TELEKOM MALAYSIA REGISTERS 50 PER CENT INCREASE IN PROFIT AT HALF YEAR MARK

Kuala Lumpur, 24/8/2004 - Telekom Malaysia today released its unaudited half-year results for the period ended June 30, 2004, which show a Group profit after tax, before exceptional gain, of RM836.9 million compared to RM557.5 million recorded for the corresponding period in 2003.

This represents a 50 per cent increase over the same period last year for the Group.

The significant increase in Group profit after tax is mainly attributed to improvement in operations, robust growth in cellular and multimedia segments as well as contribution from overseas investments, namely in Sri Lanka and Bangladesh.

Operating revenue increased by 22.9 per cent to RM6,500.6 million in the first six months of 2004 compared to RM5,288.9 million in the same period last year. Telekom Malaysia also recorded an exceptional gain of RM622million from the partial sale of half of its stake (6%) in Telkom South Africa.

Cellular earnings contributed 37.1 per cent to the total revenue, thus continuing to meet the target as envisaged by the Group. Although fixed line/voice telephony revenue declined marginally, which is consistent with global trend, telephony business continues to be the main source of revenue contributing 46.9 per cent of the operating revenue. Contribution from the Internet and Multimedia business segments showed a marked increase of RM212.8 million, up 41.9 per cent from the same period last year.

The Group's mobile segment registered a growth of 80 per cent over the previous corresponding period to RM2,415.3 million. This significant increase is a result of six months of consolidated revenue from Celcom. Revenue from mobile services grew mainly due to the increase in the number of pre-paid subscribers, which grew from 3.3 million in March 2004 to 3.5 million subscribers as at end of second quarter of 2004, bringing the combined customer base to 4.67 million as at end June 2004.

In the Internet and multimedia services segment, TMNet dial-up customers continue to grow while the TMnet Streamyx service records an encouraging growth bringing the total number of customers to 175,000 as at end June 2004. To meet this growing demand, TMNet has increased port availability and diversified the local access with fibre and wireless broadband.

The half-year results also showed marked improvement of the Group's overseas investments. A combined profit after tax of RM292.9 million compared to RM130.6 million in the corresponding period last year was recorded with cellular investments indicating an upward revenue trend. Other notable accomplishments of TM International subsidiaries include the first million subscriber mark achieved by MTN Networks Limited of Sri Lanka, putting the Company ahead of the fixed line incumbent, Sri Lanka Telecom, with a market share of 53 per cent as of June 2004. In addition, TM International Bangladesh, as the second largest cellular operator in Bangladesh, recorded a substantial increase in its subscriber base to 704,000 for the second quarter of this year. The Group will continue its strategy of investing in high growth markets in the Asian region with a focus on the cellular sector.

"We are encouraged by the performance of the Group, especially from the mobile, Internet and multimedia segments, as well as our overseas investments which all turned in significant growth in revenue as compared to the first half of 2003. Moving forward, we expect these segments to become the major growth driver and earnings contributor for the Group, while fixed line will continue to provide stable cashflows," said Chairman, Tan Sri Dato' Ir Md. Radzi Mansor.

Commenting on the Group's cellular segment, Group CEO, Dato' Abdul Wahid Omar said : "Our focus remains on completing the integration of Celcom/TM Cellular which is progressing well as expected. We are already seeing improved revenue contribution from the cellular segment and substantial gains have been recorded through the integration of marketing activities and product offerings. We aim to do better by putting our resources to focus on capturing more market share and to introduce new innovative products and services upon the completion of the integration."

"In the two months that I have been here, I have been given the opportunity to familiarise myself with all aspects of the Group's operations. This will allow me to strategise the Group's future direction and put it on course towards achieving improved customer service, operational efficiencies and effective cost management initiatives to be in line with the Government's aim of making GLCs more market-focused and show improved shareholder value. Towards this end, I would be working closely with my management team and the Board to realise the Group's vision as the Communications Company of Choice.

"Our ongoing CRM initiatives will be further intensified to integrate and co-ordinate our customer service activities towards achieving higher service quality levels across the Group. I will also ensure that the Group will work in a cohesive manner to bring in the required business performance linked to the Group's overall strategic business plans.

With the Government's optimism on an expected GDP growth of more than 6.7% and barring any unforeseen circumstances, we are confident that the Group will achieve better operating results in the second half of 2004," he concluded.