TELEKOM MALAYSIA EXTENDS REGIONAL PRESENCE WITH ACQUISITION OF EXCELCOMINDO IN INDONESIA

Kuala Lumpur, Thursday, 9 December 2004 - Telekom Malaysia Berhad (Telekom Malaysia) through its wholly owned international investment arm, TM International (L) Ltd ("TM International") has today reached an agreement with the Rajawali Group the principal shareholders of PT Excelcomindo Pratama ("XL"), to acquire Indonesia's number three mobile operator.

The transaction is structured as an initial acquisition of a 27.3 per cent interest, together with transfer of majority management and board control to Telekom Malaysia. Telekom Malaysia will pay USD314 million with the transaction expected to close in January 2005. Telekom Malaysia intends to acquire additional shares to achieve a majority shareholding in 2005 subject to certain conditions being met. This transaction will complement XL's plan for an initial public offering during the first half of 2005.

XL has a total of 4.2 million mobile subscribers and a market share in Indonesia of approximately 15.5 per cent as of September 30, 2004. During the third quarter the company gained momentum, capturing approximately 18.6 per cent of net mobile subscriber additions. XL has built one of Indonesia's highest quality mobile networks and associated transmission infrastructure. It also has a substantial presence in the Indonesian corporate data market and is developing businesses in VoIP and wireless broadband. It recorded gross revenues of Rp2,301 billion (approx USD254 million) in the first 9 months of 2004.

Tan Sri Dato' Ir Radzi Mansor, Chairman of Telekom Malaysia said : "We are excited to acquire a substantial equity interest in XL and hope we can increase our stake further. This is clearly a major acquisition for us and is in line with our strategy to acquire mobile assets in low penetrated markets close to home. Indonesia is the largest economy in the ASEAN region and should have the largest number of subscribers in the region going forward."

Meanwhile Dato' Abdul Wahid Omar, Group Chief Executive Officer of Telekom Malaysia said : "Our strategic vision is to help enhance XL's market position in Indonesia and in the process make XL a substantial contributor to Telekom Malaysia's future growth. We believe our position as Malaysian market leader, combined with our extensive experience as a regional investor, will be beneficial to XL."

He further added, "Operating in a market contiguous to Malaysia, XL is an ideal partner for Telekom Malaysia and our wholly owned mobile operator, Celcom. Substantial synergies are available based on the level of voice and data traffic between Indonesia and Malaysia. There are also ample opportunities for sharing of transmission assets and savings on capital investment. We also see many opportunities for development of joint products across both markets. Working with a good management team at XL, and with the continued support of the Rajawali Group, we look forward to realizing these benefits rapidly"

The investment in XL complements Telekom Malaysia's existing regional mobile investments in Sri Lanka, Bangladesh and Cambodia as well as a potential investment in India under a teaming arrangement with Singapore Technologies Telemedia. The combined group will have total mobile subscribers of 11.3 million (proforma as of 30 September 2004).

Mr. Peter Sondakh, CEO of the Rajawali Group said "We believe Telekom Malaysia is well placed to take XL to the next level of development. We are very pleased to have Telekom Malaysia as our new partner and to participate in XL's ongoing growth".

The deal is expected to be marginally EPS dilutive to Telekom Malaysia in 2005 but accretive in 2006 and beyond.

The transaction is subject to certain conditions including the approval of the relevant regulatory authorities.

Citigroup Global Markets is advising Telekom Malaysia on this acquisition. Morgan Stanley and Credit Suisse First Boston are jointly advising the Rajawali Group.

About Telekom Malaysia
Telekom Malaysia is one of Malaysia's largest public listed companies and the leading full service Telco, offering a comprehensive range of communications solutions in voice telephony, mobile, data services and multimedia applications. Continually evolving, Telekom Malaysia has diversified its services and products portfolio to include broadcasting transmission facilities, audio and videoconferencing, customised network, and consultancy.

With an operating revenue of almost RM12 billion in 2003 and RM9.8billion in the nine months ended 30 September 2004, Telekom Malaysia is the leader in fixed line telephony, a major player in the mobile industry and the largest Internet Service Provider in the region. With a staff strength of 30,000 employees group wide and a global presence in 11 countries, Telekom Malaysia has a long track record of keeping a diverse rural and urban population in touch with each other.

About TM International
TM International is one of the leading regional investors in mobile companies with interests in Sri Lanka, Bangladesh and Cambodia. It also has selected investments in Africa comprising Guinea, Malawi and Ghana. It has a track record of adding value to its investments, and an approach which focuses on developing the skills and capabilities of its local management teams and working in partnership with these local teams to achieve strong market positions and profitability.

About PT Rajawali Corporation
PT Rajawali Corporation ("Rajawali") is one of the largest private companies in Indonesia. Established by Peter Sondakh in 1984, Rajawali has expanded into diversified businesses in telecommunication, hotel, consumer goods and retail, and transportation. The companies are managed by highly qualified professionals in various fields and supported by more than 20,000 employees.

The company has also established strategic partnerships with reputable international companies. It has one of the largest hotel chains in Indonesia in cooperation with Sheraton and Novotel. In retail business, Rajawali also is in partnership with Metro (Private) Limited to operate Metro Retail Stores in Jakarta and Bandung. Rajawali established XL in 1995 in partnership with Verizon, AIF and Mitsui. XL is currently the third largest cellular operator in Indonesia.

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