likely to give rise to any proceedings which might materially affect the position orbusiness of the Company and/or its subsidiaries.

There were no other contingent liabilities or material litigations or guarantees other than those arising in theordinary course of the business of the Group and the Company and on these no material losses are anticipated.


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34. SIGNIFICANT EVENTS

(a) On 18 September 2002, TM issued a Notification of Claim to the Government of Ghana (GoG) pursuant to theBilateral International Treaty between the Government of Malaysia and GoG on 11 November 1996 (BIT) in respectof the following disputes:

(i) GoG’s past treatment of TM’s investment in Ghana Telecommunications Company Limited (GT) heldthrough TM International Sdn Bhd and G-Com Limited which resulted in TM losing significant influenceover the financial and operation policies decisions of GT. Accordingly, the investment in GT has beenrecorded as long term investment during year 2002.

(ii) GoG’s failure to refund a USD50.0 million (RM190.0 million) deposit for the proposed acquisition ofadditional 15% equity interest in GT (as disclosed in note 24 to the financial statements) pursuant to theHead of Agreement entered into between TM and GoG dated 10 August 2000.

Since the parties could not reach an amicable settlement, TM through its counsel in London, sent a Notice ofArbitration to the GoG on 10 February 2003 for the commencement of arbitration proceedings under theUNCITRAL Arbitration Rules in accordance with the provisions of the BIT. Subsequently, the arbitral tribunal wasconstituted in accordance to the provisions of BIT. Based on the preparatory meeting in relation to thearbitration between TM and GoG held on 17 July 2003 at The Hague, it was agreed that the arbitration hearingwill start on 5 July 2004 for a period of two (2) weeks.

(i) The hearing on the issues of the quantum of TM’s claims and the GoG’s counterclaims was heard by theTribunal from 8 until 12 November 2004. The Tribunal indicated that the decisions on issues on jurisdiction,merits of TM’s claim, quantum on the said claim and the GoG’s counterclaim would be delivered in January2005. TM has yet to receive the decision from the Tribunal.

(ii) Notwithstanding the above development, the parties could still resolve the outstanding disputes on an amicablebasis subject to terms and conditions mutually agreed by the parties prior to the decision of the Tribunal.

(b) G-Com Limited (G-Com), a subsidiary of TM, filed an application in the High Court of Ghana on 13 June 2002,seeking a declaration that the Extraordinary General Meeting (EGM) held on 3 June 2002 was null and void.On 31 July 2002, the High Court of Ghana dismissed G-Com’s application for a declaration to nullify the EGMheld on 3 June 2002.

On 25 September 2002, G-Com filed an appeal in the Court of Appeal of Ghana against the decision of theHigh Court dated 31 July 2002. The Court of Appeal has yet to fix the hearing date.

(c) G-Com filed a Writ of Summons and a Statement of Claim at the High Court of Ghana against GT on 24 December 2003 in respect of the EGM and AGM resolutions to approve certain contracts and loans. At thehearing of the injunction application held on 20 April 2004, G-Com withdrew the suit as G-Com’s appointeddirectors had given their consent under protest in accordance with regulations 70(3) of GT Regulations.


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34. SIGNIFICANT EVENTS (continued)

(d) Proposed Acquisition of 27.3% Equity Interest in PT Excelcomindo Pratama (Excelcomindo)

On 9 December 2004, TM International (L) Limited (TMIL), a wholly owned subsidiary of TM, entered into a sale

and purchase agreement (SPA) with Rogan Partners Inc (Rogan) and PT Telekomindo Primabhakti (Telekomindo)

for the acquisition of 618,345 ordinary shares of Rp250,000 each in Excelcomindo, representing 27.3% of the

issued and paid-up share capital of Excelcomindo (the said shares), indirectly through the acquisition of a 100%

equity interest in a special purpose holding company, Indocel Holding Sdn (formerly known as Nynex Indocel

Holding Sdn) (Indocel) for a total cash consideration of USD314.0 million.

Consequent thereto, TMIL had on 11 January 2005, entered into an amended and restated share sale and

purchase agreement (Amended SPA) with Rogan and Telekomindo for the acquisition of the said shares. The

Amended SPA split the proposed acquisition into a 2 step arrangement. Under this arrangement TMIL had

acquired 523,215 ordinary shares in Excelcomindo (representing 23.1% of the issued and paid-up share capital

of Excelcomindo) through the acquisition of Indocel as mentioned previously for a purchase consideration of

approximately USD265.7 million. This acquisition was completed on 11 January 2005.

In addition, under the Amended SPA, TMIL has also agreed to cause Indocel to acquire for a purchase consideration

of approximately USD48.3 million, additional Excelcomindo shares, representing a 4.2% equity interest in

Excelcomindo, free and clear of any lien and any other limitation or restriction with full rights attached thereto.

On 11 January 2005, TMIL and Telekomindo had also entered into an Option Agreement which allows TMIL to

further acquire more shares in Excelcomindo from Telekomindo.

(e) Proposed Acquisition of Idea Cellular Limited (Idea)

On 11 December 2004, TM International Sdn Bhd, a wholly owned subsidiary of TM, as a part of a consortium

with Singapore Technologies Telemedia Pte Ltd (ST Telemedia), through its subsidiary STT Communications Ltd

(the Consortium), had entered into agreements for the acquisition of 47.7% of the enlarged equity interest in

Idea, for a total cash consideration of Rupees17,396.8 million (approximately RM1,505.7 million).

The Consortium is to acquire a 32.9% equity interest in Idea indirectly through the acquisition of a 100% equity

interest in AT&T Cellular Private Limited and simultaneously subscribe for additional shares in Idea, which will

increase the equity interest of the Consortium in Idea to 47.7%.

The proposed acquisition is subject to, inter alia, regulatory approvals including approvals from the Foreign

Investment Promotion Board of the Government of India, Department of Telecommunications in India and Bank

Negara Malaysia. It is also subject to the approvals of the lenders of Idea and preference shareholders of Idea

on the redemption of the preference shares of Idea.


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35. SIGNIFICANT SUBSEQUENT EVENTS

(a) Joint Venture in Multinet Pakistan (Private) Limited (Multinet)TMIL, a wholly owned subsidiary of TM, had entered into a Joint Venture Deed with Mr. Adnan Asdar and Mr.Nasser Khan Ghazi on 16 February 2005 relating to an investment by TMIL in Multinet, a private limited liabilitycompany incorporated in the Islamic Republic of Pakistan. The joint venture is via the acquisition of a 78%(780,000 shares) equity interest in Multinet by TMIL for a total cash consideration of USD5.46 million. Uponcompletion of this transaction, TMIL will further subscribe for 7,020,000 ordinary shares in Multinet by way ofa cash injection of USD11.7 million. Both Mr. Adnan Asdar and Mr. Nasser Khan Ghazi will subscribe up to theirproportionate shareholding in Multinet.

Completion of the above transaction is subject to approvals from regulatory authorities in Pakistan andMalaysia and lenders of Multinet.

(b) Voluntary Separation Scheme (VSS)The Board of Directors had approved a Group-wide Manpower Optimisation Plan (the Plan) at its Boardmeeting on 30 November 2004. The Plan includes, amongst others, a VSS and an early retirement scheme. Theimplementation of the VSS had been approved by the relevant authority on 15 February 2005.

On 23 February 2005, the Group announced the VSS to all eligible staff of the Group as part of its manpowerrationalisation programme. The VSS, was offered across all levels of staff within the Group and the cost of thisexercise is expected to be between RM200.0 million to RM300.0 million. The VSS is expected to be completedby end of April 2005.

(c) Global Settlement in relation to Celcom Timur (Sarawak) Sdn Bhd (CTS)On 22 February 2005, Celcom, a wholly owned subsidiary of TM, has entered into a global settlementarrangement in relation to CTS involving the following transactions:

(a) The disposal by Celcom to Sarawak Electricity Supply Corporation (Sesco) and Sacofa Sdn Bhd (Sacofa) of15,000,000 ordinary shares of RM1.00 each in CTS for a total consideration of RM43.4 million divided into2 tranches:

(i) Tranche 1The disposal by Celcom to Sesco of 8,212,270 ordinary shares of RM1.00 each for a total considerationof RM23.8 million to be satisfied by the novation by Celcom to Sesco, of an outstanding debt in thesum of RM23.8 million owed by Celcom to CTS.

(ii) Tranche 2The disposal by Celcom to Sacofa of 6,787,730 ordinary shares of RM1.00 each for a totalconsideration of RM19.6 million to be satisfied by the allotment and issuance of 9,815,940 ordinaryshares of RM1.00 each at RM2.00 per new ordinary share in Sacofa, representing 16.05% of theenlarged share capital of Sacofa.

Tranche 1 transaction was completed on 22 February 2005. Upon completion of the Tranche 1 transaction,all legal actions instituted by, inter alia, Celcom, Sesco and CTS against each other have been withdrawnor discontinued with no liberty to file afresh.


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35. SIGNIFICANT SUBSEQUENT EVENTS (continued)

(c) Global Settlement in relation to Celcom Timur (Sarawak) Sdn Bhd (CTS) (continued)(b) The disposal of 12 communication towers situated in Sarawak by Celcom to Sacofa for a total

consideration of RM6.0 million to be satisfied by the allotment and issuance of 3,018,387 ordinary sharesof RM1.00 each at RM2.00 per new ordinary share in Sacofa. Upon completion of this transaction, Celcom’sshareholding in Sacofa will increase to 20% of the enlarged share capital of Sacofa.

In the event that the Sacofa Agreement (Tranche 2 transaction) failed due to the unfulfillment of itsconditions precedent or cannot be completed within 180 days from 22 February 2005, Sesco shall thenpurchase the Tranche 2 Shares for a cash consideration of RM19.6 million.

36. SEGMENTAL REPORTING

By BusinessThe Group is organised on a worldwide basis in three main business segments:

(a) Fixed line– represents fixed line, data, Internet and multimedia and other telecommunication related services

(b) Cellular– represents mobile telecommunication services

(c) Non-telecommunication related services– represents services provided by subsidiaries with core business in consultancy, property management,

education and other activities, none of which is of a sufficient size to be reported separately.

Segment results represent segment operating revenue less segment expenses. Unallocated income includes interestincome, dividend income and gain or loss on disposal of investments. Unallocated costs represent corporate expensesand net foreign exchange differences arising from revaluation of corporate borrowings. The accounting policies usedto derive reportable segment results are consistent with those as described in the Significant Accounting Policies.

Segment assets disclosed for each segment represent assets directly managed by each segment, primarily includeintangibles, receivables, property, plant and equipment, inventories and cash and bank balances. Unallocatedcorporate assets mainly include staff loans, other long term receivables, investments, deferred tax assets andproperty, plant and equipment of the Company’s training centre.

Segment liabilities comprise operating liabilities and exclude corporate borrowings, interest payable on corporateborrowings, current tax and deferred tax liabilities.

Segment capital expenditure comprises additions to property, plant and equipment.

Significant non-cash expenses comprise mainly allowances and unrealised foreign exchange losses (excluding net foreignexchange differences arising from revaluation of corporate borrowings) as shown in note 4 to the financial statements.


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36. SEGMENTAL REPORTING (continued)

Fixed line, data, Internet

and multimedia Cellular Others TotalRM RM RM RM

Year Ended 31 December 2004Operating RevenueTotal operating revenue 8,276.6 5,226.6 699.9 14,203.1Inter-segment* (199.7) (276.7) (475.8) (952.2)

External operating revenue 8,076.9 4,949.9 224.1 13,250.9

ResultsSegment results 1,500.9 820.5 32.7 2,354.1Unallocated income 67.9Corporate expenses (541.8)Foreign exchange gains 3.5

Operating profit before finance cost 1,883.7Finance cost (627.5)Finance income 214.1Associates

– share of profits less losses 120.7 43.0 — 163.7– profit on disposal 1,538.8

Profit before taxation 3,172.8Taxation (496.3)

Profit after taxation 2,676.5Minority interests (63.0)

Profit attributable to shareholders 2,613.5

At 31 December 2004Net AssetsSegment assets 21,969.2 12,470.9 1,462.4 35,902.5Associates 30.4 75.3 — 105.7Unallocated corporate assets 1,667.0

Total assets 37,675.2

Segment liabilities 2,884.6 3,493.7 134.2 6,512.5Unallocated liabilities 11,421.6

Total liabilities 17,934.1


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Fixed line,data, Internet


Year Ended 31 December 2004Other InformationCapital expenditure– additions during the year 1,480.9 1,006.5 51.5 2,538.9Depreciation 2,346.8 1,261.3 64.9 3,673.0Write off of property, plant and equipment 60.5 — — 60.5Impairment of property, plant and equipment 251.1 382.2 — 633.3Significant non-cash expenses 289.8 132.8 11.4 434.0

Year Ended 31 December 2003Operating RevenueTotal operating revenue 8,344.8 3,875.4 473.0 12,693.2Inter-segment* (405.0) (269.1) (222.7) (896.8)

External operating revenue 7,939.8 3,606.3 250.3 11,796.4

ResultsSegment results 1,588.6 453.2 86.6 2,128.4Unallocated income 85.6Corporate expenses (266.6)Foreign exchange losses (82.1)

Operating profit before finance cost 1,865.3Finance cost (517.1)Finance income 87.1Associates

– share of profits less losses 236.2 139.0 — 375.2

Profit before taxation 1,810.5Taxation (366.3)

Profit after taxation 1,444.2Minority interests (53.8)

Profit attributable to shareholders 1,390.4


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Fixed line,data, Internet


At 31 December 2003Net AssetsSegment assets 19,473.1 12,050.6 1,272.2 32,795.9Associates 1,211.8 287.8 — 1,499.6Unallocated corporate assets 1,744.8

Total assets 36,040.3

Segment liabilities 3,457.3 4,200.4 114.1 7,771.8Unallocated liabilities 11,241.0

Total liabilities 19,012.8

Year Ended 31 December 2003Other InformationCapital expenditure– additions during the year 1,969.5 684.7 27.3 2,681.5– acquisition of a subsidiary — 5,899.6 — 5,899.6Depreciation 2,587.4 932.6 31.3 3,551.3Write off of property, plant and equipment 5.7 0.1 — 5.8Impairment of property, plant and equipment 4.3 94.9 — 99.2Significant non-cash expenses 251.0 269.0 2.3 522.3

* Inter-segment operating revenue has been eliminated in arriving at respective segment operating revenue. The inter-segment operating revenue was entered into in the normal course of business and at prices available tothird parties or at negotiated terms.

By Geographical LocationAlthough the Group operates in many countries as shown in note 41 to the financial statements, the segmentisationof Group operation by geographical location is only segmentised to Malaysia and overseas as no individual overseascountry contributed more than 10% of consolidated operating revenue or assets.

In presenting information for geographical segments of the Group, sales are based on the country in which thecustomers are located. There is no sale between the segments. Total assets and capital expenditure are determinedbased on where the assets are located.


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Operating Revenue Total Assets Capital Expenditure

2004 2003 2004 2003 2004 2003

RM RM RM RM RM RM

Malaysia 12,061.4 10,996.9 33,698.1 31,035.7 2,164.0 8,173.2

Overseas 1,189.5 799.5 2,204.4 1,760.2 374.9 407.9

13,250.9 11,796.4 35,902.5 32,795.9 2,538.9 8,581.1

Associates 105.7 1,499.6

Unallocated corporate assets 1,667.0 1,744.8

Total assets 37,675.2 36,040.3

37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The main risks arising from the Group’s financial assets and liabilities are foreign exchange, interest rate, credit and

liquidity risk. The Group’s overall risk management seeks to minimise potential adverse effects of these risks on the

financial performance of the Group.

The Group has established risk management policies, guidelines and control procedures to manage its exposure to

financial risks. Hedging transactions are determined in the light of commercial commitments. Derivative financial

instruments are used only to hedge underlying commercial exposures and are not held or sold for speculative purposes.

Foreign Exchange Risk

The foreign exchange risk of the Group arises from borrowings denominated in foreign currencies. The Group has

long dated, cross-currency interest rate and interest rate swaps that are primarily used to hedge selected long term

foreign currency borrowings to reduce the foreign currency exposures on these borrowings. The main currency

exposures are primarily US Dollar and Japanese Yen.

The Group also has subsidiaries and associates operating in foreign countries, which generate revenue and incur

costs denominated in foreign currencies. The main currency exposures are primarily Guinea Franc, Bangladesh Taka,

Sri Lanka Rupee and South African Rand.


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37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Interest Rate Risk

The Group has cash and bank balances and deposits placed with creditworthy licensed banks and financial institutions.

The Group manages its interest rate risk by placing such balances on varying maturities and interest rate terms.

The Group’s debt includes bank overdrafts, bank borrowings, bonds, notes and debentures. The Group’s interest rate

risk objective is to manage the interest expense consistent with maintaining an acceptable level of exposure to

interest rate fluctuations. In order to achieve this objective, the Group targets a mix of fixed and floating debt based

on assessment of its existing exposure and desired interest rate profile. To obtain this mix, the Group uses combined

cross-currency interest rate swaps to convert certain long term foreign currency borrowings from variable to fixed

rate or vice versa.

Credit Risk

Financial assets that potentially subject the Group to concentrations of credit risk consist primarily trade receivables,

cash and bank balances, marketable securities and financial instruments used in hedging activities.

Due to the nature of the Group’s business, customers are mainly segregated into business and residential. The Group

has no other major significant concentration of credit risk other than business and residential trade receivables due to

its diverse customer base. Credit risk is managed through the application of credit assessment and approval, credit limit

and monitoring procedures. Where appropriate, the Group obtained deposits or bank guarantees from the customers.

The Group places its cash and cash equivalents and marketable securities with a number of creditworthy financial

institutions. The Group’s policy limits the concentration of financial exposure to any single financial institution.

All hedging instruments are executed with creditworthy financial institutions with a view to limit the credit risk exposure

of the Group. The Group, however, is exposed to credit-related losses in the event of non-performance by counterparties

to financial derivative instruments, but does not expect any counterparties to fail to meet their obligations.

Liquidity Risk

In the management of liquidity and cash flow risk, the Group monitors and maintains a level of cash and cash

equivalents deemed adequate by the management to finance the Group’s operations and mitigate the effects of

fluctuations in cash flows. Due to the dynamic nature of the underlying business, the Group aims at maintaining

flexibility in funding by keeping both committed and uncommitted credit lines available.


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38. INTEREST RATE RISK

The table below summarises the Group and the Company’s exposure to interest rate risk. Included in the tables are

the Group and the Company’s financial assets and liabilities at carrying amounts, categorised by the earlier of

repricing or contractual maturity dates. The off-balance-sheet gap represents the net notional amounts of all interest

rate sensitive derivative instruments. Sensitivity to interest rates arises from mismatches in the repricing dates, cash

flows and other characteristics of assets and their corresponding liability funding.

Fixed interest rate Balances

Floating maturing or repriced in Total Non- under

interest 1 year 1 to 5 More than interest interest Islamic

W.A.R.F.* rate or less years 5 years sensitive sensitive principles Total


2004

Financial Assets

Investments 2.10% — 9.5 — — 9.5 364.1 — 373.6

Staff Loans and Other Long

Term Receivables 4.00% — 7.4 45.4 141.8 194.6 49.6 470.0 714.2


(excluding short term staff loans) 1.67% — 36.8 — — 36.8 3,256.4 — 3,293.2

Short Term Investments — — — — — — 150.2 — 150.2

Cash and Bank Balances 2.67% — 7,046.5 — — 7,046.5 438.2 1,316.9 8,801.6

Total — 7,100.2 45.4 141.8 7,287.4 4,258.5 1,786.9 13,332.8

Financial Liabilities

Borrowings 5.99% 3,167.5 799.1 28.6 4,883.0 8,878.2 6.1 1,900.4 10,784.7

Customer Deposits — — — — — — 616.7 — 616.7

Trade and Other Payables — — — — — — 4,127.7 — 4,127.7

Total 3,167.5 799.1 28.6 4,883.0 8,878.2 4,750.5 1,900.4 15,529.1

On-balance-sheet interest

sensitivity gap (3,167.5) 6,301.1 16.8 (4,741.2)

Off-balance-sheet interest

sensitivity gap — — — —

Total interest sensitivity gap (3,167.5) 6,301.1 16.8 (4,741.2)


Page 298


38. INTEREST RATE RISK (continued)

Fixed interest rate Balances

Floating maturing or repriced in Total Non- under

interest 1 year 1 to 5 More than interest interest Islamic

W.A.R.F.* rate or less years 5 years sensitive sensitive principles Total


2003

Financial Assets

Investments 2.00% — 8.6 — — 8.6 376.1 — 384.7

Staff Loans and Other Long

Term Receivables 4.00% — 3.4 24.9 233.2 261.5 32.2 475.5 769.2


(excluding short term staff loans) 1.45% — 23.7 — — 23.7 3,711.0 — 3,734.7

Short Term Investments — — — — — — 263.4 — 263.4

Cash and Bank Balances 2.38% — 2,273.5 — — 2,273.5 350.1 722.5 3,346.1

Total — 2,309.2 24.9 233.2 2,567.3 4,732.8 1,198.0 8,498.1

Financial Liabilities

Borrowings 5.03% 3,379.7 537.6 919.3 4,874.5 9,711.1 6.1 1,991.2 11,708.4

Customer Deposits — — — — — — 626.9 — 626.9

Trade and Other Payables — — — — — — 4,522.0 — 4,522.0

Total 3,379.7 537.6 919.3 4,874.5 9,711.1 5,155.0 1,991.2 16,857.3

On-balance-sheet interest

sensitivity gap (3,379.7) 1,771.6 (894.4) (4,641.3)

Off-balance-sheet interest


Total interest sensitivity gap (3,379.7) 1,771.6 (894.4) (4,641.3)

* W.A.R.F. – Weighted Average Rate of Finance as at 31 December


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The table below summarises the weighted average rate of finance as at 31 December by major currencies for eachclass of financial asset and liability:

2004 2003THE GROUP USD JPY RM USD JPY RM

Financial AssetsInvestments 1.68% — — 0.89% — —Staff Loans — — 4.00% — — 4.00%Trade and Other Receivables 1.67% — — 1.45% — —Cash and Bank Balances 2.33% — 2.74% 1.26% — 2.66%

Financial LiabilitiesBorrowings 6.57% 2.13% 5.75% 5.45% 1.87% 5.80%

Fixed interest rate BalancesFloating maturing or repriced in Total Non- underinterest 1 year 1 to 5 More than interest interest Islamic

W.A.R.F.* rate or less years 5 years sensitive sensitive principles TotalTHE COMPANY RM RM RM RM RM RM RM RM

2004Financial AssetsAmount Owing by Subsidiaries

net of allowances 5.08% 167.0 — 7.7 — 174.7 8,852.8 — 9,027.5Investments — — — — — — 326.2 — 326.2Staff Loans and Other Long

Term Receivables 4.00% — 7.4 45.4 141.8 194.6 49.0 470.0 713.6Trade and Other Receivables

(excluding short term staff loans) — — — — — — 2,694.4 — 2,694.4Short Term Investments — — — — — — 148.6 — 148.6Cash and Bank Balances 2.43% — 5,034.7 — — 5,034.7 57.9 347.8 5,440.4

Total 167.0 5,042.1 53.1 141.8 5,404.0 12,128.9 817.8 18,350.7

Financial LiabilitiesBorrowings 6.59% 2,142.2 795.8 3.6 369.7 3,311.3 6.1 689.0 4,006.4Payable to Subsidiaries 5.60% 400.0 — — 4,483.5 4,883.5 — — 4,883.5Customer Deposits — — — — — — 609.2 — 609.2Trade and Other Payables — — — — — — 4,118.6 — 4,118.6

Total 2,542.2 795.8 3.6 4,853.2 8,194.8 4,733.9 689.0 13,617.7


Page 300



Fixed interest rate BalancesFloating maturing or repriced in Total Non- underinterest 1 year 1 to 5 More than interest interest Islamic

W.A.R.F.* rate or less years 5 years sensitive sensitive principles TotalTHE COMPANY RM RM RM RM RM RM RM RM

2004On-balance-sheet interest

sensitivity gap (2,375.2) 4,246.3 49.5 (4,711.4)Off-balance-sheet interest


Total interest sensitivity gap (2,375.2) 4,246.3 49.5 (4,711.4)

2003Financial AssetsAmount Owing by Subsidiaries

net of allowances 1.83% 1,489.4 — 7.7 — 1,497.1 8,768.0 — 10,265.1Investments — — — — — — 338.1 — 338.1Staff Loans and Other Long

Term Receivables 4.00% — 3.4 24.9 233.2 261.5 31.7 475.5 768.7Trade and Other Receivables

(excluding short term staff loans) — — — — — — 3,004.6 — 3,004.6Short Term Investments — — — — — — 260.3 — 260.3Cash and Bank Balances 1.62% — 679.3 — — 679.3 33.7 139.0 852.0

Total 1,489.4 682.7 32.6 233.2 2,437.9 12,436.4 614.5 15,488.8

Financial LiabilitiesBorrowings 4.91% 2,550.8 2.4 871.8 2,314.9 5,739.9 6.1 689.0 6,435.0Payable to a Subsidiary 5.91% — — — 2,983.5 2,983.5 — — 2,983.5Customer Deposits — — — — — — 614.9 — 614.9Trade and Other Payables — — — — — — 2,863.1 — 2,863.1

Total 2,550.8 2.4 871.8 5,298.4 8,723.4 3,484.1 689.0 12,896.5

On-balance-sheet interestsensitivity gap (1,061.4) 680.3 (839.2) (5,065.2)

Off-balance-sheet interestsensitivity gap — — — —

Total interest sensitivity gap (1,061.4) 680.3 (839.2) (5,065.2)

* W.A.R.F. – Weighted Average Rate of Finance as at 31 December


Page 301



The table below summarises the weighted average rate of finance as at 31 December by major currencies for eachclass of financial asset and liability:

2004 2003THE COMPANY USD JPY RM USD JPY RM

Financial AssetsAmount Owing by Subsidiaries

net of allowances 5.36% — 1.52% 3.99% — 1.50%Staff Loans — — 4.00% — — 4.00%Cash and Bank Balances 2.34% — 2.74% 1.23% — 2.62%

Financial LiabilitiesBorrowings 7.68% 2.13% 6.35% 5.57% 1.87% 7.89%Payable to Subsidiaries 5.25% — 5.82% — — 5.91%

39. CREDIT RISK

For on-balance-sheet financial instruments, the main credit risk exposure has been disclosed elsewhere in thefinancial statements.

Off-balance-sheet financial instrumentsThe Group and the Company are exposed to credit risk where the fair value of the contract is favourable, wherethe counterparty is required to pay the Group or the Company in the event of contract termination. The followingtable summarises the favourable fair values of the contracts, indicating the credit risk exposure.

THE GROUP AND COMPANY2004 2003

Contract Contractor notional or notional

principal Favourable principal Favourableamount Fair Value amount Fair Value

RM RM RM RM

Long dated swap 750.0 96.9 750.0 66.4Interest rate swap 400.0 1.4 570.0 1.4

1,150.0 98.3 1,320.0 67.8


Page 302


40. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES

The fair value of a financial instrument is assumed to be the amount at which the instrument could be exchanged

or settled between knowledgeable and willing parties in an arm’s length transaction, other than in forced or

liquidation sale.

Quoted market prices, when available, are used as the measure of fair values. However, for a significant portion of

the Group and the Company’s financial instruments, quoted market prices do not exist. For such financial

instruments, fair values presented are estimates derived using the net present value or other valuation techniques.

These techniques involve uncertainties and are significantly affected by the assumptions used and judgements made

regarding risk characteristics of various financial instruments, discount rates, estimates of future cash flows, future

expected loss experience and other factors. Changes in assumptions could significantly affect these estimates and the

resulting fair values.

(a) On-balance-sheet

The carrying amounts of the financial assets and liabilities of the Group and the Company at the balance sheet

date approximated their fair values except as set out below:


2004 2003 2004 2003

Carrying Net Carrying Net Carrying Net Carrying Net

amount fair value amount fair value amount fair value amount fair value

RM RM RM RM RM RM RM RM

Financial assets

Investments 373.6 328.4 384.7 458.4 326.2 281.0 338.1 411.8

Staff loans 195.2 175.4 262.0 233.8 194.6 174.8 261.5 233.3

Financial liabilities

Borrowings (excluding

redeemable bonds) 5,884.3 6,222.2 6,717.2 7,597.0 3,317.4 3,648.9 5,746.0 6,264.0

Redeemable bonds /

Payable to subsidiaries 3,000.0 3,148.3 3,000.0 3,000.0 4,883.5 5,037.1 2,983.5 2,959.9

The above carrying amounts and net fair values of borrowings exclude swaps, which are disclosed in sub-note (b).


Page 303


40. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)

Financial assets

The fair value of long term investments are estimated by reference to market indicative yields or the Group and

the Company’s share of net tangible assets. Where allowances of permanent diminution in value or impairment,

where applicable, is made in respect of any investment, the carrying amount net of allowance made is deemed to

be a close approximation of its fair value.

The fair value of staff loans have been estimated by discounting the estimated future cash flows using the prevailing

market rates for similar credit risks and remaining period to maturity. The fair value of staff loans is lower than

carrying amount at the balance sheet date as the Company and its subsidiaries charged interest rates on staff loans

at below current market rates. The Directors consider the carrying amount fully recoverable as they do not intend

to realise the financial asset via exchange with another counterparty but to hold it to contract maturity. Collaterals

are taken for these loans and the Directors are of the opinion that the potential losses in the event of default will

be covered by the collateral values on individual loan basis.

For educational loans, amount owing by subsidiaries and associates and customer deposits, it is not practicable to

determine the fair values of these balances as they are mainly interest free and do not have fixed repayment terms.

However, the carrying amounts recorded are not anticipated to be significantly in excess of their fair values at the

balance sheet date.

Financial liabilities

The fair value of convertible bonds and quoted bonds has been estimated using the respective quoted offer price. For

unquoted borrowings with fixed interest rate, the fair values have been estimated by discounting the estimated future

cash flows using the prevailing market rates for similar credit risks and remaining period to maturity. For unquoted

borrowings with floating interest rate, the carrying values are generally reasonable estimates of their fair values.

The financial liabilities will be realised at their carrying values and not at their fair value as the Directors have no

intention to settle these liabilities other than in accordance with their contractual obligations.

For all other short term on-balance-sheet financial instruments maturing within one year or are repayable on

demand, the carrying values are assumed to approximate their fair values.


Page 304


40. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)

(b) Off-balance-sheet

The financial derivative instruments are used to hedge foreign exchange and interest rate risks associated with

certain long term foreign currency borrowings. The contract notional principal amounts of the derivative and

the corresponding fair value adjustments are analysed as below:

THE GROUP AND COMPANY

2004 2003

Contract Contract

or notional or notional

principal Net Fair Value principal Net Fair Value

amount Favourable Unfavourable amount Favourable Unfavourable

RM RM RM RM RM RM

Off-Balance-Sheet Financial

Derivative Instruments

Long dated swap 750.0 96.9 — 750.0 66.4 —

Cross-currency interest

rate swaps 570.0 — (91.5) 760.0 — (95.8)

Interest rate swap 2,110.0 1.4 (23.6) 570.0 1.4 —

Fair values of financial derivative instruments are the present values of their future cash flows and are arrived

at based on valuations carried out by the Company’s bankers. Favourable fair value indicates amount receivable

by the Company if the contracts are terminated as at 31 December 2004 or vice versa.


Page 305


41. LIST OF SUBSIDIARIES AS AT 31 DECEMBER 2004

The subsidiaries are as follows:% of Paid-up

Shareholdings CapitalName of Company 2004 2003 2004 2003 Principal Activities

Million Million

Fiberail Sdn Bhd 60 60 RM14.2 RM14.2 Installation and maintenance of optic fibretelecommunication system along therailway corridor in Peninsular Malaysia

GITN Sdn Berhad 100 100 RM50.0 RM20.0 Provision of managed network services andenhanced value added telecommunicationand information technology services

Intelsec Sdn Bhd* 100 100 RM3.0 RM3.0 Installation and maintenance of computerisedsecurity systems and security relatedimaging technology

Mediatel (Malaysia) Sdn Bhd 100 100 RM4.0 RM4.0 Investment holding

Meganet Communications Sdn Bhd 70 70 RM11.0 RM11.0 Provision of interactive multimediacommunication services and solution

Menara Kuala Lumpur Sdn Bhd 100 100 RM91.0 RM91.0 Management and operation of thetelecommunication and tourism tower ofMenara Kuala Lumpur

Mobikom Sdn Bhd 100 100 RM260.0 RM260.0 Provision/transmission of voice and datathrough the cellular system

Parkside Properties Sdn Bhd* 100 100 RM0.1 RM0.1 Dormant

Rebung Utama Sdn Bhd 100 100 RM# RM# Special purpose entity

Societe Des Telecommunications 60 60 GFR75,000.0 GFR75,000.0 Provision of telecommunication and related De Guinee** services in the Republic of Guinea

Tekad Mercu Berhad 100 100 RM# RM# Special purpose entity

Telekom Applied Business 100 70 RM1.6 RM1.6 Provision of software development and sale Sdn Bhd of software products

Telekom Consultancy Sdn Bhd* 51 51 RM# RM# Ceased operation

Telekom Enterprise Sdn Bhd 100 100 RM0.6 RM0.6 Investment holding and provision of servicesrelating to telecommunication, computer,data and information within and outsideMalaysia


Page 306


41. LIST OF SUBSIDIARIES AS AT 31 DECEMBER 2004 (continued)



Million Million

Telekom Infotech Sdn Bhd* 100 100 RM0.5 RM0.5 Dormant

Telekom Malaysia-Africa Sdn Bhd 100 100 RM0.1 RM0.1 Investment holding

Telekom Malaysia (Hong Kong) 100 100 HKD18.5 HKD# Provision of international telecommunication Limited** facilities

Telekom Malaysia (S) Pte Ltd** 100 100 SGD# SGD# Provision of international telecommunicationfacilities

Telekom Malaysia (UK) Limited** 100 100 STR# STR# Provision of international telecommunicationfacilities

Telekom Malaysia (USA) Inc** 100 100 USD# USD# Provision of international telecommunication (formerly known as TM (USA) Inc) facilities

Telekom Management Services 100 100 RM# RM# Provision of consultancy and engineeringSdn Bhd services in telecommunication

Telekom Multi-Media Sdn Bhd 100 100 RM1.6 RM1.6 Investment holding and provision of interactivemultimedia communication services andsolutions

Telekom Networks Malawi Limited** 60 60 MKW350.0 MKW350.0 Provision of telecommunication and relatedservices in the Republic of Malawi

Telekom Payphone Sdn Bhd 100 100 RM9.0 RM9.0 Investment holding and provision of publictelephone services

Telekom Publications Sdn Bhd 100 100 RM6.0 RM6.0 Provision of printing and publications services

Telekom Research & Development 100 100 RM20.0 RM20.0 Provision of research and development Sdn Bhd activities in the areas of telecommunication

and multimedia, hi-tech applications andproducts and services in related business

Telekom Sales and Services Sdn Bhd 100 100 RM14.5 RM14.5 Trading in customer premises equipment andmaintaining telecommunication equipment

Telekom Technology Sdn Bhd 100 70 RM13.0 RM13.0 Ceased operation

Telesafe Sdn Bhd* 100 100 RM4.0 RM4.0 Dormant


Page 307





Million Million

TM Cellular (Holdings) Sdn Bhd 100 100 RM0.1 RM0.1 Market and provide voice, data, video,wireless multimedia & interactive contentand application

TM Global Incorporated## 100 100 USD# USD# Investment holding

TM Facilities Sdn Bhd 100 100 RM2.3 RM2.3 Provision of facilities management services

TM International (Bangladesh) — 70 TK- TK340.0 Provision of mobile telecommunication Limited## services in Bangladesh

TM International (Cayman) Ltd* 100 100 USD# USD# Investment holding

TM International Leasing 100 100 USD# USD# Investment holdingIncorporated##

TM International Sdn Bhd 100 100 RM30.5 RM16.2 Investment holding and provision oftelecommunication and consultancy serviceson an international scale

TM Net Sdn Bhd 100 100 RM180.0 RM180.0 Provision of Internet related services

TM Payphone Sdn Bhd 100 100 RM65.0 RM65.0 Provision of national payphone network (formerly known as Citifon Sdn Bhd) and related services

Universiti Telekom Sdn Bhd 100 100 RM1.0 RM1.0 Managing and administering a privateuniversity known as Multimedia University

VADS Berhad 69.52 69.52 RM40.0 RM40.0 Provision of international and nationalmanaged network services for businessesand organisations

Subsidiaries held throughTelekom Enterprise Sdn Bhd

Celcom (Malaysia) Berhad 100 100 RM2,619.1 RM2,619.1 Provision of mobile, fixed and multimediaservices

Mobitel Sdn Bhd* 55 55 RM8.0 RM8.0 Dormant


Page 308





Million Million

Subsidiaries held throughTelekom Multi-Media Sdn Bhd

TM Orion Sdn Bhd* 100 100 RM# RM# Dormant

Telekom Smart School Sdn Bhd 51 51 RM15.0 RM15.0 Implementation of government smartschool project, provision of multimediaeducation systems and software, portalservices and other related services

Subsidiary held throughTelekom Publications Sdn Bhd

Cybermall Sdn Bhd 100 100 RM2.7 RM2.7 Ceased operation

Subsidiary held throughTM Facilities Sdn Bhd

TM Land Sdn Bhd 100 — RM# RM- Property development activities(formerly known as

Telekom Land Sdn Bhd)

Subsidiaries held throughTM International Sdn Bhd

MTN Networks (Private) Limited## — 100 SLR- SLR370.0 Provision of mobile telecommunicationservices in Sri Lanka

TM International (L) Limited## 100 100 USD47.9 USD# Investment holding

TM International Lanka (Private) — 100 SLR- SLR200.0 Investment holdingLimited##

TMI Mauritius Limited## 100 100 USD# USD# Investment holding

G-Com Limited** 85 85 CED22.9 CED22.9 Investment holding

Cambodia Samart Communication 51 51 USD8.5 USD8.5 Provision of mobile telecommunication Co Ltd** services in Cambodia


Page 309





Million Million

Subsidiaries held throughTM International (L) Limited##

MTN Networks (Private) Limited## 100 — SLR370.0 SLR- Provision of mobile telecommunicationservices in Sri Lanka

TESS International Ltd* 100 100 USD# USD# Investment holding

TM International (Bangladesh) 70 — TK3,060.0 TK- Provision of mobile telecommunication Limited## services in Bangladesh

TM International Lanka (Private) 100 — SLR222.0 SLR- Investment holdingLimited##

Subsidiary held throughUniversiti Telekom Sdn Bhd

Unitele Multimedia Sdn Bhd 100 100 RM1.0 RM1.0 Adopting research ideas from MultimediaUniversity for further development andprototyping, directing consultancy projectto faculties and centres at MultimediaUniversity and collaborating with otherbusiness partners in joint exercise

Subsidiaries held throughVADS Berhad

VADS e-Services Sdn Bhd 100 100 RM1.0 RM1.0 Provision of managed e-services andmanaged application services

VADS Solutions Sdn Bhd 100 100 RM1.5 RM1.5 Provision of system integration services

VADS Professional Services Sdn Bhd 100 — RM# RM- Provision of Employment Agency

Subsidiaries held throughCelcom (Malaysia) Berhad

Celcom Academy Sdn Bhd 100 100 RM# RM# Provision of training related services

Celcom Multimedia (Malaysia) 100 100 RM# RM# DormantSdn Bhd*

Celcom Technology (M) Sdn Bhd 100 100 RM2.0 RM2.0 Provision of telecommunication value addedservices through cellular or other forms oftelecommunication network


Page 310





Million Million

Subsidiaries held throughCelcom (Malaysia) Berhad (continued)

Celcom Timur (Sabah) Sdn Bhd 60 60 RM7.0 RM0.5 Provision of fibre optic transmission network

Celcom Transmission (M) Sdn Bhd 100 100 RM25.0 RM25.0 Provision of network transmission relatedservices

Celcom Trunk Radio (M) Sdn Bhd 100 100 RM# RM# Ceased operations

CT Paging Sdn Bhd* 100 100 RM0.5 RM0.5 Inactive

Technology Resources 100 100 RM# RM# Investment holding and provision of Industries Berhad management services

TM Cellular Sdn Bhd 100 100 RM1,565.0 RM1,565.0 Provision of mobile and multimedia services

Alpha Canggih Sdn Bhd 100 — RM# RM- Property investment

Subsidiary held throughCelcom Transmission (M) Sdn Bhd

Alpha Canggih Sdn Bhd — 100 RM- RM# Property investment

Subsidiaries held throughCelcom Trunk Radio (M) Sdn Bhd

CT Communication Sdn Bhd*+ 100 100 RM# RM# Dormant

Firent Management Services 100 100 RM# RM# DormantSdn Bhd*+

Subsidiary held throughCT Paging Sdn Bhd*

Masterpage Sdn Bhd^ — 100 RM- RM# Dormant


Page 311





Million Million

Subsidiaries held throughTechnology Resources IndustriesBerhad

Alpine Resources Sdn Bhd* 100 100 RM2.5 RM2.5 Inactive

Freemantle Holdings (M) 100 100 RM13.5 RM13.5 DormantSdn Bhd*

Malaysian Motorhomes Sdn Bhd@ 62.4 62.4 RM0.7 RM0.7 Ceased operations

Rego Multi-Trades Sdn Bhd 100 100 RM2.0 RM2.0 Dealing in marketable securities

Technology Resources Management 100 100 RM# RM# InactiveServices Sdn Bhd*

Technology Resources — 100 RM- RM15.9 InactiveManufacturing Sdn Bhd^^

Technology Resources (Nominees) 100 100 RM# RM# DormantSdn Bhd*

TR Components Sdn Bhd 100 100 RM# RM# Investment holding

TR International Limited** 100 100 HKD# HKD# Investment holding

Subsidiary held throughTR Components Sdn Bhd

Aseania Plastics Sdn Bhd*/** 99 90 RM0.3 RM0.3 Inactive


Page 312



All subsidiaries are incorporated in Malaysia except the following:

Name of Company Place of IncorporationCambodia Samart Communication Co Ltd** – CambodiaG-Com Limited** – GhanaMTN Networks (Private) Limited## – Sri LankaSociete Des Telecommunications De Guinee** – Republic of GuineaTelekom Networks Malawi Limited** – Republic of MalawiTESS International Ltd* – MauritiusTM Global Incorporated## – Federal Territory, LabuanTM International (Bangladesh) Limited## – BangladeshTM International (Cayman) Ltd* – British West Indies, USATM International (L) Limited## – Federal Territory, LabuanTM International Lanka (Private) Limited## – Sri LankaTM International Leasing Incorporated## – Federal Territory, LabuanTMI Mauritius Limited## – MauritiusTelekom Malaysia (S) Pte Ltd** – SingaporeTelekom Malaysia (UK) Limited** – United KingdomTelekom Malaysia (Hong Kong) Limited** – Hong KongTelekom Malaysia (USA) Inc** – USATR International Limited** – Hong Kong

* Inactive as at 31 December 2004# Amounts less than 0.1 million in their respective currency## Audited by a member firm of PricewaterhouseCoopers** Not audited by member firms of PricewaterhouseCoopers^ Deregistered by the Companies Commissions of Malaysia (CCM) and struck off from the CCM’s Register pursuant to

Section 308 (4) of the Companies Act, 1965 (CA) with effect from 13 April 2004^^ Struck off from the CCM’s Register pursuant to Section 308 (4) of the CA with effect from 30 November 2004+ Will be dissolved with effect from 14 March 2005 pursuant to members’ voluntary winding up under Section 254 of the CA@ Granted order for winding up pursuant to Section 218 (1) (i) of the CA (based on just and equitable ground) on

24 September 2004 including appointment of liquidator

CED Ghanaian CediGFR Guinea FrancHKD Hong Kong DollarMKW Malawi KwachaSGD Singapore DollarSLR Sri Lanka RupeeSTR Pound SterlingTK Bangladesh TakaUSD US Dollar


Page 313


42. LIST OF ASSOCIATES AS AT 31 DECEMBER 2004

The associates are as follows:% of

ShareholdingsName of Company 2004 2003 Principal Activities

mySPEED.com Sdn Bhd 16.22 16.22 Creating, implementing and operating e-business activities including electroniccommerce delivery services, multimediarelated activities and other computerised orelectronic services

Sistem Iridium Malaysia Sdn Bhd* 40 40 Dormant

Associates held through Telekom Multi-Media Sdn Bhd

Mahirnet Sdn Bhd 49 49 Development, management and marketingof educational products offered by localand overseas educational institutionselectronically

Mutiara.Com Sdn Bhd 30 30 Provision of promotion of Internet-basedcommunication services

Associate held through TM International Sdn Bhd

Samart Corporation Public Company Limited 19.43 19.59 Design, implementation and installation oftelecommunication systems and the saleand distribution of telecommunicationequipment

Associate held through Telekom Malaysia-Africa Sdn Bhd

Thintana Communications Llc — 40 Investment holding

Associate held through TM International (L) Ltd

Thintana Communications Llc 40 — Investment holding

Associate held through Thintana Communications Llc

Telkom SA Limited (sub-note a) — 30 Provision of telecommunication and relatedservices

Associate held through Celcom (Malaysia) Berhad

Celcom Timur (Sarawak) Sdn Bhd## 60 60 Telecommunication services


Page 314


42. LIST OF ASSOCIATES AS AT 31 DECEMBER 2004 (continued)

The associates are as follows:% of

ShareholdingsName of Company 2004 2003 Principal Activities

Associates held throughTechnology Resources Industries Berhad

Mobile Telecommunications Company of Esfahan 49 49 Planning, designing, installing, operating (J.V. – P.J.S.) and maintaining a GSM cellular

telecommunication network to customers inthe province of Esfahan, Iran

Sheba Telecom (Pvt) Ltd (sub-note a) — 86.4 Provision of telecommunication services

TRI Telecommunication Tanzania Limited# — 60 Provision of telecommunication services

Associate held through Celcom Transmission (M) Sdn Bhd

Fibrecomm Network (M) Sdn Bhd 41 41 Provision of fibre optic transmission networkservices

All associates are incorporated in Malaysia except the following:

Name of Company Place of IncorporationSamart Corporation Public Company Limited – ThailandThintana Communications Llc – USAMobile Telecommunications Company of Esfahan (J.V. – P.J.S.) – Iran

All associates have co-terminous financial year end with the Company except for mySPEED.com Sdn Bhd and TelkomSA Limited with financial year ends on 31 January and 31 March respectively.

* Inactive as at 31 December 2004# Treated as other investment due to loss of control and significant influence## Treated as associates due to loss of control while maintaining significant influence

(a) During the year, the Group disposed its equity interests in associates, namely Telkom SA Limited and ShebaTelecom (Pvt) Ltd, as explained in note 20(a) and (b) to the financial statements.

43. CURRENCY

All amounts are expressed in Ringgit Malaysia (RM) unless otherwise stated.

44. APPROVAL OF FINANCIAL STATEMENTS

The financial statements have been approved for issuance in accordance with a resolution of the Board of Directorson 24 February 2005.


Page 315

STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

STATUTORY DECLARATION

We, Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor and Dato’ Abdul Wahid Omar being two of the Directors of TelekomMalaysia Berhad, state that, in the opinion of the Directors, the financial statements on pages 224 to 314 are drawn upso as to exhibit a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2004and of the results and the cash flows of the Group and of the Company for the year ended on that date in accordancewith the applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.

In accordance with a resolution of the Board of Directors dated 24 February 2005.

TAN SRI DATO’ Ir. MUHAMMAD RADZI HAJI MANSORChairman

DATO’ ABDUL WAHID OMARGroup Chief Executive Officer

I, Jaffa Sany Md Ariffin, being the Officer primarily responsible for the financial management of Telekom MalaysiaBerhad, do solemnly and sincerely declare that to the best of my knowledge and belief, the financial statements set outon pages 224 to 314 are correct, and I make this solemn declaration conscientiously believing the same to be true andby virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly )declared at Kuala Lumpur )this 24 February 2005. ) JAFFA SANY MD ARIFFIN

Before me:

T. THANAPALASINGAM Commissioner for Oaths

Kuala Lumpur


Page 316

REPORT OF THE AUDITORS TO THE MEMBERS OF TELEKOM MALAYSIA BERHAD (COMPANY NO: 128740-P)

We have audited the financial statements set out on pages 224 to 314. These financial statements are the responsibilityof the Company’s Directors. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with approved Auditing Standards in Malaysia. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significant estimates made bythe Directors, as well as evaluating the overall financial statements presentation. We believe that our audit provides areasonable basis for our opinion.

In our opinion:

(a) the financial statements have been prepared in accordance with the provisions of the Companies Act, 1965 andapplicable approved accounting standards in Malaysia so as to give a true and fair view of:

(i) the matters required by section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and

(ii) the state of affairs of the Group and Company as at 31 December 2004 and of the results and the cash flowsof the Group and Company for the year ended on that date;

and

(b) the accounting and other records and the registers required by the Act to be kept by the Company and by thesubsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

The names of the subsidiaries of which we have not acted as auditors are indicated in note 41 to the financialstatements. We have considered the financial statements of these subsidiaries and the auditors’ reports thereon.

We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company's financialstatements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financialstatements and we have received satisfactory information and explanations required by us for those purposes.

The auditors' reports on the financial statements of the subsidiaries were not subject to any material qualification anddid not include any comment made under subsection (3) of section 174 of the Act.

PRICEWATERHOUSECOOPERS DATO’ AHMAD JOHAN BIN MOHAMMAD RASLAN(AF: 1146) [1867/09/06(J)]Chartered Accountants Partner

Kuala LumpurDate: 24 February 2005


Page 317

1. Telekom Malaysia Berhad is a public limited liability Company, incorporated and domiciled in Malaysia, and listedon the main board of the Bursa Malaysia Securities Berhad.

2. The address of the registered office of the Company is:

Level 51, North WingMenara TelekomOff Jalan Pantai Baharu50672 Kuala Lumpur

3. The principal office and place of business of the Company is:

Company Secretarial DivisionLevel 51, North WingMenara TelekomOff Jalan Pantai Baharu50672 Kuala Lumpur

4. The average number of employees at the end of the financial year amounted to:

2004 2003

Group 33,996 33,726

Company 21,983 22,513

GENERAL INFORMATION AS AT 31 DECEMBER 2004


Page 318

SHAREHOLDING STATISTICS AS AT 18 MARCH 2005

2004 MONTHLY TRADING VOLUME & HIGHEST-LOWEST SHARE PRICE

0

2

4

6

8

10

12

14

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

ShareVolume

(’000)

SharePrice (RM)

Volume ’000 Highest Lowest

85,2

75

79,4

17

130,

611

56,9

39

71,1

84

68,4

80

54,6

81

59,3

62

81,6

96

53,2

92

61,8

01

50,8

33

ANALYSIS OF SHAREHOLDINGS

Share CapitalAuthorised Share Capital : RM5,000,000,021 comprising 5,000,000,000 ordinary shares of RM1.00 each,

1 (one) Special Rights Redeemable Preference Share of RM1.00 each,1,000 Class A Redeemable Preference Shares (“RPS”) of RM0.01 each, and 1,000 Class B RPS of RM0.01 each.

Issued and Paid-up Capital : RM3,385,782,401 comprising 3,385,782,380 ordinary shares of RM1.00 each,1 (one) Special Rights Redeemable Preference Share of RM1.00 each,1,000 Class A RPS of RM0.01 each,and 1,000 Class B RPS of RM0.01 each.

Voting Rights : One vote per ordinary share.The Special Share has no voting right other than those referred to in note 10(a) tothe financial statements.

DISTRIBUTION OF SHAREHOLDINGS

Size of Shareholdings Shareholders SharesMalaysian Foreign Malaysian Foreign

No % No % No % No %

Less than 100 395 1.98 20 0.10 2,678 0.00 837 0.00100 – 1,000 6,895 34.54 904 4.54 6,157,017 0.18 587,092 0.021,001 – 10,000 8,794 44.05 817 4.09 28,413,466 0.84 2,886,951 0.0910,001 – 100,000 869 4.35 410 2.05 25,098,505 0.74 18,190,992 0.54100,001 – 169,289,218(less than 5% of paid-up capital) 249 1.25 605 3.03 605,187,762 17.87 675,822,108 19.96169,289,219 and above 4 0.02 0 0.00 2,023,436,973 59.76 0 0.00

TOTAL 17,206 86.19 2,756 13.81 2,688,296,401 79.39 697,487,980 20.61


Page 319

LIST OF TOP 30 SHAREHOLDERS AS AT 18 MARCH 2005

PercentageNo. Name Shareholding (%)

1. Khazanah Nasional Berhad 1,191,326,073 35.19

2. Employees Provident Fund Board 395,449,700 11.68

3. Bank Negara Malaysia 251,680,000 7.43

4. Cimsec Nominees (Tempatan) Sdn Bhd 184,981,200 5.46Security Trustee (KCW Issue 2)

5. Citicorp Nominees (Asing) Sdn Bhd 164,000,000 4.84CBSGP GW Spore for Hibiscus Investments Pte Ltd

6. Permodalan Nasional Berhad 154,348,000 4.56

7. Kumpulan Wang Amanah Pencen 56,591,000 1.67

8. Cartaban Nominees (Asing) Sdn Bhd 49,000,000 1.45SSBT Fund GB01 for Harbor International Fund

9. Amanah Raya Nominees (Tempatan) Sdn Bhd 35,626,800 1.05Amanah Saham Malaysia

10. Amanah Raya Nominees (Tempatan) Sdn Bhd 28,368,500 0.84Skim Amanah Saham Bumiputera

11. Lembaga Tabung Haji 25,110,036 0.74

12. HSBC Nominees (Asing) Sdn Bhd 24,211,031 0.72BBH and Co Boston for GMO Emerging Markets Fund

13. Malaysia Nominees (Tempatan) Sendirian Berhad 21,171,220 0.63Great Eastern Life Assurance (Malaysia) Berhad (PAR 1)

14. HSBC Nominees (Asing) Sdn Bhd 19,033,700 0.56Emerging Markets Growth Fund

15. Valuecap Sdn Bhd 17,200,000 0.51

16. Amanah Raya Nominees (Tempatan) Sdn Bhd 13,257,000 0.39Sekim Amanah Saham Nasional

17. Bank Simpanan Nasional 13,106,700 0.39

18. HSBC Nominees (Asing) Sdn Bhd 11,197,851 0.33Stichting Pensioenfonds Abp.

19. Amanah Raya Nominees (Tempatan) Sdn Bhd 10,098,700 0.30Amanah Saham Wawasan 2020

20. HSBC Nominees (Asing) Sdn Bhd 9,546,989 0.28Abu Dhabi Investment Authority

21. Pertubuhan Keselamatan Sosial 8,911,500 0.26

22. HSBC Nominees (Asing) Sdn Bhd 8,212,900 0.24Capital International Emerging Markets Investment Fund

23. Cartaban Nominees (Tempatan) Sdn Bhd 7,475,400 0.22Amanah SSCM Nominees (Tempatan) Sdn Bhd for Employees Provident Fund Board (JF404)

24. HSBC Nominees (Asing) Sdn Bhd 7,331,100 0.22TNTC for Government of Singapore Investment Corporation Pte Ltd

25. AM Nominees (Tempatan) Sdn Bhd 7,325,800 0.22Employees Provident Fund Board (A/C1)


Page 320


26. Citicorp Nominees (Asing) Sdn Bhd 7,104,000 0.21Mellon Bank, N.A. for Acadian Emerging Markets Equity Fund

27. Citicorp Nominees (Asing) Sdn Bhd 6,546,211 0.19American International Assurance Company Limited (P Core)

28. Citicorp Nominees (Tempatan) Sdn Bhd 6,535,800 0.19Ing Insurance Berhad (Inv-IL Par)

29. HSBC Nominees (Asing) Sdn Bhd 6,334,900 0.19Pictet And Cie for VKF Investment Ltd

30. Cartaban Nominees (Asing) Sdn Bhd 6,221,600 0.18Investors Bank And Trust Company for Ishares Inc

TOTAL 2,747,303,711 81.14

SUBSTANTIAL SHAREHOLDERS' HOLDINGS (5% AND ABOVE)


1. Khazanah Nasional Berhad 1,191,326,073 35.192. Employees Provident Fund Board 426,651,000 12.613. Bank Negara Malaysia 251,680,000 7.434. Cimsec Nominees (Tempatan) Sdn. Bhd. 184,981,200 5.465. Temasek Holdings (Private) Limited 169,355,400 5.00

TOTAL 2,223,993,673 65.69

DIRECTORS’ DIRECT AND INDIRECT INTEREST IN THE COMPANY AND ITS RELATED CORPORATION AS AT 18 MARCH 2005

In accordance with the Register of Directors’ Shareholdings, the directors’ interest in shares in the Company and itsrelated corporation are as follows:

Telekom Malaysia Berhad VADS BerhadName of Directors Direct Indirect % Direct Indirect %

Tan Sri Dato’ Ir. Muhammad Radzi Haji Mansor 98,000 25,500* 0.0036** 15,000 — 0.025**

Dato’ Dr. Abdul Rahim Haji Daud 10,500 134,500# 0.0043** 15,000 — 0.025**

* Held through HSBC Nominees (Tempatan) Sdn Bhd# Held through TA Nominees (Tempatan) Sdn Bhd** less than 0.1%

List of Top 30 Shareholders continued


Page 321

REGISTRAR

Tenaga Koperat Sdn Bhd (118401-V)

20th Floor, Plaza Permata

Jalan Kampar, Off Jalan Tun Razak

50400 Kuala Lumpur

Tel : 03-4041 6522

Fax : 03-4042 6352

LISTING

The Company’s shares are listed on the Bursa Malaysia Securities Berhad in Malaysia.

MALAYSIAN TAXES ON DIVIDEND

Malaysia practised an imputation system in the distribution of the dividends whereby the income tax paid by a company

is imputed to dividends distributed to shareholders.

Malaysian income tax is deducted or deemed to have been deducted at corporate tax rate, which is currently at 28%

from dividends paid by a company residing in Malaysia.

The income tax deducted or deemed to have been deducted from dividend is accounted for by the income tax of the

company. There is no further tax or withholding tax on the payment of dividends to all shareholders.

The Annual Report is available to the public who are not shareholders of the Company, by writing to:

General Manager

Group Corporate Communications Division

Telekom Malaysia Berhad

Level 8, South Wing, Menara Telekom

Off Jalan Pantai Baharu

50672 Kuala Lumpur

Fax : 03-7955 2510

SHAREHOLDERS AND INVESTOR INFORMATION


Page 322

Net Book Net BookValue Value of

Freehold Leasehold Other Land* Excepted Land** of Land BuildingsNo. of Area No. of Area No. of Area No. of Area RM RM

Location Lots (’000 sq ft) Lots (’000 sq ft) Lots (’000 sq ft) Lots (’000 sq ft) (million) (million)

1. Federal Territorya. Kuala Lumpur 25 1,205 7 409 12 1,277 — — 96.1 1,643.2b. Labuan — — 1 161 5 710 — — — —

2. Selangor 14 10,709 22 25,426 6 479 97 16,698 190.9 615.33. Perlis — — 4 52 — — 14 750 0.4 4.14. Perak 5 61 17 679 5 297 119 7,780 18.0 85.65. Pulau Pinang 8 18 19 1,049 — — 60 15,431 9.1 73.96. Kedah 9 511 14 1,404 — — 55 2,818 12.4 82.97. Johor 10 146 26 1,324 16 591 138 14,097 8.1 126.08. Melaka 2 3 28 63,366 2 1,140 38 4,457 59.6 124.19. Negeri Sembilan 21 47,523 9 321 6 317 71 9,371 3.8 38.110. Terengganu — — 20 1,585 4 129 41 6,285 1.9 46.711. Kelantan — — 11 463 4 173 41 2,234 2.3 28.212. Pahang 4 80 44 1,856 17 691 98 8,409 6.5 102.013. Sabah — — 18 351 6 655 76 26,290 12.8 109.714. Sarawak 7 522 28 858 10 468 109 10,284 28.1 118.315. Sri Lanka 4 91 — — — — — — 8.8 13.816. Republic of Malawi — — 18 92 11 65 — — 0.2 6.917. Republic of Guinea 81 5,919 — — — — — — 5.9 8.518. Bangladesh 25 224 — — — — — — 2.0 1.219. South Africa 1 11 — — — — — — 0.8 0.720. Cambodia — — — — — — — — — 1.5

Total 216 67,023 286 99,396 104 6,992 957 124,904 467.7 3,230.7

No revaluation has been made on any of the land and buildings

* The title deeds pertaining to other land have not yet been registered in the name of the Company. Pending finalisation with the relevantauthorities, the land have not been classified according to their tenure and land areas are based on estimation.

** Excepted land are lands situated outside the Federal Territory which are either alienated land, reserved land owned by the Federal Governmentor land occupied, used, controlled and managed by the Federal Government for federal purposes (in Melaka, Pulau Pinang, Sabah and Sarawak)as set out in Section 3(2) of the Telecommunication Services (Successor Company) Act, 1985. The Government has agreed to lease these land toTelekom Malaysia Berhad for a term of 60 years with an option to renew, under article 85 and 86 of the Federal Constitution.

NET BOOK VALUE OF LAND & BUILDINGS AS AT 31 DECEMBER 2004


Page 323

USAGE OF PROPERTIES AS AT 31 DECEMBER 2004

Satellite/ Kedai TM/ Telecom-Submarine Primatel/ munication/

Transmission Office Stores/ Cable Business TourismLocation Exchanges Stations Buildings Residential Warehouses Stations Resort Centre University Tower

1. Federal Territorya. Kuala Lumpur 28 6 22 39 19 1 — — — 1b. Labuan 3 2 1 4 12 2 — — — —

2. Selangor 85 11 18 — 41 — — 6 1 —3. Perlis 10 — — 2 1 — — 1 — —4. Perak 70 22 32 81 42 — — 2 — —5. Pulau Pinang 29 — 18 33 24 2 1 3 — —6. Kedah 48 11 4 26 11 — 1 2 — 17. Johor 90 17 6 51 22 1 — 4 — —8. Melaka 18 2 5 23 6 2 — 1 1 —9. Negeri Sembilan 31 15 4 16 — 1 2 1 — —10. Terengganu 33 17 5 15 6 2 — — — —11. Kelantan 23 6 7 18 13 — — 1 — —12. Pahang 45 34 14 49 17 3 4 1 — —13. Sabah 45 33 21 22 22 2 1 3 — —14. Sarawak 72 43 24 47 25 1 — — — —15. Sri Lanka — 3 6 — 2 — — — — —16. Republic of Malawi 1 86 — — — 1 — — — —17. Republic of Guinea 26 133 27 5 4 1 — — — —18. Bangladesh — 7 — — — — — — — —19. South Africa — — — 1 — — — — — —20. Cambodia 1 — — — — — — — — —


Page 324

GROUP DIRECTORY

WILAYAH PERSEKUTUANKUALA LUMPUR

State General Manager, TM RetailTelekom Malaysia Berhad25th Floor, Menara Weld 76, Jalan Raja Chulan50200 Kuala LumpurTel. : 03-2020 6186Fax : 03-2070 2355

CUSTOMER SERVICE CENTRETelekom Malaysia BerhadConsumer And Business1A Floor, Bangunan Bukit MahkamahJalan Raja Chulan50200 Kuala LumpurTel. : 03-2026 1050Fax : 03-2031 4460

PRIMATEL BUSINESS CENTRETelekom Malaysia Berhad25th Floor, Menara Weld 76, Jalan Raja Chulan50200 Kuala LumpurTel. : 03-2020 5335Fax : 03-2070 2020

TMpointMuziumBangunan Muzium TelekomJalan Raja Chulan50200 Kuala Lumpur

Kompleks Damai1st Floor, Wisma Kotamas94, Jalan Dato Hj Eusoff50400 Kuala Lumpur

MaluriLot 1 & 2, Block 154Maluri Business CentreJalan Jejaka, Taman Maluri55100 Kuala Lumpur

ShowroomGround Floor, Wisma TelekomJalan Pantai Baharu59200 Kuala Lumpur

SetapakIbusawat Telekom Setapak44, Persiaran Kuantan53200 Kuala Lumpur

CELCOM SERVICE CENTRE

HEAD OFFICECELCOM (Malaysia) Berhad (167469-A)15th Floor, Menara Celcom82, Jalan Raja Muda Abdul Aziz50300 Kuala LumpurMalaysia

Central Regional Office2nd Floor, Menara TR161B, Jalan Ampang50450 Kuala Lumpur

Taman Segar62, Jalan Manis 3, Taman SegarCheras, 56100 Kuala Lumpur

SelayangNo. 101, Jalan 2/3APusat Bandar UtaraSelayang, 68100 Kuala Lumpur

Jalan AmpangPodium Block, Level 1 & 2Menara TR161B, Jalan Ampang50450 Kuala Lumpur

Menara CELCOMGround Floor, Menara Celcom82, Jalan Raja Muda Abdul Aziz50300 Kuala Lumpur

HEAD OFFICE:Level 51, North Wing, Menara Telekom, Off Jalan Pantai Baharu, 50672 Kuala LumpurTel. : 03-2240 9494Fax : 03-2283 2415Website : www.tm.com.my


Page 325

Group Directory continued

Medan TuankuGround Floor, No. 7 & 9Jalan Medan Tuanku Satu50300 Kuala Lumpur

PGRMLot 1.03, Menara PGRM8, Jalan Pudu Ulu56100 Cheras, Kuala Lumpur

PekelilingPekeliling Business CentreGround Floor, Pharmacare BuildingLot 14 (129), Jalan Pahang BaratOff Jalan Pahang53000 Kuala Lumpur

Taman Tun Dr IsmailAB 40, Jalan Tun Mohd FuadTaman Tun Dr Ismail60000 Kuala Lumpur

TMNET CLICKERSCASO Seri PetalingNo. 43, Jalan Radin Anum 1Sri Petaling, 57000 Kuala LumpurTel. : 03-9058 7609/9058 6920/

9056 3862Fax : 03-9058 9863

CASO Taman Connought118, Jalan CerdasTaman Connought56000 Kuala LumpurTel. : 03-9101 9633Fax : 03-9101 5733

CASO Wangsa MajuNo. 48, Jalan 1/2FPusat Bandar Wangsa MajuWangsa Maju, Kuala LumpurTel. : 03-4143 9633Fax : 03-4142 8633

SELANGOR/PETALING JAYA

State General Manager, TM RetailTelekom Malaysia Berhad1st Floor, Wisma Telekom Shah AlamNo. 6, Persiaran Damai, Seksyen 1140000 Shah Alam, SelangorTel. : 03-5518 8700Fax : 03-5512 5133

CUSTOMER SERVICE CENTRETelekom Malaysia BerhadMBS PJ, 2nd Floor, Menara PKNSJalan Sultan, 46050 Petaling JayaSelangorTel. : 03-7968 2010Fax : 03-7955 9495

PRIMATEL BUSINESS CENTRETelekom Malaysia BerhadGround FloorWisma Telekom Shah AlamNo. 6, Persiaran Damai, Seksyen 1140000 Shah Alam, SelangorTel. : 03-5518 8820Fax : 03-5518 8815

TMpointDamansara Utama91-93, Jalan SS21/1ADamansara Utama47400 Petaling JayaSelangor

Petaling Jaya20, Jalan Yong Shook Lin46050 Petaling JayaSelangor

Subang Jaya85, Jalan SS15/5A47500 Subang JayaSelangor

KajangBt. 141⁄2, Jalan Cheras43400 KajangSelangor

CyberjayaGround Floor, TM IT Complex3300 Lingkaran Usahawan 1 Timur63000 Cyberjaya, Selangor

Ampang42, Jalan Memanda 7Ampang Point68000 AmpangSelangor

Kepong16, Jalan 54, Desa Jaya52100 KepongSelangor

RawangLot 21, Jalan Maxwell48000 RawangSelangor

Kuala Kubu Bahru1st Floor, Ibusawat TelekomKuala Kubu Bahru44000 Kuala Kubu BahruSelangor

Bukit Raja (Kelang)Jalan Meru41050 KelangSelangor


Page 326

Shah AlamPersiaran DamaiSeksyen 1140150 Shah AlamSelangor

BantingJalan Chempaka42400 BantingSelangor

Kuala SelangorJalan Klinik45000 Kuala SelangorSelangor

Sabak Bernam35, Jalan Menteri45200 Sabak BernamSelangor

Port KlangLot 2.1, 2nd FloorBangunan Hentian Pelabuhan Klang41672 Jalan Perbandaran, Klang

CELCOM SERVICE CENTREPetaling JayaGroud Floor, Menara PKNS PJNo. 17, Jalan Yong Shook Lin46050 Petaling JayaSelangor

KlangNo. 1, Lorong Tiara 1ABandar Baru Klang41150 Klang

Shah AlamNo. 1Jalan Tengku Ampuan Zabedah B9/B, Section 940000 Shah Alam, Selangor

Port KlangLot 1-3, 1st FloorHentian Pelabuhan KlangKlang, Selangor

KajangLot No. 1, Taman Sri SagaJalan Sungai Chua43000 KajangSelangor

TMNET CLICKERSCASO DamansaraNo. 84, Jalan 21/35Damansara Utama47400 Petaling JayaSelangorTel. : 03-7729 2922Fax : 03-7729 4922

Kelana JayaUnit 109B, Ground FloorKelana Park View TowerNo. 1, Jalan SS 6/247301 Kelana JayaSelangorTel. : 03-7804 0410Fax : 03-7804 5910

CASO Subang Jaya22-1, Jalan USJ 9/5PSubang Business Centre47620 UEP Subang JayaSelangorTel. : 03-8024 4668Fax : 03-8024 4371

JOHOR

State General Manager, TM RetailTelekom Malaysia BerhadLevel 5, Wisma TelekomJalan Sutera 3, Taman Sentosa80150 Johor BahruTel. : 07-228 1001Fax : 07-339 1919

CUSTOMER SERVICE CENTRETelekom Malaysia Berhad4th Floor, Ibusawat Telekom Senai81400 Senai, JohorTel. : 1050Fax : 1 800 88 9393

PRIMATEL BUSINESS CENTRETelekom Malaysia BerhadWisma Telekom PelangiJalan Sutera 3, Taman Sentosa80150 Johor BahruTel. : 1 800 88 9595Fax : 1 800 88 9696

TMpointJohor BahruJalan Abdullah Ibrahim80672 Johor Bahru

SkudaiGround Floor, Ibusawat TelekomBt. 91⁄2, Jalan Skudai81300 Skudai, Johor

Pontian1st Floor, Ibusawat TelekomJalan AlSagoff82000 Pontian, Johor



Page 327


KluangJalan Sultanah86000 Kluang, Johor

SegamatJalan Pawang85000 Segamat, Johor

Batu Pahat40 & 42, Jalan Rahmat83000 Batu Pahat, Johor

Muar37A, Jalan Ibrahim84000 Muar, Johor

Kota TinggiNo. 2-4, Jalan IndahTaman Medan Indah81900 Kota Tinggi, Johor

KulaiLot 435, Jalan Kenanga 29/11Taman Indah Putra81000 Kulai, Johor

PelangiPelangi Business CentreJalan Kasa, Taman Sentosa80150 Johor Bahru, Johor

MersingLot 384, Jalan Ismail86800 Mersing, Johor

Yong PengJalan Muar83700 Yong Peng, Johor

Pasir Gudang17 & 19, Jalan 9/7Jalan Perjiranan 981700 Pasir Gudang, Johor

TMNET CLICKERSJohor BahruUnit 1.19AGround Floor (Main Entrance)Plaza Pelangi, Jalan Kuning80400 Johor BahruJohorTel. : 07-332 0040Fax : 07-332 0075

NEGERI SEMBILAN

State General Manager, TM RetailTelekom Malaysia BerhadJalan Dato’ Hamzah70000 SerembanTel. : 06-765 1888Fax : 06-767 7888

CUSTOMER SERVICE CENTRETelekom Malaysia BerhadJalan Dato’ Hamzah70000 SerembanTel. : 06-765 1190Fax : 06-763 4444

PRIMATEL BUSINESS CENTRETelekom Malaysia BerhadSuite 7, Wisma Arab-MalaysianJalan Tuanku Munawir70000 SerembanTel. : 06-765 1248Fax : 06-761 9696

TMpointSerembanJalan Dato Hamzah70000 SerembanNegeri Sembilan

Port DicksonNo. 25, Jalan MahajayaPD Center Point71000 Port Dickson

Kuala PilahJalan Bahau72000 Kuala PilahNegeri Sembilan

TampinJalan Besar73000 TampinNegeri Sembilan

CELCOM SERVICE CENTRESerembanLot 1521, Ground Floor173, Jalan Tun Dr Ismail70200 SerembanNegeri Sembilan

LukutNo. 8, Jalan Pasar71010 Lukut, Port DicksonNegeri Sembilan


Page 328

MELAKA

State General Manager, TM RetailTelekom Malaysia BerhadLevel 2, Kompleks KotamasLeboh Ayer Keroh, 75450 MelakaTel. : 06-252 2366Fax : 06-230 8220

CUSTOMER SERVICE CENTRETelekom Malaysia BerhadBangunan Unit 2, Jalan Banda Kaba75000 MelakaTel. : 06-292 9292Fax : 06-282 8534

PRIMATEL BUSINESS CENTRETelekom Malaysia BerhadLot F9-F15, Bangunan Peringgit PointJalan Batu Hampar75320 Peringgit MelakaTel. : 06-292 5012Fax : 06-281 4445

TMpointMelaka527 & 529A, Plaza MelakaJalan Gajah Berang75200 Melaka

Alor GajahBatu 141⁄2, Jalan Melaka Kendong78000 Alor GajahMelaka

Menara PertamGround FloorJalan Batu Berendam BBP 2Taman Batu Berendam Putra75350 Melaka

KEDAH/PERLIS

State General Manager, TM RetailTelekom Malaysia BerhadJalan Kolam Air, 05672 Alor StarTel. : 04-730 2552Fax : 04-733 9090

CUSTOMER SERVICE CENTRETelekom Malaysia BerhadJalan Kolam Air, 05672 Alor StarTel. : 04-731 9255Fax : 04-730 0630

PRIMATEL BUSINESS CENTRETelekom Malaysia Berhad71-72, A&B, Primatel Business CentreLebuhraya Darul Aman05100 Alor StarTel. : 04-720 2143Fax : 04-733 4770

TMpointKangarJalan Bukit Lagi01000 KangarPerlis

Alor StarMenara Alor StarLebuhraya Darul Aman05100 Alor StarKedah

Jitra19A, Jalan PJ 1Pekan Jitra06000 Jitra, Kedah

LangkawiJalan Pandak Mayah 6Jalan Pandak Mayah07000 KuahLangkawi, Kedah

Sungai PetaniBangunan Telekom, Jalan Petani08000 Sg. PetaniKedah

KulimNo. 485, Jalan Tunku Asaad09000 Kulim, Kedah

PULAU PINANG

State General Manager, TM RetailTelekom Malaysia Berhad1st Floor, Bangunan ESK10400 Pulau PinangTel. : 04-227 8000Fax : 04-227 3122

CUSTOMER SERVICE CENTRETelekom Malaysia Berhad1st Floor, Jalan Burmah10050 Pulau PinangTel. : 04-226 9595Fax : 04-226 0254

TMpointBayan BaruJalan Mahsuri11950 Bayan BaruPulau Pinang

Jalan BurmahJalan Burmah10050 Pulau Pinang



Page 329


Leboh DowningBangunan Syed PutraLebuh Downing10300 Pulau Pinang

ButterworthWisma Telekom ButterworthJalan Bagan Luar12000 ButterworthPulau Pinang

Bukit MertajamJalan Arumugam Pillai14000 Bukit MertajamPulau Pinang

Sungai Bakap1282, Jalan Besar14200 Sungai BakapPulau Pinang

TMNET CLICKERSPulau PinangNo. 12-14, Block 1Ground Floor, Krystal Point 2Lebuh Bukit Kecil 611900 Bayan BaruPulau PinangTel. : 04-643 3000Fax : 04-644 4499

CASO Pulau PinangNo. 55-1-A, Menara NorthamJalan Sultan Ahmad Shah10050 Pulau PinangTel. : 04-228 2626Fax : 04-228 7918

PERAK

State General Manager, TM RetailTelekom Malaysia BerhadLevel 2, Wisma TelekomJalan Sultan Idris Shah30672 IpohTel. : 05-241 2195/249 9121Fax : 05-241 2185

CUSTOMER SERVICE CENTRETelekom Malaysia BerhadBangunan TelekomJalan Dato’ Onn Jaafar30300 IpohTel. : 05-249 9171Fax : 05-255 1717

PRIMATEL BUSINESS CENTRETelekom Malaysia BerhadMezzanine Level, Wisma TelekomJalan Sultan Idris Shah30672 IpohTel. : 05-249 9192/9189Fax : 05-254 9696

TMpointIpohJalan Sultan Idris Shah30672 IpohPerak

Batu GajahJalan Dewangsa31672 Batu GajahPerak

TasekJalan Sultan Azlan Shah Utara31400 IpohPerak

KamparJalan Baru31900 KamparPerak

TaipingJalan Berek34672 TaipingPerak

Teluk IntanJalan Jawa36672 Teluk IntanPerak

Parit Buntar36, Persiaran PerwiraPusat Bandar34200 Parit BuntarPerak

Kuala KangsarJalan Raja Chulan33000 Kuala KangsarPerak

GerikWisma KosekJalan Takong Datoh33300 Gerik, Perak

Sungai SiputNo. 188, Jalan Besar31000 Sungai SiputPerak

Sitiawan179, Taman Sitiawan Maju32000 SitiawanPerak


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TapahJalan Stesyen35672 TapahPerak

Tanjung MalimJalan Besar35900 Tanjung MalimPerak

KELANTAN

State General Manager, TM RetailTelekom Malaysia Berhad1st Floor, Bangunan PentadbiranJalan Doktor, 15000 Kota BharuTel. : 09-743 4545Fax : 09-744 3447

CUSTOMER SERVICE CENTRETelekom Malaysia Berhad3rd Floor, Bangunan Unit 1Bhg. Pusat Perkhidmatan PelangganTelekom Malaysia BerhadJalan Doktor, 15000 Kota BharuTel. : 09-744 9292 Ext. 421Fax : 09-743 1568

TMpointKota BharuJalan Doktor15000 Kota BharuKelantan

Pasir Mas606, Jalan Masjid Lama17000 Pasir MasKelantan

Tanah Merah4088, Jalan Ismail Petra17500 Tanah MerahKelantan

Kuala KraiLot 1522Jalan Tengku Zainal Abidin18000 Kuala KraiKelantan

Pasir Puteh258B, Jalan Sekolah Laki-laki16800 Pasir PutehKelantan

CELCOM SERVICE CENTREKota BharuLot 825 & 826, Seksyen 27Jalan Seri Cemerlang15300 Kota BharuKelantan

Tanah MerahBangunan Merdeka JayaJalan Taman Hiburan17500 Tanah MerahKelantan

TERENGGANU

State General Manager, TM RetailTelekom Malaysia Berhad4th Floor, Bangunan TelekomJalan Sultan Ismail20200 Kuala TerengganuTel. : 09-620 2525Fax : 09-624 2727

CUSTOMER SERVICE CENTRETelekom Malaysia BerhadIbusawat Telekom HiliranJalan Sultan Muhamad20710 Kuala TerengganuTel. : 09-620 9292Fax : 09-624 4628

TMpointKuala TerengganuJalan Sultan Ismail20200 Kuala TerengganuTerengganu

KemamanJalan Masjid24000 KemamanTerengganu

DungunJalan Nibong23000 DungunTerengganu

JertihUpper FloorIbusawat Telekom JertihJalan Zainal Abidin22000 JertihTerengganu

CELCOM SERVICE CENTREKemamanLot K 9709-9710Taman Chukai Utama24000 Chukai, KemamanTerengganu

Kuala TerengganuNo. 6C & 6D, Jalan Air Jernih20300 Kuala TerengganuTerengganu



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PAHANG

State General Manager, TM RetailTelekom Malaysia BerhadLevel 2, Wisma Telekom MahkotaJalan Mahkota, 25000 KuantanTel. : 09-512 9353Fax : 09-513 6644

CUSTOMER SERVICE CENTRETelekom Malaysia Berhad4th Floor, Bangunan TelekomJalan Mahkota, 25000 KuantanTel. : 09-515 2292Fax : 09-514 5151

TMpointKuantanBangunan Telekom MalaysiaNo. 168, Jalan Besar25000 Kuantan, Pahang

MentakabJalan Tun Razak28400 Mentakab, Pahang

Bentong111, Bangunan Persatuan Bola SepakJalan Ah Peng28700 Bentong, Pahang

Kuala Lipis10, Jalan Bukit Bius27200 Kuala Lipis, Pahang

RaubJalan Kuala Lipis27600 Raub, Pahang

CELCOM SERVICE CENTREEastern Regional OfficeWisma CelcomNo. 7, Persiaran Sultan Abu BakarKawasan Perindustrian Ringan IM3Bandar Indera Mahkota25200 Kuantan

TemerlohNo. 62, Jalan Ahmad Shah 128000 Temerloh, Pahang

KuantanLot No. 240 & 241Sri Dagangan Business Centre25200 Kuantan, Pahang

TMNET CLICKERSKuantanTM Net Sdn BhdPejabat Wilayah PahangB30, Lorong Tun Ismail 11Jalan Tun Ismail25000 Kuantan, PahangTel : 09-512 9484Fax : 09-512 9168

SARAWAK

State General Manager, TM RetailTelekom Malaysia Berhad6th Floor, TM 100Jalan Simpang Tiga, 93672 KuchingTel. : 082-200 200Fax : 082-257 505

PRIMATEL BUSINESS CENTRETelekom Malaysia BerhadTingkat Bawah, Bangunan TelekomJalan Batu Lintang, 93200 KuchingTel. : 082-203 900/901/904Fax : 082-250 686

Telekom Malaysia BerhadTingkat Bawah, Lot 1076, 1077Kompleks Komersial Bintang Jaya98000 MiriTel. : 085-432 223/410 041Faks : 085-433 301

TMpointBatu LintangJalan Batu Lintang93200 KuchingSarawak

PendingJalan Gedong93450 PendingSarawak

Sri AmanJalan Club95000 Sri AmanSarawak

MiriJalan Post98000 MiriSarawak

LimbangJalan Kubu98700 LimbangSarawak


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LawasJalan Punang98850 LawasSarawak

BintuluJalan Law Gek Soon97000 BintuluSarawak

SibuPersiaran Brooke96000 SibuSarawak

SarikeiJalan Berek96100 SarikeiSarawak

KapitJalan Kapit By Pass96800 KapitSarawak

TMNET CLICKERSKuchingGround FloorBangunan Yayasan SarawakLot 2, Section 24Jalan Barrack/Masjid93400 KuchingSarawakTel. : 082-418 000Fax : 082-418 500

SABAH

State General Manager, TM RetailTelekom Malaysia BerhadJalan Tunku Abdul Rahman88672 Kota KinabaluTel. : 088-299 888/838Fax : 088-248 378

CUSTOMER SERVICE CENTRETelekom Malaysia BerhadGround Floor, Telekom MalaysiaJalan Tunku Abdul Rahman88672 Kota KinabaluTel. : 088-299 714Fax : 088-299 716

PRIMATEL BUSINESS CENTRETelekom Malaysia Berhad1st Floor, Lot 67-69, Block JJalan Ikan Juara 1Sadong Jaya Complex88100 Kota Kinabalu, SabahTel. : 088-269 595Fax : 088-269 696

TMpointSadong Jaya3rd Floor, Bangunan Telekom88100 Sadong JayaKota KinabaluSabah

TawauT.B. 307, Blok 35, Kompleks FajarJalan PerbandaranTawau, Sabah

Lahad DatuMDLD 3307, Ground FloorFajar Komplek, Jalan SegamaSabah

SandakanLocked Bag 4490009 SandakanSabah

KeningauCommercial CentreJalan Arusap, Off Jalan MasakBlok B7, Lot 13 & 1489007 KeningauSabah

BeaufortChoong StreetP.O. Box 26989800 BeaufortSabah

KudatJalan Wan SiakP.O. Box 34089058 KudatSabah

WILAYAH PERSEKUTUANLABUAN

State Relations OfficerLot E001, 1st Floor, Podium LevelLabuan Financial ParkJalan Merdeka, 87000 WP LabuanTel. : 087-408 888Fax : 087-453 899



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PRIMATEL BUSINESS CENTRETelekom Malaysia BerhadLot E001, 1st Floor, Podium LevelLabuan Financial ParkJalan Merdeka, 87000 WP LabuanTel. : 087-408 878Fax : 087-441 446

INTERNATIONALSUBSIDIARIES/AFFILIATES

Cambodia Samart CommunicationsCo. Ltd.33rd FloorNo. 3, Samdech Sothearos Blvd.Khan Doun Penh, Phnom PenhKingdom of CambodiaTel. : +855-16-810081Fax : +855-16-810006

MTN Networks (PVT.) Ltd.No. 475, Union PlaceColombo 2 Sri LankaTel. : +94-1-678688Fax : +94-1-678703

Samart Corporation Plc92, Moo Software ParkChaengwattana Rd.Klong Gluar, Pak-KredNonthaburi, 11120 ThailandTel. : +66-2-5026070Fax : +66-2-5026072

Sotelgui s.a.B P 2066, Conakry, Republic ofGuineaTel. : +224-450200Fax : +224-411535

Telekom Networks Malawi LimitedMunif House, Livingstone AvenueLimbe P.O. Box 3039, BlantyreMalawiTel. : +265-1-645915Fax : +265-1-642805

TM International Bangladesh Limited9th Floor, Brac Centre75 Mohakhali Commercial AreaDhaka 1212, BangladeshTel. : +880-2-9887115Fax : +880-2-9887112

MTN Networks (PVT) Ltd (MTN)No. 475, Union PlaceColombo 2 Sri LankaTel. : 94-11-267 8688Fax : 94-11-267 8703

TM International Bangladesh Limited(TMIB)Brac Centre, 9th Floor75 Mohakhali Commercial AreaDhaka 1212, BangladeshTel. : 800-2-988 7149/50/51/52Fax : 800-2-988 7112

Samart Corporation PLC (SAMART)No. Bor. Nor Jor 9299/1 Moo 4 Software Park35th Floor, Chaengwattana RoadKlong Gluar, Pak-KredNonthaburi, 11120 ThailandTel. : 66-2-502 6070Fax : 66-2-502 6043

Cambodia Samart Communication Co.Ltd (CASACOM)#56, Preah Norodom BLVDSangkat Chey ChumneahKhan Doun Penh, Phnom PenhKingdom of CambodiaTel. : 855-16-810 001/2/3Fax : 855-16-810 006

Telekom Networks Malawi Limited(TNM)Munif House, Livingstone AvenueLimbe P.O. 3039Blantyre, MalawiTel. : 265-1-641 088Fax : 265-1-642 805

Societe Des Telecommunications DeGuinee (Sotelgui S.A.)P.O. Box 2066, ConakryRepublic of GuineaTel. : 224-450 200Fax : 224-411 535

PT Excelcomindo Pratama (XL)GRHAXLJL. Mega Kuningan Lot E4-7 No. 1Kawasan Mega KuninganJakarta 12950IndonesiaTel. : 62-21-576 1881Fax : 62-21-575 61880

Multinet Pakistan (Private) Limited(Multinet)239 Staff LinesFatima Jinnah RoadKarachi 75530PakistanTel. : 92-91-111 021 021Fax : 92-21-565 6480


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LOCAL SUBSIDIARIES

Fiberail Sdn Bhd7th Floor, Wisma TelekomJalan Desa UtamaPusat Bandar Taman Desa58100 Kuala LumpurTel. : 03-7980 9696Fax : 03-7980 9900

GITN Sdn BhdLevel 31, Menara TelekomJalan Pantai Baharu50672 Kuala LumpurTel. : 03-2240 0708Fax : 03-2240 0709

Meganet Communications Sdn BhdLevel 14, Wisma PantaiPlaza Pantai, Jalan Pantai Baharu59200 Kuala LumpurTel. : 03-2284 5515Fax : 03-2284 3464

Menara Kuala Lumpur Sdn BhdJalan Punchak, Off Jalan P. Ramlee50250 Kuala LumpurTel. : 03-2020 5446Fax : 03-2034 2609

University Telekom Sdn BhdJalan Multimedia63100 Cyberjaya, SelangorTel. : 03-8312 5000/5020Fax : 03-8312 5022

Telekom Applied Business Sdn Bhd16th Floor, Menara 2Faber Towers, Jalan Desa BahagiaTaman Desa Off Jalan Klang LamaKuala LumpurTel. : 03-7984 4989Fax : 03-7980 1605

Telekom Publications Sdn Bhd10th Floor, Menara DPersiaran MPAJJalan Pandan Utama, Pandan Indah55100 Kuala LumpurTel. : 03-4292 1111Fax : 03-4291 9191

Telekom Research & DevelopmentSdn BhdIdea Tower, UPM-MTDCTechnology Incubation Centre 1Lebuh Silokon43400 Serdang, SelangorTel. : 03-8933 1820Fax : 03-8945 1591

Telekom Sales & Services Sdn BhdMenara Mutiara BangsarJalan Liku Off Jalan Riong59100 Bangsar, Kuala LumpurTel. : 03-2283 3888Fax : 03-2282 6184

Telekom Smart School Sdn Bhd45-8, Level 3, Block CPlaza DamansaraJalan Medan Setia 1Bukit Damansara50490 Kuala LumpurTel. : 03-2092 5252Fax : 03-2093 4993

Celcom (Malaysia) Berhad15th Floor, Menara CELCOMNo. 82, Jalan Raja Muda Abdul Aziz50300 Kuala LumpurTel. : 03-2687 3838Fax : 03-2681 0359

TM Facilities Sdn Bhd27th Floor, Menara TelekomJalan Pantai Baharu50672 Kuala LumpurTel. : 03-2240 1004Fax : 03-2284 1233

TM International Sdn Bhd17th Floor, Menara TelekomJalan Pantai Baharu50672 Kuala LumpurTel. : 03-2240 2254Fax : 03-7956 0266

TM Net Sdn Bhd3300, Lingkaran Usahawan 1 Timur63300 Cyberjaya, SelangorTel. : 03-8318 8027Fax : 03-8318 8077

VADs Berhad8th Floor, Plaza IBMNo. 1, Jalan Tun Mohd FuadTaman Tun Dr. Ismail60000 Kuala LumpurTel. : 03-7712 8888Fax : 03-7728 2584



PROXY FORM

I / We ________________________________________________________________________________________________________(FULL NAME AND NRIC/PASSPORT NO./COMPANY NO.)

of ___________________________________________________________________________________________________________(FULL ADDRESS)

being a Member / Members of TELEKOM MALAYSIA BERHAD hereby appoint __________________________________

______________________________________________________________________________________________________________(FULL NAME AND NRIC/PASSPORT NO.)

of ___________________________________________________________________________________________________________(FULL ADDRESS)

or failing him _______________________________________________________________________________________________(FULL NAME AND NRIC/PASSPORT NO.)

of ___________________________________________________________________________________________________________(FULL ADDRESS)

or failing him, the Chairman of the Meeting, as my/our proxy to vote for me/us and on my/our behalf at theTwentieth Annual General Meeting of the Company to be held at Dewan Merdeka, Level 4, Putra World Trade Centre,41 Jalan Tun Ismail, 50480 Kuala Lumpur on Tuesday, 17 May 2005 at 10:00 a.m. and at any adjournment thereof.

My/Our proxy is to vote as indicated below:

Resolutions Ordinary For Against

1. To receive the Audited Financial Statements and Reports for the financial year ended 31 December 2004 Resolution 1

2. Declaration of a tax exempt final dividend of 20 sen per share Resolution 2

3. Re-election of the following Directors pursuant to Article 98(2):-

(i) YB. Datuk Nur Jazlan Tan Sri Mohamed Resolution 3

(ii) Dato’ Azman Mokhtar Resolution 4

(iii) Dato’ Abdul Wahid Omar Resolution 5

(iv) Dato’ Haji Abd. Rahim Haji Abdul Resolution 6

4. Re-election of Dato’ Dr. Abdul Rahim Haji Daud as a Directorpursuant to Article 103 Resolution 7

5. Approval of payment of Directors’ fees Resolution 8

6. Re-appointment of Messrs. PricewaterhouseCoopers as Auditors of the Company Resolution 9

7. Special Business:Section 132D, Companies Act 1965 – Issuance of New Shares Resolution 10

(Please indicate with an “X” in the spaces provided how you wish your vote to be cast. Unless voting instructionsare specified herein, the Proxy will vote or abstain from voting at his/her discretion.)

Signed this _______________ day of ______________ 2005

________________________________________Signature(s) / Common Seal of Member(s)

No. of shares *CDS Account No.

* CDS – Central Depository System

Notes:1. A member entitled to attend and vote at the above Meeting is entitled to appoint a proxy to attend and vote in his/her stead.

A Proxy need not be a member of the Company and the provisions of Section 149(1)(b) of the Act shall not apply to the Company.

2. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting provided that wherea member of the Company is an authorised nominee as defined in accordance with the provisions of the Securities Industry (CentralDepositories) Act, 1991, it may appoint at least one (1) proxy in respect of each securities account it holds with ordinary shares of theCompany standing to the credit of the said securities account.

3. Where a member appoints two (2) proxies, the appointments shall be invalid unless the proportion of the holding to be representedby each proxy is specified.

4. This instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly appointed under a powerof attorney or if such appointee is a corporation, either under its common seal or under the hand of an officer or attorney dulyappointed under a power of attorney.

5. A corporation which is a member, may by resolution of its Directors or other governing body authorise such person as it thinks fit toact as its representative at the Meeting, in accordance with Article 92 of the Company’s Articles of Association.

6. This instrument appointing the proxy together with the duly registered power of attorney referred to in Note 4 above, if any, must bedeposited at the office of the Share Registrar, Tenaga Koperat Sdn Bhd, 20th Floor, Plaza Permata, Jalan Kampar, Off Jalan Tun Razak,50400 Kuala Lumpur, Malaysia not less than 48 hours before the time appointed for holding the Meeting or any adjournment thereof.

1. Fold here

2. Fold here

3. Fold here

The Share Registrar

TENAGA KOPERAT SDN. BHD.

20th Floor, Plaza Permata

Jalan Kampar, Off Jalan Tun Razak

50400 Kuala Lumpur

Malaysia

TELEKOM MALAYSIA BERHAD (128740-P) · TELEKOM MALAYSIA BERHAD (128740-P) 2004 ANNUAL REPORT GROUP...

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Transcript of TELEKOM MALAYSIA BERHAD (128740-P) · TELEKOM MALAYSIA BERHAD (128740-P) 2004 ANNUAL REPORT GROUP...