Mission: To transform TM

Malaysian Business, Dec 16, 2007 by Johannes Ridu

But Vietnam will not be the last stop for TM. Also, the demerger will not be the last step in the company's quest to go up the value chain. Wahid certainly has more up his sleeves.

FINAL TERMS OF THE DEMERGER (Key Points)

Tailored Dividend Policies

TM will return RM1.63 billion to shareholders via a special cash dividend in respect of FY07 ending Dec 31. FixedCo will be adopting a progressive dividend policy to ensure stable and sustainable dividends to shareholders while maintaining an efficient capital structure and ensuring sufficiency of funding for future growth. With a strong capital structure post-demerger, FixedCo intends to pursue an active capital management policy and distribute a minimum of RM700 million or up to 90% of its normalised profit after tax attributable to its shareholders, whichever is higher. As part of active capital management, FixedCo will continue to monetise some of its non-core assets.

In determining the capital structures of FixedCo and RegionCo, TM's Board has considered the expected dividend payment capacity of RegionCo, bearing in mind RegionCo's strategy to explore regional growth opportunities and the dividend policies of comparable companies. RegionCo's dividend payout ratio as a percentage of normalised profit after tax attributable to its shareholders is expected to not exceed TM Group's payout ratio in recent years. The actual dividend policy of TM International shall be determined at a later date by TM International's Board.

Internal Restructuring

* TM International will be acquiring Celcom from TM at its cost of investment of RM4,677 million;

* TM International will be acquiring the SunShare Investments Ltd redeemable preference shares from TM at its cost of investment of RM141 million;

* TM will be acquiring a 51% stake in Fibrecomm Network (M) Sdn Bhd from Celcom at its cost of investment of RM33 million;

* TM will be transferring the 3G Spectrum Assignment to Celcom at its book value of RM40 million;

* TM International will settle its existing net inter-company balances of RM3,041 million to TM; and z The above will be settled via a mixture of new TM International shares and cash and/or amounts owing to be settled at a later date.

Distribution of TM International Shares to TM Shareholders

Upon finalisation of the asset/shares transfer and settlement of inter- company balances, RegionCo's share capital will be equal to FixedCo's to facilitate a one-for-one distribution of shares.

With the completion of the share distribution, TM International will cease to be a subsidiary of TM and effectively demerged from TM.

Employee Share Option Scheme

TM is also proposing to establish an employee share option scheme in conjunction with the proposed demerger to ensure that the employees remain focused and committed to its success. It is also to recognise the role of the employees and their contribution in building two strong businesses.

RegionCo's Aspiration - A Leading Mobile Operator in South/ Southeast Asia